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Who will tell you the truth?

Thursday, October 8th, 2009

One of the criticisms of the economic crisis in 2008 was the claim that the credit rating agencies were asleep at the switch, and didn’t warn investors in CMOs (Collateralized Mortgage Obligations – think Freddie Mac and Fannie Mae) that the mortgage portfolios were getting more and more risky.

The issue on the table is how do you find a balance that protects rating agencies so they aren’t intimidated by the threat of lawsuits for publishing negative information, but not protect them so thoroughly that they are immune from the consequences when they fail to report bad news.

Last month, a group called Audit Integrity, which is an industry research firm that focuses on risky or fraudulent business practices, published a list of “the 20 companies most likely to end up in bankruptcy”. Hertz was one of the 20, and is now suing Audit Integrity and encouraging the other 19 companies to do the same.

(One of the 20 has already been removed, but that was due to a data problem from the company that supplies the data that goes into their risk model)

Story

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Dump the dollar, buy Indian Rupees

Wednesday, October 7th, 2009

Who would be suggesting that Indian Rupee is a better investment than the US Dollar?
Bloomberg Report

Our friends at Goldman Sachs, of course.

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Capitalism: A Love Story

Saturday, October 3rd, 2009

Michael Moore’s movie Capitalism: A Love Story opened in wide distribution this weekend.

I was working in Flint Michigan (as a contract worker for EDS) at the time Mr Moore was filming Roger & Me, and I have a very different perspective than him. The city of Flint didn’t die because GM didn’t care about Flint – Flint died because the city of Flint became a corrupt bloated cesspool dominated by the labor unions and the Democratic party. They imposed a city income tax and became very anti-business – figuring GM and parts suppliers had no alternative but to keep building cars in the city, and the city could tax its workers and GM forever without consequences and give themselves huge pension packages.

The first thing that happened was businesses fled the city. What Roger & Me didn’t show was that just over the city line (in Flint Township to the west and Burton to the East), there were prospering shopping centers, new housing construction and a prosperous middle class.

The second problem was that Flint decided to choose its mayor based on the color of his skin, not the content of his character. Shortly after I moved there, I was stunned to turn on the nightly news on TV and hear the police chief say… “Well, basically there is nothing I can do about the crime. It’s being caused by drugs and poverty, and that I can’t solve – the Federal Government needs to fix that by creating new programs”.

So prostitution and drug dealing went on right out in the open all day long with the police looking the other way. In its good times, Flint was the model of a racially diverse community – many blacks from the South moved to Michigan in the “Great Northern Migration” and filled the ranks of the people working in the factory. Black and white worked and lived side by side with mutual respect with no racial tension. The Mott Foundation supported the school system to help the immigrants from the South be prepared to participate as true equals.

Without any effective political opposition to the Democratic party rule, the city lost its tax base and filled up with non-working parasites. The middle class moved out. More stores closed. GM became a larger and larger portion of the city’s revenue – they tried to get the city to lower the property tax valuation on its inefficient obsolete factories (they were designed for the old days when you had a discrete “chassis” and a body – which is no longer how cars are designed or made). When the city said no, GM tore down the Fisher Body plant (the focus of Roger & Me). With just an empty field left, the city could no longer justify the taxes it was extorting. In 1992, Flint and Gennessee County were ordered by the State Tax Tribunal to pay GM back $35 million after a 9 year long battle. Buick City would last another 15 years or so but is now just another big empty field. Background info

So while I look forward to seeing more people understanding the Goldman Sachs / Paulson / Geithner connection, I don’t expect the film to be at all balanced or objective in its politics.

Posted in Financial Collapse, Uncategorized | 1 Comment »

My OldGM(tm) Carco dealership

Sunday, September 27th, 2009

In the spirit of full disclosure, it stopped being a GM dealership years ago.

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Save health care costs by stopping obesity? Think again

Saturday, September 26th, 2009

This Dutch study is one more coming to the same conclusion:

http://www.plosmedicine.org/article/info:doi/10.1371/journal.pmed.0050029

Conclusions

Although effective obesity prevention leads to a decrease in costs of obesity-related diseases, this decrease is offset by cost increases due to diseases unrelated to obesity in life-years gained. Obesity prevention may be an important and cost-effective way of improving public health, but it is not a cure for increasing health expenditures.

Or to put it more bluntly,  people who live an “unhealthy” life style die earlier and quickly – people with a “healthy” lifestyle live long enough to end up with Alzheimer’s and wind up in a nursing home for 20 years…

That’s not even considering the effect on the Social Security system.   The medical system (and government’s) goal measures success by quantity of life, not quality of life.   But no matter how hard medicine works, you will not live forever.

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What next?

