Wednesday, July 25, 2012

Game Changer to Fix the Euro?

This sounds like a very interesting idea that should be investigated. It might be better than the band-aids and can kicking that seems to be going on right now.

The proposal is based on a plan by the German Council of Experts. Each country puts all debt above the Maastricht ceiling of 60pc of GDP into the fund. Each would be responsible for its own debt but would be able to borrow through joint bonds, raising money on Germany’s credit card. 

The debt would be paid off over 20 years, with each state putting up foreign reserves, gold and other collateral to ensure compliance. It is the opposite of fiscal union: the eurozone would return to fiscal sovereignty and, since the liabilities would be fixed and the fund self-liquidating, it would comply with Germany’s constitution. 

In other words pool all the debt above a certain ceiling and stick it into one big sinking fund and monetize it using Germany's credit rating. Then you get a bunch of hard assets from each nation to collateralize the debt. I wonder if this means Spain would have to put up piles of gold and their airports and highways or something to hold against the debt in this fund?

It sounds like a weird kludge at first glance but I would love to see some eminent economists get out their green eye-shades out and pour over this idea. It's better than the whack-a-mole response that they are doing now.

It Seems BB&T is a Big GOP Money Spinner

While researching regional banks I came across some interesting information regarding BB&T.

The Times picked up the gauntlet this week, quoting the BB&T CEO Kelly King — a board member of the Financial Services Roundtable:
“If the president doesn’t become a little more balanced and centrist in his approach, then he will likely lose that support [of financial companies].”
Interestingly, according to campaign finance records, King has donated exclusively to Republican candidates, and BB&T’s PAC has historically weighted its contributions in favor of Republican candidates regardless of the party in control. It sounds like a guy who doesn’t even donate to Democrats is trying to shake them down for concessions on financial market reforms based on their desire for campaign contributions — and reporters are lapping it up.

You figure all big bankers would be pouting money into the GOP after Obama stabbed them in the back and started blaming them for nearly all of the nations ills. The "fat cat banker" meme has been the attack of choice by the White House for years. Only now do they understand that a "fat car banker" like CEO King provides the capital for the economy to run. If BB&T didn't crank out the loans to small businesses there would be almost no sustainable hiring in America.

Creator of the Financial Supermarket Calls for Banks to Be Broken Up: Good Idea!

I have to admit that Sandy Weill has a point when he says this:

“What we should probably do is go and split up investment banking from banking, have banks be deposit takers, have banks make commercial loans and real estate loans, have banks do something that’s not going to risk the taxpayer dollars, that’s not too big to fail,” Weill told CNBC’s “Squawk Box.”

He added: “If they want to hedge what they’re doing with their investments, let them do it in a way that’s going to be mark-to-market so they’re never going to be hit.”  

It might be a good idea to require large banks to spinoff their investment banking arms so that one side doesn't hurt the other when there is a crisis. So you have to solid, staid bank with its deposits and loans that pays a generous dividend. Then you have the go-go high risk, high reward of the investment bank that underwrites debt and trades commodities and such.

I think this would unlock quite a bit of value and go a long way to creating confidence that my money won't be used to bail out a bunch of huge banks. Right now I would only invest in regional banks because you can see they take in deposits and loan out the money for a certain rate of return. They pay a decent dividend and you won't have to worry about a Spanish bankruptcy damaging their balance sheet or even cause them to fail if you are long them. You can also read their 10Q without getting a headache or wondering what sort of assets aren't included in these figures.

Zynga Gets Hammered: Misses Pretty Badly

Well it seems that Farmville and Words with Friends is just not paying the bills anymore.

But what really dragged on Zynga's stock is the fact that the company lowered its outlook for 2012, saying it now expects bookings in the range of $1.15 billion to $1.225 billion, far short of the up to $1.5 billion Wall Street expected. 

Now the company’s projecting non-GAAP EPS for the year in the range of 4 to 9 cents, just a fraction the 26 cents that’s Wall Street’s consensus.  

This is guiding quite a bit lower to say the least. I wonder if this bodes ill for Facebooks earnings tomorrow? I just thinking the give the game away for free and use ads model might not be a good recipe for growth unless there are compelling things to spend money on.

Tuesday, July 24, 2012

Apple Takes it in the Face: I think Everyone is Waiting for iPhone 5

I have to agree with Apple CFO Peter Oppenheimer.

Some consumers are believed to be holding off on purchases on the device ahead of the expected launch of the iPhone 5 this fall. Apple has never confirmed any plans or timing for a new iPhone device, though Oppenheimer said elsewhere on the call that a "fall transition" was also a big factor in the company's lower gross-margin forecast for the September period.

There seems to be no real reason to buy a Siri iPhone when the iPhone 5 should hopefully kick so much ass. Also the Apple TV is coming out pretty soon and will hopefully be great as well. I might go long Apple again if it drops a little more. This might be a good time to buy the stock at a discount.

Obama Still Leads Romney: I Think it is Because Mitt is Unlikable

Well it seems that Obama is still ahead of Romney 49 to 43.

