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Sunday, March 30, 2008

Debt Rattle, March 30 2008

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Ilargi: There’s something I don’t understand. In several places the last few days I’ve seen the claim that proposals by Paulson and others to re-regulate financial markets are intended to make Wall Street firms “more competitive”.

Does that mean the world’s largest banks and financial institutions were not competitive until now? Wouldn’t they have said and done something about that earlier, if it were the case? And, pray tell, how did they get to be the biggest, with that terrible handicap? By the way, we’re talking about competing with whom, exactly? Upper Volta?

Also, the way to improve that ability to compete is apparently to give the Fed the power to raid all these powerhouses and demand to see their books. I hope one day someone will explain how that would improve competitiveness.

Wall Street's grim prophet
Meredith Whitney, the Oppenheimer analyst who has become the Jeremiah of the financial crisis, says there is a way out of the wilderness for banks like Citigroup. But like many of her pronouncements over the last five months, it's grim.

"The best-case scenario is that financial firms take the pain quickly and purge assets from their balance sheets. That could bring stock valuations down by as much as 50%, which would be enough so that you could legitimately buy long-term positions," says Whitney.

Given the fact that many large investment banks have lost a third of their value since the credit crisis began last summer (with Citi down by more than half), it's unlikely they'll take the pain. So Whitney fires off a worse case scenario. "They don't purge and there is a slow bleed of capital and pressure on share prices for an extended period of time," she says. "We'll most likely see a combination of the two, with more of the latter scenario. It won't be pretty."

Whitney may be singing from the same hymnbook as most Wall Street pundits these days, but she has the distinction of being one of the first and harshest critics of the financial services sector. Throughout the credit crisis she has been willing to throw stones at banks, monoline insurers like MBIA and Ambac, and the alphabet soup of bonds (CDOs, SIVs, RMBS) that have taken down stocks and the economy, cementing her place as this era's star prognosticator.

As anyone who has ever spoken with her knows, Whitney always has one more thing to say to sharpen her last statement or find another way to make her argument airtight. She's witty and thoughtful and very thorough, but her considerable charm only goes so far if she thinks you're wrong. Then it's time to be blunt and unyielding.

She famously met her husband, former professional wrestler and stock guru John Layfield, by shredding his bullish Citi call while on live TV. (He's 6'6" and 290 pounds. She took him to the mat.) This quality of fearlessness is in part why her bearish calls have walloped financial stocks and earned her a reputation as the sector's axe.

Most recently, she issued a report Friday that said Citi, along with Wachovia, Bank of America, and Wells Fargo, would have to cut their dividends due to "earnings headwinds." It was a busy week for Whitney.

On Thursday she said first quarter earnings from Citi, Merrill, and UBS will be a "rude awakening" and that these banks would need to raise even more capital. And on Tuesday, she said Citi could post a first-quarter loss four times greater than previously anticipated if it is forced to write down a predicted $13 billion. She also cut her estimates on JPMorgan Chase, Bank of America, and Wachovia. After the report was released, all four stocks fell.

Such has been the pattern since last October when she told investors to sell Citi in the wake of terrible quarterly earnings. Other analysts, including Deutsche Bank's Mike Mayo, also took the bank's management team to task during the earnings conference call; and the stock had been falling all month. But Whitney was the first to say the bank was wildly undercapitalized and that "in six to 18 months, Citi will look nothing like it does now."

She also predicted Citi would have to cut its dividend or sell its best assets to raise at least $30 billion. For her efforts, the stock plunged 7%, then-CEO Chuck Prince was ousted, investing legends including Jeremy Siegel said she was wrong, and death threats rolled in.

The bank not only cut its dividend by 41%, it also decided it needed a $7.5 billion cash injection from the Abu Dhabi Investment Authority in November. Whitney told Bloomberg TV that the deal wasn't enough to shore up the balance sheet and sure enough the bank was back on the streets in January, hat in hand.

Ilargi: Congress has some hard choices to make in the near future.

Or maybe not that hard. After all, there are only two options on the table: It’ll be either the Bulgaria Model or the Albania model. Both, of course, will greatly “enhance the competitiveness of the markets”.

A System Overdue for Reform
A week ago Thursday, just days after the big Bear Stearns crisis, Representative Barney Frank gave a speech to the Greater Boston Chamber of Commerce. Most people know Mr. Frank, a Democrat from Massachusetts, as one of the most liberal members of Congress.

He is also known for his quick wit and his sharp tongue. But ever since the Democrats regained control of Congress two years ago, Mr. Frank has taken on another identity: he’s the chairman of the powerful House Financial Services Committee, which oversees financial institutions and their regulators.

For months, Mr. Frank has been among the leaders of those pushing Congress and the administration to move quickly to help people who got subprime mortgages and are now in danger of losing their homes. He’s introduced legislation, for instance, to mandate that the Federal Housing Administration guarantee refinanced subprime loans — but only if the lender takes a write-down on some of the principal and the terms are ones that the borrower can actually repay.

At the same time, though, he has begun to think hard about a critical, longer-term issue: whether the country’s financial regulatory apparatus, which was first erected in the 1930s in response to the Great Depression, still makes sense today. “When I first became chairman,” he told me a few days ago, “I was a little daunted by the anti-regulatory view that held sway in Washington.”

Not anymore. As the crisis on Wall Street, and Main Street, has deepened, Mr. Frank has come to believe that the country needs new regulations that take into account, for instance, the enormous rise in lending — largely unregulated — that takes place outside the banking system, and that can better monitor the huge risks many Wall Street firms now take as a matter of course.

In his Boston speech, he laid out a series of ambitious ideas, including the creation of “a financial services system risk regulator,” with the power “to assess risk across financial markets regardless of corporate form and to intervene when appropriate”— perhaps by forcing companies to cut back on leverage or raise their capital requirements. He called for a consolidation and streamlining of the many overlapping financial regulators.

He also said that capital requirements for nonbanks needed to be reassessed, that consumer protection needed to be enhanced, that mortgage originators — indeed, all lenders — should have to carry a portion of their loans on their books so that they would bear some risk if things went wrong, and that companies should be regulated not according to whether they were a bank or an investment bank or a hedge fund but whether they did things like create credit. “We now see a situation in which more damage was done by inadequate regulation,” he said. He called for a new era of “sensible regulation.”

You may have noticed that when the Treasury secretary, Henry M. Paulson Jr., made his big Wall Street regulation speech a few days ago, in which he took a far more cautious — or tepid, depending on your point of view — position on the need for new regulation, he took a swipe at Democratic proposals like Mr. Frank’s, saying that most of their ideas “are not yet ready for the starting gate.”

But Mr. Paulson is wrong. Given Mr. Frank’s position as chairman of the central committee, his ideas are very much at the starting gate. He will hold hearings and get support, especially if the crisis deepens. Indeed, Mr. Paulson will release on Monday his own set of ideas, which were obtained Friday by The New York Times. Although his proposals are elaborate, they strike me as mainly an effort to keep new regulation to a minimum.

The Federal Reserve’s Power Grab
The Bush Administration’s Treasury Secretary Henry Paulson has proposed an excessive broadening of powers for the Federal Reserve; the move is thought to be in reaction to the recent panic in the financial markets and overall economic instability in the United States. The new powers granted to the Federal Reserve would include strengthened powers of oversight not only on Wall Street but in the broader scope of United States financial markets.

The New York Times is reporting that, “Many of the proposals, like those that would consolidate regulatory agencies, have nothing to do with the turmoil in financial markets.” Looking back at the historical precedence for such a proposal, the similarities are striking between the events that led to the Federal Reserve in 1913 and the current proposal of the significant broadening of powers of the private central banking institution.

In both cases J.P. Morgan emerged on the other side of the dark economic times in better shape than when a major financial institution collapsed. In the case of the 1907 panic it was the man Jack Pierpont Morgan that benefited from the strain in the market and in the 2008 panic the financial banking institution J.P. Morgan has taken advantage of the hard luck of financial giant Bear Stearns. The panic of 1907 eventually lead to the formation of the National Monetary Commission which was then the commission in 1913 that recommended the formation of the Federal Reserve Bank through the Federal Reserve Act.

The similarities in this current economic crisis that the United States economy faces and the panic of 1907 is that J.P. Morgan is once again the element that is bailing out failing financial institutions, this time around the name was Bear Stearns and the answer to the financial crisis, since the central banking system is already in place, is the strengthening of the central bank.

In 1907 the faltering bank that sent the country into a panic was the Kinkerbocker Trust Company, the difference between the 1907 situation and the Bear Stearns collapse being that the Kinkerbocker Trust was allowed to go completely under and J.P. Morgan stepped in to save the banks that the Kinkerbocker Trust was threatening to bring down with it while the Fed took steps to prevent the complete collapse of Bear Stearns.

Another interesting aspect of Paulson’s proposal includes a recommendation to broaden the President’s financial group’s authority to be “broadened to include the entire financial sector, rather than solely financial markets.”

There is a possibility that this broadening of powers is not Paulson’s idea, but rather the Federal Reserve’s power grab in a situation that lends itself to capitalization on the fears of the public, and the longing for “stability.”

Ilargi: And in case you’re still thinking that these plans must be positive in some way, let this sink in, please, I can’t make it clearer than that:

"[The plans] would not curb practices linked to the credit crunch, such as packaging risky sub-prime mortgages into highly-rated securities.”

Shake-up gives Fed a boost
The US government will tomorrow unveil a radical overhaul of financial regulation that would give the Federal Reserve greater powers to oversee market stability. The proposals are part of a wider effort to simplify labyrinthine US regulation, consolidate regulators and make the market more competitive. The review began last year, but has become increasingly critical as the Fed struggled to restore confidence in markets shattered by the credit crunch and bail-out of Bear Stearns.

