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Dis and Dat
$120 oil is here
Crude oil from the “light end of the barrel” hit $120 this morning.
Forget what Bernanke and the MSM are telling you. They keep showing the
WTI price. Even supposedly smart guys like Mark Zandi have said recently
that $100 oil is not a problem for the US. Wrong. The US
needs light crude for the gulf refineries. And consumers will be paying
$4 a gallon before Zandi or his pal Bernanke can catch their breath.
More Pirate Stuff
The Somali pirates hit another civilian sailing boat of the coast of
Oman. This is even worse than a few weeks ago when the bad guys captured
two elderly couples that were delivering bibles. This time they have
four adults and three kids. They also got two other merchant ships in past five days.
The family and crew are Danish. What they were doing in these waters and
not part of a convoy is a mystery to me. They were asking for trouble.
The pirates have already issued a warning that if there is an assault by
special forces they will kill everyone. This can easily get stepped up a
notch or two. It’s unlikely that there will be a repeat of the
disaster of a fortnight ago.
A recap of that action is that there were 4 large US Navy vessels
surrounding the boat with the four Americans. They had an FBI hostage
negotiator on board. They got two of the pirates onboard the Navy ship
and the Feebs promptly told them they were not going to let them get to
shore. They could free the hostages, take they boat and go free or there
would be a bad end.
Not surprisingly the pirates were not pleased with this and fired off a
rifle grenade. The Navy does not take kindly to that sort of thing so
all hell broke lose and the hostages were killed before a Ranger team
could get onboard. A complete balls up in my opinion.
US amphibious forces have left the area to patrol off Libya. So don’t
look for US troops to get involved. This time it will be NATO Special
Forces that get to play hero. Hopefully they will do a better job at
negotiating a deal than the FBI. That or they do a better job than our
Rangers did (I think we should have had the SEALS do that job).
Junk for Sale
The FDIC is having a big sale up in Michigan. They are auctioning off homes and property they got from failed banks.
Part of me feels that this is fine. We have to clean out the problems.
So as unpleasant as it is to have the FDIC driving down real estate
prices up in Michigan it something that has to be done.
There is another part of me that looks at this as a measure of how
desperate things have become. Is it really necessary for an institution
as significant in our economy as the FDIC to be selling dreck like this?
There has to be a better way.
Irrelevant Dollar
About two weeks ago Tyler Durden first made the observation the
dollar was becoming irrelevant. At the time I disagreed. There is too
much history to say that this is not so. Now a few weeks later I have to
agree with TD. The dollar has become irrelevant.
That there has been no significant adjustments in FX rates while the
Middle East has boiled and burned is sort of unfathomable. There should
have been some flight to quality move. But there wasn’t. For me this is a
warning sign. I have to wonder what the dollar will do when/if there
isn’t a crisis someplace that keeps it stable.
Sometime ago I recommended a long dollar Yen position. Two months later
and it is back to where it started and I/you have nothing to show for
it. I still think that the Yen is the worst reserve currency out there,
but as far as recommendations go, I have to take this one off the
table. It has done nothing for anyone, beside waste time and focus.
Sorry for the blank.
»
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cross post
http://www.zerohedge.com/article/97-all-us-mortgages-are-backed-governme...
nobody considers paying the pirates, and letting them go back to bask in the radio-activity of their homeland. better to waste a bunch of kids and parents and sailors and rangers, and have somalians abord US Navy Vessels with rifles granades---oh, shit, i fergot about the FBI "negotiators" there...
bruce, this is almost as much fun as getting rolled by a "date"
i especially liked when you agreed with tyler that the US$ has become irrelevant. even tho i have no idea what either or both of you mean by this, if anything, or if you even have an idea of what you are talking about. when i look at why you decided to agree with TD, it makes even less sense than usual.
