Saturday, October 11, 2008

Smile for a change

And remember to swallow that drink before you click on this link.

Whew!

According to some, the stock market has reached a "capitulation bottom"--nearly 3 billion shares traded on the NYSE Friday, and there's hope that investors have finally let out all that bad energy, or whatever the heck was that caused them to get their panties in a wad. Now the wonderful work of Paulson & Co. will start to reinflate things, and All Will Be Right With The World.

Nazzo fast, Guido.

There are other folks, including yours truly, who disagree. (Please note, I am not a finance professional. I just follow this stuff because of my own financial interests.) I think this is the end of Act 1.

My belief is that we may be seeing the end of the sub-prime/Alt-A crisis and direct effects of those, if we're lucky. But there are forces on the move that are going to cause us more trouble--a lot more--if things don't change.

John Mauldin reports loans for commercial construction (things like apartments and shopping centers) are starting to have problems--the default rate is rising. From the graph he provided today, it won't be as bad as the housing problems, but on top of the damage already done, the effect will be out-sized. (What, you want the graphic? Go subscribe. It's free and highly useful.)

I've also been seeing reports (Mr. Mauldin being the latest, also in his current newsletter, but first on Timebomb 2000 in this thread (and yes, if you aren't a member there, you ought to be)) that the little-known but widely used instrument of "letters of credit" are not worth what they used to be. As individuals, we never see these--but the folks who ship goods around the world (such as grain) live and die by these things.

You've heard the catch phrases about a "lockup in lending" or similar. Consider the effects of a lockup in global shipping, caused by a lack of confidence that you will be paid for the goods shipped. Let's try out the phrase "global economic collapse" and see what it tastes like.

Ack! Uck! *spit* *spit* *spit* *spit* Gimme some water to wash this crap out of my mouth! Whata tryin' ta do--kill me?!

Joking aside, this will be far more serious than what we've seen so far if it progresses unchecked. A cessation of global trade will bring nearly every county in the world to its knees in fairly short order. Every country imports some large fraction of what they need these days, thanks to globalization. For those of us in the US, consider the consequences if we were unable to import oil and natural gas. Not a pretty thought, is it?

I offer no prescription to solve this problem. What I do offer is warning that just because a few folks are saying "Yipee, it's almost over!" doesn't mean that it actually is. Keep your guard up.

Wednesday, October 08, 2008

Oopsie!

Joe Biden, beloved vice-presidential candidate of Obamanauts everywhere, is a bit confused about the responsibilities of the job he's interviewing for.

Hey Joe! How's all that extra experience working out for you?

Tuesday, October 07, 2008

Food for thought

On forums like The High Road, there is a thread that comes up every so often. It's the "How do you know if those guys breaking in your door at 3 AM are cops or not, and what should you do?" thread. It's always the subject of hot debate, and frequently ends up locked by the mods.

Well, this story doesn't make it any easier to arrive at a conclusion:

A Jackson father said his son was shot after three men kicked in their front door carrying shotguns and a pistol Saturday night.

The incident happened at about 9 p.m.The man, who doesn't want to be identified, said the men yelled, "ATF," as they stormed the home on Marble Street.

ATF likely stands for the Bureau of Alcohol, Tobacco, Firearms and Explosives.


Now I'm not about to join the "Kill them all; God knows his own" crowd. My logic works this out thusly:

If you're house is being entered by a well-trained SWAT team, you likely won't get a chance to arm yourself, unless you've hardened it far more than Joe Average normally takes the effort to do. At 4 AM, they'll swarm in several doors and windows at once, yelling to wake the dead (and given recent trends, shooting your dogs--Google it if you'd like), and you'll be sitting there in bed, and what's in your hand will probably not be your gun. If it is, you will likely die.

