Blog for December 15, 2009 [See POST-CLOSE REPORT]

"Ah yes, but what if the next stumble isn't quite a stumble but a massive reset to say S&P 200. "

Well, if you get into your shorts correctly, you should be able to retire. :)

EDIT: Actually, I wonder if they've been able to exert this much control over the markets the last 6 months, what would be their preferred outcome. I group the FED's 2 Trillion hedge fund traders in that. Because, if power wishes to maintain power, what is the required outcome? Is it more likely they attempt to engineer such a scenario?

And the slow crash of commercial real estate?

Ron Paul is on CNBC until 9. To listen to him I will even put up with Joe Kernan.
Just my opinion

Good morning.

There are NO Cara 100 Ratings Changes to report at this time.

It's higher:

Prior = 0.3%
Consensus = 1.0%
Actual = 1.8%

"We got the worst of both for this morning's initial economic news. Producer prices surged while Empire manufacturing fell back sharply. Energy costs jacked up the headline PPI for November but the core also rose significantly. The overall PPI jumped 1.8 percent in November after gaining 0.3 percent in October. The boost in the latest month far exceeded the market forecast for a 1.0 percent increase. The November gain was led by a 6.9 percent spike in energy and a 0.5 percent gain for food. At the core level, the PPI rebounded 0.5 percent after a huge 0.6 percent drop in October. The market had projected a 0.2 percent rise for the latest month. It is easy to jump on the worry wagon about inflation from today's report. But there should be a little caution about that. Oil prices have since come down and the jump in the core partly or mostly reflected getting back to near-term trend after October's sharp drop. The core rebound was mainly for light trucks and cigarettes."

I just have one comment: "The Worry Wagon???"

ICSC same store sales:
w/w change prior = -1.35, actual = 0.4%
y/y change prior = 2.6%, actual = 2.4%

Holiday shopping bumped up sales over last week, but the y/y rate is down -0.2%.

Redbook:
y/y change prior = 1.2%, actual = 1.5%

This week people are shopping more (vs last year) than they were last week.

These seem mildly positive, unless you remember last year's holiday shopping season came right after a once-in-a-generation market crash.

Those numbers seems to fluctuate from month to month. Look at last month, when the situation was reversed - demand was twice the expected amount. The same thing happened in the June/July pair.

Another key economic data point this morning:

Industrial Production for November slightly above expectations

This has somewhat muted the impact of the poor Empire State Manufacturing number that came out earlier (that was for Dec.). So look forward to another interesting open.

The TIC may not be relevant, but it's announcement did correlate to an upward move in gold (which is not the same as causation). The gold move sent me looking, and the temporal relationship of the gold move to the announcement caught my attention.

It also did occur to me that if foreign demand for US bonds was heading down by 50% or so over the last reporting period, the FED would have to find some more creative, inflationary way to do the heavy lifting of our debt should the lack of interest continue.

Yep, let's take another look at next month's report to see if this is a pattern.

RBY hanging in there. I was tempted to lighten up yesterday, but decided to stay the course. Am now looking at UXG. RSI7d @ 29. Thinking about putting an limit order in for 2.38. It is now @2.50

POT
MON
MOS
FEED
SEED
CGA
CAGC
RIG (to a certain extent)

EDIT:
FD - I own FEED and bought some SEED at $11.52

in the fast lane ( myself included )..http://www.youtube.com/watch?v=MiVfaTJUZXU

Last night PBS Newshour ran ITN's excellent intro to rare earths. Nobody seems to realize that "green technologies" greatly stimulate environmentally-ugly production of rare earths in China. Prius'es and wind turbines use huge amounts of rare earths.

Also, Molycorp's CEO (goldman-led group which bought Chevron's Mountain Pass rare earth mine- the US's ONLY past producing mine) "talks his book" about the importance of getting non-Chinese sources producing.

