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Saturday "Shock and Outrage"

As regular readers know, weekends are for whatever. Whether it be humor, video, politics, whatever…

Here is today’s:

Immediately after Dr. Tiller was gunned down President Obama said:

I am shocked and outraged by the murder of Dr. George Tiller as he attended church services this morning. However profound our differences as Americans over difficult issues such as abortion, they cannot be resolved by heinous acts of violence.

3.5 days after the killing of an Army recruiter and the wounding of another President Obama said:

“I am deeply saddened by this senseless act of violence against two brave young soldiers who were doing their part to strengthen our armed forces and keep our country safe. I would like to wish Quinton Ezeagwula a speedy recovery, and to offer my condolences and prayers to William Long’s family as they mourn the loss of their son.”

For the record, I think both murders were heinous and I am shocked and outraged by both acts, I just wonder why our President isn’t…..

Please use the comments section for your opinion…


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"The Culture that Caused the Crisis"

The Seventh Annual John M. Templeton, Jr. Lecture on Economic Liberties and the Constitution considers the social, cultural, and moral causes of the current financial crisis in the United States.

In doing so, the Lecture revisits basic lending principles and examines our nation’s skyrocketing debt, our lack of savings, and basic understanding of economic principles within the household, as well as corporate America, and the effects of our political and legislative effort to reduce discriminatory credit practices.


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GM’s "Wiped Out" Shares rise 21% Thursday

Proof insanity knows no limits. GM (GMGMQ) shares are rising despite everyone, including GM saying they are worthless.

AP Reports:

Late Monday, U.S. bankruptcy court judge Robert Gerber gave interim approval for the Detroit-based automaker’s use of a total of $33.3 billion in bankruptcy financing, with $15 billion available for use over the next three weeks. He will rule on final approval of the financing on June 25. Gerber also approved GM’s sale procedures, setting a sale approval hearing for June 30.

“Our agreement with the U.S. Treasury and the governments of Canada and Ontario will create a leaner, quicker more customer and completely product-focused company, one that’s more cost competitive and has a competitive balance sheet,” CEO Fritz Henderson said at a news conference in New York. “This new GM will be built from the strongest parts of our business, including our best brands and products.”
The Detroit automaker said warranty coverage, service and customer support will continue uninterrupted, plants will continue to make cars and trucks, and essential suppliers and GM’s 235,000 employees worldwide will continue to be paid. GMAC Financial Services said in a statement that it will continues to provide automotive financing to GM and Chrysler dealers and customers, and the federal Pension Benefit Guaranty Corp. said workers’ pension plans remain safe.

GM will follow a similar course taken by smaller rival Chrysler LLC, which filed for Chapter 11 protection April 30. A judge on Sunday gave Chrysler approval to sell most of its assets to Italy’s Fiat, moving the U.S. automaker closer to a quick exit from court protection, possibly this week.

The plan is for the federal government to take a 60 percent ownership stake in the new GM. The Canadian government would take 12.5 percent, with the United Auto Workers getting a 17.5 percent share and unsecured bondholders receiving 10 percent. Existing GM shareholders are expected to be wiped out.

In case you are still not convinced, GM on its own website says:

Will I receive payments on any shares or cancelled shares?

We think it is unlikely that you will receive payment. We cannot predict what the ultimate value of GM’s common stock may be or whether stockholders should expect any financial recovery in the Chapter 11 proceedings. When a company files for Chapter 11, its primary obligation shifts to maximizing the value of the company for its creditors. Stockholders of a company in Chapter 11 generally recover value only if the claims of the secured and unsecured creditors are fully satisfied. Thus, in most Chapter 11 cases, stockholders receive little or no recovery of value from their investment.

Yet despite all that, GM shares have rallied from $.27 cents each the moment of the filing to $.71 cents a share on Thursday. For those who do not want to do the math, that is 162%. Yup….a 162% gain for shares the company just told you will not be worth anything soon.

Why not?  The company said it has $172.81 billion in debt and $82.29 billion in assets when it filed for Chapter 11 protection. In a Chapter 11, the ONLY way shareholders collect is if there is anything left AFTER debtholders are satisfied. With federal government getting 60% ownership, the Canadian government 12.5%, the United Auto Workers 17.5% share and unsecured bondholders receiving 10%, there is NOTHING left for current shareholders…nothing…

If you own them and think they may have value someday, they will not. Take what you can get and move on…

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US Homeowners Are Effectively Broke

If we subtract those folks who own their home free and clear, US homeowners essentially own what their home is worth or more.

