Yay! Everyone is saved!!! NOT!!!!!

Market rallied. Of course, I don't have any longs in it. Not that it mattered since adding more debt seems to be the way the world goes. Yea, I'm paying taxes for people who double spend and triple spend the same tax dollar they paid 5-10 years ago. But who cares? Economy is good and market is happy!

Well, I'm not going to use that as my reason to be happy. It's not right. What is right though is that Everton won! To spoil the fun, Liverpool also won...But let live...They are playing toothless Sunderland...On the bright side, Harry won! Against Chelsea no less! I hope they become the second team to beat the drop after being bottom on Christmas. Previously, West Brom is the only team to survive the cut after being stranded at the bottom of the table on Christmas. Read up West Brom and "The Great Escape".

Talk about relegation, I was reading some nonsense on how Norwich, my friend's hometown team, is relegation fodder. Well, I'm not that confident on who is going for the drop but if you assume that teams have 19 matches left, or half the season, the bottom 5 teams can't really (although quite possibly if a turn for the worse happens) catch up with Norwich. Here's my reason why its unlikely:

1. TOP teams can't afford to lose to BOTTOM teams, so chances bottom teams even get a point against European Level teams (that's usually TOP 7), zilch...so that leaves maybe 12 games.
2. Now, there are more than 7 teams challenging for TOP 7, so let's add 3 more teams, which happens to be Stoke and notice the gap between Stoke and West Ham, exactly 1 game difference! Now that's more like 9 games left.
3. There is a reason why it's always noted as a "Relegation Dogfight"...Teams can't afford to lose...and teams between 11-15 tends to be teams that doesn't win the games they are expected to win, but they don't suck that bad...So expect a lot of draws...That's maybe worth 5-7 draws at least...
4. Assuming that the bottom teams can actually beat a few higher ranked opponents, say 4 wins and 5 draws, rather than 7 draws and 2 wins...that's like 17 points...maybe 20 MAX...And for Southampton...thats 38 points MAX for the season...1 game already spent...though well spent in drawing Arsenal...And Norwich is...what...4 wins away from safety?
5. As a rule of thumb, I always gauge potential points as equal to number of games for relegation fights...because they lose (or draw) so often...and what's left is perhaps a rate of 3 points every 3 games, and even that is sometimes considered good...
6. In West Brom's case, they got 23 out of 18 games...slightly better than my point per game average theory, and they escaped! You can barely scratch top 10 with 46 points from 36 matches...Lowest scoring champions has 80 from 30 games with the rest well above 85...That's 2.25 points per game...So what's left for scrappers?

All in all, soccer experts...do some math and stop grouping Norwich in the same tier as the bottom 5...Well, unless they lose another 5-6 games like Newcastle...Without knowing what happens in the transfer market in January, I would say the relegation fight starts from Sunderland downwards...And only including Sunderland because they are so horrible in offence. The rest of the relegation zone is horrible in defence...Except Villa which seems inept in both!

Politics makes no sense in the economy

As much as I try to avoid taking a stand in the randomness of politics, I was appalled by the lack of common sense in politics.

1. How can Democrats expect a debt limit increase without planning massive budget cuts and expect not to need another debt limit increase in the future?
2. How can Republicans expect USA to pay for previous lavish spending without a tax increase? (I do agree that it is unfair to tax regular citizens like myself who contributed positively to the economy with hard work and regular contained spending, hence never really contributing to the deficit...)
3. How is ROI different across currencies?

Actually the motivation of the post was the last one. It was so funny that I could not help myself. With people like these leading the sheep across the world, its not wonder there is only so much chaos. Where my Avril picture when I need it?

Edit: I forgot to plaster this post but since Straits Times removes articles periodically, I decided to do a Print Screen. Fallacies: (1) predictions on CPI is as vague as predicting interest rates (think China and USA) (2) no mentioned of growth period (3) 5% over a few months is not good news either yearly or monthly comparison. Summary: While putting news on a newspaper is important, but when it is filled with unknowns, newspapers do not add value to society, even if it is the national press. Same goes for political entities.

Economists gone mad

For the second time (and perhaps there was more than twice already), some inept, insane, inane, irresponsible, incorrigible, incorrect and immoral (I wanted to use the word inhumane, considering that he is obviously desperate trying to protect his wealth, but still, yeah, he is inhumane to not consider for other human lives) economist suggested that interest rates should be negative.

First, that will be uberinflation, since everyone needs to dump currency. Second, he pointedly said that people should put money into other instruments, which is...? (This creates an uber asset bubble which is the precursor of uberinflation. Third, he actually recommends to have an expiring legal tender exchangeable at the central bank. (I like having only 3 points of attack, not that I can't find more...But this g?y actually suggested such an )

The first two points are directly self defeating. Uberinflation kills all sorts of productivity and renders trade to only barter trade. Now, since he offers no useful skill other than talk, he has not value in the society he proposes.

The third is tricky. Banks can exchange the tender for you, but what about people who use cash? What about people who counterfeit money? There is a lot of administrative issues, but technically, there is a finite supply of money, and it will then be held by "elites". Yes, he is suggesting protectionism and elitism (indirectly of course). By forcing people to spend, ahem...the correct word is "invest" in useful assets, the point shoots back straight to the idea of creating an asset bubble. Basically, he is targeting savers, which defies logic to begin with.

