Anarcho-capitalists of the world unite! Wait- is that an oxymoron...?

Yesterday I swam 1800 yards for training before work. After I had drinks with Red. She is an old friend I have known my entire career on the Street. She was actually going through her divorce the same time I was but had a slight head start on me. She looked great and we had fun. I forgot what a light weight she was- two Grey Goose Cosmos and she was flying. I took her to Therapy and I have to say the bartender was sooo damn hot. I used my credit card so he had to ask for ID which means he now knows were I live- let's hope he's the stalking kind, lol. I was supposed to have drinks after with a kid who not only went to the same undergrad I did but is also from my hometown and his step-father was my dentist growing up. He had to cancel at the last minute due to work. This was the third time we've had to reschedule so I told him, in the summer we'll do it and go to the 79th Street Boat Basin.

So, apparently it is no longer allowed for a publicly traded company's CEO to announce they are filing under Chapter 11 of the U.S. Bankruptcy Code- that is now President Obama's job. I must have missed the management change announcement stating President Obama replaced Bob Nardelli as the CEO of Chrysler.

Speaking of the Chrysler bankruptcy; I have no idea how the Administration thinks it will only take sixty days to wrap up. Seriously, once lawyers get involved that messes up everything. I think President Obama being a lawyer knew that and that is why he tried to help Chrysler avoid having to go into the courts.

Ok, so I thought this country was founded on and built upon the beliefs that individuals are allowed to pursue- and even encouraged to- their own interests? Didn't our Founding Fathers write we have a right to pursue life, liberty and happiness? The belief that we could voluntarily enter into trade of private property and services is why most people take risk and try to improve their lot in life. I am on this riff because the President said Chrysler had to file because some of the loan owners were putting their economic interests ahead of the national economic interests. Well duh? He of course then blamed the hedge funds for forcing Chrysler into this uncharted territory called Chapter 11- oh, wait. We did not need a way for a company to reorganize itself and get out from under debts they can no longer pay. I am perplexed as to why the President has wasted his political capital on this. Maybe it has to do with the fact that by going through the time tested bankruptcy procedures in place the UAW may not end up owning 55% of Chrysler. Then President Obama can say, sorry I tried. Although I must say if the UAW were to become the majority owner of a major car company I would love to see how they would actually make money as they would be bargaining with themselves. "The man" would no longer be the one screwing "the people."

I also was taken aback by some in the Administration saying this changes nothing for Chrysler; everything will be as it was. Funny though that a Chrysler spokesperson said come May 4th they will idle all production until the court proceedings are done. It got me wondering if the employees who will be collecting some type of transfer payment- usually called unemployment benefits- will be excluded from the unemployment figures. Technically they will be furloughed not unemployed...

I saw cram down legislation got defeated. That would have made me feel better until I recalled my bond friend explaining to me that cram down was the lesser of two evils confronting bond holders and all of contract law. Mortgage modification is the worse one. It is worse because the second lien- home equity line of credit (HELOC) originators get treated the same as first lien (mortgage) originators. Now why would that be allowed? Well the banks that originated the mortgages securitized them and sold them- no longer their risk or problem. However- they then went and provided HELOCs to the same homeowners. Normally the first lien has claim on the asset and anyone after gets the crumbs or nothing. Mortgage mod would give the second lien guys something too at the expense of the first lien- because the second liens are still a huge risk to the banks that took TARP but don't need it and passed the stress test- yeah right.

I am sure I wrote before how in classical economics GDP/GNP is represented by Y and made up of consumption (C), investment (I), government expenditures (G), exports (X) and imports(I). Y=C+I+G+(X-M). C accounts for ~70% of Y. C is still decreasing but apparently not as quickly- and there was great rejoicing. Thing is G cannot increase enough to make up for C decreasing- unless we want to go cylinder bore socialist. So with Y still decreasing- albeit slower- we are not near a bottom.

One of The Dog's international fund managers said this morning that we are at the start of a new bull market and financials will lead it. Hello- go and reread the previous paragraph and know that the leader of the old bull market is never the leader of the new one- whenever that may start.

Back in the '90s there was a time whenever a company blew up and missed big time they just blamed el nino. I am predicting now that any company that misses in Q3 or Q4 will blame swine flu. Swine flu will be the new el nino. I have to amend that- we can no longer call it swine flu as it cause undue duress to swine and pigs everywhere (see Jimbo's blog for more info on why it is not a swine flu at all). We are so politically correct we can't call it Mexican flu- but back in 1918 Spanish flu was ok. So they are calling it by it's viral appellation. All the pigs in Egypt can now breath a sigh of relief because the government planned on killing all of them to prevent swine flu...