Bad news, we can look for these number to worsen over the next year.


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Friday’s Links

GM, Fed, Mozillo, Jobs

– Romney could fix it

– Interesting comments on regulation

– Will he go quietly?

– Coming back to Apple?

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Vanguard Picks Up 3.6 Million General Growth Shares

We knew folks were buying General Growth Properties (GGWPQ) in bulk he last couple weeks, now the news as to who is coming out. Hat Tip reader Mark for the information

Data source

Ackman’s Ira Sohn Presentation on General Growth

GGP Presentation 5.27.2009

Publish at Scribd or explore others: usa air


Disclosure (“none” means no position):Long GGWPQ

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Sears May Just Have Something With MyGofer $$

Let start out with the premise that we as American’s love convenience and anything that saves us time. We love it for our coffee, our lunch and our prescriptions. A liquor store near me actually has a drive thru window. Anything that saves us from getting out of the car we like and will use anytime we can.

So, why not drive thru retail? If I can go online and order soap, shampoo, water, soda and other household items and then go to the store and have them bring them out to my car, can anyone tell me why I would rather wander around the store and get them myself? I mean think about it. I have 4 kids, all under 6. As relaxing and fun as you might think taking all 4 of them to the store to buy household items is, I am finding it really hard to wonder why I would rather not have someone just bring them out to my car for me when I pull up. To be even more honest, I’m finding it hard to think of a reason why I would not do that even if I did not have the kids with me.

A recent study found that convenience is becoming almost as important as price for consumers today.

Enter Sears Holdings (SHLD) concept Mygofer:

From Bnet

Brenda Storch, a spokeswoman for MyGofer and Sears Holding said:

“Our goal is to make life easier for customers and to offer options that were not available before, all designed to save customers time and money. The Joliet store will feature a large online assortment and will cater to shoppers seeking both convenience and value, from the busy parent with three kids in the back seat to the person who needs a last minute gift, the DIY’er or the host that needs to throw a party with very little notice.”

Another way MyGofer provides convenience, she pointed out, is by carrying a broader assortment of products and brands than a traditional retailer including appliances, bed and bath, baby essentials, daily consumables including food, electronics, sporting goods and workwear. “Our customers can browse our expanded assortment which includes thousands of products and trusted brands to meet a variety of budget ranges,” she added. “Over time we will be able to tailor our assortments based on the needs of our customers in a given market.”

Order and pick up are designed to be convenient, too. Customers put together an order at www.mygofer.com, by phone, or at terminals in the store’s showroom lobby, then select when they’d like to receive their merchandise. They can pick up their MyGofer order immediately – or at least within a few minutes – at some other point in the day or days later. Joliet visitors retrieve their products through a drive-thru, via in-store pick-up or by shipment. “MyGofer offers its customers more flexibility than ever before, more choices, more shopping options, and we will save them valuable time on top of that,” Storch said.

Think about it. Family cookout coming this weekend and the wife give you a list Friday night of everything she wants from plastic plates, napkins, soda chips etc. Would you just go online that night, place the order and then go have it brought out to your car in the morning? Or would you rather trudge around the store on a Saturday morning? To me it is a no-brainer.

The service also lets you creates lists so that you can simply 1-click a list rather than searching for all the items each time.

The stores that have it available are listed on this link

We American’s love saving time. If Sears does this right, meaning they have plenty of staff available so it is truly convenient and time saving, this could catch on very easily. But, because it is a new retail concept, execution from day one has to be seamless, otherwise the negative word of mouth will cause the idea to flame out.


Disclosure (“none” means no position):Long SHLD

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Thursday’sLinks

Hosuing, Bankruptcy, Harvard, Fat Pitch

– 10 cities bucking the trend

– This is big news folks

Agreed

– Great job George

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A Look at Unemployment

Have been tracking the jobs information since last August. Three categories are paramount for me. Non-farm payrolls (the total), private and government. What interests me the most of the three is not the total number each month of job declines but the percentage change that number represents from the total employed the month before.

Why? If we have a firm that employees 10 people and lay off one, we have laid of 10% of the workforce. If we double employment to 20, then lay of 2, we have still laid off 10% BUT, people would also be accurate in saying “layoffs have increased 100% (from 1 to 2)”. In this case, simply looking at the total number skews reality. For that reason I want to know what percent of the total who had a job the month before lost it. Then I want to know how that percentage is trending. I also want to know this for the private sector and government.

