Where I should be is different than where I am

If I hadn't decided that my employment situation was untenable back in May, I may not be here now.  No not dead or missing, but not here setting in front of my computer typing this out.  You see, as I type this, the biggest off road race in the northern western hemisphere is happening right down south of the USA.  Baja to be specific.  My plan was to hook up with a local or semi-local team and become a crew monkey, drink getter, designated drive, etc. but since I would be paying my own way this became much harder when the cash flow slows to a crawl.  Oh well, I was only counting on a 50/50 shot at it anyway.  Maybe next year or the next or the next or the next ..............

Indecision 2010!!!!

The biggest election since the last one and before the next one just finished up.  What can I say?  Well a whole lot.  During these indecisive times I often think back to a time in my life that I had to deal with state level politicians and the wonderment (not the good kind) I beheld.  Double talk, lies and power plays were the name of the game.  Everyone needs to have the opportunity to push a publicly beneficial law or resolution through the morass that is our legislature.  Even at our state level, the idiocracy is amazing and disheartening.  Only then will the vast majority of the public realize what a system composed of amoral and broken people we send to represent us, does.  Now don't get me wrong, not all legislators are corrupt lier's, only the ones who hold any and all power.  Even then there are exceptions.  The State Senator who represented my district (think of the holiday in the middle of February and no its not my birthday) ALWAYS dealt in a fair and honest manner.  Because of this I will vote for that Senator as long as they stay in office or I live in their represented district.  If more people had this opportunity to see the real person behind the slogan, I think that the idiocy would be driven from office and good people with a REAL concern over their districts welfare would be elected.

I must admit I have a slight subversive streak.  In races that are already decided I sometimes vote for people that may upset the status quo by garnering more votes than was expected.  This way the perception of a multi-party system stays intact and might just give pause to the winner(s)/party(s) and their possible extreme views.  Till next time and the biggest election since the last one and before the next.

Lego Makerbot Oh Yea!!!

I'm a big Lego fan.  I'm also a big MakerBot fan.  Combine them and I think I have gone to heaven.  See what heaven looks like here.

The TIPS of the iceberg

One of the funnest things about writing this blog is I get to come up with AWESOME! blog titles.  Now I have never been a great fan of TIPS (Treasury Inflation-Protected Securities) because of the nature of the way the "inflation" component is calculated.  Unfortunately the inflation number the government uses can be manipulated and cajoled into showing what Washington wants to see and not actually whats going on.  In the past this has usually taken the form of showing a lower inflation number than is actual.  This has helped get politicians re-elected by a public inferring low inflation rates with good fiscal stewardship of the country.  Because of the lower than actual inflation figures, the treasury pays a lower interest rate on TIPS and buyers of TIPS receive a lower real yield.  But now the tables are turned.

For the past couple of years the USA, and to some extent the world, has been slightly deflationary.  Now, I want to be clear, deflation is bad.  People stop spending money because next week the price will be lower than today.  While its good for our individual pocketbooks, it can devastate a consumer economy based upon inflated asset values (houses).  At the moment the Fed is contemplating a strategy to pump more money into the economy and thus drive up inflation.  Increasing the inflation rate drives up asset prices and thus will keep the housing market buoyed, keeping bank balance sheets healthier, increasing money velocity, and finally getting you to spend what little savings you may have today to avoid paying more next week.  This strategy may now also encourage the government to report higher than "normal" inflation numbers to show that its policies are working and hopefully for them (not so much for us) get them re-elected.  This will be good for TIPS and the buyers of TIPS.

This is just a working theory and does NOT constitute investment advice.  As I stated earlier, I have never been a fan of TIPS because of the potential for manipulation of the inflation number and thus the interest rate the number setter pays.  TIPS can be a relatively cheap way to buy inflation protection that doesn't include a lot of market risk if held to maturity.


PS Sorry for the clunky writing.  The brain and finger connection is kind of weak today.

If I were a ........

If I were a -blank- (I won't actually type the word since it would be red flagged some where in some computer in some antiseptic data farm) I would carry out a plan specifically designed to bring chaos to the financial system of this country.  Why?  Because of grandstanding ****** (I told my wife I would try and be nicer to ****** in the future, so the *'s are my way of starting off on the right foot) politicians who have yet to vote to replace the empty spots on the Fed's Board of Governors.  Mostly this lack of voting comes down to one man and his quixotic tilt against financial reform.  Yes the Fed has problems, yes the Fed didn't "see" the credit crisis coming (you realize few people did and then usually only within narrow terms), yes the Fed could be a wanton world dominating hegemony of the richest families on earth ;), but they are needed to stabilize the idea of a stable financial system.  senator shelby (no need for capitalization because its not deserved) has blocked and cajoled the Senate from voting on filling the empty seats in a quest to block needed reform and supervision of the broad financial system.  Its not about the person nominated to the board seats, but about personal power and the next election.  Why must these politicians play with the future of the US by being ****** and potentially harming the very core of this country.  shelby will not be hurt by a failure of Fed governance, you and I will.

