Timmy Blows Top
Posted by Eddy Elfenbein on August 4th, 2009 at 9:35 am

This actually makes me think higher of Geithner, though that’s not saying much.

Treasury Secretary Timothy Geithner blasted top U.S. financial regulators in an expletive-laced critique last Friday as frustration grows over the Obama administration’s faltering plan to overhaul U.S. financial regulation, according to people familiar with the meeting.
The proposed regulatory revamp is one of President Barack Obama’s top domestic priorities. But since it was unveiled in June, the plan has been criticized by the financial-services industry, as well as by financial regulators wary of encroachment on their turf.
Mr. Geithner told the regulators Friday that “enough is enough,” said one person familiar with the meeting. Mr. Geithner said regulators had been given a chance to air their concerns, but that it was time to stop, this person said.
Among those gathered in the Treasury conference room were Federal Reserve Chairman Ben Bernanke, Securities and Exchange Commission Chairman Mary Schapiro and Federal Deposit Insurance Corp. Chairman Sheila Bair.
Friday’s roughly hourlong meeting was described as unusual, not only because of Mr. Geithner’s repeated use of obscenities, but because of the aggressive posture he took with officials from federal agencies generally considered independent of the White House. Mr. Geithner reminded attendees that the administration and Congress set policy, not the regulatory agencies.

Man, I’m curious who the source was. The article quotes one guy at Treasury and only for him specifically adds that he declined to comment “on Mr. Geithner’s tone and language.”

Blinky Is on a Privatization Binge
Posted by Eddy Elfenbein on August 3rd, 2009 at 2:04 pm

I guess vote-counting will still be public:

As President Mahmoud Ahmadinejad starts his second term in office, his government announces the privatization of 14 state-owned, giant companies.
In compliance with the implementation of Article 44 of the Iranian constitution, the government has announced the sale of 40 percent of government shares in 14 state-owned companies, including the National Iranian Gas Company, National Petrochemical Company, Iran Air, Iranian Oil Terminals Company, Iranian Tobacco Company, National Iranian Oil Products Distribution Company, and 10 percent of its shares in a number of oil refineries, the official government website Dolat reported.
The decision was taken at a cabinet meeting on July 28 and approved by the president, the website reported on August 2.
The shares were to be sold at the prices listed on the Tehran Stock Market.
The shares are to be transferred to the “Justice Shares” schemes, the creation and distribution of which has been a cornerstone of Ahmadinejad’s economic policy.
According to the Minister of the Economy Shamsoldin Hosseini, some 23 million villagers have received “Justice Shares.”
However, despite promises, workers’ representatives have complained that they have not received any shares as the company responsible for distributing the ‘Justice Shares’ is due to be liquidated at the end of September.
“Workers are still waiting for Justice Shares, as they are among the low-income groups of society, and must be given the priority in the allocation of supporting services,” the Iranian Labor News Agency (ILNA) quoted Ali Akbar Eyvazi, a member of the Tehran Province Forum of Islamic Labor Councils.
During its first term, the Ahmadinejad government privatized hundreds of state companies and promised to accelerate the process during its second term.

The Cyclical Surge Continues
Posted by Eddy Elfenbein on August 3rd, 2009 at 11:01 am

On an historical basis, the relative strength surge in cyclical stocks is stunning:

The S&P 500 Breaks 1,000!
Posted by Eddy Elfenbein on August 3rd, 2009 at 10:34 am

For the first time since November 5 — the day after the election — the S&P 500 is over 1,000.

Also, Nicholas Financial (NICK) has been as high as $7.49 a share, which gives us a triple for the year.

Oil and Stocks Are Matching Up
Posted by Eddy Elfenbein on August 3rd, 2009 at 10:03 am

From Reuters:

Crude oil has this year shown the most marked correlation to equities in decades and at the same time displayed a negative correlation to the dollar.
U.S. crude has shown a daily correlation of 0.88 with the MSCI world equity index .MIWD00000PUS since March 9, when the index touched its lowest since 2003.
“It depends how you measure it, but we are currently witnessing one of the strongest sympathetic periods in four decades, particularly with regards to the correlation between oil and the stock market,” said Francisco Blanch of Banc of America Securities-Merrill Lynch.

Here’s a look at the S&P 500 and the Oil ETF since the beginning of the year:

Vermont taxi service allows patrons to decide fares
Posted by Eddy Elfenbein on August 3rd, 2009 at 9:53 am

From AP:

When Eric Hagen started Recession Ride Taxi in Essex, Vt., he took more questions than fares.
Everyone wanted to know if the sign reading “Pay What You Want!” on the back of his taxi was for real. It is, and Hagen says he hasn’t been shortchanged yet.
He offers pay-what-you-can bottles of water, Gatorade and soda and a free ride after six paid fares. He tells the Burlington Free Press that business has been good.
Most of his transactions are in cash. But he’s also gotten a CD from a musician and a $10 supermarket card.
Hagen has been offering his taxi service Thursday through Sunday nights since June. When he’s not a taxi driver, the 46-year-old Hagen works full time for the American Red Cross.

