I was trading in the bond pits during that 1987 market and I am hoping we don't continue to mirror that pattern. The scary thing is 1987 very closely mirrored the 1929 pattern and at least one supertrader I know of made many millions of dollars trading with the presumption the pattern was going to repeat.
Thursday, August 30, 2007
A very scary stock chart.
I was trading in the bond pits during that 1987 market and I am hoping we don't continue to mirror that pattern. The scary thing is 1987 very closely mirrored the 1929 pattern and at least one supertrader I know of made many millions of dollars trading with the presumption the pattern was going to repeat.
Unintended consequences or the road to hell is paved with good intentions.
A classic example of unintended consequences illustrated in this Wall Street Journal article Affirmitive Action Backfires.
The study cited in the article runs exactly as predicted by Thomas Sowell in many of his writings over the last decade. The laudable intent of affirmitive action is not in dispute here. The important point is well stated in the article:
The study cited in the article runs exactly as predicted by Thomas Sowell in many of his writings over the last decade. The laudable intent of affirmitive action is not in dispute here. The important point is well stated in the article:
As a matter of consumer fairness, law school applicants -- regardless of race -- need to know the statistical likelihood that someone with their academic credentials will successfully graduate and pass the bar. Once informed, they can better decide whether to undertake the risk of attending that particular school, or any law school at all. If law schools are unwilling to undertake this simple reform, it should be mandated by law.
Wednesday, August 29, 2007
Inflation Omens
Once again The Instapundit links to an interesting article. This time it is Megan McArdle's post on America: Exporting High Wages.
I spent a significant part of the last three years working in India training derivative traders and I saw the same phenomenon ocurring as described in the Times article. Wages rising fast but, more importantly a shortage of truly qualified workers. India has an enormous population of uneducated lower class workers. Those workers however need a great deal of education before they can step in and work in the call centers or programming shops. The cheap cheap labor era is over in India. The same appears to be ocurring in China. The impact will be higher inflation in the developed world than we have seen in the past decade.
I am in my fifties and I think my clothing expenses have been about the same for 20 years. granted I wear khakis and golf shirts all the time but still they don't seem any more costly now. Certainly electronic equipment such as computers have gotten far better and at less cost. All of this is due to low cost labor at the manufacturing countries and has partilly offset the soaring cost of services provided locally.
Absent a deflationary debt contraction ( no certainty ) wage pressures in China and India are going to diminish the deflationary contribution we have gotten used to from those countries products. i feel quite certain that my golf shirts will cost a lot more in ten years.
I'm always bemused by globalisation doomsday scenarios in which all of our jobs move to China (or India) in order to take advantage of low-wage workers. If we really do lose all of our high-productivity jobs, and no longer make anything worth having, why would the Indians and Chinese continue to ship us software programs and flat screen televisions?Ms. McArdle links to this NYTimes article on this very subject. Wages Up in China AS Young Workers Grow Scarce
The other reason this doesn't work, of course, is that as these economies expand, demand for workers pushes up their wages.
I spent a significant part of the last three years working in India training derivative traders and I saw the same phenomenon ocurring as described in the Times article. Wages rising fast but, more importantly a shortage of truly qualified workers. India has an enormous population of uneducated lower class workers. Those workers however need a great deal of education before they can step in and work in the call centers or programming shops. The cheap cheap labor era is over in India. The same appears to be ocurring in China. The impact will be higher inflation in the developed world than we have seen in the past decade.
I am in my fifties and I think my clothing expenses have been about the same for 20 years. granted I wear khakis and golf shirts all the time but still they don't seem any more costly now. Certainly electronic equipment such as computers have gotten far better and at less cost. All of this is due to low cost labor at the manufacturing countries and has partilly offset the soaring cost of services provided locally.
Absent a deflationary debt contraction ( no certainty ) wage pressures in China and India are going to diminish the deflationary contribution we have gotten used to from those countries products. i feel quite certain that my golf shirts will cost a lot more in ten years.
Peak Oil? Not so much.
