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starbucks4ever (98.82)

November 2008

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5

Surplus of inventories? We can help!

November 30, 2008 – Comments (2)

Have consumer goods to throw away? No problem!   [more]

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2

An interview with the Russian Buffet

November 28, 2008 – Comments (1)

Reuters has an interesting  piece about a Russian tycoon who is sitting in cash, gradually accumulating distressed assets. An must-read for the likes of LordZ who thinks Russia is a snow-covered tundra among which stands a solitary Kremlin tower where Medvedev is drinking vodka looking down on polar bears walking under his window.   [more]

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10

Obamanomics: what it means to you

November 27, 2008 – Comments (22)

Can we hyperinflate our way out of trouble? Yes we can.  [more]

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All right, I give up

November 26, 2008 – Comments (6)

Obama and Bernanke could not have signaled more clearly that we're going to have hyperinflation that will reward every "irresponsible" (read: smart) borrower, inflate all real assets and multiply all savings by zero. And in response to that, the rate on a 10-year bond drops another 9 points.   [more]

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4

A solution: financial education

November 24, 2008 – Comments (2)

I've seen some calls for introducing financial education in the school curriculum. If only everyone were educated, the thinking goes, we wouldn't have a bad debt problem now and the economy would smell of roses.  [more]

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Parasite survives, market crash is less certain

November 24, 2008 – Comments (1)

Citibank got better treatment than it deserved. As an institution that worked for years to deny affordable housing to buyers, it deserved nothing less than Ch 7 just like every other institution that provides mortgage loans. A collapse of Citibank would have been absolutely terrific because it would bring down many other banks as well, and - in the most optimistic case - help achieve the absolutely best possible outcome - a total collapse of the financial system and complete destruction of property values. Tragically, the government was not stupid enough to let that happen.   [more]

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3

The problem with roads and bridges and schools

November 23, 2008 – Comments (4)

The only problem with spending on roads and bridges and schools is that its marginal return is essentially zero. By and large, the roads are already passable for cars and trucks, so aside from some extra convenience, no new profits will be made. The bridges may not be in the best shape, but somehow I don't think they are collapsing tomorrow if we don't repair them today. And as for schools, they are already receiving more than adequate funding. True, they are churning out too many students who can't read and write, but it's not because of lack of funding. It's because they have too many students who never bother to open their textbook, and it's unclear how adding a new gym and swimming pool will change that. One can see how a biochemistry postdoc may fail to produce a good research work for the lack of expensive lab equipment, but one can't see how little Johnny is flunking his arithmetics for the lack of a modern computer lab. Because the whole arithmetics is explained in a children't book that costs $.99 which little Johnny never bothered to open. Of course spending more on schools always sounds good with voters because it's much easier to tell them that their local school is underfunded than to tell them the truth that their child is a dummy because his parents gave him the genes that are responsible for low IQ. In all other respects, there's nothing wrong with Obama's promises in the sense that one could come up with worse ideas. It's probably better to have workers repair bridges than to have them, for instance, cut down trees in Sequoia National Forest because W. thinks that's how you fight the greenhouse effect. The one part of Obama's proposal that makes sense was creating new jobs in green energy. He will certainly succeed in this. I quite believe this part of Obama's program becuase wind and solar companies have been increasing payrolls at a brisk pace, so all Obama has to do is to let things run their course and take the credit for it. I also have no doubt that Obama will be able to take the credit for 2.5 million new jobs by 2011 as he promised. By that time the population will have grown by some 7-8 million so anything better than 67% unemployment for the new workers should do the trick.  [more]

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Ficticious jobs disappearing

November 20, 2008 – Comments (0)

The question "why are we losing jobs" is badly put. The correct question is why we ever had these jobs in the first place.  [more]

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2

How will you know that we reached the bottom?

