Economic Doomsday Clock

Another Monday, but not a typical Monday! It seems like it has been over 3 months where new information and drama makes almost every day seem like it's own story. Thanks to all the loyal readers that hit my blog and others like it to try and understand what is happening. Now if only 20% of this country would take 30 minutes to get a clue, we could really get somewhere.

Real American Patriots
If you only read the major newspapers or watch the mainstream media you would have zero idea just what is happening today. We should give thanks to some of my personal heroes that have helped me to learn, and have made the attempt to shed some light on the farce that is unfolding. Here are my American Patriots, and this list could go on:
1. Michael Shedlock: With concise and revealing logic, Mish really breaks things down so even I can understand them. Great ability to see through the smoke deployed by our officials, and he pulls no punches. Thanks Mish.
http://globaleconomicanalysis.blogspot.com/

2. Minyanville: The entire crew at Minyanville is both entertaining and clairvoyant. It would seem that if you were reading the "Random Thoughts". "5 Things You Need to Know", and Mr.Practical columns you knew before any of this happened how it would all play out. You simply cannot get that kind of talent anywhere else. Thanks guys.
http://www.minyanville.com/

3. Calculated Risk: Real time analysis that has no peer. The comments section of this site often is the best source of debate and idea exchange out there. With the awesome real world experience of Tanta added on, this site is excellent. Thanks to CR and Tanta for their efforts.
http://calculatedrisk.blogspot.com/

4. Barry Ritholtz: The man behind the site "The Big Picture" easily has the highest traffic of most any financial blog. Even with that kind of mainstream exposure, Barry pulls no punches and serves nobodies interests but his readers desire for good information. A rarity indeed. Thanks Barry.
http://bigpicture.typepad.com/

There are others like Karl Denninger and Naked Capitalism that also strive to bring light to the financial shadows. You need these folks during this time, and I wish we had more of them.

Economic Doomsday Clock


The Doomsday Clock was started in 1947 as a visual cue to raise awareness of the dangers facing the world. From Wikipedia:

The Doomsday Clock is the symbolic clock face, maintained since 1947 by the Board of Directors of the Bulletin of the Atomic Scientists, at the University of Chicago. Using the analogy of the human race being at a time that is "minutes to midnight", wherein midnight represents "catastrophic destruction". Originally, the analogy represented the threat of global nuclear war, but since includes climate-changing technologies, "new developments in the life sciences and nanotechnology that could inflict irrevocable harm"

To hear Hank Paulson tell it, we were at somewhere around 2 seconds to midnight last Thursday and Friday. This impending calamity is what pushed the rush to action for the biggest taxpayer funded bailout in the history of the world. I propose that an addendum be added to any bill where we get a "Doomsday Clock" time check on the financial system. This way we can all get upset and sad when it gets closer to midnight and ecstatic when we are farther away. I feel this idea will have the kind of fear inducing power that the Treasury Secretaries words have not had to this point.

I have a new poll up tonight based on the "Economic Doomsday Clock" theme;

What time is it on the Economic Doomsday Clock?
-It is after 11pm, and my mother always said "Nothing Good Happens After 11pm!"
-It is about 11:45; there is still time to get a handle on runaway government spending
-It is 2 minutes to midnight; store water and guns
-Too late; Apocalypse!

Please vote and pass this around.

Have a good night.

Enron Was Ahead of Its Time

Having fun yet? So many story lines and so many angles. What a mess this has all become. The major average "SOARED" this week to finish up where they stared on Monday. I wonder why that is not the headline today? I am going to hit a few key points I am thinking about, and then I will try and amuse/entertain as is the Friday Night usual.

US Congress Eager to Sign Bill with No Details
In case there was any doubt, we have perhaps the largest collection of hapless bums running the country. There was a story on Yahoo Finance earlier that quoted a Senator with the following line:

"We will pass the Treasury plan (RTC plan) as soon as we can, and I would like to see some details."

