Why More Republicans Didn't Support Bailout

I stated in comments on The Fly's blog here and here that the reason the bailout failed to pass today is because Speaker of the House Nancy Pelosi is using the issue for political purposes.

As Speaker, she has Congressmen to elect in five weeks and if she can use votes for the bill to help win some seats, then she will do it.

A couple hours after making the comment, I stumbled upon the following YouTube interview with Karl Rove, who reinforced my impression with actual facts and observations.

Regardless of what you think about Rove, he knows politics and he knows how to get tough votes through Congress.

So, hold your nose and click on the interview. It is only four minutes long, you'll survive and you might gain a little insight into the inner workings of Congress, although that isn't necessarily a good thing for one's blood pressure.

Ron Paul Schools'em

Even though I am a card-carrying member of the VRWC (Vast Right Wing Conspiracy), I generally consider Congressman Ron Paul to be a crank, but sometimes he gets it right. Today was one of those days.

Today's Ride

Rode around the lake after my wife finished her eight-mile training run for next month's Grand Rapids Marathon. The lake ride is very hilly which makes for an exhausting but quick ride.

Here is the ride's elevation profile, courtesy of MapMyRide. Lowest elevation is 728 feet, and maximum elevation is 794 feet. Not extreme changes in elevation, but they come one after the other so recovery time is minimal.


Distance: 10.24 miles
Time: 0:44:08
Avg. Speed: 13.9
Max. Speed: 30.8 (new pavement, long downhill run!)
Calories Burned: 457

Time for a shower, then we're heading to the running shoe store so my wife can get a new pair of shoes and break them in over the next three weeks.

MA 50 Cross Over & Cross Under Updates

My Contribution to Politics Tonight

Bullwinkle had it coming, that's all I'm going to say on the subject.

Triple MA Cross Over, Two Year Results

Triple MA Cross Over Update

Looks Like Fun

I want one.

Small Banks Benefiting from Credit Crisis

The Washington Post reports that small community banks are being flooded with deposits as the big banks tank.

Taking to the Open Road

Once upon a time in an era commonly referred to as BC (Before Children), it was common for my wife and I to hop on our bikes for a 10-mile ride around our local lake, or head out into the countryside for a quick 20-mile ride.

On at least one Sunday morning, we rode our bikes 20 miles to church, then turned around and rode 20 miles home. I also had a small group of riding buddies who would meet early Saturday morning, ride 22 miles to grab some breakfast, then ride back home. We did that on a weekly basis for a couple summers.

Now, several years and two kids later, I weigh more than I used to and about 10 to 15 pounds more than I should. And I wasn't even the one giving birth! Not good.

Making the situation worse, however, is the fact my wife became a marathon runner three years ago. So, even though she did give birth to our two children, she weighs the same today as she did when we got married 15 years ago, and she is all muscle.

Naturally, she has been on my case, in a pleasant but persistent fashion, to start taking better care of myself, especially when it comes to exercise, or the lack thereof.

I took an initial step in that direction back in May when I walked the 13-mile Indy Mini-Marathon with my wife and sister. While I trained for the mini-marathon with long walks, those went by the wayside soon after the event was over.

Then, two weeks ago my sister called and asked if I wanted to ride with her in the Nappanee Apple Festival bike tour, which featured a 25K, 50K and 100K ride through Amish country. She was doing the 50K (31 mile) and needed a riding buddy.

So, with only a week's notice and no time to train, I agreed to ride. My wife also wanted to ride, so we borrowed my brother-in-law's bike, and off we went to northern Indiana's Amish country at 7:30 a.m. last Saturday.

The ride took us past dozens of Amish homesteads with their simple, white houses, and meticulously cared for gardens. We also passed several horse-drawn buggies and many Amish on bikes, including one family of about six. The kids were out front while mom and dad rode side by side in the back of the group, it was a great scene worthy of Norman Rockwell.

We finished the ride in 2 hours, 22 minutes, which wasn't bad considering two of us are out of shape. The best part of the ride, though, was the homemade apple pie and ice cream that awaited us at the finish line. Good stuff, unfortunately, they didn't let me take an entire pie home with me.

The ride was such a nice experience for all of us, that we are now looking at doing another ride in October in either northern Indiana or southern Michigan.

