Tuesday, April 8, 2008

How Do You Say Latte in Mandarin?

No, I'm not referencing Starbucks "new" brew or their global reach. I'm referring to the impending takeover of Western civilization by the Chinese if we continue to run our dollar into the ground. I've made mention of itulip.com before. If you want to read something really scary, read the attached article to see what deflating our dollar and inflating our assets might lead to. The economist interviewed already establishes that the Chinese are dumping our treasuries indirectly through 3rd world purchases of mines, drilling facilities, and infrastructure. That's what happens when Helicopter Ben cranks up the presses. For a guy who's supposed to be the authority on avoiding recession, he sure seems to be following Japan's blueprint. Except of course, the average Japanese citizen had positive savings during their 17-year fall. The average American is drowning in debt....

Well what do you know, WaMu is bankrupt. But I've been telling you that for 5 months now. A mere $7 billion will keep them afloat. Of course, stock rose 30% yesterday with news of the infusion and this possibility is why I dumped it 2 weeks ago when it was around $9. National City is pondering several takeover options and has fallen precipitously since my strangle call. However, volatility is all over the map on these options, so be careful as the price is now under $9. I still think money can be made on both ends as hopefully it plunges to $5 or less, then receives a takeover bid propping it up over $10. Can't be too greedy though.

No updates on the Frank-Dodd builder bailout plan yet, but XHB is taking a 4% hit today. As the index or the few cash rich builders (Toll, NVR, and MDC) stumble back down, we'll keep an eye out for an entry point. Would like to see XHB get closer to $20.

Not surprisingly, neither my congressman or Cramer wrote me back when confronted with my emails about shooting down such a bill. Again, my call on this is documented back to February and thanks to my loyal readers, The Big Big Bet is living large on Google and yahoo search, so there's no denying our existence!

Linens & Things, kablooey, bankrupt. Retail will continue to dump. This is still a good entry point to short the XLY or RTH or overpriced retailer of your choice. First quarter numbers are going to be surprisingly bad for these guys, including Disney and Home Depot.

Tomorrow, long-term goals.



Tiger Coach said...

Ax... Great article on Itulip.com However, you have to wonder when anyone says that Dennis Kucinich has a handle on the current financial situation...

I have read too many articles which are all pointing the same direction as those in Itulip.

Still following the Tribe?

AX said...

Hey, that's our hometown boy! Whether you agree or not with Kucinich's political views, he's commonly accepted as a very bright guy with innovative ideas...traits that can be death in politics.

Of course I follow the Tribe! What do you think, that I'm rooting for the Marlins? Great game last night won on Fred Flinstone's homer in the 9th.

Tiger Coach said...

Can you explain why anyone would be wanting to hold mortgage debt right now?

As far as US dollars you will have to read my blog that I will update again.

I am leaning over, will you please kick me in the seat of my pants on WGO...check out megatrends.


Evidently, Gore, Kucinich, or Kerry would have been better Presidents at this point. Let's hope my stock selections are better than my Presidential votes!!!

AX said...

Well, apparently Citi is getting almost $.90 on the dollar for their debt, a level I'm sure they're thrilled with. Pimco bought debt from UBS for about $.70/dollar, even better. If they can claim that against writedowns with a known value, they might be able to write up in the future.

Gore and Kucinich yes, Kerry I don't know. You take some bad with the good, my effective tax rate will never be lower than it was while Bush was in office ever again.

Anonymous said...

Oh my what is going on here??? Kucinich, Gore, or Kerry would have been better?? Why or how by raising taxes or taking away the capital gains tax?

Lets get real the Pres really does not have much to do with any of this. People do. When an idiot buys a house for 500k and makes only 30k that is not the govt. or presidents fault.

When corporations lie (such as the financials) and have been lending money to risky clients that is not the presidents fault or the govts. We put trust in companies to do the right thing and to report honestly on their financial statements. When you research companies like ax does you can see the b.s. they are reporting (hence the write offs).

It sure sounds like everyone wants to blame the govt for everything here and no one wants to put the blame where it belongs with some greedy, stupid people. Who should not get a pass!

Not to be misunderstood, I do not think the govt has any clue on what to do or how to help with the economy. I certainly do not think they know how to manage my money better than I do. The only thing they really can control is taxes. So why do you want to work 3 jobs (like ax does) to pay more for people to build bridges to no mans land? Or to pay for handouts beware of the nany state.

Additionally, the govt is usually reactionary to help with problems that have already taken place. Not only is that not helpful, it still does not solve any problem. Only uses more tax money to hold more useless hearings.

So to think that any other Pres could have helped to avoid this situation or would have been better with the economy is not likely but, possibly would have put us in a much worse situation.

Lets keep the blame on the economy where it should be with people and some (not all) shady CEOs. The more we involve the govt anywhere (especially on this website) the worse situations usually get.

AX said...

Wow, Anon, you've been all worked up lately! Good for you. Let's not give the gov't and its interests a free pass, shall we. Paulson, if you recall (put in place by Bush) was former head of GS. Cheney ran Halliburton. These guys weren't just plucked off the street, they are rich old white dudes like Bush who have a lot of wealth and interest tied to Wall St. and big business.

Also don't forget the huge budget deficits we're running since Bush took over. The war costs money. Furthermore, we've taken to deflating our dollar's value to increase our export value and cripple the yuan (under 7 for the first time ever yesterday). The gov't has something to do with that!

Tiger Coach said...

You are 100% right old buddy. No one should get a pass on this one. I actually voted for Bush 2x...and I would probably have done it all over again...because the Democrats are constantly pandering a lot of socialistic jargon for the poor. Unfortunately, it has become increasingly apparent that the Republican are interested in welfare for big business and the rich...which is also a mess.

Consider these things and maybe you will hold the entire govt. accountable.
1.No where in the Federal Reserve Act does it say that the Fed should be responsible for bailing out BIG BANKS with tax payer money.
2. M3 is no longer reported...kind of scary if you think about it. Wouldn't it be nice to know how much our currency has deflated during this political regime.
3. Think of the saps who are seeing their life savings eaten away by the deflation issue...sure bail out the banks...and let the time who busted their humps building a life savings get dumped.

I am all for personal responsibility all-around. The buck has to stop somewhere!

Anonymous said...


I agree with you!! You are making my point. I do not want the govt to get involved really at all. I do not think they should bail out any company, bank, or individual.

This is (I thought) a free market and we should let it run its course. Big govt usually means Big disaster.

I know, I know people are going to say "well the govt does have to play a role in the economy" while this is true the question is how big a role? I say keep it small and let the free market work!