Holiday Friday Night

My wife bought a bag of squirrel food and put some out yesterday. I think these two monster fat squirrels that came to it stayed there all day and were back at the bin again today. They ate all of what she put out there (about 2 cups). Will a squirrel eat until it pops? Just wondering.

Black Friday
Would you like my "on the street" report for "Black Friday"? Ok. I did not leave the house today at all. Aside from the shopper that was trampled at Walmart, the news reports I saw seemed pretty good. We will have to wait for the hard numbers to know for sure. Never fear, the US consumer cannot be stopped!

My Silver Buying Saga
I hold a bunch of gold mining shares, and I was thinking of putting some money into physical silver. My mom gave me a nice 10oz Johnson and Matthney silver bar about 6 years ago for Christmas (My mom and her long term boyfriend spent a long time in the Sacramento area; He is a gold panner enthusiast and loves all the metals!)and I just love the feel of the thing. I wanted to get maybe 60-70 1oz bars. So it begins.

Trying to get around having to have the silver bars shipped, I called 4 shops in the area that sell silver/gold coins and bullion. Here are the 4 responses I got from them:
1-Have not had any coins or bars for 8 months
2-Could make some calls and get back to me
3-Maybe, possibly could have a few in a month or so if I was interested
4-No longer tries to get any; cannot help

Ok, well in truth these shops were pretty small outfits, so I said to myself "Self, I guess we will look online". As I listen to myself as much as possible, I started my search.

What I found was pretty disappointing. Most sites had big banners saying "NOT AVAILABLE". When the silver bullion was available, we are talking crazy premiums! One site I saw had a 10oz JM bar (the one I have) going for $160. Silver is at $10 and ounce, so that is $100 for the metal and another 60% markup from there! Wowza.

On a tip from a comment left at Calculated Risk (I had asked for help) I was pointed towards a very nice site, Northwest Territorial Mint. It seems that they do indeed have silver available, but the disclaimer says at least 30 days until the order can be filled. The pricing was a bit less onerous (10oz bar for $140) and they offer Pan American Silver minted items, which I used to own a bunch of PAAS stock.

I wrote to the site support and asked about the 30-60 delivery delay. If I can be assured that I will get my order I think I will buy 65 1oz bars. Anyone out there know a better way to go? Leave a comment if you have any input.

Here is their site:
http://store.nwtmint.com/Bullion/Signature_Silver_Bullion/ALL

Economic Wrap Up
So November reaches a close and only 1 more month left in a wildly exciting 2008. What is going to happen is anyone's guess, but I am sure it will be a wild ride.

My overall take on things as of now is this:
There seems to be a huge sigh of relief and a bunch of cautious pats on the back going on. CNBC was all happy about todays session, capping 5 up days in a row, and visibly were all giddy about the future. The markets have moved way up over the last week and all seems quiet.

I have written a ton about how you cannot have a bottom when half of market players are looking for a move up. I actually saw guys on the TV today giving estimates for UP percentages the markets will return next year. UP! In the face of a recession, higher unemployment, and more credit issues too many are already setting high goals.

Confidence is too high, and risk perception is again going awry (that rhymes!). The FED/Treasury guaranteeing basically everything is seen as the green light. It very well may be. I just think pretty soon that guarantee is not going to mean a whole hell of a lot. The 10 Trillion mark is going to get hit soon as far as bailouts and guarantees. At some point this has to matter. If it does not I fear the US government may see their own green light to really get going on spending.

Friday Night Entertainment
I was a little pressed for material tonight, but then I remembered it is still a Friday, so I can add a bunch of fun stuff to fill out the post!

Funny Pic
Speaking of squirrels and the evils of financial leverage, I give you:

more animals

Film Clips
I have been watching movies over the holiday so I have a buch of scenes on my mind.

