This financial crisis is finally waning. They always end when buyers finally realize that the firesale won't last forever and they dip back into the market to buy deeply discounted assets. We got a big boost of this yesterday.
Until now, Mr. Buffett, who has navigated the stock market with legendary prowess, has largely refrained from investing in the stricken financial industry, saying repeatedly that things could get worse.
Thousands of people on and off Wall Street follow Mr. Buffett's moves, so his decision to invest in Goldman immediately heartened investors. After falling nearly 1.5 percent during the day, the Standard & Poor's 500-stock index erased half its loss in after-hours trading Tuesday evening on news of the investment.
"Buffett is saying he's confident," said Brad Hintz, an analyst at Sanford C. Bernstein & Company.
Mr. Buffett's conglomerate, Berkshire Hathaway, unveiled the move only days after Goldman, long the premier investment house on Wall Street, embarked on a radical plan to transform itself into a traditional bank to ensure its survival. Goldman, which examined various options over the last week as its shares tumbled and some clients abandoned the firm, also said Tuesday it would sell at least $2.5 billion of common stock to the public.
The difference between Buffett and others is that HE can afford to hold something for decades until BRK makes a profit on it. Even if he dies, there is management at BRK that thinks exactly like him. And his success has not been the result of luck, it's research and thorough analysis. It's making the right decision.
Be fearful when others are greedy. Be greedy when others are fearful.
Last night and this morning I posted a couple of emails to Carl Whitmarsh in Houston regarding something he'd sent out on his massive email list. The first article was this from George Will. Now, George has never been a big fan of McCain. However, that's not the meat of the article. It's the craptastic analysis of the US falling into socialism. Here's what I sent to Carl:
It's funny to me that McCain would attack Cox for not regulating the very securities
that McCain voted to keep unregulated.
I LOVE the way conservatives have decided that this is socialism, as if the entire
capital market is now under the absolute control of the Treasury and Fed. Their
plan, buying assets that the free market has assigned zero value to, is absolutely
sound. Why? Because occasionally the market goes crazy and won't buy something
that's worth a dollar even if it's discounted to 10 cents. The market, in short, is
not always right.
The Fed was CREATED to avoid panic and provide liquidity in times of market
dislocations. Which is exactly what we have now.
That being said, Paulson's plan, as presented on Sunday, is a thoroughgoing mess.
There will have to be oversight. There will have to be caps on CEO compensation.
However, the basic idea to add liquidity to our deflated economy is a good one.
The second comment was related to a piece Harvey Kronberg ran from Royal Masset
Let me first state that despite his age and his lack of skill as a politico, I'm voting for Dale Henry for RR Commissioner. He knows the oil and gas industry from the ground up and will do an excellent job both for industry and consumers. The RR Commission regulates the oil and gas industry in Texas and we've had nothing but industry rubber stamps on it. It's time that we have someone there who'll actually do a good job for Texans and our environment.
That said, I didn't have much of problem with his opponent. Until now. Last night in Decatur, during a candidate forum, Art Hall was asked a direct question about a possible conflict of interest should he win. Specifically, he was asked if it was a conflict of interest for his wife to work for Valero Energy, one of the companies he would be regulating if elected. He stated that it wasn't and he knew it wasn't because he contacted Valero and asked them.
Wait... Art, you contacted Valero and asked them, the company you'd be regulating, if it was a conflict of interest?
You know, I'm a HUGE fan of push polls, especially when Democrats employ them against Republicans. Though I'm not much of a fan when used in a primary, I also realize they are sometimes a necessity. Only problem is, you better not get caught because the damn things backfire painfully. Let's hope they do for Larry Joe Doherty.
Many of us have been subjected in recent days to a telephone push poll paid for by Doherty in which he spreads personal smears about his primary opponent, Austin's own Dan Grant. This sleazy tactic is straight out of Karl Rove's playbook for negative campaigns. It's also sloppy as hell and everyone who knows Dan realizes it's about as far from the truth as one can get. In fact, much of it is the same crap that a certain former member of the SDEC has been spreading all over Austin. We've all heard it and we all know it's not true.
As far as I'm concerned, the push poll disqualifies Larry Joe for serious consideration as our representative in Congress, mostly because a real push poll would have been about real issues. Not, for example, a bunch of patently false information. That ain't the kind of strategy that's going to be beat the Congressman from Clear Channel.
This transgression is just the latest from the Houston lawyer and former TV judge. Earlier this month, Doherty's dalliance with rightwing Congressman Lamar Smith was uncovered in a bizarre fundraiser for Republican Presidential candidate Mitt Romney. Larry Joe's own finance chairman, Jim 'Mattress Mac" McIngvale, co-sponsored the fundraiser.
