Old Rick's Comments

Whatever Happened to Those Ethanol Companies?

Tue, 24 Nov 2009 17:07:44 -0500

Ethanol was a way to back door farm subsidies in the wake of WTO rulings on farm subsidies. The big proponents were the corn state Senators (who were loaded up with ADM $$$) of whom BHO was one. BTW, Ethanol provides only 2/3 the BTU of gasoline so a 100% ethanol burner would get only 2/3 the fuel efficiency of a gas engine OF THE SAME COMPRESSION RATIO. Ethanol starts to pay off when the engine CR gets to about 14-15 to 1 (from the current 8.5-1 for 87 octane gasoline autos). Lots of Top fuelers and Funny Cars burned ethanol in the 50s & 60s. As with GDP and unemployment rates, the government stats guys have jiggered the way ethanol fuel efficiency is measured to pervert the truth.

On Nov 24 02:13 PM Augustus wrote:

> It is nonsense to say that Bush was an ethanol promoter. Bush was
> in favor of Drill, Baby, Drill. Whatever was done to increase ethanol
> production was done to placate the greenie nutters who became the
> OBangye accolytes.

The Similarities Between the U.S. and Japan

Sun, 15 Nov 2009 12:19:07 -0500

Until, as Noriel Roubini points out, the dollar stabilizes or reverses and the "carry trades" are unwound as the traders all rush for the exits simultaneously.

On Nov 15 02:59 AM dingding wrote:

> What Mr. Auerback did not mention is that low interest rates in Japan
> helped fuel global asset inflation via the carry trade. The same
> carry trade using cheap US dollars will cause an even bigger dislocation
> in global asset prices.

May the Lloyd Be with You: Blankfein Doing 'God's Work'?

Mon, 09 Nov 2009 14:35:17 -0500

"Investment bankers have a social purpose."

So, according to some, do prostitutes!

Chart of the Day - Unemployment

Sat, 07 Nov 2009 19:24:03 -0500

The important number (as you have pointed out here before John) is the U6 rate that hit 17.5% for October.

Barney Frank: Name Names

Thu, 05 Nov 2009 15:50:53 -0500

I think you can be sure that Barney will profit somehow.

On Nov 04 09:45 PM Steven Hansen wrote:

> what triggered franks change of heart???
>
> follow the money. who will profit???

How Bloomberg Fabricates U.S. Housing Numbers

Mon, 02 Nov 2009 10:03:03 -0500

Mavericks, you probably have a 5/30 mortgage which is NOT the same as a 5 yr i/o mortgage. I've had 5/30 s several times in the past as a kind of play on interest rates. Your mortgage will not need to be refied after 5 as it will just go to the "index+2" (or whatever) interest rate and is good for another year. The 5 yr i/o OTOH needs a total refi and will start paying principal which was 0 on the i/o loan. The problem will be that the principal balance is now exceeding the value of the home, so there is probably an automatic default built in to the 5 yr i/o's
----------------------...
On Nov 02 09:00 AM mavericks wrote:

> I'm going to take the other side of this argument since I own one
> of those 5-year adjustable loans and I've been paying interest only
> on 4 of those years. As it turns out, my payments will go DOWN next
> year if LIBOR stays where it is.
>
> Second, I would think it would be in a bank's best interest to rent
> out, either to the former owners or somebody else, the homes they
> foreclose upon and try and wait for home prices to recover before
> putting them back on the market. If this is the case, would these
> homes be considered "empty"? Just asking.
>
> Frankly, I think the tone of this article is a bit on the emotional
> side so that is why I'm questioning it.

How Bloomberg Fabricates U.S. Housing Numbers

Mon, 02 Nov 2009 09:55:34 -0500

Supporting data please??

On Nov 02 09:09 AM Rich S wrote:

> You guys all need to get a life. This author is totally whipped
> up over a variation of 50K. I would imagine that the people at Bloomberg
> are too busy being product members of society (unlike most of you
> ranters and ravers) that they consider 50k a rounding error and with
> the realm of reasonableness--but then most of you don't know what
> reasonable or sane is.

Were Fannie and Freddie the Real Enablers of the Housing Bubble?