A great film is "Patton" starring George C Scott. The intorduction speech scene is an all time classic:


One of the more chilling scenes ever is when the super computer Hal9000 denies David Bowman entry back into the Discovery in the film "2001: A Space Odyssey". What would you do stuck outside a space ship billions of miles away from earth?:


Music, Sweet Music
While one can debate the merits of wearing "Sunglasses at Night", certainly the terrible video buy catchy song is worth a listen:


One of the all time greats is Pat Benatar. One of may favorites is "Shadows of the Night":


Heard this one on the radio and remembered how much I like this song. try out Roy Orbison with "I Drove All Night":


Now for some creepy piano work. Take a listen to "Tubular Bells" for the piano and guess the film it is featured in. NO CHEATING!:


Have a good night.

Things to be Thankful For

I just finished Stephen King's new book "Duma Key" and I must say, in my opinion, the book is King's best work in a long time. Novel storyline, tension, surprises, and great writing make for a powerful novel. highly recommended!

Another Day, Another Pep Talk
As written last night, today was the THIRD DAY in a row president Elect Obama held a press conference to assure the folks of America that "Help is on the way." What kind of help he did not mention, but some help nonetheless.

What was a good sign was that advisor Paul Volcker has been assigned to an advisory committee and seems that he will indeed have a hand in crafting policy. Three cheers for the Obama camp for this addition. Mr. Volcker is a solid, stand up kind of guy and he has some real world brains.

Still, one has to wonder how much influence Volcker is going to have unless he has taken a big drink from the Keynesian Kool Aid Bowl. Calculated Risk has excerpts of a 2005 Volcker speech that would seem to both correctly identify the underlying economic issues and be in direct opposition to current "more spending" plans to fix things. Excerpts from Calculated Risk:

"Altogether, the circumstances seem as dangerous and intractable as I can remember."
"Boomers are spending like there is no tomorrow."
"Home ownership has become a vehicle for borrowing and leveraging as much as a source of financial security."
"I come now to the heart of the problem, as a Nation we are consuming and investing, that is spending, about 6% more than we are producing. What holds it all together? - High consumption - high leverage - government deficits - What holds it all together is a really massive and growing flow of capital from abroad. A flow of capital that today runs to more than $2 Billion per day."

How he is going to square this with bailouts galore and forced consumption will be intellectual gymnastics.

Things to be Thankful For
On this Thanksgiving eve I would like to write a list of things I am thankful for. Some will be pretty basic, others sarcastic, and others insightful (I hope anyways!). Up front I am thankful for Blogger which allows me to make this site without any charge to me and to the readers for taking the time to check out my own little piece of the web.

Things to be Thankful For
-The New England Patriots never giving up
-The 2008 Infiniti G35X; The sweetest ride I have ever been in
-The 2008 election results were clear and known very quickly (No Florida 2000)
-Iran has no way to effectively deliver a nuclear bomb should they have one
-The Argentinian Prime Minister is a complete babe
-That unemployment during the biggest crisis since the GREAT DEPRESSION will reach only as high as 8%
-That the US can fund bailouts of any amount because the world can't do a thing about it
-For the freedom to print money without the whole currency devaluation problem
-Calculated Risk, Minyanville, and Mish
-A chance to shatter the bullshit gold COMEX market
-That our children and not us will have to pay for all of our mistakes
-Harvard Business School for all the great minds they turned out that have ruined America
-That there is no accountability in America
-Due to the recession, illegal immigration will slow down
-There is a whole new generation in their formative years that will believe the government will solve all their problems
-Prime Rib
-The bottom is in for stocks
-Inbev has stated they will not change the Budweiser formula (big one!)
-That 90% of the US population is brain dead, otherwise we are in the midst of a revolution
-Reserve Currency Status
-That banks deemed "too big to fail" are merging with as many banks as possible to become "too huge to have a bad quarter"
-Soon you will buy your electronics from Best Buy and everything else from Walmart as they are the only two retailers left
-You have less freedom of choice on all levels and that saves you from thinking for yourself
-Now that Democrats hold the White House and both houses of Congress the mainstream news and newspapers will be decidedly upbeat on everything

That's all I have for now. Add your own in the comments section.

