Mark to Market

In the coming days you might hear about something called "Mark to Market" accounting. This is something that came out of Enron inspired reforms. Companies like Enron would buy an asset, say for $10 billion dollars, then if the asset lost value and became worth, say, only $4 billion dollars, the company would not put the new low value on the books. So, companies like Enron could claim to be worth more than they actually were. Mark to Market was a rule that companies had to relist any assets at their market price if they went down in value. Well, if you are a bank and you suddenly have subprime mortgages that are worth next to nothing, the value of your assets shrinks dramatically and you have to list that on the books, regardless of the fact that you have no intention of selling the mortgages until they recover some value.

A lot of people, particularly from the right of the political spectrum are pushing for this to be modified and you might hear about it in the coming days. Simsisms urges you to do your own research and form your own opinion as to whether this is a good idea or not. Wikipedia has an article on the subject, which can be viewed here.

Many of you know that I love Dave Ramsey, in spite of his many attempts to put me out of business. He is putting forth a solution to the financial crisis that has some interesting ideas. I do not endorse or condemn it; I merely find it interesting. Again, I urge people to do their own research and draw their own conclusions. His plan may be found here.

If that plan appeals to you, there are instructions on daveramsey.com on how you can send that proposal to your congressperson. However, I think it is pretty clear from the past 2 years that your congress person hates you and would probably love nothing more than to poke safety pins into your eye sockets just to try and cause you a little more pain. I'd like to take this time to remind you that you should vote against any incumbent in the fall congressional election as NONE of them, republican or democrat, particularly deserves your vote. If you scored a 10% approval rating on your last performance evaluation, you'd lose your job. They should too.

By the way, the congressional website was apparently so inundated with visitors that it crashed earlier today. It would appear that people have a lot to say about the bailout.

In the "what the (expletive) were they thinking" category, it's suddenly come to light that the moderator of the upcoming VP debates has a decidedly Pro-Obama book coming out in January. This apparently struck no one in the debate organizing world as a conflict of interest. If it strikes YOU as a conflict of interest and you would like to tell the people in charge of the debates, you may do so at (202)-872-1020. Feel free to ring them up and call shenanigans on this.

That's the rundown on the latest. More as things develop.

Verdict on Recent Events

You know the drill. Here's the Simsisms take on recent events.

#1 Obama's performance in the presidential debate.




If I hear one more person talk about how Obama sounded more presidential than McCain I'm going to pop my eardrums a rusty nail. Who cares how a candidate sounds; it's what he says that's important. Time and time again Obama has demonstrated that he is not yet qualified to run the country. He's a great speaker, but what he says is ALL WRONG. He labelled the current financial bust the "Worst financial Crisis since the depression" and has done nothing to stop it. In fact, unless McCain had gone back to Washington, Obama would have stayed out on the campaign trail and would have had no part in the world's the government's lame attempt at a solution (verdict on that later). Exactly what has Obama ever led the way on? We can point to numerous instances of leadersip by his opponent, but none by Obama. Exactly what concrete success has he ever had? I love the fact that he speaks with energy and nice soothing tones, but to me, in order to "sound presidential," a person has to know what they are talking about, not just sound like they do.

P.S. In the presidential race, threatening to invade Pakistan should be an instant disqualification.

Verdict:




Try actually leading something, then come back and talk to us.

#2 McCain's Debate Performance



Look, McCain is not the most dynamic speaker, but I'm inclined to cut him a lot of slack since he is 105 years old and he spent 5 years in a POW camp eating torture for breakfast and pain for diner, washing it down with a huge heaping glass of severe beating.

By the way, anyone who seriously believes John McCain is a George W. Bush clone should have to forfeit the right to vote out of ignorance. George W. Bush is a Neoconservative Evangelical Christian. John McCain is a Pragmatic Moderate who doesn't really care about religion. This whole "John McCain voted with Bush 95% of the time last year" thing needs to end. One, the President doesn't vote. He supports a handful of legislation during the year. Last year, what major issues were there? Iraq and...uh...oh yeah, Iraq. In fact, I don't think Bush really cares about anything else. John McCain and Bush get along because of political convenience, but their relationship ends there. McCain has opposed the Bush administration on a number of things. In fact, he's opposed his party on a number of things. When was the last time Barrack Obama stood against his party? McCain was able to broker a bipartisan truce to end the fillibuster of political appointees, and pass campaign finance reform. What bipartisan success did Obama ever have? McCain has made a career out of standing up for his beliefs, no matter what the cost. Doesn't that sound like the type of person who should be at the helm during a crisis?