On the home front, my wife and I are considering taking a week-long biking trip through the Florida Keys in January or February, and she would like to try her hand at a triathlon next year. So, we've spent some time researching bikes on the Internet to replace her current bike, which probably has enough steel in it to create two new ones if we melted it down.

My ride is a Raleigh Grand Prix (pictured below), which I bought four years ago with the intention of taking regular rides. Total mileage over the first three years of ownership was less than 100 miles, while this year's total mileage, including a 17-mile ride tonight, is about 100 miles.


I have no idea if my motivation will survive the next few weeks, let alone the upcoming winter months, but riding in the Apple Festival and taking four-mile rides around town with my seven-year-old daughter this summer seems to have rekindle at least some desire to exercise.

So, let's see how it goes and how long it lasts. To keep me honest, I'll be posting basic stats for each ride, starting with the details of tonight's trip.

Distance: 16.98 miles
Time: 1:11:48
Avg. Speed: 14.2
Max. Speed: 22
Calories Burned: 825

A-10 Warthog Receives Weapon System Upgrade

The Genesis of Financial Armageddon

Professor of Economics Stan Liebowitz has an interesting column in Wednesday's New York Post outlining the creation of today's financial meltdown. According to Liebowitz, it all began in the late 1980s.

The shift began in 1989, when Congress amended the Home Mortgage Disclosure Act to force banks to collect racial data on mortgage applicants. By 1991, critics were using that data to paint lenders as racist by showing that minority applicants were approved at far lower rates. Banks were "Shamed By Publicity," as one 1993 New York Times headline put it.

In fact, they found a racial disparity only by ignoring relevant data on applicants' ability to make mortgage payments - such as their assets and credit history.

The full article is here.

Forbes Offers Up Plan B

Instead of spending $700 to $800 billion on a Wall Street bailout, Forbes puts forth a more temporary and reasonable solution.

The Treasury Department has told members of Congress that the U.S. faces an economic tsunami if a bill allowing the government to purchase up to $700 billion of toxic securities from financial firms is not passed this week.

Unfortunately, this solution of giving the U.S. Treasury almost unlimited power to buy distressed securities could be avoided if the government made some simple (and temporary) changes to mark-to-market accounting rules. So far, and for many unknown reasons, these changes have been considered off limits.

Full story here.

H/T: JackRyanBauer

Quote of the Day

Congressman Mike Pence, one of the best members of Indiana's Congressional delegation, had this to say about the $800 billion bailout proposal:

"I must tell you, there are those in the public debate who have said that we must act now. The last time I heard that, I was on a used-car lot," said Rep. Mike Pence, R-Indiana. "The truth is, every time somebody tells you that you've got to do the deal right now, it usually means they're going to get the better part of the deal."

Full story here.

MA 50 Cross Over & Cross Under Update

Triple MA Cross Over Update

Short Selling To Be Banned

MarketWatch is reporting tonight that short selling will be temporarily banned. Idiots.

Pink Floyd Live in Paris, February 20, 1968

Richard Wright, a founding member of Pink Floyd, died Monday of cancer. Here is a clip from Pink Floyd's performance on the Bouton Rouge show broadcast live in Paris, France, in 1968. 

I was only 11 months old when this film was shot. Feel old yet?

GM Officially Unveils Chevy Volt

MarketWatch has the story here, and while a price has not been announced yet, some analysts are predicting an MSRP in the $40,000 area. 

At that price, it is unlikely that a buyer could recoup the extra cost based upon fuel savings, so a good bit of altruism will be needed to justify this purchase.

Design wise, I expressed my thoughts in this post.

Someone Call H.G. Wells

The invasion has begun, hide the women and children immediately.

Headline for the History Books

Just wanted to preserve this headline for posterity's sake.

Australia Exchange Suspends Lehman Operations

The Australian Stock Exchange suspended Lehman's operations in that market today. Details here.

UPDATE: Lehman issued a statement this morning announcing its intention to seek Chapter 11 protection. Bloomberg has the details here.

And here is Lehman's press release.

Lehman Employees Clearing Out Desks

Lehman employees are clearing out their desks tonight. Chip East captured this pic for Reuters.

