Indian Yahoo

Yesterday's WSJ had a Mittal Steel ad containing a request for proposals for concrete and other such stuff. The most interesting thing about it was that the contact person listed two addresses, one at mittal.com and the other at rediff.com.

This is about the equivalent of a U.S. Steel RFP containing a yahoo.com email address in the contact information, isn't it? I found myself wondering if his motive was lack of confidence in his own network or the desire to tout Rediff.

As an aside, I examined Rediff's English-language site, and it contains almost exclusively stories touting the wonders of the economy in India.

Residential R/E

This morning I found myself wanting to say something -- anything -- contrarian about real estate. The bubble is about to pop, but maybe, just maybe, there is some kind of last thrash in it...

Note that the April figures came out yesterday and sales of new homes were up 4.9% when a decline was generally expected.

A few possibilities that crossed my mind:

• Uncancelled contracts and various people who didn't want to lose deposits


• Massive incentivization -- builders in FL are offering everything from copious amounts of cold hard cash to Cooper Minis if you buy a new home. Everything's included by Lennar, E-I-E-I-O.


• The increased backlog of available new homes and flattening of prices may be leading some sheeple to think a buyer's market has emerged.

The condo-flipping idiocy was long-sustained, and if you think this delusory "buyer's market" will be sustained, you could always, say, buy WCI (30% short interest) and hope for a short squeeze or something. I was lucky enough to catch it in that stock last summer. I won't be trying again, but maybe you're braver, riskier or perhaps more insane than I am.

As an aside, we walked by a fine piece of property the other night and picked up a flyer. After checking the records, we learned that out-of-town investors paid $449,000 in March 2006 and now have it listed for $555,000 two months later. I don't expect it to sell for that, but it is apparent that as far as the popping of the bubble goes, not everyone has gotten the memo.

Are Ya Ready For Some (Revenue Sharing In) Football?

If there were something like "Rules of Subversive Investing," one of them would be to keep your company private to avoid filing financial statements. It works if you want to play Pollyanna (witness the rosy pre-IPO filings J.Crew has been cranking out) or cry poor.

For proof of the latter, ask Ralph Wilson of the Buffalo Bills. He threatened to move his team out of town in the 70s if he wasn't given a bigger stadium, then demanded that luxury boxes be provided in the late 90s to give additional revenue. Now, he claims that the NFL's revenue-sharing arrangements will break his small-market team.

It is, I guess, possible to have someone rat you out despite your best efforts at obfuscation. Forbes puts together a rough valuation of all the NFL teams each year, and they say he's full of it; the team should be raking in a profit of about $36MM a year. Not too shabby in a small town.

Locals have suggested he pimp out the stadium's naming rights if he's so desperate for cash. Some company flush with cash will probably think it's a good enough idea.

Fannie Mae

Fannie Mae was fined $400MM for accounting manipulations benefiting their execs and padding their bottom line: Link

This is a huge scandal, but isn't getting the Arthur Andersen fourth degree. The media is perplexing in what they choose to highlight. Even the WSJ article today focused primarily on the former officers potentially facing legal consequences over their accounting practices rather than the specifics of the fraud and the issues it creates for its clients (plus, although this is more analysis than news, how they go about rectifying their associations w/ FM).

Darwin Gets Involved In Market Corrections?

India is on alert for suicides as their stock market slides downward.

When the most highly leveraged players remove themselves from the game permanently, does that bode well, or poorly?

Those Stable Iranian Markets

The demise of the "petrodollar" is much bandied about, but it's going to take much more than Iran's attempt to establish a Euro-based trading market to bring it down. Iran is volatile and has a suspect legal system, and neither one of these things would inspire much faith in their markets. You also have to wonder why the hell the EU would want to run currency deficits in the first place, but nobody ever said governments were expected to make any sense at all.

The Governments Own The Means Of Production

From the WSJ: "Ecuadorean officials said the cancellation of US-based Occidental Petroleum Corp.'s contract and the seizure of the company's assets didn't mean the Andean nation is nationalizing its oil industry."

Right. Petroecuador is busy compensating them as I type this, I'm sure [sarcasm]. This is yet another example of why it's best to own not the companies but they natural resources they are producing. Governments will continue to nationalize mines and facilities and impose windfall profits taxes on producers.

Junk Bonds Not Risky Enough For Ya?

How about extending credit to New Orleans, then?

Disappointingly, the terms of the line of credit are not discussed. Perhaps it contains measures for repayment in beads, beignets and revenues negotiated with the Girls Gone Wild producers, whose forward earnings are highly dependent on the revitalization of the city.

Fight Club Without All That Punching And Whatnot

The "elimination of consumer debt" that Project Mayhem accomplished can be done in an explosion-free manner if inflation is rampant. If the dollar is worthless, then credit card debt, car loan, mortgage, etc, become meaningless in real terms. Example:

You are one of the lumpen. In February 2005 you purchase a yin-and-yang coffee table for $400US. This is the equivalent of one ounce of gold.

Being lumpen and all, you probably are only paying the interest on this coffee table. Thus, in May 2006, you still owe $400US. This is now the equivalent of a little more than half an ounce of gold. If it rises more (and it will), you will soon owe your credit card company the dollar equivalent of only a few grams of hard assets.

Not that you'll have those hard assets to give them, or anything. But someone will probably have printed you a wheelbarrow full of dollars, so no biggie.

As such, why should the lumpen care about inflation? All it can do is take them from below water to level ground. It's the rest of us who used to have a comfortable view from a hill who now have to scramble around and hedge against it.

If the Fed does overshoot neutral and hike us into deflation, however, all bets are gonna be off.

Backwardation

In the US, our sufferings at the hand of the state are inauspiciously evil. From the moment you begin your day to the time you go to bed, your life is changed for the worse by the state. The temperature of the hot water in your shower, the pressure at which it comes out, the quantity of the water flow, the efficiency of the flush in your toilet, the contents of your toothpaste, the country of origin of the clothing you put on, and the price of the gas in the car that you drive, are managed by bureaucrats in Washington. - Lew Rockwell

Well, on that last one, there is a workaround of sorts. First Fuel Banks has been allowing motorists to prepay for hundreds or thousands of gallons of gasoline to lock in prices, so there is still at least one guy in the country filling up for 99 cents a gallon. Granted, he's still paying 50 cents in taxes to the feds, but at least he's not suffering for all this Iran bullshit. The company stores some of their gas and buys futures on the NY mercantile exchange to make up for the rest.

This is nothing new really. The main reason the airlines are not all completely broke is that most have contracted for years' worth of jet fuel at, say, 2000's prices.

So how to deal with rising gas prices? Buy less gas, or hedge against it. Your call. Then, tell the state to leave your toilet alone.