For all the readers, enjoy your holiday. Thanks for reading.

Have a good night.

There is No Going Back to a Free Market

I really liked last night's post, and there were quite a few comments on it. One of my rewards for writing this blog is an active comment section and I thank all that participate. I am off from work until next Monday, so it is like a mini vacation for me.

Obama Overload
I congratulate president elect Obama on a good campaign and I thank him for beating a liberal dressed like a conservative in John McCain. Obama won pretty big, and that is what it is. I understand all the glowing news stories and all the excitement. But I am starting to get worried.

Two days and two press conferences into this week I am getting a feeling that Mr. Obama may be much like a Bill Clinton and feel he needs to communicate with the masses on a regular basis. I mean, how many times is Obama going to come out and say "balance the budget after a recovery, etc"? I know one of the gripes about Bush was that he was not in touch with the people, but I do not think I need daily pep talks from our president either.

Another Obama question that I have is why does he not request that Hank Paulson and Ben Bernanke stop shoveling out cash at a record pace? Why not ask that no other monies be handed out until Obama's new team can review programs and see if it is in line with their goals? That would be the first thing I would do. Either Mr. Obama does not want to rock the economic boat, or his team would be doing the same thing. Either way, not inspiring.

Gold Watch
Do not forget that this coming Friday November 28th begins the gold settlements of COMEX that reflect the huge physical vs. spot price differences. This dynamic will be in play through December and bears watching. I found this crazy picture of a gold deposit along a quartz vein on Wikipedia, and I cannot imagine stumbling onto that baby!:


There is No Going Back to a Free Market
I am not going to go into detail with the new bailout programs announced today. More of the same with a focus on the Government buying toxic mortgage debt as well as packaged credit card and student loan securities. Please take particular notice that Hank Paulson did not even attempt the pretend that "The US taxpayer may make money on these purchases" as he left that nugget out. I think it says alot that this line was not used today.

So with the myriad of alphabet lending facilities and other credit programs, the US Government has now become the lender of only resort. While I would have loved a debate about whether this should have happened at all, that ship has sailed a while ago. I want to take a look at the future problems all this intervention will cause.

To me the biggest issue going forward is that there will not be any way for the government to get out of the loan racket. Guaranteed cash and government backed debt is going to be both preferred and demanded going forward. Nobody will go into the private sector for funding when cheap money can be had at the FED. Is there any way the FED/Treasury cannot understand this?

Reinforcing my theorem that the US financial sector and many businesses cannot function unless they are in an ultra low borrowing rate environment, the Government will have to do gymnastics to keep rates at all time lows for the foreseeable future.

What is going on right now is the elimination of the free market and its replacement by a centralized government mega bank. The repercussions of this will not be fully understood for some time. The true power in America will not reside at the White House and Congress, but at the FED and Treasury. The obscene power grab by those institutions did not require a shot to be fired, only a mere threat of "systemic collapse". I can only offer that it is lucky for America that a resurgent Russia or a nuclear armed rogue state has not seen fit to challenge America, because our too easily spooked leaders may have just handed over the country by now.

I feel frustrated because nobody seems to be motivated to yell "STOP RIGHT THERE" to the FED and Treasury. There is no debate, no discussion as to whether any of the actions taken are prudent or for the best. Look they may very well be, but without any intelligent discussion we can never know.

It is not enough that our elected leaders have taken a hands off approach. I understand that economics can be confusing. I do not expect any member of Congress to be a Nobel prize winning economist (it would be better if they were not!) but it is not acceptable for them to just give the FED/Treasury authority to do whatever the hell they want without bounds.

There is a sense that the lead guys, Paulson and Bernanke, have no idea what they are doing and are making things up daily. That is simply not good enough.

Have a good night.

