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Here's what got left out on Apple due to time -- why the buybacks if there is so much investment they could do in future R&D?

I'll tell you why -- they have nothing in the pipeline.

Worse, they were forced by the market to unlock their music.  My kid started with an iPod (because she just had to have an Apple, you know) but.... after two buys she figured out that Apple's crap has **** for lifetime and durability.  By then Apple had dropped the DRM on their music due to market pressure, and guess what -- she then used a Samsung phone (on which she listens to that same music!) and now, a BlackBerry (ditto.)

Oops -- there goes the model of "wall in the garden."

It still works with the iPhone -- for now -- but here's the question: Where is the next huge hit for Apple?

That's a good question, isn't it -- and if Apple is so cranked up about the future -- and has "the next big thing" in the pipeline why the buybacks rather than spending those funds on R&D to build the business?

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Unbridled "open border" immigration is outrageously unwise.  It has historically been associated with forced "immigration", otherwise known as an invasion.

In the early days of our nation when those who came from Europe forced themselves upon the people living in what is now America ("Indians") we allegedly took care of those pesky natives by giving them blankets.  But not just any blanket -- blankets that a person who had smallpox had wrapped themselves in.

We allegedly did this knowing that the blankets were infused with disease.  The native people of America, having zero exposure historically to that disease, had no immunity to it of any sort.  Huge numbers of them died as a consequence.  

At least this is the story told, although there is decent evidence that story may have been fabricated.

Today's version, sadly, appears to be true.

You see, today our government is doing this, albeit on a much smaller scale, with our "open border" policy toward Mexico and they're aiming the disease at our children through their intentional malfeasance.

“Let me emphasize something in context to your question,” Brooks said. “Immigration is part of Ebola, is a part of this new virus – I say ‘new’ in quotations marks because it’s relatively new to the degree we’ve seen it in the United States of America that taking the lives of American children, that is causing partial or complete paralysis of American children. All of this is related to immigration because some of these diseases are coming from abroad. By way of example, there was a study in 2013 – I think it was called the enterovirus that is causing the paralysis and death of young children in America – that thousands of residents of Central American countries were found with this illness over a year ago in 2013. 

Ebola has all the attention but enterovirus is a disease that is relatively common in Central America but virtually unknown in America.  In other words we have near-zero natural immunity to it, and children are particularly at-risk.  It's a nasty bug too, causing permanent harm including paralysis and even death in some of the kids who contract it.

Thus far it has killed at least 7, which is incidentally 7 more US citizens than have been killed by ebola that they contracted inside the United States.  More than 700 have fallen ill with it, nearly all children.

You don't think that allowing tens of thousands of illegal immigrant children to come into the country, intentionally dispersing them through the nation all summer long while refusing to disclose where they went after having intentionally failed to screen them for disease, then effectively forcing state and local governments to accommodate integrating them into our schools where they will expose our children to anything they may have carried with them across the border is the same thing as what "white man" did to the Native American with their smallpox blankets?

You're not very bright, are you?

Thank Obama and Congress for their refusal to enforce immigration laws -- they're directly responsible.

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You have to be kidding me -- this was just spewed at CNBS, and caused me to need a new keyboard.


Worse, it dovetails with this piece:

WASHINGTON (AP) — A federal regulator says government-controlled mortgage giants Fannie Mae and Freddie Mac have reached an agreement with major banks that could expand lending.

The head of the Federal Housing Finance Agency, which oversees Fannie and Freddie, announced the deal Monday at a conference of the Mortgage Bankers Association in Las Vegas. FHFA Director Mel Watt said the deal clarifies conditions in which banks could be required to buy back mortgages they sell to Fannie and Freddie for misrepresenting the loans' risks.

Watt said the agreement in principle is "a significant step forward" that will help make more mortgage credit available without harming Fannie and Freddie's finances.

Everyone is looking for a "3%" maximum down payment requirement, basically -- and they may get it too.

But that's beyond stupid.  Well beyond.

Here's what nobody is talking about in this context -- down payments are, essentially, inverse leverage indicators.

That is, if you have a 20% down payment on a financed "thing" your leverage is 5:1.  That's rather high, but at least somewhat rational.

