Dilbert and Other Stuff

Somehow, Dilbert still manages to remain tremendously on point.

First, from Barry Ritholtz's blog:

and then, from my friend, Bones:

As for the whole AIG debacle, the issue has certainly struck a chord in the media and the public , as it was widely covered yesterday and today. Clusterstock has a nice shot at Larry Summers, who, in classic two faced political style, trumpeted the sanctity of contracts (ie, AIG's bonus agreements), and how the government shouldn't meddle with them... unless of course it comes to mortgage cramdowns - because those contracts aren't really contracts in Larry's Land. One point I want to make is that it's ridiculous to play the "the government shouldn't be involved in altering contracts" card now - it's a little too late for that. I'm certainly in favor of the government keeping their paws out of private enterprise, but they are waist deep right now.

Another issue I wanted to highlight from last week was the second round in the verbal financial cold war between the US and China. China lobbed some dud missles at us last week:

“We have lent a huge amount of money to the United States,” Wen said at a press briefing in Beijing today. “I request the U.S. to maintain its good credit, to honor its promises and to guarantee the safety of China’s assets.”

“China is worried that the U.S. may solve its problems by printing money, which will stoke inflation,” said Zhao Qingming, a Beijing-based analyst at China Construction Bank Corp., the country’s second-biggest lender. “If the U.S. can make sure this won’t happen, then China will continue to invest.”

Hey man - whatever you want. As we said before, we'll have Hillary take a crap in as many boxes as you want and write "GUARANTEED" on them. I'm kinda shocked that China still doesn't seem to get it: there are three potential outcomes here:

1) they keep buying our debt until they finally realize they can't support the ponzi scheme and everything collapses.
2) we default on our debt
3) we print money to pay off our debt - this is the most likely scenario.

So, YES, Zhao Qingming - we're gonna print money to solve our problems - no matter what Hillary tells you.

Finally, I think Barry Ritholtz did an excellent job synthesizing a view I've been trying to enunciate for a while now, regarding the paradigm shift that bullish analysts seem to be missing:

"After watching Bernanke last night on 60 Minutes, I still believe he has it backwards. He started the interview expressing his thoughts that they first have to stabilize the financial system and then everything will be ok and a recovery will ensue and that once Wall Street is fixed, Main Street will follow. However, it’s Main Street that is the crux of the problem, they have too much debt and that’s leading to the lack of mortgage, credit card, etc… repayments. While the banks were ridiculously leveraged also, the banking system gets ‘fixed’ once consumers start paying their bills again. With the TALF trying to get banks lending again and other various gov’t steps, the gov’t is trying to put Humpty Dumpty back together again, the Humpty Dumpty that borrowed too much, spent too much and didn’t save enough."

I translate that additionally to mean that the problem isn't that banks aren't lending - it's that they've now adopted reasonable lending standards and we lack for qualified borrowers. We saw this same thing back in December with GMAC.

-KD