Month: March 2008

Good to Great in Montana and (Some) Other States

Just a quick chart on U.S. real housing affordability: Poor on the coasts, better inland. For more on that, see this article and this page of my Ennis, Montana website.

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Kiss Off MOS (Mosaic Company)

After kicking around a few interesting emails from a portfolio-manager friend in London, I went negative on Mosaic Company (MOS). Here’s why (note, this was longer, but my computer just crashed so we’re doing the cliff-note version):


Futurist Ray Kurzweil Pulls Out All the Stops (and Pills) to Live to Witness the Singularity

Ray Kurzweil is an interesting guy and certainly his thoughts on an exponential rate of technological advancement are relevant to everyone from West Bum Fuck Texas to West End London and everywhere in between. It’s one reason why people are constantly underestimating the rate at which advances are made (they are estimating linear growth when exponential applies). Here’s his book on Amazon: The Singularity Is Near: When Humans Transcend Biology. Now on to the articles (two of them):

Med-Tech : Drugs RSS
Futurist Ray Kurzweil Pulls Out All the Stops (and Pills) to Live to Witness the Singularity
By Gary Wolf Email 03.24.08 | 6:00 PM
Photo: Rennio Maifredi

Ray Kurzweil, the famous inventor, is trim, balding, and not very tall. With his perfect posture and narrow black glasses, he would look at home in an old documentary about Cape Canaveral, but his mission is bolder than any mere voyage into space. He is attempting to travel across a frontier in time, to pass through the border between our era and a future so different as to be unrecognizable. He calls this border the singularity. Kurzweil is 60, but he intends to be no more than 40 when the singularity arrives.

Kurzweil’s notion of a singularity is taken from cosmology, in which it signifies a border in spacetime beyond which normal rules of measurement do not apply (the edge of a black hole, for example). The word was first used to describe a crucial moment in the evolution of humanity by the great mathematician John von Neumann. One day in the 1950s, while talking with his colleague Stanislaw Ulam, von Neumann began discussing the ever-accelerating pace of technological change, which, he said, “gives the appearance of approaching some essential singularity in the history of the race beyond which human affairs as we know them could not continue.”


Did the Fed Create the Mother of All Moral Hazards?

Sure sounds like it here:

The Fed and Treasury created the mother of all moral hazards by the way they resolved the Bear collapse: they did not fully wipe out the Bear shareholders; they did not fire any of the senior management; they bailed out the creditors of an insolvent Bear; they subsidized heavily JPMorgan’s purchase of Bear; they provided a $30 billon lifeline that subsidizes Bear shareholders and management, Bear creditors and JPMorgan; and they provided – for the first time since the Great Depression – a new massive lender of last resort support to all non-bank primary dealers in the form of two new lending facilities (the TSLF and the PDCF).

Should Securities Firms be Regulated and Supervised like Banks?
Nouriel Roubini | Mar 23, 2008

The events of the last few weeks – including the collapse of Bear Stearns and of other highly leveraged, illiquid and insolvent institutions that are members of the shadow financial system – have shown that non bank financial institutions are at risk of liquidity runs in the same way as banks are. The response of the Fed to this bank-like runs on non-bank institutions has been the most radical change in monetary policy and lender of last resort support by the Fed since the Great Depression


How to Get Wall Street Journal Articles Free (and legal!)

March 21, 2008
The Wall Street Journal’s Web site is already (secretly) free

Late in January, Rupert Murdoch put an end to speculation that he would set free the Wall Street Journal’s subscription-only Web site.

While he planned to “expand” the site’s free offerings, “the really special things will still be a subscription service, and, sorry to tell you, probably more expensive,” the News Corp. head told a crowd in Davos, Switzerland. The pay wall, in other words, would stay up.

But Murdoch, quel surprise, wasn’t telling the whole truth: The Wall Street Journal’s Web site already is free. Every article that the paper publishes is available to anyone, for no money at all.


Once-in-a-Blue-Moon Bargains?

Those fund flows I bolded in the second paragraph are what prime the pump. Did the technicals trigger last week, is the question. That question will be settled soon. Will there be a follow-through day this week, or will the rally fail. We are certainly due for a bear market rally soon. And there’s been a few false starts already. So we will see. Now on to the article!

March 20, 2008
Once-in-a-Blue-Moon Bargains

by Aaron Pressman

Whether it’s Peter Lynch loading up on Chrysler in 1982, Wilbur Ross buying steel mills in 2002, or Warren Buffett opening a bond-insurance unit in February, great investors have a habit of rushing in where others fear to tread. And with ugly subprime surprises cropping up everywhere from Bear Stearns (BSC) to American International Group (AIG), there’s plenty of fear in the markets right now.

That’s prompting investors to head for the exits. So far this year they’ve pulled $75 billion from mutual funds that invest in U.S. stocks, including $9 billion in just the past two weeks, according to TrimTabs Investment Research.


Would You Believe ONE Bank Has $92 Trillion in Credit Exposure and 416x Leverage?

It’s true.

According to the following Comptroller of the Currency report (you can download it below), JPMorgan Chase has $91.7 trillion of total derivatives on $1.2 billion of equity, for a ratio of 416x.

Now, I’m no expert, but this sounds just a titty bit excessive. I don’t think I’m going out on a limb when I say we are well passed critical mass. At this point, it sounds like one of those mountains of sand Mark Buchanan talks about in his book Ubiquity: Why Catastrophes Happen.

Talk about the ultimate Butterfly Effect! This thing is primed and ready. I mean, if anyone even blinks in this Mexican standoff, let alone a major counterparty fails, it’s going to come down faster than Paris Hilton’s panties on a Saturday night. Shit, at this point, something as mundane as a mouse farting in the maid’s room at some hedge fund manager’s leafy estate in Greenwich, Connecticut could trigger the “event.”