I wonder if all those skeptical liberals will give back the contributions Madoff made to them?

I'm not surprised that you've missed my point.

Savings in current investments are evaporating, because the companies are falling apart. However, if you opened the box, took out the money, and stuffed it in gold... your 1000 is still 1000 (or if you got lucky 1300 in one month return...).

I'm not surprised that you had little point to begin with. It was just the usual left-wing b.s., which I felt like deserved a little reality check.

not everyone and I'd venture to guess a very very small sector of the entire populous has access to gold, it's investments, or any investments for that matter so that's bunk.

Isn't the idea of all these various investment instruments based on offering choice to their clients. If your future is tied to assets that are volatile (like stocks) and you have no mechanism for liquidating them before they lose 90% of their value, then I'm sorry.

Your talking about a box full of hundreds turning into ten dollar bills, first you put a story on how its deflation (its not) and then you say the answer is 're-inflation' (which will blow the economy up entirely in my opinion). The real situation is if you have a box full of Bear Sterns shares that was worth $1000, and you left them there without selling them during the entire downward spiral, well now it is worth $100. An entirely different problem than deflation or inflation... the banks are begging for inflation (bailouts) to try and fix their stock's spot price, and that is just bad economics.

Gold is just an example of a real asset that is an alternative for your investing dollars than a company stock (and not always a good one, its volatile too, but slightly resistant to inflation). No one says you have to ride the corporate down-bubble all the way to financial ruin, even if you have liquidity barriers at some point the fee for early withdrawl can be outweighed by loss of your principle value. It is not impossible to have savings, heck, given the lobbying for capital gains CUTS its not impossible to have GAINS in this environment. Price fixing stocks and corporate balance sheets to indirectly prop investors is stupid, and easily gamed by the same CEOs/CFOs who created the situation.

And big corporate corruption is not a red or blue issue, screw the politics, transparency and rooting out fraud are important to all of us. It is obvious wall street has been playing games, mocking anyone who exposes it has been a big past time of both big Democrats and Republicans.

i have a feeling that it doesnt matter what's said. What I said is....

I want a balance inflation to counter the deflation (hopefully short term) that is occurring so that we can avoid the cataclysm that I foresee. You disagree with the numbers on the picture....so the argument is silly to have. I believe the numbers on the painting, when painted, complete a dire picture of terrible consequences. You dont.

We are suffering through what I hope is a short period of deflation. On the other end hopefully we'll have a short term of inflation and eventually the see-saw will come to rest.

A $1000 bill isn't a $1000 bill because it was built on a house of cards and when the box was open and re-evaluated to it's true value, on a Tuesday, was that the 1,000 was actually different denominations. Not caused by inflation or deflation but bad (inaccurate) balance sheets (and a whole lot more). The results are the same though that most people, with very good intentions, that trusted a littany of people that they were supposed to, got fucked.

You argue about the instruments being offered as choice but the choices were a deck of lying cards, what choice is that? At some point those with a license have some responsibility to their clients no matter the industry (im sure you feel it's personal responsibility so no need to comment here).

I need a flere diagram to explain all this nonsense about shoeboxes full of ever-fluctuating denominations of money.

I just heard a CNBC contributor talk about it in terms of the "Bogadollar". A dollar valuation that is simply bogus so perhaps that helps tell you what im thinking since I agree with his description.

I'm not surprised that your lack of understanding didn't stop you from getting on your high horse to give me a "reality check".


Feels like we're back in August, Jon.

;)

I disagree that we need the government to induce inflation. I think the see-saw game is what causes depressions, and price fixing of anything is always easily gamed.

If you see the buying power of your dollars increasing, then we have deflation, if you see it decreasing, we have inflation. Ignore the 'experts' that think monetary policy solves all problems, that is how you get 0% rates and it still doesn't impact the economy.

To save some of these bad companies balance sheets through inflation alone it would need to be a triple digit inflation rate. There is simply not enough inflation to handle leverage, every attempt in history to do so has led to economic collapse that makes what we are going through look like a sunny day. The only thing that handles leverage is failure of the entities, the old default risk which is supposed to be the basis of debt pricing.

I am getting pissed that companies are claiming they don't know how to price risk. The fact is they forgot the way this system works. As long as they keep throwing out that line I fear for the safety of our economy being in the hands of these madmen. That is why I want these bad eggs to be crushed, at best they are totally incompetent, at worst they are actively destroying our society.

I wish it could be solved by printing a whole bunch of money. It won't though, it will just make good companies have to share the fate of all the bad ones.

So the rate cut looks like it could have an impact on the housing market with 30-year fixed rates at their lowest rates in decades.

I'm so p'd off a GM today...they've asked us to buyout a supplier in chapter 11 and have had us running through hoops to buy this company that was about to go under. We've been negotiating with them for weeks, really heavy the last 2 days. We were probably only a hour or so from an agreement, they show up at the plant and start taking all their tools.

All these people that thought their jobs were going to be ok because we were buying the plant start balling because they know its over.

Then come to find out, they are moving the tools to another supplier that is already in chapter 11 and they made the decision earlier this week. We've had people working 18-20 hour days on this.

I guess the thinking internally is its only a matter of time before the new supplier goes under so they'll come back begging us in a few months. I doubt I'll make it through the next wave of layoffs though.

almost time to go up to the dealership and offer to buy one of their cars off of 'em for cheap.

