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  • In the Face of Mounting Pain, Avoid Extremes [View article]
    The experts of economic profession,
    Announced a unanimous confession,
    Said the NBER,
    "We're not sure how far",
    "But a while back we entered recession".
    Nov 7, 2008. 04:45 PM | 1 Like Like |Link to Comment
  • Liquidity Is Noncontagious [View article]
    "In crunchy times like this, there's a finite amount of liquidity to go round"

    I wonder if it's possible to run a local economy based on the bills found in the Monopoly game sets found on the local store shelves.

    Hmmmm... How long before the Monopoly money trades at greater than face value with FED notes?
    Nov 7, 2008. 04:29 PM | Likes Like |Link to Comment
  • Jobs Are Obama's Job No. 1 [View article]
    I'm going to form a company specializing in digging holes by hand. Moonbat can form a company specializing in filling in holes by hand

    We will each hire the unemployed masses and win massive government contracts paying them minimum wage while we collect 6 figure bonuses for 'managing'.

    Day 1) My company employees dig a bunch of holes by hand.

    Day 2) My company employees dig a bunch more holes by hand somewhere else while moonbat's employees fill in the holes my employees dug on Day 1).

    Day 3 to N) Repeat Day 2).

    Presto. Unemployment problem solved.
    Nov 7, 2008. 04:20 PM | Likes Like |Link to Comment
  • What a Recession Looks Like [View article]
    "Govt has to install mechanism to prevent massive rally and to dampen volatility such as guaranteeing only allowable daily price rises."

    Baaaad idea.

    If you really want investors to panic, put daily price limits into effect. Nothing worse than wanting to sell shares only to see the market open at limit ask with no bids and not being able to sell anything day after day.

    Daily limits will only serve to increase volatility in the short run. I think you will find that the S&P 500 futures volatility was larger with daily price limits than it was after they went to the circuit breaker rules, but I have no numbers to quote in support of that suspicion.
    Nov 7, 2008. 04:04 PM | Likes Like |Link to Comment
  • In the Face of Mounting Pain, Avoid Extremes [View article]
    "One could argue that a similar consumption-at-any-cos... strategy has been the stock in trade for the past 20 years. But the liquidity injections have lost their power to elevate consumer sentiment."

    When increasing consumption is based on borrowing there always comes a time when the borrower cannot afford to meet the payments on the loans. We are beyond that juncture now. There is no way to 'stimulate' spending when nobody can afford the cost of living and debt payments they have now.

    This is the fatal flaw in the Keynesian monetary theory our gub'mint practices.

    What needs to happen is for people and businesses who cannot afford their debt payments to go bankrupt and liquidate the debt at whatever can be gotten via selling off remaining assets. This will cause the lenders to take losses, but they will get something back and the debt payments will be ended and their drag on economic spending removed.

    Unfortunately, the lenders in this case are the big Wall Street banks, and the gub'mint apparently doesn't want to see them to take any more of those losses than they have to. I guess it might adversely affect their campaign contributions or something.

    The longer gub'mint acts to prevent the liquidation of outstanding debts, the longer the 'recession' will drag on. It's going to be a while.

    Get used to it.
    Nov 7, 2008. 11:17 AM | 1 Like Like |Link to Comment
  • Market Fundamentals Don't Yet Signal Time to Reenter [View article]
    Lottery operaters say to gamblers, “you can’t win if you don’t play”. We say to investors, “you can’t play tomorrow, if you don’t survive today.”

    A wonderful summary of the proper way of thinking about 'investing' in the markets from somone who, at 90% cash levels, apparently knows what he's doing.

    Nov 7, 2008. 10:51 AM | Likes Like |Link to Comment
  • Market Overview: Set for Fresh Market Lows? [View article]
    Wow! FNM with losses of $20 Billion for one quarter?

    What does that say about the business model of relying on "implicit" gub'mint guarantees?