I know, I know, he's really old, he could die at any moment. He had skin cancer 8 years ago. Guess what, Obama chain smokes. Biden isn't exactly a spring chicken. By the way, compare the remarks of Joe Biden and John McCain, and then tell me which one of them sounds the most senile. Hint: McCain is not the one who said that when the Depression hit, FDR instantly got on the TELEVISION to rally the country. Yes, that's right, Television in the 1930's. Ladies and gentleman, the man a heart beat away from the presidency, JOE BIDEN!

So, McCain may have seemed old and wooden during his remarks, but the words coming out of his mouth had the benefit of being RIGHT!

Verdict:



Unless you can cite actual positions that Barrack Obama holds and why you support them, then you should vote for the guy who actually knows what he's doing.

#3 The Bailout



The bailout encompasses so many things. First, the Fannie and Freddy takeover, then the other bailouts, possibly a loan to the FDIC, and on it goes as the economy slides down the increasingly slippery slope of failure. We've had our artists come up with a graphic representation of the U.S. economy:



No one seems particularly happy about the bailout. The only positive thing people seem to be saying is that it might have prevented a total meltdown. Some are saying that we have pushed the government further into the market than it was probably ever intended to go and we may never be able to get the government out of the markets it just got into.

But wait, how do we know we've prevented a total meltdown? Haven't we been trying to stop stock market crashes since the 1930's only to find that the market will find a way to correct itself? The are billions of dollars in mortgages that are simply not worth what they once were, and are not going to recover their value for years. That hasn't changed. All these bailouts do is take a problem and nationalize it. Instead of being a problem for 20 million people, now it's a problem for 300 million people. All the money we borrowed to bail these people out has to be paid back. Now, it has to be paid back by the nation as a whole, a nation which already owes trillions of dollars already.

Now, I know some people think that the government might actually be able to hold onto these mortgages long enouh that it will recoup some of the value and even turn a profit. Frankly, I don't see how a government that can barely deliver the mail will manage to turn a profit on a dead housing industry. Bear in mind that this is the same government that could not get water to the superdome after a hurricane. That's who we are supposed to put our trust in.

The fact is, I'm convinced that no one can prevent our economy from crashing. We are a society that lives so far beyond its means that it has forgotten how to live without credit. Financial ruin is ALWAYS the end result of consistently living in debt, and that is what our nation does. Our people live off credit cards so they can buy expensive toys that rot and decay. The government uses credit to fund expansive social programs to pander to voters and to make us feel like we are a caring and enlightened people. We have raised a generation of constituents who have never heard the word "NO" from the government. Unless we change our mindset, unless we become a people and a nation willing to sacrifice and save, then we are destined for a collapse and every dollar that we spend makes the coming crash that much worse.

Verdict:



Sooner or later, it will fall.

#4 The Price of Gas



I've written before that I think gas should cost $4.00 a gallon. All of the negative externalities associate with burning gasoline should make it far more expensive then it has been. That said, how has the price of oil dropped 33% and the price of gas has only dropped by half that percentage? Why isn't there more outrage about this? How much does the Chevy Volt retail for?

Verdict:




Don't expect any favors from the Oil Companies.

#5 Short Sellers

Anyone with a basic grasp of the market, or who has watched 30 seconds of Mad Money with Jim Cramer recently, knows that short selling has pretty much been killing the market. Enough that they have actually had to ban short selling for a while. If you don't know what short selling is, then (a) please don't vote; and (b) go to this link for a brief explanation. Here's the wiki for more info.

The thing is, what has allowed a lot of these short selling damages has been the removal of the uptick rule. The basic premise is that every short sale transaction be entered at a price that is higher than the price of the previous trade. This prevents shorting during a selloff. This rule was instituted after shorting helped destroy the market back in the great depression. The Chairman of the SEC, Chris Cox, decided that this rule was no longer necessary and lifted the uptick rule last year. Incidentally, John McCain called for Chris Cox to be fired last week. We couldn't find a stock photo of Chris Cox, but we're pretty sure this is what he looks like:



The results of lifting the uptick rule have been disasterous, particularly in an already volatile market. One reason why the selloffs have been so big lately is that short sellers have been driving down the price of stock to make a buck. In the end, a lot of innocent companies are being targeted by short sellers who then turn them into the stock market equivalent of Marsellus Wallace in the Gimp scene from Pulp Fiction. Enough is enough; time to bring back the uptick rule.

Verdict:



Stop the Madness!

Economy Links

Links on economic doom.

1) It all comes back to greed. From Freakonomics.com

2) Why Secretary Paulson is wrong. From University of Chicago

3) Mark Cuban's plea for both candidates to revoke their economic plans in the wake of the recent buyouts. Agreeing with my position that Tax Cuts now become a virtual impossiblity

4) Diamond and Kahyap on the financial upheaval. From Freakonomics last week

5) Naked Capitalism, why you should hate the bailout.