I don't understand the pricing right now - we've only had 1 item in the store come down in price recently (1% Milk was bumped up to 3.09 a month ago and just came back down to 2.99). Everything else is staying static or being bumped up - in the case of gum/tic-tacs 0.10 each, which is about 7-9%. Everything went up when gas went up for "transport and processing costs", but nothing's going back down.Of course. Any decent financial broker will tell you they personally make twice as much themselves when the market is going down. (As for oil, of course it will go up long-term, probably not to the $180/b highs, but that market is flooded right now - half the reason OPEC slashed things so drastically is that they're running out of tankers to float and store excess oil in. It's also unbelievable to me that oil has cyclically risen every year in the summer, fallen every year in winter almost like clockwork and most people haven't realized this.) It can't go down any lower - it's to the point where individual people and firms are buying and storing oil, then locking in futures contracts and making guaranteed money. If only I had a few million in excess capital...What does this have to do with ideology? The man ran a Ponzi scheme and committed fraud. It's a rather damning indictment of the SEC and private risk/asset management companies that didn't call him on it earlier, but no "free market conservative" advocates for people to give their money to people doing things they don't understand. If anything, it bolsters my argument that these current regulations (and any new proposed ones) aren't working and only serve to give the masses a false sense of security.

85-90% of people in the finance industry aren't much/any better than the average guy from the street, and due to a number of factors (chief among them a populace that hadn't experienced a large downside event) highly risky behavior was being rewarded, but that's quite different than outright fraud.The majority of the US population has access to investments through 401(k)'s, etc, if not owning stock outright. And if you want gold*, I'd recommend an ETF over an individual stock - Gold exchange-traded fund - Wikipedia, the free encyclopedia . Nobody physically goes out and buys/sells gold bars.

*I wouldn'tThis I strongly disagree with. Gold is no more a "real asset" than US dollars or tulips - it has no intrinsic value and is merely a placeholder for skittish investors. It's also been much more volatile than the dollar historically and has a huge catastrophic downside risk. Gold could easily collapse 50-90% overnight and you lose that much in straight purchasing power. If you have your money in dollars and the dollar collapses overnight, it will still buy just as many goods (ok, slightly less, but the amount we import is actually fairly miniscule compared to the hyperbole around our trade deficit.)We've "balanced the deflation" multiple times since the late 1980's and had no companies failing. Badly run companies fail, the good ones survive and new, hopefully better ones are started up, and then it happens again a cycle later. Call it creative destruction, call it survival of the fittest, but it is an essential part of any free market system. By "balancing the deflation" you're not solving the problem - you're just going to push it farther down the road and probably exacerbate it.The see-saw will never come to rest. Risk is a part of life. I just watched Batman again and I don't want to sound like the Joker, but things never go according to plan, it's time to accept that and factor it into your daily life and future financial planning.

You're bringing up Madoff, who was clearly cooking the books because he produced small but consistent gains every year in a fairly small, controlled environment he presumably knew very well, yet you're advocating the government do that for an economy at large that is orders of magnitude more complex and diverse. Do you see the dichotomy there? Do you see why it's impossible for the government to do that if you want to have any sort of dynamism and entrepreneurship?They haven't "forgotten". They've made the calculated decision that if they play chicken, the government will come in and bail them all out by paying more than the assets are likely worth. And that clearly appears to have been the correct decision for most companies/industries. If the government had held the line early, you would have liquidity by now - it might be greatly deflated liquidity, but the risk would have been priced in and the larger banks would have been lending between each other again. The $600b+ of bailout money sitting there is allowing them to put off making the tough decisions because they all think there is a chance they'll be able to recoup all the mistakes they made.Amen (along with costing me and those in my+my siblings generation tens of thousands of dollars later on.)

Or actively prevent the system from working correctly - Madoff Madness | The Big MoneyPerfect.

I was reading the newspaper last night (I always read it after work, so I'm basically 24 hours behind on news) and saw that the stadium deal that's been in the works here for a few years is basically being fast-tracked by all levels of government because it's an infrastructure project that can get 'shovels in the ground fast'. Apparently that is the new criteria for getting your project approved now. It's not important if the project makes sense, is financially sound, or has all the details worked out. Can you get to work on it quick? Alright then, have some cash and hire some people!

I also saw that Canada's finance minister has finally decided that our economy might not be in great shape (this guy is a fucking genius!), and that we are going to run deficits for the next 2-3 years at least. From the sounds of it, they will be to the tune of 5-15 billion each year, and I'd bet my house that it will be closer to the high end than the low one. I can't seem to find any charts, but I'm guessing that in the next 5 years we will undo all of the surplus budgets that Canada posted over the last decade. What a joke.

Has OPEC become a joke at this point? They've made two big cuts in supply over the past couple of months and no one seems to flinch. At some point, they're going to have to work as a group and actually cut when they say they're going to cut. Until then, I'm not sure that they have nearly the control that they think they do over the world market.

It may get worse rather than better, mostly due to Chavez. That country is hurting in a bad way financially and relies on that oil revenue. He's preaching from a hilltop how supply needs to be cut, and then failing to do so himself.

Bishop: I think you've somewhat misunderstood my point. For years we've been told by free-marketers that the industry could be self-regulating and there were mechanisms in place to avoid this kind of large-scale fraud. Evidence would suggest, as you point out, that this is clearly not the case.

Now I'm not advocating the implementation of draconian regulations. I just think that this would be a good time to take a look at the illegal (or just downright stupid) activities that led to this mess, derive some lessons learned, and put in place some regulatory tools and mechanisms to help prevent this kind of thing in the future.

I'm going to post this at the risk of sounding really partisan, safe in the knowledge that most of you consider me pretty partisan anyway. :D


I'm not sure that's 100% true.

Since Reagan "the left" has consistently argued that deregulation has been taken too far and "the right" has told "the left" that they're a bunch of idiots who don't understand economics and the free market.


To go off on a tangent for a moment, I've always thought the critical flaw in traditional Socialism is that it fails to take into account human nature - specifically the forces of ambition and greed. Socialism tends to provide no real outlet for these traits, so in any real-world implementation, they found other outlets and eventually bring the system down.

Ironically, however, based on recent history, perhaps one could say the same thing about unfettered capitalism. Responding to the call of ambition and greed, actors within the system behaved in a manner that put the entire system into jeopardy.


