Monday, March 31, 2008

Combination: Investments IV & Movie Review – Francis Ford Copolla

It was a Godfather marathon weekend on some TV channel and my lifetime counter for watching the first two movies clicked from probably twenty-seven to twenty-nine. Copolla’s work is brilliant and each time I re-watch those films, I see some subtle human dynamic that I had previously missed. Apocolypse Now is another example of his genius.

Copolla’s mind is a national human treasure. He understands people. Copolla has invested heavily in the Central American country of Belize. I believe he is smart there as well.

English is the language of order, and there is more English spoken at the Belize City airport than in any US airport I can think of. The Queen of England is Chief-of-State, giving England’s court system jurisdiction over the country. Copolla holds free Title to his real estate investments, and Belizean Title seems to be more secure than its American equivalent.

Belize’s dollar is pegged to the US dollar, so the dollar value of Belizean commodities (land) has gone up in the global marketplace, although the markets have not yet fully adjusted for this. Belize is an oil exporter and the kids all wear uniforms to school.

Taxes for executives in Commercial Free Zones are zero and the small Country is served by two deep-water ports. When health care is nationalized in the States, expect the world’s center of medical excellence to relocate to the Caribbean.

Investment recommendation: Belizean Real Estate.

Sunday, March 30, 2008

Prediction: July Surprise

Reverend Wright’s responses to a white Fox News reporter:

How many of Cone's books have you read? How many of Cone's book have you read?;
How many books of Cone's have you read?

The problem with responses like that is that white people might actually read the books:

Black theology refuses to accept a God who is not identified totally with the goals of the black community. If God is not for us and against white people, then he is a murderer, and we had better kill him.

Black theology will accept only the love of God which participates in the destruction of the white enemy.

Either God is for black people in their fight for liberation and against the white oppressors, or he is not.

Wright’s church embraces black liberation theology and Barack is on record supporting it. Now that will make for some good 527s.

Now, what will be the name of the effort?

Update One: Perhaps a theme song?

She’ll cone you when you're walking on the street;
She’ll cone you when you're trying to keep your seat;
She’ll cone you when you’re walking on the floor; and
She’ll cone you when you’re walking to the door.

Friday, March 28, 2008

Fistful of Moqtada

"Rich White Men"

Barack is half white. Judging by the color of his skin, Reverend Wright looks to be at least three-quarters white. Juxtapose him against his congregation. Reverend Wright is moving into a $1.6 million, 10,000 square foot home.

The parallels between modern race relations and the Cherokee experience of the 1830s is interesting. Back then part / mostly white men rose to leadership positions in the Cherokee nation. In exchange for material goods the Treaty Party, led by Major Ridge, sold the masses down the river.

Eventually the Cherokee masses who survived the march, led by another mostly white man John Ross, massacred the leadership of the Treaty Party. That’s how that round ended anyway.

Update: Maybe Reverend Wright knows his history. He is moving to a gated community.

Wednesday, March 26, 2008

Avtomat Kalashnikova 1947

MSNBC is decrying the growing numbers of AK-47s being used in crimes:

The reasons criminals are selecting AK-47s is because they are excellent weapons and a great value. 7.62-39 rounds can still be purchased in bulk for twenty cents each.

Mikhail Kalashnikov was a Russian tank Sargent laid up in the hospital when he designed the AK-47. It is a brilliant design. A portion of the barrel pressure is vented back against a very large action that includes a cam-operated mechanism. This mechanism kicks out the spent cartridge and cocks the trigger on the backswing and chambers a fresh round, rotating it to lock in place on the upswing. The firing mechanism is an elegantly simple spring activated hammer, that contacts a freely floating pin that sets of the primer.

I’ve been unable to find ballistic information on the 7.62-39 rounds. But the AK-47 comes with iron sights graduated between 100 and 800 meters, although the effective range for the weapon is around 400 yards. You can buy a Romanian AK-47 for around $350 or a Yugoslavian AK-47 for around $550. The Yugoslavian model seems to be better made.

There will come a time in the not too distant future when it becomes illegal to purchase assault rifles like the AK-47. It’s probably best to have some of them in the hands of law-abiding Citizens too.

Tuesday, March 25, 2008

Sewer Systems

Modern sewer systems are typically designed to accommodate an average of 350 gallons per house per day with a peaking factor of three. The peaking factor accounts for the fact that everybody is flushing toilets and showering at 6:30am.

City budgets are in crisis with the melt down of the housing market for two reasons:
(1) The tens of thousands of dollars per new building permit are gone. In small cities, this is a ten million dollar annual hit.
(2) The reduction of housing value of 30% will eventually reduce the taxes from existing homes.

In order to save money, some Cities are stretching existing infrastructure by talking about reducing sewer design criteria to 220 gallons per house per day. This is the actual observed flow, and eliminates the safety factor. These cities assume that average household discharge will be the same in ten years as it is today.

