Bernanke: Why are we still listening to this guy?

Is the recession over? Fed Chairman Ben Bernanke told Congress at the end of July that the economy is showing “tentative signs of stabilization.” Why would we listen to Ben Bernanke when he has been so wrong in his predictions over the past few years heading the Fed? I would suggest we can't.

Watch out for the mortgage defaults from the alt-a and option arm mortgages later this year and throughout 2010. These defaults, I would think, will lower housing prices, which will increase mortgage defaults and decrease consumer confidence.

I hope I'm wrong and that we are coming out of this recession, but I won't be looking to Ben Bernanke for answers.

Highly Paid Incompetence - Rick Wagoner

It was announced the other day that Rick Wagoner, the former Chairman and CEO of GM, negotiated his retirement package with GM. It includes almost $8.2 million in payments over the next 5-years plus a $74,030 annual pension. How’s a dude suppose to live on $1,636,105 for five years and $74,030 a year for the rest of his life? Just kidding. Here’s my point.

During his tenure, GM’s North American market share fell from 28.2% to around 18%; the value of GM (market capitalization) tumbled from approximately $36 Billion to approximately $0; and its share price went from around $90 to around $0, all the while being paid huge sums of money. (And as Chairman of the board, he had considerable influence in deciding what his compensation, as CEO should be.)

Thank you Mr. Wagoner! Thank you for your hard work and outstanding results! Here’s your $10 or $20 million. And this lovely set of golf clubs. The taxpayers paying for this clusterfuck will be at your home shortly...they'll be the ones with the torches and pitchforks.

Housing Crisis Half Way Through

This is the best analysis and explanation that I've come across, on why the current housing crisis exists, and how far along the U.S. is through the crisis.

It's fairly long, but it's easy to scan in the presentation format, and it can be downloaded as a PDF if you have an account with Scribd.

Bottom line: "The Timing Indicates That We Are Still in the Middle Innings of the Bursting of the Great Housing Bubble."

Michael Jackson - No Resurrection

Where do I start?

I waited three days and there wasn't a credible resurrection. (I actually waited three days, 23 hours, 59 minutes and 59 seconds because I wasn't sure of the rules.) He did appear in a tree stump and as a ghost on Larry King, but many would agree that he remains deceased.

Then I waited for the memorial. Some moments were genuine and touching. Mostly it was a clusterfuck of opportunism. Some real tears. Some that looked planned, forced and/or odd.

Planned, forced and odd: The Jackson brothers all each wearing one white glove? That was fucking stupid the first time around MJ did it. (Okay. I'm biased. We'll let that one go.)

Odd: Al Sharpton: "I want his children to know there was nothing strange about your daddy, it was strange what your daddy had to deal with.” Really? You can't think of anything slightly strange about Michael Jackson? The glove. Bubbles (abandoned after puberty like many of his other friends - to be fair, apes are not pets - and especially not for kids. But he could have checked into this before the adoption. His appearance changes, apparently caused by puberty, into his forties? (See this video for his "people change as they grow up" explanation among other more disturbing accusations and revelations.) His confessions that he had"sleep overs" with kids, that, while may or may not had been illegal, should have forced any honorable father to smash this guy's face in. (Is it okay for a 40 year old man to invite a 12-year old over, feed him alcohol, show him porn, and sleep in is room okay? Not on my planet!)

Thousands of fans saying things like, "He was authentic. He spoke to me." Really!? Of all the things you can say about the guy, "personal connection" is one of them? Seriously? He was one of the most disconnected people on the planet. Is this projection? More likely it's a case of people loving his music (and dancing...the whole package) and wanting to make a connection. But this connection can't be real. Look at his life....and the rest of our lives. Who ends up in a solid brass, 14 carat gold coffin that looks like a butter chicken heater? Any connection is superficial at best.

And Lionel Richie. Is that it's own category?

Then I was waiting for the burial. But I just heard his brain has been removed.

WTF!? Where do I take this?

I'll let it take itself. More after the autopsy.

(What a fucking shit show!)