I have news for you chump, the time to see details is before you pass the biggest bailout plan since the Marshal Plan after WWII, not after. Isn't one of the major problems right now that many "homeowners" signed mortgages without seeing the details before they signed? Creepy.

Well here at Economic Disconnect I was able to obtain the complete bill, and I have taken out some details that the US congress may like to know about before they sign on the dotted line. Here are some key attachments:

1. Ben Bernanke will from now on be referred to as "Great Exalted One" during all congress briefings and interviews as well as in any written media.
2. Hank Paulson will be called "Chrome Domed Love Machine" from this point forward.
3. Treasury and Federal Reserve employees have been granted the right of "Primae Noctis" with regards to any US virgins, should any still exist.
4. Keys to Fort Knox will be provided to Paulson and Bernanke to ward off future "Systemic Risk".

I think the US Congress should really read this thing through before they sign off on it as these attachments seem a bit much to me.

Bill Gross is a Dirty Rotten Criminal
The more Bill Gross of Pimco opens his mouth the more I want him to take me up on my steel cage match challenge. The balls on this charlatan can only be termed massive. After positioning himself to make sure the government has to bailout everything this side of the Milky Way, this clown now fully expects to be managing the FED's holdings! Too rich! Check it out:
Reuters
Pimco's Gross looks to manage government's rescued assetsFriday September 19, 2:51 pm ET
NEW YORK (Reuters) - Bill Gross, chief investment officer of Pimco, said he is interested in managing a pool of assets acquired by the government through recent financial rescue plans.
"We have interest in managing this giant pool of assets, and we expect to be called," Gross said on CNBC television in response to a question on whether Pimco had been consulted by the government about doing so.

With the way the powers have danced to Mr. Gross Outs tunes so far I have every belief Bill will get his wish. Please Bill, give me a call on that match. Soon.

Enron Was Ahead of Its Time
You have to feel bad for those poor souls which ran Enron. They were years ahead of their time, they were just unappreciated as clever geniuses. If Ken Lay and crew had only waited a few more years, history would regard them as savvy players that used the whole "systemic risk" pocket aces to great effect.

Those poor Enron guys. While they were attacked for accounting fraud, Fannie Mae had their purchase caps lifted and was able to operate for 2 years without a single shred of quarterly reports. I mean, falsifying earnings reports is bad, but now that is the new good! Too late for Enron.

Enron used wild and complicated derivatives bets to lever up their small initial working capital into a mammoth, if hollow, money base. At the time this was panned as dangerous but today it is known as the investment bank business model. Again, too late for Enron.

Enron hid losses and wildly exaggerated their asset values using internal parameters that had no basis in the real world. Now this is currently known as "Level Three Asset Accounting" and "Mark to Model" pricing. Again, just missed by a sliver of geological time! Poor fools.

Enron shopped around for a buyer to help them survive, but after looking at their books there were no takers. Once again, we see that the Enron model was not wrong, just early. Today we have the FED and Treasury forcing mergers and buyouts for insolvent institutions, and when that fails they just bail them out themselves.

I think it is clear that the so called scandal that was Enron was something else entirely. I think Enron was punished and attacked so harshly because they exposed the clever plan the banks had for screwing the US taxpayer into paying for their never ending party. Enron was early once again, and paid the price. Their model was then copied and amplified to arrive at the point in time we are now at. I am not writing this to be funny. There is no material difference between Enron's behavior and that of today's players. Sick? Yes. Sad? That too. Basically what we deserve for being the losers that vote in fools? You bet your ass.

Friday Night Entertainment

Book Passages
I think i will include the writer and book title so that if the passage I use is interesting to you, you can take a look at the book.

"So I think I can tell you this: I can just about guarantee you, I believe I can guarantee you, that if you'll take this on faith and commit yourself for two years, assuming you get through some further testing, you will thank me. You'll say I was right. You'll tell me that the very thought that you might have missed out on this gives you the chills. How many human beings have ever lived, Si? Five or six billion, maybe? Well, if you should test out, you'll become one of maybe a dozen out of all those billions, maybe the only one, who just might have the greatest adventure any human being has ever had."

from the novel "Time and Again" by Jack Finney

Rock Blogging
We are in desperate need of some good tunes to soothe the soul after this week.

