IPO & What dreams may come

Amazingly, even in this current economic climate, there are IPOs being launched. I guess I'm a pessimist; to me that's akin to shoving a help message into a cracked bottle and tossing it into a sea and hoping someone finds it.

Vera Bradley has launched just such a bottle. Their revenues last year were US$289 million and the IPO is hoped to garner US$175 million and I just don't think this luxury product does well enough outside it's niche to warrant an IPO. There aren't enough people who will be willing to buy US$68 tote bags when you can get something very similar at Walmart or Target for US$19. Of course I have no clue what the business model at VB is - they could well be launching a low-cost line which would be very profitable. Some of the IPOs, like this one, just don't make much sense to me under the current economic conditions.

But it was in tough economic times like these that Microsoft and other companies were founded and funded.

To be, or not to be: that is the question:
Whether 'tis nobler in the mind to suffer
The slings and arrows of outrageous fortune,
Or to take arms against a sea of troubles,
And by opposing end them? To die: to sleep;
No more; and by a sleep to say we end
The heart-ache and the thousand natural shocks
That flesh is heir to, 'tis a consummation
Devoutly to be wish'd. To die, to sleep;
To sleep: perchance to dream: ay, there's the rub;
For in that sleep of death what dreams may come
When we have shuffled off this mortal coil,
Must give us pause: there's the respect
That makes calamity of so long life;
For who would bear the whips and scorns of time,
The oppressor's wrong, the proud man's contumely,
The pangs of despised love, the law's delay,
The insolence of office and the spurns
That patient merit of the unworthy takes,
When he himself might his quietus make
With a bare bodkin? who would fardels bear,
To grunt and sweat under a weary life,
But that the dread of something after death,
The undiscover'd country from whose bourn
No traveller returns, puzzles the will
And makes us rather bear those ills we have
Than fly to others that we know not of?
Thus conscience does make cowards of us all;
And thus the native hue of resolution
Is sicklied o'er with the pale cast of thought,
And enterprises of great pith and moment
With this regard their currents turn awry,
And lose the name of action. - Soft you now!
The fair Ophelia! Nymph, in thy orisons
Be all my sins remember'd.

Long time no post

Real life gets in the way.

Let see, what's new... survived Thanksgiving and Christmas, though I had the stomach bug from Hell the week before Christmas. Not fun. My godson turned four on the 5th; the twins will be 15 on the 26th (gawds I'm so old!) and it's colder than sin outside right now

Mr. Obama got elected in November. Let's see where this leads. I wish him well. It can't get any worse, right?

Right?

Ah well... I'm not going to complain about Bush, the economy, the war, politics...

crickets

only in this cold snap all the crickets are dead.


Ah, weather! One can always complain about the weather!

Not much point though, huh?


Good news: "Miracle on the Hudson" - everyone survived, with some injuries, from the plane crash yesterday. NYT follow-up story this afternoon: Left Engine Missing From Downed Plane

“The left engine is not there; it’s somewhere,” Ms. Higgins said. "We’ve got to go find that.”

Birds are now and have always been a severe problem for airports and it's amazing there aren't more crashes attributed to birds.

Since 2000, at least 486 commercial aircraft have collided with birds, according to the Federal Aviation Administration. Of those incidents, 166 led to emergency landings and 66 resulted in aborted takeoffs.

Canada geese, a frequent visitor to golf courses and open spaces in the metropolitan New York area during the winter, pose a particular danger to planes because of their size. The impact of a 12 pound bird hitting a plane traveling at 150 miles per hour is equal to that of a 1,000 pound weight dropped from a height of 10 feet, according to experts on bird strikes.

Rich Man's Panic

Investors should expect the Dow Jones Industrial Average to fall below 10,000 points, as the current credit crisis is a repeat of the 'Rich Man's Panic' of 1907, Tom Hougaard, chief market strategist from City Index, told CNBC.

A bit of forgotten financial history:

"We've been here before … About one hundred years ago we had an identical credit crunch," Hougaard said, adding that the Dow lost nearly 50 percent in over two years due to the 1907 crisis, which indicates further downside yet to come for today's markets.