China has 95% of the world market(having no internal "environmentalists" to contend with) and regularly cuts price to forestall competing exploration and production.

http://www.pbs.org/newshour/bb/asia/july-dec09/chi...

Hi Jock - Noted Ucore Uranium when Pinetree Capital (which I own) picked up rights to acquire up to a ~13% shareholding. Ucore has been advancing a rare earth property in southeast Alaska with prior work completed by the Bureau of Mines. Not too sure how to evaluate the value on Ucore and feasability of the Bokan Mtn. deposit, but given recent trading volumes it seems to have someones interest. Happy Trading

Luggie -

A couple of years ago, I was lucky to get to know a sharp resource guy who has spent 4 years ONLY studying rare earths. He is now one of the world's leading experts, having traveled to CHina many times, and attended conference all over the world on the subject.

He says he has yet to crack the code on rare earths as an investment. There was good speculation a couple of months ago, but the problem with the area is that most don't know the true mix of light and heavy RE's in a given deposit. (there are 16 RE's) AND, the demand for each particular element is a function of where (fast-moving) technology is heading. Then there is the tendency of the CHinese to cut prices whenever a competitior looks likely to develop a competing deposit or begin processing in competition with them. I'm told the lithium exploration plays are a scam.

So, be careful and realize that speculation and stock promotion is the game. Brent Cook (one of the few sharp newsletter writers who's also a geo, came to the same conclusion a couple of months ago).

Speaking about PNP, I missed the buying opportunity on Nov 1 and this refuses to go down despite dollar rallying and PM and energy dropping (at least until a couple days ago). Why?

I decided to lower my sell limit order on my remaining shares of HNU.TO from $11.8 to $11.7, so that it can get hit today with a higher probability (HNU.TO is $11.6 now) and I would be out of it. NG is not a bargain at this point but is rather a momentum play on a certain perception developing about how cold the winter is going to be. As we know, however, weather can change on a dime, and so I would rather wait until NG becomes a bargain again (front month futures under $5) before re-entering.

Forgot to relay that Otto recently displayed a map of para-military hotspots in Colombia. One is right near the deposits of Ventana, and Greystar. SO, the risk is not just FARC, but their opponents as well.

Although para-militaries are informally(and wrongly)considered "our side", they are just as ruthless and brutal and dangerous to mining. Otto speculated that if there is a (rumored) buyout of Ventana by a major, the due diligence will bring this risk to light, and to public view.

Anglo-american's La Colosa mine is at risk too, but can't have similar impact upon a senior's stock price.

Hello,

I think the long term technicals of PNP are quite compelling. Also, Sheldon Iwentash has increased his personal holdings of PNP from 412,000 shares in May to 2,873,900 shares today.

You know I think PM is strong today also. Given the buck is +0.93% today, gold has done really well staying even. Perhaps that's the Panda Put in action? I'm tempted to buy some more here. I see a small bounce off daily RSI = 30, perhaps gold is forming a bottom?

If the dollar retreats even a little, might be good for a nice bounce in both PM and oil - especially seeing how oil is actually UP on a day when the buck is also up big.

I'm not sure I will do more than a trade on it though - as Bill says, how much dollar rally can gold withstand? If the USD hits 80, what price would gold be?

What do you mean long term TA compelling?
I may be short sighted but both daily and weakly RSI(7) are bouncing down from over 70. Both in nominal as well as real terms (ie PNP.TO:$gold or PNP.TO:$wtic).

ALOHA !!

While silver spot is still up gold will remain stronger. At some point it will not matter if the USD goes higher.

It becomes a LIABILITY BUBBLE issue and the C WORD takes over!

Over st Seeking Alpha I saw an anti-Roubini article. I am noticing more and more analysts discussing TOTAL US DEBT and not just the little dribble of US Treasuries, even though US Treasuries, the only US marketable debt is way over $1TRIL USD for FY 2010, only two and a half months into FY 2010.

In comparison to Government Account Series securities we owe CHINA next to nothing!

