The Stalwart

Dr. Doom #5

Many thanks to a comment from Pej. It turns out we have a fifth Dr. Doom. Peter Schiff.

His extremely bearish views on the U.S. Dollar, the United States stock market, bond market and the United States economy have earned him the nickname "Dr. Doom." ^[3]...

In an August 2006 interview Schiff generated much controversy when he repeated his long-held investment thesis: "The United States economy is like the Titanic and I am here with the lifeboat trying to get people to leave the ship ...I see a real financial crisis coming for the United States." On May 16, 2006 in debate on Fox News, Schiff accurately forecast that the U.S. housing market was a bubble that would soon burst.^[7] On December 13, 2007 in a Bloomberg interview on the show Open Exchange, Schiff further added that he felt that the crisis would extend to the credit card lending industry.

Thus Peter Schiff appears to have indeed laid claim to the alias Dr. Doom, in addition to Nouriel Roubini, Marc Faber, Stephen Roach, and Henry Kaufman. Though from a preliminary read of his views, his gloom and doom seems to have been de rigeur, in terms of a housing bust and excessive consumer credit. I feel a lot of people sort of acknowledged that US housing prices were quite high and that growth in consumer debt would have its limit. Twin deficits was another bandied about problem on the radar. But the real suprise was when US housing weakness caused damage in all sorts of seemingly random, far flung places, knocking unexpected companies into insolvency and freezing up credit markets as the entire financial system, globally, lost confidence in itself. Who thought that major US financial giants would be blown to bits within months by the eventual fall in housing? Anyhow, we now have five known Dr. Dooms. 

ROH Could Close This Week, "Smart Money" Buys Into Distressed Energy Co's

Energy smart money buys into distressed Sandridge. (SD) Chesapeake Energy (CHK) also gets a dose of cash by selling assets to the same smart money.

Student loans a bright spot in lending, with lots of liquidity due to quick thinking US policy.

GE Capital begins $10bn debt sale of FDIC backed debt. Interesting to see how this goes.

Great detailed chart tracking where the bailout funds are going so far. 1/2 dedicated, 1/2 to go.

DOW could close ROH deal this week. The $78 price rises if the deal isn't closed by this Saturday, meaning more to negotiate down. ROH currently at $63.8. UPDATE: Second related link.

Even CEO Can't Figure Out How Radioshack is Still in Business

Great satire via the Onion.

Even CEO Can't Figure Out How RadioShack Still In Business

FORT WORTH, TX—Despite having been on the job for nine months, RadioShack CEO Julian Day said Monday that he still has "no idea" how the home electronics store manages to stay open. ...

"You wouldn't think that people still buy enough strobe lights and extension cords to support an entire nationwide chain, but I guess they must, or I wouldn't have this desk to sit behind all day."

The retail outlet boasts more than 6,000 locations in the United States, and is known best for its wall-sized displays of obscure-looking analog electronics components and its notoriously desperate, high-pressure sales staff...

One of Day's theories about RadioShack's continued solvency involves wedding DJs, emergency cord replacement, and off-brand wireless telephones. Another theory entails countless RadioShack gift cards that sit unredeemed in their recipients' wallets. Day has even conjectured that the store is "still coasting on" an enormous fortune made from remote-control toy cars in the mid-1970s...
In the cover letter to his December 2006 report to investors, "Radio Shack: Still Here In The 21st Century," Day wrote that he had no reason to believe that the coming year would not be every bit as good as years past, provided that people kept on doing things much the same way they always had.
Despite this cheerful boosterism, Day admitted that nothing has changed during his tenure and he doesn't exactly know what he can do to improve the chain.
"I'd like to capitalize on the store's strong points, but I honestly don't know what they are," Day said. "Every location is full of bizarre adapters, random chargers, and old boom boxes, and some sales guy is constantly hovering over you. It's like walking into your grandpa's basement. You always expect to see something cool, but it never delivers."

Well the stock (NYSE:RSH) has done better than the "smart guys" at Goldman lately!

Update

I'm pretty sure I've mentioned it in some previous post, but I recently started a new job, blogging at Clusterstock.com, the Wall St.-related sister site to AlleyInsider.com (where I'm also contributing). This was my first full week, which was awesome.

Hopefully all Stalwart readers will check out the site, and y'all should definitely ping me first whenever you've got something interesting to say.

BTW, if we can get it together, the debate Liveblog crew is hoping to liveblog tomorrow' 3rd party debate. That should be a riot.

Meet The Newest Prime Number

From the LA Times.

UCLA mathematicians appear to have won a $100,000 prize from the Electronic Frontier Foundation for discovering a 13-million-digit prime number that has long been sought by computer users.

While the prize money is nothing special, the bragging rights for discovering the 46th known Mersenne prime are huge.

"We're delighted," said UCLA's Edson Smith, leader of the effort. "Now we're looking for the next one, despite the odds," which are thought to be about one in 150,000 that any number tested will be a Mersenne prime.

Prime numbers are those, like three, seven and 11, that are divisible only by themselves and one. Mersenne primes, named after the 17th century French mathematician Marin Mersenne, who discovered them, take the form 2P - 1, where P is also a prime number.

Quite the Super(Collider) Skeptics

Well the new Large Hadron Collider is up and running which means great things for those involved in string theory and quantum mechanics. Or those such as myself who simply find reading the pop-science books on the topics enjoyable (and which is the limit of my understanding for the subject matter). This massive 27km structure in France and Switzerland will slam particles into each other at near-light speeds. Nevertheless, not everyone is happy about the collider, and I found CNN's description of this quite amusing.

