Friday, February 27, 2009

Some Dems Oppose Obama's Budget

Now this is news to me but there seems to be some Senate Dems against the tax hikes for the wealthy to pay for pennies for the middle class.

Even Senate Budget Committee Chairman Kent Conrad of North Dakota, had misgivings. Conrad said he worried about the budget's long-term outlook, which sees deficits fall until 2013 and then begin to rise again. "I think that requires additional work," he said Friday on CNBC. And he predicted trouble for Obama's plan to limit itemized deductions for individuals earning more than $200,000 and couples earning more than $250,000. "I would put that high on the list of things that will be given a thorough scrubbing and may well not survive," he said.

I think Senator Conrad understands that limiting deductions for the wealthy will result in less charitable donations since they can't write off as much as they could before. Also it will cause even more mortgage woes for the bank as rich people pay off their homes instead of holding a small mortgage for the tax write-off.

Obama needs to understand if you raise the taxes of people making $250k or more he needs to provide a way for them to escape some of the burden. Especially if they are small business owners. According to the nonpartisan Tax Foundation:

Restoring the higher, Clinton-era tax rates on the top two brackets, as Senator Obama and some Congressional leaders have proposed, increasing the 33 and 35 percent rates to 36 and 39.6 percent, respectively, would raise taxes on 45 to 55 percent of small business income, according to a new Tax Foundation study.

So raising taxes on these people will just resort in them cutting job creation or passing that tax burden on to the consumer. That means that soaking the rich isn't a good idea if you want them to boost the employment and create more jobs.

GOP Backs Obama's Iraq Withdrawl

It seems that the GOP is backing Obama on the Iraq withdrawl timetable while the Dems are against him this time. The Dems don't want the 50,000 troops to be in country until 2011. I think Obama is hedging his bets just in case he has to support Iraqi troops if there is another flare-up in violence.

Sen. John McCain (R-Ariz.) took to the Senate floor to declare “the president’s withdrawal plan is a reasonable one.” Senate Minority Leader Mitch McConnell (R-Ky.) commended “the president's decision yesterday for making it possible to take another step toward realizing our goal of a stable Iraq.” Rep. Eric Cantor (R-Va.), the House GOP whip, said Obama “deserves credit for not listening to the chorus of voices calling for a rapid drawdown of forces.”

The American People Are Now *Really* Long Citigroup Stock

In a very interesting turn of events we are now 36% owners of one the biggest banks in the US.

Besides a stronger capital base, the company is getting a critical boost to its cash flow as it forgoes its 4 cent annual dividend on its common shares. That is giving Citi an additional $2.18 billion a year. The bank will also no longer pay the 5 percent dividend it owed on the government's preferred shares that have converted to common stock.

So now we are long this ailing bank but without a 5% dividend cushion to protect our money. I guess we had to make this deal because of Senator Dodd's incompetence when he came to sticking things into the Stimulus Bill at the last minute. Oh well, our brand new Citigroup stake just dropped 39% in one trade day. With investment managers like the US Government who needs mutual funds?

Hard Hitting Time Magazine Article: Obama likes Coke!

The puff pieces by the main-stream media are just getting out of hand now.

Late last year, Obama's nascent Administration worked out of transition offices in a downtown government building, which was serviced by only Pepsi-brand vending machines, according to three people who worked in the building. Two Administration officials have told me that a group of Obama aides, frustrated by the security gauntlet required to go to the corner store, stocked a refrigerator with Diet Coke in open rebellion against the available options.

This reporter even went dumpster diving in pursuit of the truth on whether the Obama team are Cokeists or Pepsiites.

On Thursday, the recycling bin outside White House Spokesman Robert Gibbs' office contained six cans of Diet Coke and one can of Sprite Zero, which is also a Coca-Cola product.

Yes, reporter Michael Scherer was paid by Time Magazine to actually dig through a recycling bin to tell us whether the Obama people drank Coke or Pepsi. I had to look up the name of the reporter because I was sure it was Asif Manvi or Rob Riggle of the Daily Show and not a reporter for Time Magazine. I think the media in America is really bankrupt when you can mistake a Time reporter for a fake reporter on a comedy show.

Thursday, February 26, 2009

Dell's Dismal Quarter

Wow, the PC sales industry is no place to be in a recession. Dell just brought out some really dismal numbers today.

The Round Rock, Texas, computer maker's top line missed analysts' average estimate by about $750 million -- the upside being that three months ago Dell missed revenue estimates by $1 billion.

The good thing is that they are still making money. The only problem is that it is about half as much as they did last year.

Dell's fourth-quarter profit fell to $351 million, or 18 cents a share, from $679 million, or 31 cents a share, a year earlier. The latest quarter included $134 million in "organizational effectiveness" (read: job cuts) and $143 million related to stock-based compensation.

I can see things looking up for Dell once people start to upgrade their machines to run Windows 7 if they dodged Vista. The only problem is that profit margins on laptops may never recover due to the rise of the really cheap Netbook.

So they have become a competitor with China in the race to who can have the thinnest margin of them all. HP can at least fall back to their leadership in printers (which are still needed,) services, and servers (even though virtualization is constraining the revenue in that space.) Unless they reinvent themselves Dells' glory days are long past.

Obama Delivers a Whopper of a Budget: Some Stock Implications

This thing is going to cost close $3.6 Trillion dollars for fiscal year 2010? Now that is some serious "change." I found a couple of things that will impact stocks directly:

Some of the Medicare savings would come from scaling back payments to private insurance plans that serve older Americans, which many analysts believe to be inflated.

They mean Medicare Advantage which helps retirees and the elderly. That sound you heard was the NARP rolling tanks. This will also be bad for companies like Humana which has 12% of their 11.6 million customers as part of Medicare Advantage.

In a note to clients, Charles Boorady of Citi Investment Research said stocks are selling off because of an overload of news in the last few days. He said competitive bidding could reduce profit margins for insurers, but increase their revenue. Humana, HealthSpring Inc. and Health Net Inc. are the most exposed to changes in Medicare Advantage, he said.

The other bad news came for Sallie Mae (SLM) which will probably be destroyed by this budget.

And in a proposal sure to rile the nation's lenders, Obama seeks to end government-guaranteed loans and to boost the government's own direct lending in an effort to insulate students from turmoil in financial markets.

Also Pell Grants which will get an inflation adjustment and will become a mandatory budget item like Social Security. This means that college lending just got nationalized.

The agriculture subsidy changes may be positive for Agriculture stocks like Bunge or Potash depending on the details. There won't be lump sums given to farmers no matter what amount or crop they plant. However, this will take the fight of the century to get passed. I will assure you that there will be bipartisan support in stopping this budget item in states like Kansas, Iowa, Indiana etc.

Obama would break from the five-year farm bill that Congress enacted last year, with his support. He proposes eliminating what are known as direct payments -- subsidies that are paid to farmers regardless of crop prices or how much they grow -- for producers with more than $500,000 in annual sales revenues.

This part will certainly help the Mutual Fund industry. There will be lots of new fees and capital inflows into the hands of investment professionals going forward. Aren't these the people Obama is damning for getting us into this mess? Well, any way forced saving takes place is a good thing in my eyes.

The administration is starting a new program to automatically enroll workers in employer pension plans or other retirement accounts to encourage retirement savings. About 75 million Americans lack employer-based retirement plans outside the Social Security system.

Obama estimated the new plan for automatic workplace pensions would increase the savings participation for low and middle income workers from 15% to 80%. Employees could opt out of the program if they didn't want to participate.

Housing Bailout Delayed by Moderate Dems

It seems that these Blue Dog Dems might hold quite a bit of power in this new Congress. They seem to be stalling the Housing Bailout.

Centrist House Democrats who have been working closely with the financial services industry to scale back the bill balked at supporting it on Thursday after a news report suggested that Sen. Dick Durbin, D-Ill., the lead sponsor of the bankruptcy measure in the Senate, was willing to limit it only to subprime mortgages. The Senate is expected to take up the legislation within two weeks.