HNU.TO just hit my sell limit order at $11.7 for my remaining shares, which I purchased at $9.8 a couple of weeks ago. I am not completely "out of the game," however, as I sold 10 contracts of January $9 puts on UNG a couple of weeks ago for $0.77 each, and so I can still enjoy watching my position in UNG puts decaying over time. While NG is not a bargain at this point (and so I feel perfectly fine being completely out of HNU.TO), UNG can easily end up below $9 by the end of January, in which case I will automatically re-enter UNG at the cost basis of $8.23 via my put assignment -- THAT will be a bargain entry.

Hopefully this works:

http://stockcharts.com/h-sc/ui?s=PNP.TO&p=W&yr=5&m...

I realize that most on this board are short term traders, but I take a long term approach.

In the current Fortune cover story on the firm I call Oogle*, the writer asks Eric Schmidt if his company has ever responded to a nat'l security request by giving up info about a US citizen.

Schmidt responds (generically) that there are laws on the books which his company is not able to challenge legally. (That sounds like a YES to me!)

Then Fortune reports Schmidt has told friends informally that, if they want information to remain private, don’t put it on a computer.

That’s a pretty sweeping conclusion on Eric’s part! I still believed that if you paid cash for a computer, didn't co-mingle any information traceable to your identity, and paid for connectivity with cash, it might still have been possible to have information on a computer that could stay assuredly private.

(* when you're "oogling" information via Eric's servers, they're "oogling" you too, oogling on behalf of who knows whom!)

I noticed that 4/5 last days had V-shaped intraday charts. Conversely, dollar charts seem to have mid day bulge. Is this significant besides a daytrader opportunity?

Edit: never mind, this is a hammer formation on candlesticks, right?

Hi Telstar - I have been in and out of Lennox & Johnson Controls over the last number of months looking at this niche too. Let us know of others you might identify. Happy Trading

Not to end on a down note, there are a couple of precautions you can take to minimize exposure to Oogle:

There's a european-based search engine which doesn't record or store IP addresses of users: ixquick.com

If you access search and sites through an overseas proxy server, listed here:
http://www.publicproxyservers.com/proxy/list_ratin...

there has to be added some privacy protection. (Your IP address is, apparently, not passed through the proxy server to the destination site.)

Still, if you are using a computer with information associated with your identity, I suspect there are limits upon the protections afforded by these measures.

(FYI, my interest in this subject is philosophical! Not all those concerned with privacy have something to hide. I think Oogle is a great and admirable company, but what they know about all of us freaks me out!)

Thanks Luggie and Kaimu. A quick google search came up with SI and ABB.

Here is the source of the statement, it comes from XOM from their energy outlook to 2030. Here is the link see page 16.

http://www.exxonmobil.com/Corporate/Files/news_pub...

As a computer consultant, I can tell you that if you have ANY kind of connection to the internet, nothing on your hard drive necessarily stays private (especially if it's a windows machine). Restriction of physical access to a non-networked machine is the closest thing we might have to real security. And how practical is that?

As for anything you might encrypt, there are people (bad guys, or our government) out there with the skills and software, that given the time (very, very time consuming) and the money, can decrypt it.

Just a reminder for those that may not know: email is completely sent in the clear, meaning that it's like sending a postcard through the mail; anyone (with a desire) can read it - especially if sent out through an unencrypted wireless connection...be careful sending passwords in emails...

The action in GDX today may be some cause for concern for gold bulls today. Down 2% on a day where the metal held steady suggests to me that the metal may be consolidating before further downside. At the same time the yield on the 10-yr note looks like it may have just double bottomed (first bottom 10/8, second bottom 11/30). Equities have been holding near highs but seem only able to oscillate near the highs. Not to mention talking heads coming out of the wood works to all claim "Its not too late to buy gold....".

The long-term trend is in tact but I see potential for a large correction in gold to really sour the johny-come-lately gold bulls for a bit (while still maintaining the long-term bull trend).