The Pontiac Aztek

From Wikipedia: The Pontiac Aztek is a mid-size crossover SUV that was produced by the General Motors marque Pontiac from the 2001 model year to the 2005 model year. The Aztek was mostly noteworthy for its exterior styling, for which it has been voted the ugliest car in the world by a British newspaper.

The day GM died? When this clusterfuck was launched. Good luck "New GM".

Why Bailout GM?

I started writing a post on the purpose and goals of the GM bailout. While researching, I realized Robert Reich (former Democratic Secretary of Labor) had covered most of what I wanted to say in this May 31, 2009 Financial Times article.

This isn't about saving jobs, creating a better company, or a better industry; it's all about postponing the inevitable while appeasing the union and effected local interests. And the money we are spending will eventually be re-spent on unemployment benefits, retraining, etc. so this is money poorly spent.

I'll add one point that wasn't explicitly made in the article. These loans or bridge-loans are not loans. There are no interest rates attached, no repayment timing or structure, and no end date to repayment. This doesn't prove, but suggests as Prime Minister Harper let slip, that this money is not expected to be repaid.

From Wikipedia: Robert Bernard Reich is an American politician, academic, writer, and political commentator. He served as the twenty-second United States Secretary of Labor under President Bill Clinton, from 1993 to 1997. In 2008, Time Magazine named him one of the Ten Most Successful Cabinet Members of the century, and The Wall Street Journal placed him among America's Top Ten Business Thinkers. On November 7, 2008, he was selected by President-elect Barack Obama to be a member of the President-elect's economic transition advisory board.

GM Fell Down a Well

“What’s that boy?”

“Woof.”

“Jimmy fell down the well?

“WOOF! Woof woof.”

“GM lost $88B since 2005 and needs our help because with their bond rating is one-step away from default, no non-lobotomized person, credit crisis or not, would lend them anymore money and they’ve already burnt through something like $22B in the first 5-months of 2009?”

“Woof.”

“What’s that about the media and market capitalization? Comparing GM to Honda and the S&P 500 since 1978 points to a long-term deterioration of GM’s value as compared to the ‘party line’ about the current credit crisis, higher oil prices and lower sales are the cause of the current problem?


“Woof, woof!”

“What? If you add up the dollars spent and committed so far by the U.S. and Canadian governments, money to GMAC, and GM’s share of the original $25B ‘loan’ promised by Congress last year to update old factories, the ‘loan’ will be closer to $90B which is approximately the same amount as the GDP of Iraq, Vietnam, or Morocco and more than the GDP of 119 counties in the world seems obscene to you?”

“Woof.”

“Go get my check book. Good boy.”

The Game is Rigged. The Wire.

I was watching Bill Moyers interview David Simon on PBS the other night and realized that many people missed out on one of the great TV series ever produced: The Wire. Here’s a clip from season one where the drug dealers teach each other how to play chess.

And here’s the description of the show from wikipedi:

The Wire is an American television drama series set in Baltimore, Maryland, where it was also produced. Created, produced, and primarily written by author and former police reporter David Simon, the series was broadcast by the premium cable network HBO in the United States. The Wire premiered on June 2, 2002 and ended on March 9, 2008, with 60 episodes airing over the course of its five seasons.

Each season of The Wire focuses on a different facet of the city of Baltimore. They are, in order: the drug trade, the port, the city government and bureaucracy, the school system, and the print news media. The large cast consists mainly of character actors who are little known for their other roles. Simon has said that despite its presentation as a crime drama, the show is "really about the American city, and about how we live together. It's about how institutions have an effect on individuals, and how "whether you're a cop, a longshoreman, a drug dealer, a politician, a judge [or] lawyer, you are ultimately compromised and must contend with whatever institution you've committed to."

The show is very much about how our systems, by using economic incentives, corrupt individuals within each system, and create a mobius loop of corruption and/or stupidity.
A show like The Wire actually does a better job, as a fiction piece, than does journalism, in explaining a world most of us don’t understand. David Simon is correct in his assessment that our society doesn’t need 10% to 15% of our population from an economic perspective. They’re under educated and will never find a place in society. Our solution has been to create drug laws that marginalize the underclass and create a “drug war” that widens this gap.

