Lex Luz

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    • Fri Nov 21st 10:26 AM
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      Commented on:
      Banks Are Yet Again Under Pressure
      Seems to me that before we direct more blame and ire at the UAW, their contracts, and the workers they represent, we ought to consider the possibility that the executives and managers across these failed instituions MAY have had slightly more influence in setting "strategy" (in quotes for a reason) than did the swing shift frame assembly team at plant 413 or whatever.

      The fact is that all three of these companies have been failing for 35 years; their failure to anticipate and understand the first Honda Civic put the big three out of business as surely as did last year's gas-price bubble and the ongoing credit unwind.

      Of course the union contracts are a burden that can no longer be borne. No question that the UAW and its leadership have had a hand in driving this industry into the turf. The final responsibility, though, belongs with executives and management whose hubris through four decades of mind-bending decline now extends to going begging to Congress for a massive handout. The fact that they can't even be bothered to figure out how they would use that money realistically to transform their businesses is a clear indication of their incompetence first, and their arrogance more importantly.

      The unions are nothing more than a rat feasting on the hindquarters of this dead, rotting elephant.
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    • Mon Nov 10th 11:17 AM
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      Should We Really Bail Out the Big Three Automakers with $73.20 Per Hour Labor?
      As in commentary around the financial crisis, people who attempt to pin "blame" on one segment - in the case of Perry and some commenters above, on the unions - merely have a political axe to grind and really don't forward the debate. To wit, I certainly don't recall the UAW being chief among the groups setting product or distribution strategy for the Big Three. Do unions have a hand in inefficiency, poor manufacturing quality, and ill-will toward domestic vehicles? Sure they do. Are they the sole cause of the demise of the US-based auto industry? Of course not. Attempting to paint them as such reveals nothing more than a political agenda that will never help us to figure out how to get through the crisis and emerge stronger on the other side.

      Let's start working together, rather than driving ourselves closer to civil war.
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    • Wed Nov 5th 10:25 AM
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      Kill Sarbanes-Oxley - Gingrich
      It is imperative in my view that we create a new framework for corporate regulation and good governance. Total deregulation is nonsensical and wrong-headed. Onerous regulation like Sarbanes is equally nonsensical and wrongheaded. There should be one criterion above all others: the promotion of transparency. The next should be simplicity.

      Only through the full transparency of all actors can confidence in markets be restored. Only through simplicity will enough parties come to the table to make the framework workable.
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    • Tue Oct 21st 10:53 AM
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      Will the U.S. Make Money on the Bailout?
      Not only will the $700 Billion be flushed down the toilet, but the next $700 Billion and the $700 Billion after that, followed by untold trillions more will also be flushed down the toilet.

      Paulson and CashCarry will make billionaires of a few more of their friends and everyone else in the US will eat sh*t. This is the swindle to end all swindles.
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    • Thu Oct 16th 17:05 PM
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      Financials: Is Fiscal Prudence Too Much to Ask For?
      "Secrecy and creative accounting" should be called what they really are: fraud. Unfortunately no one seems to regard fraud as a negative any longer, let alone a crime. GAAP were at one time used to guide organizations toward transparency in the spirit of compliance with law, whereas now they are used to guide organizations toward secrecy and the compliance with the letter of the law while totally violating its spirit.

      Today the core curriculum at the nation's business and law schools can fairly be summarized as "lie, cheat, and steal, and when you are caught, claim ignorance and feign indignance." Until we stop grinding ethics out of people, and start leading by example with ethical behavior and standards that reinforce it (and punish its violators), we are never going to recover lost trust.
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    • Wed Oct 15th 12:27 PM
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      Crude Prices Plunge - UltraShort ETF Positioned for Profits
      This strikes me as a less-than-thoughtful analysis. Clearly the momentum at present favors continued declines in oil prices, but what happens when the impacts of the global inflation regime created by the trillions of dollars in newly-issued central bank scrip begin to be felt? What would be the impact of oil being priced in a currency other than the dollar (though what that would be now seems a challenging question to answer).

      It seems imperative also to consider global instability and "wild-card" factors in making these decisions, too. What happens to the price of oil if Israel attacks Iran and Iran blocks the straits of Hormuz?

      The article isn't investment advice, it's a gambling tip. You may have the best of it for the next hand or two and maybe the DUG is a good gamble if all current trends hold and if no wild-card scenarios arise.
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    • Tue Oct 14th 16:14 PM
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      State Capitalism: Ideology Now Bonds Russia, U.S.
      Eagle, I'd argue that it's not socialism and it's emphatically not Marxism (have you read Marx?). Benito Mussolini said it best (and I'm paraphrasing) - fascism should really be called "corporatism"... because it is the combination of state and corporate power.

      The only reason to indulge in this kind of quibble is this: Norway is a Socialist state; Sweden is a Socialist state. They've traded some possible economic growth for a societal model in which people's needs (as defined in those countries) come first. Under the United States' model of fascism, we put corporate power first on the assumption that supporting economic growth will allow more people sufficient wealth to meet their needs and their comforts.

      Say what you will about these tradeoffs, but to call the new politico-economic regime in the United States "Socialism" is a distortion. We live under a fascist regime and we will very soon see its other, uglier manifestations - for example, arresting and holding people without charge. Oh, wait...
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    • Tue Oct 14th 11:29 AM
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      First Thoughts on the Fed Plan
      While you are correct in my view to say, "The last thing we need is for bad assets to be inexorably hitting the market, much the way they did in Japan," it certainly appears that this is in fact the plan. By my reading the efforts thus far appear fully designed to block transparency at every turn.