All I can say is, if you need a reminder of how painful commodities markets can become after tops, just take a look at how many hands got chopped off trying to catch oil and gas on the way down last year. I'm not saying its happening with PMs but it seems there has been a substantial mood change since hitting the gold $1225 mark.

I'm letting it play out until the markets appear more clearly and show some more clues. If I am wrong and gold sky-rockets and $USD fails, I guess I'll be able to pay off my mortgage with the bits of physical silver I have and a few shekels of foreign currency. I'll be more comfortable wading back in once I hear a loud flush and see GDX test its 200 Day Moving Average.

As always, I reserve the right to change my outlook on a dime :- )

Take a look at the technology behind Composit Tech (CPTC).

Low resistance aluminum alloy supported by carbon fiber. Excellent transmission at ambient temp, strung like conventional wire.

Ciao, Z.

Yes, I noticed that. Unfortunately, GDX moves down when equities go down, so I don't think it has a bearing on gold sentiment.

I'm thinking along he same lines. Although I hate to see the pain I'm also with Kaimu on not wanting Bernanke out, but want him to hurry the process and be done with it. Putting someone else in the position will, I believe, only put off the inevitable by giving more false hope.

I have mentioned that where I live we've been experiencing a loss of confidence due to job loss for over a decade. Even here people who were already retired or otherwise shielded are still not convinced just how bad the situation is.

I now feel I know how Hitler was able to pick off select groups and send them to their deaths without the bulk of the population being aware of the atrocities. The human mind has defense mechanisms with which we can prevent seeing terrible things.

We are a nation of Alfred E. Neumans.

Wake up America!!!!
http://bit.ly/5XycBN

This is something I can't seem to find an answer to: Geithner stated that he is against reinstating Glass-Steagall, and, for all the noise about increasing regulations, I never found any explanation by him why exactly he is against it. Seems to be a reasonable guard against much of what transpired, why would Sec of Treasury object

NYUGrad-

Is it un-American to walk away from a mortgage?

Well, I don’t know if it’s American or not, but I wouldn’t walk away.

Twenty years ago (before we met) my wife owned a house in SF that was significantly underwater. She was unwilling to sell the house at a loss. At one point, she needed funds for a few major repairs. No bank would loan her the money. No relatives were able to (comfortably) loan her the money. She finally ended up borrowing money from a younger brother (basically all he had) with the understanding that he would be entitled to half the profits when the house sold at a future date. It sold 12 years later (during the dot com boom) at a price no one could foresee. She immediately paid her brother the entire amount he was due (even I thought she was going too far, but she stuck to the agreement).

In the early nineties, I bought a starter home on the Peninsula at what I considered the ‘bottom’ of a cycle. Prices continued downhill for another 5 years. It seemed as if real estate was were stuck in a rut, and signs offering cash for homes were all over the place (it's incredibly easy for wolves to look like sheep when times are bad). Builders started putting in brand new homes up the hill, which (in my myopic view of things) further lessened chances of a decent exit on existing homes. In reality, of course, the new subdivision presaged a recovering market. And in fact, the market took off. Quickly.

Life is full of challenges. Sometimes, my friend, it’s also unfair.

(a) Does it matter if irresponsible behavior on the part of others (including, but certainly not limited to, HB&B) puts you in a bad position? You're not the only guy who's unhappy about it. Do you walk?

(b) What if you took a hit on the 2x/3x funds because the originators failed to fully disclose (at least, in your opinion) the value erosion inherent in their design? Further, your account was margined to the hilt the day your position takes a 30% hit. Do you walk?

(c) What if your girlfriend forgets (intentionally or otherwise) the Pill? Do you walk away?

(d) What if you’re born into poverty and abuse, and on top of it you don’t like the way the principal talks to you? Do you walk down the block with a chip on your shoulder? Worse, turn the corner into anti-social and violent behavior?

