More than the typical economic slowdown...

May 27, 2009 saw the S&P 500 index dive 2%. When this happens, even the novice investor would expect to see the 10 yr Treasury drop as investors sought safety.

The exact opposite happened. The treasury went 1.5% in the direction it normally does on a trading like the 27^th.

The public is being told “the banks are fine, the economy is showing strength.” This does not reflect REALITY.

Treasury yields MUST go higher to support the trillions being pumped into the banks and the welfare state. This is a simple function of inflationary action. If yields must go up in the future, why would banks loan large amounts to businesses or individuals now? Wouldn’t it make more sense to wait till the %’s go up and then loan out money? Shareholders demand a return on their equity holdings, don’t they? That is what I would do…but then I am the Feral Capitalist.

We are 12+ months into the residential mortgage meltdown. The trillion dollar elephant in the room is the looming commercial real estate paper market.

This summer and this fall is going to give the historians something to write about for YEARS.

Expect the market to dive (Elliot Wave pattern 3^rd wave downward) by the end of the summer, credit cards to dry up, and more Gov’t intervention by Christmas.

Nature abhors a vacuum, the equation must balance, the market will find an equilibrium, pick which ever you like…but you can’t stop the “invisible hand” that is going to bitch slap those who lie, cheat, steal in order to move markets or economies.

-- Lache, The Feral Capitalist

The Ascent of Money - PBS Documentary

PBS documentaries, for the most part, are a roll of the dice. However, I ran across the program “The Ascent of Money” while browsing PBS’ list of programs.

I clicked on the link and it turned out to be a fairly recent program (Jan-2009) that offers the option to watch the entire show online.

Fore the most part, “The Ascent of Money” is a fairly accurate summation of money, banking, markets and the current meltdown. One thing that I particularly enjoyed was how it showed the evolution of the housing market in the US, the role of Freddie Mac / Fannie, and ongoing housing problems.

It gave a quick node to Soros betting against the Pound, to Long Term Capital Management, Enron and its after effects.

It also broaches the subject of bonds, options, and derivatives. I was surprised at the concise and succinct way that it explained derivatives without loosing the audience.

It is no “Commanding Heights” but it is a well rounded program and is worth watching. “The Ascent of Money” is a definite addition to the Feral Capitalist home library.

-- Lache, The Feral Capitalist

SOX, the Mortgage Meltdown, and Ignoring Reality

I have been wondering when that little piece of legislation called Sarbanes-Oxley was going to be enforced.

SOX legislation is really geared toward accounting practices. However, one if its regulatory controls is that of highlighting and clearly explaining the way a firm makes and approves decisions.

Somewhere in these firms are risk analyses that point to the probability of Alt-A and subprime housing loans imploding. That means a Risk Manager and his/her Controller either willfully ignored the risk or ignorantly trusted the analysts.

Either way, someone should pay for their stupid decisions and mistakes. Ignorance is not a defense against REALITY.

SOX was created for that specific purpose of hold responsible the upper management and officers of a firm that breaks the law. But, SOX does not allow the prosecution of REALLY REALLY bad decisions which is different from malicious intent.

That only provides more weight to letting banks and corporations fail. At the very least, these loan officers, managers, executives, and irresponsible home owners should reap the full result of their choices. Ignoring reality is not the best course of action for anyone.

-- Lache, the Feral Capitalist

Healthcare Costs Too Much so Gov't to Tax Soda

This is so BACKWARDS I don’t even know where to begin.

Even the below average student in a community college economics class learns that tax is a complete pass through cost to the consumer. It is passed through by the business selling the good/service that is being taxed.

The reason I bring this up is because one “ideas” being toyed with in Congress the taxing of SODA! Ok, so Coca Cola raises the price of a 2 liter by 3 cents, so what?

When I already pay 10% of my paycheck to a program I will NEVER benefit from (social security) and then I have to pay more taxes to just drink a coke? That is insane.

Plus, I DO NOT want Uncle Sam telling me what kind of health care I can have, what quality I can have, how much I pay, or even if I am able to receive health care. Veterans, those people who have put their lives on the line so that I can enjoy freedoms such as expressing my frustrations of our Gov’t, cannot get proper health care. What can Gov’t possibly promise to convince me that I will get proper and just health care?

The answer is NOTHING.

Hey Congress!! Get out of my Doctor’s office, get out of my Dentist’s office, get out of my Emergency Room!

Capitalism works! Try it.

-- Lache, the Feral Capitalist

Not All of Us are Suckers

What is wrong with the generation known as “Millennials?” Which is my generation by the way.

If you read my post regarding the most endangered species, the Capitalist Pig, I hint as to the reason this country and its glory is fading into that hellish void of mediocrity.

Wake up! Put down your iPhones! Log off and read a book! Grow your MIND! Trying to escape the apathetic nature of the Universe does not make it go away.

I will not allow the Gov’t to be my surrogate guardian. I am my own responsibility. I knew Social Security would fail because there is no such thing as a free lunch. And a social program created by Gov’t are doomed to fail because of MORAL HAZARD! These programs are teaching MILLIONS of American citizens that it is ok to accrue debt, go on welfare, and expect other Gov’t handouts if they make the wrong decisions.

Why is EVERYONE so afraid to tell the truth. Failure is earned! If I can’t plan well enough to have enough money for retirement, that is not my neighbors fault and he should not pay for me to live.

I heard this morning that economists are confused as to why retails sales slowed in April. They figured that the new tax credits and tax refunds would spur spending. Let me shed a little lit on the issue.

