RCA

Swine Flu: Don't Believe the Hype

James said:
"As with the Bird Flu, (which in my novice opinion was worse economically because it was passed from birds to people and then [sic] from people to people)..."

You have exactly backward! The swine flu is far more dangerous because it can be transmitted from person to person. The chance that someone would come into contact with a bird carrying H5N1 was extremely low. The chance that a person will come into contact with another human with swine flu are magnitudes greater!

James said:
"Thus, so far, the swine flu has an estimated mortality rate well within "normal" flu limits at roughly 6%. Thus, when looked at statistically, swine flu has yet to even come close to the 25% level needed to be considered a serious threat."

The big difference between swine flu and the common flu is that there currently is no vaccine available for it. We are months away from having one. As rapidly as this flu seems to be spreading, we could be in for a major problem before a vaccine is ready.

Swine flu is not a great threat because of its mortality rate. It is a great threat because we have no way to stop it. It has the potential to rapidly spread throughout the world population.

Even if swine flu mortality is no greater than common flu mortality, it will have a much more profound impact. Ten percent of several billion people at risk is quite a lot of cadavers. Not to mention the disruption to commerce when half or more of the work force is out sick.

There's a well known phenomenon in aerodynamics in which a plane's flight controls appear to do the opposite of what is intended. Time to raise interest rates?

The phenomenon the article is referring to (I think) is colloquially referred to "being on the back-side of the power curve." And whereas the author admits that he has no sound economic theory with which to back up his recommendation, that should not be considered a handicap. Those in power, who do (presumably) have a sound economic education, have done nothing to demonstrate that their education has served them well.

Three great reads for lunchtime: 1) Six people who could help save Citi 2) Assessing financial innovation 3) How many entrepreneurs can government create?

Here is another great lunchtime read:

Obama, You Can't Dismiss This Market - By Jim Cramer

www.thestreet.com/p/_h...

Three great reads for lunchtime: 1) Six people who could help save Citi 2) Assessing financial innovation 3) How many entrepreneurs can government create?

From the article:

"Americans sense the importance of smaller firms, especially start-ups. In a Zogby poll last week, 63 percent of those sampled said they thought small business owners and entrepreneurs would lead us out of our current economic difficulties, compared to 31 percent who expressed confidence in our government leaders to find the answers to our economic problems, and 21 percent who thought executives of big businesses would show us the way to a new economic future."

Yes, Americans sense the importance of small business and entrepreneurship, but sadly, the government does not. There are too many stifling regulations, taxes, and other obstacles like health insurance being melded into the ball-and-chain on the leg of the small business owner.

Obama had a great opportunity to help America solve the economic crisis, keep people in their homes, keep people employed, and help small businesses thrive. But he chose partisan politics and assuaging the "spend, spend, spend" Democrats instead. The Obama Stimulus Package was quickly turned into the Pelosi Porkulus Package and America loses.

New York magazine on why 'We Are All Vultures Now.'

We may soon also all be involuntary anarchists.

In Praise of Suze Orman

Felix,

Thanks for the good words for Suze Orman. The fact that you were compelled to provide them speaks volumes of the sad state of American culture. We are a nation of windmill-tilting critics who love to bash the people we don't personally find interesting, entertaining, or intellectually challenging. And for what? Aside from hearing ourselves talk, it gives us a sense of superiority. Not exactly something to be proud of, is it?

What has happened to civility and class? Everyone seems more interested in in-your-face, confrontational deprecations and self-congratulatory one-upmanship than in extending courtesies and graciousness. It has become fashionable to be snippy and snide. Rudeness is de rigueur.

Most days, I am ashamed of the tenor of the American conversation, and of the puerile mentality which guides it. Why are we not striving to foster and promote the best that human nature has to offer instead of the worst? Have we given up on that dream? Have we abdicated mankind's birthright to reach for the stars? Sadly, it seems that there are far more people reaching for the gutter. Our instinct for a higher nature has succumbed to our reptilian drive for narcissistic gratifications.

A Depression in 21st Century America Is Impossible

I love it when someone proclaims something is "impossible!" I'll take the contrarian bet every time, and usually do quite well!

Of course, economics (the "dismal science") is full of loopholes. There are relatively very few empirically tested macro models. So if we do not go into a depression, Mr. Hansen is bound to say, "See, I knew it was impossible!"

Bad News for Rails: Putting Lipstick on a Pig

On Feb 02 01:13 PM DanielG wrote:

> In order to get goods to or from the airport rails are used heavily?
> What? I've been in the business 31 years and watching for more than
> 45 and have yet to see a siding in an airport for freight. Quantify
> that statement Mr. Sullivan.

My interpretation is that goods must travel by rail and by truck to get to an airport. Much of the long-haul freight is done by rail, and trucks are used to bridge the short-haul gap from rail terminals to air terminals.

Options Trader Friday Outlook: GDPhew!

3.8% surely seems better than the expected 5.5%, but it is a frightening number nonetheless! And I don't think we should hold our breath that this will be the "official" number. These things have a way of getting "revised." I dounbt that any revised number would be something to cheer about.

Peter Schiff is reportedly livid about Shedlock's takedown, in which Mish asserts Schiff's clients did not profit in 2008 despite the guru's rightly gloomy prognostications. More to come soon.

It's interesting that Schiff's response was that Mish is just trying to denigrate a competitor. I, for one, had never thought of the two as being "competitors," but rather two independent (of each other and of the main-stream media) voices with astute observations made to help us understand what the heck is going on in our economy and our markets.

