pelican

The Economy, And Why It's Taking So Long to Fix It

This was a good article. And it didn't pretend to have all the answers. No one knows what to do, and if they say they do, they really don't know how their solutions will play out. That said, momentum will change once the economy recovers and asset prices stop falling. We're in a cycle and, unfortunately, the worst part of it. But storms past and damage gets repaired bit by bit. It took three years (August 1929 - July 1932) for the stock market to bottom during the Great Depression. Since things are at least not that bad, I think the stock market will bottom some time during the second half of this year (two years after it peaked). The 2000-2002 bear market was long because stocks were vastly overpriced (at least growth equities). Not the case these days. As the author noted, if your time horizon is a bit longer, things look better.

Slow Down Mr. Roubini

I enjoy your articles including this one. The difference is, in large part I can't agree with you.

But first, is it correct that Roubini has been a bear for over a decade? I ask because it is the first time I've heard that.


>>>In fact, it looks like he's already wrong--the White House has publicly announced it will not nationalize banks and has taken action to prop up Citigroup.

***As far as I know, the White House has used to language to indicate they would prefer to follow this or that course and not nationalize. But I haven't yet heard them say they will absolutely not consider nationalization. Have you? Just a reminder, we heard a lot of talk about FNM and FRE before they came under government control. That wasn't a full nationalization but I don't expect one to occur with C or BAC either. I expect something akin to AIG. C is looking for the government to take a 40% stake. That could increase over time. Who knows?

Maybe there is a degree of hysteria going here. On other hand, maybe some are not coming to terms with how deep this crisis is because it is so unfamiliar. Hard to imagine C or BAC being nationalized but economic history is full of shocking occurences. I'm still a little stunned about AIG. Anyway, I see your point about the rapidly rising level of pessimism.

Citi's Desperate Straits

"Citi closed on Wednesday at $9.64 a share -- a level which prices in a very high probability that the stock will go all the way to zero."

Why? Are you saying that any stock that trades under $10/share has a "very high probability of going to zero"? Or is there another reason that the current price level is such a good indication that zero is in the offing? Please enlighten.

Mother of All Short Squeezes?

Great article, Matt. Lots of interesting responses from people too.

Dear Citigroup Customer...

Analytics aside...why did they hang up? Hmmmmm.