No-bama

You've no doubt heard by now that the White House forced the resignation of Rick Wagoner, the CEO of General Motors, and are essentially forcing Chrysler to merge with Fiat an Italian automaker.

Now, like I've said with the banks, I'm all for equity holders or capital backers taking a hard line with the entities that they are funding, but even I've got to tap the brakes on these most recent moves. Obama and the D's continue to echo the fact that they have no intention in having the govt run these businesses but forcing out the CEO of one and pressing the merger of another sure sounds like the govt calling the shots, especially since it's rumored the boards were against both.

My preference would have been for Geithner and Obama to either provide the funding based on the feasibility of the plans GM and Chrylser put forth or either deny the funding and wordsmith an orderly bankruptcy where they can shed their crushing debt and legacy contracts and move quickly back to free enterprise. Now to be sure, I think Wagoner has been pedestrian at best, but as most businesspeople know CEO's are figureheads who garner way to much credit and bread (I'm looking at you Jack Welch) when things are good and too much blame and still too much bread when things are bad.

But his 'pedestrianess' if you will, is something that should be evaluated by GM's board, however 'cronyistic' their makeup. The govt really has no place making operational decisions and as a progressive capitalist this kinda scares me. I wish there were a few other business D's sounding off on this truly slippery slope.

How can I move on when I'm still in love with you?

Listen to this guy and tell me he doesn't sound like John Legend??? I heard this song in the car today on my way to workout and thought "Wow John Legend has gone a little pop but the base riff is still banging and I like the story he's telling."

Imagine my suprise when I looked it up to find it was a band from Ireland! Anyways like I said I like the story dude tells, it reminds me of the first girl I fell in love with, my first mix cd, my first heartfelt poem (lol) and how douchey I was at 24. She was beautiful and perfect and fragile in every way, and I was a douche who couldn't see past his own ego.

Enough cathartic digression, I'll be back on point tomorrow with my usual cogent economic and political analysis. For now check the The Script all the way from Dublin.

Monday Morning Hilarity

This is hilarious!!!

Funny Stuff: What if Teenwolf was...

...a shooting guard for your favorite NCAA team? Chances are they would be headed to the Final Four right about now. Dude could flat out hoop! He had handle, superior athleticism and leadership. Way to go TW, way to go!

And She's Off.....

Reserve Currency: A fiat currency that is held in significant amounts by governments and nations throughout the world.

Fiat Currency: Essentially paper money declared by a government as legal tender.

A couple of days ago China's Finance Minister, backed by the IMF said (paraphrasing) that the world should move towards a new reserve currency. That is, foreign governments like China, Japan, Eurozone, Latin America, Russia should lessen their reliance on the US dollar as their main currency reserve.

Well Michelle Bachman of Minnesota either purposely made up her own story or completely misunderstood the IMF and the Chinese Finance Minister, because she is off to the races on one of her 'I love America more than you' crusades, as if the rest of us are just here out of obligation.

President Obama, Tim Geithner and Ben Bernanke have clearly stated they have no intention of replacing the dollar (our fiat currency) with one global currency. Nor has any other major economic power even suggested this (remember China suggested reserve currency).

But the facts didn't stop Michelle. As usual she created a pretty cool strawman and proceeded to show the rest of us that her 'True Blue Americanisim' exceeded the rational populations by leaps and bounds. She has called for a bill that would essentially make it illegal to replace the dollar, again even though no one ever suggested otherwise.

Ignorance is not cool, be cool.

Baby Brokers

I found this Slate story through Megan McCardle's blog over at The Atlantic. It's titled Fetal Foreclosure and apparently it's on the rise in California. Apparently a douchey firm that was supposed to be acting as the broker for surrogate mothers and parents has taken the money and ran, leaving the parents who'd paid into a trust high and dry and the surrogates even more so with no funds for pre-natal care or term payments.

I'm relieved to hear that the surrogates, while no longer getting paid, aren't seriously considering abortion although from a transactional standpoint one could possibly make a case. I'm sure the parents are working directly with these surrogates to ensure (and insure) the basics that the douchey firm ran out on.

