Richard K

Energy Myths for the 21st Century

"...Professor Julian Simon, who was naive enough to believe that large populations are better than small populations, because then larger quantities of brainpower will be available (and willing and able) to solve the more vexing of the world’s problems."

Also known as the Genius of Mobs Theory.

Silver Remains a Contrarian's Dream

No one can prove that silver will not reach $50 or even more someday. Obviously the future is unknown and anything can happen.

But it is misleading to refer to $50 as a "record high." That was an anomoly, a very short sharp spike resulting from an attempted (and failed) market manipulation scheme. Yes, it did happen, but it tells us nothing about the overall silver market or its prospects.

Debunking PHEV Mythology

I think GM still is being over-optimistic about Volt profitability, even if they can sell them in quantity at $40K (which is questionable). To sell any at all they will have to offer a 10-year full (not pro-rated) warranty on the battery, and the warranty must be transferable or resale value will be nil. So how much of each sale should GM put into their warranty liability account, against profits? I wonder if they have seriously thought about this.

Personally I like the Volt in concept, but unless it can be sold at an honest profit under real-world conditions, it is just a corporate PR symbol.

So China's manufacturing looks to one day overtake the U.S. Contrary to pessimist opinion, Americans still make things, says The Economist's Free Exchange, but why should a country with 5% of world population still do 20% of the manufacturing?

Why should a country with 5% of world population still do 20% of the manufacturing?

My question: what percent of the world's manufactured goods do those 5% consume, expressed in value? They should manufacture at least that much.

Why German Customers at Austrian Banks Are Suddenly Silver Bulls

Even with the blessing of 100 lawers I would hesitate to bring any of these coins into the US declared at face value. Anecdotal reports suggest that agents of Customs, the IRS, or any agency with a DHS letterhead can make up rules on the spot. And even if I could afford to mount a legal challenge, it is a rare judge who will stand in the way of government fiat power these days.

Gold traders with bullion stocked at Comex say they're not getting the right bars (these things have serial numbers). One possibility is an honest mistake. The other - that the bar indicated on the warehouse receipt doesn't exist - is pretty dire. More from Joe Weisenthal.

Even the most benign possibility (an "honest mistake") is troubling when dealing with items worth upward of $90,000 each. The others are downright scary.

But the mainstream media, including and especially financial media, will probably file these reports under "whacko conspiracy theories" and few people will ever even hear about it.

"Food has been the Achilles' heel of the company," says a Starbucks (SBUX) exec, describing plans to revamp store menus to be healthier and wallet-friendlier. But after trying to sell music, DVDs, coffee machines, and brunch foods, some wonder if Starbucks will ever realize there's nothing wrong with just selling coffee.

But how many executive vice presidents does it take to just sell coffee? Streamlining a business model often meets resistance from the entrenched corporate bloat culture.

China won't torpedo the economy by dumping our bonds: "To see China's holdings as a threat is to misjudge the goals of the Chinese government. China believes that its affluence is best guaranteed by economic interdependence with the world's most dynamic economy."

Obviously they don't want to trigger a dollar panic by outright dumping. But there is a whole spectrum of exit strategies available for China to limit their evenual losses, many of which are being pursued even now. And as HiSpeed pointed out much of their current Treasury exposure is in short term bonds. All they have to do is let these mature, then redeem them from the US for cash at face value.

Why Selling Your GM Stock Makes Sense, Even If Bankruptcy Is Averted

There has been a suggestion that outstanding shares in Old GM will become shares in 1% of New GM. So if the total market cap remains the same, just change the dollar value of your holdings into pennies.

Why Selling Your GM Stock Makes Sense, Even If Bankruptcy Is Averted

If any bankruptcy aversion deal is announced, there will be a short sharp price spike until people calm down enough to run the numbers. If I had a GM position I could afford to lose I might take a shot at selling into this spike but this is definitely one for the most nimble of traders.

You gotta ask yourself, do I feel lucky today?

U.S. “consumer confidence” a trap of lies

I have read two things repeatedly in the economic press today:

1: Market is up on improved consumer confidence

2: Consumers are encouraged by market recovery

How can anyone argue with trends like that?

Housing on Fire - Can Someone Please Explain?

"Someone buys a house for $200,000; loses it through foreclosure; sees the bank sell it for $50,000; rents it from the new owner for $1000 a month and two years later buys it back from them for $125,000."

One might ask, why doesn't the bank just reduce the outstanding balance (which is probably still close to 200k if not more) to 125k and adjust the loan so the original owner can afford it? Yes it loses $75k but that's better than a 150k writedown via the forclosure route.

Of course they can't do this for several reasons: (1) it would set a precedent resulting in a stampede of deliberate defaults from owners looking for a similar gift, and (2) if the loan has been sold or securitized, the bank no longer has the to negotiate, only to forclose.

The market is indeed in a metaphysical state when only absurd solutions seem to make any practical sense.

eBay: Where Did All the Fun Go?

The user experience started to change years ago, when eBay began to tilt away from private sellers to volume dealers (often of gray-market distress sale merchandise). Then they started tipping the playing field in favor of their biggest moneymakers, often to the disadvantage of handicraft and other cottage-industry sellers that at least offered a unique and sometimes charming shopping experience.

Last year made one eBay purchase, a DTV converter box that was advertised as new but turned out to be a refurb. I didn't complain because (a) it does seem to work, and (b) the seller openly threatens to retaliate in kind against any buyer that says a bad word about them in the ratings.

U.S. Loss of AAA Credit Rating 'Inevitable' - BMO

As far as I know, there has been no suggestion by the us govt of criminal investigation into the rating agencies' motivation to provide AAA ratings for highly questionable mortgage-backed securities. Nor is there any need to make any threats. Thus the probability of a US downgrade by these same agencies is zero.

With a GM (GM) bankruptcy all but inevitable, here are the firm's 30 biggest shareholders, and the amount they stand to lose if GM goes belly up.

"...plan also called for the government to forgive the bulk of $15.4 billion emergency loans that the U.S. has already provided to GM."

"...the government would extend a credit line to the new company."

Any chance of this new credit ever getting paid back?

No, seriously...!