Only time will tell, but we should know in the next month . . .
http://www.ft.com/intl/cms/s/0/992a2cb0-0577-11e1-8eaa-00144feabdc0.html#axzz1cb8DVbTh
The Gulf's Other Product
5 months ago
Wednesday, November 2, 2011
Tuesday, November 1, 2011
Put A Fork In It - Greece Seems To Be Done
If you have not seen it yet, then you must be living under a rock; Greece's Prime Minister Papandreou took the nuclear option and is letting the citizens of Greece vote in a referendum on whether to proceed with the just approved bailout package.
http://online.wsj.com/article/SB10001424052970203707504577012161940303868.html?mod=googlenews_wsj
While the EU scrambles to deal with this and the markets around the globe take a dive because of it, my hat is off to him. To him (assuming he is not taken out of office before the referendum), it is a win/win situation. If the citizens vote to approve the package, the heat is off him as the bad guy and he can tell protesters that the people have spoken. If they vote against the package, Greece takes a hard default, financial repercussions ensue, Greece probably has to leave the EU and being the first in line for default may well become the first to recover from this mess. You see, those buying your bonds seem to forget pretty quickly about your default, and if the default makes you a much more solid country for paying debts in the future, all the better. They would rather lend to you after a default than before an expected default.
I view our financial morass as a lot like gangrene. Earlier efforts cut some of it away, but not nearly all of it. "Let's leave some and try to treat it with antibiotics or other treatments." Well, it has not worked and will not work and, to me, the sooner we cut it out the sooner we will be on the way to recovery. It will be quite painful, but better a few years of big pain than perhaps decades of slow pain. Not that I like either, but I think getting it over with is better. Sure, financial institutions will go under, but last I checked most corporations out there are in pretty good shape (financial institutions aside) and there is plenty of capital to fill the voids. Moreover, the big banks are not exactly doing a lot of lending or other activity to help the average Joe out, so who needs them. Seriously, $5 a month to have a debit card so you can spend your own money.
We will see what happens. I tend to doubt the referendum will ever happen and then Papandeou can point the finger at someone else for nixing it. Nevertheless, it is just a matter of time before the voters in some country get so fed up they vote in whoever is against the EU plans and this house of cards comes tumbling down. Do we really want that hanging over our heads for many more months to come?
Disclosures: None
http://online.wsj.com/article/SB10001424052970203707504577012161940303868.html?mod=googlenews_wsj
While the EU scrambles to deal with this and the markets around the globe take a dive because of it, my hat is off to him. To him (assuming he is not taken out of office before the referendum), it is a win/win situation. If the citizens vote to approve the package, the heat is off him as the bad guy and he can tell protesters that the people have spoken. If they vote against the package, Greece takes a hard default, financial repercussions ensue, Greece probably has to leave the EU and being the first in line for default may well become the first to recover from this mess. You see, those buying your bonds seem to forget pretty quickly about your default, and if the default makes you a much more solid country for paying debts in the future, all the better. They would rather lend to you after a default than before an expected default.
I view our financial morass as a lot like gangrene. Earlier efforts cut some of it away, but not nearly all of it. "Let's leave some and try to treat it with antibiotics or other treatments." Well, it has not worked and will not work and, to me, the sooner we cut it out the sooner we will be on the way to recovery. It will be quite painful, but better a few years of big pain than perhaps decades of slow pain. Not that I like either, but I think getting it over with is better. Sure, financial institutions will go under, but last I checked most corporations out there are in pretty good shape (financial institutions aside) and there is plenty of capital to fill the voids. Moreover, the big banks are not exactly doing a lot of lending or other activity to help the average Joe out, so who needs them. Seriously, $5 a month to have a debit card so you can spend your own money.
We will see what happens. I tend to doubt the referendum will ever happen and then Papandeou can point the finger at someone else for nixing it. Nevertheless, it is just a matter of time before the voters in some country get so fed up they vote in whoever is against the EU plans and this house of cards comes tumbling down. Do we really want that hanging over our heads for many more months to come?
