Zimbabwe is introducing a Z$100bn bill to circulation. This does not cover one days worth of expenses (Z$500bn) for a person living in Zimbabwe (an unlucky sperm club member). Normally, this would be a terrible thing. However, rampant inflation is a fact of life in Zimbabwe and taken for granted. What the citizens don’t realize is the great lengths their government is going to in order to encourage math skills. For instance, calculating the cost of lunch (Z$100bn) for a week (multiply by 7) including inflation (estimated at 4,500% to 11,000%) requires seriously carrying some digits; the cost for a week is well into the trillions!
Recommendation: Invest in human capital: smuggle waiters, cashiers, and other frequent handlers of cash out of Zimbabwe. These people will be able to mentally manipulate numbers of 13 or 14 digits quickly and accurately. Long or Short estimates that at current inflationary rates, these humans will be able to replace most semiconductors’ calculation power by the end of 2008.
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Mankind is divided into rich and poor, into property owners and exploited and to abstract oneself from this fundamental division and from the antagonism between poor and rich means abstracting oneself from fundamental facts.
-Joseph Stalin
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Submitted by reader Matthias
Given the “consolidation” in the banking space that has started with IndyMac, the person that looks to become the heir of the U.S. retail banking industry, is FDIC Chairman and future Chief Holder of the Bag (CHB (disambiguation, this is not a reference to Dan Shaughnessy)), Sheila Bair. But who is Sheila Bair?
Per the FDIC web site, her background is in authoring children’s books, which undoubtedly will come in handy, as she explains to the depositing public the finer points of what exactly is NOT covered by FDIC insurance. The trouble is, the original story of “Rock, Brock and the Savings Shock” is just leading the Nation’s children down an ill-conceived path to risky savings, rather than opening their eyes to the prudent possibilities of borrowing.
From the book description on Amazon:
Rock and Brock may be twins, but they are as different as two twins can be. One day, their grandpa offers them a plan-for ten straight weeks on Saturday he will give them each one dollar for doing their chores. But there is a catch! Each dollar they save, he will match.Rock is excited-there are all sorts of things he can buy for one dollar. So each week he spends his money on something different-a toy moose head, green hair goo, white peppermint wax fangs. But while Rock is spending his money, Brock is saving his. And each week when Rock gets just one dollar, Brock’s savings get matched. By summer’s end, Brock has five hundred and twelve dollars, while Rock has none. When Rock sees what his brother has saved, he realizes he has made a mistake. But Brock shows him that it is never too late to start saving.
Contrast this with the more recent thinking coming from CHB Bair:
The FDIC’s seizure of IndyMac has given Ms. Bair the ability to put her strong views into action. She has complained that lenders weren’t moving fast enough to help borrowers with troubled loans move into more affordable mortgages and avoid foreclosure.
Last October, she shocked mortgage servicers, investors and many in Washington when she pushed lenders to freeze introductory interest rates on certain high-cost loans to protect borrowers from unaffordable mortgage payments. As foreclosures snowballed, her plan attracted more attention. In December an industry coalition agreed to freeze interest rates for five years for certain borrowers who qualified.
Ms. Bair was pleased, but kept pushing. She argued for more, bigger government action. This spring, she proposed a $50 billion government-loan program that qualified borrowers could use to pay down a portion of their mortgages.
Recommendation: I think it is time to tell the real story of Rock and Brock. The one, where Brock puts his money into an FDIC insured savings account, while Rock asks his friend Kerimov to hook him up with some later-untraceable source of leverage, investing the proceeds in Russian oil assets. At the end of 10 weeks, Brock’s savings bank is kaput, wiping out most of his savings. Over the same period, Rock’s oil assets have doubled, which leaves him with enough cash to purchase the operating assets of Rock’s S&L, after negotiating a free put from the Fed. And a Ferrari Enzo.
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Topher Cox, head of the SEC and also a Jedi knight, has issued an order aimed at crushing the short-sellers and SITH lords who are trying to destroy the GSEs and some of the major investment banks. That order is the requirement that a trader must pre-borrow shares before shorting certain stocks.
SEC Chairman Christopher Cox said the SEC would institute an emergency order requiring any traders to pre-borrow stock before shorting Fannie Mae and Freddie Mac, the embattled government-sponsored entities that own more than half the nation’s mortgages. It would also apply to the stocks of Lehman Brothers, Goldman Sachs, Merrill Lynch and Morgan Stanley. The order is a near-term fix and will expire in 30 days.…
Wall Street has been calling for the SEC to address short-selling, which some believe is contributing to market volatility and could be used to manipulate shares of financial stocks.
…
Under current rules, a short-seller must locate shares to borrow, which are later replaced with stock bought at a lower price. Some market watchers have been concerned that traders were borrowing the same shares from the same lender over and over, and driving down stock prices.
Recommendation: We’re sure that this regulation is very important and will fix all the underlying problems. The root of everything isn’t awful management, poorly calculated risk assumptions, no-no, just like with Overstock (NASDAQ: OSTK), the real problem is that the stock price is low and that’s due to market manipulation and that large Death Star that the market manipulators have been using to target certain financial stocks. Christopher Cox, you are the winner of the esteemed Patrick Byrne Award for Fighting Market Manipulation.
Be sure to pre-borrow Christopher Cox shares before you short him.
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In my family, it has been a masculine tradition to keep logs of economic thought and financial analysis since the days of Ancient Rome. I will from time to time share with you relevant passages from these Legacy records.
From my forefather, Tupac Huayna Madacagalu (relayed through our familial oral tradition):
Dealing with Inheritance
Death is a very tax inefficient occurrence. You die then your estate gets devoured by Quirsatec, The Great God of the Levy. This has been THE great financial planning quandary of my time as Emperor of the Inca Empire. And I think I solved it.
