The Amazing and Most Delusional Miss Eleanor

Its always been said that the human brain is an amazing organ. A complicated organ, science has unraveled many mysteries of brain functionality, yet there remains a host of functions yet to be fully understood. It's difficult enough to grasp the normal neural functions, but what about the dysfunctional aspects of the brain?

Eleanor was an 87 year old widowed woman. A rather pleasant lady, one that you would picture gardening around her home or tending to a herd of stray cats. She was the epitome of the old eccentric lady who lived in the house on the street corner. Yet, through a series of events, she found herself on my hospital unit.

While doing an inventory of her personal belongings, I came across a strange contraption that resembled a small rubber ball embedded on a small stick....more like a deformed tootsie roll pop. When I inquired about this strange looking instrument, Miss Eleanor stated that it indeed was just that, an instrument. But, as Miss Eleanor stated, it was a special instrument with special powers. She could use it to talk to the CIA or UFOs.

Eleanor always referred to me as "Ken" even though I would kindly correct her that my name was Tim. Yet, she insisted that I was "Ken" so for the remainder of her stay I would be "Ken." Curiously.........once she did called me "Tim" with a mischievous smile.

Eleanor had this habit of asking for two small cartons of milk. It was for the baby. Eleanor told me that she was with child. When asked how an 87 year old woman could logically be pregnant, she just smiled and said that it was an amazing miracle. So for the remainder of her stay I would provide her the extra milk for the "baby" wondering how I would approach the possibility of her going into "labor."

Eleanor use to be a personal spy for FDR during the war. Well, that's what she told me. She spied on the Germans while traveling in Morocco and Algeria. Odd.....no mention of Humphrey Bogart and Casablanca.

I past by her room one evening and heard her having a conversation. I asked Eleanor who she was talking to since I saw no one else in her room. Eleanor claimed that she was having a nice long distance talk with her husband. I reminded Eleanor that she was a widow. Eleanor just laughed and said that her special instrument allowed her to contact her departed husband. She then proceeded to usher me out of her room for this was a private husband and wife conversation.....three's a crowd, you know.

A fixed delusion is a powerful force held together by time and old fashioned "wishful thinking." Eleanor and her late husband never had children of their own. I reasoned that she probably had wanted children and that this thought was so powerful that she convinced herself that she was pregnant. In this case always with child and soon to give birth but not quite reaching the desired goal.

Short Sales and the Road to.....Conspiracy?

As mentioned in my last post, I have information on the importance of short sales and how they fit into the scheme of the stock market. And provided is an interesting take on why short sales were suspended. Makes you think.

The end of shorting ban may mark the MT bottom by Andy Bebut, Wall Street Examiner.

Shorting is essential for market stability. It provides liquidity, and
short covering prevents big crashes. It’s an open question if the authorities
engineered the market crash on purpose or the shorting ban was just a knee-jerk
reaction no matter what the consequences are.

Suppose the Treasury welcomed the market meltdown and used the shorting ban
to facilitate it. What could be the reason for that? I can name several:

* The market crash provided the Congress the ability to vote on $700 bln
bailout package without much complaint from the sheeple.

* It crashed commodities and emerging markets, helping the strong dollar. The strong dollar is our policy, is it not?

* The market crash scared money into Treasuries. It’s not enough to get the $700 bln; you actually need to raise those $700 bln before you can spend it .

* The initial rally after the ban let the smart money to exit the market with profit, so it helped to recapitalize some broker-dealers.

* It also helped to recapitalize some financials who were quick enough to sell some common stock on the bounce.

The end of the shorting ban will help, and this is why.

There are two most important shorting-based strategies that provide liquidity to the market. First, just going long one stock, short another is the net injection of capital into the market. Second, shorting the common and going long preferred, convertible or bond is providing liquidity to the credit market. Those hedged trades are safer than any non-shorting strategy and hence can be more levered.

If I’m right the first signs of the credit market improvements will show up by the end of this week and the market is only waiting for good news to trigger a rally.

A Slow March Towards Socialism

As I write this morning, the Dow is erratic, akin to a cardiac patient in V-tach. Paulson's speech yesterday did not give any boost of confidence as the Dow, which had been in the positive, plunged to finish at -189.

Where are we going? This global crisis seems to be like that of a "dog chasing it's tail". What goes around seems to be coming around with a vengeance.

White House considers bank ownership stakes

The Bush administration has confirmed it is considering taking
ownership stakes in certain U.S. banks as an option for dealing with a
severe global credit crisis

US considers buying stakes in banks

Treasury Secretary Hank Paulson will reportedly use his new
authorities to buy direct stakes in U.S. banks to help restore confidence in
the markets, but investors didn't seem convinced.

Danger: The wipeout is still ahead

We haven't seen the moment of capitulation that ends a market bust, so
the fear and pain will get worse before they get better....