25 Billion Here, 300 Billion There, Another Trillion Here and Pretty Soon You Are No Longer Talking About Real Money

In a game where the Patriots were facing playoff elimination, the entire team played about as well as an injury riddled team could. Matt Cassel showed great timing and better ball control than ever before as the Patriots beat the Miami Dolphins 48-28. While this team is not a super bowl contender, the discipline, poise, and will to win is remarkable. They are an inspiration.

Citigroup Latest Shameful Bailout
I am sure you have seen the details of the obscene bailout of Citigroup (C) by the US government. Just when you think you have seen it all, our Treasury finds new and exciting way to guarantee massive taxpayer losses for years on end. I have to admit, the talent the FED and Treasury have for throwing money away is far more imaginative than I could have thought possible. Cheers fellas!

The C bailout is basically a pyramid scheme where C takes a hit on the small stuff and the government guarantees everything else. Everything. To the tune of anywhere up to 300 Billion dollars, or about half a TARP. Naturally the market loves a any bail, and the action was to the upside. Why anyone would think C is a buy here is confusing, but I am easily confused anyway. Something like 5X dilution of shareholders, earnings will be suppressed for years as they pay back the government (yeah right), and now made into a zombie with their balance sheet stuck at the FED/Treasury. Screamer of a buy!

Naturally the same old excuses were in use; "systemic risk", "financial collapse", bla bla bla. Check out this little fear monger from the AP story on Yahoo:

"If they didn't help, the damage would be beyond imagination," said Teck-Kin Suan, economist at United Overseas Bank in Singapore."

Who's imagination Mr. Suan? Yours? Mine? Another choice bit from the same story:

"It would create chaos," said Winson Fong, managing director at SG Asset Management in Hong Kong, which oversees about $3 billion in equities in Asia. "Simply put, you couldn't borrow or lend for a while. This is a nightmare scenario."

Oh my god! No borrowing or lending for a while! Holy shit and fried eggs! Reread that one again and try to remain calm! I mean this is a f#cking CRISIS!

All this systemic risk garbage is wearing me thin. The only thing at risk is the massive notional money scams that enrich bankers. Of course they are scared, they are soon to become like UAW workers or Realtors; historical bin residents.

25 Billion Here, 300 Billion There, Another Trillion Here and Pretty Soon You Are No Longer Talking About Real Money

"A billion here and a billion there, and pretty soon you're talking real money." -Everett Dirksen

I see that quote out a bunch as of late relating the current wild spending by the FED, Treasury, FDIC etc during this mess. It is both overused and totally inaccurate. The truth is much more sinister. With the amounts of money being used and proposed to be used the ability to even grasp what is going on has been lost. And it is here that I think the powers that be have made a terrible miscalculation that is going to have some serious unintended consequences (are there any other kind?).

Now this is just one bloggers take on the macro picture, so please sound off in the comments with your own thoughts.

What started as a "subprime" debacle quickly morphed into a gargantuan credit bust over the last year and a half. Through the wonders of fiat currency and financial tools of leverage the US (and many other countries) generated so much "money" that is detached itself from any tether to reality. Now I understand that by definition ALL fiat currencies work this way, but there is a subtle difference: You can push the boundaries of belief only so far before you fail to maintain the charade. I think we are at that point now or soon will be.

What should have happened at the beginning was the public failure of Bear Stearns and others; A recession for the US; Quiet capital infusions to keep the system moving; and an unwind of debt levels that were just too big. That would have been the ticket to keeping the smoke and mirror show in business.

Instead in an election year the powers that be decided to open the floodgates and pour government backed debt onto private debt that could not ever be paid back. The US government, through proxy of the FED and Treasury, attached their voucher to all the notional money in the system.

So what? Well, this is where i think things are going to get ugly. Everyone KNOWS the US cannot pay off their debts. There is no mathematical way possible, this is a fact. The world over has been accepting of this because many of their fortunes are tied to the US through many channels. Now we are faced with around 7 TRILLION in obligations to backstop a shadow banking system with more on the way. We may have reached the debt Chandrasekhar Limit I have written about.

