Econ 101

What do Occupy Wall Street & Belgian Banks have in common?

2011-10-22T12:38:00.000-07:00

The Occupy Wall Street crowd may be half right. Although they may have stumbled onto blaming the banks for our country’s financial woes through their ‘eat the rich’ philosophy, it is possible that the world’s banks may really be at the heart of the problem.

The world has become much smaller in our lifetimes as we all have become more and more interconnected through the internet, trade and the worldwide banking system. And groups like the G8, the World Bank and the International Monetary Fund have wound those ties even tighter, until today, when one of us sinks, we all start drowning. Keep that in mind as I relate the story of Dexia, the French-Belgian mega-bank that was bailed out in 2008 and collapsed in early October of this year.

It’s amazing how the skeletons fall out of the closet after a collapse. A report by the French banking regulator has recently surfaced that contains the results of an investigation that had finished up in the summer of 2010. As the result of that investigation it had threatened to put the bank "under special supervision."

So what happened? Was the bank supervised and the shareholders and investors put on alert, along with the other financial institutions that had exposure to this super bank? Nope. The report was buried. That is until the French newspaper, Libération, obtained a copy of it.

Dexia is a big deal in Belgium where it employs 10,000 people out of a population of 11 million (in the U.S. that would translate into 290,000 employees). It has over 21 million Belgian bank accounts, and its assets of $715 billion dwarf Belgium's $395 billion economy. Over the years what started out as a community bank, morphed into an outsized, overleveraged hedge fund — one that paid out huge bonuses and, as we now know, lied to investors, regulators, and the public…all at taxpayers' expense.

But the regulators weren't stupid. Inspectors of the Authorité de Contrôle Prudentiel, the French banking regulator, investigated Dexia Crédit Local (the French part of Dexia), during the summer of 2010. By then, DCL had fallen below the required liquidity levels and was having difficulty raising cash to cover its monthly expenses.

The report lists a number of infractions committed by both, DCL's pre-bailout management and post-bailout management. Among them:

- DCL gave false financial information to the public.

- DCL managed its portfolio of derivatives in a manner that violated regulatory provisions.

- DCL omitted or lied about important information concerning the acquisition of a portfolio of bonds and speculative holdings.

- DCL overvalued a portfolio of investments by an estimated €2 billion ($2.7 billion).

- DCL's CEO understated transaction volumes.

Among the other infractions listed was this gem: "From 2007 to 2008, financial communications of Dexia Crédit Local were evasive about the rising risks, though the CEO and other administrators knew about them. They covered the infractions and the consequent liquidity risks with silence." Even DCL's audit firms (Deloitte and Mazars) closed their eyes.

The report was sent to DCL, along with a threat that the bank would be put "under special supervision." And then suddenly everything stopped. No follow through. No supervision. No legal action against any of the wrongdoers (sound familiar?).

But according to the Financial Times it gets even worse. The next step was phony recapitalization! Dexia lent €1.5 billion to its two largest institutional shareholders before 2008, so that they would invest it in Dexia common stock. As a result, Dexia showed a capital increase of €1.5 billion. Inexplicably, the practice wasn't illegal at the time (loopholes anyone?), though Belgian regulators noted it.

After all this, came the comforting words from the European Banking Authority: "Belgian banks don't need to be recapitalized”. The EBA, of course, is the very same entity whose "stress test" Dexia had passed in July with flying colors.

So now we have to wonder, were the U.S. bank ‘stress tests’ just as phony? Are these kinds of shenanigans merely confined to European banks, or are U.S. banks just as guilty? Does anyone think that the same egregious flouting of sound banking principles is not rampant in the United States at ‘Too Big to Fail’ banks like Bank of America and Citi for example? And if one of them fails, will we ever know the depth of the corruption and malfeasance that led to the collapse? And perhaps most importantly, who will have to pay the piper for this farce, other than taxpayers?

Tires & Tea Leaves

2009-09-15T12:30:00.000-07:00

The Dow is up again and the economy has been saved - just ask Ben Bernanke who managed it almost (cough) single-handed. But when Ben has to tell me how wonderfully both he and the economy are doing, I tend to get a little nervous. In spite of the brass band and the pom-poms the latest fluff-up in the market is more about the tanking dollar (which drives up the price of oil and other dollar-traded commodities) than about any real growth in U.S. companies.

But perhaps if they bang the drum loud enough we won't notice that the rest of the world is rapidly losing confidence in both the dollar and America's ability to maintain its status as the economic engine of the world. Word from a U.S. ex-pat living in Asia is that America and the dollar have become a laughingstock. It's so bad that the street-traders who used to love dollars won't even take them any more for fear that they will soon be worthless. Euros and the Yuan are fine, but dollars are a no-go.

So how come we're the last to know that our currency is on life-support? Maybe we just haven't been paying attention to the signs. China has been transforming dollars into commodities faster than you can say Chairman Mao, but they've been doing it slowly and subtly so they won't jeopardize the value of the rest of their dollars or compromise their trading position with their biggest customer (the U.S.). But recently something has changed.

China had been blithely buying our debt so that we could afford to buy more Chinese goods, but the sheer size of that debt made even the Chinese uneasy. Enter little Timmy Geithner who tried to smooth tings over by shuttling back and forth with his winning smile and puppy-dog eyes saying 'Please, pleeeeease take some more, and we promise we'll be more responsible in the future - really we will.' And for a time that seemed to work.

But President Obama's overtly confrontational stand over Chinese tires of all things makes me believe that the bloom may be off the rose. If the Chinese were still docilely buying our debt, the O-man would never have risked upsetting the apple cart over tires. Why suddenly change tactics?

I suspect that through private channels the Chinese have indicated that the party's over and the U.S. is going to have to go cold turkey. The White House couldn't risk that, especially when they are about to close the deal on a government health care plan. So what options does the President have?

This latest maneuver smacks of a little Chicago-style strong-arming: if you don't want our debt, then forget about shipping us more of your 'stuff' - tires, textiles, you name it. Chinese warehouses are going to be jammed with stuff that never makes it to Wal-Mart. The question is how are the Chinese going to respond?

If they decide to make nice and buy more of our worthless Treasuries, then I expect a trade agreement to materialize out of nowhere. If not, then at minimum a trade war or at worst a total financial collapse is in our not so distant future. I just hope our President is good at reading the tea leaves.

