Saturday, February 28, 2009

Misean Institute Advanced Coures

Dean Counterpointer has been kind enough to add to the course load:

“Rob Dawg's Misean Institute 401

Term IV : Blackbelt Applications

1. CERN, Black Holes, and AIG. Implications.

2. Introduction to eTrading OFC strategies. Papers courtesy Mrkopolis.

3. Applied Tinfoil Techniques : Guest Presentation from Deepcapture.

4. Where the bloody hell are ya? A How To session with the Australian Dept of Immigration(Wall St and CT Emigration Unit).

5. Hero to Zero to Hero to Zero. The psychopathology of Gordon Brown.

6. You first! No, you! Probabalistic modeling of an Eastern Europe banking failure vs Southern Europe sovereign default.

7. Private Security : A Forward Defense and Investment Thesis.

8. Mathematics and Moral Bankruptcy : The Gaussian Cupola Function. Videoconference with David Li from federal pen.

9. Carbonized wheat-products : The Long Bond and the Immanence of Toast.

10. Civilization : Open Discussion of Prospects and Risks.

11. The Ancient Mariner : Captains of Idle Ships Debrief.

12. Term Paper : So, It Finally Happened. Get Your Hands Off Me You Damned Dirty Apes. Discuss.

The Curriculum Board reminds participants that content does not necessarily entail sound uptake, implementation, or success in future endeavours. Further investments do not guarantee future upside returns.

You have been warned.


Rob Dawg's Misean Institute

Update: The RDMI is pleased to announce the mid-term appointment of Professor Ivana Testalot as lab supervisor for all fieldwork.

Friday, February 27, 2009

Good News Finally

Expect lots more of this. A German company locating here for reasons of political stability, cheap energy, infrastructure, tax breaks, etc. - February 26, 2009
CLEVELAND, Tenn. (AP) — Wacker Chemie announced Thursday that it will build a $1 billion plant with 500 jobs in southeastern Tennessee to produce hyperpure polycrystalline silicon, a product used to make solar panels and semiconductors.
The Tennessee site was picked because of its size; proximity to a chlorine supplier, OLIN Corp.; power from the Tennessee Valley Authority and the transportation infrastructure, a company statement said.
Wacker Chemie is based in Munich, Germany, and is the second-largest producer of hyperpure polycrystalline silicon. It reported last month that its sales reached $5.5 billion in 2008.

In early December, Bradley County commissioners approved a $50 million incentives package for what they described as an unnamed international manufacturer that would create at least 500 jobs.

Hope wears a smile.

Sunday, February 22, 2009


Dark and quirky. A technical and visual tour de force. Coraline is not for children. The story is on par with the darkest of the original Grimm's fairy tales.

Friday, February 20, 2009

Tim & Bobby

Please tell me I'm not the first to see the resemblance.

Thursday, February 19, 2009

We Have A Budget

Yes, the petulant children have decided to pretend they have a budget but in reality they have merely tossed up a hail mary pass not actually scored the winning touchdown.
SacBee has one of the first stories.
As part of Maldonado's agreement, lawmakers approved constitutional amendments establishing an open primary system and banning legislative pay increases during deficit years. But legislative leaders refused to grant him his proposal to eliminate legislative pay altogether when the budget is late.

Leaders also agreed to Maldonado's demand to eliminate the 12-cent additional gas tax, which was estimated to bring in $2.1 billion through June 2010. The money will be replaced with a 0.25 percent increase in the state income tax, federal stimulus dollars and more than $600 million in line-item vetoes.

If I am adding this up correctly that puts the sales tax in LA County at 10%. Way to go fearless leaders.

AP has more:
The program cuts — some $15.1 billion, mostly to education — actually are higher than the proposed tax increases of $12 billion after Maldanado's last-minute changes. But many Republicans in the Legislature have signed a pledge against raising taxes and have decided to stick to it, even though they have not come up with a plan to close the entire deficit with cuts.
The tax hikes include an increase of 1 cent on the dollar in the state sales tax and a boost in vehicle licensing fees.
A 12-cent-a-gallon hike in the gasoline tax was removed along with a 5-percent income tax surcharge for taxpayers who owe money to the state at the end of 2009. Instead, lawmakers would impose a 0.25 percent income tax increase that would drop to 0.125 percent when California gets its expected share of money from the federal stimulus bill.

