axelrod608's Comments

Wall Street Breakfast: Must-Know News

Thu, 19 Nov 2009 12:01:30 -0500

>> "A Goldman spokesman called the risks a "moot point." " >>

Which is to say that since Goldman is all powerful in Washington DC as well as Wall St, NO negative consequences will come to Goldman.

The sheer arrogance of this company is monumental. They were one of the key players in the stupidity that resulted in the financial crash in which $Trillions of wealth were vaporized, yet they lose nothing and the stupid government and Fed that they have bought will NOT hold them accountable AND will give them $Billions in interest-free taxpayer money.

Folks, ignore the controversy about corruption in Afghanistan. Corruption is alive and well right here in the USA. Our CON gress is bought and paid for. Puppets of the corporate oligarchy.

Too Big to Fail Banks: A Simple Solution

Wed, 11 Nov 2009 11:12:36 -0500

Think of the megabanks as children and you get the real picture. If you want your children to fail, give them all the money they want and no responsibility. Exactly what our "leaders" have done with the megabanks.

The idea that huge amounts of money at zero interest is a LOAN is ludicrous. Call it what it really is - these are GIFTS. And the average fifth grader could make profits on free money.

The US federal government is the poster child for "too big to fail". Run by idiots whose financial plan is to spend 50% more than their income FOREVER. Is it any wonder they're pumping free money into megabanks ?? And people wonder why gold and other commodities is where the smart money is going...

EVERY empire in history has failed. This one will too. It's only a matter of time.

Wall Street Breakfast: Must-Know News

Wed, 11 Nov 2009 10:50:22 -0500

Come on, commenters, lets get at least a little accuracy and objectivity in the AIG controversy. Almost all of AIG was well run by competent employees. AIG was gutted by ONE division that played fast and loose with highly leveraged derivatives that went south, all the way to financial Antarctica.

MOST of AIG continued to be well run and still is. MOST of AIG has been continuously profitable. MOST AIG emplloyees are good, competent people.

I know you're angry about the bailouts. I am too. But let's keep the comments accurate. And the part of the AIG bailout that makes me furious is that the ONLY reason our "leaders" bailed AIG out was that Goldman Sucks was counterparty to many of AIG's derivatives and would have taken huge losses if AIG failed. The AIG bailout was really a GS bailout.

The underlying belief of our "leaders" is that what's good for GS is good for America. It was wrong when they said it about GM and it's wrong about GS too.

Don't Believe Long-Term Oil Forecasts

Mon, 09 Nov 2009 10:33:41 -0500

Great article and (mostly) great comments. People with "chart mentality" who look at the interrelation of two factors just don't appreciate true systems analysis which attempts to identify ALL factors that influence a phenomena - in this case oil price/supply - and come to some conclusions.

There are a host of factors that influence both supply and demand for oil and anyone who claims to have a clear, concise, accurate prediction of what the petrofuture looks like is either God or wrong.

One thing is certain - the relatively stable oil markets of the 20th century are over. The supply/demand/cost relationships are much more volatile now, and will, in my opinion, become more volatile as time goes by, until and unless the world gets serious about tapping renewable energy resources. Low cost oil producers are in decline. New souces are there, but much more difficult and expensive to develop.

The days of CHEAP oil are history.

Wall Street Breakfast: Must-Know News

Mon, 09 Nov 2009 10:04:15 -0500

>> "We NEED universal health care. How about some suggestions on how best to do it, financially and otherwise..." >> First off, we don't NEED it. Altho it is a conundrum that we are the only "first world" country to not have it, and that we spend two to three times per person for a fragmented un-system that only covers a third of the population well, and half the population to some degree.

The logical way to expand health care to the uninsured would be to greatly expand the National Health Service Corps program and its nonprofits which successfully operate in all states. Don't look for that to happen anytime soon, though, since the for-profit health insurance and care lobbies have been buying congresscritters as fast as Buffet buys stock.

If you think universal health CARE (not universal health INSURANCE) is essential, you are living in the wrong country. It will NEVER happen here as long as the Republicrats and the folks who bought them are in charge.

Calling the bastardized bill(s) currently in CON gress "health care reform" is just plain wrong. Tinkering with the nonessentials, adjusting reimbursement rates, etc, is not reform. It is what CON gress is good at - futility. The net result will leave the American "health care system" unchanged in any significant way.

