Long weekends are good and bad. The good is the time away from your actual job, sleeping later than 5am, and time aplenty to do whatever you want. The bad is the first day back to reality. I really did not want tot get up this morning. Tough time.
Anyway, I had a good weekend. The dry aged steaks were amazing. The new fishing rod and reel setup work extremely well. My potato plants are growing like crazy now. I hope you all had a good holiday weekend as well.
Airline Bailout on the Way? I read a story this morning (I can't remember where I read it or who wrote it; it was early this morning and I was half awake!) that was discussing the price of oil and how much it costs the airlines to buy fuel in the current high price era. The numbers were pretty scary and towards the end the writer remarked that the airline industry will be calling for their own bailout by years end if things do not moderate on the oil price front and fast.
While I am certain that the price of oil will "moderate in the coming quarters" this line of thinking certainly has become first response as of late. Industry in trouble? Bail them out! This is what happens when you ignore moral hazard.
So we are currently bailing out the following:
Insolvent banks that caused the mortgage mess due to greed and poor management
Insolvent home mortgage borrowers that chased prices up
Airlines a possible next bail? How about this list of possible bailouts that will be needed:
Airlines broke from fuel costs
American auto makers
Home builders at some point
Realtors and finance jobs that are being lost
At what point can we just bail on the USA? The speed at which we have arrived at complete acceptance of pure socialism is scary. No debate. No vote. Nothing but the FED along with the money folks screwing the taxpayer so they can stay rich. Ugly stuff.
Oil is all the Rage
I have about had my fill already of the oil stories. As I have said oil speculation is bad while speculating in housing is awesome. Oil speculation should be investigated by congress while home speculation should be encouraged by tax breaks and bills from congress. You get the idea.
The oil price angle, and the causes of the higher prices may be good in one way. Finally there may be a fair and objective look at what Greenspan/Bernanke easy money has done to the dollar and commodities as functions of excess liquidity. I would not hold on to that hope too hard.
Well it only dropped to 42 degrees last night and the plants in the garden seem to be ok. Lets go with the springtime temps already! Going to order some dry aged ribeyes tonight for dinner this weekend after I blog. I love the grill.
Massachusetts Senator Kennedy with Brain Tumor My home state Senator, Ted Kennedy, has been diagnosed with a brain tumor. While I am not of the same politics as the esteemed Senator, I would like to pass along my best wishes for his health and a hopeful defeat of the tumor.
Fannie and Freddie Profits to Fund Housing Bill; What profits? Some details came trickling out about the dumb housing bailout plan. Allegedly the plan will not cost the taxpayers any money because, get this, profits from the GSE's Fannie and Freddie will be used to fund the logistics of transferring the mortgage to the FHA or something. The plan is as convoluted and complex as any plan you would expect from the Senate.
FNM and FRE have had some issues first reporting correct earnings reports when they had profits, and now they have no profits anyway. Hard to see how mortgages guaranteed by the FHA are not going to cost the taxpayers any money, is the FHA part of the government or what? The crafters of this plan obviously think that home values are at THE BOTTOM and foreclosures are a thing of the past. What else can you expect from our leadership.
Oil is the Bad Kind of Bubble The market had a rough go of it today. Most commentary attributed the drop to oil prices near $130 a barrel and a hot inflation number. Why oil at $100, $110, $120, or even $125 did not cause any issues is beyond me if oil at $130 is some mystic evil number. In fact, there was a quick jump in thinking that the major issue facing the economy going forward was now Oil prices!? Weird indeed. From Yahoo Finance: AP Stocks stumble on record oil, inflation worries Tuesday May 20, 5:47 pm ET By Joe Bel Bruno, AP Business Writer Investors retreat as oil passes $129 a barrel, more worries about rising inflation Analyst Stephen Leeb believes escalating oil prices and their fallout have now replaced the health of the financial sector as the market's biggest worry. He said rising energy creates a "very vicious circle" through the economy, and thinks the government must take some kind of action to bring down prices. Oh Man! Already we are going to start hearing calls for more government intervention, this time in oil prices? An oil bailout? Can Fannie buy oil futures? Don't laugh, anything can now happen in the new era of socialist America.
"Stock investors are watching oil, period," said Leeb, whose New York-based Leeb Capital Management focuses on crude and its impact on equities. "The events that moved the market before revolved around write-offs and foreclosures, but all that's changed." When did the housing crisis and credit issues stop being the main problem? I guess at 2:30pm today when oil prices won out.
But some analysts believe the market's slide gave investors an opportunity to collect profits. Peter Cardillo, chief market economist at New York-based brokerage Avalon Partners, said Tuesday's decline doesn't change the market's long-term prospects. "The oil price rise is being done by speculators and does not reflect market fundamentals," he said. "But, it still has an effect on the consumer -- and investor confidence is equal to consumer confidence, which has been having swings as of late." And we see a familiar pattern once again.
You see Oil prices are in a bubble that is disconnected from any fundamental valuation of the commodity. This is bad. This must stop.
When home prices were in a bubble that is disconnected from any fundamental valuation of the commodity, that was good. Awesome in fact. So great that while home prices are now falling to better reflect their value based on fundamentals, there is a furious effort to try and stop that process from occurring.
Is oil more important than housing? Both are life needs. Why the differential treatment? Where are the ads and talking heads saying "Buy Oil Now or You Will Be Priced Out Forever!" How about "Stunning Oil Barrel for Sale, Recently Updated and now with a Granite Barrel".
