Barney Frank - Surprise Libertarian Streak

Congressman Barney Frank has been involved with all the bailout talk. I happened to read up a little on him.  Before, all I knew about him was that he was a gay democrat from Mass. who had that scandal with a male prostitute back in 1990. Turns out he's an interesting guy.  Congressional staff voted that he was one of the most intelligent and funniest people in congress, and it turns out he has a libertarian streak: From the Cato Institute: http://www.cato-at-liberty.org/2007/04/30/barney-frank-the-occasional-libertarian/ "...seven years ago I did a libertarian rating of Congress. Frank did better than most Democrats, and indeed better than most Republicans (including 7 of the 11 members of the Republican Liberty Caucus Advisory Board)." From Wikipedia: Political positions In Congress, Frank is an ardent supporter of medical marijuana. He was the author of the States' Rights to Medical Marijuana Act (H.R. 2592), an attempt to stop federal government from intervening with states' medical marijuana laws.[16] Frank consistently voted for the Hinchey-Rohrabacher amendment, annually proposed by Dana Rohrabacher (R-CA) and Maurice Hinchey (D-NY), that would prohibit Department of Justice from prosecuting medical marijuana patients.[17] As of March 2008, he is trying to pass the Personal Use of Marijuana by Responsible Adults Act of 2008 (HR 5843), which would decriminalize small amounts of marijuana.[18] Frank has also been a critic of aspects of the Federal Reserve system, partnering with some Republicans in this opposition.[19] Frank says that he and Republican Congressman Ron Paul "first bonded because we were both conspicuous nonworshipers at the Temple of the Fed and of the High Priest [Alan] Greenspan."[19] Frank has also partnered with Paul in support of online gambling rights. In 2006, both strongly opposed H.R. 4777, the Internet Gambling Prohibition and Enforcement Act,[20] and H.R. 4411, the Goodlatte-Leach Internet Gambling Prohibition Act.[21] To restore online gambling rights, in 2007 Frank sponsored H.R. 2046, the Internet Gambling Regulation and Enforcement Act.[22] This bill would have established licensing and regulation of online gaming sites. It provided for age verification and protections for compulsive gamblers. In 2008, he and Paul introduced H.R. 5767, the Payment Systems Protection Act, a bill that sought to place a moratorium on enforcement of the Unlawful Internet Gambling Enforcement Act while the U.S. Treasury Department and the Federal Reserve defined "unlawful Internet gambling". As a result of these efforts, Frank (who does not gamble) has become a hero to poker players and online gamblers, including many Republicans.[23] In 2006, Frank was one of only three Representatives to oppose the Respect for America's Fallen Heroes Act, which restricted protests (notably those of Fred Phelps' Westboro Baptist Church) at soldiers' funerals. He opposed the bill, which passed unanimously in the Senate, on civil liberties and constitutional grounds. Frank said of the vote, "I think it's very likely to be found unconstitutional. It's true that when you defend civil liberties you are typically defending people who do obnoxious things... You play into their hand when you let them provoke you into overdoing it. I don't want these thugs to [make the] claim [that] America is hypocritical.

Read More

Joy of the Down Sell

Money Ning had a good post about how restaurants and businesses try to up sell us - for example, by a waitress suggesting wine with our meal.

Today, I experienced the opposite - one of those rare cases of a down-sell!

It made me feel good!

We have domestic service with Dish Network, and my wife wanted to add an international channel.

I called up to add it, and the guy told me I had to get a second satellite dish for $56.

Somehow we got disconnected (turned out to be lucky for me) and I called back and spoke to a woman.

She told me that, instead of paying $56 for a second dish, they now have a “super dish” that can take the place of both the international and domestic dishes. I could get my domestic dish swapped for this one for free.

So, now, instead of having to pay $56 and having 2 dishes wired up together on the side of my house, I’ll pay nothing, and have only one dish to worry about!

See how powerful the down sell (suggesting ways to save your customer money) can be! Here, I now had a good experience with Dish Network and I'm telling everybody about it.

Read More

The Financial Crisis and Government Pushing Home Ownership

Lately, I have been reading several articles from people trying to blame the sub-prime mess on government mandates to expand home ownership among the poor and minorities.

Maybe the government did strong-arm lenders into making loans to unqualified members of groups that traditionally rented (such as minorities), but I don't think it was the main factor.

I think the main cause was the Federal Reserve trying to cushion the post dot com market crash and slowdown by lowering interest rates and increasing the money supply.

I think they overdid it, and the resultant lower rates and excess money in lenders' hands led to speculation and greed.

Remember all the house flippers and speculators in places like California, Nevada, and Florida?

In fact, Florida was the location of an infamous real estate boom and bust from 1924-1926. The difference is that, back then, Wall Street wasn’t linked up through the repackaging of mortgages as securities, so the real estate bust didn't spread throughout the financial system.

Read More

Elderly on the Front Line of the Financial Crisis

According to this New York Times article, retirees are having a tough time.

Their CDs, bonds, and dividends aren't giving enough income and they are reluctant to raise money by selling stocks because they would have to sell at a loss.

Meanwhile gas and food prices are up.

A lot of their houses are paid for, but they have trouble paying higher property tax bills, and can't sell their homes.

Read More

Wall Street Crisis and MBA Students

MBA students who were counting on $200,000 investment banking jobs are starting to think about alternatives.

Read More

NBA, Money, College Basketball, and Brandon Jennings

High school basketball star Brandon Jennings is about to revolutionize college basketball/NBA like Kevin Garnett did in 1995.

