Okay. I get it.

CNN and MSNBC I get it. MLK. Obama. Black. Historic. President.

Now let's move on with some real analysis. There are Americans, of every stripe, whose concern extends to more important matters such as the looming depression, middle east affairs and the Russo-China undercurrent.

10 hours of black punditry and civil rights anecdotes, followed by another 10 hours of the same, concluded by 10 more hours is a bit much.

Depression Economics - A harsh reality

From my hometown newspaper. Area high schools are considering eliminating sports and other extra curriculars as a way to deal with the depression. I can't blame them, and assume other local and state governments are taking similar actions.

Some of the locals are upset and are opining on how extra curriculars are an essential part of secondary education (erroneous) and shouldn't be on the chopping block, but I surmise these persons have limited background in finance and economics - government style. My 101 refresher follows:

Bonds notwithstanding, govt budgets are financed with tax receipts. Tax receipts from people and businesses. With income tax revenue in decline because of skyrocketing unemployment AND property tax revenue down as a result of spiraling home prices AND business tax receipts down as a result of decreased spending then local and state governments TAX RECEIPTS will be down. In which case spending has to follow.

What should upset locals is that between the years of 2003-2007 when almost every state and major municipality saw relative highs in tax revenues the mayors, councils, legislatures and governors spent like drunken sailors (or foolishly, foolishly cut taxes) with little foresight for a predictable downturn. Of course said locals, like the rest of us, derived benefit (nominal or otherwise) from the largess of this spending spree. And why fuss when the spigot is flowing right? You fuss because of the nasty hangover a.k.a the Greater Depression.

Happy Friday!

I don't know how the psychology of this works, but the crash and subsequent survival off those on Flight 1549 yesterday has put me in a really good mood!

Empirically it seems that America needed a feel good story like this!!!

My world's upside down

It's weird. This morning there were 146 people that woke up and did the same thing as me. Got coffee, took a cab, watched the news, had lunch, laughed with friends, sent emails, made plans and talked with loved ones. But at 3:03 PM EST they crashed into the Hudson River.

Who really knows anything....


When the world keeps spinning round
My world's upside down
And I wouldn't change a thing
I've got nothing else to lose
I lost it all when I found you
And I wouldn't change a thing

Just Say No!

I hope the congress votes NOT to pass the TARP II for Bush-Obama at this time. TARP I was fear mongered into existence and we need to tap the brakes and think about this a little more.

I'm still for the stimulus and TARP II, but let's be more contemplative this time. There's a huge difference between fear and urgency. And as with all crises, you only get a few dumb moves before you lose.

There is a WAY out of this mess, passing weekend legislation and hurrying through things is not it.

Btw this opinion is subject to change.

Fear only makes it worse

I continue to hear ad nauseam that businesses are cutting, cutting, cutting everything and everywhere in order to remain solvent. Fine. But be advised. This will only make the depression and by extension their business worse. Much worse.

I've blogged on the negative feedback loop before, but it's worth touching again. A negative feedback loop is when a negatively impacted Action-A negatively impacts Action-B which in turn negatively impacts Action-A, and so on. I actually think businesses, with their record massive layoffs and reductions in capex, are initiating the feedback loop, and in turn kickstarting a serious depression.

Businesses shouldn't be so quick to layoff the masses and slash capex based on a gloomy 2009, because by doing so they only ensure a gloomy 2009. If we get 3M more layoffs, do you think 2009 GDP grows or severely declines??? If GDP declines, what are the chances that any business has seen material P&L growth.

The economically uninitiated think the $1T stimulus will return our economy to 2005...it won't. The stimulus may keep 2M jobs losses from becoming 3M but in the end it will only make things less bad. Business, drive, innovation, creativity and risk will make things better, not Barak Obama.

Triage? No thanks.

I'm not Geithner, Paulson, Bernanke, Bair, Obama or Bush, and as a result of not being anyone of these individuals I have the unique pleasure of changing my mind, without public recriminations.