Where does this leave us, then? I think we need to finally kill this myth "the right" continues to propagate that the economic system will be totally fine if left completely unfettered. While we're at it, let's kill another myth that "the left" are only interested in a return to quasi-planned economies. No serious Democratic politician believes in that anymore, and the President-Elect certainly doesn't.

I think the bottom line is that we need to take a step back, survey the carnage, and implement, for the first time in a long time, perhaps ever, better regulation for the financial industry and leave aside the mistaken assumption that in so doing, we'll somehow be killing this industry off altogether.

I think transparency is the key to everything. Mark Cuban had a post about making everyone use an XML reporting format called XBRL. Stuff like that would be a great start.

Talk about your law of unintended consequences

My Way News - NY will lose $178M from 6 Goldman bonuses alone

ALBANY, N.Y. (AP) - Gov. David Paterson said Friday that the loss of tax revenue from just six Goldman Sachs' executives will cost New York $178 million.

The executives complied with the urging of New York Attorney General Andrew Cuomo and others who said in November that major Wall Street companies benefiting from federal bailouts shouldn't pay out the usual huge bonuses to executives.

Paterson says it is the right thing to do, but the result is a further hit to the fiscal crisis of state government.

"Things could go even more south in a big hurry," Paterson told reporters.

He said Wall Street firms receiving federal bailout did the right thing by forgoing bonuses to their executives, but that has had a devastating effect on New York's fiscal crisis because Wall Street taxes accounted for 30 percent of state revenue in the last fiscal quarter.

"I think it was the right urge," he said, but "the state lost $178 million in that moment."

I think with oil prices the countries and speculators involved got greedy - now they're scared that their consumers are on the verge of making a real commitment to alternative energies ... until that fear passes (give it 6 months) I don't see oil prices being resurgent to a huge extent.

Once its known 100% which way the cookie will crumble with regards to alternative energy (esp. in the US) I think oil prices will normalise to something more sensible - most likely around $70/barrel (which appears to have been the expert 'consensus' for the price for ages).

Agree with Bishop's earlier post pretty much across the board (I made a longer post a few days ago that got ate up by a browser crash).

Oil prices are behaving oddly, when you start seeing people preparing to create oil warehouses you know its an anomaly set to burst. Right now I consider oil to be one of the big 'negative bubbles' right now, speculation causing a price that is not sustainable in the real world. I almost wish I had a bunch of giant empty tanks and capital, or a refinery.

Alternative energy to me is hardly a variable, the tech is still not there, not enough supply, and despite current pricing concerns the demand is too much. It is high oil prices that increase the push towards alt energies, if you could buy oil cheap versus extensive R&D and equipment expenses, what would you do? Current prices are a reaction to everyone thinking the economy is going to explode... and I would be surprised if anyone is actually selling real oil at this price. At some point it doesn't even make sense to load the ship, you just leave it at your oil field in Saudi Arabia and wait for the shorts to fail.

fact: there IS going to be alternative fuel in the future. some would prefer near future, others speculate at some point in the horizon. but it's coming. oil prices were bound to decrease within the next 5 years once "the next big thing" comes out. people know what $4.50-$5 per gallon gas feels like and no one wants to go back. too late for OPEC to do anything. they basically have fast forwarded their own demise.

i don't know why everyone is up in arms, this was the whole point behind investing in alternative fuels here in the US: to stop putting money in the pockets of Sheiks and Middle Eastern countries. you live by the sword, you die by it. these Middle Eastern countries that don't produce anything other than a finite good (a finite good that will one day be obsolete, mind you). while America may have to curb our dependence on Middle Eastern oil, those countries will have to learn how to produce other goods/services to compensate for the decreased global demand.

I partially agree with this - BUT don't think this will come down to simple economics.

Politically America doesn't want to be reliant upon the middle east for Oil and that will most likely cause the administration to force alternative energy ahead through subsidies and suchlike, this will force the price for alternatives cheaper than Oil and thus encourage consumers to utilise it.

The last time I remember this happening was moving from 'leaded' petrol to 'unleaded' ... there was no real benefit to the consumer (outside of health which wasn't immediately visible) however in the UK the goverment priced unleaded petrol more cheaply and over the course of a handful of years this and consumer demand phased out leaded petrol being available (accompanied at the end by legal requirements to run unleaded in cars - by this point most people already did so there wasn't a huge outcry).

I expect the same thing to happen with alternative fuel - most likely hydrogen based (as the conversion to use hydrogen on a "normal" car is fairly minor I believe).

Agreed wholeheartedly ...

exactly Marc. but let's not make the mistake of thinking once the next official alternative fuel source hits the mainstream that oil/gas all of a sudden ceases to exist or is going to magically disappear overnight. i'm just seeing a time where oil export won't be enough to subsidize the lifestyle's of the Middle Eastern sheiks. put it this way - broadband didn't make dialup modems obsolete overnight, but the adaptation of a far superior and gradually more affordable broadband just sped up the demise of the dialup modem. but even today with everyone seemingly having broadband there are always going to be those small niche's that continue to rely on dialup. its just if you're a company that makes dialup modems you may want to consider branching out into something else. same goes for the Middle East.

but don't think any of this happens if there isn't a global recession. India/China curtailing their gas consumption is why gas is under $2 a gallon. not because of America. the global recession had its positive aspects.

I'd be EXTREMELY interested to see your source stating that the demand decline in America had no relevant effect on the price of gasoline. Thanks in advance for the link.

I agree in the long term about alternative fuels, should have specified that I do not believe alternative energy is causing the current oil pricing situation. The current situation of low oil prices is demand driven, although I think it is being pushed by speculation just like the incredibly high prices were being driven by speculation (there was no valid supply excuse for $150 and there is none for $40).

