It Might Be 39 Cents, Give or Take Three Dollars

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Ed Cone pointed to an article in WSJ about Morgan Stanley’s quarterly loss and the infusion of $5 billion their getting from China Investment Corp.  Ed focused on the cash infusion from another foreign entity (he also pointed to this earlier story), but my eye was caught by these two paragraphs:

Morgan Stanley, the second-largest U.S. investment bank by market
value, reported a net loss for the quarter ended Nov. 30 of $3.59
billion, or $3.61 a share, compared with year-earlier net income of
$1.54 billion, or $1.44 a share. The loss significantly exceeded the 39
cents a share loss estimated by analysts polled by Thomson Financial…

A loss was expected, but the red ink proved much deeper than analysts
had thought, illustrating how rapidly the market for loans and
securities tied to subprime mortgages deteriorated in November.
Analysts said the company has conservatively marked the mortgage assets
down to about 25 cents on the dollar in an effort to put its problems
behind it, and Morgan Stanley Chief Financial Officer Colm Kelleher
said he is "absolutely confident" that the write-offs accurately
reflect the values the bank sees.

In the past we’ve seen companies hammered on the Street for missing earnings estimates by a penny or two per share; amazing to see how quickly we’re becoming accustomed to seeing loss estimates that are so far off that if plotted on a globe the estimate would be the North Pole and the real number would be the South Pole.  It’s like they’re saying, "We know we’re in deep sh– but we don’t know if it’s at our knees or our neck."  And we trust these jokers with our money; I don’t know if that makes us or them the fools.

And to the point Ed was making about foreign investment I’d like to add this observation: I’ve read and heard many hard-core Iraq war supporters say that we need to continue fighting over there or soon we’ll be speaking Arabic (I heard one guy say Muslim instead of Arabic which I guess means he speaks Christian).  I’d posit that the way things are going these days which language any of us speaks in the future will be determined by which bank we work for or do business with.

Two Simple Steps to Re-Booting Your Washer

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lgwasher

Last night our son Michael was trying to do a load of laundry when he discovered that the washer wouldn’t start.  Our LG Tromm front loading washer would light up when you hit the “program” button but when you hit the “start” button nothing would happen.  “Hmm,” I thought, “maybe I can fix this.”  I must be delusional from all the holiday cheer.

We’ve already had the washer serviced before and I knew for a fact that you could access the inside by popping the top off.  Well, I thought you could pop it off but after multiple attempts to pry the dam thing off I was ready to give up.  That’s when the brains in the family, Celeste, mentioned that she thought the top slid off.  Once again I was forced to bow to the wisdom of my wife.

So I get the top off and find neat bundles of wire that all appeared to be connected properly.  I did what I do with all things mechanical or electrical: I poked and prodded and pretended to be doing something.  After I’d spent what I felt was a sufficient amount of time not knowing what I was looking at I plugged the washer in and tried to start it.  I felt quite wise that I did this before I put the lid back on since it would be necessary to not know what I was doing for another indeterminate amount of time if it didn’t start.  Sure enough it didn’t start so I spent another couple of minutes poking and prodding before I finally stopped kidding myself and put the lid back on and plugged the washer in again.  Then I kicked it.  That’s always my last resort and it works more often than you’d think.  Not this time.

While I was pretending to do something Celeste was on the phone with LG and when asked for the washer’s symptoms was told by the customer service rep that they’d received feedback similar to this in the past.  Apparently this problem can often be alleviated by following this scientific method:

  1. Unplug the machine for about 10 minutes.
  2. Repeatedly push the start button until it starts.  It may take several pushes (make that about 100) before the machine will start.

Sure enough it worked. We were told that this process effectively re-sets the washer’s “board” or in other words we had to re-boot our washer.  I’m now convinced that LG is Korea’s answer to Microsoft.

Anecdotal Economics

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A couple of personal observations that lead me to believe that ye olde economy here in the US of A is swirling down the toilet:

  • My in-laws have had two get-togethers in Charleston, SC in the last month.  For the first get-together my brother-in-law used his SUV to cart his family the roughly 500 miles from their home in Northern Virginia to Charleston.  This last week, remembering the money he spent on gas last month, he squeezed his three kids into the back seat of his Honda Accord to make the trip.  Anyone who’s traveled with three kids under the age of seven knows what kind of sacrifice that is.
  • I’ve actually heard real estate agents say this housing market really sucks. That’s like getting my wife to admit that I might be right about something we’re arguing over.
  • A guy I know who owns (owned?) a mortgage brokerage had to go out and get a "real job".
  • My bank is offering CDs with rates that almost require more than one hand if you were counting points on your fingers.  Since banks aren’t generally in the business of offering up anything with lucrative margins you just know that inflation is up there too.
  • I’m not getting two dozen pieces of mail daily trying to pimp home equity loans to me.  Something is seriously amiss.
  • My Google Alert for "stagflation" is generating lots of links.
  • Attendance at church seems to be up.  People are scared, or maybe they’re scouting out the locations for future food lines.

Reap What Ye Sow

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Given that I’ve written over 1,200 posts for this blog I’m not too surprised when I stumble across something I’ve written and then totally forgotten.  A case in point is the post Bankers are Giving Lawyers a Run for Their Money that I wrote a little over a year ago.  In that post I take Chase to task for their behavior towards us regarding the last payment on our car loan.  Here’s an excerpt to give you a taste:

Here’s what has my dander up today: When we got back from San Francisco we had a message from Chase saying we’re late on our last car payment.  This confused Celeste because we’ve been paying with autodrafts from our bank account for four years,
or the entire lifespan of the car loan.  When she called Chase back
they said that if we’d read the fine print of our loan we would have
known that they don’t accept autodrafts for the last payment.  Okay,
fine.  So Celeste asks the very unfriendly bank rep why we’re hearing
about this only now that the payment is 90 days late and we’ve been put
in collections?  The rep’s reply is that she can only handle payment,
not answer customer service questions.

It gets better.  Celeste asks how much we owe.  The rep says she
needs our bank information before she can answer any questions.  Huh?
After Celeste asks again the woman gives her the amount and they take
care of the payment information, which by the way requires a $15
processing fee.  Huh?  (Celeste truly has a knack for getting the
asshole reps).

Before she gets off the phone with the bank’s collection-dolt
Celeste gets a customer service number, calls it and enters into
banker-logic zone. The customer service rep asks her for our address to
verify that he’s talking to the right person.  When she gives him the
address he says that it is the wrong address.  Bingo, they never got
our change of address when we moved two years ago, which probably
explains why we didn’t get a late notice on the final payment.  Yet
they were able to track us down for collection purposes.  Nice…

Here’s my problem.  The bank is probably within their rights,
technically, to treat us like this but in the real world they are
behaving reprehensibly.  We’d obviously been good customers for four
years, but they’re treating us like criminals because of an honest mix
up?  And who’s to say it’s our fault?  If they could track us down for
collection couldn’t they have done the same for a courtesy call
reminding us that an autodraft wouldn’t be accepted for our final
payment?

Less than a year later we see what’s happened to the banks and other financial institutions after the underestimated impact of the sub-prime meltdown.  The hubris endemic to the financial services industry has led to the inevitable "correction" but it’s near impossible to enjoy it because real people are losing their jobs while the jerks that engineered this fiasco are bailing out with platinum parachutes that make their predecessors’ golden parachutes look positively pedestrian in comparison.  Will someone please sue these turds and make an example of them?

links for 2007-12-17

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links for 2007-12-11

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