Friday, January 30, 2009

The Fix Is Out

I'm still real rough on the economics flying around right now, so I'm hoping that writing it down will help it make sense to me. Forgive me if you already know all this.

First we have the deflationary cycle hitting us. In the past we would have inflation where we wake up and, although our money might be worth less, the amount on our home loan has magically gone down as well. With deflation the amount of our home loan stays the same, but we take a pay cut (oh, and the house is worth less too). This came about since the drastic contraction of the credit markets has sopped cash out of the system, leading to less cash chasing more goods and services (for example, how much do you have to pay the many of the millions of unemployed at the moment to get them to show up for work? Much less than you would have a year ago!)

The fix the Fed is trying to implement is 'quantitative easing', a phrase that I hadn't heard until the current debacle (or can't remember, it's been nearly twenty years since econ 101). Quantitative easing is just a really fancy phrase for 'printing money'. The only issue is that the markets have contracted so much that there really isn't a mechanism to patch our deflation with printed inflation. The way I understand it, since all of our currency is 'loaned' into the system (either via banks through the Fed, or the Fed purchasing treasuries ), that there's no way the Fed could just set up a booth where you could just go pick yourself up a bundle of newly printed benjamins. It's worth pointing out that quantitative easing didn't get rid of Japan's deflation either.

Then we have the bond market for treasuries which so far are rather hushed by my completely uneducated measure. The yield on the ten year treasury has drifted up a little (i.e., investors are just mildly interested in the possibility of being paid back); but the Treasury had no issue selling two year treasuries this week (have fun refinancing those in two years Uncle Sam, you sure as hell aren't going to get a 0% loan then!). But a fix of sorts is in the work here too.

From what I've read it would be a bad thing if the Fed itself bought up all the treasuries at a price it felt like paying instead of the market price; it would essentially be a government price fixing scheme. As well, since so many loans are based on the market rate for treasuries, what remains of the credit markets would get torpedoed since there would be no way to tell what the 'honest' rate for government debt is, since it would be completely made up by 'Uncle' Ben Bernake and 'TurboTax' Tim Geithner. What the Fed has been doing though is printing cash for insolvent financial institutions and having them buy treasuries. Using this method, the Fed still gets to price fix to a limited extent by artificially driving up demand (the banks aren't given a choice as to what to buy) and the insolvent banks (which are still insolvent) get a hard asset on their books in the form of Federal Government Debt.

But what are those treasuries actually worth as a 'hard asset'? Probably less than they were acquired for. So even though the insolvent banks were loaned money from the Fed at a 0.0% interest rate to buy the government debt, they're still on the hook for the yield differentials on the bonds since they would almost certainly have to sell them for less than what they bought them for (and if Congress/Obama has their way, remarkably less).

So we have banks that they're trying to save that shouldn't (and probably can't) be saved, billions that won't be paid back going to people who don't deserve it, and Congress ready to go even further into debt (if possible) so that some of their cronies can get jobs in printing posters to encourage condom use or some such crap. With all that, Karl Denninger politely points out that there's still a non-zero possibility of the whole circus going belly up.

All that blabber sets up the video below. No it is not me, amazingly enough, but the language is kind of salty:



*I've based and stole most of my conclusions from Karl Denninger's Market Ticker site and Mike Shedlock's Global Economic Trend Analysis site. Some hat tipping goes to the commentators over at the Market Watch site as well.

Thursday, January 29, 2009

Corn Silk Tea


This was a binge purchase when I was at the Asian grocer last. It's a corn silk tea manufactured by a Japanese-Korean conglomerate. I figured it would have a mild corn flavor, but as usual I found I was wrong when on first taste I got a dose of overpowering corn soppings*.

I know on the odd occasion when I go to the movies I might get too small a bag of popcorn and I'll find myself chewing on half popped kernels. If it's a particularly long film I will then find myself mindlessly gnawing on wholly unpopped kernels. If someone made a drink out of those unpopped kernels, this would be it.

It's not bad per se, but it's not good; more like a curiosity that probably shouldn't exist. Given that the manufacturer doesn't own up to making it, I guess they agree.


*A Google search for this beverage turned up a cottage industry for the sale and manufacture of corn silk teas as I guess it has some unknown holistic value (i.e. none). Seeing as how that stuff was rather pricey, I feel that I should point out that this drink was a whopping 79 cents down at the Asian grocer, that is, if you're into drinks that taste like popcorn-junkie urine.

Wednesday, January 28, 2009

Ace Reporting

Part of the reason the country has as many issues as it does is because of generalized incompetence within our press corps(e). Case in point, Larry Margasak, Associated Press Writer, writing about bankruptcy based mortgage renegotiations:
The bankruptcy solution would not cost taxpayers money, as would mortgage modification programs that could become part of the government's huge economic bailout package.
The first claim, that the loan cramdowns won't cost taxpayers any money, is just delusional given the amount of bailouts. The second part, that a government bailout won't cost taxpayers any money, would require logic that has been tortured to an other-wordly degree.

Glossed over in the article is the fact that the law that is being pushed will make a house loan just another form of barely secured debt, similar to an auto loan. Given the chance of taking a bath on such a large loan, the home market will only lock up further when lenders up interest rates and tighten up loan qualifiers. Investors might be willing to go out on a limb with a loan for $5,000 of unsecured credit card debt; not so much with a 30 year, $200,000 home loan.

Tuesday, January 27, 2009

Wind Powered

I can't get enough of this vid:

The video doesn't really have anything to do with the drawbacks to wind power which include it being an expensive, inefficient, bird/bat extermination scheme.