I don’t like being in a bad position any more than you do. I also don’t like being played by the Market. But it happens, every day. I suck it up. And life goes on.

I really think your properties (you own two, right) will eventually recover and you will be glad you stayed the course. Whereas walking away will probably lock you out of the recovering RE market at the worst possible time.

http://bit.ly/4q5V9a

I recall T. Boone Pickens pushing wind farms recently through a vast remote swath of the U.S. One big issue with these remote wind farms is transmission over long distances. Add limited watt production with transmission loss and you've got a dim bulb. Mr. Picken's solution is to ditch Tesla's alternating current for Edison's beloved direct current through a new tech that can push direct current down the line without all the energy loss and covert it back to a/c for consumption.

Don't be surprised if Mr. Pickens electrocutes an old circus elephant with a/c Texas-style by end of year to scare the unwashed and persuade politicians to back his program :]

NEW YORK (Reuters) - The U.S. government "quietly" agreed not to collect billions of dollars in potential taxes from Citigroup Inc (NYSE:C - News) as part of its deal to allow the bank to repay its taxpayer bailout, The Washington Post reported.

http://bit.ly/8pdP5f

I am angry beyond belief. Mr Obama is really Mr Irrelevant.

Well said 2nd. I have been trying to compose a lucid response for 2 days!...(densa member in good standing). All I could come up with is that kind of action would elevate profit and financial success above ethical behavior. I believe we all are trying to survive the fallout of behavior just like that.
NYU, that doesn't mean I don't feel for you and the pressure you are experiencing.
Maybe Casey can do an online class to take our fear of economic uncertainty away?
Peace from North Puget Sound
please experience the holidays as a time of family rather than a time for things.

You can walk away, but the decision you make will always follow you. Do you think you can live with this decision for the rest of your life?

Lawrence Livermore Labs publishes energy production/use diagrams which illustrate where the opportunities are for efficiencies in energy production/transmission/usage.

https://publicaffairs.llnl.gov/news/energy/energy....

There appears to be opportunities for improved energy efficiency in both electrical and petroleum-based systems.

Things like "smart grid" (think Cisco, GE), monitoring (lots of startups) and "substitution" (video conferencing instead of travel) are opportunities which immediately come to mind.

Dave/proudpapa- I find this an interesting discussion. NYU signed a contract to borrow money from a financial institution, at a given interest rate for a specified length of time. Would you be as agreeable if interest rates rose dramatically and said institution put a stop loss on the interest rate and called the loan?

One last thing and I'll crawl back into my hole. NYU, just make sure both of your loans are non-recourse. I'd be surprised if the rental is, and if you ever re-financed your principal residence, I would expect that your primary isn't either. The difference could be all of the money you have.

Happy Holidays to all!

ALOHA !!

Section 561 Schdeule D of the FRB states the following reserve requirements for FY 2009.

First $10.3 MIL = 0%
$10.3MIL to $44.4MIL = 3%
Over $44.4MIL - $1,023,000 + 10% over $44.4MIL

Only the bank who writes the mortgage knows what their reserve requirements are based on deposits, but for sake of argument lets say the bank is JPMChase so I know that JPMChase is in the top five of the highest bank peer group #1 so the most that JPMChase has in a $300,000 mortgage is 10% or $30,000, plus mortgage issuance costs, which would be fairly minimal in relation to the total loan amount. Skin in the game ... meaning unleveraged principle. Which by the way, is in the form of "deposits" or Other Peoples Money(OPM). So technically no US Bank has any skin in the game, but instead all our skins are in the game! Does JPMChase actually put up $300,000 of deposits behind a $300,000 mortgage? I am laughing when I answer ... NO! How immoral is it to leverage 90% of loans? Do these bankers who knowingly leverage 90% of a loan care about risk? If you cannot answer that question with an emphatic NO then you must have been asleep the past two years.

