Giving away 12% of the revenue to pay off just 1 official (and there will be plenty of others as well)? No wonder this Winter Olympics costs 6 times more than Vancouver! [more]
Just wondering how America can unilaterally fine BP. Theoretically, BP is a British company, so what's the legal basis for the fines? Won't you need some international court whose jurisdiction is accepted by the US and UK governments?
Oh, these petroleum dollars: first, they are harmful to us, second, how can we get some more? Russia's nominal president earns the Idiot of the day award by complaining that petroleum dollars come too easily, which tends to make him lazy and lukewarm about development. It's true, but when your speeches expose you as a fool, the right thing is to keep silent. [more]
Instead of admitting their own incompetence, Lehman's managers continue to blame outside forces for their mistakes. They have already blamed Hank Paulson for not bailing them out and now they're accusing JP Morgan. The gist of the accusation? According to Lehman's logic, JPM was supposed to keep its assets in a bank they knew was likely to fold. Never mind that if JPM did that, it would be facing lawsuits from JPM shareholders and the shareholders would be right. This entirely spurious lawsuit is a proof that Lehman's managers haven't forgotten anything and haven't learned anything either. [more]
13 Trillion resistance level was broken today.
...then its debt-to-GDP ratio would be 78.7%, way lower than in the US. Of course logic won't matter as long as the US holds a monopoly on economic science. The 3 ratings agencies will make sure that Europe goes all the way down in spite of its better fiscal situation. Patient (with a thick European accent): "doc, maybe we can try reanimation?" Doctor (with a thick Washington accent): "patient, don't try to treat yourself. I said, to the mortuary".
...at $5 a share... [more]
At this point, the market could have a nasty surprise for the bears.
Red-thumbing PSQ, SJH, SJL, SFK, TWM, SDD, MZZ, DXD, QID, RWM, SBB, MYY, DOG, SKK.
Short-selling ban is the last refuge of a fool. It may force hedge funds to liquidate their shorts, but then the same hedge funds remain un-hedged and can't go long. The end result is deleveraging on both short and long side and spiking volatility that further scares away mom-and-pop retail investors.
It's time for Hegel's descendants to learn some dialectics!
And so the contagion in Europe is finally reaching the American heartland. As I kept telling people this past year, the US market is the only game in town. True, the returns have been lackluster, but going from 1100 to 1200 and then back to 1100 is nothing to blush about. Compare that with the bloodbath taken by the grass-is-greener crowd in markets like China and now in Europe. China is down 25%, and the Euro is rapidly going down toward the purchasing power parity (around 1.20) and looks set to drop much further. Suddenly, my 90 cent target for the Euro looks within reach. [more]
So no more loans to countries with debt-to-GDP ratio above 100%. And there is no denying the fact: for once, the US senate has made a prudent financial decision. I can only applaud this bill, but there is still one thing I'd like to understand. If the troubled nation in question is the US, whose debt is well on track to exceed its GDP in a couple of years, will Senator John Cornyn still want the IMF to reject its loan application? [more]
Oil doubles from its low of $35 in Q1 2009, and a petroleum economy that lives and dies by oil responds by growing 2.9%? If the doubling of revenues from oil, gas, and metals exports can't help this kleptocracy to get its economy to grow, then nothing else will. RSX to $10! [more]
Guess who is back? Dick Fuld! Some New York firm, apparently jealous of Lehman Brothers, decided to grab this precious asset. Today's idiocy contest has produced a clear winner. [more]
We don't want to strike but by Jingo, if we do, [more]
People are surprised that the Euro is falling but they should really be surprised that it managed to stay above $1.20 for so long. The purchasing parity is $1.20. There was no reason to overpay for euros last year just like there was no reason to overpay for dotcoms in 2000. Economically, Europe is expected to fare much worse than America and politically, it's turning into a Eurostan in a couple of decades. If anything, the power of foresight should have forced investors to bid BELOW parity during those Bush years. Right now, when the tide is finally turning, we are very likely to go past the equilibrium point and overshoot to the downside. [more]
S&P is still overvalued, but not as dramatically as last week, and looks set to retreat still further in the next few days. Objectively, America clearly benefits from the European crisis, which it probably instigated in the first place by instructing its rating agencies to downgrade European borrowers who were no more and no less insolvent that the US government (why investors ever pay attention to what these agencies have to say, is a separate and fascinating question). The benefits should translate into higher stock prices in the medium to long term. The reasonable valuation for S&P, currently at about 900, will be inching up over the next 3 years, and if nothing else happens, then by 2013 we'll be able to call the market fairly valued at the current price of 1100. The next two weeks should be extremely interesting. [more]
Why make such Herculean efforts to pay down the debt when there is a much more simple and painless solution? Sell the Acropolis to international investors. The Acropolis alone should fetch no less than $100 Billion based on the replacement cost analysis. Any bank in the world will be most happy to hold it on its balance sheet as an intangible asset. The Chinese, for one, would be most happy to spend some of their $2 Trillion cash hoard in that way. But then again, why sell when you can mortgage it? The Greeks could bring their deed to the Acropolis to any large bank such as JPM, open a HELOC line of credit, and live happily ever after. If at some point in time the Acropolis loses its market value, they would only have to tell JPM that an underperforming asset on its books is now JPM's problem so JPM would have to hire a new appraiser, change the appraising methodology, take a write-up on its investment, and continue to provide HELOC line of credit to Greece. Greece could live off of the Acropolis forever! And even if they are asked to pay back the loan some day, and fail to pay it, what the heck anyway? They cannot pay the debt now, so why not exchange one unperforming loan for another? [more]
Jimmy Cayne said to the Market: "sir, I exist". "However, - replied the market, - the fact does not create in me a sense of obligation". [more]
The Greek government is the real idiot these days, because it decided, without any reason whatsoever, that there was any need to pay back its loans. Mr. Papandreou should take his clue from the US government, which has borrowed almost $13 Trillion and has no intention to pay this money back.
An excellent post by TMFRedwood elucidates the fiat nature of gold. I thought the goldbugs were just fools, but they turned out to be fools to the second power! They pay $1165 to switch from one fiat system to another. And then one of the two things will happen. Either the fiat currency world does not come to an end, and they find themselves sitting on a heap of worthless metal. Or, if their dream of inflationary collapse eventually comes true, they will find themselves in the same position as Philip the Fair who famously had the Templars arrested for their gold, only to find the vaults empty. [more]