I am cautiously optimistic about the new Metallica album. Take a listen to "The Day That Never Comes" and you will go back in time to the years when Metallica albums like "Ride the Lightning". I like this song:


I must admit, I can envision a charge on the Fed and Treasury by an army with the intent of setting things straight. Useful visual imagery is provided by Darth Vader's march on the Jedi temple:


Frustrated? Angry? Rock out to Limp Bizkit's temper loss song "Break Stuff". Warning: rough language and imagery. Give me something to BREAK!!!!!!!!!!!!!:


Have a good night.

Stupid is as Stupid Does

How was that for a wild ride? Dow up 150 points, sinks to down 150 points to close up, up and away over 400 points to the upside! Volatility, hallowed be thy name. I am a bit bemused by the late day action so bear with me.

Stupid is as Stupid Does
There is no real details as yet on the Resolution Trust Corporation (RTC) plan that maybe, might be in the works as reported by that pillar of integrity, CNBC. While the talking heads ( think Maria Bartiromo) are almost orgasmic with their excitement, think one second about what this means:

The RTC takes on bad debts, thus removing them from the books of banks;
The bad debts now reside at the US treasury;
Somehow some way this ends the credit crunch

.

If a reader can make a reasonable case how that works, leave me a comment, I am puzzled.

In addition, the US is now in the works of banning all short selling, just as the British has done. Why not just stop all trading on bad days like Russia? Why not just put a floor under stock prices like Pakistan?

We are quickly going over the deep end here. Here is one comment I lifted from the Yahoo Washington Mutual (WM) message boards tonight:

Title: Government To Take On Bad Bank Debts
Body: WOOOOHOOOO! We are off to the races tomorrow! Up day ahead!

So this moron is excited about the US government (his money) taking the Billions 9Trillions?) of bad debt onto the books to allow insolvent banks to do.......just what exactly? This is the kind of lunacy that can drive a man insane.

I will point you towards two pieces tonight that have the best edge on the situation. Think carefully while you read them.

Mish-Sharp as always
He may be the best out there, and he has a short, but sharp thought:
http://globaleconomicanalysis.blogspot.com/2008/09/paulson-seeks-resolution-trust.html

No excerpt, read the whole thing.

Barry Ritholtz is also brilliant and he covers all the bases tonight:
http://bigpicture.typepad.com/comments/2008/09/sec-ban-all-sho.html

Again, no excerpt, read the whole thing. Now.

Tomorrow will be interesting to say the least. I wonder if at some point anyone out there is going to wake up and realize how the average person is getting it royally in this deal. No vote, no say, just a bunch of clueless fools grasping at straws pushing the limits of debt possibility at our expense as some kind of crazy experiment. Something must be done. I doubt anything will.

Have a good night.

Pandemonium of the Clueless

Hello out there in financial reader land! Have you been having fun? Have you been on the edge of your seat with crazy disbelief at the rapid developments? I know I have been overwhelmed with information and news! Loyal reader G asked that i post if/when the proverbial sh#t hit the fan, and I say "ask and you shall receive".

Did Anyone Notice this Little Tidbit in the Mainstream Media?
Now I will say upfront that with all the drama going on, it could be possibly forgiven for the mainstream media to skip over this little item, but seriously has there been a more ominous headline anywhere this week?:

Russia suspends stock trading to stop market meltdown
by Dario Thuburn
Wed Sep 17, 2:05 PM ET
MOSCOW (AFP) - Russia suspended trading on its two main stock markets for a second day Wednesday as shares nosedived and officials pledged 44 billion dollars to fight collapsing investor confidence.

After a 50 plus % drop over two days, Russia says "No Mas" and pulls the plug. No word yet on when it will reopen, but this may be the scariest thing I saw this week. This bears your attention.