But it doesn't end even there. Last fall, Austin Political Report uncovered a clip from the late Anna Nicole Smith's reality show in which Larry Joe, the host of his own (cancelled) show on Fox, invites the troubled socialite to be a judge. Enough said about his judgment.
Serious times call for serious candidates. Larry Joe Doherty isn't serious.
Reality is never an easy thing to acknowledge, especially when it becomes clear that our intention to help people will, instead, fail them. That's the case with Representative Brad Miller's bill, HR 3915. It's also hard for me, as a Democrat, to believe that a member of my party, serving his constituents, would propose this horrendously bad, consumer harmful legislation. Last night I finally realized that he didn't do this to help out big banks, the special interest that will most benefit from the passage of HR 3915.
It's my belief that Rep. Miller had nothing but good, even noble, intentions. He wanted to protect consumers from being taken to the cleaners by unscrupulous mortgage brokers. Fortunately for Rep. Miller of North Carolina, his bill does exactly that, by killing the entire mortgage brokerage industry. Unfortunately, it still leaves consumers vulnerable to unscrupulous mortgage bankers and builder/Realtor controlled mortgage companies.
It also removes 25% of Americans from even the possibility of owning a home because they will not able to obtain financing.
This entire meltdown in the credit market is really nothing more than bad press and stupidity. For one thing, more than 80% of even the riskiest sub-prime mortgages are performing. That means that 80% of the people who obtained financing for a home outside of conventional (good credit, easy to document income and assets - the overwhelming majority of mortgage loans in US) guidelines still own their homes and will continue to. The reason the market has slowed down to a crawl (and why subprime has already disappeared) is that the loans packaged as securities and sold to investors were priced as if they bore no credit risk. In short, investors got panicked when they realized that the B/C credits they paid A prices for actually performed like, well, B/C credits.
The market has already corrected the underwriting criteria available to brokers and frozen out subprime options. This has effectively removed 25% of Americans from the marketplace for mortgage financing. Rep. Miller's bill won't change that. What it will do is make sure that these people will never buy a home by making it illegal to underwrite loans to lenient, high risk, characteristics. They may be able to refinance into FHA, some may even clean their credit to the point where they will be able to see and buy a home. However, that basket will go away and many people with poor credit will never be able to achieve the American Dream.
Of course, some of these people will able to obtain FHA or conventional financing with larger than usual down payments. However, at the very least, 15% of Americans will never own a home if Rep. Miller's bill passes.
The saddest thing about this that Rep. Miller is trying to do through legislation what should more properly be done through regulation. Mortgage brokers think national licensing, standards and regulation is a great idea. However, it has to be funded. Rep. Miller's bill tasks the same old people with implementing the new rules. As we've all seen from the anecdotal cases of broker-initiated mortgage fraud in the US, those agencies just aren't up to the task of enforcing the rules we have now.
The reality that Rep. Miller doesn't want to acknowledge is that more than 98% of brokers are good, decent professionals, a fact which no one has sought to question because more than 60% of the loans originated in the US are originated by brokers. These people who have close relationships with their borrowers. In many case, they have replaced the community banker and basically become the George Bailey's of the 21st century.
What's needed is a better bill that creates a level mortgage loan origination playing field between banks and brokers, creating an even more vibrant and competitive market. A bill that ends the ability of builders and Realtors to own mortgage companies or profit from them. A bill that protects consumers without crushing them or destroying their options.
Yes, I went to the CAMPO meeting last night. Then had to leave because I was LAUGHING too hard at the folks from the Chamber who did mob the meeting, yet still weren't in the majority. One key for you Chamber folks... if you're going to stack a meeting, cut back on the paid people and the buttons.
Specifically, I DIED laughing when some moron got up to speak and talked about the 242k people in Central Texas that have purchased TXTags basically supporting tolls. In fact, I wasn't the only one laughing. Further, I have one of those tags. So do MANY of my friends. None of us like the tolls, but we have the tags because we're going to use them and we're not stopping at some stupid booth. There are a lot of people who don't like the tolls who have the tags. These are the people who almost turned out Mike Krusee in 2006 and will succeed in 2008. Wanna talk about those voters, pal? They're angry. Not happy.
Sal's account is here and very true. I arrived around 6:30 because I was busy underwriting loans. Unlike most of the people who have a vested interest in tolling, I was just an ordinary citizen who found a 6:00 pm start time a little unusual, mostly because at the last CAMPO meeting I attended, we waited FOREVER for the politico's to show up. I should have realized they were stacking the deck with the venue and the start time.
So, Red McCombs, Ford Dealer extraordinaire, has penned a retarded little op/ed for the Schlockman (which is evidently in a race to the bottom with the Fort Worth Star Telegram) in which he's listed as a 'special contributor' instead of the far more appropriate 'used car salesman'.
