Friday, October 31, 2008

Dear Jackson Free Press & FOLO



If you want to bash Sarah Palin, this is how you do it.

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Sound Familiar?

"I have never worked harder in my life but I cannot give the tax cuts I promised during the campaign."

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DWF: Warning

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Thursday, October 30, 2008

Someone Explain This To Me

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Question for Jim Hood

When are you going to prosecute the Seale Case?

Better yet, when is The Jackson Free Press going to demand you prosecute James Seale? One would think as much time and effort as it spent trying to bring him to justice, the JFP would be outraged by your failure to do anything regarding the murders of Henry Dee and Charles Moore. I hope its not because Mr. Hood prosecuted Melton and is the only statewide elected official who is a Democrat.

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PUMA: Ghost Army in Mississippi?

From the PUMA (Hillary-promoting) website:
"You thought we’ve forgotten, ey? Not at all. During the Mississippi Democratic Primaries, Barack Obama won 265,502 votes in Mississippi, an amount equal to 61.2% of the total votes cast. Hillary came in a very distant second with 36.7% of the vote, the other candidates split the difference.
Well, when something seems too good to be true, it usually is, and reports coming out of the state provide us with the following
ultra-amazing information...."
http://www.puma08.com/2008/10/28/how-a-ghost-army-delivered-mississippi-to-barack-obama-in-the-primaries/

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TED Spread Has Improved Some but Shipping Still Slowing


TED Spread has improved somewhat in the last two weeks. Bloomberg: "Yields indicate banks are more willing to lend than they were two weeks ago. The difference between what they and the Treasury pay to borrow money for three months, the so-called TED spread, narrowed to 2.68 percentage points from a high of 4.64 percent Oct. 10."

Translation: Credit markets have thawed a little in the last two weeks. TED Spread Ticker on Bloomberg.

Unfortunately, international shipping is still slowing down to the the widespread disappearance of letters of credit:
"Suppliers of oil, coal, grains and consumer products from Chicago to Mumbai are losing sales as the credit crisis spreads beyond financial institutions, and banks refuse financing or increase the fees for buyers. Coupled with declining demand, the credit squeeze is threatening international trade, one of the lone bright spots in the global economy.
``It's like standing on a beach watching a tsunami, knowing that it's coming,'' said Scott Stevenson, manager of the
International Finance Corp.'s Global Trade Finance Program. IFC is the World Bank's private lending arm.
Emerging markets such as Brazil, Vietnam and South Africa are particularly vulnerable because buyers have more trouble proving their financial strength. The slowdown is also damaging the U.S., the world's largest economy, where exports accounted for almost two-thirds of the 2.1 percent growth in gross domestic product in the 12 months through June, according to the U.S. Trade Representative's office
. .." Shipping Continues To Fall


Note: TED Spread is difference between interest rates on 3 month T bills and LIBOR. Closer LIBOR rate is to T-Bill rate, the more fluid the credit markets are. A corresponding rise in the TED Spread means interbank lending, and thus the credit markets, are tightening.

Earlier posts on international trade & shipping crisis:
Update on Shipping Slowdown
http://kingfish1935.blogspot.com/search?q=letters+of+credithttp://kingfish1935.blogspot.com/2008/10/update-on-trade-slowdown.html
http://kingfish1935.blogspot.com/2008/10/bloomberg-letters-of-credit-frozen.html
http://kingfish1935.blogspot.com/2008/10/more-news-about-grain-piling-up-in.html
http://kingfish1935.blogspot.com/2008/10/international-trade-shutting-down.html

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Greatness.

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Time for a Break

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We Are Now Propping Up Mexico and Brazil

We really ARE the banker for the world. Bloomberg reported today, "The Federal Reserve agreed to provide $30 billion each to the central banks of Brazil, Mexico, South Korea and Singapore, expanding its effort to unfreeze money markets to emerging nations for the first time. ...." Fed Gives billions to Brazil, Mexico, S. Korea & Singapore

Leading finance blogger "Mish" Shedlock calls this move by the fed "complete silliness".
The Silliness Continues

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Trustmark Releases Earnings Statements

From what I've read so far, they are in much better shape than most banks in Mississippi.
https://investor.shareholder.com/trustmark/releasedetail.cfm?ReleaseID=343533

Other Mississippi Banks 3rd Quarter Earnings Statements:

Cadence Financial Corp:
http://www.snl.com/irweblinkx/file.aspx?IID=1018635&FID=6893752

BancorpSouth:
http://www.snl.com/irweblinkx/file.aspx?IID=100163&FID=6852086

Citizens Bank of Philadelphia:
http://www.thecitizensbankphila.com/site/about.html

Click Here to Read More..

Mish: No Surprise Banks Aren't Using Bailout Money To Lend

Leading finance blogger "Mish" Shedlock writes there is no "conspiracy" by the banks to hoard cash instead of lending money as alleged by the New York Times:

'Stop the nonsense. There is no conspiracy between Paulson and the Banks. Paulson and Bernanke want banks to lend, but the ridiculous policies of the Fed and the Treasury make it difficult for banks to do so, especially in the current economic backdrop....
Indeed, each of Bernanke's vast array of lending facilities is causing an unwanted side effect somewhere else.Perhaps banks would have been willing to lend to GE, but not at the same rate as the Fed's Commercial Paper Funding Facility. And by competing against the banks it wants to lend, the Fed is guaranteeing it will be the lender of only resort.That is just one reason not to lend. Here are more: (see link for list).....
Indeed, there are 6 different facilities by which the Fed can lend to damn near anyone it wants, while accepting whatever collateral it wants......
The economic constraints and poor policy decisions by the Fed and Treasury make mergers a better alternative than lending money or sitting in cash......"http://globaleconomicanalysis.blogspot.com/2008/10/ny-times-lending-conspiracy-madness.html

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Wednesday, October 29, 2008

International Shipping Update: Still Slowing

Financial Times chirps up about the crisis in international shipping:
"While the BDI has been dropping for months, the real collapse took place from the week after the Lehman bankruptcy. From a level of 4949 then, the BDI had, by last week, come down to 1149, for a decline over about a month of 76 per cent. This doesn't represent some piece of high-concept securitised paper meeting its maker in front of a judge; this is the real world of physical assets being employed to do actual work.....
It all goes back to that Lehman bankruptcy. Among the more serious casualties of that colossal failure of leadership was the letter of credit business. There is nothing more vanilla than the l/c for an international shipment. One bank tells another bank that it will accept the credit risk of an individual importer or exporter. They document that, with forms that have been around forever, clerks and computers shuffle the paper around. A fee is charged and goods are released for shipping, inspection, and delivery. The most boring business in the world. Until it stops.
After Lehman those clerks, and their computers, stopped trusting the clerks and computers at other banks. Treasury secretary Hank Paulson's ignorant and clumsy attempt to avoid moral hazard and systemic risk resulted in uncounted quantities of goods piling up on loading docks, and customers living off inventories and consuming less.
No, I don't think the Lehman leadership, or the shareholders who went along with them, deserved to be saved. It was not, however, necessary to sacrifice the worldwide flow of goods and credit to make them an example.
The government and banking leaders might think that those clerks and computers will have been reassured by the business cable channels telling them that things will be fine. Well, it hasn't happened yet.
Some critical institutions were caught in the middle of this. Wachovia, as I mentioned last week, did a lot of letters of credit for the Latin American trade. Royal Bank of Scotland has huge exposure to shipping. The line people working on trade finance need to be told that it is okay for them to take these risks, that they won't be laid off if they make one good-faith mistake
...
http://www.ft.com/cms/s/0/03ff3bb4-a48e-11dd-8104-000077b07658.html

Still think that Bailout Bill should have been passed? Markets plunged how many points since it was signed into law? The government nationalized the banks. The housing market slows even more. Yet that is not even the worst part. International trade freezing up is what causes depressions. THIS is what has everyone in finance and government spooked.

Earlier posts on international trade crisis:
http://kingfish1935.blogspot.com/search?q=letters+of+credit
http://kingfish1935.blogspot.com/2008/10/update-on-trade-slowdown.html
http://kingfish1935.blogspot.com/2008/10/bloomberg-letters-of-credit-frozen.html
http://kingfish1935.blogspot.com/2008/10/more-news-about-grain-piling-up-in.html
http://kingfish1935.blogspot.com/2008/10/international-trade-shutting-down.html

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Market Ticker: We Haven't Hit Bottom Yet

"In short there is absolutely nothing in the past history of the market to support a "bottom" call here. Remember that CNBC's mouth-breathers along with virtually every commentator called a bottom in March and then again in July. How has that worked out?
Is it possible we have bottomed here? Sure. Anything is possible. I could win the lotto this coming weekend, if I buy a ticket.
But hope is not an investment strategy and there is a difference between trading a bear market rally (and, if we have in fact finished (III) down, we're due for one that might last a couple of months) and investing for the long term.
If this bear is not over, then the 13/34 EMA and 20/50 SMA (on a weekly chart) will not cross back over. If you are a conservative investor you should have gone to cash in December of 2007 at the latest.
If you did not and are now paying attention to the bottom callers you are engaged in "investment by prayer", which is a horrible strategy and has been the ruin of many people in the market.
If you did go to cash back in 2007 based on a long-term timing signal and are now engaged in going back into the market "long", one has to ask - why would you be doing that when those same long-term timing signals are in fact still diverging - that is, showing deteriorating rather than improving conditions?
Finally, analyze your investment thesis based on what you think the economy is going to do. If you can come up with a cogent belief that the economy - the consumer portion of the economy - will in fact turn around by June of 2009, then you have an argument for trying to scale into investment positions for the long haul at this time.
Personally, I don't see it.
..............."
http://market-ticker.denninger.net/

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Listen to KIM Waaaaade Thursday, November 6.

