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Category Archives: Economics

If made, this is going to be one sweet movie ala “Wall Street”, “Boiler Room” and hopefully the upcoming movie “Money Never Sleeps”.


“Based on the true story of John D’Agostino, “Rigged: The True Story of an Ivy League Kid Who Changed the World of Oil, From Wall Street to Dubai” is about an Italian kid from Brooklyn who matriculates at Harvard and lands on the Merc Exchange. After establishing himself, the protagonist hooks up with another young trader and a mysterious Middle Easterner to engage in a dangerous scheme to revolutionize the oil trading industry.”

There’s No Shame in Renting, Home Prices Will Fall is a great site IMO.  I love the easy to understand information about home buying and the mortgage market in general.

I particularly like the article above.  As I think the mortgage failout will last another 18, I will continue to rent.  The aritcle above describes how there is no shame in this game.

How Missed Signs Contributed to a Mortgage Meltdown – New York Times

I worked at a wholesale lender from 2004 to 2006.  The prevalence of no doc and low documentation loans always surprised me.  I remember telling a b-school colleague who worked for Bain back in 2005 how bad it was going to be when all the ARMs and teaser rates reset.

It’s called “payment shock” when a borrower’s payment all of a sudden doubles and it is a consideration in the loan underwriting process.  However when a borrower and broker is applying for a low doc/no doc/liar loan, the income is usually inflated, the reserves sitting in the bank have been borrowed and recently seasoned.  It was really a lot of gaming the underwriting guidelines.  The broker’s knew what they could get a way with, bad deals were made and now we are reaping the results as uncertainty hits global markets.

Unpaid Teens Bag Groceries for Wal-Mart – Newsweek: World News –

It seems Wal-Mart in Mexico has an in-ter-est-ing business model.  It seems they can swing getting “volunteers” to work for them.  Now that’s truly the “free” market at work.

The Moore the Scarier

by Jonathan Hoenig     |     Published July 16, 2007

I MAKE A BRIEF APPEARANCE, unwilling and unpaid mind you, in “Sicko,” Michael Moore’s new film about health care in the U.S. In it, I make the point that while Canadians are entitled to their share of socialized medicine, the quality and availability of services is atrocious. Moore might be determined to present an alternate reality, but almost on cue I just happened to hear this week from an associate whose Canadian mother was diagnosed with kidney cancer in March. By June, she still hadn’t been given a date for an operation, prompting her family to bring her to the Mayo Clinic in Minnesota and pay $45,000 out of pocket to have the procedure done. Not surprisingly, they’d rather pay to receive a service and be cured than not pay for it and die waiting for an appointment.

First off, it’s important to realize the health-care system in the U.S. is far from a free market. Between Medicare, Medicaid and a myriad of other public programs, it’s estimated that the government pays for and controls nearly half the health care in the country. Even private health care in the U.S. is a highly regulated, obsessively congealed ball of red tape. Under the present system virtually every element of private health care, from who can practice medicine to how kidneys are allocated, is controlled by bureaucrats. Yes, U.S. health care is problematic, but not because it’s a for-profit capitalist system. The problem stems from it not being capitalist enough. It’s a little bit bewildering to suggest there’s a “right” to health care considering that, all things being equal, food and shelter are more basic necessities of life. Why those aren’t the subject of multimillion-dollar documentary films is because the free market has done a pretty good job of addressing those issues already. Home ownership in this country is at an all-time high and obesity, not starvation, is the major problem facing rich and poor alike.

Yet collectivists like Moore, along with politicians on both sides of the aisle, are now calling for even more government involvement in health care by setting up a “universal” system. Of course, universal health care is just another name for socialized medicine. Under socialism, health care is a right, just like life, liberty and the pursuit of happiness. Everybody has a right to health care in their view, not because they’ve done something to deserve it, but simply because of the fact they need it. Men like Moore believe that the fact that you lawfully earn your money doesn’t entitle you to it, yet the fact that a cancer patient needs chemotherapy does entitle him to it.

The reality is that from Canada to Cuba socialized health care’s record is appalling. It’s impossible to tally how many patients die waiting for routine preventative procedures or how many innovations go undiscovered because precious resources are squandered. If you think the Post Office, IRS and Social Security are run poorly, then you can only imagine how horrific a national health-care system would be.