While the plans would allow the Fed to scrutinise more closely the activities of Wall Street banks and intervene where an institution threatened the entire system, they would not curb practices linked to the credit crunch, such as packaging risky sub-prime mortgages into highly-rated securities.

The Securities and Exchange Commission, the main financial market regulator, could also see its powers reduced. Under the proposals, the SEC would be merged with the Communities Futures Trading Commission, which regulates exchange-traded oil, currency and commodity futures. Stock exchanges would be given greater freedom to regulate themselves and approval for new products could be streamlined.

According to a draft of the proposals, Hank Paulson, Treasury Secretary, will say: "I am not suggesting that more effective regulation can prevent the periods of financial market stress that seem to occur every five to 10 years. I am suggesting that we should and can have a structure that is designed for the world we live in, one that is more flexible." The US Congress would have to approve most of the proposals and Democratic leaders are expected to say they do not go far enough.

Meanwhile, fears are mounting of a serious recession in Japan as Asian banks, pension funds and insurers are poised to liquidate up to $300bn (£150bn) of yen "carry trade" positions.
The Japanese have been pulling back from world markets since the credit crunch began last summer. The yen has risen 24pc against the dollar, a staggering move for a major currency.

This flight to safety has been a major cause of stock market slides and currency stress in countries as diverse as Iceland, Turkey and Romania. Japan is still the world's biggest creditor by far, with net foreign assets of $3 trillion.

Now experts at Barclays Capital warn that there may be a second tsunami. Chinese, Indian, other East Asian institutions and pension funds have borrowed heavily in Tokyo at rock-bottom interest rates, using the money to buy US Treasury bonds.

Ilargi: It’s not just the US looking to enhance the Fed’s powers: the UK is in the throngs of a similar process.

Mervyn King ready to rock Bank of England's foundations
As you walk into the Monetary Policy Committee's opulent state room in the Bank of England, the first thing to catch your eye is not the grand wooden table at which the country's leading economists decide interest rates. It is a life-size portrait which hangs over the biggest chair in the room.

When the current Governor, Mervyn King, sits down to decide where he and his colleagues will guide the economy, he does so under the glowering gaze of the most renowned of all his predecessors, Sir Montagu Norman. It is more than a mere portrait. Sir Montagu stands for everything the Bank once was: fiercely independent, ruling with an iron hand over financial markets and doling out money to troubled institutions only when they were within a hair's breadth of failure - if at all.

Most MPC members testify that it is hard to make an interest rate vote without looking up, seeing those steely eyes staring back at you and wondering what Sir Montagu would have done. Heaven knows what he would have done in the current circumstances. The financial system is facing its biggest crisis in decades - perhaps since the Wall Street Crash and Great Depression which Sir Montagu guided the economy through.

More disconcertingly, it has become clear that the Bank's tool box for financial crises - fundamentally unchanged since Sir Montagu's days - is no longer up to the job. Appearing before the Treasury Select Committee during the week, King appeared to admit as much, saying the Bank was seeking out a "longer-term solution". This is putting it lightly.

The Bank is now gearing up for the biggest overhaul of its financial market controls in decades. After conferring last week with the heads of the five big banks - Barclays, HSBC, Royal Bank of Scotland, Lloyds TSB and HBOS - it has undertaken to find new, potentially radical ways to kickstart the frozen asset-backed security markets at the heart of the crisis.

It won't be easy; it will require a wholesale overhaul of the current Lender of Last Resort system, Walter Bagehot's 1873 invention, which has underpinned the relationship between central banks and financial markets almost ever since. The problem is simple: years ago, when banks were reliant for most of their funding on shareholders' capital and customers' deposits, they could usually be rescued by a quick infusion of crisp Bank of England notes.

Now they are also reliant for funding on the sale of securities and packages of home loans. When the market for these instruments dries up, it leaves institutions with a major illiquidity problem. It is this which lay behind the collapse of Bear Stearns and Northern Rock.

Treasury regulatory overhaul plan "timely" - Fed
Upcoming Treasury Department proposals to make the Federal Reserve the chief regulator of U.S. financial markets and give it sweeping new powers won praise on Saturday from the central bank and the head of the Securities and Exchange Commission.

"The Treasury's report presents a timely and thoughtful analysis and is an important first step in the complex task of modernizing our financial and regulatory architecture. We look forward to working with the Congress and others to help develop a policy framework that will enhance financial and economic stability," a Federal Reserve spokeswoman said.

Treasury Secretary Henry Paulson is expected to unveil a blueprint on Monday for fixing gaps in the U.S. financial market regulatory structure that have been exposed by the ongoing subprime mortgage crisis.
Lax regulation has been widely blamed for permitting a flood of inadequately documented loans to be made during the boom years of a U.S. housing market that has since soured and now threatens to drag the economy into a deep recession.

An executive summary of the Treasury proposals says a "market stability regulator" is needed and the Fed best fits that role, suggesting the central bank could use its control over interest rates as well as its ability to provide market liquidity to fulfill its functions.

Will Uncle Sam let the dollar collapse?
The dollar is taking a pounding. With the US sinking deeper into recession, the greenback recently hit an all-time low against the euro and a 12-year low against the yen. Last week, America's currency fell again - dropping more than 2 per cent in euro terms, to $1.5779. On a trade-weighted basis, the dollar is now south of its late-70s low point and close to its historic nadir of the mid-1990s.
The markets sense the US Federal Reserve, having already slashed interest rates by 300 basis points to 2.25 per cent since the credit crunch erupted last summer, will soon cut rates even more. The European Central Bank, in stark contrast, looks determined to keep rates at 4 per cent - where they've been since sub-prime broke. Eurozone inflation, at 3.3 per cent, is still way above target.

And with ECB Chairman Jean-Claude Trichet stressing upside price pressures last week, eurozone rate cuts seem unlikely. In other words, the gap between euro and dollar rates looks set to get wider - making the US currency even less attractive.

And, last week, just as fresh data showed America's housing and manufacturing sector weakening further, business confidence in Germany - the eurozone's largest economy - jumped up. That suggested an even bigger euro-dollar interest differential, piling still more pressure on the greenback.

But a falling dollar is not necessarily bad news for the American economy. The underlying reason for the currency's weakness, beyond the current woes on Wall Street, is that years of over-consumption have resulted in a massive US trade deficit - which, in 2006, reached 6 per cent of GDP.

The dollar's decline has lately helped address that - by making US goods more competitive. Over the last two years, American exports have risen 17 per cent in value terms, cutting the trade shortfall to 4.7 per cent of national income. In other words, as has often happened in recent decades, a falling dollar has shoved the burden of America's adjustment onto the rest of the world. And now - as the White House knows well - a further dollar slide will play a large part in rescuing the domestic economy.

The US takes a dim view of other countries - such as China - allowing their currencies to remain weak against the dollar. But when it comes to old-fashioned beggar-thy-neighbour exchange rate policy, the Americans are past masters. There are limits to this process. The euro has risen some 17 per cent against the dollar over the last year, with much of that rise happening since January. This makes life tough for the eurozone's exporting economies - which, apart from Germany, are now suffering badly.

Weber, Stark Say ECB Will Raise Rates If Necessary
European Central Bank council members Axel Weber and Juergen Stark signaled they are ready to raise interest rates if needed to contain inflation even as a global credit squeeze threatens the economy. The ECB "will act" to contain "alarming" price pressures if its inflation goal is threatened, Weber said in a speech in Luxembourg today. Stark said in Cape Town he "cannot be sure" that the ECB's benchmark rate, currently at a six-year high of 4 percent, is high enough to contain inflation.

The euro climbed after their remarks, which contrast with the views of other policy makers such as Portugal's Vitor Constancio and Belgium's Guy Quaden, who say that slowing growth will damp price pressures. Inflation in the euro region accelerated to 3.3 percent in February, the fastest pace in 14 years. The ECB has refrained from following the U.S. Federal Reserve in lowering borrowing costs to bolster economic growth.

The euro, which advanced to a record $1.5903 on March 17, climbed as much as 0.4 percent to $1.5839. The ECB aims to keep inflation just below 2 percent. Stark, who along with Weber is regarded by economists as one of the ECB's toughest inflation fighters, said today price pressures are a "matter of particular concern" and "it is very likely that the first quarter is better than expected."

A U.S. housing recession has caused a global credit squeeze for the past seven months, clouding the economic outlook globally. The cost of borrowing in euros and pounds for three months today held at the highest levels this year as banks hoard cash before the end of the quarter. Luxembourg's Yves Mersch said today the ECB will do what's needed to ensure "well- functioning" markets

Hedge fund legends hit by financial crisis
Even for the affluent residents of London's Holland Park, the arrival in the area last year of Gerard Griffin, head of Tisbury Capital, was big news. Curtains twitched as a multi-million-pound refurbishment of his house began. Rather than buy furniture or even appoint an interior designer, Griffin and his wife Sarah commissioned top artists to produce original work specifically for their home.

Soon the Griffins boasted a dining-room chandelier by glass artist Deborah Thomas, two installations by potter-sculptor Edmund de Waal (including a complete room of more than 600 porcelain vessels), and an architectural version of a Morandi painting in the gallery by ceramist Julian Stair. It was, Mrs Griffin modestly told one visiting reporter, "simply an extension of collecting on a domestic scale". To the neighbours, the house had been "hedged" - snapped up and spruced up by a rich hedge fund manager.