In the House, Rep. Ellen Tauscher, D-Calif., the head of the business-minded New Democrat Coalition, raised concerns during the private session that the measure omitted help for homeowners who aren't staring at bankruptcy but are buckling under burdensome mortgage payments.

There should be room for people who aren't about to lose their house to refinance to a lower interest rate in order to lock the thing in. That could mean $1000s in savings for homeowners even though their house isn't underwater or about to be foreclosed on.

Wednesday, February 25, 2009

Bank Stress Tests Revealed: Citi and Bank of America Should Pass

Well they finally revealed what the "stress test" of the banks is supposed to involve. I'm pretty sure that most of the 19 large banks should be able pass this test failry easily.

The "baseline" scenario envisions the nation's gross domestic product, which is the value of all goods and services produced within the U.S., falling 2 percent this year, unemployment rising to 8.4 percent and home prices dropping 14 percent.

The "adverse" scenario assumes GDP will drop 3.3 percent, unemployment rising to 8.9 percent and home prices falling 22 percent this year.

The stress tests will consider a typical regulatory measure of a bank's capital reserves, known as "Tier 1 capital," government officials said, but will emphasize tangible items such as shareholders' equity. Investors no longer trust Tier 1 capital, analysts have said, because it includes intangible assets such as operating losses that can be used to reduce future tax liabilities.
The minimum Tier 1 capital ratio that regulators need is 4% and they need a 6% ratio to be known as "well-capitalized."

So Bank of America which has a 9.15% Tier 1 Capital and Citi has a supposed 11.9% Tier 1 Capital ratio may fly right through this test with no problems. What this means is Bank of America and Citi might not be forced to take TARP 2 money and pay that onerous 9% dividend on that special preferred stock.

Iran Fires Up Their Nuclear Plant

At least with some Russian help.

The arrangement with Russia is "an appropriate mechanism for Iran to see the benefits of the peaceful use of nuclear energy," State Department spokesman Robert A. Wood said in Washington. "It also demonstrates that Iran does not need to develop any kind of indigenous uranium enrichment capacity."

My money is on them getting the bomb in 2 years tops. That is if Israel doesn't do anything to stop them. I have a feeling that Obama probably won't do anything about Iranian ambitions in the region so Israel is all alone on this one. My guess is that stopping a hot war in the Middle East between Israel and Iran will be the first foreign policy challenge of Obama's presidency.

Dodd Regrets Sinking Bank Stocks with his Loose Talk

Now this guy is so clueless he didn't realize that when the head of the *Banking* Committee talks about nationalizing banks (and wiping out their equity) it could create a reaction in the stock market.

Dodd said his statement Friday "should have been better thought-out at the time. I didn’t realize it was going to have the reaction it did," according to Bloomberg News.

And just so everyone knows where he really stands on nationalization, he said: "I think banks run by private hands are far more desirable."

I think we should just let him quietly retire or maybe move him to another Committee that doesn't torpedo the 401Ks of millions of people.

Tuesday, February 24, 2009

Sad End to NYU Food Court Occupation

I'm not even sure what they were protesting but this has to be the saddest end to a protest I have ever seen.

"You may not come in here. This is student's free space," says the cameraman, as a security guard pulls apart the flimsy barricade that the administration had chosen to leave in place for the past two days. As soon as the guard sets foot in the food court: "Excuse me, brutality here. You are on camera...Do not use brutality. You may not detain us, you are on camera!" This, as two security guard were moving away from him. "We deserve to be explained what is going on," he says to several bored-looking cops. Here's what's going on dude: you're not actually allowed to take over buildings. Believe it or not.

The part where the cameraman has to keep saying we need to "get consensus" on whether they should show their IDs is priceless. He spends almost the entire video trying to herd his "revolutionaries" together and then takes inventory of their IPods and Macbooks. I guess they didn't want The Man "confiscating" the "weapons of the revolution."

Then he says the highlight of the video. "They won't want these water bottles. They probably drink corporate water." That line had me laughing out loud. Here is more on the "revolutionaries" And a pic of their motley group showing off a MacBook Pro I think. Talk about a tool of the proletariat. You can read that both ways.

Santelli Nation?

It seems that even Dems are against the idea of an Obama Housing Bailout.

Although Obama still floats on air among Democrats generally, he’ll need to use Tuesday night’s unofficial State of the Union address to build support for his housing plan even among members of his own party. According to the Rasmussen poll, even 49 percent of Democrats oppose mortgage subsidies like the ones Obama has proposed.

Among them: Lynn Powers, 39, a Bethesda, Md., resident who describes herself as a “liberal Democrat” who has been hardworking, prudent and responsible — and now feels “like a fool.”

Yup, Lynn the problem with supporting liberal Democrat ideas is that they aren't targeted at the hardworking and the prudent. People like Ms. Powers get $13 and the promise to blow your tax money so some idiot can stay in his McMansion for a few months longer until the guy loses his job and they foreclose. Santelli is just repeating what many Americans are feeling deep down.

Monday, February 23, 2009

The Chicago Tea Party: A Protest Idea

It seems that Rick Santelli may have started a movement with his remarks earlier in the week.

Seattle on Monday. Denver on Tuesday. Mesa AZ on Wednesday. Overland Park, Kansas today. What a week, huh? We got the anti-stimulus, anti-entitlement protest ball rolling — and now the movement, spurred further by CNBC host Rick Santelli’s call for a “Chicago Tea Party,” is really taking off.

I wonder what they could dump though? The tea dumped in Boston Harbor was a symbol of no-taxation without representation over King George. Maybe they could take their $13 per paycheck of stimulus in pennies and dump it into big jars. The sound of pennies clinking into jars should be the soundtrack of the movement.

Then they can send the jars back to Washington with a note saying "I'm returning the $13 worth of stimulus money you gave me. Now give my kids back their $780 billion!" I was thinking of mailing my $13 to Dan Inouye office with that same note as a protest to see if I got anything back. I would probably get back a note saying "thank you for your campaign contribution. Dan will be sure to spend it on some pork sandwiches or maybe a pork-pie hat."

The Stimulus Might Actually Kill Banks Due to a Dodd Amendment?

Here we go again with more incompetence from the Head of the Senate Banking Committee. I think this may make that sweetheart Countrywide mortgage scandal look like small potatoes.

As part of Senator Dodd’s last-minute amendment about executive compensation, he put in a provision making it easier for the banks to pay back the TARP money to the government.
This is directly from the bill signed into law:

“…the Secretary shall permit a TARP recipient to repay any assistance previously provided under the TARP without regard to whether the financial institution has replaced such funds from any other source…”

Under the old TARP rules, a bank could only give the money back after it had replaced it with other capital, presumably raised from private investors. With the above words, that requirement is gone.

The problem is that Dodd's little claw-back add-on may have changed the nature of the TARP funds. These funds lost their "permanent" status which means that ratings agencies can't use that money to determine capital ratios. The capital ratios are important because the bank needs to maintain them at a certain level or they become insolvent.

Or in a best-case scenario the bank has a endure a credit downgrade which will make their borrowing costs go through the roof. However, if their debt rating is cut by too many levels then they might not be able to borrow at a low enough interest rate in order to stay in business. They might even have covenants on their debt like AIG had that if there rating drops to a certain level you have to close up shop.

So it seems that due to Dodds apparent screwup he may have single-handedly invalidated the TARP moneys ability to keep some banks solvent. And this guy heads the *banking* committee? And this mess-up was added to a last minute "claw-back the bonuses" amendment? I think he may have just clawed-back the ability for the US financial system to stay solvent and thus keep us out of Great Depression 2.

Then you notice that Citi suddenly had to rush back to the government so that they could raise equity to keep their capital ratios at the same level as they were before. I know that they took $45 billion in TARP money and I see that this preferred stock to common stock trade-in scheme is supposed to raise that exact same amount.

If the government converted $45 billion of preferred shares into common stock, Citigroup's ratio would rise to about 3.9 percent from 1.5 percent. There is no consensus on what ratios banks need, but many analysts prefer 5 percent or more.