Perception is all that keep the financial system going. It is the perception that the Government has saved Citi from collapse that is seen as a good thing. The perception that the FDIC could ever make you whole in widespread bank failures keeps people from pulling their money out. The perception that the debts of the US can be honored keeps pig like foreign buyers coming back to the trough.

I think we may have tilted the pinball machine of perception a bit too hard this time.

So if the US generates say 10 trillion dollars in new debt to cover all things systemic risk, how do we intend to pay that back? Our three auto makers are about finished, so not much there. I doubt securitized mortgage paper will ever be bought again from the US. We do sell some cool military stuff, but nobody can buy that much hardware. We do design some good computer software, but competition in that arena is high.

We are facing a serious recession; We are scrambling to try and make some kind of infrastructure jobs bill which will be funded by more borrowed money; Debt is maxed out at all levels of the US from the consumer, state and city governments, and many businesses. Just how in the world are we going to pay back all this money?

We are not of course. That was acceptable for a while, but now the numbers being pushed around have become so enormous there can be no more pretending. Only complete fools would continue to fund US debt. China seems especially retarded in this case with Japan a close second.

Again, this is just my take. I just think we are getting to a point where we will be laughing about debt obligations because they are so absurd. We are supposed to pretend we are serious about making good on our obligations and everything we have done to this point should make it clear we are not. You have to play the game to keep the show on, and we have gone out of bounds with all the bailouts and stimulus cash. It remains to be seen when foreign debt buyers give us the hook and take us off the stage.

Have a good night.

"Unexpected Jolt of Confidence" for Timothy Geithner

Bitter cold and ripper winds set for tomorrow. Did I ever mention that I am not fond of the cold? No? Well, I am not. Monster football game on Sunday with the New England Patriots having their season on the line against the Miami Dolphins. I cannot believe I just typed that! How things can change in one off season and 1 quarter of one game into this season.

Gold Watch
All right, I am officially worried. Today's action in the miners, most up almost 30%(I own GG and KGC), was scary. I read at least three pro gold mainstream stories. Now Mish himself has come out and said he likes gold right here! Either this is a very good thing or gold is about to collapse.

Here is Mish's piece:
http://globaleconomicanalysis.blogspot.com/2008/11/i-like-gold-here.html

And from the Australian:
http://www.theaustralian.news.com.au/business/story/0,28124,24687337-643,00.html

The Problem of Savings
A common theme that is in play right now concerns the "problem of savings". You see, when spend happy Americans sit on their money and try to pay down debt, the economy that has been built on them spending every dollar they have, and quite a few they do not, goes down in flames. If you are an ivy league trained economist you see only one way to solve this issue. No, the textbook says nothing about making an effort to transform a dysfunctional economic system into a productive and dynamic one! That was in the remedial class at the community college. The big boys know the real way out of a "liquidity trap". You may have even seen it fleshed out by the likes of Krugman and others. The answer is of course:
Separate People From their Savings By Any Means Necessary

Now this can take many forms. The old school idea is to lower interest rates so much that a saver cannot keep up with inflation by saving their money and so must spend it or try and invest it. The new wrinkle in this scheme is to use the government as a proxy to spend people's future income far in advance (through bailouts and other tax black money holes) that effectively will claim those future savings from the people through higher taxes and/or high future interest rates. As you can see, taking money from people can be done either with their agreement or without.

And that is why I get so crazy mad about all the bailouts. Set aside the fact that many banks/auto makers/ whatever firms were so badly run that they are now busted. What burns me up is that the FED and Treasury are in effect stealing your future savings and handing them over before you ever get the chance to get your little hands on them. This is the true injustice of what has been going on. By higher taxes and/or higher interest rates you will be getting less going forward. While everyone loves a good bailout, how would they feel if the headline instead read "GM to be saved; Average American just lost 3% of their yearly raise! WHOO HOO!". I bet that would not go over as well. Try to remember that nothing is for free.

