J-Texas-1

The Mess on Wall Street: $4 Trillion Down the Drain

Simple history repeating itself.

1) Enron accounting
2) Tolerated by lax GAAP rules
3) Violating unenforced regulations
4) Fraudulently and deceptively hyper-inflating company "values"
5) Paying hundreds of millions in bonuses and salaries
6) Saved by hypnotized Americans watching "reality" TV
7) Watching executives retire to their tropical islands with their fortunes in tact.

It's the perfect scam if you're the artist or at least have a bit part.

To paraphrase the old, popular movie line... "I see stupid people. They're everywhere." Or "I see thieves..." Take your pick. Or take them both.

America Buys AIG

The Fed (yes, the banker's bank) will keep using our money (with interest charged) without our permission to save the day for their fellow crooks (uh, er, I mean "friends"). Where to Paulson work? Who does Bernanke hang out with? What does Greenspan say NOW versus what he did the entire time in "service?"

Really simple. Sign a piece of paper to print money we must pay back, charge us interest to do it, then use the money to buy a company where your friends ran it into the ground with fraud and deception (uh, er, I mean accounting off-book "assets"), and stress how we did it for the country.

The Fed's fraud upon the American people will continue until.... we take back ALL the money stolen by the exec's through bonuses/salaries/optio... convict them of fraud, and either lynch 'em or throw away the key.

No deterrent, no change.

Market Adjustments: Learning to Love a Bear Market

OK, here's the thing. Everything said in the article is true. But it's missing one big point: the higher they fly, the farther they fall. What is the historical market P/E and PEG? What are they in bear markets? Recessions and/or depressions? What are they when multiple bubbles of record sizes burst at the same time?

If I inflate the hot air balloon and rise to Mount Everest, only to lose my flame and fuel at the peak, do I fall just the first 7,000 feet (25%)? Or do I fall a lot further?

The Emperor has no clothes. Everyone's now admitting that. Who has confidence in an Emperor with no clothes? Who will abide by his country's rules after admitting to themselves that they were fooled for years?

Much bigger fall to come. Go back to historical bear market and depression-era valuations (for the remaining companies that will survive, of course). Use those approximate valuations to find the bottom.

After a capitulation, of course. The Emperor's subjects must rebel to purge their embarrassment and anger before we can move on.

Analyst: Oil Prices Inflated by 50%

I listen to Norman on a local business radio station (with the volume really low). The entire way up on oil, he kept saying speculators weren't the problem and even if they were, they make the markets function more smoothly and don't bid up prices.

Norman calls himself the "Economic Contrarian." He follows the current trends and shouts (yes, really shouts... see below) how smart investors take the contrarian position to win. And then laments why it didn't work on the next few shows.

Example of a typical Norman rant...

"Come on, people! We are better off with fiat money than a gold standard. Look how much wealthier everyone is now versus the 30's. You just CAN'T argue that life isn't better. Speculators are a part of a healthy market. What you have to do is learn to spot the peaks and take the contrarian position in the trade."

On and on, same logic: take what's working, flip it, and label it "contrarian" investing.

Incidentally, he appears to be honest with his investing gaffs. He's said on air that he's been buying financial stocks all year long.

Yes, just as said above - talking head with pretty hair and too much make up.

Calling a Bottom: It's Time To Party

July 15th bottom did not hold. This "bottom" will turn out to be supported by the same quality financial engineering as the entire off-books accounting that Enron used.

Until American public company execs can no longer walk away with a fortune as the companies die in their wake, our bubbles will continue to increase exponentially until the entire market collapses under the weight of fraud, deceit, and greed.

I have a mental picture of what's happening for each of these financial companies. Bruce Willis is the exec walking away, grimy with the filth of greed and fraud, smirking as the company's assets blow up behind him. He kisses his new trophy wife, boards the plush Leer jet, and flies off to his new tropical island bought with stock options worth paper millions from off-book accounting techniques.

Until the penalties are a deterrent, the Enron's, FNM, FRE, LEH's, WAMU's, etc. of the public company world will continue.

I say if an exec is in charge within 5 years of a company's implosion, regardless of proven fault, hang 'em at the closing bell on MSNBC. Only take a couple to eliminate the fraud for a long, long time.

The Weekend American Capitalism Died

America is a slave nation, and most of the slaves don't even recognize it. I can change from one master to another, but I'm still slave to his needs so long as I have debt and no self-sufficient skills. Hard to argue with the boss man if you need him to give you food and shelter.

