San Diego Home Prices.......

If the average home in San Diego has come down in value by approximately 25% and the average home is priced around $600,000 then every "average" home owner is down about $150,000. How much more do they fall?

Obama's redistribution.........

Today on my way to lunch I passed a homeless guy with a sign that read "Vote Obama, I need the money." I laughed.

Once in the restaurant my server had on a "Obama 08" tie, again I laughed as he had given away his political preference--just imagine the coincidence. When the bill came I decided not to tip the server and explained to him that I was exploring the Obama redistribution of wealth concept. He stood there in disbelief while I told him that I was going to redistribute his tip to someone who I deemed more in need--the homeless guy outside. The server angrily stormed from my sight. I went outside, gave the homeless guy $10 and told him to thank the server inside as I've decided he could use the money more. The homeless guy was grateful.

At the end of my rather unscientific redistribution experiment I realized the homeless guy was grateful for the money he did not earn, but the waiter was pretty angry that I gave away the money he did earn even though the actual recipient deserved money more.

I guess redistribution of wealth is an easier thing to swallow in concept than in practical application..........OR....... IS IT THAT REDISTRIBUTION OF SOMEONE ELSE'S WEALTH IS A GREAT IDEA..............or just a fools game !!

Conflicted Wall Street advice.....

Kaboom.................

John McCain

I cast my vote for the distinguished aviator the other day. Election day will find me in the great state of South Dakota so I went ahead and got my civic obligation out of the way.

Let me tell you why I voted for McCain.

The financial calamity that we have experienced in our nation has hurt hundreds of millions of great Americans. There has been zero accountability by our government as to who caused it and nothing done to rectify it.

I know that the candidate opposing John McCain opposed attempts to put stricter regulations on Fannie Mae and that he was the second largest recipient of campaign contributions from Fannie Mae. I know that this very year his campaign sought the advice of the former Fannie Mae CEO, Franklin Raines. Why Mr. Raines isn't in jail for all the shady shenanigans he pulled defies common decency toward the American people. You see, I believe Raines, Fannie Mae, Wall Street, the mortgage industry, the banking sector are all at the heart of "the mess" that defines Washington and our financial system. McCains opponent claims he is going to clean up our government under the banner of "change".

I know little about what "change" this young Senator stands for. His rhetoric is superb. I know that he opposed the practice of putting violent young felons on trial as adults. That was all the "change" I needed to cast my vote.

News of the weird............

Back in July, 500 truckloads of white sand were stolen from the location of a planned resort in Jamaica. This works out to around 400 meters of beach—quite a heist. Police are taking the investigation very seriously, going so far as to test other beaches for traces of the missing sand.

Though there have been no arrests, there are suspicions that "hotels may have been involved."

In 2007, a Hungarian resort was also relieved of its beach, huts, and sun loungers.

Hank "sign here, we're injecting you" Paulson.........

Ben Bernanke and Hank Paulson spoke Monday to alternatively discuss the need for another economic stimulus package and make the case for the bailout efforts taken to date.
Many issues about the rescue plan and the economy remain unanswered, but a more fundamental question remains: Are the Fed chairman and Treasury secretary up to the job?
A resounding "no" is the answer from Christopher Whalen, managing director at Institutional Risk Analytics, who is particularly critical of Paulson.


The Treasury secretary is "grotesquely conflicted" in his efforts to bail out his former employer, as detailed here, and has found "common cause" with an overly lenient Fed chairman.
"They have a bias to preserve the derivatives market" -- the riskiest part of Wall Street, Whalen says, noting the government let Lehman and Bear fail but bailed out AIG and (according to Whalen) rescued Goldman Sachs and Morgan -- at least for the time being.

This should enrage you..............

From early 2004 till mid-2007, the nine banks named so far to participate in the government's rescue plan earned $305 billion. Since then they have posted losses or write downs of $323 billion (Wall Street Journal).

I haven't heard of any mega-bonuses from the good years being returned.

Buffett's thoughts for the deer stand.........

About the time that little fawn below your deer stand turns into a thick-necked, 14-pointer your 201-k plan (pun intended) will be back to record highs. Believe it. Warren Buffett does.

