March 17. 2008 by Dick.

The accent may be on the wrong syl LA ble.

A friend mentioned that he had heard that a very large bank was talking to the Fed about liquidity problems. He was nervous that we might be on the brink of something way uglier than most are thinking.

He had probably heard the first rumblings about the Bear Stearns calamity. JP Morgan Chase agreed Sunday night to acquire B-S but the problem in the financial markets is widespread and still growing. The Wall Street Journal has a short history of troubled investment bank sales here: snipurl.com/21y4f

We recovered from the junk-bond market debacles and from the savings and loan scandals and from the insider trading/arbitrage adversity. We will recover from this sub-prime mortgage mess, too. Nonetheless, I am not happy about owning banking stocks right now.

That said, I have two thoughts for my friend.

Really.

Just two.

(1) 99.94% of the ARM crisis has been caused by systemic fraud (as in felonious behavior) on the part of the mortgage sellers and particularly the banks that financed the mortgages, then resold them as “secure” investments to pension funds and the like. The only good news is the Saudis and the Chinese appear to hold at least some of the paper.

(2) There is no real real estate problem no matter what the news says. Lemme repeat that. There is no real real estate problem no matter what the ID10Ts in Congress say.

We own a house. The roof still keeps the rain off, the heat still keeps the cold out, and the rent-a-cat still curls up by the fire. It absolutely does not matter to me today if this house is worth a dollar, a million dollars, or something in between. As it happens, the house is worth more than when we bought it. Yay! It’s also worth less than it was a year ago. Boo! Oh, wait. I didn’t sell it a year ago and I don’t plan to sell it today so its value on the market is of absolutely no consequence to me.

OK, its value on the market is of absolutely no consequence to me except when I pay taxes on its value but that’s a whole nother story.

Now the bad news. In other words, here’s why my friend may be right.

Nobody believes me.

We are so driven by this Chicken Little squawking about the housing sky falling that we really really believe the end is nigh.

And so it will be.

For a while.

Wot to do, wot to do.

Buy.

Warren Buffet is a whole lot smarter about this stuff than I am. His advice is simple. When you find a good property at a bargain price, buy it. Unfortunately, nobody believes him right now, either.

It’s not just the economy. It’s the stupidity of the herd that drives the economy.

Posted in Banking, Business, Sociology, Politics, Random Access | 3 Comments »

February 11. 2008 by Dick.

Alice Roosevelt Longworth embroidered on her sofa pillow, “If you haven’t got anything nice to say about anybody, come sit next to me.” Gossip is the chief currency in news and in “news” magazines, so that may now be the majority motto.

Loving gossip isn’t new. Alice Roosevelt became an idol to Progressive Era women around the world, Carl Anthony wrote, and her style of detached disdain is celebrated today.

Two of my acquaintances are worlds apart in that attitude. One whom I’ll call John because his name is John, revels in gossip and in bad news about anyone outside of his own circle of friends. Maybe even within his circle of friends. The other whom I’ll call Juan because his name isn’t, is more data driven.

Juan works for “Infonablah,” an electronics company that is a very likely takeover target. They have a couple of new products and a still-useful older product line. (This is not a Microsoft v. Yahoo story.) The WSJ has reported talks about a joint venture between the large Chinese conglomerate Batooey-dot-com and Infonablah. Juan designs interface modules for Infonablah’s consumer goods division here in Vermont.

Juan foresees Infonablah stocking up on next generation goodies and letting the current customer stuff go to the “low cost” manufacturing centers Batooey maintains in China and on the South Pole. He figures the Batooey engineers are thinking the same thing.

I don’t know that Batooey would give Infonablah its next gen stuff; I think it’s more likely that Infonablah will be stripped and will disappear. Their current customer stuff will definitely go to low cost centers no matter what else happens.

That said, “combining synergies” in B-speak always means more layoffs.

Here’s the heart of it. John doesn’t know Juan but his reaction to this story would be glee when he figured out that Juan’s job might be in jeopardy.

That saddens me.

We peeps spend entirely too much time reveling in the downfall of our peers.

I like gossip as much as the next guy, but Alice was wrong. My mom and hers before her were right. If you can’t say something nice, don’t say anything at all.

=============

When I wrote this piece, I used TLAs (a three letter acronym for “three letter acronym”) to stand in for the real company names. Juan then worked for DGX, a biz about to be consumed by Wall Street Greed and a Large Chinese Conglomerate (LCC). A quick Google search showed me that DGX is Quest Diagnostics and LCC is the USAirways Group. I neither recommend nor pan these securities.

Posted in Business, Sociology, Dick's Desserts, Random Access | 1 Comment »

February 7. 2008 by Dick.

I get a lot of, um, opportunities to contribute to one cause or another. Some are actual non-profits. Others are simple pitches for a product. Most are couched as “Buy Now!” and “Just 27 cents per day!”

I didn’t understand until I read Nicholas Epley opining in the New York Times:

“People are more likely to donate to a charity
when the cost is described in terms of pennies
per day instead of dollars per year.”

It has never occurred to me NOT to multiply it out. That 27 cents a day for the DVR is another $100 bucks I won’t have at the end of the year. I do that automagically and without much forebrain activity.

People are sheep. That isn’t news.

Oh. Wait. Our fuel oil for last year cost only $8.22 per day. And this year is a leap year so it will be even less.

There. Wasn’t that better?<BR>

Posted in Sociology, Society, Grumpery, Dick's Dumps, Random Access | 1 Comment »