Stress Tests: Drama, Delays and Rose Colored Glasses

2009-05-09T08:11:00.000-07:00

Delays, leaks and high drama. The Stress Tests had Wall Street waiting with bated breath. But did the tests really deserve all the hoopla? Did the fact that the banks 'passed' mean that we can all breath a sigh of relief?

In spite of the fact that the Bulls have taken the test results as an 'all clear' for another run up on the markets, I tend to be more skeptical. Why? Because a test isn't a test if you can negotiate your own results.

To be honest, the fact that all the banks would pass was a foregone conclusion. The government couldn't risk a subsequent run on banks and loss of consumer confidence if they failed. So naturally, the criteria had to be massaged accordingly. Take a look at the scenarios: we have already reached the criteria outlined in the 'bad' outlook, as well as many of the criteria for the 'worst case' outlook. If that's so, then obviously the banks are already under capitalized, but how can these tests give us any information about future performance? The fact is that they can't. But even more alarming, from my point of view, is that the results really aren't the results anyway.

When the results of the tests were first compiled, the banks didn't like them. Instead of going public with their findings, the government then 'negotiated' the outcome with the banks (hence the delay in the release date). These negotiations allowed the banks to reduce the amount of capital requirements that the government was about to say that they needed. Pretty neat trick. I don't know about you, but in my 'school' a test isn't a test if the test taker can change their final score when they're unhappy about the outcome.

But even if the government had stood by their original findings, how reliable could they be? After all, they haven't had a great track record so far in predicting future outcomes based on 'stress scenarios'.

As William Black (an Associate Professor of Economics and Law at the University of Missouri and former bank regulator) says, Fannie Mae, Freddie Mac, AIG and IndyMac were deemed to have "passed" much more stringent government stress tests before their respective failures.

Let's review the history:

* Fannie Mae and Freddie Mac: In July 2008, Treasury Secretary Paulson testified that Fannie and Freddie were "adequately capitalized" under the test. Then in August 2008 he stated, "even in [the] most severe stress tests, [Freddie Mac shows] losses ... less than $5 billion." What were the actual losses? They were 20 to 40 times greater.

* AIG: "It is hard for us, without being flippant, to even see a scenario within any kind of realm of reason that would see us losing one dollar in any of those [Credit Default Swaps] transactions." AIG claimed in 2008. "Using a severe stress test ... losses could go as high as $900 million." And the actual losses? They were 200 times greater!

* IndyMac: Sold over $200 billion of "liar's loans." Actual losses: 160 times greater than its tests had indicated.

"The examinations and stress tests are shams," says Black.

Even the government's own results seem to be contradictory. We have to ask ourselves, if the government sees up to $599 billion in additional bank losses, then why are they requiring banks "only" raise $75 billion? That would suggest that the government thinks the banking sector is currently overcapitalized by $525 billion. That makes no sense.

According to Black, "It's in the interest of the financial community to send this propaganda out. [What's] remarkable [is] not that they do it but that it still works."

We've been lied to over and over again, but like an ingenue, we remain convinced that 'this time it will be different.' Perhaps it is just our attempt to make optimism triumph over reality.

But we had all better hold tightly to those rose colored glasses. Black predicts another wave of foreclosures and future bank losses that could total more than $2.5 trillion as opposed to the government's $599 billion estimate.

The question is, how will investors handle the huge losses to their college and retirement savings that could result from investing in banks that the government told them were safe?

"Once people learn they're being lied to, they react very badly," Black says. "And of course this is not the first lie."

It's Spring and Collusion Is in the Air

2009-05-04T09:06:00.000-07:00

Chrysler is currently in bankruptcy court. Why? Well to hear the administration tell it, it was because some money-grubbing hedge fund put all the other investors as risk by refusing to go along with the solution the government proposed. And now that the whole mess has been forced into bankruptcy court, the terms may have to be changed, because unequal treatment of specific parties or investors is not permitted under bankruptcy law.

So who was getting unequal treatment? Who was trying to skim the cream off of the top of the deal? Why the Obama Administration's major contributor the UAW, of course.

But what kind of unequal treatment are we talking about here? Well the government workout would have forced the major investors to take 30 cents on the dollar for the money that they had invested in Chrysler while making the UAW whole and giving them 55% ownership in the new Chrysler. Unfair? You bet! But one investor, a hedge fund, stood firm and refused to go along with the program. So why weren't the other investor's protesting? Simple. They got TARP funds. They were intimidated into compliance.

Harsh words? Perhaps. But they are describing even harsher actions. You see when the lone holdout in this deal tried to protect its investors and couldn't be leveraged by TARP, the government boys made it clear that they had better go along or they would have them destroyed in the media (threat about how many news outlets would do their bidding, yada, yada, yada...). The fund stood firm and forced Chrysler into bankruptcy and was immediately derided by the White House in the press (albeit not by name).

But that wasn't enough. The administration needed to make an example of them in order to assure compliance by anyone who might be considering crossing the government's will in future negotiations (can you say GM?). So the name was 'leaked' to the media and now the these guys are getting death threats, etc., from union thugs who see their gravy train being threatened.

It's ironic. The investors in this fund aren't a bunch of Wall Street Raiders. What they are is people who had retirement funds, 401k's and college funds that they put into corporate bonds because they were told that this was a less risky investment than stocks. These are people who were trying to make conservative investments to protect their capital and provide for their future. But apparently all retirement funds are not equal. They are being asked to take a 70% cut in their retirement savings so that the retirement fund of the UAW can be made whole.

This is a dangerous precedent. Even as we speak the government is trying to muscle the GM investors to go along with a similar plan, and the investors (not surprisingly) are extremely reluctant. The new workout would give the investors (who have 27 billion in equity) a 10% stake in the company while giving the unions (who have a 20 billion investment through pension plans etc.) 10 billion dollars in cash and 39% ownership in the company. What? Who thinks this is even close to being equitable? If the investors stand firm they will definitely do better in bankruptcy court.

This whole mess is becoming increasingly disturbing. The political paybacks for campaign contributions are now so blatant that the Administration is no longer even trying to hide it. Any government that is so secure in its absolute power that it no longer has any qualms about acting unilaterally outside of the law is dangerous. Yet the media in general is acting like a bunch of lap dogs and won't even mention it.

Perhaps we shouldn't attribute any ulterior motives to their apathy. Perhaps it's because it's just complicated enough that these media guys figure their viewers/readers would glaze over and lose interest and they'd lose ratings. But I'm starting to get the feeling that this spring there is a whiff of collusion in the air.