The thing is that they had that $45 billion in TARP money already on their books but Dodd made it so that it doesn't count toward their credit rating. I think Citi may have rushed into this deal only days after the "stimulus" bill passed so that they don't get the dreaded downgrade of doom from Moodys or S&P.

This is a case-in-point of why Congress needs to read 1000 page bills before they are voted on. You never know when the Head of the Banking Committee might invalidate billions of dollars worth of bail-out money with a single stroke of a pen.

Why Is the Market at 12 Year Lows?

This article seeks to explain the reasons why. I would go with the 3 Us. Uncertainty, uncertainty, uncertainty. This article even has a number that gives me pause:

With recent data showing that as much as 55% of those who get foreclosure aid end up defaulting anyway, a signal has been sent that America has gone from being "Land of the Free" to "Bailout Nation."

That means that of the 9 million that might face foreclosure almost 5 million of them might actually be foreclosed on even after we blow $75 billion in order to save them? The sound of 5 million more homes going on the market is pretty scary when there already was 3,157,806 foreclosures in 2008. If 5 million foreclosed homes are added to the rolls then we could have a serious panic on our hands.

Government Could Go Up to 40% Long on Citigroup

Well I guess it is time for the partial nationalization of Citi. Even though Harry Reid says it isn't nationalization but it is 11% away from that point. I have to agree with this statement as well:

“My main concern is that Washington is sending mixed signals to Wall Street, which is causing private capital to remain on the sideline," said Rep. Scott Garrett (R-N.J.), a member of the House Financial Services Committee. "Until investors are clear about the government’s intention with regard to future market interference, confidence will not be restored to the financial sector.”

They should either nationalize whatever banks that don't pass the "stress test" and get all of the blood-letting out of the way or pass a law that says the government can't take a controlling stake in a private corporation. Even telling people what happens when a bank passes or fails the "stress test" would be a step in the right direction. Instead it is a slow bleed-out and this uncertainty is just leading the market further and further downward.

The thing about Citi is that I think you might have seen the bottom now that the government might soon own 40% of their common stock and would be their biggest shareholder. The government would probably not fully nationalize it and wipe out their common stock or they end up taking a huge loss on their stake and are forced to run a massive bank.

However the government would now get a chance to call the shots at Citi. They would have the power to hire and fire the board, clawback pay, or just take a gander at their books if they want. I think that might be the next step for the government. They now get a chance to look behind the veil and try to value the toxic assets and see how bad things really are at Citi.

The problem is that the conspiracy theorist in me is thinking that now the Feds have access to all of the banking information at Citi. Think about the power that will have over anyone with deposits or has a credit card there. They can now see what you buy and when with any debit or credit card you have. Hopefully, they will be looking for purchases of bomb making materials or wire transfers to Iran and not "ideologically questionable purchases" at Amazon.

Friday, February 20, 2009

Rick Santelli-mania Rocks the Internet

It seems that a rant against the Obama mortgage plan has boosted CNBCs Rick Santelli right into internet star status overnight.

Still doubt that Rick touched a deep nerve with his rant against the homeowner bailout package? Check this out: Overnight on Facebook, his fans have come out in hordes. There's a "Tribute Group" to Rick Santelli (609 members); and a "Join the Chicago Tea Party" group (435 members); and "Rick Santelli for Man of the Year" (173 members).

He even got a strange, direct rebuke from the White House Press Secretary Gibbs:

“I would encourage him to read the president’s plan and understand that it will help millions of people, many of whom he knows,” Gibbs said. “I’d be more than happy to have him come here and read it. I’d be happy to buy him a cup of coffee - decaf.”

Later, Gibbs went further: “I also think it’s tremendously important…for people who rant on cable television to be responsible and understand what it is they’re talking about. I’m…feel assured that Mr. Santelli doesn’t know what he’s talking about.”

I'm not sure why Santelli needs to go to the White House in order to read this plan but I would like to read the nuts & bolts of the thing and not just this Q&A FAQ thing. Here is an "executive summary" but it is pretty broad and not really full of details on how they will get to certain things and how much they will pay for each item.

Also it is all seems voluntary so the banks or the mortgage servicing companies aren't compelled to sign off on the thing if they don't want to. Instead of an executive pay and bonus clawback this could have been a string attached to the TARP money. They could have forced (or incentivized banks through lower then market rate loans) into restructuring the loans so that more homeowners don't fall into foreclosure.

The anger that Santelli tapped into is the fact that good money will be used to bail out the bad money. People who saved a 20% downpayment and got the lowest fixed rates that they could are being asked to pay $270 billion for all those people that took out a jumbo, no-interest, no-document, variable ARMs with 2 home equity lines of credit.

To take an Aesop's Fable: The ants are being fleeced so that they can pay for the grasshopper that didn't prepare for winter. The "Chicago Tea Party" is already reflected in the stock market falling to multi-year lows. Wait until this "Santelli-mania" hits main street.

Dobson High School Advanced Placement Government Class Questions Obama Stimulus

I think this could be one of the last bastions of conservatism left in American High Schools.

Albach, who is also a Republican, said Obama’s plan sounds good but questioned how Obama can want to rely on “people’s responsibility” when that is “what got us in this economic crisis in the first place.”

“This puts us more into debt,” said Albach, 18. “It’s a horrible situation we’re in.”

There is even a nice dig at the school board who spent cashola so that the "Patron Saint of Change" Obama doesn't have to cast his gaze upon dead grass or stunted trees:

The students also questioned why Obama chose their school for his speech since he wasn’t talking about education and wondered how much money the district spent on beautifying the campus while district positions and services are being cut.

District officials noted this week that the landscaping project completed over the weekend at Dobson was already in the works and was just expedited by the president’s visit. Funding came from voter-approved bonds.

New sod was laid in front of the school Tuesday, and Daudfar said, “The joke at the school is they’re going to take it away when he (Obama) leaves.”

Thursday, February 19, 2009

Pastors Turn on Burris over Scandal

"And they will deceive every one his neighbour, and will not speak the truth: they have taught their tongue to speak lies, and weary themselves to commit iniquity." Jeremiah 9:3. Or so these pastors might say in their sermons on Sunday in regards to Senator Burris.

But, prompted by revelations Burris attempted to raise money for Blagojevich while seeking the Senate job vacated by President Barack Obama, some of those pastors will ask Burris to resign, according to the minister, who spoke on condition of anonymity because a meeting with Burris had not yet been scheduled.

I think Illinois needs to succeed from the union and become Blagojestan or something. That way their corrupt politicians don't have to come to Congress and make it even more corrupt then it already is.

Obama Mortgage Plan Blasted

It seems that Obama's mortgage plan is not as well received as he would have liked.

Homeowners who wrote checks for a significant down payment won't benefit as much as those who took 100 percent financing. Homeowners in states without significant foreclosures will subsidize those in states like California, Arizona, and Florida. And borrowers who initially had affordable mortgages -- but then refinanced during the housing bubble and used their homes as ATMs -- stand to benefit.

Actually the reward for people that saved their money for a 20% down payment and did the right thing aren't facing the stress of foreclosure right about now. Too bad these frugal people couldn't get some sort of tangible reward for their prudent behavior beyond their piece-of-mind. Maybe a waiving of refinancing fees (or a government reimbursement so the bank still gets the cash) if a person paid their mortgage for 5-10 years without interruption or something like that.

Wednesday, February 18, 2009

"Racist" New York Post Cartoon?

Here we go again with the charges of racism and such. I thought this was the post-racial era.

"How could the Post let this cartoon pass as satire?" said Barbara Ciara president of the National Association of Black Journalists. "To compare the nation's first African-American commander in chief to a dead chimpanzee is nothing short of racist drivel."

The problem is that if you read the cartoon you know they aren't talking about Obama as the dead chimp.

Obama didn't write the stimulus bill he outsourced it to Harry Reid and other Dems. Obama was just a cheerleader and Scare-Monger-In-Chief for the thing. So the heaviest-handed way to interpret the thing is to think that the bill was written by chimps. If you actually read the compromise bill you might have made that mistake. Also this cartoon nothing next to the naked racism of cartoonists like Ted Rall.