What difference does it make whether the politicians do or don't vote to fill the vacant seats you may now be asking?  The Fed needs a quorum of 5, they now have only 4.  This lack of "quorumness" disables the Fed from doing anything that might help or (I'll give this to shelby) hinder the US in an emergency.  In a financial crisis, such as oh I don't know; European default, 9/11 replay, China meltdown, California falls into the ocean, everything East of California falls into the ocean, etc. the Fed can't do anything.  Thats right nothing.  If it passed any emergency resolution to help stem the collapse of the world's best economic system, even with its many, many flaw, those resolutions could be tied up in court seeking to decide whether those same resolutions are legal while the US falls into a deep, deep economic pit of despair.  For those wishing to destroy the Fed, that is an ideal situation.  Make the Fed useless in a crisis, makes the Fed useless during "normal" times.  All of this doesn't matter much in times of relative stability, but has the world been stable lately?

















PS ****** means idiot / idiot's  :)  

Supply / Demand - Demand / Supply

You don't need Econ 101 to know that the greater the supply, with a steady demand, the less the price.  Well in China they are bucking all the supply / demand rules.  Housing is a topic often discussed at dinner parties (I really don't know if thats true since I don't go to dinner parties) especially after going through the last three years (raise your glasses to the 2nd anniversary of Lehman Bros collapse and the assimilation of Merrill Lynch).  Because of the prolific housing market talk espoused by talking heads on the ole TV and the various bloggers using the written word to deride and debase the USA's housing market, most are somewhat aware of the demand housing speculators played in the meltdown of 2008.  Apparently China needs to allow more words and visions (as in Tele, not as in psychedelic mushrooms) to penetrate its airspace so the 2nd, 3rd, 4th, etc. home buyers learn from our mistakes.  When you have rising prices and skyrocketing supply somethings gotta give.

See more here.

Whoa there White House horsey

OK lets see if that embeds its self into the blog.  What is the vid about? you ask.  Well its about the bank bailout, financial reform bill and you.  


First off it starts with the line that goes something like this, "if you bought your home at the top of the market, you had to read and sign "complicated" mortgage documents before you got keys to the house.  These "unintelligible" docs came from the "big" banks".  Well no they didn't.  The docs came from the shadow banking system.  The big banks bought the mortgages from these shadow banks (they are called shadow banks because they are outside the normal deposit/investment/commercial type banking establishment), packaged them up and sold the cash flow to others (pension funds, retirement funds, endowments, etc.).  Now it took time to match and package these loans into larger chunks of gooeyness, so when the music stopped, the big banks held mortgages that quickly declined in value and thus quickly destroyed the balance sheet of the banks.  So because I couldn't afford the  million dollar house on my field hand wage and the "big" banks had "complicated" (I have yet to see any mortgage document that doesn't spell out the terms of the contract in high school english) language in the mortgage contract, its now not my fault for signing a contract that I apparently couldn't understand.  Woo Hoo, off scott free again.


Now don't get me wrong, I'm all for less complicated ways of communicating ideas.  The part about simplifying the language of credit cards, student loans, etc. is defiantly a step forward, but when does the part about ending financial naiveté start.

The next part "banks will be prevented from growing so large that they put the entire economy at risk if they were to fail".  Um no.  I'm no math whiz, but what I see happening now and then is that the dangerous banks got bigger after the bailout, and this legislation does nothing to change that. JPMorgan + Bear Sterns = bigger, Bank of America + Countrywide Financial(shadow bank) + Merrill Lynch = bigger.  No where in the prostituted financial reform bill did it address the breakup of these government sponsored shotgun weddings.  In fact, the bailouts gave a competitive advantage to the TBTF banks by conferring that moniker upon them.  By being TBTF you no longer have to worry about risk, profits, customer service, etc.  All you need to focus on is getting bigger so that you become even more integrated in main street economies and more likely to be bailed out further down the road.


And finally you can rest easy by knowing nothing you did (even though the house payments constituted 120% of your monthly income) is your fault.  "you can rest a little easier knowing that your home, your family and your future will be protected from the irresponsibility of others."  When you repeat the "others" be sure to look in the mirror America.