Disclosures: None
Friday, October 28, 2011
The Easy Work in the EU is Done . . . Now for the Tough Stuff
So the EU got creditors to take a 50% haircut on Greece, agreed to boost (if they can get China to fund it) their fund for saving the day and all is well in the world. The DOW is up like 1200 points in a month, which is freakin' incredible, and all our problems are behind us. Well, tell that to Italy.
http://online.wsj.com/article/SB10001424052970203554104577003401844568884.html?mod=googlenews_wsj
It seems that the sixth biggest economy and the country with the fourth most debt in the world is not quite getting the benefit of all this. Their ten year bonds are still requiring 6% and that is hardly bearable. They have relatively low unemployment, lower than the U.S., but they also have an incredibly low population percentage wanting to work, with a lot of people retiring before 50, so that artificially alters the unemployment numbers. You see, unemployment numbers are based on those who say they want to work who cannot find work. Those who have given up do not count. If they did, the U.S. rate would be well into double figures.
So let's get back to Italy. They make Greece's issues look like the flea on the tail of the dog. I mean we are talking serious dollars to bail out Italy and it just isn't going to happen (especially after Italy has been doing a good job of pissing off officials in France and Germany, who likely consider Italians lazy bastards). Even after the great EU news Wednesday, Italy has seen no relief in what they are having to pay to refinance their debt. In other words, they are still screwed. And if you think China is coming in to save the day, then you have underestimated the intelligence of the Chinese. Now I am not saying China will not do it, but if they do China will have a lot of stings attached that long term will benefit China and hurt the EU. But hey, beggars cannot be choosers.
Sure, with or without China, things will sail for a while, but that Italy ship is coming into port soon and it has a certain stench to it. Prepare thy self. I do not think China is willing to put enough at risk to stem the tide.
http://www.nytimes.com/2011/10/29/business/the-spotlight-now-shines-on-italy-common-sense.html
Disclosures, none other than I think I have some Italian shoes.
http://online.wsj.com/article/SB10001424052970203554104577003401844568884.html?mod=googlenews_wsj
It seems that the sixth biggest economy and the country with the fourth most debt in the world is not quite getting the benefit of all this. Their ten year bonds are still requiring 6% and that is hardly bearable. They have relatively low unemployment, lower than the U.S., but they also have an incredibly low population percentage wanting to work, with a lot of people retiring before 50, so that artificially alters the unemployment numbers. You see, unemployment numbers are based on those who say they want to work who cannot find work. Those who have given up do not count. If they did, the U.S. rate would be well into double figures.
So let's get back to Italy. They make Greece's issues look like the flea on the tail of the dog. I mean we are talking serious dollars to bail out Italy and it just isn't going to happen (especially after Italy has been doing a good job of pissing off officials in France and Germany, who likely consider Italians lazy bastards). Even after the great EU news Wednesday, Italy has seen no relief in what they are having to pay to refinance their debt. In other words, they are still screwed. And if you think China is coming in to save the day, then you have underestimated the intelligence of the Chinese. Now I am not saying China will not do it, but if they do China will have a lot of stings attached that long term will benefit China and hurt the EU. But hey, beggars cannot be choosers.
Sure, with or without China, things will sail for a while, but that Italy ship is coming into port soon and it has a certain stench to it. Prepare thy self. I do not think China is willing to put enough at risk to stem the tide.
http://www.nytimes.com/2011/10/29/business/the-spotlight-now-shines-on-italy-common-sense.html
Disclosures, none other than I think I have some Italian shoes.
Friday, October 21, 2011
Congress Disgusts Me (and everyone else)
Let me say I was disgusted when Obama hired Geitner and Summers as the heads of his financial group. Nothing like putting the foxes in charge of the hen house. When I voted for the bit O, he had Volcker on his financial recovery team, but right after election, Volcker was quickly relegated to a back seat. I like Volcker, a straight talk kind of guy who really gets what is going on here. And at last we have a regulation that bears his name; not his idea, but his name.
You see Mr. Volcker would love a three or four page regulation prohibiting banks whose deposits are federally insured from trading for their own benefit. No trading, no derivatives, no nuttin'. It is simple in it's origins. Indeed, before 2000 it existed in the form of the Glass-Stegall Act. You see, banks since the Great Depression, i.e. 1932, were prohibited from doing the investment cha cha. They had taxpayer money and federal guarantees and had to be just banks. Boring yes, but they did not have a window to throw us into the chaos that we just suffered.
Now in 2000 Glass-Stegall, which had been around for nearly three quarters of a century was repealed. The act to do so was sponsored by three Republicans and was known as the Gramm-Leach- Billey bill. It was done under the watch of (and signed by) Bill Clinton, who I otherwise think did a good job (despite his cigar proclivity). It was torn up with great fanfare with a number of Republicans and President Clinton almost consumed in jubilation.