"Unexpected Jolt of Confidence" for Timothy Geithner
First of all, I am going to refer to the next Treasury Secretary as Timmy G, because that last name of Geithner just does not roll of the keyboard at all.

I was a bit disappointed that Paul Volcker did not get the nod. There are plenty of reports that say Obama and his people tried very hard to get Volcker the Viking, but to no avail. If that is true I applaud the effort. I think he would have been great.

So Timmy G was tapped instead. I will leave the merits of this choice for another time. All I can say is that I cannot remember even ONE time Timmy G voted against Greenspan or Bernanke, so are we really getting something new? Instead I would like to take a look at some very silly behavior and news headlines that were out today.
From the Yahoo Finance main banner:
Dow ends up nearly 500 in surprise comeback after report Geithner will be new Treasury secretary

Wall Street staged a surprising comeback Friday, with the major indexes jumping more than 5 percent and the Dow Jones industrials surging nearly 500 points in a late afternoon rally, ending another volatile week that saw stocks reach six-year lows. Stocks erased about half of the losses that came in steep selling Wednesday and Thursday after investors got an unexpected jolt of confidence late Friday following an NBC News report that President-elect Barack Obama plans to name New York Federal Reserve President Timothy Geithner as Treasury secretary.

So how was it that the possible pick of Timmy G resulted in an "unexpected jolt of confidence"? The only way for that to be so is if common wisdom along Wall Street was that Obama would pick George Bush to be the Treasury head. Or Richard Simmons. Or Jessica Simpson. I mean, is Timmy G some rare genius that can count cards in blackjack and walk on water? Just where is all this confidence coming from?

To be fair anyone other than Paulson was probably going to generate some wild excitement. But really this seems a bit much. maybe it was an "oversold bounce" predicated on a "retest of a higher low" or something. Whatever. I just wanted to point out the funny nature of the headline.

Friday Night Entertainment
After yet another wild and crazy week, it is time to cut loose and have some fun.

Film Clip
One of my guilty pleasures is watching any film that has sword fights, boxing, or martial arts. Along this line I would like to pay homage to the greatest low budget martial arts film of all time "Kill and Kill Again". The lead actor play the character Steve Chase and while the films acting and just about everything else is as weak as can be, the fighting is pretty good. Take a look at the final showdown here:


Melodic Interlude
And now onto the tunes.

Combining my love of fight films and music, I love the song from "Rocky IV" called "No Easy Way Out" by Robert Tepper:


I guess we will stick with the soundtrack theme. I really like the Jon Bon Jovi song "Blaze of Glory" which was made for the film "Young Guns II":


The band called "The Blasters" amke great music and often are included in flm soundtracks. They are featured in the great film "Streets of Fire" and they also had material on the film "From Dusk Till Dawn". Listen to "Dark Night":


While not a film tune, I was listening to Simon and Garfunkel this week and I am putting up their great song "the Boxer":


Have a good night.

Democrats Do Exactly the Right Thing

Thanks to Kevin, Watchtower and Lisa for the kind words on my promotion. How I get so much work done and write this blog at night really is just that I am passionate about my work, and I am excited to write this blog and know folks out there like it.

Citigroup Whines Like a Baby
I had seen the banner headline today that Citigroup wanted the SEC to jump back in and ban short sellers. Recall how the financials did so well (sarcasm) with the ban in place. I had it in mind to write a section about this, but Mish beat me to it. I imagine his post is a bit more well written than mine would have been, but with less snarkiness! Anyways, check it out:
http://globaleconomicanalysis.blogspot.com/2008/11/citigroup-blames-short-sellers-for.html

Key take away point: Only 2.7% of C stock is short right now. If about 3% short selling is killing you, well, I guess it cannot. Check out Mish's coverage of C's shadow assets and you may figure out why C is getting clobbered.