I hope when the State of California finally catches up to these douche "brokers" who took the money and ran, they put them in prison...real prison. There should be no place for these types of shenanigans when trusting parties, emotions and little people are involved. Reserve your fraudulent financial tomfoolery for hedge funds and speculative derivatives Sir, it has no place in the family arena.

Movie Review: Cadillac Records

I just finished watching Cadillac Records, a movie about a 1950's Chicago Blues Record label. I had no idea who Muddy Waters, Little Walter or Howlin' Wolf were so I passed on it at the theatres. I shouldn't have.

The pacing was a little choppy and at times it tried too hard to mimic Ray, Walk The Line and other recent blockbuster biopics, but save that it was Grade A. The acting was good (Wright, Beyonce and Brody were stellar), the characters had fair depth and the chemistry was off the charts. But what I liked most was it brilliantly and passionately illuminated the age old story of squandered wealth and potential.

I tell my brothers and sisters all the time that the strong have ruled the weak and the smart have ruled the stupid since the beginning of time. It won't change. Choose a side.

Well Cadillac clearly delineated the sides, sides that will never be anachronic and writ large can be applied to most of our mentalities if not our lives. On one side you had an enterprising scruffy Chicagoan who saw big opportunity, but no talent with which to realize his vision. On the other you had immensely - immensely - talented individuals with limited vision which effectively cradled an otherwise limitless path.

Well you can guess what happened when the enterprising but talentless crossed paths with the talented but self-limited??? A partnership was formed, one that produced great wealth (not riches), wealth that is still revolving today. However, the talentless was (and rightly so) all too happy to compensate the talented inline with their vision. The talented came from nothing and thought of nothing more than tomorrow and were duly compensated. The talentless came from nothing and thought of everything that could be and was duly compensated. As it is the talentless' seed will never know poverty, under education, fractiousness or blight. They will form new partnerships that exploit this loophole in natural law, while the talented meander in a world where enough for tomorrow is all they need.

Anyways, enough of my psychobabble, here's my wife (currently on loan to Jigga himself) doing a 1950's rendition of Etta James' Go Blind. It's pretty cool how great songs can sound with just the basics and a great voice.

A Pound of Flesh

There's been a lot of talk around compensation since the AIG bonus news materialized early last week. Here are my feelings:

1. In the pseudo free market that existed pre Bear I was all for people in any industry being paid as much as they could contractually get. If the UAW got Ford to agree to $70 per hour for their line workers and the Ford board and executives agreed to it then fine. If AIG traders got the board to agree to $2M bonuses regardless of how piss poor of a job they did at trading then fine, no skin of my back.

2. In a post Bear market where the govt has had to subsidize and prop up what would otherwise be bankrupt and broke companies then the govt has the right to decide how executives are paid and who and who does not get bonuses.

If your firm is solvent and hasn't taken govt money then please continue, the govt has no right to dictate compensation terms. However, if you have taken govt money, even out of compliance (I'm looking at you GS, WFC and JPM) then you are subject to the whims of whatever grandstanding republican or democratic congressperson has a mike in their face at the moment. Sorry.

It's a b#@$* girl....

For those of you who find solace in teasing me about my music selection I say so what! I'm not ashamed of liking good music, regardless of the genre. A little easy Saturday morning listening for you!

Madoff, SEC or You

I wonder if any of the Madoff victims were upset with the SEC when they thought their accounts were growing, consistently and implausibly, 15% YoY for 5, 10, 15 years?

I wonder if any of them proactively went to the SEC to complain that this guy was making them too much money by outperforming major indices consistently?

That would be a good story, but as it is people who thought they were flush were strangely silent and all too happy NOT to complain until that is they found out they weren't flush.

Are you Well(s Fargo)?

I saw this morning that the Wells Fargo Chief is complaining about the Treasury's Stress Test that is currently underway and is designed to essentially determine which banks are solvent and America can depend on and which banks (read bank's executives) no longer have any business calling themselves bankers.

