mgcolin's Comments

Coming Soon: Banking Crisis of Historic Proportions

Sat, 22 Aug 2009 12:33:42 -0400

Yes right now it is frustrating for those of us who know the banks should have failed and the pain should have been much worse. But that was round one, and I relish round 2. I cannot WAIT until this Q3-Q4 when the GDP shrinks again and all these insane bulls are caught off-guard. The S&P should be trading at 400, the smart money knows it and people buying at these levels are insane. It won't be fun, but with this debt load the lost decade is coming.

On Aug 16 07:53 PM Tack wrote:

> It's precisely these kinds of histrionic, doomsaying articles (and
> comments) that give me greater confidence to maintain, and selectively
> increase, investment positions in banks and other financials. The
> same people who likely lost lots of money on the downside will watch,
> mystified, as they observe from the sidelines the recovery phase.
>
>
> And, the more the markets run away from them, the angrier they'll
> get, at everybody but themselves, of course.

Recession Is Over: Long Live Depression

Sun, 02 Aug 2009 19:31:55 -0400

If the government hadn't stepped in, we would have had the beautiful capitalist cleansing mechanism of a bunch of bank failures, many more business failures, some individuals would have been wiped out, and there might have been violence and blood in the streets. But it would have ended after 3 or 4 years, and the excesses would have been mostly eliminated.

What we got instead is the beginning of a another lost decade which will end with....a bunch of bank failures, most businesses will fail, almost all individuals will be wiped out, and there will be likely be violence and blood in the streets.

I'd wish the worst were past now, with the S&P where it belongs at 300, the equity holders in all these banks wiped out and real estate at half the value it's trading at...where it belongs.

But they chose to reinflate the bubbles. Oh what we have to look forward to.

On Aug 02 11:32 AM studiophototrope wrote:

> Glen L

Winter's Coming for the Boomers: Part 2

Fri, 17 Jul 2009 10:37:40 -0400

No, I don't think "there is the political will and ability to switch
> our entire nation's gasoline and diesel infrastructure to natural
> gas in 5 years". That is not what I said.

I said that with $150+ oil, and with that price deemed sustainable and going higher by the market, NG could become a significant contributor to transportation within 5 years, and there will be other alternatives that will come into play including oil that is more expensive to recover. Brazil is in the midst of making NG a significant contributor as a transport fuel, and 5 years ago they were nowhere with NG.

Peak oil may be correct, but the whole point is that there are substitutes (including efficiency and conservation) that come into play at various price levels. Sure there will be pain, just as there was pain when oil was deemed no longer viable as an electricity generating fuel and power plants switched to NG and coal.

I agree with you - the US is a basket case, the future is terribly bleak for a million reasons. But people are not going to let society completely collapse because cheap oil is gone.

And what is your point on Pickens? This wind farm power transmission issue has nothing to do with the viability of using NG as a transportation fuel. His plan had two initiatives, one of which he failed on - the wind part. If oil were still $150 and he weren't so old, I think he'd be working harder on the transmission issue.

Pickens had one plan, a shot. His plan didn't work out - so your point is that the game is over and we're doomed? It will take 500 plans like his, and a combination of them will result in a solution that might not provide dirt cheap energy like oil did, but society is NOT going to collapse because we burned through one source of cheap energy. Gas is already double the US price in Europe, they survive.

On Jul 17 08:32 AM James Quinn wrote:

> Do you really think there is the political will and ability to switch
> our entire nation's gasoline and diesel infrastructure to natural
> gas in 5 years. Pickens wanted to build the windfarms to supply the
> energy previously supplied by NG so that our nation's trucking fleets
> could be converted to NG. No way to get the wind farm electricity
> to the grid. You can't poo poo these small details away. Do you know
> what it would cost to convert every car, truck, and gas station in
> America to NG? Who pays for the conversion? Frankly, your credibility
> is called into question.
>
> I

Winter's Coming for the Boomers: Part 2

Thu, 16 Jul 2009 19:23:50 -0400

I'm about as pessimistic as they come, and found your article fascinating and thought provoking.

But on the question of natural gas and on some of your oil comments you're just wrong on the facts. If there are sustained $140+ oil prices a couple things would happen. Natural gas, which pretty much everyone now agrees is very plentiful in the US, could become a very significant contributor as a transportation fuel very quicky, say within 5 years, not 20. Building NG Infrastructure is very straight forward, and standard vehicles can easily be built/retrofitted to run on natural gas (see Brazil). You really think society would shut down before people would reallocate enough resources to make the switch to NG in less than 20 years?

And there is also more oil out there if substitutes are expensive enough to make even $150 oil economical. Production of the 'not so easy' reserves takes time, and producers have to have high confidence the price will justify the costs....for now there is still enough 'easy oil', and demand is lousy so equilibrium price is $50 or so.

To me, despite such a fine article, you lose credibility where in one comment you say "if it's so easy to find more oil then how come production didn't increase when oil was $140?" And in another post you comment that sure, deep offshore reserves might exist, but it would take a long time to develop them. YES it would take a long time and that's why production didn't increase instantaneously during the 3 week period when oil spiked to $140.