Yet the real reason to oppose socialized heath care isn’t that it’s impractical, but because it’s immoral. As properly defined in the Declaration of Independence, we have the right to life, liberty and the pursuit of happiness. So while you have an absolute right to your life, you don’t have the right to demand society at large provide you with food, shelter, four weeks of vacation, a laptop computer or any other entitlement that populist politicians or socialist filmmakers care to propose.

Of course, a right is a right to action, but not to a freebie owed to you simply by being born. In America, individual rights mean you’re free to pursue your own life just as others are free to pursue their own. To the extent you’d like to contribute glasses for the blind or pay for operations for the poor, you’re welcome to voluntarily. But man is not born owing thy neighbor anything, only the obligation not to interfere with his own life, liberty and pursuit of happiness. Your right to free speech, for example, doesn’t obligate me to listen.

But establishing a right to health care is enslaving someone else with the obligation to provide it. A right to health care means that in fact, I don’t have a right to my own pursuit of happiness, because I have a legal duty to work to fulfill your rights. If you need an aspirin, I work an extra 15 minutes a day. If you need a respirator, it might be an extra 15 days. Forced to serve the collective, the individual no longer has any rights at all.

Last fall I wrote that “political winds have prompted me to increase my allocation to foreign exchange beyond the good ol’ greenback. You can debate if higher taxes and minimum wage, along with a move toward expanding entitlements such as Social Security or universal health care are worthy goals, but one thing is certain: They aren’t free. As the anticapitalist, welfare state expands, it’s my belief the value of the dollar will undoubtedly decline.” Lo and behold, the dollar has already fallen sharply as the country has moved more toward an entitlement state and socialized health care. The trend shows no sign of shifting anytime soon.

The success of Moore’s film and the widespread movement toward socialized health care by members of both political parties will only mean further declines for our nation’s currency. Of course, that’s the one risk I can hedge. The sad part is the quality of the health care for all Americans, rich or poor, will fall right along with it.

Jonathan Hoenig is managing member at Capitalistpig Hedge Fund LLC.

Fed Feels Pressure to Protect Consumers (Wall Street Journal)
State Regulators Offer Guidance on Mortgages (American Banker)
First Rung on Property Ladder Gets Harder to Reach (USA Today)
Loan Spree to Come Back Against Small Banks (Wall Street Journal)
Lender Courting ‘Green’ Clients (Sacramento Bee (Calif.))
Countrywide Warns Defaults Rising (Investor’s Business Daily)
Subprime Lender NovaStar Gets $150 Mln Infusion (Reuters)
Finance: Alliance Bancorp (Investor’s Business Daily)
Congressmen Push for Disaster Insurance (Palm Beach Post (Fla.))

I am a huge fan of Charles Wheelan, an econ prof at Chicago GSB. Anyone who wants a real simple primer on econ should read his book entitled “Naked Economics”. I loved it.

The linked article below, gives a good idea of what Charles Wheelan is all about. I hope you enjoy his work as much as I do.

An Economics Laundry List

I guess we now know why there is a payday loans on every street corner. While this may seem like a shocker, I am sure some strategic planning group or entrepreneur is smelling opportunity blood.

Credit Standards Rise for Subprime Loans (Wall Street Journal)
Lenders Get Tougher (Wall Street Journal)
Freddie Mac Urges Subprime Oversight (Washington Post)
Groups Seek Foreclosure Delay (Los Angeles Times)
Big Lender Enters Mortgage Niche (Wall Street Journal)
Mortgage Lenders Licensure Bill Heads to Governor (SitNews)
Wide Scope in Ohio AG’s Subprime Legal Plans (American Banker)
Countrywide to Add 2,000 Staffers (Los Angeles Times)
Bad U.S. Loans Plague HSBC (Wall Street Journal)
Mortgage Industry Weighs In on Proposed REMIC Changes (National Mortgage News)

Bellevue’s Seattle Mortgage to Sell Reverse-Mortgage Unit (Seattle Times)
Countrywide, IndyMac Earnings Slide (Wall Street Journal)
Zoot Redefines Lending Software (American Banker)
30-Year Mortgages Show Lower Rate for 2nd Straight Week (Baltimore Sun)
Title Firm Settles Suit on Broken Payments (Cleveland Plain Dealer (OH))
U.S. Realtors Forecast Falling Home Prices (San Diego Daily Transcript)
More Housing Woes Forecast (Palm Beach Post (FL))
Mortgage Woes Send FBR to Quarterly Loss (Washington Post)
Bankruptcies Rise Fastest for Over-55 Group (Washington Post)