These flash Wunderkinder are branching out, and surpassing toffs, lawyers and even footballers' wives with their reputation for ostentatious opulence. As head of Tisbury, a $2.7bn (£1.35bn) event-driven fund founded in 2003, Griffin was the archetypal hedge fund manager: aggressive, arrogant and nearly always right. He audaciously took large positions in big public companies including ICI, J Sainsbury, EMI and Alliance Boots, and was listened to by their managements despite being smaller than other shareholders.

But just a year on from the refurbishment of his Holland Park house, this pillar of London's hedge fund industry is on shaky ground. The latest bite of the credit crunch has caught Griffin offguard and Tisbury offside with some of its biggest investments. The fund was down 8 per cent in the first two months of the year, according to Tisbury's monthly letter - and losses are getting worse.

Hamstrung by the lack of liquidity and savaged by increasing redemptions, Griffin has had to negotiate new terms with his prime brokers, beg for patience from investors and offered his business for sale to bigger rivals, including GLG Partners. One insider said: "Tisbury has gone from darling to disaster is a short space of time. Griffin is losing staff and probably won't get much for the sale. It's been amazing turn of fortunes."

Griffin is not alone. Some of the most successful players in the industry also have serious problems. The past month has been littered with high-profile calamities. At the end of February, Peloton Partners, the award-winning fund run by ex-Goldman Sachs star Ron Beller, imploded. Focus Capital, another EuroHedge fund of the year, wound up days later. Then came the biggest casualty so far: the spectacular collapse of Carlyle Capital Corportation after a $16bn debt default.

Last week, it was the turn of John Meriwether, the man behind the collapse a decade ago of Long Term Capital Market. His bond fund at JWM Partners is struggling with losses of 28 per cent this month.
One industry expert told The Sunday Telegraph: "This is just beginning. Somewhere been 40 and 100 hedge funds will liquidate shortly. It's a bloodbath and it will get worse."

Already investors are showing their fury. One said: "I thought volatility was what hedge funds lived for? Making money, or at least preserving cash, during volatile times is certainly what we pay them for. They have been poncing around during the good times and are now found wanting at the first sign of trouble. It's a debacle out there."

UBS Gives Haircuts
In its advertising, UBS tells clients "it's you and us," but on Friday it told investors "you're on your own." The Swiss bank told clients it was reducing the value of auction-rate securities in their accounts, by an average amount of 5%.

It also refused to buy the bonds back from investors who bought the securities, thinking they were getting an easy-to-sell, higher-yielding alternative to money market funds but instead found themselves stuck with illiquid securities and capital losses, courtesy of the global credit crunch that began in the U.S. subprime mortgage market.

"This is the right thing to do," said a UBS spokeswoman. "This is in the best interest of our clients regarding our accounts. Given the current market dislocation this the next logical step for any committed wealth manager." Auction-rate securities are long-term bonds issued by local governments, agencies, or corporations but sold in periodic auctions, say every 7 to 28 days, to set the interest rate. Firms that handle the auctions, like UBS and most of the big Wall Street concerns, used to step in an buy in the auctions if there weren't enough bidders.

But that all went by the wayside in January and February as investors fled the bond markets. Auctions failed after no buyers showed up and the banks refused to step in as they had previously done. That meant the auctions failed, leaving brokerage customers holding the bag and issuers paying much higher penalty interest rates. The Port Authority of New York and New Jersey, for example, saw its rate skyrocket to 20% from 4% when its auction failed in February.

UBS has been among the hardest hit of the banks, already writing down $17 billion worth of credit holdings and facing another $11 billion in write-downs in the first quarter, according to analysts at Oppenheimer. Its problems don't stop there. Massachusetts securities regulators subpoenaed UBS, Merrill Lynch and Bank of America about their sale of auction-rate securities to customers, particularly bonds sold in closed-end mutual funds. The state is looking at what the banks disclosed about the possible risks of the securities.

"We received calls from a young saver whose house down payment is now frozen; two siblings whose family trust is now frozen; and small business owners who find their business interrupted because money they thought was liquid is tied up in these frozen securities," said William Galvin, the Massachusetts secretary of the commonwealth, in a statement.

The timing of UBS's decision is perhaps telling. American investors are facing tax time, when many will need access to cash to pay Uncle Sam. The Swiss banking giant previously told customers who were unable to sell the securities in scheduled auctions that the bonds would retain their full value and receive enhanced interest rates, according to

Investors who feel betrayed are likely to sue, adding to the pressures on UBS from the global liquidity crisis that began in the U.S. subprime mortgage market. UBS was the first major global bank to be hit by a lawsuit over losses related to the subprime crisis.

Wall Street's Crisis Hitting Small Business
The ripple effect of the financial turmoil on Wall Street is spreading more deeply into the American economy.
The local hardware store is finding it more difficult to get the loan it needs to buy its summer gardening merchandise. Ivy-covered colleges and universities are finding that donors have second thoughts about contributions until the stock market quiets down.

Some small businesses that count on using credit cards to finance their business are getting letters informing them of reductions in their credit lines or increases in their rates. "Wall Street's woes are increasingly giving Main Street the blues," says Mark Zandi, chief economist at Moody's

One sign of the blues on Main Street: consumer-confidence surveys. On Tuesday, the Conference Board said that consumer confidence had dropped to a level not seen since the recessions of 1980 and 1973. "The plunge is directly related to the turmoil in the financial system," says Mr. Zandi.

Economists are particularly concerned about one development: CIT Group, a commercial finance company that lends to small business, used a $7.3 billion line of credit from banks because it was having trouble selling its debt. "CIT does lending to Main Street business," says Fred Dickson, market strategist at D.A. Davidson & Co. in Lake Oswego, Ore.

CIT, for its part, says it is looking to sell some nonstrategic assets or business lines and is looking for additional capital. "We recognize that given the current market environment, we need to operate a smaller, more focused company," writes Mary Flynn, a spokeswoman, in an e-mail.

Strains on CIT could pose just one more challenge for small to medium-size businesses, which are finding it increasingly tough to get loans. "Bank lending to small business is freezing in place," says George Cloutier, a small-business expert and chairman of American Management Services, a consulting group. "Availability of credit to small and mid-sized companies has almost dried up."

The decline in housing prices isn't helping either, in that many small-business people use their homes as collateral for loans, says Michael Leonard, executive director of the greater Richmond Small Business Development Center in Virginia. "What we're finding is that clients already somewhat highly leveraged are finding it difficult to get new money." Small-business owners are also increasingly running into late-paying clients, he says. "They need to borrow money to bridge that gap as well," he says.

Ilargi: Steve Forbes “himself” joins the choir, suggesting that all will be fine if and when the US unilaterally declares a moratorium on mark-to-market. In other words, the system can be saved by blatant lies about the true value of toilet paper.

This idea is ludicrous, if only because the US is in no position to make such decisions about paper that has been sold globally. Also, many parties (at home and abroad) would rather take their losses now than wait a year, with the risk that those losses will have grown substantially.

Here's How to End the Panic: No more mark-to-market
The Bush administration must take two steps immediately to quickly halt the unending, enervating credit crisis: shore up the anemic dollar and, for the time being, suspend "marking to market" those new financial instruments, such as packages of subprime mortgages.

The weak dollar is pummeling equities, disrupting the economy, distorting global trade and giving hundreds of billions of dollars in windfall revenues--through skyrocketing commodity prices--to our adversaries such as Iran and Venezuela. Not since Jimmy Carter has the U.S. had a President so oblivious to the damage done by an increasingly feeble greenback.

The Federal Reserve can rally the markets for a day or two by finding some new mechanism through which to lend more money to banks and other financial institutions. But this is the proverbial Band-Aid for a patient who is beginning to hemorrhage.
The Administration acts as if the dollar were like the sun, its rising and falling beyond any control. Countless times experience has shown that notion to be false. The U.S. Treasury Department could buy dollars in the currency exchange markets.

Our allies would gladly cooperate with such an operation; their exports are being hurt more and more. The Fed could mop up some of the excess liquidity it has created since 2004, even as it makes targeted loans to beleaguered banks and financial houses.
The other measure: The Treasury Department and the Fed should get together with the SEC, the Comptroller of the Currency and other bank regulators and announce that financial institutions for the next 12 months will no longer write down the value of exotic financial instruments (primarily packages of subprime mortgages). Instead, writedowns will occur only when there have been actual losses on those assets. If a mortgage defaults, a bank will then--and only then--recognize the loss.

It's preposterous to try to guess what these new instruments are worth in a time of panic. Such assets are being marked down to increasingly arbitrary low levels. But when a bank books such a loss, it must replenish depleted capital, even though cash flows for most financial firms are still positive. Worse, when forced by panicky regulators and lawsuit-fearing accountants to write down the value of these securities, institutions will dump assets in a market where there are temporarily few or no buyers.

The result is a spiraling disaster. So let's have a time-out on markdowns until we actually have real experience in what kind of losses are actually going to occur. These two steps would quickly end the panic. Until that happens, expect more trouble.

Ilargi: And if you think Steve Forbes is just a nut from left field, think again. The very regulator of this issue, the SEC, now encourages companies to lie about the value of their assets. No, they don’t call it lying, I know. Again, if the US moves along this path, it will get into enormous trouble internationally. And, at least financially, the US can not afford to do that.

For instance, what do you think will happen if European, Japanese or Chinese banks and/or governments do their own valuations of similar (or even the same) assets, and they DO mark-to-market, and come up with much lower numbers than US financial institutions? I guarantee you that would be very ugly.

If [Mark-To-]Market Prices Are Too Low, Ignore Them
The Securities and Exchange Commission is out today with a letter to companies that own a lot of financial instruments whose current market value must be reported to shareholders. For more than a few companies, disclosing market values is neither easy nor convenient.

The issue is the application of SFAS 157, which governs the way companies compute fair value of assets, assuming they have to do so anyway. (Banks and brokers have to do that a lot, but I won’t go into the details of when they can avoid it.) The rule took effect on Jan. 1, although some companies adopted it last year.