Well, the Volcker Rule, as it is now called, was basically meant to but Glass-Stegall back into place. What began as a three page letter by Volcker has turned into a Republican bastardized 298 page piece of legislation filled with more holes than Swiss cheese. Volcker himself is disgusted with this and you should be too. All we really needed to do is repeal the legislation that repealed Glass-Stegall. It worked for nearly 70 years and could work again. Better that than 298 pages of loopholes.
http://www.nytimes.com/2011/10/22/business/volcker-rule-grows-from-simple-to-complex.html
I have been involved in more politics lately than I would like. Given I majored in political science you would think that I would love this, but it is all about money these days. Politicians go to the highest bidder on a regular basis and I am disgusted by it all. I see it every day and yes they do go to the highest bidder. Money talks and what is right walks. The new 298 page Volcker Rule legislation is proof that money talks. And those against it will blame it on Paul Volcker, who had nothing to do with the bastardization of his very good suggestion. I am truly disgusted. And you should be too. You need to know that a lot of folks we vote for are not representing us; they are representing the big banks and corporations that provide them monetary support, either in campaigns or under the table. Absolutely disgusting.
Disclosures: I am disgusted.
You see Mr. Volcker would love a three or four page regulation prohibiting banks whose deposits are federally insured from trading for their own benefit. No trading, no derivatives, no nuttin'. It is simple in it's origins. Indeed, before 2000 it existed in the form of the Glass-Stegall Act. You see, banks since the Great Depression, i.e. 1932, were prohibited from doing the investment cha cha. They had taxpayer money and federal guarantees and had to be just banks. Boring yes, but they did not have a window to throw us into the chaos that we just suffered.
Now in 2000 Glass-Stegall, which had been around for nearly three quarters of a century was repealed. The act to do so was sponsored by three Republicans and was known as the Gramm-Leach- Billey bill. It was done under the watch of (and signed by) Bill Clinton, who I otherwise think did a good job (despite his cigar proclivity). It was torn up with great fanfare with a number of Republicans and President Clinton almost consumed in jubilation.
Well, the Volcker Rule, as it is now called, was basically meant to but Glass-Stegall back into place. What began as a three page letter by Volcker has turned into a Republican bastardized 298 page piece of legislation filled with more holes than Swiss cheese. Volcker himself is disgusted with this and you should be too. All we really needed to do is repeal the legislation that repealed Glass-Stegall. It worked for nearly 70 years and could work again. Better that than 298 pages of loopholes.
http://www.nytimes.com/2011/10/22/business/volcker-rule-grows-from-simple-to-complex.html
I have been involved in more politics lately than I would like. Given I majored in political science you would think that I would love this, but it is all about money these days. Politicians go to the highest bidder on a regular basis and I am disgusted by it all. I see it every day and yes they do go to the highest bidder. Money talks and what is right walks. The new 298 page Volcker Rule legislation is proof that money talks. And those against it will blame it on Paul Volcker, who had nothing to do with the bastardization of his very good suggestion. I am truly disgusted. And you should be too. You need to know that a lot of folks we vote for are not representing us; they are representing the big banks and corporations that provide them monetary support, either in campaigns or under the table. Absolutely disgusting.
Disclosures: I am disgusted.
Wednesday, October 12, 2011
Odd Thought of the Day
So I am reading that we have achieved all we can with military effort in the Middle East and, indeed, are only making things worse there with our continued presence. We are beginning to build even more resentment and creating future generations of those who will hate us. So I say we get out as quickly as possible (I know Obama has a plan) and only supply the support they truly need and request.
This goes for the rest of the world. We still have bases with soldiers all over the globe and this costs a lot of dollars and puts folks in harms way. Let's shut as much as we can down within reason and this should create hundreds of billions of dollars.
Now I am not saying shutting down the military. I am saying bring our boys and girls back home and use the savings to better use. This is a long term thought, so stick with me.
We take the savings from shutting down bases and fund college research on alternative renewable fuels. Mostly through colleges but we can do viable private industry too. Catch is, for colleges that get money they do scholarships and caps on tuition increases, so kids can get an education without coming out with a mortgage. For both colleges and private companies, the government shares in the rewards. Any intellectual property developed belongs in part, perhaps large part, to the government. And they focus on fuels the government can use. The colleges and private industry can capitalize on their findings financially, but the government does too, reducing government spending.
And do not tell me the military has no need for green renewable technology. They are major consumers with ships, jets, jeeps, tanks and the like, so this will be a wise investment for them. And the results should give American companies and Universities a valuable commodity to market.