Wow it gets even better

This is an unlocked link to the story about Russia's wheat "friend".  How much did this cost the "friend" in bribes.  I'm frankly astonished, but can't find much more on this story as of now.

So Way Way Back When....

OK maybe only a couple of hours ago I blogged about wheat and the dramatic climb in prices.  Remember I said something about shorting/selling and how some of Russia's "friends" would probably like to exit their long wheat position with a profit.  Three words + a tild + a percentage: Wheat down ~7.5% today.  Those are some good friends.

Edit see brief synopsis here

So Way Back When.....

OK so not that far back.  On June 7th I posted a chart which contained a list of different items along with their returns.  See it here.  I then expounded on sweet sugar.  Well sugar has climbed ~20%, but that isn't the real story.  The story is wheat.  Back around then, wheat was going for ~$4.45 bushel (depending on the time frame, market, etc.) and the outlook was a little gloomy for wheat prices and the farmers who grow wheat.  Well with a drought in Russia and a ban of Russian wheat exports (with a little help from some "friends"), wheat has reached new heights.  As of now, according to Bloomberg, wheat is trading at ~$7.55 - $7.70 a bushel depending on the time frame, market, etc.  That equates to a return of ~ 69% - 73%.  Not bad and quite dwarfs the return on sugar.  Let's see what happens when the "friends" of Russia decide to close out their long wheat positions and Russian exports start back up.  Can you say crash.  Can you say short. At the moment every grain elevator operator in the world is trying to get in on the action and sell at what are historic prices.  The best line I have seen regarding this shocking rise "The markets wheat themselves".

Another question to ask is "who does this affect"?  It will affect the consumer who buys the loaf of bread.  It will affect the chip manufacturer who makes the chips.  It will affect other commodities (sugar?) when the price stabilizes.

So let's say that the nightly news is all a bubble over the rapid rise in the price of bread (pun intended - I couldn't resist), along with the increase in the price of chips.  The consumer, seeing the nightly news reports with the headlines "Wheat Crisis 2010 - Is the World About To Starve?" or "What You Can Do To Protect Your Children and Widowed Mother From The Coming Wheat Crisis Catastrophe", thinks it's a valid reason for a $1.00 bag increase in their favorite chips. The consumer decides that since the chip company is not price gouging but passing along a perceived valid increase, then its not that bad to pay the extra dollar for the salty goodness.  But see, the news doesn't report when the price declines.  The chip makers count on the short attention spans of the chip addicts and slowly respond by lowering their prices gently over time until it stops at $0.50 higher than before the "wheat crisis".  The chip addict thinks its great that the price has declined, and the chip maker is happy to pocket the extra $0.50.  Hedge fund "friends" are happy that they found a way to capitalize on the suffering of millions by unloading an unprofitable position using government manipulation (bribes, payoffs, equity, etc.).  Everyone comes out happier than before. (SARCASM)

Anyway, time to end the tirade.  I received an answer to a question that has held me up, so back to reading fascinating government prose on SWPPP.

I bet walking and chewing gum will be outlawedl next.

Wow the financial IQ of this country is defiantly on a downward trend if we need to be reminded of what is and  isn't legal with respect to this list of illegal activities. **** What do you mean I can't steal someones identity and use it to buy the mansion on the hill.  I mean come on, this is a free country after all. ****  DISCLAIMER all text between the **** **** is SARCASTIC.  Where's that sarc font when I need it.

The Best Site on the Web

Why yes this is the best site on this thing we call the internet.  Learn anything you want when you want.  This site isn't too bad either.

Perceptions are the only thing of value

Well that's not a politically correct way of thinking (referring to the title of course).  We were all told to not judge a book by its cover, not to decide on someone by the impact of first impressions, etc.  Well in the financial markets, perception is valuable and the reality is discounted and swept under the proverbial rug.  I have wanted to write a post on a certain shiny metal that really has no viable uses other than to outfit the showy with bling and now have a moment so I will.  Now I know what you'll say, "but Ramblings, my cuff links / earrings / wedding ring / bracelet / whatever is my most prized and valuable possession".  Really?  Other than ornamental jewelry, what is a "useful" function of gold.  "Well what about the gold plated connections on my $250 Monster HDMI cables?  Isn't crystal clear TV reception worthy of gold (because of course I need to see every ripple of fabric on the latest American Idol contestants)" you might say.  No gold plated connections are just a marketing gimmick that unfortunately, too many fall for.  Gold, what's it good for.  Well for one thing it has the perception of being valuable.