Blood & Circuses

2009-04-24T09:12:00.000-07:00

I know this is an economy-oriented blog, and believe me I will get there in just a moment. But there is something going on that's starting to feel (once again!) like the magician telling us to 'look over here' while the heart of the trick is going on somewhere else.

Diversion tactics. That's how the magician awes and amazes us. That's how the military gains the element of surprise. And that's how governments, like ancient Rome, diverted the population from their misery (unemployment, hunger, homelessness, etc.) by providing them with such riveting entertainment that everything else just fades into the background.

The Circus Maximus and the Coliseum were scenes of violent and bloody competition. Let's face it: blood sells...gore sells. That's why high-schoolers part with their allowances to pack the theaters and get chills and goosebumps watching the latest mayhem and mutilation on the silver screen. That's why traffic slows down at the scene of an accident so that the passersby can catch a better glimpse of the destruction.

Well it appears that the government is gearing up to give us their version of the Circus Maximus...their version of 'Nightmare on Elm Street'.

What is this spectacle that they have in store for us, you ask? Why the 'Show Trials of the Bush Administration' of course (McCarthy, you piker - you had nothing on these guys.).

I started to suspect it when President Obama made his sudden 180 degree turn on whether or not to pursue the previous administration on 'enhanced interrogation techniques'. Now whether you believe that what was done was torture or not can be argued by ethicists, lawyers, clergy and politicians from now until doomsday (and believe me it probably will). But this sudden policy change, especially coupled with the administration's sudden decision to release the photos of mistreatment of war prisoners to the ACLU got me to thinking.

Why was this happening now? Let's face it. Nothing riles up the population like pictures of 'atrocities'. You can talk about it. You can read about it. But once you actually see it, it engenders such an emotional response that all other reactions pale by comparison. These pictures are due to be released sometime in May and, believe me, there will be a huge public reaction, no matter how bad or how tame they are.

But the timing here seemed a little odd. To get the greatest bang for the buck (politically speaking) something like this should be done right before an election. The administration could have easily continued the legal battle to stretch this out until closer to election season, and politically it would seem to have been far more advantageous to be smearing the competition right before it was time for Americans go to the polls.

Now you can argue that Obama is such an ethical and moral man that he just couldn't, in good conscience, keep this stuff under wraps any longer. But he is also a politician -- a really good politician. He's even a Chicago politician, and believe me he didn't come up through the political ranks in Chicago without learning how to make political hay out of a scandal. 'Never let a good crisis go to waste.' Seems I've heard that somewhere before.

So there had to be something even more important that would be happening even sooner in order to urge the administration into action. What could possibly top an election in importance in the mind of a politician? It would have to be something REALLY big. Something HUGE.

Could it be the revelation of the government's Mafia tactics in bullying banks into taking TARP money or coercing them into committing fraud like Bank of America? Naw! That could all be blamed on Hank Paulson (who was part of the Bush administration, mind you), even though some of the other key players in this scheme, like Ben Bernanke and Tim Geithner, are still active in the government. Nope that couldn't be it. It must be something bigger.

But what could be bigger? Let's look at the government's rhetoric about the economy. Right after the inauguration it was all gloom and doom. We had to act in order to avert a catastrophe. Then we pumped trillions of dollars of taxpayer money into the financial sector to fix the problem. After that, everything was starting to look up. Things were getting better. Consumer confidence started to improve as soon as the government-speak started to veer away from the daily drumbeat of negativism. And that was good. But it wasn't good enough.

In spite of all the manufactured good news. In spite of all the cheerleading in the media and the near-canonization of the President for his performance during his first 100 days in office, the fundamentals of the economy are getting worse -- much worse.

The results of the bank stress tests will be coming out in May (Coincidence? I think not.). And in spite of the fact that the government will massage and reconfigure them in order to sugar-coat the implications, the results are bad. Really bad. The exposure in credit defaults and foreclosures is so huge that even changing the accounting rules to repeal 'mark-to-market' wasn't enough to cover it up. In addition it seems that massive fraud in the TARP program itself is beginning to come to light.

Add to that, GM and Chrysler are both going bankrupt (There! I've said it! The 'B' word). And no matter how the bankruptcy terms are worked out (looks like the taxpayers are going to pay for all of Chrysler's retirement and medical plans -- Why am I not feeling good about this?) it will mean massive layoffs. GM is already disclosing that they will idle almost all their plants for over two months this summer. And this is in addition to the record unemployment levels we are already seeing. Laid off workers are now taking, on average, over six months to find a new job, and that number is rising.

On top of all this, mortgage defaults (including Prime and Alt-A -- not just those nasty Sub-Primes that caused all the trouble in the first place) have doubled, so now people will not only be out of work, but homeless as well.

What we have is a confluence of events that will collide sometime this summer: banking crisis, massive unemployment and increased losses of homes, with not enough people to buy the foreclosures and not enough lending to finance the purchases. Neighborhoods will start to decay, and people will become angrier and angrier. It will be ugly. And it will be hot. And all it would take is a match to set off the powder keg.

We know what happens when people don't have enough work and don't have enough money. Look at France: 'Boss-nappings', strikes, sabotage of utilities, riots. And France is not alone. Germany is already bracing for unrest during the summer because of the predicted further deterioration of their banking system and their economy.

But what about the United State? Will we have unrest? Will we have riots? No! Of course not! Because we'll have bread and circuses. Roll out those show trials, and let the games begin!

These trials are planned to be even bigger than the O.J. trial. Even bigger than the Martyrs versus the Lions. Blood destruction and mayhem galore, sprinkled liberally with intrigue, deceit and corruption. It's the stuff of dreams (or nightmares) depending on your point of view. This heady mix should keep the population mesmerized for months, or at least long enough to get us through those risky dog days of summer.

At least that's what the government is hoping. We'll just have to see how well it works.

Corruption, Collusion & Icebergs Ahead

2009-04-23T14:57:00.000-07:00

When Bank of America recently posted its record profits I was skeptical. It was quite an achievement to go from needing a bailout from the Federal government to record profits in a single quarter. So I looked a little closer at the statement of earnings and it became clear that the 'profits' hadn't really been profits in the conventional sense.