Alternative fuels will eventually impact the price of oil, hopefully soon, but the tech and the supply is not there yet. I hope despite the economy we continue the investment... of course I'm one of those fools that think the U.S. needs to 'tech it up' to come back as an economic superpower. High tech fuel efficient cars can drive a part of our economy if the fools at the top of the chain were not concerned with meaningless power plays and corruption. I think other countries automakers realized this years ago, they are hoping to get the first viable, low-cost, alternative fuel (or hybrid) cars out in the market so that they can take the entire market... not just playing the 'oh lets build another SUV' game that GM/Ford were content to do for decades.

i don't know, is there a link for common sense?

we had plenty of help in driving the cost of gas down. global recession is why. Europe and Japan declining their consumption i should've added.

do the math:

you think gas shot up to $5 a gallon because of America alone? in the span of a year we increased our demand so significantly that the price that the price of a barrel of oil had no other option but to increase up to $145? of course not, you aren't that silly to think that. by the same token you can't then think America buying more Prius' all of a sudden caused a barrel of oil to decline to $35 (and dropping).

I too doubt that the demand decline in American had no relevant effect on the price of gas.

Interesting.......that link doesn't work for me. Try reposting it.

Here is to a damn good 2009.

Happy New Years everyone and damn good riddance to 2008.

I would argue that the problem is not that we had an unfettered capitalist society, I would argue that we tried to find a dangerous middle-ground. I use power as an example. When California deregulated, there were some screwy laws in place that commodities could not be bought on the spot market. That meant unless people knew what they needed 3 months out they were hosed. I look at all the small natural gas peaking plants that were built down in my neck of the woods about 10-15 years ago because nat. gas was cheap, and now they are never running because they are not profitable because of the increased demand for nat. gas since all the plants were completed.

On the flip side, I think we all know why over-regulation does not work either. I think the medium is to realize that certain industries do need to be regulated, I think power is a great example. Cheap power is great for industry. It is great for growth, but in a deregulated environment, what incentive is there to provide additional power plants?

Just my .02.

The regulation should be to make all corporate finances as public as possible. Right now studying balance sheets and other filings is an arcane art, and to really get access to important data you need to buy it (like sales figures by product that are not published). Given all the games you can play to rearrange financials, even excluding Enron style shadow companies, it is very hard to adequately evaluate an investment.

I think we need to go a new direction, although it is touchy where the line is drawn (too much information may lead to mass overhead, or if the sheep investors are in panic mood, they might use the increased information to fuel more panic and volatility).

Regulate that everything that can be made public, is public. I would go so far as to breakdowns of accounts to what they are holding (say a massive bank should have to say by percentage how much is in credit swaps for instance versus standard 30 year mortgages). For utilities, break down revenues, supply costs (and what supplies), etc...

More information is better. Heck, you can give computer geeks like me jobs to sort and process it all even. Secrecy has no value in a public company doing public business... even areas with secrets like R&D, trade secrets, and so on, they can provide breakdowns of what money is in those areas without revealing specific distributions (the point being that a company abusing the protection would be obvious because they would have really high percentage in secret accounts).

So regulate that information is released and is accurate. Then its up to the investors to make informed decisions with it, if they actively ignore companies building up massive sub-prime portfolios, well then we are screwed (I managed to detect the shenanigans without access to such detailed information, but it was not easy and involved guesswork to find sources for anomalies in the reports... although any idiot could have seen super leverage at Freddie Mac for instance).

The economy can not be 'controlled' and perform well, most of the controls I have seen over the last decade of paying attention have been anti-business in my opinion (they boost big business at the expense of gimping new entry). If we increase controls what you will see is the value of government lobbying and crony politics INCREASES, and performance will decrease yet further. The government itself is corrupt as all hell, we openly admit that its campaign dollars that swing policies, not ideals... so how can you not expect billions in pork tacked onto 'emergency bills', and fights over auto bailouts based on self-interest lines (south likes foreign autos they vote against, north is auto puppet, they vote for), and so on.

We need vicious money making driven investors who do not have the incentive to loot the corporations. Right now our economic structure is all about the CEO/BoD buddy system, and the weaknesses of it are becoming increasingly obvious. It is simply too easy to loot your own business for bonuses and stock options, manipulate short term price, and bail with a golden parachute... far easier than to come up with creative ideas for growing your business. This is why we had the generation of CEOs evaluated as good for how well they cut jobs when a company is in the crapper, or the megabonuses for creating a one year gain at the expense of a three times loss two years later, or periods of removing the 'old guard' like at Ford before you can do anything. We don't have leaders in the businesses, and they don't have accountability to the shareholders who mostly seem to behave like sheep. Vicious investors that demand competence from companies is critical, the incentives need to be realigned so that your CEO bonus and survival depends on increasing the economic health of the company both in the short and long terms.

We need people when they hear about a CEO leading the company into a gutter to actually expect his ass to get thrown on the street, and not 'oh he should be able to keep his job too, lets all sing kumbayah'. We seem driven to mediocrity and status quo, even though in reality this happy little period of the modern world is only about 100 years out of thousands of human existence. Any time the masses get content and don't want to rock the boat, the boat usually ends up sinking in dramatic fashion.

Well ... its definitely getting worse, eh?

I would like to pose a stock picking question though and maybe get us thinking ahead and get us out of this damn funk.

Are there any high quality companies (GE, P&G, Walmart, JP Morgan etc.) which I should consider buy stocks now with a time horizon of 15-20 years? I'm thinking I should stock up on some of these in my Brokerage 401k in place of other mutual funds.

Intel. Intel is trading at it's cheapest P/E in YEARS and their annual research budget is equal to AMD's annual REVENUES

I would definitely say the tech sector in general. That's the industry that will likely lead us out of a recession.

I am trying to avoid giving advice, especially because as Bishop pointed out earlier, you can never oversimplify a situation (for instance he knocked me good on gold, I wrote probably ten paragraphs agreeing with him and explaining trends in gold and currencies, but thankfully it got destroyed by a browser crash and the world was saved from boredom)....

