Progress ...

No, I did not watch W's speech. From the clips, it was poor as usual. Saying he's no Ronald Reagan is like saying a Little League kid is no Babe Ruth. His explanations to Homo Boobus don't really work well, as he's Lord of the Boobs himself. I should be wearing a bag over my head for supporting him in 2000 vs. Big John. Ugh !

But Barney Frank seems to be pushing this through with Hank the Tank. Although he's a liberal, at least Barney Frank has a brain. Unlike the current Democratic nominee. Or Nancy of the Nanny State. Big John McCain shows some leadership in getting to DC - he needs to knuckle some of the foolish Republicans. Gosh, I am sickened more and more by them and their antics.

By the way, I wish some of those distressed mortgage securities were available in retail size lots. I'd buy some at 15%. Pricing is ridiculously low even with overestimated default and loss rates.

Some more news ...

I see that SEC Chairman Cox reads this blog … a little of it.
“Christopher Cox, chairman of the Securities and Exchange Commission, told the Senate banking committee that “significant opportunities” for manipulation existed in the market for credit default swaps, which offers a kind of insurance against companies defaulting on their debt” – Financial Times

And: Mr Cox said: “This potential for unfettered naked shorting and the lack of regulation . . . are cause for great concern.”

And finally Elmer is getting the raspberry he so deserves: In 2000, Alan Greenspan, the former Federal Reserve chairman, said explicit regulation of OTC derivatives transactions was “unnecessary”.

And: Mr Cox’s call follows moves by New York state to bring parts of the CDS sector under the control of its insurance supervisors from January.

Since the ARE insurance contracts, why not ?

Here’s an example a non-posting friend sent me: “In one notorious case, a small hedge fund agreed to insure UBS AG … the Swiss banking giant, from losses related to defaults on $1.3 billion of sub prime mortgages for an annual premium of about $2 million. The trouble was, the hedge fund set up a subsidiary to stand behind the guarantee -- and capitalized it with just $4.6 million. As long as the loans performed, the fund made a killing, raking in an annualized return of nearly 44 percent.” [quoted from a Reuters article]. Is that example not fraud ?

Housing

Data for the national median existing-home price for all housing types:
For Q4 2007, that number was 205,700 on average.
For Q1 2008, the number was $196,300.
For March, $200,700;
For April, that number was $202,300.,
May was 208,300.
June was $215,100;
July $212,400;
August, $203,100.

Does anyone notice a monthly trend in median prices resembling a bottom?

There's more: Inventory:
April – 4.55 million
May – 4.49 million;
June – 4.49 million;
July 4.67 million;
August – 4.26 million.

Data really seem to show the problem is being resolved.

Markets

Doing nothing. Alpha Fund is about 125% long with 1/2 in CVX, DVN, RIG and FCX and 1/2 in BAC and JPM, plus a smidge of MBI for a speculation.

Word of the Day

"Tessera" - noun [$10, $1000 depending on meaning]; plural "tesserae"
Tessera means 1a. (Ancient History) A small quadrilateral tablet of wood, bone, ivory or the like, used for various purposes, as a token, tally, ticket, label, etc.; 1b. a distinguishing sign or token; a watchword or password (the earliest use in English); 2a. each of a small square (usually cubical) pieces of marble, glass, tile, etc. of which a mosaic pavement or the like is composed; 2b. any one of the quadrilateral divisions into which a surface is divided by intersecting lines, e. g. by lines of latitude and longitude; 2c. (Zoological) each of the paltes of which the carapace of an armadillo is composed.
Sentence: Congress and the Executive are sorting through various tesserae to arrive at a complete mosaic for the refinancing of the illiquid mortgage securities on the books of the nation's banks.

Bonus Word

Here's an interesting "derivative" word from the OED:
"Tesseract" - noun [$1000]
Tesseract means a four dimensional hypercube
Sentence: Bunkerman is such a square in so many dimensions that he's a tesseract.