ERICOPOLY

I've been wondering about that. My gut says they are trying to get approved for a dividend raise so they don't get left being the only one without a meaningful dividend after Citigroup gets theirs in 2012. Otherwise, what's the explanation? I don't buy the official argument that it's about retiring securities at a discount when in order to do so they have to issue shares at a huge discount -- 3x 1% ROA.

This is what BAC reported in Q3 (from CC transcript): If we move from the businesses to credit and the trends that we've seen in credit; as we look at consumer credit trends on Slide 21, we continue to be very pleased with the progress that we're making. If you look at consumer credit trends quarter-over-quarter, you can see continued declines in net charge-offs, 30-plus performing delinquencies as well as our nonperforming loans and foreclosed properties.

Their current forecast is inaccurate. UCLA-Ceridian pulse of commerce index is down 10% annualized -- symptomatic of a recession if you ask their chief economist: http://ceridianindex.com/multimedia/video/September-PCI-Falls/ Appears quite coincident to me...... http://ceridianindex.com/ Buffett's set of businesses is a better indicator of the whole picture. That's my view. I put that link to the ECRI in there because it's interesting. I have more faith in Buffett-vision though -- he's got reports from boots on the ground. Thus he can see what the ECRI guy is missing -- the actual results and sentiment of the businesses. Eric, I went back and looked at what WEB was saying back in late 2007/early 2008 when ECRI came out with their recession call, and WEB was saying that there was a high probability of recession. I will admit it will be extremely interesting to see who wins on the economic assessment over the next year or two - WEB v. ECRI. I would argue that Buffett has the best businesses in the country that would most likely, as a group, tend to lag the economy going into a recession (save for his housing-related businesses, which he has said continue to remain depressed). Perhaps WEB is right. It also may be a matter of time horizon - Prem and Friedberg are very worried about the environment over the near term, whereas WEB is looking out over the next 100 years. I'd be curious to pit Prem/Friedberg against WEB regarding the depression-era environment we're in. I think WEB would say the capitalist nature of our economy is healing our economy slowly over time and that there is a very small chance of a depression-type environment going forward - I think Prem/Friedberg would argue differently. As I've said before, that's the wonderful thing about this business, we can all be right at the same exact time just depending on the time horizon! Perhaps CEO Burke will be right over the next five years with his UNP purchase, but at the same time I'll avoid UNP and like investments over the near term due to the economic risk out there and end up being right over the shorter term by picking UNP and other investments up at 50 cents on the dollar at a later date 8) This is a bit like discussing sports or horse racing. I am very relieved that home construction and autos are already in the toilet. The recession of 2008/2009 was especially scary because those industries fell off a cliff and they are enormous parts of the economy. But they didn't climb back up the cliff -- there is only so far it can fall. You can't have home building fall by another 1.7 million units annually when your base is now only 500k-700k units.

Their current forecast is inaccurate. UCLA-Ceridian pulse of commerce index is down 10% annualized -- symptomatic of a recession if you ask their chief economist: http://ceridianindex.com/multimedia/video/September-PCI-Falls/ Appears quite coincident to me...... http://ceridianindex.com/ Buffett's set of businesses is a better indicator of the whole picture. That's my view. I put that link to the ECRI in there because it's interesting. I have more faith in Buffett-vision though -- he's got reports from boots on the ground. Thus he can see what the ECRI guy is missing -- the actual results and sentiment of the businesses.

Their current forecast is inaccurate. UCLA-Ceridian pulse of commerce index is down 10% annualized -- symptomatic of a recession if you ask their chief economist: http://ceridianindex.com/multimedia/video/September-PCI-Falls/

A while ago wasn't Fairholme trying to get itself listed as an offering for one of AIG's variable annuities? Does anyone know if this is still happening?

I've heard that said before but it doesn't make sense to me really. People who want to start businesses can generally get funding from the bank. I'm not sure what the 401k brings to the table in terms of jobs. I guess maybe the bank securitizes the loan and sells it to the 401k. At any rate, I think there is already enough idle money available to fund the companies that want to expand. We could cut this subsidy for a few years and I doubt it would restrict job growth. Then of course some people just buy government bonds in their 401ks. The government borrows money (the bond) and lends it to the 401k interest-free. The 401k then buys the bond and collects the interest from the very same government that gave them the loan interest-free. The poor should be really pissed about this.