Thu, 29 Oct 2009 10:44:35 -0400

It is even worse than that. In 2005, Johnson at Fannie initiated a stealth "bribery" (for lack of a better word) campaign to buyoff several Senators of both parties to scuttle the Hagel/Dole/McCain FNM/FRE reform measure (S.190 I believe). That measure was also backed by Bush (who favored greater oversight back in 2003) but, of note, it was opposed by BHO, a huge recipient of FNM/FRE bucks. You can read about it in the excellent NYT series, "The Reckoning", available on-line. Thus, the politicians were the real enablers of this mess that they now purport to want to clean up.

On Oct 28 08:14 AM Bruce Krasting wrote:

> Without F/F the insane things that happened in 2005 - 2008 would
> never have happened. The D.C. lenders are responsible for the mortgage
> mess.

Ten Stocks for the Next Ten Years

Wed, 28 Oct 2009 12:10:11 -0400

Innocex, while I'm not a fan of ALL of the picks herein, I think it's you that has much of this wrong. To wit:

1. There is no political will in the US or the UK to take on inflation a la Volker, Reagan, Thatcher in the early 80s. I don't see the super-Keynesians currently in the WH/Fed/Treasury having the guts to take rates to the double digits level that will be required. Just look at how Volker and Buffett have been marginalized by this group of yahoos (no offense to YHOO). Their responses have largely been to try to reinflate the credit bubble.

2. Gold/Silver are now far lower than their inflation adjusted highs reached in 1980. Gold would have to go over $2000 to beat July 1980. As far as Silver, who over the age of 50 doesn't long for the good old days of the Hunt Brothers! :-)

3. The sooner we marginalize the 2% of people (but 60% of the vocal volume) who constitute the "green circles", the better! We need Nucs, Yucca Mountain, CNG, Bakken oil, Tar Sands, ANWR, and expanded off shore drilling to break the Arab/Chavez/Putin oil cartel. Screw the green machine in favor of (not so) common sense. Wind and Ethanol are 2 of the greatest scams in recent history. CNG and new oil are gonna be the bridge to the urban/suburban electric vehicle. As you might guess, I think AGW is a redistributionist fraud, so keep that coal burning baby!!

4. Can't disagree with you on this one except if my 3 gets done, you could safely short USO, but not my cup of tea.

Other than that Mrs. Lincoln, the play was great!!

On Oct 28 10:03 AM Innocex wrote:

> Poor advice in my opinion, bordering on terrible.
> 1. Inflation will be curbed eventually, it would be disastrous for
> any economy to leave interest rates so low. Australia already started
> raising them.
> 2. Gold and silver are at multiyear highs so picking them now is
> foolish.
> 3. Potash makes phosphate fertilizers and there is a huge backlash
> against phosphate in green circles.
> 4. Oil is too volatile for long term safe plays, it takes someone
> to daily monitor oil prices to make money this way.
>
> The only hedge that seems decent in the list is the agricultural
> one.

Hey! Washington! This is How It's Done

Tue, 27 Oct 2009 11:23:09 -0400

If you've never read the story, it is at www.foxnews.com/story/.... It's also discussed in the NYT series "The Reckoning"

Hey! Washington! This is How It's Done

Tue, 27 Oct 2009 11:21:50 -0400

The complication for doing "the right thing" in the U.S. is campaign money, i.e. bribery. Stealth money is how FRE killed the proposed Hagel/McCain/ Dole reform bill (S.190) in 2005. BHO (with Chris Dodd and Barney) was a huge recipient of FNM/FRE $$ in his massive 4 years in the senate. You can bet that ANY reform efforts that resemble the ING breakup would be met with huge money outlays from the big 7 to stop those efforts. We need Teddy Roosevelt in the WH, not Casper Milktoast, especially a Casper that bends over for GS/BAC etc.

Five ETFs for Climate Change Legislation

Wed, 21 Oct 2009 15:34:27 -0400

Do you have any ETF recommendations that might benefit from the revelation that AGW is a fraud?

6 Dividend Stocks for Current Income

Wed, 21 Oct 2009 15:31:22 -0400

On your KMP recommendation, note that Kinder has another issue (KMR) that pays dividends as quasi-stock splits thus avoiding the potential tax consequences of an LP and making it suitable for a tax favored account. The other advantage is that KMR trades at a slight discount to KMP while the dividend is essentially equal.