Obama's Housing Plan

It seems that $75 Billion of the TARP money will now go toward people trying to get out of foreclosure. The only bad part is that it doesn't address what will happen to people who are seriously underwater in their homes.

"It seems to offer little help to borrowers whose loan exceeds their property value by more than 5 percent," he said, noting that that requirement would limit the plan's success in some of the hardest-hit areas in California, Florida, Nevada and Arizona and parts of the East Coast.

Indeed, Obama himself said, "This plan will not save every home."

The goal is to lower many endangered homeowners' payments to no more than 31 percent of their income. But that depends on a high degree of cooperation by lenders who have been increasingly wary of new lending as the crisis has deepened.

The other bad thing is that it is voluntary so the banks don't have to participate if they don't want to. They should have made this a sting-attached to the TARP money instead of limiting executive pay. They could have forced any new TARP money be set aside to reduce homeowners mortgage payments to 31% of income.

Or they could have put some kind of loan renegotiation incentive into the "stimulus" bill. Perhaps allow the bank to sell the now renegotiated loan to Fannie or Freddie in exchange for some kind of tax consideration or tax holiday or something.

Tuesday, February 17, 2009

Dianne Feinstein Should Be Tossed Off of the Intelligence Committee

I can't believe that she blundered this badly and is still allowed to touch top secret documents.

Further evidence of the close working relationship between the two countries came last week, when Sen. Dianne Feinstein, a California Democrat who is chairwoman of the Senate Intelligence Committee, said the Predators are flown out of a base in Pakistan, not U.S. bases in Afghanistan, as many counterterrorism analysts had believed.

Her spokesman, Phil LaVelle, later said she was referring to a "front-page Washington Post story in March." But she made no reference to news reports in her remarks. Pakistan has since denied Ms. Feinstein's account, but former U.S. intelligence officials confirmed that it was accurate, lamenting the fact she stated it publicly. "It was a big mistake on her part," said one.

Why is this woman giving up American secrets so freely? I hope it is just simple incompetence and not some pathological need to weaken American foreign policy. Maybe she meant to say Afghanistan and accidentally said Pakistan. Whatever the case, a person with loose-lips like this should not be allowed to handle Top Secret information at all.

What is even worse is she is the head of the committee that has Top Secret information as its lifeblood. She should be quietly shown the door because she is not up to the job of protecting American secrets.

Israel Using a Secret War Against Iranian Nukes

I just have to wonder why this British newspaper felt a need to leak this information.

"Israel has launched a covert war against Iran as an alternative to direct military strikes against Tehran's nuclear program," Britain's Daily Telegraph said on Tuesday. "It is using hitmen, sabotage, front companies and double agents to disrupt the regime's illicit weapons project, the experts say."

Quoting intelligence experts and an unnamed former CIA agent, the newspaper said Israel's "decapitation" strategy had targeted members of Iran's atomic program, hoping to set back the country's nuclear ambitions without resorting to war.

The problem I have is that isn't this a casus belli? I mean Israel is supposed to be using spies to possibly kill scientists and sabotage facilities? You would think that was a declaration of war and Iran would strike back. This is a fine line for the Israelis to walk.

Especially when Obama is a big question mark in his support for their security. If Iran declares war on Israel citing the killing of their citizens as a casus beli will America come to their aid? What happens if Iranian planes start to pound civilian targets all over Israel and the IDF retaliates by hitting Iranian airfields? The only sure thing in that situation is an oil spike everything else is up in the air.

GM Reveals Restructuring Plan and Begs for More Money

It seems that GM has their begging bowl out again.

The automaker is already surviving on $13.4 billion in federal loans and said in a plan submitted to the Treasury Department that it would seek an additional $16.6 billion if economic conditions worsen, but it could achieve profitability in two years and fully repay its loans by 2017.

This is what they will do to restructure themselves in the meantime:

GM's plan details extensive cuts. The automaker would reduce its U.S. manpower from 92,000 salaried and hourly workers at the end of 2008 to 72,000 employees by the end of 2012. Worldwide, it envisions slashing 47,000 workers, including 37,000 hourly workers and 10,000 salaried employees.

In its Dec. 2 plan to the Bush administration, GM said it would cut the number of plants from 47 in 2008 to 38 by 2012. But the new approach goes further, cutting an additional five plants by 2012 to a total of 33 facilities.

GM's brands would be reduced from eight to four — Chevrolet, Buick, Cadillac and GMC — as the automaker said in December.

The company is considering a sale of the Hummer brand and a decision could be made by the end of March. The Saturn brand could be phased out by the end of 2011. The company is also considering its options for the Pontiac and Saab brands.

My guess is that the Obama adminstration will float them that $16.6 billion loan and hope for the best. There is no way that the UAW and their lobbyists will let 92,000 of their members get fired all at once. It will also signal a big time defeat for Democratic controlled Michigan.

Friday, February 13, 2009

Clawback in the Stimulus Bill Revealed

Well here is the details of the clawback that was written into the final deal.

The bill would impose bonus restrictions on senior executive officers and the next 20 highest paid employees at companies that receive more than $500 million from TARP. Companies receiving between $250 million and $500 million would face restrictions on bonuses to their senior executive officers and their next 10 highest-paid workers. The restrictions would apply to the top five employees at companies receiving between $25 million and $250 million.

In other words all of the top traders at the firm will get their bonuses cut even though they probably never traded the CDOs that are choking out these companies. Way to incentive these people so that they stay on at the firm and continue raking in big trading profits. They might actually like their new digs in Dubai after they leave the firm.

The Boomer's Great Recession?

This is a great article on who you need to blame for all of the mess we are in.

Baby Boomers, look in the mirror. What do you see? Someone figuring out how to turn a house after two years into a 50 percent profit? Or use its equity as an ATM? Someone who borrows against his home to pay cash for that BMW in the driveway, the one he really doesn’t need? Our system of politics and business encourages self-serving irresponsibility by rewarding it.

Yup the bailouts are all for companies that set themselves up for failure because they wanted another 1% extra on their supposedly AAA+ rated debt. All of the mortgages bailouts seem to be tailored for people that bought too much house for their income and did not save enough for a crisis. There were just too many 40" plasma TVs for the toilet, granite countertops, and people living like they were millionaires all on credit. I also like how this article has an actual call for change that I can believe in.

Start change by ridding the language of the word “great,” discard it along with “awesome” and all words associated with the Dr. Spock syndrome. Revive the language of the generation that won WWII. Restore humble words such as “grit,” “integrity,” “diligence,” “honor,” “responsibility,” “sacrifice” and especially “accountability” to the social vocabulary. Let Boomer hyperbole vanish along with the merchandise the scavengers fled with when The Great Indoors finally closed.

What Will I Get for the $10,000 in Debt that the Stimulus Will Cost Me?: +$15 Per Paycheck

Well now that I read that this stupid thing is going to cost me $10k in debt.

"This legislation falls woefully short," said House GOP Leader John Boehner of Ohio. "With a price tag of more than $1 trillion when you factor in interest, it costs every family almost $10,000 in added debt. This is an act of generational theft that our children and grandchildren will be paying for far into the future."

So I looked over how this bill will directly affect my wallet and here are highlights.

For most working individuals, the credit will be paid over time at roughly $15 per period, assuming 26 pay periods in a year. Estimated cost: $116 billion.

I won't be doing the following things that the bill covers:

1. I'm not a retiree so I won't get $250.
2. I won't be paying the AMT so that doesn't affect me.
3. I won't be buying a car so I don't get to deduct the sales tax.
4. I won't be buying a home so I miss out on the $8000 tax credit for 1st time home buyers.
5. I won't be going to college so I'm eligible for the American Opportunity Tax Credit
6. I can't get a Pell Grant since I won't be going to college.
7. I don't have kids so I don't get the child tax credit or the earned income tax credit
8. I have a job so I won't get COBRA benefits or Medicaid
9. I have a job so I won't get an additional 20 weeks in unemployment benefits
10. I don't qualify for food stamps so I won't see the increase the 13.6% increase in payments.
11. I'm not a needy family so I won't qualify for Temporary Assistance for Needy Families part of the bill.

