Anandakos

Is the Market Reversal Already Happening?

I very much agree that taxing carbon would have been FAR better. The current cap and trade is so eviscerated that it won't accomplish much, but will guarantee trading profits for big coal and utility companies.

I'd prefer to see a mandatory universal single payer catastrophic system and leave the rest to the private sector. I think some fellow from the Hoover Institute suggest that "catastrophic" be defined as a percentage of last year's income. Something like 25% or thereabouts.

That gives people the opportunity to save up a quarter of their annual earnings or buy private insurance to get to the Federal level, preventing fiscal Armageddon for families, but allowing reasonable premiums.

In the years following the onset of a debilitating disease, the threshold of Federal payment would fall because a debilitated person has no income.

It also removes the quarrels about pre-existing conditions, rescission, and the "public option".

Do calm down about "protectionism" though. Since we don't make much except airliners, grain and CDO Squareds here in the US anymore, what do we care if other people raise tariffs on our exports? With a few well-placed tariffs we might be able to make some things again.

You're smoking some old leftover John Birch brand pre-Fidel Cuban stogies if you think that organized labor controls this administration. Ha. Ha. Ha.

And finally, how in hell do you propose to pay for the debt which means so much without raising some taxes? Yes, spending needs to be cut, mostly on Imperial Wet Dreams and no-bid contracts. But most of the difference between 19% brought in and 25% spent is W's tax cuts and the spending to catch the economy falling off the step ladder.

Your characterization of Democrats shows an excessive intake of Vitamin G. Poisoning by this vitamin is shown by enlargements of the abdomen and buttocks caused by lethargically channel surfing between Fox News Channel and the WB.

On Nov 22 10:52 AM FB5000 wrote:

> I have to admit I quit reading when I saw a 90% correction in the
> S&P.
>
> Market PE of 88? Really?
>
> Where do they find keep finding these Klowns?
>
> You are in a low inflation, low interest rate environment. Productivity
> is high, corporate profits are increasing, world trade is increasing,
> retail sales are rising
>
> The negatives are housing - expect it to continue to lag - and large
> and growing govt. debt and an expansion of entitlements. Increased
> taxes are coming. This is not a bad thing if the money used on good
> programs and to pay down debt. And if the tax burden is more evenly
> spread over the society.
>
> The market is where it was in 1998. On balance you should expect
> continued improvement from these levels. Especially as economic growth
> accelerates into 2010, profits rise and rates stay low.
>
> We will see employment growth in first half 2010 and rising inflation
> later into 2010. Rates will have to rise.
>
> This is not a bad environment and markets reflect that - once Armageddon
> was averted.
>
> The real risks are political
>
> 1. Cap and Trade - a stupid piece of legislation. Just tax carbon.
> Cap and trade will impose costs but not achieve the desired outcome.
>
> 2. Healthcare "reform" - a very stupid piece of legislation. This
> could be done at a much lower cost. I hope the bill is thrown out.
> This would be very bullish.
> 3. Protectionism. Obama is an instinctive protectionist. This is
> very very very bad. I hope he gets better advice. The Clinton approach
> would be far better - Larry Summers are you listening? Or is nobody
> listening to you? Hard to imagine
> 4. Organized Labor. Andy Stern is now basically living in the White
> House. This is very bad. Andy would like to organize the world. He
> may do it. Obama needs to get away from this concept. It is the job
> killer.
> 5. A stupid desire to Tax the life out of the "rich". Class based
> ideologically driven garbage thinking does not lead to prosperity.
> Ask the British who lives through the 1960's and 90% marginal tax
> rates.
>
> Avoid those 5 things or get rational Carbon and Healthcare legislation
> and smart Tax reform and we will see new highs in the S&P and
> 4% unemployment before the next Presidential election. Obama gets
> re-elected and the Republican party splits into a moderate wing and
> crazy - Glen Back wing. Guaranteeing the next 20 years of Democrat
> rule.
>
> That's all.

The Bair-Miller-Moore Haircut: Answering Felix Salmon

Hey folks. Anybody here willing to pay 1.1% more on your home mortgage in trade for making sure that the banks don't go blooey again? Line up!