Gold Rallies Back
While still quite a ways off from the old highs, Gold has made a nice move, and today it made it's biggest one day run ever. Why? Well, with all the crap paper out there and with trust evaporated, only treasuries (why trust those?) and the good old yellow metal will do for many. This reminds me of a story that was told to a young Conan the Barbarian by his father. Conan's father related to him the story abut the "riddle of steel", but I have put in GOLD instead of steel to make my point:

Once giants lived in the earth, Conan, and in the darkness of chaos, they fooled Crom, and they took from him the enigma of steel [GOLD]. Crom was angered, and the earth shook, and fire and wind struck down these giants, and they threw their bodies into the waters. But in their rage, the gods forgot the secret of steel [GOLD] and left it on the battlefield, and we who found it, are just men, not gods, not giants, just men. And the secret of steel [GOLD] has always carried with it a mystery. You must learn its riddle, Conan, you must learn its discipline, for no one, no one in this world can you trust, not men, not women, not beasts, this you can trust.

While this whole mess can turn on any assets class at any minute, I still love gold's fundamentals going forward. Just be careful out there!

A Brief Statement of Truth
Senator Harry Reid (D-Nevada) had a rare honest moment today and I will direct you towards Mish for full coverage here:
http://globaleconomicanalysis.blogspot.com/2008/09/senate-majority-leader-reid-no-one.html

Quick summary "Nobody knows what the hell to do about this mess!" You hit it out of the park Mr. Reid, Bravo!

Pandemonium of the Clueless
There is simply too much going on for me to be able to cover all the bases. I refer you to the blogroll to the left. Naked Capitalism, Calculated Risk, Minyanville, and Mish have been doing unbelievable real-time analysis of all the news and their material is the best anywhere, anyplace.

With all that has been going on my main focus has been on the whole moral hazard issues. Not in the sense of "should we be doing this, it may be a moral hazard" because the hot to trot leadership we have has already made the choice to wade in. I mean just what in the world is Ben Bernanke and Henry Paulson thinking about as they make the off the cuff moves with billions of taxpayer dollars? Sadly the folks we all sent to congress are unable due to limited mental ability to ask any questions or to get some kind of fix on the FED and Treasury's thinking process. In the spirit of goodwill, I thought I might put together a few questions that our elected representative may, just maybe, want to get answered by the "Toxic Twins" of Bernanke and Paulson before any more bailouts/conservatorships/liquidity injections etc are done. Hopefully one of them will read these and try to get a response.

1. What is a "Systemic Risk" exactly and in no uncertain terms?

2. If indeed the US financial system is "Fundamentally Sound and Secure" as you have stated on numerous occasions, how does that square with the idea that a Bear Stearns or a Fannie Mae, or an AIG bankruptcy would cause a "systemic risk" to the entire financial system? Can those two ideas be reconciled?

3. While Lehman Brothers employees are filling cardboard boxes and leaving their jobs, how can Merrill Lynch workers and Freddie Mac employees be supported? What would you say to the Lehman folks right now?

4. Is there a dollar figure at which taxpayer backed bailouts will have to stop? If yes, what is that number? If no, do you see a problem with that?

5. With the FED and the Treasury backing down on the AIG "bridge loan" or whatever you call it, is it even remotely reasonable to expect private firms (still standing banks, foreign wealth funds, etc) to put up any money towards helping failing businesses? Why indeed should they if the US government will assume all the risks? Do you see the underlying issue here?

6. Secretary Paulson; as a former head of Goldman Sachs would you have recommend to your board to extend the AIG bridge loan? If not, why is the US taxpayer not given equal consideration?

7. If the only thing keeping the banking system afloat right now is the delaying tactics aimed at keeping assets related to real estate and their associated derivatives form being valued at their realistic price, how long can that go on? Do you have a plan that takes into consideration those items being marked to current market? If you do not, why not?

8. While the SEC has targeted short sellers as of late, what is being done about CNBC anchors reporting on phone calls they are having on air in the midst of this market turmoil? Is one more disruptive than the other? If so, how?