They weren't making their money from loans. They weren't making their money from credit cards. The profits were all in the 'other' category. The 'profits' came first and foremost from legal (but questionable) changes in the accounting regulations that allowed Bank of America to change the valuation of their assets from 'mark to market' to 'mark to future'. It basically allowed them to change over from valuing their assets at the current market value, as had been the previous standard, to valuing them according to a formula of their own making. This new value would be based on the estimated value of the asset at some time in the 'future' when the real estate market would have 'recovered'. Wow! A stroke of the pen and a loss becomes a profit.

Another 'profit' was realized from the sale of a Chinese bank that they may or may not have purchased with TARP funds (after all, all of the money was mixed together and it's so hard to keep track of where it came from, you understand).

But Bank of America's ethical challenges weren't confined to their efforts to turn a profit, as shown by a story that has emerged from the office of New York Attorney General Andrew Cuomo.

It seems that when Ken Lewis and the Board of Bank of America was considering the acquisition of Merrill Lynch it became apparent that there had been a substantial deterioration in the assets of Merrill that had been covered up during the merger negotiations. When this was revealed prior to the consummation of the deal, B of A tried to back out of the merger under the 'Material Adverse Change' (MAC) clause, as they were bound to do to protect their investors.

But when Ken Lewis informed the Treasury (who had acted as the matchmaker for this shotgun wedding) that Bank of America wanted out of the deal, then-Secretary Hank Paulson, acting in concert with Ben Bernanke from the Federal Reserve, made it clear to Lewis that he and the board of B of A would all be replaced unless they went through with the merger (another testament to the unintended consequences of taking TARP funds).

In order to protect their jobs, Lewis and the Board completed the merger while failing to inform their shareholders that the condition of Merrill Lynch had been fraudulently misrepresented. (For more complete details, please read the letter posted at:
http://zerohedge.blogspot.com/2009/04/cuomo-letter-exposing-paulsons-and.html ). Apparently saving their jobs was more important than protecting the stockholders.

It's a sad time here in our country. Our financial system and our government has sunk to new lows in ethical relativism when, under the guise of 'protecting the system and the U.S. taxpayer,' our officials use mafia tactics and bank officials are willing to cover up fraud in order to keep their jobs. Unfortunately, this may only be the tip of the iceberg when it comes to corruption. I just hope that the next iceberg doesn't sink the ship of state.

Banks, Bunco and Bull Markets

2009-04-03T11:12:00.000-07:00

Looks like the Dow is up for the fourth consecutive week in a row. That's the best 4-week increase in the market since 1933. That's pretty amazing considering the horrific job loss numbers that have surfaced since Wednesday. The national unemployment rate now stands at (drum roll please) 8.5%. But as the talking heads keep reminding us, it's not as it was back in the Great Depression when unemployment hit 25%.

In 1929, the year of the great crash, unemployment was below 5%. That's lower than our unemployment numbers were when our stock market hit the skids back in October of 2008. Currently, experts estimate that our unemployment could hit 10% by the end of 2009. Time frame-wise, if we get there by the end of this year we'll match the employment rate for 1930. But things did get worse during the Depression. In 1931 unemployment levels hit 16%, followed by 24% in 1932, and finally, in 1933, it peaked at 25%.

When we look at those numbers it seems like we have a long way to go. After all, if unemployment continues apace we'll have to stay in a recession/depression for three more years for things to get that bad. And everyone's telling use that things are going to turn around by the end of the year - maybe - or in early 2010 at the latest. Except that the government's been fudging the numbers. The unemployment statistic that most closely reflects the way jobless numbers were kept back in the 1930's is the U6. And what is the March 2009 U6 unemployment number from the bureau of labor statistics? It's 15.6%. That puts us at about the same unemployment level as 1931.

The numbers are bad, really bad, but the news keeps telling us that the reason the stock market isn't reacting to them is because unemployment is a 'follower' indicator. But if they keep 'following' employment numbers that not only get worse and worse, but also keep being revised downward after the fact, where's the ray of sunshine? Where's the hope, the sunny outlook, that's driving the Bulls in the stock market?

Maybe the markets are looking at something else? Maybe they're looking at the financial sector - you know, the sector that drove the economy into the tank in the first place. On the surface, things don't look so promising there either. With Treasury Tim's tough talk about cleaning up the financial industry and creating tough new international regulations for the entire financial sector, the market should be cratering. But it's not.

Why? It's because Geithner's tough talk about cleaning up the financial mess is like closing the barn door after the horse is gone. Yesterday the FASB (Financial Accounting Standards Board), the designated private sector organization in the US that establishes financial accounting and reporting standards, made a big change in its rules. Banks and financial firms will no longer have to value their assets based on mark to market.

What does this mean? It means that instead of valuing assets based on their real worth if they had been sold today, financial institutions can value them based on creative formulas that assume the sort of unsustainable year over year price increases that created the original real estate bubble. Banks will now be able to set the asset values on what the property may be worth later on down the line during the life of the note with the built-in assumption that property values will recover. And they get to create their own formulas to arrive at those values. Wow! Complicated? Arcane? Opaque and undecipherable? You betcha! We'll never know how much those assets are really worth or how bad off the banks really are.

But I thought Tim Geithner and the Treasury were demanding more accountability and transparency from the financial sector? Apparently they won't be getting it, because this change in the regulations sets the stage for even more shenanigans.

The combined effect of the FASB's actions and the latest bail-out legislation is to allow 'toxic assets' to be auctioned off to new 'public-private partnerships' at new 'revised' (read artificially inflated) values. Miraculously, all those bad assets that were sucking the capital out of the banks are gone! But where did they go?

Why, they went to us, of course. At least the cost of paying for them went to us, because these new public-private partnerships will enable banks and financial institutions to buy back their own bad assets for about 5-10% of their value. The government then puts in matching funds and the balance is covered by loan guarantees that are not recoverable. In other words, the government eats all of the loss except for that original 5-10%, while the banks get a fresh shot of capital and clear all the bad debt off their books.

It's magic! Sort of. It looks a lot like what old time law enforcement used to refer to as 'bunco'. You see before bunco became a social dice game for women, it had a different meaning altogether. Webster's Dictionary calls it a 'swindling scheme', and we've been swindled all right. In spite of all of the tough talk from Tim Geithner and the G20, the prospect of all that nice new money just waiting to flow into the coffers of the very same financial institutions that caused this mess is driving the Bulls in the market toward a new stampede.

It looks like 1933 all over again. Unfortunately, 1933 turned out to be a Bear Market rally that set the stage for an even steeper market plunge. History repeats.

