Michael Gracie

Financial stocks rally because Warren Buffett is attempting a bailout of bond insurers. The nonsensical reasoning is reinsuring the municipal risk carried by the gang including MBIA and AMBAC is supposed to shore up their credit ratings, and they’ll be ok as a result.

Not so fast. A sensible person should pay attention to these points:

• Buffett is not touching the caustic CDO stuff that put the insurers in their precarious positions in the first place.
• It’s the nasty stuff now trading at pennies on the dollar with the highest risk of default, which means capital calls are still inevitable.
• Capital is in short supply at these insurers, and derivative counter-parties are hiding under rocks right now.
• At least one insurer has already said no.

Municipal deals were long the bread and butter of these bond insurers. At one time, they were producing record revenues and profits per employee. Then the insurers got greedy, backing structured finance transactions they had narry a clue about, and now they’re poised to tank. A shrewd person like Warren Buffett knows this, which is why he is going specifically after the municipal business. I’d suspect Buffett doesn’t care if these insurers fail - Berkshire would be in a perfect position to take over the direct lines which it is already reinsuring - the highly profitable end of the business. Peel off the last decent layer before the core finally rots away.

This move doesn’t relieve credit markets - it looks more like the fifth nail in the coffin.

And if that’s not enough, Jesse Eisinger says municipal bond insurance is just a scam anyway. (h/t to Paul Kedrosky)

UPDATE: The WSJ had the same idea, although they alude to Mr. Buffett as “the Wolf.” I don’t think there is any sheep’s clothing here - it’s just too obvious, and Mr. Buffett is simply looking to reward his shareholders. There is nothing inherently wrong with that.

One 47 inch LCD television, mounted on a wall in my next door neighbors’ living room: rough guess $1,100.

One Gracie-engineered wiring job, complete with GFCI outlet, Coax and CAT3, flush mounting plates, and the boxes and BX and wirecapping to make an electrical inspector check “approved” with glee (crappy picture notwithstanding): a 12 pack of Miller Lite and a Tostino’s pizza.

Watching the lady of the house shrug with indifference as the man of the house gloats about his new toy, only to see that television on 24/7 though my dining room window and into the neighbors’ living room while the man of the house is away on business…

PRICELESS!

It’s an attitude thing.

I’ve been in Orvis Cherry Creek plenty over the last year. I have more hard gear than most humans will need in a lifetime, but the place has an excellent fly selection and is always working deals. The folks are generally friendly and helpful, although I don’t usually need a lot of help with fly selection - it’s a man on a mission thing (and I know I’ll get a parking ticket if I don’t hurry). But that’s not why I go there.

Today, I noticed the weather was warming. I decided to go pick up the mail. Orvis isn’t far from the post office, so I thought I’d stop by and pick up a license (no, I haven’t been fishing in over a month, and yes, it sucks). Unbeknownst to me, Orvis doesn’t have one of the hard copy license machines. So what does the guy behind the counter do when I ask for a license? He goes behind said counter, cranks up the Colorado Division of Wildlife web-based license purchasing, and lets me do my stuff. It was such natural, courteous, going-out-of-your-way kind of service - it doesn’t happen very often, particularly in retail. But it didn’t surprise me one bit - not from those folks.

Heck, I didn’t even hint that I was going to buy anything else. But I’ll be hard pressed to shop anywhere else this season.

Thanks guys.

1) Bill Gates’s nemesis?

2) The Hotel California?

or

3) Just a time sink you can map (and of course, waste more time doing so)?

Everything has its limits. Thousands of daily “friends” requests aren’t going to do you much good - those “requestees” will either try taking yet more of your time, or they’re making the request because you are desirable for whatever reason and their hope is the resulting association will make them so too. Not having the ability to fully extricate yourself from the situation doesn’t help matters.

I am quite surprised users are just waking up to these issues now.

Mark Cuban thinks the internet is just dead and boring, and blames the economy. But maybe it’s the users…dying of boredom, and attempted to alleviate what ails them through the virtual world.

Will Jerome Kerviel remain in custody?

A Paris court sent French trader Jerome Kerviel behind bars Friday, while the investigation into billions of euros (dollars) of losses he allegedly caused for bank Societe Generale took a new twist with a second employee taken into custody.

Investigators want to know whether Kerviel acted alone, and if so, how it was that a brokerage employee sent him a message before the scandal broke, saying: “You have done nothing illegal in terms of the law.”

This is getting repetitive…”no surprise.” Although it still won’t surprise me, I’m waiting to hear that volumes of trading records, emails, and other intra-office communications have mysteriously disappeared.