At least some people are trying to hold the line

This from the Financial Times via The Naked Capitalist…..

At a time when America, or at least Wall Street, needs a spineless hack as the head of a key agency, it is saddled with a credible man of principle: James Lockhart, OFHEO’s director. Yale graduate, Harvard MBA, lieutenant in the nuclear navy, risk management software entrepreneur, senior insurance executive, and former head of the Pension Benefit Guarantee Corporation. “A real hard-ass” in the words of a mortgage finance executive. It doesn’t seem as though he can be intimidated by the threat of being sent back to Plano, Texas, to work in his uncle’s car dealership.

Lockhart was appointed in the middle of last year to the directorship when there was no immediate, obvious cost to anyone of having a competent, effective regulator who actually knows what those buttons on his computer are connected to.

What is worse, his resistance to Fannie and Freddie ballooning their balance sheets and loosening their controls is reinforced by his experience in a previous job. The Pension Benefit Guarantee Corporation, a thinly capitalised government insurance operation, which charged inadequate premiums for covering beneficiaries of failed pension funds, was in turnround, as they say in Hollywood, during his tenure from 1989 to 1993. Lockhart had to clean up other peoples’ messes and one can guess he doesn’t want to do that again.

While I have been taking a break from posting, the world has been ending. There is nothing really new in that so I don’t know if I should make a point of recapping what these pages have missed. But just in case you are interested….

Macro Man says “Bloody Hell…..”

That is generally how a lot of people reacted to this week. It was the TIC data for august that had Macro Man all excited but most of the excitement has been centering on the structured investment vehicles of this world (other wise known as SIV’s). All anyone really knows for sure is that something is really wrong with the SIV’s of the world.

We know this because the Treasury department and Citigroup (the largest bank in US) have been banging heads together to try to create one big bail out fund. Seeing as how Citigrou’s own personal pet SIV demons have it on the hook for about 100 billion, the suspicion is that this is a plot to bail out Citigroup. But seeing as how even SIV’s that are not associated with Citigroup are starting to go bankrupt, I think that it is safe to say that this problem is broader then just Citigroup.

In other news, oil has almost managed to break $90 a barrel.

Some of our products are made exclusively for certain high-profile customers. In these kinds of arrangements, the customers are expected to forecast ahead of time what quantity of product they will need. The forecast does not have to be precise down the the last unit, but it does have to be in the right range Click Here to continue reading.

Great innovators are the ones who do what everyone said can’t be done. Columbus. Orville and Wilbur. Einstein. Edison.
Great idiots are the ones who attempt to do what everyone said can’t be done. Since they are so much more common, their names are less famous, though a good historian could name a few (shame on Click Here to continue reading.

I was working on some new Acer PC’s at work, when I noticed something that struck me as rather suspicious. The default profile is named “Acer User” as you might suspect, but in the Windows Directory structure, it is named “Lenovo User”. As you might already know, Acer and Lenovo are fierce competitors in the Click Here to continue reading.

I have been told that I am a fool for not investing in stocks while I am still young. They say “stocks always deliver positive real returns over any 20 year period.” They say” This hold true even if you buy right before the stock market crashes.”

I wish I could force those people to read this rant.

This is what the speculators are like. Even the best of them tend to build fortunes that don’t last.

The US mint still puts out gold coins that are legal tender. They are mostly sold to collectors but they are still legal tender. Got that?

In fact, if you try to pass of a forged coin as legal tender the full weight of the law can come down on you regardless of whether the gold content is the same as this case proves.

So what happens if you try to pay your employees with legal tender gold coins and report their income based on the face value of the coins (i.e. the amount that the coin is legal tender for)? The full weight of the government comes down on you for tax evasion because the coins are worth more then the amount they are legal tender for. Thankfully, we still have jury system in this country so the company in question did not get convicted.

Still, I think that it is disturbing that they only got off because of a hung jury. In my opinion, it should have been a straight acquittal. How can you make something legal tender and then demand that they value it according to some other standard for tax purposes?

Granted, the construction company that was doing this was trying to help its workers avoid taxes on their wages. But lots of companies use more dubious methods then this to avoid paying taxes and get away with because it is legal. The way that most companies account for stock options would be just one example. Why pick on the blue collar companies?

If you don’t want them reporting their wages according to the face value, don’t make it legal tender. How hard of a fix is that?