    Note to posterity: If the gub'mint gives you a 'sure thing' you should take your money and run away as fast as possible because some insider is trying to steal it.
    Nov 7, 2008. 10:46 AM | Likes Like |Link to Comment
  • Anatomy of a Buying Panic [View article]
    Nice market summary for short term activities.

    For a larger picture you might want to point out that the 200 day moving average is still over 1200. The SPX needs to gain nearly 50% just to get back to this average.

    Until you see a break above this average, any market gains can be considered bear market rallies and should be traded as such. Don't be afraid to exit long positions on rallies and capture paper profits before another sell off hits.

    It will be some time yet before the market consolidates for a sustainable bull market run.
    Nov 7, 2008. 10:11 AM | Likes Like |Link to Comment
  • We Have a Debt to Discharge [View article]
    "The end to this phase will come when the creditors of the US write off their prior lending, and decide not to throw good money after bad."

    Truer words have never been spoken. Our eventual fate rests uneasily in the hands of our creditors, and the gub'mint's plan is to keep adding to the pile of debt they are carrying on our behalf.

    When "the end" arrives, it will be most unpleasant.
    Nov 7, 2008. 09:30 AM | 4 Likes Like |Link to Comment
  • The Downside of CDS Demonization [View article]
    In the United States, the Board of Governors of the Federal Reserve System requires zero percent (0%) fractional reserves from depository institutions having net transactions accounts of up to $9.3 million.

    Depository institutions having over $9.3 million, and up to $43.9 million in net transaction accounts must have fractional reserves totaling three percent (3%) of that amount.

    Finally, depository institutions having over $43.9 million in net transaction accounts must have fractional reserves totaling ten percent (10%) of that amount.

    However, under current policy, these numbers do not apply to time deposits from domestic corporations, or deposits from foreign corporations or governments, called "nonpersonal time deposits" and "eurocurrency liabilities," respectively. For these account classes, the fractional reserve requirement is zero percent (0%) regardless of net account value.


    Seems to me that most of the banks' excess leverage problem could be 'fixed' by increasing the reserve requirements. ZERO percent reserves on domestic corporate deposits seems just a bit on the risky side, does it not?

    Gee, facts point to lax FED policy as a primary driver for the mess we're in.

    So in truth, does "Too Big To Fail" really mean "Designed to Fail"?
    Nov 7, 2008. 09:21 AM | 1 Like Like |Link to Comment
  • The Bleak Christie's Sale [View article]
    Say it isn't so!!

    Art prices can go DOWN !?!

    How do you short famous painters?
    Nov 6, 2008. 03:38 PM | Likes Like |Link to Comment
  • Treasury Secretary Speculation Heats Up [View article]
    The only 'help' you will see with Barney Frank as Secretary of the Treasury is when he helps himself.
    Nov 6, 2008. 03:30 PM | Likes Like |Link to Comment
  • Big Moves in Low-Priced Stocks [View article]

    For a parallel case one need only look back to June/July.

    Freddie Mac was trading nicely above $20 for several months after falling from much higher. Once it broke through $20 it fell ever faster at larger volumes. Those who interpreted the change in 'information' (ie falling share price) properly sold at $19, even though on paper the stock was a better deal for less money.

    They were right to sell, as current stock holders at $0.90 will attest.
    Nov 6, 2008. 03:23 PM | Likes Like |Link to Comment
  • When Can You Trust Economics Papers? [View article]
    Discussions of economics, as in politics, usually lack clearly defined terms.

    Long-winded arguments often turn out to be debates over the meaning of 'growth' or 'risk' as each side usually has a differing definition, which then logically drives their differing conclusions.
    Nov 6, 2008. 03:12 PM | Likes Like |Link to Comment
  • Treasury Secretary Speculation Heats Up [View article]
    Ron Paul for Treasury Secretary!

    He's the ONLY politician in DC that actually understands economics.

    And he's honest too, for what that matters in Washinton. It's probably a liability on second thought.

    Nov 6, 2008. 12:15 PM | Likes Like |Link to Comment