9. Have you thought further ahead than 5-10 days over the last 6 months? Be honest.

10. Are you two on Dope?

There are 10 questions that need to be answered before Hank and Bennie make any more moves. Somebody has to answer for the debacle that is currently underway. That not one serious or revealing question has been asked or answered says alot about both our journalists and our leaders.

Final Thoughts
This is the big time. There are things at work here that are huge. Yes, I can agree that the system is at stake. But you have to ask yourself, if we can delay a real day of reckoning for all the troubled debt that is out there, will it just go away? Or will it only come back later? I can understand the yearning to kick the can down the road, but that mentality got us into this mess after the Tech bust. At some point you have to face your own monsters. Hiding and pretending they are not there only gets you so far. It should be time to face ours.

Hedge Fund Bailouts
I have it on good authority, insider information actually, that the next in line for a bailout is the hedge fund below:

more animals

Have a good night.

Public Enemy Number One

Hello all once again! Hope all is well with the regulars. While the den/library is now finished up, I have moved on to the overhaul of the living room. Not as intensive, but still time consuming. It probably is better that was as the loss of Tom Brady for the Patriots was as sad an event as I have seen in some time. Also the stuff going on out there in the financial world is enough to push a man to his bullshit meter limits.

Lehman Getting Assistance it Does Not Want
There have been many sources being "quoted" today with some kind of so called information on what is to become of Lehman brothers (LEH). I saw one report that said JP Morgan took a look and said no thanks, then I saw one that said Goldman was a last resort buyer but that fell out as well. Tonight there is yet another report that Bank of America (BAC) is the next in line. All I can say, in the immortal words of Arnold on Different Strokes is, "What you talking about Willis!?"

BAC is already saddled with the Countryfried bad paper and now personal identification theft disclosure. How in the world is BAC going to take in all the issues with LEH? I have no idea, but I imagine there will be even more taxpayer cash involved. From tonight's story:

Reuters
Lehman in sale talks as survival questioned: sources
Thursday September 11, 6:22 pm ET
By Patrick M. Fitzgibbons
NEW YORK (Reuters) - Lehman Brothers Holdings Inc was forced into talks about a possible sale after the Wall Street bank's shares plunged more than 40 percent and cast doubts on its survival.
The company and U.S. regulators were in intensive discussions about a number of options, including a complete sale, but Lehman has been resisting U.S. government intervention, a source with direct knowledge of the discussions said.

So LEH is resistant? Let em fail I say. Why is the US government AGAIN in on one of these deals? Just what in the hell is going on here? Not every single bank or brokerage can be a "systemic risk" can they? They must be a systemic risk to fat cat CEO pensions and stock plans, because that is the only group benefiting from this stuff. There is better analysis out there than I can give here quickly, so use the blogroll and comments section to discuss. I am about at wits end with this endless intervention.

Public Enemy Number One
Darth Sidious: "Every single jedi, including your friend Obi Wan Kenobi, is now an enemy of the Republic."
Darth Vader: " I understand my Master."

As if I needed another boiling point tonight, check out the boldness of this call to screw taxpayers as hard a possible without the benefit of dinner first:

AP
Democrats call for foreclosure freeze
Thursday September 11, 5:39 pm ET
By Julie Hirschfeld Davis, Associated Press Writer
Democrats call on Fannie Mae and Freddie Mac, under government control, to halt foreclosures
WASHINGTON (AP) -- Four Democratic senators urged the mortgage companies Fannie Mae and Freddie Mac on Thursday to temporarily freeze foreclosures on loans they hold.
The troubled companies, seized by the government Sunday, should help struggling borrowers swap their mortgages for more affordable loans and stay in their homes, the lawmakers wrote the new chief executives and federal regulator now running Fannie Mae and Freddie Mac.
It was the latest sign of mounting congressional pressure on James Lockhart, the director of the Federal Housing Finance Agency, to ensure that the companies use their clout in the mortgage market to help homeowners caught in the housing crisis.
The senators -- Sherrod Brown of Ohio, Bob Casey of Pennsylvania, Bob Menendez of New Jersey and Charles Schumer of New York -- wrote that the companies should "take whatever actions are necessary" so more families "do not have to suffer the economic and personal disaster of foreclosure."