No mention yet when the voters get their say on the proposed increases in the sales tax.

Update2: The Central Valley Business Times has some of the sausage making details:
The logjam was breached with the votes of Sen. Abel Maldonado, R-Santa Maria, Sen. Roy Ashburn, R-Bakersfield and Sen. Dave. Cogdill, R-Modesto.
Mr. Cogdill had helped negotiate the complex deal and for his troubles was ousted by fellow Republicans as minority leader 24 hours earlier.
Mr. Maldonado was the swing vote in exchange for some of his pet ideas.
For his vote, Mr. Ashburn won approval for a state tax credit of up to $10,000 over three years for buyers of new homes.
To gain the support of Sen. Lou Correa, D-Santa Ana, who had threatened to be the lone Democrat holdout and thus kill the budget deal, Orange County will get $35 million more in tax revenue every year.

We are still screwed.

The LATimes proves once again how marginalized the press has become with this gem:
In an unusually strong statement, Mary D.Nichols, the chairman of the state's Air Resources Board and an appointee of Gov. Arnold Schwarzenegger, said, "There are people who will die because of this delay. ... It is sad in an era where most people understand that strong environmental standards actually help California's economy as well as public health. ... Anti-tax zealots were able to force a weakening of our anti-diesel pollution standards as the price of a balanced budget."

I hold this as a possible ray of sunshine on a smoggy day. Perhaps the State will be forced to roll back its draconian global warming initatives to save its business sector.

Wednesday, February 18, 2009

Corning Understands

Mike Thaman (Corning): "Obviously there is never a more expensive time to own a home as when prices are falling."

Amen brother Mike. His only shortcoming is that Kramer likes him.

Predailian Update

First, the pea sized hail was great. No damage and delighted offspring.

This one is for "w" who asked about my new neighbors in their 10,000 sf home. That's them in the corner.

Ramirez Nails It

Micheal Ramiriez is cartoonist for IBD. Fools rush in...

I hope she put down a towel. ;-)

Tuesday, February 17, 2009

Theme Song for Timmay

Who can take a mandate, sprinkle it with crap
Cover it with sub'sidies and a liquidity trap
The Timmay Man, oh the Timmay Man can
The Timmay Man can 'cause he mixes it with hope and makes the dollar seem safe

Who can take a bridge loan, wrap it in a TARP
Soak it in the Fed and play the taxpayer like a harp
The Timmay Man, the Timmay Man can
The Timmay Man can 'cause he pushes an agenda that makes the markets feel good

The Timmay Man says everything he speaks is satisfying and delicious
Now you talk about your entitlement wishes, you can even eat the dishes

Oh, who can take tomorrow's revenue, spend all now
Separate the sorrow and collect up all the bows
The Timmay Man, oh the Timmay Man can
The Timmay Man can 'cause he does what he's told to keep the world intact

a-Candy Man, a-Candy Man, a-Candy Man
Candy Man, a-Candy Man, a-Candy Man
Candy Man, a-Candy Man, a-Candy Man

Monday, February 16, 2009

Centimeter Hail

Cool. Global warming reigns. Centimeter hail coming down as we speak. Pics soon. Until then yesterday's photo of the poor Red Tailed Hawk in the rain.

Saturday, February 14, 2009

Little Dubai

Seems the Simon Property Group's expansion to the Camarillo Premium Outlet Mall is getting closer. With about 8 weeks they've leased 23 of 45 storefronts:

Neiman Marcus Last Call, Aldo, Charlotte Russe, Columbia Sportswear Company, Converse, Crocs, DC Shoes, Ecco, Esprit, Etnies, Journeys, Karen Kane, Le Creuset, Loft Outlet, Michael Brandon, New Balance, Papaya, Rack Room Shoes, Robert Wayne Footwear, Skechers, Tommy Bahama, Vans and Zumiez.

Okay, I'm an old fuddy duddy. I haven't heard of half of these. It will be interesting to see how the other half gets leased. I just don't see how an Esprit can survive what must be crushing overhead.

