Archive for November, 2009

More Nothing From CBO

Monday, November 30th, 2009

Wow, only another month of pointless Senate debate, a conference committee, and by 2013 we’ll have health care reform!!!

And what does the CBO say about all this?

The good news on health care reform:

Those currently buying insurance as individuals will see their benefits improve and their premium costs go up less steeply than presently.

The bad news on health care reform:

Those currently buying insurance as individuals represent only 17% of the market.

So, for the 72% of Americans who currently get their health care from their employers, premiums wouldn’t change very much at all.

Proving: the employer based health insurance system is good for everyone who has a job, although it keeps wages down and premiums continue to skyrocket.

Those who don’t have jobs or the self-employed or the bone idle or the working poor or those whose employers don’t offer health insurance continue to be screwed.

Single payer would have insured everyone, cut administrative costs substantially (they’re currently 30% of health care spending, or more accurately insurance company spending to cherry pick the healthy, which by the way will still be in place following health care “reform”), and kept premium increases reasonable.

But the medical-industrial complex would make a lot less money, particularly from prescribing and getting paid for treatments of dubious medical effectiveness, and that’s just plain unacceptable to the Washington leadership circles they’ve purchased.

Gorilla, whose own insurance is going up next year by 12%, has gone beyond being dismayed: “Reform today is bullshit by other means. We’ll all be in Medicare by the early 2020s, including me!”


Mods With No Bods

Monday, November 30th, 2009

Here we go again, the government hasn’t had much luck convincing, cajoling, and/or bribing mortgage servicers to modify home loans permanently!

Not a surprise, since lowering interest rates without lowering principal owed, at a time of record foreclosures, homeowners under water, and high unemployment, is essentially a non-starter.

The easiest method to force the servicers and banks to the table is of course the one the Administration and Congress haven’t supported: allow bankruptcy court judges to alter loan terms as part of bankruptcy filings.

Lots of deals would be done then, but that requires goring the oxen who are buying and paying for our political leaders.

So, the dance continues, the bust continues, and the pain continues…

Gorilla says: “Not being serious is the new serious!”


Financing Debt Is Risky!

Monday, November 30th, 2009

Who knew? Not the banks backing indoor ski slopes in Dubai!

Turns out the non-sovereign debt of Dubai won’t be guaranteed, a blow to those who naturally assumed from their experience in other badly indebted nations (USA, Ireland) that the government would come riding to the rescue!

So, Dubai’s a good lesson for some investors and banks, and yet another unlearned example of what happens when banks get too large to succeed and too large to fail.

Will this effect the dollar carry trade investments in emerging markets? Probably not, since no one in the world of financial services appears to understand the definition of risk.

Gorilla says: “Mohawk or pompadour, the haircuts will keep coming!”


Doesn’t Matter 2 Or 10

Monday, November 30th, 2009

Iran will build 10 reactors, because they didn’t like our approach to the first 2!

Wow, guess this means they want nuclear weapons! But that was the conclusion after the first one, so it must be 10 times more likely now!

In fact, this is all part of an endless negotiation, the main points of which are to get the US less isolated from Iran and Iran less isolated from the rest of the world. Nobody’s going to war over Iran, including the Israelis, so there’ll be plenty of hiccups along the way. The only question is when high level, bilateral talks will begin.

Gorilla answers: “Early 2011, expect jaw jaw to take off!”


Well, They Did Finance The Nazis

Monday, November 30th, 2009

So is banning minaret construction a big surprise from supposedly tolerant Switzerland?

Not really. Most European nations have an outsized fear of Islamic immigrants, mainly because they’ve done such a lousy job of integrating immigrants into their societies. You can’t take uneducated people from backward countries like Pakistan, do nothing much to bring them into the 21st century, and expect an immediate adoption of Western civilization.

Ghettoization remains the preferred choice over assimilation, much easier to keep an eye on the cauldron.

And of course it’s racist, but let’s recall that the Swiss and the other Western Europeans were hardly cordial to that other group of “others”, the Jews, and apparently haven’t learned one damned thing since.

Americans, led by the Know Nothing Party’s demonization of all those who are black, brown, or lacking a penis, have nothing to be proud about either!

Gorilla says: “Let’s just vote to tear down all the churches and start over again as human beings!”