The Bair-Miller-Moore Haircut: Answering Felix Salmon

Ah the good old days when we bankers could bloviate about how policies to make us rich would make other Americans fabulously weathy. That was a hale and halcyon era my friends. We could make any stupid shit at all up and people would buy it hook line and sinker. A sucker born every second! Screw the minutes; they'll take care of themselves. Seconds lever us up 60X.

Chinese Exports: Can Emerging Markets Replace the U.S. Consumer?

Silver-bug,

Unfortunately, you <b>can't</b> put your bets on China. They won't let you. While they have certainly welcomed investments by foreign corporations with open arms -- providing that they brought lots of technology to steal -- they do not actually allow foreign individuals to invest in their stock market.

When you buy a "China" fund you're buying shares in businesses that have factories or other operations in China, not Chinese companies themselves.

So good luck betting on China. When they're satisfied that they have bled those foreign companies dry of technology, they'll tax them out of existence and you'll lose your entire investment.

On Nov 13 05:17 PM silver-bug wrote:

> Good charts and diagrams, but I would like to see the demographics
> of the Chinese population, because that is the driving force of their
> economy. China has a growing middle class, as opposed to the shrinking
> middle class in America. It has a labor force of over 800 million
> people, and these are hard-working people who save money to buy things
> instead of using credit. China has $2.3 trillion worth of reserves
> to spend, and it spends this money wisely, developing infrastructure
> and obtaining vast amounts of natural resources for growth. And
> Chinese government is also providing a fiscal stimulus for it's people,
> which is also being spent wisely by the people.
>
> So, I think China has the ability to soak up the export slack with
> an increase in domestic consumption. It may slow down a bit, but
> it won't be significant. Most of the economic growth in the world
> will be driven by China and then followed by India, and other smaller
> eastern emerging market nations.
>
> I would put my bets on China.

Understanding Energy: Professional Money Management and Peak Oil

Finc 101,

I worked for ten years as an I/T person in the geosciences departments of Sohio, Amoco, and Shell. I've seen the large-scale deposit maps. There are over 2.5 million ten-digit API base numbers (the well head identifier) in the continental United States.

They are <b>everywhere<... that igneous or metamorphic rocks are absent at depths of less than 15,000 feet. The cheap glory holes you are imagining have all been drilled. The only significant hydrocarbon accumulations in onshore North America are trapped in thin strata between impermeable shales, like the Bakken deposits underneath the upper great plains.

Many have been known about for a long time, but the thin "pay" made them uneconomical to exploit with vertical drilling techniques. Now that we have horizontal drilling and fully steerable bits we can exploit them, but the thin pay is still a limitation to the total deposit. There are no more supergiants in North America, expect perhaps offshore in the Gulf.

Anything else is a gnat bite compared to America's voracious appetite for liquid hydrocarbon fuels.

On Oct 27 11:51 PM Finc101 wrote:

> The reason why oil is so expensive is because drilling is so expensive.
> In the early days of oil almost all discoveries were made by the
> inexpensive cable tool method. This is a slower drilling process,
> but requires only 2 men crews and can drill thousands of feet deep.
> It is very simple and requires no mud pits, pumps or other capital
> intensive equipment. In fact, almost all of the great Texas oil fields
> were discovered this way. If we wanted more domestic oil production
> and more domestic oil discoveries, the US must allow wildcatters
> to utilize this cheap drilling method and find more oil. Currently,
> this method is made impractical by regulations require anti blowout
> equipment and other devices designed to elimiate waste and damage
> to the environment. If drilling is cheaper, then the well exploration
> process can be riskier (producer or dry hole) and dont have to produce
> as many barrels per day to be profitable. It changes the whole economic
> picture of drilling from one of hiring expensive contractors to a
> DIY proposition potentially. There is no way that the fields in
> P.A. or Texas would have been discovered by using todays expensive
> methods, no one would have taken the risk to drill. We need wildcatters
> again to discover new fields on the cheap.

Understanding Energy: Professional Money Management and Peak Oil

Perceptions,

Well said. And this is another reason to put money on China. We may all be leery of the techno-fascist government of the country, but they are following exactly the correct path for an oil-constrained future.

