ERCaptain

IBD: Something smells at GM, and it's not just their new Cadillac men's fragrance (Yes, it's for real. Toronto Star: "Eau De Bailout"). GM's sales and share are crashing, but some strong assets just underscore why it should have undergone a normal bankruptcy, not a politically rigged one.

The US consumer is ticked off. Govt rigged UAW bailout = angry average Americans + angry bond holders + angry capitalists.

Even guys I know who have GM tattooed on their butts (never bought anything but GM brands) are now buying or considering Ford for their next purchase. After earnings announcements from Ford yesterday, it looks like they could be poised to be competitive with Toyota as having the largest US market share.

If even their most loyal are embarrassed at what has happened in this rigged bankruptcy, GM has serious work to do to regain the confidence of the average American.

Winter's Coming for the Boomers: Part 2

"...now at last we are beginning Chapter One of the Great Story which no one on earth has read..." C. S. Lewis

On Jul 17 10:15 AM bobbobwhite wrote: ....
> has ever changed, and it never will. It cannot. This is a physical
> world and all existing things eventually end, and new things start,
> and they end, and......................

Game Over, CIT

Not to say that Chap 11 doesn't lead to eventual liquidation...
such as is the case with Lehman.

Game Over, CIT

Press release minutes ago said that it was likely that this would be Chapter 11 bankruptsy, i.e., reorganization.

Not a Chap 7 liquidation.

Preliminary Analysis of the House Health Bill

On Jul 16 01:49 PM WS1835 wrote:
"BTW, a public system based on a Medi-care model will automatically bankrupt the medical system since Medi-care reimbursement rates do not come even close to covering the actual cost of care. Everyone will have coverage, but there won't be anywhere to use it."
And CromwellCTDude wrote:
"Limiting factor could be finding enough doctors to go around."

You are both right. The reasons for long waits and lack of quality care is that the system will be damaged and fewer doctors will even want to be part of the system.

I currently have a child considering a medical profession. If I can have any influence, I will encourage her to use her talents and resources in a field where she will still be rewarded for her efforts and education... like becoming an analyst for Goldman Sachs, professional bureaucrat (like Geithner), or union lawyer...

Preliminary Analysis of the House Health Bill

Want to see the current example of governement run health care? It is the VA system. A visit takes a day; quality is often questionable; the infrastructure is terribly outdated..
for veterans, it is often used, but would they if they didn't have to?

How about other social programs?
Medicare? Disaster
Medicaid? Broken
Social Security? Disaster

And now we want to turn over our Health to these morons in Washington....

Have we all lost our minds ?

First Read of House Health Care Reform Act (H.R. 3200)

Want to see the current example of governement run health care? It is the VA system. A visit takes a day; quality is often questionable; the infrastructure is usually terribly outdated..
for veterans, it is often used, but would they if they didn't have to?

How about other social programs?
Medicare? Disaster
Medicaid? Broken
Social Security? Disaster

And now we want to turn over your Health to these morons in Washington....

Have we all lost our minds ?

Game Over, CIT

CIT may restructure and reemerge from this. As in many bankruptcy situations, current stocks holders are wiped out, bond holders become stock holders in the new CIT, and the company reemerges without the massive amounts of debt.
This would keep CIT alive in it's niche, and the nightmare scenario of the businesses they support going under would not materialize.
I haven't seen one report that says there is any other financial institution that is ready and willing to take on the role that CIT has in the market. Loans to small businesses generally used to be privately funded. CIT is THE provider to many of the countries retailers, manufacturers, transportation industry companies, and supply companies. Smaller local traditional banks aren't big enough to do these loans, the very large banks didn't take them on, and private lenders are not in the business any more.

The End of Asset Allocation

Lawrence York makes a good point.

Much of the other posts I am reading here seem to indicate that people do not believe that 3 or 4 standard deviation events occur. They not only are possible mathematically, it just happened. IN other words, something that may only happen .3% of the time still happens.

I think that one who was applying modern portfolio theory dogmatically, wishes they had paid attention to some of their gut instincts about the amount of risk that had entered certain asset classes.

There will be a reversion to the mean, and once again it will look like AA worked. There is now a greater probability that the next measured variate will deviate less. In other words, this extreme event is likely to be followed by a less extreme event. Buyers will feel comfortable that it is safe to invest again, and the market will continue to cycle.

On Jul 14 03:29 PM Lawrence York wrote:

> Asset Allocation is based upon statistics. It fails because the economy
> moves through business cycles and quants operate models they don't
> fully understand the assumptions behind. Foremost among those assumptions
> is regression to the mean. And although models now have become real-time
> adjusting for new inputs their failure rests on errors like chasing
> the market and staying diversified. In short they fail to correctly
> price both value and risk.

