Wednesday, December 31, 2008
Then I thought about all the pain these sub prime deadbeats are causing the economy and all the banks that are asking me for my tax dollars to pay for their stupid mistakes, not to mention all the gray haired middle age bankers who scoffed and laughed at me and my ilk when we said there were problems in the housing market. And so on second thought, naaaahhhh, I'm going to continue to gloat;
And thus, let me give you the 2008/2009 New Year's Toast
May your houses and Mercedes get repossessed.
May you lose the job you earned through having nice hair and kissing the boss' ass at the expense and integrity of the firm.
May your toxic wife leave you as you no longer can establish a line of credit to rent her.
May your children actually have to pay their own way through college and learn to hate you as you spoiled them this entire time and accustomed them to an unsustainable level of living with other people's money.
May you never travel to Europe, Arizona or any other luxury trips ever again.
May the IRS come knocking at your door this April.
And may you have to get a real job and produce something of worth.
HAPPY NEW YEAR!!!!
Monday, December 29, 2008
Sunday, December 28, 2008
"While Zorba was the last of the three musketeers I dealt with, Aramis was the first. And though not as eccentric as Zorba, he too had his similarities and eccentricities. Like Zorba, Aramis was also a “super tan man.” Though without the Hawaiian shirt in January and a medallion nestled in his chest hair, his hue told me he was also spending an inordinate amount of time in a tanning booth or on a beach. Additionally, Aramis was in real estate, and like Zorba was what I called a “pretty boy” real estate developer. “Pretty boy” meaning they may have been the “developer” of a property, but they weren’t the actual ones laboring to build the property. The “real” developers wore work boots to the bank and dusted up our chairs with sheetrock dust. The Three Musketeers just moved money around. Aramis was also a good friend of the banker, and like Zorba would talk about actual business 10% of the time and grilling, drinking, boats, cars and golf the remaining 90% of the time. They were quite the same.
But while Aramis and Zorba were similarly exotic, the deal he brought into the bank was so commonplace and overdone that the details are not worth explaining. Aramis was a developer who wanted some amount of money to build some new twin home development, in some far flung suburb, targeting some group of young folk. Aramis hadn’t conducted any kind of absorption study, therefore compelling me to pull some quick supply figures. These figures would show an excessive and gluttonous level of similar housing in the area which would guarantee the spectacular demise of this development. But of course I would be countered with the argument these developments were different because they threw a duck feces-infested pond in the back, had a club house or some other such thing, and therefore would not only sell, but sell faster and for more than the comparables. Besides which, Aramis could personally guarantee the loan; please write it up anyway.
It was the same broken record song I had heard a million times before.
But while his deal was common, Aramis had two exceptional and unique skills; tax returns and guilt tripping.
In true real estate developer tradition, Aramis furnished nowhere near the amount of documentation necessary to fully and adequately analyze his proposal. And like most other developers before him, he failed to file his taxes on time, had to file an extension and so we were stuck with a 2005 tax return that was now approaching 19 months old.
But what was most disturbing wasn’t that his tax return was dated, but that it showed a loss in 2005. And not only that, but his 2004 tax return also showed losses. Given his stories that paralleled Zorba’s about going out on the boat, Arizona golfing trips and other such luxuries, I found it odd that according to my tax returns I made more money than this presumed real estate mogul, yet I was not living his middle-aged-man, Metamucil jet set lifestyle. This, combined with a dearth of other documentation I needed to write up the loan, made it highly unlikely we were going to approve Aramis’ latest real estate development.
When I presented my findings to the banker, particularly the fact he had lost money in two years that were presumably banner years for real estate, I was more confident than usual this deal would be shot down. But as bankers became more and more desperate as the housing situation became progressively more dire, surprises became more and more frequent, and I was about to get one of the most outlandish lines that would resurrect my now perfected credit union face of disbelief;
“Well, he shows losses on his tax returns to lower his tax bill. He makes a lot of money; he’s just trying to hide his income.”
Being a capitalist and understanding the natural incentive to lower one’s tax bill, I could appreciate an individual taking whatever legal measures necessary to minimize their reported income. But I also knew the difference between cash expenses and non-cash expenses, as well as stated profits and cash flow. It was one of the most incredulous lines of BS I had ever heard in my entire banking career.
“Oh, I know that he’s showing losses on his tax returns. Oh, and I know it was during the two best years in real estate history. But you see, he’s really making money. He has $4 million in cash just floating around. You just don’t see it. But it’s there. It’s invisible! It’s magic money!”
Additionally, the banker said it so matter-of-factly I almost sensed he was trying to insult me or make it sound like this was common knowledge. That all multi-millionaires show losses on their tax returns. But he may as well have been trying to convince me it was just as common knowledge that gnomes protected the bank’s vaults at night with their swords that were made by magic Federal Reserve fairies.
Crazy as an excuse as it may have been, I had heard this excuse once before from another developer in my days at the credit union. But in his case it was legitimate as he furnished us with an audited personal income statement compiled by a reputable CPA firm which showed one time items had distorted his true income and cash flow. Therefore, this particular individual really did make some money and it was a one-time event he posted a loss. Thinking there was an outside chance this was something similar, I asked the banker if he had an audited income statement prepared by a CPA.
“Uh, no, he just has his tax returns” the banker responded.
Of course. The implication was I was just supposed to take this man on faith. I was literally to believe in magic, invisible money and the heroic Guardian Gnomes of the Bank Vault.
By now I was getting angry and tired. It was the same damn thing, over and over again;
Some real estate developer had an ill-thought out plan for a real estate project. The housing and economic data would prove it was doomed to failure. Bankers blinded by their greed for commission would ignore the realities and risks, and fight to have the deal approved. We’d get a direct order to write it up anyway, but when we’d try to analyze it, we were guaranteed to never have the documentation needed to analyze the loan. And now, not only did I have grossly inadequate documentation, I was to ignore what documentation I did have. I was to ignore the losses on this individual’s tax returns and just trust he was making lots of money or whatever else he wanted to tell me. I’d rather believe in the sword-making Federal Reserve Fairies.
Now visibly losing my patience, I asked the banker in a somewhat stern tone,
“How are we supposed to know what his cash flow is then? How am I to measure his ability to pay back this loan? How am I supposed to write up this loan? I can’t do this unless I get more documentation.”
He could hardly argue, even if his sole interest was getting a commission. Aramis had such a lack of needed documentation, plus the fact he was losing money according to his dated tax returns, it almost necessitated, even by the banker’s standards, we get more documentation. He said he’d put in a call and see what updated information he could get.