The rule sets out three categories of assets, with different ways to value them. Category 1 includes assets with easily observable market values. I.B.M. stock closed today at $114.57, and it is not easy to justify a different value if your quarter ended today. Category 2 is a little fuzzier, where there are observable markets that provide a good guide to prices of your asset, even though there is no direct market. And then there is Category 3, which is essentially mark to model.

In companies that adopted Statement 157 early, we have seen a lot of assets end up in Category 3. That may be proper, since there are plenty of complex financial instruments for which there is not much of a market these days. But it also provides companies with a way to fudge figures.

The S.E.C. letter asks companies for some disclosures on how they came up with those values, and on why a lot of assets may have moved into Category 3. Such disclosures can only help investors. But one part of the letter stood out to me, providing an excuse for companies to ignore a market value if they don’t like it:
“Under SFAS 157, it is appropriate for you to consider actual market prices, or observable inputs, even when the market is less liquid than historical market volumes, unless those prices are the result of a forced liquidation or distress sale. Only when actual market prices, or relevant observable inputs, are not available is it appropriate for you to use unobservable inputs which reflect your assumptions of what market participants would use in pricing the asset or liability.”

That sounds to me like an invitation to fudge. Some people on Wall Street think that nearly every sale today is a forced sale. There are entire categories of collateralized debt obligations where most, if not all, of the trades, occur because a holder has received, or expects, a margin call. What the S.E.C. should require is a disclosure when a company concludes that a market price should be ignored because it came from a “forced liquidation or distress sale.”

Then there should be a disclosure of how much lower that distress price was from the value the company is using in its own valuation. Alternatively, there could be a simple rule, at least for banks. If you will ignore this price as irrelevant when you decide whether to send out margin calls to those to whom you have lent money, then you can ignore that market price when you make your own reports. But if you won’t lend based on a valuation that ignores actual market prices, then you should not use that valuation for your own accounts.

Ilargi: Spain is way beyond redemption or salvation. The European Central Bank has been secretly propping up the Spanish banking system for at least half a year, to the tune of God knows how many billions. But that can’t last: as problems emergy in other European countries, credit support for Spain will dwindle.

I’ve hardly ever seen a better definition of the word “BUBBLE” than this one:

"Spain's economic growth[..] provided a quarter of [EU] new consumer spending during the past four years[..] That's more than five times the contribution of Germany, where the economy is three times the size."

Zapatero Depletes Surplus as Housing Shakeout Reduces EU Growth
Miguel Angel Lopez and Virginia Pardo watched the steady rise of interest rates last year as they expected their first child and wondered whether they would be able to keep up with the mortgage on their two-bedroom Madrid apartment.

Then the government introduced a 2,500 euro ($3,947) payment for each newborn, the first in a series of benefits and tax breaks aimed at cushioning the impact as Europe's biggest housing boom shudders to a halt. Permits to build new homes, which peaked in 2006 at 734,978, two-thirds more than Germany and the U.K. together, will drop to 500,000 this year from 675,000 in 2007, according to Banco Bilbao Vizcaya Argentaria SA, Spain's No. 2 lender.

"Lots of people may have to stop paying their mortgages if rates keep increasing," says Pardo, a 29-year-old homemaker whose husband makes about 1,000 euros a month as a warehouse manager. "This will give us room to breathe," she says, cradling their 2-day-old daughter, Ainhoa. Prime Minister Jose Luis Rodriguez Zapatero, whose Socialist Party retained control of parliament in March 9 elections, is increasing government spending to avoid a real estate fire sale.

In a country with an 86 percent home ownership rate, highest in the 15-nation euro region, the collapsing housing market is already slowing the economy. Growth will dwindle to 2.5 percent this year from 3.8 percent in 2007, according to forecasts by the Paris-based Organization for Economic Cooperation and Development.

Zapatero, 47, and his People's Party opponent, Mariano Rajoy, 53, made the economy the centerpiece of their campaigns. Both pledged to end the wealth tax on assets, which has ensnared more and more Spaniards because of rising home values. The Socialists also promised to give workers an annual income tax rebate of 400 euros and boost the lowest state pensions by 26 percent. That's on top of the surge in infrastructure investment already budgeted for this year.

"We've saved, we've managed our finances well and we've got a bigger surplus than expected, so we can stimulate the economy and help families," Zapatero said in a Jan. 29 interview on Spanish public television. "This is a prudent measure."
Residential construction, which accounts for about 6 percent of Spain's economy, peaked in 2006 after a decade-long surge fueled by a drop in interest rates, growing incomes and vacation home purchases by Britons, Germans and other northern Europeans. Housing prices gained 11 percent a year on average, as even ordinary Spaniards speculated in real estate.

Spain's economic growth, which outpaced the euro-region average, provided a quarter of the single-currency area's new consumer spending during the past four years, according to the European Union's Luxembourg-based statistics agency, Eurostat. That's more than five times the contribution of Germany, where the economy is three times the size.

Now, a glut of properties weighs on the market, and interest rate increases and tighter bank lending standards make it more difficult for buyers to finance. The supply of new homes in 2006 outstripped demand by about 50 percent, according to government estimates.

Mortgage interest rates more than doubled since 2005 as rising credit costs sparked by the U.S. subprime crisis compounded eight increases by the European Central Bank. The 12- month euro interbank offered rate, or Euribor, calculated monthly by the Bank of Spain and used to set mortgage rates, was 4.79 percent in December, the highest since 2000. It eased to 4.35 percent in February, 26 basis points above a year earlier. (A basis point is 0.01 percentage point.)

The slowdown can be seen on the streets of Madrid, where buildings are plastered with "For Sale" signs and it's getting easier to find a seat in the normally packed cafes. "People just don't have any money," Antonio Romero, a taxi driver, says. "With so many people on low wages, the price rises are really being felt and people are cutting back on unnecessary expenses."

German watchdog eyes $600 billion global bank losses
The financial market crisis could cause losses of up to $600 billion at banks and other financial institutions worldwide, a German magazine reported on Saturday, citing an internal report by German financial watchdog BaFin.

The $600 billion figure represents a worst-case scenario for losses linked to the financial turmoil sparked by the meltdown in the U.S. subprime mortgage market, Der Spiegel magazine said in a story released in advance of publication on Monday. "Based on current knowledge and the market situation, we believe $430 billion is more likely," the magazine quoted what it said was a 16-page report by BaFin as saying.

BaFin calculated that banks had already acknowledged about $295 billion in losses, of which Germany accounted for around 10 percent, the magazine said. Extrapolating from this percentage, German banks could suffer $60 billion in losses in the worst case and $43 billion in the more favorable scenario, the magazine added.

However, the magazine also said BaFin cited the risk that the financial crisis could spread beyond the banking sector to affect hedge funds, insurance companies, pension funds and even some non-financial companies.

A figure of around $300 billion for losses reported to date came from publicly available sources, she said.
German mass-circulation Bild newspaper reported on Friday that German banks could face as much as 70 billion euros ($110 billion) in writedowns on their investments as a result of the credit crisis, citing "speculation by banking insiders" for the report.

Florida's latest attraction is bringing in bargain hunters by the busload
It's breakfast time in Orlando and thousands of people are clambering aboard tour buses all over the city ready for fun in the Florida sunshine. One group, however, won't be following the others to Disney World or the area's many other theme park attractions. They'll be taking a shopping trip in the company of estate agents and mortgage brokers, hoping to find a bargain among a selection of repossessed and run-down homes.

The growing popularity of the six-hour "foreclosure express" tour is one symptom of the worst housing crisis to afflict the Sunshine State in recent years, a slump set off by the sub-prime mortgage crisis that has sent repossessions soaring and prices into freefall. The bus follows a pre-determined route through residential neighbourhoods and stops at up to a dozen empty houses already repossessed by lenders. The passengers disembark and size up the premises as they decide whether to offer an asking price often already below the open-market value.

"It pulls everyone together," said Orlando real estate agent Janice Ziesig, who organised the first tour for 24 would-be buyers last month after adapting a similar concept she saw in California two years ago. "It's really a rolling classroom with realtors, a lawyer, a property appraiser and a mortgage broker aboard with the buyers and investors. People can get a good idea of what's available."

Recent figures from showed 279,325 homes have been repossessed in Florida since January last year, making it second to California, where there were 481,392 foreclosures, among the worst-affected states. The news for those wanting to sell their homes, particularly in Florida's larger metropolitan areas, is almost as bleak. February sales of existing homes were down 25% on a year ago, at only 8,310 statewide, according to the Florida Association of Realtors.

Three-bedroom houses in Kissimmee that sold for $240,000 a year ago can now be snapped up for $198,000, a 17.5% decrease. And prices in Miami, which were rising by more than 20% annually as recently as 2005, showed a 19.3% decline from a year ago, the biggest drop in the US alongside Las Vegas, according to the Standard & Poor's/Case-Shiller home price index.

Ilargi: Just like everything else, logic is upside down in Australia. I still don’t see what this guy says. Plaese enlighten me?! It goes something like this:

Affordability is low, since demand oustrips supply. This is getting worse, fast, demand rises all the time. We’ll be saved, though, when interest rates come down. However, that willl push up demand even more, and therefore prices too, which in turn makes “dwellings” even less affordable. And somehow that is supposed to be a good thing.

Australia: House prices to jump 40% in five years
BIS Shrapnel director and chief economist Frank Gelber said housing affordability, already at record lows, would sink even lower as demand continued to outstrip supply. Mr Gelber said there was currently a construction shortfall of 30,000 dwellings, but has forecast that number would grow to 60,000 by June this year and 129,000 midway through 2009.