My initial position on TARP was that it was necessary. That the few multinational banks who received the majority of the assets were too big to fail. Now, I'm not so sure. Why? Citi's third impending stock collapse, BofA's double TARP dip, and JP and Wells coming dysfunction lead me to believe that the injury is simply beyond triage.

Again, via my hindsight, a better position may have been to:

1. Identify the crappy multinational banks (C), insure the depositors and then let the institution fail. Their fault!

2. Recapitalize iffy banks (WFC), with usuriosness of biblical proportions. Their greed and poor risk management should be punished.

3. Cut major tax breaks for healthy regional banks (BBT), who practiced risk management accordingly, with all the legislative help possible to spur growth.

Multinational banks are like great quarterbacks for championship teams...essential. Since our current qb decided to party hard and become a drunk, it's time for us to focus on grooming our young backup.

Invisible Hand

I wrote back in October about short selling, the investment practice of borrowing another guys stock, selling high, buying low and returning said guys stock.

On it's face the concept is silly, it's the epitome of needless and probably has a minor hand in the current market mess. I imagine it has its origins in powerful brokerages lobbying for its passage so they would have another way to wrest fees from clients.

That said, all of the talk regarding banning shorts or severely altering their application is silly as well. But for no other reason than I profit from them. Eliminating shorts, would effectively end my budding career as a trader and force me back into the adult world of detesting Sunday nights.

Invisible Hand Reference

I am Klaatu, humans cannot be trusted (in robot voice)

If I get another email opining on how WWII, not FDR's stimulus pulled us out of the depression I'm going to...uh do something.

In the instance you're a friend of mine who's sending me these emails or just your garden variety parrot co-opting this thesis at dinner parties here are few digestible points to consider:

1. In 1941 war spending WAS deficit spending

2. The WPA shaved 6+ points off unemployment from '32 to '36. Seriously. That's 6 points in the middle of the worst economic crisis the globe had ever seen.

3. There was a massive draft, that SEVERELY depleted the labor pool. Don't understand? Try this. If Culverania has 100 citizens, of which 20 are unemployed the unemployment rate is 20%. If they draft 15 of those to go to war with the country Ryanstan, their unemployment rate is now 5%. Magic? Not quite. Since those 15 citizens...err...Privates are now paid by the government, it's govt spending!!!

Considering the upswell in WWII as Great Depression buster myth it seems like we're down to two options to bust this Greater Depression (or so categorized at a later date).

A. Massive war - world style - in which tens of millions of people die, hundreds of billions of assets are destroyed and trillions of govt dollars are spent

B. Gargantuan stimulus that avoids tragic dislocation of epic proportions and that impending visit from Klaatu.

I vote B.

6.5

Recently a friend and I discussed O's chances at being a two termer. He believes it will happen. Me, not so much. At the moment people are sympathetic to his inheriting a crappy situation. But people are fickle. And moments are fleeting.

With Geithner's first allocation of the TARP v1.5 O will officially be responsible (this is how leadership works.) He may be able to play the Bush out of Jail Free Card once in the subsequent six months, but after that no dice.

The good news is the tectonic shift in the economy provides cover to stall on his campaign promises of higher taxes and healthcare, without angering his base...or at least those who understand economics and finance.

This will allow him to concentrate on just one thing. 6.5. Most people expect unemployment to touch 10 percent by early 2010. If O's monetary and fiscal policy - coupled with a fortuitous bounce in private industry - can cut that by 3.5 points no later than July 2012 he'll win regardless of what campaign promises went unfulfilled.

If it's between 6.5 - 7.5 and the R's have another McCain on tap O may be able to squeak one out on pure talent alone.

If it's between 6.5 - 7.5 and the R's are running a stalwart, O's toast.

If it's higher than 7.5 and the R's are running Joe the Plumber, O's toast.