The Death of Giants

2009-03-30T09:48:00.000-07:00

Many of you out there are probably too young to remember a saying that was popular when I was young - "What's good for General Motors is good for the U.S.A.". In those days GM was, quite literally, the engine of the economy. It not only employed a huge work force on it's own, but it was also responsible for keeping auto showrooms, parts manufacturers and the steel industry booming in the United States.

My Dad worked for General Motors all the way to retirement - first as plant security and later on in the office expediting special orders. When I was a kid we sometimes got to go to the plant on Sundays to see the idled line and check out the really cool mini fire engine. The plant was cavernous and dark and so huge that it had to have not only its own fire department, but also its own medical staff and cafeterias. It seemed like a small city. And I can still remember the way it smelled - a heady combination of 'new car' and motor oil.

As it happens, Dad passed away several years ago so he never had to see what happened to the company he loved so much. I'm not sure what would have been the hardest for him - watching his retirement investment in GM stock dwindle away or the mortification of seeing his much beloved company reduced to being run by government bureaucrats.

In fact, it's my opinion that today's stock market sell-off is actually the result of the realization that unprecedented government interference with the market is now the order of the day. Chrysler is being forced into selling out to a foreign car company and GM is now effectively being run by the Obama administration. The U.S. executive branch has fired half of the board of directors, canned the CEO and installed their own cronies to run day to day operations.

The era of direct micro-managment of the private sector has officially begun. The government is running the banks, insurance companies, and now the automobile industry. What industry is going to be next?

Today is a sad day indeed. It marks the death of giants of U.S. industry. Let us hope that there aren't more to follow.

Alternate Reality 2

2009-03-24T11:43:00.000-07:00

I can't escape it. No matter where I turn I see news that makes no sense and has only a minimal attachment to reality - at least my reality. By that I mean the reality that I grew up with. The reality where America - the place I was born and raised - was a constitutional republic with a capitalist economic system. That's where I came from. That's my comfort zone.

But now I'm not even sure we still have a constitution. If we do it must be in tatters. Today I read that my President wants to hand over to Tiny Tim Geithner the authority to seize any businesses - not just banks - that he sees as a threat to the stability of the economy. And once those companies are seized, the government would have the right to set salaries and bonuses for all employees as well as having direct oversight over company operation.

Huh? Six months ago if anyone had told me that I would have thought they'd been dippin' into the 'good stuff'. Now it's just part of the daily news. And what's even weirder is it doesn't seem to be worrying anybody - AT ALL!!! That's right, everybody's too worried over the AIG bonuses.

Next I find that one of the U.S. Senators from Maryland is introducing a bill allowing newspapers to become non-profit organizations so that the industry can survive. Okay...? Maybe that's what they should have done for the buggy whip manufacturers in the early 20th century. Make them 'non-profits' so they won't have to fail.

And then I listen to the happy-face media telling me that the economy may have turned the corner because housing sales and the stock markets are up. Well guess what? Housing inventories haven't dropped, so increased sales is really just a sign of banks offloading more houses with bad mortgages at depressed prices. And why is the stock market up? Because of Timmy's kewl plan to unfreeze the credit markets.

Guess what? We're already almost 4 TRILLION DOLLARS into unfreezing the markets without any results. What makes anyone think this NEW plan - which is really just another way to hand out more bailout money in the form of 'loans' that never need to be paid back - is going to change anything. When asked today what his backup plan was if this doesn't work, Geithner's essential response was: "Back-up plan? What back-up plan?" According to Tim, all it will take to make this successful is the 'will to make it work'.

Gee, Tim. How insightful. Are you also going to offer free courses in positive thinking as well, so we all have 'the will to make it work'? Sheesh!!!

Well, even though today's blog may not have added much to the knowledge base on the economy, at least I got a chance to vent. Thanks.

The Fat Lady Has Finally Sung

2009-03-23T13:11:00.000-07:00

Okay, I promised that today was going to be devoted to explaining mark to market, but Tiny Tim Geithner's new rescue plan has me so seething mad that I have to change topics.

There's been a populist wave of anger against the AIG bonuses, and there should be an even bigger wave of anger against this latest financial bailout (yes, it really is another bailout). Instead the markets are up almost 500 points and Wall Street is singing 'Happy Days Are Here Again'. Why? Because the financial market just found another golden goose that will let them squeeze out a few more eggs from the U.S. treasury.

Of course the taxpayer will be on the hook for it (can anyone say Resolution Trust 2.0?). For those of you who are too young to remember the savings and loan industry fiasco, the Resolution Trust Corporation was set up to bail them out. We footed the bill then, and we'll be footing the bill now, but by comparison the numbers for Tim's new project are going to make the Resolution Trust debacle look like pocket change.

Since all of our pockets are about to be picked (right down to the lint) you'd think people would be screaming. But the fact is, most people don't understand what this program really means, so let me explain.

Under this new program, the FDIC will form PPIF's (Public Private Investment funds) that will purchase the toxic assets from banks and other institutions (What is it about 'toxic' that people fail to understand? But I digress.). These investors can include individuals, insurance companies, mutual funds, financial institutions, etc. But that is where the problem comes in.

Let's say I'm a bank (financial institution) with $100 billion dollars in toxic assets. They're on my balance sheet valued at 80 cents on the dollar. Unfortunately, the market has them marked at only 30 cents on the dollar. Now without a crystal ball there's no way to know what the performance would be if I held the assets to maturity, but let's assume that they are generating cash flow at the present time.

But even with the current cash flow, I'm getting a little (a lot) hinky. The economy is still pretty unstable and unemployment keeps climbing, so it's not a sure thing that the payments on these assets are going to keep flowing in. But I know that if I sell these assets now I'll have to take a massive loss. That loss might even be so bad that the FDIC could take action against me because my capital (assets) would fall below the minimum level allowed for all of the lending and investing I've already done. Bummer! So I won't (can't) sell these toxic assets as long as I have even the slightest hope that either the cash flow - or some government subsidy - will exceed that 30 cents on the dollar value.

It's an ugly situation, but a really cool thing just happened. As a financial institution I can participate in the toxic asset auctions that the Treasury has come up with as a 'bidder' and 'bid' on my own assets. Let's say I bid 75 cents on the dollar for my toxic assets. In order to do that I will have to provide 5-10% of the actual money. The rest will be provided by the Treasury, the Federal Reserve and FDIC by way of a guaranteed bond. Since it is a guaranteed bond, that means that the most I can lose is the 5-10% (my original contribution) of the asset's value.