Friday, February 13, 2009

Darwin is being cheated

The Obama Administration has tossed out another vaporware product to stem the great rebalancing. I just wish they'd act more like Apple and less like Microsoft. Timmay blew his last Tuesday "plan real soon now, and gee is it keen!" speech so this time Leader O himself will take to the podium. AP has the story.
WASHINGTON (AP) — JPMorgan Chase & Co. and Citigroup Inc. are expanding their efforts to halt home foreclosures while the Obama administration develops its plans to help the U.S. housing market.
JPMorgan Chief Executive Jamie Dimon said the New York company plans to halt new foreclosures for owner-occupied home loans through March 6. Dimon made the pledge in a letter to Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee, who released it on Friday.
"This moratorium replicates the 90-day foreclosure freeze we announced on Oct. 31," Dimon wrote. "We believe three weeks is adequate time for the Treasury to announce — and for us to implement — a new plan."

Devolution will not be denied. Anybody with two brain cells and a synapse knows this is a save the bondholders delaying tactic.

Thursday, February 12, 2009

She Stole My Idea!

SacBee reports on a bando scam:
The real estate agent implicated in an alleged scheme to rent out a home she had no legal right to was booked into the Sacramento County Jail this morning on criminal trespass charges, jail booking records show.
Powers and three others have been sought since Tuesday, when police issued trespass warrants in what they said was a "cash for keys" scheme in which the home was rented out to a couple about two weeks ago. Police believe the tenants and Powers, as well as the fourth suspect, are all related and had hoped to elicit a payment from the bank that owns the home in exchange for moving out.

I predicted this long ago but reiterated the concept when I found out recently Countrywide was offering up to $5000 to vacate. Just another moral hazard of changing the rules.

Records x2

Two records to report.

First and most important; Camarillo recorded a new record low of 33ºF yesterday breaking the old record of 36ºF. The kittehs (Gordy and Knuckles) wanted nothing to do with the outside this morning. This is particularly amazing given the significance of recent urbanization increasing the UHI effect. Details of the recent and impending weather at Wunderground. For new evidence of UHI see the recent Watts Up With That post.

Oh, yeah. The "other" record. CNN reports home prices fell at a record pace and amount:
NEW YORK ( -- Home prices fell 12.4% during the fourth quarter of 2008, the largest year-over-year decline since the National Association of Realtors began keeping comprehensive records in 1979.

New term; "Effective Mortgage". For years, more than a decade my home was appreciating at more the $12/hr. Every hour. Every day. Every month. Every year. For more than a decade.
La de da. Freakin' good for me. I must be a RE genius. Since then? $20/hour in equity evaporation. I must be an FB. I still have a net expense about 1/2 what a more modest rental living space would cost. But that's just me. The other 80% are staring at monthly expenditures more akin to owning a boat than a house.

This is also why "cheap" houses are the only ones selling. People are no longer including an investment component in their decisions. Anything above shelter needs is now a wild ass bet on long odds.

Wednesday, February 11, 2009

Fishnet Thursday

Stockings as allegory for the economy. Threadbare and worn but still holding together and full of interesting stuff.

Break In the Weather

White Ledge Peak, Carpenteria, CA.

Nordoff Peak, Wheeler Hot Springs, CA.

Chief Peak (to right) Upper Ojai, CA.

Yes, this is what I stare at all day long from my office.

Tuesday, February 10, 2009

Freeze! It's the bank!

Police said they believe the incident is part of a "cash for keys" scam in which the renters planned to stay in the bank-owned home until they received a payment from the bank in exchange for moving out.

The home was empty this morning, except for a few personal belongings and landscaping tools.

Being sought on criminal trespass charges are Phillis Powers, a real estate agent who police say rented the house out without legal authority to do so; Carver Barney, his wife Sandra, and her brother Dennis Eugene. Police believe the four suspects are related: Sandra Barney and Dennis Eugene are thought to be Powers' siblings. Police said Eugene has an outstanding warrant involving another matter, but provided no details this morning.

The raid on the home disrupted a peaceful neighborhood that is home to several influential Sacramentans, including members of the Maloof family, who own the Sacramento Kings, and Sacramento State President Alexander Gonzalez.

Read the rest at the SacBee.

James Bulger Strikes Again

Shasta Lake teachers hit $76 million lottery jackpot
SHASTA LAKE - A group of 15 teachers and administrators at Shasta Lake School, who've been playing the state lottery together for seven years, picked the winning numbers for a $76 million SuperLotto Plus jackpot that was drawn on Saturday.

