Blog for December 3, 2009 [See ADDENDUM]

Good morning.

AMZN - JMP Securities Initiates with a Market Perform.

GG - Upgraded to Buy @ UBS

This is a bit of head scratcher. While it's positive that BoA has recovered sufficiently to make this move, they will issue a lot of new common shares.

From the WSJ:

But Bank of America also is paying a high price for its exit, showing the lengths companies will go to get out from under the government's thumb. It plans to raise about $18.8 billion in new equity through the sale of securities, a move required by federal regulators to ensure the bank has sufficient capital reserves and will not need to come back to the government for additional aid, according to people familiar with the matter. The remaining amount will come from current liquidity, Bank of America said.

That's a lot of money to raise in the capital markets. And I'm not sure I'd be cheering were I common shareholder.

Bill,

I know of an actual local situation very much like this.

"...what they won’t tell you is that many now fear for their lives and must resort to packing pistols. What kind of life is that?"

About ten years ago a client of over forty years (formerly my employer in the 1960s) was sold by a CEO who had been there only three years*. This company was the city's largest single employer and many shareholder, myself included, were appalled at the low per share sale price.

Many friends and acquaintances were jobless, the city has lost big charitable gifts and community support and we now have six empty factory buildings to remember him by.

He and a couple of other in top level management did hire bodyguards and he moved out of town. As far as I know nobody actually pursued him, but I hope they all spent many sleepless nights.

*Edit: He made only $18M on the initial deal, but of course became an officer in the purchasing company for a couple of months and then got an additional "retirement package" reportedly equaling $25M in cash and stock options. Not bad for only 36 months on the job.

I don't know how such a person could sleep at night, destroy a community to get additional personal wealth that you don't need? It seems to me that this is the type of greed that tax policy should dissuade. But instead our tax policy either encourages it or is neutral on it. What is the solution? One low flat tax on income, but have a higher tax on this type of transaction? But then the person applies inventive methods to avoid the tax. I don't have the answer. It is very troubling, and people's lives are at stake.

a position in select refiners... I do think an inflection point is approaching...

ALOHA !!

The US Treasury Daily Statement shows time and again that when you send $1 of your tax money to DC they leverage $6 of debt. In actuality that translates to:

FOR EVERY DOLLAR YOU SEND TO WASHINGTON IT BRINGS BACK TO YOUR COMMUNITY $6 OF DEBT.

You and your local community are not even getting one cent in return any more. The tax return to your community is negative 600%.

As I have mentioned the only reason income tax was ever created was to pay off wars. Once the war was paid off then the income tax stopped. The main reason wars like the Civil War got paid off was because after the war was over the US Treasury went back onto the gold standard. After Vietnam we never returned to the gold standard. In fact three years before the Vietnam War ended we went off the gold standard. America defaulted in 1971. Prior to that FDR defaulted in 1933. When Nixon defaulted in 1971 the entire World was forced off the gold standard and as any government debt chart will attest things got parabolic right after that. DEBT soared and has been soaring ever since. We are now two months into FY2010 and the combined US DEBT is at $9TRIL. The amount the US Treasury owes to US citizens out of that sum dwarfs anything owed to China. When mainstream media speaks to the huge liability of our debt to China they purposefully gloss over the debt owed to every US citizen. So the old JFK line about "Ask not what your country can do for you; ask what you can do for your country" is now as worthless as the Government Account Series IOU it was printed on! Because the US Treasury now has 306 million creditors on their hands and in reality China is the least of their worry. The last person to bring up the debt that the US Treasury owes to 306 million Americans went on 60 Minutes and then resigned. Not a word uttered by then Tres Sec Hank Paulson on the matter, because at Goldman Sachs there is no ethics only privilege.

When I was a kid in the 1960s I used to sit in our station wagon car and drive past signs that read YOUR TAX DOLLARS AT WORK and there would be a brand new freeway. The US Treasury should post that same sign right above TABLE III-A PUBLIC DEBT section of the US Treasury Daily Statement, because every time I look there that is what I think of.

Nothing speaks louder ... and says KEEP YOUR MONEY IN YOUR COMMUNITY. If you keep you income tax dollars in your pocket and in your local community then those dollars will never meet the multitude of sleazy lobbyists and special interests, nor will those dollars ever meet Tim Geithner and "his" US Treasury where those dollars are multiplied into "debt derivatives" leveraged 600%! Neither will those dollars ever meet the sleazy BAILOUT KINGS OF WALL STREET, the sleaziest of all who do "God's Work"!

