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Monthly Archives: April 2009
Check out this frightening analysis of commercial real estate from Deutsche Bank: Deutsche Bank’s analysis
Really interesting blog post about the attraction of gold: Attraction of gold
“Separate developers in Buckhead are building four speculative office buildings at the same time with virtually no leasing activity. The 35 recent condominium projects will help give Atlanta a 40-year supply at the current sales pace. A $600 million outdoor shopping mall under way has suspended construction to save money.”
Hugo Chavez is a thug. He is currently in the process of destroying the country of Venezuela, which is suffering from soaring crime, inflation and imploding economy. His thugs flout Venezuelan law and recently ransacked a Jewish synagogue, and he openly courts Iran. He is the enemy of anyone who loves freedom and democracy.
For Obama to shake his hand is disgrace. This is the first thing that Obama has done that has really upset me.
Here is a link with a picture, which Chavez is now using for propaganda: Obama and Chavez
I read a wonderful newsletter every month called the Gloom, Boom and Doom Report, written by Marc Faber. (Gloom, Boom and Doom report I highly recommend it.
Marc Faber if you don’t know is a great investor, market commentator and newsletter writer. Some of his highlights include calling the 1987 crash, the recent housing bubble and the great debt bubble we have been building. His newsletters are not all about financial markets but include a lot about history and geopolitics. He occasionally has some thought provoking, controversial comments. His latest comments in the April 6th issue stunned me.
He mentioned how there is growing outrage at how taxpayers are bailing out the financial elite. Here are the comments that stopped me cold:
“In every society, outrage by the people has been very dangerous. But throughout history, before it turned in earnest against the government, the political elite always managed to turn it against minorities, whether it be Jews throughout Western Europe (conveniently assisted by the Church), Armenians in Central Asia, Kurds in the Middle East, Indians in Africa, and Chinese in Southeast Asia. And since I have far more Jewish friends around the world than friends of any other ethnic background, I am deeply concerned about the growing outrage of the American people – particularly if the US economy doesn’t improve, which I believe it won’t in the long term. For sure, if I were of Jewish origin and living in the US I would be insuring against the eventuality that that outrage will be turned against a minority group. I would buy property in Asia and keep some assets in Asia (but not through an American bank), where Jews are such a tiny minority and such an economically insignificant economic force that they don’t attract any attention. In fact, if I were Jewish, I would leave the US without delay! The “outrage” writing is on the wall and I wouldn’t trust Mr. Obama for a second.”
Now normally he isn’t prone to hyperbole. And he is strong student of history. And history is on his side in the argument. It seems to have started with the biblical story of Joseph being Pharaoh’s adviser to years later Jews being enslaved by a Pharaoh, who “knew not of Joseph.” The Jews had a prominent place in Ottaman empire only to be turned on savagely by fanatical Islamic sects.
The best example though is Germany’s Jews. Before WW1 crushed Germany and after a series of terrible economic policies destroyed Germany’s economy, Jews had never had it as good in any country. They were scientists, musicians, doctors and financiers. A short 15 years after the end of WW1, Hitler was in power and a reign of terror started. One of the reasons that so many Jews were slaughtered in the Holocaust is that they thought that it was impossible that this would happen in their beloved country of Germany.
And here we are with wars that are draining our economy and economic policies that some would argue are very similar to the Weimar Republic’s (pre-Hitler Germany) policies of printing money. Now while this time it may not be the Jews, history shows that when “things get bad, the majority turns against the minority,” Marc Faber says.
Let’s hope the US is somehow different and that history does not repeat itself.
Make sure you watch this great commencement speech by J.K. Rowling, the author of the Harry Potter series. This is an older video from last year, but I think it is so fantastic that it is a must watch.
“In a controversial effort to provide a final bit of wisdom before students graduate, the Wharton School has invited New York financier Bernie Madoff to speak at this year’s graduation ceremony.
Madoff, former non-executive chairman of the NASDAQ stock exchange, has recently become known for his elaborate Ponzi scheme for which he pled guilty to an 11-count criminal complaint in March. He will address Wharton’s Class of 2009 via videoconference on May 17 at 5:30 p.m. at Franklin Field.
As a businessman, philanthropist and “close” friend of Ronald Perelman – for whom the Perelman Quadrangle is named – Madoff would have been welcomed by students and faculty had it not been for the recent scandal, several Wharton professors noted.”
Here is the link: Madoff at Wharton
Too funny. (In case you didn’t know this is a satire site)
From the Financial Times, the UN has put together a document highlighting the need for a lot more food production:
“It warns that global agriculture production must double by 2050 for the world’s fast-growing population to have enough to eat and to deal with the effects of climate change.”
Here is the story link: Food production needs to double
Prices need to rise to encourage more food production and more technological investment needs to happen as well, so yields rise.
This is an incredibly disturbing blog post explaining how the the Treasury department’s new plans can be gamed in a similar way to how Enron gamed the electricity system before its collapse. God help us all if this is even close to correct. Here is a snippet:
Before we go there, what will happen with these banks when they can bid on each other’s assets? Let’s do a thought exercise. Let’s say you are a bidder for Bank A. You know your banking asset is worth $50, and you also know the asset Bank B has is worth $50. You call your buddy up, the trader at B, and make a deal. Happens all the time. You go to bid, and you bid $80 for B’s asset. Then you wait. If B doesn’t come through, you are screwed out a lot of money. And hey, isn’t this wrong? Well, you are pretty sure one of those Rubin-protégé government whiz-kids has given someone who knows someone you know a wink-wink about this. You take a drink, steady the nerves. Then, the bid comes back for your asset – $80 from B. You have each bid up each others assets and traded them. And now the government is screwed.
Yup. Bad news. Bank A pays $6.50 for its new asset because of the leverage , and it loses all of that. It also loses the $50 from not having the asset anymore. However it gains $80, net profit – same as Bank B. The government has paid $73.50 for a $50 asset, twice. (See previous for how the levered non-recourse loan turns into a put option.) We tend to call this collusion if you and I did it.
Here is the link: Banks as Enron?