Yet the countervailing weight holding down Romney is how voters perceive him personally. Some 35 percent of voters view the former Massachusetts governor favorably, while 40 percent view him unfavorably. That makes him the first presidential candidate viewed unfavorably by a plurality of voters in advance of his summer nominating convention since Bill Clinton in 1992.

Some of this is from him not submitting his tax returns. The idea of a rich dude hiding a bunch of money in a Cayman Island bank account is something Americans can stomach while they might be looking at a second recession. I mean most rich guys and celebs do all sorts of tricks to avoid taxes but Romney still should release those records. It would show that he has nothing to hide.

When I was first looking at Romney I figured that him being a rich plutocrat will hurt him in the long run. That is why I supported Herman Cain and Mike Huckabee because they could probably release 10 years of tax returns in an instant. Then you will have all these tax pros laughing at how they didn't take advantage of this loophole or that loophole to avoid paying taxes.

The whole idea of people gaming the tax system to pay less taxes is a joke. That is why comprehensive tax reform where they get rid of a ton of deductions and credits and things should be done soon. Simply everything, make sure everyone pays something, and cut rates across the board and Americans should rejoice. I still like Reagans tax idea. Three lines: What you made, percentage of what you made, what you pay. Write a check for the amount in line 3.

Thursday, July 19, 2012

An Idea for Penn State: Donate the Profits of the 2012 Season to Child Sex Abuse Victims

I think this would be a great way to heal what has happened at Penn State.

In the coming days, this is the statement I'd like to hear from school president Rodney Erickson: "We're playing football in 2012, but we're not playing for glory or money. Every dime of profit over expense will go to victims of child sexual abuse in the State College area. Every Penn State helmet will bear the child sexual abuse blue ribbon symbol. Every home game will have a moment of silence before kickoff in recognition and support of those who have suffered from our school's failure. If we earn a bowl bid, every member of the travel party – including administrators and coaches – will spend an eight-hour day at the bowl site interacting with abuse victims. 

Nick Saban has a similar idea as well.

''Maybe they ought to tax all the tickets that they sell on athletics and give the proceeds to some child abuse organization. Or something like that, rather than worrying about some punishment that is really going to have no positive affect on anything.''

The Alabama coach didn't go into details of how a tax would be implemented. He stressed his comments had to do more with philosophy than a real recommendation.

I think that would be a fairly positive outcome. Maybe permanently implement this tax as a way of giving back to the victims.

Monday, July 16, 2012

Democrats Willing to Plunge the US into Recession to Get back At the Rich

This is just the kind of small-minded approach that will damage our economy.

Sen. Patty Murray (D-Wash.) on Monday announced that Democrats are willing to allow a slew of tax cuts and spending provisions to expire if Republicans refuse to raise taxes on the wealthy, potentially inching the country off a "fiscal cliff."

"If we can't get a good deal, a balanced deal, that calls on the wealthy to pay their fair share, then I will absolutely continue this debate into 2013, rather than lock in a long-term deal this year that throws middle-class families under the bus," Murray, a budget committee member and former co-chair of the debt supercommittee, said at a Brookings Institution discussion of the "fiscal cliff."

In other words if they don't get their pound of flesh out of the wealthy they are going to make every American suffer. Of course the wealthy will not be impacted as much as the middle class because any downturn means huge layoffs just when the economy is trying to recover. What they need to do is comprehensive tax reform and then work on the "fiscal cliff" after that. 

Friday, July 13, 2012

Condoleezza Rice at VeeP? Romney Will Win the Election in a Landslide

Condi would be a VP pick that would win him the election outright and he needs to seriously consider it.

The Drudge Report ran a blaring headline late Thursday night reporting that sources within Mitt Romney's presidential campaign say Condoleezza Rice, who served as secretary of state and national security adviser under President George W. Bush, is a "front-runner" for the running mate slot.

She has demurred at VP as early as last month but maybe they can convince her to run. Hell, a VP slot could make her President in 8 years if she chooses that route. She doesn't seem like a person that wants that office but she could certainly do the job if she wanted.

She is the multilingual and an actual intellectual unlike Obama who is a fake intellectual. She is one of the few Americans that can stare down Putin and speak to him in perfect Russian. She is an exciting figure for conservatives and would obliterate Biden in any debate. It would be like a grown woman and an 8 year old boy debating one another.

Thursday, July 12, 2012

Obama's Biggest Mistake was "Not Telling a Good Enough Story?"

I would go with not knowing jack about creating a job or how businesses work and then not getting someone in there that can educate him. Instead he just said this mess:

"When I think about what we've done well and what we haven't done well," the president told CBS television in an interview, "the mistake of my first term - couple of years - was thinking that this job was just about getting the policy right."

"And that's important. But the nature of this office is also to tell a story to the American people that gives them a sense of unity and purpose and optimism, especially during tough times," Obama said in an excerpt of the exchange with Charlie Rose.

No you don't "tell them a story" which implies that you are telling them a fairy tale. Instead you simply instill in them a sense of unity and purpose and optimism through deeds and not style. You do this through something other than class warfare and setting fire to a trillion dollars of their money. Also blaming the guy that was there before you even after being in power for an entire term is also such a waste of time.