yest. i put together a deal and today, i funded it: for $130 in "irrelevant" green stamps, i got a '56, '57, '59, '61, and '62 Proof Sets. each set contains one Franklin Half Dollar, a Q, and a Dime of 90% silver, then the proof nickels and pennies, too, the '56 & '57 being Wheaties. Each Proof Set has .613 Troy oz. of silver @ melt. So, 5 sets X .613 = 3.07 oz silver @ $34.50/oz = abt $105.75 of silver. Two of the sets were in Capital Plastic holders, the other 3 in original gov't packaging. The strikes on the '59 set are exceptional; the steps on Montecello are supassed by the steps on the Lincoln Memorial, and the little standing eagle to the right of the Liberty Bell on the Franklin Reverse is exquisite.
but, bruce, i agree with all yer other sychopants, here, too: you are much more fun when you stay away from fiction. your writing is much fresher. so, enuf of those anaylses! besides, if you stopped writing about the pirates, now, yer own mother would kill you in a heartbeat.
Piracy, one of the things of our past that will become a bigger part of our future.
Piracy and voodoo Economics practiced by WitchDoctor Economists is nowhere retro enough. Wake me when we get back to Cannibalism and Human Sacrifices! :>(
http://en.wikipedia.org/wiki/United_States_Pirate_Party - it's a start. ;-)
President Madoff"? The Professor looked quizical for a second.
"Yes, the Chinese have released him and set him up as top dog in the new colony, New Xian, they are calling it."
I clicked the safety on my MAC-10 to ON and pointed it down towards the ground. I wasn't really prepared to use it on the Professor - he was way too valuable a commodity. There were other dangers down here I was more concerned about - albino alligators and rats, rats of the human kind. The MAC-10 could put out a nice volume of lead if neccessary, but the close quarters and the hard walls made that dangerous for me as well. My eTAZER
could handle the Professor if neccessary, but I did not think it would be a problem once he heard about his new deal.
"He sent you this". I passed a small pouch to the filthy ex FED Chairman. He pulled a flask out, opened it and sniffed.
"Talisker, 10 year old. The only single malt from the Isle of Sky in Scotland. I can't believe Bernie remembered". He took a slug. Looking back in the pouch he took out a cigar and a book of matches. "Cohiba, no doubt. If that rat bastard thinks this makes up for the 500 large he stole from me..." He lit up.
I don't know much about Scotch or smoke, but apparently the Professor still did, even after a year of living like an animal in the sewers of the City.
I handed him a q-tip and said "Swab the inside of your mouth". He did and handed it back. "Just a precaution, Professor". I slipped the sample into the portable DNAnalyzer on my hip and waited for the confirmation to come through. It would take about a minute.
Just then I heard a sound from my right, and a poor disheveled and filthy creature, a man I supposed, appeared in the tunnel.
"Everything OK, Jimmy?" he said.
"Yea, Fred, no problem. Just an old friend come to visit" the Professor replied. A strange look came over Fred as he noticed the Cuban and the flask, not to mention a man in a LEVEL 2 bio-hazard suit, and he disappeared back into the shadows.
"Time to roll, Professor. I don't like what I saw in that man's eyes, like a light bulb going off. And there WAS a million dollar bounty on your head, even if a million barely bought a few crusts of bread at the end."
I clicked the safety on the MAC-10 to OFF.
To be continued...
Thank you Bruce and to those who posted comments. This is why I read ZH.
Well done Bruce, thanks as always.
No wonder they screwed up - sent Rangers to do a SEAL's job.
Warheads on foreheads is the only solution to pirates. Obambam does not have the balls.
Shades of Carter and the Iranian rescue..........These PC assholes.............
I always said Obama would make us long for the <sarc on> good old days of Jimmy Carter <sarc off> and, by God, I think I will be proven correct.
My take on it is, the way we're committed to handling bank failures over the last several decades, something like a Resolution Trust Corporation has to exist.
In the S&L crisis in the early 90s, Congress had to fund it, which meant holding a vote. Remember the outrage and horror over the $50+b price tag?
This time, they're afraid of holding a vote because it would mean making a sensible estimate of the costs. No one could possibly vote for it and stay in office. That's why they're using Fannie & Freddie, with their open credit line at the Treasury, to let the banks foist the shitty paper onto the public. That's why Treasury arms like FDIC are involved in things so far outside their charter like managing asset sales.
