Read This

It is not in the easiest format and I am posting it a little late, but it's worth a read nonetheless.

Ugh

Lately, I've gotten tired of following all the developments in the de-capitalization of the capital markets. This bailout and that bailout. This promise and that promise. Those bonuses and whose bonuses? Everything is such a mess and it is going to take a while for it to be resolved. I'm tired of analogies putting the financial mess into terms even I can understand.

I'm suffering from negative-data-fatigue-syndrome or NDFS for short. It's exhausting being inundated with and having to process unemployment figures, growth figures, money supply changes, trade data, current account balances, consumer spending numbers and all the random indices that come out every week. And I'm an information fiend. I like to be on top of it. But, 'it' has gotten so big that I would have to leave my job in order to track 'it' to the extent that it deserves. But I can't leave my job cause there's a recession going on.

I have a high tolerance for information so I am used to handling a lot at once, but it is starting to get ridiculous. I would rather be smacking you with information instead of having it smack me. Ugh.

Good Piece From Rolling Stone

This stuck out:

As complex as all the finances are, the politics aren't hard to follow. By creating an urgent crisis that can only be solved by those fluent in a language too complex for ordinary people to understand, the Wall Street crowd has turned the vast majority of Americans into non-participants in their own political future. There is a reason it used to be a crime in the Confederate states to teach a slave to read: Literacy is power. In the age of the CDS and CDO, most of us are financial illiterates. By making an already too-complex economy even more complex, Wall Street has used the crisis to effect a historic, revolutionary change in our political system — transforming a democracy into a two-tiered state, one with plugged-in financial bureaucrats above and clueless customers below.

He maintains a good balance between scathing sarcasm and simplifying complex events. A lot of time is spent mapping out the relationships of the current players: Paulson, Geithner and the guys who were/are running banks. It's a small world and everyone wants to help out their old friends.

The entire piece by Matt Taibbi can be found here.

First Pass

Lance crashes in Spain; future races in doubt [cyclingnews]
Canada's banks are looking more and more liquid [portfolio.com]
A fantastic idea [clusterstock]
A very timely analogy explaining the most recent round of bailouts [econlog]
More on Geithner's 'plan' [self-evident]
I'm not a huge Alberto Contador fan, so it was nice to see this [velonews]

First Pass

AIG just can not stay out of the news. Now, there are publicizing their counterparties who are getting bailout money and their bonus program is coming under harsh criticism. [Bloomberg]

This gets a little technical, but it is a good explanation of credit spreads, CDSs and broader view of the industry. [A Credit Trader]

Canadian growth will not be in line with the Bank of Canada's most recent estimate. [Report on Business]

An unexpected move by OPEC. [Bloomberg]

Mixed Bag

I read Madoff's allocution the other and was immediately struck by the fact that he deposited large sums of cash into accounts at J.P. Morgan Chase. How did the bank not know that something was? Maybe they did... [Portfolio.com]

An interesting piece on magnesium bikes. My bike is a carbon fiber monocoque and I've heard of titanium bikes, but I've never heard of a magnesium bike [velonews.com]

I watched Cramer get trashed by Jon Stewart. Stewart did a good job of asking relevant questions and Cramer did a good job of not really answering them while at the same time admitting he may have made a mistake or two. I think CNBC is in a bad position. They can't decide whether or not they want to be an entertainment channel or a news channel. One could argue that they've managed a decent balancing act until now, but that their perceived position is changing.

It was easy to fly all over the world with the CEOs of various banks and go on rants about companies and yell at the government when the markets were going up. But ever since the market has gone down, CNBC is seen more as part of problem rather than an impartial entity reporting on the problem.

They would argue that in order to get the best stories they have to be tight with the Wall St. inner circle, that there is no other way and that this is part of the territory. Wall St. is run by insiders and so CNBC promotes and rallies behind the companies and people it wants to remain close to in order to maintain a competitive advantage over the other financial news organizations.

I can understand why Stewart thinks that CNBC contributed to the current financial mess. They were bullish up until the very last second and started up again as soon as they could. The part that bugs me, though, is that Stewart thinks that CNBC is responsible for the drop in his mother's retirement fund.

Why are investing and finance areas where it's ok to be ignorant? You don't drive a car with knowing the rules of the road, how to operate it and what the risks are. If you don't understand the risks involved, that's fine, just don't invest and instead, put all of your money into a savings account. If you do invest, you must be prepared that crazy stuff will happen. People must take responsibility for their actions. That is the key point. Everyone wants to be absolved of responsibility and play the blame game. Granted, derivatives got out of hand and everyone bet against them all being in the money at once. But, the probability isn't zero. It's larger than we'd initially think, but it's definitely not zero.

