A gold bug has many questions, with the greatest being whether to continue the buildup in gold coins at current prices. The spot under the bed is getting stuffed to the gills, and the wife refuses to let the ground under the tomato garden be used as a makeshift repository, but that won't stop purchases.
Then too, of late, the newsletters have been urging the wise to keep their stash of gold in a country away from your own Federal authorities (ironically resulting in some Swedish Gold Bug saying, "I will store my gold in America, some Cayman Gold Bug saying, "I will store my gold in Sweden, and some American Gold Bug saying, "I will store my gold in Cayman").
Along with this question of whether to buy more while the getting is cheap (Gold Bug Economic World Cheap, that is), and where to store it, is the question of what further action Bernanke will take in light of the market drifting back toward 12000.
What is the Fed up to this weekend?
It all reminds me of that Tom Waits song, "What's He Building In There", with Wait's crackpot voiced speculations about what's going on in a neighbor's house growing ever more creepy sounding.
Saturday, April 12, 2008
Wednesday, April 9, 2008
The End of the World Came in 1992
We stumbled upon this wonderful interview by way of Maoxian, who links to it. Normally we are not huge on linking at all, but sometimes things are said better elsewhere. We don't really know the personalities or magazine behind this interview with a hedge fund manager, but the questions asked and answered explain current financial difficulties better than we could ever do on our own.
We try our best here to comment on the financial and political happenings in a manner that is understandable and enjoyable to the regular reader, without being experts. Where we are sufficiently lacking understanding, we try to link to those who can add clarity.
When a person understands why things happen, they are less likely to leap to the more preposterous life choices that lead to stockpiling gold coins, cans of ravioli and Pabst in the basement, or ignoring the 401K because the rapture is coming at any moment.
And there are truly people like that.
I've a friend (really, it's not me, he's Canadian, as will be all future "friend" anecdotal points) whose father worked for financial institutions most of his adult life: from Equitable to Morgan Guaranty to Moodys to Merrill Lynch (from the 1970's through 1992). He was not a stupid man. He worked as a buy side analyst making a comfortable living, supporting wife and kids. He came home each day, finished off his Wall Street Journal and New York Times over a dinner of some fried food, often chicken (that chicken would later rise from the plate and kill him) and watched the national news, then flipped over to more coverage on PBS. He would go to bed around 2 a.m. after prayer for an hour or so.
He was a religious man. He was atuned to politics, but did not vote under the theory that everything was in God's hands. His favorite portions of the Bible were the sections dealing in prophecy and the future. Needless to say he was pretty sure that before his lifetime was over the "end times" would be upon us, and paying too much attention to structuring your 401K or investments was a waste. It would be of no value when the system fell apart and Christians were running for their lives under the new regime created by the Anti-Christ and his sidekick (some sort of talking beast-man).
(His vision of the future included invasions of U.S. soil by Germans and Chinese by way of Mexico, a United Europe run by the Anti-Christ and gearing up for war against Israel, numerous plagues upon man, huge locusts with genetically engineered man heads, the persecution of Christians, and increased sinful behavior, with women running around nearly naked. In fact when women started appearing in the 1980's with leggings and long sweatshirts, he grew alarmed, as he had dreamed that very thing many years earlier. I gather Jennifer Beals only confirmed soon coming doom).
Back in the late seventies he encouraged everyone to buy gold, but bought none himself, and while his wife often noted this as a major command decision flaw, his odd inability to act on his instincts perhaps kept him from buying into a bubble. He was no gold bug by any means, just somewhat skeptical of the system, and how much to commit to earthly things. He was rational enough not to buy gold, but religious enough to give his friends the heads up so that at least they would be covered when all hell broke loose. Laying off risk perhaps on others?
Of course the end of the world came in 1992... for him. It was that chicken on the plate. After years of battery and frying, the chicken had enough and struck back at his heart and he died. Because he was not proactive with his investments, and did not want to appear before God to be too focused on earthly goods, a lot (of potential money) was left on the table.
Given that story about my friend's father, we hope to move people away from that. From what? From drawing life-affecting wrong conclusions based on beliefs that cannot be supported by reality. While this may seem an unnecessary task, in actuality, the more you drill down into the average American's mind, the more you find pockets of fantastical thinking that lead to cynicism and lack of movement.