A week had gone by and as usual we did not receive any new documentation. However, instead of sending us his tax returns, Aramis himself was going to come to visit and talk to us about his real estate deal and answer any questions we might have. Returning to the airplane analogy, this would be like needing wings for a plane, and instead of the manufacturer sending us the actual wings, a representative would come to our office and talk about wings. Talking about wings would presumably be enough then to get the plane up in the air and flying. Of course it wouldn’t. All it would do is waste my time. I didn’t need Aramis to talk to me about a deal. I didn’t need Aramis to explain to me how his twin homes were different. I didn’t need Aramis to explain how he was making money. I needed Aramis to prove it. And the fact he wasn’t sending any documentation, audited or otherwise, meant I was going to have to suffer through another sales pitch, interweaved between stories of boat parties, golf trips, Viagra and the baby boomer bar scene that largely wouldn’t change a thing.
The banker introduced me to Aramis and despite there being snow outside, Aramis was sporting his nice, dark tan. We sat at a conference table and there I listened pointlessly for 30 minutes about Aramis’ business, how he was super busy working on all these real estate deals and hadn’t gotten around to filing his 2006 tax returns. But it should be of “no concern, because those tax returns would show losses anyway, which were irrelevant because he was just trying to lower his income tax bill. And say, did you see Frank by the way? Yeah, they went golfing in
And like any other meeting or high school economics class, it was humanly impossible to pay attention, let alone care. Aramis could have told me all the stories he wanted. He could have told me how his business worked in detail (to the point that it would make sense). He could have told me he just discovered platinum in his back yard. He could have told me he personally knew Jennifer Aniston and she had a weakness for video game-playing economists. None of it would matter because he still wasn’t providing any documentation to back it up. The loan I was looking at was for a real estate development, plain and simple. He wasn’t able to prove to me he could pull it off, plain and simple.
The meeting concluded and I bid him farewell. I returned to my desk with no more information than I had before I went into the meeting. But ten minutes later, the banker came down and said,
“What did you do?!”
Confused, thinking there was nothing I could have possibly done, I asked,
“What? What did I do?”
“Aramis came all the way out here to talk about his business and you didn’t even act like you were interested,” he said. “You just completely ignored him!”
The banker was right. Not only did I act like I wasn’t interested, I genuinely was not interested. And while I did not completely ignore him, I wish I could have. For while we could have argued about civil pleasantries and standard banking etiquette, when it came to interacting with potential clients, all of that was irrelevant because there was no loan there to be made. Aramis was balking and was outright, albeit subtly, refusing to furnish us with the information we needed to do the loan. He was hiding something, and no matter how much the banker wanted to hound me or pressure me into approving this loan, I couldn’t underwrite it even if I wanted to.
But then came the stroke of genius that earned my hat tip to Aramis. His second skill; his ability to lay a guilt trip. Frustrated the banker said,
“Look, I just talked to Aramis and you don’t understand. Aramis is one of my best clients. For him to take the time to come talk to us is enormously generous on his part. And you did not even take the time to get to know him or learn about his business and that made him very upset. If you don’t talk to him or at least look at this loan, then he’s seriously thinking about taking his business to another bank.”
The irony and hypocrisy were staggering on so many levels.
First, if Aramis wanted to take his business to another bank, then fine, let him go. Part of the free market is competition. And you hope to outdo your competitors so you get a larger market share and thus make more profit. Therefore, not only do you strive to become the best, but if there is something you can do (legally) to weaken your competitors, then you certainly do it. And here was the perfect opportunity to weaken one of our competitors. He was the perfect Trojan horse. Aramis was a bad client and a bad loan. Every indication in the housing market and economy suggested a housing bubble and subsequent collapse, if it wasn’t occurring already. Aramis, completely unable to prove his ability to not only sell these twin homes, but personally guarantee the loan, meant some unlucky sucker of a bank would end up holding his worthless development in foreclosure and would be bleeding cash to float it. If we passed on this loan and a bank with lesser quality and credit controls took it, we just delivered a blow to our competition. If he wanted to pick up his toys and go home, let him.
Second, the “honor” and “privilege” to be in the presence of the great Aramis was a joke. The reason why is, when it comes to lending, it works the other way around. If there was anybody to be humble and kneeling it was him. He was the one asking us for money. And typically when you ask to borrow money you do so in a humble manner. You don’t bark orders or demand to be given a loan like a suburbanite princess demands to be given a convertible Cabriolet. Furthermore, the reality is if you are the one who wants to borrow money, then you are the one who has to prove you can pay it back. The arrogance of Aramis to not only refuse to furnish us with information that would prove his ability to pay back the loan, but his insistence we trust his word, was laughable.
Finally, if Aramis was such a big time real estate mogul, what in Heaven’s name was he doing dealing with a small time bank like us? If he was indeed that great and big of a player, then he would have been poached long ago by much larger banks that could lend him much larger amounts of money, and probably on better terms. The truth is he was a client this relatively new banker brought over from another small time bank and was an absolute nobody. Didn’t matter what he said he was or what he said his business did; none of the documents proved it. All they proved was he was a nobody. And a nobody that was losing money."So buy the book already!
Saturday, December 27, 2008
Maybe, don't shoot rockets into Israel next time?
Like just leave them be?
I know, crazy concept, people just don't like being shot at, but maybe, just maybe try it once and see if Israel in turn leaves you alone.
I love how the story shows nothing but Palestinian casualties (and how many of them I suspect are posed like this one).
Friday, December 26, 2008
And the fish I smell is the whisper/smear campaign against the movie "Valkyrie."
Ever since it went into production it was befuddled by a bevy of problems, set backs and delays.
Then the German government/people were complaining about the movie and some complained about Tom Cruise having the audacity to make a movie of one of the nation's greatest heroes (which the Germans seemingly failed to do in the past 60 years).
Because of all this I was hell-bound-determined to see the movie simply to spite what I suspect was a group of leftists/Tom-Cruise-haters/jerks that didn't want to see another movie about good guys vs. bad guys, sacrifice and duty and other such things those of lefter leaning ideologies love to hate succeed in the box office.
Saw it last night. Amazing movie.
I didn't know much about Von Stauffenberg aside from the historical facts of his attempt to assassinate Hitler. But the plotting, the scheming, how much all those men gave up (family, wives, children, careers) AND just how close they came to pulling it off, make this not only a very thrilling and engaging movie, but you learn a lot more beyond what you picked up in the history books.
Not to mention you have Eddie Izzard and Kenneth Branaugh as well as what I could count to be two actors from the Lord of the Rings trilogy that keep you looking for other actors you may not recognize.
So, do yourself a favor, ignore what preppy liberal elites write as they went from daddy's dime to major in journalism to working at USA Today or the NYT or whatever dying periodical they work for now and instead of report the news, try to create it or sway you one way or another.
It's a great flick, a great history lesson and a great tribute to a great man.
Monday, December 22, 2008
In any case, as no doubt most of you would surmise, I do not endorse "Chedda's" service. We here at Cappy Cap pride ourselves on the fact that we are all real men and women and support ourselves through work and not parasiting off the taxpayer. We here at Cappy Cap are not the lowest life form, known as the welfare bum. We here at Cappy Cap all are real adults, fully realizing that if the world was full of "Chedda's" there would be no motorcycles to buy with our "bling" that we stole from the non-existent taxpayers because there would be no economy by which to extract taxes from because we'd all be too busy lying around wondering why we're poor.