I would also add Barney Frank to this list as he is a hopeless fool on the whole thing. Now before anyone gets all "see what the democrats are doing" on me know this: this plan will (A)get put forward, and (B) get passed overwhelmingly by both democrats and republicans. So please save the partisan stuff, both sides are whores in an election year.

So now that FNM/FRE are backed by you and me, why the heck not just stop all foreclosures for 90 days? Why not 120? Why not forever? Taxes, carrying costs,etc will be covered by the taxpayer so why not give a bunch of voters a rent free 6-12 months? Sounds just wonder-fing-full to me.

There is nothing to do here. No letters to write, no calls to make, no protests to form. The only thing to do is to go to the polls this November and vote AGAINST every single incumbent in the house and senate and local government unless you are sure they will oppose any more intervention and any more costs being passed to the taxpayer. That's it, that's all. The screwballs on this list are now enemies of the good and right and I will contribute cash money to their opponents whenever they are up for election.

There is something very wrong going on right now and there is significant long term damage being done to the US citizen. Too focused on Sarah Palin's eyeglass style, too enamored with the new 90210 show, too distracted by the high cost of living, the average person is blindly being robbed with nobody to speak for them. We are supposed to have a representative government, but they only represent the banks and the foreign debt holders. Sad times indeed. If you have children I feel bad for you and for them going forward.

Have a good night.

Friday Night Fights

Thanks for the kind words on the renovation project. Working for a living is rough stuff! Next up is the living room, but that only need paint, new heater covers, and a good cleaning. The never ending story.

Blog will be light on material tonight as I am as sick and mad over the current mess out there and I want to stay in a good mood. It is NFL opening weekend and I want to be positive.

Fannie and Freddie Bailout Plan at Hand
News on the wires this evening that a final plan to backstop FNM/FRE is about ready for action. Laddy freaking Da. More government jokers putting my money on the line to help banks and foreign debt holders. thanks a bunch guys. Not much detail as yet, but I am sure it is going to cause me to yell and/or throw stuff. Yahoo article here:
http://biz.yahoo.com/cnbc/080905/26564844.html

So after all the jawboning about how any backstop would not be needed, it is needed after all. Why the sudden rush now? I believe I have an answer.....

Bill Gross and a Steel Cage Match
The manager of the largest bond fund, Bill Gross of PIMCO, has come out and basically said the US government has to start putting floors underneath all kinds of assets to stave off panic and deflation. OK shit for brains, why not move to Pakistan where they are trying that very thing? Don't let the door hit you on the way out Bill. Let me get the timing of this straight; Mr. Gross pleas like a little baby for federal mass capital infusions, especially to cover the ENORMOUS amount of FNM paper that PIMCO holds to protect against losses and presto! A plan is about in place. Well color me unsurprised.

Get this Bill, I don't care what you want. I don't care if the only thing that will save me from a life of hunting and gathering to eat is a massive government sponsored backstop of all things financial. I would rather have the system collapse than keep up this charade any longer. You want to take my money and give golden parachutes to banking executives? You want to take my money and support home prices in ghost towns in Metro Phoenix? You want to take my money and keep your carp FNM paper good? I tell you what sir, you can have it. Just step right up and into a steel cage. They close the door and we have at it. Me to keep what's mine and you to take it from me. The person that can exit the cage gets his way? Are you game?

There has to come a time when we the people say No More. Enough is enough. The great credit experiment is over and it was a failure. Start looking for ways to rebuild a busted system instead of getting even more dumb and pouring whatever resources the US still might have on a lost cause. Enough said.