Having an RTC would also mean that the shadow inventory would have to come out into the light. I think anyone who knew how long it would take to work off that inventory wouldn't consider buying a house for years.
My take on when it ends is pretty simplistic: Over the last 5 decades, home prices have averaged around 2.5x median family income. Last year, the median home price in the US was about $182K. The median family income was about $52K. All else equal, a reversion to that long-term mean would mean that home prices would have another 30% to fall. A reasonable person would expect significant overshoot, say to 2x median income, or about 40% further to the trough. We've had $trillions spent in contravention of constituency and it's only slowed the process, not reversed it.
2.5x median is one metric
carrying costs are another I think 40% from here e.g. the $300k dump circa 2005 that is now 150k becoming 80k is not in the cards - prices flat for the next 5 years no question down another 10 to 20% depends on the market dynamics - and then the elephant in the room currency and inflation - a hard asset such as a piece of ground with a shack on it looks a great deal better than pieces of paper
That's why I qualified 'all else equal.'
You could certainly wind up with a scenario where it cashflows to bulldoze the house and plant on the land.
The best asset classes in the 70s were junior miners and raw land (followed by Japanese small-cap stocks, but that could be a one-off).
Dead on Zack Attack. You should do a Contributor Post for Tylern re: this.
It would beat much of the long-winded diatribes or regurgitated cut and paste crap that appears on a regular basis.
We are paying $10.70 per gallon in the UK...yes that's right, stop wingeing.
Holy Fuck Batman, $10. fucking 70 ? ???
Would stop it if we knew what it was. Can you explain?
Hey Bruce, did you see this one from zerohedge:
http://www.zerohedge.com/article/how-did-gaddafi-bypass-us-anti-money-la...
I'd say it's about time you stopped reinforcing that American stereotype that the Swiss are the ones who help tax evaders and gangsters.
A few weeks back I mentioned how naked short selling and "failure to deliver" constituted counterfeiting. If someone counterfeits $100 U.S. Notes they face some huge penalties.
Yet the large Wall Street firms routinely do the same thing on a much larger scale.
This article makes some good points on the subject:
************************************
Rise in Securities Settlement Failures Shows Some Traders Game System, but Failed Settlements Also Can Signal Systemic Risk, According to Kauffman ReportContact:
New paper urges regulatory crackdown on traders who boost profits by failing to honor legal obligationsBen Branham, 646-246-6147, benjamin.branham@edelman.com, Edelman
Barbara Pruitt, 816-932-1288, bpruitt@kauffman.org, Kauffman Foundation
Fred Sommers, 617-733-8291, fred.sommers@basispointgroup.com, Basis Point Group
(KANSAS CITY, Mo.) March 1, 2011 - A large and growing number of securities transactions that fail to settle indicates a possible lapse in regulatory oversight and poses a potential liquidity risk that can lead to a future systemic crisis, according to a new report issued today by the Ewing Marion Kauffman Foundation. The report urges a tough regulatory crackdown, including substantial financial penalties for settlement fails.
According to the report, every fail introduces a cumulative and potentially compounding liquidity risk into the orderly process of settling the $7.5 trillion of security transactions completed each day. It goes on to say that the failures are at least partly attributable to gaming of the system by traders who use delay to generate additional profit.
"There is a lopsided risk-reward dynamic embedded in the structure of current fails regulations. Capital markets firms can increase profits while laying off the risk associated with these profits to investors, the Treasury, and ultimately the taxpayers," the report observes.
Harold Bradley, Kauffman’s chief investment officer, and Robert Litan, Kauffman’s vice president of research and policy, co-authored the paper with Robert A. Fawls and Fred E. Sommers, partners at Basis Point Group, a leading financial markets research firm based in Massachusetts.
"Settlement failures are a canary in the coal mine of the financial markets," Bradley warns. "If we write a check without money in the bank, we end up in jail. When securities transactions don’t settle, the same thing happens on a larger scale. Too many settlement fails can put the financial system on edge."
