Author Archives: buddy

The Mother Of All Bailouts:European Edition

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Well well well, not only did the EU get its act together, but they were able to get something out the door to help reassure people that the Euro is a good place to park your cash.

European Union finance ministers moved toward agreement on an unprecedented loan package worth at least $645 billion to prevent Greece’s fiscal woes from triggering a broader sovereign-debt crisis and shattering confidence in the euro.

Jolted into action by last week’s slide in the currency to a 14-month low and soaring bond yields in Portugal and Spain, the 16 euro governments sketched out plans to make 440 billion euros ($570 billion) available, with 60 billion euros more from the EU’s budget

Of course they still have some arm twisting to do before they’ll have used all the bullets of government manipulation.

Government officials said they won’t push the independent ECB to, for example, buy government bonds. President Jean-Claude Trichet accelerated the market selloff on May 6 by rejecting that measure.

I’m sure they’ll try their hardest to get some quantative easing going on from the ECB side.

Obama yesterday emphasized “the importance of the members of the European Union taking resolute steps to build confidence in the markets,” White House spokesman Bill Burton told reporters in Hampton, Virginia.

Of course they haven’t done anything about the underlying problems, just punted that issue down the road like the American administration. All they’ve done is put one hell of a bandaid on the patient hoping it won’t die as the head lies on the road. And it’s obvious that the public in Europe is enamored of bailouts there as they are here in the States.

Voters in Germany’s most populous state dealt Chancellor Angela Merkel a painful setback Sunday, erasing her government’s majority in the upper house of parliament and curbing its power after a stumbling start and criticism over the Greek debt crisis.
…”This is of course a warning shot for the governing parties, and the people should know that it has been heard,” said Foreign Minister Guido Westerwelle, the vice chancellor and leader of the Free Democrats, Merkel’s junior coalition partner. “We must make an effort to win back lost trust.”

Well, color me skeptical about any politician actually doing what they say. I think the thing to take away is that the pols of Europe are scared of the downside and are willing to do anything thing possible to save their asses without actually fixing the problems they have. In other words, they are acting like typical politicians and their countries will be the worse for it. But we’ll see.

Apple, The New Evil Empire?

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I have to say, I’m glad that I haven’t been in too deep with the hype machine that is Apple. It seems they’ve finally pushed people too far and have gone well beyond anything that Microsoft would ever do.

US regulators are considering an inquiry into whether Apple violates antitrust law by requiring that its programing tools be used to write applications for the iPad and iPhone, a source familiar with the matter has now said.

I’m not saying Microsoft hasn’t used its market position, but can you imagine the uproar if it told all its third party developers that not only MUST you buy a Microsoft operating system to create your applications, but you must also only use tools that we allow you to use.

The uproar would be stupendous. You would have geeks rampaging through the streets. Er, ok, maybe not that far. But it really is ridiculous to absolutely mandate that you must create an application only using approved tools.

This is the problem when you have a cult of personality instead of a CEO.

Volatility? What Volatility

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Nice spike in volatility.

Anything happen today that I missed?

Yahoo! says the Vix was only up 5.34 points. Oh wait, that’s a 30.57% rise today. Guess the market wasn’t liking that downgrade. But really, has the dowgrade for Greece already been baked into the market or was adding Portugal to the mix the part that really spooked the market. Guess we’ll find out…

Build Your Own Cellular Network?

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Let’s be honest, haven’t you always wanted to own your own cellular network? Now you can.

The task of running a cellular network has usually been reserved for major carriers. But now an open-source project called OpenBTS is proving that almost anyone can cheaply run a network with parts from a home-­supply or auto-supply store. Cell-phone users within such a network can place calls to each other and–if the network is connected to the Internet–to people anywhere in the world.

Sweet. Now that sounds like a fun afternoon of tinkering.

Greece Needs Cash Now

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Which is really what they’re saying now that they’ve activated their “lifeline”.

Prime Minister George Papandreou asked for the 45 billion euro ($60.5 billion) package put together by the European Union and International Monetary Fund to be activated after months of markets pushing Greek borrowing costs ever higher, undermining the country’s efforts to cut its 300 billion euro debt load.

“It is imperative that we ask for the activation of the mechanism,” Papandreou said on live national television and radio from the remote Aegean island of Kastellorizo.

As a side note, of course he made the announcement from a remote island, that way he can dodge the protesters.

My issue is that the IMF is funded by me. As I said previously on the issue, I am a bit concerned.

And here’s where I become mildly concerned about my ass being on the line for the money. While the IMF is technically independent, if there’s a problem, you know they’re coming back to the US for cash.

I hope the technocrats at the IMF have at least given a heads up to Treasury and the President that this is an issue that may come up. Hey, it’s one thing for the US to save the sorry ass of GM, but how will the voters respond to knowing they’re also bailing out the sorry ass of the Greek government?