With a 3% down payment your leverage is 33:1 or more than six times higher!

The problem here is the same as everywhere else -- the economy in general is drunk on exponential credit expansion, which is in fact inflation, and you, dear reader, get screwed by this as the expansion of unbacked credit causes prices to rise yet your wages do not.  In other words you lose purchasing power through these shenanigans -- that's inflation!

Wake up folks -- those putting more air in the balloon are simply trying to rescue their own fat from the fire, which is threatening to consume them.  But there is no rescue per-se -- there is only dragging you in to take their place, and if you sit silently for this crap (or worse, cheer it on!) you will be the one that fries.

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From the comments on a previous post, and a question that has been asked more than once....

I note that Karl often advocates that we individuals in the United States should reform the corrupt ways of our government by starving it Atlas Shrugged style. I, for one, would like a little more insight on Karls opinion about how that would work.

A fair question.

Here's my view: Americans, in general, refuse to confront what the 'culture of more' really means.

Let's look at the statistics.

If you are in the top quintile, which means you have an income of more than about $90,000 in your household, you are the effective funding source for the government.  If we extend that down to the 4th quintile we comprise approximately all federal revenues.

That is, if you are in the lowest to middle quintile you are a net sink on the government, not a net source.

That threshold is approximately $55,000 a year in family income, or around $30,000 if you're a single person.

Now let's talk about what constitutes privationpoverty, or, if you prefer, "need".

In this country you may think you're poor if you have a family income around $50,000 but you're not.  What you don't have is a (newer) Lexus, Mercedes, or similar.  You don't live in a swanky area near or in a big city.  You can't go out for steak and lobster every night.  You don't take fly-away vacations to wherever you wish.  In short, you don't have the trappings of being "rich."

But you probably do have a $100+ cell phone bill, you probably do pay upwards of $100 for "cable TV" (or satellite), you probably do drive a car newer than five years old and you probably do have some designer clothing in your closet -- and likely quite a bit of it.  You probably do have a large-screen TV in your living room, and likely another one in at least one bedroom and you probably eat out at least once or twice a week, with most of you "eating out" daily at your job rather than bagging a lunch in with you.  If you have kids they probably have $300+ mobile devices in their hip pocket before they have a driver license (which you paid for), another $100/month cell bill, video game consoles and a whole bunch of $50 video games, they're dolled up like Dancing With The Stars contestants, you believe they're entitled to a college education irrespective of how they fund it (and you'll give up all your financial information and put them, yourself or both into debt to get it) and more.  Most of you with a couple of kids live in a vastly larger house than the one I grew up in, about 1,200 square feet for four of us; hell, most couples with a townhouse (and no kids!) have more space than that.  You most-certainly have plenty of decent-quality food to eat, you most-certainly have flushing toilets and hot showers, you most-certainly have a means of getting around and you most-certainly are not, by any rational definition of the word, impoverished.

So here's the question for you: Are you willing to compromise what you claim is important to you in terms of personal and national integrity, never mind liberty, so you (and/or your family) can have the privilege of living in a swanky part of town, with two parents working and shoving the kids off into daycare, driving that Lexus and otherwise living better than 95% of the world's population does?  In short the deal you've made is about privilege, not "need", and in exchange you source the funds for the scams!

That's the choice, you see.  So long as you are a net producer you are the problem because you enable the addictions and stupidities.  You make possible the government spending.  You make possible the lies.  You make possible the inflation, the Fed's actions, what Wall Street does, the gouging of people at the doctor's office and hospital, the blatant rip-offs by police officers confiscating property from people who have done nothing wrong and even the shutdown of an entire town searching for one guy who took a shot at two cops while, in a single weekend, a dozen or more people are shot in Chicago and nobody lifts a damned finger.

Yes, you're responsible for Obama being able to occupy the White House with a questionable pedigree, issue illegal executive orders modifying legislation (a power he does not have but has arrogated to himself) and more.  You were equally responsible, irrespective of your vote or political party, when Bush did the same crap and Clinton before him.  You're responsible, if you're one of those producers, for all the things you whine about when it comes to both foreign and domestic policy.  