The report points to an uptrend in settlement failures for Mortgage-backed Securities (MBS) and Exchange Traded Funds as particularly troublesome. It says MBS fails averaged $115 billion per day in 2010, an increase of more than tenfold since 2008.
"Failures now are at a level that presents significant systemic risk to all investors in the event of another market shock," Fawls said. "Though the Fed has the detailed fails data for each primary dealer, we could find no indication that it is using available tools to mitigate this risk to U.S. capital markets."
Basis Point Group estimates that settlement failures and other accounting recognition delays impose hidden costs to asset owners of about 27 basis points every day—or about $300 billion in assets that cannot be reinvested. At that level, and assuming a conservative annual interest rate of 3 percent, settlement failures cost underfunded pension funds and other institutional investors at least $9 billion a year in lost earnings.
"These preventable losses are particularly intolerable at a time when both public and private pension funds are asking employees to accept benefit cuts, increase their own contributions, or both," Litan said. "Regulators can fix this. Every day of delay raises the risk to the financial system as a whole and to every investor, large or small."
The paper notes that the Federal Reserve and the Securities and Exchange Commission have previously and successfully intervened to reduce fails in the market for U.S. Treasury paper and in the equities market. It says they should take similar action now in the broader securities market.
"The regulatory establishment must gain control over Wall Street’s hyperkinetic trading interests and stiffly fine traders who do not meet their contractual and legal obligations to settle trades on time," Sommers said. (continues)
********************************************
How do you stop regulatory capture? Consider the scene in the film "the untouchables" - You have to substitute the entire jury from one trial with the jury of another trial. Trouble is - How do you substitute most of the Justice Dept, FCC, FDIC, CFTC and every other regulator?
Holy Crap! CustomersMan
Yep, this is the canary in the coal mine.
I am surprised there's so little comment.
But, then again...boyz and pirates...what can I say?
...yup, the Somalis ain't no pirates. They are street mutts in a dingy who just happened to get hold of auto weapons and noticed only token resistance in their future. Dumb as sticks.
The realy piracy is shared here by CM.
Thanks Bruce; interesting insights for interesting times.
here's some dark humor:
http://www.southparkstudios.com/clips/225458/somalian-pirates-we
Southpark, Thats the Good Shit. Shows how you can make any group like-able.
I have a dumb question. Is sailing anything for pleasure through the area that necessary? I mean three teenagers. Sheez Louise. And also this dumb question? Are the Somali pirates emboldening others in other areas to do the exact same thing. Note: The leader of Equitorial New Guinea just ordered a gagillion dollar yacht for himself for fun.
The houses are called fixer uppers.
And not everyone owns/can afford a McMansion.
One thing you won't get from this administration relative to the pirates... testicular fortitude. Regular strafing runs of boats on shore and in the water would substantially curtail these activities. I would also implement a few trap plays for these lovely dirtbags, perhaps leaving a few boats floating in the water with bags of cash, drugs, all with GPS transmitters on them and very very large bombs tied to them. As soon as the goods got on shore and made their first stop.... ba boom. Sad that the administration is emasculating our spec ops guys. (One or two SOG units can ruin your whole day, pirate man, and I hope they do soon.)
If there is a reserve currency left, I'd call it the Swiss franc.
For this oil issue, this is a short term uncertainty premium worth $10 for the elimination of Qadaffi, period. Once he goes, the air will come out of this trade back to 95 imo. (and yes, I'm short CLk1 at 102 - I'm not prison sore yet, but it's starting to feel "unpleasant."
i like Dis and Dat †
i became really interested in the pirates back in fall of '08. during the elections, or lead up to the elections. i didn't have a TV, and was higher up and further back. had to read USa News. that stupid color filled four sections thing. they liked to carry the pirate news. i was so intrigued with the story. i thought the pirates were winning way back then.
Pirates FTW
If you are a sophisticated financial investor you probably are looking at storage you're wealth out of the dollar, but the dollar is still used world wide.
