Whidbey

2008 - Where I Was Right and What I Could Not Have Imagined

Your forecast and comments sere prescience pure and simple.

I hate the pain yet to come, but I suspect you are correct GE is on the slippy slope and the autos too.

It will be different the next time, but who will give us justice for the lies and deceit that lead to this economy? No one, we were fooled by our own passion for the good life and undone by a generation or two of hedonists. I hope the Boomers drown in this sea of woe they created. Really!

Bond Expert: Friday Outlook

Yes, like the cat the US Treasury comes around twice a week offing its spawn and the Chinese say they still like it.

But what seems to be making us all nervous is the ease with which CitiGroup is apparently being talked into suicide by various unknown traders. It is unnerving to those of us who hold GI and hate having to give them up get some piece of mind. Is cash becoming dangerous?

Berkshire Hathaway Down Nine Days in a Row

Disquieting too. The scuttlebutt is that the CDS used to cover recent investments have been priced out of all reason, or went up, in any case. So there is concern over the LT solvency of BRK or its future growth rate, or has the great man stumbled in his deal timing, or god forbid , all three. I think he as been a little early in making his plays. Interesting graph, thanks.

Dear Mr. President-Elect: Advice on Combating White-Collar Crime from a Convicted Felon

Interesting, but not complete. Most Boards are involved in systematically robbing the shareholders by diverting large sums to executive compensation, special pay to board members and compensation for "finding deals or finance etc.". The large corporations spend lavishly for training, meetings, tours and inspections. The crimes are many and the auditors go for, because you know who hires them.

Congress robs the public with travel, health care, district offices and retirement
pensions that are in effect golden dreams for little more than answering role calls. The days of citizen legislators is gone and the age of the professional legislature with a staff of twenty toads is here, yet they use our money to rob, misgovern and wreck the state.

While we are at it, I spent some time as a senior officer the in the military. The problem of competency is very real there too. Promotions are very "club" oriented and if the best man is selected he will likely not be the most popular candidate with the selection board. And if the pols like an officer, who cares what the selection boards wants? The "Yes" man or women will be elevated even if he or she is known to be a ninny, incompetent and drag on the armed force. Who needs 110 admirals? Why 12 four star generals in peace time? Is it the responsibility or getting the old boys and girls their day in the values, and getting the retirement sweeten. If you go into retirement at age 50 as a bird col you, on average, earn more in retirement than during active service. Make sense?

Why AIG Was in the CDS Business

What we will never understand is why AIG management would enter a line of business (CDS)that had the potential of taking the firm down, or simply did not know what the risk was.

Insurance theory requires reserves against insured risk (as actuaries access the risk.) In this instance it was apparently believed that AIG was too big to fail, or management was ignorant of the risks, or less than honest.

Bond Expert: Friday Wrap

If the GNMA is now issuing "warnings" things are turning a deeper shade of black, if possible.

The government's credibility, along with its underwriting on treasuries as Full Faith and Credit Instruments, (albeit they are honored with a lesser currency), will now be questioned anew by citizens and foreign creditors alike. Is this a set up? Clearly, this the beginning of the end of an orderly monetary/debt system. My clients in China are saying that they see a diversification away from anything issued by the US government or its business sector.

More on the Bond Auction

Delightful lesson.

Hidden Crash: The Dumping of Venture Funds

Great insight on the trends. My experience as a lawyer is about the same, product extension mergers are still alive compared to portfolio acquisitions which are dying or dead. I suspect that the portfolio investors are right to be slowing down. I have been in practice 40 years and seen downturns and I agree with your concusions. The economic slow down will hit venture investing hard and I think that a good part of that is the earnings shifts that change the PV analysis of the targets revenues and shifts a lot of attention to asset analysis. That means that service oriented ventures are virtually off the market for a time. The shift investors is also interesting. Well done.

Bond Expert: Thursday Outlook

Thanks for the table, it is helpful.

I will be glad when the funding is over to see what the market shapes out to be.

Selective Data: State by State Unemployment

Good,

but why not add that significant unemployment virtually assures no inflation now or later, at least until unemployment falls. It does, on the other hand, point to the possibility of deflation induced by decreased demand, lower earnings and lower values for tangibles (and intangibles too probably). Deflation is one economic problem that most pols and economists have no idea how to manage, or cure. It is really bad news!!

John Hussman: It's Tough to Buy Into Fear

Your funds reflect this philosophy? I want to believe, but I have some terrible scares from being a chump. I am looking and I will look at your funds. Thanks

The Fed Money Machine Gears Up to Print Trillions

You have seen nothing yet.

When Congress convenes they will pump heavy bucks into pet projects, needed or not, and they will use the economic recovery as an excuse to engage in "redistribution&q... among the social classes. The party has yet to start, but when it does it will feel good !- then not so good. The first stage of inflation is stimulative, in its later form it leads to utter revulsion.

Great Post.

The One-Word Topic of the Day, and Week: Obama

Get real, if you can. Obama is just a human with some skills and none of them are in finance or economics. We have problems that will have to be lived out, muddled through, not fixed with a single stroke. It is not energy for doing we lack, is not knowing what to do.


On Nov 07 05:32 PM User 118015 wrote:

> Obama will make the nessasary changes to get this country going again...the
> economic news is obscene and unamerican and unworthy of a great nation.
> Building the intrastructure which has fallen into decay could be
> a priority and provide jobs for engineers and construction workers.
> Building a new green source of energy and a new source of green transportation
> will provide jobs for everyone.
>
> If the FDA would let loose with new management, drug products that
> have been canned because of political reasons can get a chance to
> get on the market along with new stem cell therapies and drugs given
> half a chance by a rational administration. MarvinMBA

Unemployment Rate Soars, Recovery Outlook Worsens

It is easy to get too pessimistic, but in this instance unemployment means lost consumer demand and that spells lost earnings. When earnings fall, stock prices fall and we enter a deflationary spiral. Volcker was good at inflation in the past, but this is a different problem. Economists do not know what to do with deflation. Helos with bucks from Ben is no answer but his silly remark emphasized how little we know about combating deflation. The Ice Age in Japanese equities is the laboratory for what does not work, but even Obama does not have a chance in breaking this spiral without also breaking the bank. Get nervous.

Buffett on Investing vs. Business

Interesting, but to his investors it is really of no concern. BRK is so diversified that it can survive, if not prosper, in most markets.

What I am concerned about is the strength of the whole US economy and the main economies of the world. The weakness we are seeing is a consequence of globalization I suspect (connections), coupled with idiotic behaviors by many adults (no judgement).

The talk of regulation leaves me a little crazy since I have worked in corporate regulatory affairs for a long time and they develop new kinks before the old can be fully understood and ruled on. Some day, maybe next week, the wheels are going to come off and no one is going to be able to do a thing about it.