It's all you, because without you there is no funding to do any of that.

I know the riposte that will come: The government will simply ratchet down on you if you cut your earnings back voluntarily and you'll wind up in the street.  

In a word: smiley

Here's why -- it's already true that the first three quintiles of earnings in terms of household income are net sinks; that is, their effective household income is higher than their nominal income.  That is, they are net consumers.  And I already pointed out where the threshold is -- and that's from the CBO's data, not mine.

The government cannot ratchet down on you if you choose this course of action because there is nothing to take (everyone below that line is a net sink on government resource) and they would have done it already if they were able.  They know damn well that if they try it a majority of the population is now incentivized to rise up and revolt.  That is the math, and those in the government are fully aware of it which is why you have everyone screaming at you to "work harder", "make more" and similar.  It is not about your success, it is about you volunteering through your own expression of greed and avarice to screw everyone else, most-particularly your children, grandchildren and those not yet born just as long as you are led to believe you can get "yours."

You choose folks.

I used to be one of those guys who got writer's cramp stroking checks to the IRS but eventually I came to the above conclusion -- there was no way to keep doing that and sleep with myself at night.  I was enabling it as certainly as is someone who allows another to live under their roof and/or protection that refuses to contribute to the common benefit of the household and instead drinks or drugs themselves into a destructive stupor.

I decided to change my way of life in that regard as I found enabling national stupidity to be an outrage I could no longer sit for.  Voting and personally lobbying for change, along with working in the political process (for both "major" and third parties) delivered no net positive change nor was there any apparent on the horizon.  Quite the opposite, in fact.

I believe there are but two ways to resolve this dilemma, the illegal way and the legal way.  The illegal way is to simply not pay taxes and hope they don't come after you; hide income, sell drugs, whatever.  It might work and it might not, but if it doesn't you are pretty likely to go to prison.  After all if you're going to be a net producer The Devil insists that you produce for him!

But the legal way and the one that the government can't do anything about is to reduce your family income to be under the threshold where you are a net producer.

If you live in a high-cost area you may need to move.  So what?  If you have a spouse that is hung up on material things and the trappings of wealth or living in a swanky location you may have a personal problem in that you decided to be with the wrong person.  I cannot answer whether that is true for you but I can tell you that if you are driven to the acquisition and holding of wealth for someone else then you're cuckolded or worse.

If you personally are hung up on such things then just shut up and suck up what comes to you because you've made a deal with The Devil on the premise that he will help you at other people's expense.  That never works out in the end.  Ask all the medical folks who took the deal offered them: Play along with the government scam and medicine will go from being a solid middle-class (middle quintile) income to one in the top quintile -- Hippocratic Oath be damned.

Those very same doctors are now crying poverty, refusing to see Medicare patients because it doesn't pay enough, crying about "cost management", malpractice insurance and being "forced" to become part of a hospital staff rather than an independent practitioner.

The beast they got in legion with turned on them and screwed them in the ass, as it always does.

My answer to those people's complaint is simple and succinct: **** you -- a decision to screw everyone for a little piece of the scam, which is exactly what you decided to do, earned the wage now being paid.

When you make a deal with The Devil you always get ****ed.  It might not happen immediately but it most-certainly will happen and when it does you have nobody to blame but yourself because you tried to exploit others -- that is, do an evil thing for your own personal aggrandizement and wealth.

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Want a 10-bagger?

Buy the November $10 BBRY calls for about 50 cents.

There's a rumor that Lenovo will bid for the company as early as this week -- at $15, with a $3 override available to get a deal done around $18.

I don't have a clue as to the provenance of this reported rumor, but if you're into such things that's a very cheap play as these things go.  The market doesn't appear to believe the rumor is real, given the (relatively) low implied vol on the option -- which is part of what makes it relatively attractive to consider.

Those calls are too close-in time-wise to be a decent bet on the next earnings release -- with the Passport included, which appears to be selling very well.  That makes this one a pure play on an M&A deal, which are usually (unless you have inside information) a loser for the common rube like myself.

Nonetheless if you're into such plays this one looks pretty attractive.

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