Friday, April 3, 2009

Things That Make You Go Hmmm..

Steady rain with thunder and lightning this evening. It is always a bit strange to ear thunder so close to the wintertime, I just associate it with the summer. Still, beats loyal reader Kevin's area forecast for a BLIZZARD! Stay warm Kevin.

Mortgage Implode O Meter Legal Wrangling
This news item broke last night:
New Hampshire Judge Orders ML-Implode To Divulge Identities of Anonymous Posters
LAS VEGAS - A New Hampshire Superior Court Judge has ordered Implode-Explode Heavy Industries, Inc., the owner of the popular mortgage industry crash site Mortgage Lender Implode-O-Meter (ml-implode.com) to give up the identities of persons who provided information to the site about The Mortgage Specialists, Inc. of Plaistow New Hampshire.
Rockingham County Judge Kenneth R. McHugh also ordered that the allegedly "secret" and "defamatory" content about The Mortgage Specialists would have to stay down permanently.
The information consists of an anonymous posting on the ML-Implode forum about The Mortgage Specialists and the publishing of the company's 2007 "Loan Chart" sent in by an informant and placed online by the Implode-O-Meter staff.

I am no lawyer, and thus there may be some kind of weird standing that makes this kind of thing enforecable, but it stinks. Blogs are the real news sources. Witness the cascade of newspaper failings. This item bears watching. Economic Disconnect extends every support for the Implode o Meter.

Things That Make You Go Hmmm..
I am not an economist. I do not manage anyone else's money, just my own meager stash. I am not Harvard Business School trained or Yale economy educated. Thus I am easily confused. I find that there are many things respected economist types say that make no sense to me, but that is because I am of limited nuance for such things. I saw plenty of stories that made say Hmmm over the past couple of days.

First up is a Robert Reich blog post at Talking Points Memo. Relevant confusing excerpt:
It's a Depression
Capital markets may or may not unfreeze under the combined heat of the Treasury and the Fed, but what happens to Wall Street is becoming less and less relevant to Main Street. Anxious Americans will not borrow even if credit is available to them. And ever fewer Americans are good credit risks anyway.

All this means that the real economy will need a larger stimulus than the $787 billion already enacted. To be sure, only a small fraction of the $787 billion has been turned into new jobs so far. The money is still moving out the door. But today's bleak jobs report shows that the economy is so far below its productive capacity that much more money will be needed.

This is still not the Great Depression of the 1930s, but it is a Depression. And the only way out is government spending on a very large scale. We should stop worrying about Wall Street. Worry about American workers. Use money to build up Main Street, and the future capacities of our workforce.

Mr. Reich correctly puts together the pieces that the US consumer is tapped out, and they are not taking out credit they do not need, at least for a while. Repair of personal balance sheets after a debt binge never seen before on earth sounds like a sound decision. Mr. Reich even acknowledges that the pool of "good credit risks" is getting more shallow every day. What's confusing? Nothing if he had stopped right there.

Mr. Reich then goes all Keynesian on us and makes the case that to support debt accumulation (it is not lending and borrowing, but debt assumption) close to the absolute peak the Government must jump in and spend whatever is needed to restore the old activity level.

Nowhere does Mr. Reich offer an opinion on whether this is a good idea. At no time does the writer cast any value at all on overconsumption and debt fueled asset bubbles.

As far as the note that the economy is "below its productive capacity", isn't it always? I mean if need be we could force into labor the entire able bodied population to make things like cars. Would anyone buy them? What is the point of activity for activities sake? Again, no mention of this.

So I am confused. The US citizen has outstripped their net worth in spending, and the government must come in and support spending at unsustainable levels otherwise the economy collapses. Let me know how that works out.

The second item comes from my favorite bond guru, Bill Gross of PIMCO. Regular readers are well aware of my long standing issues with Mr. Gross. In a small, almost blip of an CNBC video summary Mr. Gross makes the following observations:
Bill Gross: Job Cuts Will Get Worse Before They Improve
Bond guru Bill Gross sees the unemployment rate jumping to double digits before it improves, and even then the economy will evolve into something we haven't seen before.

