The Investor's Coroner: Now with Prozac

Welcome to a little something I like to call The Investor’s Coroner, your weekly attempt to make both sense and fun of the current international marketplace. Here at The IC (oh yeah, I’m initializing) we spend a good chunk of our lives following the market and throwing up in our mouths. As a result, it is a little difficult to keep The IC light and fluffy like a rich lady’s bath towel. For this reason and this reason alone, The Investor’s Coroner now firmly endorses Prozac. Prozac, keeping The IC calm and focused since it was prescribed to me a couple of weeks ago.

But enough about prescription mind control, let’s take a look at our money.

This Whole Fannie Freddie Debacle
Shit, where do I begin?

In the interest of brevity, here is my watered down version of Freddie Mac and Fannie Mae: they are banks that receive preferential treatment from the government (a right to borrow at a lower amount than any other bank) because their sole charter is to help stabilize the homeowners market by insuring a profitability in the mortgage market. Which is to say that they buy, bundle, hold and sell loans. Well, that’s what they used to do. About eight or nine years ago, they decided that they would focus more on turning a profit because they were after all, publicly traded companies with obligations to their shareholders. Never mind that their chartered obligations were to help US homeowners. That’s not important. And besides, the two aren’t really all that mutually exclusive anyway. In 2001, Warren Buffet, the Investing Jesus, bailed on Fannie and Freddie saying that they had lost focus and that their radical new ideas would cause a major screw up.

Well, they screwed up. They got greedy and they got buried in the mortgage security mess. You could make an argument that, to a large degree, they were the mortgage security mess, but The IC ain’t here to pick at hairs, grasp at straws, blame anyone or take sides. I’m here for the yogurt. Delicious low-fat yogurt.

Anyways, the Senate is voting Saturday to quickly pass some kind of housing bill which increases the credit limit Fannie and Freddie got from the US from 2.5 billion to 800 billion dollars, which basically means that the government is going to float Fannie and Freddie some cash by buying their stock and trading their crappy mortgage securities for treasury bills, which is your money, essentially. So basically, a large part of our money supply will soon be represented by worthless mortgage-backed securities, which means serious inflation, a decrease in purchase power and a decrease in the value of the American dollar.

But that’s not all.

Also included in the glorious bill meant to save the US homeowner are two provisions not getting much press.

In this housing reform bill, congress and the senate have agreed to give the IRS the right to monitor all credit card transactions. What this has to do with anything I don’t know, but I guarantee you it wouldn’t have passed on its own.

Also, all mortgage brokers, as a result of this bill, will be required to be fingerprinted, which is par for the course in the New America but still doesn’t have anything to do with the housing debacle.

So, in a nutshell, the government just bailed out two banks it created to keep the government from having to bail you out.

Gotta love this country, huh?

Speaking of Oversight
The Democrats and the republicans could not agree in exactly how to expand its oversight of the commodities market, particularly with regards to oil which is, forgive the expression, a hot commodity. A group called the Commodities Futures Trading Commission, which is every bit as boring and unnecessary as it sounds, wanted expanded powers to monitor speculators doing unethical things. The specifics of those things have not yet been made public as no arrests or even significant inquiries have been made into recent commodities trading, nevertheless, everyone in congress wants more oversight of the market. Thankfully, the democrats and republicans are both greedy and could not agree who gets the privilege of restricting future markets and monetary freedom in the name of big government. Sometimes, their lack of organization is our only friend.

Have I Mentioned that there’s a Real Push for this Oversight Stuff?
I have no idea what nanotechnology is. I tried to look it up and understand it but I have no clue. I can’t lie: I’m just not that smart. Nevertheless, there are committees forming to push for regulatory and deregulatory requirements (read: requiring lots more money) to control whatever the heck nanotech is. I have no idea if this is good or bad but I think it’s funny that this week’s market news could have best been defined with the headline: “The Government Knows What’s Best, Stupid!”

Carl Icahn, Yahoo and the Meaning of Love
For those of you who don’t know, Carl Icahn is basically this really rich, radically pushy dude who buys tons of chunks of companies and then comes in and tells said companies how to run themselves. Because Yahoo rejected Microsoft like a scorned bitch, Icahn started acting like that freaky dad who can’t handle the fact that his daughter dumped the high school quarterback. Icahn demanded that the deal with Microsoft go through and when it did not, he threatened to replace Yahoo’s board of directors and make the deal himself.

In the business, we call this brass balls.

Anyway, Yahoo relented a little bit and let Icahn pick three members to sit on Yahoo's board and oversee any future dealings with anyone anywhere ever. I’ve said it before (but it’s been a while), if Carl Icahn wants your sandwich, you give Carl Icahn your sandwich. It’s just the easiest way to deal with the dude.

T Boone Pickens is up to Something
T Boone Pickens, in addition to having one kick ass country name, is also one of the richest oil barons in the rich tradition of oil baroning. Which is why I find it a little more than funky that Captain Boone has spent 58 million on awareness of alternative energy and has petitioned (read: asked) congress to increase its subsidies of alternative energy.

Either Slim Pickens is just following the subsidy cash while worrying about his future or he’s honestly worried about the country. My cynicism points to the former, but my childhood heart beats relentlessly for the latter.

Something Called Net Neutrality Should Probably Be Important to Me
Much like nanotechnology, I don’t understand what net neutrality is. It has something to do with profits from websites and web sources or something. The whole thing is really confusing so I just want to say that I’m for whatever provides the least oversight of the internet. I don’t know if that means I’m for net neutrality or against it, but if this becomes one of those political hot buttons, I just want it on the record right now that I vote for whatever has the least oversight.

Nokia and Qualcomm Finally get off Each Other’s Throats
Share prices of Nokia and Qualcomm both raised after they settled their four year long bitch fest of a lawsuit out of court. This was like finalizing the divorce of an abusive couple and watching with glee as one of them moves to Detroit and both get on with their lives.

When one company pays another company an assload of money and both stocks rise in price, well, that’s what’s called a good divorce. In other words, we are all a little better off now that these two have stopped fighting.

New Innovations are Still Better than New Prescriptions
Singapore is a badass place. I’ve never been there. But once I’m allowed to leave the country again, I’m totally going. In Singapore, they are considering ways to allow their citizenry to buy organs from living hosts by contributing to their charities or through other methods of trade. Now that, ladies and gentlemen, is a freaking free market. Screw organ donors. They have organ sellers. That’s fierce.

Therapists are now treating autistic kids with robots. When asked how this newfound therapy was working, one doctor said, “Who gives a shit? At least we don’t have to deal with the kids anymore.”

And now, your motivational investment quote of the week:

“What a man thinks of himself…indicates his fate.”
Aaaaa—Henry David Thoreau