The way I see it ... DEBT, the way US Banks and the US government "do" DEBT is evil. They believe you can prosper and retain power as a MONOPOLY by issuing unlimited amounts of DEBT, because that is what they are doing right now. I mean what is $5TRIL of DEBT issuance per month if not "unlimited"? Further if you are injured as a trader or an investor you have no recourse because the US FED and its "appointed agents" have immunity from prosecution, so there is "no law" that the US FED or any of its agents must abide by. This was proven publicly when Blanchard Coin sued JPM and Barrick Gold(ABX) for manipulating gold futures. Whereas, Blanchard Coin did not lose on merits it lost because JPM and Barrick Gold were appointed agents of the US FED and immune from prosecution. There are no consequences for the MONEY MONOPOLY. We have foolishly allowed them to be GOD doing GODS WORK living above the law in sumptuous splendor and privilege. No US citizen, not even OPRAH or even Bill Gates has such privileges. Not even the President of the US has those kinds of privileges, as Nixon found out the hard way. When has a US FED Chairman ever been forced to resign?

What is most immoral in America today? I would have to say hands down ... our MONEY! It is impossible to CHANGE America and still use the same monetary system we use now. That's a PERIOD!

Can someone tell me why gold topped at the very beginning of 2004 and silver went on 4 more months and 26% higher? The dollar bottomed roughly with gold top back then. The fed rate was increased in mid 2004. The reason I'm asking, 2009 has been a close copy of 2003 investment wise so far.

So Jack Handey, your hypothetical case is an interesting one. Lets see how it differs from the one we were discussing.

First, as a practical matter, HELOCs can follow you, unlike primary loans, so this would not be a great strategy assuming you made a big pile of money the bank could come after you for it.

Second, your intent is different. To me, since this is a question of morality, intent matters. NYU did not start with the intent not to pay. He fully wanted to live in the house, and rent out his rental. In your case, you obtain a loan with the full knowledge and intent to default. Legally similar, but not morally similar - because of the original intent.

Third, in your hypothetical example, you make a bundle of money as a direct result of your consciously committed fraudulent act. NYU on the other hand is losing money - but by defaulting, he loses less than he would have otherwise. That's hardly the same thing. He's not profiting, he's just losing less.

But for the bubble blown by Head Banker Greenspan, and the deliberate systemic fraud perpetrated by HB&B which has been detailed here at length, his purchases likely would have worked out. I'm not bringing that up to say "one good fraud deserves another", but when confronted with losses that stem directly from such a massive and systemic fraud committed by the VERY PEOPLE HE SIGNED HIS CONTRACT WITH, using his rights to limit his losses on a contract both parties signed willingly and entered into in good faith just seems like a prudent act, not an immoral one.

Good morning.

CCL - Upgraded to Overweight @ JP Morgan. PT Raised from $22 to $43

It doesn't seem to matter that he is debasing our savings to worthlessness.

Seems to me the game is to reward those who borrowed and spent what they couldn't repay, at the expense of those of us who scrimped and saved all these years.

To me, what's so wrong with this is everything. Unemployment at official 10%+, unofficial closer to 20%, and the dollar, which when the Fed was created, would buy 100 loaves of bakery bread, now buys 1/2 a loaf, if its on sale.

Add to insult, Person of the Year 2009 runner-up was Nancy Pelosi.

"The U.S. government "quietly" agreed not to collect billions of dollars in potential taxes from Citigroup Inc"

Well, I'm sure they will do the same for all of us. After all Timmy got a pass, now Citi — they can't expect taxes from all of us who have made it possible to "forgive" their taxes.

"Yes We Can!" Announce, "...a payback of the TARP with interest." Barack Obama last week.

I only wish he were irrelevant. I see him as the greatest national danger ever.

cheapy,

Hey, why not? He fits right in there along with Yasser Arafat.

TIME, Nobel, what award will be debased next?

