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5 Reasons Why the $700B Bailout Could Translate to $250 Oil

Here is the link to send a quick note to each of your Senators:

www.senate.gov/general...

5 Reasons Why the $700B Bailout Could Translate to $250 Oil

PLEASE, tell your Senators to NOT pass this bill!! Tell then you will vote for, and contribute to the campaigns of, any challengers for their seat if they do vote for this bill. (And tell them they will have won your vote and financial support if they do not.)

www.senate.gov/general...

Wall Street Breakfast: Must-Know News

I'm going to make this short and to the point.

Text of the bailout plan (from the NY Times):
graphics8.nytimes.com/...

Sec 109c line 14 "principal write downs" of mortgages
Sec 110-2 Modifications (to mortgages)
(a) Reduction in interest rates
(b) Reduction in loan principal

Now think about this example:
There are two neighboring houses.

In the first house, Peter was prudent, saved his money, lived within his means, worked hard, and could afford his mortgage.

In the second house, Paul took on too much debt, lived beyond his means (possibly even taking out a HELOC or two to "live the good life"), worked just enough, and frankly cannot afford the mortgage he got himself into.

The aforementioned sections essentially say that the tax money that Peter has paid will go to help his neighbor Paul. Truly robbing Peter to pay Paul's mortgage!!

On top of that, everyone else who knew they couldn't afford a house and thus are renting... their tax money goes to help Paul too!!

That is f***ing ridiculous.

Sec 113a1. "Minimizing negative impact" -- This section is pure fluff but does clearly say there *will* be a negative impact, which they will attempt to minimize (ya right). None of "the gov't might actually make a profit" absurd punditry.

Here is a graphic showing who in the House voted for or against this absurd, Socialist bill:
www.nytimes.com/ref/wa...

I will vote for, and contribute to, the incumbent campaigns of those who voted against this bill.
I will vote against, and contribute to, the challenger campaigns of those who voted for this bill.

As a taxpayer, one who lives well below his means, and an American, I am utterly furious that House Speaker Nancy Pelosi, D-Calif., Senate Majority Leader Harry Reid, D-Nev., Paulson and House Republican Whip Ray Blunt, R-Mo could come up with this absolute garbage.

Moreover, the fact that Henry J Paulson originally asked for $700,000,000,000 without any oversight at all, just a "trust me, I'll spend it right" attitude, is completely un-American and goes against our democratic system of checks-and-balances. He is a snake, a complete failure at his duties, and should resign immediately.

I implore all of you:
PLEASE send emails, write letters and tell your Senator and Representatives that you-- as a financially responsible homeowner-- REFUSE to help pay the mortgages of your financially irresponsible neighbors. They don't need to be very long-- just a paragraph or two to get to the point.

Tell them you will send money to support the challengers to kick out the incumbents to voted for this bill.

And tell those Representatives who voted against this bill that you wholeheartedly support their vote, and will be contributing to their campaigns.

They need to know: Vote for this bill and they will be out of office.

Alternative Bailout Plan: Good and Bad Ideas

I'm going to make this short and to the point.

Text of the bailout plan (from the NY Times):
graphics8.nytimes.com/...

Sec 109c line 14 "principal write downs" of mortgages
Sec 110-2 Modifications (to mortgages)
(a) Reduction in interest rates
(b) Reduction in loan principal

Now think about this example:
There are two neighboring houses.

In the first house, Peter was prudent, saved his money, lived within his means, worked hard, and could afford his mortgage.

In the second house, Paul took on too much debt, lived beyond his means (possibly even taking out a HELOC or two to "live the good life"), worked just enough, and frankly cannot afford the mortgage he got himself into.

The aforementioned sections essentially say that the tax money that Peter has paid will go to help his neighbor Paul. Truly robbing Peter to pay Paul's mortgage!!

On top of that, everyone else who knew they couldn't afford a house and thus are renting... their tax money goes to help Paul too!!

That is f***ing ridiculous.

Sec 113a1. "Minimizing negative impact" -- This section is pure fluff but does clearly say there *will* be a negative impact, which they will attempt to minimize (ya right). None of "the gov't might actually make a profit" absurd punditry.