And don't give me some story about an investment professional telling you that your money would grow at 7% indefinitely and you just did what they said and now your portfolio is down 50%. You could have not invested. If you are shocked at being down 50% you should never have invested. No one forced you to. You did it because you got greedy just like the Wall St. CEO's that are taking all the heat (I am in no way defending what they did. They got super greedy and bet the farm without fully understanding the risks and that was stupid.).

You could have put your money under the mattress and not participated in any of the craziness.

First Pass

And again...Paulson & Co cleaning up the UK banking sector [ftalphaville]
A nice discussion of AIG, CDSs and moral hazard [Econbrowser]
More on moral hazard [CafeHayek]
John Galt would hate this bill [Report on Business]
Libor rate are indicating that credit markets are still frozen [Bloomberg]

It's A Good Thing She's Got Such Valuable Insight

...to balance with her good looks.

First Pass

This can't be good. [dshort.com]

Black Swan hedge fund closing because they're are making too much money. [Bloomberg]
Rogue traders at MER before BOA bought em? [Bloomberg]
So timely. If you haven't read this yet, now's the perfect time. [Asymmetric Information]
More on BOA's lack of due diligence. [ftalphaville.com]

More Michael Lewis

I'm a fan of his pieces. This is his latest in Vanity Fair. He also had a good one, here, at Portfolio.com.

FIrst Pass

It's refreshing to see that someone had a good year. I guess with fewer players in the market it's easier to make a profit. [Bloomberg]
Low nat gas prices are trickling through and producers are beginning to shut-in. [Oil and Gas Journal]
Debt begets more debt. [The Australian]

A Look Around

A big loss, matched with more gov cash at AIG. [Globe And Mail]
Sorry Eastern Europe, we've got our own issues. [WSJ]
Oooooh, and that's a bad miss. [Reuters]
Think Q4 Canadian GDP will be as bad as the US? [Bloomberg]

WOW

I way underestimated the amount of money the US government has spent so far. It's not $1.7T, but $2T. Not a huge amount, but when you're measuring in billi...., no wait trillions, 17% is non-trivial. They've committed almost $9T, but have only spent a fifth so far.

Early? Or Late? Pass

Who's with Rick? I am. [FreedomWorks.org]
What's a copula? [Wired]
Mortgage payments are beginning to converge to rent. [WSJ]
The gas lobby. [WSJ]

Everything Is Down

Nat gas traded below $4/MMBtu, the DOW is in the 7330's, the TSX is sub 8000, crude is off 1.62 to $37.86. Fortunately the despair can be hedged with another falling asset. Gold is the only thing going up and may hit $1000 by the end of the day.

I wonder how much money the US government needs to throw at this in order for things to turn around? $5 tril? $7 tril? Taking Bush's $.7 tril, Obama's $.7 tril, bailout of Wall St at about $.2 tril, housing and auto bailout at $.1 tril, we're currently at $1.7 tril (keep in mind that I'm just trying to remember all the numbers I've read about in past few months and I may be off...) and nothing.

Westjet: The Last One Standing

I say, let Air Canada go down. They don't come close to WestJet in terms of service or business model. WJ has never gotten government assistance and AC just keeps going to the trough.

First Pass

Dismal housing numbers out of the US today may be a good thing. [Clusterstock]

Interesting relationship between shipping and commodity-driven exchange rates. [Bloomberg]

It's comforting to know that the BofC governor is worried about how much debt we all have. [Globe And Mail]

Did Stanford set off a bank-run?? [Reuters]

The GBP is down on calls for quantitative easing in the UK. [Guardian]

Looks Like Someone's Still Got Some Cash

Russia, China sign $25-billion energy deal [Globe And Mail]

First Pass

IEA: Oil Going Right Back To $150 Again [Business Insider]
Stanford investigation sparks fears in Antigua [Reuters]
U.S. oil falls to $37 on demand concerns [Reuters]
An overview of the proposals to fix the financial system [Vox]
Markets, dollar tumble in early trading [Globe And Mail]
Oil Falls Below $36 as Deepening Recession Cuts Fuel Demand [Bloomberg]
Lloyds facing further writeoffs as HBOS loan losses mount [Guardian]
US shares dive on doubts over rescue stimulus [Times UK]

Ultimatum Time

Report: GM considering Chapter 11 filing [Globe And Mail]