This former central banker fail to understand economies in general. It's like a human being, it grows, it matures in whatever teachings it had from past experiences. It falls sick and gets well throughout the business cycles. And last but not least, it is indirectly dependent on its population. He should take geography 101 to know that we only have so much land space, so much useful land, resources. Oh, moral education 101 is probably needed just for him and Mankiw too.

That is why developed nations should view their socio-economic policies carefully and regularly so that the economy does not overheat badly while staying in the front end of science. It is tough, but it does not take a PhD to realise the problems. Rather than "fix" the problem to his (and many bankers') favor, why not just let the problem fix itself, like the news-less now? Is he so afraid that he will become poorer because he is wrong?

I'm not a rocket scientist, but my heart goes to people who suffer through this while myself and many of my friends are not badly affected. Printing more money is NOT a solution. It is THE destruction.

If I can survive the cold in Antarctica, I would raise my own farm there and show him what the right way of life is. Money, at the end of the day, is just paper. It has no value pre and after life. Money is the means to an end, not the end itself, and substituting it with land, gold, silver or any asset as an item for hoarding is not the correct way to live life.

One way train

Well, the bears are getting run over, and from a small profit to a huge loss, that is my story for the rally. Interestingly, wise men like Roubini and Schiff have continued their rant on the worsening economy, like myself. I did find something useful.

Shiff mentioned that inflation is rendering the USD useless, and hence a more risky asset compared to stocks and other risky instruments. This is a sad state of affairs if you look at it. Bad numbers, rally. Good numbers, rally more. Here, stagflation rules, and soon will give way to uberinflation. I like coining new terms. How will Obama save USA? Or won't he, since he has all the money and power now? Or maybe he will just rob me?

Frankly, like my other posts, why do we need to continue bailing out these banks and have no control on them. Obviously, they don't want to be "backed" either. My solution at the beginning is simple. Nationalize the banks. Well, that will provide chaos right? No, since you only need to nationalize some big banks that proved to be the weakest link to the many counterpartied banks. Then, wind it down completely. Either way, we are backstopping the losers.

Now, we backstop the banks, the banks still don't lend as much, one, the demand is not as high anymore, two, they learn not to lend to deadbeats. Three, outside the banking operations, they need to wind down, thereby reducing their productivity, if they had any to begin with. So why the optimism? Green shots?

Well, in short, when I compare what is happening today to anything else, especially when USA is worried about losing their AAA rating like how UK is rumored to be, I will say, don't worry. You lost it already. When Geithner gave PPIP. When Bernanke print money to buy money. When FASB changed Mark to Market into Mark to Myth/Max. When Obama sided with exorbitantly paid UAW to give Chrysler to workers who build cars that no one wants and giving lenders nothing but death threats. When everyone allowed the banks to argue how to present the state of their financial health.

The biggest loser is not the ones who lost weight on TV. Its the Americans from age 65 and below, because retirement will disappear from the dictionary. In fact, the whole world, except for a few countries, will suffer for the cruelest of hits.

Well, like they say, "nice guys never win". Bankers and Politicians are the complete anti-thesis of nice guys. Can I be a nice guy and attain success? In fact, early in my career, I was told that I can't succeed just by being a nice guy and that is again proven by an official outing yesterday and some chitchat I heard today. Well, so much for humanity.

I do need to say, it is interesting to know that Tolkein wrote his books because he wanted to reinspire humanity. Its really great to know someone with similar aspirations being successful, but he has advantages. I don't. But like him, I know it is not easy.

Bulldozer in action

Yes, the recovery is here. The bulldozer is here, fueled by the infinite dollar printing machine that is built just to bail out the banks. And what's more important, the banks don't need a bail out and now, our money is just used to destroy shorts like myself so that I will get destroyed by the same crooks twice. Now, that does not sound like the American Dream.

The pristine vision that USA gave everyone around the world is shown clearly here, corrupt and despicable. From arm twisting Bank of America to buy Merrill Lynch to allowing AIG to write down losses 60 billion dollars without failing, most of which goes to other banks like Goldman Sachs.

The wonderful thing is that Obama is still regarded highly and considered the savior by everyone outside USA. What is funny is that the market is buying it, just like the rest of the world. Here is a few points I want to note. I may be wrong, but I don't think I'm illogical. Maybe ranting a bit, but not illogical.

• Unemployment is high
• US GDP is consumer driven so far
  
• US productivity goes down and hence GDP
• Banks are not lending as much as before, hence, hurting businesses
  
• Banks have a lot of bad loans which might be highly leveraged, which might render them insolvent
• Small banks are failing every Friday, politically so to reduce the impact on the stock market
• Small businesses lose their access to a local banking system and facilitate
  

As noted above, banks and businesses are suffering from the downturn, and since unemployment will not come down for a while, businesses will be affected. With all that, how is the current money printing helping? I don't know, other than propping up the market to attract investors? Isn't having a pristine government even more efficient? How does businesses and hence taxpayers benefit from all these actions? So, everything is good to news people and banks, but why are there still so many people suffering from unemployment? Why are banks happy about? Is it that their shell games in transferring bad assets to the Fed and Treasury a success and the rest of the world can celebrate?

End Of Bear?