I shan't provide the link, for the scumbucket, real or not, doesn't deserve the traffic.
Oh, heh heh. Well we meant well, and well um, gee, you know uh this one village in Alaska had to move due to the lack of frost.
Meanwhile it's 20 below the average temperatures here in Minnesota and we're suffering one of the coldest winters in the past 20 years.
To all the global warming conspirators out there, go ef yourselves.
ht to Kate.
Though chaotic, a trend does seem to be occurring. The Corruption Index in the US is going down implying there is MORE corruption. However, I argue the Corruption Index is woefully underestimating the amount of corruption here or is a lagging indicator. I fully expect, along with all the other social and economic metrics of this dying nation, the Corruption Index will approach 6.2, dropping nearly a full point by 2010, putting it in league with Cyprus, Portugal and Botswana.
Alas, just another ounce to be added to the metric tons of empirical proof the US is collapsing.
Sunday, December 21, 2008
Friday, December 19, 2008
Thursday, December 18, 2008
Well who freaking wouldn't?
Hell, I wouldn't mind becoming a senator. Of course, it's along the same lines of listening to these 20 something girls who say, "Well I like traveling."
Again, who freaking wouldn't? They make it sound like it's a hobby they slave at or major in during college.
It's the issue of whether you are so luxuriously rich and paid for that you can AFFORD to travel. And thus it is the same thing when it comes to becoming senator.
If you can afford to become a senator, well then isn't it a cute little noble "hobby" for you? No, no, it's not a serious job where millions of people's lives depend on the decisions you make. No, it's like traveling or playing Barbie.
Now I've tried to warn you people about nepotists. It is the nepotists that are largely to blame for our problems today. People who had no skill, no game and no talent, but instead were put in charge of the country's most powerful positions because of who their daddy was.
George Bush the son of Bush '41.
Nancy Pelosi, daddy's girl of Baltimore's mayor.
Al Gore son of a senator.
Barack Obama, had mommy pay for everything to go to Harvard and went straight into politics and on the public dole
Ted Kennedy, brother of JFK, neither of which I recall built the empire Joseph Kennedy did.
Not one of these parasites and nepotists ever did a damn thing in their lives worthy or noble (bar JFK of course). Not one of these preppies ever worked a day in the private sector and therefore, no matter how many years of "public service" they have, are thereby incapable of making the real world, tough decisions every day normal REAL men and women like us have to. They got their jobs based on who their daddy was, their connections and no matter how bad they bungle it, because they have the money, they can afford the PR and campaign expenses to buy them a seat.
But as much as I loathe these inferior humans, they are ultimately not the ones to blame for their perpetual and dynasty like life long, and multi-generational long political careers.
It is the American people.
Americans have largely fumbled the ball on this one, somehow thinking we have to constantly and perpetually elect these scumbuckets into office. That we have no choice. But if there was something that told me Americans are forever lost and have completely abdicated their responsibility of being stewards of this democracy, it is this past election.
If I recall correctly, everybody wanted "change." And who got elected?
Joe Biden a 84 term senator and his never-set-foot-once-in-the-private-sector-community-organizer-cum-state congressman-cum senator-cum president-elect Barack Obama.
And who got berated, yelled at, and vilified?
Sarah Palin the only person in recent memory to run for office WHO WAS A FREAKING NORMAL PERSON. And what was the main criticism?
She doesn't have enough public experience.
The hypocrisy is only what socialists can conjure;
Palin didn't have enough experience, but Obama did.
We want change, but Palin would be a normal blue collar person like us. Let's go with the veteran, life long insiders.
And now, lil Miss Princess, Caroline Kennedy wants to become New York's senator.
Did she flip burgers?
Did she work retail?
Has she ever waitressed?
Did she pay her way through college?
No, of course not.
Oh, but you watch. You watch those "street smart" New Yorkers. They're going to fall for it hook line and sinker. They'll vote for her just like those moronic imbeciles in Boston voted for Ted Kennedy. And even though she has no clue, could not even fathom what normal hell it is to live a normal everyday person's life, oh, she's still somehow going to be able to help you. She's going to know what it's like to be facing foreclosure. She knows what it's like to have to scrimp and save to pay for health insurance. Oh, I'm sure she knows.
Americans, specifically, New Yorkers have a chance to pull their heads out of their asses and elect a normal person. And if you don't, then you can expect to have the same things;
A perpetuity of incompetent, spoiled brats who view public service as a cute little hobby and a means by avoiding work at all costs, and the economic mess we've gotten ourselves into.
I know, I know, you view government as merely an entity to provide you public services like roads and defense and otherwise you don't want to hear from them, but an increasing percentage of parasites and scum-bag are progressively using it as a means to take money from you so they don't have to work (that really is it in a nutshell).
So go here and sign the damn petition if you haven't already. Since you are part of a democracy, this is how it works and you owe it not only to yourself, but the state as well as you are a steward of this democracy.
Wednesday, December 17, 2008
And so, now that the economy has gone to hell and I no longer work in banking, I have my days open and just as much as I am excited to watch Tom and Jerry during the day time, so too am I excited now to watch Hogan's Heroes when it comes on.
The show is freaking hilarious. The premise of how outlandishly stupid the Germans had to be so that Hogan and his crew could run an espionage outfit out of Stalag 17. There's always a hot chick they manage into the plot every 3rd episode. And then there's Schultz. How couldn't you like John Banner?
Oh, but oh is there resistance to Hogan's Heroes. You see, for while it is a hilarious show for GUYS, the femme fatales in my life find it a stupid and sophomoric show. How "dumb" Hogan's Heroes is. How "impossible" it would be to not only run an outfit like that out of a prisoner camp, but that there's seemingly a never-ending stream of Heidi's and Helga's and hot German scientist babes.
Yeah, I know. And that's what makes it great.
That being said, I do have an honest question about Hogan's Heroes that mayhaps some of the Captain Capitalismites out there might be able to answer.
I've noticed a disproportionate amount of the episodes have snow in them. And now that I think about it, none of the episodes ever seem like they're filmed during summer. All of the heroes are dressed in winter great, Klink has a full officer's long coat on and Schultz is dressed in a long coat as well.
Anybody know why this was?
Have a young boy, confused about the housing market and the current day economy? Why nothing makes a better stocking stuffer than the epic story of a heroic economist who fought against the villainous forces of fat, middle aged bankers in the classical bedtime story; "Behind the Housing Crash!"
You and the Mrs. want to learn to dance, but don't have the time to take classes? Why, your beloved Captain has you covered. Take a dance class or get one of his instructional dance DVD's. Your choice of Swing, Salsa, Ballroom or Latin or all four.