In ten years they have opened as many kilometers of HSR as exist in Europe. They have stated a national goal that 20% of cars sold in the country will be electrically powered by 2015. Yes they're building coal plants too rapidly, but they're also dumping gigayuan into solar energy production and use.

On Oct 27 08:55 AM perceptions_now wrote:

> Regrettably, I am of the opinion that Oil Production has already
> effectively Peaked in 2005, in that it has subsequently failed to
> keep up with inflation, Demand or Population growth.
>
> There are no new sources of Oil, which will now prove sufficient
> in size to overcome the depletion of the existing, but decaying old
> super fields.
>
> If we were just treading water, with no growth, we would need 1 new
> Saudi Arabia every 3 years!
>
> If Production were to keep up with inflation, Demand &amp; Population
> growth, then another 2 Saudi Arabia's would need to be found &amp;
> put into production every 3 years.
>
> New unconventional sources such as Canadian Tar Sands &amp; Shale
> and the newer deep water fields are simply not sigificant enough
> to offset the depletion rates at the old super fields, such as Ghawar.
>
>
> I suspect the current Production plateau may continue, for a short
> period, but production will fall behind Demand. However, as Demand
> outsrips Supply and Prices rise, those very Price rises will trigger
> the cost ratio to run ahead too much, thus triggering the next Economic
> &amp; Share Market pullback.
>
> The old rules are changing, the return on Money &amp; Energy are
> being irreversibly delevered. The EROEI (Energy Return O Enrgy Invested)
> was 100/1 in the early days of Oil, it is now less than 10/1 and
> falling. New Oil is going to be much more costly to find &amp; Produce
> and the Investment return is not going to be anywhere near what it
> used to be.
>
> When perceptions finally accept that Oil has Peaked, then the rush
> away from Oil, into the search for something that may not be there,
> will also severely dilute the capital needed for Oil Exploration,
> as the EROEI will be decimated!
>
> In fact, even though Demand and Price has been rising, the investment
> in new Exploration has already been falling!
>
> There are no guarantees in life, but the likely outcomes suggest
> that 5-10 years from now, the Global Economic outlook, will be significantly
> different to today and I am not talking of upsides!

Fannie and Freddie: Worthless?

@Duude,

In actual fact, the total indebtedness of the all sectors of the US economy is very nearly exactly the same today as it was twenty-four months ago at the first rumblings of the crisis. Yes, government debt has ballooned, but private debt has shrunk by the same amount.

Would you <i>really</i> have preferred an <i>actual</i> shrinkage of the total capital debt of the US economy by 2.5 trillion dollars in two years?

Yes, over time it needs to come down a percentage of GDP, most likely by growing more slowly than does GDP. Actually shrinking total debt when investors are rushing equity capital out of the country to emerging markets would be insane. Are you a bond ghoul who would love to be paid back with ever scarcer and hence more valuable dollars? If so, admit it so we can evaluate your posts accordingly.

Since the capital base of American industry is steadily shrinking through disinvestment and depreciation, for the US to "grow its way out of this recession" -- everybody's favorite prescription -- it must have capital. Long term equity capital is vanishing from America as rapidly as the middle class. We either borrow (more productively than in the past to be sure) or we sink into genteel poverty like most of quaint and lovely old England.

On Oct 20 10:09 AM Duude wrote:

> These companies will survive but not as private companies. They're
> simply an arm of the US government. They will never be recapitalized,
> broken up or spun off with a new public offering. They have far too
> much bad debt and taxpayers won't stand for more tax dollars to recapitalize
> it. This is unfortunate because it only means the government will
> continue to subsidize mortgages, creating a bigger and more dangerous
> bubble. Government believes the best fix for a bubble is to make
> it bigger still. Taxpayers are already buried in debt and the government
> is now building a mountain with more and more dirt on the corpse
> of taxpayers everywhere.

When Morgan Stanley Almost Died

Whoops. Apparently HTML tags are persona non grata on Seeking Alpha. Especially those with no matching closing tag......