Friday, January 23, 2009

That's What It Is...

MarketWatch commentator LBX comments under an article on the impending doom of bad credit card debt that will send the rats scurrying to the Federal trough for a bailout of their own:
Capitalism, it is called.

Visit the capital and collect.

Thursday, January 22, 2009

Oscar of Grouches

The Academy Awards are officially useless (as if they weren't earlier). No best picture nomination for Dark Knight.

Wednesday, January 21, 2009

Made in America

Here:
A Japanese worker was severely injured Wednesday by a World War II bomb in Okinawa, which witnessed the Pacific war's fiercest battle nearly 64 years ago, officials said.

Jun Kohagura, 25, was working on an underground water pipe on the subtropical island when the bomb went off, seriously injuring him in the face.

I couldn't decide between that bit, or this story about plant companions (which are not made in America), but stories about Japanese loneliness are just too depressing.

That Joke Isn't Funny Anymore

I remember when I lived down in Cincinnati and we would have that rare winter event where we would get back to back snow storms and it would stay cold for a couple days to keep it all from melting. That was pretty cool, until I got to Cleveland and got to experience it for an entire month (at least) every year, without fail.


Check my blog, every year it's the same crap. Down in Cincy we'd fantasize that we'd get one decent snow during the winter. In Cleveland we worry that it might not end, that God will forget to turn the heat lamp back on and that we'll freeze in place.

This is my limit, I certainly couldn't live further north where the entire month of January is zero degrees and they get one warm month a year (August 2nd-27th).

Surprise JPOP Attack

The Case Western station played a J-POP tune this morning, specifically this one (but I'll warn you that while the tune is good, the vid is every bit as unwatchable as you might imagine):

Monday, January 19, 2009

What's wrong with this picture?

From Cleveland.com:
BURGLARY, WEST 131ST STREET: Shortly before midnight Friday, someone with a $1,900 LCD TV and a food stamp card was victimized by a burglar at a house in the 3300 block of West 131st. The TV and food stamp card were stolen, along with some medication.

Thursday, January 15, 2009

C&C

I've never been a huge fave of the Command and Conquer series*, but the artwork they have out on their site for the latest edition is pretty nice!


I wish more politicians had this attitude (toward everyone equally); their do-goodery will be the death of us all.


What game can go wrong with saucy babes with firearms?


A note on the site said this was the preliminary box art and that the final product might not look like it. Don't mess with success is what I say!

*I burned out on RTS's about 70% of the way through Starcraft. I just can't get back into them.

Tuesday, January 13, 2009

Inauguration

Using the power of MS Word, I slapped my thoughts together and laid the gooey mess down in 'comic' form:

Sunday, January 11, 2009

Investments

I have a modest amount of money in a 401K that's growing steadily more modest and I've been pondering a plan of action. I know I mentioned buying gold coins and whatnot, but that's just a hedge against losing everything as declining demand for commodities will probably offset any inflationary hedges. It's irrelevant anyway since the IRS keeps 401K money locked away from such things.

Our company's 401K plan managers made their yearly pitch with the typical "can't predict peaks/troughs" bits; but what if the trough is still well off and there's still time to save something by tucking the cash in safer plans? With American leaders set to follow the failed Japanese post bubble plan, it seems like playing the 'bear' will be a strategy that will pay off for ten or more years. From Karl Denninger:
Please tell me this is a joke. Obama really believes that The Fed can hold interest rates at zero for four years and they can spend without bound, while the bond market will blithely look on at $1-2 trillion deficits annually and the economy will begin to recover?
...
This plan is asinine in that if it "works" the flight out of Treasury debt that occurs with a recovering economy will guarantee rising rates (and thus torpedo the budget and government through radically increased borrowing costs) while if it fails we will have spent the money that is going to be necessary for that direct assistance to Americans.

I've seen stupid come out of our government before, but this takes the cake; it is, in fact, a "can't win" proposal.
That post, and this one where he predicts that a depression (a 10% market contraction) will hit this year leave me more pessimistic than ever. Of course every recession has it's cheerleaders who claim that the day of judgement is nigh, but this time it would seem that there are too many fundamentals to be ignored.

Monday, January 05, 2009

If Elites Care...

The Guardian notes (thanks Drudge):
Obama has remained wholly silent during the Gaza crisis. His aides say he is following established protocol that the US has only one president at a time. Hillary Clinton, his designated secretary of state, and Joe Biden, the vice-president-elect and foreign policy expert, have also been uncharacteristically taciturn on the subject.
Actually, it would be reassuring if Obama was like most of the rest of America and he just flat out doesn't give a crap about the 'Gaza crisis'. It's only a crisis in the small minds of the idiots that care to be our elites.

Friday, January 02, 2009

Commie Comics

Japan, ever ready to read stuff in pictorial form, has a new love:
TOKYO – Just in time for Christmas, Karl Marx is finding a new audience among Japanese comic book fans.

The manga edition of his masterpiece, "Das Kapital," hit Japanese bookstores this month and sold about 6,000 copies in its first few days, said Yusuke Maruo of EastPress Co.

"I think people are looking to Marx for answers to the problems with the capitalist society," Maruo said. "Obviously, the recent global crisis suggests that the system isn't working properly."
As opposed to the system Marx advocated that generated more death and refugees than anything before in the history of mankind.

Although, I do have to wonder to what 'system' Mr. Maruo is referring. The current scam being run has little in common with vanilla capitalism, and Japan in particular runs a game that has much more in common with Marx's theories than Adam Smith's.