IMO they've won the lottery every week for two decades.

Hothouse Politics

"Better never than late." - Rob Dawg on climate change legislation.

As you may have noticed lately the Congress and Federal government in general have been having a quiet period with not much happening to take up their attention. To address that dearth of pertinent events in need of their beneficence Ed Markey, chairman of the House energy and environment subcommittee has taken the lead.

From the FT:
Mr Markey said the debate in Congress was no longer focused on whether to pass climate change legislation but on how much to spend on it. His committee’s goal is to complete legislation by Memorial Day so it can go to the House floor.

“We know the G8 and the rest of the world is waiting for the United States to stop being the laggard and be the leader,” Mr Markey told CERA, a week-long energy conference that began on Monday. “There are potentially catastrophic consequences for the planet if we do not act.’’

Mr Markley said that neither the government or the private sector has invested enough in combating greenhouse gas emissions.

“The tools to solve these problems, in many instances, have not been invented yet,’’ Mr Markey said.

He urged Congress to set market-driven policies to give energy companies certainty and opportunities to participate in the “revolution” about to take place around climate change. He likened it to the developments that took place in telecommunications sector.

Where to begin? First, the US has been a leader. The rest of the world is fast adopting our positions vice AGW. Second, the entire AGW scheme is collapsing. Third, don't they have something better to do?

I'm getting tired of all this extraConstitutional meddling.

Pole Dancing

Despite the attempts of the Federal Reserve to drive such borrowing costs lower by purchasing home loans, average mortgage rates have risen from 5.04 per cent on January 13 to 5.51 per cent last Friday.

This from the FT. You know things are bad when the Rethugians are falling over themselves to out demon the Demoncrats. For instance:
The mortgage subsidy plan was a centrepiece of the Republicans’ proposal for an alternative stimulus to the versions pushed by the White House and congressional Democrats. The proposal would in essence cap mortgage rates at 4-4.5 per cent and would, its proponents say, help to stabilise house prices and hence prevent the downward spiral of falling asset values, bankrupt households and troubled lenders.

Sad. And the cracks re starting to show. Colusa County has decided that since State Treasurer Chiang is delaying payments to counties they will equally delay payments to the State. LA County is also considering the same. There was a bomb threat at a mall in Boise. Boise of all places. An thn there's Denniger:
Now let me explain what is almost certain to happen if you are foolish enough to let Taxcheat Timmy pull this garbage.

See, these assets really are trash. Yeah, right now they are kicking off cash flow. For now. But they're impaired and while their coupon will pay for a while they will ultimately default on their face value and recovery is pennies (and in the case of synthetics, zero) when they do.

So what happens here is that you provide 95% non-recourse financing. Sir Hedge Fund buys a buttload of this garbage having only 5-10% of the face at risk, and that's all they need to put up as well, since the government is going to provide the financing - as a "no recourse" loan (presumably very cheaply.) They get a 6-7% coupon which means that in one year they're covered, and in two they're making money like a madman, up 200% or more on their original risk capital.

100% annual returns with government guarantees. What's not to like?

Monday, February 09, 2009

A Tree Grows in Chi-town

ACORN. We've heard this before. Only difference is the $4.1 billion price tag. I don't need to explain where that "stimulus" goes. Other than that, SOP:
$50 million for the National Endowment for the Arts
$380 million in the Senate bill for the Women, Infants and Children program
$300 million for grants to combat violence against women
$2 billion for federal child-care block grants
$6 billion for university building projects
$15 billion for boosting Pell Grant college scholarships
$4 billion for job-training programs, including $1.2 billion for “youths” up to the age of 24
$1 billion for community-development block grants
$4.2 billion for “neighborhood stabilization activities”
$650 million for digital-TV coupons; $90 million to educate “vulnerable populations”

This is more and more looking like Christa McAuliffe pushing all the buttons.

Sunday, February 08, 2009

If it weren't so serious this would have devolved in farce long ago. Finally a little detail on the chickens panicking in Washington. Excerpts from the New York Times:
Wall Street helped produce the global financial and economic crisis. Now, as the Obama administration prepares to unveil a revised bailout plan for the banking system, policy makers hope Wall Street can be part of the solution.