But that is a bad assumption. The combination of waves of relatively low-IQ immigrants and a severe economic downturn will yield more people in each house. The average number could easily double.

That is why I think we can expect to see stories about sewer systems discharging into streets as our world moves forward. Border towns will be first.

National Strategy

It is every fundamentalist Muslim’s duty to wage unending war until Dar al-Islam (the land of Islam) finally conquers Dar al-Harb (the land of war, where we live), producing a worldwide Caliphate. We can deny it all we want, but that is their duty.

In the course of their work however, it is permissible to enter into a tactical Hudna. A Hudna is a truce of up to ten years where the tactical position of Dar al-Islam is strengthened. Al-Sadr has entered into a Hudna.

Section 8:66 of Sharia Law authorizes the concept of Hudna:

Now hath Allah lightened your burden, for He knoweth that there is weakness in you. So if there be of you a steadfast hundred they shall overcome two hundred, and if there be of you a thousand (steadfast) they shall overcome two thousand by permission of Allah. Allah is with the steadfast.

In contrast to Section 8:66; Section 8:65 directs believers to fight when they regain a position of strength:

O Prophet! Exhort the believers to fight. If there be of you twenty steadfast they shall overcome two hundred, and if there be of you a hundred (steadfast) they shall overcome a thousand of those who disbelieve, because they (the disbelievers) are a folk without intelligence.

McCain can keep the troops in Iraq and Afghanistan for two hundred more years. But as soon as we leave, the Hudna will end and Iraq will degenerate into civil war, yielding either an Islamic theocracy or a military dictatorship.

Our national interest is best served by disengaging from Dar al-Islam and adopting a defensive stance against the demographic, money, and legal weapons of the modern Jihad.

Monday, March 24, 2008

All In The Family

At the risk of doing Hillary’s bidding, this would make for some different White House reunions.

Barack’s father had eight children by four different women. Barack’s mother was named Stanley because her dad wanted a boy and had two short-term marriages to men from the third-world. As Barack is our prospective Commander in Chief, it is fair to discuss this and the potential impacts on his judgment.

The photo text is probably BS but Barack has chosen to maintain his membership in the congregation. That is offensive.

Saturday, March 22, 2008

Movie Review: No Country for Old Men

Excellent. Watched it twice. The celebration of rugged individualism was a breath of fresh air. In the spirit of Lwelleyn’s opening scene, here’s some 30-06 ballistic data:

Short Range
+0.2” 50 yards
+0.7” 100 yards
Zero 150 yards
-2.2” 200 yards
-5.9” 250 yards
-11.4” 300 yards

Long Range
+2.1” 100 yards
+1.8” 150 yards
Zero 200 yards
-3.5” 250 yards
-9.0” 300 yards
-26.3” 400 yards
-54.0” 500 yards

Friday, March 21, 2008

Nobody to Say No

Then Treasury Secretary now Banking Executive Robert Rubin (Goldman Sachs 1966-1992) tells then Banking Executive now Treasury Secretary Henry Paulson (Goldman Sachs 1974-2006) to have the taxpayers pick up the tab for irresponsible business practices:

“There is a strong need for urgent action," Rubin, who is chairman of Citigroup Inc.'s executive committee, said. "I would be very, very seriously considering the possibility of using public funds in one form or another."

I believe that there will be justice in the end for this. I can imagine international bounty hunters, funded by an angry, nationalistic autocrat. After the credit card goes away.


Only one camp expressed outrage.

Now why would a local Chicago politician and community organizer, whose wife still complains about the family finances, need to travel internationally during his rise to power?

Perhaps he was a B-list public figure to showcase charitable works in Africa.

Perhaps he wanted to take the family to see the land of the ancestors.

Perhaps it had something to do with the $3.5 million that Auchi (Iraq) lent to Rezko (Syria) that helped finance Obama’s $1.95 million home.

International travel records for government officials should be public information, just like financial disclosures. If I’m right, the State Department passport information would include dates and ports of entry back into the United States. Information on third world visits would be limited to stamps on Obama’s passport.

If he is asked to volunteer his passport in the dialog to come, I predict that he will claim that it is lost or stolen.

Thursday, March 20, 2008

Bernanke's House

Reports put the value of his Washington DC home down $260,000; from $1.1 million to $840,000. That works out to a loss of 31%.

A drop of 31% is similar to the markets I’m familiar with in the high desert and northeast.

Goldman Sachs had estimated mortgage losses to be $300 billion a month or so ago. Some people have been arguing that losses could be as high as $1 trillion. I have been stating for months that the losses will likely be around $3 trillion* (a 30% drop in residential real estate values equates to $6 trillion; half of which is owned by the bank; add commercial losses; add consumer credit; subtract people who choose to keep making payments on upside down homes).

The math is pretty straight forward. But then I’m not pushing an agenda.

* Qualification: 2006 dollars. The trashing of the dollar will reduce the number but not the impact. Deflating the savings of Americans will ease the pain of Wall Street.

