Eto’o and Bernanke Gamble on Liquidity

8/26/2011 Portland, Oregon - Pop in your mints…

We will continue our Ode to the Auto Feo next week.  The week appears to be ending anti-climactically.  Ben Bernanke said nothing of consequence at the economic conference in Jackson Hole, Wyoming today.  As we have stated here at The Mint previously, the FED has essentially shot its last round of lethal ammunition, announcing that rates will stay near 0% until at least 2013.

Anything further would make the FED look like more of a laughing stock than it already is.  At this point, they are giving away money because no one will take it.  Unwittingly, the FED’s taking this most recent stance will spur a spending spree that will certainly be labeled “economic recovery” by the politicians who have become accustomed to identifying capital consumption as “growth” and capital accumulation as something to be severely punished.

Fortunately, the currency regime will end long before it can further scorch the earth.  Our only advice is to not hold dollars or bonds when it does end, for those assets are the ones that will burn.

It appears that the debt crisis in Europe is spreading to the football clubs of Spain and Italy.  Allegedly some of the clubs can’t pay salaries and the players are striking in the off the field sense.  This is probably why the great Samuel Eto’o went to Moscow to become the highest paid player, of any sport, mind you, in the world.

Samuel, opting for liquidity over fame, must figure that Russian billionaires are more likely than Europeans to pay their bills over the next three years.  Not a bad bet.

We will leave you with some footage of Eto’o’s goals which should tide you over in case La Liga and La Nazionale don’t play for a time:

Shabbat Shalom!

Stay tuned and Trust Jesus

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

P.S.  For more ideas and commentary please check out The Mint at http://www.davidmint.com/

Key Indicators for August 26, 2011

Copper Price per Lb: $4.08
Oil Price per Barrel:  $85.52

Corn Price per Bushel:  $7.52  
10 Yr US Treasury Bond:  2.19%
FED Target Rate:  0.08%  ON AUTOPILOT, THE FED IS DEAD!

Gold Price Per Ounce:  $1,828 PERMANENT UNCERTAINTY

MINT Perceived Target Rate*:  2.00%
Unemployment Rate:  9.1%
Inflation Rate (CPI):  0.5%!!!   UP 0.7% IN ONE MONTH, 8.4% ANNUALLY AT THIS PACE!!!
Dow Jones Industrial Average:  11,285  TO THE MOON!!!

M1 Monetary Base:  $2,040,500,000,000 RED ALERT!!!
M2 Monetary Base:  $9,498,800,000,000 YIKES!!!!!!!

Ode to the Auto Feo, Part III – Lemon Discovery

8/25/2011 Portland, Oregon - Pop in your mints…

Oh Bank of America, how far you have fallen.  Today, B of A took a hand out that they allegedly do not need from Warren Buffett’s group.  For this ‘unnecessary’ $5 Billion of capital, B of A is paying 6% per year, a higher rate than many Americans are paying on their mortgages.

What a brilliant move, and one that should give equity holders just enough time to get out while they still have some pocket change left.  Brilliant for Buffett, we mean.  For B of A shareholders, it is simply the latest bungle by management who are naturally overwhelmed by the sheer magnitude of the bank’s compost pile that it calls a balance sheet.

Like a compost pile, B of A’s assets should be allowed to disintegrate and be spread around organically to provide fertilizer for enterprises that actually contribute wealth to society.

In its current state, B of A as an entity is not only cannibalizing itself and its shareholders, but also nearly anyone that it comes into contact with.  As such, the term’s of Buffett’s deal have allowed him to go into the toxic mix with a biohazard suit on.  Berkshire should be shielded from the eventual collapse, albeit as a secured creditor.

But enough of B of A’s present woes, we have been relating a personal anecdote which may help readers understand the origins of what will be a spectacular slow motion collapse of B of A. 

At a minimum, we hope you get a laugh at our expense.

You can catch up with the Ode to the Auto Feo, Parts I and II by clicking on the following links. 

Ode to the Auto Feo, Part I –  The Birth of a “Need”

Ode to the Auto Feo, Part II –Optimism and Desperation are Poor Bedfellows

Our story continues:

We climbed into what our delusional mind had now identified as a BMW X5 smiling from ear to ear.  No, it was not perfect but the vehicle was powerful.  It felt like it was reliable and had been well cared for.  Heck, the A/C even worked and had recently been charged!  We were feeling extremely good about our purchase.