Karl Denninger, The Market Ticker guy, will be his guest. If the show is anything like his last appearance, should be really good.

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Tuesday, October 28, 2008

More Terrorism From Obama Supporters


More attacks by Obama supporters continue this week as they engage in domestic terrorism against Republicans. The picture to the left is the well-known effigy of Governor Palin one hater displayed in front of his California home. Naturally the police said this was not a hate crime (although the liberals had a few other things to say about such nooses when one in Jena was hung with NOTHING attached to it).

While this could be called hate speech, violence occurred yesterday as Obama supporters attacked and maced elderly Republican campaign workers in Galax, Virigina. Obamabots Mace Elderly Republican Campaign Workers Unfortunately this is merely the latest in a series of violent acts committed by supporters of Barack Obama. Earlier this month, JJ posted a story about a male Obama thug-wannabe beating a McCain supporter in the face with a stick. Female McCain Supporter Beaten.

I guess this is called "getting in their faces".

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What Exactly IS the Socratic Method?

There is no problem or issue Frank Melton or the Jackson City Council can't make worse, as history has shown. What should have been a simple renewal of the wastewater contract has turned into a circus. JPD. The Fire Department. Grants. Farish Street. A-1 Pallets. Now the wastewater contract renewal. It was supposed to be completed by the end of September, only to be delayed as Melton wanted to rebid the contract a few days before it expired.

Since the contract was due Friday, a reasonable person would have assumed the city would have a contract drafted and ready to present to the City Council for approval. However, this is Frank Melton we are discussing and true to form, the contract is not ready. Does anyone want to guess who is going to receive the $7 million per year contract? You guessed it, Socrates Garrett, last seen snatching the cleanup contracts for the storm cleanup last spring. The Clarion-Ledger reports Mr. Garrett is once again the beneficiary of some Melton shenanigans to the tune of several million dollars. As I wasn't aware Mr. Garrett possessed any expertise in wastewater treatment, I am slightly curious as to why the company that's held the contract for over 20 years is bringing him on as a partner.

However, I am sure this is all above board.

Clarion-Ledger story: http://www.clarionledger.com/article/20081027/NEWS/81027045

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Market Ticker: Cut It Out Now!

"Let's start with AIG: $122 billion may not be enough.
Why? Because the CDS they wrote keep going down in value and forcing margin calls for more collateral (money).....

Now let's talk banks. You know, those things that are supposed to hold reserves against deposits when they make loans? Well guess what - there are no reserves. The non-borrowed reserves have been negative for months - since the turn of the year, in fact, and now total over $300 billion dollars.
What does this mean? Simple - the banks lost (blew, speculated with and got caught on the wrong side of, issued or purchased crap securities with, paid bonuses with, paid the light bill with, etc) the reserves they are supposed to hold against deposits. This would usually result in them being declared insolvent and the FDIC would seize them, but that would be inconvenient. So instead they went to The Fed which loaned them reserves so it appears they have some. It appears they have subsequently lost some of that money as well, because the "non-borrowed" reserve number continues to increase in the negative direction (that is, it's a negative number - a very large negative number.
)..."
http://market-ticker.denninger.net/archives/P3.html

Keep Reading.

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An Obamabot Unleashed


This is a picture of Helen Jones-Kelly, director of the Ohio Department of Job and Family Services.
The Columbus Dispatch reported she "confirmed today that she OK'd the check on Samuel Joseph Wurzelbacher following the Oct. 15 presidential debate." "Obama Government Spy Harasses Joe the Plumber
In what can only be termed an outstanding coincidence, apparently a total of four computer checks were on the Plumber by people with access to Ohio government computers.
I've had it. Its time to take the damn gloves off. These same people who scream bloody murder about the Bush administration intercepting phone calls from Al Qaida terrorists in Pakistan to Americans without a warrant (never mind they can check your mail and body at the border without a warrant) think its perfectly ok for this government bitch, and I do mean bitch, to harass someone who dared to ask Obama a question. It should also be pointed out she gave the maximum donation allowed by law to Obama.
Whats good for the goose is good for the gander. Any other info that is verified or from trustworthy newssources sent in to me will be posted on this website as long as its legal and not libelous and nature. Its about time to let this Obamabot know what it feels like to be on the receiving end. Perhaps she'll realize at some point what civil rights really mean.
She believed in a right to privacy when the state supreme court unanimously ruled against her on a public records request: http://www.sconet.state.oh.us/Communications_Office/summaries/2008/0417/062239.asp

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Preach Brother Preach!!!

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So You Obamabots Want to Bring Back the Clinton Economy?

Well, here is what Arthur Laffer has to say about Clinton's policies:
"The stock market is forward looking, reflecting the current value of future expected after-tax profits. An improving economy carries with it the prospects of enhanced profitability as well as higher employment, higher wages, more productivity and more output. Just look at the era beginning with President Reagan's tax cuts, Paul Volcker's sound money, and all the other pro-growth, supply-side policies.
Bill Clinton and Alan Greenspan added their efforts to strengthen what had begun under President Reagan. President Clinton signed into law welfare reform, so people actually have to look for a job before being eligible for welfare. He ended the "retirement test" for Social Security benefits (a huge tax cut for elderly workers), pushed the North American Free Trade Agreement through Congress against his union supporters and many of his own party members, signed the largest capital gains tax cut ever (which exempted owner-occupied homes from capital gains taxes), and finally reduced government spending as a share of GDP by an amazing three percentage points (more than the next four best presidents combined). The stock market loved Mr. Clinton as it had loved Reagan, and for good reasons.
The stock market is obviously no fan of second-term George W. Bush, Nancy Pelosi, Harry Reid, Ben Bernanke, Barack Obama or John McCain, and again for good reasons..."
http://online.wsj.com/article/SB122506830024970697.html

Anyone think Obama might pursue these policies?

Better yet, anyone think the Obamabots under the age of 30 will believe Mr. Laffer?

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Monday, October 27, 2008

The Master



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Who is Teresa Ghilarducci?

Although unknown to most Americans, Teresa Ghilarducci is the intellectual godmother for the Democrats' plans to radically change how Americans save for retirement. Ms. Ghilarducci, an economist at The New School for Social Research, called for the abolition of the tax breaks given to employers for 401k plans and instead proposed the mandatory enrollment of American employees in Government Retirement Accounts (GRA's) that are funded by a 5% mandatory payroll deduction in her book, When I'm 64: The Plot Against Pensions and the Plan to Save Them, published last year.

Ms. Ghilarducci outlined her proposals in a briefing paper nearly a year ago:
"The plan calls for all workers not enrolled in an equivalent or better defined-benefit pension to enroll in a GRA, a plan that borrows the best features of defined-benefit and defined-contribution plans, including guaranteed retirement benefits that last a lifetime, low administrative costs, and steady contributions. With GRAs, workers will accumulate savings in investment funds that earn a rate of return guaranteed by the federal government. These funds will be converted to life annuities upon retirement. Along with Social Security benefits, these will replace approximately 70% of pre-retirement earnings for the typical retiree.

Guaranteed Retirement Accounts eliminate the regulatory and tax law favoritism that not only gives 401(k)-type plans wide discretion and little scrutiny, but does so at the expense of the defined-benefit system.....

Guaranteed Retirement Accounts are like universal 401(k) plans except that the government, as befits a large and enduring institution, will invest and manage the pooled savings.

Contributions equal to 5% of earnings are deducted along with payroll taxes and credited to individual accounts administered by the Social Security Administration. The cost of contributions is split equally between employer and employee. Mandatory contributions are deducted only on earnings up to the Social Security earnings cap....

The pooled funds are conservatively invested in financial markets. However, participants earn a fixed 3% rate of return adjusted for inflation, guaranteed by the federal government.....
Participants who die before retiring can bequeath half their account balances to heirs; those who die after retiring can bequeath half their final account balance minus benefits received... "
Briefing Paper on Proposed New Government Retirement System

The rest of her plan is more of the same as the esteemed professor calls tax breaks for 401k plans a wasteful expense, claiming they cost the government $80 billion a year in tax revenue. She considers $80 billion in a $2 TRILLION budget "extravagant" while ignoring the fact these plans ARE taxed upon withdrawal of funds.

