April Trading Update

I had to ring the register today on my Wachovia short. Read this morning's catastrophic news. It was a very small trade but making 6 pts on a $30 number so quickly compelled me to cover and move on. I also covered my Capital One Financial short today and my latest Fannie Mae whack. I made 6.25 and 8.25 points respectively!

Here's my updated list of positions:

Bank of America - short from $38, this time. Trading at $35.50 as I type this.

HSBC - short from $71 - a twelve point loser so far. I have added puts in April, May, and January on the way up. It's a foreign bank with lots of exposure to booming (read: "bubbly") China and Europe. If it didn't crater, it'd be the only large bank not to.

H&R Block - another short, trading at 20.44. I'm down about 1.5 points. They have a large, unrecognized exposure to mortgage junk - so the rumors allege. As I was typing this I decided to short some more.

Simon Property Group - short from $86, currently trading $96. It's been pretty darn annoying. I did buy some puts and I added a long position in SRS which is an "UltraShort Real Estate ETF" that has SPG as its largest component. I really need this sucker to start tanking. They lease commercial malls and whatnot. In this real estate meltdown, it's not a question of "if", but of "when".

Wells Fargo - still short Warren Buffet's chief bank holding. Trading at $27.25, right now I am up 3pts and doing even better on my October 30 puts.

But my best short has been First Federal Corp. I bought some pricey puts a month ago and since then the stock has dropped from $28 to $18. I am holding out for zero on this distressed, California mortgage lender.



Now for my longs which....suck.

I added to my Google position essentially twice on its 350 point descent. I got out of my last buy for a small profit but still have some $508 stock. Presently that purchase is 50pts in the red.

Coeur d'Alene is still killing me, it's been hemorrhaging my cash for almost two years now. I am so glad I dumped my Newmont Mining ten points higher. What a POS these mining concerns are! They simply can't get the metals out of the ground.

Also, I unsuccessfully tried to bottom pick First Marblehead, the student lender. I bought at an average of around $7 and ended up dumping it at $4. I figured that I needed to be long at least one of these distressed financials as a hedge against my Armageddon-predicting portfolio of shorts. Luckily, it was a tiny, tiny trade.

Lastly, I did recently initiate a put position on Jones, Lang, LaSalle - a commercial real estate name. That's one of the next bubbles to pop painfully.



Remember I got my butt handed to me these past several months shorting long term Treasuries. Otherwise, I've been batting a high percentage with my recent trades. So piggyback away if you dare.

Massachusetts And Healthcare - Another Profile in Fascism And Stupidity

As of 2007, Massachusetts residents are now compelled by law to have health insurance. If one chooses not to be insured, the state will fine them I believe around $300. Likewise, if a business employs 11 employees or more it must offer a health plan or suffer a fine as well.

Sure if you want to drive a car, you ought to have insurance in case you injure another party, but what could possibly be the motivation for forced health insurance?

If I get sick, how exactly does that affect anyone else? Contagious diseases are few and far between these days.

Devil's Advocate - Well, if one doesn't have health insurance, when they do get sick and show up at the hospital, then the government will have to foot the bill. So in that sense, the uninsured cost taxpayers money.

Well, obviously we need to get rid of mandated care then. DA you should go back and read my free hot dog analogy. Since it's short I will reprint it below:

If some restaurant decided to give away free hot dogs, there'd be a long line around the corner to get them. Then invariably, some politician will point and clamor, "Look how many people NEED hot dogs!"

I say you allow hospitals to turn away anyone who can't pay. Let gunshot victims from the hood bleed out on the sidewalk if they're uninsured. No doubt one of his buddies has some bling currency to pay for urgent care.

The idea that the government is capable of administering a universal, for-the-wretched-and-poor, healthcare system remains a fancy. It's their very mandates, tax-breaks, and existing subsidies that have pushed healthcare costs to such stratospheric levels . So now, after they have made it prohibitively expensive, they are going to wax indignant and compel everyone to buy it one way or another!?!?!?



Massachusetts employers (there are 12 left!) actually have to issue a new tax form to their workers - a 1099-HC. The Commonwealth has decided to use tax returns to enforce the healthcare mandate. My wife accidently threw it out with the junk mail and we had to scramble to find another copy. From reading some websites, she was by no means the only one to make this oversight.

While filing, I noticed a religious exemption to the healthcare mandate. Residents can check a box if their faith rejects modern medical treatment; I assume it's for the Scientologists(?).

Then right below, the tax form asks if you are claiming a religious exemption BUT have sought medical treatment in the past year. Don't try to lie! In other words, they are going to investigate any religious hypocrisy - which apparently the State of Massachusetts also feels is well within its charter.

Well, if that is the case, why pick on one religion?

I say, if some emptyhead buys a Prius but has oil heat and/or more than 3,000 square feet, and/or keeps their thermostat above 73 degrees....