On Jul 13 11:22 AM James Quinn wrote:

> Your easily recoverable thesis is a crock. It takes 10 years from
> discovery to extract the oil in deepwater. Natural gas needs to be
> transported by pipelines that don't exist. Cars and trucks don't
> use natural gas today. It would take 20 years if we had consensus
> today to convert transportation to nat gas.
>
> Everything is so easy in theory. Little things like the fact that
> geologists and experienced oilmen are retiring with no one to replace
> them may have an impact. How about no refinery capacity. How about
> the energy infrastructure rusting away and needing a $10 trillion
> upgrade that no one is willing to make.
>
>

2009 Mid Year Outlook: Expect Deflation and an Oil Price Drop

Mon, 06 Jul 2009 20:37:41 -0400

You're right a lot of the things you mentioned will likely not deflate, but houses in most places could easily drop further -- just compare current non-foreclosure prices to what they were in 1998. In most places housing is still double what it was in 1998. So massive drops to come there.

And all the services prices you mention could also drop. American workers are about 40% overpaid vs. their competition in Asia (adjusted for productivity).

Why Macroeconomists Are Particularly Obtuse

Sun, 21 Jun 2009 21:11:18 -0400

I was no fan of Ronald Reagan...and it's tough to handicap all these what-ifs to say whether a set of policies were "net-net" right.

I think Obama/Geitner are definitely looking worse "net-net" for the country

Worst thing I feel Obama, Geithner are doing is putting pressure on Bernanke to do the wrong things...like keep the stimulus on and print more and more money to distort long interest rates longer...all designed to reinflate the asset bubble.

My Simplistic model:
Lessons from the 60's (SPEND), 70's (INFLATE), 80's (SPEND&BORRow), 90's (GROW, don't pay down debt), 00's (SPEND&BORROW), '10's (INFLATE or PAY - no more debt available)

So unless Bernanke removes the gas now, we will face massive inflation. I think the game is done already, I just need help figuring out how to play a complete collapse in late 2010 or early 2011.

Inflation is a monetary phenomena not a supply and demand phenomena. Demand will ALWAYS go up if there are no consequences for defaulting on debt or paying bubble value for asset...like completely losing your equity in a company, house, or stock. Just because there is momentarily no demand for anything doesn't mean that demand won't skyrocket if the wealth effect can somehow be recreated.

Obama and Geitner are pressuring Bernanke to let them continue to artificially reinflate the bubble. And they continue to put 'regulations' in place that really just protect the banks and speculators.

The banks should have been wiped out...nationalized, Sweden.
The S&P should have dropped to 6X trailing 10 year earnings (400)
The fed should not have printed so much money.
We should have suffered some of the consequences, not stolen from the future.

In the 30's asset values went down meaningfully and there were real consequences for taking on debt, taking too much risk...like losing your deposits in a failed bank, losing your house, family everything. Speculators suffered in the 30's...even the RICH were wiped out...you think Obama and Geitner want the rich to suffer meaningfully right now.... unfortunately the die is cast..these guys are getting the last fumes out of a worn out story...and the foreigners are figuring it out.....paying for our sins would have set up the country for 10 years of low inflation growth, but Obama and Geitner want the easy way out....which means inflation.

If by late 2010 there hasn't been any improvement in the Healthcare debacle, the S&P will be at 300 and inflation will be 12% calculated as conservatively as they can get away with....the dollar will be plummeting during election time and interest rates will need to go to 20%.

Some companies will be fine, diverse multinationals with scale benefiting from weak dollar....but the US economy will be a basket case until rates skyrocket, asset levels (houses/stocks) return to realistic levels and the debt holders are wiped out.

So 12% inflation, 20% interest rates, very cheap stocks...that's what 2012-14 will look like. It won't be the end for the US, but it will be the last few years, and by far the worst, of the US' Lost Decade and a half. It will be the seventies....but if you're in cash now...then Asia, commodities and foreign currencies you'll do fine over the next 10 years.

Dendreon: Charting the Course to Big Profits

Wed, 10 Jun 2009 16:18:33 -0400

Right - the do-nothing treatements like Provenge wouldn't exist - and people with terminal prostate cancer would die 4 months earlier.

But the common sense option of not paying for these marginally efficacious would save society BILLIONS...those 4 months are not worth the cost to insurance companies or the government.

If people want to pay $50K out of their own pockets for an extra 4 months they can, but the government should not be in that business.

And yes without the government and insurance companies as a customer, researchers would have to develop something with a better cost/benefit relationship.

Dollar's Purchasing Power Annihilated - The Chart They Don't Want You to See

Sat, 09 May 2009 09:31:42 -0400

Who Cares what the dollar has done over the last 100 years? Average Standard of living has improved dramatically.

To regain competitiveness against the Asian currencies the dollar should probably drop by another 30-40%%, and labor costs also need to drop at least 30 or 40%.