I stumbled upon a website called dshort and came across a few posts. One was the famous bear charts. Another was the bottoming process for bear markets. According to it, we are in our sixth month, with a range of six weeks to eight months since 1950. I think it is not correct to say that we are near the end.

From what I remember favorably about USA since 1950, the people here have been very vocal and active to point out their disfavor of any form of bad policy making. I think that negated any bad interventionist approach that came its way since 1950. My impression of the 1930s is the big government effect, which is what we are experiencing now. The Fe(e)d and Treas(on)ury can pump as much liquidity as they like, all for the sake of recapitalizing badly managed banks. Furthermore, people nowadays are withdrawn from politics. Additionally, a depression is a worldwide phenomena, so unlike recessions since 1950, there is no other place to load up developed debt and write them off with the blink of the eye. That is why, I like the bottoming to be near, say another two months, but I see no fundamental truth to that.

Anyway, I want to reiterate my disgust for Goldman. Of all the tricks that a bank can use, like squeezing losses to a certain time period and raise reserves, piling losses on a "orphan" month (December 2008) is quite blatantly the cheapest trick ever to be shown in public. Sadly, the world market bought into that and rallied. Fortunately, I was enlightened by Jason that Goldman can only change reporting standards once. But then, rules are made by humans, so if they are less than responsible...

Well, my shorts probably might be killed, but at least show me productive wealth creation, not creative wealth production (think BAD movie remakes). My stand is pretty much set and will remain as such.

A stock market is an exchange for people to invest in productive companies, most often judged by the profitability of the company, thereby increasing the capability of the company to be more productive through capital infusion by selling shares. Banks already have a supply of capital and should not be reliant on third party cash infusion, hence the lack of need to be in the market. Also, being the better of balancing capital compared to industrial companies, the industrial is like a boy pitted against an adult in number crunching. Therefore, I don't see the need for (deposit) banks to be listed. Hm, I'm starting to like credit unions more...

Gold Standard

I got a pretty good lesson today. I have always overestimated Gold production, even though I understood the lack of liquidity. Mike and Matt reminded me that the Gold standard is very different from Fiat money. Well, of course, what am I thinking? Too much manga. They can have quite a lot of Gold in them. Wait, that's fantasy, not real life. But it does remind me that alchemy was once thought to be science, for the same reason of increasing money supply...

Then again, my shorts got killed again, and Goldman reported FABULOUS earnings. Guess what, from what I read, they missed, on a 4 month basis rather than just Q1. So happens that their rollover from an investment bank to a regular bank will phase out December 2008, which they wrote a huge loss down, so Q1 plus December is $1.24 ($3.39-$2.15), which is way below $1.60. Even if we compare Q1 to Q1, using the same months as comparison, it points to a sharp decline over last year's Q1 and at best a Quarter-(2)-To-Date flat YOY performance.

WOW! From cook the books to cook the calendar. I wonder whether they will do the same to skip some other months? If only the real cooks are THAT creative. I haven't got the whole story yet, but I hope the tide will start turning for me. And someone...please dump these frauds in jail!

On a side note, AIG is saying that the outcry will hurt their business and damage the chances they pay back to the people. On the sympathetic note, I agree and I must say that witchhunts typically crucify the ones that are less guilty. On the other, perhaps they should open up all their books and DOJ can start hunting the REAL culprits, like former boards, CEOs, CFOs and other coo COOs. You can't blame others if you are unwilling to blow the whistle on the wolves, right?

Bulls gored me again...

Today, I saw my stocks basically half. Frankly, the volatility was expected, but I do not understand why there is much to cheer for WFC's "better than expected" earnings.

1. If WFC did not want TARP money, took it anyway, made more money than they used to from its TARP money, how is it surprising. Bears are merely betting that weak banks that are "Too Big To Fail" will get crushed by their own weight rather than have weak earnings.
2. WFC consistently made 0.55+ per share for the past 2 Q1. (Specifically, 0.60 and 0.66) In difficult times and coupled with reason 1, 0.55 cents per share is a wonderful thing? Even if they performed above par, that is on the back of unrealistically lowered expectations (50% drop YOY for a "strong" bank?), (artificially) "improving" environment and oversimplified "bank robbing taxpayer" game.
   
3. They have a sudden turnaround in fortunes, a record loss and record profit. How many times does that happen for a company? I'm sure AIG can now churn up 60 billion of net profits. Its more of a hunch reason than the first two but whatever.

Frankly, even as a resident alien, I feel cheated by the bankers and politicians. After all, if one follows the progress of a society, these two professions are the least productive and most destructive. When will everyone realize that banks are using over leveraged dollars to squeeze more money out of taxpayers? When will people make a stand for it?

Optimism Question

Basically, over the past month, when everyone was thinking "When will the rally end?", the rally continued to kill the bears with much vengeance. The thing I don't understand is, what is the basis for optimism? Because Citi and BoA are profitable? Because they can avoid writedowns since FASB loosened M2M? Because Geithner created PPIP using taxpayer money on the backdrop? Because the market was overdepressed?

Frankly, I think all the points above are invalid. The core businesses of the banks are made to be profitable without the risky betting, collecting deposits without extensive lending. If they are profitable, they should be able to handle writedowns based on M2M, even if they have assets that are unjustifiably depressed. Why? Because these assets are the same assets that make them money when the wind is behind their back, which is when the assets mature. If they overpaid for it, they ought to lose money. That is why I say FASB and the banks have cheated again.

