merkhet

Okay, now that I got the elephant in the room out of the way, the most important thing I learned from Warren Buffett comes from his speech at the University of Florida a few years ago: It gave me a significant amount of perspective. http://tilsonfunds.com/BuffettUofFloridaspeech.pdf

Elephant in the room: how to invest.

+1

It's one of the relatively most insulated, with exports being a small percentage of GDP (at about 13%). The rest of the world feels relatively more pain when the US stops buying their goods, than vice-versa. From a stock market standpoint, think of the banks as hubs and investors as spokes. The interconnection was between hubs. When a hub goes down because of funding concerns and/or general insolvency, you get massive forced liquidations. Add that to the fact that global housing prices were the instigating factor (+ the U.S. being a huge importer) and you get the type of economic recession that we experienced. Right now, I don't see what causes significant forced liquidations like we saw in '08. Moreover, as Eric pointed out, we are not a huge exporter. As a huge importer, I suspect we will come out alright.

Interesting video of Jennifer O'Connor during testimony on the IRS scandal. https://www.youtube.com/watch?v=Dyk1P-p56cE Chaffetz seems like a bit of an asshole. What does that make Issa? A different kind of asshole? They are, after all, Congressmen.

Interesting video of Jennifer O'Connor during testimony on the IRS scandal. https://www.youtube.com/watch?v=Dyk1P-p56cE Chaffetz seems like a bit of an asshole.

Status conference set for September.

The White House counsel request is rather interesting. Not that it matters, but here's a link to the PDF. (https://www.dropbox.com/s/zhusvfa1esqexf2/2015-08-21%20White%20House%20Counsel%20Application%20for%20Access%20to%20Protected%20Information.pdf?dl=0)

I'm definitely biased at this point given how often I've presented on the bull side. :) The best I can come up with on a bear case is the following: (1) The government can continue to delay this for longer than I anticipate (2) There's really no incentive for either side to move to solve this issue sans legal rulings or fear of legal rulings (3) Matt Levine has a pithy comment about the lack of political motivation, again, sans legal rulings or fear of legal rulings (http://www.bloombergview.com/articles/2015-08-20/endowment-spending-and-bank-earnings) Legally, if it comes to that, I think the Steele case filed in the District Court of Delaware is pretty hard to argue with on a legal basis.

http://i.imgur.com/k5RYAgh.gif

Thanks!

Would someone be willing to post a PDF copy of that e-mail (you can black out your e-mail address). I might be able to get someone to cover that.

Interesting. Thanks!

Can anyone confirm that Fairholme shareholders received the following e-mail recently?

It's mostly liquidity that causes some issues to be more popular than others.

I wouldn't necessarily classify it as speculation, but that's the gist.

Pershing Square advanced the same arguments in one of their complaints that they then withdrew. So, Pershing has, in fact, already thought of this.

He's referring to the former.

I would quibble a bit with your assumptions here. (1) I think you're assuming that you're blowing mad stacks of cash in your example, but my guess is that you're not blowing all of the $0.01 tax. First, a bunch of it is going to taxes. Second, unless you made a concerted effort to do so, you're not likely to spend all that cash. A lot of that is going into a bank account or an investment account somewhere. (2) Thus, your concentrated effect is likely significantly lower than you think it is. And the combined aggregate effect of the $40 of after-tax spend is likely higher than you think it is. (3) Also, you calculated $40 per person and then for some reason talked about how $40 is not enough to take a family of four to dinner. Except a family of four would save $160, so unless you're going to a really nice restaurant, I suspect you can get a few dinners and/or movies out of that. And, remember, you're just talking about consumers right now. We haven't even broached the subject of companies that have oil as a large part of their COGS (transport, plastics, etc.) and the effect of consumer demand + additional profits that can either go into the pockets of investors or into rising wages for workers -- that's what I mean by multiplier effects. (If each incremental unit of oil price increase hires 1 roughneck @ $100k and removes 5 workers from other industries each earning $40k, then that's not a good thing for the economy.)

My mistake. The status conference was vacated back when they extended the response time for the defendants' reply to the motions to unseal. No status conference today.

I must be bored because I'm wading into a macro discussion... So, let's roll this back two years or so when oil was above $100. Shale was booming precisely because of the high oil price because a lot of it isn't economical at current prices, right? And the higher the oil price got the more shale boom we created because that's the nature of those kinds of markets. If you think of the U.S. economy as a giant machine/system, then what is going on when oil hits $100? Well, gas prices are high across the board for consumers of oil. Where does that money go? It goes from the consumers to the producers (and the rest of the chain, refiners, etc.) --> so the question is what's the multiplier on that spending? Do the profits that are flowing into the shareholders, employees, etc. of oil producers (et. al.) get spent? Or are they saved? What's the general impact of that? Think about it another way. Let's say oil & gas is 6% of GDP. (That 6% is energy as a whole which is over counting, but let's roll with it.) So roughly 94% of the country is pouring an elevated amount of money into the coffers of 6% of the country -- would it be better to have 94% of the country have a little more money in their pockets or better to have 6% of the country have a lot more money in their pockets? (Simplification, I know.) Also, think about the following -- the roughnecks on these rigs are getting paid $100K+ which bumps them up into a pretty high tax bracket. The vast majority of the remaining 94% of the country are in a lower tax bracket than the roughnecks -- so not only do you think about the 94%/6% cash in pockets dynamic, you also have to consider the after-tax amounts being higher in the 94% as a whole than in the 6%. All this is to say that I have a theory that insanely high oil prices actually choke off productive growth in the non-oil parts of the economy by siphoning money away (through COGS and lowered consumer spending) to the oil parts of the economy.

1996 @ the age of 13. Was a great ride until it wasn't. Then I found religion. (Graham/Buffett)

I don't count on settling at all. As I said before, governments are highly bureaucratic and always backward looking and react quickly after disasters have happened. I guess the previous government lead attorney left because he figured out there is no way to win and these government heads were too stubborn to talk about settlement. Therefore it will be a waste of his life to defend this non-sense. That's a highly unlikely reason for the guy to leave. It's not like this case will drag on for the rest of his career so to leave Justice because of that would be rather impulsive.

There's a closed status conference set for tomorrow, so I think both sides may get a preview of how the court views the unsealing of the discovery materials.

Perry Capital wants access to the Protected Information: https://www.dropbox.com/s/p9s839t2hrg3mmp/2015-08-11%20Notice%20for%20Perry%20Capital%20to%20Access%20Protected%20Information.pdf?dl=0 Government wants to deny Perry Capital that access: https://www.dropbox.com/s/zxmo01gpnos0rj8/2015-08-12%20Government%27s%20Opposition%20to%20Notice%20for%20Perry%20Capital%27s%20Access%20to%20Protected%20Information.pdf?dl=0 Moreover, we now know why the briefing schedule was suspended.