Obama deploying WMDs

Yep, Oh!Bama is deploying WMD's on the world...that is, Wildly Monstrous Deficits.

In a nutshell, what he is doing is totally unsustainable, irresponsible and will lead us (more) swiftly down the road to financial oblivion. Higher taxes will not solve all the spending this administration is proposing. Social Security and Medicare are running out of money, now sooner than had been forecast.

These WMD's are going to ultimately have a wider range of effects than did Bushes concocted WMD's of Saddam in Iraq.

Be Angry At The Sun

by Robinson Jeffers:

That public men publish falsehoods
Is nothing new. That America must accept
Like the historical republics corruption and empire
Has been known for years.

Be angry at the sun for setting
If these things anger you. Watch the wheel slope and turn,
They are all bound on the wheel, these people, those warriors.
This republic, Europe, Asia.

Observe them gesticulating,
Observe them going down. The gang serves lies, the passionate
Man plays his part; the cold passion for truth
Hunts in no pack.

You are not Catullus, you know,
To lampoon these crude sketches of Caesar. You are far
From Dante's feet, but even farther from his dirty
Political hatreds.

Let boys want pleasure, and men
Struggle for power, and women perhaps for fame,
And the servile to serve a Leader and the dupes to be duped.
Yours is not theirs.



....published more than six decades ago, seems timeless, seems somewhat appropriate as well.

Think as I do

The age of political correctness, think as I do or suffer the wrath of the opposition. Pity.

I like this:

Everywhere you look, the blight of umbrage continues to spread through our political system. The end of the campaign last year didn't slow it down. Blogs speed it up. Taking offense is your ticket to attention from the media. You can't win if you don't play. And it's not all on the left, either. Liberal columnist Joe Klein makes an ill-considered remark about conservative columnist Charles Krauthammer, and every other conservative faints from the shock, awakening only to demand that the scoundrel be silenced. Can't anyone just shrug anything off anymore? Link

Speak your mind, you are entitled to your opinion. Just wear a helmet to fend off the stoning it might bring.

Oops, we made a mess, you clean it up

Former Countrywide Financial Corp. boss Angelo R. Mozilo, whose embrace of exotic loans helped fuel the mortgage boom and meltdown, will face Securities and Exchange Commission fraud charges unless his lawyers prevail in an eleventh-hour appeal, people familiar with the SEC's investigation said Wednesday.

Mozilo is among several former executives of the Calabasas company whom the SEC staff wants to charge in a civil case, one of these people said. He would face accusations of insider trading and failing to disclose to shareholders the risks the company was running unless the SEC's five commissioners overturn their investigators' recommendation. Link

I would like to see that smarmy weasel Mozilo doing the perp walk in a colored Federal jumpsuit, but with only civil charges against him, he will probably only be wrist-slapped rather than soundly thumped for aiding and abetting the loss of trillions of dollars around the world.

And the newest data out on housing sounds very dire indeed...

...the [word from the] National Association of Realtors today… the median home price fell 14% from the first quarter of 2008 to the first three months of 2009, to just $169,000. Of the 152 metropolitan areas surveyed by the NAR, just 18 registered annual price gains. Nearly half of all sales during the first quarter were foreclosed properties or short sales. A whopping 3.7 million previously owned homes are still on the market.

And RealtyTrac, which keeps up with the foreclosure data has this to say:

April 2009 U.S. Foreclosure Market Report™, which shows foreclosure filings — default notices, auction sale notices and bank repossessions — were reported on 342,038 U.S. properties during the month, an increase of less than 1 percent from the previous month and an increase of 32 percent from April 2008. The report also shows that one in every 374 U.S. housing units received a foreclosure filing in April, the highest monthly foreclosure rate ever posted since RealtyTrac began issuing its report in January 2005.

“Total foreclosure activity in April ended up slightly above the previous month, once again hitting a record-high level,” said James J. Saccacio, chief executive officer of RealtyTrac. “Much of this activity is at the initial stages of foreclosure – the default and auction stages – while bank repossessions, or REOs, were down on a monthly and annual basis to their lowest level since March 2008. This suggests that many lenders and servicers are beginning foreclosure proceedings on delinquent loans that had been delayed by legislative and industry moratoria. It’s likely that we’ll see a corresponding spike in REOs as these loans move through the foreclosure process over the next few months.” Link

Quite a mess and, no doubt, will be so for some time to come.