I am a proponent of removing the drug laws. Consuming chemicals should be a personal choice. Right or wrong, this type of activity is a matter of freedom – not government mandate. But the question pops up – what do you do with 30 million people (in the U.S.) who are under educated and basically unemployable once our ridiculous drug laws are removed? Short-term I think the solution is negative income tax. Long-term it’s education. But the fact remains…..as Huxley presented in Brave New World….we have our Alphas and our Epsilons. A rich society like ours should have a plan, or better yet, a path for the people who can’t perform within the system.

So kids. What is that plan?

National Debt, Unfunded Liabilities

I just finished watching Frontline. George W. funds a war - a national crisis - by lowering taxes. (Yet another reason he'll be remembered as the worst U.S. president ever.)

Surpluses turn into deficits turn into massive debt. W. promises subsidized prescription drugs (Medicare D) to seniors. Nice idea. We can't afford this, nor can we, the taxpayers, afford many other promises made by most Western governments.

Be scared of unfunded liabilities. Be scared of national debt: iousathemovie.com.

Laugh at Chimpanzies washing cat.

GM Loses $9.6 Billion

GM lost $9.6 billion in the 4th quarter 2008. That’s $3.2 billion a month. If you break that down into a 20-day work month at 8 hours a day, it totals about $5,555 per second.

Look at your watch and count with me: $5,555, $11,110, $16,665, $22,220, $27,775, $33,330, $38,885, $44,440…..keep going for the rest of the day. You’ll end up with a total of $160,000,000 after your eight-hour shift. And it’s all your money. Feel better? Me neither.

Jon Stewart: Fox News and the Dirty Sanchez

In 8 minutes, Jon Stewart demonstrates clusterfuckery in action.

AIG testimony, Gabagool, Fox News, Glen Beck cries. Rome is falling.

"John Stewart looks at how Fox News is fueling populist outrage at the government's attempts to rescue the economy. Fox’s Griff Jenkins reported on “tea parties” to protest the stimulus package. “They are going to try to send tea bags to D.C., D.C. — tea-bag the white house,” explained Jenkins. Stewart found a raunchy double meaning in Jenkins’ words."

The Pope: Doesn't like condoms, but pedophiles are ok

This Pope is out of touch, gives poor advice, and has protected felonious criminals in the past. Can we stop taking him seriously yet?

Joseph Alois Ratzinger, better known as Pope Benedict XVI, is the Catholic church’s 265th Pope. He is currently touring Africa explaining to the Aids ravished continent why "condoms increase the problem". (This, by the way, is a much more humane approach than archbishop Maputo Archbishop Francisco Chimoio took in 2007 when he claimed, and preached to his flocks, that condoms are purposely contaminated with the aids virus.) This tour follows the wildly successful "lifting of the excommunication" of holocaust denier Bishop Richard Williamson.

I've wanted to write something about the topic of the Pope's character and credibility after watching the excellent documentary, Deliver Us From Evil a while back. (Synopsis: Moving from one parish to another in Northern California during the 1970s, Father Oliver O'Grady quickly won each congregation's trust and respect. Unbeknownst to them, O'Grady was a dangerously active pedophile that Church hierarchy, aware of his predilection, had harbored for over 30 years, allowing him to abuse countless children. Juxtaposing an extended, deeply unsettling interview with O'Grady himself with the tragic stories of his victims, filmmaker Amy Berg bravely exposes the deep corruption of the Catholic Church and the troubled mind of the man they sheltered.)

Cardinal Ratzinger, while serving as Prefect of the Congregation for the Doctrine of the Faith, sent a letter in 2001 to all Catholic Bishops ordering them to keep all child sexual abuse investigations secret threatening excommunication for the victims, victims’ families, as well as priests and other church officials. Power and control was obviously more important than truth and morality for this future Pope.

This was an obstruction of justice. Enough so that the Vatican requested immuinty for the Pope from President George W. Bush in 2005. Immunity was granted. If Joseph Ratzinger were in business or government, he would almost certainly be in jail now. (Well, assuming we could find a jury of peers. For the Pope.)