An environment of rising interest rates had compounded the problem with people choosing to wait before buying or building property, he said. This also meant that when interest rates stopped rising or eventually started to fall, there would likely be a surge in demand for housing which could result in a price explosion.

"We've got rising interest rates suppressing any upswing in demand for housing ... and we need to wait now before that demand comes through," Mr Gelber said. "But when it does, it will be very strong."

The figures quoted by Mr Gelber are largely in line with Australian Bureau of Statistics data. Calculations, based on the ABS established house price index, show that during the 10 years to December 2007, house prices rose an average of 9.9 per cent a year. The index rose 12.3 per cent in 2007. In the 10 years before that house prices rose an average 6 per cent a year. In the past 20 years they have risen an average 7.9 per cent a year.

Blindsided by the subprime storm
There may be no Canadian company that better epitomizes the financial turmoil wrought by the subprime mortgage crisis than Xceed Mortgage Corp. The alternative lender, which relied on the securitization of its loans to finance new mortgages, has been hammered by the collapse of the market for asset-backed commercial paper (ABCP).

The company, whose stock hit $10.45 a share in early 2006, is now trading at a little over a dollar. Xceed has suspended its dividend and its line of uninsured mortgage products. In the past two months, it has cut 100 staff, or nearly three-quarters of its work force, to help in its attempt to return to profitability. It's been a precipitous downfall for a company bursting with promise when it went public in June of 2004; one of few firms providing mortgage loans to people with shaky or unestablished credit histories, including new immigrants and the self-employed.

Despite their subprime status, these customers rarely defaulted on their mortgages in Canada, and the business model looked sound, said one industry analyst who declined to be named. By all rights Xceed would still be "chugging along" if its funding model hadn't fallen off the rails, although that's a moot point today, the analyst said. "This isn't a market issue and, unlike the U.S., we continue to believe the subprime mortgage market in Canada is sound," he said.

"The risk we always saw with Xceed was that they relied very heavily on the securitization model; that you'd have to keep rolling over all of that paper. That was a newer, unproven model in the market, and because of that we'd always applied a lower multiple to them to reflect that risk."

More people who don't qualify for traditional mortgages will be out of luck now, both when they try to purchase a home or refinance their mortgage, said Alex Haditaghi, CEO of "Xceed represented something wonderful for this industry, a way to service a unique clientele. Unfortunately we no longer have access to a lender such as Xceed for those customers," Mr. Haditaghi said.

A number of industry watchers say the most likely scenario is that Xceed will be sold. Toronto-Dominion Bank and the Bank of Nova Scotia, which are in the best shape of the Big Six banks in relation to their exposure to the frozen ABCP market, are considered potentially interested, according to two industry sources.

CIBC Finally fesses up to exposure
To some it was nothing more than a pleasant surprise. To others, this week's news that the Canadian Imperial Bank of Commerce has an additional $25-billion exposure to investments tied to the health of monoline insurers, was nothing more than a confirmation of what some market participants had known for a few months.

Indeed, there has been considerable talk about such exposure among some U.S hedge funds, who were presumably getting their information from other U.S. market participants. That talk had made its way into reports compiled by some Canadian-based analysts. And some of those details had appeared in the press. So the "new" information was neither a surprise nor pleasant.

But until this week, CIBC had played mum on the whole matter. CIBC, which has written off $4.2-billion, used to claim that its disclosure was the bets of all the banks. That may have been the case but Royal Bank of Canada's first-quarter results contained enough to satisfy the deepest probing analyst.

But overall, the way the banks have disclosed their exposure to U.S. problems and also to the asset-backed commercial-paper problems in Canada hardly passes the test of keeping the market informed. On the local matter, it was only after some analysts pressed the banks to break down their ABCP exposure between their own conduits and those in which they had liquidity agreements that the banks fessed up.

The information disclosed by CIBC is noteworthy for another reason. CIBC's $7.9-billion exposure to the U.S. residential-mortgage market shows almost 44%, or $3.45-billion, was with a CCC-rated guarantor. (The bulk of that has been written off.) On the other hand, CIBC has no exposure to CCC-rated guarantors for its non-U.S. residential-mortgage investments, which means that dealing with CCC-rated entities was probably a one-off.

One possible conclusion: CIBC had a system that it didn't follow when it dealt with the CCC-rated guarantors. The other conclusion: CIBC didn't have a system--and was bagged by Goldman Sachs.
Too many awards Maybe the Canadian banks are making too much money. Maybe the lobby group, the Canadian Bankers Association, should lighten up. Or maybe a consumers group should start a new award--but with a different emphasis.

We are speaking of the news the CBA is accepting nominations for the 2008 Canadian Banks' Law Enforcement Awards, "which recognize outstanding police performance in fighting crime against Canada's banks." The award will be given to those who have gone "beyond the call of duty in their efforts to fight crime against banks, their employees and their customers," the CBA said.

"This is our chance to recognize the excellent work done by members of law enforcement and to highlight their efforts." The award has been presented to 210 officers since it was initiated in 1972. An alternative award, of course, would allow consumers to rank what they see as the greatest abuses committed against them by Canadian banks.

Commons finance committee to vote on ABCP hearings
The asset-backed commercial-paper workout will become a political issue next week when the House of Commons finance committee votes on whether or not to hold hearings into the crisis. Committee members will vote on Monday on a motion tabled by Liberal finance critic John McCallum. It is expected there will be broad cross-party support for the proposed hearings, which would take place in the next two weeks.

A ‘yes' vote to the idea of hearings would give hundreds of disgruntled retail investors a chance to have their say in public. It would also likely mean bankers, brokers and other high-profile Bay Streeters would be called to Ottawa to account for their role in the crisis. The hearings, if they take place, would also likely involve officials from the Bank of Canada and Canada's top banking regulator, the Office of the Superintendent of Financial Institutions.

The notice of motion filed by Mr. McCallum this month says members of Parliament will try to find out "whether federal regulators and other stakeholders could have done a better job in anticipating the crisis and/or reducing its cost," and "what action the federal government, federal regulators and other stakeholders are taking so as to reduce the likelihood of experiencing a similar crisis in the future."

The ABCP crisis began last August when investors - from ordinary folks who had poured their savings into the paper to huge institutions holding many millions of dollars worth of the stuff - found the market had frozen up and they were left holding investments they had thought were safe and that could be rolled over on a short-term basis.

Since then, a committee of bankers, lawyers and accountants has worked on a plan to restructure the investments. Most of the large institutional investors in ABCP are thought to have backed the plan, which also has the support of Canada's big banks.

Musashi said...

See comment from yesterday that was posted while you posted this.

It also relates to what Whitney says.

The way to unwind it without blowing up is to eliminate leverage.

If the big depositories have to write off 50% it is survivable, problem is the leveraged IB's are history.

They should be wiped out as should be their management, stockholders and all the defaulting borrowers.
To those that say it isn't enough of a penalty, I say it is, because to most of those "people" financial ruin is worse then the death of their children or even their own.

Ilargi said...

The big depositories are just as over-leveraged as anyone else, though not as much as hedge funds. And don't forget that Glass-Steagall's demise allowed them to branch far beyond their core business. At a 50% haircut, and with all assets marked-to-market, there won't be much left on Wall Street. It'll be like the effect of a smart nuke: only the buildings remain.

What I think is the main point is that this will happen no matter what they do, so it's better to get it over with, even if it'll be uglier than Dante.

This road will not be chosen, though, not a chance, since the people who make the decisions in the field, from bankers to politicians, are all linked to the industry in various degrees of incestuousness.

They will save their derrières with your money as long as they can, simply because you let them.

Anonymous said...

To this economic outsider's eyes all this business looks like a party was held and the price will be paid by foreign investors and US taxpayers. Things will then slide into the next bubble maybe alternative energy and such and things will proceed, business as usual. Likely wrong about this somewhat 'optimistic' outcome but would like to know why.

Ilargi said...

Anon 846534,

It won't work out that way, there'll be no next bubble, because the model is broken. The amount of debt that financed this last bubble has been dozens, if not hundreds, of times bigger than all the others, both in absolute and in relative terms.

Besides that, we are fast running out of the natural resources, not least of which is energy, to fuel such a bubble. Alternative energy sources are a fata morgana: a complete illusion. Or in a term I coined a year ago: Receding Horizons. We will never run our society on alternative energy sources. They work only on a small scale, made possible by the -often hidden- input of cheap conventional energy.

We will soon, or arguably already have, enter the phase where the only way to get our hands on resources, most importantly fuel and food, is to physically fight for them.

Greyzone said...

Anon (and Ilargi),

Given that past societies existed without fossil fuels, it is completely possible for a society to exist with alternative energy sources. So what is the real problem? Overpopulation coupled with a world view within current civilization that hinges on infinite growth.

Planet earth can only support something far less than the current population. Estimates vary but several of them cap out at a max of 2 billion and that would not necessarily be a nice place to live. My own guess is in the 500 million to 1 billion range. Yet we have 6.7 billion and climbing right now.

This population crisis is also the core reason for the water crisis, the arable land crisis, the pollution crisis, the energy crisis, etc., etc.

What this means is that a civilization predicated upon alternative energy sources would look nothing like our current civilization. Probably far slower pace of life, more pastoral with much of the non-pastoral life focused around academia and a far smaller artisan/merchant class than we see today who would also be engaged in the manufacture of the highest quality, longest lasting goods possible. Such a civilization would have to have a near religious reverence for its environment in order to survive, would have to practice active population control, and have heavy social penalties (including death) for those that violate those social values.