On Oct 05 02:56 PM Anandakos wrote:

>
> Felix,
>
> Thanks for having the courage to advocate for better regulation.
>
>
> My favorite is revoking deposit insurance from any depository institution
> which has more than 2% of national deposits or is a part of a larger
> group which does. It would have to be withdrawn over a period of
> time, of course, in order to prevent runs on the big banks.
>
> But over that implementation period it would force them to retrench
> to a smaller size and force the breakup of the financial supermarkets
> which have so much inherent risk.
>
> Yes, it <b>would</b> increase the risk of direct <b>banking</b...
> failure for each surviving individual bank, because they'd have less
> ability to cross-capitalize from unregulated siblings. And, they'd
> inevitably be more regional, since it would be impossible for a nationwide
> depository to have less than 2% of total deposits.
>
> But it would greatly reduce the risk of infection from those same
> unregulated siblings and the temptation to inflate earnings by financial
> engineering gambles. It would reduce banking to the regulated utility
> it should be. There are <b>plenty</b> of talented bankers running
> regional banks and large credit unions who would be glad to step
> up to running the sorts of large regional banks that would survive.
> Let the Dimon's, Lewis's, Blankfein's, and Kovacevich's of the world
> run investment banks. There fill an important role in a truly free
> capitalist system, but gamblers like them should <b>never</b> have
> been allowed into the no risk world of FDIC and Fed backed commercial
> banking. Never.
>
> One simple regulatory change with <i>enormous</... potential for
> restructuring.

When Morgan Stanley Almost Died

Felix,

Thanks for having the courage to advocate for better regulation.

My favorite is revoking deposit insurance from any depository institution which has more than 2% of national deposits or is a part of a larger group which does. It would have to be withdrawn over a period of time, of course, in order to prevent runs on the big banks.

But over that implementation period it would force them to retrench to a smaller size and force the breakup of the financial supermarkets which have so much inherent risk.

Yes, it <b>would</b> increase the risk of direct <b>banking</b... failure for each surviving individual bank, because they'd have less ability to cross-capitalize from unregulated siblings. And, they'd inevitably be more regional, since it would be impossible for a nationwide depository to have less than 2% of total deposits.

But it would greatly reduce the risk of infection from those same unregulated siblings and the temptation to inflate earnings by financial engineering gambles. It would reduce banking to the regulated utility it should be. There are <b>plenty</b> of talented bankers running regional banks and large credit unions who would be glad to step up to running the sorts of large regional banks that would survive. Let the Dimon's, Lewis's, Blankfein's, and Kovacevich's of the world run investment banks. There fill an important role in a truly free capitalist system, but gamblers like them should <b>never</b> have been allowed into the no risk world of FDIC and Fed backed commercial banking. Never.

One simple regulatory change with <i>enormous</... potential for restructuring.

Why U.S. Government Should Cut Federal Workers' Lavish Compensation

You jealous carpers are completely ignoring that over 70% of non-military government workers have a Bachelor's degree or higher. Since Reagan's day there has been an accelerating trend to outsource all of the positions that ordinary workers once held in the government: janitors, mail delivery staff, cafeteria workers and so on.

What is left has on average nearly three times the college attainment of the wider society. Further, anyone above a GS-10 nearly always has a graduate-level degree.

I'm not a Federal employee so don't accuse me of arguing my self-interest. However, I know several, all of whom are sharp and work hard. Most of you have just drunk Reagan's jealousy Kool-Aid.

How PHEVs and EVs Will Sabotage America's Drive for Energy Independence

Fred Linn,

Railroad locomotives do not use lead acid batteries as a storage technology for traction power. They do have batteries to crank the prime mover if its shut down, but the batteries are not in the power train.

They work as follows: a diesel engine of significant power turns a large alternator by direct drive. If the engine uses A/C traction motors the output from the alternator is fed directly to the traction motors through a control system. If the older direct current motors are used, the output from the alternator is passed through silicon rectifiers to product direct current which is then fed to the motors.

No batteries are used in standard diesel-electric locomotives.

Now there are some new hybrid designs coming on the market in order to store the electricity generated by regenerative braking in batteries for later traction use. However, the diesel electric locomotives "we have been building for the last 70 years" emphatically are not hybrids. They dissipate the regen braking energy through large steel grids on the roof of the locomotive. They function as resistive heaters to radiate the energy from braking.