Now let's say that these toxic assets turn out to be worthless (Surprise!). So that means that instead of losing the entire 80 billion of toxic assets that were on my balance sheet all I really lose is the 5% of the 75 billion that I originally put up as a bid (3.75 billion dollars) plus the original 5% markdown I took when the assets were 'bought' at bid. Neat!

So who's on the hook for the rest? Why the taxpayer of course, to the tune of $71.25 billion dollars. Since there is no mechanism set up to stop this process, what do you want to bet this scenario is repeated over and over. The Treasury has just set up a plan that will bail out all Tim's friends in the financial industry (Again!). I guess they won't have to give up their corporate jets and houses in The Hamptons after all.

But what about the credit markets? If the financial institutions get these bad debts off their books, won't they at least unfreeze? Well, with the Treasury saddled with additional billions of dollars of bad debt, it's only recourse will be to print more money or have the Federal Reserve buy up more of the debt. Since this can't help but lead to more inflation (or even hyperinflation) what incentive will the banks have to lend out dollars that will be paid back with dollars that are worth markedly less and less? If they don't make a run for precious metals and foreign currencies I'll be surprised.

Let's face it. The fat lady has sung. All that's left for us to do is sweep out the theater.

For a more complete understanding of PPIF's and the Treasury plan go to http://market-ticker.denninger.net . I give full credit to Karl Denninger for making this stuff simple enough that even I could understand it.

Why AIG is Too Big to Fail

2009-03-22T09:25:00.000-07:00

All of us have heard the 'too big to fail' mantra ad nauseum. Whether it pertains to AIG, GM or the Big Banks we're propping up, it's the same old refrain. We're tempted to start putting our fingers in our ears and start humming 'La La La La La' just to make it stop.

But whether we want to hear it or not, the beat goes on. And because the underlying issues are too complicated or too arcane for the media to plug them into a 30 second sound bite (Move along, nothing to see here. Let's talk about executive compensation instead!), we remain blissfully uninformed. But in the case of AIG, the government may (surprise!) actually be telling us the truth. It really may be 'too big to fail'.

It seems that AIG has an estimated 1.6 trillion dollars in exposure through real estate backed derivatives; some commercial, mostly residential. So far, the air is slowly (or not so slowly) escaping from the residential bubble and the value of these investments is declining (see my next blog on Mark to Market). And although it may not be apparent yet, the deflation of the commercial bubble is not that far behind.

But why should we care? 1.6 trillion dollars is obviously a lot of money, but how will it affect us? The problem is that the biggest buyers of AIG Financial Products' derivatives (which consist mostly of collateralized debt obligations tied to mortgages) include Middle Eastern sovereign-wealth funds and the Chinese and Indian governments, which are also among the biggest holders of US Treasury securities.

So what happens if we just stop pumping money into AIG and let it fail, rather than 'unwinding' the problems first? It's pretty simple actually. The big investors who bought these financial products lose some or all of their investment. We wave and say 'thanks for coming' while shuffling them out the door with their hands still outstretched.

But then, with good reason, those same investors begin lose confidence in their U.S. securities investments, especially now that the United States government is an 80+% owner of AIG. They begin to question whether their other U.S. investments are safe. They start refusing to buy more, or even -SHOCK!- begin dumping the ones they already have. That means that not only is there no longer a market for our debt (Don't worry, Bernanke will come to the rescue on that one. Ben will buy it!) but with a glut of treasuries on the market from investors who are now making a bee-line for the exits, we will have to offer more and more interest as an incentive to get anyone to buy them.

Now if we didn't need any more money and didn't have to issue any more treasuries to finance our fiscal shortfall, it would still be a pretty nasty situation. But since we are currently set to start running record budget deficits our need for someone - anyone- to finance our fiscal gluttony is desperate. So we're between a rock and a hard place. Either we keep propping up AIG and sending money down a fiscal rat hole or we stop, let them collapse, and then watch the countries that are willing to underwrite our debt disappear into thin air.

Hello Hyperinflation!

Now I won't bore you with long explanations of what that means. I'll just say that all of your savings, your 401k's and your retirement plans won't be worth the $1,000 stamp it will take for them to mail you the check. Maybe there really are some companies that are just too big to fail.

Out of Thin Air

2009-03-19T08:57:00.000-07:00

Like a magician who diverts our attention to his right hand while the trick is being performed with his left, the government continues to blow smoke about the AIG bonuses while the Federal Reserve produces money out of thin air.

Yesterday the Fed moved to buy 300 billion dollars worth of longer-term Treasury securities in order to 'drive interest rates for home loans even lower'. This is the first time in 50 years that the Federal Reserve has purchased Treasury securities (although back then it was for different reasons). But since the credit markets still remain essentially frozen, driving down the interest rates for home loans seems a bit superfluous. After all, if you can't get a loan, who cares what the interest rate is?

In order to address that little problem, the Fed also announced that it would be buying another 750 billion dollars worth of government-guaranteed mortgage-backed securities (in addition to the 500 billion they've already bought) to try to 'loosen up' the market. All in all the Fed produced 1.15 trillion dollars out of thin air yesterday while backpedaling on Ben Bernanke's claim that the recession would be over by the end of the year.

Was this a masterful stroke of financial wizardry? Will it solve the problem? Not Likely, but it will create problems of its own.

The Chinese are already in a snit because of our mismanagement of our financial house. The purchase of our own long-term Treasuries is guaranteed to make them even more nervous. And the infusion of another trillion dollars of funny money into the system is also guaranteed to start reviving inflation which will dilute their dollar investment even further. I can hear the gnashing of teeth in Beijing from here.

Although yesterday's Fed announcement did bring a temporary pop to the stock market, the dollar plummeted (reaching an all-time low against the Euro) and gold jumped. We are making the world very nervous. And if we make them so nervous that they stop buying our long-term treasuries, or even start dumping the ones they already have, the Fed will be forced to start printing more money to buy more and more of them. Can anyone say hyperinflation?

The FOMC (policy-making group for the Fed) had always said that as a last resort in their quiver of options they could purchase our Treasuries. The fact that we've reached the 'last resort' does not instill confidence.

The question is, is the economy even worse than they are letting on? Is Ben's smiley-face interview on 60 Minutes and the AIG debacle just a smokescreen to keep us from seeing how bad things really are? Or is there an even more sinister motive behind it all?

