MiddleOfRoader

Why Shouldn't Goldman Sachs Repay Their TARP Money?

Once Goldman and other financial companies capable of repaying the TARP money do repay, there will be a stigma for still having TARP money. The shorts will know who to zero in on and it will be open season, sort of like shooting fish in a barrel.

Astounding Volume in 3x Financial ETF FAS May Signal Turnaround

FAS is for you if you like to go all in when you play poker.

Pension Underfunding: The Next Earnings Shock?

Is real estate cheap in Nebraska? I believe that is the only state which does not have unfunded liabilities, as they are barred in the state constitution. Then I would only have to worry about unfunded Federal promises.

Ten Stocks to Hold Long-Term - Barron's

If these are "great" stocks, capitalism is in trouble. There are two or three whose best days may be ahead, and that's about it.

The Free Market Votes: Still No Change We Can Believe In

Yup, entire sectors of the market will be under pressure until new rules of the road become clear, and it could be quite awhile before there is clarity. Profit levels may never return to where they were when government increased spending without raising taxes to pay for it, the rest of the world did not compete with us for resources, and labor had few friends in government. As Bill Maher would say, "New rules everybody". At least until the next mid-term election.

The Scariest Chart Ever

Deficits don't matter, so there is no reason to worry:

.... Former Treasury Secretary Paul O'Neill was told "deficits don't matter" when he warned of a looming fiscal crisis.

O'Neill, fired in a shakeup of Bush's economic team in December 2002, raised objections to a new round of tax cuts and said the president balked at his more aggressive plan to combat corporate crime after a string of accounting scandals because of opposition from "the corporate crowd," a key constituency.

O'Neill said he tried to warn Vice President Dick Cheney that growing budget deficits-expected to top $500 billion this fiscal year alone-posed a threat to the economy. Cheney cut him off. "You know, Paul, Reagan proved deficits don't matter," he said, according to excerpts. Cheney continued: "We won the midterms (congressional elections). This is our due." A month later, Cheney told the Treasury secretary he was fired....

If anyone says deficits matter, just fire them. Problem solved.

Marc Faber, Jim Rogers and Boone Pickens - Bullish on Oil

Cargo ships are docked, airlines have reduced the number of flights, factories are idle, workers do not have jobs to commute to, so I agree with driftwood2.

At some point economic activity will start to pick up, and that might be the time to get in.

Does USL have a lesser contango problem than USO?

Buying USO Is a No-Brainer

I'm delaying a long position on oil until 1) the extent of the new administration's/Congr... commitment to developing alternatives becomes clear and 2) there is at least some uptick in economic activity.

I think some of the posters holding USO might be better served holding USL. The charts look almost the same up until November, but USL has been falling somewhat less since then:

stockcharts.com/charts...

An article discussing the differences between USO and USL is located at:
seekingalpha.com/artic...

Cramer's Lightning Round - The Most Dangerous Stock for 2009 (12/23/08)

IMO Cramer is no worse than other low-cost investment advice sources.

I subscribed to two monthly investment newsletters, and the advice coupled with the timing of that advice was so bad I had to subscribe to Morningstar as a check on those letters. The Morningstar ratings provided a false sense of security. As the year wore on and time after time either earnings or future forecasts came in below previous guidance, Morningstar would suspend the cratered stock's ratings as "Under Review". A couple week's later the "fair value" would be slashed 20% - 50%.

Last year, almost no energy stocks were rated highly by Morningstar, as Morningstar said they do not earn the cost of capital over a full cycle. In the midst of the big run-up in oil prices, Morningstar changed their model, with the new model basically assuming something close to the current oil price would continue indefinitely. All of a sudden, most energy stocks seemed to be highly rated, a couple of months before they all fell off a cliff.

At least Cramer went bearish on almost everything around the end of September, and viewers who followed that call probably saved themselves 20% - 30% if they were still invested at that point. Most other sources of advice kept preaching the benefits of sticking to a long-term allocation.

Detroit Bailout: No News Is Bad News

Health care - subsidized for elderly and by allowing pre-tax dollars to pay for it.
Housing - subsidized by deduction on mortgage interest.
Agriculture - subsidized by farm support payments.
Oil and gas - subsidized by depletion allowances and tax credits.
Private equity - subsidized by lower tax rate, capital gain rate versus ordinary income.

What's the big deal about one more subsidy?

The Deflation Risk Keeps Rising

Perhaps more important than the PPI change is how much gets passed through to the consumer. Competition in many industries would not allow them to pass through much of the increased cost of goods when the PPI was rising and they would have to eat the increased cost. Now that the PPI is falling, producers can recoup some of the cost they had to absorb earlier by not passing the savings on to consumers as quickly as they are realized at the producer level.

At some point energy prices will level out. If consumer prices are still in decline after that due to slack demand, that might be the time to start worrying.

Government transfer payments provide a certain base level of demand. Social Security benefits will be increasing 5.8% for January, a not too shabby increase for that segment of the population.

A trillion dollar stimulus package would also act to keep deflation at bay for awhile.

Who Might Benefit From Detroit's Failings

I disagree that consumers will benefit if Detroit shrinks or closes divisions. Less competition = higher prices.

I'm guessing if there is a bankruptcy filing, the imports will start marking up their prices the next day. The public is going to pay one way or another.

The Government's Pouring Money Into a Bottomless Citi Pit

I think selling off the toxic stuff in a fire sale was avoided because that would establish a market price which other banks would be forced to mark their bad stuff to under mark-to-market accounting.

Lucky Number 13: A Big Two-Day Advance in the Dow

PS After crashing 86% from 1929 peak to 1932, the Dow doubled from 1933 to 1937. So today's investors still in the game might get "lucky". I'm not sure about everyone else.

Lucky Number 13: A Big Two-Day Advance in the Dow

FDR was inaugurated March 4, 1933 in the middle of a bank panic, proclaiming "The only thing we have to fear is fear itself." Apparently it was a time of fear and paralysis. The next day he declared a bank holiday. After Congress passed an Emergency Banking Bill, on March 12, FDR announced the soundest banks would reopen. On March 13, deposits at the reopened banks exceeded withdrawals. "Capitalism" was saved.

Any parallels with the current situation?