F. George McDuffee wrote:
Metal content? Priced steel, aluminum or copper lately?

On Sat, 24 May 2008 08:37:02 -0700, "John R. Carroll"
wrote:

Its always dangerous to extrapolate from a single data point, but
this could be the first drops of water seeping through the cracks
as the dam bursts, although Vallejo is not a major municipality.

Like Orange was?
==========
Interesting that you remember Orange County.

I'm funny that way. LOL
I remembered Coughlin as well.
It comes from a life time of making mistakes and trying to learn from them
in an effort to avoid repetition.
There really isn't anything new under the sun.

It appears that the
Orange County Debacle and the LTCM disaster were linked [if only
by the employment of extreme leverage, hubris, and over reliance
on arcane calculations -- Astrology for Orange County and the
BMS/VAR algorithms for LTCM]].

Financial catastrophe was [apparently] avoided only because
Greenspan stepped in to coordinate the orderly
unwinding/liquidation of LTCM.

Financial catstrophy wasn't avoided at all. Orange County was wiped out.
The truth of the matter was that they had to rebuild on a sound foundation
and after digging through the ash to collect up the bits and pieces that
remained, they did and have.
They now wish they had purged their entire system like one of those colon
cures. It would have hurt but they would have greater confidence in their
law enforcement at the County level. That ain't workin' out nearly as well.

The principal beneficiaries of the Feds activities were LTCM principals.

It is also worth noting, in fact it's critical, that unlike his successor,
Ben Bernanke, Greenspan didn't put Federal money into a private institution
to accomplish his goal. He bent the arm of the financial services industry
and made them clean up their own mess. That's a HUGE distinction.

Bernanke has broken with a policy that has been in place as long as the
Fed - about 70 years.
I'd be willing to bet yo my last dollar that it won't be another seventy
before PE is back at the well, hat in hand.
In fact, it might be that another such bail out will actually be expected
and built in to current and future decision making.

Ben Bernanke has converted the Federal Reserve into the "**** boy" of
private equity. Mark my words.

This was not a coup on the part
of Greenspan, as he had largely created this financial H bomb by
failing to take action when it was possible to do with minimal
cost/disruption.

I think he thought he had set the proper example. He hadn't, however,
anticipated the likes of Bernanke, Paulsen or BushCo.

--

John R. Carroll
www.machiningsolution.com