Geert Wilders is a Hero

Thanks to Instapundit for linking to this Wall Street Journal article about Geert Wilders. I will quote one portion of the article but you should click through to read it all.

Having his own party liberates Mr. Wilders to speak his mind. As he sees it, the West suffers from an excess of toleration for those who do not share its tradition of tolerance. "We believe that -- 'we' means the political elite -- that all cultures are equal," he says. "I believe this is the biggest disease today facing Europe. . . . We should wake up and tell ourselves: You're not a xenophobe, you're not a racist, you're not a crazy guy if you say, 'My culture is better than yours.' A culture based on Christianity, Judaism, humanism is better. Look at how we treat women, look at how we treat apostates, look at how we go with the separation of church and state. I can give you 500 examples why our culture is better."

He acknowledges that "the majority of Muslims in Europe and America are not terrorists or violent people." But he says "it really doesn't matter that much, because if you don't define your own culture as the best, dominant one, and you allow through immigration people from those countries to come in, at the end of the day you will lose your own identity and your own culture, and your society will change. And our freedom will change -- all the freedoms we have will change."

Oh and Mr. JamesTaranto the author of the article is being a little too pc. Jim you wrote a fine article, as usual, except you missed the whole point by throwing the Islamist view a bone.

Powerline: Muslims "worry about image"

Powerline points out an Associated Press article saying Muslims are worrying about their image after the Mumbai attacks. The Powerline article is very good but I have a slightly different view.

I believe the image of Islam is just fine having been polished up by the typical murderous mayhem of its adherents. After many years of this barbarous behavior with no outcry from "moderate" Muslims one is led to the conclusion that "moderate" Muslims are cowards or non-existent.
Mark Steyn in his book America Alone asks a qquestion that goes something like this: If an Islamic terrorist, a moderate muslim , Santa Claus, and the Easter Bunny all arrive at an intersection where a hundred dollar bill is lying in the street who will get the hundred dollars? ----- the terrorist because the others are all mythical creatures.

Unchartd territory? Not so much.

Blodgett and Hussman on "uncharted Territory".

Market In "Uncharted Territory"? Only If You're An Idiot

Fund manager John Hussman takes aim at one of the ludicrous excuses that is making its way around Wall Street: All past losses and future uncertainty can be forgiven because the market is in "uncharted territory." Please.

Go to both links, they cover it better than I would.

Mortgage Rates Improve On New Fed Moves

Bespoke Chart:

How are stock mutual funds doing?

Businessweek says:

Every Stock Mutual Fund Has Lost Money in

2008, Except One

Oh by the way, that one is flat for the year. None are up. Glad I am paying that 2% fee for professional package.

WSJ: Auto Makers Alreadt Bankrupt

The Auto Makers Are Already Bankrupt

Admitting the obvious is their best chance to restructure.

Panic in Bond Market and Banking System

I have been in the market as a futures trader for 30 years and some very painful trades are creating consternation in the debt markets today. Two bank prop desks have bought approximately 40,000 210 calls on the five year treasury note today. That strike price implies a negative 9% (all numbers approx) rate of interest. NEGATIVE!! That means paying 9% to give the government your money for 2 years!

This is almost certainly a panic extreme hedge against some risk in a non exchange traded derivative that is causing capital impairment charges. Here is a link talking about this issue:
money at aol


I don't want to pass rumors so I won't give names but this is extraordinary and a really desperate protective measure. Desperate enough that gold is up.

Barrons: Sum Micro trading less than cash

Eric Savitz at Barrons:

For Sun Microsystems (JAVA), it has come down to this: the stock is now trading for the net value of the cash and investments on its balance sheet.

As of September 30, the company had $2.63 billion in short-term cash and investments. Add in $490 million in long-term investments, and back out $694 million in long-term debt, and you get net cash of $2.486 billion.

JAVA shares today have dropped another 34 cents, or 9.2%, to $3.38. It’s current market cap: $2.49 billion. Since announcing the headcount reduction plan, the stock is down 17%. Ergo, you in theory could buy Sun today, pay off holders and the debt with the existing cash, and get the entire company for nothing.