So in other words I only qualify for 14% of total spending of the stimulus bill. Basically, I took out a loan from the government for $10,000 and am getting a $30 cash payment per month on that loan. That has to be one of the worst uses of debt I have ever seen in my life. If the government just gave everyone a $10,000 tax credit payable in installments it would have been a better stimulus then this bill. Oh well, that 12% approval rating for Congress will just drop to single digits as this recession gets worse.

Obama the Road Warrior

Hmm it seems that the White House may be no place for Obama after all.

Officials say that although Obama won’t necessarily travel every week, as was suggested in one briefing, he will continue to be out of the White House a lot. “He feels best, he is at his best, and our agenda is the most popular and at its best when it’s getting sold by the popular in the administration and the person who connects with voters,” one official said.

I think this is a pretty wise plan because the Salesman-In-Chief should be out there amongst the people drumming up support for his plans. Also he needs to clearly define what he wants and force Congress to back him not the other way around.

The biggest failure of the stimulus was getting Pelosi and Reid to write the thing in the first place. Obama should have presented them with the bill and had them make changes to it. So that way he gets his message across that he has the political capital while they have the 12% approval ratings. They need to sell his bills and not the other way around.

A longtime adviser contends that Obama “actually didn’t spend a lot of political capital” on the stimulus, “because at the end of the day, he wasn’t on the phone begging Democrats to vote for it." The adviser added: “He’s going to get credit for getting some stuff done at a time when people are just desperate to feel like something is happening.”

This longtime adviser needs to know that a failure of the stimulus written by Pelosi and Reid are going to be pinned on Obama. He can't fall back to the stance of "they gutted my bill" and that is why it failed.

Instead it is a case of Obama telling them to write a bill and it was crap so ultimately it is his fault for outsourcing it to Congress. However if it somehow succeeds (by some miracle) then Obama will have his thunder stolen by Reid and Pelosi who get to take credit for writing the thing.

This plan had all of the risks of failure and all of the credit going to someone else. Hopefully he understand that his voice will always be louder then Pelosi and Reid because he has a 68% approval advantage over them.

More Stimulus Specifics: I don't agree with these Economists

The more I read this thing the more I know it is just billions of dollars poured down the rathole. First of all these economists are probably pretty smart people but their statements don't sound right to me.

“There is an argument from behavioral economics that people react differently to big lump sums versus these smaller increases in take-home pay they’ll get every paycheck,” said Joel Slemrod, an economist at the University of Michigan in Ann Arbor and an expert on tax policy.

The problem is that the smaller increase amounts to $16.66 extra per paycheck for a single middle class person. I'm sorry but that isn't much money and this Slemrod guy should know that. It isn't enough to incentivize the person to do anything other then maybe buy a morning Starbucks again. I guess that may get more baristas hired or something but I don't see many jobs created by this measure.

I mean you can't pay off your credit card bill, pay the rent, or have it take care of your car payments. You can't even buy a video game for that money or take a date to the movies. Most people don't stay awake at night thinking "If I only had $16 extra a month I could get out of this mess." If it was like $200 per paycheck or something then we could talk.

This is regarding the $60 billion that goes to handouts for the poor:

Funding such programs is particularly effective, said Alan Blinder, a Princeton economist and former vice chairman of the Federal Reserve. “These are hand-to-mouth consumers. If you put cash in their hands they’re going to spend it right away,” he said.

The problem is that the cash you put into their hands can't help them not be poor. I wish they could have been in the form of grants for them to go to ITT, provide financial education, or job placement assistance or something more tangible. You need to use that $60 billion to lift them up and not keep them in poverty. Also I'm not sure how many jobs giving handouts to poor people actually creates. I guess there will be more bureaucrats shuffling paper or something.

However, if a poor person enters into a middle class lifestyle due to an upgrade in education or a better job then that stimulates the economy by $1000s per person. That person now has the chance to save for their kids college, their own retirement, or just live a more secure life. Instead this bill gives people a few dollars extra per month but keeps them in a perpetual cycle of poverty.

Here is the red meat of the bill:

The legislation includes $29 billion for highway construction projects; $16 billion for investments in public transit; $7 billion to expand access to broadband; and $11 billion to renovate the nation’s electrical grid. The measure also would provide $5 billion to weatherize low-income homes and $4.5 billion to make federal buildings more energy efficient.

I just wish that all of these numbers could have been bigger because these measures will actually create more jobs for certain industries. A new highway construction site helps the construction company, the planners, the heavy equipment maker, the aggregates miner, and the construction crew. There are jobs all along the way. Of course the projects must be planned meticulously so there aren't billion dollar bridges to nowhere that sunk the Japanese stimulus.

If the aid to states and consumers and the government spending all have the desired effect, there could be 3.5 million additional jobs in the U.S. economy by the fourth quarter of 2010, according to Fair’s model.

I hope this happens but I am highly pessimistic. There are just too many places where this money can be wasted and not actually create a job. If Congress asked themselves how many jobs would be created from every spending measure then this would have been Obama's first big win. Now, I can see it falling far short of 3.5 million jobs and could cost him his second term if the economy goes even more pear shaped from here.

Thursday, February 12, 2009

Gregg out at Commerce Secretary: I smell Forceout

I'm still not sure why Obama picked a fiscal conservative like Gregg in the first place.

White House spokesman Robert Gibbs said once it became clear Gregg was not going to support some of Obama's top economic priorities, it became necessary for Gregg and the administration "to part ways," Gibbs said. "We regret that he has had a change of heart."

Yeah, I think Gregg thought the Stimulus Bill would fail and Obama's people didn't like the sound of that. You have to support the President when you work for him and I guess Gregg woke up and found he couldn't do it. I mean a fiscal conservative would have to be crazy to support that bloated mess that is the Stimulus Bill.

They didn't touch on it but I think the White House looking over his shoulder in the census was part of the decision as well. Why should you take a job where a major part of your work will be overridden by your boss? The census needs to be seriously looked at to prevent any chicanery that rewrites Congressional Districts. It will be a way for one party or another to hold the reigns of power for decades.

What the Stimulus Does Do is Help the Poor

Well at least the stimulus is good for something. It will make poor people stay that way.

People who get food stamps — 30 million and growing — will get more. People drawing unemployment checks — 4.8 million and growing — would get an extra $25, and keep those checks coming longer. People who get Supplemental Security Income — 7 million poor Americans who are elderly, blind or disabled — would get one-time extra payments of $250.

The idea of giving people $25 more in they unemployment checks is so asinine that it is insulting. That amounts to like a movie for 2 people or a few Subway footlong sandwiches. This part is especially bad:

Advocates for the poor say that directing stimulus money to the neediest Americans makes sense because they're the most likely to put cash back into the economy quickly.

"Poor people just spend money faster, because they're really living at the edge," said Elizabeth Lower-Basch, a senior policy analyst at the private Center for Law and Social Policy.

Yeah but the poor spend money fast but then they are right back where they started. The goal should be getting a poor person to be a middle class person. Adult education and help finding good jobs even in the government sector is what this bill should stimulate. Also you want to provide incentive to keep the person away from "living at the edge" and move them toward saving for the future. This part is especially pie-in-the-sky:

Sharon Parrott, a senior analyst at the Center for Budget and Policy Priorities, said that while the benefits provided under the stimulus program are short-term, they could have a lasting impact on families by helping them maintain stable housing and avoiding disruptions in schooling.

Providing short term benefits does not maintain anything. To maintain stable housing you need to give a person a steady stream of income not a one time $250 that they can't even use to pay 1 months rent or $25 extra dollars per unemployment check.

Stimulus Bill is Gutted In Final Negotiations: Mark My Words It Will Fail

Well it looks like all the work to get the stimulus bill down to $789 billion has pretty much doomed it to failure. Almost all of the pro-business stuff was chopped out of it or just watered down basically so it will stimulate hardly anything. I assure you that people will doing postmortem on why the stimulus failed in just a few months time. Here are some highlights on what they cut out of the stimulus.

