ERICOPOLY

I just discovered a whopper of a deal breaker for me with respect to moving to Australia: 4. Will the accumulated income from your IRA be included in your taxable income as a resident of Australia? Yes. source: http://www.ato.gov.au/corporate/content.aspx?doc=/rba/content/35498.htm

Given Warren's thoughts on housing it will surprise me if he hasn't been using the past few months to add to his $5b. He commented on how BAC reminds him of his glory years with AXP, and $5b isn't big for him given his stream of incoming cash. I mean, if he leaves this position untouched during a period where he bought $10b of IBM it will show tremendous discipline. Just since he committed the $5b in August it has already been replenished with what is pouring through the door.

So if you fast forward 2 years and realize those cost savings, we start at $11.8b additional pre-tax income relative to this year. Strip out $15b worth of 2011 R&W provisions and we're at $27b extra pre-tax income relative to this year. $27b is what it takes to boost their Basel III capital ratio by 150 bps annually (until they use up the tax losses). And this $27b figure doesn't even include any other improvements (such as reduced loan losses or decline in legal expenses).

This exchange on the conference call today is interesting. Moynihan suggesting that in 8 quarters time the legacy asset servicing expenses could drop by $1.7b per quarter. So that's a savings of $6.8b annually. Add on top of that the expected $5b in cost savings from "New BAC" progress and just those two items save $11.8b annually. Edward Najarian - ISI Group: You talked about the LAS costs coming down, you know, when you broke $3.5 billion down into sort of $1.5 billion of litigation in $2 billion core. Can you give us any sense of what you think, sort of a long-term run-rate or a normalized level is for that $2 billion core? I know you're probably reluctant to talk about the timing of getting there, but when you do get there, maybe even few years away, what would be the right number to think about that $2 billion going to? Brian T. Moynihan - CEO: I think Ed, to frame that, I think about the 60 plus delinquent units and the progress we made this year and then progress we ultimately got to get to, to get to a normalized level that will take the next six to eight quarters to get through that. But when you get down to that level, the number should be more in the $300 million a quarter versus a $2 billion from the operating cost side. And so, a reasonable amount, the servicers loans even under the heightened servicing duties that will be embedded in a way you service delinquent loans going forward to that kind of number. I just again say it's going to take us time to work through that. You see the progress we've made this year, you see the flows coming in slowing because on a whole servicing portfolio and in terms of improving delinquency, and then moving the stuff through the process. So I think that's what you should be looking for, from $2 billion down to maybe $300 million a quarter type of number. EDIT: Or are those cost cuts not mutually exclusive?

They stated today that they have asked for neither a dividend nor a buyback. There is even talk of issuing $1b worth of shares to employees (in lieu of cash compensation) in order to build capital.

Reserve releases are a non-recurring factor (however of course the elevated level of loan losses will never end). Most of the gains are one-time in nature (however of course all of the litigation, R&W, and mortgage losses are perpetual).

Houses in foreclosure over 180 days are already written down to realizable liquidation value. I take it (my hope) the deal would only be for such houses (thus it costs the banks nothing).

Any guesses on how much we waste on prosecuting prostitution? How much lost tax revenue there? There are tons of countries that have legalized prostitution and the societies are perfectly fine. No crumbling morals whatsoever. Just look at Australia -- the place is a nice clean country to visit. A great place to raise a family. We just waste money left and right. Mostly right.

Then of course we spend an average of $91,700 per student between the ages of six and fifteen. Imagine how much costs we should be able to save there. That's the second highest level of spending in the OECD, yet our 15 yr old kids rank 15th in reading, 19th in math, and 14th in science. It appears that we spend about 30% more than we need to in order to be 15th ranked in spending (to match our results). And on the global playing field, the "We're No. 1" honors go to Finland, Japan and Korea - places where the football spurring deep passions is round, not oblong. Finland, Japan and Korea were the top finishers in an OECD (www.oecd.org) study that measured 265,000 15-year-olds' literacy in reading, mathematics and science (see charts accompanying this feature). U.S. fans fed up with the BCS may find little comfort in the OECD rankings. The apropos U.S. refrain would run something like, "We're No. . . . Ah, 'Bout Average, Dude, . . . Whatever." U.S. students finished 15th in reading, 19th in math and 14th in science - and in a study that only ranked 31 nations. Worse, out of 34 OECD countries, only 8 have a lower high school graduation rate. The United States' education outcomes most resemble Poland's, a nation that spends less than half on education than the U.S. http://mercatus.org/publication/k-12-spending-student-oecd http://www.siteselection.com/ssinsider/snapshot/sf011210.htm If America Spends More Than Most Countries Per Student, Then Why Are Its Schools So Bad? http://www.businessinsider.com/us-education-spending-compared-to-the-rest-of-the-developed-world-2012-1?nr_email_referer=1

Were we to match Australia in health care and defense spending, we would save $5,047 per capita. That's $1.57 Trillion! (estimated 311 million people in the US) Annually!

2009 defense figures: http://en.wikipedia.org/wiki/List_of_countries_by_military_expenditures_per_capita US: $2,141 Australia: $893 Canada: $560 Germany: $558

Good point on healthcare but as far as defense, we have peace in our homeland, or as close to peace as you can get in a country with 300 million people. There hasn't been a full war fought on American soil since the civil war. In fact this modern global era has been the most peaceful in all of human history relative to how many people there are. The brown people we bomb don't have peace, but the American people very much do. Same can be said for Mexico and Canada. And Australia/New Zealand. It helps to not be within marching distance of Germany.