Here is the datat from the (BLS all numbers seasonally adjusted where applicable):

The number do show an improvement in the rate of decline since the Dec./Jan. highs.

The key point to note is the April numbers. Without the highly abnormal hiring done by the government (72k jobs for temporary census workers), the improvement in April would have been roughly halved. Noting that does place a large dose of doubt as the the “improvement” in the job situation. May estimates are for -532k non-farm job loses in May (to be released 6/5).

My thought is that number is too low. I think -575k or greater is more likely unless the government hired another 72k people like it did in April. Assuming the government employment changes are normalized, then I think a spike is in order…

Again, what is of more importance is how government hiring effects this number and does the rate of decline in private sector jobs abate. True growth will only come from the private sector. Government can only grow payrolls and pay for them either through increased borrowings or increase takings of private capital (taxes). Neither is conducive to growth. We cannot keep losing a greater percentage of private jobs that the overall picture would lead us to believe and hope the economy improves soon.

That also goes to earnings. Q2’s earnings were better than many of the reduced expectations. BUT, it was not due to top line sales growth but increase cost cutting (jobs). If we have sales declining but cut costs ahead of them, then we can improve the earnings picture. Now, this is not to say this is a bad thing, but it is reality.


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Tilson’s Updated Housing Analysis

For those who do not wish to peruse the whole presentation (your insane if you do not) there are two slide that bear a close watch. The whole sub-prime has been exhausted. It is the Alt-A mortgage storm that is the cause of then next wave down.

What is an Alt-A loan? Current slang terms for them are “liar loans”, “no doc”, “teaser”, “pick a pay” etc. In short, these loans, whose use exploded in 2005-2008 and the next bane of housing’s existence. The largest problem comes from the resets over the next 2-3 years. These are loans that allowed the payee to “pick a payment”. They could choose the full payment, interest only, or the “minimum”. The minimum choice then allowed the bank to add the rest of what would have been a full payment onto the existing loan which caused it to “negatively amortize” or grow larger rather than shrink over times.

After a preset period, usually 3-5 years, the loans “reset” with a new payment (no more pick a pay) based on current interest rates and a current loan amount. Do we think folks who paid less than the full payment before will now be able to afford a new, far higher amount on a home worth less than the loan? Me either.

So the question then is, when do they reset? How much more pain is in store?

The next question is, “how big is this market”?

Yeah, big…

Please check out the presentation especially if you are either think of buying or selling a home. It may save you a fortune on either side…

T2 Partners Presentation on the Mortgage Crisis-4!3!09 3 T2 Partners Presentation on the Mortgage Crisis-4!3!09 3 optionarmageddon

Publish at Scribd or explore others: Finance Business & Law subprime housing crisis


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Wednesday’s Links

Moore, Bloggers, Reich, Leftist

– Don’t get the joy here

– This is exciting news

– Even the home team is turning on the administration

– It is funny how definitions change over time

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AutoNation’s Mike Jackson on the Auto Industry

AutoNation’s (AN) Mike Jackson was on CNBC this am as GM (GM) files for bankruptcy protection. Since Jackson sells cars from every dealer, he is probably the best guy out there to comment on both the industry and the auto makers.

Regular readers know how high we hold Jackson here. He has his pulse on the consumer and credit markets. Not sure if he was asked to be the “car czar” or not but if he wasn’t, huge fail on the government. If he was, my guess is that he turned it down because he seems to lack the ability to tolerate the garbage that goes on in Washington. Good for him (and shareholders)

Part 1: Banks are not lending…

Part 2:

Were they managed for the unions?

Part 3: What the industry will look like in 5 years


Disclosure (“none” means no position):Long AN

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6/1 Appearance on Wall St. Media

Talking about oil (USO), natural gas (UNG), General Growth Properties (GGWPQ) and Phillip Morris International (PM).

See more video at Wall St. Media


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Tuesday’s Links

Funny, Newspaper, Horror, WTF???


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Latest Hurricane Forecast Coming Tomorrow

We all know how reliable these tend to be…not very. But, if you are an investor in oil or gas, you will want to know what is being said. It has been a few years since we have had a significant storm so I think it may tend to be “more likely than not” we see something this year..

I am long both natural gas (UNG) and oil (USO) through both the ETF’s and options in them.


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