Wednesday, May 30, 2007

It's Called "Sub Prime" for a Reason

My favorite is the left wing spin on foreclosures. In true leftist form they shift the blame from the person who most deserves it (the sub prime borrower too stupid to take the time to realize what they were getting into) and blames it on "evil greedy capitalist mortgage companies" that took advantage of these poor souls.

Now, I'm no big fan of mortgage brokers. Truth is, I will even go so far as to say some of them probably did outright lie or fail to mention some of the key aspects of how ARM's and reverse amortization loans work, and furthermore I hold them as one of the key villains that caused this housing bubble. But please, could you leftists just once, JUST ONCE tell people they're responsible for their own actions? Huh? Could you just leave the land of "Make Believe" and join us in the real world for 5 minutes? Could you just be truthful and say, "look, numskull, didn't it bother you that you could afford this house and this car for this meager of a payment? Didn't you bother to read or at least understand what you were getting into?"

No, of course not. That would not get them votes. That would be true, genuine leadership, but it wouldn't get you votes.

No, if you want votes, take a class of people, stupid or not, and explain the reason their lives suck isn't because of the stupid decisions they've made in the past. No, blame it on boogie men.

"Big Oil"

"Corporate America"

"George Bush"

"Global Warming."

And then tell them they're victims and entitled to recompense (meanwhile telling them they're incapable of ever achieving true success on their own because the world is stacked against them, condemning them to futility and dependency on the government). It is a classic play from the play book of the left.

Regardless, much as I'd like to rip on leftists all day, I do take some sadistic joy in seeing the banks and financial institutions that made loans to these morons and somehow didn't think it would come back to bite them in the ass. They keep floating around this statistic that the majority of sub prime lenders still pay their bills on time, which is true;

It's just the trend that bothers me (chart from WSJ).

Tuesday, May 29, 2007

The Middle East's Greatest Hope

Capitalism is an amazing force.

Never has such a force done so much good for society than capitalism

It breeds innovation, wealth, peace and wipes out poverty at a rate and level that socialists could only dream of achieving.

And I am sincere when I say that the more and more I think about it, capitalism is the only force that can quelch the insanity of radical Islam and provide the idiot nutjobs an alternative to blowing themselves up in a fruitless attempt to get to heaven. Heck, look how it's converted all of Mao's "devout" followers, not to mention lifted hundreds of millions out of poverty in China. If it can convert communist China, it certainly can provide hope to the middle east, and the UAE is just such a hope.

This is an amazing chart, and I truly and genuinely believe that the solution to the problems of the middle east lie here; letting their people and commerce be free to do as they chose, just not blow people up. Additionally I think the UAE in diversifying their economy beyond oil will position themselves to handle the inevitable time when oil becomes either obsolete or depleted splendidly and will, overtime, soon increase their standards of living beyond their Saudi counterparts.

No wonder Halliburton moved there.

Monday, May 28, 2007

"Housing Will Bottom in 2011"

I've said it before and I'll say it again;

It will vary depending on the region you're from, but housing would have to correct between 20-40% in order to come back in line with historical valuations relative to rents and income (or incomes and rents would have to increase by that much, ha ha ha!)

However, some crafty soul has expanded Robert Shiller's now-famous chart to forecast when and how the housing crash will occur. He forecasts a bottoming out in 2011 and a price drop of 43.5%.


I wouldn't be quite that pessimistic, but it just amazes me how a bunch of yahoo bloggers in their spare time were able to predict this happening long before hoity, toity, big time, and much higher paid Wall Street and banking hot shots did. Similar to how some unknown bloggers brought down Dan Rather. In both instances though I think there was a bias or incentive to ignore reality.

In the case of Dan Rather, it was simply political bias that blinded the entirety of CBS.

But this housing bubble, it was much worse and much more detrimental to the economy and American society; bankers had the incentive to keep loaning out money because bankers are primarily paid in commission, not salary. Therefore it didn't matter whether the loan was good or not, as long as it got through the door, commissions got paid and bankers were happy. Management was happy as sales were up and growing at a record clip. But what amazes me is how wide spread this turning-the-eye to bad loans must have been to even have Wall Street investment banks who bought portfolios of subprime loans didn't pick up on the problems of these subprime lenders that are now bankrupt. And now, that the entire financial services industry has turned a blind eye to poor credit, they have allowed a large (arguably the largest) financial bubble in the history of the world build up.

2011 may not be too far off.



This Shouldn't Be Happening

Remember when Spain elected Zapatero after the Madrid bombings and then Spain pulled out of Iraq as a way to appease the Islamic terrorists? That was supposed to make things all better right? Like then the terrorists would have left Spain and Spaniards alone. Right?

Riiiiiiight.

Thursday, May 24, 2007

How Rich Are You?