Now, I must go and read the hundreds of pages of the Medicare 2010 book my government sent me to inform me of the hundreds of changes they've made for this year. THAT is what our "health care" dollars are being spent on - I get thousands of pages of printed crap from hundreds of insurance companies and the government every year, most of which I can't understand anyway because it's all written by thousands of attorneys.

Bottom line - LESS THAN HALF of all the money Americans spend for "health care" actually pays for health care. "Reform" would change that. Reform is NOT going to happen. Only the details will be adjusted. The golden rule applies - those with the gold make the rules.

CIT Group's Bankruptcy Plan: Goodbye Common and Preferred Stock

Tue, 03 Nov 2009 08:58:16 -0500

The feds shout "hurrah, Taxpayers - look how much money we made you" as a handful of megabanks pay back TARP. But they don't specify how much !! Think about it - the few that pay back were charged no more than .025% interest, so the gains to the taxpayers is negligible. The $Billions lost to CIT far outweigh whatever was taken in on TARP repayments.

It's the same version of "accounting" as is being used to make Q3 numbers look so good. Yes, there are a FEW companies with robust business activity. Overall, the true result is NET LOSS for both public and private economic activity.

Making the middle class poorer will not lead to "recovery". And the underlying government policies are gutting the middle class.

Oil: Supply and Demand? Hardly!

Sat, 31 Oct 2009 10:12:14 -0400

>> "Globally, we are awash in oil." << Well, sort of...Other commenters above have noted that major oil fields are depleted and in decline. Others have also noted that new finds are more expensive and challenging to exploit.

>> "The cost of fuel is the corner stone" >> of civilization as we in the Western world know it. And while we are an amazingly adept species at problem solving, we sometimes don't address the right problem. yes we can find and exploit more fossil fuels. For a limited time, because the resources are finite. They will NOT last forever.

We would be wise to put out bucks behind converting to sustainable energy.Our children and their children would be thankful. But our corporate and political leaders ( ??there's a difference ??) seem to prefer to walk on the razor's edge of the supply/demand continuum.

When the dollar index drops into the 40's, where will the money come from to build green energy ??

Wall Street Breakfast: Must-Know News

Thu, 22 Oct 2009 11:06:57 -0400

More "misses" than a beauty pageant on expectations at historically low levels. And "earnings" are more bookeeping maneuvers than income. The risk premium driving this market upward is unbelievable. Unintelligible. Unsustainable.

How Washington's Policymakers Are Damaging the U.S. Economy

Mon, 19 Oct 2009 12:39:37 -0400

So much fuzzy thinking. So little discussion of the root cause. To understand the process the USA is in , one must understand the underlying assumptions for our debilitating policies.

We are run by two ruling parties who would like us to believe that they are different. But at their very core, not one of the current 535 "fools on the hill" - with the possible exception of Ron Paul -or any of this or any previous administration believe that we will EVER have to repay our national debt. The operative assumption is that somehow we can continue to borrow and spend with no need to repay it, EVER. Thus, the underlying assumption of ALL federal policy results in unsustainability.

Worse, the tactics that people believe can be used to "solve" the neverending debt accumulation problem are based on the kind of logic that would get one a failing grade in every Logic class. "We can grow our way out of the problem" - yes, TEMPORARILY. Not forever. Spending more that one's income eventually results in insolvency, bankruptcy.

"We can inflate our way out of it" no, not really. Inflating the currency changes its RELATIVE value - against other currencies. Make the dollar ten times cheaper than other currencies and they will buy us out. They're already doing it. Foreign ownership of productive US assets is ongoing. It will continue to accelerate as our currency fades.

Invalid assumptions result in unsustainable policies. The idea that we can forever spend more than our income by borrowing forever is ludicrous and illogical. What we are left with is a Washington bureaucracy that has only two things it can do - determine how fast and how far down the rabbit hole they will take us.

Wall Street Breakfast: Must-Know News

Mon, 19 Oct 2009 11:25:07 -0400

Get real. The "crackdown" is on GS and other megabank competition. With GS controlling the Fed, the Treasury and all the pResident's advisors, the real insiders will surely get a free ride.

Get real. ZIRP benefits megabanks. And megagovernment. Interest rates are going nowhere as long as GS can use free money for trading and the Gummint can use free money for, well, every stupid thing they can think of.

Pension Apprehension

Tue, 13 Oct 2009 12:40:45 -0400

What you have described here is the chicken. The egg was ZIRP - a federal zero interest rate policy. While ZIRP is manna from heaven to the few giant companies that can receive the free money, it drops the rate of return on every class of return-producing investments. The result has been reduced returns - usually less than taxes and inflation - on a wide variety of investments.