A First Look Inside the Fannie / Freddie Bailout Plan

bearfund - I stand corrected. I was thinking of the very small minority of honest home buyers that probably said something like, "Hmm... are you SURE I can afford that?" That's the folks fooled by the lenders that Spitzer was after. And the same folks that will get killed with the new bankruptcy laws designed to create life slaves by "honest" mistakes.
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I imagine my blindness comes from the anger at the Rep. betrayals. Hard lesson to realize they're all lying to us.
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Now, if I can just figure out the best investments for the hyperinflation that will define the next decade...

A First Look Inside the Fannie / Freddie Bailout Plan

bearfund - give me a break. The majority of the loans soon to default were liar or NINJA deals since 2003. Spitzer had all 50 state Attn's General suing for lending fraud, only to be blocked by the administration.

In the previous 50 years, the folks lending the money simply didn't write the check if the applicant couldn't CLEARLY afford the payments. And it worked. So now it's the buyer's fault? Of course.

The Treasury's guidelines for lenders, something put out in response to this risk: "Can you please make sure they can pay the loan back before you give 'em the money?"

Gee, now why didn't I think of that?

Unchecked greed caused this debacle, like the ones before it. And it's fostered, as usual, by the politicians and administrators. History repeats. As will it when the American experiment finally fails.

Maybe we had to do this now that we reached this pathetic point. But it didn't have to reach this point.

GDP. CPI. Iraq. BLS. On and on, the lies just keep coming. "Don't worry, taxpayer. Inflation means that deflation is under control. Say, did you see that girl strip on Big Brother 437? Wow!

You talk of irresponsible buyers getting houses they can't afford. Well what the h*ll do you think all this deficit spending has been for the past two decades? Responsible? You need some smelling salt.

America's days as a leader are numbered. And it's a small number.

The good news is, if we watch Russia and learn her history the past two decades, we have a guide map for the new Amerika. I just hope I can learn to love stale bread. But I PROMISE to love it if I see Paulson wearing a ragged, stained suit while standing in a bread line next to the Maestro and Helicopter Ben. Yippeee!!!!

Much to Like About the GSE Rescue

"Two things are not understandable. First why these institutions would have run into losses when they were allowed substantial leverage by Federal Govt and Federal Reserve plus funding by public at rates much lower than the rates at which these institutions have been rediscounting as their spreads were always maintained and guarnteed."

Hmm... where to begin? The best thing is to realize that the hallmark of the Bush Administration has been to look the other way as the bullies (big business exec's et. al.) beat up the little kids (most Americans). It's not as much deregulation as it is oversight negligence.

Let me count the ones I can think of without stopping my typing to think... credit card fees, fraudulent mortgage lending practices (squished Spitzer and 49 other state AG's from stopping it in 2003), oil futures trading in U.S., CDO's traded to get around trading laws, rampant drug advertising, electricity trading...

In every case, the law IS ALREADY ON THE BOOKS. The response? Okay, we'll start watching this now. Where the ____ where you the five years when it could have been prevented?

Just a hunch, but I believe Spitzer got exposed (pun intended) because he called out the brotherhood for its blindness after they stopped him from avoiding the scandal.

The legacy of America the past 20 years will be a new definition of how to succeed: forgo ethics and morals and embrace greed and corruption.

God forbid if you don't make the fabulous five (percent of wealthiest Americans) before the jig is up on your lies.

Is Oil a Bubble? Part One

Y'all are all a little bit right and a little bit wrong (and probably me, too). Folks pointing out we have two time lines, short and long, are on the right track. But that's not what I want y'all to know.

Go find a copy of "The Doomsday Myth" and read it. Basically, the fear stems from projecting usage trends straight-line without regard for folks substituting the expensive and scarce resource with a cheaper one.

Oil will remain a viable commodity for applications where it's unique properties (or location) make it profitable to use it.

People vote with money. If the free market is allowed to work, some enterprising young fella will "strike gold" so to speak and solve the problem. No better place on earth to do that than the good old U.S. of A.

The transition, now that's the thing. Long-term inflationary plays and alternative energy speculation.

Aside from investing, you gotta actually survive the transition. Can you commute to work with gas at $10/gallon? Pay the $500/mo electric bill? Eat $1,000/mo groceries? These may be years away, but do you have enough slack to outlast the transition?

Just maybe we fast-forward to the past, reaching back to times long ago where we had local farmers and smaller towns, fresh food markets. And a lot less weekend driving.

Wouldn't that be nice?

My guess? Short-term pricing bubble in the middle of a long-term transition trend.