It's like a leading with your right

In boxing fighters lead with their weak punch - aka the jab - to probe the opposition before following up with stronger punches like the straight right, uppercut or hook. By leading with a stronger punch you open yourself up to be knocked out, which is why it's rare. When you do see it, it's probably because:

1. The fighter has a fundamental disrespect for his opponents power and ability, or

2. The fighter himself is too inexperienced to realize the risk, or

3. The fighter just wants the experience of being knocked on his tail.

Number 3 is a joke, but what is not a joke is this or this. I have a problem with people thinking it's okay to even try and injure the President of the United States or to even try and attack a US Consulate. To even try and lead with their right.

New Music...at least to me

From the Last Chance Harvey movie. Quite poppy, but I enjoy lyrics that speak to me at once.

Where do we go from here?
Where can we hide?
'Cause I made a U-turn
and I'm still alive.
Where do we go from here?
Where did they put the signs?
'Cause I need an exit after this life.
Where is this better place?
Where are these better times?
'Cause we've both been looking
but we can't find

Kobe v Lebron

I don't know about you but I would love to see the Lakers and Cavs....err...King James and Kobe go at it for 7 games in June.

This would be 10 times better than watching the Ubuntu reunion tour, sorry KG you know I got love for you!

Dangerous but Necessary

The Necessary: I'm all for the government intervention - in it's many forms - into the economy at this point, as it's clear that we're dangling on the precipice of depression and I'm loathe to tell literally tens of millions of Americans to simply 'suck it up' like so many free marketers want to do. What's shocking is that I am unable to find an unemployed person (R's especially) at this point, opining on the virtues of the free market. I guess social welfare is not so debilitating or nefarious when you're the recipient...but I digress.

Dangerous: With the intervention comes government (R or D) entrance into private markets. This is a slippery slope, that is only going to get harder to retrace the more intervention we need. The government shouldn't be dictating which firms have private jets, pay bonuses and develop what products, that is a job traditionally reserved for the managers and shareholders. Unfortunately the managers need the politicians money (equity) thus forcing the pols to act as private investors, who are rightly entitled to dictate. This is the danger with asking pols to acts as investors.

The best analogy I could come up with for something being dangerous but necessary, would be imagining your wife lost, but safe, in the jungle. You know you can go in and find her, but are unsure if you will ever get back out. To be sure, you all will both be safe once inside, but may live the rest of your life in previously unimaginable environment.

Thanks for the memories...(queue sarcasm)

Dear Mr. BCS-

How uneventful was that? Two of the most potent regular season offenses. Two of the best college Q's surrounded by some of the most athletic and talented offensive personnel in college football and we get 38 points...total.

You seriously need to rethink your ridiculous bowl scheduling. Some 25 days after these teams finish their regular season they play for the championship??? In case you have never played big time college sports, I'll clue you in. EVERY team sport (hoops, football, volleyball, etc) depends on timing, communication and a familial like synchronicity with your teammates. These are honed day in day out in practice and then refined during the game...like clockwork.

When you preempt that clockwork with two eventful Holiday's and NO GAMES you totally throw off the teams timing, communication and synchronicity. This then shows up in dropped balls, muffed kicks, slack routes, fumbles, turnovers, etc. Which then results in a crappy game.

I know it's about money and not the hard work or the bruises, bumps and broken bones these guys sustain throughout the year. But if you can see past the green for a second I would implore you to talk to the players and coaches of both the winning and losing teams tonight and see how their performance was affected with the 3+ week BCS imposed sabbatical.

Sincerely,

R to the C

Purpose is Potentiality.

Last night I couldn't sleep and as usual my brain went into idea mode. Most of my midnight ideas are nothing more than lucid dreams, but this time I hit on something, or so I think. Why don't you be the judge.

The idea: Allocate a portion of the forthcoming stimulus to nascent high tech and other startup firms.