That's called the LIABILITY BUBBLE ... That is the opposite of the GOLD BUBBLE that Bank of China speaks of.

ALOHA !!

WOW what a shock to hear that from DODD!!!

I have no TV. Will this be on YouTube or CSPAN? I know it will be on Jon Stewart Daily Show and Letterman and Leno!

Lets see how this "moves" the markets! Do they have a DOW and GOLD ticker at the bottom of the TV screen?

http://www.c-span.org/Watch/C-SPAN3.aspx

Added more at $8.62.

Man offers over $1000 worth of gold for free to random people

http://www.youtube.com/watch?v=WAaVK5AkZzI&feature...

If there are 3 legs to a bull market & the third is the speculative phase where the public gets involved and the price goes higher than anyone could have imagined...this is where everyone & the mailman is an expert on gold/mining stocks (aka 1980).......If so then we are no where near the end of the run in gold

I think we are only in the 2nd stage now & there should be a shakeout between the 2nd leg & 3rd final leg.

Fed's Bernanke: Removing Fed from bank supervisory role would be a mistake due to its 'unique' expertise - Q/A

I'll leave it to you all to exercise your imagination in listing all the roles Fed has unique expertise in. Have fun. I am

Yen is down briskly since BOJ announced they were turning on the printing presses. NYUGrad called it.

Hmm, I wonder if this same plan will occur to any of the other countries complaining about currency appreciation vs. the USD.

Thank you, Quasi.. Which makes me think ADM would be a decent ' long ' at some point in time....

Fed's Bernanke: Fed will not monetize the debt; US cannot continue to run high deficits; will maintain strong commitment to price stability; thinking a lot about exit strategy
- says US deficit needs to be in 2-3% of GDP range over time
- notes that the Fed may not be able to halt the increse in real interest rates if the deficits remain high; debt to GDP ratio cannot move higher indefinitely and must come down
- claims that some deficits are not permanent, but others may become so if entitlement spending is not addressed

How can I get this message to Benny? Never mind. Apparently he is too far into dementia to care what he once said ;-)

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In 2002, then-Fed Governor Benjamin Bernanke burst into our monetary consciousness with his printing press speech. His fine work earned him the honorary title "helicopter commander." While largely a background figure since then, his recent appointment to succeed Alan Greenspan as Fed chair makes this an ideal time to review Dr. Bernanke’s views on monetary policy, and to speculate about what his chairmanship will bring.

http://tiny.cc/GhPfy

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Is SRS a viable long at this time? or have the HB&B best and brightest fixed that and moved on? Densa qualified comments appreciated.
peace

Here's a link to a Yahoo reprint about a Ken Gerbino article from June in which he calls for Gold to soar. Of course, Bill had already called for this in his TOG some months before. Gerbino (who runs his own investment firm) called for a trading range of $850-$1250 for the POG over the next couple of years. But the best part of the article is when he describes what happens when governments fire up the printing presses. It's a pretty basic description but it gets right to the point. In many ways it reminds me of the way that Kaimu gets his points across on this blog; clearly written and in terms that everyone can understand. If only the financial media would present things in this manner.

http://finance.yahoo.com/news/Ken-Gerbino-Was-Righ...

ALOHA !!

I get this from the Cunning Realist. He has mentioned before that due to his clandestine ties to Wall Street he gets a lot of feedback from Senate staffers. Here is one from a "former" Senate staffer who I am sure is tapped into the Senate staffers now working the Senate.

It seems common sense that a "tug-o-war" is going on between a Senators "duty" to WE THE PEOPLE and his "unofficial duty" to his WALL STREET MASTERS.

From Mr. C Realist, esq. ...

READ ON:
Wednesday, December 02, 2009
"Fingers In The Wind"

I received this update from a former staffer on the Senate Banking Committee:

Just an anonymous observation, but as a former staffer for one of these Senators, I'll just point out the obvious: most of them have their fingers in the wind right now. They're leaning to confirm BB, because they don't want to be out on a limb, and there's a lot of talk coming from Wall Street that continuity is absolutely necessary to maintain investor confidence, and that BB is critical in this regard.

On the other hand, they recognize that the Fed is very unpopular. If they see signs of strong sentiment against the Fed, they may vote against him, but this is all about politics right now.

The word going around is that tomorrow's hearing has suddenly become a lot more important than it was just a few days ago.

posted by The Cunning Realist

sounds about right.