So, while this man tours Africa spewing his archaic 15th century ideas and ideals, and you try to interpret the deep meaning of his words and thoughts, keep in mind he's protected thousands of child molesters and rapists from prosecution over the years.

I would argue he's not a moral leader.

Gary Goodyear: Do You Believe in Gravity?

In a March 17, 2009 Globe and Mail article, recently appointed Canadian Minister of Science and Technology answered, when asked if he believed in evolution: “I'm not going to answer that question. I am a Christian, and I don't think anybody asking a question about my religion is appropriate.”

The theory of evolution is not a religious question. Nor are the theories of gravity (gravitational theory) or atoms (atomic theory). These scientific theories are backed by facts - lots of facts - and are only disputed by non-scientists without the qualifications to dispute them.

Now, gravity doesn't really work within quantum mechanics, but if it's me and a cliff; I'll put my money on gravity every time. Atoms? Shall we reintroduce Earth, Water, Air, Fire, and Aether? Let's not!

If the question were re-worded to "do you believe in gravity" and the Minister answered: “I'm not going to answer that question. I am a Christian, and I don't think anybody asking a question about my religion is appropriate" this controversy wouldn't exist. He would have been turfed the next day.

Mr. Goodyear is not qualified to be the Minister of Science and Technology. He should resign or be fired.

Chrysler May Require More Cash!!!

Associated Press reports that Chrysler may need more government bailouts by July.

Even if Chrysler LLC gets additional government loans, it could face another cash shortage in July when revenue dries up as the company shuts down its factories for two weeks to change from one model year to the next, its chief financial officer said.

Please see my other blog for why this will never end.

Jon Hamm Bailout

Jon Hamm requests $100 Billion in this Video

(Thanks Boris.)

Canadian Real Estate (bust)

I saw this Canadian real estate story in McLeans today:

....because despite the carnage in Vancouver, many economists and real estate groups are still predicting that we’ll have just a little stumble—maybe a drop of three to eight per cent in prices—and then the market will roar back to life by the end of the year. But new data on the plunging housing market suggests that those relatively upbeat assessments are wrong, and Canada could see a 20 per cent drop in average house prices between now and late 2011. If sophisticated investors are correct, it might be close to a decade before we once again see prices as high as they were last summer.

About a year ago, Simon Côté, managing director of property derivatives at National Bank, had a bright idea. He noticed that the market let investors bet their money on oil futures, bond futures, even canola futures, but there wasn’t a way to bet on the future prices of Canadian houses. So he decided to launch a whole new market, one that, among other things, would allow investors who think they know where the housing market is going to put money on it.

When the Teranet market started up in December, it immediately predicted a shocking drop of 20 per cent, followed by an excruciatingly slow recovery that might not see prices return to last year’s high for seven years, or longer.

Here's my addition: Regional markets are different than national aggregate numbers (ave. through out the county or region) ....but....primary residents are not investments!

Fuck! Your kitchen is not your retirement! We'll come up with better kitchens! There's always something better

New Nationalized City Bank

A funny little spoof on how government mismanages things. Ha! Except. WTF. Who's bailing whom out now? Do the banks need a 5-year plan? Gosplan? Okay....fuck it - it is a funny video.

GM Pension Fund

Another $32 billion goes missing from the black hole known as GM.

"Details are emerging about how General Motors Corp.'s U.S. pension funds went from a $20-billion surplus at the end of 2007 to a $12.4-billion deficit 12 months later.

Newly released numbers show that the funds, which help support more than 650,000 Americans, were tapped for billions of dollars over the past year for employee buyout programs, benefit increases and as part of the UAW's retiree health care trust deal."