The logic: Stimulus, in its many forms, may prevent further damage to the economy but it will not position us for growth. To grow we (we being America) are going to have to develop new goods, services and industries.

Most startups need about 2-3M and can employ up to 20 people in their infancy. I know the employment number is low, but that is not the purpose. The purpose is potentiality. The potential for the next Henry Ford, Dave Packard or Bill Boeing. The potential for the next multi-trillion dollar industry that spurs real growth. True growth. Not the ersatz tech bubble or housing kind.

A $200M allocation by Obama and congress could help incubate 100 startups. The government could even have a stake in the instance that their funding spawns the next Google! Think about it, even if only 1 of the 100 startups turns out the trillion dollar 'widget of the century' the investment will have been well worth it. Now think about 2...or 3.....

Funny Stuff: Colbert, Blacks & Minnesota

Colbert, dude...there are black people in Minnesota, 208,000 of them to be precise!

Nonetheless his joke that Al Franken (our newly elected Senator and noted SNL alum) was black by Minnesota standards was hilarious. I literally laughed so hard that my stomach hurt.

Watch it - starts around 4:15

The Colbert ReportMon - Thurs 11:30pm / 10:30c

Colbert and Colmes - Roland Burris Appointment

Colbert at Christmas
Colbert Christmas DVD

Green Screen
Bill O'Reilly Interview

I went to school down south and every time I told someone where I was from they would lean in and whisper the question "There are black people in Minnesota?" To which I would answer "Yes."

It is that simple, seriously

Bernie Madoff: Rich Manhattanite who stole $50B -> Out on Bail

Tyrone Bigsby*: Intractable Bronx kid who stole an iPod -> At Rikers

Part of the reason "right" collar crime will be with us always is because guys like Ken Lay, Dennis Kozlowski, and Bernie Madoff sit in their plush penthouses and mansions for years on bail and then proceed to Club Med to serve their prison sentence.

As a deterrent, after Madoff's conviction they should make a HUGE deal about throwing him in Sing-Sing, one of NY's most notorious and violent prisons. Then they should loop the show Lockup - on CNBC - for a full week. The elitist, grimey, conniving businessmen who engage in this type of activity would certainly get the picture.

*aka Dave Chappelle

Sorry ma'am this seat's reserved for my blue stapler

Apparently there are groups calling for Obama to appoint a Latino to fill Richardson's slot at Commerce. This is silly. Just as silly as:

-Demanding David Patterson replace Hillary with a woman.

-Demanding Blago replace O with a black.

No position, whether Cabinet Sec or CEO, should be reserved for a specific demographic. I applaud Bush (whose cabinet was more diverse than Clintons) and Obama for recognizing the importance of diversity, but there is a line between real diversity and overt pandering.

Real Diversity: Decision makers - like Art Rooney - recognize prejudices in their hiring/appointing processes and institute effective measures to counteract them.

Pandering: Decision makers create a placatory executive level position for Community Outreach and give to a black dude.

To analogize...if there is a qualified Condi Rice waiting in the wings, then I'm all for it, otherwise find a capable Commerce Secretary and get on with it.

Israel v Gaza

I heard it said that if Hamas puts down their weapons Israel would lift the blockade, but if Israel puts down its weapons Hamas would kill as many Jews as possible.

I'm loathe to look at this ongoing conflict with the traditional one-sidedness that produces those kind of aphorisms, but it's hard to argue against a country fighting an organization whose sole mission is organized around that country not having the right to exist.

To be sure Israeli politicians are not innocent in the Arab-Jew conflict writ large and a counter argument could probably be made for the actions of Hamas being retaliatory, however long in the making. How so? In 20 years would it be wrong for an Iraqi leader (then a young boy) who saw his parents, sisters and 10,000 of his countrymen killed at the hands of the West, to want revenge. Would he be wrong to wage war, traditional or non?

I don't know the answer. I do know there is a young Iraqi boy who misses his mom and dad.