But ya, research your stocks. Look at their revenues and earnings, I'm a big fan of the dividend as I'm a hardcore for the traditional intent of a stock... but dividend like earnings is an indicator of cash value of that piece of paper. Realize that they are not fixed though, nothing guarantees they won't cut dividends or estimates of future conditions especially in this climate.

I like tech sector and I agree the U.S. needs to 'tech it up' to hold onto the economic superpower title (if we keep on the path to mediocrity expect to be outpaced by foreign business, actually I made a killing my first year favoring international growth... but situation is different now). Buy tech with a business model you understand though.

Financials in my opinion still have some of the worst downside risk. Heavilly research, although I think there are some diamonds in among the rough (as always happens when an entire sector is crapping out, sometimes some future winners get roughed up, and sometimes solid ones just become more affordable).

I do think it makes sense to have a long portfolio (not saying the market has a bottom now, but that moving on good companies has to happen before the upturn if you want to get 'lucky'). Just please attack the books as best you can, break down any funds you own to see what is in them and how they are distributing after the bloodbath... if you play stocks directly, I really think its best to look at companies reports during recessions... yes the numbers might look bleak, but this is probably the closest you'll come to real truth about what a company looks like. Any company looks good in fat years, its at the skin and bones stage where you can see how they survive. For instance, I learned loads about the CURRENT financial disaster by doing a college project a few years ago now about the S&L years.

Okay I needs to be shutting up.

If only I wouldve shorted Oil when I said I would (or was thinking about it), dang.

GE and good, established pharmas are, like everything else, beaten down at the moment from where the market will usually price them and are, I think, very safe to continue to do well, economically.

I think all financials are high risk, high reward. The only three I'd consider investing in are JP Morgan Chase, Citibank & Bank of America, and even one off those three could go under (or get taken over by the government).

Read up on recent history on Bank of America (I can't comment on other two)... I'm a bit paranoid and wary about them at the moment. They've made acquisitions that at least a few people have lightly criticized, also while it may not be explosive bad collapse scenario I think they will need to either estimate low or they will miss it.

My paranoia should not prevent you from doing your own research, I have been madly wrong before (say about buying oil for instance). Also if it is any indication about the strength of my thoughts, I have no position in regards to BoA, either buy or short... I'm mostly researching for indirect stuff and more examples (in particular more data on what I'll randomly call 'merger cannibals' I guess ;) ).

Another heart-warming tale of how our current economy works:

The Highest Paid Man on Wall Street - The Daily Beast

Just more evidence of the massive looting incentives that have been the modus operandi of the top level corporate thieves for a while. Even after the company is busto there are ways to corrupt large sums of money into your hands at the expense of others, its just terrible if you ask me.

Or free market capitalism at its best, depending on who you ask. I'm sure this can be twisted into somehow being the fault of government intervention in the market.

This happens in free market capitalism when the incentives are screwed up (as I mentioned before). If corporations were functioning correctly, they would not let worthless executives sell assets below value in order to earn a third party paycheck to said worthless executive.

Corporations are not built just to provide looting for the top CEOs, we have the executives of this generation looting the efforts of the past few. I'll be more than happy to show how that is not free market capitalism, but a system guaranteed to collapse.

US Bank is the strongest of the big banks. They are very conservative and do not have a large portion of their capitol in the mortgage market. Also, the don't touch sub prime lending.

Yeah, that's a good point, and I'll admit my post was pretty rushed. Another bank that seems to be in good shape is Wells Fargo, for similar reasons.

Not a good week for economic news, Obama seems to be raising red flags every. Another foreclosure report caught my eye ...
Flood of foreclosures: It's worse than you think - Jan. 23, 2009

On the hand, my company did end up in the Fortune 100 best companies to work for which I thought was pretty cool. Its not for everyone but I do think it is one of the better companies.
100 Best Companies to Work For 2009: NetApp - NTAP - from FORTUNE

Deed in lieu of's are also on the rise and those dont even show up...plus you have to add that my home should be on the market in a few weeks so +1 :)

Its a slow day at work so i found the testimony from the guy who testified before the House about the Madoff fraud.

I don't claim to understand all he is saying but i still found it to be fascinating stuff.

http://media.ft.com/cms/5dc7a512-f2f6-11dd-abe6-0000779fd2ac.pdf

Finally got around to reading this article (well started anyway)... fascinating read. Yes I know I must live a very boring and sad life if this is how I'm spending my Saturday (I'm under orders not to post on this board for a week starting tommorrow :( ).

Anyhoo, relevant to my recent blathering, page 48, read the little blurb on cost of capital and DOD contracts. That is exactly what I'm getting at with the giant database of doom. You can datamine out so much obvious corruption in the federal budget if you put enough math and figures together.

I also need to see if I can get my hands on a Bloomberg machine to further my evil plots.

What pisses me off is the "all banks are bads" spin by the media and the government. The government forced the Bank of America/Merrill Lynch merger (which made the company even worst) and they forced nine banks to take bailout money (including Wells Fargo). They then paint Wells Fargo as an "evil" bank for spending "taxpayer" money for a junket to Vegas. Wells Fargo is healthy, they didn't need the money, and shouldn't have to answer to taxpayers (after not wanting to taxpayer money) when they were a responsible bank from the start.

Does this mean that the the irresponsible banks and execs shouldn't be dragged and hung? Of course not.

Drama Behind a $250 Billion Banking Deal - NYTimes.com

Speaking of Vegas, I quite enjoyed the mayor there taking Obama to task for his criticism of people deciding to do business in Vegas. His complaint in general was spot on, there are far less reasonable locations that could be chosen for a meeting.

Kind of made me wonder what would draw fire next? Being located in NYC or California since overhead there is so much higher?

Considering the recent article and promotion about Vegas deals, I think it is one of the cheapest resort destinations out there.