While observers were left nonplussed by the anticlimactic flashing dots on a TV screen that signalled the machine's successful test run, among teams of scientists involved around the world there were jubilant celebrations and popping champagne corks.

In the coming months, the collider is expected to begin smashing particles into each other by sending two beams of protons around the tunnel in opposite directions.

Skeptics, who claim that the experiment could lead to the creation of a black hole capable of swallowing the planet, failed in a legal bid to halt the project at CERN, the European Organization for Nuclear Research.

I would consider the opponents above much more than skeptics... and of course hoping that these skeptics' view on the project will prove unfounded, I notice that other less dramatic skeptics exist towards the project exist as well.

Others have branded it a colossal waste of cash, draining resources from its multinational collaborators that could have been spent on scientific research with more tangible benefits to mankind.

Perhaps, I haven't followed the details of funding this project and whether or not the relevant people supported it. But I can't help thinking about atomic energy or quantum mechanics (and possible quantum computing now in the works) and all the benefits we've reaped or will reap from them. And the project cost US$9bn, which is massive, but then again how much does the US blow through for a few months in Iraq?

I've heard people attack space exploration on similar grounds as the collider and I feel that in the end while near-term tangible benefits are surely good, sometimes we need to make sure we go for the less tangible longer term ones as well. Benefits come from strange places. Who would have thought that a lot of time spent thinking on human rights and different forms of representative government would have lead to the most prosperous and innovative time for the human race? Also, as from another CNN article.

Why should the layperson care about this particular exploration? Years ago, when electrons were first identified, no one knew what they were good for, but they have since transformed our entire economy, said Howard Gordon, deputy research program manager for the collider's ATLAS experiment.

Anyhow, whether the money proves itself worthwhile or not, I hope we can agree to just cross our fingers and hope that the earth isn't swallowed by a man-made blackhole, as some skeptics would suggest.

An Interesting 'Gay Gene' Theory

The basic idea, courtesy of New Scientist: Researchers found that the female relatives of gay men tend to have more children than other women. Thus those women are considered to be "hyper-heterosexual" (i.e.: they like to procreate with men more than other woman). The conclusion: Gay men share a gene with those women that makes them more attracted to men than normal.

HT: MarginalRevolution.

Gay Marriage Cards From Hallmark

Post California Ruling, the market responds

Most states don't recognize gay marriage -- but now Hallmark does.

The nation's largest greeting card company is rolling out same-sex wedding cards -- featuring two tuxedos, overlapping hearts or intertwined flowers, with best wishes inside. "Two hearts. One promise," one says. Hallmark added the cards after California joined Massachusetts as the
only U.S. states with legal gay marriage. A handful of other states
have recognized same-sex civil unions.

And how long will this stance last?

Hallmark's largest competitor, American Greetings Corp., has no plans
to enter the market, saying its current offerings are general enough to
speak to a lot of different relationships.

Aerial Advertising

I've always wondered about the economics of aerial advertising -- when planes fly by the beach dragging banner for a night club, for example. Not only does the branding proposition seem dubious, but in the age of sky-high jet fuel costs, it seems awfully expensive. Nonetheless, it persists. Ad Age has a thing today about how this mode of advertising is "Flies Above the Recession", which sounds intriguing. Unfortunately it's a video, meaning there's zero chance I'll get around to checking it out. Check it out and come back here and let me know what you thing.

Economics Of Same-Sex Marriage Laws

Even with the DOMA (Defense of Marriage Act) and Supreme Court setbacks, laws recognizing same-sex marriages are popping up in various states (happily, imo). Larry Ribstein has a great post up, explaining the trend, chalking it up to state vs. state competition, federalism and the market for law: "But same sex marriage is proving the dynamic nature of our federal system. All it takes to recognize a right is one state. Mobile parties can go to that state or contract for its law.  Then they can try to take their rights on the road, and challenge other states to either send them away or recognize the right. States can’t afford to send away either big firms or entire groups of people."

Here's Ribstein's telling of recent history:

• Massachusetts became the first state to recognize full-fledged same sex marriage. But out of state couples couldn’t use the law because of a century-old Massachusetts law restricting local marriages by out of state couples.
• Then California recognized same sex marriage. So NY couples had an incentive to settle in California.
• Then NY recognized out of state same sex marriage, thus giving same sex couples an incentive to come back to NY after they get married in California.
• Meanwhile, Massachusetts had an eye on those New Yorkers flying all the way to California. According to a story about all this in today’s NYT: "A June memo from the Massachusetts Office of Housing and Economic Development estimated that 21,000 gay couples from New York might go there to marry if the state allowed. That is about 43 percent of the estimated 49,000 same-sex couples in New York."
• Not surprisingly, Massachusetts, by a law signed Thursday, now lets out of state couples marry in Massachusetts instead of having to go to California.

It's interesting which states compete with which other states. It's not surprising that New York, California and Massachussets, all relatively wealthy, and economically dynamic states would compete on this front. Obviously North Dakota doesn't feel the same pressure to keep up with California in its attitude towards same-sex marriage.

I wonder what this means for a city like Austin -- a high tech, dynamic and "blue" bastion in the middle of Texas (generally a dynamic state, but fairly conservative in its attitudes).