In light of the ongoing European financial crisis, Rocky is pleased to learn that the European Central Bank now provides visitors to their headquarters with a “hard hat” at no cost! However, they do ask visitors to ”wear socks.”
No mention is made whether visitors must empty their pockets of spare change upon entering.
For a full text of the ECB’s dress code, see “What to wear” at:
New York’s new governor, Andrew Cuomo promised voters that he’ll clean up Albany’s back-room politics and reduce wasteful spending. He’s got four years to achieve his goals — but even if he fails, it seems that he won’t be “eating crow.”
Rocky received an email that Shore Bank had been seized by the FDIC, and his account had been safety transferred to “Urban Partnership Bank.”
Rocky previously sang the praises of Redneck Bank which sends new depositors a free beer can holder, pays 2% on its money market account, and has NOT been seized by the FDIC. Redneck Bank is from a “red” state.
In contrast, Rocky surmises that Chicago-based Shore Bank got “in too deep” with the loan “sharks,” and was eventually was swept out to sea. Some news reports even suggest that the Chicago-based bank had questionable ties to President Obama and other pols. See: http://biggovernment.com/centralillinois912project/2010/08/05/shorebank-now-under-scrutiny-by-the-feds-federal-bailout-also-unlikely/
The email from Urban Partnership Bank isn’t too promising either. It begins:
It has been a very busy Monday here at Urban Partnership Bank, formerly ShoreBank. We are pleased to share with you that our new bank remains committed to meeting your banking needs and to the mission of serving low and moderate income communities. We will also continue to support energy efficiency and environmentally-friendly development.
[Disclosure: Rocky wishes that the "mission" of taxpayer-funded FDIC-insured banks was to lend money only to credit-worthy individuals and businesses. Instead of focusing on energy efficient lightbulbs, perhaps checking the loan documents should be a higher priority? Rocky also notes that without FDIC insurance, he would not have an account at Shore Bank. This is an example of "moral hazard." ]
Rocky’s primary computer contracted a horrible virus yesterday from a website which re-printed the speech.
If this was a political conspiracy, then Google is behind it too — as Google directed Rocky to this insidious site. And, if Al Gore “invented” the internet, then President Obama’s speech just un-invented it (for Rocky.)
Several websites advertise repairs for the virus ($39.95), however after consulting with Computer Man, Rocky learned that the virus is essentially irreversible. And the software vendors are simply extorting money.
[Disclosure: Rocky's primary computer was rebuilt from scratch, and his backup systems worked fine. Thanks to Computer Man for his expert advice. No thanks to President Obama. Rocky wonders whether a Republican President's State of the Union might result in a "red" Screen of Death?]
Rocky lacks any substantive insights on today’s AIG grilling of Treasury Secretaries Geithner and Paulson by the House Oversight and Government Reform Committee. So he’ll instead focus on the important stuff.
Rocky notes that both Geithner and Paulson appeared to be wearing waterproof scuba diving watches.
Geithner’s watch came before the camera as he was pointing his index finger at the committee in a Clintonesque “I did not have sex with that woman, and even if I did, it was in the best interests of American Taxpayers” moment.
Paulson’s watch came before the camera when the Committee ran over Paulson’s self-imposed time limit, and he “graciously” agreed to stay for an extra eight minutes. The eight minutes ran to ten minutes, and Paulson objected. The Committee Chair graciously acknowledged Paulson for providing an extra two minutes.
If Paulson and Geithner had been Secretaries of the Navy, the waterproof watches would make more sense.
Perhaps Geithner chose a waterproof watch to protect against a waterfall of tears. In contrast, Paulson was probably enroute to a flyfishing date with Robert Rubin, Tiger Woods and Dan Rather at “The Perfect Cast,” a resort who’s list of celebrities is a who’s who of the morally challenged.
The following letter was published in the Financial Times of London.
It appealed to Rocky’s sensibilities:
From Mr Eric Keetch.
Sir, In a sleepy European holiday resort town in a depressed economy and therefore no visitors, there is great excitement when a wealthy Russian guest appears in the local hotel reception, announces that he intends to stay for an extended period and places a €100 note on the counter as surety while he demands to be shown the available rooms.
While he is being shown the room, the hotelier takes the €100 note round to his butcher, who is pressing for payment. The butcher in turn pays his wholesaler who, in turn, pays his farmer supplier.
