This one is huge and could directly affect you. [Bloomberg story]
This bankruptcy has been rumored since before Christmas. General Growth properties is the second largest shopping mall operator in the United States. They owe $27 billion in debt they used to buy up around 200 shopping centers around the United States.
The debtor in possession which will run the company in bankruptcy is Pershing Share Capital Management, a private equity firm.
If you haven’t tried Google Earth, or haven’t looked at it recently – you really need to take a look. What you will see should scare the hell out of you.
Google Earth’s “Street View” seemed innocent enough – it started out by having someone in a car driving around San Francisco taking pictures of the buildings downtown and making those pictures available integrated in with the satellite imagery and maps.
What’s changed is the scope of what they have done. It isn’t just a few big cities with a high curiousity level and interest from tourists – they have now sent their cameras to pretty much every street and rural road in America, taking 360 degree pictures every couple hundred feet and placed it all online on the internet.
Back in the heyday of the Soviet Union, they produced deliberately wrong maps as disinformation to prevent the United States (and possible future and past enemies like Germany) from having an accurate understanding of where cities and roads were and identifying targets of military or economic significance. Entire cities (like where their nuclear weapons programs were conducted) were not even shown on the maps.
Google Earth has essentially put pictures of every road, every house, every business in the Entire United States on the internet for anyone in the world to access without restriction. With 2 pictures of the same object from slightly different locations, it is possible to create accurate 3d measurements.
Google is not the government (yet), but this should cause you to have some thoughts about the conflict between the freedom of the first amendment and the government’s need to provide security. Some countries in Europe are starting to push back on Google Street View.
What do you think the United States should do? (if anything)
Fox News (and the Washington Post) are reporting that today’s speech by President Obama will discuss the “Five Pillars” of the recovery of the U.S. Economy.
If you’re thinking…. I’ve heard the phrase “Five Pillars Of…” before, you’re right. Islam’s core belief system is called the Five Pillars of Islam.
For partial credit, you might have thought of the Seven Pillars of Kwanzaa.
Just wait until you read the Ten Commandments of Obama.
Who could have seen this coming? By converting farm land to making ethanol from corn, the price of food has gone up – requiring the government to spend more money on food stamps, WIC and the school lunch program.
Of course the executives from “Big Ethanol” say that isn’t true.
Well, people warned Congress it would happen.
With the threat of punitive 90% taxes on their income and earnings caps on the truly talented in the financial services business becoming scapegoats, firms beyond the reach of Andrew Cuomo’s show trials and public intimidation are hiring away the very people who have the skills to prevent further collapse of the US banking and financial services industry.
Good job!… especially you Republican traitors in the U.S. House.
On a post over on the radio blog, I detailed how Textron got itself entangled in the Radio business. Textron’s main products are Cessna airplanes and Bell Helicopters. Textron is also involved in designing control systems for other military weapons.
Bell Helicopters are used by the US military and they were involved in building the new fleet of presidential helicopters that was just cancelled. Textron was already obviously in finanical distress before that announcement. The “war on private airplane travel” particularly hit Textron hard.
So today’s news is a group in the United Arab Emerites wants to buy Textron.
Anyone have a problem with folks in the middle east owning the company that makes aircraft and weapon control systems for the US military, and airplanes?
After all, we’re not at war with Islam – there is no risk here – we’re all part of the same community.
Office rents are falling, vacancy rates are approaching 10%, and construction of the new World Trade Center continues.
Anyone with an option is fleeing Manhattan, the smoking bans, transfat bans, proposed taxes on free bridges, higher income taxes, MTA claiming new budget shortfalls – and living and working in the most obvious target if/when there is another large terrorist attack.
“Intense Preparations” are underway preparing for a possible GM bankruptcy, along the lines of Geither’s plan – to split the company into a “good GM” and a “bad GM”.
Reading between the lines, it sounds like the decision has been made – in a company as complex as GM, it takes a while for lawyers to write up the paperwork and anticipate possible objections the court or other parties (including countries in Europe) may have.
If GM “goes”, the automotive parts business will likely follow – as well as serious damage to the bondholders (most of the value of the bonds has already been “written off”, but forces everyone to adjust their valuation)
But don’t worry – the Federal Reserve has lots of “money” it can create to keep funding cascading bailouts of the companies that fail.
A few of you are aware that in a previous life, I worked for a major equity trading venue (not the NYSE – think #2) doing programming and software design of electronic order matching (trading) systems. People who personally knew Bernie Madoff from when he ran that market in the early 1990s made it clear they would rather I leave and stop pestering them about planning for the future – things like in 2000 and 2001 having a real disaster recovery plan in the event of a terrorist attack that destroyed our facility) – so it made my decision to leave in 2002 that much easier.
Many politicians – and radio people like Bob Brinker and Michael Savage – believe one of the root causes of the past year’s collapse of equity prices is to the end of a quaint rule called the “Short Sale Uptick Rule”.