(Reuters) - Billionaire investor Warren Buffett is buying U.S. stocks, he wrote in an opinion column in the New York Times."A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful," Buffett wrote in the paper.Buffett acknowledged the economic news was bad, with the financial world in a mess, unemployment rising and business activity faltering.

"What is likely, however, is that the market will move higher, perhaps substantially so, well before either sentiment or the economy turns up," he said. "So if you wait for the robins, spring will be over.

"Buffett, who made his money by building his company Berkshire Hathaway Inc into a $199 billion conglomerate, wrote that investors were right to be wary of highly leveraged entities or businesses in weak competitive positions."But fears regarding the long-term prosperity of the nation's many sound companies make no sense," he said.

Buffett said major companies would suffer earnings hiccups, but added they "will be setting new profit records five, 10 and 20 years from now."

Joe, the plumber............

Having the main stream media attack this fine American is par.

Maybe when they get around to looking at their 201-k accounts (pun intended) they might do some analysis of who got this financial calamity off to a fine start.

Corporate Governance

In America, it is a joke. The wolves and fox are still guarding the hen house. Until that changes how or why would anyone commit private capital to help bail any company out?

Put some of these CEO's in leg irons and there would be some howling.

Or how about some of the clowns who sat on the Board of Directors and toasted the party line all the way to the meltdown. Let some inmates bend over these chieftains and politicians who got us in this mess. Now that would be some Obama-style, change!!!!!!

And the first guy to the slammer should be the guy in charge of the SEC.

Outrage.........

Where is the outrage? Who represents the anger of Main Street? What policy maker has our interests at heart first and foremost? What politicians should be tossed from office for the billions in losses suffered by American retirement plans? How do the chieftains of these Wall Street firms continue to rip off shareholders without any repercussions?

Letting the Democrats lead an inquiry into the horrorific financial mess is like letting the potheads guard the chips-n-dip. The SEC, out to lunch. Cris Cox is beholden to higher powers. Franklin Raines? Why that cat isn't in jail is anyone's guess. Robert Rubin, a near billionaire doing nothing; absolutley nothing.

Hank Paulson, taking care of the Mother Ship (Goldman Sachs, the firm he sucked $500 million out of before taking the Treasury job). Letting all those major firms go down BEFORE they change the mark-to-market rules is sheer travesty. Imagine the outrage of the thousands of former employees of those firms!

The lack of trust that America has for Wall Street and the slimy politicians trying to spend our money to extricate the big players from oblivion is warranted. I say the best start would be vote out any incumbent. That is a start in the right direction.

Panic is for losers..............

Third quarter 2008 statements are out and you might want to stop worrying, it doesn't do any good. The stocks don't know you own them and wouldn't behave any different if they did. So, first, take a deep breath. Get some perspective. If you don't have any, may I kindly offer up some for free.
First, review these facts of the market since I went to work on Wall Street in 1982:
1982: Double-digit unemployment
1983: Record budget deficit
1984: Technology new issues bubble bursts
1985: Dollar too strong
1986: Dow at 1800 - "too high"
1987: Stock market crash
1988: Worst drought in 50 years
1989: Savings & loan scandal
1990: Iraq invades Kuwait
1991: Recession
1992: Record budget deficit
1993: Clinton health care plan
1994: Rising interest rates
1995: Dollar at historic lows
1996: Greenspan "irrational exuberance" speech
1997: Asian markets collapse
1998: Long Term Capital collapses
1999: Y2K problem
2000: Dot-com stocks plunge
2001: Terrorist attacks
2002: Corporate scandals
2003: Gulf War II
2004: High oil prices
2005: Trade deficit - KATRINA hits
2006: Commodity prices spike- T buys BLS
2007: New Fed Chair, inflation, energy, metals, int’l

Now consider the following;