Friday Night Entertainment
Now that I have that off my chest, lets move along. I am sitting right now surrounded by all my books. Reading is FUNdamental ya know? As a new feature I will be posting lines from some of my favorite books. You may be able to source it by GOOGLE, maybe not. This might inspire some interest in some of my favorite books. Lets try it out with two selections form two of my favorites.

Novel Line One
"Hapscomb's Texaco sat on Number 93 just north of Arnette, a pissant four-street burg about 110 miles from Houston. Tonight the regulars were there, sitting by the cash register, drinking beer, talking idly, watching the bugs fly into the big lighted sign."

Novel Line Two
"They must have a print. Why fingerprint if they didn't have something to match it to? They were checking that van for prints. No time to see if they were checking cars too.
Van. Carrying the wheelchair with Lounds in it-that tipped them. Or maybe somebody in Chicago saw the van. There were a lot of vans at Gateway, private vans, delivery vans.
No, Graham just knew he had a van. Graham knew because he knew. Graham knew. Graham knew. The son of a bitch was a monster."

Film Clip
One of Ray Bradbury's greatest works was "Something Wicked This Way Comes". A film adaptation was made that was pretty good. Check out this amazing sequence as Mr. Dark steals life from Charles Halloway, very scary scene:


Rock Blogging
One of my favorite bands is Creedence Clearwater Revival, but I love so many songs it can be hard to pick out just one. Take a listen to the classic "Fortunate Son":


Found a great old clip of a live Kenny Rogers performance of "Ruby". Classic tune:


Black Sabbath always gets the rep that they only had heavy stuff, but they often used blues and alternative instruments for many songs (The Wizard, NIB, etc). One immortal song is "Planet Caravan" which is just amazing:


Final song for the evening. I heard this one on the way home and it got me all amped up. Billy Idol with "Rebel Yell":


Have a good night.

Conflicting Headlines, Conflicting Data, Overall Confliction

Once again I say hello to all the loyal readers and any that just swing by by chance! It has been a while once again. I FINALLY finished the new Den/Library room and I must say I am a bit impressed. I have not done real work for some time and I have not done construction/carpentry in a LONG time but the results were better than hoped for. I have pictures at the end of the post.

Summer is fading away up here. The mornings are dark and the sun is setting earlier. The temps are getting cool at night. It is enough to make me cry, as you all know how much I dearly LOVE the cold weather! The only good thing is that NFL football season starts tomorrow night and I am extremely excited for some games.

Palin Vice President Pick By McCain
As usual I try to keep political crap out of this blog, but I have a few observations on the current campaigns. John McCain's pick of Sarah Palin seemed a bit strange to me, and as new events unfolded seemed very strange indeed. Obviously facing the rough economic times to come a solid financial pick was preferred by me (hello, Mitt Romney PLEASE!) but whatever. Please note how when a Republican woman is running for Vice president with a large family and some daughter issues the news media asks whether she should be running at all. Compare and contrast this with a Democrat candidate where the only stories would be of the amazing perseverance of the woman running and how tough she must be. Again, no horse in this race but biased media reporting should always be noted as it extends to all facets of news.

Lehman Brothers - Just Go Away Already!
The drama involved in the Lehman Brothers (LEH) saga is almost too much. There are crazy reports every day. The latest news has a Korean banking consortium led by Korea Development Bank (KDP) buying up to a 25% stake in the firm. Some stories have a Korean Military Pension Fund also getting onboard. While the CNBC types get to cream their pants at the idea that LEH is not a ZERO, there are some real issues that need to be thought about before flailing away at a deal like this.

For one thing the selling of a major stake of a large investment bank to a foreign company has to be more clearly annotated. If (when) LEH fails, will the KDP get made whole no matter what? I certainly can imagine this kind of rider on any deal. If so, does the FED and Treasury backstop such a deal with tax money? We don't know. In the scheme of things any bailout of any firm in the US ( be it FNM, FRE, BSC, etc) is really saving the foreign debt holders ass anyway, I guess this point is not that big a deal. Just seems like a little caution should be exercised before selling off huge chunks of US firms to foreign countries. My 2 cents.