Without getting completely boring, the purpose of this rule in the 1930s was to allow the person who manages a stock on the NYSE (call the Specialist) to prevent a sudden fall in the stock of a price – by people who wanted to bet that the price will go down further by creating a stampede. 70 years ago, this was a really great idea to avoid market instability and prevent 1929 from happening again.
If you wanted to sell IBM stock 40 years ago, your order was sent to New York on a teletype, printed out, hand carried to the specialist on the floor, and he would find a buyer or if nobody was buying – the specialist would directly buy your stock at a price that HE set. Pricing information was delayed 15 or 20 minutes to the general public, so he had a lot of time to “work things out”. Your sale reported on the “stock ticker”, a machine at your local stock broker so they could keep somewhat current on the day’s trading.
By controlling what traded when and at what price, the specialist (one person) could block a surge in selling using the “tick” when he did not want to be the buyer (because he also believes the price is headed down and wants to get the prices adjusted lower first and get out of the way in the 15 minute window before the entire world found out).
So if this rule was working so well to prevent market panics, why did the SEC allow exchanges to get rid of it in 2007? The main answer: Electronic trading. Only the most inefficient markets now involve human decision making to routinely manage the trading of a market. Note that “program trading” and “electronic trading” are different things. Program trading is the computers for a customer making automated decisions to buy and sell. Electronic Trading is the actual matching of buy and sell orders. You don’t need electronic Trading to do Program Trading – but it does make it faster and potentially more dangerous to market stability.
With automated trading in 2009, the last sale price (which controls the uptick rule) can go up and down 100s of times a second. That crawl you see on the cable TV channels is no more real than the Pirates of the Caribbean ride at Disneyland. It’s nothing but a snapshot of some recent stocks at a speed the human mind can absorb.
A TV picture only updates 30 times a second (computer monitors typically are 70-90 times/second). You just can’t enforce a rule like the uptick rule – even if you still thought it was a good idea. A human being cannot absorb information at 100 times a second and certainly can’t click a mouse at the “right” time to not break the rule.
Just how is an electronic market so different in 2009? Here are the specs for the Universal Trading Platform that NYSE Euronext is rolling out in Europe, and recently replaced the ARCA trading system that trades NYSE stocks in Chicago (not New York, Andrew Cuomo)
“Customers trading on NYSE Euronext European cash markets will realize reduced latencies […] of 150-400 microseconds per roundtrip on the Universal Trading Platform . In addition to delivering exceptionally fast transaction speed and system-wide reliability, the Universal Trading Platform sets new industry standards for capacity with the ability to handle 100,000 orders per second.“ (The system my group designed in 2001 was shooting for a target of 150 matches per second)
To put this in context, light (and electricity) travel at 186,000 miles per second. In 400 microseconds, electricity travels only 74 miles. 400 microseconds is their “worst case” total time for the Euronext UTP to get an order, match it and give the answer back to the buyer and seller.
There are other reasons the Uptick rule also makes no sense in 2009 – because stock options, single stock futures, ETFs (like SPDRs and contra ETFs that bet on an index going down) and a variety of other financial products allow people to “bet the market will keep going down” without any regard to whether the last sale that happened 572 microseconds ago was at a better or worse price than the 2nd older sale.
Making things even uglier – there is no such thing now as “the exchange” where a stock is traded – no more than there is an “American Car”. There are multiple trading platforms all trading the same stock at the same time all over the world. By the time each trading venue “hears” about the last trade at another exchange, it is probably no longer the most recent trade.
This is why I described the NYSE trading floor as nothing but a TV studio living out the quaint fiction for the masses that there is still a trading floor. Any humans you see on the floor are there for very little reason in 2009, and with each passing day there is less and less reason for humans to stand around on “Wall Street” in New York City.
Mayor Bloomberg, Governor Paterson and Andrew Cuomo have no leverage over “Wall Street”to keep them under the jurisdiction of any part of New York State goverment – they just are too blinded by their own desire for power to realize it yet. That’s especially odd in the case of Mayor Bloomberg – since his fortune was made on selling information to people on Wall Street, and knows every detail of the business.
The Federal Government only has nominally more control because it controls the creation of US dollars by the US Treasury and Federal Reserve. That power card has now been put on the table for the last time. Globalism is going to win this fight, and that’s not a good thing if you believe in the values of the United States, individual freedom and representative government based on our national interests.
But to finish on a positive note, Congress did solve that problem with Baseball Players taking steroids and Michael Vick is in jail for those dog fights. We need to keep the inportant issues in focus. Who do you think is going to win American Idol this season?
For those of you who still think the NY in NYSE stands for New York (because you see a TV picture from their NY studio each morning – quaintly still called the “Trading Floor”)… the French man responsible for merging Europe’s dominant electronic trading system EuroNext into the former New York Stock Exchange making the NYSE a truly global business – has decided to “retire”.
I’m sure this has absolutely nothing to do with the US President and Congress proposing punitive income tax rates, Andrew Cuomo suing to get the names and salaries of people on “Wall Street” so thugs from ACORN can show up at their houses to extort money from them, and the Governor of New York saying that if he knew raising taxes would make rich people leave New York (Rush Limbaugh), he would have done it sooner. Nothing at all.