UK view? Financial crisis: We're all socialists now, comrade

A quarter of a century ago, in the era of the Labour manifesto that was
dubbed (by a member of the Labour shadow cabinet) "the longest suicide note in
history", when one wanted to depict the absurdity of the view of the world
advanced by Tony Benn and Michael Foot one simply had to say: "They want to
nationalise the banks!" People fell about laughing.

Given the socialistic leanings of our Prime Minister, it may well have been a move he undertook calmly and, quite possibly, with a little excitement
Today, it is all considerably less funny. We are all socialists now.

The stock market is generally considered a good indicator of "confidence" in the country and it's policies. Based upon how things are going, my "confidence" factor is a little unsteady.

Update: 1220 PST

The Dow now stands -365 points and its now below 9000 to 8900! The economic toilet continues to be on automatic flush cycle. Could this be the expected initial reaction to the lifting of the Short Sale ban? Will discuss the issue of short sales in another post. It's interesting and may provide a glimmer of hope for tomorrow....or maybe not. Who the hell knows anymore. Free market concepts appear to remain in cardiac arrest.....screw 360 joules....ramp the defib up to maximum with full bolus fluid challenge?

Update: 1310 PST

The Dow continued it counter clockwise imitation of the economic toilet flush. At the closing bell, Dow finished -679 to finish at 8579. The sell off contributed to credit concerns, Sec. Paulson's proposed bank buy, and.....the feeling that the Bailout help is too slow incoming.

General Motors takes a shot under the bow and is listing heavily in choppy water. Ford not much better. GM down graded by Standard & Poor's. GM stock now at $4.76, down 31%.

Can't wait until tomorrow. Anyone had the guts to look at their retirement accounts lately?

Debate? What Debate?

The Dow drops 508 points. Iceland goes hat in hand to Russia for a $ 4 billion loan to keep it from economically melting into the Atlantic. Europe is standing on the edge of their version of "recession/depression" roulette. At a time when the whole world is looking for future leadership, all we get is 90 minutes of equal time campaign ads. Both candidates could have saved time and money by just re-running the first debate. Yes, both candidates presented their respective positions. They were polished and sincere, but no new ground was broken.

McCain missed another golden opportunity to force the issues for economic recovery. Linking Obama and the Democrats to Fannie and Freddie only once, and rather weakly, does not cut it. McCain's proposal for implementing a program to help bailout mortgage foreclosures will not resonate well with the general public and most Republican voters. Did not Sen. McCain review recent polling data that would have shown that the overwhelming majority of Americans were against bailing out those with sub-prime mortgages? The rest of the debate was the usual campaign boiler plate of platitudes and generalities. This was a horrible debate format for a debate of this magnitude.

As I see it, the debate ends in a tie, and a tie will be spun as a victory for Obama by the MSM.

McCain and the "Ghost" of Bob Dole

The last month until the election maybe too little and too late for John McCain and the Republicans. McCain may have made a strategic blunder by backing last weeks Senate and House Bailout Bill. McCain's lack of true conservative principles have now bubbled to the top. At the very least, McCain should have backed the free market principle by demanding a free market solution. This would have been a sharp contrast versus that of Obama and put McCain as the defacto leader of a growing population of voters who are angry and dissatisfied with both Congress' and the Administration's handling of this financial crisis. The champion of anti-ear marks simply caved. By backing and voting in the affirmative for the Senate version of the Bailout along with its additional tacked-on $100 billion plus pork package, McCain unceremoniously abandoned his only self promoted positive attribute against an irrational Obama populist movement.

McCain now must rely on a popular, yet unproven running mate to plug the ever growing leaks in his campaign ship. History overwhelmingly reveals that come election day what really matters will be the top of the ticket. Couple history with McCain's current disjointed message and his inability, or out right refusal to attack Obama's sordid past political record makes it almost impossible to make up ground. Can it be done? Some pundits believe so, but only if McCain does what is alien to his political character....go heavily and massively negative.

There is a historical context that portrayed McCain's current predicament, Bob Dole's 1996 run for the presidency. Dole's haphazard approach and "nice guy" attitude easily assured Bill Clinton's re-election. Towards the end of the election, Dole was left crying out in the political desert, but there was no one left to hear the message. McCain should take heed.

Bailout Bill Gains Traction-House Likely to Pass

It appears that enough "no" votes from Monday's House vote likely to change to "yes." Will Republican House members follow?

How will the Wall Street respond? And will it work? Some are saying.....no!

"At best, Congress will pass a quick fix that's bound to fail in the long run. Meanwhile, some experts offer solutions -- including $500 billion in tax rebates -- that could work."

My guess is that we will be back in "crisis" mode by next month.

Great Night for Gov. Sarah Palin

Gov. Sarah Palin did an outstanding job going toe to toe with Sen. Joe Biden in tonight's Vice Presidential debate. She appeared to be witty and equal to the task of jabbing Biden with economics and his/Obama's past voting record. For once, Gov. Palin started, what hopes to be, the Republican's unearthing of the Obama/Biden past voting records. Sen. McCain needs to follow up when he debates Sen Obama next week.

