{ Monthly Archives }
February 2009
- Investment - If you’re financially stable and have a few thousand disposable dollars, then you have to ask yourself, “Why aren’t I buying shares in gigantic, insolvent bank?” This may sound counter-intuitive, but it makes a lot of sense in the medium- to long-term. As of this writing, Bank of America stock is valued at $5.32, and Citigroup closed yesterday’s trading with a price of $2.46. Those prices are down from 52-week highs of $43.46 and $27.35, respectively. Obviously, these banks’ re-valuation hasn’t been the product of market caprice; there are reasons that the stocks have collapsed. Most notable among them is the widely accepted notion that, since the market value of these banks’ assets is less than that of their liabilities, the corporations — and, by extension, the stocks — are worthless. Ignore this trifle. In all likelihood, this fact will lead to some form of government receivership, either by way of common stock dilution or FDIC finagling. Such would be very bad news for short-term stock value, but somewhat immaterial to those planning to hold the stock for a few more years. Once the government is satisfied that the banks are stable, it will release them back into the wild, where markets would be expected to re-value them accordingly.
Let’s do the math. If you assume 5% annual inflation for the next 8 years and 20% off the top for broker’s fees and capital gains, then you break even if these stocks double in value by the 2017 inauguration. Had BoA stock made it to $13.94 by that point, you would’ve broken even with the prospect of placing that cash into a savings account paying 5% interest. If BoA hasn’t recovered to one-third of its pre-crisis price in 8 years, then your nominal loss will likely be low on anyone’s list of concerns.
Should you prefer, you can consider the prospect from a normative standpoint. The excrement is hitting the turbine. Your tax dollars — or the promise of your tax dollars — are being spent to keep these banks afloat and thus defer the threat of systemic financial risk. If you have cash on hand that you could be investing, then you’re also probably feeling more euthanistic than enthusiastic about the prospect of your other tax dollars being spent to keep irresponsible/victimized mortgage-holders in houses they shouldn’t have been sold in the first place. By investing in banks that the government will fortify forthwith, you can profit, personally, from the efforts of the collective. The flesh exists; you need only take your pound.
Update: Dilution of common stock has begun! By the time you read this post, Citi stock should be even more affordable than my estimates assert.
- Comeback - Say what you will about the new Republican Party; the Republican Governors Association is serious about staging a comeback. It’s so serious, in fact, that it’s posted a meaningless 74-word statement on that website. If you refresh a few times, you’ll see the alternate header images, one featuring Bobby Jindal and Tim Pawlenty buttressed by less prominent governors and another featuring Charlie Crist and Sarah Palin interspersed with their own pair of nameless white faces.
Of the 74 words, I would argue that not all of them are optimal. The “farm team” line may sound folksy to rural and exurban voters, but it also implies an level of skill insufficient for big league play. Also, the concept of “new ideas founded on conservative principles” borders on being contradictory. By definition, conservatism is backwards-looking, nostalgic, and opposed to newness.
- Advertising - Perhaps you, too, can recall reading spin from the good people at Kraft who view Asia as an antediluvian market waiting to be flooded with cheese. Needless to say, a functional combination of soy sauce and cheddar has yet to be discovered.
Similarly, the New York Times reports that Frito-Lay is attempting to increase their market share among women who snack. The strategy will include new packaging, new packaging, re-organizing store shelves, and even an animated website. Personally, the prospect of re-branding Smartfood leaves me feeling a little violated.
- Local - Local politics can be peculiar. In New York City, for instance, the cost of living is high enough to earn the Rent is Too Damn High Party (RTDH) support enough for a position on the ballot. Moreover, while New York is one of the few states that allows independent parties to piggyback on the strength of more prominent parties’ candidates by way of fusion voting, RTDH runs, instead, its founder, Jimmy McMillan, a.k.a. “Papa Smurf”.
More unique but less amusing is the position of the District of Columbia, governmental control of which has been split between local government and the U.S. Congress, in which D.C. has no voting representative. Although heralded spokesperson Eleanor Holmes Norton has a seat in congress, its non-voting status cements her role as do-nothing-congressperson-in-chief. Yesterday, however, the U.S. Senate made way for a vote to be held on a bill providing D.C. with an actual vote in the House of Representatives. The Washington Post discusses the bill’s constitutionality here, and Time provides a concise history of D.C.’s voting status here. Congresswoman Norton’s enfranchisement of lack thereof notwithstanding, you have to appreciate the chutzpah displayed by whichever District apparatchik made “Taxation Without Representation” the locality’s default license plate motto.
