rsinvestor

Widening Rich/Poor Gap Spreads Contradict Global Recovery

Actually, the contrarian view would be: the more articles like this that come out and spell doomsday, the closer we are to a bottom. I am not agreeing or disagreeing with your thesis (you make some good points), but a true contrarian sees all these "Headlines of Disaster", and starts buying.

And by the way, Capitalism is most assuredly not dead. The hiccups we go through every so often are a natural stepping stone to a more efficient form of capitalism. What doesn't kill it makes it stronger.

ECRI: Economy Falling at Fastest Pace in 60 Years

Just as Florida, California, and Nevada are trying to bottom out from their housing crisis, Detroit stands poised to take their place.

Is the Worst Over? Let's Keep Our Options Open

bosun.j --
Absolutely program trading caused the 15 minute swoosh yesterday at 12:45. Everyone and their granny had stops at S&P 839 (intraday low on 10/10). Those got taken out without hesitation. Then, out of nowhere, short covering seems to be the driver for the 11% swing up. Once traders realized that the "short the support breach" wasn't working, volume continued higher on the up move.

The Shallowest Generation

There are two types of people in this world, in general: Those who play by the rules because it's the right thing to do in the long run, and those who believe "if you ain't cheatin', you ain't tryin'".

Seriously, how much simpler can it be? As you point out, it is infuriating to find out that those of us who made sacrifices to live within our means must now pay for the loose-living, no-discipline lifestyles of others. I consider folks like those who bought houses/cars/TVs they can't afford to be gaming the system. They are hedonists that know the worst that will happen is that those things will be taken away. Now, our government has sent the message that we won't even take them away, we'll help you pay for it.

Crazy. And it's not just the boomers, it's also their children who learned from their parents.

U.S. Sector P/E Ratios

I appreciate the information. However, just using PE to determine relative valuations falls a bit short of the big picture. Especially when it comes to financials. The current interest rate environment sets the stage for financials to blow away (dismal) estimates in 2H 2008.

My thesis is based on the fact that their cost of money, Federal Funds rate and bond rates, are very low. Meanwhile, consumer interest rates have not dropped at all. A 30 year mortgage is the same today as it was 12 months ago, when the Funds rate was 300 basis points higher. This has to widen margins for banks still lending money.

On a price/book basis, the financials are attractive. I do agree, though, that strictly looking at earnings, financials are toxic.