GamePolitics is reporting that one Australian would-be politician is taking an enlightened stance on gaming in general, and especially with respect to censorship. “Censorship is odious because it removes community choice. Censorship states that the thought is the action; that the common person can’t distinguish between depiction and actuality… Censorship says, ‘Let me decide who speaks.’ And games are talking. They’re speaking very loudly, to a great many people, in strong and clear voices. They’re speaking in places that have never read a newspaper and in houses which have never listened to politicians. It’s okay to be worried by what games are saying. It’s okay to disagree. But it’s not okay to stifle those voices. It’s not okay to kill the game.”

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Filed under: Forecasts, Economic data, Politics, Housing, Recession

Most Americans realize that each new U.S. president, upon taking the oath of office, faces his/her share of economic problems, none of which originated on his watch.

President John F. Kennedy spoke to this when he stated (and someone stated it before him), “It’s true. Life is not fair. Some men go to war, and others remain at home. Among those who go to war, some men are sent to the front lines, while others stay behind. It’s true. Life isn’t fair.”

Still, even though each age has seen its share of formidable economic problems, the scope, seriousness, and systemic impact of economic problems facing the new president, be it Democrat Barack Obama or Republican John McCain, might represent the biggest economic decisions since those President Franklin D. Roosevelt confronted upon taking office in the depths of the Great Depression in 1933.

What’s one issue likely to give the president more gray hair? The kinds of systemic reforms to lobby for, on the heels of the federal housing bailout of Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE) following the collapse of the housing market and rise in mortgage defaults, stated economist David H. Wang. The housing bailout will further increase the U.S Government’s annual budget deficit, which is expected to reach $490 billion in Fiscal 2009, Wang stated.

Au revoir ‘heads I win, tails you lose’?

Further, as BloggingStocks Peter Cohan has pointed out on several occasions, the housing bill represents the socialization of risk in a very massive swath of economic activity — the socialization of risk after an incorrect investment calculation by private banks and mortgage lenders. Also, at this juncture, no one, with 100% certainty, can put a dollar figure on the ultimate cost of that intervention to the taxpayer: it could be $50 billion, or $500 billion, or even considerably more.

Economist Wang argues that voters/taxpayers might begin to ask, “since we’re socializing the risk, what’s the gain for us? Where’s the reward?” The aforementioned are legitimate questions, in Wang’s interpretation.

“The housing bailout issue has the potential to critically review the whole risk/reward system relating to mortgages and banks / mortgage lenders. The public might very well want to know why are we perpetuating a system in which good mortgages mean banks and mortgage companies win, but bad mortgages mean the taxpayer pays?” Wang asked. “The public may ask the new president ‘What’s in it for us? And how come we’re not sharing in the rewards, in the upside?’ “

“Bank lobbyists may counter with, ‘Well, we’re writing mortgages that enable millions to buy their first homes,’ but my sense is that won’t be enough of a reward for the public, given the size of the bailout and its ultimate cost to taxpayers,” Wang said. “They’re going to want something more, from a financial standpoint.”

Still, Wang is swift to point out that that “something more” would represent a formidable economic task for the new president — one where powerful lobbies will work to cease it — because it implies enormous economic change, “perhaps the biggest economic change since the begin of FDR’s New Deal programs in the 1930s.”

Further, the above, combined with the U.S.’s other economic problems and a crowded international plate, means that mortgage risk reform will have to compete with other pressing issues vying for the new president’s attention. But Wang still sees mortgage risk reform up ahead.

“I think it will become increasingly clear that, once the American people grasp the size of the cost they will pay for the housing bailout, the pressure will be on the new president and Congress to institute reforms that grant the public more rewards,” Wang said. “Keeping deserving families in their homes won’t be enough.”

Economic Analysis: On to economist Wang’s analysis we’ll add that, in addition to who is elected president, reforms aimed at increasing the public’s return on the mortgage bill it’s paying for will also depend on the composition of the new U.S. Congress. A Republican Party-led Congress will probably block public-oriented solutions; a Democratic Party-led Congress, more prone to favor public-oriented reforms.

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Filed under: Major movement, Bad news, Washington Mutual (WM), S and P 500, Housing

In this series, we take a look at the 25 stocks on the S&P 500 Index (SPX) that have turned in the worst performance during the past decade — what went wrong, and what happens next.

