TFN eNews 06/26/2009: Have another drink…
Published via e-mail broadcast on June 26, 2009
In today’s TFN eNews:
* The culture of know-nothing
* Forgetfulness drink
* Much ado about nothing?
Dear TFN Reader,
During my ten days in Germany, I managed to meet a bunch of old friends. One was my former roommate from my school days at the University of Göttingen.
Back in the day, we were quite famous for the parties we threw. And infamous among the stolid Göttingen citizens who lived in the apartments above us… who, pitchforks and torches in hand, rang our doorbell at the ungodly hour of 9:00 a.m. after my 25th birthday celebration had gotten ever so slightly out of hand.
Despite his disreputable collegiate self, my friend turned out well. He’s a top-level executive who in the course of his career has run a bicycle manufacturer, a major fruit importer, and one of the largest sports retailers in Europe. You’ve seen his type flying first class on major European airlines: Tall, balding, attired in expensive conservatism, with absurdly rectangular glasses and half covered by a copy of the Frankfurter Allgemeine Zeitung.
When it comes to business, finance, and negotiation, there’s no-one better qualified than him.
On occasion, this inveterate bachelor also dispenses parenting advice. He does so quite freely, despite having absolutely no practical exposure to the subject at hand.
Now, I know: Experience is underrated these days. You have a community activist running the most powerful country in the world, an unelected gaggle of institutional apparatchiks directing the largest economy, and political appointees with no investing experience “regulating” the financial system. Dear Abby’s successor to the realm of syndicated relationship advice is a single mother of one.
And one of the largest car manufacturers in the world now has a chairman who boasts that he knows nothing about the auto industry.
You’d think I’d be used to it. But maybe parental advice is truly the one remaining area where credibility is harder to come by. Since this, too, is likely to change, let me be the first to define some basic qualifications. I suggest a minimum of two years of diaper changes and interrupted sleep, a half-decade of supervising homework and music practice… and a minimum of 2 months of non-stop exposure to teenage obnoxiousness before you’re allowed to ask “Have you ever considered asking what he wants?”
*** Seeking shelter from a rain squall off Berlin’s Alexanderplatz, I was delighted to explore a store called “Ostpaket” (”package from the East”).
It specializes in stuff characteristic of East Germany’s sparse assortment of consumer goods: Candies made from Sanddorn berries, a relative of decorative firethorn bushes in East Coast front yards… the flowered housecoats my grandmother and aunts spent their domestic lives in… and tiny novelty bottles filled with “Forgetfulness Drink” — high-proof grain alcohol required to look back on 40 years of communism, suppression, and food shortages with a nostalgic tear in the eye.
Not that forgetfulness is the domain of incorrigible East German communists.
In two weeks, we’ll be celebrating the 15th anniversary of a curiously ironic lawsuit. On July 6, 1994, plaintiffs filed a class action suit alleging that Citibank had engaged in “redlining” practices in the Chicago metropolitan area in violation of the Equal Credit Opportunity Act.
Citibank allegedly had rejected loan applications of minority applicants while approving mortgages filed by white applicants with similar financial characteristics and credit histories. Plaintiffs sought injunctive relief, actual damages, and punitive damages.
In other words, Citibank was being accused not of making high-risk loans to shaky customers. But of not making enough high-risk loans available to all shaky customers.
The suit was classified as a class action on June 30, 1995. The parties voluntarily dismissed it on May 12, 1998, pursuant to a settlement agreement. The Plaintiff’s Lawyers list also contains this particular entry:
“Obama, Barack H. (Illinois)”
The very man who won the 2008 election blaming the housing crash on “irresponsible business practices” had sued to compel banks to make more shaky loans.
How quickly people forget.
More disturbingly, the speed of forgetfulness seems to be increasing: Half a year after swearing to regulate the mortgage industry into submission, two U.S. Democrats now want Fannie Mae and Freddie Mac to relax the very standards for mortgages on new condominiums they just tightened.
Representatives Barney Frank (chairman of the House Financial Services Committee) and Anthony Weiner warned that the new 70% sales threshold could lead condo buyers to avoid new developments. They asked companies to “make appropriate adjustments” to their underwriting standards for condos.
I wonder what a search of their office waste baskets would show. I suspect there might be the one or other miniature bottle of East German grain alcohol.
Maybe they should go the presidential way: Sue!
*** “Congress is working overtime to try to revive the nation’s economy. Today’s Cap-and-Trade vote is fueling speculation,” writes TFN’s stock guru Andrew Snyder today, but he wonders if it’s worth all the to-do…
“One of the biggest movers in the pre-vote hype is Broadwind Energy (NASDAQ:BWEN), a growing player in the nation’s wind-energy industry. As a maker of turbine gearing, the company stands to see substantial growth if the sector finds the legs so many politicians are trying to force.
“As I write, shares of the billion-dollar company are up by more than 35%. The stock closed the day yesterday at $8.23 and is currently trading for $11.23.
“With no material news coming from Broadwind executives today to explain the massive surge in valuation, investors are left wondering what to think.
“Is the action due to Pelosi’s impending vote? Or is there something bigger on the way?” Read the rest of the article here.
Quote of the Day:
“Americans should know that those Members who vote for this climate bill are voting for what is likely to be the biggest tax in American history. Even Democrats can’t repeal that reality.”
Recommended Reading
“NCI Building Sytems: Blame it on those greedy shorts”
“Gold and Resources: 3 “Stealth Stocks” that could turn $2,500 into $25,000″
Today’s Top 3 Financial News Headlines
NPR.org — Will Overstimulating Economy Bring Inflation? “In the current crisis, the Federal Reserve and other central banks around the world have been taking unprecedented, historic steps to make credit available — to basically push money into the economy. The head of Germany’s central bank has warned that this could lead to inflation.”
Reuters — GE’s Immelt says U.S. economy needs industrial renewal “The world’s largest economy can no longer count on consumer spending to drive demand, nor can it rely on Wall Street financial wizardry if it wants its population to continue to enjoy a high standard of living, the head of the largest U.S. conglomerate said.”
Business Week – Capitalizing on Cheap Natural Gas “While the price of a barrel of oil has doubled since early March, to about $68, natural gas prices are languishing at about $4 per million BTUs. In markets where traders make bets based on those standard measures of barrels and BTUs, the 18-to-1 price ratio for oil is about double the typical ratio of 8 or 9 to 1. That has some speculators betting natural gas prices will spike.”
Cordially yours,
J. Christoph Amberger
Executive Publisher, TodaysFinancialNews.com
Next Article: Profiting as energy goes green and lean
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