Category Archives: economics

Greatest. Theory. Ever.

John Bott, the bond guy on KSEV here in Houston, just advanced the greatest.  theory.  ever.

Iceland gets tired of having to make amends for its bizarre failed adventure in being the financial hub of Europe.  The IMF declines to bail Iceland out.  The EC declines to bail Iceland out.

Left with no options, Iceland adopts the gold standard.

This move immediately has the same effect on other countries’ currencies as an approaching tidal wave has on a group of secretive skinny-dipping bathers:  the water retreats, and reveals who is swimming naked.

Sadly, EVERYONE is swimming naked.

Now, the IMF is BEGGING Iceland to reconsider, and is offering copious loans, if only they will renounce the gold standard.

Sportsfans, that’s how fragile this situation is.  If the Austin Powers movies were real life, and Dr. Evil was defrosted tomorrow, surely his henchmen would urge him to buy control of some obscure nation, and threaten to put that nation’s currency on the gold standard, unless the world’s big powers paid him one MILLLION dollars.

[cue embarrassed cough from henchmen]

Pitchforks and Torches

Wow, did you see the surge in the yield of the 10 year Treasury note yesterday??  It closed about 3.7%.  Traders are calling “bullshit” on the FedGov’s redhot dollar printing press.  You can order the tide to go out all day long.  The tide doesn’t care, the tide is oblivious to your desires.

The ChiComs are worried sick about the brazen devaluation we’re conducting, but they are in a trap of their own making.  If they start dumping the debt, they will set off a landslide, and crush the value of their own position.  If they even pull back in their buying of US debt, they damage the value of their holdings.  As Donald Tramp says, when you owe the bank a million dollars and can’t pay, you have a problem.  When you owe the bank 100 billion dollars and can’t pay, the bank has a problem.

Obama increases CAFE standards ftw

Enrico applauds Obama for increasing the fedgov’s CAFE standards, governing the average miles per gallon consumed by fleets of cars sold in the US.

This is such a freakin’ OBVIOUS move that it is just criminal it has taken so long to make.  This is the first increase in 32 years, for all love.  Enrico kids you not.

The world totally ABOUNDS with techniques for increasing the fuel economy of internal combustion engines.   And, the world is CRAWLING with well-demonstrated, prototype-ready slight twists on ICEs which are much, much more efficient.   AND (Enrico wishes he had a bigger font), the world is completely infested with radically different personal transportation schemes which are insanely more efficient than ICEs.

So, why, O why, have these highly prolific engineering feats not swept the ICE into the dustbin of history?  Or at least, goosed it up to the point where it doesn’t simply gulp fuel?

Economics, my dear reader, economics.  The auto manufacturers pwn the nickels and dimes of making the ICE.  They make them on a vast scale.  They are insanely cheap to make.  They can’t afford the loss of market share and profits that would arise from introducing costs others don’t have, even if those costs greatly increase fuel efficiency.

One of Enrico’s portfolio companies has a well-demonstrated technology which would increase the fuel efficiency of diesel engines by at least 10%, at a scaled-up cost of approximately $300 incremental per engine.  Enrico thought, when he invested in this company, that his proposition would be a no brainer for engine manufacturers to snap up.  He was sadly naive.

Enrico personally visited Caterpillar, and personally explained the economics and the fuel efficiency savings to very senior, experienced, wise engineers at the company.  The engineers totally agreed with the findings, and actually thought the fuel efficiency results would be even better than Enrico claimed.  But they also demonstrated to Enrico’s complete satisfaction that it was a non-starter in the marketplace.  Too much incremental cost.   $300.

There are probably thousands of stories like this.

The car manufacturers need the assurance that everyone else will be forced to introduce these miniscule additional costs in order to be able to sleep at night.

The only possible criticism of Obama is that he didn’t go far enough.  There’s no reason why cars can’t get 50 mpg on average, even sticking with the ICE.  But Enrico won’t criticize, nope, he sure won’t.

Let’s all decide we’re not going to buy oil from our enemies, ever again.

Ken Langone bitchslaps Whoremonger Eliot Spitzer

Ken Langone, the founder of Home Depot, is on CNBC right now delivering a richly deserved bitchslapping to the whoremonger Eliot Spitzer.

Spitzer went after Hank Greenberg and Dick Grasso for purely political reasons, because they were big, visible power brokers, and because Eliot Spitzer, who is about as evil a dude as has ever graced a podium, believed that knocking off giants would enhance his career.

One only has to look at where AIG has gone since Hank Greenberg was chased out to see that Hank was doing a magnificent job.   The impoverished shareholders of AIG ought to be allowed to take an ounce of flesh nearest Spitzer’s heart (if he has one).

Dick Grasso did nothing wrong.  He, and the NYSE, won in court.  Apparently, the whoremonger was on CNBC recently to claim that Grasso got off on a technicality.  Really, whoremonger, hows stupid do you think we are?

Ken Langone was on the NYSE’s compensation committee, and he was notably outraged by the whoremonger’s baseless charges.  “Baseless,” that’s how the New York appeals court described the whoremonger’s allegations.

The gall of the man, to show his face in public, to even talk about running for office, is staggering.