We see that in our own lives and daily struggle with it. My friend's father's beliefs were not necessarily wrong, but rather, his emphasis was wrong. He did not give unto Caesar what was Caesar's, or do the tasks (like voting) that a good citizen should do. There is a way to vote while at the same time knowing that God controls the ultimate outcome. There is a way to plan for the future even while believing a future may not come. '
Greater still, he ignored from his own book the point that his emphasis should be on love, and that God would take care of the future, and that if you are doing all you can today for God and man, then you will be prepared for whatever the future might bring. You do what you know to do given the brain and skills God gave you, but you don't let the earth or the tasks own you. We do (right), God validates. (Or for the atheist, we do right, and right itself will yield seen or unseen fruit).
In most cases the future is unknowable and the time you think you have can be much shorter (or longer). While looking for death (or Satan, or happiness, or love) to approach from the left and at some precise time, the same can approach you from the right at the moment you least expect it. Be ready for any outcome, and stay armed with wisdom and true knowledge.
We try our best here to comment on the financial and political happenings in a manner that is understandable and enjoyable to the regular reader, without being experts. Where we are sufficiently lacking understanding, we try to link to those who can add clarity.
When a person understands why things happen, they are less likely to leap to the more preposterous life choices that lead to stockpiling gold coins, cans of ravioli and Pabst in the basement, or ignoring the 401K because the rapture is coming at any moment.
And there are truly people like that.
I've a friend (really, it's not me, he's Canadian, as will be all future "friend" anecdotal points) whose father worked for financial institutions most of his adult life: from Equitable to Morgan Guaranty to Moodys to Merrill Lynch (from the 1970's through 1992). He was not a stupid man. He worked as a buy side analyst making a comfortable living, supporting wife and kids. He came home each day, finished off his Wall Street Journal and New York Times over a dinner of some fried food, often chicken (that chicken would later rise from the plate and kill him) and watched the national news, then flipped over to more coverage on PBS. He would go to bed around 2 a.m. after prayer for an hour or so.
He was a religious man. He was atuned to politics, but did not vote under the theory that everything was in God's hands. His favorite portions of the Bible were the sections dealing in prophecy and the future. Needless to say he was pretty sure that before his lifetime was over the "end times" would be upon us, and paying too much attention to structuring your 401K or investments was a waste. It would be of no value when the system fell apart and Christians were running for their lives under the new regime created by the Anti-Christ and his sidekick (some sort of talking beast-man).
(His vision of the future included invasions of U.S. soil by Germans and Chinese by way of Mexico, a United Europe run by the Anti-Christ and gearing up for war against Israel, numerous plagues upon man, huge locusts with genetically engineered man heads, the persecution of Christians, and increased sinful behavior, with women running around nearly naked. In fact when women started appearing in the 1980's with leggings and long sweatshirts, he grew alarmed, as he had dreamed that very thing many years earlier. I gather Jennifer Beals only confirmed soon coming doom).
Back in the late seventies he encouraged everyone to buy gold, but bought none himself, and while his wife often noted this as a major command decision flaw, his odd inability to act on his instincts perhaps kept him from buying into a bubble. He was no gold bug by any means, just somewhat skeptical of the system, and how much to commit to earthly things. He was rational enough not to buy gold, but religious enough to give his friends the heads up so that at least they would be covered when all hell broke loose. Laying off risk perhaps on others?
Of course the end of the world came in 1992... for him. It was that chicken on the plate. After years of battery and frying, the chicken had enough and struck back at his heart and he died. Because he was not proactive with his investments, and did not want to appear before God to be too focused on earthly goods, a lot (of potential money) was left on the table.
Given that story about my friend's father, we hope to move people away from that. From what? From drawing life-affecting wrong conclusions based on beliefs that cannot be supported by reality. While this may seem an unnecessary task, in actuality, the more you drill down into the average American's mind, the more you find pockets of fantastical thinking that lead to cynicism and lack of movement.
We see that in our own lives and daily struggle with it. My friend's father's beliefs were not necessarily wrong, but rather, his emphasis was wrong. He did not give unto Caesar what was Caesar's, or do the tasks (like voting) that a good citizen should do. There is a way to vote while at the same time knowing that God controls the ultimate outcome. There is a way to plan for the future even while believing a future may not come. '
Greater still, he ignored from his own book the point that his emphasis should be on love, and that God would take care of the future, and that if you are doing all you can today for God and man, then you will be prepared for whatever the future might bring. You do what you know to do given the brain and skills God gave you, but you don't let the earth or the tasks own you. We do (right), God validates. (Or for the atheist, we do right, and right itself will yield seen or unseen fruit).