Heavy Handed Obama

On the one hand a case can be made that Obama is easy. Money handed to banks with little stipulation to actually do anything with it...easy money.

On the other hand, Obama is starting to come across heavy handed and thuggish in some instances. The Chrysler bankruptcy is the example most in the news. Forcing secured bond holders to settle for less than what bankruptcy and contract law call for, and giving more to the UAW than what they are entitled...heavy handed.

The close relationship between the rule of law and the enforceability of contracts, especially credit contracts, was well understood by the Framers of the U.S. Constitution. A primary reason they wanted it was the desire to escape the economic chaos spawned by debtor-friendly state laws during the period of the Articles of Confederation. Hence the Contracts Clause of Article V of the Constitution, which prohibited states from interfering with the obligation to pay debts. Hence also the Bankruptcy Clause of Article I, Section 8, which delegated to the federal government the sole authority to enact "uniform laws on the subject of bankruptcies."

The Obama administration's behavior in the Chrysler bankruptcy is a profound challenge to the rule of law. Secured creditors -- entitled to first priority payment under the "absolute priority rule" -- have been browbeaten by an American president into accepting only 30 cents on the dollar of their claims. Meanwhile, the United Auto Workers union, holding junior creditor claims, will get about 50 cents on the dollar.

The absolute priority rule is a linchpin of bankruptcy law. By preserving the substantive property and contract rights of creditors, it ensures that bankruptcy is used primarily as a procedural mechanism for the efficient resolution of financial distress. Chapter 11 promotes economic efficiency by reorganizing viable but financially distressed firms, i.e., firms that are worth more alive than dead.

Violating absolute priority undermines this commitment by introducing questions of redistribution into the process. It enables the rights of senior creditors to be plundered in order to benefit the rights of junior creditors. link to above

...and with GM Obama is calling for a possible deal in the (likely) event of a bankruptcy of something approaching the following terms:

Government Trades $27B for 50% Stake
Bondholders Trade $27B for 10% Stake
UAW Trades $20B for $10B Cash and 39% Stake

Who gets their chops busted in that deal? I suspect it is very likely payola to the UAW, and unions in general, for their support of the Dems (and why Veep Biden is out hawking this stuff).


Lets hope his policy making gains some sensibility soon or the long term unintended consequences could be profound.

Electronic Medical Records - No Thanks!

Please, Oh!Bama, give up on the electronic medical records. THe majority of the doctors say they don't like it...and of course the privacy thing...

An extortion demand posted on WikiLeaks seeks $10 million to return more than 8 million patient records and 35 million prescriptions allegedly stolen from Virginia Department of Health Professions.

The note reads: "ATTENTION VIRGINIA I have your sh**! In *my* possession, right now, are 8,257,378 patient records and a total of 35,548,087 prescriptions. Also, I made an encrypted backup and deleted the original. Unfortunately for Virginia, their backups seem to have gone missing, too. Uhoh :("

The note goes on to demand $10 million within seven days, presumably from the time the data was apparently seized on April 30, in exchange for the key to decrypt the encrypted backup.

"If by the end of 7 days, you decide not to pony up, I'll go ahead and put this baby out on the market and accept the highest bid," the note says.

It's not immediately clear whether this note is genuine. The Virginia DHP hasn't responded to repeated calls and e-mail messages seeking comment.

However, a notice posted on the DHP Web site on Monday morning acknowledged that the site "is currently experiencing technical difficulties which affect computer and e-mail systems."

A spokesperson for the Virginia Attorney General's Office said the agency could neither confirm nor deny any knowledge of an extortion demand.

A note sent to the Yahoo (NSDQ: YHOO) Mail address listed in the ransom demand also has gone unanswered.

Extortion demands of this sort have become relatively common in data breach cases. Last October, for instance, Express Scripts, a prescription drug management company based in St. Louis, received a letter that threatened the release of millions of patient records. A month earlier, a man from Solana Beach, Calif., was arrested for allegedly hacking into a Maserati dealership Web site, accessing customer data, and then threatening to release the information unless the company paid him.

The attack technique -- capturing data, encrypting it, then selling access to the former owner -- has become popular enough to earn its own name: cryptoviral extortion. Link to article

Nope, it just isn't the right time. Wait till you have a budget surplus to work from...which will be, oh, never.