The Debt-Equity Clock Is Ticking - Morgan Stanley

Fri, 16 Oct 2009 17:30:57 -0400

I agree with the equity argument, but believe that most of the equity allocation should be 1) foreign or international (<20% US exposure) 2) be high quality with transparent balance sheets (rules out financials) and 3) pay dividends at around the same rate as long-term treasuries. I would also (and do) hold U.S. equities that are energy/commodity related. In regard to the foreign exposure, note the Niall Ferguson article in Bloomberg (quoted on Market Currents) predicting another 20% downside for the sawbuck.

Can We Add Some Inflation to Some Deflation and Claim Overall Prices Are Stable?

Thu, 15 Oct 2009 12:50:43 -0400

Larry, on top of export driven grain price increases, don't forget that the ethanol mandate monster is still among us. Those 2 factors combined could easily drive corn and soybeans back to the stratosphere.

Looking Back at Fiscal 2009

Mon, 12 Oct 2009 11:54:16 -0400

jdl51 sez:This is the final Bush budget. All of the deficit, aside from the $200 billion stimulus spending, are what's left of the Bush administration "fiscal responsibility". In other words, Obama is not responsible for this deficit and it's increased government spending.
----------------------...
Wow! talk about not being able to remember history!! It was a year ago when the Dem majority split the 2009 budget in half with "the Bush budget" covering the 6 months to end of March when the second half Democrat/Obama budget could run the deficit up faster than Bush ever had. If you are going to write here, at least TRY to get your facts straight. BTW, I think that Bush and the GOP congress were complete fiscal failures as are Obama and the Dems. WE ARE TOAST!

Stock Market Bubbles

Sat, 10 Oct 2009 18:41:26 -0400

I'm currently reading Crash Proof 2.0 and I think Peter Schiff would add a #4 and he assign probabilities of 5% to your #2, 15% to your #3, and 80% to his #4. Also thanks for the disclosure on SDS. I've lost a bit trying to insure against the "coming decline" with SPX puts, but the decline is not coming soon enough. now thinking that it could be some time as the Govt continues to add liquidity so a longer term vehicle (SDS) is probably in order.

Feldstein Health Care Proposal

Thu, 08 Oct 2009 14:53:42 -0400

This is sure a better start than anything currently roaming the "hallowed" halls of Congress. Add to this idea some measure of tort reform and cross state line HI competition with some subsidization for pre-existing conditions and you can create a 55 page HCR bill that can be understood by a non-PhD semanticist. The biggest problem with the current efforts is trying to throw all the problems in one big bag and solve them all simultaneously. A common saying in engineering is "define the problem before you define the solution" .

Chart of the Day: The Billion Dollar Gram

Thu, 08 Oct 2009 11:54:14 -0400

A pretty staggering depiction! If you click on the "information is beautiful" link below the chart rather than on the chart, you get a much clearer view (not that you necessarily WANT a clearer view as clarity will induce anger).

Don't Let the Headlines Fool You

Wed, 07 Oct 2009 18:18:10 -0400

An even better leading indicator might be average weekly hours worked which fell again last week to around 33 hours. It seems that job losses and unemployment rate almost by definition cannot reverse until weekly hours starts to move up.

Smarter Way to Pick High Yield Stocks?

Mon, 05 Oct 2009 13:21:31 -0400

MOmentum basis that is, not an Altria (MO) basis (which looks pretty good right now too).

Smarter Way to Pick High Yield Stocks?

Mon, 05 Oct 2009 13:20:00 -0400

Somehow, the philosophies of momentum investing and dividend investing seem a bit incongruous. As a dividend investor actually using dividends to support my retirement. I'm a lot more concerned about the financial strength and stability of the company and the stability of the dividend than I am by what Mr. Market has done with/to the stock in the last X number of days. I guess you could argue that proper fundamental analysis of say, PM several months ago, would have had me buying the stock at $37 yielding 6.1% than buying it now on a MO basis yielding 4.2%.

Best Dividend Picks for 2009, 3Q Update

Fri, 02 Oct 2009 13:46:53 -0400

This has probably been mentioned by DGI before, but with regard to KMP, you can also buy KMR which handles distributions differently, essentially in stock. KMR sells at a slight discount to KMP also, so yield is higher, around 9% because of the discount. KMR does not have the Sked K issues thta come with KMP, so KMR is more appropriate for a tax-advantages account.

