Friday Night Zone Blitz

Another Friday night is upon us. It was very cold here today and cold rain expected for the entire day tomorrow. Last nights post was perhaps my all time favorite, so if you checked it out I hope you liked it as well. The post before that made the blog Some Assembly Required today and I love it when work that I have done finds its way across the Internet.

In case I do not do an NFL section this weekend, I wanted to pass along the NFL pick of the year: Miami Dolphins beat the New Orleans Saints on Sunday. You read it here first!

Just What Kind of AAA Assets are on the FED Balance Sheet Anyway?
By now most are well aware of the games that allow various debt instruments to be rated AAA by the various agencies. The main part of the game is of course to just rate the stuff AAA and not worry too much about it.

The FED feels that in order to maintain it's Independence they must keep the bulk of their operations behind the curtain. Of course the FED is all about appearances anyway. Change one word in a statement and affect the entire bond market, say you are separate from the politicians will while you execute the very will of the politicians, round and round.

Sometimes a few details fall through the cracks and what has been seen so far has not been encouraging if you pay taxes.

It may interest the readers to know that the FED, and then by extension the taxpayers, now own a deserted shopping mall in Oklahoma City. This gift was packages into the Bear Stearns sale/bribe package. Mish has some details:
FED Owns Deserted Oklahoma City Mall
Nice!

As the FED is now tapped out of their treasury purchase money, they will only have whats left of their MBS purchase power which was started at 1.5 trillion or so. What kinds of top rated paper that is just miss priced does the FED hold? Guest writer EB at Zero Hedge has the details:
Fed Splurges on Freddie Gold
The story has plenty of details, but an introduction:

If you would like to know just how many California newlywed first time homebuyers with no mortgage insurance, with no verifiable assets or income were originated loans by unknown parties throughout the boom years of 2007 and 2008, or just how many Malibu yuppies are extracting the last bit of cash from their home ATM on this brief respite from the mean reversion in home prices due to end in the early teens, read link.

Hint: It is none too pretty!

The Audit the FED bill has not had much coverage here because there is NO WAY it will ever happen. Even if, huge if, the bill should pass, the FED will just decline to participate. Who is going to make them? If you answered anything other than nobody, are you sure? Final answer? Want to phone a friend?

Covered by a panic the FED (and every other branch of government) are operating well beyond the scope and charters that define them. What are rules anyway? This speaks to what I wrote about last night. If the voters voted out anyone that opposed the Audit the FED bill, the next set of elected officials would gladly endorse it. When the FED declines to play, more pressure could be applied by elected officials doing the will of the people, if not they are gonzo as well. Of course none of this will happen.

Credit Card Scorched Earth Policy
from Wikipedia, the greatest site the world has ever known:

Scorched Earth
A scorched earth policy is a military strategy or operational method which involves destroying anything that might be useful to the enemy while advancing through or withdrawing from an area.

It did not take long for almost every major credit card issuer to replicate the Citi monster credit card rate rise. On the surface this seems like a sure losing tactic, as the huge interest rates will both increased defaults and decrease credit usage. Denninger of Market Ticker has some provocative (aren't they always?) on this dilemma. While on the surface it may seem the Banks are going all out to get as much as they can from anyone that will pay before they lose too much money, I think something more nefarious is at work.

Think about the clear effects of what this policy will do, as written above:
-increased defaults
-decreased credit usage

Now which of the above two points is the FED/Treasury/FDIC really concerned about?

Exactly.

I see this as an act of financial terrorism by the banks, something I have written on before.

I think this could be a concerted effort by the banks to force some kind of "deal" with the FED/Treasury. In order to "restore the flow of credit" the the banks will accept a much publicized limit on credit card interest rates, say to a paltry 20% and in exchange, you guessed it, a backstop for escalating credit card losses! Both sides win. The banks pawn off another entire segment of loan losses on the taxpayer and our heroes in the government can say "Look what we did for the little guy! We lowered his CC rate!".

I sincerely hope I am wrong about his.

Friday Night Entertainment
It is now my fun time on Friday night. I hope you stick around to check it out.

Funny Pictures
Just for laughs.

One of these things is not like the other....

see more Lolcats and funny pictures

I am no archaeologist, but I am sure the fossil record rejects these items as occurring in the time of the Dinosaurs:

see more Epic Fails

This one is mean, but I could not help it:

see more Epic Fails
Ouch!

Film Clip
A film strangely nobody seems to have seen but me (uh oh!) is Berry Gordy's The Last Dragon. Besides having the actress Vanity in the film (which is good already) the flick sports great martial arts action and surreal comedy. Enjoy this scene which is indicative of the entire film:

"Bruce Leroy?!"

Friday Night Rock Blogging
I had hoped to fill out maybe 16 songs, made up of pairs of two to go head to head in video fights with the winner decided by popular vote. Not many suggestions have come in, so what I thought would be 8 music genres going up against each other. Last week the winner of the Punk Rock contest was Billy Idol's "Dancing with Myself". Tonight I will have a heavyweight battle up for vote. I still need nominees for music categories like 80's rock, Country, Folk, Metal and others at your input. Two nominees in the category will meet first, then all the categories will go head to head after that. Do not be shy, participate!

Some warm up songs before the main event.

I used to love the video for Huey Lewis and the News song "I Want a New Drug":


As is true for all the really great bands, picking one Scorpions song out can be tough. Pick up the pace with "Big City Nights":


If there is a bad song on the Kill Bill Vol I soundtrack, I have never fouind it! here is a song in a foreign language and it still rocks! Enjoy "Meiko Kaji - The Flower of Carnage":


The MAIN EVENT!

In the second installment of Friday Night Video Fights we have a real clash of titans.

In the Red Corner, the mega band Metallica with their hard metal anthem "Master of Puppets":

Tough song!

After an exhaustive search for a worthy opponent, here in the Blue corner is the speed metal classic legend Motorhead and their signature masterpiece "Ace of Spades":

Wicked!

Remember to vote on which song is the heads up winner. This will be a close one I think.

Have a good night.

Stop Threatening Me With Economic Terrorism

Tomorrow is Friday! After just a 4 day work week I still feel wiped out. Get your film, books, music requests in for Friday Night Entertainment, after this week of frustrating government manipulation it may be all that stands between you and insanity!

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.