29 September 2008

Yikes!

Wheee! Can't remember ever seeing a week like this before! Oh me oh my.

I don't even know what to think anymore. Krugman says a bad deal's better than no deal. DeLong says we should just nationalize them all. Roubini says we all need to find a nice cave to live in. McCain said he only he could save the nation by getting the house republicans to vote for the bill, but in the end, Boehner said the house GOP killed it because Pelosi hurt their feelings. (Just for the record: I admire the courage of all the reps of both parties who voted no. This bill was railroaded through with little consideration and huge pressure, promises of doom if it did not pass, and it took a lot of balls to withstand that pressure and say "no." Whether that'll make things worse, I dunno, but I admire the balls.)

Wowie. I don't think anybody knows what's going on anymore.

And in the midst of the carnage, AAPL was downgraded today (nice timing, Morgan Stanley) and plunged 20% on the day:

Well, just for the record, I bought AAPL today, and also bought into the indices. I'm bullish, long-term, though for sure the short term looks bleak. But values like these don't come around too often.

Buckle up, kids! It's gonna be a wild ride!

17 comments:

  1. I'm bullish too. If I had some spare change, I too would have sunk more into AAPL.

    It's easy to get caught up in the panic selling but if you're a long term investor, you can just treat this as a discount on some of your favorite stock.

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  2. How sad it must be to live a life in which bad news for the country is good news for you.

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  3. How sad to ostensibly have a background in finance and not understand that there's money to be made in a down market (and I am not talking about short selling). Glad I'm not your employer.

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  4. Do you think Pelosi did us a favor by killing the bill with her over the top partisan speech effectively killing the bill

    It is weird that the far right and far left seem to be dedfellows in this not passing. it seems that the far right opposes it because they don't think government should steer market forces and the far left thinks thers should be even more regulation and micromanagement in the bill

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  5. Judd,

    First of all, did you read Pelosi's remarks? They were incredibly tame, with one passing reference to Bush's failed policies. If that "partisanship" was so fierce as to induce wavering GOP reps to oppose, then they really are a bunch of whiny-ass titty babies.

    Having said that, it may in the end be a good thing. Consensus is that this was a bad bill. Maybe they can come up with something better. I've heard talks of nationalizing, and talks of a small tax on stock transactions (like $0.25 per transaction), and other schemes? Who knows what they'll come up with.

    You're right about the weird bedfellows thing. The only thing I'd disagree on is that the dems who opposed it mostly did so because they don't trust Bush & Paulson and were unwilling to give them such unfettered control over the way the money would be spent.

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  6. I heard and saw the remarks. She comes across quite shrill, partisan, disingenous, very annoying PMS type of way. But yes that shouldn't sway you if you believe in the bill, but it sure make her look like nutty nut she is. No one is looking good, looks like there is many people to blame across the political spectrum from main street to wall street.

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  7. Why do people always use the adjective "shrill" when referring to female politicians? I've never seen anyone describe a man that way, regardless of what he said or how it was delivered.

    About Apple: There was a time when DH and I had a choice of investing a largish sum of money in Apple @ $13.00/share or starting our own company. We thought the company would provide better income and security over the long haul. Ha! Our industry changed, the economy went bad, and we lost the business. Meanwhile, Apple stock split and is now selling at ~$165 (last I looked).

    Dumbest decision we ever made. I kick myself daily.

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  8. *Yawn* 38 more years until retirement and counting.

    I heard somewhere that the average single-stock investor (vs diversified mutual fund-type investor) loses money in the long term, but don't quote me on that.

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  9. The more I ponder this I realize that although there is lots of blame to go around from wall street, main street, relaxation of lending rules with Fannie and Freddie --- the root of this is socialism. Everyone deserved a home, minorities were disenfrachised, etc. It looked great for awhile until the pyramid scheme had run its end game.

    The next socialist failure is taking a bit longer to run its course but it will make this current debacle a drop in the bucket. That is medicare and social security. No one will man up and talk about it. No is out ringing the alarm but it is going to collapse the US.

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  10. Well, Pelosi called the Republicans "unpatriotic" and such. However you see the bill, calling people names is not how you build a coalition. She could have just waited to have her little tirade.

    And I've often called men shrill. I never thought of it as a female attribute. It's when you repeat your argument a little louder each time, without adding any substance.

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  11. Fannie Mae and Freddie Mac were a big part of the problem. They are examples of government controlled businesses.

    And yet, government controlled business is the solution?

    We do not need more government rewards for bad business practices.

    There are plenty of problems in the business world without having government control even more of it.