The 'Rich Man's Panic' was caused by a severe lack of liquidity as banks pulled back lending and led to numerous bank runs and eventually the creation of the Federal Reserve in 1913.

"It's most likely to get worse before it's going to get better … I don't think we're really seeing this capitulation just yet, but we're close," Hougaard said, adding that the S&P 500 could take out the low of the 2002 bear market, which was 944.

I think this is acutally worse than the 1907 panic, even though there are more safty measure in place now than at that time. And I don't see any J.P. Morgan's looming on the horizon...

See also: 5 Lessons About What Happened To The Economy You Didn't Learn From CNBC.

They had me at the melting cow

Gawker, that is: It's The "Absurd Financial Product Some Rich Person Actually Bought" Contest!, but I stayed for the story.

Today's decision by the Bush administration to stick us with even more debt (to the tune of half a trillion US$) is just insane. Re-inventing the RTC was a semi-decent idea yesterday, but it's morphed into a massive bailout for the entire economy. These idiots are re-financing the United States. Hell, they're re-financing BAD DEBT.

Ye gods and little fishes. Why the hell didn't we impeach the Clown College when they lied and invaded Iraq?

CNN wants to know, Will it work?

Um.

Those securities were backed by home loans, many made to buyers with bad credit or without proof of income. As housing values fell and foreclosures shot to record levels in the past two years, the value of those securities plunged. That in turn caused massive losses in the financial sector.

This week it reached a crisis situation. Banks and investment firms stopped making the loans to each other as they hoarded cash to protect against any sudden liquidity crunch as well from unknown problems on their partners' balance sheets.

No.

"I'm confident this will work," said Mark Zandi, chief economist with Moody's Economy.com. "The federal government is committed to backstopping the nation's financial system and will do whatever is necessary to make sure the system does not unravel. The details are important but secondary."

The Devil's in the detail Mr. Zandi. This bailout is going to cost more the Iraq war, which has already saddled the US with a multi-trillion dollar debt.

"If this doesn't work, we're in trouble, because there's not much more the government can do," said Jaret Seiberg, a financial services analyst at the Stanford Group. "They've left very few arrows in the quiver."

Good point Ms. Seiberg.

I'm a lot less optimistic than I was yesterday.

~ ~ ~

Text of Paulson's news conference Friday

Paulson, Bernanke Expand U.S. Power to Rescue Markets

Rescue cost: Hundreds of billions

I was thinking of posting a sign

here, stating that United States was up for bidding

FOR SALE: ONE COUNTRY, BADLY USED, AVAILABLE NOW! CHEAP!!

but then spotted this piece in the LA Times:

Hey U.S., welcome to the Third World!

We thus want to acknowledge the progress you have made in your evolution from economic superpower to economic basket case. Normally, such a process might take 100 years or more. With your oscillation between free-market extremism and nationalization of private companies, however, you have successfully achieved, in a few short years, many of the key hallmarks of Third World economies.

Your policies of irresponsible government deregulation in critical sectors allowed you to rapidly develop an energy crisis, a housing crisis, a credit crisis and a financial market crisis, all at once, and accompanied (and partly caused) by impressive levels of corruption and speculation. Meanwhile, those of your political leaders charged with oversight were either napping or in bed with corporate lobbyists.

I wonder if there is some kind of an award... like the Nobel... for countries who tank fastest. Darwin award wouldn't do... no one has died from this stupidity. Yet. There is the Ig Noble but I think we deserve something better than that.

In any event, I think the US has won, by a land-slide. Seven years, plus a pointless war, is all it took. Seven short years. Of course the underpinnings of this disaster have been there for decades:

Take John McCain, your Republican presidential nominee, whose senior staff includes half a dozen prominent former lobbyists. As he recently put it, "I was chairman of the [Senate] Commerce Committee that oversights every part of the economy." No question about it: Your leaders' failure to notice the damage done by irresponsible deregulation was indeed an oversight of epic proportions.

