The World of a Blogger

I was looking around for something of interest to post and not a lot of much interest. Sure Obama announced mortgage support that has my head swimming on how it might work. For it to work you need to get the message to those that qualify that they should apply and I consider that unlikely. I know from experience that the government is expert at creating programs that are incapable of being understood by those that would benefit, so unless some support system pops up to help them, it will be useless.

And I read other snippets here and there today but nothing too spectacular. Admittedly, after some of the incredible economic happenings of the past year, it takes a lot to get ones attention. News that two years ago would have been front page news is now (yawn) boring. And so I have decided to go a bit off agenda for tonight and talk about my experience (all these three or so months) as a blogger.

Initially, there was a lot of trepidation. Do I know enough to blog (no); do I know my links to be right (no); do I have topics that interest people (not always); do I think what I am saying will add to the equation (probably not); can I take negative comments (yes); can I take positive comments (definitely yes); am I opening myself up to being sued (I hope not). All this and more obsesses your thinking when you blog.

And then you deal with the comments. Some positive, some negative, some ignorant, some just seeking attention, but some very informative - to me and others, which is most appreciated.

The blog, if you want to do it right, also carries a fair amount of responsibility. You want to provide timely, accurate and interesting posts. You want to have posts daily if possible because it you skip a day or two some people may stop coming back. Believe me, there is a noticeable change in hits between when you have had a few consecutive good posts and when you have not. People forget you fast. Keeping up with the comments and occasionally responding is also a responsibility. Good questions deserve a response.

Overall, I must say my blogging experience has to date been a rewarding one. I have experienced a world I did not know and am learning a lot. It has brought me exposure to new worlds, made me a contributor to a major financial site and gotten me quoted by some I respect. Not a bad few months.

I will try to improve upon this in coming months. I am reading up on the topics upon which I blog and looking forward to hopefully posting better, more informative blogs going forward. To those that have followed me, thank you. To the rest, well thank you as well. (There are a few to which this thank you does not apply and you know who you are.)

And a special shout out to Chris and Cody, my biggest supports. You guys have been very much appreciated.

Disclosures: None.

A Nice - Well Thought Out - Plan

WaPo has an article on how the just announced "Plan" from Geithner & Co. was changed at the last minute from what had been planned for weeks. They apparently realized late in the day that what they were planning on proposing was too expensive, too risky and too politically unacceptable. Wow, I thought that of the Plan they did announce, so I guess we got lucky. I am not feeling so lucky, but it is all relative.

http://krugman.blogs.nytimes.com/2009/02/17/the-geithner-delay/

Off to a bit of a rough start, but with any luck (okay - a lot of luck) they will figure it out on the run. Do they really have any other choice? Do we really have any other choice? Afraid not.

And obviously you cannot please all the people all the time. Just when half of us are complaining about spending too much on the Plan (and the structure of it), the other half are complaining it is not enough. Greenspan is in the latter half, so I feel much more secure in being in the first. Greenspan thinks we need to spend more on TARP as banks will not start lending until they feel comfortable with their capital. Guess what, they won't start lending until they feel comfortable that the crap on their books is stabilized, which is a long way off. They also will not start lending until they have a belief those they are lending to will be around to pay it off. This is not just about liquidty. It is also about trusting what is on someone else's books.

http://www.bloomberg.com/apps/news?pid=20601087&sid=a1VL7sNIBt9g&refer=home

Overall, I still think the Plan is the wrong approach at the wrong time (or any time). You have heard me rant enough about that, however, so I will spare you this time. I will point to an excellent post by John Hempton at Bronte Capital. The good news is that he looks at the banks in the U.S. and under "most" definitions of insolvency considers them by-and-large solvent. The bad news is that they failed by some tests and, moreover, he does not like the Geithner Plan, or the lack of a plan therein. And if you live in the U.K. he does not look so favorably on their solvency. Now I am not sure he is properly considering what impact U.K. banks folding (being nationalized -or nationalised) will have on U.S. banks ,or what a spiraling down world economy will mean to them either, but he is giving this situation some nice studied thought. His plan on how to "stress test" the banks is creative. I like it. It will never be adopted, but I like it. He may be right that nationalizing banks is not a plan so much as a recognition that no plan is working. I do agree it should only be done with those that we determine are insolvent, by at least some means, but I think it needs to be done to some. Right now, no plan is working and constantly shifting plans is getting us nowhere.

