Items today:

1. Stock market riots in Pakistan. My friend who runs a hedge fund sent me the following link, with the question "How long until this happens in lower Manhattan?"
(This story was covered on the front page of the NYT and Financial Times today.)

2. McCain jumps on socialist bandwagon. From an article in the LA Times today:

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In response to a question about the housing crisis, McCain said homeowners should be able to obtain new mortgages at the current value of their home. He has proposed the federal government cover the difference. "The values of homes in Michigan and across this country have dropped dramatically, and you ought to be able to be making payments at the new value of your home," he said.
**

My comment: WHAT???!!! This man calls himself a republican? Advocating that the rest of us subsidize the bad financial decisions of our fellow Americans?!

Let's get this straight with an example: Mr. and Mrs. Smitty bought a house in Temecula in 2003 for $300K, put down $10K, and got a loan for $290K. The lived in the house; they were not the reviled "speculators" that we hear so much about. The home then increased in value, so in 2005 the Smittys took out a home equity loan for $100K in order for Mr. Smitty to pay off his student loans and buy a new Hummer. By early 2006, the home was worth $585K, so the Smittys took out another $75K on an upsized home equity loan, with the total loans against their home now at $465K. They used the $75K for a new GMC Yukon and a first-class trip to Europe. The knew they couldn't afford the loan payments, but they figured the house would keep going up in value so they would either re-fi or sell.

Now, in 2008, their home is worth $300K again, with $465K borrowed against it. John McCain, instead of letting the market take its course, now wants us as taxpayers to pay for the Smitty's vacations, cars, etc. Those of us who lived within our means get punished for the sins of those who did not.

While I am vehemently against this type of "socialization of risk and privatization of reward" that we keep hearing about (whether it be for Bear Stearns, Fannie Mae, or the Smitty Family), I say that if we do engage in bailouts, we (the taxpayers, with the US Government acting on our behalf) damn well better be taking a big piece of the potential upside as well, as we DID NOT do for Bear Stearns. For example, with McCain's plan to bail out the Smitty Family at taxpayer expense, the government should get a large portion of the increase in value, if any, when the house sells. And there should be draconian penalties for those who would try to game the system with barter and such to avoid paying the government its share of the upside.


3. Hamburgers in Paris. From today's New York Times:

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Some of the most celebrated chefs in the city have taken up the challenge. Yannick Alléno, who earned a third Michelin star in 2007 for his precise, rarefied cuisine at Le Meurice, serves a thick, succulent hamburger at his casual restaurant, Le Dali. Mr. Alléno’s baker, Frédéric Lalos, a winner of one of the country’s fiercest cooking competitions, makes the buns. With smoked bacon, lettuce, dill pickles, mustard, mayonnaise and fries, the burger at Le Dali costs 35 euros, about $56.
**

My comment: At the *casual* restaurant, the hamburger was US $56? Holy cow.