"The business model for big US banks is broken. Let us count the ways.
One: Banks no longer scrutinize a would-be borrower to decide whether he is good for the money. Instead they "originate and distribute" loans. "
Cheers. This is only the second WSJ writer to understand the sub prime mortgage scam. John Snow was the first a couple of months ago. The rest of the gallons of ink spilled on the subject have been bafflegab. The maker (originator) of the loan must lending his own money, and know that if the borrower defaults, he get hurt (or at least his bank gets hurt). If the originator can sell the loan and dump all the risk on the buyer, he will loan money like a drunken sailor. If the bank needs more money to do mortgages, let it attract more deposits.
Thursday, January 10, 2008
Frank Luntz blames the voters
Frank Luntz, pollster and focus groupie extradinaire, was on Fox this morning. This is the guy, back before NH primary poll closed, who did the video of a room full of voters. He opens by asking everyone who hasn't made up their minds to raise their hands. Every hand goes up. Then Frank gives his pitch. At the end he asks how many will vote for Romney. Every hand goes up. Message: Everyone really wants to vote Romney. Just let me give 'm my patented Romney pitch. Why do I have trouble believing this?
Anyhow, back to Fox this morning. The Fox guys ask Luntz why the NH polls predicted an Obama win. Luntz says a couple of really astounding things. "Oh the tremendous turnout threw our models off". Translation, the pollsters fudge the raw poll data based on past history. I didn't know that. I thought that "40% favor so-and-so" meant the 400 people out of the 1000 polled said they mean to vote for so-and-so. Apparently the pollsters "correct" the counts before releasing them to the press.
Second, Luntz said "Oh its a racial thing, 20% of whites are secret racists and say they will vote for Obama to conceal their racism, not because plan to vote for Obama." I don't believe this either. Obama is charismatic speaker, good looking young guy, a real politician who has achieved high office and is very attractive to every one. Even us old McCain republicans think Obama is one hellova candidate. I dislike having a slippery pollster like Luntz, call us Yankees racists. I think Luntz is excusing his polling failures by blaming the voters.
Anyhow, back to Fox this morning. The Fox guys ask Luntz why the NH polls predicted an Obama win. Luntz says a couple of really astounding things. "Oh the tremendous turnout threw our models off". Translation, the pollsters fudge the raw poll data based on past history. I didn't know that. I thought that "40% favor so-and-so" meant the 400 people out of the 1000 polled said they mean to vote for so-and-so. Apparently the pollsters "correct" the counts before releasing them to the press.
Second, Luntz said "Oh its a racial thing, 20% of whites are secret racists and say they will vote for Obama to conceal their racism, not because plan to vote for Obama." I don't believe this either. Obama is charismatic speaker, good looking young guy, a real politician who has achieved high office and is very attractive to every one. Even us old McCain republicans think Obama is one hellova candidate. I dislike having a slippery pollster like Luntz, call us Yankees racists. I think Luntz is excusing his polling failures by blaming the voters.
Wednesday, January 9, 2008
The accountants giveth, the accountants taketh away
KB Home (a builder) took a solid hit today. Accountants erased $514 million from the company's books. Zap. A half a billion dollars just evaporates.
How do they do that? Accountants in the past had computed that KB Home had tax credits worth $514 million that could be used to reduce their taxes, when and if they ever made any money. Accountants are allowed to enter potential tax breaks onto the company books as an asset. Wow. Add $514 million to the bottom line, that will make the company look profitable. Pumps up the stock too. Great.
Unfortunately the auditors decided that the chances of KB Home ever making any money were remote and they insisted that the $514 million be removed, 'cause it wasn't ever going to do KB any good.
Something like this happened over at GM last year to the tune of $39 Billion (yes, b for billion).
This kind of book keeping doesn't help investors evaluating the company or managers trying to improve the company earnings. It is a deceptive practice intended to make the company look more profitable than it really is. There oughta be a law agin it.
How do they do that? Accountants in the past had computed that KB Home had tax credits worth $514 million that could be used to reduce their taxes, when and if they ever made any money. Accountants are allowed to enter potential tax breaks onto the company books as an asset. Wow. Add $514 million to the bottom line, that will make the company look profitable. Pumps up the stock too. Great.