Many Polynesian island societies had outlooks like this and managed to reach stability for centuries at a time but those societies did not bear much resemblance to what we have today. And we, as members of this society, can only vaguely see the outlines of what such an alternative society might look like. And this does not mean a society without technology either. We just cannot imagine the lifestyles and shape of such things from where we are today.

However, to try to imagine that sort of high-tech society, start with the idea of an orbital space colony that stops interacting with earth. Assume your colony is physically large enough to support 100,000 people. Try to imagine the systems and structures in place for such a colony to continue operating for multiple generations and you begin to see that our "way of life" would have to drastically change even in the presence of high technology.

Right now though this civilization is doomed so long as it refuses to abandon the myth of infinite growth. The civilization I just described has no chance to arise so long as the current corrupt beast sits astride planet earth.

Ilargi said...

I think talking about "how many people the earth could sustain" is little more than dabbling in some out there sort of romanticized religion, brought on by the refusal to recognize who we are.

Or, alternatively, a lawnchair theory meant to trick ourselves into staying indoors, in order to not poke our heads through the doors and windows of our abodes, while telling ourselves we are doing valuable work theorizing.

Whether this world can theoretically feed 1 billion people or not is irrelevant for all our intents and purposes. However, we can be sure that after we are done, this planet won't feed that number of our species for a long long time. Neither will it feed any other "higher developed" lifeforms anywhere close to the numbers these exist in now.

We are well into a phase of our existence that will show that we are driven by no higher goals or instincts than the "lowliest" jellyfish. Difference is, we need a much more complex biosystem to survive than "lower" lifeforms do.

A few people will survive, I think, but perhaps that also is nothing but a religious ideal.

"How many people can the world sustain" is a broken record, stuck in a phase that clings onto the notion of man as an animal driven by reason. Man is not that. Man tells itself that, because that triggers feel-good brain chemicals.

We will in our lifetimes wreak havoc upon this planet, and all the lifeforms it hosts, beyond anybody's imagination or belief.

Anonymous said...

I believe that as we speak, there is a segment of the powers that be 'elite' on this planet that actively hold the position that if they could just eliminate 90pc of the human population, that there would be plenty of stuff left for the 10pc that survived. I believe that they will actively pursue any and all strategies to make that occur.

Bio, nuclear, intentional starvation, name it, they'll try and use it.

Destroying stuff takes so much less energy than creating stuff. Spend 10 hours making a beautiful teapot: it can be dropped on the floor in an instant. What's the EROEI of destruction versus creation?

Destroying world finance took much less energy to accomplish than what it will take to rebuilt it.(if ever)

I'm really tired of play cleanup to the criminals and banksters. The S&L mess under one Bush was enough, but another one?

The new Federal Reserve motto:

Justice for Just US

Anonymous said...

Odd Crop Prices Defy Economics

"Whatever the reason, the price for a bushel of grain set in the derivatives markets has been substantially higher than the simultaneous price in the cash market."

could this be the very sign of liquidity crunch? cash can demand a discount.

Rick said...

Perhaps instead of telling clients "It's you and us" UBS should be telling them "It's U and BS."

FB said...

"the notion of man as an animal driven by reason."

Do you think many people adhere to that? I have often thought that people will consent to exercise reason if it suits a particular purpose or situation, otherwise...

And the willingness decreases as the awaited reward recedes into the future (receding horizons?). A further factor is whether the reward is personal or collective. Etc.

Not very optimistic.

On a completely different subject, it is very bizarre to jump from here to Spiegel where they had an article today on full employment in Germany by 2010.

The disconnect here is astounding. North America plunging (and a bit aware), Germany feeling great (?!) and France simply "elsewhere".

Ilargi said...

Anon 856397:

The Odd Crop Prices article was in a Debt Rattle earlier this week.

And no, no liquidity crunch, a food crunch.

Ilargi said...

Are you trying to reason that man is not a reasonable being?

Which Spiegel article? My German is fluent, just in case.

FB said...

"Are you trying to reason that man is not a reasonable being?"

"Which Spiegel article? My German is fluent, just in case.",1518,544225,00.html

Note that in the meantime, another article is out discussing the widely divergent opinions on the issue.,1518,544287,00.html

So you German is fluent?

Hmm, a "son of Europe", Basque alias, good English, fluent German, some French(?)...
OK, this is shaping up...

Anonymous said...

Is anyone else as 'shocked' as I am about the fed reserve getting yet more power legally? Does it get any more blatant than this?

scandia said...

To me this feels like a coup. Can't believe this was conceived and articulated in only a couple of weeks...and like Ilargi I wonder about the intent to get citizens to file.
I'm reading elsewhere references to " lots of money slooshing around the world". There appears to be money in an alternate system ,not the one you and I are locked into.

Anonymous said...

I’ve been reading your blog for a while now I really appreciate all the effort you put into this. I’m something of a novice at financial systems so please help me out with some things I’m trying to understand.

Your thesis is that the meltdown in the financial world is deflationary. I understand money is destroyed when loans are re-payed or defaulted on. The Fed fears deflation and is combating deflation by attempting to create money, but I think you are saying they cannot create money fast enough to avoid deflation because the big financial institutions are already leveraged to the hilt and likely basically insolvent.

The Fed is fighting this by literally creating money and giving it away (in return for garbage paper). The average American will eventually pay for this because it dilutes the value of their dollars. As morally wrong as this is why can’t it work? The Fed can create as much money as it wants to can’t it? Is there a limit? Even if the Fed is limited by current law a simple act by a terrified congress could will any amount of money required into existence, Sure this would (further) tank the dollar but isn’t this amore likely scenario than actual deflation?

You also seem to worry about a domino style collapse of the big banks due to the giant ponzi scam CDOs etc they have been playing at. Suppose the big banks did collapse what then? Couldn’t other institutions move in to take their place (the First Bank of Berkshire Hathaway, Bill Gats Savings and Loan have a certain ring to them). I have no doubt the economic dislocation of the failure of the big banks would be significant but wouldn’t the majority of the financial damage be limited to the big banks themselves?

I’m trying to figure out how to navigate this mess and keep my meager savings intact, it seems to me there are very different actions I should take depending on how things develop Deflation and big bank collapse = stuff my money into my mattress, hyper-inflation caused by massive bank bailouts = own real things.

Musashi said...

The second Spiegel article is much more realistic.
The first one sounds like positioning attempts and is conditional,

wenn nun die Weichen richtig gestellt würden ..... Die von der SPD geforderten Mindestlöhne wirkten dieser Entwicklung entgegen.

I know what you are saying, just trying to figure out what they are playing at. I assure you that it will not be with my money, except maybe a small portion in a most indirect way.

Peter said...

Car Finance In UK provides various information on financing a car. To know more about cheap car finance, used car finance, personal car finance and bad credit car finance, visit our blog.


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Maslow and the Chakras

awkward_pose_3-001Human nature strives for structure and understanding. In studying the seven chakras, which are thousands of years old, I’m struck by how Maslow’s Hierarchy of Need aligns with this ancient tradition.

First, consider the seven Chakras:

tapestrylife.wordpress.com1. Muladhara – Tailbone / earth / smell/ fundamental needs to stay alive                                                                        2. Swadisthana – Sacrum / water / taste / emotions, dreams, sexuality                                                                         3. Manipura – Belly / fire / sight / ego identity                     4. Anahata – Heart / air / touch / selflessness                       5. Vishudda – Throat / ether / hearing / communication and truth                                                                                6. Ajna – Third eye / transcendence / intuition / higher self  7. Sahasrara – Crown of head / soul / unconditional love / direct link to divine

Now, consider Maslow’s original Hierarchy of Needs (1943):

changefactory1. Physiological – air / drink / food / sleep / shelter     2. Safety – security  / order / stability / freedom from fear                                                                                3. Social – belonging / affection / love                          4. Esteem – mastery / independence / status / dominance / self-respect                                                    5. Self-actualization – realizing potential / self-fulfillment / personal growth / peak experiences

There are direct correlations between Muladhara and our physiological needs, Manipura and safety, Anahata and social, Vishudda and esteem, and Ajna with self-actualization. One could argue that Swadisthana and Sahasrara also fit into the ladder but I think they possess less clear correlations, which makes sense given the culture Maslow represents – an early twentieth century discomfort with sensuality at the base end and the Sahasrara notion of an individual unified with the whole as the apex chakra.  After all, Maslow was dealing with personal psychology, not spirituality.

About paulefallon

Greetings reader. I am a writer, architect, cyclist and father from Cambridge, MA. My primary blog, is an archive of all my published writing. The title refers to a sequence of three yoga positions that increase focus and build strength by shifting the body’s center of gravity. The objective is balance without stability. My writing addresses opposing tension in our world, and my attempt to find balance through understanding that opposition. During 2015-2106 I am cycling through all 48 mainland United States and asking the question "How will we live tomorrow?" That journey is chronicled in a dedicated blog,, that includes personal writing related to my adventure as well as others' responses to my question. Thank you for visiting.
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2 Responses to Maslow and the Chakras

  1. Barry Kibel says:

    You are correct about Swadisthana, but not about Sahasrara. In Maslow’s later work on spirituality and peak experiences (what one experiences at the top of his pyramid), he evoked the B-values to best capture this. These values include wholeness, completeness, perfection, truth, etc. which clearly are reflections of unified consciousness. I wrote a small book on this topic, which you might find of interest: BE-Value Psychology, available from Amazon Books or Kindle.

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Saturday, January 24, 2009

Call 'em the DePaul Droopy Demons

One is DePaul coach Jerry Wainwright. The other is cartoon legend Droopy Dog. Won't say which is which, but both have the same number of Big East victories this season.

The Question

Were those really Bo Ryan's usually fundamentally sound Wisconsin Badgers who kept committing shot-clock violations even though they trailed Illinois by double digits with less than 10 minutes to play?

