Lex Luz

35 Comments

    • ON: Wed Oct 1st 14:54 PM
      Commented on:
      In Case a $700B Addition to the Debt Isn't Enough
      "These lawmakers are all bigger lowlifes than common criminals. They steal our future so that they can get elected today and stay in office to line their pockets with legal bribes. "

      QUOTED FOR TRUTH.

      I will be voting against ALL incumbents this year and ask all people who believe in the promise of America to do the same. Whether you are a Republican or a Democrat or like me, Something Else Entirely, PLEASE, PLEASE, PLEASE vote to kick them ALL out this year.

      No incumbents, no mercy - KICK THEM ALL OUT.
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    • ON: Wed Oct 1st 14:49 PM
      Commented on:
      Four Myths About the Free Market and Its 'Demise'
      Marc, yours are the most intelligent comments I've read here in ages. Rigid adherence to dogma IS a prescription for disaster.

      I generally believe that the best solutions are those that will arise through the mechanisms of markets left alone to function as they will. That said, I'm keenly aware that the orderly functionining of free markets depends on both buyer and seller having access to the same information - i.e., transparency and accuracy in reporting.

      It is incredibly easy to see that at least some of the foundation of today's challenges stem from a lack of transparency in credit markets in particular.

      Regulations aren't the boogeyman here; lack of transparency is. Typically, the best (not the only, mind you, but the best) intentioned regulations work to promote and enforce transparency and fair reporting in markets so that buyers and sellers can more reasonably establish fair prices and so that trust, over time, is bulwarked.

      There will never be a perfect balance of information between buyers and sellers, nor will their be a market perfectly free of government intrusion at some level, and I for one don't believe there should be. We should err on the side of less intrusion than more in my belief, and all of our efforts ought to be aimed at increasing transparency while limiting burdensome rules. That's the genesis of SANE regulation, which is what has been missing for some time now.
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    • ON: Thu Sep 25th 09:05 AM
      Commented on:
      What's Wrong with the Trickle-Down Bailout?
      A well-written article that points to some of the flaws with the current plan, which is clearly tailor-made to punish taxpayers to the greatest extent possible. Frank's demands for bankruptcy cramdowns and for CEO pay reductions are idiotic window dressing designed expressly to distract taxpayers from the theft that is this bailout package.

      The fact that the bailout is designed expressly to grossly overpay for the weakest of the toxic bonds cannot be stressed enough. Taxpayers have a hard time understanding that this program won't cost $700 Billion, it will cost well into the trillions, and it is positively guaranteed to enrich the very banks who have made this mess. There are no provisions in this bailout to increase transparency or to facilitate the creation of a marketplace for these assets that would force some meaningful price discovery.

      The bailout as constructed is theft, pure and simple. You can bet that Dodd, Frank, and the rest of the Congresspiggies who vote for this trash will profit handsomely from it.
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    • ON: Thu Sep 25th 08:58 AM
      Commented on:
      SEC Triggers Prison Construction Boom
      Magicians well understand the importance of diversion. Lots of flash and sizzle keeps people from seeing that the lady hasn't ACTUALLY been sawn in half. So it is with the SEC, who will now vigorously prosecute small fry crooks so that those who've stolen tens of billions can move along quietly to steal tens of billions more.
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    • ON: Thu Sep 25th 08:48 AM
      Commented on:
      Bush's Speech: Surprisingly Coherent
      Under the current plan as I understand it, Treasury will purchase distressed assets at a "held to maturity" price largely established by the banks' "mark-to-myth&quo... model. The claim that we will purchase these securities at a discount to market value is a bald-faced, shameless lie. Rather, we are giving the very people who have profited from theft the opportunity to steal again by passing off the worst of their worst-performing bonds at prices that are likely to be 4 to 5 times their likely market value (assuming one uses the Lone Pine - Merrill deal as a benchmark).

      The better solution here is for Treasury to make an "all-or-nothing&q... deal for the securities in question at somewhere between 9 and 12 cents on the dollar. Banks can choose to participate or not, but they do NOT get the option of simply passing the trash to the taxpayer.

      Thinking that this plan will be designed in any way to "protect" taxpayers is utterly ridiculous. At best, this is extortion on the grandest scale in human history, and every government official involved in it thus far has proven him or herself either a liar or a dupe.
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    • ON: Tue Sep 23rd 16:52 PM
      Commented on:
      Bernanke Gives Up on Reverse Auction Idea
      The better idea is the reverse auction, which contributes to price discovery. If banks don't want to sell their garbage to the Treasury at the market-clearing price discovered through a reverse auction facility, fine, let 'em keep it.