Friday, September 25th, 2009

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What Cost Cutting looks like

Friday, September 11th, 2009

Wal*mart apparently wants to lead the way in “fixing” health care by working smarter.  A year or two ago, they rolled out a plan to sell many common prescriptions for $10 for 90 days worth.

Personal anecdotes are not the basis on which to make policy,  but I have the feeling this is showing us the future.   Two weeks ago upon discharge from the hospital, I went to CVS with 5 prescriptions on a Sunday with my niece, while we were still making small talk, the clerk announces – you’re all set…   my insurance company is paid, I pay my copay and I’m out of there.

My new doctor seems to want to save me money, so last week (after throwing away 4 of the 5 meds), he encourages me to go to wal*mart where I can “save money” by using the $10 special for the 1 remaining med he wants me to take.   I get there around 4:15 (the place is closed from like 12:30-2pm for lunch)…  hand over my script and am told “I won’t be  able to fill this today” given the impression that they ran out and more will be in tomorrow.   When I  ask what time I should pick it up (after the delivery comes in), then the story changes to “Oh, I have it, but there is no way it will get filled today – can you just come back tomorrow?”

So today, my dentist wants me to take that exotic drug penicillin (I probably have an ear infection affecting my balance).  About 4pm, the dentist says they’ll call it into Wal*mart.   About an hour later, I go into Wal*mart and am greeted with “OMG, this prescription just arrived.  You’ll have to come back in a few hours…. so I go grocery shopping, eat dinner, play with the iPhone and it’s now 6:30ish…  sun will be setting soon and I don’t like driving after dark.   Get to counter, the woman in front of me is being told that her prescription is not ready and maybe she’ll be able to get it in 20 or 30 minutes…   so it’s my turn to say “Hi”, and I get the same story….  there is only one pharmacist and the clerk and they’re buried.   I agree to come back tomorrow to pick up my antibiotics, by which time I probably will no longer need them or I’ll have a bigger problem than I do today.

I have the feeling I’ve just seen the future if we get Obamacare.

Posted in Politics, Uncategorized | 3 Comments »

The other shoe just dropped

Monday, August 31st, 2009

http://www.reuters.com/article/marketsNews/idUSN2414172020090824

The NY Federal Reserve Bank (the most important) has just announced that the head of the AFL-CIO in New York is being named to be the chairman of the NY Fed (the job that Tim Geithner held last year).

All is clear now who is calling the shots and in control of our federal  government.    There is no reasonable reason why a labor union thug  should be making banking policy.   The coup has happened.

Or if you are slightly less pessismistic, Goldman Sachs just got their butt kicked out of any role in making monetary policy.

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Lithium Ion Battery Duty Cycles

Friday, August 14th, 2009

Barack Obama, the Science President, is staking the future of America, and especially that of our government car company GM, on the Volt electric car, which uses lithium ion batteries, that can be recharged by a small electric motor if the battery gets low.

A commenter on a news story pointed out that the lithium battery pack will have a life of only 1,000 duty cycles before it must be replaced, which the person believes will cost about $15,000.    If you use your Volt to go to work and back every day and nothing else (2 cycles/day x 5 days/week X 50 weeks),  at the end of 2 years, your batteries will be useless.   They will start to lose range long before they die completely, which means the 40 mpg gasoline engine kicks in, defeating the entire purpose of the electric car.

But 1000 is probably way too optimistic.  

http://batteryuniversity.com/parttwo-34.htm

But lets say that is accurate.   Instead of your 40 mile commute costing $1 in electricity, the cost of using up the batteries adds another $15.00, or in the ballpark of comparison to gasoline an additional $10 per gallon.

GM claims to have “magic” proprietary computer software that will allow the batteries to last 10 years:

http://gm-volt.com/2009/01/23/gm-qa-with-bob-kruse-on-the-chevy-volts-batteries/

(How did they determine that in less than 10 years?)

President Obama makes a big deal that he’s the “Smart” president.  Answer that one, smart guy.

If you get past that issue, Lithium ion batteries are dependent on lithium that is only commercially viable in one mine in the world, lose their ability to deliver current if they get too hot, and are a significant fire and explosion hazard.    There is also currently no technology to recycle lithium ion batteries.

Posted in Politics, Technology Politics, Uncategorized | 3 Comments »

Bankruptcy Watch – Taylor Bean

Tuesday, August 11th, 2009

http://online.wsj.com/article/SB124949523458308423.html

Taylor Bean ceased all of its Mortgage related activites a few days ago, and will file bankruptcy this week.    FHA pulled the plug on them for undisclosed financial reasons.

Private mortgage lenders can’t compete against Freddie Mac and Fannie Mae with a bottomless pit of free government bailout money.   The same thing will happen to Health Insurance if ObamaCare passes.

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