A proposed $15,000 tax credit for homebuyers was reduced to $8,000, Democratic Senator Max Baucus said, a decrease that may hurt U.S. homebuilders such as Centex and D.R. Horton Inc.

Yup they watered down the thing that could have *directly* helped the housing industry. I wonder if anyone on Congress know that falling house prices are what is causing most of this mess. $15k for buying a house is a big incentive and represents nearly half a years salary for most Americans. Plus it gets people to remove supply from the system so that prices can come back to equilibrium again.

A family could have conceivably put 3 years worth of retirement money away or payed for 2 years of college simply by buying their first home. $8k is still good but the psychological impact of getting what could have been a 10% discount on a $150K home is huge.

In a loss for big homebuilders and manufacturers, negotiators all but eliminated the biggest tax cut for businesses, a provision that would let companies convert losses into tax refunds, Baucus said.

Baucus said the measure, which would have let companies claim an estimated $67.5 billion in tax refunds this year and next, was sacrificed to help keep the final package under $800 billion.

This change might single handedly doomed this thing to failure. $67 billion in tax refunds in the next 2 years could have easily kept some companies from laying off more workers. It was a perfect way for companies to turn the losses they are suffering right now into capital down the road. The recession could have actually been a somewhat positive thing for companies that are suffering big losses now. This could have softened the blow for many companies.

Democratic Senator Barbara Mikulski of Maryland said her plan to aid the auto industry by letting car buyers take a tax write-off on their interest payments was reduced to $2 billion from the original $11 billion.

Didn't we just invest billions in these companies so that they wouldn't go bankrupt? So they water down the very amendment that could have helped the auto industry by giving a financial incentive for consumers to buy a car. Instead they gutted it and took away the ability to deduct the interest if you had your car financed. More case-in-point for why Congress is so reviled in this country.

Lawmakers scaled back Obama’s proposed payroll tax credit to $400 for individuals and $800 for families rather than the original proposal of $500 and $1,000, Baucus said. The plan includes an alternative minimum tax cut, he said.

They even gutted Obama's campaign promise? The GOP plan to cut payroll taxes would have been the best solution to help the middle class but $500 is $500. What is wrong with giving people an extra $100? That is like a week of groceries or like 4 tanks of gas that the government is taking away.

However the AMT tax cut is a so called "tax cut for the rich" that all the Dems supposedly hate since only upper middle class people get hit by it. Whatever the case this thing is a flawed joke that will stimulate hardly anything. I will be shocked if 4 million jobs will be saved or created due to this weak-kneed bill.

Retail Sales Up for January: I'm not joking

It seems that economists were way off yet again.

The Commerce Department reported Thursday that January retail sales rose 1 percent from December after having fallen for six straight months. Wall Street economists surveyed by Thomson Reuters had expected January sales to show a drop of 0.8 percent.

So that is a 1.8% discrepancy difference from their opinion to the real number. I wonder if they just pulled their number out of the hat or that deep discounting actually brought people out to buy? Sometimes economic prognostication seems more like voodoo then regular science.

Wednesday, February 11, 2009

Wife Swaps' Stephen Fowler is the Audience for Obama's "Bitter Clingers"

It seems that Wife Swap may have inadvertently revealed one of the the people that Obama addressed his "bitter Americans that cling to guns and religion" remark back during the campaign. Fowler is the pure embodiment of the far left coast Chablis sipping liberal that has such disdain for the "flyover states."

Except that Fowler, a British expatriate, didn't even try to get along. He was phenomenally cruel to Gayla, giving her the silent treatment for much of her stay. When he did talk to her, he managed to insult, among dozens of groups, fat people-the fat people who pay his wife money to make them not fat. (His wife suggested that she looked down on people who didn't have advanced degrees and was not proud — shades of Michelle Obama! — to be an American. But her behavior was so much better than her husband's that it hardly drew notice.) "Agenda, that's a big word for you," Fowler said as Gayla stumbled through a set of rules she sought to impose on his family. "The most boorish and abusive of husbands ever," concluded a blogger on Reality Roll Call.

This liberal snottiness and arrogance is why their message does not reach the majority of Americans. Fowler sees the common American as fat, lazy, and stupid but he still wants to preach his agenda of sustainability (or whatever liberal cause he is pushing on his T-Shirts) to that person. He wants to "help" the person he so disdains. So in this case the message is destroyed by the messenger.

The sad thing is that people like Joe Biden identify with and seem to want to help the common man. So whenever we see a person like Fowler who is cruel to some women from Missouri it turns more and more people against liberals. Fowler destroys whatever message that Biden is trying to preach.

How can you listen to a "message of sustainability" when the messenger is an aberrant scumbag that should simply move back to Britain so he can be away from the unwashed masses of Americans? That is the liberal paradox. How can the party for the common man show such contempt for that selfsame common man?

World Oil Demand in the Crapper: Bad for Energy and Mullahs

I love how the world turns so quickly. We had $140 oil in July of last year and now this has happened.

Demand is expected to fall by 980,000 barrels per day in 2009 to 84.7 million, the agency said in its monthly market report. The IEA's forecast last month was for demand to contract by 500,000 barrels per day this year.

If the oil producing countries don't cut supply fast enough we may see some sub $20 oil in the future. That should be good for consumers but bad for the electric car industry, renewables, alternative energy, as well as drillers and oil service and exploration companies. It might be good for refiners depending on how gasoline consumption shakes out.

We might also get a collapse of Iran's government due to social unrest caused by massive unemployment. However, if the Mullahs start massacring kids in the streets of Tehran Obama better not sit there and act like nothing is happening like Bill Cinton did in Rawanda.

Stimulus Bill Enters Final Stretch Weighs in at $789 Billion

It looks like they are stripping all the good stuff out of it in order to get the price tag down.

Working to accommodate the new, lower overall limit of the bill, negotiators effectively wiped out a Senate-passed provision for a new $15,000 tax credit to defray the cost of buying a home, these officials said. The agreement would allow taxpayers to deduct the sales tax paid on new car purchases, but not the interest on loans for the same vehicles.

The did keep in $6 billion for school repair and modernization which should be good for construction stocks. Hopefully the money is used for buildings and coats of paint and not wasted on stupid crap.

Sen. Tom Harkin, D-Iowa, told reporters that $6 billion would be set aside, and officials said it could be spent only on repair and modernization work, a limitation designed to appease the moderates.

But officials said House Democrats were holding out for as much as $9 billion.

Tuesday, February 10, 2009

Stimulus Support Slipping

I think Americans are finally waking up and starting to understand that this is just a big pile of pork and not enough tax cuts and infrastructure spending.

Notably, support for the proposal is now much lower than it was in January among those who have heard a lot about the economic stimulus. By 49% to 41%, those who have heard a lot about the proposal now see it as a good idea; in January, those who had heard a lot favored it by more than two-to-one.

It is just too much sod for the Capital Hill lawn and clawbacks for Wall Street and other assorted nonsense. If it was 40% tax cuts to 60% spending from the very get-go then I think a lot more Americans would have been behind it.

Obama should understand that Pelosi and Reid are not reliable when it comes to writing bills that Americans can stomach. I think Obama's original bill may have been an easy sell. But now the bill that is moving through Congress is a bloated mess and more and more Americans are catching on to it.

Clawbacks Added to Stimulus Bill

Yet another feel good populist BS thing.

The $838 billion measure includes an amendment penalizing companies that paid bonuses greater than $100,000 to executives after receiving government rescue funds last year. The amendment would require the companies to repay within four months any portion of the bonus above $100,000 or face an excise tax of 35 percent on the portion of the bonus above $100,000.

What keeps these companies from just paying the excise tax on the $100,000? There is no reason for them to give the money back early. They will just pay 35% on it and forget about the early payment clause. Also this smacks of double taxation because the people that got the bonuses will have to declare them as earned income and pay taxes on them.

