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  • California: The Haves and Have-Nots [View article]
    While commendable, your situation is anecdotal and is NOT, I would argue, indicative of the "average."

    As they say, the road to hell is paved with good intentions. All programs start by using a situation similar to yours, but before you know it we have 20% of the population collecting unemployment insurance.

    All presently terrible programs were conceptualized in nobility.

    If they came out and said "we are going to arbitrarily confiscate and redistribute money at our choosing" no one would sign up.

    The saving grace is that the solution is quite simple. Like an alcoholic who hits bottom and realizes he needs to stop drinking, someday people will realize not even governments can spend money they don't have ad infinitum.

    Or we'll just drink ourselves to death. Either/or...

    On Jul 02 01:08 PM masf wrote:

    > Why do we keep insisting on buying spilled milk instead of milk we
    > can drink? Consider the costs of these "savings" in prisons, emergency
    > rooms, and lost productivity. I'm a Californian who has benefited
    > from some of these programs. I became disabled shortly after my
    > baby was born 11 years ago. Despite outstanding education and pushing
    > myself to the point where I was literally passing out, I could no
    > longer hold a job. Guess what? If you work hard and are very, very
    > determined... you can still be stopped. Thanks to my fellow tax
    > payers, I have completed a vocational rehabilitation program, found
    > a part-time job, and have good chances of working full-time soon.
    > Compare this outcome with the alternative: the state bringing my
    > child up for me. And I think we Californians are at least as worthy
    > of bailout funds as AIG.
    Jul 2, 2009. 02:20 PM | 5 Likes Like |Link to Comment
  • Stocks Are Hot, But Do the Americans on Food Stamps Care? [View article]
    The counter is that pensions are disastrous for companies (especially small ones), and without companies where will employment and said pensions come from?

    Yes, many of the big/internationals are screwing people over but more people are hired by small businesses than the behemoths. Pensions, health insurance, minimum wage, unemployment insurance...these things all cripple an employer's ability and incentive to hire more people.

    The current system is not perfect, but then neither is capitalism itself when it's managed by humans. Human nature is flawed, and the more we try to tinker with things, and deny the facts of our own beings, the worse things become. Nothing that involves human decisions will ever be perfect, and in fact that is why our Constitution was created to try and remove any situations that relied on human nature to "do the right thing."


    On Jun 09 11:48 AM Living4Dividends wrote:

    > Excellent post, TraderMark. Indeed you are correct. The 401K has
    > been a disaster for average Americans.
    Jun 9, 2009. 01:27 PM | 2 Likes Like |Link to Comment
  • Stocks Are Hot, But Do the Americans on Food Stamps Care? [View article]
    I have to disagree with the general anti-401k sentiments here. Valid points, and I gave no negative (and a few positive) feedback to the posters.

    I'll start with a caveat: I am in total agreement about the general corruptness of our political/economic system. I just don't think a 401k vs. a pension is a part of this problem.

    I think a moral society is one that allows its citizens the most choice possible. This is commensurate with a 401k. A lavish, or even a pauper retirement is not a right. That is my general belief. If you have the discipline and desire to save all your life and to defer the consumption of those dollars to some future date, more power to you. There are negatives to this; your present standard of living is diminished in the hope/expectation that your future standard will be increased.

    If one fails, or is simply unable to fully accomplish this goal then they will have to figure out alternative means. Either living with relatives (as almost every elder person did until the past few decades), work a couple extra years, or work part-time to supplement whatever savings you do have.

    But the notion that everyone over some arbitrary age should be labor-free is totally baseless, IMHO.

    This is akin to the obesity problem in America. Should we legislate some type of weight-management system for all Americans? Is it our inalienable right for healthy, fit citizens to subsidize those that consistently, often defiantly make poor choices about their well-being? I do not think so.