We're going to have a positive quarter at some point in the second half," he predicted. "Those that would look for bottoms in the economy or the stock market, though, I think are really focusing on the wrong thing, because that implies that we're going to return to what is a normal stasis. We think that's incorrect. We think that unemployment will go to 10 percent before it returns to 8."
Instead of that "normal stasis," Gross said he sees something quite different.
"We're evolving into a 'post-levered' financial economy which will witness intense regulation, and a redistribution of profits and wealth, most importantly, to previously disadvantaged groups, and so that's the 'new normal' that in no way resembles past experience."

I have no idea what Mr. Gross means by a "redistribution of profits and wealth, most importantly, to previously disadvantaged groups". I am confused because the only redistribution I see going on is the distribution of taxpayer funds towards bailing out the fat cats like PIMCO. The only money I see going to disadvantaged groups is more bailout cash, lending programs, and bad asset scams serving those that should be disadvantaged; the idiots that wrote all that paper!

Again, I am confused.

The last item concerns FED head Ben Bernanke's talk today at a FED conference. Relevant excerpt:
Fed 'extremely uncomfortable' about bailouts
Bernanke: Fed 'extremely uncomfortable' about bailouts; but strategy to ease crisis is working
CHARLOTTE, N.C. (AP) -- While acknowledging that the Federal Reserve was "extremely uncomfortable" about last year's bailouts of big financial companies, Fed Chairman Ben Bernanke said Friday the central bank's strategy to ease the financial crisis is working.
In remarks during a Fed conference in Charlotte, N.C., Bernanke said the central bank was forced to take action because the collapse of those companies would have dealt a serious blow to the financial system and the national economy.
The situation underscores the need for new powers to allow the government to safely wind down such huge firms, he said. Bernanke and Treasury Secretary Timothy Geithner recently asked Congress for such powers.
During his speech, Bernanke also defended the Fed's decisions to revive the economy by plowing trillions of dollars into efforts to stabilize the banking system and to lower interest rates. Its program to buy mortgage-backed securities of Fannie Mae and Freddie Mac has helped drive down the rate on 30-year mortgages to record lows.
"These are extraordinary challenging times for our financial system and our economy," Bernanke said. "I am confident that we can meet these challenges, not least because I have great confidence in the underlying strengths of the American economy."
To brace the economy, the Fed has slashed a key interest rate to an all-time low of near zero. The central bank has turned to unconventional tools -- such as its recent decision to start buying government debt -- to pull down interest rates on a range of consumer loans. The goal: entice Americans to go out and spend again, which would help lift the economy out of recession.

This is not so much confusing as a collection of useless lies.

- Note the story uses the line "last years bailouts". There are no bailouts this year? Ongoing lending facilities, auto maker money, etc. Nice move.
- The FED in "uncomfortable"? When I am uncomfortable with something I do not do it. I went to the doctor and told him it was uncomfortable when I raised my left arm over my head and he said "Don't do that!". Little joke.
- Spare me the whole "wind down" talk. Bernanke had already said in quoted words that there will be no more bank failures so do not even pretend.
- If Bernanke had great faith in the strength of the US economy I would offer that the FED would not have had to exhaust the alphabet in acronyms for all their lending facilities. Next up, Chinese alphabet acronyms (the Chinese ok'd this at the G20 meeting) for more lending programs.

It would seem to me a much better use of time and taxpayer money would be to develope industry and more robust economic machinery in the US rather than to try and prop up asset bubbles and keep the debt splurge pedal matted to the floor. just my 2 cents, but then again I only went to state school!

Friday Night Entertainment
Another long week deserves some fun!

WARNING: SERIOUS TIME WASTER
I am lax to even put this up as I will drop way too much time playing this game, but here is mini putt 3 to drive you crazy:
Mini Putt III
You were warned!