That feeling was soon to pass.

No matter that the Iranian had us call his brother to let him know we were purchasing the car.  Presumably it was to arrange a ride home but in retrospect it appears that there was a “family” debt that needed to be settled and the proceeds from the sale were of great interest to the brother.

For our part, we had to call our brother in law to arrange a ride home.  We drove our find back to Portland from Gladstone to pick him up, still in awe of our good fortune. 

Then, it began to fall apart.

The Illusion is Shattered

Not literally, of course, but the mental construction of the BMW X5 and more importantly the vehicle’s reliability were quickly demolished as we watched the oil pressure drop, the check engine light go on, and the temperature gauge quickly approaching the red line.

“What is going on?  This car was working flawlessly until now…”  We thought to ourselves.

“Are we seeing things?”

Our mind attempted to pass it off as an optical illusion.  After rubbing our eyes and focusing our mind, we turned off the A/C and reluctantly turned on the heater on that warm summer evening in a vain effort to regulate the temperature.

Then the car stalled.  In vain, our mind made another attempt, an appeal to the supernatural.

“Perhaps the car is possessed,”

We dutifully exercised our authority in Christ to cast out demons from the lifeless mass of the Isuzu.

The Isuzu, for we would never again see the vehicle through our rose colored glasses, started up and again we were off, albeit at a slower pace and with the heater running.

When we arrived at his house, we were concerned.  Maybe this car wasn’t worth $1,300.  Maybe it is just scrap.  Even so, we held to the hope that, if we could just get the vehicle home, it would serve its purpose to take us the 1.5 miles necessary for our daily commute.  We let the car cool off.

Upon exiting the vehicle, we noticed a small but very important defect that had escaped our eagle eye during the inspection:  The driver side door’s keyhole was a hole, as in, there was space where one would normally expect to insert the key. 

Now we were flabbergasted.  All of the other defects were somehow excusable because for the most part they had been invisible and had for whatever reason not manifested themselves during our inspection.  This one, under the circumstances, was humiliating.

Oh, how we wish we had heeded the spousal veto!

We went to the front door of our brother in law’s house a mere shadow of the conquering hero we had been just 30 minutes before.

We felt we had just thrown $1,300 down the drain.  It was not so much the sum that bothered us as the fact that we had allowed ourselves to become enamored with the vehicle and in the process had allowed ourselves to be blinded to its obvious faults.

After twenty minutes chatting with our sister, enough to let the vehicle cool down, we were off to Gladstone.  The sun had long since set and the blackness matched our darkening mood.

Our brother in law attempted to cheer us up. 

“This is a great car!  You don’t really need the lock on the door and once you get it home, it should serve its purpose.”

His words of encouragement sustained us for the next painful part of our all night journey, bringing home our error in judgment to show to our loving, supportive, and rightfully skeptical wife.

We doubt such fear struck the board of Bank of America as they reported Countrywide Financials mortally wounded loan portfolio to their shareholders for the first time.

 Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

P.S.  For more ideas and commentary please check out The Mint at http://www.davidmint.com/

Key Indicators for August 25, 2011

Copper Price per Lb: $4.08
Oil Price per Barrel:  $85.06

Corn Price per Bushel:  $7.30  
10 Yr US Treasury Bond:  2.24%
FED Target Rate:  0.08%  ON AUTOPILOT, THE FED IS DEAD!

Gold Price Per Ounce:  $1,759 PERMANENT UNCERTAINTY

MINT Perceived Target Rate*:  2.00%
Unemployment Rate:  9.1%
Inflation Rate (CPI):  0.5%!!!   UP 0.7% IN ONE MONTH, 8.4% ANNUALLY AT THIS PACE!!!
Dow Jones Industrial Average:  11,207  TO THE MOON!!!

M1 Monetary Base:  $2,033,000,000,000 RED ALERT!!!
M2 Monetary Base:  $9,478,200,000,000 YIKES!!!!!!!

