ERICOPOLY

We have chickens, they lay about 8 eggs a day. My 3 yr old collects the eggs and takes them into preschool to sell to the teacher & assistants. He saves it in a tin can and buys toys with the money, personally handing the money over the counter. Today he's getting a "gun that shoots missiles" (it's one of those little Nerf guns).

The cool thing is that it not only takes pressure off the debt service ratio, but it also drives the debt down at a faster pace. 25% of the loan is paid off in 11 years at 4% fixed interest rate. 16% of the loan is paid off in 11 years at 7% fixed interest rate. Refinancing speeds up consumer deleveraging even though discretionary spending can rise at the same time.

Nope. Real estate declines are hard to ignore, and that's deflation right before my eyes.

See the graph page 10 of JPMorgan's presentation: Consumer deleveraging largely driven by charge-offs http://files.shareholder.com/downloads/ONE/1550254602x0x515337/85746b44-384f-4eab-8c22-498b7d509acf/BAAB%20Conference%20Presentation%20Final_11.4.11.pdf

What do you mean? Don't charge offs decrease the health of balance sheets by reducing assets relative to liabilities? Maybe you meant defaults and debt to equity conversion? I'm thinking about how BAC and their peers are collectively paying down the debts of consumers courtesy of positive yet weakened bank earnings. Yet the health of the bank balance sheets are improving at the same time. The banks are like consumer debt paper shredders. Just look at the credit card charge-off rates over the past 3 years. You have had chargeoff rates go at high as 10%, but the historical norm is more like 5%. So that's rapid deleveraging, courtesy of would-be bank earnings. Yet the banks can absolutely afford to do it. Capital ratios have been building at the same time. Okay, I see what you're saying, but I would characterize that as defaults and forced haircuts on consumer debt, as opposed to willing deb reductions, and only partially the reason for our accelerated private sector deleveraging. Japan had a MAXIMUM unemployment rate of 5.5% and did not have non-recourse real estate lending. Can you imagine how slow our consumer debt deleveraging would be coming along if everyone was still employed and we couldn't walk from our mortgages? The putbacks are just more of the same -- bank paper shredder. And no, it's not voluntary on the banks behalf. Yet I am still grateful. The non-recourse lending may have encouraged recklessness, but that's water under the bridge. From here on out, it's a wonderful thing as the cleansing process is happening much faster. Instead of somebody stuck paying a massive mortgage, they walk. The banks have a few years of depressed earnings and we're done.

What do you mean? Don't charge offs decrease the health of balance sheets by reducing assets relative to liabilities? Maybe you meant defaults and debt to equity conversion? I'm thinking about how BAC and their peers are collectively paying down the debts of consumers courtesy of positive yet weakened bank earnings. Yet the health of the bank balance sheets are improving at the same time. The banks are like consumer debt paper shredders. Just look at the credit card charge-off rates over the past 3 years. You have had chargeoff rates go at high as 10%, but the historical norm is more like 5%. So that's rapid deleveraging, courtesy of would-be bank earnings. Yet the banks can absolutely afford to do it. Capital ratios have been building at the same time.

In order to regain their financial health and credit ratings, households and businesses are forced to repair their balance sheets by increasing savings or paying down debt. This time it's mostly chargeoffs in the US that's driving it, not "savings or paying down debt".

Even if we were to cut emissions by 50% below 1990-levels by 2050—an extremely unrealistic scenario—the difference in temperature would be less than 0.2 degrees Fahrenheit in 2050. At that pace it becomes a 20 degree increase after 50 lifetimes strung end to end (assuming one lives 80 years). I'm betting all the political conservatives would find that very significant had somebody done that to us over the past 4,000 years.

Let's say Klarman's actions eventually force a trial decision that is "multiples of the original settlement". First: How long until that decision? Second: Assuming the bank then tries to take Countrywide into bankruptcy, no doubt a whole new trial will need to take place to contest the bankruptcy. How long from today until they would eventually have to pay up if the court rules that Countrywide was not property "ring fenced"?