"...all hell broke lose and the hostages were killed before a Ranger team could get onboard."
Why didn't the Rangers kill all of the pirates? We will now be required to pay the costs associated with prosecuting & imprisoning these miscreants. Where's Jack when you need him?
"Why didn't the Rangers kill all of the pirates?"
Like the Russians (correctly) did? Too culturally insensitive, it might rile the Muzzies.
Pirates shouldn't be prosecuted and imprisoned.....they should be treated as Pirates and sent to Davie Jones locker.....No if's and's or but's...Period......
Sink the m-fuckers including the mother-ships and after a while when they don't come home there won't be anymore to come out!
Bruce, nice recap. I'm sure you are familiar with the possible roots of the Somali Piracy being in the indiscriminate dumping of nuclear waste in thin walled containers in the shallow seas off th ecoast of somalia by European companies for decades?
It really does put a new spin on the whole deal. The defective birth reates and general sickness deformity on the affected parts of Somalia's coastline are supposed to be off the charts.
ORI
http://aadivaahan.wordpress.com/2011/03/01/on-outsourcing-and-its-ills/
Why in God's name have we not tried counseling and anti-depressants?
Send brother oBummer over to talk to them.....it's worked with all the other countries he's talked to....... (sic)
Damn those laws of thermodynamics and this finite planet.
Ori,
do you have list of european countries doing this. Any links?
Falak, try this page. i found many of the sites and some of the pictures and videos truly stunning.
http://www.google.co.in/search?sourceid=chrome&ie=UTF-8&q=Somali+piracy+and+nuclear+waste
ORI
Germany and it's sidekick Frankenreich, for starters.
http://english.aljazeera.net/news/africa/2008/10/2008109174223218644.html
Definitely not the German government. It would be the end of the world, if you can prove that German government is involved. There were and are huge demonstrations in Germany against the prolonged use of nuclear power plants. Nuclear energy is highly unpopular in Germany.
For over 30 years this is a fierce battle now - they've dumped nuclear waste into old salt mines in Germany and many barrels leak now. It's a total disaster. And if they [politicians] continue with Gorleben, things will get unpleasant. I am not kidding. The farmers in the area will defend their ground with every possible method and they will have the support of the majority of the population.
http://www.merkur-online.de/bilder/2010/11/26/1024193/1729168795-asse-at...
When the police tried to secure the Castor transport (transport of nuclear waste to Gorleben) last year, they were tired and almost beaten by the protesters. Thousands of thousands of people blocking the railroad, tractors blocking roads and cutting off the suplly lines of the police, numerous clashes with the police. The transport needed over 90 hours, which was a new record. If they continue with Gorleben, things will end ugly. And Graf [Count] von Bernstorff is also a fierce opponent against the government. The nuclear industry offered him 30 million Deutsche Mark to get his ground - he refused. Now the government wants to take his land. He'll fight them. Legal action.
And France is certainly not Germany's sidekick. Rather the opposite.
I remember that train stopping story.
But I put it down to extreme green-ness in a too politically correct german environment. Heck fo a story nevertheless.
Meanwhile, try this one for size.... tells you a little abotu what is allowed and what is not!
It's fromt he end of 09, but sure tells a story...
http://www.telegraph.co.uk/news/worldnews/piracy/6684210/Navy-regularly-releases-Somali-pirates-even-when-caught-in-the-act.html
ORI
Can we off-load all the TBTF Bankers on a sailboat and the US Congress/Senate in row-boat off of Oman? Frank could try to 'blow' I mean row the boat home.
How about a trip in a jet over the ocean, halfway to the next stop.
give me back my fish ....the cry of a hungry somalian fisherman...
give me back my house...the cry of an angry foreclosed Michigan resident.
give me back my Libya...the cry of a Khadaffi.
give me back my dollar relevance...the cry of every american..except big Ben.
maybe these pirates can take over the Enterprise! i'd have to buy a huge bag of popcorn for that one!
The pirates may be outgunned by our military, but they are not outballed.