Ode to the Auto Feo, Part II – Optimism and Desperation are Poor Bedfellows

8/24/2011 Portland, Oregon - Pop in your mints…

Today we will continue the saga of the auto feo.  If you missed part I, please click here to get up to speed.  It shouldn’t be difficult as the auto feo is currently at a dead stop.

But first, a quick look at the markets.  At this point in the day, everything appears to be literally on hold until the FED chairman Ben Bernanke speaks at Jackson Hole.  What will he say?  Our guess is not much.  Perhaps some dribble about standing prepared with all necessary tools to fight deflation.  If He were truly to use his post for something useful, He would encourage Congress to recapitalize US households, not banks.

Speaking of banks, Bank of America seems intent on claiming that they are in no need of capital even as they sit on $2 Triilion in assets of an imploding economy.  B of A made perhaps the worst choices of all time when they paid a premium for Countrywide and Merrill Lynch.  They may not have had much choice in the matter given the carte blanche that regulators had during the panic of 2007-2008.  Whatever the case, they are now choking on the sewage of the above mentioned entities.

Citigroup, on the other hand, may need another reverse split sooner than they think.  With that said, we return to our personal story of a bad acquisition.

We left our story yesterday arriving at our rendezvous with the then owner of what would soon become our next “Auto Feo.”  As we pulled into the parking lot of a large supermarket, nature called.  Not seeing the vehicle which we were to inspect, we entered the supermarket to tend to our personal needs.  As we were exiting the supermarket, we received a call from the owner, announcing his arrival.

Our pulse quickened.

We exited and there it was!  A black beauty of an SUV.  At that moment, as the sun began to set over the horizon, the 1993 Isuzu looked like a late model BMW X5.  We were about to make the bargain of the century.

Astute readers will note that what we saw that evening was a mirage, born out of the dangerous mix of optimism and desperation that was moving in our body to inhibit our ability to make an informed decision.  We can only assume the same was true when B of A was looking over Countrywide Financial in late 2007.

We met the man, an Iranian, who promptly handed us the keys as we hopped in for a test drive.  As the engine roared to life, we were able to overlook the cracks in the windshield and somewhat soiled interior.  After all, it is a ’93, we thought.

As we proceeded around the block, never exceeding 40mph, we were impressed.  “This is a solid vehicle,” we complimented the owner.

A Solid Vehicle Indeed!

“Yes,” he replied, “we purchased it from a family friend and it has been our family car for five years.  We have maintained it and most recently replaced the clutch.  It was very expensive.  In Iran, a clutch costs you $200, here, $800.  We have a better car now.”

A new clutch!  We thought.  What a steal.  We bonded with the man as we spoke of our children and family life.  This was no longer a negotiation, it became a matter of honor.  As we parked the vehicle, there was only one hope for us.

The spousal veto.

For those of you who have never been married, this is commonly known as “running the idea by our wife,” which in most cases can save one from making a bad decision or fending off persistent salesmen.

Excusing ourselves, for it seemed an unnecessary step when we were obviously getting a BMW X5 for a mere $1,350, we made the call. 

Our wife was predictably skeptical. 

“Don’t you want to see other options?” 

We assured her that this was the best deal out there. 

“It’s not that urgent, come home and sleep on it and see how you feel about it in the morning.” 

Out of the question, I did not want to waste another trip to Vancouver or Gladstone just to pass on a car.

Again, astute readers will recognize this last objection as the sunk cost fallacy.  We, of course, did not.

“Well, if you are sure…”

And with that, our loving, ever supportive wife relenting gave her approval of the purchase and the deal was done.

We went back to the Iranian and, with an unintentional pause before speaking, extracted a $50 reduction in the vehicle’s price.

At $1,300, the deal was done.  And almost immediately, our problems began...

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

P.S.  For more ideas and commentary please check out The Mint at http://www.davidmint.com/

Key Indicators for August 24, 2011

Copper Price per Lb: $4.01
Oil Price per Barrel:  $85.72

Corn Price per Bushel:  $7.31  
10 Yr US Treasury Bond:  2.25%
FED Target Rate:  0.09%  ON AUTOPILOT, THE FED IS DEAD!