...then the state ought to revoke the $2,000 hybrid vehicle income tax deduction.

After all, the government isn't supposed to be establishing or favoring any particular religion, correct? I say round up and flay all the hypocrites!



Make no mistake, this healthcare mandate is not the rotten fruit of economic illiteracy - as making MORE PEOPLE buy something that is too costly only aggravates unaffordability.

It's not about nanny-statism or a treatment crisis - as 90% of Mass residents already have some form of health coverage.

This mandate is but another Trojan horse, another salient by statists against the rights of private individuals. If you pay attention, the subterfuge is apparent in the words of program officials:

"We need to be fair and lenient in terms of enforcement both on employers and individuals in the first year in order to not incur some kind of a backlash," said Richard C. Lord, president of Associated Industries of Massachusetts and a member of the Connector board. "We need to.....give everybody a chance to adjust to the new realities."

They've already admitted the fine for uninsurance will rise every year. Was there ever a doubt? Next up will be more regulation ("standard setting") on the minimal care and insurance levels. In the meantime, jobs and people will continue to flee the state - an old reality that jurassic politicians have yet to adjust to.

My neighbors here in Massachusetts are old and Moronic; unfortunately I also get the government they deserve.

Elevating Jason Lewis

As I dashed off to mail my tax return, I just heard a great analysis on the radio:

If some restaurant decided to give away free hot dogs, there'd be a long line around the corner to get them. Then invariably, some politician will point and clamor, "Look how many people NEED hot dogs!"

That little hypothetical illuminates at least a couple of the major ailments of our healthcare system.

I am pretty sure the raspy voice who uttered it was Jason Lewis. I first heard him when I moved to Charlotte where he was THE local radio talking-head. I guess if he's now subbing for Rush Limbaugh then he's sort of a rising star in his realm. He's pretty decent on economics and historical analogy - but man, he is one angry dude.

Although I guess that there are as many serene radio talkshow hosts are there are serene basketball coaches.

(Adult Language Warning)



Alright, I just had to work that profane clip in because I found it funny. Serious, more cogent blogging will return now that my taxes are done and I have vowed not to start another book for the time being.

Pluming Prius Putzes

Read these holier-than-thou license plates.






























Virtue may be its own reward -- but as any self-respecting Prius Progressive can attest, the payoffs of hybrid ownership don't stop there. Beyond the gas pump savings, the tax breaks, the entree to carpool lanes, the freedom to park without feeding meters and the aura of cool kinship with Hollywood hybriders such as Leonardo DiCaprio and Cameron Diaz, comes something more visceral.

Say what? Prius drivers don't have to feed the parking meters? Are you freakin' kidding me?

Read more here.

The Forgiveness Of Debt - It's Nothing New

From Briefing.com this morning,

WSJ reports state govt's are acting more aggressively to help homeowners avoid foreclosure, frustrated by what they view as the federal govt's inadequate response to the mortgage crisis. But some of the programs are putting states at odds with mortgage lenders. Ohio officials announced Tuesday that they had enlisted more than 1,000 local attorneys to work with certain borrowers free of charge to try to block foreclosures. Wednesday, an Illinois lawmaker introduced a bill, backed by the state's governor, that would impose a moratorium of as long as 60 days on foreclosures. The measure would apply only to borrowers who enter housing counseling and is meant to give them more time to work out a deal with lenders. Maryland Gov. Martin O'Malley signed emergency legislation Thursday to give borrowers at least 150 days to cure defaults, effectively creating a short-term moratorium on foreclosures. The state also is requiring mortgage-servicing companies to provide the names of borrowers whose adjustable-rate mortgages are about to reset to higher rates, and it is asking companies to stop levying late fees and other charges on borrowers whose request for a loan workout is being evaluated.



Ever since the dawn of civilization, populist politicians have successfully erased the debt of deadbeats. Ancient Rome, Ancient Greece, and all over Europe potentates have exercised this power against lenders. Jewish bankers were targeted more times than can be catalogued. Whatever the actual level of predatory usury (less than fable suggests), their high interest rates had to incorporate the very real probability that the next local ruler would simply absolve all debts to Jewish bankers. Certainly, raising the costs of collection was no way to get Shylock to lower his rates, now was it?

The very same thing is happening in courtrooms and legislative chambers all across the country today. Socialists are doing everything they can to retard, harass, and preclude lenders from reclaiming their own rightful property, i.e. foreclosed homes. This will surely put upward pressure on mortgage rates, for many, many years to come - which of course, will hammer housing prices even lower and increase the number of foreclosures. How boring is it to hear me say this for the umpteenth time?

You know, not too long ago debt was not only stigmatic, too much of it would get you imprisoned.

Now they won't even throw you out of the bank's house!!!