The G20 metting is coming up in April, and coincidentally there is a suddenly a lot of talk about moving away from the dollar as the world's reserve currency. In fact there is a movement building up steam, supported by the United Nations, to create a new 'world currency'.

Perhaps it is only coincidental that the Federal Reserve's latest move is almost guaranteed to send the world running away from the dollar and looking for cover in another currency.

Yeah, that's it. It's a coincidence.

Leprechauns, Lending & Trains

2009-03-14T07:42:00.000-07:00

Last Week the banks were in fine form, driving the stock market rally. Suddenly, they're telling us they are doing much better and don't need any more government money - at least not right now. In fact, some of them are saying they wish they hadn't taken those TARP funds in the first place. Even CitiGroup is up 50% from its stock market low and says that now (after a 45 billion dollar infusion of cash from the government) it is one of the best capitalized banks in the world. Amazing!

On Friday General Motors started telling us that they didn't think they'd need any more government money, but at the beginning of the week their independent auditors were telling us that bankruptcy at GM was almost inevitable. Huh?!

What a happened? Was it something we said? Then let's say more of it! Or is there something going on under the surface that we're not yet aware of that is driving this new-found financial success and fiscal responsibility.

Obviously there has been a sea change regarding 'taking the government cheese'. I'm guessing that either Tiny Tim Geithner from treasury or the TARP Oversight Committee is suddenly attaching some really unattractive strings to the shower of money they've been throwing at the banks and industry.

Up until now Tiny Tim has been the Treasury Leprechaun with his Pot of Gold, showering his riches on anyone who would take them. But it seems that change is in the wind. What I'd like to know is what kind of change would make the banks and the auto industry start shaking in their boots and pushing themselves away from the government trough?

Was it the specter of Nationalization? I mean REAL nationalization, not just de facto nationalization. The kind where the government actually takes over the day to day running of the whole shebang, leaving the high-paid executives out in the cold.

Or could it be that the TARP and bailout recipients are suddenly being forced to reveal where all the money went from the previous go-rounds? Or maybe it was the sight of Bernie Madoff being shuffled off to jail while Bank of America is being pushed to come clean on the Merrill Lynch bonuses. Whatever it is, it seems to be a sobering experience for all concerned.

For everyone, that is, except the government. They're still spending like drunken sailors (if you'll pardon the insult to drunken sailors). Congress gave up its cost of living increase this year (about $3,000 per Congressman) to make a show of fiscal responsibility. But it left in place the mechanism for future increases. Oh, and FYI, while they postponed any salary increase they voted to triple the MRA expense allotment given to each Member of Congress instead, raising it from $30,000 per year to $90,000 per year. Nice deal if you can get it. Just let me know where I can trade a $3,000 raise for for $60,000 'allotment' and believe me, I'm there.

Government just doesn't seem to be getting the message. Congress is already talking about the NEXT bailout package. Our expenditures are now 15% of the GDP (versus the historical highs of about 10%), and we are making fiscal policy that will guarantee out inability to grow our way out of the debt we're leaving our children. In order to finance this fiscal bonanza we have been selling our debt in the form of T-bills and Treasury bonds to any investor (foreign or domestic) who will buy them.

But China (the biggest holder of our debt) is starting to get concerned (can you say default?), and that concern is causing them to become uncharacteristically blunt. They are now referring to their investment as what it really is: a loan to underwrite our wasteful spending. They're calling for us to be 'honorable' (Congress? Honorable? What an oxymoron!) and protect their capital. Sounds like we're starting to make them really nervous.

And they aren't the only ones getting a little weak-kneed over the size of stimulus expenditures. Tiny Tim has been urging the G20 to ante up for another round of world-wide stimulus. From the U.S. Government's point of view that makes perfect sense. After all, if ALL of the world's economies are tanking at once, then there won't be any safe havens for capital to escape to, ergo it will have to stay put. But the Germans and the French aren't willing to climb on board for another ride on the fiscal train to nowhere. In fact the Germans are already looking for ways to ease out of their stimulus spending in order to get back on track with sustainable expenditure levels.

But here in the U.S. it seems that the train is picking up steam, and we just keep shoveling in dollars to keep it rolling down the track. The problem is that the bridge may be out up ahead.

Unemployment Numbers

2009-03-13T10:19:00.000-07:00

Or: 'Data Sleight of Hand for Dummies'



The stock market has been up for three days in a row (can anyone

say Bear Market Bounce?). Apparently there is so much money

sitting on the sidelines that investors will use any hint of good news

to get back into the market.



So What's the good news? Well, General Electric has had their AAA

rating downgraded by Standard & Poors - Oh, wait! That's not good

news.



I know! CitiGroup and General Motors are about to be delisted from

the Dow Jones Index (their price slide has been dragging down the

average you see, so I guess that's good news in a way ... sort of).



And Bernie Madoff pleaded guilty in his fraud trial so that bum is going

to jail where he belongs. An now all of those people will get their

money back ... oh, wait! They won't get their money back, but they'll

feel a whole lot better about being broke.



Oh! And the rate of housing foreclosures has doubled lately in many

locations because banks are moving up foreclosures to get them off the

books in order to avoid having to rewrite the loans under the new Federal

guidelines. They’re ‘clearing out bad loans’ so the banks can be healthy

and make loans again … maybe. At least they can still loan out the

capital that they haven’t already invested in China and India after getting

their bailout money. So that’s good news, isn’t it?

And the President says that things aren’t as bad in the economy as we

first thought (you know, like when he was telling us we were on the verge

of economic catastrophe and HAD to pass the economic stimulus bill or

we were going to cease to exist as a country). Things are better because

of the stimulus package that was passed just 4 weeks ago. Wait a

minute!? Four weeks ago? How could a bill passed 4 weeks ago have

already turned the economy around?

Let’s face it. It takes longer than four weeks for the Federal government

to blow its collective nose, let alone cut checks to the states, send them

out, have the states move the money through their own bureaucracies and

cut through all the local red tape to get the money into the economy. And

the state governors are still arguing about what portions of the money they

will or won’t take, so how can the money already have moved through the

pipeline and be stimulating the economy? The words ‘smoke and mirrors’

come to mind. But when it comes to the economy smoke and mirrors is

just SOP (standard operating procedure).

Take the unemployment rate for instance. With so much good news out

there we haven’t been hearing much about unemployment lately. But it just

keeps chugging along, rising from week to week, with no end in sight. Of

course if (when?) GM goes into bankruptcy that rate might spike a bit, but

don’t worry. The Bureau of Labor Statistics has that covered because the

accounting for unemployment numbers isn’t a science it’s an art. And if the

numbers get bad, you can always change the accounting rules. Then you

can compare the statistics gathered under the new rules against the

statistics gathered under the old rules and give yourself an instant edge.