Always a friend of the referees, Bobby Knight said officials would do a better job if they worked fewer games each week because they'd be less fatigued.

I suppose. And coaches might not be so stressed out if they didn't eat, drink, walk and talk basketball 24 hours a day, 7 days a week, 52 weeks a year.

If a coach takes more down time, though, he might lose an edge because other coaches wouldn't. Which could cost him his paycheck. And if refs only work three times a week, it would affect their standard of living.

Everybody would like more time to just chill ... but it isn't always practical now, is it?

1 comment:

  1. now that's funny and i hope the dog thinks so to...he can be tough on those he does not like..


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An Alternative to Lab Testing
Family pets help test experimental cancer treatments.

A new alternative to traditional laboratory testing helps assess cancer treatments for humans, while providing options to dying pets. Dogs have become more favorable to researchers because they experience cancer in similar ways to humans. Like their two-legged counterparts, canines develop secondary cancers and become resistant to drugs over time.

Unlike studies of the past, scientists don’t induce illness in the subjects. The experimental treatments are made available to pets already diagnosed with cancer.

Participating dogs continue to live at home while their family collaborates on the research, keeping detailed records on quality of life and behavior. Maintaining a normal living arrangement contributes to a more realistic reaction to the illness and treatment as compared to the more traditional laboratory rat living in a controlled environment.

Some of the experimental treatments have undergone human testing and require animal testing for regulatory reasons, but most have not been tested in humans at all.

Currently 19 veterinary institutions in the U.S. have trials underway, while Europe is still evaluating whether they want to test drugs using this new method.

After writing about the history of animal testing in June, it’s heartbreaking to learn what we’ve subjected animals to in the name of medicine. While there are ethical implications with any kind of testing, I’m glad that scientists are exploring ways of developing treatments that consider the welfare of those who have advanced the medical breakthroughs that we rely on.

JoAnna Lou is a New York City-based researcher, writer and agility enthusiast.

More From The Bark

More in JoAnna Lou:
Bucket List for Dying Shelter Dog
Dog Rescued From Utah Mountain
Legalizing Pets in Our Final Resting Place
World's Ugliest Dog Crowned
Therapy dogs Visit Charleston, South Carolina
Dogs Dislike Those Mean to Their Owners
Comfort Dogs at Funeral Homes
DNA Testing for Breed Bans
Courtroom Dogs in New York
Dog Lunges in Front of Bus


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photos + post by amy nadine, graphic design by eunice chun

We couldn’t believe how many emails we got asking how to do the brows from last week’s Mastering Falsies post, especially because we did them the easiest way out there… with a brow stencil! So I grabbed my cousin Emily again to show you exactly how simple it is to do.

TOOLS: Powder shadow in your exact brow shade or darker for more drama, a stiff-angled brow brush, a spooly or disposable mascara wand, tweezers and a brow stencil. We scored and used this kit that comes with all of it (and different stencil shapes, a wax to set them and a highlighter).

  1. With the spooly, comb your brow hairs up and over.
  2. Fit the stencil precisely where you want the shape of the brow to be, paying attention to the position of your own natural arch.
  3. With the stiff-angled brush, fill inside the stencil by shading the powder using small quick strokes.
  4. Let the new brow shape be your guide to stray any random hairs that are not part of it.

That’s it! I swear it really is as easy as it looks. Of course if you don’t want to go the stencil route, you can always use our Brows 101 guide that Lauren Conrad so kindly lent us her brows for too.

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College Football

College Football 2013 Top 25 Preview: No. 12 LSU Tigers

Image (1) les-miles-t-bob-hebert.jpg for post 203169

2012 Recap: How did LSU do? It depends how you interpret it. The Tigers beat Texas A&M and South Carolina. They led in the fourth quarter against Alabama. On the other hand, they could not pull away against decrepit Arkansas and Auburn teams. 10-3 in the SEC West is not terrible, but, given the talent available, one could have expected more.

Offense: LSU has the components for a productive offense. The problem, as always, is assembling them. Mettenberger has a big arm. He can make all the throws. He also ranked outside the Top 60 in passer rating last year and threw just five touchdowns in SEC play. They have an effective receiver tandem with Beckham and Landry. They are stocked at running back, since the team voted Jeremy Hill back. They lose veteran offensive linemen but, at least on paper, return size, depth and talent.

Defense: The defense lost a lot of NFL-caliber talent, because Chavis and Co. have a track record of finding and cultivating NFL-caliber talent. The line, anchored by probable first round defensive tackle Anthony Johnson, should be among the SEC’s best. The Tigers are also well provisioned at linebacker and in the secondary. The worry with them is any level of regression. For a team that has a tendency to scrape together one-score wins, even a decline from Top 10 to Top 15 or 20 nationally could be impactful.

USATSI_6813934_153192880_lowresAussie Rules Punting: LSU lost mercurial punting talent Brad Wing, but have a virtual clone in his countryman Jamie Keehn.

Summer of Les: Les Miles rappelled down a building, explained social media, did the Harlem Shake and interacted with children. Not unrelatedly, he skated by on that whole Jeremy Hill thing.

Schedule: This is not a slate for the fearful. Playing in the SEC West is always tough. LSU plays Florida for their cross-division rivalry. The other cross-division game is at Georgia. Throw in a neutral site opener with TCU for good measure.

Ceiling: 12-0. Les Miles’ insane stew ends up tasting delicious. The defense and offense hit their potential. The TIgers are too big of brutes for their brutal schedule, gut out some close wins to finish the regular season undefeated.

Floor: 6-6. LSU does not get things together on either side of the ball. They have some poor fortune. A moderate fall, with their rough schedule, turns into a dramatic one.

Prediction: 9-3. LSU is a very good team. Even if they split Florida, Georgia, Alabama, Texas A&M. There are multiple pitfalls to avoid away from home.

25. USC 24. Miami 23. Northwestern 22. Oregon State 21. Nebraska 20. Texas 19. Louisville 18. Baylor 17. Michigan 16. TCU 15. Oklahoma 14. Clemson 13. Florida State

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BioTerrorism Was A Threat, But Not A Substantial One

bioterrorismFor most communities, planning for a bioterrorist attack was theoretical. The threat might have existed, but the idea that such an attack could be perpetrated against the United States was hardly given a second thought by most people.

Then came the stunning news in October, when letters containing anthrax spores were sent to Capitol Hill and buildings in Florida and New York City. Traces of the deadly microbes also were found in local government and postal locations along the East Coast. Five people died and 13 others took ill as a result of the incident. For a nation still reeling from the tragedy of Sept. 11, the anthrax attack drove home the point that everyone, everywhere was potentially vulnerable to a bioterrorist or chemical attack.

Thurston County, 3,000 miles away …

Audit Firms Needed Restructuring

ceocomLegislated restriction of non-audit services would seriously impact not only small accounting firms but small and midsized businesses across America, according to testimony presented to the U.S. Senate by William Balhoff, CPA, and the chair of PCPS, a membership division within the American Institute of CPAs that represents the interests of over 6,100 local and regional CPA firms.

In response to the debacle of the Enron Corp., both the Senate and the House of Representatives are working on bills that would attempt to prevent corporate financial disasters that are caused by questionable accounting. The House bill seems to be following the service restrictions that the nation’s biggest accounting firms have already committed to.

It would require firms to abstain from providing internal audits and technology implementation services to the public …

Removing Skin Tags With Tea Tree Oil Can Work, Sometimes

removngstksSkin tags, also known as acrochordons, are harmless small skin growths that look very similar to a mushroom or a small piece of hanging skin. They typically have a skinny base with a larger growth at the top. They can appear virtually anywhere, but typically show up in areas where the skin rubs together such as the:
• Eyelids
• Armpits
• Under the breasts
• In the groin
• The upper chest
• The neck
Skin tags are invariably benign, non-cancerous skin growths that are asymptomatic. Essentially they show no symptoms unless they are harmed in some way via being scratched or rubbed. Skin tags are made from fibers, ducts, nerve cells with a covering or epidermis.
Some people are more susceptible to getting skin tags. Causes include being overweight, hormonal shifts (in pregnancy), genetics and more. We don’t really know exactly why they appear. Thankfully they can be easily removed with a number of homeopathic methods. The one I will discussing today is with Tea Tree Oil, or melaleuca oil. It is an oil that it taken from the Melaleuca alternifolia plant. It is native to some areas of Australia. Tea tree oil has been used for decades to treat a number of health conditions, mostly those affecting the skin due to its antiseptic, antibiotic, antifungal and antiviral properties.
It is especially effective at removing skin tags. I highly recommend purchasing a therapeutic grade oil as it will be more concentrated and not diluted by water or oil. One of the best available is through doTerra. doTerra doesn’t market it as tea tree oil however so please look for Melaleuca oil.
Once you obtain the correct oil, you can proceed to remove the skin tag using the instructions below.
1. Clean the affected area around the skin tag with soap, making sure to not aggravate the skin tag by rubbing it. A gentle cleansing is adequate.
2. Dry the area
3. Take a Q-tip or cotton ball and put a few drops of the tea tree oil on it until it is evenly soaked.
4. Apply the tea tree oil to the skin tag. You only need to apply it directly to the skin tag, not the surrounding area as you may experience some skin irritation.
5. Repeat this at least three times a day. You should see the skin tag disappear (if you follow these instructions) within 14 to 30 days. If you follow these instructions and the skin tag remains, please consider using a different oil. Some oils are very diluted and don’t have the correct therapeutic properties and you will waste your time applying it to the skin tag.
If you are unable to apply the tea tree oil that frequently, and if the skin tag is in a location that cannot be seen, you can soak a cotton ball in tea tree oil and tape it directly to the skin tag, leaving it there during your day or while you sleep at night. Just be sure to look for irritation on the surrounding skin. If this occurs stop the treatment and use a Q-tip instead to apply the tea tree oil directly to the skin tag.
Tea Tree oil has not been approved by the FDA in the treatment of skin tags, however there is research to prove its effectiveness. Many people have found using it gives them amazing results. This is an excellent alternative to try before removing the skin tag through other more invasive means i.e. surgery, freezing etc.
In addition, this is also a much less expensive option if you don’t have any type of health insurance or in the event you have a significant amount of skin tags. There are other over the counter OTC creams and solutions, but tea tree oil has been reported as the most effective, homeopathic remedy for skin tags. You can also keep the oil Continue reading

Furniture Manufacturers Smell Recovery

furnituremanuAnd even as exhibitors conceded that March had been a little slow and that the future was questionable, the fact that some of the larger furniture players had just posted better than expected sales was a high point on opening day. In fact, furniture makers such as Furniture Brands International, La-Z-Boy, Bassett, Natuzzi, Hooker and Stanley have all reported sales increases in the past few months. Retail giant Havertys reported the day before High Point opened that its March sales rose 2% compared to year-to-date figures, reaching #42m.