    I choose to be healthy. Because I WANT to be healthy. It is hard work, but I view the reward as absolutely worth it. If I were to get hit by a bus tomorrow, or have an unexpected aneurism I would not regret my past choices. Simply a "Black Swan" I could not account for. The same goes for my finances. I save and live below my means, but any number of things could destroy my financial well-being. But those are out of my control. The things I can control I try to do so as beneficially as possible. It is EASY to spend all your money and then blame "others" when you have nothing left. Or the analogous excuse, "I'm just big-boned."

    Everything in life is a choice, and every choice has a consequence; from the minute to the massive. I live below my financial means, and similarly I only eat those foods I can "afford" calorically speaking. I exert energy maintaining my financial balance sheet, and my cardiovascular one too.

    I think there is just to many calls for "Something has to be done about...", or "We really need to...." even on a lot of issues I agree with. Ironically, or perhaps hypocritically I guess that's what this post is, too. Oh well, no one's perfect. Certainly not me! :)

    Jun 9, 2009. 01:15 PM | 6 Likes Like |Link to Comment
  • DDR to Sell Malls at 30% 2004 Prices [View article]
    Tyler, I'm a big fan of you and your blog, ZH. But this isn't a very legitimate comparison is it? You are comparing the average price for a 110 piece portfolio to the average price of 11 pieces within that portfolio. Unless we know the specific prices of the 11 pieces today vs. their 2004 price this is inaccurate to assume a blanket discount.

    Jun 9, 2009. 12:30 AM | 7 Likes Like |Link to Comment
  • Can the U.S. Break the Oligarchy Cycle a Fourth Time? [View article]
    Yes, the current system is fairly bass ackwards. Congressmen should absolutely have term limits, whereas I actually believe the Presidency should have no term limit. Every 4 years everyone in the country is allowed to vote yea or nay against the president, but as a citizen in Missouri I am powerless to oust Chris Dodd or Barney Frank.

    And I would argue those 2 (and a slew of others) are far more detrimental than an often figurehead President.


    On Jun 08 10:54 AM Jimbo wrote:

    > Regarding Jack Gordon's comments,above, I don't see the Democratic
    > party doing much to solve the problem either. Both major parties
    > have been co-opted by "influence" and Washington has become a house
    > of political prostitution. We require a constitutional amendment
    > to limit congressional terms of office and laws making it a felony
    > for any former member of congress or any former federal employee
    > to lobby congress. I only hope that a peaceful political revolution
    > takes place before the situation becomes literally violent.
    Jun 9, 2009. 12:09 AM | 2 Likes Like |Link to Comment
  • Why Is Oil Creeping Back Up? [View article]
    Yes, this seems to be a very risky game of chicken. People worldwide buying and storing betting on a recovery and higher prices. But if wrong, this means there is a HUGE price drop in the near future. It has become a zero-sum game. Either oil will ramp back to the $100ish, or crash back to the $30ish (maybe lower?).

    Personally, I'm expecting a drop (both in oil and the markets) but other than some long exposure to a couple drillers I am mostly avoiding this game right now.


    On May 31 01:00 PM CautiousInvestor wrote:

    > A provocative article and many thoughtful comments.
    > On this one I will join forces with George Soros and others who believe
    > the recent bounce in oil prices is a result of speculators anticipating
    > an economic recovery nothwithstanding the falling dollar, reduced
    > oil shipments and stockpiling by China.
    > Within the US, we are at a 25-year high in petroleum storage and
    > have 139M barrels more in storage than last year - an average increase
    > of nearly 3M barrels a week despite OPEC’s 29Mb/week production cut.
    > And the same is true in Rotterdam, where oil storage is reaching
    > record levels, and in England where tankers brimming with oil float
    > off the south shore.
    > Even Iraqi Oil Minister said last week: "We don’t think it’s a wise
    > economic decision to produce oil from secure underground fields and
    > then pay to store it in floating tankers. Future generations can
    > benefit from it better than we can, if we don’t need it."
    > To the extent that speculators are betting upon an economic recovery
    > and attending increases in energy prices, it's somewhat ironical
    > that the recent runup of over 50% could easily choke-off the very
    > recovery they are betting on.
    May 31, 2009. 01:35 PM | 8 Likes Like |Link to Comment
  • Update on U.S. Debt and Fed Assets [View article]
    I meant there is a lack of lending supply, not a lack of housing supply. The Fed has crowded out all creditors by subsidizing below market interest rates. The only institutions loaning money are ones with the free Fed money. But their balance sheets are so bad that they don't want to lend to anyone but the most solid borrowers.