One benefit of 401k plans she seeks to change is ownership of the retirement funds. Currently 401k funds are the property of the employee (after becoming fully vested). If he dies, his heirs receive ALL of his money saved for retirement, minus any taxes. Under Ms. Ghilarducci's plan, surviving family members only get HALF of what remains in the account with the rest going back to the government. Consider this example: an American works for 40 years, builds up a nest egg in his GRA of $100,000 and suddenly dies from a heart attack. His wife will only receive $50,000 as the government will seize the money he earned and contributed to his retirement under this plan while the detached ivory-tower thinking of Ghilarducci and government-first philosophy of the Democrats consider such thievery to be "fair".

Unfortunately, Ms. Ghilarducci ignores the the effect her plan will have on financial markets when such a massive amount of 401k funds are transferred to the federal government. The current crisis in our markets will seem mild as they collapse from such a withdrawal of capital. Instead of addressing this very serious concern, she blithely says any injury caused to the worker can be prevented with a tax credit and says the government "conservatively invest" the money contributed to GRA's. One can only imagine the mischief this will create as it gives government further control over the markets and private businesses.

Democrats will seize upon this opportunity to impose conditions on funds receiving government investments as it does for corporations doing business with the federal government: Labor conditions. Environmental regulations. In what countries and types of business does a fund invest its money? Preferred investments and projects by favored political pals (Teamsters pension fund ring a bell?) will be a tempting target. Diversity guidelines. The list goes on as GRA's will inject the government into the economy in ways unimaginable only a few years ago.

Such a scenario is not far-fetched as House Democrats are currently discussing enacting legislation doing exactly what this liberal economist proposes: forcing the involuntary transfer of 401k retirement funds into government coffers. Investment news reported they recently held a hearing to examine "proposals to overhaul the nation's $3 trillion 401(k) system, including the elimination of most of the $80 billion in annual tax breaks that 401(k) investors receive.
House Education and Labor Committee Chairman George Miller, D-Calif., and Rep. Jim McDermott, D-Wash., chairman of the House Ways and Means Committee's Subcommittee on Income Security and Family Support, are looking at redirecting those tax breaks to a new system of guaranteed retirement accounts to which all workers would be obliged to contribute
" Earlier Post on Democrats Seizing 401k Plans

Mr. Miller had his own comments for the 401k tax breaks: "“We’ve invested $80 billion into subsidizing this activity,” he said, referring to tax breaks allowed for 401(k) contributions and savings..." Another Kingfish Post on Dem's Seizing 401k Plans.

The playbook is familiar: Democrats will use the worn out mantra about stopping tax breaks for the rich, protecting the little man on the street, etc., then fast-track legislation effectively abolishing private retirement accounts, moving most private retirement funds into the government cookie jar. The victims will receive no right to their money but instead an IOU from the government for an annuity as the government does the same for Social Security and FDIC. Meanwhile, liberals will celebrate, proclaiming they succeeded in protecting the middle class when in reality they reached their goal of enslaving everyone.

This is their idea of change.

Note: Listened to Mark Levin tonight who oddly enough, interviewed Dr. Ghilarducci. She said she wanted to "nationalize" 401k plans. No spin, no out of context, she said that was exactly what she wanted to do.

Related Post:
Are Your 401k Plans Safe From the Democrats?

Additional reading:
Ghilarducci NY Times Essay
Money Magazine Article
Washington Post Article on Ending 401k Plans

Additional note: Believe it or not, Limbaugh actually nailed the essential elements of her plan on the radio today. As I've read her policy paper, I can confirm that everything Limbaugh wrote about her plan is true. Nice to see he caught up with The Kingfish Limbaugh Analysis

Click Here to Read More..

Sunday, October 26, 2008

Obama on Redistribution of Wealth



Warren Court was not radical enough with economic changes.

"The Supreme Court never ventured into the issue of the redistribution of wealth."

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A Word From Our Sponsor

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The Legacy of Joe Biden




In 1974, Biden voted to cut off all aid to South Vietnam, causing the government to collapse and guaranteeing a communist takeover of S. Vietnam. These are pictures of the Senator's legacy. The same Senator who opposed Desert Storm. Coincidence? I think not. For a more personal note on Senator Biden's legacy, read this blog written by someone who lived in the refugee camps: http://songkhlavietnameserefugeecamp.blogspot.com/

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Market Ticker: Fed Has Lost Control

Denninger writes with acid yet again, cutting through the BS, telling Americans some things the media and politicians are not willing to say:
"today we learned that The Fed has lost control of the Effective Fed Funds Rate - their own overnight lending rate. They were forced to change their interest rate on reserves in order to try to get it back under control - and there is no reason to believe their efforts will be effective.....
Treasury will have to issue three trillion dollars of new debt over the next 12 months in an attempt to make this work. But Treasury has been using very short-term debt - mostly four week and 13 week "bills", to fund the existing debt, because they are cheaper. As such the total amount of these auctions could easily reach five trillion dollars over the next 12 months.
Already, Treasury is issuing more than $100 billion dollars in this debt a week, on average, including new issues and rollovers. This is about double the total amount of debt that foreigners (or US interests) hold in total, and we have barely begun to actually issue the debt necessary to make the "TARP" operate.
We are, in effect, borrowing to pay interest. If you have ever tried to do this personally, you know that doing so almost always leads to bankruptcy......

I believe Treasury has been attempting to "kick the can down the road" as is the usual pattern in Washington DC.
Unfortunately the can has filled up with cement and there is now a very high probability that instead of the can being able to be kicked down the road until next year after the elections the second-level dislocation - the "big one" - is going to happen within days
. ..."
http://market-ticker.org/archives/623-The-Stark-Choice-Now-Facing-America.html
Someone made a snarky comment last week about my posting Denninger's columns on a regular basis. I am doing so for several reasons. I think he has a very valid point of view which needs to be considered. The media has consistently gotten this whole story wrong and the debate over the Bailout proved most politicians either don't care about this problem or if they do, it's too complex for most of them to understand. I think the two institutions, the media and our political leadership, have consistently failed the American people. If you read Mr. Denninger's predictions for 2008 nearly a year ago, he completely nailed everything that's happened in the markets and economy this year. He was also one of the few people who read the Bailout Bill. As I read it, I was able to confirm his analysis and everything he said would happen after it was passed took place. When it comes to the issue of the transparency of balance sheets, he is one of the few voices bringing it up as Bernanke and Paulson try to fight a forest fire with a garden hose. Keep reading his posts, you'll learn more from him than from the hacks or money honeys.

Click Here to Read More..

Saturday, October 25, 2008

No Letter of Credit? No Shipping.

The media continues to wake up to the developing crisis in international trade. Yahoo News (Singapore) reports:
"There is growing evidence the global credit crisis is stifling seaborne trade as banks become more reluctant to honour crucial letters of credit between buyers and sellers who ship goods and resources, analysts say.
"With reports of sellers' banks deciding they don't trust the financial institutions named in buyers' letters of credit, have come alarming anecdotes of cargo ships being stuck in home ports," Matt Robinson, an economist at Moody's Economy.com, said.
"With ships not moving, stocks have been piling up and exporters have grown desperate for income from idle inventory," Sydney-based Robinson said in a report published on Wednesday.....

Robinson said if the crisis worsened ordinary consumers could be hit as more importers feel the pinch.
"This could lead to price distortions as demand, despite being subdued by slowing economic conditions, outstrips supply as shipments are delayed," he said.
"Consumers also face potential supply shortages as shipments of foodstuffs and grain lay stranded overseas," Robinson said
." http://sg.news.yahoo.com/rtrs/20081023/tbs-shipping-credit-trade-7318940.html

Earlier posts on this subject:
Update on Trade Slowdown
Bloomberg: Letters of Credit Frozen
Time to Wake Up
More News About Grain Piling Up in Ports
International Trade Shutting Down?

Click Here to Read More..

Regions Goes A'Begging

Regions Bank apparently has its hand out for some federal bailout money after announcing this week its earnings plunged 79% in the third quarter. The Birmingham Business Journal reported:
"The Birmingham bank posted net income of $79 million for the quarter ended Sept. 30, versus $394 million during the same period last year. In the second quarter, Regions reported $206 million in earnings.....
Regions, Alabama’s largest financial institution, announced plans to participate in the government’s capital purchase program, which is part of the $700 billion rescue package signed into law earlier this month. The Treasury Department will spend $125 billion to help provide capital to thousands of banks in exchange for preferred stock.
If Regions qualifies, it will gain between $1.2 billion and $3.5 billion worth of capital, which would provide “a significant strengthening of our overall capital base,” according to the press release.
The bank’s Tier 1 capital ratio – the primary measure of a financial institution’s capital level – was at about 7.47 percent in the third quarter or $1.7 billion above the minimum allowed by bank regulators
......." http://www.bizjournals.com/birmingham/stories/2008/10/20/daily10.html?ana=from_rss

BBJ also reported Regions suffered from large losses due to "non-performing" loans:
"In the latest quarter, Regions sold off or moved about $430 million of non-performing loans and foreclosed properties off its balence sheet, which totaled $186 million in losses.
Total net loan charge-offs jumped to $416 million, compared to $209 million in the second quarter
..."

