NOVEMBER 26, 2008

Peter Ackerman and John Vogelstein - Restore TARP to Its Original  The authors in the Washington Post reprise the argument for the "good bank/bad bank" structure. I am getting to the point where I can believe that is a good idea. The aspect of the proposal that is most appealing is that it is easy to understand. That is a very valuable commodity today.

 

(posted at 7:17 pm by Mike Rulle)

 

 

Now Inside Edition is interviewing the Turkey Farmer in the MSNBC Sarah Palin Turkey Slaughter video-- KTUU 2008 Sarah Palin turkey interview. These people are truly funny, although they seem to not be all that aware of it. The video has had over 2 million hits on YouTube. The farmer, Brian Tomes told Inside Edition "The only thing I can say is, 'Don't mess with my Governor!'"

 

(posted at 7:03 pm by Mike Rulle)

 

 

Maybe I just see what I want to see and disregard the rest. But every week or so I go onto the  Trulia real estate website. It is a great source of information and is updated weekly with a 2-3 week delay. I recommend it highly. Today I wanted to see how home sales are doing in various areas of the country. I try to pick cities just randomly (very hard by the way, there is always a method). But I looked at LA, SF, Dallas, Phoenix, Bakersfield, Sacramento, Atlanta, Miami, Hoboken, Morristown (NJ), Bayville (NJ), and probably a few more. Everyone of them is experiencing numbers of sales well off the bottom (at lower prices than the highs of course--but remember the dictum "for every loser there is a winner"---buyers "win" at lower prices). Cities like Phoenix are 70% off the lows and Bakersfield, California (ground zero for real estate) has sales at all time highs. If this is the worst economy since the great depression, why is this happening?

 

(posted at 6:50 pm by Mike Rulle)

 

 

An interesting website, Abnormal Returns, posts great articles of the day. He notices that Slate's economic section has an article stating that volatility is up and day traders are back.  (The Big Money). For all of us who got very sick of this kind of talk back during the tech bubble this is good news. Not so much the "volatility is up" part, but the "day traders are back" part. Even an empty glass can get filled with water one drop at a time.

 

(posted at 6:23 pm by Mike Rulle)

 

 

I like this fellow's view better than Martin Wolf's (see below). He has a more unencumbered view of the world. Frankly, this is the way I want to think and may in fact come around completely to this point of view. Said another way, I see no reason this cannot be true. But highly regarded Societe Generale strategist James Montier Has ‘Never Been More Bullish’ on Stocks .Now, granted, it sounds like he is reading from some mechanical chart. But he does say his analysis is a "bottoms up" (or company by company) approach. We can either call him a leader or a fool. I hope he is the former.

 

(posted at 6:06 pm by Mike Rulle)

 

 

As evidence that none of us, least of all the media, has a clue as to what the so-called financial crisis is about, I present Financial Times columnist Martin Wolf as Exhibit A. In his article titled  Why fairly valued stock markets are an opportunity he leads off by saying there is good news and bad news. The good news is in the title. The bad news is "that the world economy is teetering on the brink of what may well be the most damaging slowdown since the second world war. Policymakers around the world - particularly in the inordinately complacent surplus countries - do not begin to understand what this may mean". It is a sign of the times that his mind does not feel any cognitive dissonance when asserting two completely opposing ideas as simultaneously true.

 

(posted at 5:55pm by Mike Rulle)

 

 

After the election Karl Rove noted that the leading candidate for president in the Republican party will be partially a function of who can support candidates in their election bids. The Atlanta Constitution notes that Sarah Palin will be campaigning for Saxby Chambliss in the Georgia Senate runoff. Palin Georgia-bound for Chambliss Mitt Romney and Mike Huckabee will also be campaigning. I guess we know who is interested in the nomination. 

 

(posted at 5:32 pm by Mike Rulle)

Too many rich US farmers get subsidies: GAO. Duh. When I first saw this article, I was yet again amazed at more evidence that Obama is a follower of Hayek instead of Alinsky. But Greg Mankiw points out that the Obama plan will simply result in breaking up large efficient Farms into smaller ones. If Obama really wants to address the subsidy problem (or welfare problem) of farmers, he needs to eliminate all subsidies.

(posted at 9:55 am by Mike Rulle)

In his commentary, A Theory of Financial Panic Kling makes the point that the bailout was intended to free up capital by the mechanism of insuring against extreme risks. I need to read this more carefully, but the Paulson plan intellectually was intended to lower the amount of capital being posted by financial entities for unlikely events. In other words, the market was charging itself too much for insurance against low probability events. To me, this is just another way of saying that Paulson was trying to restore "confidence" in the system. As I have stated elsewhere, this is circular reasoning. Ultimately, confidence in an economic system is an act of faith.

(posted at 9:42 am by Mike Rulle)

Yesterday I asked in a post for someone to explain why the Federal Reserve is buying mortgage backed securities and direct agency debt. Well, it turns out Arnold Kling provides an answer Do I Get a Prize?. Apparently, most of the debt is already guaranteed by the Government so it really is the definition of pure arbitrage. (Imagine if you could buy back your mortgage and issue another one at 1% lower rates). The answer, while good, still does not get at the larger question as to why we are de facto imposing price controls on debt, rather than letting the market sort it out. It is going to have to sort it out some day.

(posted at 9:30 am by Mike Rulle)

Thomas Sowell takes a crack at the dangers of the mini-obsession with "CEO pay" in his retelling of the Russian Fable Ivan and Boris Again. Ivan is jealous of Boris because Boris has a goat. His lucky day comes however when a genie arrives to make any wish he has come true. Ivan wishes for Boris' goat to die. It is funny because it is so true. I cringe every time I see a company announce it's senior executives will receive no bonuses this year. To me, it is political pandering. If they think that will make people not wish for their goat to die, they will be disappointed.

(posted at 9:08 am by Mike Rulle)

 

A vaguely perceived irony is the Obama transition. I actually do not know what to expect from him. David Harsanyi discusses this in Maybe It Is a Time .If all one knew about Obama is what you have seen in the last 3 weeks one might think of him as a "New Democrat", , the old 1990's centrist faction of the Democratic Party. Yet just 8 months ago he ran to the left of Hillary Clinton as a McGovernite. How does one reconcile these two ideologies? More to the point, how does the sappy media not point at this obvious absurdity with a critical eye? Instead of an opportunist Obama becomes politically savvy, Lincoln and FDR all rolled into one. It is as if the entire "Intelligentsia" is in on the joke. It really is pathetic.

(posted at 9:00 am by Mike Rulle)

Brent Bozell over at TownHall brings up one of my favorite "memes": Liberalism = Genius?. It is amusing. My favorite is this exchange between Robin Roberts and George Stephanopoulus on ABC."Some would say it's a team of rivals, a la President Lincoln, or is a better comparison a team of geniuses as FDR did?" George Stephanopoulos unsurprisingly agreed: "We have not seen this kind of combination of star power and brain power and political muscle this early in a cabinet in our lifetimes." Doesn't one have to be a genius to be able to identify a genius? Maybe not, but you get the idea.

(posted at 8:35 am by Mike Rulle)