    So it's a bit of a paradox. The only people who can get loans are the people that don't really need them. These people were never the issue, so the slight benefit they may receive from a slightly lower interest rate is going to be more than offset by the heftier tax burden coming their way.

    The problems all stem from individuals and companies with terrible balance sheets. But none of these people are going to qualify for a low, fixed-rate mortgage or business loan.

    Despite the Fed's best effort, there is a massive credit shortage. And the Fed's response to this shortage has been to fix prices BELOW the market rate. The laws of supply and demand apply to interest rates the same way they do to every other commodity in nature. Fixing prices below market creates a shortage.

    If the Fed simply got out of the way, market forces would take interest rates probably up to the low double digits. This would then bring on a massive (and very much needed) liquidation. It would rapidly bring housing prices to the correct level. Painful, yes, but very very swift. Every business built on a shoddy business model over the last 10 years would fold, and everything left standing would be exponentially stronger. The remaining companies would start hiring as they picked up market share, and new businesses would emerge with sounder business plans.


    On May 23 02:48 PM rockingandrolling wrote:

    > I disagree -there is no lack of housing SUPPLY. The last time I
    > checked there was about 1/12 to 2 years of SUPPLY of housing in the
    > market - including existing homes and new construction .....
    > There is lack of demand.....
    May 23, 2009. 09:10 PM | Likes Like |Link to Comment
  • Update on U.S. Debt and Fed Assets [View article]
    Ahh, but you misunderstand the market. The problem with mortgage rates at 4-5% is it's not creating SUPPLY. The Fed has subsidized overly-low interest rates. In the process, it has driven most private lending out of the mortgage market.

    Would you personally give any of the shaky individuals applying for mortgage loans today a 30 year loan at 3%? That is a negative real interest rate, on a likely depreciating asset, and it would be given to a high-risk borrower. An all-around terrible proposition to any sane creditor.

    That is the problem. Unless it is backed by taxpayers, no one is going to loan any money at these ridiculous rates. And taxpayer-backed loans are a fraudulent concept. Continuing to push rates lower only EXACERBATES the problem.

    Lack of supply is the problem, not lack of demand.


    On May 23 12:35 PM rockingandrolling wrote:

    > I don't see interest rates rising anytime soon. Bond rates will fluctuate
    > within a livable range....
    > Mortgage rates will have to drop even more - because the current
    > level 5% is not creating demand. The majority of homeowners already
    > have a fixed rate mortgage near the 5-6% level. The rate should be
    > somewhere between 2.5 to 3%. This would facilitate refinancing and
    > home purchasing, and would put much needed extra money into our economy!
    > I'm afriad that without a further reduction in mortgage rates -housing
    > prices will to continue to decline as they still have not reached
    > a true price/value ratio. Historically housing prices increased in
    > the range of 2% per year. In the 5 years leading up to the housing
    > bubble they increased anywhere from 10-25% per year....this inflated
    > value will have to be corrected. I hate to say it but, we can lose
    > another 20 to 40% of home value depending on location.
    May 23, 2009. 01:16 PM | Likes Like |Link to Comment
  • Deflation Risk Disappears from TIPS Charts; Inflation on the Horizon [View article]
    Ankit, you were taught misconceptions and have accepted them as fact.

    You are treating savings as some separate entity from investment. Savings equals investment. It is just deferred consumption. If no one saved anything, and immediately consumed everything they earned there would be no innovation and no growth. Taken to the extreme, this would be the hyperinflation of the Weimar or Zimbabwe. No one would have any capital, and we would essentially be hunters and gatherers.