      The only way to restore confidence in market participants is to force complete transparency. This would require such a comprehensive transformation of banking culture AND of government culture that it is all but guaranteed not to happen. Therefore, the pain will be long and deep, and in all likelihood we will reach a point where the very future of the nation is in grave doubt.

      The crisis could be swiftly resolved with courage and honesty. Unfortunately, these traits are drilled out of students at the nation's top business and law schools as the first order of business.
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    • Wed Oct 1st 14:54 PM
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      In Case a $700B Addition to the Debt Isn't Enough
      "These lawmakers are all bigger lowlifes than common criminals. They steal our future so that they can get elected today and stay in office to line their pockets with legal bribes. "

      QUOTED FOR TRUTH.

      I will be voting against ALL incumbents this year and ask all people who believe in the promise of America to do the same. Whether you are a Republican or a Democrat or like me, Something Else Entirely, PLEASE, PLEASE, PLEASE vote to kick them ALL out this year.

      No incumbents, no mercy - KICK THEM ALL OUT.
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    • Wed Oct 1st 14:49 PM
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      Four Myths About the Free Market and Its 'Demise'
      Marc, yours are the most intelligent comments I've read here in ages. Rigid adherence to dogma IS a prescription for disaster.

      I generally believe that the best solutions are those that will arise through the mechanisms of markets left alone to function as they will. That said, I'm keenly aware that the orderly functionining of free markets depends on both buyer and seller having access to the same information - i.e., transparency and accuracy in reporting.

      It is incredibly easy to see that at least some of the foundation of today's challenges stem from a lack of transparency in credit markets in particular.

      Regulations aren't the boogeyman here; lack of transparency is. Typically, the best (not the only, mind you, but the best) intentioned regulations work to promote and enforce transparency and fair reporting in markets so that buyers and sellers can more reasonably establish fair prices and so that trust, over time, is bulwarked.

      There will never be a perfect balance of information between buyers and sellers, nor will their be a market perfectly free of government intrusion at some level, and I for one don't believe there should be. We should err on the side of less intrusion than more in my belief, and all of our efforts ought to be aimed at increasing transparency while limiting burdensome rules. That's the genesis of SANE regulation, which is what has been missing for some time now.
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    • Thu Sep 25th 09:05 AM
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      What's Wrong with the Trickle-Down Bailout?
      A well-written article that points to some of the flaws with the current plan, which is clearly tailor-made to punish taxpayers to the greatest extent possible. Frank's demands for bankruptcy cramdowns and for CEO pay reductions are idiotic window dressing designed expressly to distract taxpayers from the theft that is this bailout package.

      The fact that the bailout is designed expressly to grossly overpay for the weakest of the toxic bonds cannot be stressed enough. Taxpayers have a hard time understanding that this program won't cost $700 Billion, it will cost well into the trillions, and it is positively guaranteed to enrich the very banks who have made this mess. There are no provisions in this bailout to increase transparency or to facilitate the creation of a marketplace for these assets that would force some meaningful price discovery.

      The bailout as constructed is theft, pure and simple. You can bet that Dodd, Frank, and the rest of the Congresspiggies who vote for this trash will profit handsomely from it.
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    • Thu Sep 25th 08:58 AM
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      SEC Triggers Prison Construction Boom
      Magicians well understand the importance of diversion. Lots of flash and sizzle keeps people from seeing that the lady hasn't ACTUALLY been sawn in half. So it is with the SEC, who will now vigorously prosecute small fry crooks so that those who've stolen tens of billions can move along quietly to steal tens of billions more.
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    • Thu Sep 25th 08:48 AM
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      Bush's Speech: Surprisingly Coherent
      Under the current plan as I understand it, Treasury will purchase distressed assets at a "held to maturity" price largely established by the banks' "mark-to-myth&quo... model. The claim that we will purchase these securities at a discount to market value is a bald-faced, shameless lie. Rather, we are giving the very people who have profited from theft the opportunity to steal again by passing off the worst of their worst-performing bonds at prices that are likely to be 4 to 5 times their likely market value (assuming one uses the Lone Pine - Merrill deal as a benchmark).

      The better solution here is for Treasury to make an "all-or-nothing&q... deal for the securities in question at somewhere between 9 and 12 cents on the dollar. Banks can choose to participate or not, but they do NOT get the option of simply passing the trash to the taxpayer.

      Thinking that this plan will be designed in any way to "protect" taxpayers is utterly ridiculous. At best, this is extortion on the grandest scale in human history, and every government official involved in it thus far has proven him or herself either a liar or a dupe.
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    • Tue Sep 23rd 16:52 PM
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      Bernanke Gives Up on Reverse Auction Idea
      The better idea is the reverse auction, which contributes to price discovery. If banks don't want to sell their garbage to the Treasury at the market-clearing price discovered through a reverse auction facility, fine, let 'em keep it.

      It is readily apparent that the plan here is to transfer the very last bits of wealth into the pockets of bankers and drive the US into default. Paulson's pals on the street profit best from a facility that declares a "held to maturity" price and buys assets at those hugely inflated levels, so that is what will be done. The putative Dodd plan is nothing more than a red herring.
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    • Mon Sep 22nd 14:35 PM
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      In Defense of the Paulson Plan
      The notion that there would be "no banking system by next Tuesday" if this bailout doesn't occur is ridiculous on its face. Certainly there are premier institutions that would fail, and the shockwaves would be extraordinary. Yet there are hundreds more institutions that are well-capitalized and functioning, and they would emerge to become the new leaders of the industry.

      When partisanship trumps reason, plenty of intelligent people make all manner of oddball claims and assertions. Enough people believe them and that's how we end up where we are today - ready to hand a blank check to a man who has proven himself to be either a terrible prognosticator or an outright liar. I have an opinion about which of those he is.
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