Hardly suprising after Obama gets a Nobel for peace

Wake me up when reality makes a comeback....sigh

loannetter - "the trader mentality is sometimes evident in Borrowers expressing anger at their bank for not helping them. The word 'entitlement' springs to mind. Since when does stiffing your bank equate to their immorality for not bailing you out?"

Hmm what do you mean by the trader mentality? Most traders come well equipped to take losses. It's what we do. The trade didn't work, you take your loss, you move on. I'm not sure how entitlement or anger works into that.

on chart CLW.

Controlled by a new central bank is now offical. Change we can believe in.

http://tinyurl.com/yb8luvc

http://www.youtube.com/watch?v=sMHyovwX7JM

Illini, this one's for you:

Backroom Ben is the name and I stared down the Southbound train
'Til Geitner’s cavalry came and tore up the tracks again
In the winter of '09, we were hungry, just barely alive
By May the tenth, 900 was breached
It's a time I remember, oh so well

he night they drove old Dixie down
And the bears were falling
The night they drove old Dixie down
And the bankers were calling

Back with my wife on the Avenue, when one day she called out, “Dear Ben, quick, come see, Time named you Man of the Year"
Now I don't mind choppin' down bears like wood, and I don't care if the money's no good
You take what you need and you leave the rest
But we should only retain the very best

The night they drove old Dixie down
And the bears were falling
The night they drove old Dixie down
And all the people were calling

These are the personal views of Peter Morici, a professor at the University of Maryland's Robert H. Smith School of Business and former chief economist at the U.S. International Trade Commission:

The Internal Revenue Service is suspending tax rules for Citigroup Inc. and other Troubled Asset Relief Program recipients to permit those companies to more rapidly pay back the Treasury what they owe in TARP loans, and to their boost stock prices.

For Citigroup, that means an additional $38 billion in tax deductions to help the beleaguered company pay the Treasury the $20 billion it owes the TARP. In addition, these breaks will juice Citigroup, General Motors Co. and other TARP recipients' stock prices, and make TARP's huge equity positions more valuable.

At General Motors, the value of Treasury stock may never equal what the TARP paid for it, and juicing stock prices in this manner serves to make the bad and ill-conceived investments at Citigroup, GM and others, approved by Treasury Secretary Timothy Geithner and President Barack Obama, look better than they are.

As the IRS and TARP both are part of the Treasury, Geithner is giving away taxpayer money to preserve his own tainted reputation, and cover up President Obama's bad bets and payoffs to their Wall Street pals.

The president continues to talk tough about bank bonuses but at his recent meeting with the big bank CEOs he did not float the idea of taxing undeserved bank bonuses as the U.K. prime minister is imposing for similar abuses across the pond.

Instead, the president encouraged bankers to better explain to the public why bank executives deserve the bonuses they "earned" using extraordinary government aid to dig out of a crisis they created.

Meanwhile, the president continues to aggressively fund raise on Wall Street for Democrats, and all the while he is advised by Lawrence Summers, who took millions from Wall Street banks in 2008.

Don't feel like paying all your income taxes this year? Send the president $20 to help out his Democratic congressional pals campaigning for reelection next fall, and ask for a break when you file your Form 1040 this April.

Who knows, the president says he likes small contributors, and who he likes, and who pays him, seem to get very nice bonuses and tax breaks.

Brace for oil inflation denominated in $USD ... keep those Fed rates at zero and enjoy the accolade from the Time editor, Ben.

ALOHA !!

First of all I would not assume a loan I could not pay off in five years or less, if I had to take a loan at all. I prefer to pay cash. Yep, I did not own my first home until I was in my late 40's and I am living in it right now here in Hawaii.

It occurred to me, what would everyone here do if instead it were an "owner financed" loan and not a "greedy bank" loan? Would you "stiff" a US citizen who has 100% sweat equity in that home? Banks have no equity in the home. Now I know the "owner financed" loan the owner will simply get his home back and hopefully the owner did not buy at the peak of the market and is not underwater, but what if he were underwater would you "stiff" him as easily as a bank?

