Archive - 2010 - Blog entry

President Obama seems to be tone deaf and his State of the Union address was revealing. His rambling speech continued his theme of Big State control on the one hand yet preaching bipartisanship and fiscal responsibility on the other. This administration and the Democratic leadership is marching us toward European-style welfare socialism and seem incapable of compromise.

5-min VIX Charts ~ Intra-day Bottom & Close

A greater government involvement in the financial sector is not something I thought I’d ever ask for, but it has turned into a necessity in order to preserve, not destroy, capitalism.

Is Google Inc. (NASDAQ:GOOG) a Buy, Hold or Sell? Not knowing what kind of performance you’re paying for makes it challenging to answer. It would be just like asking, do I take the over/under in the Super Bowl without knowing the over/under line.

How to win the war against terrorism. Predator drones are turning the tide. It may all come down to the price of wheat. Afghanistan is a different story. Is this where our zero stock return is coming from?

The lead story this morning of ZH is "The Only Thing Better Than A Zero Hedge? Wells Fargo's "Never Lose" Economic Hedge", explaining more accounting shenanigans (if you read the links below, you will see that I have caught Wells in a few rather aggressive interpretations) related to MSR's. One thing that was noted was the inputs for valuing MSRs using interest rates as was extolled by management. Well...

The US Gov't can show 'profits' ad infinitum by endlessly EFT'ing money from the Treasury's savings account (at JPM) to the Fed's brokerage account (at GSCO) and vice versa. Or better yet, the Fed can pay the Treasury several times more by printing trillions of US dollars, buying companies on Wall Street, and achieving small dividends.

Thus, the so-called "profits" are NOT evidence that the US economy is doing well. Far from it, these profits are proof that the printers are working long hours. Moreover, the state's Dept. of Moral Hazard has taken upon itself Robert Wadlow-sized liabilities, which call into question the solvency of the entire American financial system.

Frustrated with hedge funds and private-equity investments, public pension funds are turning to one of the oldest investment strategies—using borrowed money to boost performance...

Another reason for markets to puke. The GDP report. There are very high expectations. Hang on if reality falls short.

In an often defiant tone, President Obama insisted that as far as he is concerned the era of “Big Government” is not only still here to stay, but needs to be dramatically expanded -- even if some recent elections and public opinion polls suggest that a growing number of Americans are leery of moving further in this direction.

In the face of Obama's determination to push for more “change” down the path of expanding political paternalism, one imagines what Stinky BO might have said in the State of the Union address if he had chosen to propose the type of (Austrian Liquidity Theory) change that really would have meant greater freedom and opportunity for the American people.

(courtesy of Northwood University & the Mises Institute) What he could have said might have been something like the following:

The vote was as shoo-in all the way. There was some noise but it did not amount to much. Bernanke has too many friends for a Senate slap down. One of them is Alan Blinder. Let's just say we don't agree.

The Chinese economy must be getting out of control, because the Chinese government is doing the unthinkable: It is desperately trying to put the brakes on the economy. When you pump a stimulus package that represents 14% of GDP through a fire hose into an economy, which was already on shaky bubble foundation, in a very short time you’ll have some serious unintended consequences -- you’ll get super bubbles.

Of particular note is the difference between some readers perception of the Suntrust results and mine. If you take a close look at the results, you will see credit performance and asset quality is still deteriorating. The perception of a reprieve or moderation is potentially misleading due to the fact that Suntrust (like most other large banks) is actively shrinking their loan portfolio and transferring bad assets from one category to another.

To the credit of the CEO, he actually appears to tell it like it is and does not appear to be on a marketing binge to sugarcoat reality.

RealtyTrac has new numbers out. More bad news in my opinion. The trend is continuing and this trend is not our 'friend'.

In his first State of the Union speech in 2010, President Barack Obama carefully chose his words in calling for a new jobs bill to stimulate real organic economic growth. However, politicians have always been extremely deft about making speeches that present a united front with the people against corruption, while often hammering out legislation behind closed doors that ensures no real change will ever occur. To determine if the wool is being pulled over our eyes once again, let’s turn to the actual text of President Obama’s State of the Union speech.