Does he address the rising acidity of the oceans? http://en.wikipedia.org/wiki/Ocean_acidification Thomas Lovejoy, former chief biodiversity advisor to the World Bank, has suggested that "the acidity of the oceans will more than double in the next 40 years. This rate is 100 times faster than any changes in ocean acidity in the last 20 million years, making it unlikely that marine life can somehow adapt to the changes."[20]

Then on top of that add in the costs of sequestration.

Today it costs $6.50 per watt for installed residential rooftop solar (without a subsidy). GE thinks the price will come down to $3 per watt by 2015 (without a subsidy). http://www.cleanenergyauthority.com/solar-energy-news/ge-working-to-cut-installed-cost-of-rooftop-solar-to-4-a-watt-103111/

I found this interesting -- old news (from August) to some of you: L.A. judge puts time limit on BofA MBS fraud claims http://newsandinsight.thomsonreuters.com/Legal/News/2011/08_-_August/L_A__judge_puts_time_limit_on_BofA_MBS_fraud_claims/ Pfaelzer's findings aren't binding on any other district court judge presiding over a Countrywide MBS fraud case, and there are still unanswered questions about whether the MBS class action tolls the statute. But the Stichting ABP opinion is definitely not good news for anyone who's still contemplating federal fraud claims in an MBS fraud suit against Countrywide. Plaintiffs are going to have come up with a very good explanation for why they waited until now to bring those claims.

Politically it is far easier to subsidize solar than it is to bring in a carbon tax to raise the price of oil and gas.

Obvious cost: solar subsidy Hidden cost: coal/oil/gas carbon pollution What matters to me is which cost is higher, and I don't know. My intuition is that the carbon pollution will be more expensive in the long term.

I watched it last week but thought it was odd. The storyline leads us to believe that nobody had any idea what was about to happen because they blindly followed a risk management model that turned out to be flawed. Then they need a rocket scientist (literally) to inform them of what might happen if there is a 25% decline on $7 trillion in assets?

Current (Q3 2011) representations and warranties outstanding claims are $11.672b. See page 31 of BofA's 3rd quarter earnings presentation: http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9MTExMTY3fENoaWxkSUQ9LTF8VHlwZT0z&t=1

I'm surprised that BAC is only paying 0.27% on deposits. WFC pays 0.25% on deposits. What's driving the sudden drop in cost of deposits for BAC?

Imagine Goldman Sachs with mediocre talent though.

Thanks for posting that, I now understand why the ECRI is thinking a recession is coming. He is looking at decelerating growth (down to 0.2%) in the consumer discretionary income. He might be looking at other things but given that he mentioned this one, it must be a big part of the puzzle. Thinking about it logically, if discretionary income contracts then you have a headwind.

I liked the piece by Michael Lewis: http://www.vanityfair.com/business/features/2010/10/greeks-bearing-bonds-201010 I think that tells more of the story than merely the government employment and unionization figures, and commodity cycle.

Seems quite unethical to me. no? Like an ambulance chaser, only in hedge fund clothes.

I typically read three books a night. Olga The Brolga, The Knight And The Dragon, Go! Dogs! Go!, a rotation of about 40 books. I guess I read them each at least a dozen times.

Just own Berkshire stock with your $1b and then put $10m in tax-exempt municipal bonds. Net worth $1.01 billion. Maybe 500k income 0% tax rate. Need more income? Buy more municipals instead of some of that Berkshire stock. Recently they decided to return cash to shareholders via a buyback -> tax free once again. It's a joke really, this idea that you can get the rich to pay more in tax. They don't have to pay more if they don't want to. One probably needs to mark capital gains to market like Cardboard wrote to get Mr Buffett on board in helping with the tax bill.

Buffett has also stated that he intends to exercise the Goldman Sachs warrants that Berkshire holds. So the derivatives risk is within his risk tolerance at least.