Glenn Reynolds links to this great WIRED article about a huge oil find deep beneath the Gulf of Mexico. One of the most consistent idiocies of Congress is pandering to public opinion and media posturing over high oil prices and excessive oil company profits. The WIRED article reveals flaws in both ideas. The extraordianry effort and expense of finding oil nowadays requires the potential for a high payoff and an oil price high enough to make looking for oil worth the trouble. All during the nineties when we had relatively benign oil pricing exploration dwindled. Then when supplies got tight everyone complains the oil companies are not expanding supplies. High prices bring on discoveries and also make environmentally friendly energy sources more competitive. I suggest we cut the pay of Congressmen and raise the pay of oil drillers.
Wouldn't it be ironic if the middle east runs out of oil and prices explode over $100 a barrell just as the USA finds billions of barrels on its own territory. The balance of payments problem would disappear as fast as all those Saudi financed mosques.
Wouldn't it be ironic if the middle east runs out of oil and prices explode over $100 a barrell just as the USA finds billions of barrels on its own territory. The balance of payments problem would disappear as fast as all those Saudi financed mosques.
Tuesday, August 28, 2007
"Jaw dropping
Those are the words Don Worden used to describe the carnage in the stock market today.
Worden.com are the vendors of a terrific and economical product for technical analysis of stocks. I use it and recommend the product. don Worden went on to say about Tuesday's action:
Worden.com are the vendors of a terrific and economical product for technical analysis of stocks. I use it and recommend the product. don Worden went on to say about Tuesday's action:
Industry groups gave us 239 declines versus zero advances. Major Industrial sectors gave us 31 declines versus no advances. Four of the 17 Breadth Groupings had no advances. One of those was the Dow. Another was the Bellweather Grouping. HalfPoint Movers had 112 winners and 2594 losers. The Nasdaq 100 had seven winners. The SP-500 had 14 winners.
All of the 17 Breadth Groupings were beyond Decisively negative. They were jaw-droppingly negative.
Alphaville points out some reasons to be cautious on the Chinese market
Alphaville notes:
Profits rose on average by 71 per cent in the first six months of the year for the more than two-thirds of listed Chinese companies that have already published results. But operational profit growth was only about 35 per cent, according to Jerry Lou, equity strategist at Morgan Stanley.
So up to half of the heralded earnings growth of companies listed in Shanghai and Shenzhen may have originated from piling into the country’s red hot stock market. Almost a third of those companies’ income in the first half was non-operational, up from 13 per cent in 2006, and much higher than most developed markets where non-core income usually accounts for less than 10 per cent of total profits
Chinese and Indian stock markets are going to be great opportunities for a long time, but they will also have far greater volatility than we in the developed markets typically experience.
Monday, August 27, 2007
American Soldiers Are Still the Good Guys
Peggy Noonan writes a wonderful piece in the WSJ on American soldiers. Whatever happens in Iraq in the future you can be sure the individual American soldier will be missed by the people who have had the chance to deal with them one on one.
Sunday, August 26, 2007
Dehne: Good business and fair pricing.
Thursday night big storms knocked out power to 300,000 homes in the north suburbs of Chicago. Our house was one of them. Power company officials were telling the Glencoe city services staff we were looking at 2 or 3 days before power could be restored. Our battery powered backup sump pump failed in about a hour because it was running almost continuously. We (mostly my wife) then spent the next 22 hours bailing the sump hole and carrying the water up to a bathtub to dump so that the basement would not flood. Our neighbors all got around 4 or 5 inches of water. Early friday morning we were calling around looking for portable generators but not finding any available. Until I called Dehne Lawn and Leisure of Northbrook, Illinois. The owner had taken the initiative to spend over a hundred thousand dollars on an emergency shipment of generators that were to arrive that afternoon. I ordered 1 of the 20 remaining available from the 100 he had ordered. I paid $1300 including tax.
When I picked it up I found I had paid exactly the same price they charged in non emergencies, no extra mark up in price. Plus they had assembled the machine and filled it with oil. All I had to do was put in gasoline and fire it up.
I will be forever grateful for the service that Dehne and staff provided. They will certainly gain my custom for the future.
When I picked it up I found I had paid exactly the same price they charged in non emergencies, no extra mark up in price. Plus they had assembled the machine and filled it with oil. All I had to do was put in gasoline and fire it up.
I will be forever grateful for the service that Dehne and staff provided. They will certainly gain my custom for the future.
Contingent liabilities and pricing tail
Tom Maguire at Just One Minute discusses a Michael Lewis article on pricing an option to cover the risk of an earthquake in both Japan and California. This is the kind of thing Warren Buffett and Ajit Jain have made so much money doing over the last decade or so. The discussion is a good example of the logic involved in estimating contingent probabilities.