SAVERS PROCESS THE FUTURE THROUGH THE EMOTION OF FEAR.
INVESTORS PROCESS THE FUTURE THROUGH THE EMOTION OF FAITH.
SAVERS THINK THAT PAPER MONEY HAS REAL VALUE, IE. A $100 BILL.
INVESTORS KNOW THAT PAPER MONEY IS ONLY A MEDIUM OF EXCHANGE.
HARD CURRENCY IS NOT A STORE OF VALUE, PURCHASING POWER OF MONEY IS.
SAVERS THINK THAT LONG TERM RISK IS THE LOSS OF PRINCIPLE.
INVESTORS KNOW THAT LONG TERM RISK IS OUTLIVING YOUR MONEY.
REMEMBER, THE CPI OVER THE LAST 30 YEARS HAS TRIPLED, WHO TRIPLES THEIR INCOME? RISK IS THE EXTINCTION OF THEIR PURCHASING POWER. SAFETY IS INCREASING THEIR PURCHASING POWER.
SAVERS DO NOT KNOW THE DIFFERENCE BETWEEN LOSS AND FLUCTUATION. INVESTORS KNOW THE DIFFERENCE.
IF THE MARKET INDICES FALL 25%, THAT DOES NOT MEAN A LOSS OF 25%.
IF YOU DON’T PANIC, THERE IS NO LOSS. IF YOU DO NOT SELL, YOU HAVE NO LOSS.

THE DOWNS IN THE STOCK HAVE ALWAYS BEEN TEMPORARY. ALWAYS HAVE BEEN. THE UPS IN THE STOCK MARKET HAVE ALWAYS BEEN PERMANENT, ALWAYS HAVE BEEN.

THE REAL RISK IN STOCKS IS NOT OWNING THEM. THE LACK OF INTELLIGENCE IS NOT THE SAVERS DOWNFALL. FEAR AND THE LACK OF STOCK OWNERSHIP IS!

Stocks solve long-term problems and should be owned for the long haul. If you are going to puke them up every time America stumbles into a mild recession or correction you deserve your investment fate. Listen up and pay attention here. At the end of an investor’s life, less than 5% of total lifetime return will come from what the investments did versus other investments. The other 95% will come from how the investor behaved. I have a firm belief that there is no relationship between investment performance and investor performance. Stock market success is a function of two things: first, recognition that the markets will go down and sometimes go down a lot and two: preparation to regard those declines as either non-events or buying opportunities, and never as an occasion to sell in a panic.

With all certainty, the most boring and mediocre stock fund in your portfolio, the one that you hold onto during a vicious and severe bear market is infinitely better than that world-class stock fund that you sell out of at the bottom of a temporary decline.

Now, if your serious retirement portfolio is making you feel uneasy and you feel it needs professional, unbiased attention, let’s talk for a moment on what you might do. The first thing you should do would be to shut off CNBC. I hope someday CNBC will be required by law to flash on the TV screen a graphic that says “Nothing that happens in the market in the next 30 days will matter in 10 or 15 years”.

You also might want to stop reading the financial press. Yes, I read three papers every morning before the average guy gets out of bed, but journalism always gets it wrong. It has a relentless bias to the negative. I call it financial pornography. Reporters never report my reasons the stock market is headed up in our lifetime and it isn’t the job of journalists to make people great investors. It’s their job to make people come back for more journalism.

The simple lesson to remember is that markets are not logical or reasonable; they are emotional and unstable. Markets are crowds of people. As we know from attending sporting events or concerts, the normal rules of behavior do not apply when we are in large groups. If we try to predict what a crowd will do based on logical behavior of a single person in isolation we will most likely be mislead. And so it goes with the stock market.

Today the black boxes at a handful of firms scan the exchange order books every millisecond and automatically execute algorithmic trades, ripping any conceivable advantage away from the public. They are the casino, with structurally embedded multi-billion annual profits — leaving everyone else on the other side of the zero-sum game. We think that sitting and doing cold and hard calculations on valuation levels and the reasonableness of gains is as futile as predicting what a teenager might do at a rock concert. The market is not an exercise in calculus. It is primarily an experiment in crowd psychology.

Today, stocks are on sale, we are in a recession and stocks are down to more attractive buying levels. Stay the course, stay smart and keep contributing to your 401-k. And don't forget one thing. I've never met a successful pessimist.

Wall Street's Con Artists to the end.........

WASHINGTON - Days from becoming the largest bankruptcy in U.S. history, Lehman Brothers steered millions to departing executives even while pleading for a federal rescue, Congress was told Monday. As well, executives who feared for their bonuses in the company's last months were told not to worry, according to documents cited at a congressional hearing. One executive said he was embarrassed when employees suggested that Lehman executives forgo bonuses, and cracked: "I'm not sure what's in the water."

