On GE

Looking at GE's single-digit share price of late, one might wonder if it's a bargain or otherwise.

Being nothing if not a parrot in puppy skin, will simply repeat what yours truly, last November, referred to others as having said:

Funny how Immelt has seen fit to remind shareholders several times recently how GE has a AAA rating, and yet they run to the FDIC to get $139B in debt backing, not to mention getting themselves on the do-not-short list back in September.

That was when GE was in the $20 range, a mere 50% or so haircut from its recent highs. Now, less mere, more haircut.

Mr. Mortgage Refines His Outlook

Ironically, if you've checked out his site lately, Mr. Mortgage is figuratively homeless for the next coupla weeks. Updates are available by email, once one signs up.

In his latest missive, there are at least several choice tidbits well worth pondering:

CA Jan 2009 home sales fell 22.1% from Dec and were at the lowest level years. The median price hit $224k, down 10% from last month and 53% from the peak. 60.4% of total sales came from the foreclosure stock. This is now a categorical wipeout.

Next, is for the mid to upper end homes to follow in expeditious fashion accelerating the Alt-A, Pay Option, Jumbo Prime and Prime Implosion. This will make the ‘Subprime Implosion’ look like a walk in the park.

Are we running out of buyers? Where will they come from? Homeownership going into this crisis was at an all-time high, credit is tight and the all-important market-moving move-up buyer is gone. Prices are falling so fast and rents closely behind that we could conceivably see a default and foreclosure crisis among investors who bought foreclosures too early thinking they were getting a good deal a year ago. The investor today can rent the home for much less than the one who bought nine-months ago putting pressure on past buyers.

Note to potential buyers of average to nicer houses: as previously mentioned in "But in the Nicer Neighborhoods," end of this year and beginning of next oughter be interesting times.

On Geithner and Bubbles

So there had been some noise about our now Treasury Secretary Timothy Geithner and his taxes, which may or may not be a good indicator of his level of fitness for oversight of ye olde IRS. For review, old hat:

-Geithner paid $16,732 in back taxes and interest for the years 2003 and 2004 after an Internal Revenue Service audit, but didn't amend his 2001 and 2002 returns, which reflected the same error, at that time.

-He made amends for the 2001 and 2002 omissions, paying $25,970 in self-employment taxes and interest, but only after he was nominated to serve as Treasury secretary.

-The IMF circulated documents to Geithner offering extra pay to cover his U.S. self-employment taxes. He filled out the forms and received the extra cash, but he didn't pay the taxes.

All the same, there has been some juicy stuff, albeit somewhat less circulated, about his personal finances:

All of the Geithners' mortgages...carried adjustable-rate mortgages with the risk that annual rate increases could raise their interest payments to as much as 11.25 percent, though the couple tended to refinance or sell their homes before they faced a rate adjustment.

They also took out second mortgages, now known as home equity lines of credit, borrowing a total of nearly $1 million in 2002 on their second Bethesda home, which they bought a year earlier for $1,085,000.

In 2004, they sold that house for $1.45 million and bought their current house in the New York suburb of Larchmont with a $1 million Wells Fargo mortgage, later adding a $400,000 home equity line of credit, also from Wells Fargo.

Just a couple days ago, by happenstance, an otherwise hapless pup thought she mighta saw a putty tat:

"The causes of this crisis are many and complex. They accumulated over a long period of time, and they will take time to resolve," Geithner said.

"Governments and central banks around the world pursued policies that, with the benefit of hindsight, caused a huge global boom in credit, pushed housing prices and financial markets to levels that defied gravity.”

Maybe me simply dumb dog; irregardless, does it not instill great confidence in one's mind that the arguably second most important financial person in the country--if not the world--considers the causes of the crisis manifold and complex, and allegedly requires hindsight to see bubbles in housing and credit? Perhaps elaborate plan, as conniving as certain kibble-crunching kitties.

But truly, what conviction, to actually be smarter than the average bear, but to partake continually of trufflesque ARMs and HELOCs simply to show the masses how good they taste. Kudos to the new Maestro.

Would that I had a smorgasbord of delicacies with which to demonstrate palatability thereof to others. Cruel fate.

Uh-Oh: Ben's Contrite (Sort of)

As previously noted, Ben Stein is probably not terribly smarter than yours truly, which is really saying a lot. He was horribly, ridiculously--yet simultaneously incredibly, inexplicably, smugly so--wrong about financials all last year, and then some. Although, to make it all better, he kinda sorta left-pawedly admits to it now, after a bit of time to reflect, presumably:

I was wrong and Peter Schiff was right -- in a very big way.

He then goes on about how badly Schiff's portfolio has fared (so what? I'd call it bad timing as opposed to fundamentally wrong) compared to his truly guru-worthy index-based vehicle, which was "only" down some 20 percent last year. As if that's something to be proud of. And invokes Buffett's missteps, of which which yours humbly has enumerated a few. By the way, anyone look at GE lately? This is what a certain nameless puppy (whose name starts widda "B" and ends widda "A", and in da middle is "ACAL") said last November:

In October, Buffett swooped in to buy some GE stock at a then-bargain $22.25. That, for a financial black box that many suspect doesn't nearly deserve the AAA rating its CEO constantly has to remind the public it still has.

But enough about dumb dogs; here's the truly worrying Steinism:

I assume that Peter Schiff is a fine and capable man. But he is not Superman. He is a man. No more. Recently I heard him make a prediction on a California radio station of simultaneous ruinous inflation and a complete collapse of the economy. At least this is what I understood him to be saying.

This scenario has no precedent in history that I am aware of. Maybe we have skipped the rails of history, but a huge increase in demand -- fueling inflation -- coincident with a huge drop in economic activity (which is what I understand Mr. Schiff to be predicting -- maybe I am wrong) would make no arithmetic sense.

I've seen some scary stuff before, but Stein disagreeing with Schiff on such a scale is a touch disconcerting, to put it mildly. And, by the way, about the last part of his quote above: HUH?!!! Demand, and demand alone, creates inflation? (Don't see him saying Schiff said so.) Funny, methought money supply alone, independent of demand, maybe could mayhap perhaps create inflation... Silly puppy. Moral of story: read and believe Stein. 20 percent of his portfolio disappeared last year, so obviously big man knows something about fighting inflation.

Here's the punchline, a new one:

Again, I emphasize that I am extremely fallible, too.

Gee, you think?

Again, I emphasize that I am extremely emaciated, too.