Want to disassociate yourself from the sub prime slime and ponzi-scheme running investment bankers that have brought the US economy down? Want to establish that you are indeed the Alpha-Male/Female at work? Want to be appealing to girls? Then tell them what they want to hear! Tell them, you contribute to GDP. Nothing says, "I rule and I'm sexy on top of it" than a shirt saying, "I Contribute to GDP."
And finally, stocks are down 40% while the economy is in shatters. What better gift than the gift of education! Take a class on basic personal financial management or a more advanced class solely dedicated to the valuation and analysis of stocks (click here and scroll down a bit, you'll see the links).
Also, feel free to contact the Captain if you're interested in any of the above, or just want to say hello! The Captain always likes to hear from the readers and would bring good Christmas cheer to him if you said hello!
Tuesday, December 16, 2008
Ergo, since trying to reason with them doesn't work, there are only two ways I've found that works.
One is to bet them. It's one thing to advocate socialism and socialist policies, but when a savvy, educated economist challenges a socialist on their philosophy and forces them to put their own hard earned money on what they "know" to be "true," you'd be amazed how many of these zealots won't even wager $20 on something they not only feverishly support, but insist on forcing the rest of society to live under.
The second is to just let them have their way, as no matter how pretty your charts, and beautifully scripted your power point presentations, nothing convinces socialists they're wrong like a collapsing economy, a Stalinist regime, 40 million people dead from starvation and the TRUE elimination of their social freedoms. Give them a little bit of their utopia and they'll be BEGGING for full force free markets to come back.
Now, it takes a while, and as humans are prone to do, they may have to repeat their mistakes several times to finally learn a lesson or two (Tulip Bulbs, Dotcoms, Beanie Babies, and Housing), but inevitably they learn from them, and if they're smart, they start teaching and instilling these hard-learned lessons to future generations, allowing them to avoid the mistakes of the past (and make whole new ones).
But it was this line of thought that got me thinking about economics and how if we mastered it, or at least instilled some basic, simple economics principles in our society, it would not only eliminate a whole host of social problems and ailments, but basically be the guiding force to govern society. I still contest to this day, a population adequately educated in economics could inoculate itself against recessions. I still contest to this day, that I don't care how "mature" the US economy is, RGDP growth of 7% per year is possible. I still contest to this day that if we mastered economics as a society we could have income per capitas of $250,000 per person and effectively eliminate poverty, not to mention extend life expectancies to unfathomable ages. All these benefits are possible if we just master economics.
However, as these advances in economics occur (more so, instilling what we already know about economics in the masses), it will be at the expense of a much larger and older institution; religion.
If you think about it, religion was not created by a "god" or "gods" by which to govern the people. It was created by people to govern people - and not necesarily without merit.
Disagree with religion much as you would like, it provides an otherwise unorganized society a means by which to organize and progress. Religion provides laws, it provides order, it keeps peace, etc. Religion in other words was nothing more than the ancient version of government. ie- it's no coincidence that in the olden days (and even in many archaic societies today) religion WAS the government. The Ten Commandments and other remnants of Christianity are instilled in US government to this day. Not to mention, rules and laws such as how to butcher animals and swine in Jewish texts were not done so because "god" ordained it as such, but rather because it was for the health benefits of society at the time (pre-refrigeration).
However, religion has one primary flaw; in order to give it teeth, and give its clergy "authority" or "legitimacy" to rule over the masses you had to create things like "hell" and deities and wrath, largely things that could not be proven until (conveniently) somebody died and went there. The problem is technological advances in science have not only made some of these rules obsolete, but have disproven or dismissed a lot of the tenets by which religions are founded on. We no longer need to butcher various animals certain ways due to refrigeration. We no longer have to worship the sun as, well, as it turns out it's just one of a gazillion stars out there. And no, AIDS wasn't created to hurt or banish any one group of non-believers or another, it's frankly just a really bad virus.
However, this spells trouble for religion in that as humans learn more and more about the universe and solve its mysteries, it disproves and obsoletes more and more aspects of religion all together. This relegates religion to the position it's in now, second to most governments and secular law, and more a means by which to provide moral guidance and comfort to its followers.
The question is as religion goes the way of the dinosaurs (or adapts to become more acceptable and marketable to the modern day masses - a perfect example being a church in the Twin Cities that has "pet baptismals") what will provide the matter by which we create the laws to most efficiently govern society. And that is where economics steps in.
Economics is such an encompassing study that it is more or less the only thing that could replace religion. It's designed to allocate the resources of society to not only advance it, but keep it from regressing. It's purpose is to enrich the most amount of people to the maximum extent current resources and technology will allow. It insists on relative peace, calm, stability and order within society in order to achieve this, and if it doesn't get it, it mercilessly punishes its people for their mistakes (as it is doing so today).
Ergo, the more people study economics, all the goals and aims religion was designed to achieve (or perhaps I should qualify it by saying, the NOBLE goals and aims) can be achieved without resorting to fairy tales of hell, burning bushes, killing infidels, gays and whatever outmoded hogwash is out there.
The question is whether we will force our children to study economics, finance and personal financial management as much as we force them to study catechism, or in some parts of the world, force them to learn the economic merits of an engineering degree over blowing themselves up.
Monday, December 15, 2008
No matter how rich your daddy was.
No matter where you went to school.
If you do not post a profit and have no talent, the cold, harsh reality is that you don't deserve to be in the market.
Ahhhh, Wall Street. You pathetic bunch of gray haired, middle-age-man has-been's.
It does not surprise me that for all Hollywood portrays the US, we are some of the most stuffy, anti-sex people on the planet...though this could just be the fact I live in Minnesota where sex is largely regarded as a regrettable means/chore by which to keep the human population going.
Sunday, December 14, 2008
Sadly, it's basically a slow motion version of watching an innocent, hopeful (yet absolutely brilliant) man having his dreams destroyed as he slowly realizes that socialism, hope, change and Obama is largely just that.
And that's the harshest part of it all. When people are that insanely intelligent to create insightful stuff like Sinfest, no matter how much socialist brainwashing they received in the schools, with an intellect like that, they will inevitably find the truth.
The question is whether they will crack or join the good side of the force upon finding the truth. Something tells me Tatsuya Ishida, despite his idealistic "hope," will become the most powerful force for capitalism...bar your beloved captain of course.
Saturday, December 13, 2008
I don't care if they work at Goldman Sachs.
In the end, these people are not "intelligent" or "smarter" or "better."
They're absolutely inferior people compared to the rest of the US and only got by on connections.
And the Wisconsin hick fly over kid selling lemonade at his stand making a profit is a better businessMAN than any one of these schmucks will ever be.
Friday, December 12, 2008
"Republicans for once fight big business?"
"Republicans save taxpayer money?"
"Republicans refuse to bailout overpaid union workers?"
Meanie evil republicans refuse to help families, the poor and the economy that are dependent on the holy and sacred auto industry.