In most cases the future is unknowable and the time you think you have can be much shorter (or longer). While looking for death (or Satan, or happiness, or love) to approach from the left and at some precise time, the same can approach you from the right at the moment you least expect it. Be ready for any outcome, and stay armed with wisdom and true knowledge.
Sunday, April 6, 2008
Ballmer Up Against Yahoo's Sugar Walls
Steve Ballmer is not about to be pushed around, delayed, waylayed, or forced to overpay for a Yahoo who, with each passing day of income slowing recession, stands firm in their rejection of Ballmer's punishing kiss.
Taking the osculation attempts up a notch, Microsoft announced on Saturday that Yahoo had a short three weeks to give in or steps would be taken to get to her via spreading rumors among her hot friends:
He went on to suggest--indirectly--that the monetary value of the hookup might be more McDonald's than Applebees if Yahoo kept being such a b-word about it all:
He sent this via email, from the comfort of his home computer and crossed his fingers. Steve hates the relationship drama when everyone already knows Yahoo can't do better than him.
Taking the osculation attempts up a notch, Microsoft announced on Saturday that Yahoo had a short three weeks to give in or steps would be taken to get to her via spreading rumors among her hot friends:
"If we have not concluded an agreement within the next three weeks, we will be compelled to take our case directly to your shareholders, including the initiation of a proxy contest to elect an alternative slate of directors for the Yahoo board,”
He went on to suggest--indirectly--that the monetary value of the hookup might be more McDonald's than Applebees if Yahoo kept being such a b-word about it all:
“If we are forced to take an offer directly to your shareholders, that action will have an undesirable impact on the value of your company from our perspective, which will be reflected in the terms of our proposal.”
He sent this via email, from the comfort of his home computer and crossed his fingers. Steve hates the relationship drama when everyone already knows Yahoo can't do better than him.
Weekend in China
The monetary chief in Hong Kong, Joseph Yam, argued against any changes in the HK currency's peg to the U.S. dollar as a means of calming inflation.
(Xinhua/China View)
*
Despite rice shortages in many countries, the supply in China is not at risk, according to various government officials. This is due to the reliance on domestic supply instead of imports for the bulk of their needs. The government has curbed exports and increased subsidies to maintain price stability.
(China Daily)
*
Roland Soong over at EastSouthWestNorth gives us the "Red Army" on the march. Americans be afraid. Very afraid. Capitalism run amok?
*
New Zealand and China, friends with new free trade benefits:
(Xinhua/China View)
*
The United Arab Emirates seeking new business opportunities with the East, roadtrips to China:
The president of China, Hu Jintao, and the premier, Wen Jiabao, welcomed members of the visiting group.
Said Sultan Ahmed Bin Sulayem, Chairman of Dubai World, one of the Dubai government's investment arms:
(CNN)
And in a related story from the Kippreport, the United Kingdom roadtrips to the United Arab Emirates right after the U.A.E. trip to China. The geographic direction of these road trips is most notable.
"With the U.S. economic slowdown and its credit crisis unresolved, Hong Kong and the Chinese mainland's economy will be affected and the public should be psychologically prepared, he added."
(Xinhua/China View)
*
Despite rice shortages in many countries, the supply in China is not at risk, according to various government officials. This is due to the reliance on domestic supply instead of imports for the bulk of their needs. The government has curbed exports and increased subsidies to maintain price stability.
(China Daily)
*
Roland Soong over at EastSouthWestNorth gives us the "Red Army" on the march. Americans be afraid. Very afraid. Capitalism run amok?
*
New Zealand and China, friends with new free trade benefits:
"The China-New Zealand free trade agreement, to be singed in Beijing on Monday, will boost bilateral complementary and mutually beneficial trade ties, and enrich the content of "China-New Zealand comprehensive cooperative relations for mutual benefits and win-win situation in the 21st century."
(Xinhua/China View)
*
The United Arab Emirates seeking new business opportunities with the East, roadtrips to China:
"The Chinese government invited Sheikh Mohammed Bin Rashid Al Maktoum on an official visit to the country. The ruler responded by arriving with an entourage of 50 business leaders and throngs of government support -- an obvious symbol of the importance the U.A.E. has put on growing relations with China. "
The president of China, Hu Jintao, and the premier, Wen Jiabao, welcomed members of the visiting group.