Administration officials said the plan, to be announced Tuesday, was likely to depend in part on the willingness of private investors other than banks — like hedge funds, private equity funds and perhaps even insurance companies — to buy the contaminating assets that wiped out the capital of many banks.

OMFG moment. HEDGE FUNDS? What are they thinking? They want to introduce more leverage and debt?

The officials say they are counting on the profit motive to create a market for those assets. The government would guarantee a floor value, officials say, as a way to overcome investors’ reluctance to buy them.

Spine chills galore. "A way to overcome reluctance?" What, gold plate the turds?

Details of the new plan, which were still being worked out during the weekend, are sketchy. And they are likely to remain so even after Treasury Secretary Timothy F. Geithner announces the plan on Tuesday.

Ahhh the announce that they will have a plan soon plan.

But the aim is to reduce the need for immediate federal financing and relieve fears that taxpayers will pay excessive prices if the government takes over risky securities. The banks created those securities when credit and home prices were booming a few years ago.

No, those securities created an environment of loose credit and house price inflation.

Besides devising a way to bring private investors into the bank bailout, the Treasury plan is expected to inject more capital into some banks and to give many homeowners relief from immediate foreclosures.

The worse keeps getting worser. Which of those are good ideas? Which in any way addresses the supposed problems?

It also is expected to increase financing for a Bush administration program intended to encourage investors to finance such things as student loans and credit card debt.

Student loans? Paid back with high paying jobs starting in the next few years?

The Treasury Department had intended to unveil the plan on Monday. But on Sunday Mr. Obama’s economic advisers said they would wait another day, to keep the focus on winning Senate approval of an economic stimulus program. Mr. Obama plans to promote the stimulus package in a televised news conference Monday night.

Let me translate. The Senate would balk if the details were known.

...After it turned out that the banks were in even worse shape than thought, the Bush administration decided it was more important to invest directly in the banks.

Well gee, shock surprise. It didn't work but this time for sure. Thus the accompanying graphic.

It was also unclear how the assets would be valued, raising political questions about whether the purchase prices would be fair both to the banks and to the taxpayers. But as those assets have remained on the banks’ balance sheets, they have continued to decline in value, producing more multibillion dollar losses.

And this stops the decline in value how? A "floor" is only risk limiting not value setting.

The securities are complex and hard to evaluate, and there is little public information about precisely which assets are owned by each bank. And some prospective purchasers say banks are not making many available for sale, or have refused to accept the prices being offered.

Another admission they are just guessing.

Cognitive Dissonance

Dissonance and consonance are relations among cognitions that is, among opinions, beliefs, knowledge of the environment, and knowledge of one's own actions and feelings. Two opinions, or beliefs, or items of knowledge are dissonant with each other if they do not fit together; that is, if they are inconsistent, or if, considering only the particular two items, one does not follow from the other.
1. One may try to change one or more of the beliefs, opinions, or behaviors involved in the dissonance;
2. One may try to acquire new information or beliefs that will increase the existing consonance and thus cause the total dissonance to be reduced; or,
3. One may try to forget or reduce the importance of those cognitions that are in a dissonant relationship (Festinger 1956: 25-26).

Today's mutually exclusive ideations come from the people selling this white elephant in Camarillo, CA. Everyone knows the true story of white elephants right? Not just useless but so much less than useless that the owner could openly flaunt the waste. Check out this description:
Truly one-of-a-kind large estate with three levels. This 8100+ sq. Ft. Gated Mediterranean Villa has it all. 7 Bedrooms 9 Bath, Theater Room, Private Office, formal Dining Room and Living Room, Oversized Family Room with Fireplace and Media Center. Huge Kitchen with Viking Stove. Built-in Espresso Maker. Massive Master Suite with Fireplace and Balcony. Spectacular Bathroom with His and Hers Sinks Jacuzzi Tub and Steam/Shower. Front-Entry has large Double Wrought Iron Doors with Bubble Glass. Beautiful Foyer with 25 foot Ceiling and Massive Motorize Chandelier that can be lowered. Five balconies, Custom Wood floors, Travertine and Tufted Carpeting. Hand Carved Built-in Cabinets, Central Vacuum, 3 Air-Conditioning Units, Walk-in Safe, Fire Sprinkler System. Exquisitely Decorated. Circular Driveway with Breezeway. Pebbled Bottom Pool and Spa. Covered Patio with Stamped Concrerte. Wrought Iron fence around pool. Horse Property. 4.6 acres This Home is Priced Millions Below Replacement Cost.