Cool!

Case in point: when the media’s talking heads and the government gurus

talk about today’s unemployment rate versus the Great Depression it’s like

comparing apples and oranges. In those days, the accounting and statistics

were much simpler: they just counted the people who were out of work.

Since there was no ‘safety net’ (no unemployment insurance, no food

stamps, no welfare) the unemployed just lined up at whatever distribution

center was handing out the day’s largesse in the form of food, temporary

work, etc., and the bean counters went to work keeping their tally.

But today it’s more complicated. The statistics for unemployment come

from an amalgam of figures: registration for unemployment benefits,

statistical sampling and a little creative  accounting thrown in for good

measure. So there’s nothing to let the average citizen know when the

government is cooking the books on unemployment because nobody is

standing in line for soup.

The biggest component of modern unemployment figures is applications

for unemployment benefits combined with the reports filed by the

applicants on whether they are currently looking for work.

If you are unemployed and looking for work you count. If you are

unemployed and have stopped looking for work (because you are

discouraged or there is nothing out there in your field/industry), then you

are ‘marginally attached’ to the labor force, but not really unemployed so

you don’t count.

About 2.1 million people fell into the ‘marginally attached’ category in

February (obviously it’s a pretty big margin). But even more importantly,

if you have given up looking for more than a year then you cease to exist.

You are no longer unemployed. You are no longer ‘marginally attached’,

you are just gone. Poof! Pretty neat trick.

But there is an even bigger piece of the unemployment puzzle missing.

What about people who can’t file (or aren’t eligible) for unemployment

benefits like seasonal farm workers or the self-employed? How do they

fit in?

Well, seasonal farm workers fall into a separate category and are never

counted in unemployment figures because they are, you know, 

seasonal. And even if they become unemployed because of other

forces outside of the seasons, well then, they’re still seasonal, so that

doesn’t count. Like during the dust bowl when all of those farmers and

farm workers were out of work and had to migrate to other states.

Under today’s unemployment accounting they weren’t really out of work,

they were just seasonal. Unfortunately they had a really bad season.

Next we come to the self-employed who have lost their businesses or

have seen their client base shrink to nothing. How do they get counted?

Well as long as you have any client base left, you really aren’t

unemployed. Even if you have to collect pop bottles to scrape together

enough money to pay your power bill, you’re still working, darn it. And

besides, the government would never know or report that you were

unemployed unless you managed to be included in their statistical

sampling called the Household Survey.

The Household Survey consists of data gathered from 60,000

‘scientifically selected’ households who are polled monthly regarding

their employment data. Of course how ‘scientifically’ these households

are selected may be up for some debate.

For example under the Clinton administration the number of households

sampled was reduced to 50,000 to streamline the process and the

samplings taken from inner cities and lower economic neighborhoods

were reduced. Voila! The unemployment rate among blacks, inner city

youth and the poor declined. What an achievement! But was that because

of better social programs, a better economy, or just smoky accounting.

Hmmmm? I wonder?

So when the government tells me that the current unemployment rate is

still under 10% but over 700 people are showing up to apply for a job as

a school janitor and over 600 show up to apply for a minimum wage kennel

cleaning job at a veterinary hospital, I REALLY have to wonder.

I mean based on past performance, how much reliance can we put on

unemployment statistics? You be the judge.

Alternate Reality Alert

2009-03-10T10:29:00.000-07:00

-Musings over my morning coffee -

Looks like just another day in the alternate reality we are all participating in.

I guess I should have bought Citi shares when they were still a buck a share (Dilemma - Buy stock or a candy bar? Hmmm?). They’re up about 40 cents a share today based on a statement from the bank CEO that Citi made a profit during the first two months of this year. Ironically enough, if you read deeper into the article you find out that the losses that would offset some (or all?) of the profit have not been calculated.

WHAT!!!??? Can I use this method of accounting, too? Just ignore any negative cash flow and only count income. And what is really funny is that based on this lame statement the stock market (driven by banks and financial stocks) is rallying over 300 points. ROTFLMAO!

If this works then I want to buy stock and then convince the CEO to make some baseless positive statement so I can make a killing on the market. Woo-Hoo!!! We're all going to be rich!!! Obviously the economy is now completely divorced from reality.

My question is, are we all so desperate that we're willing to grab onto any 'happy face' statement just so that we don't have to deal with what's really happening in the economy? I guess phony rainbows and sunshine are preferable to uncertainty and the looming storm clouds on the horizon. After all, anything is preferable to accepting that our existence may not be able to continue to revolve around the latest iPod or getting another big screen TV. And the government is facilitating our delusion. Like pushers for our addiction they are frantically trying to convince us that if we (and they) can only spend enough, everything will be hunky-dory.

But reality is trying really hard to tell us something else. Reality is trying to cut through the fog of media hype and government propaganda to tell us something totally different. Maybe, just maybe, it might be a good idea to look at cutting back on our debt, readjusting our life style and making a few preps for the future since it really is possible that the future may not look like our consumerist, hedonistic past.

Oops! I think I might have made one or two of you uncomfortable. After all consumerism has been our drug of choice, enabling us to block out the reality of the erosion of society's (and the economy's) underpinnings. If we could all just stay high with acquiring more stuff and making more trips to the mall, maybe we wouldn't have to deal with the fact that things are unravelling.

Let's face it, human beings hate change. We cling to the known - the comfortable- like limpets until it finally becomes too uncomfortable (literally - too painful) to stay with the status quo. We're approaching that point. We are literally on the brink.

I've felt for more than a year now that there was something unsettled, some big change on the horizon that I couldn't put my finger on. But it's becoming clearer and clearer that major social upheaval is percolating just under the surface. We are on the cusp of transformative times. The only question is how we choose to participate in the transformation. Will we be the actors or will apathy and denial condemn us to be the ones that are acted upon?

I know that for some of you my musings may be a little darker than what you'd like to have accompanying your morning coffee. But for some others, you may feel a some relief at finally finding someone giving voice to your misgivings. Sometimes it just feels good to know that you're not the only one out there seeing this stuff. I hope that if that description fits you that you'll come back again.

Next post: Unemployment Numbers - Or 'Data Sleight of Hand for Dummies'