Goodman (I think that's the mayor's name) was upset that the city's suitability for business purposes was cast as suspect and I'd say that's a very fair complaint. I'm familiar with business only trips to Orlando so I know such a thing is possible in what is primarily a tourist/resort/vacation spot.

quite frankly, in this current economic climate whether you needed bailout money or not - anything more than a conference room in a local Marriott is wasteful and looks bad.

When can banks re-pay the money?

banks would prefer asap.

Banks forced to take bailout money, lol... they've got some good spin doctors.

Yay! Good news day!

-Retail sales rise 1% in January. Sure, not much, but better than the expected loss. Biggest increase in 14 months and 1st gain in 6 months

-Jobless claims drop slightly. Still, a big number and higher than analyst expectations so this isn't exactly good news- just slightly better bad news

Any silver lining, I suppose

SI

Take it from Obama's point of view: it's the perception, not the actual effect that's important. He is all about perception and not any real affect on society.

My Way News - Midway Games files for bankruptcy protection

CHICAGO (AP) - Midway Games Inc. (MWY) (MWY), best known for its "Mortal Kombat" video games, said Thursday that it filed for Chapter 11 bankruptcy protection.

Midway said the filing stemmed from a change in ownership in late 2008 that led to accelerated buyback requirements related to two classes of debt that the company did not think it could fulfill.

In December, media mogul Sumner Redstone sold his majority stake in Midway - an interest of about 87.2 percent - to a company led by private investor Mark Thomas.

In a statement, Midway Chief Executive and President Matt Booty called the bankruptcy filing a "difficult but necessary decision."

"We have been focused on realigning our operations and improving our execution, and this filing will relieve the immediate pressure from our creditors and provide us time for an orderly exploration of our strategic alternatives," he said.

Midway said that it and its U.S. subsidiaries filed voluntary petitions in U.S. Bankruptcy Court for the District of Delaware.

Midway said the filing does not include its operations outside the U.S., and that they will continue to operate as normal.

The company is seeking several first-day motions so it can continue to operate normally.

Midway shares fell 10 cents, or 40 percent, to 15 cents in morning trading.

The midway things been coming for ages - not exactly a great surprise imho and not really linked to the recesion per-se ..

Eh, I didn't figure it was worth its own thread but wanted to give it a brief mention, this seemed like as likely a place as any other.

While we're on the subject of bankruptcies that were inevitable regardless of the recession.

Charter Communications to file for Chapter 11 - Feb. 12, 2009

NEW YORK (CNNMoney.com) -- Charter Communications, a provider of cable TV, Internet and other broadband services, said on Thursday that it will file for bankruptcy, as part of a "financial restructuring."
The St. Louis-based company said it planned to reduce its debt by $8 billion as a result of a Chapter 11 filing. The company added it intended to file on or before April 1.
"The purpose of Charter's financial restructuring is to strengthen its balance sheet in order to fully support the company's operations and service its debt," said the company, in a press release.
Chief Executive Neil Smit said in the same release that the company "will be even better positioned to deliver the products and services our customers demand now and in the future" as a result of the filing.
The company described its operations as "strong," and said it had $800 million in cash to help meet its needs to continue operating. The company said in its press release that service should "continue as usual."
One analyst said the news was not a surprise and that it could be beneficial for the company.
"This is expected, and this is a fairly traditional style of bankruptcy," said Chris Roberts, analyst for Tejas Securities Group. "By cutting interest expense, they'll generate more cash flow to help invest in the business."
Charter's largest shareholder is its chairman, Paul Allen, a co-founder of Microsoft (MSFT, Fortune 500).
Charter, which has about 5.5 million customers across the country, is the nation's third largest publicly traded cable company, behind Comcast (CMCSA, Fortune 500) and Time Warner Cable (TWC). (Time Warner Cable is a subsidiary of Time Warner, which also owns CNNMoney.com. Time Warner (TWX, Fortune 500) plans to spin off Time Warner Cable later this year.)
Charter's (CHTR, Fortune 500) stock plummeted nearly 50% on the news, to about 3 cents a share. Because of its low stock price, it is vulnerable to large fluctuations.

Okay, finally the stimulus bill has passed. I really don't know if it will do the job ... may be too small (Fri NYTimes talked about the Japanese lost decade and that their advice was more $ stimulus and transparency in the banking system i.e. don't hide the losses).

In reading the plan below, it seemed alot of 'citizen relief' rather than 'business stimulus'. Not sure if that is a fair characterization and I understand the 'relief' portion will allow us to spend more for 'business stimulus' ... but I would have preferred a more targeted package.

Wouldn't this plan have been better just focusing on houses, foreclosure prevention/relief/mitigation, banking reform/nationalization (temporary) etc.? Maybe its swung to the other extreme from Paulson.

Stimulus measures that may help your wallet - Feb. 13, 2009

Found the Japanese 'lost decade' article.

In Japan’s Stagnant Decade, Cautionary Tales for America - Companies * US * News * Story - CNBC.com

Am the only one who finds this package pathetic (and a reminder of last summer's $300 credit)?

While that is certainly worthwhile (and presumably the purpose of the remaining $350 billion TARP money) it would only deal with the initial (and one continuing) cause of the problem but not with the acceleration of the downturn that's now being caused by unemployment. The downward spiral that comes with unemployment has to be addressed as well and that's where the spending - replacing the lost demand - comes in.

What isn't being said by those who object to the demand package is that the usual supply side answer to recession - reducing interest rates - has run out of steam with rates now being near zero. The same happened in Japan in the 1990s.

You need to replace the demand lost by unemployment. Tax cuts and handouts are one answer but in the current circumstances not an efficient stimulus because people save too much of it (the Australian government gave $1400 to all pensioners in December and monitored the use of the money - only 20% was spent, 80% was saved, paid off credit cards etc).

Only government spending the money directly can ensure it is indeed spent and therefore an efficient stimulus - assuming there's adequate monitoring of the spending.