Here is a graphic showing who in the House voted for or against this absurd, Socialist bill:
www.nytimes.com/ref/wa...

I will vote for, and contribute to, the incumbent campaigns of those who voted against this bill.
I will vote against, and contribute to, the challenger campaigns of those who voted for this bill.

As a taxpayer, one who lives well below his means, and an American, I am utterly furious that House Speaker Nancy Pelosi, D-Calif., Senate Majority Leader Harry Reid, D-Nev., Paulson and House Republican Whip Ray Blunt, R-Mo could come up with this absolute garbage.

Moreover, the fact that Henry J Paulson originally asked for $700,000,000,000 without any oversight at all, just a "trust me, I'll spend it right" attitude, is completely un-American and goes against our democratic system of checks-and-balances. He is a snake, a complete failure at his duties, and should resign immediately.

I implore all of you:
PLEASE send emails, write letters and tell your Senator and Representatives that you-- as a financially responsible homeowner-- REFUSE to help pay the mortgages of your financially irresponsible neighbors. They don't need to be very long-- just a paragraph or two to get to the point.

Tell them you will send money to support the challengers to kick out the incumbents to voted for this bill.

And tell those Representatives who voted against this bill that you wholeheartedly support their vote, and will be contributing to their campaigns.

They need to know: Vote for this bill and they will be out of office.

Speculating on the Future

I'm going to make this short and to the point.

Text of the bailout plan (from the NY Times):
graphics8.nytimes.com/...

Sec 109c line 14 "principal write downs" of mortgages
Sec 110-2 Modifications (to mortgages)
(a) Reduction in interest rates
(b) Reduction in loan principal

Now think about this example:
There are two neighboring houses.

In the first house, Peter was prudent, saved his money, lived within his means, worked hard, and could afford his mortgage.

In the second house, Paul took on too much debt, lived beyond his means (possibly even taking out a HELOC or two to "live the good life"), worked just enough, and frankly cannot afford the mortgage he got himself into.

The aforementioned sections essentially say that the tax money that Peter has paid will go to help his neighbor Paul. Truly robbing Peter to pay Paul's mortgage!!

On top of that, everyone else who knew they couldn't afford a house and thus are renting... their tax money goes to help Paul too!!

That is f***ing ridiculous.

Sec 113a1. "Minimizing negative impact" -- This section is pure fluff but does clearly say there *will* be a negative impact, which they will attempt to minimize (ya right). None of "the gov't might actually make a profit" absurd punditry.

Here is a graphic showing who in the House voted for or against this absurd, Socialist bill:
www.nytimes.com/ref/wa...

I will vote for, and contribute to, the incumbent campaigns of those who voted against this bill.
I will vote against, and contribute to, the challenger campaigns of those who voted for this bill.

As a taxpayer, one who lives well below his means, and an American, I am utterly furious that House Speaker Nancy Pelosi, D-Calif., Senate Majority Leader Harry Reid, D-Nev., Paulson and House Republican Whip Ray Blunt, R-Mo could come up with this absolute garbage.

Moreover, the fact that Henry J Paulson originally asked for $700,000,000,000 without any oversight at all, just a "trust me, I'll spend it right" attitude, is completely un-American and goes against our democratic system of checks-and-balances. He is a snake, a complete failure at his duties, and should resign immediately.

I implore all of you:
PLEASE send emails, write letters and tell your Senator and Representatives that you-- as a financially responsible homeowner-- REFUSE to help pay the mortgages of your financially irresponsible neighbors. They don't need to be very long-- just a paragraph or two to get to the point.

Tell them you will send money to support the challengers to kick out the incumbents to voted for this bill.

And tell those Representatives who voted against this bill that you wholeheartedly support their vote, and will be contributing to their campaigns.

They need to know: Vote for this bill and they will be out of office.

Looking for Hope

I'm going to make this short and to the point.

Text of the bailout plan (from the NY Times):
graphics8.nytimes.com/...

Sec 109c line 14 "principal write downs" of mortgages
Sec 110-2 Modifications (to mortgages)
(a) Reduction in interest rates
(b) Reduction in loan principal

Now think about this example:
There are two neighboring houses.

In the first house, Peter was prudent, saved his money, lived within his means, worked hard, and could afford his mortgage.