TGIF And Predictions

Friday, November 27th, 2009

These were the events in Gorilla’s world that mattered this week:

Climate Change: Another week of faintly ridiculous posturing. The President proposes a pollution reduction he hasn’t got the votes for, while the Chinese advance a crafty formula that won’t cut pollution at all. There just isn’t the political will anywhere to do something about a problem that’s not coming around the corner for a couple of decades. Gorilla thinks there will be progress only when progress is necessary, roughly sometime after 2030.

: The economy’s anemic growth continues. While there was good news in the form of reduced unemployment claims, the fact remains that unemployment will remain sky high until the economy grows a lot more than 2%. Gorilla still believes it will take a decade to get unemployment down below 7%.

Iraq: Stalled out on its way to an election in January. The underlying differences among Sunnis, Shiites, and Kurds have not been addressed, but for the US that’s no longer a problem. Gorilla suggests we’ll be out as planned by 2011, and Iraq will start the next round of civil war in 2012.

Iran: Still lots of posturing, but the outlines of a deal are in sight. This will be some combination of inspections in Iran and the Russians helping out with nuclear technology. The Israelis will not be happy, but will not do anything. Why the US is not seizing the opportunity to make a buck on developing Iran’s nuclear industry, a la India, remains a mystery. Gorilla says a deal will be completed in 2010, and Obama will visit Iran in 2013.

Dubai: Real estate bubbles don’t work any better in the Middle East than they do in the US. Perhaps this time the creditors will actually take a haircut. Gorilla puts forth the theory that creditors may use this default to get more guarantees from the government, particularly with massive CRE losses on the horizon and another round of the residential housing bust occurring simultaneously. Spoons therefore should be locked away.

Thanksgiving: Americans have little to be thankful for in terms of political leadership, but Gorilla observes that fecklessness is next to bloggedness in the world he inhabits.


To See, You Must Pay

Friday, November 27th, 2009

Fresh on the heels of submitting yet another phony climate change proposal, China now says it will only allow international verification on Chinese sights that have international funding.

Funding of course hasn’t even been agreed, and none of the major Chinese polluters, like coal mines, are going to be covered by this non-binding proposal.

In fairness to the Chinese, the US is the biggest energy waster and polluter on earth, and there’s absolutely nothing being done to change that behavior.

So, the two countries who are 40% of the climate change problem remain 40% of the climate change problem and growing.

Gorilla isn’t impressed: “The canaries in the coal mine are really ostriches!”


A Horse To Make The EU Barnier

Friday, November 27th, 2009

What’s more ridiculous than a Belgian President of the EU?

Why, putting a former French agricultural minister in charge of the internal market!

Surely, this grand gentleman, steeped in the noble French history of farm subsidies and utility protectionism, will prove the perfect antidote to those horrible Anglo-Saxon capitalists!

Who says the EU doesn’t throw its weight around?

Gorilla thinks there’ll be nary a dry eye in the City of London: “The joie de vivre is about to leave!”


Bubble Popping?

Friday, November 27th, 2009

Do buy, or not Dubai, that is the question!

Seems Dubai is about to default on a loan payment, causing markets worldwide to get very nervous.

After all, the dollar carry trade bubble depends on borrowing cheap dollars and buying better yielding securities, commodities, and the debts of countries like Dubai.

And of course the usual suspects are pissing away billions: Citibank is one of Dubai’s big lenders!

Could be just a small hiccup, or a larger belching out by the woefully under-regulated financial services industry.

Wall Street no doubt will tell its US Treasury and Fed subsidiaries to chill out.

Gorilla asks: “Is this the sheikh out I’ve been expecting?”


A Bank Without Credit

Friday, November 27th, 2009

Taking a cue presumably from the zombie banks in the USA, the IAEA has agreed to set up a nuclear fuel processing bank in Russia!

Putting aside whether anyone will make a deposit, why Russia? Aren’t we still spending a few billion to track down and secure all the nuclear weapons from the old Soviet Union?

It’s another example of the curious inconsistency about proliferation.

We don’t deny nations the right to peaceful nuclear power, but don’t ourselves allow international inspection of our stockpiles.

We think nuclear proliferation is terrible, but conventional arms sales are a big money spinner.

We’d like Iran to get with the program, but aren’t willing to cajole Israel, India, or Pakistan to join the party.

Gorilla says: “Hypocrisy is job one at the IAEA Bank Of Tomorrow!”