It slowed because of people like me. If the Gov’t wants to give me a tax credit, fine, I will take it. But I also understand that I need to pay it back, so therefore I can’t REALLY spend it. I have to save it. It is not disposable income, it turns out to be an increase in savings.

They forgot to factor in that there are still some in this nation understand economics, finance and accounting. They forgot to factor that a good number of other FERAL CAPITALISTS still exist.

-- Lache, the Feral Capitalist

Learn More about the Feral Capitalist

Ok kids, if you want to know more about The Feral Capitalist, click on the title of this blog or click on the side link that says "Interests, Resources, etc..."

I will be putting up some of my favorite links to my web resources, blogs, and other readings and documents.

I will also upload my photos of my trip to the Fed to my Google Sites page.

-- Lache, The Feral Capitalist

Reading Atlas Shrugged for the 2nd Time

It has now been 13 months since the Feral Capitalist finished reading Atlas Shrugged, and about 16 months since finishing The Fountainhead. Both of these books inspired me to make significant philosophical changes in my life.

Objectivism comes the closest to my own philosophy of living on earth, but be assured that I am an American Capitalist. There are some ideas I do not agree with when it comes to the more outspoken Objectivist blogs and authors. But that is ok, we are free to disagree, and I don’t need nor require the label of Objectivist. My philosophy is my own, and according to Ayn Rand 'all that matters is a self sufficient ego.'

I have started to read Atlas again. I plan to glean even more from it this time. When I first read it, I most identified with Hank Rearden. I wonder if as I progress through the book if I will begin to identify with Dagny, or d'Anconia, or even Galt more than Rearden this time.

Last night, as I was taking a business final, I watched as scores of upper classmen going into their classrooms with business suits on and preparing their presentations in the hallway and it got me to thinking. How are the overall the tenets of Capitalism taught and supported by faculty? How many presentations are geared toward the James Taggart viewpoint that making money isn’t as important as the social responsibility of business and giving the little guy a chance? Then how many of those are given “A’s” simply because they sound fair as opposed to the hard nose presentations of driven capitalistic students?

My best friend is in Graduate school to earn his MBA and he tells me that the James Taggart viewpoint is quickly snuffed out. Blank out arguments such as “it isn’t fair” is quickly silenced unless that statement is promptly supported by rational thought.

I hope that is the case.

-- Lache, the Feral Capitalist

Playing the Market's 1st week May'09 Rally

I wouldn’t be able to call my self “The Feral Capitalist” if I didn’t play that crazy thing called the Market.

I am not a registered financial advisor, the following statements are my personal OPINIONS regarding my holdings which I can trade at anytime.

With that said, I sold every position I had when the S&P hit 907 on Monday. I bought lots of positions when it hit 702 right before it dropped to 666. I sold because the return I made was not worth the extra 7 -10% + the risk of me being wrong about the future.

It is my opinion that we are in for another huge swing downward. The bottom is not in until it is tested within a 2-3% margin. Since 666 has not been tested, expect this relief rally to quit around 925 – 975. It might even go to 1000 or it might not. I made all of my losses back from the crash in 2008 and then some with this rally, and that is good enough for this capitalist.

The name of the game for the Feral Capitalist is now the preservation of my capital and that means totally negating risk being applied to it. I did that.

Be aware, THIS IS NOT THE NEW BULL MARKET. If you are buying into this rally without any options to hedge losses, you are INSANE.

Ok, I am out to watch “Star Trek.”

-- Lache, The Feral Capitalist

Fear is a Powerful Weapon and a Weak Crutch

Heads up People; My blog, some of my favorite blogs, and some honest reporters writings could be ruled a weapon and thereby shutdown or prosecuted if this new bill is passed as law.

According to SlashDot :http://yro.slashdot.org/article.pl?sid=09/05/05/1734238&from=rss

EXCUSE ME! I wonder what these “defenders of the Constitution” would call “The Federalist Papers?” Would those be considered as weapons?

This bill is the result of those in Washington who have now become fearful of THEIR OWN CONSTITUENTS. Guess what, my dear Congressional Reps, my state would not allow such a HIDEOUS law to be enforced. Seriously, is the Obama Administration about to hire a “BLOG CZAR?” I might as well start calling my friends comrades.

If I may remind the Reps, The Constitution gives me the right to say and print ANYTHING that is not libel or slander. If you don’t like what I am saying (or typing), DO NOT READ IT!

It’s a wonderful tool called a “mouse click” that allows anything you want to disappear from a computer screen.

I do not fear this new bill because it relies on a weak, pathetic, and feeble fear of OTHER PEOPLES OPINIONS!

How do these people get into office?

-- Lache, The Feral Capitalist

Discounting the Effect of Technology on Bank Failures

I ran into this little tidbit on www.urbansurvival.com/blog

One of the main arguments that the US Consumer is not facing anything like the Great Depression is the “low” number of bank failure rates.

Up until today, I mostly agreed with that argument as in history class we learned that thousands and thousands banks failed during the Great Depression. That does not begin to compare with the paltry couple of hundred failed banks we have seen fail thus far.

UrbanSurvival offers this view: don’t take the bank HQ closing as one failure, but also take into consideration the corporate branches, the member client banks, and the ATM only branches. The official reports discount the effect of technology on the consumer with regard to the ease of getting money in and out.

During the ‘30s, the only option was to go to the physical bank to withdraw/deposit. Today, an ATM allows both those transactions while the physical branch bank can be hundreds of miles away.

It all boils down to the confidence of the consumer and the ease of which they can access their earned moneys.

Just a thought…from the Feral Capitalist

-- Lache