Thursday, August 23, 2007
Assurances on Buybacks Cost a Lender
August 23, 2007
Assurances on Buybacks Cost a Lender
By GRETCHEN MORGENSON
Expanding rapidly as the nation’s largest home mortgage company, Countrywide Home Loans quietly promised investors who bought its loans that it would repurchase some if homeowners got into financial difficulties.
But now that Countrywide itself is struggling, it may not be able to do so, making it even harder for troubled borrowers to reduce their interest rates or make other changes to their loans to avoid foreclosure.
The possibility that Countrywide may have to buy back mortgages that it sold comes on the heels of its announcement last week that the tightening credit markets had forced it to draw on its $11.5 billion line of credit from a consortium of banks, a move that sent the market plummeting.
But yesterday, Bank of America agreed to invest $2 billion in Countrywide, buying preferred shares that carry an interest rate of 7.25 percent and can be converted into common stock at $18 each.
“Bank of America’s investment in Countrywide represents a vote of confidence and strengthens our balance sheet, enabling us to position Countrywide for future growth and success,” Angelo R. Mozilo, chief executive of Countrywide, said in a statement.
Countrywide, with its stock depressed, had been seen as a prospect for a takeover. But any obligation the company has to buy back loans may complicate discussions with potential investors or buyers.
The repurchase obligations are discussed in Countrywide’s prospectuses and pooling and servicing agreements that cover about $122 billion worth of mortgages packaged and sold to investors from early 2004 to April 1 of this year.
The agreements said that Countrywide Home Loans, a unit of Countrywide Financial, would buy back mortgages in the pools if their terms were changed to help borrowers remain current. Such changes are known as loan modifications. In general, it is difficult for homeowners to get loans modified if they are in a securitization pool.
It is unclear how many modified loans are involved. But it would cost $1.2 billion for the company to repurchase 1 percent of the loans in the pools at issue. Repurchasing 5 percent would cost $6.1 billion. When such buybacks are made, the original amount of the loan is paid into the pool and divided among the investors.
Under the terms of the loan pools, the decision to modify a mortgage is left to the company that services it. Servicers deal directly with borrowers, taking in monthly mortgage payments and sending them out to the investors in the pools. Most of Countrywide’s loans are serviced by its Home Loan Servicing unit.
But Countrywide’s servicing unit may have less incentive to help troubled borrowers who are interested in working out their loans, analysts said, because doing so could put the parent company on the hook to buy back a loan.
“With the volume of adjustable-rate mortgages that Countrywide has originated, their liquidity crunch potentially eliminates a viable tool to keep mortgages affordable in the face of impending interest rate resets,” said Kevin Byers, a principal at Parkside Associates, a consulting firm in Atlanta and an authority on securitizations.
According to company figures, last year 45 percent of Countrywide’s loans had adjustable rates; many begin with low rates and adjust to much higher levels.
Agreeing to buy back loans that are modified is highly unusual and perhaps unique among pools issued by companies like Countrywide, Mr. Byers said. Pools backed by mortgages issued by Fannie Mae and other government-sponsored entities typically include such language.
It is likely that Countrywide put the language into its agreements as an incentive to make its mortgage pools more attractive to investors, in turn generating more money for Countrywide when it sold them.
A Countrywide spokesman, Rick Simon, said that the company’s servicing unit was interested only in keeping loans performing and that its modification decisions would be based on that goal.
“Investors rate servicers based on their ability to keep loans in a performing state and to turn nonperforming loans into performing loans,” he said. “The fees collected for servicing are based on the loans performing.”
Loans that reach foreclosure are expensive for both lenders and servicers, Mr. Simon added.
But servicers must also consider the interests of investors who bought the mortgage pools for the cash flow they generate. If the cash flow drops because of loan modifications, some investors will be unhappy.
Mr. Simon would not say how many loans Countrywide had modified and bought back as a result of the pooling agreements. But Countrywide’s financial statements from last year show that it bought fewer delinquent loans out of securitization entities than in previous years. Those purchases totaled $1.5 billion last year, down from $3.8 billion in 2005 and $3.4 billion in 2004.