November 19, 2008 – Comments (4)

I know everybody has his own theory, so there'll be no harm if I suggest my personal indicator. Wait for the Fool to launch another newsletter. I predict this time their newest new special will be devoted to shorting. It will be touted as a special product for a select few investors (just like you), and it will invite you to take advantage of the shorting strategy that has produced such terrific returns over the last decade. It will be argued that on the average, bad stocks tend to go down, so you can always beat the market by picking the most overvalued stocks and applying the time-tested sell-and-hold strategyof Soros and others. That's when you'll know it's time to get back into the market.  [more]

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12

Bad is not good

November 19, 2008 – Comments (6)

Deej sees a silver lining in the drop in new housing starts because this process helps reduce what he thinks is an overproduction of houses. I don't see it as a good sign because I don't think we have an  overproduction of houses. We have an overproduction of houses priced above $500,000 and underproduction of affordable houses. The drop in housing starts is not a harbinger of recovery, but a sign of inability of the construction industry to produce what consumers need. The proper analogy to describe this process is the Soviet economy that can't figure out how to produce a 300 MHZ CPU for under $300 and instead complains about production difficulties, lack of silicon, stingy consumers, lack of funding, etc. while it proudly continues to manufacture the largest microchips in the world.  [more]

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6

Let's bail everybody out.

November 18, 2008 – Comments (1)

As they say in the classroom, let's go back to the condition of the problem.   [more]

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6

Salaries at GM: $78/hour

November 17, 2008 – Comments (10)

MarketBottom has an excellent comment to  jerryguru69's post about Detroit.  [more]

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Hank finds a new bubble to invest in

November 14, 2008 – Comments (0)

The derivative junk is out. Credit card debt, car loans and education loans are in. Hank Paulson has found a new, better way to waste 700 billion.  [more]

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7

blackmailing congress

November 12, 2008 – Comments (7)

"Advocates for the nation's automakers are warning that the collapse of the Big Three -- or even just General Motors -- could set off a catastrophic chain reaction in the economy, eliminating up to 3 million jobs and depriving governments of more than $150 billion in tax revenue. Industry supporters are offering such grim predictions as Congress weighs whether to bail out the nation's largest automakers, which are struggling to survive the steepest economic slide in decades. "  [more]

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What's wrong with automakers that they would need a bailout?

November 12, 2008 – Comments (0)

Yet another bailout, this time for Detroit. And yet another time, people asking for a bailout have conveniently forgotten about their assets while taking such pains to remind us about the liabilities they're facing.  [more]

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Great news from China: 586 bln to be withdrawn from US bonds to stimulate its economy

November 09, 2008 – Comments (1)

I'm quite happy about that decision. For one, infrastructure spending could mean higher commodity prices, which will give Bernanke some more problems, and more problems for Bernanke means less problems for the victims of his bubble-reinflationg policies. Secondly, it removes yet another big buyer from the US bond market.  They can't spend $586 billion and keep buying US bonds at the same time, and most likely, they will finally have to sell some of the bonds they already have. I can't wait to see the bond bubble burst, together with property values fueled by the bubble. Finally, it's the right decision for China itself. China still needs more investment in its infrastructure, and it makes a world of sense to make that investment now when domestic consumption needs a stimulus and construction materials are cheap. Even if those state-sponsored projects are not 100% efficient, it's a far better use of that $586 billion than lending them to Obama's bankrupt government, to be lost to hyperinflation, default, or both. And those of us who for whatever reason want some 10-year T-bonds in their portfolio (I wouldn't touch them right now, but if the price is right...maybe), may soon enjoy higher yields than the current pathetic 3.5-4%. Of course, it will be less fun for those who already hold this toxic paper, bought for 3% yield, but it will be a good lesson for them not to buy junk from subprime departments of the Treasury.
  [more]

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Is low minimum wage the problem?

November 02, 2008 – Comments (2)

Dwot thinks Vancuver's problem is low wages. Her rationale: there was a time when one salary bought you a place, and now it's obviously out of the question, egro, wages have become too low.  [more]

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