Angry Physicist

Did the ECB Save COMEX from Gold Default?

Why do people think there is a problem?

They bought contracts to buy gold at a price. They executed the contract, and took delivery. Delivery was made. There is no evidence otherwise, is there.

They seem perturbed that they weren't able to engineer a short squeeze of Deutsche Bank, because they couldn't bust the ECB too.

Now, who is the manipulator in this scenario?

'Future of Finance Initiative' Zinger: Borrowers Must Be Able to Repay Loans From Income

"Were they all so deluded by the apparent prosperity of our late, great asset-based economy that these wizards of the financial world were unable to see something so simple, only now realizing just how huge this simple error was?"

No, they weren't all stupid. They just didn't give a crap because they were into making money NOW.

"It's pretty simple - borrowers must be able to repay loans from income."

The next step is, "What happens when---not if---banks get on the stupid bus again?"

The logical consequence to this is, of course, adversarial government regulation.

And here is the *real* source of the problem: when that time comes around the laissez-faire above all crowd start mewling and howling about free market principles and Ayn Rand and all that bovine scatology.

he political reality is that sufficiently effective counter-cyclical government regulation must inevitably stand firmly in the way of some very wealthy and powerful people's ginormous paychecks---and their political contributions.

It is not a matter of stupidity---it is a matter of understanding, and squashing, the political power wielded by those who want to do something dangerous and stupid for their own personal benefit.

New Limits on Credit Card Companies: Is Hell Freezing Over?

<i>By limiting banks' ability to manage risk, regulators would be forcing the institutions to withhold credit, raise interest rates or eliminate such programs as zero percent balance transfers to compensate for it, industry officials and analysts said.</i>

That is a heaping load of pure bovine scatology.

The issue is not managing risk---it is stopping clearly deceptive practices. It is preventing bank's ability to fool customers into thinking they have a good deal when they don't. Nobody would stand for it if buying a car was infiltrated with such flim flam, even if there was an impenetrable 30 page "disclosure" form. Banks love disclosure requirements because they can stuff absolutely everything in there from the mundane to really critical, and nobody can discern which is important and what is legalistic mumbo-jumbo.

Banks will have the ability to price risk the old fashioned way: credit lines and interest rates. Sure, the front page interest rates will likely go up---and this means that the cardholders will have much clearer ways to compare one offer from another. They will go to the bank that actually does offer them the best deal, not the footnote-encrusted best* deal***.

That's the real reason some banks don't want this, as they will have to face honest competition and consumer pushback. Of course, all banks will be in the same position, and honest nicer ones should approve this move.

SUV Makers Feel the Heat of Higher Oil Prices

"bbzz24 you're an idiot. How do your landscapers get your yard done? How do your deliveries get to your house? How do your contractors get your new A/C there and installed?"

Guess what? I've been to other countries, and they have landscapers, home deliveries and air conditioning.

What they don't have is US-size "full-size" pickups and SUV's.

There are plenty of 'utility' vehicles, rather like "El Camino" style smaller pickups on a car body, and occasional somewhat larger pickups. And then commercial delivery trucks.

In reality, few of the US full-size pickup buyers (and virtulaly none of the full-size SUV buyers) actually use their trucks to their capabilities.

Back to the USA. In 1980, cars were something like 80% of the vehicle sales, trucks/suv's 20%. Today it's like 48%-52%. So, did nobody have landscaping, construction and A/C in 1980? Obviously they did. Farmers and ranchers got the trucks they needed and life went on.

The reality is that most (not all, but the large majority) of the demand today is spurious egoboosting and neurotic mommyism.

[ED: Comment edited to remove abuse.]

Alan Greenspan Loses His Mind

Alan Greenspan is dumber than a bartender.

Any bartender knows that the way to deal with an unruly drunk is to cut him off from liquidity, completely. Not raise the price of beer to everybody by 50 cents.

The Fed didn't need to raise interest rates to deflate the obvious bubbles. It needed to 1) raise margin rates sharply in 1999-2000, 2) majorly crack down on bank underwriting & lending standards and increase capital ratios against mortgages.

Both could have burst the bubbles, without harming the economy as a whole more than necessary.

Countrywide Financial: Who Didn't See It Coming?

“It is difficult to get a man to understand something when his salary depends upon his not understanding it.” -Upton Sinclair

Somehow his prescience was magically enhanced when he was in communication with his broker.

Do you remember the summer of 2005? The New York Times Magazine (consumerist porn for rich pseudo-liberals) had a fawning, obsequious article about Bob Toll --- high-end homebuilder CEO. He went on and on about how the US and especially Toll was immune to any problems, how housing prices are bound to keep on going up, how Toll was so much stronger than the rest, with a rock and housing prices would equalize with Britain's. Remember that?

At the same time he was unloading oodles of stock. Hundreds of millions. He (or his company) bought the sponsorship of the Metropolitan Opera broadcast---yes it's now the "Toll Brothers"---not Texaco---Metropolitan Opera Broadcast.


Cynical "bitter renter" conspiracy theorists: 2
Words of "Captains of the Industry" CEO's: 0
What they got for not believing their propaganda: $$$$$$$$$$$$$$$$

Betting On Oil? Pay Close Attention To The Facts

Ronald Reagan abandoning price controls lead to a great drop in oil prices in early 1980's? Give me a break.

Maybe, in US, for natural gas---which is not a world fungible commodity---it's a potential hypothesis.

For oil, everybody is ignoring the obvious. In the early 1980's,
Significant oil was discovered and exploited in the North Sea at maximal commercial
production by Britain and Norway---capitalist and NATO allies. And Cantarell (the planet's second biggest oil field after Ghawar) came on line in a similar period, and the Alaskan oil was really flowing. (And there was a big recession, too). Those discoveries, plus the war in Afghanistan, helped to topple the USSR.

Guess what? North Sea oil production, and Cantarell is crashing. Not just a modest decline but a serious crash. Oil price is marching ever up, and Russia is rising once again, and in a triumphalist and sour mood.

All the high tech employed by Britain and Norway resulted in sucking out the oil faster, but it doesn't actually seem to get much
more total oil!

Bull Market Monetary Environment: Rising Inflation and Money Supply

One reason is simple.

War is inflationary. Always has been, always will be.

Uranium Mania: Watch This Market Grow

Cameco has sold most of their near-term future production forward at much lower prices than current spot price.

Matching Management with Culture: How the Wrong CEO Can Ruin a Company

I seem to remember a study which showed how low-key, promoted-from-within CEOs resulted in better company performance than expensive, outside recruited flashy CEOs.

Of course the second group got much larger options and compensation packages.

There seems to be some kind of primitive, unintelligent apeish-genetic urge to give leadership power to the toughest, most arrogant, sounding man (and usually it is a man, not woman who is this sort).

Of course being an asshole will be a bad "fit" for just about any corporate culture.

Nardelli wasn't actually the real boss at GE. Perhaps his true nature was kept in check there?

Another potentially relevant example: Microsoft seems to be doing far more poorly with the loudmouth, aggressive, and arrogant Ballmer running things versus the semi-autistic Gates.

Five years of billions of dollars of revenue and we get Vista---mostly a downgrade from XP?

Of course there are difficulties with industry maturity but one of Microsoft's biggest present problems, one that they never used to have, is the major exodus of many of their best technology employees---especially to Google. That's clearly a sign of spreading disease in the corporate culture.

Microsoft Research is doing great by paying academic-style researchers more money and letting them do whatever they want. Few of their inventions have any relevance to Microsoft's products and Ballmer ignores them.