Under most agreements, the amount of loans that can be modified in any pool is limited to 5 percent, unless the mortgage borrowers are defaulting or seem to be about to default. Mr. Simon said that the pooling agreements indicating that Countrywide was obligated to buy back modified loans applied only to mortgages that are not in danger of defaulting.
But the language in the pooling agreements from 2004 through much of 2007 does not state this clearly. Only as of April 1 do Countrywide’s pool terms begin stating that the company is not required to repurchase modified loans.
Mr. Simon said this change in language was made to clarify the original intent of the agreements.
Many subprime loans being serviced by Countrywide are in trouble. As of June 30, almost one in four subprime loans serviced by the company were delinquent, up from 15 percent in the period a year ago. Almost 10 percent were delinquent by 90 days or more versus last year’s rate of 5.35 percent.
Loans can be modified to try to keep homeowners from losing their property. Major changes like reducing the interest rate are considered a loan modification.
Lesser changes are not, strictly speaking, modifications. Getting a delinquent borrower current on a loan by adding the payments that are owed is considered a forbearance, not a loan modification.
Update: Housing Wire critiques the Times article.
Assurances on Buybacks Cost a Lender
By GRETCHEN MORGENSON
Expanding rapidly as the nation’s largest home mortgage company, Countrywide Home Loans quietly promised investors who bought its loans that it would repurchase some if homeowners got into financial difficulties.
But now that Countrywide itself is struggling, it may not be able to do so, making it even harder for troubled borrowers to reduce their interest rates or make other changes to their loans to avoid foreclosure.
The possibility that Countrywide may have to buy back mortgages that it sold comes on the heels of its announcement last week that the tightening credit markets had forced it to draw on its $11.5 billion line of credit from a consortium of banks, a move that sent the market plummeting.
But yesterday, Bank of America agreed to invest $2 billion in Countrywide, buying preferred shares that carry an interest rate of 7.25 percent and can be converted into common stock at $18 each.
“Bank of America’s investment in Countrywide represents a vote of confidence and strengthens our balance sheet, enabling us to position Countrywide for future growth and success,” Angelo R. Mozilo, chief executive of Countrywide, said in a statement.
Countrywide, with its stock depressed, had been seen as a prospect for a takeover. But any obligation the company has to buy back loans may complicate discussions with potential investors or buyers.
The repurchase obligations are discussed in Countrywide’s prospectuses and pooling and servicing agreements that cover about $122 billion worth of mortgages packaged and sold to investors from early 2004 to April 1 of this year.
The agreements said that Countrywide Home Loans, a unit of Countrywide Financial, would buy back mortgages in the pools if their terms were changed to help borrowers remain current. Such changes are known as loan modifications. In general, it is difficult for homeowners to get loans modified if they are in a securitization pool.
It is unclear how many modified loans are involved. But it would cost $1.2 billion for the company to repurchase 1 percent of the loans in the pools at issue. Repurchasing 5 percent would cost $6.1 billion. When such buybacks are made, the original amount of the loan is paid into the pool and divided among the investors.
Under the terms of the loan pools, the decision to modify a mortgage is left to the company that services it. Servicers deal directly with borrowers, taking in monthly mortgage payments and sending them out to the investors in the pools. Most of Countrywide’s loans are serviced by its Home Loan Servicing unit.
But Countrywide’s servicing unit may have less incentive to help troubled borrowers who are interested in working out their loans, analysts said, because doing so could put the parent company on the hook to buy back a loan.
“With the volume of adjustable-rate mortgages that Countrywide has originated, their liquidity crunch potentially eliminates a viable tool to keep mortgages affordable in the face of impending interest rate resets,” said Kevin Byers, a principal at Parkside Associates, a consulting firm in Atlanta and an authority on securitizations.
According to company figures, last year 45 percent of Countrywide’s loans had adjustable rates; many begin with low rates and adjust to much higher levels.
Agreeing to buy back loans that are modified is highly unusual and perhaps unique among pools issued by companies like Countrywide, Mr. Byers said. Pools backed by mortgages issued by Fannie Mae and other government-sponsored entities typically include such language.
It is likely that Countrywide put the language into its agreements as an incentive to make its mortgage pools more attractive to investors, in turn generating more money for Countrywide when it sold them.
A Countrywide spokesman, Rick Simon, said that the company’s servicing unit was interested only in keeping loans performing and that its modification decisions would be based on that goal.