Opponents claim that socialized medicine would require higher taxes but international comparisons do not support this. The ratio of public to private spending on health is lower in the U.S than that of Canada, Australia, New Zealand, Japan, or any EU country. Yet the per capita tax funding of health in those countries is already lower than that of the United States. http://en.wikipedia.org/wiki/Socialized_medicine In fact here are the health expenditures per capita for 2008: United States: $7,164 Canada: $3,867 France: $3,851 Australia: $3,365 New Zealand: $2,655 source: http://www.globalhealthfacts.org/data/topic/map.aspx?ind=66

The country is interesting. We spend the most on defense yet we don't have peace. We spend the most on health care by a massive margin yet we're not the healthiest. On March 1, 2010, billionaire investor Warren Buffett said that the high costs paid by U.S. companies for their employees’ health care put them at a competitive disadvantage. He compared the roughly 17% of GDP spent by the U.S. on health care with the 9% of GDP spent by much of the rest of the world, noted that the U.S. has fewer doctors and nurses per person, and said, “[t]hat kind of a cost, compared with the rest of the world, is like a tapeworm eating at our economic body.” The CIA World Factbook ranked the United States 41st in the world for infant mortality rate[117] and 46th for total life expectancy.[118] A study found that between 1997 and 2003, preventable deaths declined more slowly in the United States than in 18 other industrialized nations.[119] For example, the United States was listed as 37th for life expectancy and 41st in low birth weight.[120] The U.S. stands 50th in the world for a life expectancy of 78.37. Australia, the first major country on the list stands ninth with a life expectancy of 81.81. source: http://en.wikipedia.org/wiki/Health_care_in_the_United_States

Well if that happens then it really is the next Berkshire Hathaway -- the one where the cash is all paid out to shareholders and they never buy any new operations (GEICO, etc...). After all, where are those textile operations today?

And I'm sure that was their thinking with the nice images. Perosnally, when searching I care more about content than form, though. I'm not one of the people who thinks the search results of one is better than the other. So it's sort of like an elevator -- they both take me to the same destination but I prefer the one with nice pictures on the walls.

I just have an old habit from when NCSA Mosaic was my browser. You know, the free browser that Netscape copied and then tried to charge for?

I prefer Bing for a couple of reasons: 1) more attractive page 2) Shorter name to type as I use the address bar

Have you ever considered that extingushing the flames when our rivers start catching on fire again will create much needed jobs? In fact that is the foundation of Rick Perry's jobs plan. I read the biography of Rockefeller. Apparently before the automobile there was no use for gasoline so they just dumped it in the river (all they wanted was the kerosene for lighting). I guess this means the auto industry cleaned up our rivers. The oil industry led by Rockefeller actually saved the whales (kerosene replaced whale blubber). Electric light nearly killed the oil industry were the car not to come along just in time. The EPA never saved the whales. Who needs the EPA when you've got the Texans? Whales for Texans 2012! Although back in those days oil hadn't been found in Texas yet.

They've only just barely got going with fracking and already we've had recorded earthquakes and contaminated drinking water. No wonder one of the political parties wants to get rid of the EPA. Geez I wonder why?

I'm finding nice suburbs in Sydney where a modest house rents for about $70,000 per annum, or a 5% gross rental yield over market asking prices. This is not much different from the San Francisco Bay Area real estate market. Here is a typical house near where I grew up (I grew up in Los Altos Hills): http://www.realtor.com/realestateandhomes-detail/1681-Kensington-Ave_Los-Altos_CA_94024_M16447-11083 It's just a modest 1953 rambler selling for $1,649,000. That equates to roughly a 5% gross rental yield. No different from Sydney really.

But that money has to go somewhere, either US Govt or Banks or MBS holders. It will come off the homeowner's liability side of the balance sheet, but he assumption is that after it wipes out its liability, the homeowner will then go out an re-lever himself to start the game again. The key thing holding back investment is final demand from consumers. That's it! Look if people are buying things off the shelves companies will hire and expand. They can only do this if they have the cash flow. Refinancing can not only boost their cash flow but accelerate their debt retirement at the same time. It does wonders for morale.

Adding to my last point... You see these charts that show US consumer debt being at an extremely large level relative to GDP. Those historical levels where the consumer debt was much lower had mortgage payments in excess of 7%. I mean, 7% is rather low historically. But my example shows that 4% mortgage payments initially repay at a 76% faster pace than 7% interest rate mortgages. So those charts can be a bit misleading because there is no RATE OF DECAY component, and the rate of decay is all important.

The best news I've heard recently is the rumor (rumor is news these days) of a new Obama mortgage refinance push. It does quite a bit to address the consumer debt. We are already at nearly the lowest household debt service level in 32 years. 1) Getting mortgage payments even lower is only going to push that debt service level lower. 2) The initial payment's principal component of a 30 yr fixed mortgage refinanced at 4% is 76% larger than one at 7%. So principle payments 76% larger? Yes, that's accelerated de-leveraging. While at the same time reducing the absolute size of the payment. Who says you can't haver your cake and eat it too?

I'm not in agreement. It is important to make sure the rally has legs before buying in. I would wait until the market can break through several more resistance levels before thinking of committing any serious money in this market.