Calm before the storm?

June 30, 2008

My early evening walks around the ‘hood this weekend have a new, strange element. Fewer cars driving (and speeding) about, less people in the local merchants- and this is a pretty lively area, located just eight miles from downtown Los Angeles.

Now, I am aware this could just be down to most people having left town for the holiday week.  Perhaps too, folks have modified their drving habits to try and offset that $5 per gallon price of petrol- which would explain the empty parking lot at Vons and Pavilions.

In light of the financial crisis confronting this nation, it seems to me a bit, well, odd. Can this be ignored? Am I alone here? Hello? Hello?!

Now it is not like there is a thing one person can do to alter the situation. Steward your ship to the best of your ability, and brace for the worst they can throw at you, is about all an individual can do to cope.

Personally, I’m voting with my feet (and in protest), and moving nearly all my funds from BofA, where I’ve banked for over thirty years, into a couple of local credit unions that appear to be well managed. Certainly BofA, with their ill-advised purchase of those Cunts at Cuntrywide(tm), as well as their failing foray into investment banking, is looking like a pail imitation of their once formidable self.

Ever since this takeunder of Tangelo Orangezillo‘s personal piggy bank was announced, I’ve been scratching my head asking Why? Why? Does Kenny-boy (Lewis) even begin to realize what ha has gotten himself and his shareholders into, by bailing out this big bowl of wrong?

So few of the everyday people I encounter seem to have any idea that things are melting down in financial markets, and that we could actually experience something only every third generation gets to encounter- a big time event like a Great Depression, or a World War.

It has always seemed to that everyone born after World War II has been coddled in a way, that they would always have the gummint as a backstop to just such a massive life altering event and so don’t worry, be happy, live your dreams.

I must be weird because that has always made me suspicious. I was indocrinated in this life by survivors of the Great Depression- my gandparents- from whom I learned to value prudence, thrift, and self-reliance. If you count on the government to do the right thing, or do right by you, you are better off making a deal with the devil because at least he has a retirement plan for you.

So, in other words, don’t. Be self reliant.

Certainly Indy Mac, Wachovia, WaMu could, based on their crashing share prices, be close to closing their doors. With BofA and Citi right behind them in the queue.

But the take I get that most people seem to have is they expect a bailout. And that that is okay.

Yet, only a few seem to ask the question, what if that’s not feasible? Why not? Maybe the numbers don’t work. Aw hell, the Fed can always call up the Treasury and tell them to fire up those presses and print more money. Job done. Hmmm, maybe you are right.

So far I have not heard of one run on any bank.

The cable business channels pump “this is the time to buy” like excited monkeys, in a fruit-bearing attempt to steer the herd to stocks they need to unload. Fast.

That seems to working. For now.

But out on my walk, in fabulous summer SoCal weather with nary a cloud in the sky, I had this eerie feeling one gets in the calm before a storm.

Is it due some misplaced sense of complacency?

Is it because folks are simply too busy with work and famliy to stay abreast of current events? (Certainly the teevee news does nobody any favors.)

Or am I simply overfed on Crisis, Panics, and Crashes and under-informed about the realities of high finance which might, unbeknownst to me, be beyond my comrehension?

Everyone else must be feeling confident since they feel free to vacation, sit back in their hammock or Lazee Boy, and with the fullness of faith rely on Big Brother (i.e the Fed and the gummint) to step in and save us from ruin bail everyone out.

Even though all that the gummint can do is rob from Peter to pay Paul.

So somebody is bound to be short changed in that transaction.


That pesky problem persists

June 29, 2008

[Hat tip]

That’s sickening

June 25, 2008

I fucking cannot believe this is about to happen:

Bank of America’s Countrywide Tab Signed by Taxpayers [Bloomie]

“Bank of America Corp.’s $3 billion takeover of Countrywide Financial Corp. will be financed by 138 million tax-paying Americans.

“Bank of America, led by Chief Executive Officer Kenneth Lewis, can use tax write-offs to pay for Countrywide, the country’s biggest mortgage lender, said Robert Willens, a former managing director at Lehman Brothers Holdings Inc. who now runs his own accounting firm. Taxpayers may pick up about $5 billion of Countrywide’s losses over 20 years, he said. Countrywide shareholders approved the sale today.”