“Investors rate servicers based on their ability to keep loans in a performing state and to turn nonperforming loans into performing loans,” he said. “The fees collected for servicing are based on the loans performing.”
Loans that reach foreclosure are expensive for both lenders and servicers, Mr. Simon added.
But servicers must also consider the interests of investors who bought the mortgage pools for the cash flow they generate. If the cash flow drops because of loan modifications, some investors will be unhappy.
Mr. Simon would not say how many loans Countrywide had modified and bought back as a result of the pooling agreements. But Countrywide’s financial statements from last year show that it bought fewer delinquent loans out of securitization entities than in previous years. Those purchases totaled $1.5 billion last year, down from $3.8 billion in 2005 and $3.4 billion in 2004.
Under most agreements, the amount of loans that can be modified in any pool is limited to 5 percent, unless the mortgage borrowers are defaulting or seem to be about to default. Mr. Simon said that the pooling agreements indicating that Countrywide was obligated to buy back modified loans applied only to mortgages that are not in danger of defaulting.
But the language in the pooling agreements from 2004 through much of 2007 does not state this clearly. Only as of April 1 do Countrywide’s pool terms begin stating that the company is not required to repurchase modified loans.
Mr. Simon said this change in language was made to clarify the original intent of the agreements.
Many subprime loans being serviced by Countrywide are in trouble. As of June 30, almost one in four subprime loans serviced by the company were delinquent, up from 15 percent in the period a year ago. Almost 10 percent were delinquent by 90 days or more versus last year’s rate of 5.35 percent.
Loans can be modified to try to keep homeowners from losing their property. Major changes like reducing the interest rate are considered a loan modification.
Lesser changes are not, strictly speaking, modifications. Getting a delinquent borrower current on a loan by adding the payments that are owed is considered a forbearance, not a loan modification.
Update: Housing Wire critiques the Times article.
Tuesday, August 21, 2007
Subprime crisis over. Or not.
Some Bloomberg headlines today seem a little contradictory to me.
U.S. Stocks Rise on Rate-Cut Speculation After Dodd Comments
Fitch to Review $92.1 Billion of Subprime Securities
Home Foreclosures Almost Double in July as Rates Rise (Update3)
The WSJ has a nice article on short money turmoil
The WSJ discusses the wild action in the money markets and posts the chart above as illustration. The chart should be compared to the one I posted earlier in this post.
Update: Bespoke Investment Group has some nice charts covering the same subject over a longer time frame.
who is swimming naked
The title is the ending of one of Warren Buffett's favorite sayings " It is not until the tide goes out that you find out who is swimming naked." The tide has gone out in the short term money arena and a few folks are looking redfaced. The Wall Street Journal discusses the SEC looking at irregularities at Sentinel Management Group. This is likely to be only the first not the last instance of suitless swimmers. Thanks to Between The Hedges for pointing out this article.
Monday, August 20, 2007
Courses online for the Curious
I have purchased and enjoyed a number of courses from the Teaching Company. The courses cover a huge range of topics and are well done by excellent lecturers. Today the Instapundit links to an article on the Popular Science Magazine site listing courses online and available free from several of our leading universities. I recommend bookmarking this article as a reference to these web sites.
Sunday, August 19, 2007
Who moved my loan officer?
This is a weekly chart of three month treasury bill yields (courtesy of stockcharts.com ). obviously the past week was a bit unusual. The longer term credit markets were also moving but not nearly to the same extent. The sharp move down in ultra short US Treasury securities reflected a flight to safety away from short term commercial paper by banks and money market funds. Those lenders of short term money withdrew from the markets leaving a vacuum that was going to put some companies like Countrywide Mortgage into bankruptcy. The Fed acted to relieve some of these constraints as specifically as possible, rather than just lower rates slightly for the entire economy. The comparison is to using a rifle instead of a shotgun. Will it work? I don't know long term but they definitely got a big psychological sigh of relief from the stock market.Significant problems remain in place. Dennis Gartman of the Gartman Letter included an ominous chart in his Friday issue. ( I am unable to find a copy to reproduce here) The chart illustrated the number of mortgage teaser loan rate rollovers that will occur over the period Dec 2006 through Dec 2011. The number is rising very fast right now but the peak is still a couple of months away and almost 40% higher than at present. Do not let the talking heads on business television convince you the crisis is over. The panic may be over but the problem is growing larger and will for some time. At least the issue is on the front page now. As Donald Coxe likes to point out the scary stuff is on the front page but the dangerous stuff is still on page 16 where no one is paying attention.