http://brontecapital.blogspot.com/2009/02/bank-solvency-and-geithner-plan.html

What I also will point out is that it looks like doubts about the Plan, either based on its structure, its size, the news that it changed at the last minute or otherwise are not helping the markets. Indeed, not much was out there today to help the markets. In the U.S. they returned to a three month low and in Japan, well they seem to be at a roughly 25 year low on the Topix index. It could be worse and in Japan it is.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aWVkxlKnYCzQ&refer=home

http://www.bloomberg.com/apps/news?pid=20601087&sid=aEIKhsCHNmMA&refer=home

Some of the market depression is undoubtedly tied to mounting concerns over Eastern European banks. I noted some here on that the other day. Moody's announcing some possible ratings downgrades for banks with subsidiaries or units in certain suspect countries there cannot be helping.

I could go on about the GM and Chrysler plans, but there is a lot out there about these, so you do not need me to deliver more bad news on this. I noted recently that I believe the markets are about to break through price supports and reach a new trading range; I am still there and we are almost there.

Disclosures: None.

Japan's Lost Decade (or two or three or four . . . )

Not much comment here, just passing it on for folks to read. Japan is in a world of hurt - still. I do not have the link at the moment but I read yesterday that Japan focused on stability more than economic recovery. If people have food, housing and other basics, society can survive. Perhaps survival needs to be the focus at the moment.

http://www.calculatedriskblog.com/2009/02/japans-economy-shrinks-sharply.html

Obama - Please Wake Up

Every day I have more doubts about Obama and what he is doing. Occassionally he will do something brilliant, like getting Paul Volcker on his financial team, but then he does something stupid, like putting Geithner and Summers in charge, allowing them to basically push Volcker aside. Now in another bone-headed move, he is consolidating even more power with Geithner and Summers. Yves does a good job of explaining the situation at Naked Capitalism. This is not going well . . .

http://www.nakedcapitalism.com/2009/02/geithner-and-summers-consolidating.html

Disclosures: None

Obama's (shhhh!) Secret Plan

A bit of wishful thinking on my part, but I think that Obama may have a secret plan. Let's just say that we as a people had a "culture" that allowed us to nationalize banks. If we were going to do it, how could the government announce this as its plan without destroying the remaining stock value of most, if not all, financial institutions, including those that should survive and are not being nationalized? Answer - it cannot do so. Accordingly, we need to devise a way to stealthy go into the banks, review their books carefully to determine those to take down and then - all at once - announce those being nationalized and those being supported as private institutions. Now the Geithner announced plan includes a "stress test" for banks over $100 billion, i.e. the top 14, so it will allow the government to do this review for the big boys, and for the rest we need not bother - the FDIC will take care of them in due course.

http://krugman.blogs.nytimes.com/2009/02/11/obama-on-nationalization/

Doing the nationalization all at once should hopefully avoid stigmitizing the remaining viable institutions (if done properly it could give them a boost) and should allow us to put this chapter behind us and get on with or out of this recession/depression. Anyway, I can have a dream.

Meanwhile, either Obama is not the President I hoped he would be or he is just keeping his true plans under wraps and plans on giving us a big surprise. It could happen, but I doubt it. He could not properly do this without Congressional support and there is no way Congress could keep a secret. At the end of the day, that may be a major problem with nationalization; it cannot be structured in a fashion that it can all be done at once and doing so any other way just leads to more doubts and problems.

Disclosures: None

Been There, Said That

More nationalization talk summarized nicely at Calculated Risk.

http://www.calculatedriskblog.com/2009/02/growing-chorus-for-nationalization.html

Not Lookin' Pretty

Just a short post this morning. I just saw this from Ambrose Evans-Pritchard of the Telegraph and wanted to pass it on. Ambrose is known for being a bit over the top in his doom-and-gloom ranting (I know you are thinking I am the pot calling the kettle black), but even accounting for his slant, this looks pretty bad. We thought we had a bad mess on this side of the pond, but things in the US are just rosy compared to Eastern Europe. A major mess is brewing. I am sticking with my Depression call.

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/4623525/Failure-to-save-East-Europe-will-lead-to-worldwide-meltdown.html