The perception of gold as value goes back thousands of years.  Perception of value is all gold has going for it.  Does it do anything like say, a barrel of oil, a bushel of wheat, a cow/pig/buffalo/horse/rabbit/etc., or an acre of land.  No it doesn't.  But what it does do, is captivate mens minds with the shiny glint of sunlight off the speck in the river.  In an emergency would you rather have a bucket of wheat or a gold ring?  Gold can buy the bucket o' wheat, but only as long as golds perception of value holds.  This perception of value extends to all kinds of things including small rectangular pieces of paper with a picture of our first President located on the front.

Full Disclosure - I do have a small position in gold limited to what fits around me and my lovely wife's finger.

Sugar. The sweetest things in life are not free.

Sugar.  The white crystalline goodness that I no longer put on my cereal in the morning and no longer drink in my Coke.  Infectious Greed posted this graph over the weekend.


As you can see, sugar has taken a beating.  Since I consider myself leaning toward a contrarion (sp?)/ value "investor" stance, I had to look up the reason(s) for sugars decline.  What are they?  Well google "investing in sugar" to find a ocean liner full of info.  Some say sugar is crashing others say its only a trough between peaks.  I think it all depends on China (doesn't everything depend on China now-a-days) and the burgeoning middle class' taste for the sweet stuff.  For me, I will keep up with the idea of investing in sugar or a derivative investment vehicle for sugar, since I'm looking for a job and this gives me something to model (excel spreadsheets, not what I look like in sugar). FWIW I would GLADLY pay $0.05 - $0.10 more for my Coke if it had real sugar instead of high fructose corn syrup.

PS - Notice that the USD is beating Gold YTD.  Hum very interesting.

Disclosure: At the time and date of this posting I have no positions in sugar.

China Wages Skyrocket

So I blogged about China in a previous post, specifically about their property bubble.  According to this article (you can get free access to FT.com), China's wages are increasing.  This should help fuel the bubble.  One question I will pose; if Chinese wages reach some kind of parity to Mexico/Brazil/??? then what incentive is there to ship goods from China and wait weeks for the container to float across the blue Pacific when the supposed labor rate advantage has disappeared?

Europe oh Europe Where Dist Thou Go Wrong + Linky Goodness

CAUTION (Many parentheses ahead).

So for everyone who thought that the ~$750 Billion bailout of the Euro dominated countries would solve the crisis, well, no it didn't.  It kind of reminds me of the beginning of WWI, but without all the killing, when Hungary says its debt is greater than stated and so France's debt goes all illiquid (no one wants to buy the bonds) on us.  Here is a great synopsis of what is happening and what could happen.

So Europe goes down in theoretical flames (or maybe real ones.  Who knows, just look back at their history.), and Europe is the biggest buyer of China's goods (nope, the good 'ole USA is numero dos) so what happens to China when the ein'st and zwie'st (1st and 2nd in kind of German speak) markets are extremely soft?  China already has the biggest property bubble ever seen, not counting the one before or after.  It's all the rage to short China and Europe now so cheap opportunities are most likely far gone, but with a little work and luck there are things that can be done.

General links (may not include anything to do with finance)

-   MetalJockey is back baby!  Now with Zambian goodness.

-   We just need to keep counting everyone for full employment.  Here and here.

-   How to live in a house for free for 1 to 2 years.  Here and here.  Since I actually have equity in my abode, I would most likely be foreclosed upon quite quickly.

The last set of links is interesting for a number of reasons I won't get into because most likely you didn't click on the links.  One interesting reason I will discuss is the fact of what happens to the property taxes or lack there of.  Past due taxes are first in line for repayment when a house is sold out of foreclosure, short sell, etc.  Local Governments finance the past due taxes by selling the INDIVIDUAL tax lien to a private entity.  Usually the bidding starts at an 18% return and goes down (the return, not the price, the price goes up) from there.  So lets say that I'm Joe Sixpack who stopped paying my $2,000 month mortgage one year ago.  If I didn't spend the money on six packs then I would have $24,000 (ZIRP world, no interest blah, blah, blah).  Let's say the bank didn't pay the property taxes due to the lack of me making payments (why lose more money by paying $ out to another entity when you can transfer the risk to them for free).  I show up on the courthouse steps with five grand in my pocket and buy my tax lien for a 15% return.  WooHoo!!!!  I just made 15% (~$750) on five grand using what is technically the banks money (leverage baby) while living rent free in my (ok actually the lenders) house.  Now time value of money comes into play here because of the lack of a known time frame from buying the tax lien to the actual foreclosure sell, but really within a ZIRP world does time value of money really matter to a small individual.