Now, I know, I know, that does not include the costs of the company’s plan to cut 5,000-6,000 jobs. So there’s actually less cash to go around than meets the eye. Nonetheless, the stock’s ongoing swoon is a startling reminder that any stock not trading at zero can always go lower.

Bespoke: On high yield bonds

Bespoke is really on its game today. Credit spreads continue to be a big problem as they demonstrate in these charts. Click to their site to read their commentary.

Bespoke: SP500 way below 200 day average

Bespoke chart

Poll on auto bailout

via Instapundit:

Should We Bail Out The U.S. Automakers?
Selection		Votes
Yes, they're vital industries.	3%	338
No, let them fail. That's capitalism!	97%	9,654
9,992 votes total
pollcode.com free polls

Politicians might want to take a look at this. People don't seem to have much enthusiasm for buying inferior products made by indifferent non-competitive workers supported by corrupt union offficials. But maybe I am misinterpreting 97 to 3.

Solving the Auto company problem

Mark Perry via Larry Kudlow may have properly identified the problem:


Now remember all these are wage rates for manufacturing in the USA.

Congress is (still) an embarassment

Every time Congress is on TV questioning someone I am ashamed for my country. Today we were treated with Dennis Kucinich, a demonstrated incompetent and certifiable loon berating a professional public servant, Neal Kashkari, for giving a truthful and straight forward answer to a question. Mr. Kashkari should have apologized for failing to respond with meaningless bullshit but he is not fluent in Congressionaleze.

Good Read On Hedge Funds

Interesting article by Ultimi Barbarorum:

Trimming the Hedgies

November 12, 2008 ·

Going through my daily abnormal returns browse these days makes me want to misquote Admiral Beatty at the Battle of Jutland: there seems to be something wrong with our bloody hedge funds. They’re crapping out left and right. What gets me is not just that they are all doing it at the same time, which is astonishing enough, it is that it seems to be getting worse. Given half decent risk management, this should not be happening. I was aware of the existence of hedge fund beta where it comes to Quants, but I had always assumed there was sufficient diversity of opinion within the rest of the popular hedge fund strategies, particularly in equity long short, so that they would have some sort of diversity in their returns. I had also assumed that these guys were smart and flexible enough to be able to stop themselves out, to switch stuff around and refashion their portfolios to find something that works. At the very least, they could have just stopped doing anything, cover shorts, sell longs, and go flat.

This is clearly not the case, and I have not yet found a convincing explanation for it. The Citadels, Atticus(-ses, Attici?), Tontines, Fortresses of this world seem to be deer in headlights. Their performance is deteriorating over the course of this year, not stabilising. September was the worst month ever, we were told, so it would not be a very difficult decision to retrench, take some action, gross down and change orientation some way. Instead we find out that October was worse.

M y opinion is the hedgies got too big and too greedy to turn down the money offered them by late to the party "me too" bankers. Arb strategies are not always scalable to bigger size so less profitable but growable strategies are utilized and the returns jacked up with huge leverage. At 40 to 1 a 3% retracement is a 100% plus loss. Live by the sword die by the sword.

Good for Mexico

From the FT:

Mexico hedges almost all of its oil exports for the coming year

By Javier Blas in London and Adam Thomson in Mexico City

Published: November 11 2008 02:00 | Last updated: November 11 2008 02:00

Mexico is taking steps to protect itself from the oil price remaining below $70 a barrel in the clearest sign yet of the concerns of producer countries at the impact of the global economic slowdown on their revenues.

The world's sixth biggest oil producer hedged almost all of next's year oil exports at prices ranging from $70 to $100 at a cost of about $1.5bn (£961m) through derivatives contracts, according to bankers familiar with the deal.

The cover is far higher than the country - which relies on oil for up to 40 per cent of government revenue - usually seeks. Last year, Mexico hedged 20-30 per cent of its exports.

Mexico's finance ministry yesterday declined to comment but said in its latest quarterly report that its oil income stabilisation fund spent about $1.5bn on "financial investments, as part of the measures taken for risk management".

Oil prices hit an all-time high of $147.27 a barrel in July but have since fallen to less than $65 as the global economy cools. In London yesterday, oil ended the session up $1.73 at $59.08 a barrel.

Tomas Lajous, a strategist at UBS in Mexico City, said the trades appeared to have occurred in late August and early September. "The hedge is very good news . . . a presumed cost of some $1.5bn is immaterial relative to risks," he said.