      It is readily apparent that the plan here is to transfer the very last bits of wealth into the pockets of bankers and drive the US into default. Paulson's pals on the street profit best from a facility that declares a "held to maturity" price and buys assets at those hugely inflated levels, so that is what will be done. The putative Dodd plan is nothing more than a red herring.
      View article »
    • ON: Mon Sep 22nd 14:35 PM
      Commented on:
      In Defense of the Paulson Plan
      The notion that there would be "no banking system by next Tuesday" if this bailout doesn't occur is ridiculous on its face. Certainly there are premier institutions that would fail, and the shockwaves would be extraordinary. Yet there are hundreds more institutions that are well-capitalized and functioning, and they would emerge to become the new leaders of the industry.

      When partisanship trumps reason, plenty of intelligent people make all manner of oddball claims and assertions. Enough people believe them and that's how we end up where we are today - ready to hand a blank check to a man who has proven himself to be either a terrible prognosticator or an outright liar. I have an opinion about which of those he is.
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    • ON: Mon Sep 22nd 10:15 AM
      Commented on:
      Treasury's Plan Is Breathtakingly Awful
      The plan is a fait accompli; it will rush through congress with one or two cosmetic amendments to suggest that there will be some "transparency,&qu... "accountability," or "oversight," but the simple truth is that there will be none. We now officially live in the Soviet States of America.

      Prepare for the wholesale criminalization of all manner of political activity; the only way this kind of usurpation of power by the executive can persist is with aggressive clampdowns on dissidents. This too will be rushed through a compliant congress under the guise of some emergency ("domestic terrorism" seems a good bet).

      Thomas Jefferson, I believe, wrote that from time to time the tree of liberty must be fertilized with the blood of tyrants. In November we have the opportunity to "spill their blood" peacefully by kicking out every single member of the House of Representatives, and 1/3 of the Senate. In my opinion, anyone who votes for an incumbent this year is absolutely as much of a treasonous monster as the 535 people who currently sit in office. And yes, that includes McCain and Obama. These people are actively working to destroy YOUR life and YOUR potential prosperity in order to line the pockets of their campaign contributors. That is the simple, unavoidable truth. Vote them out.
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    • ON: Wed Sep 17th 10:46 AM
      Commented on:
      The Housing Slump Rolls On
      When I hear Bob Toll, Ara Hovnanian, and Lawrence Yun make a joint statement that "the housing market is finished forever," then I will know we have reached the bottom, and the buying opportunity of a lifetime will be upon us.
      View article »
    • ON: Tue Sep 16th 12:11 PM
      Commented on:
      Inflation Concerns? That's So Yesterday
      It seems to me that deflation, while inarguably painful for many, is PRECISELY what is required to clear the space for a real economic recovery to begin. Yet it is also manifestly clear that the Fed is playing a one-note song titled "inflate at all costs." The end result of this policy may not be disaster, but it seems to me that it has a greater likelihood of bringing on calamity than just letting the cycle play out. To my way of thinking we should be letting the deflationary forces run, and looking toward a future in which free markets can be restored on the strength of sane regulation that promotes transparency and a meaningful pricing of risk.

      Instead we are about to get a new series of rate cuts, the creation of additional lending facilities that will take the contents of bankers' wastepaper baskets in trade for treasuries, and one more inflationary bailout after the next. Prices may fall in the short run on the back of flagging demand, but ultimately with all this nonsensical expansion of money supply we will see the collapse of the dollar and that seems to me to be far, far worse than a period of deflation.
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    • ON: Fri Sep 12th 10:52 AM
      Commented on:
      Time To Bail Out WaMu?
      BigMike - one reason WaMu can't simply modify its loans is that while they may be servicing those loans, the investors in the various MBS were promised income based on a formula that includes the revenue from the loans AFTER they adjust (the formula also includes runoff, some provision for expected default rate, and plenty more). ALL the investors in any given loan (portions of the cash flows of which might sit in more than one MBS) must agree to the modification. This is one of the big challenges for the servicers. So it's really not as simple as just giving the borrower a pass on the reset.
      View article »
    • ON: Fri Sep 12th 10:42 AM
      Commented on:
      Obama or McCain: Who’s Better for Healthcare Investors?
      Interesting article - thanks for the side-by-side comparison.

