Fisher: Fed Should Increase Rates If Inflation Accelerates

Bloomberg.com: News

May 29 (Bloomberg) -- Federal Reserve Bank of Dallas
President Richard Fisher said he expects the central bank would
raise the benchmark U.S. interest rate should the public begin
to expect greater gains in consumer prices.

``If inflationary developments and, more important,
inflation expectations continue to worsen, I would expect a
change of course in monetary policy to occur sooner rather than
later, even in the face of an anemic'' economy, Fisher said
yesterday in a speech in San Francisco.

Until the Treasury and the Fed pursue a legitimate effort to support the dollar inflation will increase. the longer they wait the worse it will get.

Bloomberg: credit crunch no just in US

Bloomberg.com: Exclusive

May 28 (Bloomberg) -- A relic from Russia's debt default a
decade ago is threatening the country's economic resurgence by
forcing more than 200 companies to increase the interest they pay
to as much as 16 percent.

With bond yields rising worldwide as the U.S. subprime
turmoil spreads, hedge funds and other investors in Russia are
demanding the higher rates or their money back.

Fortune: article on Ken Heebner

America's hottest investor: mutual fund manager Ken Heebner - May. 27, 2008

Full disclosure: I do own some of the Focus fund run by Heebner.

I Wish Jeff Had Made This Up

Jeff Matthews Is Not Making This Up

Just more reason to throw the bums out.

BCA: Treasuries Testing The Upper Limit?

BCA Research - Independent Investment Research Since 1949

U.S. Treasurys: Testing The Upper Limit?
Last week's selloff in Treasurys is likely to be short-lived, due
to still weak domestic economic conditions and house price deflation.

Say It Ain't So

via The Instapundit:

Kanjorski says Dems were insincere about ending war

Rep. Paul Kanjorski (D-Pa.) is seen in a video that has surfaced on the Web saying that Democrats “sort of stretched the facts” in the 2006 elections about their ability to end the Iraq war.

In a video , posted to YouTube on Thursday, Kanjorski reflects on the Democrats’ approach to the war in 2006 and said they pushed the rhetoric “as far as we can to the end of the fleet — didn’t say it, but we implied it — that if we won the congressional elections, we could stop the war.

Politicians stretching the truth? I am shocked, shocked I tell you. We need to throw the bums out. All incumbents, in all elected offices, from both political parties.

Is This One Of Those Cigar Things Slick Willie Likes?

Bloomberg.com: News

Bill Clinton Eyes Number Two Slot for His Wife, N.Y. Times Says

By Mark Drajem

May 23 (Bloomberg) -- Bill Clinton has been discussing with

friends the possibility that Hillary Clinton could be the vice
presidential running mate of Barack Obama, the New York Times
reported.

Lieberman Always Worth Listening To

Democrats and Our Enemies - WSJ.com

There are of course times when it makes sense to
engage in tough diplomacy with hostile governments. Yet what Mr. Obama
has proposed is not selective engagement, but a blanket policy of
meeting personally as president, without preconditions, in his first
year in office, with the leaders of the most vicious, anti-American
regimes on the planet.
Mr. Obama has said that in proposing this, he is
following in the footsteps of Reagan and JFK. But Kennedy never met
with Castro, and Reagan never met with Khomeini. And can anyone imagine
Presidents Kennedy or Reagan sitting down unconditionally with
Ahmadinejad or Chavez? I certainly cannot.
If a president ever embraced our worst enemies in this way, he would strengthen them and undermine our most steadfast allies.
A great Democratic secretary of state, Dean Acheson,
once warned "no people in history have ever survived, who thought they
could protect their freedom by making themselves inoffensive to their
enemies." This is a lesson that today's Democratic Party leaders need
to relearn.

Senator Lieberman is the only incumbent I would vote for. Throw out al the other bums of both parties.

Calculated Risk: Option Arm Training Video

From Calculated Risk:

Channel 5 in San Francisco got its hands on some "training videos" used by World Savings--now owned by Wachovia--to teach brokers and loan officers how to originate their "Pick-A-Payment" negative amortization ARM. It's pretty disgusting:

I agree.