It also has pushed investors out onto the increased risk continuum, especially those nonprofessional investors who don't know or understand the risks. Bernie Madoff's scam was made possible by Alan Greenspan. He pushed us all out onto the risk continuum.

I remember reading 3 - 4 years ago about the "looming pension crisis". Then, Fortune 500 pension plans were underfunded by well over a $Trillion. But the financial assumptions were so insanely rosy that those in power just ASSumed we'd grow our way out of the problem. Duh.

With a jobless recovery well under way, I expect US economy to be very similar to the Japanese economy of the past decade or two. So the ultimate question is, if ZIRP is such a brilliant policy why does it result in ZEGR - zero economic growth rate? And yes, I realize it was extremely effective at inflating the bubble. But now that the bubble has popped, what will ZIRP do ? For a few megacompanies it will provide opportunities for obscenely high earnings. For the middle class, especially retirees, it will suck the life out of every class of retirement vehicle.

Wall Street Breakfast: Must-Know News

Fri, 02 Oct 2009 09:34:42 -0400

It's time to eliminate corporate taxes for manufacturing companies that produce their products in the USA. The economy will not improve until and unless we start making something more tangible than paper financial instruments and dollar bills, and paying Americans for doing the work.

Wall Street Breakfast: Must-Know News

Tue, 29 Sep 2009 09:30:16 -0400

>> ..."big drugmakers announced deals that give them rights to new flu vaccines, increasing their exposure to one of pharma's brightest, but riskiest, segments " >>

How can you call vaccines risky when Congress has already preemptively bailed the drugmakers out ? Big pharma no longer has ANY risk other than losing money if they don't sell. Under current law, any person killed, crippled or made sick by a vaccine can only sue for damages in "vaccine court" and if they win, the TAXPAYERS pay the damages.

Worse, because of shortages this year, vaccine peddlers are "extending" (diluting) vaccines to make them go farther. The adjuvitants used to dilute the vaccines are NOT tested for use in humans. Some of them are known carcinogens.

See Dr. Joseph Mercola's article for complete info at mercola.com.

Add to that the fact that two states have made vaccinations MANDATORY. If you refuse, they can force you into quarantine until the threat is over.

The land of the free and home of the brave is crumbling under massive government overregulation that favors big business over individual rights.

Wall Street Breakfast: Must-Know News

Fri, 25 Sep 2009 09:10:00 -0400

The housing data herein remind me of my favorite "little book" - How to Lie With Statistics. Up the road from me, in Port St. Lucie, FL, sales numbers are up 50%. Whoopee, right ? Wrong. Sales prices are down another 24%. Median sales price is down to a tad over $100,000. You can buy a new, never lived in, 3/2/2 pool home for $100,000 to $125,000 off foreclosure. With the federal first time buyer down payment, you can move in and owe less than $100k. VERY good news for first time home buyers.

Buy if you want to sell a home over $250,000, your chance of finding a buyer is only marginally better than your probability of getting hit by a snowball.

Cherry picking statistics does not lead to valid conclusions. Keep in mind that all reputable reports are documenting the mass of empty homes that are not in foreclosure or on the market - the part of the housing iceberg not visible.

The housing bubble continues to deflate in the areas it was most overblown.

Seven Points to Look For in October

Thu, 24 Sep 2009 10:18:14 -0400

C'mon, people. Put trailing stops on your longs, buy some puts and stay the course.

Taking the cash value out of life insurance only makes sense if you're holding enough cash to settle your estate. And most annuities have substantial penalties for cashing out. It makes little sense to lose money needlessly.

You can ride the upside as long as you buy protection. I don't, but I had a stroke a while back and complexity is difficult for me.

The sky is not falling.

10 Notes on Current Market Risks

Mon, 21 Sep 2009 11:49:52 -0400

Re "insider selling", the assumption is always that they know something that will take the price down. Which may be valid in normal times, but may be way off target today.

Let's face it, just about everybody lost a chunk in the past couple years. And over half of everybody is holding assets that are underwater. Where I live there has been a big increase in garage and yard sales, cars, trucks and motorcycles on the lawn with "for sale" signs. I would assume that some portion of those "insider sales" are nothing more than a way to raise liquidity to cover the effects of what occurred in the greater economy.