I wasn't really saving for retirement though beyond a certain point. Past a given threshold it's just a tax shelter boosted with interest free non-recourse loan. $60k per year joint pre-tax savings -- and I was 30 years old. On top of that I was also saving another $7k in after-tax 401k contributions as well as after-tax IRA contributions of another $5k each. The reason I was doing the after-tax is so that I could then roll them into RothIRAs when I quit, which I of course did :) That was a back-door Roth contribution (front door contributions were disallowed due to our incomes). So that's like $77k per year in savings. For "retirement"... which shouldn't have even happened for another 35 years anyhow. There's a limit to how much I can hold back a smile while I justify these contribution sizes "for retirement". Retire where? Oh, on my yacht of course. You'd be surprised at the cost of retirement these days :D I think you could limit the pre-tax subsidy to something reasonable. If I were self-employed like my wife we could have bumped it up to about $85k pre-tax (would be even higher if we made more money). The self-employed enjoy the "profit sharing" contribution which is 25% of profits up to about $160k of income. I think the limit on pre-tax contributions is somewhere near $110k. Then maybe around $120k if you count after-tax IRA contributions as well. Meanwhile the only discussion in Washington is about how we can't afford Social Security and must cut back on it.

The savings subsidy increases the debt. So point taken. The 401k/IRA plans are not a replacement for Social Security -- you can see this in the participation rates. The savings subsidy is a zero-interest non-recourse loan to the relatively high income people. The cost of the subsidy is born by the tax payer. You can't expect me to believe that the wealthy need a subsidy in order to save? Some people may need one, but look my wife and I were making pre-tax contributions of about $60k per year when we were working. That's an aweful lot. It effectively meant that the government each year was giving us a new $15k interest free loan to be repaid when we draw down the account. Could we still afford to save even without the $15k interest-free loan? Of course we could, don't be stupid. It's just a free handout.

They could temporarily eliminate/reduce pre-tax 401k and IRA contributions. People can still save on an after-tax basis. Perhaps allow an after-tax 401k or IRA contribution instead. Generally speaking those contributions reduce government revenues. By definition that money wasn't going to be spent anyhow, so a tax on it would not take money away from private sector spending. That money was also not being used to pay down debts, thus taxing it doesn't slow down private sector deleveraging. The govt wants more private sector spending yet it is subsidizing savings via this program. Genius isn't it? And largely it's the higher income people who contribute to these plans, so at a time when we can't figure out how to fund retirement for the lower income, we respond by increasing retirements for the relatively rich by way of a tax subsidy. In order to afford this tax subsidy we borrow money and thus add to the deficit. Right, and nobody wants to cut this one eh?

Anyways, how far along are we with the putbacks? Last year Goldman estimated $25b total costs for BAC, including the $7b already reserved for and charged off. BAC added $1b to reserves in Q1 and $14b in Q2. That brings the total to $22b right? By Goldman's stale estimate we're at 90% of target. How close are we to getting that one behind us?

There was probably a point during the D-Day invasion where the battle was viewed to be "going well". Somebody perhaps then said "you think all these dead bodies piled up is good?".

It's doing fine as long as $1 trillion is borrowed and spent every year. But that seems not likely to change for a while yet. Other theories: 1) People say that when Europe collapses it will hurt our exports and people will get fired 2) The guy from the ECRI is one of the few who is always right (until he isn't :D)

So if this is all about the impact on the share price from the Merrill deal then I'm left wondering what the heck? They knew about the BAC stock price drop and were happy with it -- happy enough to vote YES anyhow. That is the perplexing part -- they had a really good idea of how the market would value BAC with Merrill and they went along with it. Not much changed in that regard when the loss was disclosed. Actually, in the week after the Merrill loss was reported WFC dropped another 30%. That's actually more than the 29% drop that BAC suffered. Then over the next week they both fully recovered to the level seen before the Merrill loss report.

Shareholders collectively held $65 billion worth of BAC (that was the entire market cap) before voting on the Merrill acquisition. But they are suing to recover $50b? Huh? In other words, they argue that the Merrill deal left them with only 23% of their prior value (they measure value in terms of share price). It destroyed 77% of shareholder value... huh? But then again I don't decide these things -- who knows what the judge will be talked into.