I've wanted to be short Wells for sometime now because I think the Golden West...err...Wachovia assets that it took on back in Q4 are a lot more toxic than we think. While Citi and BofA have taken their lumps and will probably be on the upswing for sometime I think Wells secrecy regarding their balance sheet and marks belies a dirty little secret.

That assumption was only confirmed by this article this morning in Bloomberg. Their chief is complaining that the stress test, that all major multinationals are submitting to is unfair and "assinine" because it just makes their stock susceptible to short sellers. Well methinks this guy has just done his firm a major disservice, because if the rest of the shorts are like me, they are reading this as a HUGE RED FLAG this guy has just raised around his stock. Especially when he submits that his firm does their own periodic stress test which is much more scrutinous than the Treasury's, but then complains about the potential results of the Treasury's stress test.

I say Citi and BofA are up for a while, and Wells is getting ready to take a dive. Thanks Golden West!

6 Overtimes???

Cat's were hoopin' last night weren't they? And I missed it!

Rautins fadeaway 3's off of down doubles (reminds me of myself), Divendorf stroking game winners (that was close) Walker getting to the cup, AJ Price doing what he does, Flynn running the show and a lot of banging with the bigs!

As you guys know I'm a Big Ten guy, but as a former D1 hooper I've got to appreciate the hoopin I saw going on in the highlights this morning. I took to the sack after Samuel Young and Pitt pulled a snoozer against WVU (Ruoff is a solid second guard btw). And then wake up this morning to a 6OT hoopfest.

Besides the fact that my man played for UConn a few years back and I'm partial, you have to admit that if Dyson were still in uni UConn would have won and would be on track for another NCAA Title. But as my coach used to say injuries are apart of the game!

Either way good game fellas!

Mark-to-Market

I'm absolutely surprised at how many people think suspending mark-to-market is a good thing. It seems that all of the finance gurus whose financial sleight of hand and mythical magical creations of wonderment drove us into this mess, want to do it again with suspension or "loosening" or mark-to-market. For those of you who don't know mark-to-market is an accounting procedure in which firms are required to value assets at their current market price.

Quick example: If I buy 3 investment properties at $100K apiece and decide to hold them for 18 months b/c I think they will be worth considerably more, say $125K total, mark-to-market means that I must value those properties at $100K on my balance sheet even though I have no intention of selling at that price.

Now the asset derivatives that are currently weighing down the banks are a little more complicated than property but you get the picture. These firms currently have to value their assets at market prices which is little more than cents on the dollar. Now I'm not necessarily for mark-to-market but the time to change it would have been when these derivatives were liquid and were probably present valued at or near premium. Switching then would have been totally above board, because it would have been on principle which meant not necessarily in your (the banks) best interest. Trying to change now because the market is illiquid just seems more like cheating.

Bank A's Asset Valuation March 12, 2009 Under Mark-to-Market = $5.5B

Bank A's Asset Valuation March 13, 2009 Under Revised Mark-to-Market = $9.2B

You see changing things on paper makes everything all better!!!

Oh no he didn't....

Jonathan Stewart you are a funny dude...ff to the 7 minute mark to get to the funniness!!!

The Daily Show With Jon StewartM - Th 11p / 10c

Basic Cable Personality Clash Skirmish '09

Daily Show Full Episodes
Important Things With Demetri Martin

Political Humor
Economic Crisis

Way to go Citigroup!

The market suprised me today with a 300+ bounce to the upside which was totally awesome. I was lucky enough to get long AAPL early in the session and it paid off pretty well. The stock never dipped below the 50 day moving average which is highly unusual but hey no complaints here.

I'm thinking long tomorrow on Apple or the S&P Index for another 3-4% increase. I think people have had it with the doom and gloom at least for a few days.

Minnesota nICE

I lived in North Carolina for almost 5 years where 35 degrees literally meant a weather emergency. So why did I wake up this morning elated that it was 35 degrees outside....oh yeah it's Minnesota that's why.