Saturday, August 18, 2007
Police Misbehavior and not in Chicago or LA
Those of us who live in the Chicago area are accustomed to incidents of criminal behavior by individual policeman. Los Angeles has also had well publicized problems over the years. Radley Balko points to an incident of abuse of power in a small town. (via Instapundit of course: I don't think he sleeps)
One is warned by these kinds of news stories to remember the most dangerous thing most people face is their own government. Americans are lucky because we live in a country where our rights are protected relatively well, but the point is still true. The obvious danger of a Saddam Hussein or an Idi Amin tends to be attached to them personally but their power comes from being head of the govrnment and having control over police, military, and taxation. All governments, benign or otherwise, impose their will with the authority to arrest and imprison. Police have the legal right to point a gun at you. This is the reason I support the right to bear arms.
Anytime we read about abuse of power or intimidation by police we need to overreact and have those police officials removed from office. We endanger ourselves by failing to respond.
One is warned by these kinds of news stories to remember the most dangerous thing most people face is their own government. Americans are lucky because we live in a country where our rights are protected relatively well, but the point is still true. The obvious danger of a Saddam Hussein or an Idi Amin tends to be attached to them personally but their power comes from being head of the govrnment and having control over police, military, and taxation. All governments, benign or otherwise, impose their will with the authority to arrest and imprison. Police have the legal right to point a gun at you. This is the reason I support the right to bear arms.
Anytime we read about abuse of power or intimidation by police we need to overreact and have those police officials removed from office. We endanger ourselves by failing to respond.
Thursday, August 16, 2007
academics rival media for lead in liberal bias.
Thanks to the Instapundit for linking to Back Talk and his comments on bias in academia. The bias is not surprising but the lopsidedness is and eyeopener. Next time your alma mater calls asking for money remember these statistics. The image is from the Back Talk site mentioned above and I recommend you read the whole thing.
Monday, August 13, 2007
Porkbusters update
Glenn Reynolds one of the founders of Porkbusters today points to an article by Robert Novak on the scumbags in Congress and their earmark payoffs to political supporters. As always Murtha is in the lead and Pelosi is useless. The republicans are no better.
I admire the effort by Representative Flake but I continue to advocate voting against all incumbents. throw all the bums out!
I admire the effort by Representative Flake but I continue to advocate voting against all incumbents. throw all the bums out!
Sunday, August 12, 2007
Dr. Helen comments on celebrity and media anit-Americanism
Dr. Helen notices a distinct political slant to drew Carey's new show. Just one more glib celebrity trying to fit in with the in crowd. Probably hoping for an invite to a Sean Penn/ Hugo Chavez party.
Mauboussin; cash flow more important than earnings
Michael Mauboussin of Legg Mason writes and interesting paper on the importance of cash flows.
What You See and What You Get.
What You See and What You Get.
Anti American Propaganda and the Complicity of the American Left
The Beauchamp/TNR slander of American soldiers is merely one more instance of leftist gullibility when it comes to believing anything bad about America. ION MIHAI PACEPA a former communist intelligence officer writes the following in the Wall Street Journal Opinion page:
Sowing the seeds of anti-Americanism by discrediting the American president was one of the main tasks of the Soviet-bloc intelligence community during the years I worked at its top levels.He goes on to give an example of other propaganda efforts: (this one bought hook line and sinker by surrendercrat John Kerry)
During the Vietnam War we spread vitriolic stories around the world, pretending that America's presidents sent Genghis Khan-style barbarian soldiers to Vietnam who raped at random, taped electrical wires to human genitals, cut off limbs, blew up bodies and razed entire villages. Those weren't facts. They were our tales, but some seven million Americans ended up being convinced their own president, not communism, was the enemy. As Yuri Andropov, who conceived this dezinformatsiya war against the U.S., used to tell me, people are more willing to believe smut than holiness.
Gateway Pundit, Michelle Malkin , Powerline, all are on the story.
Unfotunately, anti American groups can always find unethical ambitious political types or gullible celebrities with more money than sense who buy in to propaganda and use their access to media to spread fallacious information.