Nobody cared much for the people getting priced out of housing when prices were doing the parabolic thing. In fact smug home "owners" often taunted and jeered at people that opted to wait or could not afford to buy in the bubble mania. These same aloof fools are now whining for help. Unreal.
In summation, I had posted on May 5th that Oil was approaching and important psychological point. I had ended that post:
" I am struck by how strong the desire is out there to be optimistic about various things. Oil is becoming a major threat to that mindset. With all the FED bailout plans and emergency lending tricks have created a new bubble, a bubble in sentiment? If oil at $120 means nothing bad in a macro sense, then you know folks are pretending hard. It is shaping up to be a LONG summer."
And today we see an AP article that says what I said, well kind of. One can dream that reality has come back to the market, but I imagine today's action will have no follow through. When the Oil price bailout plans start to circulate, you know it is time to kiss your money goodbye as the government is going to need all of it very soon. Vote in the new poll!
Rain has arrived here in Massachusetts. Wonderful. I am in the market for a grill, so if anyone has a suggested model that they like please let me know in the comments. I would prefer a charcoal grill, but the mess and effort involved is more than a gas grill. I just want some grilled steaks! We had electric heat at the old apartment, and the oven here is electric and you cannot cook a good steak without a good gas oven broiler or an outdoor grill. Just my opinion.
Myanmar Relief - A Quick Word The scale of disaster in Myanmar (Burma) is much larger than I thought, and seems to get bigger as more information is gathered. The major problem with aid efforts is a silly reclusive government that rules it's people with an iron fist. Any severe dictatorship worth it's weight in fascism is well schooled in keeping any outsiders outside, so their fragile hold on power can be maintained.
So what can I, you, or anyone do? I guess try to donate to major relief organizations that are involved. Hopefully the help will get there and not be hijacked by the government for their own personal usage. If I were Emperor of course, I would send 2 aircraft carriers and 3 divisions of amphibious Marines to invade and overthrow the government in less than 2 days. Then maybe the people there could get some kind of reasonable representation going. Instead of helping truly desperate people like those in Myanmar, we are stuck over in Iraq. What can you do.
The Tyranny of the Minority There is indeed a new bubble to be aware of, and that bubble is the "bailout bubble". Programs of all sorts and acronyms have made the rounds over the last 6-8 months, each getting bigger and more dumb as we go along. The latest was the US House of Representatives passing a bill sponsored by Barney Frank (yes, he is from Massachusetts! Sorry Country!) which promises big time cash for mortgage bailouts, as well as cash to take care of empty homes. There is a speculative mania in bailouts right now, so beware buying any ETF's that specialize in tracking bailouts, we may be near a top!
What has really started to get me aggravated is this desperate rush to save a small number of retards that are in trouble with their mortgages. Let us assume a few numbers just for arguments sake, and yes I know what happens when you assume!
For this discussion, assume that 90% of of all outstanding mortgage holders are current and on time with their payments (I am sure it is higher) so that 10% of mortgage holders are in some stage of default. We will further assume that the entire 10% of late payers will be foreclosed (this would be high).
With that in mind, what the heck is the rush for all the bailout plans? Forget the "systemic banking collapse" argument for a moment, I want to focus on why more people across the country are not OUTRAGED at this blatant money drop for fools.
I think I have an idea. The 90% are mad and upset with the reward system being put in place for irresponsible borrowers. I am sure of it. I am equally sure that those same "homeowners" are terrified that their major asset, their home, will lose value over the next few years. They are only concerned that the bailout plans in effect prop up their home prices. A selfish and understandable desire.
It smacks me as disingenuous as public officials are out in force trying to act like they even care about people losing their homes. They don't. They are concerned with large numbers of voters losing equity in their homes though! If we could make it perfectly clear that these bailout plans will do nothing to stop home prices from falling (they won't stop that) I think the 90% out there would make more noise about the free ride being offered on their backs for the losers out there.
I realize this is subtle difference, but I think it is important to clearly define what is going on here. All the FED help, all the treasury plans, and all the bailout bills have one aim: to put some kind of artificial floor under home prices to maintain calm among middle class voters. Nobody gives two hoots about a bunch of fools getting kicked to the curb. When those curbside dwellers are dragging down the home values however, people care a whole lot. would like to stop the pretending that "preserving the American dream" or "keeping families in their homes" is anybodies main desire. It is not. If it was a fact that taking out foreclosure folks and shooting them dead and burying them in the back yard for fertilizer added $25,000 in garden equity to a home, gun sales would be way up. And yes, Americans are that greedy and craven.
So the current mess is clear example of the "Tyranny of the Minority" as failed flippers, dumb dreamers, wannabe real estate tycoons, and liars are holding the banking system and the home price scale hostage. It speaks volumes about the banking system that it can be this fragile. It says allot about how disconnected from fundamentals home prices became that they can rise and drop by huge percentages over a 6 year span. Both things are broken and both must be allowed to go where they must.
Ok, enough with the heavy stuff! It is Friday night and that means some entertainment, yes?
Here is a scene playing out all across America as adjustable rate teaser loans get reset: more cat pictures
If you get pulled over for DUI, at least try and stand up during the field sobriety test:
Time for some Music!
One of my favorite bands was Queensryche. Check out "Silent Lucidity":
While I love almost all songs by the Eagles, I especially love "Tequila Sunrise":
Sadly they have already disbanded, but Audioslave for a brief moment showed how great rock and roll can be even today, sample "Like a Stone":