- Bernanke - No matter how many words the Wall Street Journal managed to milk out of Fed Chairman Ben Bernanke’s testimony before the House Financial Services Committee over the last two days, anyone watching it had to admire the man’s capacity to suffer fools. Had it not been for the dry witticisms offered between questions by Chairman Barney Frank, such as “and as you work out the details of this marriage with Treasury, keep in mind that my colleague, like me, is from Massachusetts, and we give you more leeway in doing marriages than some other places…[recognizes] the gentleman from North Carolina” then the proceedings would’ve consisted solely of redundancy and hand-holding. If only Larry Summers had been there, he might have reminded the committee that there are no stupid questions, only stupid people who ask questions.
- Commentary - Yesterday, longtime brother and sometime reader Miles Kafka commented that the Animaniac-worthy intonation of Jindal’s response to Obama’s address was uncharacteristic of the man. This is true. As recently as this past Sunday, Jindal spoke like a regular human being on Meet the Press. On that occasion, Charlie Crist was the one looking distractingly like a Muppet.
Also, recently-acquired sister-in-law and “well-educated foreigners [sic] that Obama warned us about” Mina Seetharaman noted that my comparison between Michael Phelps and Joey “Jaws” Chestnut came off as being unnecessarily disparaging to the swimmer. Such was not the comment’s intent. I merely intended to wittily remark on the arbitrary nature of prevailing opinion whilst simultaneously furthering the spectacular (literally) cause of competitive eating.
- Video - Thanks to the nerd girls at The Park Bench for bringing this video clip to my attention. Whimsically, it is apropos nothing here.
- Address - In preparing for the president’s address to Congress, which is not technically a State of the Union address, I gather, due to the brevity of his presidency, to this point, I’m reminded of two things.
The first is the State of the Union address from 2003, I think, to which much levity was brought by virtue of the rum my roommate at the time had brought back from a sojourn in Cuba and his insistence that we drink “every time Bush says something stupid and every time they pause for applause.” It probably goes without saying that little of the actual speech was committed to memory. The next morning, there were bite marks on two of my fingers.
The second is the notion that, having taken office in Dubya’s wake, Obama doesn’t have the highest bar to cross. It’s a bit like looking at a prospective automobile purchase and thinking, “Well, it’s not a burnt orange ‘72 Corolla.” One imagines that, should the current president have difficulty sleeping, his wife will remind him that neither has he started an unnecessary war, nor has Joe Biden shot any campaign supporters in the face. Such, sadly, is the change we need.
On to the address:
- While I’m wondering if the skirt on the Michelle Obama’s escort can possibly be as short as it seems, David Brooks remarks that the first lady is wearing “The first sleeveless outfit in American history.” Jim Lehrer questions the veracity of this claim, to which Brooks replies “It’s just a guess, but I bet I’m not wrong.” This is why we love PBS.
- The way she’s shaking hands on her way into the chamber, HRC appears to be in extended campaign mode, a presumption that would seem to be corroborated by reports that she delivered at least one speech to service-people and their families while re-fueling on her way back across the Pacific last week. One hopes she is supporting the president’s policies in public.
- On the topic of Jim Jones, Obama’s National Security Advisor:
Gergen: “a former basketball player at Georgetown University.”
Lehrer: “Also head of NATO…”
Apparently Lehrer read more of Jones’ resume than did Gergen.
- With all the glad-handing and gratuitous applause, one wonders whether our elected officials are attempting to outdo the Oscars in terms of self-congratulation. Get on with the speechifyin’.
- “You don’t need to hear another list of statistics,” he says; I disagree. We live in an age of stochastic reasoning. If this speech isn’t going to involve a PowerPoint presentation and at least some discussion of the NAIRU-related impact of forthcoming fiscal policy, then we might as well get on with fortifying our local Hooverville lean-tos.
- Joe Biden’s going to run the committee overseeing the recovery plan. That’s a great position for a guy apt to take credit for other people’s work. Hopefully that oversight will keep him too busy to have much interaction with the press.
- Obama makes haste in plugging the new recovery website. Is BSD now the official web-design contractors of the Obama administration, or is it coincidence that all the content he sanctions is eerily similar? Maybe the shades of blue just make me paranoid.
