Monday, July 28, 2008
Friday, July 25, 2008
Tuesday, July 22, 2008
New Wearable Feedbags Let Americans Eat More, Move Less
Continuing my Wall Street commentary; Jim Cramer had some comments on the whole (ridiculous) short seller conspiracy today in the NY Times. Cramer is generally a die hard bull, and he definitely knows how the trading markets work. Although ignoramuses will misread Cramer's piece as another rant against short sellers who destroy companies, don't miss the most important point from Cramer is his closing line:
Tuesday, July 15, 2008
So let’s see now. Mortgage lenders make tens of thousands, if not millions, of subprime loans to people who don’t have the ability to pay the money back. Wall Street institutions then buy the loans and package them into complex derivative securities, while the rating agencies give them triple-A ratings, which we now know that they knew amounted to a ticking time bomb. (E-mail will get you every time.) Then when it all goes to hell in a handbasket, who do they blame? Why, short-sellers of course!
The most amazing part is that the Securities and Exchange Commission seems to be buying the argument, with the announcement that it will conduct an investigation into supposed rumor-mongering by hedge funds and short-sellers. Of course there was rumor-mongering by hedge funds and short-sellers — the big financial companies haven’t exactly been model of openness as they’ve had to write off billions in bad loans, and nobody knows how bad it’s ultimately going to be. All we — and they — can do is guess. But just as the commodities speculators are being blamed for $140-a-barrel oil — whether real problem is the lack of an energy policy — so now are short-sellers are being blamed for the problems Wall Street inflicted on itself.
Why isn’t the government investigating, say, Franklin Raines, the former chief executive of Fannie Mae, whose quest for rapid growth, and a higher stock price, had a lot more to do with Fannie’s current precarious state than anything any short-seller could possibly do?
So what does the SEC do? They pass an "emergency rule" - that ALREADY EXISTS!
“S.E.C. Chairman Christopher Cox said at a Senate Banking Committee hearing that the Securities and Exchange Commission would institute an emergency order requiring any traders to pre-borrow stock before shorting Fannie Mae and Freddie Mac, the embattled government-sponsored entities that own more than half the nation’s mortgages.” (Wall Street Journal news alert)
Too bad no one pointed out at the hearing that short-sellers already pre-borrow stock before shorting anything, not just Fannie and Freddie. And if they don’t, that’s called naked short-selling, and it’s against the law. (Just ask Patrick Byrne.) So why the emergency order? Oh, right. Because this is about chasing bogeymen, not getting to the root of any real problem.
We don't like the speculators BUYING assets and driving the prices up.... We don't like the short sellers SELLING assets and driving the prices down!!! What the fuck are we supposed to do!?!??! Look, I'm certainly not in favor of the deliberate spread of misinformation in order to manipulate stock prices - but that's not the definition of short selling.
Nocera is clearly as frustrated as I am with the blame game going on - from predatory lenders, to speculators, to short sellers - we keep trying to shift the blame, which is not going to solve the problem. I am especially troubled by this SEC "emergency rule" because they already passed such a rule several years ago! It's unlikely that this new "emergency rule" will be have any more impact than Reg SHO, which prohibits naked short selling (quick tutorial: when you short a stock, you basically try to sell high and buy low - the opposite of the normal buy low then sell high pattern. The catch is that you have to "borrow" the shares that you sell from someone - then you sell them, you hope the stock goes down, you buy it back, and you return it to the person you borrowed it from - who is no worse for wear. Naked short selling is when people sell stock they haven't borrowed, and it's already illegal except in very specific cases. Nocera's reference to Patrick Byrne is a great story of the OSTK CEO who claimed that short sellers were destroying his company.)
“The Fed is asking for more power. But the Fed has proven they can not be trusted with the power they have. They get it wrong, do not use it, or stretch it further than it was ever supposed to go. As I said a moment ago, their monetary policy is a leading cause of the mess we are in…"
“Now the Fed wants to be the systemic risk regulator. But the Fed is the systemic risk. Giving the Fed more power is like giving the neighborhood kid who broke your window playing baseball in the street a bigger bat and thinking that will fix the problem. I am not going to go along with that and will use all my powers as a Senator to stop any new powers going to the Fed."