Told ya

The Chicoms are buying the crap out of gold.  Enrico remains uncertain that gold or any metal will turn out to be the commodity into which a major nation makes its currency convertible, but he is more certain than ever that one of the major economies will take the step of currency convertibility to a tangible asset within the next decade.  Enrico supposes that China is also uncertain about the selection of a commodity or commodities, but in the business of hedging one’s bets, how could one ignore the most popular value storage commodity of choice in human history?

What will happen when the first major economy takes this step?  Enrico sees two possibilities, possibly not exclusive:  war, and a domino effect of other major economies following suit.

These idiots are making me THIRSTY

Back when Enrico was working for a certain legendary IT consultancy, he heard a story from a colleague about the time he was assigned to herd cats in the quant shop of an investment bank peopled exclusively with PhD computer / exotic math wizards.  My colleague, Chuck, gave his introductory spiel to the PhDs in which he briefly outlined what he understood to be the mission, obstacles and resources of the group, and the course of action he proposed to herd them towards.

After he finished, there was a crashing silence.  Then, after a few minutes, one of the PhDs raised his hand.  Chuck gaily called upon him.  The PhD said “I’m trying to decide if you’re a liar or just an idiot.”

Enrico often these days finds himself in the same dilemma.  I think there’s a typo in my heading for this post:  these idots are making me ANGRY.

Tax cheat Tim Geithner is the idiot currently making me angry, with his proposal to auction off toxic assets in a manner which is GUARANTEED to cause maximum losses for the Treasury.  Enrico shakes his head in dispair, and grimly buys more commodities.

The Magic Negro steals General Motors

The Magic Negro has taken full control of General Motors.

Enrico has to say, he doesn’t understand this.  Enrico thought our nation had extensive legal provisions for the eventuality in which General Motors finds itself, and as far as he is aware, the legal code lacks any procedure legitimizing the Executive Branch of the Federal Government taking over a corporation.

Enrico is not a stockholder or a creditor of General Motors, but, if he were, he would be pondering legal action to challenge the Magic Negro’s blatantly illegal move.

Sportsfans, if the Magic Negro can take over General Motors, he can take over your house, or your car, or your farm.

What has happened to the rule of law?  The rule of law now is, the Magic Negro has the army, the air force and the navy, and you don’t.

Euro perishes, commodity-backed currencies gestating

Milton Friedman said in 1999 that the Euro would not survive the first economic crisis. It appears that he will be proved right, probably before the end of the 2009.  The stresses and strains which are variably affecting, say, Spain and Germany, increasingly make a single currency and all that goes with it an unbearable burden for both countries.  To understand this, think about the divergence between the economies of the American South and the industrial northeast during the period after the end of Reconstruction.  Think of the bone-crushing poverty in the American south in the early 1920s.  The economies of the regions had diverged, the burden of the US dollar made it nearly imposible for the South to get up off the canvas.

There will be civil unrest in Spain, possibly Italy, Portugal, and there is of course already civil unrest in eastern Europe.

Meanwhile, as the dollar is systematically destroyed by the power of the press, commodity-backed currencies are gestating.  Russia, China, and the UN are all pondering the roll-out of new currencies, which inevitably will be backed by something.   A single pinprick in the dam will unleash the torrent.  The UK had a failed debt auction earlier this week.  The crisis will come upon us seemingly all of a sudden.

Hell has definitely frozen over

Ok, sportsfan, here’s a completely novel scenario:  Enrico agrees with something the moronic idiot Paul Krugman wrote.  Enrico is going to have to decide whether Paul Krugman has accidently hit upon a sound notion, or whether Enrico has somehow been reduced to the intellectual level of a BAOJ columnist.

Yes, yes, I know, the market rallied big time today.  I’m selling it like a big dog.

Geithner’s plan is not going to work.  It is only delaying the inevitable.  Seize and liquidate, baby, that’s the way to go.  Take the medicine.

Capitalists of the world!  Do not do business with Tim Geithner, Chuckie Schumer and Barney Fag!  They want to play “tails I win, heads you lose.”  And they’ll be quite self-righteous whilst they’re watching a mob string your family up with piano wire.

Idiots in Congress

Tax Cheat Tim Geithner is expected to finally unveil a plan next week to auction off “toxic” assets bedeviling the balance sheets of financial institutions.

Meanwhile, Congress, particularly the notably corrupt Barney Fag and the even more notably corrupt Chuckie Rangel, have been doing their best to ensure that few will participate, and that the bids are as a low as possible.

The morons in Congress apparently don’t understand the contradiction between their efforts to restore the world’s credit system, and their efforts to use the country’s tax code to punish people working at these paralyzed institutions.

Who wants to be in a public-private partnership with a partner who is inclined to exhort the mob to strangle your family with piano wire?

There’s another shock coming, too.  Eric Holder, the Magic Negro’s Attorney General, is working 24/7 to figure out who to toss in the pokey.  Gee, I wonder how the people tax cheat Tim Geithner wants to bid on the mortgages will react when they have to start every morning perusing a list of their colleages who will be doing the perp walk that day?

Hey, RATSOCRATS!  Capital is mobile.  Slavery was abolished over a century ago.  Why can’t you idiots figure this out?

How come Congress isn’t voting to impose a 90% tax on the salaries of tax cheat Tim Geithner and Chris Dodd?  Actually, it should be imposed on everyone in Congress who didn’t read the bill that authorized the payments of the bonuses to AIG before voting on it.  I think that does actually include everyone in Congress.