I think the Obama Administration just wants to move Wall Street to Dubai or London where the government isn't so rapacious when it comes to bonuses. Also I wonder if it is the right time to penalize people that are trying their best to keep their businesses afloat? They could just jump ship and work for a private equity firm and leave their old company high and dry and let them fail. I'm pretty sure some of these guys probably won't work nearly as hard if they know the government suddenly becomes a member of our Board of Directors.

Monday, February 09, 2009

The New Culprits of the Financial Mess: TLC, Bravo, HGTV, and Fine Living Networks

I have been saying this for a while but I have finally saw that New York Magazine has pointed a finger at some of the people you can truly blame for this financial mess.

The real villains here, the truly bad seeds at the heart of this crisis, have gone unpunished thus far and are still in operation. They are Jeff Lewis and Ryan Brown of Bravo's Flipping Out, Armando and Veronica Montelongo of TLC's Flip This House, Kristen Kemp of TLC's The Property Ladder, Kendra Todd of HGTV's My House Is Worth WHAT?, and the TLC, Bravo, HGTV, and Fine Living networks in general. All of them encouraged people to take out massive loans in order to buy and renovate homes and sell them at a profit when, really, most people have terrible taste, and furthermore, are bad at laying tile. These shows are still on! WHY?

Yup, these asinine shows told people how to become "Real Estate Millionaires" by borrowing money to buy a home and then borrowing more to fix the home then selling it for a profit. It is all well and good if the bigger fool theory is in place. However, if there is no one around to buy the home then the mortgage defaults, the loan goes sour, and the bank gets a home that no one wants to buy with a bunch of granite countertops and stainless steel appliances in it.

I think Obama should shoot a clawback at Robert Kiyosaki and his "Rich Dad, Foreclosed on Dad" crap that made him his millions. I think they need to limit that guys salary to $500K as well as those "Wall Street Fat Cats" that pretty much gave people what they wanted. Which was an all consuming need for a life they couldn't sustain; with money they had no chance of paying back. I think Kiyosaki has his name right below Dick Fuld in who needs to be blamed for this recession.

You Can Now Invest in TARP 2. Is it a good deal?

It seems that the Son of TARP that is going to be rolled out tomorrow might be an interesting alternate investment depending on how it is structured.

The administration is expected to announce Tuesday that the government's latest bailout strategy will be enticing big investors to buy more than $1 trillion in troubled assets from the banks. The hope is that, free from the drag of subprime mortgage debt and other bad investments, banks will be more likely to start lending money again and the economy will rebound.

If the government eats even 50% of the losses then it might be a pretty good deal depending on how it is set up. It would be like buying a super risky stock and having the government eat half of your loss if the company goes belly up. However, if the number is too small like 20% reimbersement for losses then it is like throwing good money after bad.

Most of this debt is still performing for the most part or the homes that they are backed with would have been forclosed on already. There is quite a bit of risk that the homeowners could lose their jobs in the recession and then kill off the loan. If expert risk managers can get in there and vet the loans for failure then you might be able to get a chance of a lifetime on these assets. Also if the government provides some way to reduce loan rates to limit forclosures it will help these assets as well.

It is kind of like having the government buy an entire shipwreck site of a Spanish Galleon full of gold and then bringing it to the surface. You would have to go through plenty of muck and rotted timbers but there is gold waiting in there. The government may even pay half any losses you get from removing the muck and timbers as well.

What we need to know now is if the government is paying an inflated price for that shipwreck site or not. It would also be nice to know the timbers and muck to gold ratio as well. In any case going long the "Bad Bank" from TARP 2 might be quite a handsome investment if you hedge the downside and are prepared to do some digging.

Senator Patrick "McCarthy" Leahy Wants a Witch Hunt Committee?

I hope everyone ignores Sen. Patrick "McCarthy" Leahy and his "Truth" Commission.

"We need to come to a shared understanding of the failures of the recent past," Leahy said in a speech at Georgetown University.

"Rather than vengeance, we need a fair-minded pursuit of what actually happened," he said. "And we do that to make sure it never happens again."

This is still more "Get Bush" doctrine even after the guy is back in Crawford cutting brush. The Dems are in power but they still want to look back and give Bush a black eye. Obama has rightly avoided this "Truth" BS because he knows that every President has some scandal in their administration and he doesn't want to get investigated after his 4 years are over. It is just more of the same "Bush Derangement Disorder" that "Tailgunner Pat" Leahy is foisting on everyone.

This is Not the Way Obama Wanted to Start the Week

You know it is going to be a tough week for him when he hits his head going into Marine 1. That really looks like it hurts as well.

Obama Hits the Campaign Trail Again

Wait I thought he already won the Presidency but he seems to still be campaigning for some reason or another.

At ease back in campaign mode, Obama took a range of questions after making an opening pitch for the stimulus package. He tried to put the economic legislation in real terms, saying it would help people through broader unemployment benefits, tax relief and job opportunities.

"Being here in Elkhart, I am more confident than ever that we will get where we need to be," Obama said. "Because I know people are struggling, but I also know that folks here are good workers and good neighbors who step up, who help each other out, who make sacrifices when times are tough."

I guess he actually went into the den of the "clingers" and assured them that new sod for the capital hill lawn will somehow create 4 million jobs and rescue Elkhart's economy. I'm pretty sure that the American people are smarter then that. If he did, however, tell them that they would get more money in their next paycheck due to income tax cuts then he would be talking their language.

Ebay Former CEO to run for Governor of California

I guess she is running for technocrat and chief to replace the Governator.

Former eBay Inc Chief Executive Meg Whitman, one of the highest profile Republican technology executives in Silicon Valley, has formed a committee to explore running for governor of California in 2010, the first official step of a campaign.

Could she be angling for a Presidential nod in 2012 or 2016? I could see that happening if she wins in California. We already elected a Republican governor from that state.

Friday, February 06, 2009

Tentative Stimulus Deal Reached

It seems like the price tag might be more palatable for Americans as well.

At $780 billion, the legislation would be smaller than the measure that cleared the House on a party-line vote last week. It also would mean a sharp cut from the bill that has been the subject of Senate debate for a week. That measure stood at $937 billion.

At $780 billion it is about the same size as the TARP so that Trillion dollar figure won't be thrown around as much. Now I just need to see the bill in order to pass judgment on the thing. There better be tax cuts for me and no freebies for liberal fat cats or I will not be happy.

Why Does Amazon Thrive?

This is a great breakdown on why Amazon is doing so well while almost every other retailer in the world is suffering.

Customers want cheap stuff, but they also want convenience, quality, and a friendly, hassle-free atmosphere. Amazon isn't Tiffany's, but it's not a chaotic, out-of-the-way discount zoo, either. Instead it occupies a sweet middle spot—it's the nicest place to buy cheap stuff. These days, that combination goes a long way.

I think this is the crux of Amazons appeal. You can save money but not feel like you are forced to do it. I think the idea that people can still feel like it wasn't the recession even though they are forced to save money. Amazon fills the niche that Wal-Mart or the Dollar Store has a hard time with. They provide just about everything you want at a discount and without the hassle of driving, parking and dealing with giant bins of things you probably wouldn't buy if there wasn't a recession on.

The Historical Record on Sarah Palin

This is a very insightful piece that should go into the historical record book whenever someone asks about Sarah Palin and the election of 2008. This part is especially good.

Either way, the Palin moment shed a powerful light on the power, the potential, and the ultimate inadequacy of a conservatism grounded solely in cultural populism. It also exposed the vulnerability of the Left to a challenge to its most cherished claims—as the sole representative of the interests of the working class and the only legitimate path to political power for an ambitious woman.

And, perhaps even more telling, it revealed the unfortunate and unattractive propensity of the American cultural elite to treat those who are not deemed part of the elect with condescension and contumely.

I think Palin is the model for a conservative woman that wants to hold the reigns of power to follow. This woman, however, needs to keep in mind that they *must* fill their own vessels. They cannot rely on the MSM for anything and she needs to show that she is a strong, and capable leader and must not fall into the trap of the cultural elite.