Seattle-based Washington Mutual, Inc. (NYSE: WM) was doing just fine on the charts, thank you, until the entire financial-services sector was upended in 2007 by the twin evils of caustic subprime loans and the ensuing credit crunch.

While it’s an honor it would probably just as soon not claim, WaMu is a prime example of an otherwise decent stock that got slammed by a macroeconomic stealth bomb.

What went wrong? At No. 9 on our list of SPX stragglers, WM shed 83% of its value during the 10-year period that concluded on June 30, 2008. Prior to June 2007, the stock was trending higher along support from its 50-month moving average. Double-top resistance near $46 proved difficult to surmount, but WM was holding up respectably … that is, until the first shock waves of the credit crunch hit in spring 2007.

Following news of large subprime-related losses at hedge funds owned by Bear Stearns, Wall Street’s attention was suddenly riveted to mortgage loans and the banks that carried them on their balance sheets. During WaMu’s first-quarter report, chairman and CEO Kerry Killinger attempted to reassure anxious investors with the optimistic statement, “Over the past 12 months, we’ve taken a number of prudent actions to reduce our exposure to the subprime mortgage industry … [which] limited our exposure to the mortgage market’s downturn and position us well to expand and grow as market conditions improve.”

The shares dipped at the time, but it was in July 2007 that WaMu shares took their first major hit. Moody’s was one of many ratings-services agencies to scrutinize subprime last summer; the firm downgraded nearly 400 subprime-mortgage securities in one fell swoop. As it slashed ratings, Moody’s cited Washington Mutual as one of four major subprime lenders that prompted the downward revisions.

Despite the existing hints of danger, investors seem shocked last October when WaMu said its third-quarter earnings would fall 75% year-over-year, outpacing analysts’ expectations for a 43% drop.

The following December, investors punished the stock again. Washington Mutual announced that it would exit the subprime lending business, a decision that would shutter 190 home loan centers and sales offices, plus 9 loan and processing call centers. In total, WM cut 2,600 home loan staff positions and 550 corporate positions. The bank also unveiled a long list of drastic measures meant to shore up capital: it would slash its dividend from 53 cents per share to 15 cents, and raise $2.5 billion from the sale of convertible shares.

The aggressive plan to raise capital arrived a tiny late. In its fourth-quarter report, WaMu confessed to a loss of $2.19 per share, and reiterated that it wrote down $1.6 billion on the sinking value of its mortgage portfolio. As the West Coast bank struggled, word hit the Street that it could be acquired by J.P. Morgan Chase (NYSE: JPM). Thanks in part to a $7-billion capital injection from a private-equity group led by TPG Capital, the bailout deal never happened. Things were hardly looking up, though, as WaMu reported another round of job cuts, a wider-than-expected quarterly loss, and another dividend reduction.

What next? In recent months, WaMu has continued on its slash-and-burn mission to save money and limit mortgage losses. The company said in June that it would cease offering two varieties of complex mortgage products, and eliminate 1,200 jobs (with many of the cuts focused on California and Florida, two states that were severely bruised by the foreclosure crisis).

Talking of eliminated jobs, Killinger was stripped of his chairman post in early June - despite his recent recommendation that investors should just “calm down,” many shareholders were up in arms about the TPG deal. Angry investors claim that the arrangement was dilutive to existing shareholder value and constructed with financial penalties meant to force their approval. Even more troubling, they say, is that the potentially more lucrative offer from J.P. Morgan was never brought to shareholders.

On July 22, Washington Mutual reported a second-quarter loss of $3.3 billion. Executives noted that losses from the bank’s subprime mortgage portfolio have lessened, even though losses among prime mortgages are still rising. While some banks have caught a major boost following their second-quarter earnings reports, WM is not one of them — the stock added some points on the basis of widespread sector momentum, but quickly slipped back to its pre-report perch near $4.

Elizabeth Harrow is an analyst and financial writer in the research department at Schaeffer’s Investment Research. She is featured in the weekly video series Option Basics on SchaeffersResearch.com.