Shooting At Paulson

Listening to CNBC today and over the past few days I am struck by the frequency of attacks on Hank Paulson. I don't know how the efforts of the Treasury Secretary are going to work out, nor does anyone else I would bet. But if you read Mr. Paulson's resume it will give you some comfort that he as at least as qualified as anyone available.
The critics, most of whom are not qualified to carry Paulson's brief case, are all over him because the problems are not over yet. After all the TARP was passed way back on October 2nd and we still have problems. I mean really, what is he dawdling over ? As far as they can see it is only the biggest financial collapse in 50 years. Jeesh!

Fullermoney today points out a terrific letter by Tim Price that reminds us to step back from the emotion of the moment and put this extraordinary situation we have into long term perspective and judge it against history before making ad lib decisions. Link here and very highly reccommended.

Another perspective of Mauboussin‟s that seems, at face value, to be bad news but which is almost certainly extremely positive for current investors is the paucity of returns over the recent past. He charts the rolling 10 year returns for large cap stocks:
“Over the past century-plus, the market has tended to bottom out around zero percent rolling ten year returns. That happened in the 1930s and 1970s, and that is where we are today. The rolling 10 year figure is worth examining for psychological reasons, too. If the average investor is in a mutual fund, they have lost money after taking fees into consideration. Further, most investors lose an additional 200 basis points due to bad timing. So on a dollar-weighted basis, the average investor has been down substantially in the US stock market in the past decade. That is very psychologically damaging.

Why stocks maybe are not cheap

from Clusterstock an interesting blog run by the once infamous Henry Blodgett.

Jeremy Siegel's Mistake: Why Stocks Are NOT "Dirt Cheap"

Henry Blodget | Nov 7, 08 10:48 AM

Yesterday, we noted that Wharton professor Jeremy Siegel's "fair value" estimate for the S&P 500 is a startling 1380, which is about 40% higher than most other estimates (Robert Shiller, Jeremy Grantham, Andrew Smithers, John Hussman, et al). Prof Siegel, who is now a pitch man for WisdomTree funds, uses this estimate to conclude that stocks are "dirt cheap."

The other experts, meanwhile, who use a consistent, historically predictive, and fully explained methology, estimate that fair value is around 900-1000, about where we are now. In their view, stocks are just fairly valued.

So who's right?

It comes down to apples to oranges but I much prefer the oranges to Professor Siegel's apples because he uses forward earnings estimates and they are notoriously unreliable.

Bespoke: post election market action

Table by Bespoke:

Solar Power game changer; via Instapundit

follow link:

credit car shoe finally dropping?

Bloomberg.com: Worldwide

Credit Card Bond Sales Plunge to Zero, First Time in 15 Years

By Sarah Mulholland

Nov. 5 (Bloomberg) -- Credit card companies were shut out of
the market for bonds backed by customer payments in October for
the first time in more than 15 years, as investors shunned the
debt amid the global credit freeze.

More problems if banks cannot securitize credit card debt. They will have to withdraw credit from another section of the economy.

Hussman on Value Dinosaurs

John Hussman this week points out that 3 month bills have matched the S&P500 for ten years with considerably less volatility. He also notes Buffett and Grantham and Neff are dipping there toes in for value. That is not bad company swim with.
Hussman:

In my view, we are entering an environment that provides good conditions for value-based stock selection, because the speculative garbage has been increasingly shown to be exactly that. I also expect that we will be able to accept a much more typical exposure to market risk in the next market cycle than we were able to take in the recent one.

For anyone with a sense of long-term market history and an understanding of what drives sustainable long-term investment returns (as opposed to the ephemeral type we've seen in recent years), current valuations are like old friends. That's why “value dinosaurs” like Warren Buffett, Jeremy Grantham, and John Neff have come out of what seemed like extinction. Grantham recently noted that he is “filtering money in slowly” because, as he puts it, “If stocks are attractive and you don't buy, you don't just look like an idiot, you are an idiot.”

good news on solar.

Via Mike Shedlock

World's Most Efficient Solar Cells Created

In the land down under, comes some positive news on the energy front: World's most efficient solar cells created.