Said Sultan Ahmed Bin Sulayem, Chairman of Dubai World, one of the Dubai government's investment arms:
"We are concentrating in China, concentrating in Africa, because these are places where they're hungry for capital and there is growth potential," he said, "The officials in the East are encouraging while the officials in the West are creating noises unnecessarily. So, naturally, people will look at more investment in the East..."
(CNN)
And in a related story from the Kippreport, the United Kingdom roadtrips to the United Arab Emirates right after the U.A.E. trip to China. The geographic direction of these road trips is most notable.
As Prince Andrew comes to town, Sheikh Mohammed, Ruler of Dubai, comes to the end of this four-day trade trip to China. The two trips highlight the importance of jet-setting, high-level delegations to beefing up trade relations...
Thursday, April 3, 2008
Inside, Inside the House of Money
From Inside the House of Money:
From the book of interviews by Steven Drobny, published in 2006, and no doubt researched prior to that date.
What is your long-range view of the world?
"At some point, we will have had The Big One. It's out there. I don't know whether it's a financial asset depression or a real depression. The thing that I'm sure about is that financial assets can't keep doing what they're doing, or that so many people can be rewarded for being imprudent.
I have a friend who, unbelievably, actually puts away money every month to buy a house. She's getting squeezed because the $500 she puts away every month to save for her vacation house is getting 1 percent. All of our other friends who have gone out and bought houses all leveraged up when they really couldn't afford them are being rewarded. So the house that she's saving up for now costs 20 percent more, the person who borrowed the max has made multiples of 20 percent, depending on their elverage, but yet she's made 1 percent.
Over the long term, that's not sustainable.
Longer term, we'll have a problem with crude. I wouldn't be surprised if in three to five years it hits $100 a barrel. The pull from Asia is just gigantic. There are eight million nongovernmental cars in China versus 120 million in the United States and China has five times the population. I'm not one of these "China is the be-all and end-all" types--and again, it's like the Internet, I'm not sure if there's going to be any return--but it's definately going to change the world."
Scott Bessent, Bessent Capital
From the book of interviews by Steven Drobny, published in 2006, and no doubt researched prior to that date.
Oba Ma X-ray Vision and Organizational Force
Signs that Master Oba Ma has x-ray vision and is looking through Darth Hillary to plan for the larger, later battle with Emperor McCain:
Of course we can expect Hillary to quickly scramble together her own "go team", though her comfy ladies of a certain age might have trouble taking it to the streets with the same energy.
(Hillary Note to Self: Have Maggie schedule fundraiser with Michael McDonald to help us take it to the streets)
...The experience changed the course of my life -- and I want to share that kind of opportunity with you.
That's why we're introducing a program that's going to train a new generation of leaders -- not only to help us win this election, but to help strengthen our democracy in communities across the country.
If you apply and are selected, you'll be trained in the basic organizing principles that this campaign and our movement for change are built on. You will be assigned to a community where you'll organize supporters. Assignments will begin in June, and you'll be required to work a minimum of six weeks over the summer.
This program is designed to give you real world organizing experience that will have a concrete impact on this election.
Apply to be an Obama Organizing Fellow and put progressive values to work in the real world:
http://my.barackobama.com/fellows
(From Obama campaign mailing)
Of course we can expect Hillary to quickly scramble together her own "go team", though her comfy ladies of a certain age might have trouble taking it to the streets with the same energy.
(Hillary Note to Self: Have Maggie schedule fundraiser with Michael McDonald to help us take it to the streets)
Wednesday, April 2, 2008
Congress Feeds, Taxpayers Eat Each Other
Just as you were about to pick up the chainsaw to carve a support beam in half, you get the news that the government is stepping in (again) and you breath a sigh of relief. The kids can stop peeing on the wall now. The wife can mop up the acid spread across the attic floor. Finally the government you have been begging for has stepped up to be of maximum assistance.
Yes the Fed tried mightily, with some progress, to keep the whole system from going under, but what is the collapse of American life as we know it, when compared to the loss of your house. Better you have a house and no economic system, than an economic system with no house, or so goes the theory for those caught up in housing treachery. The Fed was too concerned with the big picture, it's Fed friends (ECB and BOE) too concerned with local inflation, to be of much help to the likes of real people.