U.S. Home Builders: No Light At The End Of The Tunnel

BCA: Sentiment among U.S. home builders remains at rock bottom levels - builders expect no improvement in sales over the next six months.

Donald Cox weekly webcast

BMO Nesbitt Burns PCD

Matthews: Scenes from an Annual Meeting

This is very interesting.


Jeff Matthews Is Not Making This Up

Scenes from an Annual Meeting

Petrobras Hires 80% of Deepwater Rigs, Inflates Rents

From Bloomberg:
Petroleo Brasileiro SA, Brazil's
state-controlled oil company, leased about 80 percent of the
world's deepest-drilling offshore rigs to explore prospects
including the Western Hemisphere's biggest discovery in decades.

Petrobras, as the Rio de Janeiro-based company is known, is
hiring rigs that can drill in at least 3,000 meters (9,800 feet)
of water, Chief Executive Officer Jose Sergio Gabrielli said in
an interview last week. The world has 21 such vessels, according
to Rigzone.com, which tracks the offshore drilling industry.

Read the whole thing.

Austrailian: Credit Where It Is Due

The Austrailian News writes a true thing:

THERE is a certain familiarity to the concomitant series of actions and reactions when disaster strikes in the world. The US stands ready, willing and able to offer assistance. It is often the first country to send in millions of dollars, navy strike groups loaded with food and medical supplies, and transport planes, helicopters and floating hospitals to help those devastated by natural disaster.

Then, just as swift and with equal predictability, those wedded to the Great Satan view of the US begin to carp, drawing on a potent mixture of cynicism and conspiracy theories to criticise the last remaining superpower. When the US keeps doing so much of the heavy lifting to alleviate suffering, you'd figure that the anti-Americans might eventually revise their view of the US. But they never do. And coming under constant attack even when helping others, you'd figure that Americans would eventually draw the curtains on world crises. But they haven't. At least not yet.

So it was last week. The US stood ready to help the cyclone-ravaged Burmese people. It did not matter that Burma's ruling junta was no friend of the Americans. With more than 100,000 people feared dead and many more hundreds of thousands left destitute, US Air Force cargo planes loaded with supplies and personnel started arriving in nearby Thailand to begin humanitarian operations in Burma.

A US Navy strike group in the Gulf of Thailand sent helicopters ashore, ready to arrive in Burma within hours. Alas, Burma's military leaders left their people to die for 10 days before finally accepting help from the evil empire. Even if the Yanks are allowed to boost their assistance to Burma, they can expect a groundswell of criticism.

Read it all and see if your temperature rises like mine. Plus kudos to Austrailia as one of the other countries that responds generously to disasters in other companies.
hat tip to the Instapundit

On Housing

Calculated Risk has several excellent posts on the state of the housing problem as revealed by the Freddie Mac quarterly conference call. just scroll down through the posts.
http://calculatedrisk.blogspot.com/2008/05/freddie-mac-on-walking-away.html

http://calculatedrisk.blogspot.com/2008/05/freddie-mac-conference-call.html

http://calculatedrisk.blogspot.com/2008/05/foreclosures-filings-rise-65.html

Bespoke: On Retails Sales

From Bespoke Investment Group:

While retail sales rose 2% on a year/year basis, after adjusting for inflation, sales actually declined by 1.9%. In fact, this month's decline marks the fifth straight monthly year/year decline. This is the longest streak of monthly declines in the last fifteen years.

It just doesn't get better than being a Grandpa

My "little" girl and her husband brought the 2 grandkids to visit this weekend and it just doesn't get any better than that. I have been blessed in my parents, my siblings, my spouse, my daughter and son-in-law and in my two grandchildren. No one could be luckier.