The Bottom That Never Was Meets the New tradable Bottom
Last night I had a piece on the silliness of technical analysis at inflection points such as this one. Today all the markets crashed through all lows since 2003. No "bottom" call held, not even the panic bottom from a while back.

While we all like to make fun of the FED and the Treasury for pursuing bad ideas and expecting good outcomes, many market watchers/players do the same type of thing. Today there were new thoughts about a "tradable bottom" being established. Whatever, I have said my piece on this stuff.

The issue with the markets right now is that there is almost no real value in it. The perceived value of stocks relies heavily on whatever bailouts may come from the government. All the financials are zeroes unless they have massive government intervention. Many retailers, homebuilders, and home improvement companies are not far behind. Charts and trends make no difference when perception is the key parameter for the market. See GM today. Up over 30% when pro bailout congress people prematurely said a compromise was reached, then gave it all back when that was shown to be untrue. Was GM really worth 30%more at any point today? Only with a ton of cash from the taxpayer. Otherwise, nope. Sick really. People buying a stock because it is so bad off it is going to get bailed out. OK. It has been a winning strategy in the financial stocks so far.

My last thought about a "bottom" is this:

A long term bottom is reached when nobody wants to buy any stocks. None. A bottom is not reached when half the market wants to make sure they do not miss a possible move up. That's it. That's all.

Democrats Do Exactly the Right Thing
When I saw the UAW guy giving his speech today around noon on CNN (I was in the lunch room) I was disgusted at the craven fear mongering that was going on. The guy really said that Congress must act "Now, Today" on a bailout. About an hour later a headline flashed on Yahoo Finance that a compromise bill had been reached. Naturally I was mad that the congress would take their marching orders from some guy at a press conference, but not surprised really.

I was surprised at what happened next. The Democrat leadership came out and said "What a minute there CNBC! No deal has been reached." And this would have been good enough for me, but they even went further! In what can only be termed as an act of clarity and sheer brilliance, the Democrats withstood the bullying tactics that got the TARP passed and made a simple, reasonable, and badly needed request:

Present a plan to the Congress on how the taxpayer money will be used to save and reform the auto industry.

I was blown away. This is just what the doctor ordered. No ore being rushed into passing bills and handing out money with no thought, no debate, no real plan of action. Take some time and think about what is going on. Three cheers for the Congress today, they earned it.

Now the hard part. By the powers of reality the US automaker cannot present a plan where cash alone will save them. They are powerless to get out of their crushing obligation debts, and cannot go on without the kind of restructuring that only bankruptcy protection can provide them. This is a fact. This will not change in 2 weeks.

The next question for me is whether the great move by Congress today was just that, a move to get cover to pass a bailout in 2 weeks that stinks, or are they really going to look at the auto plan and judge it on it's merits?

At this point I want to stay hopeful and so will not offer a prediction. I am excited that maybe the Congress may become addicted to this thinking thing and want to keep doing it. I am hopeful that getting burned by the TARP they have learned a lesson. I HAVE HOPE! This should make all the readers very nervous.

We will see what happens, but for one night I am giving the Congress a free pass and the Democrat Leadership in particular a high five. Let's keep it up and maybe you can recapture a tiny fraction of trust. A sliver. A nanotube. But that would be a start.

Interesting Tidbit
One of the small articles on the Wikipedia Main Page this week was about a ship, the SS Central America. I was fascinated by the story. The 30,000 pounds of gold that was lost when the ship sunk helped to touch off "The Panic of 1857". Back when money was tied to gold, all that missing bullion made a dent! Maybe we could sink the Federal Reserve? Anyways, a salvage company researched the ship exhaustively and was able to locate it! An operation was performed and over 150 million dollars in gold was recovered, including an 80 pound gold brick! SWEET! I have ordered a book written about the entire search and recovery. Can't wait to get it. Here is the Wiki entry:
http://en.wikipedia.org/wiki/SS_Central_America

Have a good night.