Rock Blogging
A little music to get your weekend off right!

Another YouTube "not embeddable" band is "The Cure". I was able to find a live performance of "Friday I'm in Love" that I could embed, so enjoy on a Friday!:


Another tough embed is "Til Tuesday" and "Voices Carry" long a gulity pleasure of mine!:


I found an old school video of "Wayward Son" by the band "Kansas". Great song, scary video:


Last call!

Something a little faster and with an edge. Take a listen to "Judas Priest" and "Ram it Down":


Have a good night.

8 comments:

Anonymous said...

GYSC

Did I ever tell you I hate snow and I really hate blizzards.
Having a house on a corner lot out here isn't a good idea either:-(
Kevin

GawainsGhost said...

Here is an extremely well-informed article on the origins of the current crisis and why the current administration is deliberately avoiding confronting the real problem.

http://www.atimes.com/atimes/Global_Economy/KD03Dj02.html

watchtower said...

@ GawainsGhost

I cannot get that link to work, could part of it have been cut off?

watchtower said...

Nevermind I think I found it:

Geithner's dirty little secret
By F William Engdahl

"...The irresponsible management is purged, stockholders lose and the purged bank is eventually split into smaller units and when healthy, sold to the public. The power of the five mega banks to blackmail the entire nation would thereby be cut down to size..."

"This is what Wall Street and Geithner are frantically trying to prevent."

I hope you don't mind but I put the link into tinyURL to keep it from being cut off on the end.

http://tinyurl.com/dmjawh

watchtower said...

W.H. team discloses TARP firm ties
By KENNETH P. VOGEL | 4/3/09 10:49 PM EDT

"Lawrence Summers, a top economic adviser to President Barack Obama, pulled in more than $2.7 million in speaking fees paid by firms at the heart of the financial crisis, including Citigroup, Goldman Sachs, JPMorgan, Merrill Lynch, Bank of America Corp. and the now-defunct Lehman Brothers."

http://tinyurl.com/dh8qyg

Engdahl also mentions Larry and his shenanigans in the article GawainsGhost linked to.

getyourselfconnected said...

Great stuff Watchtower and Gawains. Something tells me this week coming up will be quiet. Calm before the storm.

GawainsGhost said...

No, Watchtower, I don't mind at all. I guess the link did get cut off. Just read it this morning, copied the link and pasted it. I'm not much of a computer geek, you know, so I guess I'll have to learn to be more careful.

Anyway, this is a continuation to that Atlantic article I posted last week about the financial oligarchy. It really is running the country, and running it into the ground.

People need to wake up and smell the coffee. The government is colluding with the major banks to loot the treasury, impoverish the taxpayers, destroy the middle class, and bankrupt the US.

I'm not much of a conspiracy theorist, and I don't attribute evil motives to politicians and financiers. I just think they're incompetent. And maybe a little more than greedy.

Either way, this is why I vote against every incumbent regardless of party. It's time to take our country back.

By the way, I just finished reading Mark Levin's Liberty and Tyranny. I highly recommend this book. It is a lucid and compelling defense of the Declaration and the Constitution, of America.

It really is all about individualism vs. statism. The statists have won many battles, but I for one refuse to believe they will win the war.

The price of freedom is eternal vigilance. The tree of liberty must occasionally be nourished with the blood of patriots and tyrants. That sort of thing.

watchtower said...

Once again "The Quiet Coup" article from the Atlantic comes up in topic in an article titled:
"America’s Financial Oligarchy Is Still in Control" by W. Lorimer Wilson.
(this article can be found at the Financial Sense website which I will provide a link to)
Here is what Mr. Wilson said about it: "Johnson’s article is so frank, so insightful and so alarming it deserves the widest readership possible during these traumatic times..."

http://tinyurl.com/c9lu27

Thanks GawainsGhost for bringing "The Quiet Coup" article to my attention.