Fascinating Finance Facts Daily 5-27-10

I'm looking for a job link.

GS Settlement?  I actually thought the government might go for the big B as in $1 Billion.

Inflation, what inflation? (source) I wrote about the governments slight of hand concerning inflation way back when.

New and Improved / Change is the Only Constant

So I changed this blogs title because I'm far from a student and few Moto Adventures were being had.  That said this blog will now be updated more regularly with what I think are fascinating finance facts.  The reason that this blog will be updated more frequently is because I am now semi-employed.  So if you know someone who needs a finance person familiar with most aspects of the financial world please, please tell me about it.  My wife will go crazy with me around more (not to mention the honey-do list she is generating).  My skills include MS Excel (all types of general and financial spreadsheets including budgets, pro-forma's, forecasting, financial modeling, etc.), MS Word, MS Powerpoint, Google Sketch-up, Quickbooks, with a working knowledge of Matlab, MS Access, C++, HTML and exposure to several accounting programs and Mathmatica .  I learn quickly and can adapt to whatever formats and systems companies use.  FYI, I will work for very little money for the right opportunity (opportunity does not just include the monetary possibilities but also knowledge acquisition opportunities).  I have been involved in three start up companies as a founder and manager, two of which were sold.  Please help my wife get me out of the house and help me avoid the "list".  Leave a comment or email me with any and all leads.

Watch Out for More Fascinating Stuff

I read this in the comment section of Paul K.'s Infectious Greed blog;

... speculator who trusts smoothly operating financial markets to pay him large amounts of electronically transmitted digital representations of federal reserve liabilities in faithful fulfillment of a bunch of derivatives transactions.

In other words US Dollars.

The Lamest Duck of All

Well since the health care bill (it should be called the health insurance bill) passed we now have a whole lot of lame duck congresspeople (you have to be PC or you will be called racist, genderist, ageist, etc.) who now can pass anything they want with no worries about what will come in November. Here comes cap and trade. :(

I need to move to New York to avoid future colds

In my previous post I postulated that I was infected with a common cold by sharing saltines with AJ. Well a New York legislator has come up with a plan that would forever keep me from making the same mistake. BAN SALT. Yep thats right ban salt, and anything including sodium, from being incorporated into foods that are made. This bill only covers restaurants now, but could conceivably be expanded to other foods. Is this the first in a tidal wave of new regulations designed to limit the use of future government health care???? Probably not, but it makes a good conspiracy basis for future blog posts.

As per my thoughts on the health care bill now being fought over in the bowels of congress, while we need health care reform, all this bill does is provide insurance and does not guarantee reasonable nor affordable HEALTH CARE. It does not attack the cost structure of health care or ease of that same care. The USA is in the enviable position of being able to learn from all the mistakes that other countries have made in implementing solid health care reform. Do we use that info to implement smart reform or do we bicker and power grab until the bill is 5,000 pages long and filled with bribes and deals. You be the judge. Happy salt eating while you still can.... Ummmmmm popcorn with real butter and salt Ummmmmmmm.

It's been a really, really, really, really, really, really, long time

So its been awhile since I last posted anything of interest (has anything been of interest ;) ). Right now I'm interested in convertible bonds and the mechanisms and pricing of said bonds. Settle down, I know you are excited for an upcoming treatise on the nuances of the convert bonds, but you'll have to wait (I'm mean that way). This interest was flamed by my "reading" of a book on the collapse of Lehman Bros. I put reading in quotations because my local library has seen fit to offer the book only in listening form, and yes that bugs me. The great thing about an actual book is the fact that you can re-read passages that maybe you don't quite understand the first time through and then glean new info from the re-read. This is totally lost on listening to a book. My MP3 player unfortunately does not allow me to rewind passages without rewinding to the start of the chapter. With the chapters being approx 90 minutes long, this leads to much soul searching when it comes to not "getting" the "text" the first time through. Do I waste 30 minutes of listening time to gather that 15 seconds of info, or do I just keep going. Oh, the dilemmas I face.

Just got back from a warm weekend away with the family. Had a great time and found a new favorite hiking area. I did come home with a cold that A. apparently gave me (I will no longer share saltines while watching Mythbusters on Netflix). Have I told you how much the family loves Netflix and Hulu streaming. All the shows we like that are on cable (which we WON'T have) at 1/8th the cost. Now if only they could stream it to my phone. Till next year.

It's been a really, really, really, really, really, really, long time