Chrysler is Worth Nothing

Throwing money at this company is a waste of time and money. “Loan” is really a political term. As taxpayers, we are at the back of the line. Everyone else (bondholders, union pensions, stock holders) will get paid first. These “loans’ are gifts to a failed industry. The company died years ago, but nobody bothered to report it. Here are some facts:

Dailmer currently values the company at nothing

In 2008, Dailmer revalued their 19.9% share in the company at – wait for it - $0.

http://thearticlewriter.com/autowriter/to-daimler-chrysler-is-utterly-worthless/

Cerberus Values the company at $0

This is the first paragraph on the Cerberus site describing what they do: (the company that owns Chrysler): Cerberus Capital Management, L.P. is one of the world's leading private investment firms. Cerberus specializes in providing both financial resources and operational expertise to help transform undervalued companies into industry leaders for long-term success and value creation.

http://www.cerberuscapital.com/about_comp_prof.html

And how are they investing this failing company to make it an industry leader? They are sending representatives to the government to beg for handouts. As a business, this company has no value. If it did, Cerberus would be investing the company.

Opinion

My opinion? I believe “Jeep” is a brand that will survive bankruptcy and could have a long, prosperous life within a sustainable company. Other than that, this company has failed and needs to be terminated.

Chrysler is worth nothing and needs to go bankrupt ASAP! Every dollar we throw at them is money that could be spent on health care, retraining, or not spent at all. Please contact your local congressman, senator, MLA, or MP and say NO!

Worthless Car Companies

I'll do my own post soon....but to put this in perspective (and I don't thing this is a good idea) - you could give 97 smart entrepreneurs a billion dollars a piece to start new businesses. And we'd get our money back! We won't with the car companies. We are giving money away. Loans, gifts, bailouts - whatever. There is nearly a 0% this money will come back.

http://www.thetruthaboutcars.com/freep-does-the-math-974b-and-counting/

The Second Great Depression – Part 1 – The Problems

I don’t know what people will call this current financial crisis. It may be something like “the great real estate bubble” or “the great derivatives meltdown”. I think this will be either the “Second Great Depression” or “The Great Stagflation”. (Although some argue we had this one in the seventies already.) The bad news, regardless of names or titles, is that this is going to difficult. The good news is we’re the richest society in the history of the world and there’s no reason we can’t get through this with some collective dignity and health.

The major economic problems as I see them are:

1. Real Estate is overvalued. Consumers are heavily in debt against over valued real estate, which means financial institutes are heavily leveraged against overvalued real estate. Sub-prime mortgages were only the first round of defaults. The second wave (Alt-As and Option ARMs) won’t hit until the end of 2009. It’s impossible to predict how much values will drop, or which regional markets will drop/level off, but based on long-term trends and the recent national 25% drop, it wouldn’t be unreasonable to expect another 20-40% drop over the next few years.





2. Derivatives. I won’t lie. I don’t really understand these things very well. The first time I heard of them was back in the spring of 2003 while reading the Berkshire Hathaway 2002 annual report where Warren Buffet said of them, “I view derivatives as time bombs, both for the parties that deal in them and the economic system…… The derivatives genie is now well out of the bottle, and these instruments will almost certainly multiply in variety and number until some event makes their toxicity clear. Central banks and governments have so far found no effective way to control, or even monitor, the risks posed by these contracts. In my view, derivatives are financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal.”


I don’t have much more to add to that. Huge sums of money with no “true value” (many filled with toxic debt) combined with so much uncertainty in the markets.....this can't be good.


3. Debt. We borrowed and consumed. Then borrowed to consume. The numbers are staggering now, and in any imaginable future. Please watch this. http://www.iousathemovie.com


4. Banking Crisis. A free market cannot run properly without strong financial institutions. Either let the weak banks fail or we temporarily nationalize them. My free market inclination is to let them fail, but I don’t think we know how bad things can/will get. I don’t believe there’s even a consensus on if the original $350B helped or hurt the situation. The point is, we need to move much quicker. (I realize Obama hasn’t been in office very long.) Mr. Geithner’s plan to stress test the banks sounds reasonable if it can be accelerated. If we learned anything from the Japanese crisis in the late eighties, it’s that time is not on our side and mistakes will drag this out for years or decades.

I think future economists will prove that Bear Stearns should have been allowed to fail. The Fed could have brought in subsequent measures to prevent the cascade of failures. But by interfering as they did, they opened the doors to an “all in or all out” proposition. As soon as they started to interfere with a problem that big, they bought the problem. Which quickly leads to the other choice: Nationalize the banks.

Next on Clusterfuckery: Why the Stimulus Packages Won't Work