Back in 1995, Kevin Garnett went straight from high school into the NBA. Before that, it was understood that star basketball players out of high school would go to college, and then get drafted into the NBA.

For the top players, however, the colleges benefited more from their talent then they did. Sure, the players received scholarships - which is good if they want an education. But, they can't work campus jobs for extra money, they can't sign with an agent, or get sponsorships. Meanwhile, the colleges can get money from ticket sales, merchandise sales, sponsors like Nike, etc.

After Garnett, a lot of the top players skipped high school and went into the NBA. The college game suffered from lack of top talent.

Then, 2 years ago, during contract negotiations, the NBA commissioner made the Player's Union accept a provision that requires draft choices to be at least 19 and one year away from high school.

This forced the players to work for free in college - for at least a year.

Now, Brandon Jennings (this year's top high school point guard) had poor SAT scores and no desire to go to college. Instead, he and his family hired an attorney and agent, and he signed with an Italian team in the European Basketball league.

Now, instead of playing for free at a college - and going through the motions of being a "scholar/athlete" - he is doing an apprenticeship with an actual pro team, and getting paid $1 million in salary, plus a shoe endorsement from UnderArmour for a lot more.

His contract with the Italian team is three years - but he has a clause that he can leave after year 1 or 2 to sign with the NBA.

The other interesting thing about Jennings is that he signed up to endorse the fledgling shoe division of Under Armour - instead of Nike or Addidas.

He is being advised by Sonny Vaccaro, the same agent who negotiated Michael Jordan's relationship with Nike. At that time, Addidas was the big shoe company but Vacarro convinced Jordan that he would ultimately get rewarded well as Nike built its shoe division around him.

Now, Vaccaro is trying to do the same with Jennings and Under Armour.

Read More

The New Monk

A new monk arrives at the monastery. He is assigned to help the other monks in copying the old texts by hand. He notices, however, that they are copying from copies, not the original manuscripts. So, the new monk goes to the head monk to ask him about this, pointing out that if there were an error in the first copy, that error would be continued in all of the subsequent copies. The head monk says, "We have been copying from the copies for centuries,but you make a good point, my son." So, he goes down into the cellar with one of the copies to check it against the original. Hours go by and nobody sees him. So, one of the monks goes downstairs to look for him. Hearing sobbing coming from the back of the cellar, he finds the old monk leaning over one of the original books crying. He asks the old monk what's wrong, and in a choked voice came the reply, "The word is celebrate."

Read More

Posts About the financial Crisis

On my business and trading blog, I've recently written 5 articles about the the current financial crisis: Lehman, Merril Lynch, and AIG Lead to The "Unbubble" Lehman, Money Market Funds, and the Government Guarantee Controversy Kraft Foods (KFT) Replaces AIG in Dow OfficeMax Stock Hurt by Lehman Fallout Short Sellers Aren't Evil

Read More

Short Sellers Aren't Evil

Short Sellers have become the latest "whipping boy" in the on-going drama with the financial markets.

Currently, the SEC has temporarily banned short selling on a list of 799 financial stocks.

As reported on CNBC, this list seems to have been quickly thrown together - some CEO's have questioned why they were not included on the list, and some were surprised when reporters told them that their stocks were on the list.

Chicago Tribune reporter Joshua Boak reported on Saturday that many exchanges, traders, and economists have been outraged by the ban, and warned that this could disrupt the flow of the markets.

In fact, the SEC has since modified the ban to allow market makers to short stocks - to help maintain liquidity and an orderly market.

Proponents of short selling argue that "investors are best served when they can hear both the reasons to buy and reasons to sell any given security."

Boak went on, in a separate article, to explain his personal experience with short sellers. Back in 2005, when he wrote for the Toledo (Ohio) Blade, Boak investigated the State of Ohio's $50 million investment in rare coins.

It turned out that pension money was invested in shares of Greg Manning auctions - which bought and sold rare coins, stamps, etc.

Shares in Manning Auctions took off after a majority stake was bought by a Spanish company called Afinsa Bienes Tangibles. This company bought postage stamps from money invested by Spanish and Portuguese pension funds. They kept the stamps in a vault and paid the pension funds 8-10% a year.

Short sellers suspected that Manning Auctions was being supported by Afinsa, and that Afinsa was a Ponzi scam - using new investor money to pay old investors.

The short sellers contacted Boak and the Blade - who ended up exposing the scam.

So, he credits short sellers with saving 143,000 pensions.

Read More

OfficeMax Stock Hurt by Lehman Fallout

Even though OfficeMax is not a financial stock, its stock was down 16% on Friday because of an indirect connection to Lehman Brothers.

This was OfficeMax's biggest one-day decline since October 1987.

It turns out that, in 2004, OfficeMax sold its timber assets to Boise Land & Timber and, in return, received $1.6 billion in installment bonds from Boise.

Half the value of these bonds were guaranteed by collateral bonds issued by Lehman.

Now, those collateral bonds are in default.

Right now, the Boise installment bonds have not defaulted, and OfficeMax is ok. But, if something happens to the installment bonds, OfficeMax would not be able to collect from Lehman.

Read More

Kraft Foods (KFT) Replaces AIG in Dow

I am planning to buy Kraft Foods (KFT). It should get a boost because it has just been added to the Dow - to replace AIG. Being added to the S&P 500 would produce more of a boost, but there are still a lot of funds and investment strategies that use Dow components. Longer term, Kraft has a history of solid performance.  I like the fundamentals of holding a prepared foods company - they, along with grocery stores are starting to see their sales increase as people stop eating out as the economy continues to slow down.

Read More