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  12. Rogue medic,
    Fannie Mae and Freddie Mac were a big part of the problem. They are examples of government controlled businesses.

    Um, you need to check your facts. they were not government controlled (at least prior to being taken into conservatorship). They were federally chartered, but privately capitalized and privately managed. Get your facts straight.

    We do not need more government rewards for bad business practices.

    On this we agree.

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  13. jb said: "...The more I ponder this I realize that although there is lots of blame to go around from wall street, main street, relaxation of lending rules with Fannie and Freddie --- the root of this is socialism."

    You've got to be kidding. The root of the problem is unfettered capitalism. The solution to getting more low-income, urban and minority people into homes is not to lure them into ARMs or no-documentation loans, while suspecting at some point they won't be able to afford the mortgage payments. Lenders could have come up with much safer alternatives, but they were betting on a higher return on capital.

    Also, prior to this, banks were reluctant to lend to qualified minority buyers, or to support the purchase of urban housing. That's clearly racial profiling, and not something you can blame on "socialism."

    I'm ashamed to admit that Clinton supported deregulation, but let's not forget this happened under a Republican-controlled Congress, and Republicans are still condoning deregulation, despite recent events. Democrats are looking for more oversight, to prevent runaway greed from causing this problem again in the future.

    You right-wingers sure can twist facts to fit your agenda.

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  14. 8:04

    Check out Acorn, speeches by Maxine Waters, and such when they considered regulating fannie and freddie

    there is lots of blame but socialist programs all eventually fail. this played out within a few years, medicare will be a few more years, ans social security 1-2 decades.

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  15. I don't think there is a perfect form of government, or one that won't eventually fail due to the foibles of humanity. Unregulated capitalism is not sustainable, either, as we're now seeing.

    I may be progressive, but I don't go all the way to socialism.

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  16. From About Fannie Mae

    "The Federal Housing Enterprises Financial Safety and Soundness Act of 1992
    The Federal Housing Enterprises Financial Safety and Soundness Act ("FHEFSSA") of 1992 modernized the regulatory oversight of Fannie Mae and Freddie Mac. It created the Office of Federal Housing Enterprise Oversight ("OFHEO") as a new regulatory office within HUD with the responsibility to "ensure that Fannie Mae and Freddie Mac are adequately capitalized and operating safely." OFHEO is funded by assessments on Fannie Mae and Freddie Mac and is authorized to act without HUD oversight on a range of regulatory issues enumerated in the statute. FHEFSSA established risk-based and minimum capital standards for Fannie Mae and Freddie Mac. And, it established HUD-imposed housing goals for financing of affordable housing and housing in central cities and other rural and underserved areas."


    And from Freddie Mac's FAQ page - 7) Is Freddie Mac regulated?

    "Yes. The Federal Housing Enterprises Financial Safety and Soundness Act of 1992 created a regulatory oversight structure for government sponsored entities (GSEs) like Freddie Mac, divided to address two functions – our housing mission and our safety and soundness. The U.S. Department of Housing and Urban Development (HUD) has oversight responsibilities for the housing mission of the GSEs. Effective January 1, 2005, HUD established new and increasing affordable housing goal levels for the GSEs for the years 2005 through 2008. These goals require that a certain percentage of the mortgages we purchase support financing for housing low – and moderate – income families. Safety and soundness regulation is vested in the Office of Federal Housing Enterprise Oversight (OFHEO). Organizationally, OFHEO is located within HUD, but operates independently of the Secretary of HUD as it implements, monitors and enforces capital standards for Freddie Mac and Fannie Mae."

    It appears to me that there is a significant amount of government control of what these two Government Sponsored Enterprises do. Especially when you consider that the government created them to make mortgages more affordable. Read this very short piece - Fannie and Freddie

    And a very interesting 9 year old article Fannie Mae Eases Credit To Aid Mortgage Lending from the NY Times that includes this paragraph - "

    In July, the Department of Housing and Urban Development proposed that by the year 2001, 50 percent of Fannie Mae's and Freddie Mac's portfolio be made up of loans to low and moderate-income borrowers. Last year, 44 percent of the loans Fannie Mae purchased were from these groups."

    I did not claim that they were effectively controlled, but I don't really believe that government and effective go together all that well in a sentence, unless the goal is satire. Private enterprises certainly do not have a record of good risk management. Wall Street also does not do a good job of discriminating between lucky fools and competent executives. Both work too hard to be responsive to those even more gullible than themselves.

    This government/private chimera was a pratfall waiting to happen. The bail out will only encourage more recklessness, prolong the damage, and pass on more debt to our children.

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