I have read that this package is estimated to bring 3-3.5M back into the workforce which is your point above (not sure how those estimates are done). Thanks for your perspective.

I find the tax cut part useless. If that $300B would have been infrastructure spending (re: jobs and long term benefit), I'd have been downright giddy.

SI

That would have just added more to the backlog, pushing project starts to 2011 and beyond. Not only does it takes time to plan/bid/award/negotiate large construction projects, but there is only so much that can be done at the same time. Don't get me started on utilities infrastructure where very little of it will actually happen in the near future (due to current backlogs and lack of qualified field crews).

A key part of the Japan lost decade comparisons that gets lost behind the 'more money, faster' tagline, is actually ripping the banks apart (in audits) and wiping out shareholders if necessary. The banks in Japan did not want that and held on until something had to be done, and the banks in the US are going to do the exact same thing.

Making the banks fail if that must be the case is a critical requirement of recapitalizing them. Default and get it over with, hell most of the equity in the banks is evaporating anyway with several major players less than half or in some cases 5-10% of previous size! (by share value).

which is what theyre 'saying' theyll do via the Geithner 'stress test'. I mean if the opposition just simply doesnt believe the words coming out of their mouths than arguing about the bill is pointless because you could say it's all BS anyways.

Lets say I doubt how stressful that stress test is going to be. I start doubting the government when it shows obvious incompetence and corruption time and again.

so than there really is no point in debating the merits or lack thereof of said stimulus or packages or tarp tauf whatever because you dont believe that it is what we think it is anyways.

I'm against any plan in general. Throwing hundreds of billions of debt on top of trillions of debt isn't the answer. What happen to the Dems promise to bring back the "spend-as-you-go" policy?

we ran into this little thing called a deflationary spiral.

If you do nothing then the recession will continue to deepen. Tax revenue will fall (corporation taxes, income taxes and sales taxes) and government unemployment responsibilities will rise - the deficit will snowball.

There is no way out of this that will protect the deficit.

I would support a plan that actually worked, not full of pork, wasteful spending, and attack the problem.

one person's pork is another person's job, etc. etc. etc. not everyone is going to be happy unless it works which is years away from knowing.....I believe it will AND believe that what we're debating is accurate to the intent, if you dont, than Im not sure what there is to debate, since we could be debating anything really.

Actually, Hoover thought the answer was to balance the budget in bad economic times. That... didn't work out so well.

SI

Calling it "pork" does not rob it of its stimulative action. We may approve of some projects more than others but whether you put your money into bibles or condoms the stimulation to employment in both manufacture and retail is pretty much the same - just in different sections of society (or maybe not ;) )

I seem to recall, I think it was the 1987 recession, that it was decided that you needed to balance the budget over the full economic cycle. You go into deficit in bad times and surplus in good and achieve overall balance. Because tax revenues are lower in the former and higher in the latter, that seems to make sense.

When I see good things in legislation I'll try and announce it, when I see crap I'm gonna call it and not hide behind panic politics. Following the calls of panic leads to wonderfully terrible things, history has shown plenty of that.

And where you see a deflationary spiral, I see necessary deleveraging. We only are printing money to obfuscate bad debt from bad decisions by bad leaders at bad banks. I've already argued before that we never saw the sort of inflated prices to match that massive leverage (did your loaf of bread cost ten times the price of 1990?), so the real result of printing money is going to be an increase in prices (now that everyone knows the wizard of oz is just some fool behind a curtain).

To even start to match all that super leveraged debt to avoid what they are terming deflation, you would need to quintiple prices, at least.

I won't even start to go down the similarities to the Japan situation, which was a massive period of stagnation caused by throwing misguided fiscal policy to save face for morons.

We need to take the hits, and if they look to severe to survive, we need to close the banks and force a controlled reset.

+1 to SportsDino's post.

but unfortunately I dont have any idea what SD is talking about above because he doesnt trust in the actual verbiage of the bill. So SD, to make the debate even sided you should write exactly what you think this bill will effect, i mean what pork will be unfunded, what will happen, who will do what, etc. and we can debate that.

Im being sarcastic but in multiple threads some people (not only yourself) are saying we're against the bill because we dont believe the gov't will do XYZ eventhough the bill states XYZ so what does a supporter of the bill do with that?

I guess a supporter would just have to say, "welp, youre wrong." which means nothing.

Isn't that how it should work? When times are bad, you might come up a little short but then definitely pay it back and get ahead in the good times so you don't have to borrow the next bad time. I don't remember it with regards to the 1987 recession but it could easily have been mentioned then and I wouldn't have noticed (being only 7 at the time :) )

SI

I think the single biggest problem I have with the bill, and I can only speak for myself, is that if only 5-7 people "possibly" could have read this bill prior to voting on it...then my trust has to be placed primarily on the small group that had control of the bill in the late hours of Thursday/Friday AM. I have almost no faith that the majority of our Senate (or House for that matter), is able to digest a typical article in the WSJ, let alone one of(maybe THE?) largest bills intended to stimulate the economy ever. EDIT to add: I have no faith they could have digested this bill in a day.

The other concern I have is that there isnt nearly the energy infrastructure projects that I would have hoped for in such a massive bill. So that means we'll be seeing another one of these within a year or so. So while I do agree that a large bill is necessary, and that tax cuts alone arent going to be the long term solution, I think this bill is entirely too rushed for the limited short-term stimulus it will deliver.

Now THAT is a good point that goes to the heart of the opposed due to trust argument and I can buy that. You're not saying the intent is to pass the bill and than do things different than that which the bill affords but that the bill has been passed so fast that it may NEED to be pushed aside, tweaked, cajoled, or massaged. I can understand that POV.

Yeah, I think the Japan issues from the 90's are worthwhile to keep in mind, but I dont buy that NO spending is the alternative. It's all about ROI to me...and what gives better long-term ROI.