That's right! He's a CAR SALESMAN. Who the hell cares what the man who tries to sell you clearcoat thinks about transportation??!?!? He picked Ford's to sell... enough said about his intelligence. Red McComb's apparently a very passionate man. He's wild about tollroads. Red, now that I think about it, is kinda trash (sorry, it's the Ford thing... I hate Fords. They're just soooo lame). He's also a little bit senile (what is he, 90?)
By utilizing toll roads and private investment along with traditional funding methods, Texas can get more roads built faster and without a significant tax increase.
By using public-private partnerships or comprehensive development partnerships like the $5 billion Texas 121 project, the state would have the resources for additional road projects because of the billions private companies are willing to pay to build and manage user-financed toll roads.
I would think one bout of looking like an ass would have been enough for the Star-Telegram editors. Turns out, it's not.
Let's look at this odious piece of trash...
First, according to an editorial in Wednesday's USA Today, traffic congestion cost $63 billion in lost productivity and additional gas in 2003, not including the 18.4-cent federal gas tax or other state and local transportation taxes. In other words, relief of traffic congestion is good for drivers' psychological and financial health.
Congestion is a bitch. Roads and public transportation are the solution. The method used to pay or them is largely irrelevant. This is approaching the millionth time I've heard toll roads conflated with easing congestion. It's also the millionth time pro-toll forces have looked like idiots. You'd think they would learn from the mistakes of the irredeemably stupid Ray Perryman.
Second, as Star-Telegram reporter Gordon Dickson wrote last month, state transportation officials reject as absurd the claim of some toll critics that an 8-cent-per-gallon increase in the gas tax could finance regional transportation needs. The actual number, according to state officials paid to calculate these costs, is $1.40 per gallon, which would increase the price of gasoline to more than $3.70 per gallon today. How could this help the poor?
Oh, yes... tolls are cheaper. This is an outright lie. For one thing, the tolls are going to run at least 12 cents per mile (as we've seen in Austin, sometimes they are MUCH more expensive). At 20 miles per gallon, that's a gas tax equivalent of $2.40 per gallon. Even if the State's ridiculous estimate were correct, a gas tax would STILL be CHEAPER than tolls, by at least $1.00 per gallon. That's reality, and I'd like to see Mr. Erler deny that.
However, we all know that the state's estimate is way off and completely meaningless. Why? Because, unlike Mr. Erler, we actually did some research. Bottom line, tolls are ALWAYS going to be more expensive than a gas tax. Period. The State's numbers are 'engineered' to come to a preconceived conclusion. Instead of just blindly accepting them, Mr. Erler, why not actually investigate the assumptions used? Those assumptions include a PROFIT for a private contractor that is paid EVEN UNDER A GAS TAX MODEL. Why would we be paying for that if we shift gears and ditch the tolls and the CDA's?
I'm going to stick to the TTI numbers. They are accurate and unbiased unlike those used by the State.
So what about the public versus private issue? Consider last week's announcement that a private company has been selected to build and manage Texas 121, just north of Fort Worth and Dallas. That company will pay $2.1 billion upfront and another $716 million over 49 years, and it will spend an additional $2.26 billion for construction and maintenance over the 50-year span of the contract.
This deal will, according to local officials, provide "several hundred million dollars" for non-toll roads in our region.
As for the money 'up front' to be used for other projects, that's little more than an acknowledgment that people will have the same problem with tolls that they have with gas taxes (money generated in one spot goes to pay for a project in another). Of course, we could raise that money upfront by selling bonds backed with tax revenues, which is basically what the toll road companies are doing (only in their case, their bonds are backed with massive tolls).
The most interesting thing about this is the money. We already know the state has promised a nice 12% ROE to developers. Annually. That means that these roads will have to pay more $609.1 mn annually, just as a return on invested capital. What's the debt service on $5.076bn? Around $400 mn annually? Combine the two and that means that North Texas drivers who use 121 will have to cough up roughly $1.09 BILLION annually. Of course they won't, so the entire project will end up devolving to Texas taxpayers anyway. Even if $609.1mn is also used to pay down debt, it's still too expensive. Maybe the toll companies aren't looking to make a profit... oh, hell, even Mr. Erler wouldn't buy that argument.
The numbers, any way you slice and dice them, will always come out in favor of a gas tax. I suspect Mr. Erler knows this which is why he's so disingenuous in his op/ed piece. My only question is why the Star-Telegram published it without even bothering to include a counterpoint. It's obvious that Erler believes what he's saying. Unfortunately for him, he's confused belief with truth. As someone far smarter than I once said, "It's not what you know; It's what you know that just ain't so."
Recently I got a mailer from TakeOnTraffic.org, which is an education initiative funded by the Greater Austin CoC to inform the people of Austin that they need roads. Masters of the obvious, these folks.
