• Dan Denning…and a bad case of leprosy at Fannie Mae:
“Billion dollar parts of Fannie Mae’s balance sheet keep falling off. When it’s a toe or a pinky people can politely pretend not to notice. But $9 billion!? That’s got to be at least a nose, an ear, and a bottom lip. Surely markets must now realize something is seriously diseased in the mortgage lending market?”
Last week, Fannie Mae announced it would not meet the deadline for posting third-quarter financial results after the independent auditor had refused to sign off on the accounts. Fannie, it is alleged, “has been accounting improperly for derivatives” and, if the SEC agrees, will post an additional $9 billion after-tax loss.
• The economy of Afghanistan is booming, reports yesterday’s “Liberation.” The numbskull Taliban practically ruined the Afghan economy back in the year 2000 when they decided that pushing drugs was against Islamic law. They outlawed the opium trade and reduced production from 4,600 tons in 1999 down to 200 tons in 2001.
But then came the U.S. and its allies. We Americans love democracy — especially when we can slip our own stooge past the voters. Hamid Karzai, former CIA asset and now duly confirmed president of Afghanistan, also banned opium. But nobody paid any attention; maybe they thought he didn’t mean it. Production this year has bounced back to 4,200 tons. One in ten Afghanis works in the opium industry, with a household income averaging $17,000 per year.
Afghanistan has become the world’s first real “Narcdo-nation,” says the Liberation. Trade in the stuff represents 60% of the country’s GDP. Even in Colombia, narco trafficking is only 7% of GDP.
• Jules is applying to colleges. He is targeting expensive, Ivy League schools, despite his father’s advice.
But he was discouraged; the first time he took the SAT tests, his scores were at the low range of what the good colleges require. But then, he took a very expensive SAT preparatory course. For three or four days, he boned up on how to take the SAT.
This week, we got the results: H is scores went up more than 150 points.
“What sense does that make,” he father asked. “The tests are supposed to be measuring whether or not you have an aptitude for college-level work. What they really measure is whether your parents put out nearly $1,000 for a course in how to take the tests. The whole thing is nonsense.”
“You’d be better off not going to college at all,” he advised his son. “Get a job somewhere. Start a business. Travel. Open your eyes. Read. You’ll probably learn more, faster than you would in college.”
Jules paid no attention.
Bill Bonner [send him mail] is the author, with Addison Wiggin, of Financial Reckoning Day: Surviving the Soft Depression of The 21st Century.