One instance happened here in Hawaii to an ex-employee of mine. He bought a vacant lot at the top of the market for $120,000. He sent a letter to the owner who lived in Seattle, WA saying he could no longer make payments. The owner sent him a letter back saying he would drop the loan from $120,000 down to $70,000 if he would continue to make reduced payments. He agreed and so the owner is happy(is getting income) and so is the lot owner. Why can't a bank do that on its own volition? Especially since a bank has no "skin in the game" ...

Also here is an instance where a large investor is trying to "stiff" Citibank on a deal to buy stock, not technically a loan though, but close enough. How much weight does $7.5BIL have? Will this set precedence for other investors to stiff US Banks on equity plays? Would Citi ever "mislead" anyone?

Abu Dhabi Fund Seeks to End Citigroup Share Purchase

2009-12-16 — bloomberg.com

"The Abu Dhabi Investment Authority is trying to abort an agreement to buy $7.5 billion of Citigroup Inc. stock at eight times today’s price, saying the bank misled it about the investment."

Interesting that the new money is going to be fiat. At least they could have backed it partially by gold, oil or gas (LOL, it was a joke).

BTW, is it just me or it doesn't sound right: GULFO.

The Gulfo will be indirectly backed by oil-rich sovereigns intent on hyperinflating the $USD, Euro, Yen in oil terms. It's the currency equivalent of the 1973 Arab oil embargo in the U.S. but with a permanence to benefit OPEC nations for decades to come. This trade shift to the Gulfo in 2010 could be the true peak oil as demand/price reaches unsustainable levels.

Change we can believe in.

Re "This trade shift to the Gulfo in 2010 could be the true peak oil as demand/price reaches unsustainable levels."

Can you elaborate on this? I feel GULFO will devastate dollar and facilitate hyperinflation in USA. Is that what you mean? How does it tie to peak oil?

One of the rules of investing in real estate is to be able to take the emotion out of buying or selling a house. An emotional connection is made when you call it a home. Take the emotion out of it and make it purely a business decision. A "short sale" might be a valuable option as well as talking with the bank to tell them of your current circumstances and see if they can do anything. Bankruptcy, an ultimate solution, is dependent upon different circumstances for everyone. Current and future employeers may look unfavorably upon it or may not, just depends.

As far as buying another house or procuring a loan, just remember that "CASH IS KING". It doesn't matter what your credit rating is....that is just a number the banks assign you. You can ALWAYS, ALWAYS, ALWAYS, find someone that will carry a loan for you on a house IF you have the amount of cash they require to (comfortably) make the loan. The terms are what make the deal and when you can get around the standard bank financing method, you can come up some creative financing that will be acceptable to someone! Usually these are retired people who have equity built up in the house and are looking for a fixed income. Also landlords who are looking to sell there rental property and get out of the rental business (AKA rent to own)or have a house that requires too many repairs they do not want to do. Most people are too lazy to work to find these properties. My family has done a number of creative financing deals, both as the seller and as the buyer. It is possible to walk into a deal with 0$, gain $10k of equity on paper, and walk away with $10k in cash....all while the banker looks at you and asks you "how did you do that"? I've seen it done!

The new Community Chat is up. Sorry for it being so late.

http://caracommunity.com/content/blog-december-16-...

"The owner sent him a letter back saying he would drop the loan from $120,000 down to $70,000 if he would continue to make reduced payments. He agreed and so the owner is happy(is getting income) and so is the lot owner. Why can't a bank do that on its own volition?"

Because when they asked Obama for a tax break he said, "Yes We Can."

davefairtex,

Answering two days later...!...but I didn't want to let this pass. Entitlement is a frame of mind homeowners have expressed to me once they run into trouble. Considering one's home as a trade -- if that was your view going in is great. Funny how once things go wrong it gets all personal? For most people it's hard to see it as a trade you could lose, for all our trader bravado about investment in real estate.