Wednesday, March 19, 2008

Let the Lawsuits Begin

Henry Paulson, formerly chief of Goldman Sachs, is successfully transferring collateralized debt obligations (CDOs) from the investment banks to the federal government. If he has any financial interest in the investment banking industry, I consider his actions to be unethical.

Merrill Lynch has just filed suit against XL Capital Assurance, a CDO insurer for $3 billion. XL Capital’s defense will be that they were defrauded by the CDO originators, most likely including Henry Paulson.

The gloves come off when money is on the line. We are entering the discovery period. It is entirely possible that Henry Paulson will be taken down by this, or any of the upcoming lawsuits. If fraud is proven, the fallout is unpredictable.

Look What We Just Bought

Fannie Mae/Freddie Mac have recently lost two thirds of their value because the houses securing the debt that they hold are worth, or will be worth, less that the amount of the mortgage. Their solvency is questionable.

Congress has just authorized these companies to reduce their hard reserves from 30% to 20%.

And your Federal Reserve is accepting bad mortgages in exchange for treasury bills.

That noise from the back of the bus was the passenger side rear wheel. And you, my prole friends with savings, are the ones who are being asked to pay the mechanic.

Tuesday, March 18, 2008

"It Was Stained"

I do not believe that the Constitution was stained.

The Founding Fathers placed humans in three catagories; Voting Citizens, Non-Voting Citizens, and Non-Citizens. Non-Voting Citizens could aspire to become Voting Citizens through hard work. Life was not as good for Non-Citizens, but their existence in the US was probably, on average, much more pleasant than as slaves back in their home countries. Slaves were not created in America; they were imported. Even slaves had the potential to buy their freedom. This system was more fair than anything that preceded it.

Because of the surpluses that the Founders’ system created, we have been able to make ourselves feel better by making the system more equitable. Unfortunately, in a universal democracy, the electorate always learns to vote itself benefits that the treasury cannot afford. Thus pure democracies are inherently unstable and fall apart in internal civil conflict.

We’ll be lucky if we still have the freedoms presented to us in 1789 when the smoke clears. Slavery is a natural human condition.

Thursday, March 13, 2008

One Hundred Billion

$1.2 trillion of sub-prime mortgages were issued between 2005 and 2007. S&P estimates that losses on these loans will be $285 billion. They also assigned AAA credit ratings to 85% of the sub-prime CDOs. Stocks are up today on news that S&P sees an end in sight for the ‘sub-prime’ market.

S&P has someone’s agenda.

Sub-prime means nothing at this point. Real estate values nationwide dropped 8.9% last quarter on a $20 trillion asset; erasing $2 trillion in real estate wealth, probably half of which belonged to the bank. $460 billion worth of adjustable rate loans will reset this year and real estate values will continue to fall.

In my micro-world, homes that sold for $80,000 in 1998 (in a stable market) sold for $215,000 at the peak, and are now selling for $135,000. That number will probably go lower as people who need to sell their homes are forced to sell at market rates, dropping comparable prices. Builders I know are selling below cost to liquidate inventory. There were around two hundred sales per month at the peak and twenty sales per month now.

A 35% drop in home values would erase $7 trillion in real estate wealth, probably half of which used to belong to the bank. The Fed has printed $400 billion this week. The Fed is just getting started. Germany dropped the gold standard in 1914. The image is a 100 Billion Mark from 1923. It bought two beers.

Update: I missed the Doctor Evil reference in the original post.


Angelica Rivera, a 28-year-old mother of five, encounters a border as she attempts to get her housing voucher. I believe that that is a Marlboro. I put her body mass index at 35.

The percentage of the federal budget dedicated to social services was zero percent in 1930 and ten percent in 1947. In 2008, it is nearly seventy percent as the baby boomers and immigrant waves start to sign up en mass.

The world economy is moving away from the dollar. There is no way to divorce social expectations from the dollar. Why won’t people talk about this?

There will be many more borders in the years to come.

Friday, March 7, 2008

Jobs Report

The real jobs report numbers:

Minus 111,000 value generating jobs (construction, manufacturing, business).

Plus 89,000 value consuming jobs (health care, education, government).

And the Fed will print 100 billion dollars this month.

Update (Friday afternoon): The updated figure has been raised to $200 billion for the month. Which is two years worth of war effort.

Update II (Tuesday): Make that $400 billion total.

Update III (Sunday): Mortgage securities are now exchangable for treasury bills.

Monday, March 3, 2008

Government Workers

Previously on Brick Oven:

Card #1: Sub-Prime Mortgages (populist government policies; greed);

Card #2: All Mortgages (negative equity situation);

Card #3: Municipal Bonds (unrealistic due diligence; declining tax revenue; ratings corruption);

And now:

Card #4: Government Pensions

90% of large government pension funds were healthy in 2000; the number dropped to 58% in 2006 (GAO). The kicker: the GAO calculation assumed sustained rates of investment return. Which means fund managers chasing risk in order to make returns. See Card #3.