I will let free markets speak for themselves in that the Chicago Tribune filed for bankruptcy for who in god's name would buy that crap? Additionally, I will further use this as an example of how socialists (in this case journalists) will follow their ideology to the point it destroys their employer/career, not on principle, but because they're too damn brainwashed, too damn arrogant, and just too damn stupid to realize that they might be wrong.
Thursday, December 11, 2008
But a drawback for being a freak is that when you find great things (like a nautilus in the middle of nowhere in Nebraska or a ghost town that time and Google satellite has forgotten) people either;
1. Don't believe you or
2. Think you're a freak for finding such things interesting.
Regardless, I am going to recommend "Duck You Sucker." It's a great movie. A great find. Almost as great as finding an oredont in North Dakota.
Now, the Major (held prisoner in California) does not agree with me. Oh, he likes the movie alright, but does not deem it a great movie that I do.
And that's where Cappy Cap readers will come in. If you are bored this weekend and have nothing else to do, may I recommend you rent or perhaps buy (which you shan't regret) Duck You Sucker. You read this blog because of its economic entertainment, so if I recommend a movie (which are infinitely more entertaining than economics) how can you possibly go wrong?
Now this report is just full of a ton of interesting oil stats, but I am not an expert enough to dissect it all. That being said, just posting it up there in case anybody is looking for some really good stats on oil.
to a collapsing economy and crashing stock market;
Monday, December 08, 2008
I got a couple e-mails posts that there were some difficulties in getting your book from Amazon. if this is the case and you're still have problems, e-mail me and I will gladly mail you a signed copy for the cost of the book and shipping (which I don't know how much it costs because it depends on where you live in Canada).
Thanks for letting me know of this problem.
Sunday, December 07, 2008
Saturday, December 06, 2008
Complete and utter morons.
Yeah, THAT will help bring business to the state!
This, in combination with primarily liberal states facing huge budget shortfalls is beautiful in that it is ultimately the little state and local socialists realizing not only do they have to pay the piper, but their little socialist ideology is actually failing.
Friday, December 05, 2008
He cites a report, which I perused, and poached this great chart which makes his point all that much clearer.
About the only thing I could add to this is beyond a 4 fold increase in the cost and nowhere near a 4 fold increase in quality, it is a pity that more and more students choose worthless majors. This basically makes education nothing as much as a vital tool to help poorer classes escape poverty and achieve wealth, but makes higher education a luxurious hobby for the upper classes. If all sociology majors, political science majors, hyphenated-American studies majors, etc. were wiped out, more resources could be poured into accounting, engineering and computers, bringing the cost down for these vital degrees and enriching many more Americans, particularly the poor.
If humans were robots or planets or something else that operated according to physical laws or principles, then quants would be right 100% of the time. They could predict human behavior, schedule it actually, and predict everything that would ever happen. Quants could also go so far as being able to predict girls and figure out what they want.
Obviously, this is impossible.
And the reason it's impossible is because humans are not robots. We change our minds, and without rhyme or reason half the time. We don't abide by hard and fast laws like gravity and physics, but are inherently chaotic. Ergo, developed the most advanced model in the world, it will still, inevitably be wrong.
This is why I like to approach economics for what it is; an art.
Economics is really more like "The Force" than it is some kind of engineering program. Many commentators and economists I've spoken with lament how the profession has more or less become a math degree tailored towards economics, and not a study that accepts there's some aspect of art to it. That so much emphasis is put on statistics, math, econometrics and so forth, the economist loses the forest from the tree and thus develop models that failed miserably to value securities such as CDO's, SIV's and other mortgage related securities.
Now, most quants know that the whole world can't be modeled. They know the limitations of their models, but then you get some die hard quants who never bothered to take an independent thought in their lives and really think that unless it runs through a statistical analysis program and shows a correlation, then it's worthless.
Case in point;
I had a quant berate me for saying housing starts predicted spikes in unemployment 6-18 months in advance. I based it on a chart showing housing starts and unemployment where, reliably, as housing tanked, unemployment would peak 6-18 months later. He, however, ran it through a statisical program (I forget the name of it) and said there was NO statistically significant relationship. That I didn't know what I was talking about and blah blah blah. So naturally when unemployment started its most recent exponential growth upward, the drawbacks of being a head-in-the-sand quant versus a Jedi Master made itself painfully obvious once again.
Now, as regular Cappy Cap readers know, this is one of my favorite charts, but it shows you a very important lesson about economics and life in general; just because you aren't a professional NEVER question your own eyes. The professionals can be wrong and frequently are. And the more you treat something that is indeed an art like a science, the worse you will become at predicting it.
Just ask quants how many models they have that have helped them land dates.
Thursday, December 04, 2008
But this got me thinking;
As America's "elite" proves themselves basically to be nothing but a bunch of nepotistic, incompetent boobs who rely on connections and cronyism instead of skill and game to award themselves the best jobs in the US, won't the American public and economy at large start to value these people less and less?
I mean if Harvard for god's sake didn't see this coming, shouldn't this make corporations think twice about hiring from these presumed "elite" schools? Not that there is an immediate and viable alternative readily available, but if I was head of a corporation the LAST people I would be looking to hire is anybody who had anything to do with the Ivy League, now-defunct elite bulge bracket investment banks, and the hopelessly pathetic DC.
You see, I want production. I want competence. I want profit. I don't want wheeling and dealing and a bunch of blue bloods talking about Skull and Crossbones while they refer to each other by their initials;
"Why hello BW! Say, nice suit, JB! Where did you get it?"
"Well I got it from Saks 5th Avenue. I don't much like slumming, if you get my drift, ehhhh BW?"
"Ha ha ha! I know just what you're saying JB! How about we award ourselves some stock options while we hire your nephew for that new VP position?!"
"I like you're thinking BW!"
Of course, it's going to be more of an issue of these people running the institutions they control into the ground and newer, better, faster and less corrupt companies replacing them. Lord knows normal, working schleps like us will never get into these old guard companies, let alone would have the patience to fight the internal political battles against the entrenched old guard to slowly turn them around. Regardless, I'm just wondering if corporate America and society at large are realizing the "wizards of Wall Street" they ain't and people like my mother could do a better job managing America's "corporate crown jewels" than the current lot.
Wednesday, December 03, 2008
In the past I said the DJIA at around 8,000 is accurately valued. Understand this is ACCURATELY valued, meaning not a deal, nor over priced. It's about where it should be. And the way I base this is on the S&P 500 P/E ratio.
Historically the S&P 500 P/E ratio trades around 15 - ie- you pay $15 in stock price for $1 in earnings. The hope is, with the recent drop in stock prices, stocks are now below this average, perhaps even as low as a P/E of 7 which it was back in the early 80's and for most of the 70's. The problem is, even with the drop in stock prices, it is not;
Currently the stock market is trading around a P/E of 14. A bit lower than the historical average, but not a "steal" by any means.