On a more critical note, it should be pointed out The Clarion-Ledger did not publish this information this week even though Regions (which contains the former Deposit Guaranty National Bank) is one of the largest banks in Mississippi. The newspaper's business section continues to display its sloppy nature as its entire coverage on Regions' problems consisted of this single paragraph:
"Regions had a poorer performanse and reduced its dividend from 38 cents to .10 cents per share to strengthen its capital position. Regions posted a net income of $206.4 milion in the second quarter, with 30 cents per diluted share, including the final $100.1 million in expenses from the institution's merger with AmSouth."

No mention of a request for federal help, the size of the losses, or what the net income in the third quarter was, which was the point of the whole story. Even worse, the story was written by a Hattiesburg American reporter. So much for business journalism in Jackson as The Clarion-Ledger, Mississippi Business Journal, and other local publications completely missed a story that was definitely newsworthy as well as easily available on the web as no fewer than three different business publications reported it early this week.

Regions Earnings Statement:
http://www.regions.com/about_regions/IR_newsreleases.html

Click Here to Read More..

Friday, October 24, 2008

Our New Word Today is "TED", as in "TED Spread"

Good morning boys and girls. Before we take our naps today, we are going to learn about "The TED Spread". Do you know what the TED Spread is? The TED Spread is "the difference between the interest rates on interbank loans and short-term U.S. government debt ("T-bills")."

Do you understand what this means? You compare the interest rates between the three-month T-Bill rate and the three-month LIBOR rate. A small TED Spread is good, a large TED Spread is bad. We don't like big TED Spreads. They are mean and hide under the bed waiting to eat little children. Big TEDs give nightmares to rich people everywhere. We try to make them go away.

The Gospel of TED Spreads according to St. Wiki states "The TED spread is an indicator of perceived credit risk in the general economy. This is because T-bills are considered risk-free while LIBOR reflects the credit risk of lending to commercial banks. When the TED spread increases, that is a sign that lenders believe the risk of default on interbank loans (also known as counterparty risk) is increasing. Interbank lenders therefore demand a higher rate of interest, or accept lower returns on safe investments such as T-bills. When the risk of bank defaults is considered to be decreasing, the TED spread decreases.." http://en.wikipedia.org/wiki/TED_Spread

There is even a pretty color chart to help you understand the TED Spread. You can see it on this little website in Halloween colors: http://www.bloomberg.com/apps/cbuilder?.ticker1=.TEDSP%3AIND

Now line up for the bathroom, then unroll your nap pads, get your blankie and lie down. This will be a long nap.

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I report. You decide.

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Market Ticker: Fiscal Cat 5 Warning

Can't say he didn't warn us.

Just wait until you see what will come next.
"If you're playing "Buffett", following his claim (note: there is no penalty for lying on national television about what you're doing in your personal account) that he's buying here, there is a little ugly fact you need to be aware of.
That fact is treasury issuance.
See, to fund all this crap that Congress, Paulson and Bernanke have in the pipe (you know, the TARP, the newly-minted SIV that Ben announced this morning to buy commercial paper, etc) the treasury issue requirements will be north of three trillion dollars in this fiscal year.
Oh, and that's before Obama wins (and he will) and promises another $1 trillion worth of new spending without a nickel's worth of ability to fund it.......

what's nasty here is that right now we're seeing a flight INTO longer-term bonds (the 10 in particular), which means the market is anticipating another stock panic, and with good reason....
Bernanke is doing what Paulson tried and failed at in the "free" (coerced by arm-twisting by Paulson) market through executive fiat, and he is printing money to fund it. Exactly how much money he is printing (as opposed to lending) depends on the precise amount of overpayment that is being induced through these so-called "loans", but that it is happening is not open to question.
Why has this become necessary?
Ben and Hank produced a dislocation in this section of the marketplace by favoring other debt instruments with federal guarantees, thereby forcing money out of these instruments.
This in turn created major problems for money market funds who buy this paper as a routine matter of course in that when they needed to redeem deposits they suddenly found no buyers for the securities, as those people had fled to other instruments that Ben had guaranteed payment on!
As each new facility is rolled out by Ben and Hank a new area of debt becomes backstopped by the government in some fashion, thereby forcing money out of other instruments and causing those instruments to become distressed!
We are rapidly reaching the point where only The Fed and Treasury are providing any lending at all!........"
The Market Ticker: Fiscal Category 5 Warning

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Thursday, October 23, 2008

This Is How Screwed Up NOPD Really Is

"The veteran New Orleans police officer booked this week in the rape of a 13-year-old girl has a history of rape complaints against him, the department announced Wednesday..."
http://www.nola.com/news/index.ssf/2008/10/cop_booked_in_rape_of_13yearol.html

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Red State Update

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Obama: Defend Yourself and YOU are the Criminal



Supporting evidence for video:

"A 55-year-old Wilmette man was charged Thursday with weapons violations after he shot and wounded a burglar in his home more than a week ago.
Hale DeMar, of 35 Linden Ave. in the north suburb, was charged with a misdemeanor for violating a state law that required firearm owners to have a valid Firearm Owner’s Identification card, Wilmette police Officer Roger Ockrim said in a news release. DeMar was also cited for violating a village code that prohibits possession of handguns in Wilmette, the release said. Violation of the ordinance is a petty offense carrying a maximum fine of $750 upon conviction
." (WNBC Chicageaux)

A law was passed in the Illinois Legislature to prevent cities such as Wilmette from prosecuting homeowners who tried to defend their families from thugs breaking into their homes. The law, SB2165, "Amends the Criminal Code of 1961. Provides that it is an affirmative defense to a violation of a municipal ordinance that prohibits, regulates, or restricts the private ownership of firearms if the individual who is charged with the violation used the firearm in an act of self-defense or defense of another. Effective immediately." Bill to Let Homeowners Defend Themselves

The bill passed 41-16. Obama voted against the bill. Obama's Vote Against the Right to Self Defense The bill was vetoed and Obama naturally did not even vote that day. Obama Skips a Vote, Again

Considering he told Georgia to show self-restraint when Russia attacked, perhaps one shouldn't be too surprised Obama expects families to stand by idly while they are raped, robbed, and murdered.

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Apparently Democrats Aren't the Only Ones Thinking of Stealing 401k's

The Wall Street Journal reports Argentina is attempting to seize private pension funds. Don't think this is going unnoticed here at home by a few Democrats:
"The government proposed to nationalize the private pensions, which would provide it with much of the cash it needs to meet debt payments and avoid a second default this decade....
Argentine President Cristina Kirchner said the move to take over the private pension system was aimed at protecting investors from losses resulting from global market turmoil (sound familiar?) Funds in the system, which is parallel to a government pension system, are administered by financial firms. The private system has about $30 billion in assets and generates about $5 billion in new contributions each year.
While no one knows for sure what the government would do with the private system, economists said nationalization would let the government raid new pension contributions to cover short-term debts due in coming years.
Argentina's financing needs are growing quickly as the global financial squeeze pushes down prices of its commodity exports, such as soybeans. Coupled with unchecked government spending
...."
http://online.wsj.com/article/SB122460155879054331.html

Earlier Posts on Democrats Targeting 401k Plans:
More on Democrats Going After 401k Plans
Are Your 401k's Safe From Democrats

Note: By the way, I asked a Republican Operative on the national level why they weren't attacking the Democrats for trying to seize 401k money. He said there wasn't enough time. Um, it's more relevant to Americans than Ayers is, it deals with the economy, and it is an issue affecting the pocketbooks and retirement plans for most Americans directly and immediately. Trust me, this will be an issue they get. But not enough time. Now, back to Bill Ayers and how he blew up Lincoln log cabins as a child.

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Wednesday, October 22, 2008

Sitting Up With the Dead



Classic.

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Market Ticker: Have We Reached "The Bottom"?

"From a fundamental analysis perspective the underlying problem with the market here is the same as it was a year ago - valuations are too damn high. I have no faith that the operating earnings estimates for the S&P 500 are going to be delivered on a forward basis, and without that, I've got nothing to invest based on, since its always the earnings stupid that drives prices.
From a technical perspective the picture is even worse. We have a confirmed double-top, a DOW theory primary trend bear market reconfirmation, and a spike bottom. From a technical perspective this implies that the entire bull market move to the first peak is going to be retraced, which puts the S&P 500 down into the 500 area, erasing twenty years worth of gains....
Could it really be different this time? Sure. It can happen. We hear that constantly - "this time its different." Well, perhaps some day it will be.
But history says that staking your fortune on such a belief is a poor gamble. In every case through history primary bear markets - ones that have confirmed on Dow Theory - the buying opportunity hasn't been on the initial decline, in that every time that low has broken and led to new lows.
It is only when a low is made and retested a few months later that one can reasonably take long positions. A retest that comes a week or a month later is too much, too fast.
How do you know when you've got a valid retest?
......"
http://market-ticker.denninger.net/archives/P2.html

Explanation of Dow Theory:
http://en.wikipedia.org/wiki/Dow_theory

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Update on Trade Slowdown

The Bailout still hasn't thawed the credit markets as international shipping continues to slow down because letters of credit from banks are not being honored by sellers. Livemint.com reported:
"Dry bulk shipping has been on a roll and what we are seeing is completely unprecedented,” said Anjali Kumar, spokesperson for Great Eastern Shipping Co. Ltd, the country’s biggest private shipping firm. “Fortunately, the tanker sector is doing well and is helping us cope with the situation.”
The Baltic Dry Index, a benchmark for shipping bulk commodities, on 17 October tumbled nearly 7% from 1,615 points to 1,506, its lowest since November 2002. The index has plunged 53.2% since the end of September, and 86% since 20 May, when it had hit a high of 11,893 points....