That last is worth repeating: "This Home is Priced Millions Below Replacement Cost."

Okay. Let's imagine Mr & Mrs Elephant Owner having a conversation.
"Honey, there's an idea forming in my head. The houses in the neighborhood have come down so much in price and ours has gone up so much we can rightsize our home and get rid of that pesky mortgage." "Oh honey, that's great. What do you think we can get?" "let's not get greedy and instead price for a quick sale:"

Jan 29, 2009 Listed $3,390,000 -- VCRDS #90001747
Apr 29, 2004 Sold $2,450,000 44.1%/yr
Nov 30, 2001 Sold $1,015,000 -2.1%/yr
Oct 15, 1991 Sold $1,259,027 --

And what does zillow that unreasonably sunny zestimator think? $1,863,500.

Update, the Popcorn Machine and an explanation:

About 5 years this home was used as the "Design House" a charitable event where designers show their stuff in individual rooms. The home theatre had that popcorn machine as a prop and the owners obviously decided to keep it.

Saturday, February 07, 2009

Late Night Raw Meat

Bloomberg: Feb. 7 -- Advanced economies are already in a "depression" and the financial crisis may deepen unless the banking system is fixed, International Monetary Fund Managing Director Dominique Strauss-Kahn said.

“The worst cannot be ruled out,” Strauss-Kahn said in Kuala Lumpur, where he was attending a gathering of central bankers from Southeast Asia. “There’s a lot of downside risk.”

That's downside from here.

Signs of Implosion

What? There haven't been any signs before?!? No, not really. No circuit breakers in the markets, no home builder major bankruptcies, no domestic violence. The declines everywhere have been orderly for the most part. Don't mistake rapid for chaotic. Frankly I'm a bit amazed and worried that some things have held together this long. So what did I find? Nothing but a little old house. Actually a medium large new house.

9077 Goldenrod Ct
Hesperia, CA 92344
Price: $130,000

That's $59/sf and a bit off it's high sales price of $379,000 Jun '06. Short Sale. Beautiful new "turn key ready" home built in 2004. Huge kitchen with island and dual glazed windows to keep the house cool in the summer & warm in the winter. Laundry room is located upstairs for convenience and his & hers sink in master bedroom. Great family home in a beautiful neighborhood.

Now most likely this is some sort of come-on trying for a bidding war or perhaps just a Realitter® fishing expedition for clients knowing there's no chance of approval for this price but consider that 2/3rds off is what it takes to even get potential buyers' attention. The Antelope Valley real estate market is officially broken. I tried to get a Redfin map of REOs for this area and got an error of too many to display. Here's what it looks like zoomed up:

Looks like a lot of house for sale? No, that's just the REOs. Like I said broken.

Use it and lose it

Credit Card use continues to collapse.

The Federal Reserve issues a comprehensive report called G19 every month. It ain't very interesting unless you know what to look for. Much like yesterday's discussion of the equally information heavy EIA inventories the G19 is screaming "pull up, pull up!" The trillions in liquidity injection has had a negative effect on the 68% of the economy that is consumer consumption. And why not? Look at the 2% jump in new car auto loan rates in December. Reminds me of the old Irish joke.

Paddy: "Shawn, Shawn, I'm afraid this is it. I am at death's door and I have last request. When I'm gone pour this bottle of 40 year old Irish whiskey over me grave."

Shawn: "Of course old friend, anything but I have a question. Diya mind if I strain it through me kidney's first?"

And that's what we are getting, liquidity strained through the bankster's kidney's.

More on the multiplier effects of collapsing consumer credit later but for now ponder the fact that perhaps as much as half of decline isn't credit being paid down but written off by the banks.

Friday, February 06, 2009

$1500 New Auto Credit

Oh goodie. Straight from the taxpayer's pocketbook to the GMAC black hole. Let's be clear what the Senate is trying to do. They are trying to get consumers to take on more debt. This is a microcosm of their whole game plan. Time for someone to talk about the emperors clothes. Every single proposal from the smallest to the grandest ultimately involves some form of additional debt. This has to fail. It doesn't matter how many Nobel wanna bes make powerpoint and blog posts. The flaw is not inside the bounds of their thinking.

