Current Book Read
I picked up the book "Illegal Tender" by David Tripp. The novel chronicles the saga of a 1933 double eagle gold coin that escaped the clutches of the gold takeaway by FDR. The final coin recently sold for over 7 Million dollars at auction. The coin traveled far and wide and tracking it down was a main priority of the Secret Service for years. Fun read so far, I am about half way through. The book has a wonderful chronicling of how gold was flying away from the US and the obscene powers assumed by the government in the face of "systemic risk". Sounds familiar?
Where Was Aluminum's' Bailout?
By now we are tired of hearing that home prices need to be supported, stock prices need to rebound, and that baseball cards are actually very undervalued. The mania to get asset prices up is running full throttle. Historically this was not always the case. Take the poor metal aluminum.
Aluminum is the most common earth metal, but due to its reactivity it is almost never found in the pure metal state. Aluminum exists as an ore, usually bauxite. Pure aluminum metal was once one of the most sought after and valuable metals on earth. Then disaster struck. two independent discovers, Charles Martin Hall and Paul Heroult found a way to purify aluminum from all the ores where it could be found! This made pure aluminum as common as wood. From the Legacy section on Wikipedia:
Although aluminium is one of the most commonly occurring elements on Earth, before the invention of the Hall-Héroult process, it was initially found to be exceedingly difficult to extract from its various ores. This made the little available pure aluminium which had been discovered (or refined at great expense) more valuable than gold. Bars of aluminium were exhibited alongside the French crown jewels at the Exposition Universelle of 1855, and Napoleon III was said to have reserved a set of aluminium dinner plates for his most honored guests. Additionally, the pyramidal top to the Washington Monument is made of pure aluminium. At the time of the monument's construction, aluminium was as expensive as silver. Over time, however, the price of the metal has dropped; the invention of the Hall-Héroult process caused the high price of aluminium to permanently collapse.
Now what do you think happened to all the aluminum jewelry makers? What about the shipping industry and mining for pure aluminum? Gone. Busted. This no doubt had a huge effect on asset prices across the board. Did the world end?
You know it did not silly, we are still here! The industry changed and moved on. That is it. That is all. By my highly scientific calculations I have figured that if the US government had wanted to prop up aluminum prices over all this time at the old price, it would cost exactly 15 penta-tetra-gigbyte-trillion dollars to have done it (yes I corrected for inflation!). Not even helicopter Bernanke has a ship that big! Sometimes things change.
Stop Threatening Me With Economic Terrorism
"Why, Mr. Anderson? Why, why, why? Why do you do it? Why, why get up? Why keep fighting? Do you believe you're fighting for something, for more than your survival? Can you tell me what it is, do you even know? Is it freedom, or truth, perhaps peace, could it be for love? Illusions, Mr. Anderson, vagaries of perception. Temporary constructs of a feeble human intellect trying desperately to justify an existence that is without any meaning or purpose! And all of them as artificial as the Matrix itself. Although only a human mind could invent something as insipid as love. You must be able to see it Mr. Anderson, you must know it by now. You can't win, it's pointless to keep fighting! Why, Mr. Anderson, why? Why do you persist?
"Because I choose to."
Agent Smith and Neo in their final confrontation in Matrix Revolutions.
First off let's get Rick Santelli's rant up, which was pretty awesome:
Pretty good stuff.
You can see Mr. Santelli's frustration starting to show. The traders around him also were more than quick to join in. They are not alone.
I on two different occasions today wanted to scream at what I was hearing. First up was Robert Shiller and this Tech Ticker spot where he argues not that the mortgage bailout plan is unethical, a moral hazard, or bound to fail but that it is NOT BIG ENOUGH! He further plays the game of "we all need this to happen" with this reasoning:
And on the fairness point, Professor Shiller argues that the plan does, in fact, help renters and comfortable home-owners, too--because we're all in this together, and because the economy is everyone's problem.
The second was from an interview that ran while the NBC Nightly News was on and the Rick Santelli rant was actually shown! Mark Zandi, who this blog has a long history of not liking (see this post from March 8th 2008) had a spot he resorted to what I can only describe as economic terrorism and threats. His rebuttal to calls that mortgage deadbeats should get no help was that if that help does not come, YOU will get hurt. He said that if YOUR home drops in value you cannot access that "equity" any longer and thus will be worse off.
Well Mr. Zandi, if my home drops in value it will not affect me one iota because I do not use my home as an ATM. I could go on and on, but he main point remains thus:
Home mortgages and other credit loans need to be made good for one reason and one reason only: To save the big conglomerate banks. Those firms hold so much influence and so much sway that they are threatening the Congress and the American people with economic terrorism.
Should they go bust, along with CDO's, derivatives, etc maybe the world will end. Maybe it will not. Maybe if the government keeps all the bailout cash and uses it to use local banks with solid balance sheets and conservative operations as the primary lenders things will be better than fine. Or not.
The point is that I CHOOSE TO SAY NO. I may be wrong. I may want to kiss Mark Zandi' butt after an economic collapse. I might pray to a Ben Bernanke statue should Armageddon happen. I may regret my decision to oppose rewarding reckless and just pure retarded behavior. Maybe so, and I fully own up to that I may be so wrong as all get out.
I still choose to say no. I choose to, just like Neo. There is right and there is wrong. There is what is just and there is what is not. We can debate the fine points of various bailouts all night. Right now I am just sick and angry with being threatened and told that I must submit to whatever is done or else. Well, I would like to see the "else". I do not like being threatened. I do not accept using fear and veiled references to "tanks in the streets" if bailouts do not happen. They say I will be worse off if I do not support the mortgage bailout of the octuplet baby lady's moms home that is in pre-foreclosure and I say I will bear that burden with the honor that I did not save the home of yet another idiot.
I imagine that is what it boils down to. Bankers, politicians, and market players (in general) have no shame, no honor, no sense of accomplishment, and no shame. To keep the status quo so they live life high on the hog they need us to be afraid, very afraid, so we do not ask too many questions or demand that responsibility be upheld.
Well, I am not afraid. Are you?
Have a good night.