“Traders who hire ships on spot basis are facing difficulties to secure letters of credit from banks,” said an executive at Chowgule Steamships Ltd, who did not want to be named. Letters of credit assure a shipper of payment for a cargo after it is loaded on a ship, but before the buyer receives it.
The squeeze on trade credit is also restricting commodities shipments. Around 90% of the world’s $14 trillion (Rs683 trillion) trade is handled via trade credit, the SCI official said.
“You don’t know the credit worthiness of the guy hiring the ship
... The best and the biggest of names are defaulting,” said an executive at Apeejay Shipping Ltd, who too did not want to be named
......" http://www.livemint.com/2008/10/21005334/Shipowners-see-business-slowin.html

Meanwhile, The Economist picks up the story as it gains more steam in the mainstream media:
"Since the early summer the prices of various kinds of steel have fallen by 20-70%, iron ore is down by a third and the key rate for bulk shipping of commodities such as iron ore, coal and grain is down by more than four-fifths. There is even talk of grain cargoes piling up in ports in the Americas. Their buyers’ letters of credit have not been honoured, because of a lack of confidence in the banks that underwrite them. At least one Australian producer has had the same problem with iron-ore shipments. And shipowners are struggling to finance new vessels they have ordered....." The Economist

Steel Guru reported the same as well:
"The Baltic Dry Index stood at 1506 as the week ended a massive fall from the 11,893 points at which it stood as recently as May 2008. The problem is not just the market's view on forward demand for commodities, although that is a large part of it. Rather, it's the global credit crunch. Reports from London indicate that ship owners are having trouble getting banks to sign off on letters of credit for the cargoes..." Steelguru.com

It is clear the global credit crunch is affecting international trade as there are more reports every day on shipping falling off due to sellers not honoring trade credit and letters of credit. This is the real economy. While the money honey gets mad about the Dow, this might be where the real story is as it affects the everyday lives of Americans much more quickly and directly than does a thousand point drop in the Dow.

Earlier posts:
http://kingfish1935.blogspot.com/2008/10/bloomberg-letters-of-credit-frozen.html
http://kingfish1935.blogspot.com/2008/10/time-to-wake-up.html
http://kingfish1935.blogspot.com/2008/10/more-news-about-grain-piling-up-in.html
http://kingfish1935.blogspot.com/2008/10/international-trade-shutting-down.html

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Zogby Poll with 1 Day to Go in Ohio: Obama Leads Clinton

"A new poll shows Barack Obama has taken a narrow lead over Hillary Clinton in Ohio for the first time in the campaign for the state that could decide which Democratic Senator will win their party's nomination for president. However, other polls still show Clinton in the lead, with the gap shrinking.
With a day to go before the primary election, a Zogby International poll for Reuters/C-SPAN/Houston Chronicle that was taken between Feb. 29 and March 2 shows Obama with 47 percent compared with Clinton's 45 percent. The previous poll from a few days earlier showed Clinton with a narrow 47 percent to 46 percent lead. The same poll showed the race in Texas, which also has its primary Tuesday along with Ohio, Rhode Island and Vermont, narrowing. Obama had a four percentage-point lead several days ago, but that has shrunk slight to a three percentage-point lead at 47 percent to 44 percent."
http://www.bizjournals.com/dayton/stories/2008/03/03/daily3.html

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Some Reality for FOLO


(Picture of victim's eye after Democrat took her McCain sign and beat her in the face with it.)

After forgetting to take her meds yesterday, Lotus hyperventilated over so-called Republican terrorism. So-called because she can't actually list an incident of violence against a Democrat or Obama supporter in this election. (I don't consider tearing up yard signs acts of violence or terrorism.). The one violent incident she does mention didn't even happen in this election cycle. Dear Lotus, since you are so concerned with election violence, hopefully you will publish this story and criticize the assailant:

"Here is a real district attorney’s complaint documenting an unprovoked assault by an enraged Democrat against a McCain volunteer in midtown Manhattan: “Defendant grabbed the sign [informant] was holding, broke the wood stick that was attached to it, and then struck informant in informant’s face thereby causing informant to sustain redness, swelling, and bruising to informant’s face and further causing informant to sustain substantial pain.”....
The overly formal document doesn’t mention this important detail: the victim was a small, quiet, middle-aged woman wearing glasses, and the attacker was a loud, angry man who went into orbit at the mere sight of McCain campaign signs....."

The complaint as well as interview with the victim can be found at Democrat Beats up McCain Supporter.

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Tuesday, October 21, 2008

Deepika

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Democrats' Plans for Controlling the Media

Conservatives and Republicans fear the Democrats will impose the Fairness Doctrine on talk radio if Obama wins in November. While they rightly worry about the Fairness Doctrine, they fail to pay attention to other plans the Democrats have for controlling the media.

Under the guise of improving diversity and attention to local affairs, Obama explicity states his goals in a 2007 press release after an FCC hearing in Chicago . Here are a sampling of reports:

"Obama Urges FCC to Reduce Length of TV Station Licenses
By Ira Teinowitz of TV Week September 21, 2007
Democratic presidential hopeful Barack Obama is throwing out more hints that the Federal Communications Commission would have a somewhat different focus if he wins the election.
At Thursday night's FCC media ownership hearing in Chicago, an aide read a statement in which the Illinois senator complimented the FCC for holding the hearing but questioned some of the FCC's past focus on easing ownership rules.
Sen. Obama said the FCC should reduce the length of TV station licenses and get more input, more often, on how well stations are serving community needs.
"I believe that broadcaster license-renewal requests--the periodic review required to ensure that broadcasters are complying with their public-interest obligations to local communities for using the public spectrum--should require greater FCC scrutiny and public input and occur more frequently."......
"Instead of greater consolidation, I fully endorse the call for new rules promoting greater coverage of local issues and greater responsiveness of broadcasters to the communities they operate in.".....
http://my.barackobama.com/page/community/post/reneaguilera/CWDT

The Broadcast Law Blog:"According to press reports, the statement expressed the candidate's positions favoring shorter license renewal terms for broadcasters so that they would be subject to more public scrutiny, as well as criticizing the FCC for allowing broadcast consolidation....."Broadcast Law Blog

Broadcast Engineering.com: "Obama called for “greater clarity” of broadcasters’ public-interest obligations. The Illinois senator said he supported new rules “promoting greater coverage of local issues and greater responsiveness of broadcasters to the communities they operate in.”
He also urged greater FCC scrutiny of broadcast station license renewals and more public input into the process
..." Broadcastengineering.com

Congress passed the Telecommunications Act of 1996, easing restrictions on how many media outlets a corporation (or individual) could own in a particular market. There has been much debate over this law as most radio stations are now owned by only a few companies. Critics argue that such consolidation has stifled diversity in programming and ignored the needs of local communities. An earlier post, The Changing Face of Radio, discussed how consolidation has ruined the radio industry. However, the Democrats go past the goal of increasing competition and have made it clear they want to make it easier for the government to harass and control the media.

The Democrats advocate shortening the length of a broadcast license from its current term of eight years to one that is only two or three years, thus forcing the station to constantly worry about getting its license renewed by the government. The Democrats also have a few ideas of how to improve the so-called community focus of a station. The two Democrats on the FCC Board made the following recommendations, as reported in Broadcast & Cable:

The localism items proposed -- it established no final rules -- that broadcasters be required to better demonstrate their local programming service to the community at renewal time, including forming community advisory boards to help them determine programming of local import.

Specifically, the localism item looks at nine areas: 1) communications between the community and the station; 2. the nature and amount of local programming; 3. the nature and amount, specifically, of political programming; 4. underserved audiences, i.e. are the communities whose needs have not been addressed?; 5. disaster warnings and whether, say, there is someone physically at the station to relay them; 6. the relationship of network and affiliate, and whether that can an impediment to local decision-making (preemption of programming, content issues); 7. payola and sponsorship identification (radio pay-for-play rather than TV product integration); 8. the adequacy of license renewal procedures; and 9. additional spectrum allocations that might increase the diversity of voices.It is a laundry list that has broadcasters fearing the kind of regulatory heavy hand cable has long complained of from this commission.
Democrats
Michael Copps and Jonathan Adelstein generally supported the localism initiatives but said they wished they had been final rules rather than proposals. They worried that the final rules might be watered down and were concerned about the commission's willingness to enforce them.
"We need to put meat in the sandwich we deliver," Adelstein said. "Why not a final order," Copps added, "rather than just good ideas?" He said he was skeptical but would work with the chairman to "try to move these things along
.” http://www.broadcastingcable.com/index.asp?layout=article&articleid=CA6513849

Citizen Review Boards. The Democrats want to establish citizen review boards for tv and radio stations. One can only imagine the mischief this would create. What would be the criteria for appointing people to the board? Would a station criticize a government body, local or federal, if the allies of that government were on the board? Would there be a board for each station or just one for that community? What powers would such a review board have? Would local or federal governments appoint the members? How much weight would be given to its recommendations for the renewal of a license? If the license is renewed every three years, a station would be forced to become a trollop, trying to please the government in order to stay in business.