The political leadership in Washington has taken note and come to the rescue in the form of a bipartisian aid package. Like most new projects in the works, this will probably go a long way toward doing absolutely nothing for the issue at hand, or nothing in the next few moments between the homeowner having to trash the home, and the sheriff coming to dump the household, little Muffie too, out onto the front lawn.
In short, and still under discussion:
I am not sure this is what the average investor thinks they want (or whether it will be the right or the left hand of the taxpayer that is handing cash to the other hand). Ideally what the average person would request is a plan similar to the following, and up for discussion nowhere:
1) Have the government call the bank/mortgage company to hold off on any action for about three months while I get my junk together.
2) Force my bank/mortgage company to refinance me at a lower rate on my fixed rate loan, or a lower rate than my teaser rate, since things have gotten way out of control, what with the payments to Visa for the big screen tv. ("N.C. Final Two babee!!)
3) Roll my two months of $50 payments (with $3000 past due) into the refinance or write it off (because of Bush, Exxon profits, Iraq, Bear who?, Yes You Can, gas prices).
4) Adjust the mortgage down so that it reflects the 40% drop in accessed value, less another 60% for any contingency loss of value. Force the bank to comply, or have the government guarantee the difference, don't really want to get into the specifics or read the documents.
Given the gap between what is coming eventually, and what people want yesterday, one imagines there will be a certain sort of disappointment.
Between all the measures-the finance facilities, debt swaps, lowered rates, Fed window openings, free checks in the mail, contract rewriting, counseling-one imagines that eventually we will see complete doom (as the gold bugs are talking lately) turn into general recession or annoyingingly higher unemployment.
But these past few months should be a joy. We are seeing all the levers of government at work to save us, and were we in certain less developed parts of the world, this would have ended quite differently, resulting in us literally eating each other or installing a true dictator.
Yes the Fed tried mightily, with some progress, to keep the whole system from going under, but what is the collapse of American life as we know it, when compared to the loss of your house. Better you have a house and no economic system, than an economic system with no house, or so goes the theory for those caught up in housing treachery. The Fed was too concerned with the big picture, it's Fed friends (ECB and BOE) too concerned with local inflation, to be of much help to the likes of real people.
The political leadership in Washington has taken note and come to the rescue in the form of a bipartisian aid package. Like most new projects in the works, this will probably go a long way toward doing absolutely nothing for the issue at hand, or nothing in the next few moments between the homeowner having to trash the home, and the sheriff coming to dump the household, little Muffie too, out onto the front lawn.
In short, and still under discussion:
- More money for foreclosure counselors, like $100 million to expand counseling for homeowners at risk of defaulting on their loans
- Tax-exempt bonds to let local housing agencies refinance subprime mortgages.
- $4 billion in grants for local governments to buy foreclosed properties.
- More transparency in real-estate closings to help borrowers better understand the terms.
(N.Y. Times)
I am not sure this is what the average investor thinks they want (or whether it will be the right or the left hand of the taxpayer that is handing cash to the other hand). Ideally what the average person would request is a plan similar to the following, and up for discussion nowhere:
1) Have the government call the bank/mortgage company to hold off on any action for about three months while I get my junk together.
2) Force my bank/mortgage company to refinance me at a lower rate on my fixed rate loan, or a lower rate than my teaser rate, since things have gotten way out of control, what with the payments to Visa for the big screen tv. ("N.C. Final Two babee!!)
3) Roll my two months of $50 payments (with $3000 past due) into the refinance or write it off (because of Bush, Exxon profits, Iraq, Bear who?, Yes You Can, gas prices).
4) Adjust the mortgage down so that it reflects the 40% drop in accessed value, less another 60% for any contingency loss of value. Force the bank to comply, or have the government guarantee the difference, don't really want to get into the specifics or read the documents.
Given the gap between what is coming eventually, and what people want yesterday, one imagines there will be a certain sort of disappointment.
Between all the measures-the finance facilities, debt swaps, lowered rates, Fed window openings, free checks in the mail, contract rewriting, counseling-one imagines that eventually we will see complete doom (as the gold bugs are talking lately) turn into general recession or annoyingingly higher unemployment.
But these past few months should be a joy. We are seeing all the levers of government at work to save us, and were we in certain less developed parts of the world, this would have ended quite differently, resulting in us literally eating each other or installing a true dictator.
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