6) Obama lied about how Social Security recipients would have lost everything under privitization. From factcheck.org.

7) Obama was NOT the 4th largest recipient of donations from Fannie Mae and Freddie Mac. That's a dirty political lie. Obama was the SECOND largest recipient of donations from Fannie Mae and Freddie Mac. From factcheck.org

Remember: In this year's national elections, vote against the incumbent.

Regime Change

I've thought a lot about the recent government takeovers, financial crisis, gas problems, etc. I'm not sure where I stand on a lot of things. I support high gas prices, but the rest of it, I just don't know how I feel yet. I do know that things should never have gotten this bad. I also know that it is not just the democrats who are at fault, or the republicans who are to blame. It's not one party's fault; it's everyone's fault. As far as national politicians go, they ALL failed us.

That is why I have come up with a radical solution. This fall when you vote in national elections, don't vote along party lines. Vote against the incumbent. Every single member of congress should lose his or her job. They should all be replaced. Let's finally hold people accountable, let's throw them all out. Let's have real change, let's get rid of everyone.

UDOT MEETING

Special Post for all of my Utah Bretheren. UDOT is having an open house in the Provo/Orem area, Thursday, September 18. They are soliciting feedback about which roads need to be more friendly to bike riders.

More info may be obtained at bikeutahvalley.org, one of my favorite, and oft pimped for sites.

Happy Birthday Danny!

There's about a million things I want to blog about. Lehman brothers, Merrill Lynch, Bankruptcy, England, etc. But, today, we pause and recognize a truly momentous and important occasion.

HAPPY BIRTHDAY LITTLE DANNY!!!

I didn't have time to compose a poem for you, but I did find this great birthday song and I think it expresses everything quite well. So here's to you little buddy.

Palin and Clinton

Hilarious!

Should we raise the price of water?

Second part of this weeks series on the economics of water. Explains why we have a shortage of water, which falls from the sky, and no shortage of oil, which we have to drill for.

Click HERE to go to the article.

Clean Water

I know that the radical shift in tone from each blog post must throw some of you, but I can't help it. The reason this happens is possibly because I'm a person of such radically diverse interests. Unfortunately, this means that 2 out of every 3 posts are meant to be ironic, with the remainder actually having some serious or relevant point.

This post is one of those serious/relevant point things. I like to stay informed on the world and when I catch something interesting or informative I like to pass it on. I found a great article on freakonomics (one of my favorite sites) on economics of clean water. I found it a great, informative read on a very basic problem and I strongly encourage everyone to check it out.

Article is called Potability, Politics, and Pipes By David Zetland

Please read and encourage others to read, and also discuss the article and the issues it talks about at your water cooler.

From the Sports Guys Mailbag

Too good not to share.

Q: MEMO

From: Satan
To: Tom Brady
Subject: Re: Our Deal

I've fulfilled my end of the deal. Now, your soul is mine. Can you please notify Belichick that I will be collecting him and his video tapes in the coming weeks once I finish with Archie Manning and sons?
-- Kevin, San Diego

You can read the rest of Bill Simmons Mailbag here.

Open Letter to the Miami Dolphins

Dear Miami Dolphins,

Football season is under way and I wanted to take a moment to reflect with you on last season. Greatness was within your grasp, and you blew it. You kept yourself out of the history books. You could ave gone 0 and 16, completely winless, and you tanked. You showed up, and for no reason at all, decided to actually try hard. And you know what, it blew up in your faces, didn't it. You won that game and your spot in the history books vanished. Millions of your loyal supporters, mediocre cynics like myself who simply wanted to see a new level of terrible achieved went away empty-handed.

Now, I'm here to urge you this year to try again. I know what you're thinking, last year was the year. If you couldn't go winless with a team that bad, it just isn't meant to be. Well, I think that's nonsense. Miami Dolphins, I know you have it in you to not have it in you. I know that you can succeed at failure. I know that with a lot of misspent effort and blown off practice, the 2008-2009 season can be the worst season ever! You can show up to the field and phone it in, I know you can, you've done it before. Bill Parcels is over the hill and gaining speed, you don't need to listen to him. Have you seen the man wear shorts? He should have zero credibility based on that alone.

I know, you think you have to score every football game. There's something in you that says you can't help but try hard. But, I watched you today. I watched you struggle against the New York Jets. I'm telling you, that if you can lose to a team as dreadful as the Jets, you can lose to anybody. More importantly, you can lose to everybody. It's the Jets! They were led to victory by Brett Favre's reanimated corpse! He's so old he mixes his gatorade with metamucil and unicorn blood at half time just to keep going.

Believe, Miami Dolphins, Believe. Believe in miraculous disasters. Believe in disappointments. Believe in Epic Failure. I know you can do this.

I believe in you.

Brad