Vad's got magic fingers and a good trading platform, but I've had a gut full of playing nowhere doji type days like today. Where's the beef?

chilling

Les

http://tinyurl.com/obama-jintao

"When I ask Gary Cohn, Goldman’s chief operating officer, and David Viniar, the firm’s chief financial officer, if, barring a financial Armageddon, Goldman would have survived without all the various forms of government intervention, Viniar says, “Yes!” almost before I can finish the question. “I think we would not have failed,” says Cohn."

http://www.vanityfair.com/business/features/2010/0...

revisionism in progress

Here is a link to a video map of United States showing all counties starting in early 2007 thru Sept 2009. It really is amazing showing by color the progression of unemployment thru the country. It makes you think of a plague wipping out the population. Quite scary when the predictions are for much worse. Heaven help us.

FAZ been a good ride the last hour or two - should I hold overnight...

Vad - I'm finding worthy short positions moreso than long ones. And I'm beginning to really like my short gold position (despite it being down slightly) mainly because when I look at the gold futures chart I see a massive volume spike over the past couple of days with a parabolic move higher. That usually ends in pain for longs.

Yup... WFC just added itself to the number of shorted/profited from. As for gold, I'd say what I think but last thing I want is argument with goldbugs... but it involves word "bubble" (Grin)

Probably shouldn't have done it given it's strength, but I sold my remaining WATG at $13.31 that I bought 2 or 3 days ago...taking the gains.

I decided to look at the news for the largest IYR holding, NLY. Apparently, they are providing a monthly commentary on the economy and real estate. Here is the latest one:

http://tinyurl.com/yebdr8o

Here are some excerpts from it:

"October 2009 was the fourth month in which CMBS bonds could be submitted to the Fed for consideration under the TALF program. Under the program, an owner of CMBS presents his/her positions to the Fed for their consideration to provide financing."

"October was not only a busy month in terms of collateral submitted to the Fed, it also had the largest amount of bonds rejected. These rejections raised some eyebrows in the market. To start, given that the September submission was entirely accepted by the Fed, there was a certain confidence growing about the process and the bonds that could be submitted."

So this has to be the reason for a poor performance of IYR in October. The above excerpt also shows that the wellbeing of companies in IYR is not very dependent now on the continuing collapse of the commercial real estate market. They are being completely bailed out by the Fed through TALF, and as long as TALF accepts CMBS bonds, the companies in IYR will keep doing well despite a collapsing commercial real estate market. I should have done my research about what is driving IYR *before* I started scaling into SRS. I'll sell my SRS at the first opportunity and will stick with TWM, which, as the NLY's commentary shows, is a "pure" play on the economic collapse, since Fed is doing basically nothing to help small cap companies while the large banks are tightening credit to them.

teamonfuego, in support of your GLL thesis, my sell stop limit order on DGP was hit at $32.67 today for the shares I purchased at $29.67 on Friday. That is, I also think it is wise to lighten up on gold now.

Wohhh! I smell you, but first I have to appeal to the decaying DNA substrate cause if my hunch is correct, I share many qualities with my mom, God's will be done, such as traits and personality organization. You see, I figure as the base pairs of my mind translate my soul to the engrams of my heart, which is located approximately...an ongoing question, but sharing knowledge is not only most excellent and its own reward...I think it leads to understanding.

Oh, that burns me up...what indignation and raping and pillaging...I almsost want someone to ask for and use the sword that cuts asunder. WhY would the molecules needed for this process not respond to magnetic shaping; could we not every believer pPrAy that someone will find out.

Dajavue all over again...wow, I get dizzy when I think how high that slope is getting. Gartman was just saying how he needed to adjust his pacemaker or was that hearing aid...actually, I have to ask a loaded question. Do we really have an excuse, more than usual, to not be asking him questions? He even was saying things like GLD is going from right to left, he left out up and down, finally. I wonder if he will stake his reputation on it?

A rose is a rose by any other name, even alicce knew this! She said as, as she tended to her freshly removed shoes which she painstakingly placed under the tree. Was that a tree...oops, my bad, could have been a symbol of a thought she had there. I do not blame her though she is just a product of her world and I am almost convienced that had her brain chemicals not been manipulated, she would have thought better than about jumping down such a deep hole. Only suggested and a working hypothesis by the way. Interesting to intertain though.

Dec. 3 (Bloomberg) -- The U.S. House of Representatives voted to prevent the federal estate tax from expiring on Dec. 31 and to permanently exempt couples’ fortunes of up to $7 million.

The House voted 225-200 to indefinitely extend the current tax, which imposes a top rate of 45 percent.