$70 Billion Fund Created To Ease Liquidity Crunch

Ten banks and securities companies have formed a $70 billion loan pool to help ease the liquidity crunch. The Wall Street Journal has the details here.

Merrill Sells to Bank of America

Merrill's board tonight agreed to sell the company to Bank of America for $29 per share, or $44 billion. The sale price represents a 71 percent premium for Merrill stock, which closed Friday at $17.05.

Full story here.

UPDATE: Bloomberg has more here.

Look Out Below

For those not following futures price action this evening, I wanted to let you know that NQ (Naz 100) is down 42 points, YM (Dow 30) is down 266 points, and ES (S&P 500) is down 35 points.

Everyone appears to be on Lehman deathwatch as potential buyers back away after the Federal Reserve failed to backstop large chunks of Lehman's debt like they did for Bear Stearns, remember that company?

Some are predicting a formal declaration of bankruptcy from Lehman by midnight.

Meanwhile, Bank of America appears to be buying Merrill for $25 to $30 per share.

Interesting times ahead.

MA 50 Cross Over & Cross Under Update

Triple MA Cross Over Update

New iPod Nanos Released, Apple Stock Drops $5

Guess the market doesn't like the new colors of the iPod Nano, which are now available at the Apple Store.

Micro Hydro Energy

Popular Mechanics has an interesting article on the potential use of micro hydroelectric sites throughout the country. One stumbling block, of course, is government regulations that make it difficult and expensive to bring smaller sites online.

Small-scale hydro sites won't solve all of our energy needs, but they can help.

That Rose, Fannie Mae

Cleverly done parody.


H/T: Barry Ritholz

Triple MA Cross Over Update

Here are the updates on the Triple MA Cross Over system. I didn't get these posted over the weekend because I was busy with several household projects, including replacing the frame on the front door of my house, which took most of Saturday.

Anyway, results for the five-day holding period are below, followed by the four-day holding period. Enjoy. 

This Is Why They Suck

Much has been made of GM's proposed Volt hybrid since the concept vehicle was unveiled at the North American International Auto Show in January 2007. 

In fact, some people believe GM's foray into hybrid and electric cars will enable the company to avoid bankruptcy while ushering in a new era for American car manufacturers.

At the 2007 auto show, GM introduced the Volt concept car – a vehicle with a hybrid soul hidden behind an edgy design with a "don't mess with me" aggressive stance featuring a low roof line and wheels pushed to the corners, an attitude polar opposite of the Japanese jelly bean Prius.

Love it or hate it, the design grabbed your attention and made you stop, look and ponder the question: Would I drive it?

The answer for many of us was, hell yes.

Here is the concept as shown in January 2007:

Fast forward 20 months and production photos of the Volt have been leaked, or released to the public, and instead of a car with an edgy, aggressive stance, consumers will be getting....another Japanese jelly bean design.

This, ladies and gentlemen, is why they suck:

Now, to be fair, I imagine there are a zillion reasons (aerodynamics especially) why the cool concept car has had its soul sucked out and thrown away, but this design leaves me cold. If I want a Japanese jelly bean design, I will buy a Japanese car.

Detroit listen up. If you want my money and my loyalty as a customer, then give me something fresh. Give me something new. Give me something cool. Give me something I can't find anywhere else. 

This GM-branded Prius doesn't cut it and I would never, ever spend my money to buy a car with such an uninspiring, soulless design.

GM had an opportunity to make a clear, bold and exciting statement about the company's future products, instead they played it safe. Nice, boring and safe. 

Unfortunately for GM employees, such behavior won't save the company.

A Veteran Speaks To Senator Obama

Swing Trade: HBI

I took advantage of the morning gap and closed my swing trade on HBI. This trade was supposed to be closed end of day Wednesday, but the gap is a gift and I love presents!

Bought Friday @ $24

Sold Monday @ $25.83

Gain of $1.83 or 7.6 percent.

Offshore Wind Power Leaes On The Way

The Wall Street Journal is reporting that the Interior Department is getting ready to lease large sections of the continental shelf for wind power production. Now, if we can just get a few oil wells thrown in for good measure.