Furthermore, this says nothing about future earnings which are bound to be lower as the economy continues its trudging through a recession. If earnings drop, which I'm betting they will, this will only provide less E for the P that you're paying, and thusly P will have to drop.
Sorry to be the bearer of bad news, but good or bad, truth is truth.
However, there is some solace, because Obama will fix everything.
Tuesday, December 02, 2008
But if you smooth it out a bit, a disturbing trend is showing and that is, over time, our long term economic growth rate has been decreasing;
People ask me what I think is going to happen in the future, and then when I tell them, they all poo poo me saying, "Oh Captain, you're so pessimistic." "Oh Captain, why do you have to be cynical."
So allow me some of my insights.
One, I'm rarely wrong. Matter of fact (and arrogant as this may sound, it's true) if the blue blood Ivy League loser ilk had listened to this dumb fly-over country hick graduate, they wouldn't be going to the taxpayer with a cup in their hand, let alone be looking for a job today. I predicted this housing market crash (along with a million other people), the stock market bubble, the Asian currency crisis, and the collapse of the Suharto regime (never mind, long story, back in my youth). So when I predict a slow degradation of the US into essentially an English speaking version of France and an utter financial and economic collapse under the weight of the baby boomers retiring/social security/medicare, maybe, just maybe this once you ought to listen to me.
Two, without economic growth, let alone the hope for future increases in economic growth, the present value of today's assets are going to drop or at least not go up. I know people on Wall Street and people who rely on increasing asset values for retirement like to hunt or look for reasons for their assets to perpetually go up aside from profit, but with the backdrop of slowing economic growth, it is unlikely, assets as a whole, are going to go up, unless you have some kind of phenomenon contributing to an asset bubble (lower interest rates, the trend to throw trillions into 401k's, tulip bulbs, etc.).
Three, recessions are a good thing, damnit. I don't know why we try to avoid them all the time at the expense of compromising our future economic growth. Not only did we have higher average economic growth in the 40's and 50's, it was more volatile, resulting in more, but briefer recessions. This was due to the government not trying to impose a Keynesian interventionist fiscal policy every time the economy got a sniffle. Now bailout this, bailout that, Fed Funds rate lowered here, loan package there, Stimulus Plan I, II and III. Instead of letting resources reallocate efficiently and rapidly, we now prefer long, dragged out, dulling recessions or periods of lackluster economic growth. Anything, ANYTHING to avoid two successive quarters of economic decline, because we know that is just an unacceptable economic fate.
In any case, there's more economic data suggesting a collapse in the US. I have tons of it. And I doubt I'm going to be proven wrong. But if it's anything like the housing crash (or the stock market bubble, or telling a large bank here in America Indonesia would fall) getting the morons in the financial markets and financial industry to listen will be an impossible task and, ergo, why I'm simply just going to be recording it here for anybody willing to pull their heads out of the sand.
Monday, December 01, 2008
A true statesman would never do such a thing as it is the people he truly cares about.
I ask stupid, elementary questions like "does that 3% even exceed inflation?"
"Well who cares about sales if they had to discount their products so much they weren't making any profit anyway?"
But I found this chart interesting in that it's the first chart showing a decrease in consumer spending online.
The problem I have with Black Friday (aside from soccer moms causing traffic jams as they stop in the middle of road to contemplate which way to turn) is that it is more of a holiday event than a genuine economic event. That shopping is "just what you do" after Thanksgiving, not to mention you need to get out as your family is driving you crazy. Ergo, yes, traditional sales may be up 3%, but that is due to a social phenomenon, whereas online sales are down and online purchases are purely more of one of an economic nature.
I will say it before, and I'll say it again, the stock market was accurately valued around 7,500-8,000. And this does NOT consider the potential drop in corporate earnings in the future which may be well worse than I expect.
So enjoy the sucker's rally. I'm saving up a little bit o' cash.
Saturday, November 29, 2008
Freaking hilarious to see not just the greedy scum bag business"men" who couldn't make a dime in profit, but to see their gold-digging wives actually having to face the prospects of finding (dun dun dunnnnnn)
Lesson to be learned;
Always lease a depreciating asset. Never buy.
Wednesday, November 26, 2008
See, now you know pretty much what every other gaming aficionado knows.
Long story short, if you are thinking about buying X-Box for your kids or for that matter any Microsoft product, forget it. The problems are not worth it. The thing overheats, the thing freezes up and then when you get it repaired, THRICE, and call up Microsoft again, "Oh, well it's no longer under warranty so that will cost you $99.00."
So, let me save all of you economists out there a little bit of your finite lives.
It's not worth the time, let alone the money you will have to spend constantly resuscitating your X-Box 360. It's not worth the time having to mail the thing into Microsoft, let alone the hours you're going to spend on the customer service line. Just do yourself a big fat favor and get a Playstation or a Nintendo.
So if that helps anybody make their decision for what to get for Christmas, god bless 'em.
In the meantime I'm getting myself a Mac from hence forth and never a PC.
Oh, and to Sarah, the Microsoft customer "support" person, be happy in knowing I've cost Microsoft way more than the $99 you wanted to charge me to repair something that should have been working properly in the first place.
Enjoy being in a distant 3rd place when the next gaming console generation comes out.
Tuesday, November 25, 2008
I know, I know. The democrats are not for socialism.
And I know, I know, the republicans cannot gear up the gall to call them that.
But if you look at government spending as a percent of the economy, you'll realize that (bar times of war) the overall trend in government spending has been to go up.
The problem is this chart only shows FEDERAL government spending and does not include state and local spending as well. If these are considered, overall government spending is at about 37%.
So the question I post to all you aspiring, junior, deputy, official and otherwise economists out there is, fine, we may not be socialist now, but if the democrats and Obama were to have their way (which they will) will you admit we WILL be a socialist nation?
This debate rages between me and my Obama supporting friends. That I am a "fool" a "moron" to suggest we're going to become a "socialist" nation. You fool, you do not know of what you speak. To which I respond "yes, the one economist in the group does not know what he's talking about. Oh sure, the sax player and the admin assistant and the lifetime student in journalism, they know what they're talking about when it comes to taxes and fiscal policy, but I am the moron of the group when it comes to these things." But that doesn't change the fact at what point, what level of government spending is a country deemed a socialist nation?
It's an important question to ask because if the republicans are "going to get tough" like they say they are, are they going to gear up the gall to call the democrats what they technically and economically would be considered; socialists?
This would be a brilliant PR campaign. They wouldn't be lying. They would be calling the democrats what they are. And (for once) they could make a clear, distinguishable difference between them and the democrats (not to mention a track record that will be against everything Obama does from hence forth and will come in handy come 2012).
Of course, relying of the current strategerists in the republican party to realize and recommend this would be like them fielding a candidate like Reagan again. But one can hope.