Please, by all means possible, vote for Mr. Magoo in November. Let's just complete the hat-trick of the past two elections and keep putting greed-mongering, hate-filled useless politicans in office, mkay?? Thankx!

Not that the junior Senator from Illinois is a much better choice come November. At the very least he didn't help lead this country into damnation. No... he's just spent everyday since the last election tryin' to get elected this November. "First do no harm". Well, he did that, at least.

Admittedly, your transition to Third World status is far from over, and it won't be painless. At first, for instance, you may find it hard to get used to the shantytowns that will replace the exurban sprawl of McMansions that helped fuel the real estate speculation bubble. But in time, such shantytowns will simply become part of the landscape. Similarly, as unemployment rates continue to rise, you will initially struggle to find a use for the expanding pool of angry, jobless young men. But you will gradually realize that you can recruit them to fight in a ceaseless round of armed conflicts, a solution that has been utilized by many other Third World states before you. Indeed, with your wars in Iraq and Afghanistan, you are off to an excellent start.

Believe it or not, I actually have more hope than Ms. Brooks. I remember the 1970's recession. I remember when Japan practically bought the United States at fire-sale prices in that decade and how hated they were for doing it. I remember being in New York City in it's darkest hours and no, not 9/11, but the early 1970's recession hit NYC really hard. I remember the S&L meltdown of the 1980's; it was bad for most everyone, but we survived it. The problem is we learned nothing from these experiences.

We have short-term memories in the United States. It looks like it's The End Of Times, but it really isn't. It's bad... really, really bad, but we've been here before and we'll be here again. That's what happens when a people have short-term memory problems - they make the same mistakes over and over again.

Like Yogi said, it's deja vu all over again. Maybe this time the Arabs will buy us out.

~ ~ ~

One of my favorite websites: Improbable Research. Enjoy.

It's not that we're in a recession or anything...

Merrill posts $4.9 billion loss, sells Bloomberg stake

We're going from bad to worse. But Freddie is looking at offering US$10 billion in new shares. I really wonder who would be insane enough to buy them.

The main buyers for any new-stock issues are likely to be existing shareholders worldwide, the paper said, citing one person involved in the discussion.

Any sale would have to offer a high rate of return to attract buyers, given the near-14 percent yield on Freddie's preference shares, the paper added.

During the last major recession faced by the US, the Japanese came to the rescue by buying up the United States, mostly in real estate. I'm thinking this time it might be the Chinese, though they seem to be a tad busy in Africa these days.

We have a "bad air" alert in CT for the weekend. Tomorrow night I'm going up to the Casino with my sister and friends to celebrate another friends impending doom... um, marriage. Hen party, bachelorette, I'm not sure what we're calling this, but it will involved gambling and alcohol and food in air conditioning, so I don't care.

If you're not afraid of the "bad air" we're going to be having in CT this weekend, you might be interested in a road trip. I spotted this article,
134 miles of Yankee Charm in the NYT this morning. It's not a cheap trip given current gas prices, but it would be a nice one. Probably better to do in October when it's cooler and the leaves are peeping.

Credit Crisis

FYI

Mortgage Lender's Bankruptcy Would Have Severe Impact on Consumers

"Countrywide is at ground zero of the mortgage crisis," commented Weiss. "It exhausted many of its extraordinary financing options last year and is ill-prepared for the rising mortgage defaults and home foreclosures that are widely expected this year. Already, the credit quality of Countrywide's mortgage servicing portfolio has deteriorated, with 7.2% of the mortgages it's servicing delinquent in December, up sharply from 6.5% in November and 4.6% a year earlier."

Weiss' conclusion: "With the mortgage market and economy continuing to slide, it's likely Countrywide will suffer intolerable losses. Thus, in the absence of extraordinary intervention, we believe it could be difficult for Countrywide to avoid failure, with a potentially severe impact on consumers."

Read the entire article. I hope you're not trying to sell in this market - which is only going to get worse.