Gold Price Per Ounce:  $1,753 PERMANENT UNCERTAINTY

MINT Perceived Target Rate*:  2.00%  EASIEST MONEY EVER COMING IN JAN 2012!!!
Unemployment Rate:  9.1%
Inflation Rate (CPI):  0.5%!!!   UP 0.7% IN ONE MONTH, 8.4% ANNUALLY AT THIS PACE!!!
Dow Jones Industrial Average:  11,232  TO THE MOON!!!

M1 Monetary Base:  $2,033,000,000,000 RED ALERT!!!
M2 Monetary Base:  $9,478,200,000,000 YIKES!!!!!!!

Ode to the Auto Feo, Part I – The Birth of a “Need”

8/23/2011 Portland, Oregon - Pop in your mints…

Apart from earthquakes on the US East coast and Colorado all appears calm relative to the past two weeks.  Ben Bernanke is scheduled to speak in Jackson Hole today which may or may not change that.  As we have stated recently, with the FED’s most recent announcement of its intention to hold its funds rate below 0.25% until at least 2013, they essentially told the world that they were stepping back to let the chips fall where they may.

With the fate of the US dollar apparently sealed, we have a personal anecdote to share.  Like central banking, this is for entertainment purposes only.

A little over a year ago, our second car, which we affectionately call the “Auto Feo” (Spanish for “ugly car”) died.  It was a vehicle which had been struck by another vehicle on the passenger side, denting the wheel well.  The damage was cosmetic and only noticeable when one opened the passenger door, causing a horrendous sound of metal crushing metal.  While driving, the car would “bark” (as in, it sounded like a dog was after us) if the front wheel on the passenger side hit a sizeable bump, causing the tire to rub against the crimped wheel well.

The car served its purpose until the automatic transmission went out.  Even then, we were able to salvage a year of commuter service out of it before the transmission had a catastrophic failure, after which we finally took it to the junk yard.

Without much time to mourn, we set our sights on finding a replacement for the Auto Feo.

Based on a previous good experience, we wanted an Isuzu Trooper or Rodeo, any model year that could be had for $1,300 or less.  After passing on what in retrospect was the best option at the time (a 1995 Trooper) we were eager, perhaps too eager, to not let the next opportunity pass us by.

We were ready to be taken for a ride, literally, figuratively, and with a pun intended in the worst possible way. 



The Auto Feo - One vehicle, many lessons



 After doing our due diligence by surfing Craigslist, we found a 1993 Isuzu Rodeo with 143,000 miles on it which the owner was selling for the incredibly low price of $1,350.  We were intrigued.  In retrospect, we were sold before even driving the vehicle.  A dangerous frame of mind when one considers Craigslist’s non-existent vetting of sellers.  (Editor’s note:  We are not criticizing Craigslist, which offers a tremendous service, but rather our own lack of diligence.)

We were foolish, impatient, and determined.  It is a dangerous frame of mind to be in when making any purchase and a deadly combination of states of being when trolling the internet for a used vehicle.

As the warning lights in our mind began to go off, we pressed on.  We called the number and arranged to “see” (read “purchase” as it should have obvious that our mind was made up) the vehicle that very evening.

It was a warm early summer evening, pleasant in every way.  The wind was at our back, traffic was smooth as we wound our way across Portland to Gladstone.  What could possibly go wrong?

As we approached the rendezvous with our mystery seller, we were relaxed, optimistic, and the epitome of P.T. Barnum’s sucker…

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

P.S.  For more ideas and commentary please check out The Mint at http://www.davidmint.com/

Key Indicators for August 23, 2011

Copper Price per Lb: $4.00
Oil Price per Barrel:  $85.77

Corn Price per Bushel:  $7.30  
10 Yr US Treasury Bond:  2.14%
FED Target Rate:  0.09%  ON AUTOPILOT, THE FED IS DEAD!

Gold Price Per Ounce:  $1,830 PERMANENT UNCERTAINTY

MINT Perceived Target Rate*:  2.00%
Unemployment Rate:  9.1%
Inflation Rate (CPI):  0.5%!!!   UP 0.7% IN ONE MONTH, 8.4% ANNUALLY AT THIS PACE!!!
Dow Jones Industrial Average:  11,177  TO THE MOON!!!

M1 Monetary Base:  $2,033,000,000,000 RED ALERT!!!
M2 Monetary Base:  $9,478,200,000,000 YIKES!!!!!!!