Equity Markets Move Today

The S&P is up about 2.5% currently. There seems to be an almost frantic move into the equity markets today after yesterdays release of the banking stress tests. Maybe those that have remained on the sidelines are finally dipping a toe in, or diving in. I have opened modest long positions in a few equities over the last couple of months...PM, BTE, EPD, WIN, HD...and made quick round trip trades in those and others. I am up on all my recently opened positions.

But, with the nature of this market and potentially the majority now thinking an "all clear" was sounded by the FED, assuring us no major bank would fail, can this move sustain, or is this the last gasp of a bear market rally. This brings to mind the words of Mark Twain...

Whenever you find you are on the side of the majority, it is time to pause and reflect

I am thinking there's a little more run in this move, and then get the heck out with some profits. Let the majority wrestle for the top.

Some thoughts on Short Selling...

OK, so I am not hugely knowledgeable about the pluses and minuses of selling short in the equity markets, but here are a few thoughts. Maybe they are legit, or, maybe they are lame and I need to be schooled on why I am wrong in my thinking.

Short selling is said to be beneficial because it increases liquidity in a particular equity. Liquidity is defined as the ease of conversion of an asset into cash. If I do not own a particular asset than I should not be able to convert it into cash in the first place. Simplistic logic, yes, but here I believe simple reigns.

Taking an equity position in a company is becoming an owner of the company, and getting somewhat of a say as to the leadership and hence, the direction of the company. A short selling preempts that ownership, a short seller is NOT an owner...he is the antithesis of ownership.

Who really benefits from the short selling of an equity? It appears that anti-owners and market makers are the beneficiaries. Market makers get to continue selling shares at whatever spread they can muster when otherwise daily volume in a stagnant company might decline by a significant amount.

Proponents of short selling say that it helps find the true value of a company. I say it is to a company what mark-to-market accounting has been to the banking industry of late. Banks complained that having to mark-to-market some of their assets that they had no intentions of selling impeded their ability to maintain healthy balance sheets. Hmmmm? So, if I have no intention of selling my shares of a company, why should someone else be allowed to borrow them and sell them and undermine my balance sheet? It is the exact same logic. My shares are worth to me what my cost basis is, and allowing them be be taken and revalued by a non-owner is absurd....

...what if this were allowed in say, the home real estate market. In a neighborhood a couple of houses are for sale, the vast majority are not for sale. The average price in the 'hood is 100K. The owner of one of the For Sale homes is desperate to sell and accepts an offer for 95K. Short sellers, sensing blood in the water, begin shorting the other residences...95K, then 90K, then 85K....selling homes that are still occupied by folks with no intention of moving, but now living in a home that had been revalued by someone with no ownership in the area. A manipulation of price.

Speaking of manipulation of price, that is my next beef with shorting. It is widely believed that a consorted effort, if not an orchestrated effort, by hedge funds and other large investors may have been behind the voluminous decline in the financial sector stocks. And, with no up-tick rule in place, their effort was relatively smooth with hardly a bump in the downward slide.

Currently there are hearings going on regarding short selling...

informal inquiries...are being conducted quietly over a rash of complaints by investors who say losses they've incurred are a result of deliberate shorting through unregulated hedge funds. link.

But when you've had guys like this running the SEC in the manner that he ran the SEC it is no wonder that we had the unscrupulous crowd running wild on Wall Street.

JFK Quote

"We are not afraid to entrust the American people with unpleasant facts, foreign ideas, alien philosophies, and competitive values. For a nation that is afraid to let its people judge the truth and falsehood in an open market is afraid of its people."

John F. Kennedy, 1962

I wonder how JFK would be regarded today espousing ideas such as the ones contained in the above quotes? Surely he would be regarded as batty, as is Rep Ron Paul for his calls for more transparency and adherence to the Constitution.

Bank Failure Friday Report

For 2009, banks number 30, 31 and 32 that were not amongst the elite "too big to fail" crowd were declared insolvent and closed on May 1. The anti-greenshoots were:

Bank Name	CERT #	Closing Date	Updated Date
America West Bank, Layton, UT	35461	May 1, 2009	May 1, 2009
Citizens Community Bank, Ridgewood, NJ	57563	May 1, 2009	May 1, 2009
Silverton Bank, N.A., Atlanta, GA	26535	May 1, 2009	May 1, 2009

Link to data

The list on the FDIC site shows banks failures back to October 1, 2000. Amazing the number of failures 2008 and 2009. You'd think we were in the middle of financial turmoil or something.