To me, and I wont claim to be an economist or expert, if you are going to try and cause a degree of inflation (by printing and circulating money internally to the US) to combat deflation (or devaluation) then it makes sense to try and alleviate external purchasing where plausible. To me, the most plausible way is through energy independance, the jobs that creates while eliminating outgoing recurring expenses to the country. I dont think that is protectionist or isolationist...as once you do that you can begin exporting your energy technology/expertise to the rest of the world(that hasnt done so themselves).

But while building bridges and high speed trains create some jobs...they are temporary by nature(albeit longer term temporary), and produce little ROI (where ROI means "how does the overall country profit from such an expense?"). Having nice roads doesnt necessarily invite a significant amount of external (to US) revenue to come enjoy your roads or bridges. So, yes there are necessary projects like that, they arent all necessary ASAP...even if they could begin ASAP. ROI-based projects are more critical.

I agree with SteveMax. Cost/Benefits have always been my thing, along with the dominance of the federal govt in many state, local and personal issues.

To me one of the most ludicrous aspects of the current stance to the economic crisis in America seems to be the lack of attention and investment given to the most vital future resource of the country - that being its education system.

I don't know if this is repeated in other states but in Florida they're cutting teaching jobs hugely and increasing class sizes - both of which will be very detrimental to the quality of education supplied.

Yet its educated people who in the whole are more likely to setup their own businesses, invent new technology etc.

Here's a summary of my position as brief as i can make it:

- I am opposed to TARP. I'll put it in bold letters: I THINK IT IS A MISTAKE TO BUY DERIVATIVE INSTRUMENTS THAT ARE EFFECTIVELY WORTHLESS. Any money pumped into them evaporates instantly without creating ANY economic value whatsoever. It is a political/corruption move to cook the books of bad business, and you cannot convince me otherwise unless you are willing to actually break down exactly how economics says bailing out morons is capitalism. Or chasing lost money with even more money makes sense.

- I am opposed to tax cuts on capital gains. Because most of the people gaining right now are just like me, they made the easily predictable short (leveraged inside information or just plain good guesses) and every dollar they made is basically money sucked out of the economy. It will not stimulate growth either, it will stimulate continued looting of the businesses as the value of speculating is high and the value of investing is low.

- I am opposed to wasteful spending to 'just create jobs'. First and foremost, large amounts of each dollar will go to corruption, with the likelyhood being only pennies on the dollar actually leading to worker salaries. Second, government debt will need to be paid eventually. Third, most of the money spent will not generate any future value added to the economy... it will not have either a lasting impact, or create jobs that will survive longer than a tiny period of time.

- I have advocated spending as part of a stimulus package, I have even gone through and mentioned some I liked and others I disliked. I even made my list of six or seven proposals that I would like as focused stimulus packages that I think would have a lasting impact. I know I have posted a lot of junk, but I believe I have been internally consistent all this time... I want spending on America's messes (huge spending perhaps) that will make us stronger in the future. And I want it spent with a vicious eye kept out for thieves. Right now I'm looking at this stimulus with a vicious eye, if you did too I'm sure you could spot the 'hahaha, good old Democratic back scratching' moments litterred in there. Hell, you can probably link every Republican vote (3ish?) to a particular portion of the bill if you tried hard enough.

- I agreed with the depreciation changes as a method to affect current cash flows, and I believe that is in the package, although I have not verified what survived or not. Although i think they may be abused and hope someone is watching for it.

- I'm for a payroll holiday to improve the ability of employees to whether there expenses when there is likely no raises this year.

- I don't think I have mentioned it, but I approve of unemployment extensions and improvments. People can't find a job if their life depended on it right now, and sadly their lives do depend on it.


I'm sure I've babbled plenty of other stuff out there if you want more details. If anything, despite the massive amount of words and noise, of anyone on the board I'm probably the easiest to guesstimate what my stance is on a particular issue since I've spouted out so many of them. I'm sorry I didn't compartmentalize it into some nice tidy 'liberal', 'conservative', or other box for you to categorize which herd I belong to. I pretty much burn the entire spectrum with my criticism and my views of economics, which are supported by neither party in office, and certainly not by most modern business.

I also am very skeptical because I see the games politicians and businesses are playing, and break down what they are really trying to do, not what they are saying they are trying to do. Do you really believe the same folk who screwed us so royally are truly going to do the best thing for the US as a whole now?

I am saying that the things in the bill themselves are enough to show how useless or ill advised they are. How they describe the bill in the news, and what the actual language really tells are two different things. That and some people might honestly believe X billion for yada yada is all great and gonna save the economy, but I am saying that X billion is not all its hyped up to be. That it may be too much for yada yada, or it will be mis-spent because the bill has nothing in there to prevent it from being wasted. I may even disagree that yada yada will have any useful effect whatsoever on economic growth (or job growth).

If there is X billion being spent, I want to see 5000*X jobs created. For 800 billion I am expecting 4 million jobs. Somehow I doubt that is happening with this package as it is currently constituted. You find me where even 2 million jobs get created by that bill and I swear I'll shut up. Hell, for 1 million I'll at least tip my hat to you and Obama. It would have cost 800,000 per job created, but at least you would have a measurable result. It still would only be a dent in the side of exploding unemployment.

And finally, 2 trillion in bank handouts probably won't create a single job. It'll be sucked up to counter balance their bad bets of the last two years IF THAT (since we are talking 10 to 20 times leveraging on a nice day).

good post but i think theyre saying jobs saved too, I have to go to lunch but I want to read your post again.

I'm not sure it was the 87 recession - these things see to come along far too often and it's difficult to remember exactly when. But I do recall it was seen as a new idea which is surprising when you consider how obvious it is. But then economic theory, it seems to me, is so corrupted by self-serving ideology that I shouldn't be surprised at anything it throws up :)

U.S. agents enter Stanford Financial Houston office

You have to wonder how much more of this bullshit is out there. These jackasses should be taken to the wall.

Stock market looking good in preseason.