As for PPIP, why should it be a cheer? Geithner basically did the same thing as Paulson, except Paulson created a "holding" rather than a casino like Geithner. The problem now is that the banker is the banks, because the good ones will not be sold and the bad ones will be overpaid for. So just like my previous comment against FASB's ridiculous changes, if I writedown 1 million when the market is down and make 10 million when the market is back up, why should I worry? The solid banks should have done enough homework to prevent the writedowns from bringing them down. Its like the logic of "not investing more than you can spare". So the big firms are like the typical overspending American? I must say, overspending in not an issue isolated to USA, though it started here, that's for sure.

Well, the market is depressed, but I don't think they are at the fair value level, so overdepressed, no. GDP will fall because the government spending is falling into the pockets of the rich. What will the jobless do now? Why should one buy a home they cannot afford? If they want to increase social benefit, then they should have created more grassroot programs rather than a blanket money spray. I may not be the best educated person on economics, but I don't feel my logic is far off.

Banking Debts

Well, not really a post, but here's an article comparing GM's and Banks' debt holders.

Based on the article, which I must first say I would only agree with mostly on what is going on currently, the government and the banks are definitely immoral. While I don't sympathize much with GM, but this discrepancy between an actual productive industry and an imaginary productive industry is pathetic. It is a scam, and the world is paying the rich few for their lifestyle with their own lives...Its only a matter of time before The Great DePonziScheme goes down in flames. I will coin it "The Great Ponzission".

What should we call our crisis?

Suddenly, people have given up all hope that something right will happen and that will correct the market. Suddenly, there is a market rally. Suddenly, my longs regained some lost ground.

But the question remains...What is the magnitude of our crisis?

1. Not-A-Depression
2. Depression-Lite
3. Depression-Make-2
4. The-Greater-Depression
5. Armageddon Lite
6. World War 3
7. Apocalypse
   

I personally coined it number 4 back around March 2008, and it turns out to be heading straight for number 7. Frankly, comparison is difficult and obscure, but all of which sends a bleak outlook for life after the crisis. Deflation. Hyperinflation. You name it, its possible with Bernanke and Geithner. What baffles me is why hard working people of this country have not stood up to the nonsense out there. China and EU have spoken up. Soon, words will become action. I wonder what Volcker would have done...Maybe he is just like Bernanke...Maybe not.

Geither's plan is essentially to use taxpayer's money to totally write off all the bank's debt. Not to mention Bernanke and Paulson had already opened the floodgates. Now, all the money is with the house, so who's left? It is the same as Paulson's TARP. There is one difference though, the administration, and I find it ridiculous that people are lauding it already. Debators need to be more objective like Shedlock, Krugman and Denninger. Even when I don't agree with them all the time, at least I find them objective and straightforward.

Frankly, it is interesting to see how everything goes on here but it is like a horror show with no known ending. I don't mind being part of the show, but what worries me is my family, and I hope more people will realise that the lunatics at in the House, Congress and now, unfortunately, White House, are doing to common folks. When USD is useless because USA does not produce meaningful outputs like food and energy, then the nightmare will start. My main concern so far is the the import/export ratio of necessities are not within self-sufficient levels, so can someone explain to me why we should not be worried if a more self-sufficient country (even if moderately) starts to decline USD?

Wac A Bia...

Well, try to rhythm the heading to a bank, yes and its the one Buffett is in charge of indirectly now. Why do I want to rhythm it with so many possibly bad sounding things?

Well, I reached my last straw with Wachovia. Just because I tracked my transactions automatically online with a software, I get charged six bucks. I mean, dude, I need to pay to look at my own transactions? And I do not get a notification that I signed up for such a pay service? This is a complete scam. Ok, maybe not really a scam, but definitely BAD service.

I read that Freddie Mac and Fannie Mae need to ask for more government loans. 12% of mortgage owners are behind schedule. 5.4 million. Let's work some math. 12%=5.4 million, so that means there are 30 million mortgage owning families. Slice and dice, dividing some duplicates for flippers, multiply for families and more, that perhaps 100 million Americans under the contractual binding of a mortgage?

Now, to satisfy perhaps 10 million people (based off some random number pulling), we are sacrificing 300 million people's future for 10 million people. What is Pelosi thinking? More stimuli? She should resign from her seat as well as Dodd and Frank. Oh, and take Grassley with you.

What we need now is more Cuomo action. Clawbacks, charges against irresponsible, perhaps fraudulent actions. Why should the CEOs of yesterday take billions when their actions cause trillions of today's money get vaporized? How can the economy recover if there is no definitive action to correct the problems?

Despite some of the bailouts having worked to paving the recovery, I think any recovery is hampered by the genuine lack of confidence. No job creation since no money is really flowing to the commoners. No big sustained rally because there is no confidence that money can invested in a properly defined asset. No pouring of more investments since no one can be sure if the markets are just being manipulated. Simply put, no confidence whatsoever.

Inspire confidence? There is no way to inspire confidence if only rogue traders are prosecuted. Some big shots have to take the big fall. Clawbacks, maybe not complete but to the maximum possible. If someone can be punished for a wrong tax return filed years ago, why can't they clawback money?

There are retroactive punishments for most other crimes, so why not failure of leadership for businesses? Must the only way bad leaders are punished to be the day they get themselves overthrown and brought to the brink of death by revolts? A bit far fetched, but let's not say that social unrest is not present.

