Thursday, February 19, 2009

Worth pondering

In 1938, ask the world economy was re-taking, bringing collectivism and fascism in its wake, a group of ideologically mixed intellectuals met in Paris. Read about that assembly here

Wednesday, February 18, 2009

Feb 18 utterances

You can read me today in the NY Observer and on

Blah blah blah

In the past 48 hours I've overdosed on 2 TV specials and one Leonard Lopate WNYC blabfest, all addressing the cause of the present Wall Street/credit/CDO-mortgage crisis. all featured journalists mouthing pieties about matters which, if they'd had any knowledge, or guts, they'd have reported on, and vehemently, two years before the fact, when all the evidence was there, loudly pointed to by the likes of James Grant, rather than riding bravely around the chatterati circuit two years after. Not one of these talking-writing heads had anything to offer apart from the most trite and anodyne observations, yet these are the blatherers who occupy prime real estate in what I suppose we should call "the media space." No wonder people hate newspapers and magazines and networks. Supposedly guardians of our life, liberty and happiness, they in fact guard nothing except what seems to be a premptive claim on talk-show time. Enough, already!

Tuesday, February 17, 2009

Theory That A Good Offense Is The Best Defense

Has anyone noticed that the Republicans and the bank presidents are pursuing the exact same PR tactic? Cooperation is regarded as a sign of weakness and remorse for past fiscal sins is unthinkable. The theory seems to be that the best way to deal with public fury is to ignore it until in time it goes away.

Friday, February 13, 2009

Long held belief confirmed (sort of)

When King Duncan arrives at Macbeth's castle and is told of the death of the traitor Cawdor, he remarks, "There's no art to tell the mind's construction in the face," by which he means we have no way of telling what a person's like, or is likely to be thinking at the moment, from his expression. The latter, as in poker face, is certainly true, but I've always argued that you can tell quite a bit about a person's character, personality etc. from his physiognomy. Now there's a bit of science that confirms that thery.

Thursday, February 12, 2009

A Practical Solution

For the past couple of days, I've been mulling a solution to the credit blockage. The problem has been valuation. The only practical solution would be to bypass that problem for the moment and let time and markets take their course, with the upside socialized and the downside privatized. I finally came up with what seemed a perfect solution, only to read in today's Huff Post that Jeffrey Sachs had reached almost the identical conclusion. While I suppose there's little consolation in second place, the Sachs plan is still the only one I've read that makes sense.

A jab at St.Warren

THIS bears reading. If derivatives are, as Buffett famously declared, "financial weapons of mass destruction," Moody's supplied the missile fuel

Wednesday, February 11, 2009

Midas Watch Column

To read me in today's Observer, go here

Tuesday, February 10, 2009

Sublime Irony

Geithner's noncommital language regarding the TARP/TALF etc. planwas obviously designed to pacify Wall Street by making clear that Uncle isn't yielding to populist outrage. It's clear they're still trying to figure out how to cut the Gordian knot of pricing, especially with the Lone Star-Merrill 22cents-on-the-dollar CDO fire sale being the latest media elephant in the room. Naturally, the Street obliged with a near-400 point markdown.

Geithner Plan

This strikes me as on the money.


begins with a "G" - as in "Gutless"

Bernanke may be smarter than it appears

With Treasury yields as low as they are, the "safety premium" (low yield = low risk) vs. good corporates and municipals may be too pricey for money managers and could force the bond market to open up. The success of the Cisco offering could be an indicator.

Monday, February 9, 2009

Common sense

This makes a lot of sense.

Reflections on a lottery ticket

Ordinary people in this country are inhumanly patient with the fatcats who lecture them constantly about not saving enough etc. My personal favorite among these is a screed that reappears regularly in the pages of lofty journals with circulations of about 10,000 like-minded people: the point is always how stupid the poor and humble are to buy lottery tickets, given the astronomical odds against winning. But here's something these people know that some asshole at Harvard doesn't. The odds of a janitor or a pizza deliverer becoming wealthy via the lottery may be one in a trillion, but the odds of becoming wealthy via the social and economic mechanisms of this "meritocratic democracy" are ZERO! Looked at in this way, a $1 flyer on the Mega-Millions is an overlay.

More Fiscal Idiocy

On WNYC this AM more foolish talk about how tax cuts get saved and therefore aren't properly stimulative. I get a tax cut that I spend. But the store I spend it in breaks up my disbursement and pays fractions out to suppliers and employees, and these may well put it in their banks, 401 (k) plans etc. This economy depends on bang for the buck: dollars moving from one point of transaction to the next, again and again. The old multiplier. But eventually, EVERY DOLLAR SPENT WILL BE SOMEWHERE SAVED! Right now, the money's grinding to a halt in the banks. There's the problem.

Saturday, February 7, 2009

Uncle to the Rescue

Today's Times indicates that the Treasury plan will include taxpayer-backed guarantees designed to induce private-sector purchases of toxic assets. This "inducement" must be fairly priced. Already, there are billions in vulture funds circling this area. The only equitable arrangement must include a fee for guarantees that gives the vultures a choice between buying a CDO at 60 for a 15% current yield or buying the same paper, government-guaranteed, at 90 for a 10% yield. Uncle Sam has to be mindful that the private market could gang up and offer low prices. $78 billion of our money has already been blown away by Paulson. Time to stop!

Thursday, February 5, 2009

My latest for Forbes

click here


It now seems incontrovertible that Larry Summers is helpless in the face of his egotism, and is determined to keep Paul Volcker out of the loop. This is not good.

Wednesday, February 4, 2009

More Idiocy

I just heard someone calledStephen (?) Hall, identified as a "compensation consultant) knock the proposed compensation limit on the grounds that many of the afflicted have built lifestyles predicated on the incomes derived from choking the global financial system with crap and this will wreak severe hardships on their families. What I find myself asking is this: what's the moral difference between these and some poor fool who bought a house he could never afford? I guess it's that the former depended on the latter to underwrite the McMansion lifestyle.

Latest in NY Observer

click here

Tuesday, February 3, 2009

A puzzlement

Why didn't Obama reach out to Paul O'Neill, Bush's first Treasury Secretary, who was fired for speaking truth to liars.

Deep Thinking Department.

Odd how the same guys who 18 months ago swore that increased regulation would drive business away from Wall Street now aver that increased regulation (equals transparency) etc. will bring business to Wall Street.

Thought for the Day

In a culture where Time is Money, Foresight is too expensive to heed.

Sunday, February 1, 2009

Resolved: that Retained Earnings are too valuable to be entrusted to management

I think this is as good an argument as any for making corporate dividends tax-deductible at the source. This should force a higher rate of disgorgement as well as oblige CEOs to go to their stockholders for equity financing.