WSJ: Democrats and the Killing Fields

from the Wall Street Journal an outstanding article:

Democrats and the Killing Fields

By ARTHUR HERMAN
May 1, 2008; Page A17

Most people have never heard of Operation Frequent Wind, which ended on April 30, 1975, 33 years ago. But every American has seen pictures of it: the Marine helicopters evacuating the last U.S. personnel from the embassy in Saigon, hours before communist tanks rolled into the city. Thousands of desperate Vietnamese gathered at the embassy gate and begged to be taken with them. Others committed suicide.

Those scenes are a chilling reminder of what happens when a great power decides to cut and run. Two of the three presidential candidates are proposing to do just that in Iraq. We need to remember what happened the last time we gave up on an unpopular foreign policy, not only in humanitarian terms but in terms of American power and prestige.

Actually, the U.S. had won the war in Vietnam on the battlefield, just as the surge has done today in Iraq. Over Easter 1972, South Vietnamese forces, backed by U.S. airpower, crushed the last communist offensive, killing nearly 100,000 North Vietnamese troops.

Go to the Journal site to read the rest. Should either of the two Democrat candidates win the election will they forget the lessons of Viet Nam and abandon the people of Iraq? Will they behave responsibly or choose cowardice? Will they choose to see the big picture like Roosevelt and some of the great Democrat leaders or to be a toothless pandering frenchocrat like Carter? The answer to these questions is important if we wish to halt the spread of barbarianism. Remember it has to be America no other country can do it without us.
Thanks to the Wall Street Journal for publishing this article.

Troubled Bankers Choking Off More Borrowers

from Bloomberg:

May 6 (Bloomberg) -- Countrywide Financial Corp. has suspended the home equity credit lines of almost all its Las Vegas customers, including the $60,000 Christopher Whipple says he needed to expand his cell-phone accessories business.

``I hope this doesn't break me,'' the 35-year-old retailer said. His credit score was 790 out of a possible 850, putting him in the top 40 percent of borrowers.

Since January, Countrywide, Bank of America Corp., Washington Mutual Inc. and IndyMac Bancorp Inc. have frozen about 600,000 equity credit lines nationwide, said Michael Kratzer, president of a Bankrate Inc.-owned Web site that's fielding consumer complaints. The lenders are targeting borrowers in cities where property values are falling, including Las Vegas, Chicago and Los Angeles, he said.

Frozen credit and real estate declines are putting a chill on spending and hurting the economy. In February, taxable sales in Clark County, Nevada, which includes Las Vegas, fell 3.1 percent from a year earlier, dropping 13 percent at furniture stores and 6 percent for durable-goods wholesalers. In the same month, as it became harder to borrow money across the U.S., consumer spending rose at the slowest pace in more than a year.

The implications for the economy from these tighter lending standards is very negative. The swing from no credit standards to very stringent standards is the mechanism for spreading the housing crisis into the broader business economy. This is also why the very worst recessions tend to be drawn out double dippers and not V- shaped quick rebounders.

troubled

Barron's: The Nest Buffett

Barron's article on the likely successor to Warren Buffett as chairman of Berkshire Hathaway.

Throw The Bums At The UN Out Too!

How bad does the UN have to get?

This is a neat graph showing the unemployment rate for the last 40 years. Business cycles are clearly visible though they look to be waning in severity. Based on only a quick glance, it looks as though we've likely yet to find the to (bottom) of this cycle.

Can Funds Go Wrong with Buffett as Their Guide?

A Morningstar article On Buffett and funds that follow his strategy.

I am heading out to the Berkshire annual meeting tomorrow. I will try to remeber what I hear and post on it.

Brazil

Bespoke and Bank Credit Analyst both had post on Brazil today. Standard and Poors awarded Brazil an investment grade rating for their government debt. This rating will allow institutions limited to investment grade bonds to finally participate in the bullish story. The extra money being invested there will lower the costs of government borrowing and contribute to a virtuous circle of a stronger currency and smaller reduced cost for government.

This is a tremendously bullish development and the market has rallied sharply. If the political cass can avoid screwing this up (no sure thing) Brazil could have a very sustained trend up.