Anyway, it might be another rant, but I think this is good food for thought. Seriously, if confidence is the preultimate requirement that the economy needs to see job creation, revery or whatever, why is there only talk? Talk the talk, walk the walk. The Congress and House are full of talkers, now, where are the walkers?

I do want to leave with one more food for though. Gold standard or not. Dan and Mike were discussing this and I would agree with both sides of the coin. One is that Fiat money is good for financial stability but bad for economic stability. Two is that the gold standard has brought the opposite effect. Hence my proposed solution is to fluctuate between the two with a point of social stability, just like breaking from the Gold standard to pull the economy together and unplug from the standard to reorganized the numbers. What are auditors for?

The O

For any Gundam fan who watched the Zeta series all the way, you would have remember the bad guy's machine called The O. Of course, I'm talking about Obama, and I'm not referring to him as a bad guy, just rather, just that the halo on him is like he is the messiah. Of course, there are detractors, but the supporters are now at fever pitch to the point where he's a hero even before beginning his term. Which of course created the Obama rally.

The thing I don't understand is that he has said that he will solve the problem. So far, the solutions he suggested are not going to help. Bail out homeowners means that many young people like myself would be denied the chance to get a house at the correct price with the correct loan. It is populist at best and suicidal in truth. When the government forcefully becomes a pseudo landlord, basically, we do not have democracy anymore. And printing anymore money recklessly means that lender countries like China have more reason to dump the dollar, creating the end of the dollar.

Of course, what make or break him are his associates. None have really impressed so far, and ideas are just being spun around. From the trillion stimuli to TARP 2.0, things just keep coming. Of course, they are good efforts and one should realize that the reason why they are not able to pull the stimuli through as of now is due to TARP being passed so easily. Yes, it got shot down once. Yes, it crashed the market. But one would wonder, who benefits from a bullish stock market when everyone else outside than Wall Street loses their jobs?

That brings TARP 2.0. The good, it shifted the focus away from Wall Street. It has been proven that dumping money to the banks does not save the economy. If you lend money to your drug addict friend, and never got back any, what is the chance you will lend him again? It simply saves Paulson's friends.

The bad about TARP 2.0 so far? Barney Frank wants to spend some of it on commercial real estate. Why is this man in Congress, much less the head of the Housing board or something? I understand saving municipalities, saving automakers for their jobs, but commercial real estate? I suspect Frank merely copied the words "automaker" and "municipal" from other scrips like that from Obama.

Ok, Mike told me of the construction workers, but here is the scenario.

You hire a factory load of autoworkers to make a car, the car can be sold cheaper, maybe at factory cost, and the workers get lesser pay based on the market. The velocity of money is relatively slow compared to other products, but manageable. At least there is a relatively weak but existent market for cars.

Imagine the skyscraper, which no one wants right now, being built because real estate moguls are bailed out. The workers? Yeah, how is the money being given to the rich developers going to save these poor workers. Not to mention that they are already poorly paid and facing the sad truth of the lurking hyperinflation. Will the money reach them? Will the money be recycled back into the market when the product doesn't even move off the shelf? Oh, and then the deficit Frank created with his demands won't be paid by the next generation, because there isn't a next generation because the current is too poor to feed them when inflation kicks in once velocity of money picks up.

So frankly, I rather see a plan to reshuffle these workers with only labor skillsets to municipalities related construction workforce than building more skyscrapers. Build better transport, better networks, not skyscrapers for Frank.

I think "The O" should start by ordering the entire Congress and House be re-elected. The entire idea of the Democrats holding the majority of all three pillars of USA is sickening to say the least, having people like Frank that still seats in great authority. Obama made the good move of having Republicans in his cabinet. Now, he needs to weed out people like Frank, who's ideas are either populist or bad for unknown, and perhaps suspect, reasons. The sad thing is when Ryan voted for Obama, but was unable to support a capable Republican in Connecticut who got unseated, I knew that the system is flawed.

Anyway, this week, the Obama factor took a hit at the end, and my shorts recovered some of its losses. It's one thing to hope for armagedon, its another to see the market and capitalize on a weakness. One thing for sure, the market must correct itself, with or without intervention, and time has proven that intervention has often made things worse.

So far, nothing about the USA government inspires me. There are lots of great people, but often, in the struggle for power and money, these great people are drowned by the desires of the masses. Yet, the thoughts of that ONE can move the masses. So even when I truly feel Obama can change a few things for the better, he is not making the best moves. Or perhaps my judgment was wrong, that he is only another mediocre politician. Perhaps only time can tell.

Smash and .... smash some more

Just a quick update from my online absence. Actually, just blogger absence.

I'm out of breath from my latest new low in stocks. Down near 30% after the market defied the downturn. Still holding though with the few points of note:

1. Fed rubbishes all USD to save its pride by downing rate to technical zero
   
2. Hedge funds unconstitutionally, illegally and irresponsibly suspends redemption. If the fund previously allows anytime redemption and now suspends it, it falls in this group
   
3. Madoff, enough said. I actually admire his guts and realization that he pulled off something a lot of corrupt officials have not been able to. Only bad is that the charities are hit too, which is TOTALLY the charities' fault. I would recommend legal action against the misuse of charitable funds.
4. Auto bailout. Enough protectionism already. Foreign companies hires Americans too.
5. Obama's mystical powers at work. His wow factor is killing me more than helping me. Then again, I will thank him if I still have continuous income ten years from now.