An observant friend of mine once told a leftist at a college party, "Hey, instead of bitching and whining about how you have it so touch and that the rich in America owe you a living, how about you go and help some truly poor people in Africa or something?"

And he had a good point. Here in the US or any developed nation, we're always focused on the super rich in America. And we tend to forget that just by being born in the West we are fortunate and enjoy such high standards of living it is unfathomable to us how 1.2 billion people in the world live on a dollar a day.

Ergo, if the truly globalist, environmentalist, socialist really cared, they too would argue for not just redistributing the wealth of the richest in the US, but also advocate taxing themselves to help out those in other countries that REALLY ARE in need.

Which is why this web site is a sobering reminder of how we are really lucky and why we should be thankful to capitalism (of course the web site draws a different conclusion, but regardless). I just threw in $40,000 to show how rich the AVERAGE American is relative to the rest of the world;



(Kudos to Visualizing Economics)

Visualizing Economics

I have to admit, these guys have some pretty great charts, and I should give them their due. Here's just a couple;

Just kind of a cool historical chart showing income per capita;



And who can go without their top earning dead Celebrities in 2006 chart?

They seem to theme around income distribution, didn't get the impression that they were pro or anti wealth redistribution, regardless I got lost on their site for a good 30 minutes, which with my attention span is forever.

Will the Housing Market Spill Over into the Larger Economy?


Hard to see how it isn't.

Wednesday, May 23, 2007

Another Horrible Stock Pick by the Captain

As you all know, I don't make stock recommendations. You can get sued for that. I invest in insanely high risk stocks that you're guaranteed to lose your investment in. That's why I tell you NOT to invest in these stocks. And my new stock pick is just as stupid, risky and insane.

Ergo, you are a fool! A moron! An idiot! If you are to invest in this one.

Woe is you who is so stupid as to follow my advice and invest in such an obvious con.

But no, you won't listen to me. You'll invest anyway even though you are guaranteed to lose your shirt.

Why the chances of you making money on this stock is like Venezuela or Bolivia experiencing economic growth in the next 10 years.

Anyway, here it is.

Verasun Energy.

Yes, I am aware of their distribution problem, but frankly I just wanted to invest in something that might stand a chance of benefiting from high oil prices. I almost feel guilty as it's an ethanol producer and me being the evil capitalist, in a sense have betrayed by evil Big Oil Overlords (gosh, I hope they don't send assassins to kill me for stepping out of line. I can hear their black helicopters firing up now! I mean they're all powerful and control everything, just look at the 2006 congressional election..oh wait..)

Tuesday, May 22, 2007

Richard Almanac Economics - The Inverted Yield Curve

I was originally skeptical of a recession occurring. And even if one did occur, it wouldn't be drastic.

So what, we're in recession. Suburb Sam, Trophy Wife Trisha and his Bevy of Suburbanite Princesses would have to make do in their palacial estate and 3 SUV's and VW Cabrio convertibles without a home equity loan to finance their family European trip for two years as GDP contracted 1.3%, and Trisha might have to shop at Wal-Mart and get a job!!!

Oh, the horrors.

But as time has gone on and I've seen just how much rot there is in the banking sector, not to mention the bevy of data coming out from different sectors, I'm pretty convinced a recession is on its way.

And then I found this;

It's one of those lessons you learn long ago. "Recessions always follow economic phenomenon X."

They don't know why.

Professors could really never give a good reason.

It just so happens recessions would always follow certain things and inverted yield curves were one of them. Sort of like various superstitious weather predictions found in Poor Richard's Almanac

There are theories that inverted yield curves foretell a recession as the long term future prospects of the economy are so low that demand for long term capital is also low, thereby driving down demand and therefore long term interest rate for loanable dollars.

Or that short term demand for immediate money to make a quick buck to feed a bubble drives up short term interest rates above long term interest rates, only until that bubble pops. But certainly this is not happening (note the heavy sarcasm).

Whatever the case, inverted yield curves tend to precede recessions. And when you combine it with charts like this;

it's getting harder and harder to ignore these "economic superstitions."

I wonder what Ben Franklin would be predicting.

Monday, May 21, 2007

For the Love of Pete

You may not know Commie Pete, but he was one of the original old school bloggers that happened upon my web site long ago.

He's an odd sort, religious, but a commie (of course) because that's just how you have to be if you're living in Canada.

Regardless, you will visit him. You will conform;

Commie Pete.

Lowest Taxed Cities in the US


Wow, and not a one from California or the East Coast. Go fig.

Bahh, Cheyenne, Fargo, Billings, what do they know, they're just a bunch of dumb hicks. They can't possibly know something that the coasts don't.