      Alas, this article further deepens my belief that after so many decades of choosing between the lesser of two evils, finally this time around we have a REAL choice. Unfortunately, it's the choice between disaster and calamity.

      Obama's plan strikes me as disastrous; an invitation to extraordinary waste and corruption and a continued rapid rise in prices for healthcare based on the introduction of a bloated bureaucracy and a "two-tier" medical insurance system that will gradually but inexorably suck more people into the morass of the publicly-funded system.

      McCain's plan strikes me as utterly calamitous as it is tailor-made to relieve employers of the burden of providing a health insurance benefit. This will drive insurance premiums for individuals so far through the roof that a $5,000 tax credit will hardly start the motor toward recovery from the family's financial shock. The end result of this is that vastly more people will go without insurance and costs will rise farther, faster. Uninsured people get sicker faster and depend on emergency rooms - the highest-cost option available - for their primary care. They can't shoulder those bills, so guess who does? People carrying private insurance.

      So, disaster on one hand, calamity on the other. Nice choice.

      The REAL solution, in my view, is simply to eliminate health "insurance" (it isn't truly insurance anyway in the real sense of the term) altogether and let actual, honest free-market mechanisms drive innovation up and costs down, thereby expanding access and quality. Since that will never happen given where we are today, we need more compelling plans than either one of these two candidates is offering.
      View article »
    • ON: Wed Sep 10th 17:13 PM
      Commented on:
      Expect the Real Rally by Mid-2009
      This is one of the most bizarre leaps of illogic I've ever read on SA. First, the secular trend in employment has been completely obfuscated by changes in the way the statistics are derived; there is absolutely no credible way to determine what the realistic employment numbers are in the United States (or if there is, I'm certainly not aware of it).

      Employment could be extrapolated, perhaps, through income trends but goodness knows no one wants to examine THAT secular trend too carefully. If anything, the secular trend in income is down and headed lower. The consumer spending binge of the past 15 years has been financed entirely on debt and illusory asset inflation, cycling together.

      Secondly the notion that retiring baby boomers will drive employment higher, and therefore spark the revival of the American Consumer, is suspect at best. To begin, boomers will likely find that they can't retire in the traditional sense and many will compete for low-wage jobs to supplement income. This will likely pressure wages lower, and in turn pressure consumer spending lower too.

      We are entering a seismic structural shift. The entire economic establishment appears to be firmly attached to the cliff-edge of denial. Frankly, I think the American Consumer is comatose and will remain so for decades.
      View article »
    • ON: Wed Aug 27th 12:32 PM
      Commented on:
      Wall Street Breakfast: Must-Know News
      CCerenz - Our auto companies are uncompetitive because they are run by fat, lazy bureaucrats with no market savvy and neither the ability nor the willingness to innovate given their knowledge that no matter what happens, they will be bailed out by Uncle Sam as is happening now. Yes, they have high labor and legacy costs. This too is a reflection of poor management. Everyone loves to pile on to the unions and they certainly bear their share of the blame but at the end of the day there is SOMEONE running the company who must set strategy and execute against it. When that strategy fails, the CEO should either adjust or accept failure. Instead, American auto company CEOs go crying hat in hand to Congress and whip up a spectacular frenzy among the deluded that it's all the fault of someone else. Nonsense. We are a nation of whiners indeed - and there are no greater whiners than those who've led once-great businesses into the sewer.
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    • ON: Wed Aug 27th 12:23 PM
      Commented on:
      California Home Sales: 43% Year Over Year Increase!
      My own belief is that we are starting to see the formation of a "bull trap" here, and that the real price slide in real estate lies ahead. ARM resets won't peak until 2011, so inventories are all but certain to rise. Energy prices will move far higher on fundamentals in coming years; thinking that $4.50/gal gasoline crimped some commuters is going to look mighty quaint when gasoline crests $8.00 a few years out. Add to that the likely specter of higher mortgage interest rates and you've got a pretty good, if not perfect, storm that will yield vastly lower prices. California real estate remains "affordable" only under extremely generous lending terms or to the unusually wealthy. As ordinary homeowners (folks who were smart enough to buy in 1995, say, and didn't pull multiple cash-out refis along the way) see their equity evaporate, they'll curtail spending further and we'll have more fuel for the deflationary spiral.

      I certainly expect to see a little bump in prices while rates remain low, and that will induce a whole lot of bottom-calling. I also believe very strongly that after a mania as long as we had, the pain will last longer than real estate touts will ever be willing to believe.
      View article »
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