If they're not a well-trained SWAT team or if you've hardened the entrances to your home, the results are more problematic, especially if you take the above example to heart, and decide that anyone entering your home by force needs to be resisted with deadly force. You may be able to arm yourself and make a fight of it, and you might get one or two. You will likely die in the process. Even if you realize that they are cops, I sort of doubt that you're going to get much chance to lay down arms. They're going to be so busy trying to kill you they probably won't even recognize you're trying to surrender. If you're fortunate, they'll figure it out after you're dead. If it's a mistake (wrong house), perhaps your survivors will receive a nice settlement.

If it's the bad guys (as above), and you either carry at home by habit (few do), or you keep a gun to hand while at home (some do), and especially if you've hardened those entrances (as you ought to do), then it's a different ballgame. They'll likely attack at a much earlier hour, when you are awake. Hopefully you can recognize from their attire (and lack of good dynamic entry technique) that these aren't cops, and take effective action.

Unlike the man above, who's son was shot. At last report, his condition was unknown.

Finishing up

I'm out of order with this, but after some jet-lagged sleep, other things drew my attention today.

Sunday was my last day in Oregon, and like most it dawned wet. I hope it is just the time of year I was there. I'd hate to know people lived their entire lives like that.

At any rate, I went north again, passing by most of the things I had seen earlier. My destination was Tillamook, and the Tillmook Air Museum. But first, I had to pass through the Nestucca Valley:







I said it was wet--I didn't say it wasn't pretty. Eventually I arrived at my destination. It's a big place:

Yep, that's me, living dangerously again. It's in my genes. To give you some idea of how big this place is, it's a old World War II blimp hanger. 1072' long, 192' tall and 297' wide if memory serves. It has 11 acres of roof, and took 2,000,000 board feet of lumber to build.

Yeah, it's made of wood.

And that picture is from 3/4 of a mile away, heading toward the museum from town (taken on the return trip.)

They have planes. Lots of planes. This picture doesn't do justice to the number, but I was backed up as far as I could go. This is half the planes that were visible. There were more under the big white tent. For scale, that tent is as tall as the tail of an A-26 Intruder or a PBY Catalina. I know because there was one of each under there, along with an SBD Dauntless and a number of other fun things.




At any rate, I eventually made my way back to my temporary digs and settled in. I had to get up early to head back to Portland and home. The trip was like most airline travel--crammed into an aerial cattle car--but it went smoothly and I arrived home safely and grateful to be among family again.

At least some of the scenery on the flight was decent...

Mt. Hood.

How to handle a heckler

(Via the Drudge Report)

Strong words

(From John Mauldin's Outside the Box E-Letter. As required by the reprint agreement, you can reach Mr. Mauldin at johnmauldin@investorsinsight.com.)

Here are some strong words, written by Dennis Gartman and included in today's Outside the Box:

Thus to begin, we say here this morning, mincing no words whatsoever, we are more frightened now for the future of the global capital markets than we have been at any time in our thirty+ years of watching, commenting upon and taking part in them. We are fearful... and we mean this fully... that we have passed the tipping point; that things are now spinning out of control; that forces have been unleashed that cannot be stopped without some truly massive, truly strong-handed, governmental action including the closure of markets and limits upon bank withdrawals, et al. These are troubling times, and our fear is palpable and growing. Worse, these concerns are giving rise to the likelihood that the Left shall be in ascension, and that manifestly left-of-centre, interventionist government lies ahead here in the US and in Europe. Higher, rather than lower taxes will be the end result. Greater... indeed very much greater... intervention in the capital markets lies ahead. Trade and act accordingly.

I want you to note two key phrases in there--"closure of certain markets" and "limits upon bank withdrawals". It's out there now, in public: people--well-placed people--are talking about market and bank holidays. Given the havoc in the markets today, and yesterday, and the day before, and so on, these actions may be closer than any of us would like to believe. This turn of events, while painful, has always been inevitable. The good news is that you can ride it out, if you prepare correctly.

"Trade and act accordingly," indeed. Do you need a picture?