Tuesday Outlook: Commodities, Global Markets

I think it is more than high end "window dressing" (i.e., picking it after it already looks good).
She made the call before GS announced earnings which the consensus amongst analysts had widely missed (nearly 50% off).
With Goldman being one of the last global investment banks. They do not have many people with whom to share the profits. It is likely they will continue to make large profits until their competitors can get their feet back under themselves.
This is a political liability for Goldman because now they stick out like a sore thumb. Congress, and many others, will now have someone that they can point to and use as the symbol of corporate greed.
Merrill and Bear are hidden behind the drapery of their bank owners and still wobbly on their feet. Goldman is a good stock pick no matter how much one may fear the way they made their money.

On Jul 14 03:59 PM BARBI520 wrote:
> Isn't Whitney a little late. Financials are up huge in the last few
> months.

Goldman's Blankfein Inspires Art and Life

Hello Dear Chairman --
You are the last one at the table. How big would you like your slice of pie to be?
With fear and envy, and at your service,
One of the plebiscites

Like Henry above I am torn. I both am troubled by the way GS has skimmed money off of our economy. It looks Machiavellian, how their competitors have disappeared from the table. However, one has to envy the capability, earnings power, and bonuses.

I told someone this morning that, right now, I would rather own GS than be a competitor.

CIT Group Is Welcomed to Bailout Nation

I am a capitalist, but I am going to ask the obvious question.
First the premiss --
The current "bailouts" were done to avoid the crumbling that occurred during the Great Depression when "failure" was the common option. Instead of 10-11% unemployment, the U.S. had an extended period of much larger unemployment numbers and economic malaise.
This time, they chose to not let the "systems" fail. And so far, many of the beneficiaries of this support have either already paid back the money, with hefty interest payments, or have plans in place to pay back the money ASAP.
I do not want socialism, nor do I want long term gov't intrusion.
Now the hard question --
Hasn't it basically worked?
Please understand, I am not an Obama supporter. I think the swing to the side of socialism is painful and I look forward to the swing back to "barbaric" free markets.
With CIT being the only major lender servicing a huge part of our retail, and infrastructure (e.g., supply, transportation, manufacturing) economy, doesn't it make sense to work CIT out of this doldrums? Then should we create a regulatory and tax environment that would encourage more private investment in this kind of lending?
I am not making any claims to understanding. These are real questions, not statements.

Why Economic Dogma Threatens Our Future Prosperity

A little humility in the approach would make this article more digestible. I suspect I would like Professor Weigand in real life, but this article was too much.

I guess if we disagree with any of his points we are suffering from cognitive dissonance. Brilliant! Thus the article and professor are beyond critique.

Where do we begin? Macro assumptions? His read on market sentiment? Health care? His assertion that CNBS and Fox have "carefully-scripted narrative" (there must be a plethora co-conspiratorial analysts coming on those shows)?

The professor puts himself in opposition to the recently released paper of the San Francisco reserve regarding the value of tax cuts.

As long as we are going after Keynesian, why not go back to Roosevelt? "Ronald Reagan is the inventor of borrow-and-spend government." Really? I thought Roosevelt gave us a primer.
I have found it interesting that there has been very little recent main stream criticism of Obama's modern application of keynesian economics, while Reagan took a beating a la "Voodoo Economics".

One would imagine that Professor Weigand would have more followers after this insightful post. Imagine a professor still taking an opportunity to poke at Reagan. Isn't it innovative thought? (Like Rob I am being rhetorical!) I am not sure I would want to pay the good professor for credit hours sprinkled with that level of insight.

15 Stocks You May Want to Keep Out of Your Portfolio

I have one question --
How often have companies that have received the "<1.8 – Likely to Go Bankrupt in the Next 2 Years" rating actually gone bankrupt within 2 years?
Give us some historical data!

Bank of America: 'Amazed by Goldman Sachs' Unmatched Risk Taking / Risk Management Skills'

The analysis certainly makes a point. GS is the only global investment bank that has thus far survived the financial meltdown. As a "last man standing" the pie is certainly split amongst fewer players.
Their earnings are coming out next week -- I am expecting some large numbers. Bloomberg commentarty this morning said that their earnings may be close to or surpasing the record numbers of 2007.
Say what you want, hate 'em or love, but GS is going to make money. There is a reason that a large percentage of the Fortune 500 wealthiest families are GS clients.