In the second house, Paul took on too much debt, lived beyond his means (possibly even taking out a HELOC or two to "live the good life"), worked just enough, and frankly cannot afford the mortgage he got himself into.

The aforementioned sections essentially say that the tax money that Peter has paid will go to help his neighbor Paul. Truly robbing Peter to pay Paul's mortgage!!

On top of that, everyone else who knew they couldn't afford a house and thus are renting... their tax money goes to help Paul too!!

That is f***ing ridiculous.

Sec 113a1. "Minimizing negative impact" -- This section is pure fluff but does clearly say there *will* be a negative impact, which they will attempt to minimize (ya right). None of "the gov't might actually make a profit" absurd punditry.

Here is a graphic showing who in the House voted for or against this absurd, Socialist bill:
www.nytimes.com/ref/wa...

I will vote for, and contribute to, the incumbent campaigns of those who voted against this bill.
I will vote against, and contribute to, the challenger campaigns of those who voted for this bill.

As a taxpayer, one who lives well below his means, and an American, I am utterly furious that House Speaker Nancy Pelosi, D-Calif., Senate Majority Leader Harry Reid, D-Nev., Paulson and House Republican Whip Ray Blunt, R-Mo could come up with this absolute garbage.

Moreover, the fact that Henry J Paulson originally asked for $700,000,000,000 without any oversight at all, just a "trust me, I'll spend it right" attitude, is completely un-American and goes against our democratic system of checks-and-balances. He is a snake, a complete failure at his duties, and should resign immediately.

I implore all of you:
PLEASE send emails, write letters and tell your Senator and Representatives that you-- as a financially responsible homeowner-- REFUSE to help pay the mortgages of your financially irresponsible neighbors. They don't need to be very long-- just a paragraph or two to get to the point.

Tell them you will send money to support the challengers to kick out the incumbents to voted for this bill.

And tell those Representatives who voted against this bill that you wholeheartedly support their vote, and will be contributing to their campaigns.

They need to know: Vote for this bill and they will be out of office.

Citi in Talks With Wachovia as $700B Bailout Plan Moves Forward

I'm going to make this short and to the point.

Text of the bailout plan (from the NY Times):
graphics8.nytimes.com/...

Sec 109c line 14 "principal write downs" of mortgages
Sec 110-2 Modifications (to mortgages)
(a) Reduction in interest rates
(b) Reduction in loan principal

Now think about this example:
There are two neighboring houses.

In the first house, Peter was prudent, saved his money, lived within his means, worked hard, and could afford his mortgage.

In the second house, Paul took on too much debt, lived beyond his means (possibly even taking out a HELOC or two to "live the good life"), worked just enough, and frankly cannot afford the mortgage he got himself into.

The aforementioned sections essentially say that the tax money that Peter has paid will go to help his neighbor Paul. Truly robbing Peter to pay Paul's mortgage!!

On top of that, everyone else who knew they couldn't afford a house and thus are renting... their tax money goes to help Paul too!!

That is f***ing ridiculous.

Sec 113a1. "Minimizing negative impact" -- This section is pure fluff but does clearly say there *will* be a negative impact, which they will attempt to minimize (ya right). None of "the gov't might actually make a profit" absurd punditry.

Here is a graphic showing who in the House voted for or against this absurd, Socialist bill:
www.nytimes.com/ref/wa...

I will vote for, and contribute to, the incumbent campaigns of those who voted against this bill.
I will vote against, and contribute to, the challenger campaigns of those who voted for this bill.

As a taxpayer, one who lives well below his means, and an American, I am utterly furious that House Speaker Nancy Pelosi, D-Calif., Senate Majority Leader Harry Reid, D-Nev., Paulson and House Republican Whip Ray Blunt, R-Mo could come up with this absolute garbage.

Moreover, the fact that Henry J Paulson originally asked for $700,000,000,000 without any oversight at all, just a "trust me, I'll spend it right" attitude, is completely un-American and goes against our democratic system of checks-and-balances. He is a snake, a complete failure at his duties, and should resign immediately.

I implore all of you:
PLEASE send emails, write letters and tell your Senator and Representatives that you-- as a financially responsible homeowner-- REFUSE to help pay the mortgages of your financially irresponsible neighbors. They don't need to be very long-- just a paragraph or two to get to the point.