I think the next Sarah Palin will come out of the women now serving in Iraq. War heroes usually make decent Presidents and a woman that can lead men into battle can easily lead this country. I think the Republican party needs to scour the ranks of the military as they start to leave the service. I think the Iraq War will spawn another "greatest generation" of American leaders and the GOP needs to be there the harness them.

Thursday, February 05, 2009

Blagojevich Earmark in the Stimulus Bill

You read that right. The disgraced former governor put a $2 billion earmark in the stimulus bill.

After FutureGen was abandoned, disgraced Illinois Governor Rod Blagojevich paid Cassidy and Associates, a major Washington, D.C. lobbying firm, $468,000 in public funds to lobby to restart the project. The Illinois delegation in Congress has also been pushing hard for the FutureGen earmark, despite the fact that the Obama administration has been vocal about their opposition to earmarks in the stimulus, and has even specfically said they are oppposed to including funding for FutureGen in the bill.

Obama is against this but it is still in the stimulus. I have to agree that this thing is just one big Christmas Tree for liberal fat cats. $30 billion for infrastructure is just too little if they wanted to follow the Obama rhetoric of biggest road expansion since Eisenhower created the Interstate Highway system in the late 50s. I hope the GOP can block the thing and turn it into actual stimulus and not just a bunch of giveaways to Blago.

Congress Bungles Digital Switchover

It seems that instead of everyone switching over to digital Feb. 17 we will end up with a piecemeal transition over the next few months.

When Congress postponed the mandatory transition to digital TV until June, it also gave stations the option to stick to the originally scheduled date of Feb. 17.

That means the shutdown of analog signals, which broadcasters had hoped would happen at nearly the same time nationwide, could now unfold in a confusing patchwork of different schedules.

Instead of sticking with the date that has been in the works for what seems like years we will push things back 4 months pretty much for no reason at all. So instead consumers will get just certain channels with only some being blacked out on Feb. 17. There will now be no rhyme or reason to what channels will be okay and what channels will be blacked out. And people wonder why Congress has such low approval ratings.

Hamas Negotiators Found with Millions in Suitcases

It looks like Hamas "negotiators" were trying to add to a slush fund/buy more rockets/pocket bribes or something.

An Egyptian security official, speaking on condition of anonymity because he was not authorized to speak to the media, said the group initially refused to be searched by Egyptian authorities at the Rafah border crossing. When the group relented, authorities found $7 million and 2 million euros ($2.5 million) in cash in their suitcases. Another security official, also speaking on condition of anonymity, said $9 million and 2 million euros were found. The discrepancy could not be immediately explained.

My money is on cash funneled out of pro-Hamas groups that they were taking into Gaza for either bribes or bomb making material.

Tuesday, February 03, 2009

Wired Writer Gets Job at Wal-Mart

He finds that Wal-Mart it really isn't as bad as Barbara Ehrenreich of Nickel and Dimed fame will have you believe.

Several of my co-workers had relocated from other areas, where they had worked at other Wal-Marts. They wanted more of the same. Everyone agreed that Wal-Mart was preferable to the local Target, where the hourly pay was lower and workers were said to be treated with less respect (an opinion which I was unable to verify). Most of all, my coworkers wanted to avoid those “mom-and-pop” stores beloved by social commentators where, I was told, employees had to deal with quixotic management policies, while lacking the opportunities for promotion that exist in a large corporation.

I have read in several places that many Wal-Mart associates move from other stores and stay in the system for their entire career. They must be doing something right. I think most of the anti-Wal-Mart sentiment is out there because they aren't unionized. If there was a Wal-Mart workers union affiliated with the Service Employees International or something then most of the criticism would disappear overnight.

Amazon Introduces New Downloadable Game Service

This seems like a pretty interesting way to pick up those Jewel Quest style puzzle games.

Gamers, take note. Today we are pleased to announce the beta launch of the Amazon Game Downloads store,, our first step into the downloadable games space. Loaded with an ever-growing roster of casual gaming titles for your PC, the Amazon Game Downloads store features more than 600 games on day one, all priced under a tenspot at either $6.99 or $9.99. As a bonus for exploring our new Game Downloads store, for the next week we’re offering three free, full-version games – “Jewel Quest 2,” “The Scruffs” and “Build A Lot.”

Too bad there is no Rocket Mania 2 on there.

Monday, February 02, 2009

University of Texas Physicists Figure Out How to Recycle Nuclear Waste

Well, I think it might be time for Mike Kotschenreuther, Swadesh Mahajan and Prashant Valanju, of the IFS, and Erich Schneider of the Department of Mechanical Engineering to win the Nobel Prize for Physics because they may have solved one of the only drawbacks left to nuclear power. Here's how they did it.

First, 75 percent of the original reactor waste is destroyed in standard, relatively inexpensive LWRs. This step produces energy, but it does not destroy highly radiotoxic, transuranic, long-lived waste, what the scientists call "sludge."

In the second step, the sludge would be destroyed in a CFNS-based fusion-fission hybrid. The hybrid's potential lies in its ability to burn this hazardous sludge, which cannot be stably burnt in conventional systems.

"To burn this really hard to burn sludge, you really need to hit it with a sledgehammer, and that's what we have invented here," says Kotschenreuther.

One hybrid would be needed to destroy the waste produced by 10 to 15 LWRs.

You could even make these hybrid reactors a part of the system so the act of destroying the waste will actually generate power as well. Now that is a cool deal. I wonder how they will be getting the sludge to the hybrid reactor though? I guess in barrels in the back of a truck or something. Either way these Physicists just earned themselves $1.5 million dollars and may have solved the global warming problem in one fell swoop. Hook 'Em Horns!

Republican Stimulus Plan Provides Immediate Relief

Unlike the Dem Plan which is all about the pork-barrel and $500 next year sometime. Here is the highlight of the GOP plan.

McConnell also said Republicans favor cutting the two lowest tax brackets as a way to " put money back in people's hands directly." If adopted, that would reduce the tax rate from 10 percent to 5 percent for the first $8,350 in individual income for the current year, and $16,700 for couples. The tax rate would be lowered from 15 percent to 10 percent on income between $8,351 and $33,950 for individuals and between $16,001 and $67,900 for couples.

So that means they will start getting more money in their next paycheck and not next year after we are already recovering from the recession. Nobody can argue against receiving more money each paycheck. The other part of the plan tackles mortgages:

The goal was to have banks lower the interest rate to 4 percent or 4.5 percent on 30-year fixed rate loans for many primary residences, by directing Fannie Mae and Freddie Mac to buy the mortgages.

In other words the US Government will provide a low interest/fixed interest loan that is below the rates other mortgage brokers charge. That means Uncle Sam has become a mortgage market monopoly that will funnel all new mortgages into government controlled Fannie and Freddie. In other words nationalizing the mortgage industry in the US. Let's hope the cure is not more destructive then the cause.

Pork and Eugenics in Stimulus Bill?

That may be the case according to this CNN article. Here is the pork:

I'd settle for removing more of the ridiculous items that House Democrats slipped into the legislation to advance their sociopolitical agenda. Like $350 million for child care on military bases. Or $335 million to prevent sexually transmitted diseases.

Here is the creepy eugenics part which amounts to $200 million for birth control funding to stimulate the economy.

When ABC's George Stephanopolous asked Pelosi to explain how birth control helps the economy, here's what the speaker said: "The family planning services reduce cost. They reduce cost. The states are in terrible fiscal budget crises now, and part of what we do for children's health, education and some of those elements are to help the states meet their financial needs. One of those -- one of the initiatives you mentioned, the contraception, will reduce costs to the states and to the federal government."

You know the nation's cupboard is bare when politicians propose limiting the number of births as a way of improving the economy. That's a conversation we shouldn't be having.

The bad part is that the people with higher birthrates are usually Latino or Black. So Pelosi pretty much said she wanted to lower the birthrates of minorities in order for "states to meet their financial needs." Pelosi must really be losing it when she considers reducing the number of future Latinos and Blacks as a way to "reduce costs."