It is also telling that Democrats want to interfere in the relationship between the network and its affiliates, by advocating the government take control of a station's content away from its owners. The Democrats complain about stations ignoring "underserved audiences." How exactly does one determine what constitutes an "underserved audience"? Ratings? Sociological studies? Focus group polling? Such a vague goal is merely an excuse to give the government more control over content as some government official will determine what audience is "underserved" (after cooking the statistics to support the ruling) and issue a decree to the offending station to whom it will market its programming (CRA in Broadcasting anyone?).

The press has its freedoms because the Founding Fathers knew government needs a watchdog. The public has a right to information provided by a media free from any form of government influence if the government is truly to be for the people and by the people. What Obama and the Democrats desire is to shield themselves from media scrutiny under the masquerade of serving the community, a tactic used by most despots and tyrants. The public is harmed when the media is controlled by a few large corporations or the government, even in the age of the internet. While there may be some legitimate complaints about how media consolidation harms local communities, such concerns can be addressed by simply re-imposing some of the limits on ownership of media outlets in a market.

However, the Democrats desire to create their own version of Huey Long's Louisiana, seeking to create Community Review Boards, make the stations constantly plead for license renewals, give outside groups more power to veto said renewals, and dictate what the content should be, all under the guise of "protecting" the "underserved" and "the community". If a Republican government came up with these ideas, one can only imagine the shrieking and gnashing of teeth among the media that would occur. However, the media does not mind selling its soul as long as it serves The Cause. Huey P. Long took over the media in Louisiana while promising to "Share the Wealth". The Democrats intend to do the same while the media doesn't just sell them the rope but ties the noose for them as well.

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Is Obama the Next Hoover?

The Cato Institute's Alan Reynolds recently wrote the Great Depression was caused not by Hoover's inaction, but rather by his actions as he took a stock market crash and turned it into a catastrophe. Mr. Reynolds opined:
"Far from "doing nothing," Herbert Hoover initiated a violent implosion of world trade and prices by signing the infamous Smoot-Hawley tariff on June 17, 1930 (Hiked tarriffs to 60%) The Commercial and Financial Chronicle then observed "a renewed violent collapse of the stock market." Benjamin Anderson, the chief economist for Citibank at the time, called the draconian tariffs Hoover's "crowning financial folly" and explained why:
"In a world staggering under a load of international debt, which could be carried only if countries under pressure could produce goods and export them to their creditors, we, the great creditor nation of the world, with tariffs already too high, raised our tariffs again ... Protectionism ran wild over the world. Markets were cut off. Trade lines were narrowed. Unemployment in the export industries all over the world grew with great rapidity, and the prices of export commodities ... dropped with ominous rapidity."....

In short, Hoover's rush to "do something" soon proved extremely dangerous to the U.S. and world economy. Hoover's trade policy seems like an extreme version of what Barack Obama proposes to do if elected. The same is true of Obama's Hooveresque vision of raising corporate taxes by 25% (in the guise of closing loopholes and tax havens), and of trying to raise income, payroll and investment tax rates for those who already bear most of the federal tax burden....
At the end of 1931, President Herbert Hoover asked for a temporary tax increase, saying it was "indispensable to the restoration of confidence." Congress went along in June 1932, raising the top income tax rate from 25% to 63% and quadrupling the lowest tax rate from 1.1% to 4%. That didn't help confidence or the Treasury. Revenue from the individual income tax dropped from $834 million in 1931 to $427 million in 1932 and $353 million in 1933.
It was Hoover, not FDR, who pushed for the biggest increase in marginal tax rates before or since. And it was Hoover, not FDR, who created the Reconstruction Finance Corporation to make lavish loans to banks and businesses--just as the Bush administration is doing today
. .."
http://www.cato.org/pub_display.php?pub_id=9671

Last week in the debate, he said he would make trade agreements dependent on labor and environment conditions. This will merely cause countries to avoid signing trade agreements with us as they will rightly perceive we are telling them how to run their country. He wants to raise taxes in an economy that is probably going into a recession. He claims only the rich will suffer, ignoring the fact the superrich that everyone loves to bash usually have their money protected in low-tax trusts and foundations. Think Obama will attack those loopholes? The ones used by Soros, the Kennedy's, and his other super-rich Democrat friends? His target is the working and investing rich, the ones who are productive with their money and make the economy run (by the way, is there anyone you personally know making over $100,000 a year who DOESN'T work hard?). However, like Hoover, Obama wants to hike taxes during a time of economic crisis, which will merely make things worse. He also resists any calls for across the board spending cuts, in a two TRILLION dollar budget. Since he is advocating making Hoover's mistakes, one must ask if Obama is another Hoover.

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Monday, October 20, 2008

Tonight's Humor is Brought to You By.....

A blogger at The Jackson Free Press. This post by the Millsaps graduate is for your amusement. Enjoy:

"There has been quite a debate over issues of tax cuts, class warfare, and shared prosperity ('spreading the wealth around'). I want to present a little tutorial on income and taxes for my friends who bemoan the idea of taxation - or, rather, higher taxation.
First, higher income always comes on the backs of the poor. After all, we buy food for cheap because we pay farm workers so low. We buy clothes cheaper because folks are willing to work for close to minimum wage without health care.
So, we could lower taxes, but would you be willing to pay much more for goods and services so the folks who "need" government service (e.g. health care, food stamps) can afford those previously provided for services?
Second, if I make higher income, someone else generally has to make a lower income - there is only enough money to go around. The economy has a fixed amount of "good" high paying jobs. The economy needs people to be willing to take low income and physically demanding jobs. Would you be willing to pay more to people who do those jobs so your taxes can be low?
Third, income tax rates are at a historical low. Take a look at the marginal historical tax rates. Go ahead, google it. Tax rates have been unbelievably high (even close to the 90 percentile in income!!).
Fourth, we are only as prosperous as our neighbor. When we lower taxes, we lower social programs. Take a look at the 1980s which led to the social upheavals of the 1990s (remember the high crime rates, teenage pregnancies, and so forth?) When we lower social programs, we cause social problems. When we have social problems, we have major expenses for YOU the taxpayer. You have to hire more police, more teachers, pay for more health care and so forth. The gist of my point is this - you are going to have to pay for "it" some how. We can lower taxes in the short term, but you'll pay for it in the long term.
The problem, then, is not taxes. The problem is government working well and working for us. So, quit bemoaning taxes and bemoan bad government programs!
posted by
John Sawyer on 10/17/08 at 07:44 AM"
http://www.jacksonfreepress.com/index.php/site/comments/a_friendly_tutorial_on_taxes/

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A Rat Killin' Story

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It's the Transparency, Stupid

Dylan Ratigan of CNBC points out the same Secretary Paulson who is trying to clean up the mess in our markets, lobbied the government while at Goldman Sachs in 2000 to change the leverage limits placed on financial institutions:

"Dylan introduces a pair of quotes from Hank Paulson when he was the CEO of Goldman Sachs back in 2000. They follow:
“We and other global firms have, for many years, urged the SEC to reform its net capital rule to allow for more efficient use of capital. This is the single most important factor in driving significant parts of our business offshore, so that our firms can remain competitive with our foreign competitors risk-based capital standards must become the norm. " - Goldman Sachs, CEO Hank Paulson, Feb. 29, 2000
...." http://www.cnbc.com/id/27217313/

Transforming a dollar of capital into forty dollars of capital is "efficient"? Keep in mind it's the leveraging that allowed the housing meltdown to crash the markets and economy. The same CNBC story reported some remarks by Morgan Stanley CEO John Mack on how reckless Wall Street firms were in leveraging their assets:

"One year ago, Morgan Stanley ran leverage at some 30-times, Mack said. This means for every dollar of capital the firm had, it carried some $30 in debt. Morgan currently sits at "slightly below 20-times leverage," he said. With the $9 billion investment from Mitsubshi UFJ Financial Group and future federal aide, Mack expects leverage to fall into the teens.
Mack indicated he now questions whether it was wise to maintain such a high leverage ratio, and he noted that other financial institutions abroad had leverage ratios of as much as 40 or more
..."

The current Secretary pushed for the rule changes causing this disaster. The Bush administration changed the rule in 2004. When the whole thing blew up, the Secretary demanded we bail out his buddies on Wall Street without ANY judicial review (thank goodness THAT was changed). He became Secretary after he cashed out of Goldman Sachs to the tune of $500 million. He resisted any limits on executive compensation and has refused to prosecute anyone involved. The esteemed Secretary ignores any discussion of making balance sheets more transparent, as firms are still allowed to keep these toxic deals off of the books. Meanwhile, no one has been indicted or forced to give back their ill-gotten gains. Money is thrown at the problem while common sense is thrown out the window.

