Paul Bogdanich

Market: Spooked Today, But Panic Attack Is Likely Temporary

I worry more about the day after Thanksgiving shopping numbers than most of the rest of this. If those are terribly weak we have problems. Store inventory has already been on "sale" for 9 months now. Additional discounts or "sales" will represent nothing more than dumping of inventory before closing stores and layoffs or the retailer filing a writ. If that happens then the REITS and the small banks that hold all the commercial real estate paper have had it. So in short I see the sell off as a reaction to the consumer confidence numbers. We, as an economy, can't take another very weak Christmas shopping season. If we are down from last year then the reflation probably fails. Additionally the bankers paying record bonsuses at the same time everyone else goes in for the double dip vastly increase the probability of material social unrest.

This Advance Will Be Measured in Days, Not Months

Too bad you're not a major client of a big bank like UBS. They let those clients hold the positions open indefinitely. Goldman ony closes out clients when it's on the other side of the trade. Morgan is touchy depending on who you are and most of the others that were bought by the commercial banks like BofA are worthless.

The Truth About Bailouts

The man says it himself, "The dollar must fall." So as long as that is the case and every paniced person in the World, which is most of them right now, are buying US treasuries the thing to do is borrow short term to generate the "manufacturing jobs" that are to "fill the void" from lost service sector jobs and then monetize a large part of the debt. This would have the effect of holding the nominal value of the debt and overpriced assets like homes steady while the real value of the currency falls making the inflated home price not so unmanagable. The problem with the man's arguement if done directly is he has suggested is I believe he overestimates and puts way too much faith in the private sector. He assumes that these manufacturing jobs are going to magically appear in short order to fill the void from the millions oj jobs lost in the busted service sector. In fact left to market devices that process would most likely take multiple decades (like 30 to 50 years) and those interveining decades would be full of misery, incredible hardfship, despair and untimely death. Please don't get me wrong I fundamentally agree with him but the time to have done all these things was eight years ago. We didn't. Instead we did the exact opposite and doubled the debt, waged a bunch of wars while doling out tax cuts and generally raping the treasury. So now we are between a rock and a hard spot and in that situation it is no time to show virtue. It is time to push against the hard spot and see if it gives. If it does not (the lenders fail to lend) then we have lost nothing as at that point we can all accept whatever fate awaits us which will almost assuredly not be pleasant.