I thought sure Ken Lewis would come to his senses once he got a gander at Orangezillo’s toxic sludge machine. Apprently not- he must be raving mad to pursue this.

I urge Kenny-boy to just walk away from this triple debacle (now for taxpayers, soon for Tangelo and then you, BofA). I promise you if you don’t you will be losing deposits from long time customers- like me. You don’t know what you are getting into, Kenny-boy, with this oozing toxic orange waste.

You don’t want to be sharing a cell with Tangelo Orangezillo, do you?

BTW, Kenny-boy, how did that venture into investing go for you? Not so well, huh? You should have learned a lesson from that, grasshopper: don’t stray from what you do best, and never go out of your depth to chase profits. You just might be chasing them as they spital down the bowl.. you with it.

Yet another example of why we need to have Glass-Steagal reinstated.

“The only thing Ben Bukkake has got left to inflate is the dollar.” -Paco Bell

Grim days for capitalism as winds of change sweep Wall Street

June 25, 2008

In case you missed this- Tom Wolfe did a piece on hedgies for the issue of Portfolio, which debuted April 2007. Here is a kind of update. [International Herald Tribune]

“Of course, Wolfe’s 1980s Wall Street – of privileged WASPs (and Jewish Anglophiles), the sons of Harvard and Stanford and Princeton braying for money on the bond market – is pretty much gone now. It was replaced, in part, by the world of private equity and hedge funds, by bankers who think proprietary trading is more important than servicing clients.

“And now that world is crumbling, too.”

Interesting to consider those old warhorses Wilbur Ross, Carl Icahn, Kirk Krikorian, Boone Pickens as knife catchers; that BSC is no more; IMB is in a coma (closed @ 1.23 today); MBIA and ABK are on life support; Blackstone‘s ego resembles a big, flat tire; WaMu, Citi, Lehman, are all overexposed to deriviatives that have declined in value significantly (“pennies on the dollar”); it was rumored today a hedgie might have blown up after a bunch of gold was dumped on the market- enough to lower the price; housing sales continue to decline to the tune of double digits, inventory is still growing- and this is the high season; DOW Chemical has raised prices 50% (Dupont will no doubt follow); counterparty risk is making the knees of bean counters knock louder and louder every day; oil; airlines; Iowa; auto sales; food; stagflation; and of course the ongoing contraction of credit; is there anything I missed?

The lemon is out of juice.

Actually, this is all part of the market cycle- the rumors of the death of capitalism are exaggerated. We just had the longest bull market ever- it began in the 80’s, and we’ve only witnessed a few brief recessions/corrections. We just happened to get stuck with the check now. And our wallet is missing…

“The only thing Ben Bukkake has got left to inflate is the dollar.” -Paco Bell

Some other interesting new finds:

I’m going out to the store for more popcorn. Man this is a looooong movie!

“It sounds like even the firms that aren’t in trouble are in trouble.” -Tom Wolfe

Don’t spend it all in one place

June 23, 2008

If you listened to Jim Cramer of Cramerica Industries(tm) you no doubt made out like a bandit this past week.

Comment on well you did listening to Jims advice.

Fliptard rage

June 22, 2008

[Hat tip]

#We gotta get out of this place#

June 21, 2008

Don’t you just love how the bankruptcy reform act of 2005 is blowing up in the faces of the bill’s authors- the credit card companies? I just love it when a plan (doesn’t) come together. [Mish]

These pix of the flooding in Iowa are certain to conjure questions in the minds of those wondering about a Black Swan event occurring. If not, it probably will. [Boston Globe][Hat tip]

Firefox 3.0 is out, and they fixed the most serious problem- memory leaks, and the most annoying- the download manager that functioned at a blistering 200 baud (seemingly). I installed it and like it’s just like says on the (virtual) tin. I’d already migrated over to Opera long ago, so prefer to stick with it for now, but I still prefer to use Firefox over IE. [Firefox 3.0]

Does the “full faith and credit of the United States Government” mean anything when the subject is effectively bankrupt?

“99% of everything done in the world, good or bad, is done to pay a mortgage. Perhaps the world would be a better place if everyone rented.” -Nick Naylor, in Thank You For Smoking