Gasparino Vs. Taibbi
Posted by Eddy Elfenbein on August 3rd, 2009 at 9:21 am

I’m glad to see that Matt Taibbi’s famous article on Goldman Sachs (GS) is losing credibility. Charlie Gasparino is the latest to criticize it.

That storyline isn’t just wrong, it’s pretty naïve. But it’s gaining credibility following Taibbi’s Rolling Stone piece, first in the blogosphere and now with a growing number of what is commonly referred to as the mainstream media. It’s one thing to watch half-literate bloggers in desperate need of attention jump on the Goldman is the root of all evil story; it’s quite another to see respected news organizations with experienced reporters and presumably more experienced editors do it and in the process obscure the fact that Goldman, for all of its sins during the bubble years, was probably the least culpable for the system’s eventual collapse. And maybe more importantly, that Goldman and all the other banks are now overtly protected by the federal government and can still roll the dice and take risk only this time under the explicit protection of the American taxpayer.
All of which brings me back to Taibbi, who is usually a really good reporter, and a provocative storyteller. In addition to his Rolling Stone piece on Goldman, I watched his performance on WNYC. What’s interesting to me is (particularly after the WNYC appearance) is how much of what Taibbi is stating as fact or suggesting is probably true, is actually wrong.

As they say, read the whole thing.

Guess What Investment Class Is Up 10-Fold in the Past Five Years?
Posted by Eddy Elfenbein on August 3rd, 2009 at 9:04 am

Old movie posters.

When actor Nicholas Cage auctioned a rare Dracula poster in April, Ralph DeLuca knew he would outbid whomever dared raise their auction paddles against him in an effort to capture a piece of movie history.
The 1931 poster, one of only three remaining from the movie’s original run, sold for a stunning $310,700 (U.S.). Mr. DeLuca, who lives in New Jersey, insists that he landed himself a dependable investment.
“I got out of investment banking a couple of years ago and started investing in posters,” he says. “The prices keep going up for the really rare things, and I’d rather put my money in something tangible than in stocks.”
Mr. Cage likely agrees – he bought the poster 10 years ago for $77,000. His 303-per-cent gain easily outpaced the minus-10-per-cent total return he would have earned on the S&P 500 over the same time period. British insurance broker Stackhouse Poland said posters have multiplied in value by up to 10 times over the past five years.

More U.S. Banks Put on Probation
Posted by Eddy Elfenbein on July 31st, 2009 at 12:21 pm

From Reuters:

U.S. federal regulators have raised the number of struggling banks which they have essentially put on probation, forcing them to fix their problems to avoid potential failures, the Wall Street Journal said.
Citing data obtained under the Freedom of Information Act requests, the paper said The Office of the Comptroller of the Currency (OCC), along with the Federal Reserve, have issued more memorandums of understanding so far this year than in all of 2008.
At the current rate of at least 285, the Fed, OCC and Federal Deposit Insurance Corp are in line to issue nearly 600 of these secret agreements this year, the paper said, compared with last year when 399 such agreements were issued.

So that’s secret probation, but what about double-secret probation?

The Government Revises GDP Growth for the last 70 Years
Posted by Eddy Elfenbein on July 31st, 2009 at 11:16 am

Congratulations, we all just got wealthier today! Or I should say that according to the government, we got wealthier—not only today, but in the past as well.
The Commerce Department released its second-quarter GDP report this report and along with it, they revised ALL the GDP numbers going back to 1929.

Today, BEA is releasing revised statistics of gross domestic product (GDP) and other national income and product accounts (NIPAs) series from 1929 through the first quarter of 2009. Comprehensive revisions, which are carried out about every 5 years, are an important part of BEA’s regular process for improving and modernizing its accounts to keep pace with the ever-changing U.S. economy.

Paging Mr. Orwell, to the yellow courtesy phone.
These weren’t small changes either. Here’s a look at the old and new quarterly series which begins in 1947 (in trillions of dollars chained at 2000 prices):

Be sure to tell your grandparents that things weren’t as rough as we thought back in the day. Here’s a look at the percentage difference between the old and new series:

Here are the recent old and new quarterly growth numbers. There are some significant changes. For example, the fourth quarter of 2007 was -0.17%, now it’s positive 2.12%. According to NBER, the recession began in December 2007.

The first quarter of 2008 used to be positive 0.87%, now it’s -0.73%. Growth for the second quarter of 2008 was nearly cut in half. The contraction for the third quarter of 2008 was more than five times worse than originally thought!
Going back a few years, the third quarter of 2000 was originally -0.46% but now it’s positive 0.33% (that’s a Clinton quarter not a Bush quarter for all you political folks). This is important because journalists often refer to a recession as back-to-back quarters of negative economic growth. It’s technically not, although a NBER recession usually corresponds with back-to-back quarters of negative growth. Well, in 2000, it never happened. According to the old series, we had negative growth in three of five quarters. Now it was just two out of three quarters.
If anyone needs me, I’ll be in East Germany updating some crop reports.