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Sunday, October 19, 2008

Southern Crossroads Radio

Heard this program tonight on WFMN, 97.3 FM, Southern Crossroads Radio. Pretty good blues show. It would be nice to see something like this survive in the era of Clear Channel cookie-cutter programming. The website for the show is Southern Crossroads Radio.

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MSU/JSU: Why? Why Not USM?

While the local media applauds the decision by Jackson State and Mississippi State to play each other in football, JJ refuses to participate in this farce. Make no mistake, such a deal is good for Jackson State and I applaud them for landing such a quality opponent, as it means a great deal of money and attention for them. However, Mississippi State deserves criticism for making such an arrangement.

There is no reason for Ole Miss and MSU to avoid playing Southern Miss, if they are going to start playing Jackson State (USM deserves the same criticism for playing Delta State while avoiding JSU as well). LSU plays Tulane every year and picks up another Louisiana school at least every other year. Tennessee has played Memphis on more than a few occasions. Miami plays Florida. Clemson and South Carolina have a traditional rivalry. Considering this and the fact the schools begged us to spend money to expand Memorial Stadium for them, Ole Miss and MSU should take turns playing USM each year in Jackson.

Such a game should be scheduled during the state fair. One of the hallmarks of the Texas State Fair is the annual Oklahoma-Texas game held during the fair in Dallas. Imagine the turnout if such a game was held during the fair in Jackson. Since Jackson does not have many events with statewide appeal, this would be an opportunity for it to capitalize on one of the few it does. Shuttle buses could ferry visitors back and forth from the game to the fair. For once a family would have a choice between tailgating (where there is gasp, drinking) and a family-friendly Mississippi State Fair.

In times of tight budgets, it is insane for the Bulldogs and Rebels to pay hundreds of thousands of dollars in rent-a-win fees when a game with the Golden Eagles will draw a great deal more interest and money, than would a match-up with the Citadel or University of Louisiana at Monroe or Lafayette or Bunkie or whatever they call themselves each week. Mississippi State can play Jackson State on the gridiron..... after it plays Southern Miss.

Note: Earlier version of this post contained an egregious error on my part. I thought the NCAA rule was that wins against AA schools didn't count towards bowl eligibility. Since then I discovered, through the help of a commenter, that one win every two years can be used. Thanks.

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Market Ticker: Fraudacity Rampant?

Mr. Denninger keeps asking questions regarding the financial crisis completely missed by the media. He is not some conspiracy theorist or a genius. He simply reads what is published and asks questions, something our money honeys seem unable to do as they blather about the rise and fall of the Dow Empire. He coins a new word in this post, fraudacity, as he discusses the phoniness of the Bacardi Bailout:
"John Mack yesterday in a CNBC interview said that the capital deployed by Treasury into the banks was going to rebuild their capital ratios - not be lent out. In other words, they intend to hoard it.
CNBC's Fast Money finally started talking about the outright fraud and lies last night. Dylan Ratigan was absolutely on fire about the fact that Paulson was in fact one of the executives lobbying hard for removal of leverage limits in 2004, just two years before he took the position at Treasury (and cashed out $500 million in Goldman Sachs stock tax free.)
I and a few others have been peppering the media with this, and finally, someone woke up to the fact that
the very same people who made this mess now want we the taxpayers to pay for cleaning it up - after they ran off with all your money!.....
Nor does it stop there....."

Fraudacity Story

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Saturday, October 18, 2008

Bernanke Defends the Liquidity Maginot Line with the Same Results

Anna Schwartz tells The Wall Street Journal that Bernanke is using the wrong tools to solve this problem. The hapless Fed Chairman defends his Maginot Line of Liquidity while the CDO Panzers outflank him through the forest of overleveraged balance sheets. Who is Ms. Schwartz? She is 92 years old and lived through the Great Depression. She co-authored with Milton Friedman "A Monetary History of the United States" in 1963, the leading treatise on how monetary policy "turned the stock market crash into the Great Depression". Since 1941, she has worked at National Bureau of Economic Research in New York. Her thoughts on the current crisis should be taken very seriously. Regular Readers of this blog will find her remarks sound very familiar.

"Ms. Schwartz thinks that our central bankers and our Treasury Department are getting it wrong again.
To understand why, one first has to understand the nature of the current "credit market disturbance," as Ms. Schwartz delicately calls it. We now hear almost every day that banks will not lend to each other, or will do so only at punitive interest rates. Credit spreads -- the difference between what it costs the government to borrow and what private-sector borrowers must pay -- are at historic highs.
This is not due to a lack of money available to lend, Ms. Schwartz says, but to a lack of faith in the ability of borrowers to repay their debts. "The Fed," she argues, "has gone about as if the problem is a shortage of liquidity. That is not the basic problem. The basic problem for the markets is that [uncertainty] that the balance sheets of financial firms are credible."
So even though the Fed has flooded the credit markets with cash, spreads haven't budged because banks don't know who is still solvent and who is not. This uncertainty, says Ms. Schwartz, is "the basic problem in the credit market. Lending freezes up when lenders are uncertain that would-be borrowers have the resources to repay them. So to assume that the whole problem is inadequate liquidity bypasses the real issue
.".....

Today, the banks have a problem on the asset side of their ledgers -- "all these exotic securities that the market does not know how to value."
"Why are they 'toxic'?" Ms. Schwartz asks. "They're toxic because you cannot sell them, you don't know what they're worth, your balance sheet is not credible and the whole market freezes up. We don't know whom to lend to because we don't know who is sound. So if you could get rid of them, that would be an improvement." The only way to "get rid of them" is to sell them, which is why Ms. Schwartz thought that Treasury Secretary Hank Paulson's original proposal to buy these assets from the banks was "a step in the right direction."
The problem with that idea was, and is, how to price "toxic" assets that nobody wants. And lurking beneath that problem is another, stickier problem: If they are priced at current market levels, selling them would be a recipe for instant insolvency at many institutions......

Today's crisis isn't a replay of the problem in the 1930s, but our central bankers have responded by using the tools they should have used then. They are fighting the last war. The result, she argues, has been failure. "I don't see that they've achieved what they should have been trying to achieve. So my verdict on this present Fed leadership is that they have not really done their job." http://online.wsj.com/article/SB122428279231046053.html

This is what Karl Denninger has been preaching on The Market Ticker and what he said on Kim Wade's show Monday. Most of the financial reporters don't have a clue or are using the wrong paradigm to analyze this problem. Its not liquidity, its not interest rates, its not the bailout and recapitalization. Its the transparency that is key. The freezing up of international shipping is merely a symptom although its a very serious one. The Fed and Treasury ostriches refuse to acknowledge they might have made a mistake in ignoring this issue. As Ms. Schwartz and others have stated, the problem is these CDO's were private deals and too often were kept off the balance sheets yet can very easily sink a company. Until these are acknowledged and valued properly (and how do you void mark to market if they were grossly overvalued in the first place?), banks will not lend to each other and the credit markets will stay frozen.

Click Here to Read More..

Friday, October 17, 2008

Another one bites the dust

Damn. The FOURTH attorney in my law school class from Mississippi College is about to be disbarred. . Kyle Sadler, Ed Benson, Kristi Smith-Miller all disbarred; now Dwayne Deer is headed that way as he was charged with fraud. Then Laura Kuns of Diaz case fame was in my class as well. What the hell were Richard Bennet, Jeff Jackson, and Mary Libby Payne teaching us?

Another Crooked Lawyer

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Fox is in Charge of the Financial Hen House

Probably the single largest factor that caused the market meltdown was the 2004 SEC rule change that removed leverage limits. The New York Times reported:
"On that bright spring afternoon, the five members of the Securities and Exchange Commission met in a basement hearing room to consider an urgent plea by the big investment banks.
They wanted an exemption for their brokerage units from an old regulation that limited the amount of debt they could take on. The exemption would unshackle billions of dollars held in reserve as a cushion against losses on their investments. Those funds could then flow up to the parent company, enabling it to invest in the fast-growing but opaque world of mortgage-backed securities; credit derivatives, a form of insurance for bond holders; and other exotic instruments. ......

Over the following months and years, each of the firms would take advantage of the looser rules. At Bear Stearns, the leverage ratio — a measurement of how much the firm was borrowing compared to its total assets — rose sharply, to 33 to 1. In other words, for every dollar in equity, it had $33 of debt. The ratios at the other firms also rose significantly. ...... "(Kingfish note: The limit had been 12:1 before the SEC action) http://www.nytimes.com/2008/10/03/business/03sec.html?pagewanted=1&_r=1

Want to guess who spearheaded the effort by the investment banks to get the SEC to change the rules? "The five investment banks led the charge, including Goldman Sachs, which was headed by Henry M. Paulson Jr. Two years later, he left to become Treasury secretary. "

Anyone questioning the leadership of the Treasury Department as it bailed out Bear Stearns, AIG, Fannie Mae, Freddie Mac, the nine largest banks while each time promising that particular step would solve the crisis as the SAME leadership caused this debacle to happen in the first place in the private sector. Skeptical? Ask Secretary Paulson when he is going to force the banks and other financial institutions to put these CDO's and other off-balance sheet assets or losses on their balance sheets so we can finally have an accurate picture of our financial health? Why does he insist on throwing money at the problem while avoiding the issue of transparency? Sixty Minutes recently reported the credit default swap market could be as large as $60 TRILLION dollars but no one knows for sure because they are not regulated or registered, yet we are assured by the Secretary and Federal Reserve Chairman that spending $700 billion on the banks will fix the problem.

