DISQUS

An interesting post by Denninger related to this:

http://market-ticker.denninger.net/archives/118...

A bit tabloid-ish perhaps. Madoff is scum, but he didn't kill anyone. You're right about social security, though; in fact, a great cartoon to that effect came out not long after the Madoff scandal first broke: Madoff is seated beneath a lamp being interrogated, and they're asking him 'OK Madoff, where did you get the idea for your Ponzi scheme?', and he replies 'From social security.'

Maybe a few school districts in Wisconsin will be interested -- they have some catching up to do.

Apparently a lot of it was borrowed money -- it seems the school districts borrowed money at some fixed, low rate and then invested that money in the CDOs, with the promise that they'd have positive cash flow, which they could then use to fund their (unsustainably growing) OPEB' obligations. The decision to do this seems to have been driven by a change in the law about how they had to account for (and perhaps fund) these 'Other Post-Employment Benefit' obligations.

He said, she said: what 'representations' were made in the contract? Maybe their complaint is more with the rating agencies; if so, good luck. I don' t really understand what these investments were, but that's enough to know a school district should never have been putting money into them. And regarding upcoming -- or already here -- problems with pension obligations, the Naked Capitalism blog has been doing a good job covering that.

The foto must be from (the making of) 'Love with the Proper Stranger', a movie that does not get much attention anymore, but is worth seeing. Not yet out on DVD the last time I looked, which was a while ago.

Congrats to Fiat -- those be some might fine assets (yuk yuk) you done just bought.

Chrysler is a crap company and one wonders in any case why Fiat is interested; maybe they never heard of a value trap. But regarding the delay, one also wonders if certain commitments were made to ensure their patience.

Back then he probably had help from the government in identifying which properties were actually 'distressed' -- made everything so much easier I imagine. Perhaps he was even the FDIC's or the RTC's biggest customer. Savvy guy. Kind of like Gross buying FNM and FRE debt and then lobbying for the government to make the implicit guarantee explicit.

Deck chairs, Titanic. It'll be seen that way, sort of: those who want to delay the sale are delaying the lowering of the lifeboats from the sinking ship that is Chrysler LLC. So full steam ahead with the rescue, even if not everyone will be or wants to be 'rescued'.

It's quite a large jump in the overall unemployment number (9.4%) compared to the reported job losses.

Put stops on *ALL* positions -- bullish, bearish, regardless. To lock in profits and/or avoid big losses. It's a dangerous market.

I have access to Argus research reports on specific companies via my Schwab brokerage account. Here are a few quotes from their report on CFC = Countrywide Financial (remember them?) from August 2, 2007:

[Argus Rating: BUY

• We are maintaining our BUY rating on Countrywide Financial Corp. but reducing our 12-month target
price to $35 from $50.
• The company reported second-quarter operating earnings of $0.81 per share, about $0.10 below
consensus and down 30% from $1.15 per share in the prior-year period.
• Countrywide cut its 2007 EPS guidance once again, to a range of $2.70-$3.30 from $3.50-$4.30.
Guidance was $3.80-$4.80 earlier this year.
• We are lowering our EPS estimates to $3.00 from $3.85 for 2007 and to $3.65 from $4.70 for 2008,
and cutting our long-term growth forecast to 11% from 12.5%.
• Consolidation in the space is likely to continue over the next few years.
• While margins are likely to remain under pressure in the near term, mortgage banks continue to cut
capacity, which should eventually lead to more rational competition and better margins for the largest
bankers, including Countrywide.
• CFC's valuation is now very attractive relative to those of the company's mortgage finance peers and
other large-cap financial stocks...]

I'm saving this one for posterity. It's just one example, but there are others. So while perhaps a bit anecdotal, I don't take them seriously anymore. I mean I could find spot-on analysis of CFC on the Yahoo message boards at about the same time.

http://market-ticker.denninger.net/archives/108...

[So let me see if I get this right.

The Taxpayer hands JP Morgan billions of dollars to bail them out and keep them from potentially being declared insolvent.

In return for this JP Morgan spends that money speculating on the price of oil, and in fact does one better - they take physical delivery and lease a ship to store it in, thereby withholding the oil from the market and propping up the price, hoping to be able to sell that oil at a higher price later.]

Way past time for a sequel to 'Wall Street'.

It's worth noting that he changes his "Horsemen" (of tech) whenever one of them turns into a nag.

Let the comments begin on the last half hour's action. I'll start: just unbelievable.

I have just read that we are in the midst of a "burgeoning recovery":

http://finance.yahoo.com/news/Two-separate-labo...

So can we please stop all the negativity? Thank you.

They don't need to do anything as grubby as make and sell auto parts anymore -- they should just take all their cash, and as much additional as they can get their hands on (covenants be damned) -- and put it into the stock market. Dart throwing or an index fund will do. They'll be swimming in positive cash flow in no time.

Actually it appears it was always the creditors who would be forced to make the "massive sacrifices", not the UAW. Obama and his cadre can count votes, if nothing else.

Asking such a question as 'Is the rally justified?' seems like a good way to lose a lot of money. At some point you have to divorce yourself from the need to be 'right', i.e. the need to ask and then answer and then act on this question. If you feel too much uncertainty, or if your answer is the opposite of the way the market is going, then it is better to stay out rather than keep beating your head against the wall that is the trend.

Perhaps a bit of skepticism is in order when a 90% up day coincides with the largest bankruptcy in US history, one that no doubt included the same strongarm tactics by the Obama administration against holders of secured credit, which will be followed by the same legally questionable court proceedings as in the Chrysler case. And who knows how far those tentacles will reach out into the wider economy -- already one supplier (Lear) announced it will not make interest payments on its debt, which most people see as the first step toward bankruptcy. But I guess 'quantitative easing' will take care of all that...

One question that keeps suggesting itself: If the US consumer is approx 70% of the economy, where will the jobs come from?

It's all just a lot of gambling. As someone who travels to the UK often, it's especially absurd to see the pound rising, as that place is a basket case -- e.g. absurdly high housing prices, completely unjustified by the economic environment that you see around you. All created by debt. And now the government is creating money -- they call it 'quantitative easing' -- in an attempt to prop it all up. A shell game that will collapse in the end, just as it will in the US.

And one more thing the two (the UK and the US) have in common: increasing numbers of repulsively overweight people, especially women.

What stocks would those be? Is the indicator more specific?

Rhetorical questions.

Hopefully it isn't telling anyone to buy GM.

Perhaps the average taxpayer, or if not him then maybe an above average taxpayer, both of whom are now significantly invested in GM, is wondering about now how the government has so much money to invest in a bankrupt car company -- which does not seem like a very smart business decision, even if it was a business the government ought to be involved in -- when the deficit is already running so high.

If there is deliberate manipulation going on then you have to hand it to them -- they're pulling it off. And if they can keep it up -- literally -- long enough, then an actual recovery might take over that job for them.

Anyone watching the market near the end had to be amazed by the way it seemed to go straight up into the close. Some story about GM re-opening a factory to make small cars -- as if they haven't tried that already, as if there is little competition of any consequence in that niche, as if there is enough volume/market share to be had there in the near future to do GM any good -- appeared at about the same time, and I wondered 'Can something that absurd actually be helping to push the market up into the close?'.