Your Daily Oil Chart

Sunday, May 20, 2007

"Communist" China is More Capitalist than the US

So while our beloved government here takes the surplus from social security and invests it in...

loaning money to other divisions in the government for what amounts to wealth transfers...

The Chinese take their trillion dollar surplus and buy a large chunk of a private equity firm.

"Communist" China is now officially more capitalist than the US.

Friday, May 18, 2007

How One Liberal Can Wreak Havoc Upon Society

I'm always amazed how one leftist, if strategically placed can wreak havoc upon thousands, if not millions of people.

Kim Jong Il comes to mind. One leftist, in a position of power keeps 22 million North Koreans impoverished and in hell.

Hugo Chavez is about the unleash a similar Venezuelan version of hell on his own countrymen.

But these are dictators who have the entirety and infrastructure of a government to unleash their evil. Some leftists are not so fortunate. But every once in a while, one of them gets lucky and finds themselves at the right place and the right time to foist a lesser standard of living upon the masses and detract from other peoples' lives.

This woman is such an example (awesome article here);

Here you have some woman, who no doubt enjoys the highest standards of living in the West, who never starved or missed a meal, who is suffering from some kind of mid-life crisis and looks back at her life and says, "what have I accomplished?"

Now, you can go and become a doctor, start a business, join the police department, or work with orphans or a bevy of millions of other things to add worth to your life and give your time here on this planet meaning. But what do Baby Boomers and Gen X'ers lean towards now as their primary means of making a difference?

Going on some god damned worthless political crusade.

For you see, becoming an activist or picking up some random crusade doesn't require effort. It doesn't require you to do anything.

To become an officer you must go through training.

To become a doctor, you must get some schooling.

To help orphans you need to donate your time.

But to go on some random political, activist-ridden crusade, all you have to do is say you care and BOOM! You have gone from "Middle Aged Person Nobody" to... (drum roll)

INSTANT POLITICAL CRUSADER PERSON!

Forget whether the crusade actually helps society out or not, no, that doesn't matter. It only matters that the newly reborn political crusader feel good about themselves. And ideally, if you can avoid any real effort, sweat, thinking or toil, all the better, because again, it really isn't to end the war in Iraq, or help the children in Africa, it's so you can go hold that sign up and protest because it makes you feel like it's 1969 all over again.

But this professional activist hit the leftist lottery jackpot. In protesting against the development of a larger main port, she's effectively limiting the amount of goods that can be imported into Europe, namely Chinese imports. And in doing so she's choking off the supply of goods and services into Europe which will drive up prices for those goods and services and in doing so effectively decrease the standards of living of 500 million Europeans.

That's got to be a HUGE ego boost to a socialist. I can see her now, "I may not be Lenin, but I just single handedly forced 500 million Europeans to pay higher prices for imported goods by bottlenecking one of the largest ports. I'm a rebel. I'm a crusader!!! I made a difference!"

So for one person's psychological self-worth 500 million Europeans, some of which are poor and could certainly benefit from the increased purchasing power Chinese goods afford them, will be forced to pay higher prices so she and her merry band of professional activists can feel good about themselves. Forget whether that difference is good or bad for society, that's not the point, all that matters is that the crusader get to feel good about themselves (see - "Al Gore")

There is one final thing I'd like to point out, as I have pointed it out before. And that is if you want a reason why China will inevitably kick the west's ass in economic growth and productivity, just look at the highlighted section of the article.

I've mentioned it before, but if you get a dictatorship that knows what its doing (at least economically, not necessarily democratically, and not that I necessarily agree with it) a lot of hurdles, stops and speed bumps are removed from attaining excellent economic growth and that gives you a big advantage over your western economic counterparts. Like the shirt says, "Imagine a World with No Liberals."

I see a world with income per capita of $250,000 and a lot less poverty.

Wednesday, May 16, 2007

China Strikes Back


Something tells me we'll be seeing a return to 1820. Wish the chart was extended though.

The past three years alone at 10+% growth in China would show a rapid acceleration. And we get all giggity giggity with 3% RGDP growth. Cripes.

The Housing Market Index


Looks like after a false recovery housing is still heading down. A technical analyst would say that this is obviously the bottom because we've never been this low before. Ahhh, if it wasn't for all that damn gluttonous oversupply in the market.

Nicolas Sarkozy Napoleon Height

He's 5'5" or 168 cm already!

Just an experiment I'm working with here aspiring economists. I noticed the most frequent hits I was getting was people google searching for Nicolas Sarkozy's height. "Height" and "Nicolas Sarkozy" were in a post of mine a while back, but nothing about his actually height.

So for all of you looking for his height he is;

5'5" or 168 cm.

In the meantime since I'm getting a lot of traffic to this one post BUY MY BOOK!!! DO IT NOW!!! It's much more interesting than President Sarkozy's height!

Tuesday, May 15, 2007