Well, not all are gloomy for shorts, but I'll rather focus my creativity on my story book. Stuck and stuck, and too much action. I need more substance in the story, which I have but cannot really express it in words. Unfortunately, formulae don't work here.

Dirty game

Politics and finance that is. So much for the airy fairy "play fair" propaganda. As long as the politicians and the big money managers win, it is fair. Even if Main Street suffers for it. What do I mean? Look at TARP, the financial bailout and the automaker bailout.

Well, the automakers did not get their bailout but frankly, they will eventually, because the politicians are too weak to make good decisions. This shows that if you don't have friends in Capitol Hill, no one cares about you, not even the press who are supposed to by fair and unbiased. And typically, those with friends are the ones who cry wolf most.

While it is true that the automakers are asking for only 10% of the current TARP bill, it is still atrocious. Here is a quote I saw and it explains why the automakers MUST fail.
Quote from seekingalpha.com comment on a news line post:
1: Legacy costs. The foreign transplants have not been operating in this country as longs as the little 3 and therefore don't have as much future liability. Additionally, their benefits are not nearly as generous as the little 3.
2: The UAW did renegotiate the wage structure for future hires that puts the new hires more in line with the foreign transplants, but all those on board before the renegotiation just a few years ago will not see a cut in pay and will still be eligible for cost of living raises as long as they remain with the companies. This is most of the employees.
3: The UAW still has written in their contracts that all workers from idled plants must be paid 95% of all wages they would earn working full-time. This ties the hands of the little 3 as they need to either make a permanent decision to close a plant, pay idled workers 95% or operate the same plant with full capacity and thus produce a glut of vehicles when buyers aren't readily available. The foreign transplants don't have this and are much more flexible.
4. When a UAW employee is laid off, they receive $105,000 in lump sum above and beyond any other benefits that they have accrued and are eligible for. The foreign transplants don't do this.
5. There are all kinds of additional union rules which don't take the form of a wage but negatively affect production and thus are best summed up as a benefit with a cost.

Frankly, after seeing this, I'm very convinced that everyone who supports the bailout is either an autoworker under the UAW. While I sympathize with the autoworkers in general, I have no sympathy for the workers in the three beggars, especially the older contracts.

Explain to me this, a group of scientists who pay so much tuition fees to study and invent new tools for the future only to get spit in the face for their idealism with receiving much lesser pay than a autoworker who does not create anything new. There is no birthright in life. If you feel you are special, then prove you are special, including unionized workers. I can recall the defeat the union pilots had in SIA a few years back. Bittersweet to know that SIA is surviving well. Then again, they are government backed, but with a lower cost structure, they are sustainable even without government funds or backing.

Now, the newest deathnote on the financials is the Madoff scam. Frankly, reading what he had confessed, I feel some sympathy for him. He cheated, and he confessed when he owned up. The worst part is the "smart money" that are suing him confessed that they know he cheated and still invested with him. Unfortunate but true.

What inspires you when you are doing everything right but still lose because someone simply rules that you must lose? What if you are persecuted for doing something right? This is what it has become. A world economy at the edge of a simplistic answer that it has too much corruption that a simple zero-sum game is now being twisted beyond recognition. Yet, bailouts only prove to be more denial. Companies will take the money and pocket it, like AIG. Nothing will change, nothing can change with bailouts.

It's like giving a candy to a child who robbed and bullied other children. I've seen that before, and I'm seeing it now. Obama has not done anything yet. His announcements are in the right direction but so far, actions are in the wrong direction. GM will cut all their jobs even with the bailout. UAW will not change if the bailout passes. If a bailout is not passed with the future in mind, then there will be no future, and children will grow with all the wrong teachings.

The end of the world is not a truth that we know. All things die one day, just like suns and black holes. End of days is and end only for those who can't see past the present and forget that the sun rise tomorrow even without the if selfishness of today all die. Obama's presidency will be judged, in my mind, on how much future USA has, not how much he can save of today's mess.

Sometimes, it boggles me to know that losing some today is good for tomorrow, but I have a good example for it. Like losing shedable weight.

Bailout Mania

An interesting history of the bailouts. Not a long history of data but interesting circles...

Chaos Ascending Severe Heights...Whatever

I spent the week pretty listless. For some reason, I can't sleep well. Maybe it's because Ken (Low) told me of a girl that I used to like being on Facebook. She has not accepted my request yet. Maybe she's angry still, or whatever. The problem is, I am as disinterested as I'm interested. The thing is open dialogue, and I can't seem to get it out directly. I've been more vocal since I'm in US, not because of training, but because of sheer disparity.

Anyway, its not a big deal. I'm out of the market, mostly. Made a small step to recover my losses. Jammed the brakes on my story writing. Man, I just can't seem to get the right stuff together.

But most important of the week is work. Seems like even my company is scrambling for the financial fracture. Not that we have not warned against it, but there is a thin line between optimism and being wishful, and a thin line between realistic and pessimism. My take is to take everything and plan diversifying routes to consolidate the foundation.

