occdude

Citi Breaks the Buck

Next stop, bankruptcy.

How Much Downside Could Still Exist?

First, anybody see the jobs numbers today? 700 thousand jobs lost in Feb alone whats that going to do to future companies earnings and whats that tell you about current companies earnings? How are next months job numbers going to look? Up, Down? I'd guess down. So since less people will have jobs do you think they will be spending more money or less? I'd guess less. Companies get their earnings from people spending, also companies laying off people indicates that people are spending less. So the question becomes if companies are getting less earnings will the stock market be higher or lower? My guess lower. The question how much lower AND when is the proper way frame the question and the answer is not in the foreseeable future and barring technical "spurts" will we see the downside.

My guess is that the fundamentals have to kick in before the downside is reached, investing in equities will have to be eniticing again from an inco me perspective rather than speculative price appreciation one. Namely dividend yields will have to go up again to not pre-crash 2-3 percent but more like 6-8 percent. Companies will have to first have earnings to yield, therefore layoffs will have to stabalize before we can entertain thoughts of recovery. Second there will have to be a "theme" like the internet, steam engine, whatever, which will have to be a direction that the economy is going which looks viable, profitable and innovative to spur interest in equities.

I see none of the above happening in a time span even worth considering. We're in a secular bear market which depending on how bad the govenrment screws up price signals in the economy will last a long time so invest accordingly until things change DRAMATICALLY on a fundamental basis.

In Defense of Peter Schiff: A Response to Mish

I read Schiff and Mish avidely and I am both saddened and elated that the Austrian economic tent is big enough to accomodate both almost diametrically opposite views.

Deflationists have the upper hand as of late and will continue to thump the "inflationistas' as long as there is a credit bubble that needs deflating. Ironically Schiff reallly thought that the domestic market was going down, was he wrong? Is he a deflationist?? He also recommended holdings in PM, commodities and foreign currencies if all those asset classes were averaged in would Mr Schiffs portfolio show a better return than foreign equity holdings alone? Meanwhile his equities are still paying their dividends for the most part in countries with low credit exposure and or high manufacturing or commodity exposure.

Long term I think there will be a currency crisis, once we get away with the first couple of trillion in printed money without everyone raising their eyebrows we'll continue to try and print our problems away until finally our lenders will have had enough and will take away the punch bowl.

At that point you'll see the Schiff scenario come roaring back, but this is going to take a while. The world economic system is realigning did you think this would happen overnight? The dollar will not go gently into the night, its gonna need a good push and maybe even a drop kick.

I think buy and hold is good for the passive investor who has a long term perspective and you could do alot worse than follow Mr Schiffs advice if you're not interested in running your own portfolio.

One thing both Mish and Schiff DONT disagree with is the fact that PURCHASING POWER of the average American is going to go down hard,

Seeking the Fix That Will Finally Work

This is ridiculous. Has anybody read a good economics book (one without pictures) to figure out what is really going wrong here? Does everyone think this is a matter of confidence, that there isn't fundamental flaws with our general economy? That "alls we have to do folks, is lend out that money...."?

I got news, and it aint good. Whats happening is exactly what should be happening and is a very rational event based on solid fundamentals. The irrational thing to do is a "global intervention" where the entire freaking world debases their currencies collectively and we end up tacking EVERYONE down. You want to see GLOBAL hyperinflation and depression? Keep messing around.

Everyone needs to put down the damn remote, and PAY ATTENTION! This isn't going away and squandering what precious capital that remains on propping up unproductive assets is economic suicide!

So please, I implore you, enough with the "liquidity bromides" and start thinking outside the damn box, because inside the box is where the problems start and end.