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palegray.net writes “Scientists have discovered new meaning behind the functions of the Antikythera Mechanism, which has been referred to as the oldest known analog computing device. In addition to providing a means to compute the dates for solar eclipses, the device apparently tracked the four-year cycles of the Olympiad. From the New York Times article: ‘Only now, applying high-resolution imaging systems and three-dimensional X-ray tomography, have experts been able to decipher inscriptions and reconstruct functions of the bronze gears on the mechanism. The latest research has revealed details of dials on the instrument’s back side, including the names of all 12 months of an ancient calendar.’”

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DeviceGuru writes “Caltech claims its researchers have ‘turned science fiction into reality’ with their development of a single-chip microscope. Even though it doesn’t have any lenses, the device is said to provide magnification comparable to that of sophisticated optical microscopes. The microscope’s magnifying capabilities derive from a technology known as microfluidics, which is based on the channeling of fluid flow at incredibly small scales. Applications for the so-called ‘optofluidic microscope’ are expected to include field analysis of blood samples for malaria, or checking water supplies for giardia and other pathogens. The project’s director thinks devices based on it could be implanted directly into the human body, in order to help arrest the spread of cancer.” There’s also coverage of the microscope at EE Times.

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Union Fenosa May Gain on Gas Natural’s EU16.8 Billion Offer - Bloomberg
July 31 (Bloomberg) — Union Fenosa SA , Spain’s third- largest power producer, might gain in Madrid trading after Gas Natural SDG SA said it will offer 16.8 billion euros ($26.2 billion) for the utility to triple its power generation capacity. Gas

US says al-Qaida in Iraq, denied foreign cash, using extortion - Chicago Tribune
WASHINGTON (AP) _ Al-Qaida in Iraq is increasingly embracing extortion and kidnapping to finance its operations as cash carried in by its dwindling foreign fighter network is drying up, according to U.S. intelligence and documents captured in Iraq

Surviving personal finance as a fresher - Daily Telegraph
Heading off to university was a daunting prospect for me. It was the first time I had been away from home for a prolonged period and had the freedom to do anything I wanted to do. Most students are very inexperienced when it comes to personal finance

Comparing Mortgage Trusts and Finance Companies - Scoop
Mortgage Trusts and Finance Companies - What is the difference? In the light of all the recent publicity involving the financial sector it is important that the fundamental differences and risk profiles of Mortgage Trusts and Finance Companies is

Mortgage finance report suggests funding gap higher than thought - Daily Telegraph
British banks are facing double the “repayment shock” on their securitised mortgages than previously thought, leaving lenders with a major funding gap that could intensify the credit crisis, a Government report has warned. Sir James Crosby, the

CAI International, Inc. Reports Results for the Second Quarter of 2008 - MSN MoneyCentral
SAN FRANCISCO, July 30, 2008 (PRIME NEWSWIRE) — CAI International, Inc. (CAI) (NYSE:CAP) reported that net income in the second quarter of 2008 increased $2.2 million, or 53.7%, to $6.3 million, compared with net income of $4.1 million in the second

Temasek: The Model for China’s Sovereign Wealth Fund? - BusinessWeek
After months of rumors, news of a Chinese sovereign wealth fund was finally confirmed in March 2007. Making his address to the National People’s Congress, Finance Minister Jin Renqing said an bureau would be formed to invest part of China’s growing

Korn/Ferry hires former Citi exec Heinzerling - Reuters
NEW YORK, July 30 (Reuters) - Billy Heinzerling, a two-decade veteran of Citigroup, (C.N: Quote , Profile , Research , Stock Buzz ) has joined executive recruiting company Korn/Ferry International, (KFY.N: Quote , Profile , Research , Stock Buzz ) a

Fitch Upgrades NorthStar Realty Finance Corp.’s CRE CDO Asset Manager - Businesswire.com
NEW YORK–( BUSINESS WIRE )–Fitch Ratings has upgraded NorthStar Realty Finance Corp.’s (NorthStar) U.S. commercial real estate (CRE) CDO asset manager rating to ‘CAM2′ from ‘CAM2-’. NorthStar’s 2006 CAM rating was re-scaled to match updated

Lease woes sting automakers - Detroit News
Automotive leasing, which once accounted for almost a third of the market, will become more high-priced, difficult, and rare as banks and automakers scale back on the practice. Chase Auto Finance, among the leading lease lenders not owned by an

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Filed under: Earnings reports, Press releases, Products and services, Marketing and advertising, Garmin Ltd (GRMN)

Garmin Ltd. (NASDAQ: GRMN) shares are tanking this day after the maker of personal navigation devices stated that its new nuvifone will be delayed by several months. I would avoid this fad stock for a while.