On Aug 28 03:12 AM Fred Linn wrote:

> Mr. Peterson--------" Fred Lin, in an HEV you use the batteries to
> recover the energy lost in braking and use it to help with acceleration.
> In PHEVs and EVs I'm with you, why bother? "----------
>
> Exactly my point Mr. Peterson. People should not believe what
> they are being told----and this has been going on for YEARS.
>
> Hybrid vehicles offer about a 25% fuel savings overall, depending
> on driving conditions. There is lttle if any savings on highway
> driving----most of the savings are in stop and go city traffic.
> Compare that to 200% increase in thermal efficiency using biofuels.
> Hybrids seem to me to be paltry by comparison.
>
> Then add the fact that hybrids add another $2,000 to $5,000 to the
> price. Biofuels can be produced using all off the shelf parts,
> and are well tried and well proven.
>
> Of coarse automakers want people to believe that they can only have
> cars with power and efficiency if they pay a premium price.
> They are only interested in getting the premium price---not delivering
> the goods.
>
> There is no technical reason for using all the exotic battery types
> people are mentioning here. Good old lead/acid batteries work
> just fine----we've had 150 to perfect them(this year). The Baker
> Electric is a classic car that ran on lead/acid batteries and is
> widely recognized as one of the finest cars ever built---and performed
> admirably within the limitations of its battery/charging format.
> We can build hybrid cars just fine with lead/acid batteries.
> Railroad locomotives are one of the most efficient means of transport
> we have----and we have been building diesel/electric locomotives
> (hybrids using diesel engines to charge lead acid batteries) for
> over 70 years. If we can build locomotives capable of producing
> horsepower in the 4,000 to 6,000 range----we can easily produce cars
> needing only 100-200 hp.
>
> Look back through these posts. Everyone is brainwashed on "new"
> technology. The truth is, the clamor for "new" technology is
> just coporate manuevering to get hands deeper into your pockets.
> We can do everything we want our vehicles to do, right now, in a
> clean, renewable and sustainable way, using technology we have right
> now, and have had for over 50 years.
>

How PHEVs and EVs Will Sabotage America's Drive for Energy Independence

You say that Priuses use Nickel Metal Hydride batteries while the PHEV's and pure EV's use Lithium Ion batteries. Are you assuming that both kinds are manufactured in the same facility? It seems to me that's the only way that building more of one could necessitate building fewer of the other.


On Aug 26 11:14 AM John Petersen wrote:

> Mrfnd, the scarce commodity is the batteries. One GM Volt uses the
> same batteries that could be used to power 10 Prius class hybrids.
> One Nissan uses the same batteries that could be used to power 15
> Prius class hybrids. So for every EV you build, you are going to
> keep 10 to 15 Prius class hybrids off the road.

New Unemployment Insurance Claims Keep Rising

Karl,

I didn't know that jobs were even on a leash....;-). The proper spelling of the word that sounds like "loo-zing" is "losing". The word you wrote is pronounced "loose-ing" and though it is occasionally used -- viz. "he was loosing the hounds for the chase" it's pretty stilted and archaic.

You are right that we have "some deeper problems on our hands". Specifically, we don't make much that individuals want to buy these days. Yes, we're still the world's largest exporter, but a significant portion of that is agricultural commodities. Most of what we assemble from components consists of high end capital goods (Dreamliners!), chemicals, and machinery.

Those industries can only employ a small fraction of the workforce because they're so technology intensive. Now that the rest of the world is suspicious of our financial "products" -- not our stocks and traditional bonds, no, the "creative" stuff -- we are not going to be able to sucker them into buying dead tree certificates at a 99,000% markup. So yes, we have a problem.

Chap08,

Very true. But I'm not sure we want the dollar to fall to its "true value". How much DO you want to pay for that new Dell laptop? Ten grand?

Unlike AmEx, Capital One's Defaults Worsening

This could not happen to a nicer group of scumbuckets.

Cash for Clunkers May Cost Up to $45,354 Per Vehicle

Good post, Love. Sounds like your "don't use the brakes" takes the place of a Prius' econometer. Well done.

It is odd how much extra fuel is consumed on curvy roads. It must be the greater tire friction from the turns. Yes, that's surely it.

On Aug 04 06:49 AM H. T. Love wrote:

> On Aug 02 09:04 PM Old Wizard wrote: