Wow. What an excellent day! [more]
Amazement, incredulity, rapture - how else can I describe my feelings?
This is absolutely amazing, guys. Of course it's only a small setback for our corporate communism, but I could hardly expect even that much. At the very least, we've just got one parasite off our neck.
Congratulations to all believers in the free market: [more]
Strangely enough, Hank Bailout Paulson is still getting some degree of support from Caps members. "But if we don't do it, the sky will fall and..." (here goes the sound byte: we'll have recession, depression, famine, civil war, the commies will come and steal our precious bodily fluids- pick your favorite line). [more]
Once a customer walked into a bank and asked for a mortgage loan. The banker handed him a stated income form, on which the customer wrote "2.7 trillion dollars a year". Then the banker handed the customer an application form, which asked what kind of mortgage the applicant needed. The customer checked the "Other" box and wrote: "fixed-rate, zero-down-payment, 10-year mortgage loan at 3.7% for 11 trillion dollars". The banker laughed and showed the customer the door. [more]
Now, I will ignore the news of Buffet's investment in Goldman (I think it convinced me to hold on to 1 share of BRK-B forever and to buy into tomorrow's rally), because there is nothing much to say. I had a feeling that something like that was coming (in fact, GS was on my buying list, but I procrastinated, letting Warren get ahead of me), but it's only in hindsight does it seem to me like yet another Buffett classic (even better than his legendary purchase of Coke). I think it's safe to buy DJIA calls now. But back to the matter. [more]
Economists see financial bailout as necessary, financial sites assure us. What are their arguments? [more]
The latest blatant manipulation of stock prices was fully expected, but it still stank to high heaven. There are several things that were wrong with it, but most importantly, it was a shameless robbery of stock buyers. There is a loser on one end of every transaction, but until Hankie ordered prices to stop dropping, one could at least argue (provideded he still retained some vestiges of idealism after the latest series of bailouts and government-sponsored takeovers) that it was fair play for everyone (well, mostly). The victims of this latest round of social planning? The younger generation that is trying to follow the advice of wise men from the Fool and accumulate a stock portfolio that would complement a handout from the crumbling Social Security. Now 10% of their purchasing power is gone within 2 days. If you had a 401K contribution scheduled for this Friday, congratulations! It just bought you 10% less units than it would have under free market conditions. Georgie, Bennie, Hankie, and Co. just made you overpay for the stocks that sellers would be happy to let you have at Wednesday's prices. To call a spade a spade, they just stole one tenth of your contribution. And provided the effect sticks (otherwise, why start the whole thing, right?), this will diminish the purchasing power of all your future contributions as well. Thanks very much, Hankie, may I fund another bailout? [more]
If the industry pundits are right, LEH should make the world a better place tomorrow morning by going belly up. They were a major player in the financial bubble that made dirt cost like gold, taking cheap houses off the market and cheating millions of first-time homebuyers out of hundreds of thousands of dollars. Luckily, in a final act of poetic justice they swallowed some of the rat poison they were peddling to others, and got a taste of their own medicine. I am happy for the LEH employees who will get the pink slip tomorrow. Hopefully, some of them have ARM mortgages to pay and will contribute to the foreclosure inventory. And let's hope they face a tough labor market. [more]
Now that the free market is celebrating another triumph as FNM and FRE are being "taken over" by the government, I will ask one naive question. What if (suppose for the argument's sake) the shareholders (an unthinkable assumption, right?) don't intend to sell the companies to the government? As far as we know, Fannie and Freddie were not in bankruptcy as of Friday. And moreover, they did not announce bankruptcy either on Saturday or on Sunday. If I read the corporate law correctly, this should mean that both companies were still owned by their shareholders, is that right? So how come this private property suddenly winds up in the government's hands without a shareholder vote, and ligit owners still don't know how much they sold their company for? We thought such things happen only in Russia, right? Oh yeah, I forgot about Venezuela... [more]
As a net buyer of stocks during the next 4 years, I have a vested interest in cheap valuations. But cheap valuations are hard to come by. Especially when a president is smart and his efforts to enrich his Wall Street buddies are well thought-out and efficient. No big mistakes are being made, every blunder gets quickly recognized and correctred, the banking system functions like a Swiss clock, and S&P is one big bubble of gigantic proportions. That's what we had under Clinton - a totally unassailable stock market fortress that never offered a good entry point. [more]