Irish eyes ain't smilin'

During the peak of the financial crises a couple of years ago,
when it seemed possible that the entire banking system could unravel,
I was in Bucharest for a week. I was having lunch with some Romanians
and they were asking me what was going on in the USA, their pensions
were in AIG. I gave a "I'm sure everything will be fine" that I didn't
believe and felt glad that I had wired some money to Europe the week
before, I thought the dollar was going to continue sliding.

I apparently suck at financial analysis because I had sent the money
at the peak of pessimism at 1.55 eurusd, then sent most of it back at
the peak of european fear last year at 1.25. Doh. (not even doh with
exclamation point, just doh.

Someone who doesn't suck at financial analysis is Michael Lewis from
Vanity Fair. I wanted to buy his book 'the big short' in houston last
year, but I was already burdened down like juan valdez' mule and couldn't
take a hardback book with me. A lot of content from that book is online,
including the story of AIG's trading group as told to Mr Lewis by insiders.

It was good that we didn't let the Romanian's lose their pensions, but
they could have done it without making The Goldman Sachs whole, or providing
a windfall to a guy that was betting against the housing ponzi scheme
instead of screaming about the problem from the rooftops. His story
is told in The Big Short and in a really excellent excerpt we get most
of the story in "Betting on the Blind Side"

That guy Dr Burry is a genius and he deserves to get paid, but very few people
put the whole problem together like he did, and certainly no one in
the government figured it out. (I could see it was a bubble, I knew
that the mortgages were being sold off as bonds from reading 'Liar's
Poker', but I had never heard about CDS' and CDO's before 2008)
Hopefully next time someone sees Armageddon coming down the pike, they
won't just buy CDS's against meteor strikes. ("so if a 100 m tall wave
washes us away, you have to pay $2MM? I'm rich bitches. But don't tell
anyone if they don't buy my newsletter.")

I also like ML's article on the Irish disaster where the government guaranteed a bunch of bankster money, putting the irish people on the hook for a few year's worth of tax revenue instead of just dumping the bondholder's
overboard like the more sensible Icelanders did.

A good beginning

A link from The Big Picture led me to a column from Senator
Ted Kaufman of Delaware that lays out a plan for rebuilding
the financial system. It sounds pretty sensible to me, this whole
idea of Too big to fail should mean a company needs to be broken up
before it fails.

It's too long to excerpt, but here's the highlights:
The Volcker Rule: A Good Beginning
Glass-Steagall for the 21st Century
Size and Leverage Constraints: Cutting the Mega Banks and Shadow Banking System Down to Size

Hopefully something will be done to wind back the clock to the 1970's, if
there's another financial crash I don't think the USA has much left on it's credit
cards to do another bailout.

Future company mergers

From Atlas Shrugs, a list of future company mergers:

Watch for these consolidations later this year:

1. Hale Business Systems, Mary Kay Cosmetics, Fuller Brush, and W. R. Grace Co. will merge and become: Hale, Mary, Fuller, Grace.

2. Polygram Records, Warner Bros., and Zesta Crackers join forces and become: Poly, Warner Cracker.

3. 3M will merge with Goodyear and become: MMMGood.

4. Zippo Manufacturing, Audi Motors, Dofasco, and Dakota Mining will merge and become: ZipAudiDoDa.

5. FedEx is expected to join its competitor, UPS, and become: FedUP.

6. Fairchild Electronics and Honeywell Computers will become: Fairwell Honeychild.

7. Grey Poupon and Docker Pants are expected to become: PouponPants.

8. Knotts Berry Farm and the National Organization of Women will become: Knott NOW!

And finally, ...

9. Victoria's Secret and Smith & Wesson will merge under the new name: TittyTittyBangBang.

Breadlines R us

The house just voted down the bailout procedure and my stocks to
watch list on Yahoo is entirely red. Gah. One benefit of being in
Italy for the next great depression is that if there are breadlines the
bread here is yummy. Not that crummy bunny bread stuff for me.

If it gets that bad I'm sure we'll be shown the door pretty quick
though. It'll be "no bread for you", and out the door we go.

Hopeful panicking

We've been traveling for the past week while the double storms hit
back home, one the hurricane in galveston, the other the collapse
and possible resuscitation of the financial system. Watching events from
europe my face took on the appearance of several smileys from msn,
especially the one with teeth gritted and hand up in fear.

Hurricane Ike doesn't look like it was as bad as it could have been.
A little more severe and a little further west and galveston and south
houston would have been tostada. The mayor of Houston and Judge Ed
have things firmly under control and made adjustments to federal delivery
drops that made things better. (I think not perfect outcomes from the
feds is inevitable, it just demonstrates why most power should be at the state
and local levels)

The shitstorm in new york is even worse and left me bouncing from one foot
to another deciding if I should try and move whatever cash I have to euros
right away and sell every stock. Apparently I'm a good indicator for panic
because right at the point I was about to sell what stocks I have, everything
rebounded 10%, I'm lucky it takes me a couple of days of bouncing from foot
to foot to make a decision.

I'm in the hopefull panicking stage now. Maybe this bailout thing will work
and the government pledging it's full faith and credit for all this bad debt will
win the day. I feel more like I'm at a bar and I'm watching two drunks trying
to pay the tab. The first drunk is fairly shabby looking and hands over a beat up
nearly expired mastercard, the bartender runs it and it is declined. The second
drunk says " no problem, I got this one" and pulls and equally shabby looking creditcard
out and hands it to the bartender. If the bartender runs it, it might be declined
then he'll be short on his register. He does the safer thing and just takes a paper
imprint and sends the two drunks off into the night. The bar might never get paid
but at least he won't be short that night.