The first hearing into what caused the nation's financial markets to collapse last month, precipitating a $700 billion bailout, opened with finger-pointing and glimpses into internal company documents from Lehman's chaotic last hours.

Rep. Henry Waxman, D-Calif., chairman of the House Oversight and Government Reform Committee, said the giant investment bank was "a company in which there was no accountability for failure." Lehman's collapse set off a panic that within days had President Bush and Treasury Secretary Henry Paulson asking Congress to pass the rescue plan for the financial sector.

Richard S. Fuld Jr., chief executive officer of Lehman Brothers, declared to the committee "I take full responsibility for the decisions that I made and for the actions that I took." He defended his actions as "prudent and appropriate" based on information he had at the time.

"I feel horrible about what happened," he said.

Waxman questioned Fuld on whether it was true he took home some $480 million in compensation since 2000, and asked: "Is that fair?"

Fuld took off his glasses, held them, and looked uncomfortable. He said his compensation was not quite that much.

"We had a compensation committee that spent a tremendous amount of time making sure that the interests of the executives and the employees were aligned with shareholders," he said. Fuld said he took home over $300 million in those years — some $60 million in cash compensation.

Waxman read excerpts from Lehman documents in which a recommendation that top management should forgo bonuses was apparently brushed aside. He also cited a Sept. 11 request to Lehman's compensation board that three executives leaving the company be given $20 million in "special payments."

"In other words, even as Mr. Fuld was pleading with Secretary Paulson for a federal rescue, Lehman continued to squander millions on executive compensation," Waxman said before Fuld appeared as a witness.

The government let Lehman go under Sept. 15, only to bail out insurance giant American International Group the next day, in a cascading series of financial shocks and failures that put Washington on track for the multibillion-dollar rescue starting the end of that week.

Waxman described that plan as a life-support measure. "It may keep our economy from collapsing but it won't make it healthy again," he said.

That sentiment echoed on Wall Street, where the Dow Jones industrials sank below 10,000 on Monday for the first time in four years. Investors fear the crisis will weigh down the global economy and the bailout won't work quickly to loosen credit markets.

The rescue plan, now law, was so rushed that the usual congressional scrutiny is only coming now, after the fact.

"Although it comes too late to help Lehman Brothers, the so-called bailout program will have to make wrenching choices, picking winners and losers from a shattered and fragile economic landscape," said Rep. Tom Davis of Virginia, the committee's senior Republican.

Waxman said that in January, Fuld and his board were warned the company's "liquidity can disappear quite fast."

Despite that warning, he said, "Mr. Fuld depleted Lehman's capital reserves by over $10 billion through year-end bonuses, stock buybacks, and dividend payments."

Waxman quoted Fuld as saying in one document, "Don't worry" to the suggestion that executives go without bonuses.

That suggestion came from Lehman's money management subsidiary, Neuberger Berman. Waxman quoted George H. Walker, President Bush's cousin and a Lehman executive who oversaw some Neuberger Berman employees, as responding with a dismissive tone to the idea of going without bonuses.

"Sorry team," he wrote to the executive committee, according to Waxman. "I'm not sure what's in the water at 605 Third Avenue today.... I'm embarrassed and I apologize."

Rep. Elijah Cummings, D-Md., said: "I wonder how he sleeps at night."

Fuld said in his statement that the company did everything it could to limits its risks and save itself.

"In the end, despite all our efforts, we were overwhelmed, others were overwhelmed, and still other institutions would have been overwhelmed had the government not stepped in to save them," he said.

The 1999 Clinton Administration.........

"In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.The action, which will begin as a pilot program involving 24 banks in 15 markets -- including the New York metropolitan region -- will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring. Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits......'Yet there remain too many borrowers whose credit is just a notch below what our underwriting has required who have been relegated to paying significantly higher mortgage rates in the so-called subprime market.'' (Frank Raines statement)......By expanding the type of loans that it will buy, Fannie Mae is hoping to spur banks to make more loans to people with less-than-stellar credit ratings....In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980's.''From the perspective of many people, including me, this is another thrift industry growing up around us,'' said Peter Wallison a resident fellow at the American Enterprise Institute. ''If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.''