Oh, I read a lot about the automakers this week. I'm against the bailout and most of the week, I'm very angry by the unrepentant autoworkers demanding a piece of the bailout that went to the financial sector. Financial sector is where all the liquidity comes, so they have a stronger case for help than any other sector. Automakers in that sense has less argument, the "Beggar" Three has no argument. But I must say, I'm not unsympathetic for the workers, except that there are always bad sheep who are no different from robbers and pirates demanding their ways of life to be the same without regards to the rest of the world.

The "Beggar" Three must fail, but probably not as a total collapse. Some point that business will cease completely, I don't see it as that. To go out of business immediately, they will have to go through a lot of paperwork, lawsuit and usual shenanigan that has brought this chaos. Then factories get sold, business units get sold and all those money will fall back to the company books to clear off the debt. Of course, the unfortunate part is that workers will get cut.

But here's the part that makes their failure a must. Sustainability. Right now, live or die, they need to pay for the legacy contracts to UAW. They can cut the new workers easily which they will do mercilessly even with a bailout. Now, we want to save the jobs where people are willing to work hard for, not the ones that people won't. With the Jobs Bank by UAW, we are practically paying for no productivity. As much as UAW did well in the past regarding safety and income for the workers, they have not done themselves any favor with the lack of productivity in recent years.

Regardless, the problem will continue one way or another. People get ahead and happy for themselves and let the foundation rot under them. Like the saying I like about forebears growing the tree for us? A good portion of these people are now sitting under the tree, enjoying and not growing more trees for their children. Naturally, that indicates that the bailout is definitely NOT the solution. Letting GM going under its own folly and weight IS.

Here is another perspective that I looked at. In Asia, the three companies are doing well. The image of lower quality did not seem to have affected them much. BUT, if the bailout happens here, what will the disparity be between the workers here and the workers in other countries building the same machines under the same company. No one can say the machines built overseas are worse, because it has always been known to be opposite. Assuming that the quality thing is reversed, what will the bailout add to their productivity overseas. Negative, since HQ always gets better stuff, why work harder? Also, the other companies will ask the respective companies to bail them out when they don't need to, and the three automakers will still DIE from fierce competition, simply because they are that bad!

That is my hunch, but it has not worked disastrous so far. Bad maybe, but mostly in the ballpark.

Anyway, I read that Goldman Sachs has renounced bonuses for their executives, citing from the executives themselves that it is the right thing to do. In fact, IT IS! See, Goldman is the best of the bunch, and they will put weight on others not to follow suit. Think of it as brand and confidence building. Now, that us see where "Actually Infectious Greed" will do. I'm sure they will do the same "see, no bonus" trick but announce the annual salary to by twice that of Goldman's people. I rather trust Goldman. Sachs I mean.

Last but not least, sport. Everton...Draw. Pats...Lost. Pistons...Won a few but may lose the Suns game...Not a lot to be happy about, but I did turn green in my investments. Now, to add more productivity in office. I rather have my job two years from now than simply ask for bailout, but improving the company's sustainability!

The story about the beggar

This is an edited version of the story I heard. It's one of the supposedly boring stories that are supposed to teach you something, and yes, while many others also hear it, only a few knew what it really meant.

Once, there was a merchant (I prefer to think of a farmer) who made a good living. To and from his work, he always passed by a beggar every day. Taking pity on the beggar, every once a week, he would give the beggar enough money for food. Over the years, the charity became a routine.

Unfortunately, disaster (think a drought) struck and business was bad. The merchant barely made a living and decided to cut back on his charity, and being the nice man he always was, he decided to let the beggar know.

So he said "Business has been bad. I'm sorry but I have to give you less from now on."

The beggar reacted by grabbing the merchant's collar and yelling "What did you do to my money?"

Of course, this is a age old story, meant to advocate smart use of resources, even with maximum social benefit in mind. But, what GM, Ford and Chrysler are doing now are no different from the beggar. The fact that the cash burn started from poor management for a few decades now makes bailing out the "Wheeny" three even more futile and merely suicidal on the cash perspective. It's one thing to feel angry about being scammed, its another to be angry at others for your own doing. Oh, did I mention their arrogance years before to lobby against the US government?

I think emigrating the entire state of workers to start drilling in Texas would cost less. Also, the UAW has always been hardlined about their worker's welfare. They want the automakers to take care of everything, even when the workers are no longer with the company. Now, how is that money earning the company more money? Did the worker build something great? Are the workers in the company benefitting from their predecessors?

It's one thing to be responsible for your workers, but its another when the company cannot survive taking the stab to the gut. Ultimately, reward should only come after work is done, not before. I always believe people have to work for their food, where the poor and willing workers of many other countries do not have a chance to.

However, if one does and is unrewarded, then many others will be unrewarded too. Motivation will be lost and that will hence bring about the downfall of the empire by its rotten leadership. UAW has done a great job. Too good in fact. Policing rewards is a tricky job and in this case, UAW made it unsustainable for the automakers. Of course, they can always say the automakers are not competitive enough, but they are ultimately part of the team in the automaker.

I would feel the sincerity of the workers of the three companies if they asks their union to cut back on their welfare demands. Afterall the crew sink with the captain and the ship, as long as the captain is not Jack Sparrow, or Paulson. Anyway, even a cutback in benefit will need to be in black and white to protect the workers. We know unscrupulous capitalist industrialists and their sneaky lawyers will backstab the hardworking workers once the "war against depression" is over. Then again, you can believe I'm being optimistically utopian, but I do advise ward against harm. Better be safe than sorry. Hardworking people should always be rewarded, merely pen pushing lawyers shouldn't.