Monday, November 24, 2008
Talk about mortgage brokers, SWAPs, bailouts all you want, what is ultimately driving this crisis is the fact that Americans are not producing enough to warrant the prices of our assets. Housing, stocks, you name it, all derive their value from the profits or income that can be produced from them. And if there is no profits or income, then there is no value in those assets.
For example, housing. Housing rose to unrealistic heights based on temporary and flighty demand as sub prime slime who could not afford those houses long term, flooded the market only to go bankrupt 3 years later. The problem is rents, the thing that ultimately gives property its value, did not go up. This is why a bubble formed and you are now experiencing dropping property prices. The markets finally realized that housing cannot "always go up" unless there is a corresponding increase in the rents, which never happened, ergo why Case Shiller is showing plummeting housing prices.
Stocks are another perfect example. The stock market, for decades, has been flooded by basically Baby Boomer and Gen X retirement money based on the principle that we should religiously and always invest in the stock market for our retirement. The problem is we are no longer investing in the stock market for the profits the firms generate, but rather because we were told by the government to use them as a retirement vehicle. Now, as corporations report horrendous corporate earnings, not to mention practically all of the financial services industry is filing for bankruptcy or a taxpayer bailout, the market is realizing that the ultimate driver of value of stocks (PROFITS) are non-existent, and ergo, why should those stocks have any value.
The problem, however, is that while the stock market and housing market are certainly very important to the economy, it does not address the overall economy. ie-the American people. How much "wealth" or "production" do we produce as an economy. And not only how much do we produce, but how much do we spend. ie- are we net producers or are we net parasites?
Take a guess which one we are.
The metric by which this is measured is the current account balance. It shows, simply, how much more or less do we produce versus consume. It basically looks at the national accounts, measures how much we made, and then how much we spent. And for the past 20 years, we have been spending more than we made.
Going from just a 0% of GDP balance in 1991, we have persistently and continually spent more than we made in this country, more recently spending 5% more each year than we made.
Now, I know that it is blasphemy to criticize or critique the Neo-American past-time of spending more than we make. That it is a crime punishable by death to suggest people be responsible and live within their means. But that still doesn't change the fact that Americans have essentially been becoming progressively "economically lazier" as time has gone on. We work less, spend more, and don't give a damn about how to pay for it, let alone ever have the intention to pay for it.
It is this that is causing asset prices all over the place to collapse. Stocks, housing, the dollar, as nobody, Americans or foreigners, are willing to invest their money in assets that are ultimately reliant upon Americans to churn profits out of them. We're too busy watching American Idol. We're too busy campaigning for Barack Obama. We're too busy majoring in sociology to hopefully become a "community organizer." None of which produce one ounce of GDP, income, or profits.
Meanwhile, I suggest you take a look and see what the Chinese, Arabs and Russians are majoring in, in college. And then take a look at their current account balances.
Sunday, November 23, 2008
What's scary though is that instead of working more to pay for what is guaranteed to be 7 years of financial famine, the western world seems to be working less.
Additional nots is that Korea is doing quite well, though still declining and the world's "best" country according to the UN and other self-back-patters, Norway, works the least of us all (then again they do have oil).
Saturday, November 22, 2008
Posers like Arianna Huffington have to rely on people aside from themselves to make themselves relevant.
Arianna, if memory serves me correctly, was married to a REPUBLICAN politician and then upon divorce all of the sudden decided to become a raging liberal. Was this because she genuinely believed in socialism?
No, of course not.
It was merely expedient and self-serving to her. She could find a career in socialism even though she genuinely may not have believed in it.
Just like Hillary Clinton, former college Republican, didn't believe in socialism either.
Her husband cheats on her, and unlike her intellectually honest feminist brethren, she sticks with the infidel none the less for political purposes even though deep down in side I'm willing to bet she damn well knows capitalism is the only way to go. Ergo, this the point I'm trying to make; these people are posers.
You must understand that not only do these people have no substance on their own, but therefore must parasite off of others. Their primary motivation is nothing as noble as "informing the people" or "advancing the rights of women" as much as it is "putting money in Arianna's/Hillary's pocket book" under the guise of "women's rights" or "social justice." And in this regard I truly pity their followers.
Did you really believe all the BS on the Huffington Post? Did you believe the founder had some kind of intellectual, ideological strain in common with you?
You're just as dupable as Republicans who believed Bush would be a conservative.
You have to understand the Arianna Huffington is basically an old hag version of Paris Hilton.
But, boy does she like other people's money...because...well...she certainly can't make any of her own.
She is a fraud and a fake.
And, as free markets are prone to do, they have proven it.
She now has to rely upon charity and handouts because she is not genuine, she is not real, she is a charlatan. She has to rely upon handouts, just like the scum bag wall street investment banker brigade has to rely upon tax dollars to bail her out.
Now I don't expect things like free markets and competition to permeate the minds of leftists any time soon. Nor could I ever hope to dream of leftists seeing the merits and benefits of such ideals.
All I'm pointing out is that your "queen bee" needs a subsidy because she couldn't cut it on her own. And maybe, just maybe, politics aside, you might want to consider why that is.
Friday, November 21, 2008
1. SHOP NOW! This is the last weekend before Black Friday. If you wait until the day after Thanksgiving, you are guaranteed to spend more than 3 times the amount in lines, traffic, not to mention increase your risk of a heart attack by 58%. If you go this weekend you will be able to walk in the malls, void of slow old people blocking your way or little children you constantly have to avoid tripping over or SUV driving soccer moms who decide to stop in the middle of intersections as they consult their maps/Tom Toms and then SLOOOOOOWLY turn out of that intersection. It would even be in your economic interests to take a day off from work to get your Christmas shopping done.
2. Given the economic crisis occurring and the practical guarantee we're going to go into recession, think about sentimental gifts made with your very own hands. For example, men, a poem is a incredibly rare (and incredibly cheap) gift to give to your beloved. Even your cold hearted, evil meanie captain wrote poetry in his youth. Regardless, the point is a poem goes much further than flowers, chocolates or other consumables and will give your beloved timeless warm fuzzies. Ladies, you too can partake in the frugal Christmas by giving your beloved, ahem, "gift" certificates. Gift certificates to things like being served a martini by a girl in a French maid outfit. Or perhaps being served a cigar...in a French maid outfit. Heck, basically just walk around in a French maid outfit and you can barely fail.
3. Parents, LISTEN TO ME! When I am king I will make it a crime, punishable by death if you buy your children clothes for Christmas. I don't know how many billions of dollars are wasted, every Christmas when parents buy their poor kids a sweater, a shirt or something no kid in the history of Christmas ever wanted. You see, as a parent your responsibility is to clothe your kid anyway. So don't cop out on this and use Christmas as an excuse to do what you are legally obliged to do. Christmas is for Kids. And kids want toys. Now keep in mind you don't have to buy a LOT of toys. Buying just one big one is enough (like a Wii...boy a Wii sure would be great! Even adults like Wii's! Especially video game playing economists! Yep, they SUUUUUURE love Wii's!). In buying one big gift you not only probably save money over buying them multiple little ones, but also save yourself time. You can also knock out multiple kids in one shot, video game consoles are great for this as you buy one for your children, not one specific kid.