That Schiff is "livid" and that he reacted so defensively to what is apparently a fair assessment of his recent market performance is astonishing. The facts should speak for themselves, and at the moment, the blogospher seems to believe that Mish's account was quite factual.

It will be interesting to see how this plays out in the supposed WSJ article in the works. If Mish's assertions are corroborated, he has much to gain in credidibility and readership, while Schiff would have much to lose. Of course, if Mish's assertions cannot be corraborated, or are discredited, the reverse is true.

George Soros slams TARP, saying it has been carried out in a 'haphazard and capricious way' and 'without proper planning.' The $850B stimulus plan 'is not enough to turn the situation around' when 'the economies of the world are falling off a cliff.'

Why is it that so many can see the truth of this assertion, but congress, the fed, the treasury, and Hank Paulson can't?

"Honestly, most people that have looked at this from a realistic standpoint would say this timeline is almost unattainable," UAW chief Ron Gettlefinger says of the Feb. 17 auto industry restructuring deadline. "I hope this wasn't set up to intentionally fail."

The operative term in his statement is "almost." Yes, it will not be easy, but it is attainable (or at least it was when originally proposed - the auto companies and their playmates may have already done a lot of fiddling while Detroit was burning).

My fear is that it was not the plan which was set up to intentionally fail, but that the players in this comic opera are determined to have it fail so that they can wrest more largesse from the Treasury.

My hope is that, should this latter scenario be the case, congress will overrule it and just say, "No!"

Will There Be an Obama Bounce?

On Jan 19 04:31 PM jenny wrote:

> Obama bounce this week, Obama Crash next week once people realize
> numbers haven't actually changed.

Jenny, you have the cycle right (bounce then reversal), but I believe it will last a little longer than a week.

Contrary to the original thesis by author, Kathy Lien, there will be a bounce. Ms Lien does pay homage to the unique situation of tomorrow's inauguration when she likens Obama to Kennedy. But what Ms. Lien fails to recognize is that the current inauguration scenario is unlike any we have ever seen.

There will be a euphoric bounce due to the fact the we are inaugurating our first black president ever, and this will receive additional momentum because of the hope and hype about Obama's infrastructure spending.

I believe this has the potential to carry the market for a couple of weeks, with the caveat that no bombshells are dropped by Treasury, the Fed, the OMB, or other government reports (I know, that is a big "if").

In late January or early February, however (bombshells or not) people will come to their senses as earnings reports continue to disappoint, and they realize that even "shovel-ready" projects will take months to have any impact on the economy. Fear will replace jubilation, and the Obama bounce will be recognized for what is always was - a bear-market rally based on irrational hope.

JPMorgan Beats: For Banks, This Is as Good as It Gets

My sentiments exactly! My first thought when I read the title of this post was, "What?!"

It is disingenuous and misleading to declare, "JPM Beats..." without some context. They certainly didn't beat expectations of a few weeks ago, and they certainly didn't beat prior year or prior quarter. In fact, in every meaningful way, they did NOT beat anything!

On Jan 15 08:47 AM Jarret wrote:

> It is a bit crazy to say they BEAT estimates when in fact 2 weeks
> ago consensus estimates were .31 cents a share. They beat the "new
> lowered" estimates that Wall Street scambled to provide prior to
> today.

The Economic Meltdown: Dismantling, Yes; Doom, No

You oversimplify, and fail to understand the ramifications of what Fred Wilson was saying in the blog article you cite. While agreeing that Wilson's thesis probably holds true, you claim that it will only be applicable to American companies. This is how you transformed Wilson's analysis into your axe to grind about the war.

Suppose Wilson is correct in his prediction (and hope) that in their restructuring, the automakers will adopt a far more efficient distribution model, using internet purchases and direct delivery in lieu of a dealer network. There are some important reasons why this is problematic, but let's just suppose that it does come to pass.

If the Big 3 implemented such a model because it reduced their overhead significantly and gave them a competitive advantage, do you not think that Toyota, Honda, Nissan, Mercedes, et al would also adopt this business model? In fact, they would suffer less hardship in converting from the current dealer-model because their dealership networks are less entrenched and less powerful than those of the American car makers.

Lets look at another industry that Wilson talks about: mainstream media. If American newspapers and magazines get universally transformed from printing presses and physical delivery infrastructures, why would foreign newspapers and magazines prosper under the current model of physically printing and delivering content?

You actually make no hard case for your thesis that the US war makes things different for US companies - that this is the reason they will transform their business models. The sea-changes that are coming for industries world-wide, will be hastened by the war and its financial effects for American companies. But the changes will occur internationally, nevertheless. If anything, this would bode well for American industries, if they are ushered into a more prosperous future earlier than their international counterparts.

This piece, cloaked in the garment of "analysis," is a thinly veiled effort to espouse your political views rather than to inform. The internet will transform (is currently transforming) many businesses in many industries. The financial implications of the US war effort may hasten this metamorphosis for America, but the rest of the world will follow. If the business climate is better, and operations more profitable under a bit-based economy, there is no reason why they wouldn't.

I, too, deplore the way the Iraq war was (mis)handled. I, too, believe that it was criminal to divert so many billions of dollars on this trumped-up war when it could have been spent on education or health care in this country. But you do yourself and your argument a disservice with a red herring effort to cite the war as the reason that American companies will be changed by the Internet.

The Internet will change business globally simply because it will make business sense. American business may be forced into this change prematurely because of the financial drain of our war efforts. But this is ancillary, not causal.