I'm trying to figure out what the shareholders might have lost because of Merrill. You have to admit, they were going to suffer some pretty radical stock declines in early 2009 just by virtue of not only being a bank, but by having Countrywide to boot! Even WFC lost 33% in the first two weeks of 2009. Thus it's not too instructive to look at the stock drop alone for BAC over the first two weeks of 2009 -- but rather look at how much further it dropped once the "bomb" was dropped on shareholders regarding the Merrill losses. A few dates in 2009: 1) Jan 1: Merrill deal closes 2) Jan 2: BAC closes at $14.33 (same as the range before shareholders approved Merrill purchase) 3) Jan 15: BAC closes at $8.32 (the day before Merrill loss is disclosed) 4) Jan 16: BAC closes at $7.18 after Merrill loss of $15.31b is disclosed 5) Jan 28: BAC closes at $7.39 Alright, you could have sold your shares for about 15% less after you found out about the loss. $50b in damages? That's ridiculous.

Lower interest rates? The wealthiest 5% of U.S. households saw incomes fall 7% after inflation in Bush's eight years in office,

They might also be playing fast and loose when listing the ingredients: http://newsok.com/high-fructose-corn-syrup-in-soda-has-much-more-fructose-than-advertised-study-finds/article/3510173 The high-fructose corn syrup (HFCS) used in soda is supposed to contain no more than 55 percent fructose and 45 percent glucose, according to the Corn Refiners Association. ... The Keck researchers found that the sweeteners in Coca-Cola and Pepsi contained as much as 65 percent fructose (and only 35 percent glucose), and Sprite registered as much as 64 percent fructose (and 36 percent glucose). Tested samples of Mexican Coca-Cola — which is supposedly made with cane sugar instead of high-fructose corn syrup — contained no sucrose, only fructose and glucose in a 52 percent-to-48 percent ratio.

Why do they add loads of salt to a sweet drink like Coke? I've heard conspiracy theories but is there a practical reason?

I was wondering the same thing about muni insurance. Did lowering the interest rate on munis via the regulated bond insurers contribute to the municipal over-indebtedness? For that matter, did lowering the tax rate take it a step further?

Polls show that 70% of Greek voters are against leaving the Euro. http://www.guardian.co.uk/business/economics-blog/2011/nov/01/greek-referendum-papandreou-canny-move Trouble is, the same polls show that 60% are against terms of the bailout. What do the other 130% of Greek voters think?

I had a similar path. I was determined to do accounting at one point when I was in junior college, but I had to complete calculus and statistics as part of it. So I did the full year of accounting that they offer in JC, took business law, etc... I found myself enjoying the math classes the most so I thought I'd do statistics and thus I applied to math departments when I was ready to transfer to 4 year school. Then once at UCLA they required me to take a year of C++ programming as part of the math degree I was seeking. Then I liked programming so much that I switched into a Math/Applied Science major and chose CS as the applied major. The horror of this approach is that in order to complete my major I had to pass 7 upper division CS classes from the Engineering school yet I was completely unqualified (before taking the C++ programming, my only computer knowledge was word processing). So suddenly I'm in the Engineering department (totally unqualified by the way) taking upper level undergraduate CS classes like Operating Systems, yet I don't even know what the hell a "makefile" is -- being a complete novice in the field, I've never written anything in "C" and don't know what the heck the term "assembly language" means or what a "compiler" really does, I skipped all the lower division CS classes, and here I find myself being graded on a curve against mega-nerds who were programming computers in diapers, and I still passed it all only because I studied practically 24/7. I think I still have post traumatic stress from that experience. Prerequisites really are important by the way. No real plan, just blown by the winds and eventually graduated :D My GPA from CS classes is probably a C+, but considering the circumstances I'd say I did rather well -- not exactly going to help me get into any graduate schools though. But none of it matters, they never asked for my GPA when I interviewed with Microsoft. They were amused by my perseverence so perhaps it's a good approach after all.

He and his wife have one child (I hunted for his bio hoping to find him with like 7 children or something).

Consumption though is not a problem. It's whether or not the consumption can be sustained without environmental collapse. Today (for example say the Clean Air Act) we essentially bake certain external environmental costs into US manufacturing which has an effect of more accurately pricing finished consumer goods, but then we allow it to be undercut by products produced in foreign factories where such costs are not priced in by regulations. The free market is not going to put external costs into finished goods without help from regulatory authorities. He doesn't even touch on this. Instead he's just taking a head count.

I think the United States is a good example. The country with the most consumption doesn't have the largest population. He has a Harvard education. I saved my money wisely. From my relatively low level of education (relative to his), I have learned that the answer is renewable energy technology, recycling, and conservation.