Tell them you will send money to support the challengers to kick out the incumbents to voted for this bill.

And tell those Representatives who voted against this bill that you wholeheartedly support their vote, and will be contributing to their campaigns.

They need to know: Vote for this bill and they will be out of office.

Defensive Positioning in the Bailout's Absence

My previous links were lost.

Here is a text of the bailout:
graphics8.nytimes.com/...

Here are who voted for it and against it:
www.nytimes.com/ref/wa...

Defensive Positioning in the Bailout's Absence

I'm going to make this short and to the point.

Text of the bailout plan (from the NY Times):
graphics8.nytimes.com/...

Sec 109c line 14 "principal write downs" of mortgages
Sec 110-2 Modifications (to mortgages)
(a) Reduction in interest rates
(b) Reduction in loan principal

Now think about this example:
There are two neighboring houses.

In the first house, Peter was prudent, saved his money, lived within his means, worked hard, and could afford his mortgage.

In the second house, Paul took on too much debt, lived beyond his means (possibly even taking out a HELOC or two to "live the good life"), worked just enough, and frankly cannot afford the mortgage he got himself into.

The aforementioned sections essentially say that the tax money that Peter has paid will go to help his neighbor Paul. Truly robbing Peter to pay Paul's mortgage!!

On top of that, everyone else who knew they couldn't afford a house and thus are renting... their tax money goes to help Paul too!!

That is f***ing ridiculous.

Sec 113a1. "Minimizing negative impact" -- This section is pure fluff but does clearly say there *will* be a negative impact, which they will attempt to minimize (ya right). None of "the gov't might actually make a profit" absurd punditry.

Here is a graphic showing who in the House voted for or against this absurd, Socialist bill:
www.nytimes.com/ref/wa...

I will vote for, and contribute to, the incumbent campaigns of those who voted against this bill.
I will vote against, and contribute to, the challenger campaigns of those who voted for this bill.

As a taxpayer, one who lives well below his means, and an American, I am utterly furious that House Speaker Nancy Pelosi, D-Calif., Senate Majority Leader Harry Reid, D-Nev., Paulson and House Republican Whip Ray Blunt, R-Mo could come up with this absolute garbage.

Moreover, the fact that Henry J Paulson originally asked for $700,000,000,000 without any oversight at all, just a "trust me, I'll spend it right" attitude, is completely un-American and goes against our democratic system of checks-and-balances. He is a snake, a complete failure at his duties, and should resign immediately.

I implore all of you:
PLEASE send emails, write letters and tell your Senator and Representatives that you-- as a financially responsible homeowner-- REFUSE to help pay the mortgages of your financially irresponsible neighbors. They don't need to be very long-- just a paragraph or two to get to the point.

Tell them you will send money to support the challengers to kick out the incumbents to voted for this bill.

And tell those Representatives who voted against this bill that you wholeheartedly support their vote, and will be contributing to their campaigns.

They need to know: Vote for this bill and they will be out of office.

Throw Bailout Money at the Causes, Not the Symptoms

Rokjok777 -- If you think giving McCain the presidency will in any way "punish" him... please, just don't vote at all. Jeezus that is friggin stupid. Probably the dumbest thing I've seen or heard in weeks, and I've these last weeks have been particularly ripe with idiocy.

About Pinnacle Airlines, and Concentrated Risk

Excellent article.

Judging by Mohnish Pabrai's Form 4 purchase history, I'd say Mr. Pabrai has learned a few hard lessons by trying to smash a value investing "home run" with super-cheap small caps. It really just doesn't work that way. Perhaps it was a desire to rapidly catapulting himself to a level where others will bid $650,100 to have lunch with *him*. Pigs gets slaughtered, and the market ate Monish for lunch. I'm not one for excessive schadenfreude and I have a great deal of compassion for the huge losses he's had to swallow, but I'm sure Pabrai is digesting a lesson that will only make him come back stronger.

Always keep in mind: small/micro cap + "great" value = value trap. (Much more often than not.)

