Compression of Time

Crisis makes much natural evolution occur rather quickly. Darwin knew this and the evolution of man in the ice ages showed this too. Weak species are quickly wiped out and the strong survive to propagate. This metaphor applies to the events of the past six months in the US financial markets, too. Glass-Steagal was eliminated years ago, but many relics of the past lived on. Until now.

And then there were two ... independent investment banks. Three major bracket firms will have disappeared when this weekend's actions are closed. In March, Bear, Stearns was swallowed by JPMorgan. Lehman Brothers will be liquidated. And Merrill Lynch will become part of Bank of America. Morgan Stanly and Goldman, Sachs are the final two.

Many good people at LEH will their jobs, thanks to the foolishness of its leaders. Very sad. This also is a reminder to anyone considering having a significant investment in one's employer. Don't do it. If the firm fails, you lose both your job and your life savings at the same time. Never, ever take that risk.

Where is the SEC ? The school of piranhas shorting stocks is ridiculous again. Here's a proposal: fine anyone not delivering shorted shares on time 100% of the value of the stock. That would stop shorting of virtual shares. Honest snafus could be excepted.

Dear Hank: call up the major trust companies and "urge" them to call in all outstanding stock loans. Other large brokers should to the same. Also, good job on the Nancy Reagan policy on LEH getting taxpayer money. One has to draw the line somewhere and this was as good as place as any.

I don't see how AIG can survive. The "three strikes rule" applies - three huge losses in a row.

The BAC price for MER seems fair to me. $29 is about the level of its stock price before last week.

Oil is trading at $98. Gold is up a bit. In my verily humble opinion, the oil should move seasonally in the range of $90 to $110.

From Barron's this weekend, I noticed that 30 year conventional home mortgages from FNM or FRE was around 5.6% - a fine rate for the common man. Also, I saw the intermediate grade bond index had improved quite a bit week to week. Not all is bad.

I expect to do nothing today, except urge Mrs. B to deploy some of her cash hoard in the Sky Fund. I may buy some stocks if verily good prices appear.

PS: Estimated taxes for Q3 are due today. Ughhhhh.

Word of the Day

"Traduce" - verb, transitive [$10]
Traduce means to speak ill of, misrepresent.
Sentence: Since Obama has no record of experience nor expressed policies other than seizing more of the nation's wealth, his "one word" campaign now reverts to traducing the record and experience of John McCain as a true reformer.