The farmer takes the note round to his favourite “good time girl” to whom he owes €100 for services rendered. She, in turn, rushes round to the hotel to settle her bill for rooms provided on credit.
In the meantime, the Russian returns to the lobby, announces that no rooms are satisfactory, takes back his €100 note and leaves, never to be seen again.
No new money has been introduced into the local economy, but everyone’s debts have been settled. Is this “quantitative easing”?
London W4, UK
[Disclosure: Consistent with Rocky's past practice, any reader who can identify the logical flaw in the above, should contact Rocky and claim a prize of dubious monetary value.]
The following flow-chart (which outlines the House Democrats’ Health Plan) reminds Rocky of Offering Memoranda that he read for CMO and CDO-squared structures in 2006 and 2007. This chart was provided by the Joint Economic Committee, Republican staff.
Rocky’s rule of thumb in investing: If he doesn’t understand it, he doesn’t invest in it. Rocky doesn’t understand this chart.
One can only hope that this “structure” has a happier-ending than the structured finance market.
Local charities in Moline, Illinois (population 43,000) want every man, woman and child to quickly drink 93 cans of soda.
After Rep. Barney Frank criticized Northern Trust (a TARP recipient) for sponsoring their annual charity golf tournament, Wells Fargo and US Bancorp slashed their charity contributions to the Moline-based John Deere Classic.
Local charities said that they were relying on this $200,000. To fill the budget gap, they instructed their volunteers to collect empty beverage cans and claim the 5-cent deposit.
Rocky did the math in his head, and that’s 4,000,000 empty cans!
The charity’s can-collecting seems especially odd since Wells Fargo and US Bancorp both said that they will donate the same amount of money directly to local charities.
Rocky’s three theories:
1. The local charities saw local homeless people living high on the hog (collecting empty soda cans,) and they wanted a piece of the action.
2. A weak economy and high unemployment rate correlates with increased beer consumption — and those empty cans are strewn in the streets and parks.
3. It is a publicity stunt on the part of the charities.
Click [here] for the full story.
A wise man once said, “You can judge a man by the company he keeps.” Rocky finds this platitude unsatisfying. Rocky also wants to see the man’s “abode.” Oops, typo. Make that “commode.”
Secretary of the Treasury Tim Geither continues to (unsuccesfully) market his New York suburban home. The listing is now on Zillow. Click here for details and pictures.
Mindful that former Federal Reserve Chairman said that he did his best thinking in the bathtub, the world can now see the room [click here] in which Secretary Geithner dreamed up the TARP. The computer on which he botched his income taxe return [click here.] And most importantly, the room to which he fled, when he learned that Lehman filed for bankruptcy [click here.]
While Mrs. Geithner sits by the phone waiting for a call from the producers at MTV Cribs and House Hunters, Trophy Wife asks, “What’s with those blue bathroom tiles anyway?”
“I’m sick and tired of picking up the newspaper and reading about another idiotic use of taxpayer money while our country is on the brink,” said Senator John Kerry. He made the comment after learning that Northern Trust (a TARP recipient) upheld their committment to the Northern Trust Golf Open.
For the first time in recent memory, Rocky and Senator Kerry agree on something. However, their agreement is not about business and charity decisions at Northern Trust, one of the few profitable banks (2008 net income = $640 million). Their agreement is about the idiotic use of taxpayer money.
For some “idiotic” examples, visit Time Magazine’s 2008 Top 10 Outrageous Government Earmarks: [click here for the list]
Rocky thought that the purpose of a stimulus package is to increase consumption. He wonders why would the Senator discourage a private, profit-making enterprise from engaging in that exact activity? If Northern Trust cancels their consumption while the Government spends stimulus dollars, it’s like moving money from the left pocket to the right pocket. Perhaps the Senator is upset because Northern Trust won’t sit nicely in his left pocket?
On a positive note, Rocky appreciates the Senator’s Rocky-esque pose in his picture. But there’s much more to “being Rocky” than just raising one’s fists.
Rocky wrote last month that he was buying the Gasoline crack spread because he thought it was a good investment both technically and fundamentally. Since he entered the trade, Rocky’s investment has returned 550% (unleveraged). Rocky never gives investment advice, he just “calls them as he sees them.” Hence the purpose of this update is not to gloat or celebrate, but rather to point out the inconsistency of an article in this morning’s Wall Street Journal.