Unfotunately, anti American groups can always find unethical ambitious political types or gullible celebrities with more money than sense who buy in to propaganda and use their access to media to spread fallacious information.
Saturday, August 11, 2007
Time frames make a difference
Despite ravings of CNBC talking heads about market armageddon the recent action, though volatile does not represent a collapse. i don't know where this market may go but I can see it has not gone anywhere yet. top chart is daily and looks pretty wild but, the second is monthly and barely merits notice.
The Fed to the Rescue!
Accrued Interest writes a good article about Bernanke, the Fed, and how they are reacting to the subprime led liquidity crisis.
I know wall streeters and Cramer were all panicking and crying for mommy to do something. Well the Fed did do something friday. They injected huge cash reserves in to the banking system by accepting various types of mortgage securities as collateral for short term loans. This effectively put a value on securities that banks were refusing to use as collateral because there was no viable quote to use as a valuation method. Billions of dollars of collateral ( fewer billions than a few weeks ago ) were temporarily rendered valueless because the participants in that market had withdrawn. The fed properly stepped in to restore some normalcy and prevent further contagion so that a general credit crisis would be averted.
I am not normally a fan of government intervention in markets, but this is precisely the proper role of the Fed in a market spasm. Bernanke and friends took a very targeted approach and addressed the exact problem rather than cutting rates. The liquidity crisis was not because of rates being too high it was due to lending not being available. What difference does the interest rate make if I cannot get a loan in the first place?
I applaud the Fed's action and am reassured some about Ben Bernanke's abilities to take the heat and perform.
Restoring normal credit conditions to the market is the right move. Bailing out a bunch of over leveraged hedge fund managers is not the job of the Federal Reserve.
I know wall streeters and Cramer were all panicking and crying for mommy to do something. Well the Fed did do something friday. They injected huge cash reserves in to the banking system by accepting various types of mortgage securities as collateral for short term loans. This effectively put a value on securities that banks were refusing to use as collateral because there was no viable quote to use as a valuation method. Billions of dollars of collateral ( fewer billions than a few weeks ago ) were temporarily rendered valueless because the participants in that market had withdrawn. The fed properly stepped in to restore some normalcy and prevent further contagion so that a general credit crisis would be averted.
I am not normally a fan of government intervention in markets, but this is precisely the proper role of the Fed in a market spasm. Bernanke and friends took a very targeted approach and addressed the exact problem rather than cutting rates. The liquidity crisis was not because of rates being too high it was due to lending not being available. What difference does the interest rate make if I cannot get a loan in the first place?
I applaud the Fed's action and am reassured some about Ben Bernanke's abilities to take the heat and perform.
Restoring normal credit conditions to the market is the right move. Bailing out a bunch of over leveraged hedge fund managers is not the job of the Federal Reserve.
The religion of peace (or is it pieces?) Strikes again.
Gateway Pundit;
Islamic Militants Booby-Trap Decapitated Heads to Bombs
Those piece loving muslims have murdered two elderly monks in Thailand and booby-trapped their heads to bombs. Has anyone noticed the hue and cry from peace loving co-religionists condemning these acts?Oops! Never Mind
Oops!... Global Warming A Bust- Figures Were Fudged!
The Gateway Pundit has some updated figures and links to other commentary. Also the Instapundit links to Bjorn Lonborg"s new book on climate and Michael Crichton's review.Watts Up With That?
Has explanation and data about NASA's revised list of the hottest years on record. Including a particularly interesting explantion for why at least some of the source data was inaccurate.
Friday, August 10, 2007
Innocent and proven innocent.
All charges dropped against marines investigated for crimes at Haditha. Pennsylvania's braying jackass of a congressman, Jack Murtha had pronounced them guilty months ago of course because it suited him politically. Will he apologize as loudly and publicly to these men?
Sunday, August 5, 2007
Mark Steyn points out another Spineless industry.
Mark Steyn tells the tale of another member of the media and publishing industry demonstrating a lock of backbone or principle. The book "Alms for Jihad" is being suppressed by threat of lawsuits from welathy Saudis. The book is about Saudi funding of terrorism and Islamic jihad through the cover of charity organizations. Read Steyn's take.
Thanks to the Instapundit for pointing this out.
Thanks to the Instapundit for pointing this out.
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