Bundled up on a crisp June night, a pan flute filling the air with its melodies, I drank chicha and pondered tax efficient solutions to the death problem — what can we do to best minimize estate taxes? And it hit me, like a great bolt from Apocatequil:
I will never die and thus never bequeath my estate and also never pay the taxman any goods.This will likely require some alterations to our belief system, but as ruler, that is all in the game.
As I thought later, I realized the genius of my own genius. Not only would I minimize taxes and not die, but I would ensure that my offspring were properly incentivized to go out and conquer for themselves, for otherwise they would have nothing and they would likely be thrown off the cliffs into the depths below with nary a single coca chew to soften the blow when the state falls apart around them! Oral Note to self: This is also a great opportunity to create a post-mortem fashion and maintenance start-up and produce crazy profits.
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Mac’s are dominating the news, whether it be Freddie, Indy or Apple. But investors are understandably confused as to how to look at each Mac, and whether being a Mac is a good thing or a bad thing for a potential investment. Here is what our research indicates.
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In Three Days of the Condor, when professional killer G. Joubert is asked “Why” he kills people for a living:
I don’t interest myself in “why”. I think more often in terms of “when”, sometimes “where”; always “how much”.
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Do you ever have one of those days? When you feel like you might just default at any second? It could be spurred on by a liquidity crisis like Ford took away your factoring, has contractual price downs that are killing your margins and is ordering less volume to boot, and your revolver is maxed out and good luck raising any more money in this market; suffice to say you’re regretting your decision to be a consolidator in the auto supplier space. Or it could be a liquidity crisis where you had one too many jaeger bombs and the smell of your toilet indicates you may have also had too much tequila, but you have no memory of having ANY tequila. Either way, you could default at any second and you don’t like where things are headed.
That is when you need to restructure and find yourself a personal CRO. What can he strip out? What can he improve? You spend your weeknights doing what? Why don’t use lean manufacturing while performing your job? You should consolidate your suppliers. And lose that contract with that girl, you know the one, she negotiated terms at the top of the market and you find yourself spending significant capex to maintain your supply and she is putting out little in the way of compensation.
I found myself at this point, on the veritable verge and I needed outside help. Luckily, Long or Short Capital has a very generous and unique health package that allows its employees to be extremely healthy and notably more efficient. You think the firm with the SAAP based financial results doesn’t have generous fringe benefits? Come on!
I have just brought my CRO in (pictured above) so he is busy getting getting dug in and up to speed on me. I will update as he begins producing actionable recommendations.
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Lam Sai-wing is the head of Hang Fung Gold Technology, a retail jewelry company based out of Hong Kong, famous for its Swisshorn Gold Palace. The WSJ caught up with him to talk about his golden romper room.
Corporate speak:
Building a gold toilet, I realized…would be like an investment, plus we could let people see it for an admission fee, and we could use it to launch our brand. [Besides gold prices were so low they could only go up; buying gold at $200 an ounce would hedge against inflation]
-Lam Sai-wing
Translation:
This was the perfect way for me to stoke my ego plus it was a sizable risky speculation in a commodity which, as a retail jewelry business, is not what we should be doing — another reason it was a great idea! I knew that if gold went up, I would look like a genius and likely get a nod from the Wall Street Journal who eats up these zany stories; if gold went down or stayed the same, I would look like the guy with the crazy big ego but I’d still be rocking a gilded room. A classic win-win situation for me, win-lose for the shareholders. It’s all in the game.
Corporate speak:
The toilet and the Guan Yin statue are the most valuable pieces[.] As for the toilet, that’s the cornerstone of our company[.] It’s an icon. It will never be taken apart.
-Lam Sai-wing
Translation:
As for the toilet, that’s my throne. It will be taken apart if the price is right.
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No man loves America more than Neil Diamond and no man wants your 4th to be better and freer than Neil does.
Except the staff of Long or Short Capital.
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In its recent presentation to investors, Yahoo correctly pointed out that Carl Icahn has not had much success in recent battles with corporate management. In fact, his track record looks miserable. But they made a key error in their analysis. Where is Yahoo on this list? As one of his largest and most public failures, shouldn’t Yahoo be included in the list of his underwater investments?
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Highly controversial for racial and cultural reasons, and that’s likely the only reason why it’s unpublished in academia, the Mexican Woman Theory of Women suggests that once a woman locks down a man down, things change dramatically, namely into a pear (Spanish Editor’s Note: pera en español, muchachos!). Women in such situations turn into pears, or at least change their shape to be more pearlike than before. My body of research canvassed all the women I have seen in my life who are Mexican, or whom my naivete and racial insensitivity suggested were Mexican, so they might not all technically be Mexican, but for all intents and purposes, I will consider them to be daughters of Mexico.
The evidence suggest that there is a startlingly high number of attractive Mexican women between the ages of 18 and 24 (seriously, they are really hot and seem awesome in every way and I have no way of accessing that market legally domestically). But there is also a huge amount of pear shaped not attractive Mexican women aged 27+.
Why the discrepancy? What happens? Simply put, women require manipulation (and incentives) too.
Recommendation: Keep them on their toes. Literally, it’s great exercise.
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Dear Yahoo!,
About a month and a half ago, we provided you with a free report on how to increase your value. Since then, you have not followed any of our suggestions. In particular, our suggestion #8 — “Let the company be bought by Microsoft (NASDAQ: MSFT) at a 50% premium to YHOO’s closing price before MSFT’s February bid” — went unheeded.
Since then, you have chosen to take a few other actions including:
However, I must give credit where credit is due. Congratulations on:
Had we known here at LoS that this type of success was possible, we would never have issued our initial recommendations. Our apologies for failing to see the bigger picture.
Sincerely,
LoS
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