The Interior Department, the agency that handles oil-and-gas leases in U.S. waters, is preparing to lease swaths of the outer continental shelf to companies that want to erect massive wind turbines. With the public-comment period for the proposal scheduled to end Monday, competition is heating up to develop wind projects on the shelf, the same underwater formation largely covered by an oil-drilling ban that has become a contentious issue in the presidential race.

The federal program signals the start of a broad push to develop offshore wind energy in the U.S. The country often is dubbed by renewable-energy experts as "the Saudi Arabia of wind" because of its vast, windy expanses, particularly in the Western plains. Now, rising interest in renewable energy is spurring exploration of the ocean, where the winds typically are heavier but the technological hurdles to tapping it are higher. That shift mirrors the oil industry's move to offshore wells decades ago.

Full story here

Conservatorship for Fannie & Freddie

The Washington Post is reporting the following:

The government has formulated a plan to put troubled mortgage giants Fannie Mae and Freddie Mac under federal control, dismiss their top executives, and use government funds to prop them up, government officials told the two companies yesterday, according to sources familiar with the conversations.

Under the plan, the federal government would place the firms in a legal state known as conservatorship, the sources said. The value of the company's common stock would be diluted but not wiped out while the holdings of other securities, including company debt and preferred shares, would be protected by the government.

Full story here.

UPDATE: Bloomberg has an article on Fannie and Freddie here, while the New York Times article is here. The Financial Times weighs in here.

UPDATE 2: The Wall Street Journal covers the story here. And apparently McCain and Obama share the perspective that Fannie and Freddie need to be restructured, with McCain explicitly calling for them to be closed.

UPDATE 3: MarketWatch has a story here and the number of comments already exceed 280, so go on over and enjoy the fun.

UPDATE 4: Barry at The Big Picture speculates the bailout bill will reach $500 billion.

Swing Trade: HBI

I bought HBI at $24 this morning after it triggered a buy signal yesterday on the Triple MA Crossover system. I liked that the stock went up on a day when the Dow was down more than 300 points and the Naz was down 75 points.

Guess people still need underwear even during a recession.

Win, lose or draw, this trade will be closed end of day Wednesday.

Swing Trade: QLD

I was stopped out of my RSI(2) swing trade early today. Almost bought back in at market close, but decided against it.

The three major indexes are oversold according to RSI(2), so I'm looking for a bounce, but don't expect it to last long.

NDX (Nasdaq 100) is 10 points above July's low and has an RSI(2) of 1.84, so we're into extremely oversold conditions, however, the Nasdaq, Dow and S&P still have further to go before reaching the July lows, so I don't think we're done going down.

And if Bill Gross is right about a pending financial tsunami, and I think he is, then the July lows probably won't hold.

Gross: Delevering Leading to Financial Tsunami

Bloomberg interviewed bond fund manager Bill Gross, who says the federal government needs to start buying assets to prevent a mild bear market from turning into a "financial tsunami".

"There is an increasing reluctance on the part of the private market to risk any more of its own capital,'' Gross said. "Liquidity is drying up; risk appetites are anorexic; asset prices, despite a temporarily resurgent stock market, are mainly going down; now even oil and commodity prices are drowning."

You can read the entire article here.

Gov. Sarah Palin Biography Video

This video was bumped from the Wednesday night convention schedule after Mayor Giuliani's speech ran long. Enjoy.

Swing Trade: QLD

I went long QLD at $71.44 on an RSI(2) buy signal issued last night. 

The Nasdaq 100 is oversold with an RSI(2) of 6, and it is sitting on the bottom trend line drawn thru the March and July lows and the daily S1 pivot point. Either the market bounces for a day or two, or it rolls over and dies.

My stop is tighter than normal at $70.44, for a risk of $1 per share. I'm using a tight stop because if the Nasdaq 100 breaks and closes below the bottom trend line, then I don't want to be long into the next leg down.

Commodity Hedge Fund Blows Up

This might help explain oil's dramatic decline, or not:

Ospraie Management LP is shutting its flagship commodity hedge fund after it lost almost 40% this year, according to a letter the firm sent to investors Tuesday.

Ospriae Fund Ltd., which had roughly $2.8 billion in assets at the start of August, is one of the largest commodity hedge funds in the world. It's down 38.59% so far this year, mainly because of a sharp drop in its holdings of energy, mining and resource stocks during a six-week period, the letter said.

More details at MarketWatch.