    Deflation taken to the extreme would result in a glut of savings and a society full of people that at SOME point would be ready, but more importantly CAPABLE of making investments in the true sense of the word. Investment requires having capital in anticipation of future opportunities. Systemic deflation gets triggered by malinvestment. If there are real opportunities for productivity enhancements and innovation, investment capital will pour forth.

    Look at the current market situation. Most everything being consumed was depreciating crap. Or overpriced housing. Meanwhile, the small percentage who have saved in anticipation of a future opportunity will have investment opportunities of a lifetime sometime in the next few years. After all the crap gets flushed, those who saved will start to consume.

    Most Americans decided to consume not just current, but future wages as well in the last several years. I went the opposite direction. So in a year, or two or three, I will transfer all my deferred consumption into a productive and profitable enterprise.

    Lastly, and still most importantly, IT'S MY MONEY. It is not the government's role (in fact it's supposed to be illegal) to "encourage" me to piss away my hard-earned income. If I have a 3 bedroom house and no one ever uses the 3rd bedroom, should the government be able to annex that room and put a tenant in there? Is that a policy you would advocate? I certainly hope not. But in theory, that is the equivalent to the monetary policy you support.

    May 23, 2009. 03:30 AM | 2 Likes Like |Link to Comment
  • Chart of the Day - PE Ratio [View instapost]
    Good comment. And combined with the fact that a much larger percentage of the populace is invested in the market than in anytime in US history and this could be a pretty valid explanation.

    The unsettling notion is that this would mean the pain will be exponentially greater if this turns out to be "the big one."

    On May 22 07:38 PM derryl wrote:

    > I think moreso now than at any time since the late 1920s, stock are
    > being bought on share price speculation rather than as dividend
    > paying investments. If you can buy a 30/1 stock for $12 and sell
    > it a month or two later for $16, who cares about the earnings of
    > the company whose stock you just made profit from? I'm not arguing
    > the morality of speculating vs. investing. I'm just offering a possible
    > explanation for enduringly high P/E ratios.
    May 22, 2009. 08:14 PM | 2 Likes Like |Link to Comment
  • Morgan Stanley analysts expect most banks to repay TARP funds by Q4 2009 and to issue more stock over the next few quarters.  [View news story]
    No, TARP money will simply be recycled into the next round of struggling banks and/or whatever other industry government gets the whim to subsidize. Eventually, like all "temporary" government programs it will just become a permanent $750B slush fund that the gov't can use as it pleases.


    On May 22 02:09 PM Windwood Trader wrote:

    > Somebody please explain this to me. The TARP money will be totally
    > repaid-
    > Does this mean that we, the American taxpayer will not be out the
    > $800 billions?
    > Was this the grand scheme?
    > This inquiring mind wants to know.
    May 22, 2009. 02:17 PM | Likes Like |Link to Comment
  • Morgan Stanley analysts expect most banks to repay TARP funds by Q4 2009 and to issue more stock over the next few quarters.  [View news story]
    Maybe they will, maybe they won't. Does it matter?

    We will either have government controlled non-lending banks, or we will have "private" non-lending banks.

    May 22, 2009. 02:01 PM | Likes Like |Link to Comment
  • Chart of the Day - PE Ratio [View instapost]
    Do you take this chart as evidence of a "new normal" since removing the gold standard and thus creating higher and higher "bottoms" do to fiat currencies? Or do you take it as being potent evidence of a severe detachment from reality and an especially painful reversion to the mean? Or something else entirely...?

    May 22, 2009. 01:53 PM | 5 Likes Like |Link to Comment
  • It's Lights Out! [View instapost]
    Greenpeace must be popping the champagne corks as we speak!

    Millions of unemployed and decreased standard of living = Global Warming Solution. Brilliant!
    May 22, 2009. 12:50 AM | Likes Like |Link to Comment
  • The U.S. Needs More Inflation? [View article]
    Jeff, thanks for the link. That was a very informative piece.

    May 21, 2009. 12:02 PM | 3 Likes Like |Link to Comment