These are extraordinary times and the ordinary assumptions may not be valid now.

Wall Street Breakfast: Must-Know News

Mon, 21 Sep 2009 11:04:39 -0400

In reality, unfortunately, the Fed IS independent, a private entity, not part of the government as most folks seem to believe. Which, of course, is the very reason it should not exist at all.

All US money is created by the fed and lent - at interest - to our government and corporations. Nice job, but not one you'll find listed in the Constitution.

There will be no audit of the Fed while the bankers still run this country.

Wall Street Breakfast: Must-Know News

Fri, 18 Sep 2009 09:39:42 -0400

Checks and balances. When a sector of the economy runs amuck, those running the show get to make a choice - do nothing and suffer the consequences or jump in and regulate. In DC, where it is essential to LOOK good (ignore BE good or DO good), you heard every talking head say last year, "We can't do nothing".

So, the consequences aren't bankruptcy. They should have been. No, the consequence is that the fools on the hill (Congress) will tighten regulation. So, for the banking industry, the consequences will be uncle sam in their day-to-day operation. And we all know how competent they are. (Madoff comes to mind)

This is bad for banking, bad for the economy. Worse, the small fraction of bankers that created the mess get off scot free and many are still working on the street.

And there;s NO winners.

I agree with doubleguns - if any company runs itself into the ground let it fail. Use the Constitutional solution - Bankruptcy.

Capacity's Comeback Strongly Indicates Recession's End

Thu, 17 Sep 2009 10:16:22 -0400

Manufacturing is such a small part of the economy these days, it's improvement makes little difference . Not that a little is not good, it is. In the past, these improvements were significant when the manufacturing sector was larger. This measure gets less significant every year as our manufacturing base erodes.

But Cash Is Earning Zero

Thu, 17 Sep 2009 10:02:59 -0400

Timely article and generally great comments. I get a chuckle out of the SA poster that says evry day "this market just keeps going higher, no force on earth can stop it". Last time I checked, EVERY market over time goes up AND down.

Yes, we've had a great run. And it won't continue forever. I see signs of topping out and am over 95% in cash. I can more afford to pass up the last 5 or 10% of gains than I can afford to lose 5 or 10% of capital. I've locked in 20% gains for the year. Last year I was 50% up at mid year and ended up less than 1%. Live and learn.

After last year, my risk tolerance level changed greatly. I'm retired and can't afford to lose capital.

Wall Street Breakfast: Must-Know News

Thu, 17 Sep 2009 09:48:33 -0400

That states' Attorneys General are starting to investigate the perps responsible for vaporizing $trillions is good news. It's been so long, it was beginning to look like they were going to get away scot free.

Lord knows, the federal government - run by the same gang that bailed out the perps - will do nothing. The casino gambling as business practices crowd cost me mid six figures. Who's going to bail me out and the millions of individuals investors like me ??

I want justice. And, honestly, payback. The fraudulent ratings of financial instruments was at least as destructive as what Madoff did, it cost more people more money as well. Go Cuomo. Go Brown. Sic 'em

Will Chimerica's Demise Take Down Global Economy?

Tue, 15 Sep 2009 09:27:02 -0400

>> "But when Barack Obama chose to slap 35% tariffs on Chinese tire imports, this was an unmistakable act of active protectionism" >>

Oh, please, cut the hyperbole. The tariff was imposed on ONE company's tires - Cooper Tire - which made a deal with China to build a factory there and to export 100% of its production to protect China's domestic tire industry. China would NEVER permit a Chinese company to do any such thing, but the US - with close to zero control over its companies - did nothing to stop the unfair deal.

Our government cannot control companies that enter into these totally one-sided agreements, so it is using the only tool it has left - levy tariffs.

Let's get a little objectivity in the reporting of these issues.

Four Major Developments Gold Investors Should Watch

Tue, 15 Sep 2009 09:15:36 -0400

I've often heard that the time to buy anything was when there were no buyers left and the time to sell anything was when everyone was buying. These days every cabbie, every shoeshine boy and every waitress is giving unsolicited advice to "buy gold". That may not constitute fundamental research, but it has been on my mind. I don't have an answer other than to hedge every dollar I have in gold.

Economic Donkeys

Mon, 14 Sep 2009 13:16:24 -0400

Excellent article. SA has been running some truly extraordinary pieces this week. with Mauldin and Lounsbury over the weekend. Kudos.

