March 2009

As Chart of the Day points out, “a home buyer who bought the median priced single-family home at the 1979 peak has actually seen that home lose value (1.6% loss). Not an impressive performance considering that nearly three decades have passed.”


Where has the AIG bailout money gone?


From Nicolas Rapp.

Interesting news tidbit:

U.S. House Set to Vote on 90% Tax Targeted at Executive Bonuses

U.S. House Democratic leaders have set a vote for today on a proposed 90 percent tax on executive bonus payments by companies receiving more than $5 billion in federal bailout funds.

The move is obviously targeted at AIG, but will include many other companies receiving bailout money.

One thing that people tend to forget is that Congress makes the rules, and if you screw people over badly enough, even if what you did was technically legal, you will be the target of political backlash and revenge.

Congress is effectively saying, when all else fails, change the rules.

In my opinion, it’s about time.

Making the rounds…

Shortly after class, an economics student approaches his professor and says, “I don’t understand this stimulus bill. Can you explain it to me?”

The professor replied, “I don’t have any time to explain it at my office, but if you come over to my house on Saturday and help me with my weekend project, I’ll be glad to explain it to you.”

The student agreed.

At the agreed-upon time, the student showed up at the professor’s house. The professor stated that the weekend project involved his backyard pool. They both went out back to the pool, and the professor handed the student a bucket.

Demonstrating with his own bucket, the professor said, “First, go over to the deep end, and fill your bucket with as much water as you can.”

The student did as he was instructed.

The professor then continued, “Follow me over to the shallow end, and then dump all the water from your bucket into it.”

The student was naturally confused, but did as he was told.

The professor then explained they were going to do this many more times, and began walking back to the deep end of the pool. The confused student asked, “Excuse me, but why are we doing this?”

The professor matter-of-factly stated that he was trying to make the shallow end much deeper.

The student didn’t think the economics professor was serious, but figured that he would find out the real story soon enough. However, after the 6th trip between the shallow end and the deep end, the student began to become worried that his economics professor had gone mad.

The student finally replied, “All we’re doing is wasting valuable time and effort on unproductive pursuits. Even worse, when this process is all over, everything will be at the same level it was before, so all you’ll really have accomplished is the destruction of what could have been truly productive action!”

The professor put down his bucket and replied with a smile, “Congratulations. You now understand the stimulus bill.”

Hear that giant crashing sound? That was the sound of the US Dollar dropping 2.5% today when the Fed announced it will be buying treasuries.

Picture 1.png

Here’s the 30 minute chart. I’ll let you guess when the FOMC meeting was:

Picture 2.png  

That’s a big single-day move, sure to be felt like an earthquake all around the world… let the race of currency devaluation begin continue!

Take a look at the 27 Visualizations and Infographics to Understand the Financial Crisis for several takes on explaining current events… there’s some great eye-candy in there…


From Hussman:

Meanwhile, the excitement of investors last week about Citigroup posting an operating profit in the first two months of the year simply indicates that investors may not fully understand the term ?operating profit.? Citigroup could burst into flames while Vikram Pandit sells lemonade in the parking lot, and Citi would still post an operating profit. Operating profits exclude what happens on the balance sheet.

Something humorous for a Sunday evening…


Amusing, what does one trillion dollars look like?


The above picture is what $100 million in US$100 bills would look like… click on to see what a billion and trillion look like…

Just in case you’re not enjoying the way the economy is going… get yourself a good cup of coffee and send a subtle message to the rest of the world.


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