The second problem with this is that how in the world does anyone really think they can make out on this deal. LEH is stuffed full of some of the worst toxic mortgage crap there is. Alt-A is just getting going baby, and if KDP thinks they are getting a deal they are, just a raw one. Never mind the commercial paper mess on the way for 2009 and what havoc that will play on firms like LEH. I am not one to stop a fool from losing his money, but you know we the people are going to get fleeced to pay Korea back when this goes bad. Again, perhaps a little public debate on this issue by the presidential candidates would be more useful that the usual "I think creationism should be taught in schools" debate that gets 20 minutes every time.

Gold and Silver Armageddon
Wow, gold and silver have been getting beaten like a red headed step child! There are many smarter watchers of the metals than me with good analysis on this, but again it seems too much leverage was the culprit. Leverage is bad no matter the asset class being chased. Sadly the fundamentals of gold are great but is seems the "evil speculators" have cause great technical damage. Where is the gold price bailout I wonder? I still have an inkling to buy miners and or gold ETF's is the $750 area is breached, but then again I am a total chicken so we shall see!

Conflicting Headlines, Conflicting Data, Overall Confliction
Check out these headlines, all on Yahoo Finance today:

Domestic auto makers post steep August U.S. sales drops
Oil prices down slightly as stronger dollar, falling fuel demand outweigh Gulf oil shutdown
Homebuilder Hovnanian Enterprises reports wider 3Q loss on declining home sales, land values
GMAC Financial cutting 5,000 jobs, ceasing wholesale mortgage originations

Compare the above with the fantasy 3% plus GDP reading last week and the following headline also from today:

Factory orders see wide gains led by aircraft

So which is it? We are in the midst of the worst housing bust ever which has facilitated all kinds of FED lending and bailouts, or everything is running smooth at3% growth? The auto makers are seeing sales fall by staggering 20-50% but aircraft sales are making up the difference in this high fuel cost environment? Brokers are being indicted left and right for ARS sales that were lies, but foreign banks want to step up and buy huge stakes in these same firms? None of this stuff gels together and thus i call bullshit.

We can debate the GDP, or any government data point, based on how it is calculated by funny math and the like. Instead just try to focus on the clear baloney being bandied about by news sources, talking heads and our officials. Everything is great except for this huge debt unraveling and once in a lifetime credit crunch but there will be no effect on the overall economy? Ok.

Something has to give. This kind of debt collapse cannot exist in a vacuum. While figures don't lie, liars can figure and the time is coming when the clear reality of lost jobs, lost home values, lost companies to overseas countries and lost standard of living will not be able to be glossed over by funny stats. Strap in for that ride.

Den/Library Remodel
I have always wanted a den type room, basically a library to house my substantial book collection (over 250 strong) and to serve as a NO TELEVISION exclusion zone for reading and writing my fantastic blog, Economic Disconnect. After about 4 full weekends and some afternoons of hard work, I finally have such a room.

The room sits opposite the main living room with a nice gas fireplace centrally located. The issue was this atrocious wood paneling that adorned the walls. The wood paneling sucked up all the light and made the room very dark. To take off the paneling i had to gingerly remove it without ripping to much of the drywall off due to the adhesive that was used. After that I had to repair and make smooth the damaged walls, then prime the plain drywall, then paint. I also had to make all new wood trim for the room as I destroyed the old stuff during demolition. I just love cutting miter joints by hand! Anyways, here are some pictures of the before and after.

This picture is of a corner with the window visible. Note the repaired walls and missing wood trim:


Now witness the completed section with new stained and sealed wood trim around the window:


Here is the wall where the computer was to be placed all patched up:


And here is the finished wall with the computer in place. This is the spot where the magical writing abilities of the author are put to use:


Now I am no pro, but I am pleased with the results. Only about 6 other rooms that need some kind of work left to go! Who says there is a home improvement spending collapse?

Have a good night.