We Don’t Have No Inflation

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Seriously, all you have to do is exclude the bad numbers and voila, you’ve got the number you want.

Wholesale prices rose more than expected last month as food prices surged by the most in 26 years. But excluding food and energy, prices were nearly flat.

Again and again, this is the problem with government statistics today. They are rigged. Of course there is no inflation when you remove all the bad parts. I’d like to know from the eggheads, since I need food to eat and energy to live in my house, why we get to exclude it?

It’s nothing more than a way to rig the game.

Greece Gets A Bailtout

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Greece finally got it’s bailout. Thankfully I’m not directly on the hook for any of the cash.

Euro zone finance ministers unanimously approved a detailed 30 billion euro ($40.5 billion) emergency aid mechanism for debt-plagued Greece on Sunday but stressed it had not requested that the plan be activated now.

Right. Does anyone really believe it wasn’t requested? I mean, why bother going through the process of creating a bailout if Greece didn’t want it. Everyone knows that’s a lie, so why bother repeating it?

“If the mechanism had to be activated, it would not be a violation of the no-bailout clause (in the European Union treaty) since the loans are repayable and contain no element of subsidy,” Eurogroup chairman Jean-Claude Juncker told a news conference in Brussels after the meeting.

And if they happen to forgive the loan? Does it then become a bailout an violate the no-bailout clause? I’m just askin…

The size of the International Monetary Fund’s contribution to any package was not disclosed but it would come on top of the euro zone amount.

And here’s where I become mildly concerned about my ass being on the line for the money. While the IMF is technically independent, if there’s a problem, you know they’re coming back to the US for cash. Hopefully they’ll be able to stick the Europeans with the losses when they happen.

And losses will happen on this bailout. It’s painfully obvious to anyone with a working set of eyes that Greece is nowhere’s even close to getting their house in order. Yes I know, like the US should be talking… 😉

Barry, It’s All About The Narrative

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Barry Ritholz asks why doesn’t anyone know what a profit is in relation to the government bailouts.

Why doesn’t anyone understand what a profit is? It is the total revenue minus the total costs. Which is why this FT headline is our second dumb headline of the day:

US Treasury’s bail-out profits top $10bn

“The US government has made more than $10bn so far on banks’ repayments of bail-out funds, according to a new analysis that suggests taxpayers might turn a profit on the unprecedented help extended to the financial sector during the crisis . . .”

No, they have not made $10 billion dollars. As the article later states, “Treasury still expects to lose $117bn on the entire Tarp Programme, which includes investments in the car industry and AIG, the insurer.”

Barry Barry Barry. I love the rhetorical question. They call it a profit because other wise people might see the hundreds in billions of dollars that are lost forever and may decide that the current occupant of the white house hasn’t done anything other than make this recession worse by it’s profligate spending.

Excuse me. Congress’ profligate spending.

Regardless, the narrative is that the bailouts and all the spending at all level of the government is needed because they know better than you do. If you start to question the bailout, why, you might even start to question other things and we can’t have that. Just read the legacy media and do as your told and things will be fine.

How Is The Fed Going To Know A Bubble?

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So the Fed has spoken. They know their low rates aren’t good but hey, don’t worry, they’ll be able to spot any bubbles and do something about it.

Thomas Hoenig, president of the Federal Reserve Bank of Kansas City, for a second straight meeting was the sole member to oppose keeping that pledge. Analysts saw Hoenig as concerned that holding rates too low for too long could feed some new speculative bubble in assets such as stocks or commodities.

Fed members noted the importance of closely monitoring financial markets and institutions to help detect risks at an early stage. They cited, in particular, the need to monitor asset prices and loan levels.

Information collected by Fed staff hasn’t revealed significant threats in the financial markets or widespread high-risk-taking, the minutes concluded. Still, Fed officials said they would be on the watch for any such threats.

Does anyone at the Fed remember Alan Greenspan and his Irrational Exuberance speech? That was in 1996. I vividly remember the Fed stepping in an stopping the Tech Market bubble from happening. Oh wait. That never happened. The head of the Fed even said it was a bubble and they did nothing.

Housing market anyone? Anyone not believe that 2005 – 2008 wasn’t a housing bubble? The Fed controls interest rates and yet they too could not see that bubble happen.

The Fed has missed two of the largest bubbles of all time, which happened right under their noses. But now, this time’s different? Sorry, homey don’t play that game. I remember the tech bubble. They all said this time was different. It wasn’t. And this won’t be either.

Concurrent System Design For Dummies…

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You really should read the following post by The Reinvigorated Programmer. It’s one of the funnier things I’ve read in a long time. And it’s also helpful. Can’t say that about too many things on the web.

I explained to her that it’s an elementary principle of concurrent system design that you minimise your lock phases: acquire a resource, use it and release it as quickly as possible, so that the resource can be used by other agents. But she gave me some dumb story about having had to get up to fetch drinks for the boys.

Heh.

It really is funny. Check it out.