The device, which the company had originally hoped to be available for the fourth quarter holiday season, will not be launched until the first quarter, according to a statement from the Cayman Islands-based company. Of course, the company tried to put a positive spin one the announcement.

“While we had hoped to have carrier launches in the fourth quarter, we’ve found that meeting some of the carrier specific stipulations will take longer than anticipated,” Garmin stated. “We remain pleased with carrier interest in the device and are working toward making necessary design changes to meet their stipulations. We anticipate launching the product during the first half of 2009.”

First half of 2009? Nothing like setting a vague target that can easily be changed. And the company’s problems don’t stop with new products. Fewer people are buying the old ones as well. Garmin anticipates 2008 revenue of $3.9 billion, down from a previous estimate of $4.5 billion. Earnings per share are seen at $4.13, below its previous forecast of $4.40.

While Garmin’s automotive/mobile, outdoor/fitness and aviation segments are expected to see double-digit revenue growth, the company’s marine segment will see flat sales growth this year. I wonder if this forecast, which has also been pared down, is too optimistic.

Even though the company reported a 20% rise in second quarter profit, storm clouds continue to gather. The company’s SG&A expenses soared to $125 million in the second quarter from $95.3 million. Cost of goods sold hit $494.5 million from $367.8 million.

Investors are learning once again that fad stocks like Garmin eventually come crashing down to earth.

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jamie writes “The politicization of Bush’s Justice Department, which this week was officially determined to be illegal, has a funny side too. Sometime in 2005-2006, White House Liaison Jan Williams attended a seminar on LexisNexis searches, and wrote one herself. When she left, she passed it on to her successor Monica Goodling in an email. Justin Mason, author of SpamAssassin, is skeptical about its accuracy: [First name of a candidate]! and pre/2 [last name of a candidate] w/7 bush or gore or republican! or democrat! or charg! or accus! or criticiz! or blam! or defend! or iran contra or clinton or spotted owl or florida recount or sex! or controvers! or racis! or fraud! or investigat! or bankrupt! or layoff! or downsiz! or PNTR or NAFTA or outsourc! or indict! or enron or kerry or iraq or wmd! or arrest! or intox! or fired or sex! or racis! or intox! or slur! or arrest! or fired or controvers! or abortion! or gay! or homosexual! or gun! or firearm! Needless to say, when asked about it, Williams first stated she didn’t remember ever seeing it, then said she’d used an edited version just once. LexisNexis records show she used it, as shown, 25 times.” Note that ’sex!’ appears twice in the query. Must be VERY important.

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ljw1004 writes “Alzheimer’s researchers are divided on whether the disease is caused by ‘beta amyloid’ (a peptide found in Alzheimer brains) or by ‘tau protein’ (normally used for cellular scaffolding, but can aggregate out of control and destroy neurons). Today in Chicago a new drug has been announced that stops tau aggregation and appears to have halted Alzheimer’s-related decline in 300 clinical trial patients. The drug is known as ‘rember.’ Do you’ve friends or family who appear to be on the road to dementia? Here’s an on the web questionnaire, part of one used in the clinical trial to diagnose dementia. (Disclosure: I made the online questionnaire, and my father is one of the scientists behind the drug.)”

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phobos13013 writes “Fifty years ago yesterday, in 1958, President Eisenhower signed the United Says Public Law 85-568, National Aeronautics and Space Act to create NASA. In the fifty years since its creation, NASA has made manned missions landing on the Moon, put a space station in orbit, launched numerous unmanned missions to the Moon, Mars, the solar system, and beyond, as well as launching reusable manned spacecraft in orbit. Some of the failures included the loss of two manned spacecraft and their crews as well as the loss of the Apollo 1 crew during a training mission. Even though the future of the organization is in question, Americans, and the world, are looking forward to another fifty years of progress including a return trip to the Moon and an eventual manned mission to Mars.”

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