Unfortunately the auditors decided that the chances of KB Home ever making any money were remote and they insisted that the $514 million be removed, 'cause it wasn't ever going to do KB any good.
Something like this happened over at GM last year to the tune of $39 Billion (yes, b for billion).
This kind of book keeping doesn't help investors evaluating the company or managers trying to improve the company earnings. It is a deceptive practice intended to make the company look more profitable than it really is. There oughta be a law agin it.
Hillary wins and confuses every pundit in the land
Going into yesterday's primary I, all the TV talking heads, and Hillary's people all expected Barack Obama to mop the floor with her. One pollster was giving Obama a 10% lead. Hillary staffers were crying in their beer with the media. Wall St Journal reported Hillary's people predicting a horrible loss, they were looking for jobs, a total wipeout.
Damn. I figured by 10:30 there would be enough election returns in to make turning on the TV worthwhile. And there she is, a solid 5000 votes ahead of Obama with only 65% of the vote counted. Then Obama clinched her victory by giving a gracious concession speech.
Wow. How did that happen? Pollsters completely blew it, predicted the wrong winner and everyone lapped it up.
One thing that threw the polls off was the speed of the thing. With only four days from the upheaval that was Iowa, the voters were still in a state of flux. Iowa changed Obama from a nice guy but too young to be a contender into a real contender. And it promoted Mike Huckabee from "Who is he?" to a second real contender. A huge bunch of voters started to think thoughts that they never thought before. Takes more than the alloted four days to settle voters down. The pollsters cannot poll as fast as voters can change their minds. The reported polls represented the voter's intentions as of Saturday or Sunday. By Tuesday a lot of voters had changed their minds. The pollsters just aren't fast enough to catch the mood shift before primary day.
Then Hillary allowed some of her emotions to leak out on TV. I watched it and before the election, said to my son," That is the most effective speech Hillary has given in the whole damn campaign." I saw Hillary's no-nonsense facade soften enough to let us voters see that she really cared about something. It must have changed some minds, the TV replayed it all day, you couldn't miss it.
So, on to super Tuesday.
Damn. I figured by 10:30 there would be enough election returns in to make turning on the TV worthwhile. And there she is, a solid 5000 votes ahead of Obama with only 65% of the vote counted. Then Obama clinched her victory by giving a gracious concession speech.
Wow. How did that happen? Pollsters completely blew it, predicted the wrong winner and everyone lapped it up.
One thing that threw the polls off was the speed of the thing. With only four days from the upheaval that was Iowa, the voters were still in a state of flux. Iowa changed Obama from a nice guy but too young to be a contender into a real contender. And it promoted Mike Huckabee from "Who is he?" to a second real contender. A huge bunch of voters started to think thoughts that they never thought before. Takes more than the alloted four days to settle voters down. The pollsters cannot poll as fast as voters can change their minds. The reported polls represented the voter's intentions as of Saturday or Sunday. By Tuesday a lot of voters had changed their minds. The pollsters just aren't fast enough to catch the mood shift before primary day.
Then Hillary allowed some of her emotions to leak out on TV. I watched it and before the election, said to my son," That is the most effective speech Hillary has given in the whole damn campaign." I saw Hillary's no-nonsense facade soften enough to let us voters see that she really cared about something. It must have changed some minds, the TV replayed it all day, you couldn't miss it.
So, on to super Tuesday.
Tuesday, January 8, 2008
Northrup to compete for next Humvee (WSJ)
Last year I posted about buying MRAPS armored trucks for $500,000 apiece. Todays WSJ has ar article about Northrup bidding on a new "Joint Light Tactical Vehicle" to replace the Humvee sometime in the future. Target price is $300,000. Cheaper than MRAPS, but that ain't saying much. The plain old Jeep which worked just fine in WWII, Korea and Vietnam, and is still in production after 60 years, has an MSRP of $20,000. The much bigger fancier Humvee goes for $56,000. This here Joint Light Tactical Vehicle has gotta be wonderful to justify its price.