Still, like what I believe from the story above, bailing out the automakers will mean that the taxpayers' money is worthless. Even the workers at the automakers. How much will you pay for a worthless product? Now, imagine your money is taken to put into junk, how much will it be worth? I sincerely hope my argument is put in good perspective, and that the people of America where freedom is believed to be everywhere will stand up and oppose any more unnecessary bailouts, and Obama has not inspired confidence that he will do the right thing yet. Please don't waste my vote of trust, Obama.

Get to work...

I saw this more socio-philosophical article in WSJ and I think every American should see it, even Obama. In fact, everyone around the world should see it. It is not about being responsible, the best way to have a socially beneficial society. I wonder what parents are teaching these days...

Edit: Now, we're talking. This article is conceptually what I feel should be the "change" element of Obama's campaign. Fortunately for him, his charisma will bring more willingness out of people.

Obama the Next

Obama is the president, starting 2009. How long will he be there? No one knows, yet people are starting to compare him to previous presidents. I find this comparison pointless to some degree. I rather him do his work and save the economy. But today, I read a different comparison, one that is touted a few times but not a popular leaning, Jimmy Carter. Well, I'm not sure of his era, but at least he hired Volcker and "fired" the useless politicians. Could be worse.

Anyway, ever since the crazy downward March to Dismember (December), I am staring at a recession, at least and I would like to tout it the Greater Depression. Well, being optimistic, of course, I think the chances of it happening is slim at best, unless Obama continues the lax to spend trend. If that happens, let just say, Armageddon is not far.

Well, what about being the next Next? Obama have to raise taxes more or less, so I think his promise to me and many others is not far from being impossible. Of course, he can still do it, but I wonder how much I will need to pay for other stuff. Hopefully not. I don't want to pay for the unemployment benefits of those who doesn't want to work. Frankly, I'm sick of hearing all the human rights arguments of free healthcare and what not. I believe the true things that should be free is transport. The motivation and need to get work done.

Healthcare is a necessity and a responsibility of everyone, not a right or previlege. Is the state not a collection of everyone? Poor countries can't afford free healthcare, so why should rich countries waste their money on it? Making it accessible to the needy is more important than making it free. Technology advance will take care of the price. Anyway, my take on why the medicare is not effective. Too much politics. How can one negotiate the price of a treatment? Doesn't that mean monopoly by the medicare agents? Doesn't that mean money is siphoned from the system to needless logistics?

If medicare is a free market, the technology has a price of its own, and the poor will be able to get some aid regardless of the price. Yes, the cheap types, but with medical advance, are you telling me the generics are dirt compare to the "supposed elixirs"? If generics are useless, then why are pharmeceuticals cutting throats to extend patents and shooting generic companies to increase profitability. Brand name is worth something, but not everything.

Anyway, the article raised a few good points about what the next president needs to do. Most of it needs to be like a strict father who lived through poverty and hardship, educating citizens to spend within their means and finally setting up a stable infrastructure that will prevent the gangsters of the economic world from succeeding. Hopefully also, he can do it and get re-elected. If he does the necessary, I'll stand as always have for a hero of times. That is, if he does. The article is critical of him, but I have a more optimistic view of his methods.

Then again, I'm pretty annoyed to have lost $200 today. All because of his speech. My shorts got killed despite all the bad economic data. A speech cannot change history in a single day. People still starve and remain jobless. Making money and jobs out of thin air will only destroy the already weak economy, further flushed by the weak currency. Frankly, I think the liquidity trap is in place, and we are going nowhere until that big crash comes. Everyone can inflate the system, but the amount of air, food and water are finite and so is economic expansion. But anyway, no matter how critical people are of Obama, I'll only judge him on his actions, not his political leanings.

Obama is chosen to make tough decisions, not easy and populist ones like keeping people in their homes for what they can't afford. In fact, I have posted before that housing should come down further. JPM and Bank of America had started some change to keep owners in their homes, so I don't see why Obama needs to worry to much about that. Afterall, let the banks decide which of their businesses will be good.

If you want to hit the restart button to end all problems, you need to make the hard choice of admiting defeat. Admit defeat that a perfectly working scientific system is ruined by corruption, selfishness, hypocrisy and wanton for power, which was credit and cash. In short, humanity itself ruined the perfect ecology of free market that it created.

No matter the game, changing the rules in the last minute just to win like the Fed, SEC and Treasury in the bailouts, the rate cuts and the short bans meant uptmost corruption and hypocrisy. Also, beggars don't get to choose, so why were the "Big" wheeny three get to choose their terms? Are they not begging now like AIG had? Where was Paulson when the problem started one year ago?

So Obama, no more halo effect. It does not work on me. I prefer Obama over McCain on ideas, but do the work you are chosen for. Be the President that will feed the sick patient called USA the bitter pill to cure the ills that plagued it. Don't play goody two shoes follow populist ideals which lead to nowhere. In the end, the cycle of evolution will weed out the bad leeches. People have to evolve with time. If not, we will all die like dinosaurs. I don't get to be ruled by many presidents and prime ministers, but I know a good one when I see one.