Granted, Gov. Palin's responses were weaker when discussing world issues and foreign policy, but she kept her head above water. This appears to be a vast improvement since the last time she was quizzed by Gibson and Curic. This can be attributed to last weeks debate "boot camp" that was held in Arizona. Overall she came across believable and likable.

In all fairness, Sen. Biden did a credible job of presenting the Obama positions. His 30 plus years in the Senate showed in his knowledge base. There should be no doubt that the American voter has two campaigns with a different political philosophy, in other words, there are two notable differences for voters to choose from.

Who won? As usual, it depends on your political persuasion. The poll on the Drudge Report has 73% voting that Palin won. A check of NBC, CBS, ABC, CNN, and MSNBC show that an over whelming number thought that Biden won. During the 2004 Presidential debates, I recall receiving emails from Democratic operatives instructing individuals to vote in all on-line polls as often as the sites would allow. So, I'm a little suspicious for the wide margin for Biden in the MSM polls.

For those Obama supporters who think that Gov. Palin did an outstanding job against Biden, remember that your party and their surrogates are to blame. By constantly painting Palin as an intellectual idiot and white trailer park trash, Palin was able to do what she has historically been effective at....debating.

Let's hope that this night's performance will jump-start McCain.

Wall Street's Answer to the Senate

So, after all the urgency and rushed vote of the Senate last night, the Dow falls 348 points. Somehow, I don't buy the drop attributed to "bad" economic news. Maybe Wall Street grasps the fact that this bill would only be a band aid at best?

Auto sales down! Ford states that sell of popular Pick-up series down 42%. It may difficult to secure a great auto loan, but auto loans have not dried up. Here in the San Diego area one can still secure a good auto loan, pending fair to good credit history. I would venture that what may be hitting the auto industry harder is the high price for a gallon of gas and heavy price tag for "fuel efficient" automobiles. Pop quiz, tell me why Pick-up truck sales are down?

This is a Joke....Isn't It?

Washington Mutal, WaMu, just went under and had to be bought out by Citi Corp. I believe that WaMu lost about $50 billion over a short period of time. WaMu's CEO, who had only been in the position for 3 weeks got a very generous $19 million pay off while walking out the door!

Now, lets be honest, in a free market society, did WaMu really get what it deserved?

It Looks and Quacks Like a Duck Therefore It's a Dog

So our Senate meets, debates, votes, and passes a bill that basically has the same number of pages as that of a Steven King novel. I'm venturing that the bill's content is far more horrific than said novel.

Supposedly this bill is identical to the House bill with one large marked difference, instead of a $700 billion bailout, our illustrious Senators have added an additional $100 Billion worth of unsalted pork. This additional tack-on covers items like alternative energy programs, tax relief items, etc.

I'm certainly not an economic whiz, but what do energy programs have to do with credit and liquidity issues laying siege to Wall Street? The intent is targeted towards those House Republicans and Democrats that shot down last Monday's bill believing that these additions will entice the renegades to come back onto the reservation. But isn't the $700 billion give away still there?

Remember, our Sec. of Treasury has given no assurance that $700 billion will solve the current crisis. There is a track record that pretty much says it will more than likely not solve the issues. The past month of Federal bailouts have yet to calm our financial markets, why will additional funds do any different. We are attempting to inject a Socialistic antibiotic when what should be looked at is the use of a Capitalistic antibiotic. Our patient is a free market institution. Free markets and Socialism do not seem to mix. Therefore you have a financial allergic reaction. It initially looks like the medicine is working, then all the antibodies and antigens start to interact and shock ensues.

These free market ideas have been batted around as potential treatments:

Reduce capital gains tax, or temporarily set them to zero for 1 year. This would allow the unencumbered movement of investments to bank accounts allowing banks to have the necessary funds to make loans.

Allow banking and mortgage firms that made bad decisions to file for bankruptcy or to be bought out by stronger competitors. If toxic sub prime mortgages have the possibility of being profitable at a later time, stronger firms may have the ability to temporarily absorb the impact.

Reduce the business tax to make it on par with the rest of the world. This would stimulate growth and employment....and make us competitive in the global market.

Reduce government spending, reduce federal and state income taxes. This would mean more money pumped back into the economy.

Go back to sound lending principles. Have the federal and state governments stay out of the mortgage business.

And lastly, have the government stay the hell out of our business!

Calm Before the Storm?

As I post this morning, the DOW is up 256 points.....why? Calm before the storm? Perhaps the market is up due to the thought that eventually Congress will have "something" on the books. Perhaps certain stocks were artificially devalued due to yesterday's crash and people are buying.

A couple of days ago, Goldman-Sachs raised more than $5 billion in one day. If we're in a credit or liquidity crisis, how did they pull this off? Simple, by selling some of their holdings and assets. BTW, this is normal Wall Street maneuvering. Citi Corp buys Wachovia, Citi Corp certainly had assets and the ability to absorb Wachovia's liabilities. The same can be said of Washington Mutual purchase. The Fed pumped in over $600 billion into the system during the weekend. Is it possible that market principles are at work to somewhat clean up it's own mess?