This is evidence that industry analysts are on track in their observations: that Americans will continue to look homeward when it comes to spending disposable income.

Michelle Lamb, founder and chairman of Marketing Directions, which publishes The Trend Curve, notes: `Consumers are …

9/11 Hit The South, Too

911hitIt goes without saying that no one in the Southwest went untouched by the events of September 11. Add an assortment of regional disasters, both natural and man-made (Enron, for starters), to the lingering economic and psychological effects of 9/11, and it’s a wonder that anyone in the area remains confident about the future. Yet design professionals in this region are determined to keep their chins up–even if it has only been to keep their heads out of the flood waters in south-central Texas last summer or to look for rain in drought-stricken states. In Dallas, Jon Flaming reports, “The only design trend I’ve noticed is the minimalist trend: no work. It will get better, though.” Of Oklahoma City, no stranger to terrorism, Amy Johnson of Walker Creative says, “My …

Japan’s Disaster Relief Team Helps The World

jdrt“In areas that have experienced a natural disaster, hospitals have often been destroyed and doctors themselves may have been injured. There is a kind of medical vacuum in such areas,” says Dr. Kondo Hisayoshi, a member of the medical team. “We focus on filling the vacuum, alleviating the disastrous situations and saving as many lives as possible.”

Dr. Kondo, who now works for the Research Center for Radiation Emergency Medicine of the National Institute of Radiological Sciences, has had a great interest in the activities of the JDR ever since he was a medical student. He registered with the medical team soon after becoming a doctor. Dr. Kondo has been dispatched to Nicaragua after a hurricane in 1998, to Taiwan after an earthquake in 1999 and to Mozambique after floods …

Hotels Make Safety The Top Priority During Disasters

hduringdEnsuring the safety of their guests and employees is the top priority for hoteliers. Whether operating a beachside hotel, ski resort in the Rockies, or urban skyscraper, natural disasters and emergency situations are a reality. Hoteliers who display a heightened approach to crisis management and communications are better prepared for such frightening scenarios.

Hosting hundreds of travel writers this past September for the Society of American Travel Writers convention, Bermuda’s Fairmont Southampton and Fairmont Hamilton Princess hotels were not going to let a looming hurricane dampen the annual conference. As Hurricane Erin prepared to bear down on Bermuda with winds up to 85 miles per hour, hotel employees readied to execute an expeditious plan for the safety of the employees and guests. All team members assumed specific duties from locking …

Hurricane Andrew Destroyed Many Lives

hurricaneIn the early morning hours of August 24, 1992, a wicked hurricane ripped through southern Florida. By lunchtime, 15 people were dead and 250,000 were homeless. Ten years after one of the worst natural disasters in U.S. history, witnesses remember Hurricane Andrew’s scariest moments and the struggles of starting over.

“If Our Marriage Survived This, We Can Get Through Anything.”

Leslie Case, then 27, was relaxing with her husband, Brad, at the family’s Florida Keys beach house when the first warnings about Hurricane Andrew flashed across the TV screen. Together the Cases stored away the deck furniture–“just in case the wind was bad”–and decided to head back to their avocado and lime farm in Homestead, 60 miles away. Leslie, three months pregnant with her first child, was a rookie when …

CEO Compensation Issues – Never Will Be Settled

ceocomThe New York Times recently reported that Mr. Weill received over $1 billion during the last decade.

If it weren’t for the Times’ report, no one would know Mr. Weill’s true compensation, nor its significance. No Securities and Exchange Commission report or Citigroup annual report gives any hint of this billion-dollar compensation package. No official report compares this with corporate philanthropic giving; for example, Mr. Weill’s annual compensation has generally exceeded Citi’s corporate philanthropy by a ratio of three to one.

No official report provides any data on the ratio of Mr. Weill’s or any other CEO’s pay to that of the average American worker or a company’s average employee. At Citigroup, the CEO compensation package is generally in the area of 3,000 times that of the typical bank teller.…

When The Unthinkable Happens

unthinkablehWhat happened on September 11, 2001, was unthinkable, the terrorist attacks of that day so unimaginably monstrous they boggled the mind and still threaten to defy comprehension. And no wonder, for how do you think about the unthinkable? How do you imagine the unimaginable?

Well, if you’re like me, you start with reading. For you believe that books–by offering information, ideas, and, in the case of fiction, opportunities for empathy–can stimulate thought, provoke discussion, and, ultimately, provide understanding, reassurance, and even comfort.

It was this belief that prompted the creation of 911: The Book of Help, which I had the privilege of coediting with Marc Aronson and Marianna Carus. This anthology contains stories, essays, and poems by 25 prominent writers for young readers who share their highly individual, deeply personal, …


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Previously on The Blog About Nothing... in London!

  • mustafas Mustafa's Gemuse Kebap
    Long queues and a complete tourist trap
  • beerberlin Beer Garden Time in Berlin
    Eins Bier Bitte
  • grindcoffee Grind Coffee
    Coffee Time in Putney
  • kalamaras Kalamaras
    A Piece of Greece in London
  • coffeeberlin Berlin
    Coffee Time in Berlin
  • sambaswirl Samba Swirl
    Froyo Time in Chiswick
  • tarantella Tarantella
    Another Italian Place in Chiswick
  • wharf The Wharf
    A lovely Restaurant by the Thames in Teddington
  • fiveguys Five Guys
    American Invasion
  • phene The Phene
    Great local pub for a drink in Chelsea
  • mangotree Mango Tree
    Great but Expensive Dim Sum Place
  • makoto Makoto
    Sushi Time Chiswick
  • buenosaires Buenos Aires
    Argentine Steakhouse in Chiswick
  • lookingglass Tea Time
    Fashionista Afternoon Tea
  • jsheekey J Sheekey
    Oyster Bar in London
  • alboccondivino Al Boccon Di'Vino
    A Real Italian Feast
  • donostia Donostia
    Basque Cuisine in Marylebone

The most Talked About American Burger Online

Founded in 1986 by the Murrell couple with their 4 sons, even though they had another son after they open the first store in Virginia they didn’t change the name Five Guys Burgers and Fries. What started as a family business soon changed into franchise around 2003, now Five Guys has more than 900 locations in the US. Their menu straight forward burgers, dogs, sandwiches, and fries. With a policy of no freezer only coolers you can be sure they will use fresh products, also there are no timers in the kitchen as they believe a good cook knows when food is perfect.

Five Guys

I went for a bacon cheeseburger, a kosher dog, and the five guys style fries cooked in peanut oil. You can add 15 different toppings to your burger, including grilled onions, relish, jalapeno peppers, pickles, and hot sauce, making the possibility of having 250.000 combinations you can ask for.

My Order

The burger was good, American flavours, pretty straight forward classic bacon cheeseburger, crispy bacon, melted American cheese, ideal for burger purists. I really like it even though the patty was well done and I’m more of the medium rare type. The fries were good, nice flavour with the peanut oil, and the portion was huge basically a quarter of the paper bag was full of fires. Finally the kosher dog was excellent no need of anything else, the sausage flavour was nice, and again the melted cheese did justice.

Kosher Dog

Some of the Fries

The Five Guys Bacon Cheeseburger

Fast food kings, nice burgers, excellent and deserved online buzz, and good critics and reviews, won’t hesitate to go again and get another burger if hungry.

One I talk about a guy I remember the Seinfeld episode “The Pool Guy”

Jerry: Yeah?
Ramon: Hey it's Ramon
Jerry: What?
Ramon: Hey, It's Ramon Jerry. I’m coming up
Jerry: Oh. Okay. Wha… what is he doing here?
Elaine: Who? Who is Ramon?
Jerry: He's the pool guy
Elaine: What pool guy?
Jerry: Do me a favour. Just stick around while he's here.
Elaine: Yeah, no problem
Ramon: Hee… hey, hey Jerry How are you, crazy guy?
Jerry: Hey. So, ah, Ramon this is my friend Elaine
Elaine: Yeah and I was just leaving. Bye-bye Jerry

Five Guys Burgers and Fries
T: +1 256 382 3150
Area: Huntsville
Twitter: Five_Guys
Five Guys on Urbanspoon

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Timbaland, Missy Elliott Debut New Songs at New York’s Highline Stages

Jemal Countess, WireImage
As The BoomBox previously reported, rapper Missy Elliott and producer extraordinaire Timbaland are back as hip-hop's dynamic duo, working on new material and performing live.

According to HipHop DX, the cosmic pair debuted new tunes last nigh

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