Apple Inc (AAPL)

[Tex]

OT Regime Change

We've already had regime change at FRE and FNM, and we're threatening regime change wherever firms require a big enough asset buy-out, and unless I mistake the warrants arrangement with AIG we've already made clear AIG's new partner is the federal government, and with AIG execs spending $100k on posh hotels and spa treatments AFTER the $85b line of credit, then begging for tens of billions more, I expect more regime change.

The question is whether this regime change is for the better. In other words, with Goldman Sachs alumni at the helm of Treasury and some expertise in how to run a complex financial institution, perhaps there is some institutional understanding how to run as complex a beast as the New Treasury Department. But ... perhaps not? And with regime inevitable in the Treasury Department due to impending elections and a new executive, what are we going to get?

The CEO of an online auction house who thought buying Skype for billions was a slick idea? Some other celebrity?

The main problem with nationalization seems to be that government-run enterprises just don't have that hunger for efficiency and profit that one expects from private enterprise. I know a family that has owned (several times) a bank in Mexico that has been privatized and nationalized repeatedly as government squeezed all the good out of it and left it for dead, so it could be revitalized by someone who understood its business. It's the craziest story, but it's not uncommon in Central America for nationalization to work like that. Why would we have a different outcome in D.C.?

For my part, I think the regulators are indeed responsible for many of the features of the current market that are lending to lunacy. Atop the oversight-loosening at the SEC linked just recently, in which the SEC changed the rules, I think the SEC also made clear in recent years that it was happy to sit back while other rules were simply erased through nonenforcement.
http://jadedconsumer.blogspot.com/2008/09/naked-shorts-alive-and-well.html

It'll take some effort to clean house. The question is whether we have a good maid service on the task yet, or not. And whether the maids on the next shift can tell carpet cleaner from tile cleaner.

Take care,
--Tex.