Another reason for capitalization dysfunction is that it is computed against the balance sheet, yet these megabanks hold portfolios of tier 2 and 3 "assets" off the balance sheet. Until and unless ALL assets are on the balance sheet, we will continue to have megabank accounting that is little more than smoke and mirrors.

Transparency should be a prerequisite for any financial entity.

Despite Dedicated ETFs, No Reliable Way to Play Natural Gas

Mon, 14 Sep 2009 12:30:07 -0400

Ultimately price is a function of supply and demand. The latest generation of discovery techniques combined with the latest generation of technology in drilling have created a situation where potential supply is, essentially, unlimited, The ONLY constraint on supply is producers shutting down or slowing down or just not drilling anymore.

NG prices WILL fluctuate, but for the next decade or more, they will not rise much more than they are currently. Like the contestants at a chili eating contest, there's simply too much gas.

Wall Street Breakfast: Must-Know News

Mon, 14 Sep 2009 12:18:33 -0400

>> "Three more bank failures on Friday..." >>

Moodys just reported that US banks have taken less than half the losses so far on mortgage and securitues gone bad. The FDIC "watch list" of troubled banks has grown from mid - two digits to mid - three digits.

Regardless of what the Kudlows and Bartiromos say, it ain't over. It's just begun.

?Green shoots ?? Nah, it's moss on an economic rock that's no longer moving.

Wall Street Breakfast: Must-Know News

Mon, 14 Sep 2009 12:07:37 -0400

Yes, there are American made tires.Last time I bought tires I researched them on the Tire Rack site. I bought Fuzions, which are made in two countries, each of which place a code on the tires so you can tell where a given tire was made. I specified American made and the dealer had 4 American made tires in stock. So far so good.

You REALLY do get what you pay for. You just gotta do the legwork to determine what you want.

Wall Street Breakfast: Must-Know News

Mon, 14 Sep 2009 12:01:30 -0400

Cooper Tire is building a tire factory in China. To not compete with China's domestic tire industry, Cooper voluntarily aggreed to export 100% of the production. This is NOT fair trade. Jack Crooks had an excellent, in depth report on the situation in today's Black Swan Capital "Currency Currents"
www.blackswantrading.c...

American multinational companies are gutting domestic manufacturing with these antiAmerican deals.

Deflation Looms

Sun, 13 Sep 2009 10:06:32 -0400

>> "This is an amazing experiment. History books will look back at this time and PhD's will be earned analyzing methodologies and outcomes.

It is amazing that this is still guesswork for so many of our most brilliant minds." >>

I liked Bling daddy's comment, but this first part isn't true. This is not really an experiment. The results are already in, but this nation's "leaders" are just ignoring the facts.

A few years ago, economists at the World Bank studied all national economic crises over a 30 year period. Amongst their findings was that the length and depth of the following recession were directly correleted with the amount of money the country threw at the problem in order to fix it. This occurred in every case, without exception.

Our nation's "leaders" don't believe this. And based on the tsunami of money they have thrown and are throwing and threaten to continue to throw at the problem, one can safely predict that based on experience, they are creating the longest, deepest recession in global history.

In another comment today I said that economics is not a science, just observation and opinion. Because of that, people like Bernanke can hold their opinions firmly in the face of the opinions of others that were determined by analysis of factual historical examples.

We're going down spending folks, because the folks in charge aren't willing to face facts or learn the lessons of history.

Deflation Looms

Sun, 13 Sep 2009 09:46:24 -0400

Lounsbury and Mauldin in 2012. Not that they'd be interested.

A lot of people don't get the simplistic forces at work here. First, real wages adjusted for inflation have not increased since the early 1980's. Increased family incomes were a function of more family members working and working more hours. Plus the bizarre accounting trick of counting equity from mortgage refi's as "income". The feds also counted refi equity proceeds as GDP. Without it, GDP "growth" would have been negligible from the late '90's to 2007.

Second, if you think of credit purchases as pre-spent income, the bubble was formed by the vast majority of America's middle class spending far more than they were earning by accumulating debt. I have yet to see a single writer comment on the function of debt as a reducer of the velocity of money. Today's earnings aren't going into the productive economy for more goods and services. They're going to pay back the last decade's excess.

What one would believe to be a great deal of liquidity is merely being absorbed against continuing capital losses and to repay old debts.

If deflation in the housing and CRE sectors continues at current rates, the Fed can't create money fast enough to replace the losses. So much for futile and failed monetary policy.