It's up to you to be sure that you don't get caught unprepared. I'm not saying "Run! Empty your bank accounts while you still can!", though some will no doubt do so. What I'm saying is that it would be a very prudent move to increase your cash on hand, just in case you didn't have access to it through the ATM. How much you want ot keep on hand is up to you.

Huh...

(Via the Patriot Post)

Due to my travels last week, I missed the vice presidential debate. I've caught snippets here and there, but I suppose I need to sit down and watch the entire proceeding.

"[Sarah Palin] killed. She had [Joe Biden] at ‘Nice to meet you. Hey, can I call you Joe?’ She was the star. He was the second male lead, the good-natured best friend of the leading man. She was not petrified but peppy. The whole debate was about Sarah Palin. She is not a person of thought but of action. Interviews are about thinking, about reflecting, marshaling data and integrating it into an answer. Debates are more active, more propelled—they are thrust and parry. They are for campaigners. She is a campaigner. Her syntax did not hold, but her magnetism did. At one point she literally winked at the nation. As far as Mrs. Palin was concerned, Gwen Ifill was not there, and Joe Biden was not there. Sarah and the camera were there. This was classic ‘talk over the heads of the media straight to the people,’ and it is a long time since I’ve seen it done so well..."

This is from Peggy Noonan, as quoted in today's Patriot Post. Please note that this is something of a reversal of her earlier position that McCain's pick of Palin was a mistake.

If this was a mistake, he needs to make about a dozen more mistakes just like it.

Monday, October 06, 2008

"What happened?"

(Via SurvivalBlog)

Today was a travel day, flying back in time as I traversed the country from Oregon to Arizona to North Carolina. What happened while I was on the plane?

Well, for all intents and purposes, Wall Street lost its nerve. If you look at the interday trading, stocks were bouncing all over the map. For someone who is a nonprofessional in finance, it looks to me like every idea in the world was tossed against the wall to see what stuck.

Very few of the moves in stock prices are rooted in reality. However, that doesn't mean anything, since the markets are now being moved by emotions, primarily fear. Paulson's master plan has failed to calm the markets, and people are getting scared. (Boy howdy, am I glad I moved out of equities some time ago.)

At this point, we don't need a zillion ideas being thrown against a wall, hoping something sticks. We need to go for the root of the problem. Glenn Beck has one of the best writeups on how we got to this juncture that I've read. You should check it out. I'm looking forward to the next two installments.

Sunday, October 05, 2008

Stuck

Every year, I attend a professional conference for IT folks that work in a specific area of the attractions industry. Every year, I've always left right after the conference wraps up, and I've always had people asking me "Why don't you stay and hang out with us?"

So this year, I scheduled 2 days (Saturday and Sunday) after the end of things to hang out with these folks that I consider my friends. So would you like to know what my friends did to me? They all bailed!

Not that I'm really mad at them. Really, I'm not.

Today, I had a wonderful drive south along the Oregon coast on Hwy 101:







Eventually, I turned inland, winding up in Eugene. Taking I-5 north, I stopped at a rest area to check a map, and then got off the superslab and took an unknown road that ran right through the heart of the Willamette valley. That was pretty spectacular in its own way.












Yes, another lovely picture taken from a moving vehicle while I'm driving. Yes, it's dangerous. I live on the edge, OK?

Eventually, I worked my way back to Corvallis, and visited the campus of Oregon State University for a short time. It looks like a nice enough place, but what can you tell from a half hour?

After that, it was back down Hwy 34 and Hwy 20 to the coast and supper. Now here I sit, in a motel room, with National Treasure on the tube, all by myself, writing in a blog. I had considered going back to the club where most of us had finished out last night, but the crowd is a bit young for me (you know--half my age) and the music isn't my club music (Are there any 80s clubs left?). Besides, going to clubs where you don't know anyone--by yourself, and at my "advanced" age--is something that's simply too depressingly pathetic to contemplate. Besides, National Treasure isn't really a bad movie.

I have another day to myself, and then it's back on the great aluminum bird to wing my way east to home, family and friends. None too soon as far as I'm concerned.