Headlines That Change

A little short on time this evening as the drive home was a bit long. On a solid personal note, I was informed by the boss today that for the year end review I am getting a promotion! Good stuff. I have done a ton or work this year, so I am glad.

Market Dips Below Retest Levels; Well Some Retest Level Anyway
By now, you the readers, know of my hatred of technical analysis and especially for all the catch phrases some market players like to use to try and make sense of things that make no sense. Terms like "retest" and "head and shoulders" especially get me rankled.

So today the DOW and S&P fell below the much celebrated lows that were successfully retested last week or something. So that is bad right? That means new lows and the retest last week was bunk?

Nope. The charty types now mean that crazy intraday low from a while back where the DOW kissed near 7800. That is what they really meant. The 8100-8200 area was a "false low" masked by volatility or something.

I bring this up because a ton of people I know, and many I respect, love talking about the markets in these terms. While I use charts myself, I use them for long term trend watching as well as historical action. Trying to say "8153 on the DOW is the ultimate low" is like trying to guess the correct interest rate the FED should be at: A waste of their time and mine.

Auto Bailout a No Go if Democrats Have to do it Themselves
So you think everything is going to change just because Mr. Bush is gone? You think now that the Dems are in control we are looking at politics by other means? From Yahoo Finance:
Senate cancels vote on doomed auto bailout

WASHINGTON – The Senate's top Democrat has called off a planned vote this week on a $25 billion auto industry bailout. Senate Majority Leader Harry Reid said that he wanted to figure out some way to help Detroit's struggling Big Three but that efforts to do so had stalled.
The White House and congressional Republicans rejected Democrats' plan to dip into the $700 billion Wall Street rescue fund to finance loans to U.S. automakers.

So the republicans (some of them, nowhere near all of them) are balking? The lame duck White House is not in love with the idea? So what? If this is the right thing to do, then make a vote. Get everyone on record, yeah or nay. What is the problem?

Simple, as always. The TARP was dogshit that the public did not want. The auto maker bailout is even more crap that the public has said NO to. While this is nice, the Congress does not care. If the auto bailout had huge support like the TARP did it would go through. But the craven democrats do not want anything to bite them, surely not another bailout with serious opposition. So no vote. New politics, same as the old. Weak and scared politicians (either side) unable to do what is right, only what is politically possible. Remember the big debate Bush promised about the "Flat Tax" if he beat Kerry in 2004? Remember the debate? Of course you don't, it never happened because the opposition was too high. Note: I am against all bailouts, but if the Dems think it is for the best, they should go for it.

Headlines That Change
Saw a strange thing today on Yahoo Finance. After the FED had given their forecasts, you the ones that have been so spot on up to now, Yahoo had this headline up:
AP
Fed sharply lowers forecasts, hints of rate cut

Later in the day when the selling got heavy, the lead headline became:
AP
Fed sharply lowers economic forecasts for this year, 2009; signals another rate cut coming

And then later tonight, an amalgam of the two:
AP
AP
Fed sharply lowers forecasts, hints of rate cutWednesday November 19, 3:13 pm ET
By Jeannine Aversa, AP Economics Writer
Fed sharply lowers economic forecasts for this year, 2009; signals another rate cut coming

Now I am not proposing that there was anything sinister going on here. I am just pointing out that the good old game of "hint of a rate cut" was changed to "rate cut coming". Take from this what you want, I just found it interesting.

As far as rate cuts go, what is the point. The effective FED rate is 0% right now, and they only have 100bps left anyway. I guess they could keep going for the hope of getting a bump, but I do not think that will fly.

What will the FED do? One cut of 100bps? Two 50bps? Four 25bps? I have no idea and it does not matter. Well, I take that back because it matters as it is the new poll question! Please vote on what you think Bernanke should do with his last 100bps of credibility!

Have a good night.