Monday, March 2, 2009

While Peter McKay and Harpie fuss over IFB's, Identifiable Flying Bears,

Other folks are thinking about what's wrong, how it came to be and what should be done. Below are some interesting thoughts from a former US Assistant Secretary of the Treasury. His name is Paul Roberts and according to Wiki, was instrumental in the creation of Reaganomics. Known for criticizing both Dem's and Repugs, I thought it worth a read.

The next step is for holders of the swaps to short the asset in order to drive down its value and collect the guarantee. As the issuers of swaps were not required to reserve against them, and as there is no limit to the number of swaps, the payouts can easily exceed the net worth of the issuer.

This was the most shameful and most mindless form of speculation. Gamblers were betting hands that they could not cover. The US regulators had abandoned their posts. The American financial institutions abandoned all integrity. As a consequence, American financial institutions and rating agencies are trusted nowhere on earth.”


As a former Treasury official, I am amazed that the US government, in the midst of the worst financial crises ever, is content for short-selling to drive down the asset prices that the government is trying to support. No bailout or stimulus plan has any hope until the uptick rule is reinstated.

The bald fact is that the combination of ignorance, negligence, and ideology that permitted the crisis to happen is still present and is blocking any remedy. Either the people in power in Washington and the financial community are total dimwits or they are manipulating an opportunity to redistribute wealth from taxpayers, equity owners and pension funds to the financial sector.”


  1. For those that were not aware, this is how Italian clocks work . . .
    Well, the TSX sucked wind today. Guess the Dow did the same and AIG, our favorite insurer, lost a few bucks in the fourth quarter.

    Read it and weep / laugh . . .
    AIG lost $61.7 billion in the fourth quarter, yet the US taxpayer (govt.) keeps bailing them out. Who will bail the taxpayers out, and does anyone feel that we're headed in the same direction -- pouring untold amounts of money which can never be paid back, into an endless sinkhole?
    From Money& . . .

    ". . . That’s the single largest loss ever suffered by a U.S. corporation, larger than the record losses at Bank of America and Citigroup COMBINED!

    "Worse: To keep AIG from going belly-up, Washington is giving the company another $30 billion, bringing the total bailout for this one company to a staggering $180 billion. "That’s equivalent to nearly HALF the U.S. government’s entire budget deficit for all of 2008!

    "Worse still: The company’s stock, which sold for nearly $50 per share last May is now only 49 cents. Any investor who bought $10,000 of AIG stock eight short months ago now as a meager $98 left. The rest — a whopping $9,902 — is gone with the wind."

    ". . . If this is what happens to companies that are seized and operated by Washington bureaucrats, what’s going to happen to Citigroup now that those same people have controlling interest? What’s going to happen to Bank of America? To GM? To Ford? To all the other stocks getting money from Washington?

    "And what’s going to happen to the millions of investors stubbornly sticking with bull market buy-and-hold strategies — who are still hanging on to these doomed stocks — as this crisis continues to intensify?

    "More importantly, it makes one wonder ...Why are so many smart investors doing so many brain-dead stupid things?

    "Take Warren Buffet, for example. The Wizard of Omaha’s Berkshire Hathaway just put in its worst year ever. Its shares have plunged 48% in value. . . . But has Buffett learned his lesson? Apparently not!

    "Although his letter admits that “the economy will be in shambles throughout 2009, and, for that matter, probably well beyond,” Buffet continues by saying, “But that conclusion does not tell us whether the stock market will rise or fall.”

    "Is this his rationale for continuing to own billions in companies that are almost certain to get hammered by “an economy in shambles?”

    "Won’t the “economy in shambles” also devastate his holdings in retailers, furniture and jewelry stores, real estate firms and so many others?"

    ". . . Buy-and-hold investing is risky enough when you have a reasonable assurance that the economy will be stable. But in an economy that’s admittedly broken — and in a stock market that’s been falling or six straight months — it’s utterly insane!

    As long as he stays on that tack, Mr. Buffett is not only losing money hand over fist as the market sinks, he’s also completely missing out on the truly explosive profit potential this bear market offers."
    Here is one aspect which very few bother considering -- for each DOWN, there must be it's equal and oppsite UP so obviously there are opportunities out there, and is why the msm trash should be taken with a pinch of salt.

    Further, --

  2. Charles, apparently Buffet draws 100k per yr in salary, plus expenses of course, and lives in the house he built/bought in 1958. He can afford some losses and to look long term.

    Other than that, all the apocalypse now sayers are still quoting '92 and '82. Yep, sure was a major load of horsepuppy. I remember. But we'ze still here.

    End of the day, Buffet isn't telling people to sink their money into China, like Soro's and Rogers. At least not that I have heard.

    I think Soro's and Rogers and their ilk are being very much less than honest, and are very much concerned with themselves.

  3. Buffet is more American than apple pie. He loves what he does for a living. Did you know his annual shareholder meetings used to be bring your own brown bag lunches? He has mellowed on that.

    China? lmao I say good luck!