Those Militant Vegans Had It Coming

Here's Ted Turner on not taking action against "global warming" - the apocalypse of his pagan creed:



"Not doing it will be catastrophic. We'll be eight degrees hotter in ten, not ten but 30 or 40 years and basically none of the crops will grow. Most of the people will have died and the rest of us will be cannibals."



Cannibals, huh?

Well, if there are no fruits and veggies, I say we eat the vegetarians first.

It's too bad that few of them are well marbled.

Be Wary Of Servants Of Society, The Planet, The System, And The Greater Good

What to think when even the icons of free market capitalism are appealing for the Big Government bailouts?

Steve Forbes recently phoned in an interview to CNBC in which he advised the Feds to "suspend mark-to-market accounting" for toxic, bidless, mortgage related securities.

He's far from the only such obvious hypocrite on this issue, but a hypocrite nonetheless. Why would the yield-hungry, strong hands buy mortgage debt if the Feds artificially inflate its value? You can't very well on one hand decry a lack of liquidity and then take steps to aggravate the dearth.

These exceptional arguments, are unfailingly based upon "avoiding systematic risk", "maintaining confidence and integrity in the marketplace", and serving "the greater good". If you listen to Federal officials justify their bailout of Bear Stearns against the accusations that they are saving "Wall Street instead of Main Street", they invariably assert that the latter's welfare redounds from the former's. In other words, while they may admit to holding their noses and bailing out the fats cats,...it's for the good of society. So we should all just trust them, our politicians and bureaucrats.



Meanwhile, it's yet to be demonstrated how $4-$5 gasoline from Fed-induced inflation contributes to the greater good.

Greater good arguments are the foundation of all political rhetoric. No pol will ever stand up and put forth proposals for "minority interests", "a generous lobbyist", "in the furtherance of my incumbency status", or for "my family, friends, Law school classmates, and cronies".

Examples:

The whole gamut of environmental regulations strangulations is marketed as "saving the planet".

The War on Terrorism is against an "existential" threat to our nation.

Taxes, although mostly for income redistribution, are pumped as for societal infrastructure. And don't you dare ever bring up questions of "efficiency"!

I even read justifications for regulating homeschooling in California along the lines that "...if we (the state) don't oversee these homeschoolers now, SOCIETY will be paying for it later on..." Meanwhile there's probably not a single homeschooled kid wandering the streets homeless or in the prison system. Sure, those religious spelling bee champs are a real burden on "society".



Neither I, nor anyone else, have any idea how bankrupt Bear Stearns was or what it's "spiralling" effect would have meant for the Main Street economy. The point I want to make is that everyone should be extremely cynical about "greater good" argumentation.

If Steve Forbes thinks mortgage securities should now be exempt from current accounting procedures because they are opaque and illiquid, then why didn't he object in recent years to banks marking them at unsustainably high levels? If he was against mark-to-market from the get-go then he'd be on firmer ground.

Let the record show that the Feds did a similar thing back in the 1980s with the S&Ls. With a wink and a nod they allowed the banks to delay recognizing losses for years. Steve Forbes and other interventionists would point to this as evidence that the Fed's stabilization worked but did it?

It ended up costing taxpayers $125 billion!

Now, if the Fed had allowed events to run their course, perhaps watching several banks fail and a panic ensue, what would have happened?

Well, maybe the financial sector would have learned a lesson? Maybe they would have learned not to traffic in opaque, illiquid securities? Maybe a smaller panic twenty years ago would have precluded the super-sized one we are facing today?

These days I am a big believer in failure as the needed fertilizer for future success.

I say, let there be chaos, volatility, and fortunes won and lost. Society is disserved by sheltering consumers and corporations from the consequences of bad decisions.

I have never been able to shake this "for the best" image from my head.

Enjoy:



There most certainly is an ideal of greater good.

It just seems these days, its protectors are as artless as Kathy Bates.

Banks - Tripling Down On Their Losers

I just got the inside word that one of these banks that I am already short:

Bank of America, HSBC, Wachovia, FirstFed, Wells Fargo

...has senior management pounding the table to increase its Home Equity Loan portfolio.

They are trying to UP the compensation to brokers to sell more HELOC products.

Hard to believe, isn't it.

Reminder - Housing is in the sewer AND it's still unaffordable; we're in the first inning of a recession; and mortgage rates can only rise from here. HELOCs, due to their secondary lien status, are trading at pennies on the dollar. Thus they can't be easily pooled, securitized and sloughed off onto investors - banks will have to hold them on their books indefinitely.

Admittedly I don't fully understand the banking business. But to me, it seems as boneheaded as the homebuilding biz. Just as Moronic builders like Ara Hovnanian won't EVER stop building - no matter that the US housing market is already over-supplied by 3.5 million homes - banks seemingly won't ever stop underwriting new loans. They mistakenly think merely slowing loan growth and raising lending standards constitutes a defensive posture. They are wrong - it's time to batten down the hatches.