“Instead, we should give them less to do so they can do it right, either by taking away their monetary policy responsibility or by requiring them to focus only on inflation…"
“Let me say a few words about the GSE bailout plan. When I picked up my newspaper yesterday, I thought I woke up in France. But no, it turns out socialism is alive and well in America. The Treasury Secretary is asking for a blank check to buy as much Fannie and Freddie debt or equity as he wants. The Fed’s purchase of Bear Stearns’ assets was amateur socialism compared to this.” (emphasis mine)
Way to go Mr. Bunning - taking a hard line instead of cow-towing to your constituents and trying to placate them with soothing lies and witch-hunts for speculators, short sellers and predatory lenders.
We'll see how this all plays out...
Wednesday, July 09, 2008
Ok folks, now here's the truth: most airlines didn't do what they were supposed to do - which is to hedge their fuel costs by locking in prices (buying futures) in the oil futures market. Southwest, on the other hand, hedged the majority of their costs, and is doing well comparatively. The airline industry as a whole made some poor business decisions and they are begging for you to try to help blame their way out of it by complaining to congress, and labeling speculators as the Evil Doers.Our country is facing a possible sharp economic downturn because of skyrocketing oil and fuel prices, but by pulling together, we can all do something to help now.
For airlines, ultra-expensive fuel means thousands of lost jobs and severe reductions in air service to both large and small communities. To the broader economy, oil prices mean slower activity and widespread economic pain. This pain can be alleviated, and that is why we are
taking the extraordinary step of writing this joint letter to our customers.
Since high oil prices are partly a response to normal market forces, the nation needs to focus on increased energy supplies and conservation. However, there is another side to this story because normal market forces are being dangerously amplified by poorly regulated market speculation.
Twenty years ago, 21 percent of oil contracts were purchased by speculators who trade oil on paper with no intention of ever taking delivery. Today, oil speculators purchase 66 percent of all oil futures contracts, and that reflects just the transactions that are known. Speculators buy up large amounts of oil and then sell it to each other again and again. A barrel of oil may trade 20-plus times before it is delivered and used; the price goes up with each trade and consumers pick up the final tab. Some market experts estimate that current prices reflect as much as $30 to $60 per barrel in unnecessary speculative costs.
Over seventy years ago, Congress established regulations to control excessive, largely unchecked market speculation and manipulation. However, over the past two decades, these regulatory limits have been weakened or removed. We believe that restoring and enforcing these limits, along with several other modest measures, will provide more disclosure, transparency and sound market oversight. Together, these reforms will help cool the over-heated
oil market and permit the economy to prosper.
The nation needs to pull together to reform the oil markets and solve this growing problem.
We need your help. Get more information and contact Congress by visiting www.StopOilSpeculationNow.com.
Since then the airline has hedged 70% to 80% of its anticipated fuel use every year, more than any other airline. The airline said it saved $727 million last year by locking in lower fuel prices in prior years.
So far, the carrier hasn’t had a year when it lost money on fuel hedges." (quote from the LA Times)
Sunday, July 06, 2008
<Bloodninja> Wanna cyber?
<MommyMelissa> Sure, you into vegetables?
<Bloodninja> What like gardening an shit?
<MommyMelissa> Yeah, something like that.
<Bloodninja> Nuthin turns me on more, check this out
<Bloodninja> You bend over to harvest your radishes.
<MommyMelissa> is that it?
<Bloodninja> You water your tomato patch.
<Bloodninja> Are you ready for my fresh produce?
<MommyMelissa> I was thinking of like, sexual acts INVOLVING vegetables... Can you make it a little more sexy for me?
<Bloodninja> I touch you on your lettuce, you massage my spinach... Sexily.
<Bloodninja> I ride your buttocks, like they were amber waves of grains.
<MommyMelissa> Grain doesn't really turn me on... I was thinking more along the lines of carrots and zucchinis.
<Bloodninja> my zucchinis carresses your carrots.
<Bloodninja> Damn baby your right, this shit is HOT.
<Bloodninja> My turnips listen for the soft cry of your love. My insides turn to celery as I unleash my warm and sticky cauliflower of love.
<MommyMelissa> What the fuck is this madlibs? I'm outta here.
<Bloodninja> Yah, well I already unleashed my cauliflower, all over your olives, and up in your eyes. Now you can't see. Bitch.