Tolls, tolls and more tolls appears to be on tap if the GACoC has their way. One has to wonder what they'll get out of it, especially since I'd be willing to bet most members of the CoC aren't so much for tolls... they just want traffic off the roads (we'll get to that in a bit). Most of the site is pretty worthless (the design's not bad... the information is. For example there is a lot of information about why we need roads. Which is pretty stupid because no one is arguing that point save maybe morons). The Transportation Funding section is the real meat of the site... the rest of it is as substantial and worthwhile as a rice cake.
Gasoline taxes. This is the main source of revenue for highways right now. However, the state gas tax hasn't been raised since 1991. With gas prices already reaching record highs, it's unlikely that the state will ever raise this tax enough to pay for all of Texas' unmet transportation needs.
Yeah, not so much at record highs anymore and around current, lower, prices, alternatives still make a lot of sense which puts an upward cap on gasoline prices. However, let's not even get into that. Let's focus instead on the idea that the state won't raise the gas tax. This is as much BS as anything else on this site. The state has been made very aware that it's cheaper to do that than anything else.
However, it may soon be possible for regions like Central Texas to institute local gasoline taxes. To meet our immediate needs, a Travis County gas tax would have to be set between 30 and 50 cents per gallon. This could have a severe impact on lower-income residents and on the regional economy.
That number for the gas tax is just wrong. We already know that it'll cost much less, even without indexing which the state is going to eventually pass. Further, the idea that gas taxes hurt lower-income residents more than tolls is absurd. For one thing, if tolls are used for expansion of 35 through central Austin, we'll all be paying the price. That's the most obvious issue. The less obvious issue is that tolls are going to increase the cost of goods sold for every business through increased transport to market costs. That'll be passed on even to consumers who don't use cars.
The other reason we'll be effected is that traffic won't disappear on 35 because there isn't a free 130 to take traffic away. 130 was always intended to be a bypass to 35 through Austin Metro for traffic moving north to south and vice versa. We already know that most trucking companies aren't going to use the toll roads. Which means that traffic in central Austin will continue to be bad and everyone will suffer. Take the tolls off 130 and watch the congestion on 35 disappear.
Finally, let's consider the only cost metric that makes sense, cost per mile. On the toll roads, the absolute best you can do is $0.12 per mile. With the gas tax (at even an inflated $0.17 per gallon), the per mile break down if your car (like most) gets 20 miles per gallon is $0.0085 per mile. Less than a penny per mile for new roads and improvements to existing roads is hell of a lot better than $0.12 per mile.
(Couldn't be more true... - promoted by Karl-Thomas Musselman)
crossposted from McBlogger From Lubbock we drove up 27 at just under light speed. I drive fast, Hank drives like a bat out of hell. That's been set on fire. We stopped for a brief meeting in Plainview to visit supporters there, then on to a meeting in Tulia where someone showed us a clipping from the Amarillo paper that brought a smile to our faces. Here's an except...
So names would be it. For Agriculture Commissioner. I'm sorry, but Todd Staples sounded like some rich frat boy. How could I not vote for his opponent, Hank Gilbert? Probably would keep a spittoon on his desk.
A guy named Hank Gilbert was born to be ag commissioner. First thing I thought of was Hank Kimball, the county extension agent in "Green Acres'' and how well he did his job in and around Hooterville.
No one would vote for a Hank Gilbert for Chief Justice of the Supreme Court, but for ag commissioner, cha-ching.
Damn skippy, Mr. Beilue. Even Hank's name is perfect for Agriculture Commisioner. The meeting went extremely well and despite all the negative press Tulia has received, there are some great folks there who are suprisingly turning up Democratic!
Honestly, I'm not a road trips kind of guy, but this has been fun. Hank and Katy are blast on the road.
For our final Meetup before the election, we're pleased to welcome:
Chris Bell
Democratic Candidate for Governor
We're proud to be bringing Chris Bell back to our Meetup. Chris came to one of our very first events. He was considering running for governor then and he spent a long time talking and listening to everyone there. Now he's the Democratic nominee, the only progressive in the race against three Republicans. We're sure that every progressive will want to hear what he has to say.
But wait! There's more! Joining Chris Bell will be Austin political guru GLEN MAXEY, who will add his insights on this year's campaign;
Plus Congressman LLOYD DOGGETT.
We expect this will be the BEST MEETUP EVER so come early---wear blue---be loud!
As always we gather to socialize around 6:30 and start our speakers around 7:15. We had a great Meetup in August and we're looking forward to an even better one this month!
Mother Egan's does us a great favor by providing us a place to get together every month. Please return the favor by having something to eat or drink, and don't forget the friendly wait staff.
From Lubbock we drove up 27 at just under light speed. I drive fast, Hank drives like a bat out of hell. That's been set on fire. We stopped for a brief meeting in Plainview to visit supporters there, then on to a meeting in Tulia where someone showed us a clipping from the 