Mark Gongloff writes a modestly gloomy piece, “Falling Gas May be Gone as a Stimulus:”
“Falling gasoline prices were for months a rare and welcome bright side to the economic meltdown. They aren’t falling anymore….Gas has risen even as crude oil prices have tumbled…and demand for gasoline has fallen amid a deep recession. Higher gasoline prices sometimes crowd out consumer spending on other suff, but they will bolster January retail sales numbers due Thursday.”
He concludes: “…if gasoline has found its floor, it will be one less support for any economic recovery.”
Rocky notes that this is a textbook example of glass-half-empty syndrome — reminiscent of a frightened blind man looking in a mirror. (Rocky frequently mixes his metaphors. Always shaken, not stirred.)
As gasoline prices reached $5 last summer, doomsday pundits wrung their hands and politicians spoke about intervention in the markets. Newspaper columnists predicted the end of the American way of life. Fortunately, Washington did not intervene, and high prices increased production and curbed consumption.
Last fall as gasoline prices collapsed, the same doomsday pundits pointed to the deflationary collapse of the economy — and all the evils the collapse will wrought. As commodity prices ticked lower, more people jumped on the bandwagon and viewed this as a coincident indicator of economic implosion. Eventually gasoline prices overshot to the downside late December (when Rocky entered his bullish trade); other industrial commodity prices are groping for a similar floor.
An algebraic representation of this phenomenon:
Prices high = pundits are bearish. Prices low = pundits are bearish.
Both when gasoline reached $5 and when the crack spread went negative, supply and demand came back into balance, and a new equilibrium was reached.
To conclude: Rocky believes that gasoline’s ticking up a bit is a POSITIVE sign for the economy. It also shows that markets, when left to their own, eventually find a sensible equilibrium.
Rocky just read the most brilliant idea to create new jobs in this post-financial crisis world.
Jan. 30 (Bloomberg) … Earlier today, Senate Democrats took the first step toward limiting pay for workers at companies receiving federal bailouts. Senator Claire McCaskill of Missouri introduced legislation to restrict compensation at such companies to $400,000, the equivalent of the U.S. president’s salary. Another measure being proposed would create a court to restrain executive compensation.
Rocky observes that if the government “caps” compensation on the best and brightest employees at a company, those employees will quit. The capped employees will then either launch or join an unregulated company.
Once they settle into their new positions, these employees will count as “new jobs created” in the monthly statistics of the Labor Department (even though they are just moving around). The old positions will not count as “job losses.” (Although the regulated company performance will deteriorate faster, that’s a problem for the Treasury Department, not the Labor Department.)
Perversely, the lower the cap, the more jobs that will be “created.” So, if Obama wants to “create” millions of jobs, he can pick random industries, force them to accept a few government dollars, and just keep lowering the salary cap!
Note to Senator McCaskill: You wrote that the $400k cap is based on the salary of the President of the United States. Does your cap for executive compensation permit the following tax-free FREE perks: Company Residence (White House); private chef and dining room; private jet (Air Force One); private helicoptor; 34 member domestic staff; private security detail; and a personal “needs” expense account, which total tens of millions of dollars each year?
McDonalds is bringing back the boneless McRib Barbeque Sandwich in selected markets. Rocky believes that lobbying by the Boneless Pig Farmers of America for their piece of the “pork” in Obama’s $800 Billion stimulus package may explain this controversial culinary development.
From today’s Wall Street Journal:
“When you’ve got 800-plus billion dollars to spend, you’ll have an equal number of opinions on how it should be spent,” said Chris Galen, spokesman for the National Milk Producers Federation, the dairy industry’s main lobbying group.
Rocky respectfully disagrees with Mr. Galen’s comment. The world population is only 6.7 Billion, and there are far too few economists amongst that total to create 800 billion opinions.
Nonetheless, Rocky believes that much of the lobbying may be for naught. No matter what Obama tells him to drink, Rocky still prefers a Diet Coke with his McRib, rather than a pint of milk.
The Official website of the BPFAA (Boneless Pig Farmers of America): http://www.bonelesspigs.org/bonelesspigs_MMH.swf is well worth a visit.