The picture of it shows fat offroad tires, no mudguards. A four man closed cab with a light machine gun on the roof and a slanty armored bottom. Boxy windowless van body on the back.
Other bidders include Lockheed Martin, BAE systems, Boeing, and General Dynamics. Hellova lot of high techie aerospace companies to do an armored car/truck. Either the military airplane business is drying up, and they need the work, or they expect to design high tech Future Combat Systems digital radio stuff into the guts of the vehicle. Which is a boondoggle. The fancy electronics should not be custom designed to fit just one vehicle. Design one good package and use it on everything from jeeps to tanks. Cheaper that way and much easier to stock spare parts for, train for, and manufacture in real volume.
The article mentioned that the brand new MRAPS armored trucks, first of which are just getting out to Iraq, have a few "issues" . Like too big and heavy to go off road or into the narrow streets of Baghdad, where they get stuck going round sharp street corners.
The picture of it shows fat offroad tires, no mudguards. A four man closed cab with a light machine gun on the roof and a slanty armored bottom. Boxy windowless van body on the back.
Other bidders include Lockheed Martin, BAE systems, Boeing, and General Dynamics. Hellova lot of high techie aerospace companies to do an armored car/truck. Either the military airplane business is drying up, and they need the work, or they expect to design high tech Future Combat Systems digital radio stuff into the guts of the vehicle. Which is a boondoggle. The fancy electronics should not be custom designed to fit just one vehicle. Design one good package and use it on everything from jeeps to tanks. Cheaper that way and much easier to stock spare parts for, train for, and manufacture in real volume.
The article mentioned that the brand new MRAPS armored trucks, first of which are just getting out to Iraq, have a few "issues" . Like too big and heavy to go off road or into the narrow streets of Baghdad, where they get stuck going round sharp street corners.
Heavy turnout in NH
Or at least in my part of it. Franconia, about 981 registered voters, and heavily democratic. Voted at midday and the traffic was heavy, heavier than it was for the last general election in 2006. I haven't bothered to turn on the TV today 'cause I don't think there is anything to know until the polls close. Then we get the exit polls, for what ever they are worth, and the real results will trickle in all evening. Franconia just puts real paper ballots into a wooden ballet box and counts them by hand, after the polls close.
Monday, January 7, 2008
Science Fiction gets to GM (WSJ)
GM has a project to invent an automatic self driving car. Rick Wagoner, GM CEO, will give a key note speech at the Consumer ELECTRONICS show (Las Vegas). Wagoner is convinced that being the first with game changing innovations is the solution to one of GM's fundamental problems, its battered image.
Sell your GM stock ASAP.
Letting a micro processor drive in Rt 128 rush hour traffic would scare the hell out of me. I don't care how cool it is, or how much testing it passed, no micro processor is going to be as reassuring as my two hands on the wheel, and my foot on the gas. Plus decent engine power, strong brakes and good handling. Like my Deville gives me.
GM's problem isn't battered image. It's problem is crummy product. The only thing GM makes that anyone wants to buy is Corvette. The rest of their cars & trucks are so plain and boring they make the blandness of Toyota and Honda look exciting. GM's problem is a management of bean counters (Wagoner is an ex bean counter) rather than real car guys, engineers and salesmen. Only a bean counter would think you could sell an automatic drives-itself car.
Sell your GM stock. The company is doomed as long as this bunch of suits are running it.
Sell your GM stock ASAP.
Letting a micro processor drive in Rt 128 rush hour traffic would scare the hell out of me. I don't care how cool it is, or how much testing it passed, no micro processor is going to be as reassuring as my two hands on the wheel, and my foot on the gas. Plus decent engine power, strong brakes and good handling. Like my Deville gives me.
GM's problem isn't battered image. It's problem is crummy product. The only thing GM makes that anyone wants to buy is Corvette. The rest of their cars & trucks are so plain and boring they make the blandness of Toyota and Honda look exciting. GM's problem is a management of bean counters (Wagoner is an ex bean counter) rather than real car guys, engineers and salesmen. Only a bean counter would think you could sell an automatic drives-itself car.
Sell your GM stock. The company is doomed as long as this bunch of suits are running it.
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