    My feeling is that they are trying to hang on to the capitalist/free market model. I also think that they severely underestimating the accumulating anger out there.

    Harper is doing his own spinning over here. Whatever.

    Heard on BNN the other day that Ruger is completely sold out of handguns. At least one industry is thriving.

    Things will go up again and it will be back to the same ole' same ole' the only difference being fewer pillars (banks) and the house will get heavier. How will it be supported in the next crash? You do know there will be another?

  4. "Yet, there will be no depression." (From Garth's latest post)

    He may be right, but has he forgotten all those baby-boomers who are set to retire in 2015 or, if not already, be laid off with little or nil in their RRSPs and investment portfolios?

    As links below show, manufacturing in China has slowed to a crawl, which also encompasses the rest of us. How many manufacturing plants has Canada seen closed in the past year?

    Bear in mind this economic / social turmoil is not unique to this continent, it is worldwide so from my perspective, it was gone well beyond the Buffett's / Soros's / Rogers and other multi-billionaires.

    I figure that sooner or later -- probably sooner, as MI5 are now working on new plans to quell summer riots in the UK -- it will be the social upheaval thruout the world, primarily in Europe then spilling over here which leads to a form of anarchy.

    Anyway, that's my story and, like my knickers, are frequently changed!
    Manufacturing, like auto sales, the worldwide economy and my stomach have all turned Due South! --

    As well, what if AIG goes belly-up? --

    Bank accounts in Ukraine are now frozen. Almost time for the song "Money For Nothing (And The Chicks For Free")! --
    Could this be a sign of Economic Global Warming?! --

  5. And now for The Best Comeback Line Of The Year. If you ever testify in court, you might wish you could have been as sharp as this policeman.
    He was being cross-examined by a defense attorney during a felony trial. The lawyer was trying to undermine the policeman's credibility . . .

    Q: 'Officer -- did you see my client fleeing the scene?'

    A: 'No sir. But I subsequently observed a person matching the description of the offender, running several blocks away.'

    Q: 'Officer -- who provided this description?'

    A: 'The officer who responded to the scene.'

    Q: 'A fellow officer provided the description of this so-called offender. Do you trust your fellow officers?'

    A: 'Yes, sir. With my life.'

    Q: 'With your life? Let me ask you this then officer. Do you have a room where you change your clothes in preparation for your daily duties?'

    A: 'Yes sir, we do!'

    Q: 'And do you have a locker in the room?'

    A: 'Yes sir, I do.'

    Q: 'And do you have a lock on your locker?'

    A: 'Yes sir.'

    Q: 'Now why is it, officer, if you trust your fellow officers with your life, you find it necessary to lock your locker in a room you share with these same officers?'

    A: 'You see, sir -- we share the building with the court complex, and sometimes lawyers have been known to walk through that room.'

    The courtroom EXPLODED with laughter, and a prompt recess was called. The officer on the stand has been nominated for this year's 'Best Comeback' line.
    If you think that fermented apples may be good for you, these are the possible end results . . .
    G'day to one and all.

    A letter to the ed. and a column caught my eye, and neither has anything to do with the economy. A short letter, so I'll retype it (no name or address) . . .

    "More Arctic respect from Russia than US

    "A few months ago, I tuned in to an interview of a Russian diplomat. During the interview, he stated Russia recognized the Canadian northern islands as Cdn. as well as the North West Passage.

    "I think this is the only country that has made such a statement.

    "The US wants to change the Alaska / Yukon border, which has always pointed to the North Pole, it wants to move the border to a more northeast direction so as to take over part of our Beaufort Sea. They do not recognize the North West Passage as being Cdn.

    "There has been a lot of hot air re: a Russian bomber coming close to our northern border. This has happened before when Ottawa flexes its muscles about owning the Arctic.

    "Russia has several times the coastline of anyone else. It appears that any dispute in the Arctic will be who owns the under-sea ridges.

    "The Coast Guard should be the dominant force in the Arctic, and Canada should insist on a pilotage service through the passage. The army wouldn't be of much use in the Arctic.

    Name / Address
    Can anyone smell the implementation of a NAU / SPP / reworked NAFTA and then one landmass, a.k.a. CANAMEX?

    As far as under-sea ridges, try active under-sea volcanoes, both Arctic and Antarctic. Ultimately, no one wins in a scrap like this, as most of us will be blown to smithereens.

    The columnist brings Bill C-51 to the forefront. Say, don't the above and Bill C-51 go together? That would sure make things very nice for Harper & Co.

  6. Great Bear video Charles. A good laugh is becoming a rare treat lately.

  7. Hope everyone is alright.


    Get ready for an upside


  8. "For Bernanke and Geithner, there are no bad assets. Only misunderstood assets."

    A good one from Dee's Krugman link above, but I would change it slightly:

    "... there are no bad assets. Only assets which have not found greater fools. It is the job of government to find such fools or take their place."

    Someone correct me, but that is what everything so far boils down to.

  9. No need for correction Herb. Well said.