4. Cash is king. Let me point out something about older folk and how they are wise. When you get older and become a grandparent, why do you think they give the kids money? Because it never fails. See, wisdom comes with age and older folk know that instead of having to shop in the first place, just go to the bank, get a $20 or a $10, put it in an envelop and by golly, you are guaranteed to make the kid happy. I remember having my radio show and I put the question out there, what do think kids prefer to get; cash or a random gift. I bet my producer it would be cash. Sure enough we had this sweet little 5 year old girl call in (her dad called in, but put her on the phone because she had an opinion and wanted to share it) and sure as all get out she preferred cash. Cash is a beautiful gift in that it not only saves you time, but it is the most efficient gift in that 100% of it goes to what the person wants. So if you don't know what the person wants, don't spend hours trying to figure it out, you don't have time for that. Give them the gift of cash (or a gift card if you want to get all "sentimental.")
5. Jewelry. Oh yes, you didn't see that one coming did you, men? How could our Captain, our cold hearted, indifferent about women, Captain suggest such a thing? What did we do to deserve this? Well hold on there now, there's rhyme and reason. First, jewelry functionally is worthless. But if you yourself have a very capitalistic wife, she will understand that part of any well-balanced portfolio is a little bit of exposure to commodities or precious metals. Now you can't give a barrel of oil as a gift, but you can buy gold or platinum in the form of jewelry. If you have a particularly understanding wife, she will agree that the jewelry is there first and foremost as a hedge against economic collapse and should the economy collapse, the jewelry must be hocked and melted down. You don't have to buy a lot, you don't have to buy anything fancy, but instead of investing in boring ol' commodities through your brokerage, why not have it beautifully adorned on your beautiful wife's face, all the while knowing, "Yeah, I'm insured against economic Armageddon."
6. And finally, what says I love more than a book about the housing crash? Sure you could get your beloved jewelry or diamonds. Sure you could get your father a tie. And sure, you could get your little ones toys. But will their lives really be complete without knowing fully what happened to the housing and financial markets? Do you think the kids will REALLY enjoy playing Wii when in the back of their minds at night they ask themselves "how did house price to rents ratios get so high?" And while your wife will be reading the poem you wrote her as you adorn her with the new necklace you bought her, can you both really enjoy the moment as deep down inside both of you are yearning to understand the relationship between monthly housing starts and unemployment? Make your Christmas complete (and avoid lines). Order "Behind the Housing Crash."
Thursday, November 20, 2008
This is just one of what is now an increasing number of charts showing various things out of whack MORE than they were right before the Great Depression.
Housing prices to rents, etc.
All currently at higher levels (or at least before the stock and housing markets started to tank anyway) than what they were before the Great Depression.
To this day what I cannot understand is with these figures how it took Wall Street, economists and various other finance professionals to take until 200-freaking-8 to predict a recession. I was almost angry that the economy didn't go into a recession in the first half of 2008, let alone 2007 which is when I was predicting the economy would (arguably as early as 2006, but I'd have to check my posts).
Regardless, nobody listens to poor Cappy. And only if Wall Street did, would they, along with the rest of America be avoiding this current financial crisis.
Wednesday, November 19, 2008
The people who actually buy this thing and give it to somebody as a gift are those people who hand out fruit and apples to kids on Halloween.
I can only see buying this as a means to insult a liberal friend and make them eat their own medicine.
In the meantime, do your children, friends and family a favor and don't buy them that "green card."
Buy them this instead.
(Because what kid doesn't love a book on economics?)
If you had a shady real estate developer, there was a horse.
If you had some rich doctor or lawyer, there was a horse.
If you had some trust fund baby now slowing watching his parent's fortune erode, there was a horse.
And the reason there was a horse was not because they came riding into town on one, or were racing them, but their wives, without fail bought them.
This manifested itself on the personal financial documents of the people applying for loans. Typically what you'd see was a rich man making all the money (or at least borrowing all the money) and the wife, who was literally doing nothing, running some token business on some money her husband gave her to keep her out of his hair (I affectionately referred to this as "KHOMA" money - Keep Her Off My Ass - in m book). So what you'd see is the husband listing an AGI (adjusted gross income) of say $560,000 and the wife showing a perpetual loss on "Frieda's Farms" or "Heather's Horses" or some such dumb name on their schedule C.
Now while for the most part, if the husband was bringing in a decent amount of cash, I could see it definitely being worth dropping a couple grand on some horses to keep the wife out of his hair so he could effectively run the real business while she lost a grand or two on her horse hobby and play "Make Believe Businessman." But what was scary was just how many times I saw the horses (combined with other consumer spending on the part of the wife) that actually crippled and threatened the man's financial solvency.
One guy was an overweight guy and without a doubt had essentially bought his wife because he was too physically unattractive to find one. Naturally the wife, along with children, would rack up credit card bills that would wipe out what he earned, almost penny for penny. And of course
the single largest expenditure was her "horse business." So when he came in for a loan for his wife's "horse" business I was curious and started asking questions;
"So does she breed the horses?"
"So she races them then?"
"So she uses them to teach riding?"
"Well, what does she do with them?"
"Well, she rides them and maintains them."
Meanwhile he wanted us to lend against this never-profitable operation.
Another hilarious instance was when one guy actually wanted to use his wife's horses as collateral. That if he defaulted on his business loan, then we could go and repossess the horses and sell them to recoup the money.
Well "yip yip yip yip yahoo."
Just what banks and bankers wanted to do.
Repossess on a "horse," feed it, store it, and then try to sell it.
What is sad though is that because horses were so prevalent when it came to dealing with the upper classes, they inevitably became collateral for more real estate deals than most people realize. Through the personal guarantee of the borrower, sometimes they would put up "All Business Assets" as collateral for the loan. And not just all business assets, but all personal assets as well. And though horses were never intended to be the primary form of collateral, invariably they did boost personal financial statements enough to make it look like the borrowers were solvent enough to guarantee the loan.
Alas, big dumb animals were tangentially backing up various real estate and other business deals.
Ultimately what I found is that horses are more or less a tell tale sign you're dealing with a "Bon Fire of the Vanities" type couple. The wife typically cares more about the horses than her husband. The husband is feverishly working to support his wife's spending habits and keep her loyal to him. And both are so vain about their appearances that every bit of asset and property is borrowed against and leveraged to the hilt.
But what gets me about the horses is "why horses?"
What is the freaking pull?
I suppose I could be asking the same question on any kind of frivolous consumer spending such as;
"Why a boat you'll never use?"
But there is something about horses and trophy wives that I can't put my finger on, but I know is there.
Alas, perhaps the aspiring, junior, deputy, official or otherwise economists can tender some theories.