As quaint as the story of David and Goliath may be, no matter how great/underappreicated a particular micro-cap "David" may seem... 99 out of 100 times, Goliath smashes him and soon everybody forgets he ever existed. But that 1 time out of a 100 makes for great CNBC news fodder and bedtime stories. Everybody kicks themselves for "missing the boat" and so are on the look-out for that next undervalued David to pick up a rock.

Remember, all the present day "Goliaths" were once "Davids"-- because they have a proven track record for surviving and thriving. Invest in Goliaths when the price is cheap... but not so cheap that their market cap makes 'em look like a scrawny David. And don't gamble your hard earned money on the next chump to toe the line and throw rocks at the giants.

California Signaling A Housing Bottom? [Housing Tracker]

User 235452-- Your link to UsHousingmeltdown.org'... tool for finding the Ceiling Fundamental is OUTSTANDING. Thank you for posting this!

The Dollar Holiday Blues

[Comment edited for abusive language. Commenter put on notice]

Speaking of Europe and your statement that oil @ $131 will affect them as much or more than us, I respectfully differ. Since oil is priced in dollars, and the dollar has been collapsing in a rather healthy manner almost in lock-step with the rising price of oil, a barrel of oil costs only 83 Euros. Moreover, European countries have huge fuel taxes... and it's far easier for them to lower taxes slightly to maintain their economies than it is for the US to print and loan, print and loan fresh new dollars at 2%, as the more dollars Uncle Ben has printed, the weaker our dollar gets and conversely the higher the price of crude goes. It's a vicious cycle, but mainly for holders of the once and nevermore mightly US dollar.

And while that may be open to some debate, I think it simply cannot be argued that you need to use a different mugshot... and I don't mean the one they took from the side. :)

Full disclosure: Long and heavy on FXA (better interest than FXE).

Don't believe Paulson: S&L 2.0, the Bank Failure Redux

Reggie I'd like to join the chorus of people thanking you for yet another well researched and well presented article-- truly a gem amongst the gravel that are most of the articles seen on seekingalpha.

drmalaka -- Respectfully, I have to disagree with your assessment on inflation. The money supply absolutely *IS* going up, and unfortunately since the Fed stopped publishing the M3 numbers, we can only speculate by how much. Keep in mind that even when a homeowner pays $1M for a $500K home, that money isn't exactly buried in the ground... shares of it are paid to the home seller, home builder, mortgage originators, etc. So that money still very much exists and is circulating.

Moreover, with the Fed accepting the toxic loans as collateral to give out yet more freshly printed money at 2%-- and thus allowing these loans to blow up on their books... namely the books of all taxpayers-- that money is going somewhere, maybe not directly to Joe Schmoe home owner with a HELOC at twice the value of his property, but it is making its way into the economy, and thus driving up the prices of all goods. We're first seeing the impact on non-discretionary items such as food, fuel, etc.-- and isn't no surprise at all that these are exactly the items the Gov't does *NOT* include in their inflation numbers?

As I've mentioned before, it's best to not think of yourself as paid in dollars, but rather in the dollar equivalents. We can't eat dollars, and we can't fuel our cars with dollars. One dollar buys half as much gas as it did 5 years ago. One dollar buys half as much food as it did 5 years ago. That's the hidden pay cut of inflation. Inflation is here and now. If our incomes remained the same, we're all paid half as much as we were 5 years ago.

In short, until I hear that the Fed is actively not replacing old bills (net decline in dollars available) you can bet your last ever depreciating dollar that inflation is here, is real, and will be hidden tax on sensible Americans that bails out these unscrupulous lenders and the fools who overpaid by 100%+ for their homes. Until then, I am and will continue to very actively take every spare $US I have and diversify away from the every collapsing US dollar.

minor fyi-- your "Counterparty risk analyses" hyperlink appears to be broken. (not sure if you can edit your article now to fix.)

Considering Disaster

mkreisel-- Yes, and how often do you buy a house? What about electronics? Are you buying a new TV or cell phone every two weeks? Healthcare, education-- yep, are you perpetually ill or a regular student?

Didn't think so. But you sure as heck need to buy fuel for your car, and food to fuel you and your family.

"Inflation" moderating for those items you mentioned is moot for 90% of the population 90% of the time. Everybody buys gasoline-- and gasoline has doubled in 5 yrs. Same with food. Think about it.