Okay, what is the practical effect of a $1500 new auto discount? Just the biggest unintended consequence imaginable. Every used car in the nation is now worth that much less. Used prices are tied to new. There are a whole lot more used vehicles than new. Instant deflation and another kick to the spiral.
-- National Fuel is reporting a loss for the quarter of $42.7 million or $0.53 per share. The loss is due to the previously announced $108.2 million (after tax), non-cash impairment charge to write down the book value of its oil and natural gas producing properties as a result of significantly lower commodity prices at December 31, 2008.

Ouch. Imagine that, losing money selling natural gas and petroleum products. Could be worse. You could be ""banking" on the expected future price of your products:

-- The Company is revising its GAAP earnings guidance range for fiscal 2009 to a range of $1.10 to $1.30 per share. This guidance includes the impairment charge ($1.35 per share) noted above, and assumes flat NYMEX equivalent pricing of $5.50 per MMBtu for natural gas and $45.00 per Bbl for crude oil for unhedged production for the remainder of the fiscal year.

NatGas $4.726 and Oil $41.32. And how have they done these last two years?

It reads like petroleum double down.

Everyone enjoy the long expected, overdue bear market head fake. This is the end on my 8200 attractor. 7900 will be the new neighborhood until next big drop.

By request:

Big Bad Voodoo Bonds

The moment has passed. This is the 10 year. Anybody glad they bought those 2.14159%s as a deflation hedge? What is the NPV of a Dec '18 2.1% in a 4% world? About $85. Ouch.

California took another ratings hit today. Still a long way to go and the States' lenders still have no clue. The Sacramento line is that debt always gets paid first. The Treasurer was just on the financial entertainment network saying exactly that. He even went so far as to say bondholders get paid before medical treatment for children. Anybody want to take the over on how long that bet lasts?

Thursday, February 05, 2009

Chart Patterns

I like look at pretty charts but if Citi and BAc have taught us anything charts are not investing tools. That said are there any chartists out there? Does this not look like a manufactured textbook example of head and shoulders to zero?

Hitting the House ATM

I was wondering about the people presently entering into preforeclosure. Using tax rolls, last sale date and loan amount I was able to uncover the following examples from nearby Somis:

SOMIS, CA 93066
Assessed Value $436406
Loan Amount $780000
Loan Date 10/13/2005

SOMIS, CA 93066
Assessed Value $227304
Loan Amount $584000
Loan Date 09/08/2006

SOMIS, CA 93066
Assessed Value $361192
Loan Amount $750000
Loan Date 12/20/2005

We need a new term for this behavior. As the Fed chart indicates lots of this equity extraction went right back into the property bubble. These people doubled down on a losing margin position and now it's margin call time. These poor loosers effectively re-bought their own properties at the top of the market.

Tuesday, February 03, 2009


Sometimes stuff happens. One kind of stuff is inexcusable like forgetting wagga's birthday. Cheers mate. Sorry. I may be buying a Volvo this week if that helps at all.

Sometimes you get pleasantly surprised. TJ of the long time "bear and comrade" fame, infamous blogger and long time reader/lurker called to say hello. Big shout out there TJ.

Sometimes it is a small world. At Jim the Realtor's 50 bday par-tah it was "small world" time. A fellow blogger sent their kid to a summer camp where I was a lifeguard a long time ago. And ChrisG 'bout fell over when he found out the supposedly normal guy he was talking to was really not so normal, he was me! Jim the (Really Old) Realtor didn't even try to cover up the cement scratches from where the minivan went into his pool.

Anyway. This morning Mrs. Dawg and I were on our morning "constitutional" and walked past a new candidate for leverage university senior project failure. We went a little further, 3.8 miles and in a less common direction and thus discovered what we'll call "The Bookends." Two houses, one street, two delinquencies, one owner. First up:
1925 Ramona

A $870k loan from the tippy toppy Oct 2005. Borrowers; Garry J & Christie J.

Next up the other end:
1324 Ramona

At least they bought after the peak, a whole 8 weeks later grabbing a sweet $682,500 mortgage on a house they paid $1,183,200 to buy. Currently for sale. $825k.

So read here and learn the darkside of the property ladder.