Raise your hand if you went to public school

Congratulations, if your hand is raised you're a socialist! How does it feel knowing that someone else's taxes paid for you and your siblings to go to school? Huh...what's that...your parents paid taxes? Well sure, but there's a 100% chance that your parents taxes (that also went to pay for other services such as airports, police, roads, etc) didn't cover the cost of your K-12 education, so at the least you were subsidized by someone else. Again congratulations socialist.

So if your opposing healthcare reform on the merits or are just a little unsure about the logistics (like I am) you're an informed citizen and I congratulate you. But if your simply following someone else's talking points, namely calling it socialistic, then make sure you're not a de facto socialist...err....public school alum or attendee.

I almost threw up a little bit....

...in my mouth when I read the first sentence of the following story. I couldn't even finish reading it. If one of my readers is able to stomach the whole thing all the way through, please never ever mention this in casual conversations with me...EVER.

This is not a joke or a stunt, I seriously almost threw up and my stomach is still in knots. Women and little people are precious resources and as such should be protected...always.

If you don't want to puke or walk around mad all day tomorrow then go no further - you've been warned - click here to read more.

Strength

I was doing my morning BBC scan when I came across this story. Now the story itself is nothing special. It just outlines Hillary Clinton's first official Nato meeting and the subject paramount to all else...Russia.

But what I did find interesting was this quote from a Russian diplomat:

"We came out of the crisis that we had after the August 2008 events [the war with Georgia], the crisis in the South Caucasus, stronger," he told Russian channel Vesti TV. "Our Western colleagues saw in Russia a partner that one cannot wipe one's feet on. We are strong... and we are restoring cooperation, including on our terms."

It's been my experience with strength, whether it be physical, mental or intellectual, that those individuals, teams or nations that truly possess it never feel the need to opine on it. They don't feel the need because strength truly speaks for itself, either through demonstration or perception or history.

When individuals or teams or nations (whose currency incidentally is on the verge of collapse) brag on their strength it usually means they're trying to convince themselves more than others.

You asked for it and you got it

When my niece was just a tyke she would often fail miserably at some mundane task like pouring water into a cup. Asked if she wanted help she would remark no and refrain to herself "I can do it, I can do it." And low and behold on the 2nd or 3rd time she would do it. At that point her success no longer had anything to do with the balance of the pitcher or cup size it had to do with a function of her mentality.

That said I must point out how disappointed I am in all of the economically literate and republicans who know that our economic crisis at this point is more a function of the human psyche than any technical or fundamental indicator.

As long as republicans continue to openly and blatantly rail against all government measures as socialism, anti-capitlism and failure and market prognisticators continue to opine on how much more further the market CAN drop then we will have a depression. But it will only come because a section of our populous has decided to play with fire.

What republicans should realize is that people are listening. And if they believe that nothing will work then they will contract and the programs which are meant to STIMULATE and not SUSTAIN will fail. What prognosticators should realize is that commercial traders and investors don't like to lose money. So they will continue to tank the market based on your ambient, incessant and ridiculously pessimistic view of the capital markets which will force the market down. This is exactly what is happening with the S&P at this point.

My PoV is this crisis is indeed solvable and since all of the INDUSTRIAL economies are in this together there is a good chance we can fix this thing and avoid a massive depression. But as long as there seems to be a certain segment who is hell bent on pushing this thing to the brink for political purposes we will depress. But be warned if we depress there will be massive negative unintended consequences. A favorite turn of the century rapper of mine, DMX, had a saying "you asked for it and you got it." I will echo the same to the small, but powerful contingent, who want to use a depression to eliminate President Obama. We may get a depression and Obama may pay the price, but remember when that time comes and the negative national and gloabl externalities manifest that "you asked for it and you got it."

$60B AIG...Really?

I don't even want to blog about this catastrophe, let alone my trading day. For the first time I feel like this market and our economy are approaching a point of no return, or at least no return soon.

To that end I had an interesting conversation with a former b-school classmate this past weekend and we both agreed on one thing. The best time to fix this would have been when Bear was sold to JP and the economy, and more importantly consumer confidence, hadn't yet begin its slide.

I'm hard pressed to believe that Paulson and Bernanke thought that out of the hundreds of investment houses, banks and tertiary financials that Bear was the only one in trouble.