- “This time,” he says, “[banks] will have to clearly demonstrate how taxpayer dollars result in more lending for the American taxpayer.” That rhetoric is all well and good, but my impression was that a bulk of the forthcoming monies would go to fortifying banks that were arguably insolvent. Forcing a bank to provide more loans when its liabilities already dwarf its assets is like administering CPR while smoking a cigarette: you aren’t making your job any easier.
- “It’s not about helping banks; it’s about helping people.” Be prepared to hear that line repeated incessantly. [Note: Banks are run by people.]
- Had Charlie Rangel not moved his tongue, I would’ve thought him dead. Somebody warm up a pair of heart paddles and a Luther, in case he needs to be resuscitated.
- Is it just me, or has Obama been selling an awful lot of legislation as being imbued with his “vision”? I like the guy, and I like his vision. I even like the blustery flourish with which he bloviates. At some point, though, he’s going to have to say, “Look, it’s a budget; let’s not pretend we can’t grease it through the House and strongarm a couple of key Senators.”
- With respect to the automobile industry, “will not walk away from it” would’ve been preferable to “cannot walk away from it.”
- We’ll seek “a cure for cancer in our time.” Call me crazy, but I thought that was why Nixon started the War on Cancer. It’s not that I’m pro-cancer; I just like to recognize policy recycling. Actually, that might be reduction by reuse. Close the loop.
- Had Nancy Pelosi leapt from her chair with any more force on the “health care reform” applause line, she would’ve remained airborne through the beginning of Obama’s education platform.
- First come the cheers for cutting the deficit, then come the less-unanimous cheers for “the deficit we inherited.” That’s high comedy. Would we get more of it if the address were preceded by a few complimentary congressional cocktails? If so, then such spending might be merited.
- Seriously, Nancy Pelosi keeps flying out of her chair. I bet she hasn’t looked that spry since the Eisenhower administration. There’s no way her knees aren’t sore this morning; mine would be.
- Checks are on the way? What the Flying Spaghetti Monster is this nonsense?
- I don’t mean to be a semantic prick, but placing a moratorium on plotting is tantamount to endorsing the concept of thought-crime. Plotting is un-neighborly; attacking is criminal.
- The exemplary narratives are a bit too cliched. There’s a white guy who felt compelled to distribute his excess wealth, and there’s a poor black girl asking for money to build a functional school in her district. They’re moving stories, but they make one think that, somewhere nearby, Katherine Heigl is having an awkward encounter with an idiosyncratically charming man.
- On the conclusion of his address, the president is mobbed by congresspeople holding out copies of the address for him to autograph. Perhaps these individuals left their dignity in the cloak room.
- Response - Coming to us from the Louisiana Governor’s Mansion in Baton Rouge, which looks suspiciously like a set from True Blood, is Bobby Jindal with the official Republican response to Obama’s address. Some notes:
- Usually, Bobby Jindal speaks with the inflection of a normal adult human. Tonight, however, he’s over-emphasizing every third or fourth word and allowing his pitch to similarly rise and fall, giving him the soundtrack of a condescending, yarn-spinning clown. Perhaps Louisiana lacks teleprompters of adequate size for such occasions.
- The personal exposition is a twofer. The Republican party gets to present its own hardship-addled minority candidate, and Jindal gets to drilling his narrative into the collective skull of the electorate. Unfortunately, it’s entirely off topic.
- Due to a snafu at PBS, Jindal is interrupted twice in quick succession, first by a moment of credits and then by two or three seconds of an ad for an upcoming Stevie Wonder program. I doubt I missed much. It goes something like this:
“Where we agree, Republicans must be the president’s strongest supporters, but when we disagree –”
“PBS presents…Stevie Wonder”
- Jindal’s Katrina anecdote illustrates what was wrong with Dubya and his administration, but it doesn’t say much about the federal government, as a whole.
- Bobby is against raising taxes. In fact, he’s in favor of lowering them. This must be what he meant when he talked about supporting Obama when they agree.
- Okay, I get the vilification of bureaucrats, but that flip remark about corruption in the Capitol came out of left field. Perhaps the governor would prefer to see more overlap between the Cabinet and the boards of honest companies like Halliburton.
- On the topic of Republicans losing their principles, he says that “Republicans went along with ear-marks and big government spending.” Lost in this acknowledgment is the fact that, because they were in control, they were “going along” with themselves.
- That guy describes an astoundingly idealistic place. Where is this “America” of which he speaks, where everything is superlative? I’d like to see the most detailed map of the most detailed way to get there.
- Gergen and Brooks exchange some choice words criticizing Jindal. The AJC has collected the best of the, along with a few others, here.