If we can borrow a somewhat apropos expression from the Big Government solutions manual:

Remember, you're a hammer...so every problem is a nail.

Their reckless pursuit of growth is what got them in trouble in the first place.

Hey Jeff Jarvis and NYT

Let this post be a follow-up to Even Their Little Theories Are Bunk where I discussed the inane proposition that Hillary Clinton's people were wagging Matt Drudge.

Since that last posting I started saving all the unbehooving pics Drudge featured on his page so as to to provide evidence to the contrary.













Can you say FUPA?

















Clearly, Drudge is an Obama supporter...

[for you Morons that don't read my blog...the above is sarcasm.]

Job Market 2009

Ambulance Chasing At Bear Stearns

From CNBC:

I have to give a shout-out to Ray Schmitz, an associate broker at Coldwell Banker Previews International in New York City.

A week ago last Monday, when several employees of Bear Stearns Bear Stearns Cos were leaving the building with cartons and plants, Schmitz was standing outside the building, handing out his business card.

"There were some people who were not happy about their own circumstances,” Schmitz told me this morning, “and sure there were people who didn’t want to talk to me and some who didn’t want to look at me."



What next? Are divorce lawyers going to start whipping out their business cards every time they see a couple argue in a restaurant?

I wouldn't put it past them.

This Bear Stearns thing reminds me of my own serious car accident. About nine years ago, after the car I was in was pulverized by another and wrapped around a telephone pole, I laid sprawled out, immobilized on the backseat when some lawyer reaches in, before the paramedics, and handed me his business card. I wish I kept it so I could post his info here. Furthermore, of course the guy that caused the accident admitted, later on in legal proceedings, that he met his legal counsel randomly in the hospital. SURE it was "random". They are total scumbags, the lot of these PI lawyers.

Anyway, it's a wonder that some meathead from Bear Stearns didn't reach out and punch the real estate jerk.

There's a major difference between say my harmless brand of mental schadenfreude and the in-your-face commercial variety.

Real Estate Agent - The Second Worst Job In America Today

The Orange County Register. "Orange County real estate agents collectively earned about 13 percent less in commissions from home sales last year than the year before. And their income was down about 42 percent from 2005, shrinking by $645 million in the past two years."

"The reductions, spurred by two years of declining home sales, prompted more agents to either leave the business or find jobs elsewhere, while offices either closed or merged with other brokerages. Real estate brokers also reduced agent positions while cutting support staff and costs."

"‘The industry as a whole is definitely taking a gigantic haircut in commissions,’ said Steven Thomas, president of RE/MAX Real Estate Services of Aliso Viejo."

"Forty-five percent of all agents affiliated with an active Orange County real estate office had no income last year from commissions, said Patrick Veling, president of Real Data Strategies Inc. of Brea. Of the 55 percent of agents who had a sale last year, half did just one or two transactions apiece."

"To put that in perspective, a sales agent’s typical commission split amounts to a fourth of the overall commission, or about $8,900 for the sale of one median-priced home in 2007. Fewer than 28 out of every 100 agents did more than two transactions last year, according to Veling."

"‘We have too many agents in the business. This will filter them out,’ said Bill Plattos, broker for a regional chain based in Costa Mesa. ‘People thought it was easy. They muddled it up. Some of them were unprofessional.’"

"Virtually every agent knows someone who’s gotten out of the business, although most who have taken employment elsewhere say they’re keeping their licenses active and trying to keep a hand in the trade."

"One agent, saying he earned just $12,000 last year, took a job at a fitness center to cover living expenses."

"Edward Campbell of Midway City launched his real estate sales career in early 2007 but after six months realized that residential sales were not for him. He switched to commercial real estate."

"Campbell recalled holding two open houses in early 2007 to which nobody came. Those days followed attempts to market the house, then time spent setting up signs and flags. Only to end up spending the day sitting in an empty house, hoping somebody would show up."

"‘It was just boring,’ Campbell said. ‘It was just standing around doing nothing.’" (link)







Okay now, I tried to find some worse jobs (pictured above) but I am sure they pay more than $12,000 per annum. (Don't forget sewer diving.) I have no sympathy for anyone who "loses" income. Y'all have to remember, when us traders have a bad year, it's a NEGATIVE one. Anyway, the agents out there who hustle will still do quite alright - it's the 25 year old newbies and part-timers who are done.

The only job worse than real estate brokering today is, of course, mortgage brokering.

Agitprop Update

"The oil companies, the predatory student loan companies, the insurance companies and the drug companies have had seven years of a president who stands up for them. I will be a president who stands up for all of you...."

That's a quote from Hillary Clinton's campaign speech yesterday.

I must admit, I haven't heard the expression "predatory student loan companies" before. It must be a new bogeyman.