Welcome back to The Investor's Coroner, an attempt to make both sense and fun of the current global markets and inform you of the happenings in the international marketplace while simultaneously cracking half-hearted jokes about the future of America (hint: It's in China).
It is a goal of the Investor's Coroner to make you laugh, help you learn and just generally make the knowledge rain on the stripper stage that is your consciousness.
Accountability Fucking Blows
You might have noticed that America is broke. That does not keep it from spending money, however. Nothing can keep a government that creates money out of thin air from spending money. Think about it. I mean, if you could create random hot members of the opposite sex out of thin air, would you ever stop? Man, my harem would have a harem.
So anyway, that's a problem. Not the harem thing. The money thing.
But first, a quick history of what the fuck went wrong.
Banks offered loans to people that didn't deserve them because the government told the banks that if they didn't find a way for poor people to get houses they couldn't afford, the government would fine the banks for being in violation of something called the Community Reinvestment Act. Bad loans were made. They were not repaid. No one lender, no one in the banking industry and no one in government was held accountable.
Banks and brokerage firms then sold their bad loans to Fannie Mae, Freddie Mac and other lending institutions, which then reinvented the words "tranche" and "bundle' and sold the "guaranteed" loans off as securities for investment purposes. As long as people paid their loans on time and housing values kept increasing, everything would be fine.
Housing values dropped and people stopped paying their loans. Things were pretty fucking far from fine. Fannie Mae and Freddie Mac were not held accountable.
After the loans were bundled into something called Collateral Debt Obligations (CDOs), these "securities" were then rated by companies like Moody's and AM Best which get paid (by the companies that are being rated, incidentally) to value securities for risk elements. All of these rating companies concluded that all of these CDOs were as safe as Treasury Bills. The CDOs currently trade at roughly 1/90th of their value. As of yet, not one rating agency has been held accountable.
The resulting fallout has been wicked scary. Banks are unwilling to lend. Thanks to the hyped up inflation due to the printing of money out of nothing and a political climate that encourages property foreclosures, banks no longer have a reason to lend money. They don't trust the government because the government got them into this mess. They don't trust the loan seekers because citizens are broke and unwilling to pay back. And they don't trust the market because they're sitting on top of roughly three million foreclosures and need to clean house before they buy a new coffee table, so to speak (or whatever).
In short, the banks have no incentive to pay because the American people have no incentive to pay back and even if the American loan taker outer does pay back, thanks to the printing of roughly a trillion bucks in the last two months, the money paid back to the banks will be seriously devalued in relationship to the money paid out unless interest rates are allowed to get jacked up (because inflation is currently more than double the prime rate). To dumb this down even further, the banks are not willing to pay ten bucks to a guy so that he can pay them back nine dollars a year later especially when said guy has almost no incentive to pay.
And so we got a new president. And so he decided that the best way to get America out of this mess was to pack every requested government construction project, pet project, pork project and projectile vomit into one thousand page document that no one read, all with the hopes that the American government can replace the banks and loan money to businesses to stimulate the economy. Naturally, there is no incentive to pay this money back so it won't be paid back.
As is the new American Way, no one has been or will be held accountable.
Depression or Recession? Semantics or Technical Jargon?
Some people say we're in a recession. Others say we're in a depression. Still some say that we're all figments of the imagination of a demented butler plotting to kill his master. No one can say for sure and the thing is, it doesn't matter.
If you go by the unemployment definition, we are nowhere near a depression. Unemployment sucks right now, but it's no worse than in certain parts of the ‘70s, a decade that pretty much sucked but was recessed and not depressed.
If you go by the GDP definition, we are definitely in a depression. My advice: don't go by the GDP definition. It will only make you feel worse.
No matter how you look at it, labels do not offer a solution. Fighting over whether we're in a depression or a recession is like arguing about what to call the hole in the boat as it sinks. Anyone who cares is obviously not all that worried and has enough money so fuck ‘em and fuck the name game while we're at it.
Nothing Lasts Forever: The Auto Industry and You
As I'm sure you're aware, American auto makers are begging for money like little bitch bums. And they're getting it because… they overpay people? No, that's not it. They're getting it because… they have to honor pensions that drive up the prices of their lousy cars? No, that's not it, either. They're getting billions of dollars because… fuck I don't know. Does it matter? Hopefully, they'll pay it all back. On a related note, I hope the dude who stole my skateboard in St. Louis twenty years ago will return it to me here in Tampa. A man can dream.
Profit from Poverty: Your Guide to the Future
Companies posting the biggest gains on the stock market in the last few weeks are companies that cater to the poor and cheap. Wal-Mart, Metro PCS, Dollar Tree, McDonalds and a few others are staying afloat simply because they are the only providers that people can fucking afford. Who says there's nothing positive in the business section these days?
Fuck Your Cancer: Get to Work
Apple, Inc shareholders expressed distress over the release of medical information regarding CEO Steve Jobs, who just beat pancreatic cancer, announced that he would still run Apple, then took a leave of absence a week later due to complications resulting from cancer medication. When asked when he would be back to work, Jobs replied, "Fuck you asshole. I have cancer."
Can't say I blame him.
CitiGroup will Not Rest Until You Own It
CitiGroup asked for the GDP of Zaire (25 billion dollars) from the American government, which gave it like 50 billion just a month ago. In exchange for this, the American government now owns 36% of CitiGroup's worthless stock, which it plans on selling after it gives CitiGroup enough money so that the stock is worth something again. After it sells the stock at a profit, the American Government will then use those profits to give CitiGroup some more money so that it's stock will go up again. Really, this is a great system. Really.
My Personal Plan
If I may veer from the Coroner's template for a moment and throw out a little personal something about me, I feel obligated to let you know I have a plan. I am borrowing as much money as I can, not paying any of it back, not filing for bankruptcy, not taking any responsibility, and then I will ask the government for money, which it will print out of nothing and give to me so that I can afford to go to a bank and take out another loan that I won't pay back all in the name of stimulating the economy.
What can I say? We learn from our leaders.
New Innovations Not as Cool as Cash Reserves
Some restaurants, like the Tierra Sana in Queens, are offering weekly specials whereby diners can choose how much they pay. Somehow, I see this ending badly.
Florida's Fish and Wildlife commission is tacking magnets on crocodiles to keep them out of recently built neighborhoods. Apparently, this worked in Mexico, and if anything works in Mexico, it eventually works here.
Your Motivational Investment Quote of the Week
"You've got to be original, because if you're like someone else, what do they need you for?"
–Bernadette Peters