Tic..tic..tic.. that is the sound of invisible off-sheet swaps and balance sheets waiting to explode.

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Bloomberg: Letters of Credit Frozen, "Nothing Is Moving"

FINALLY some of the American media is beginning to wake up to the shutting down of international shipping. Kingfish has been warning you about this little-known disaster in the making while the media has been asleep at the wheel. Bloomberg reports:

"Oct. 15 (Bloomberg) -- Commodity shipping rates plunged to the lowest in more than five years as a lack of trade finance left cargoes stranded and the global economic slowdown limited raw material demand.
Traders are finding it harder to get letters of credit that guarantee payments for goods, shipping executives said.
Together with a slowdown in trade, that has contributed to this year's 82 percent drop in shipping costs for grain, coal and other commodities. Rates are so low that Zodiac Maritime Agencies Ltd., the line managed by Israel's billionaire Ofer family, announced today it may idle 20 of its largest ships.
``Letters of credit and the credit lines for trade currently are frozen,''
Khalid Hashim, managing director of Precious Shipping Pcl, Thailand's second-largest shipping company, said in Singapore yesterday. ``Nothing is moving because the trader doesn't want to take the risk of putting cargo on the boat and finding that nobody can pay.''
The Baltic Dry Index fell 11 percent today to 1,615, the lowest since February 2003
. Rates for larger ships of the type Zodiac intends to idle fell 17 percent today, taking this year's plunge to 85 percent, according to the London-based Baltic Exchange.
Banks are leery of financing commodities and shipping transactions.
Rio Tinto Group, the world's second-largest aluminum producer, may delay the planned sale of $10 billion of assets and Sterlite Industries (India) Ltd. shelved its $2.6 billion purchase of Asarco LLC. Ship owners can't find cash to finance the construction of new ships...."
http://www.bloomberg.com/apps/news?pid=20601087&sid=alFFUQ8a.WZM&refer=home

Naked Capitalism posted some more information on the slide of the BDI. There are also some good comments at the end of the story. http://www.nakedcapitalism.com/2008/10/baltic-dry-index-falls-nearly-20-in-two.html?showComment=1224057420000

If I had to make a completely uneducated guess, I think this is an example of what completely spooked Bernanke and Paulson into injecting $250 billion into the banks instead of first buying the bad paper. They see the wholesale rejection of letters of credit and trade credit by shippers, causing a depression and other crisis's if allowed to worsen. If the trade credit implodes, then we are facing a real economic disaster.

Earlier posts on this subject:

Time to Wake Up
More News about Grain Piling Up in Port
International Trade Shutting Down?

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Trollfest '09

Trollfest '07 was such a success that Jackson Jambalaya will once again host Trollfest '09. Catch this great event which will leave NE Jackson & Fondren in flames. Othor Cain and his band, The Black Power Structure headline the night while Sonjay Poontang returns for an encore performance. Former Frank Melton bodyguard Marcus Wright makes his premier appearance at Trollfest singing "I'm a Sweet Transvestite" from "The Rocky Horror Picture Show." Kamikaze will sing his new hit, “How I sold out to da Man.” Robbie Bell again performs: “Mamas, don't let your babies grow up to be Bells” and “Any friend of Ed Peters is a friend of mine”. After the show, Ms. Bell will autograph copies of her mug shot photos. In a salute to “Dancing with the Stars”, Ms. Bell and Hinds County District Attorney Robert Smith will dance the Wango Tango.

Wrestling returns, except this time it will be a Battle Royal with Othor Cain, Ben Allen, Kim Wade, Haley Fisackerly, Alan Lange, and “Big Cat” Donna Ladd all in the ring at the same time. The Battle Royal will be in a steel cage, no time limit, no referee, and the losers must leave town. Marshand Crisler will be the honorary referee (as it gives him a title without actually having to do anything).


Meet KIM Waaaaaade at the Entergy Tent. For five pesos, Kim will sell you a chance to win a deed to a crack house on Ridgeway Street stuffed in the Howard Industries pinata. Don't worry if the pinata is beaten to shreds, as Mr. Wade has Jose, Emmanuel, and Carlos, all illegal immigrants, available as replacements for the it. Upon leaving the Entergy tent, fig leaves will be available in case Entergy literally takes everything you have as part of its Trollfest ticket price adjustment charge.

Donna Ladd of The Jackson Free Press will give several classes on learning how to write. Smearing, writing without factchecking, and reporting only one side of a story will be covered. A donation to pay their taxes will be accepted and she will be signing copies of their former federal tax liens. Ms. Ladd will give a dramatic reading of her two award-winning essays (They received The Jackson Free Press "Best Of" awards.) "Why everything is always about me" and "Why I cover murders better than anyone else in Jackson".

In the spirit of helping those who are less fortunate, Trollfest '09 adopts a cause for which a portion of the proceeds and donations will be donated: Keeping Frank Melton in his home. The “Keep Frank Melton From Being Homeless” booth will sell chances for five dollars to pin the tail on the jackass. John Reeves has graciously volunteered to be the jackass for this honorable excursion into saving Frank's ass. What's an ass between two friends after all? If Mr. Reeves is unable to um, perform, Speaker Billy McCoy has also volunteered as when the word “jackass” was mentioned he immediately ran as fast as he could to sign up.


In order to help clean up the legal profession, Adam Kilgore of the Mississippi Bar will be giving away free, round-trip plane tickets to the North Pole where they keep their bar complaint forms (which are NOT available online). If you don't want to go to the North Pole, you can enjoy Brant Brantley's (of the Mississippi Commission on Judicial Performance) free guided tours of the quicksand field over by High Street where all complaints against judges disappear. If for some reason you are unable to control yourself, never fear; Judge Houston Patton will operate his jail where no lawyers are needed or allowed as you just sit there for minutes... hours.... months...years until he decides he is tired of you sitting in his jail. Do not think Judge Patton is a bad judge however as he plans to serve free Mad Dog 20/20 to all inmates.

Trollfest '09 is a pet-friendly event as well. Feel free to bring your dog with you and do not worry if your pet gets hungry, as employees of the Jackson Zoo will be on hand to provide some of their animals as food when it gets to be feeding time for your little loved one.

Relax at the Fox News Tent. Since there are only three blonde reporters in Jackson (being blonde is a requirement for working at Fox News), Megan and Kathryn from WAPT and Wendy from WLBT will be on loan to Fox. To gain admittance to the VIP section, bring either your Republican Party ID card or a Rebel Flag. Bringing both and a torn-up Obama yard sign will entitle you to free drinks served by Megan, Wendy, and Kathryn. Get your tickets now. Since this is an event for trolls, no ID is required. Just bring the hate. Bring the family, Trollfest '09 is for EVERYONE!!!

This is definitely a Beaver production.


Note: Security provided by INS.

Trollfest '07

Jackson Jambalaya is the home of Trollfest '07. Catch this great event which promises to leave NE Jackson & Fondren in flames. Sonjay Poontang and his band headline the night with a special steel cage, no time limit "loser must leave town" bout between Alan Lange and "Big Cat"Donna Ladd following afterwards. Kamikaze will perform his new song F*** Bush, he's still a _____. Did I mention there was no referee? Dr. Heddy Matthias and Lori Gregory will face off in the undercard dueling with dangling participles and other um, devices. Robbie Bell will perform Her two latest songs: My Best Friends are in the Media and Mama's, Don't Let Your Babies Grow up to be George Bell. Sid Salter of The Clarion-Ledger will host "Pin the Tail on the Trial Lawyer", sponsored by State Farm.

There will be a hugging booth where in exchange for your young son, Frank Melton will give you a loooong hug. Trollfest will have a dunking booth where Muhammed the terrorist will curse you to Allah as you try to hit a target that will drop him into a vat of pig grease. However, in the true spirit of Separate But Equal, Don Imus and someone from NE Jackson will also sit in the dunking booth for an equal amount of time. Tom Head will give a reading for two hours on why he can't figure out who the hell he is. Cliff Cargill will give lessons with his .80 caliber desert eagle, using Frank Melton photos as targets. Tackleberry will be on hand for an autograph session. KIM Waaaaaade will be passing out free titles and deeds to crackhouses formerly owned by The Wood Street Players.

If you get tired come relax at the Fox News Tent. To gain admittance to the VIP section, bring either your Republican Party ID card or a Rebel Flag. Bringing both will entitle you to free drinks.Get your tickets now. Since this is an event for trolls, no ID is required, just bring the hate. Bring the family, Trollfest '07 is for EVERYONE!!!

This is definitely a Beaver production.

Note: Security provided by INS
.