I'd also note that Josh Peters at MStar just added MO to his Harvest list. I had given up MO 3 years ago at the PM split because of the potential liability issues and put those eggs in the PM basket. Would apreciate DGIs opinion/thoughts on MO at 7.6%

Marc Faber: Equities Safer than Dollars

Wed, 30 Sep 2009 21:21:14 -0400

On Sep 29 01:09 PM User 353732 wrote:

> 2. Only certain kinds of equities, I think, are a hedge against dollar
> debasement:
---Companies with global reach and multinational internal supply chains that limit their exposure to the US economy to under 20% of global earnings.
------Companies that own substantial, non-replicable intellectual
property rights which convey major pricing power to offset dollar
declines
-------Companies with leading global brands and unbeatable logistical and distribution capabilities which also convey important pricing power to offset dollar declines
-------Companies with real physical assets ranging from energy to
minerals and metals(including gold, silver, platinum and rare earths) to land to food, water and agri-goods to large world class manufacturing facilities that are direct hedges against dollar debasement: as the dollar goes down the price of their assets increase
----------------------...
Along these lines, I suggest a read of Peter Schiff's book; "Crash Proof". Peter shows up in these here parts once in a while.

Marc Faber: Equities Safer than Dollars

Wed, 30 Sep 2009 15:15:46 -0400

JD sez:"Next month, the last Bush budget will expire. So aside from the stimulus spending this year, somewhere around $100 billion, all of the deficits accumulated since 1980, around $11 trillion, are from the last three republican presidents.
----------------------...
The FY09 budget was split in 2 by the Dems last year because they wanted the second half to be an Obama budget. The "last Bush budget" expired in March when the Dems passed a pork-filled, earmark filled second half budget. I'm not sure how the last 3 years have been "Bush budgets" since congress has been Dem since Jan 2007. Beside that, budgets, as passed and implemented, are NOT Presidential budgets, they are Congressional budgets at the end of the day and the Pres, Dem or GOP can only sign or veto. Note that during the, as you say, "last 3 Republican Presidents", the Dems have had Congressional control for all but 6 of those 20 years. Now who did the borrowing and spending? Most of us fiscal conservative Republicans puked at the GWB/GOP Congress budgeting from 02 to 06 and that is a big reason why they lost control, but this Pres and Congress are taking us to entirely new territory "where no man has gone before".

The Bottom for House Prices May Not Have Been Reached

Wed, 30 Sep 2009 11:58:24 -0400

ooops, meant "overshoot" the mean (to the downside.

The Bottom for House Prices May Not Have Been Reached

Wed, 30 Sep 2009 09:18:29 -0400

I lived in San Diego for a long time and watched the housing bubble from its early days in 2000-2001. A nice 4br house in a desirable neighborhood was priced at around $240K in 2000. That (typical) house went to near $600K by 2005 at the bubble top. Looking at that class of house now on realtor.com shows listing prices still in the $450K area with not many sales. It seems that reversion to the mean in that category would have prices at $250-300K so the thesis that "The bottom...may not have been reached" certainly seems likely. It also seems likely, given the CA employment picture, that prices could undershoot the mean (as happened in mid 90s) as reversions often do.

Funding a Rally Extension

Mon, 28 Sep 2009 15:30:23 -0400

beaux wrote: But it must be said that the posts following the article are so consistent in their vitriol and cynicism for this rally....
----------------------
I didn't detect as much vitriol for the rally as for the Fed and the folks who are fueling/manipulating this faux bull

"Cash-for-clunkers" critics are ignoring two things, writes Matthew DeBord: Nobody was expecting demand to miraculously bounce back to 2006 levels - automakers are reorganizing to profit on fewer sales - and the credit crunch had basically killed the industry. The program may have pulled demand forward, but the economy needed the boost now, not in November.

Mon, 28 Sep 2009 14:32:40 -0400

You have to be thoroughly impressed by a guy who does auto analysis for the Huffington Post! There was an article on SA several weeks ago that was much more credible. The author of that article backed out a "normalized" level of sales (given current conditions) and figured that the C4C program really cost around $23K per car sold above that normalized level.

Bank of America's Gain Is Taxpayers' Loss

Thu, 24 Sep 2009 10:28:04 -0400

KDI, I missed the articles on the "tent cities...springing up all over". Would you please provide SA readers (at least this one) with a legit citation on where these cities are located? While things ain't very good except on Wall Street and in Charlotte (as the article points out), the only tent I've seen on the news is the Gadhafi tent in N.J.