Yes I have read all the crap about how better drilling technology gives us decades more of cheap oil, natural gas and the like, but this stuff will run out and we need to spend money now to prepare for the future.
By the way, I am watching Bill Clinton on TV with David Letterman and the guy is talking smarter than any Presidential candidate I have seen. Seriously, he gets it and has some great ideas, so if you can find reruns, go for it. Worth the watch and relatively bipartisan.
He says no new taxes right now and we need to go full court against the mortgage problems in this country.
Whether you like him of not he is a very smart guy.
This goes for the rest of the world. We still have bases with soldiers all over the globe and this costs a lot of dollars and puts folks in harms way. Let's shut as much as we can down within reason and this should create hundreds of billions of dollars.
Now I am not saying shutting down the military. I am saying bring our boys and girls back home and use the savings to better use. This is a long term thought, so stick with me.
We take the savings from shutting down bases and fund college research on alternative renewable fuels. Mostly through colleges but we can do viable private industry too. Catch is, for colleges that get money they do scholarships and caps on tuition increases, so kids can get an education without coming out with a mortgage. For both colleges and private companies, the government shares in the rewards. Any intellectual property developed belongs in part, perhaps large part, to the government. And they focus on fuels the government can use. The colleges and private industry can capitalize on their findings financially, but the government does too, reducing government spending.
And do not tell me the military has no need for green renewable technology. They are major consumers with ships, jets, jeeps, tanks and the like, so this will be a wise investment for them. And the results should give American companies and Universities a valuable commodity to market.
Yes I have read all the crap about how better drilling technology gives us decades more of cheap oil, natural gas and the like, but this stuff will run out and we need to spend money now to prepare for the future.
By the way, I am watching Bill Clinton on TV with David Letterman and the guy is talking smarter than any Presidential candidate I have seen. Seriously, he gets it and has some great ideas, so if you can find reruns, go for it. Worth the watch and relatively bipartisan.
He says no new taxes right now and we need to go full court against the mortgage problems in this country.
Whether you like him of not he is a very smart guy.
Wednesday, October 5, 2011
Chew On This
China has been a major stabilizing factor in the global economy. Without its continued growth, things would have been a lot worse these past few years. Well the Hang Seng is now down roughly 35% from its peak last November.
Monday, October 3, 2011
Death, Taxes and Greek Default
Two out of three of these are unavoidable. Ironically, the Greek debt problem proves that taxes are avoidable as tax evasion is apparently an art form in Greece, so that just leaves death and Greek default. Nothing new here, just folks coming to reality. Seriously, anyone with brain cells should be able to read the stats and know that Greek default is in the cards and has been for well over a year. Problem is, most people do not read the stats. Well, they are ugly - worse than even shave the dog's butt and teach him to walk backwards - ugly. It is just irrational to me that the folks in the EU are keeping it on life support. Either let it die or come together and do a Euro bond that all the EU supports (sorry Germany but it is time to decide whether to get out of the pool).
Now I am really pissed off. Five weeks ago I had to sell some put options on AMR - you know the parent of American Airlines. I had these for like a year and they were up a bit but I had to sell before I wanted as I had to pay a contractor for work on the house. Today, these options closed 157% higher than where I sold a mere five weeks ago. Unfreakin' believable! But I still have puts on Alcoa that did quite well today. Oh well.
Now here is the deal. I would assume that a Greece default is already baked in the cake on stock prices. It is not a big surprise as it has clearly been coming for over a year. I admit the fallout is what has folks disturbed and what that will be no one knows. We will see.
By the way, I have no doubt the EU will come in and save the day and not let Greece default - yet. Their banks have too much at stake and they are still in kicking the can mode. Greece will default, but probably not just yet.
Disclosures: none
Now I am really pissed off. Five weeks ago I had to sell some put options on AMR - you know the parent of American Airlines. I had these for like a year and they were up a bit but I had to sell before I wanted as I had to pay a contractor for work on the house. Today, these options closed 157% higher than where I sold a mere five weeks ago. Unfreakin' believable! But I still have puts on Alcoa that did quite well today. Oh well.
Now here is the deal. I would assume that a Greece default is already baked in the cake on stock prices. It is not a big surprise as it has clearly been coming for over a year. I admit the fallout is what has folks disturbed and what that will be no one knows. We will see.
By the way, I have no doubt the EU will come in and save the day and not let Greece default - yet. Their banks have too much at stake and they are still in kicking the can mode. Greece will default, but probably not just yet.
Disclosures: none
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