“We make the estate tax go away for 99.75 percent of the people in the country,” said North Dakota Democrat Earl Pomeroy, the main sponsor. Republicans who voted against the measure said they favored repealing the levy.

Congress in 2001 decided to drop the estate tax in 2010 before reinstating it in 2011 at the previous higher top rate of 55 percent for estates valued at more than $1 million.

Nevada Representative Dean Heller, a Republican, said Congress should allow the levy to expire as the 2001 law intended. “Americans are sick and tired of broken promises from their government,” he said. Twenty-six Democrats joined all Republicans in voting against the bill.

http://twitpic.com/s23dx
http://twitpic.com/s247o

It's been like this for quite some time. there are still choke points such as grand central, penn station, path station etc, where people cattle on thru.

But for the most part there is an eerie emptiness in NYC. Today there were more police than passengers on one of my subway platforms during rush hour! eerie

Maybe everyone is working until 9pm and i am the only slacker commuting at 5:30-6pm.

Disclaimer: I do not know anyone in these photos.

ALOHA !!

Thanks for the photos NYU GRAD! Instead of attending the Business Seminar today Obama should have been on your train so he can see what's left of his Stimulus!

All I have to do is go look at the pittance he doles out to the SBA($745MIL)to see where he and Congress really stand on job creation. His $787BIL USD Stimulus and only $745MIL ends up at the SBA private sector, less than .1%. Probably the banks and the unions got the other 99.9%! If its Public Works then its all unions ...

Congress and "Obaman Sachs" must actually believe that we can't see what is going on here. It's called HUBRIS!!

this is a special tribute to all those out there who still like to argue about 'conservatives' and 'liberals' and whatever. also, who could forget the nice folks who always defend obama with a "but you didnt say anything about bush" comment. read 'em and weep:

In an interview with MSNBC's Norah O'Donnell this afternoon, Lynne Cheney revealed that while researching the Cheney family tree for her new book "Blue Skies, No Fences," she discovered that the Vice President Cheney and Barack Obama are related -- albeit distantly. According to Mrs. Cheney, the two politicians are eighth cousins.

*** Update *** The Obama campaign emails NBC/NJ's Aswini Anburajan that the Chicago Sun-Times actually wrote about this relation back in September, although the article notes that Obama and Cheney are 11th cousins -- not 8th cousins.

*** Update II *** Our mistake: The Sun-Times says that Obama and George Bush are 11th cousins, and Obama and Cheney are ninth cousins once removed. It seems we're all related.

http://firstread.msnbc.msn.com/archive/2007/10/16/...

there is ONE take-your-money party.

ALOHA!!

Due to my NYC art connections one mentioned she went on YouTube to see the LADY GAGA Music Awards thingy, which I did not see because I do not have a TV and she said one of GAGA's songs has 88mil views and another has 44mil. Even John Lennon and Beatles top out at 7-12mil views.

Its the whole Roman Empire Colosseum thing only on a 120" flat screen ...

As they say in NYC, "What UP Kaimu"!

I hope I see the Frank Sinatra version of NYC again in my lifetime. An era of hard work is rewarded. Cops on the beat walk with pride and a smile, not a chip on their shoulder. Where teachers go to school ready to teach the young apple seeds of future NY success stories. 9/11 brought New Yorkers together. the Wall Street scandals have divided us.

As i mindlessly march through my commute everyday, my iphone reaches "Empire State of Mind" at least once. It is a hybrid song by a R&B Soul singer and Hip Hop rapper, and talks about the New York I know and hope to see once again.

Live performance from this week for HIV/AIDS benefit.
http://bit.ly/EmpireStateLive
(You may see a quick ad by AmericanExpress)

For those who missed this free live concert on Youtube this week, I would highly recommend watching the rebroadcast on the link above. Alicia Keys is a native New Yorker whose talent is really rare and only comes along once in a while (Sings, writes songs, plays piano, produces).

Good morning.

FSLR - Upgraded to Buy @ Collins Stewart. PT = %160

SNDK - JMP Securities Initiates with a Market Outperform. PT = $30

NYUGrad,

Thanks for the link — wish we had 99 more like Sanders.

Too bad most people will never read or hear of his Bernanke assessment.

I recently got broad band after waiting for DSL for years, but I'm hearing of people who are now needing to cut expenses and dropping their internet hookups.

When things get really bad everything except food, clothing and shelter take the rear burner. I do believe you are right about the minor events of life occupying attention, but perhaps it is a self-protective device related to mental survival due to physical survival overload.