The Stress Test Scam (Part 1)

Fri, 08 May 2009 04:00:39 -0400

OK - We all know the stress tests are an insult. Sets up the US for a Japan-like low/no growth decade. Who will buy US debt with no growth in the US economy and with massive deficits?

How do we exploit the situation other than shorting the dollar, buying oil and gold?

Cramer Calls Out Roubini

Wed, 06 May 2009 17:26:29 -0400

I also can't believe anyone as 'academic' as Roubini could ruffle a veteran trader (a very rich and charismatic one) like Cramer.

Again Jim this is the second or third time you've taken up this Doctor Doom....Why would this kook Dr. Doom bother you so much?

Jim and Wall Street and Washington - You can't pump up the economy again. Wall Street can't carry the burden anymore and the people of the US/UK/Spain aren't willing to face the reality of the hangover from banking deregulation and ridiculous goal of "everyone is a homeowner".

Cramer Calls Out Roubini

Wed, 06 May 2009 17:17:34 -0400

People PLEASE look at the numbers on the US economy. The smart money knows Roubini is right. and Schiff Too.
I Just read Schiff's book predicting this.

Very accurate predictions, but not much of a book, only suggestions were gold and int'l stocks bought through his brokerage.

i dont know what to invest in other than a weakening dollar, and higher oil (I think)

I still wanna believe everything is OK, but Roubini is one very wise economist.

U.S. Dollar Can and Will Drop

Sat, 02 May 2009 17:01:32 -0400

The Asian tree will grow to dominate every industry and scale is the reason. China/India's population is large enough to transform into a consumer market more than 4X larger than the US over the next 50 years. Japan could have done it too, but it's population just isn't large enough.

On May 02 03:58 PM bricki wrote:

> I've been hearing that for at least 30 years now, starting back when
> Japan was in it's glory. The problem is that the mercantile growth
> model does not scale beyond the point where a certain level of affluence
> is reached. After that internal demand must dominate. Nobody has
> made that transition successfully yet.
>
> Be careful of extrapolation. Most models are linear for short periods
> of time, but that linearity becomes a trap when extended beyond those
> periods. Trees do not grow to the sky no matter how promising they
> look in the beginning.
>
> On May 02 01:01 PM mgcolin wrote:

U.S. Dollar Can and Will Drop

Sat, 02 May 2009 13:01:56 -0400

This may be true today, but unfortunately Asia will dominate EVERY industry 20 years from now unless US employment cost decline significantly and the educational system in the US improves dramatically - and I just don't see it happening. Most likely it's the end of the world for western standards of living.

Labor Costs Are Down, but Who Really Benefits?

Sat, 02 May 2009 12:26:23 -0400

Why don't you just try to get a job in the government?

On May 02 01:55 AM g452ooo wrote:

> There is a growing class warfare in this country. It is between
> the quintessential "haves" vs. the "have-nots". But most people
> don't realize who the "haves" are. The masses only know that they
> are the "have-nots". Now some think the Wallstreet barons or the
> investors are the "haves". And others think that landlords are the
> "haves". And there are multiple other groups which many consider
> to be the "haves".
>
> But, few people realize who the very largest group of "haves" is
> in this country. It is GOVERNMENT WORKERS. They are the largest
> group of "haves" by a long shot. Well, what is it that they have
> that we don't? They have job security, first and foremost. Have
> any of you ever seen a government employee fired or layed off. I
> don't mean "riff'ed". That is a voluntary separation, with a nice
> lump sum offered as inducement. I mean actually told that they are
> being terminated. I don't mean those (rare ones) who have committed
> a gross infraction or crime.. I mean, downsizing. Nope. It doesn't
> happen. Or have you ever heard of government workers taking a cut
> in pay? Absolutely not. Or no raise? Sorry, they religiously get
> raises every year.
>
> You have a job for life when the government hires you. The pay isn't
> out of line compared to the private sector. But, the job for life,
> is getting to be the big feature. There is a whole lot of financial
> security which comes with that too. And, the benefits when you leave
> employment after 20 to 30 years of service.. ahh, now they are really
> nice.. much bigger than what us private sector folks will be looking
> forward to receiving once we get to be full retirement age.
>
> So, how come the government workers get a better retirement than
> the rest of private sector workers? We know that they aren't in
> the Social Security system. But, why is their retirement pay so
> much better that the rest of us? Did they work harder than us or
> were their jobs much more hazardous then ours or did they work longer?
> They get full retirement benefits after 30 years service at age 55.
> Age 55! What is up with that? Why do they get full retirement
> 10, 11 years before we poor private sector folks can, and they get
> higher benefits at that?! And, they get medical benefits for life
> too.
>
> What we have here is a dirty little DOUBLE STANDARD. While those
> of us out in the private sector have to work 44, 45, 46 years to
> qualify for a retirement benefit, these GOVERNMENT workers can work
> just 30 and then retire with a better income than we do with almost
> half again as many years in the workforce! Now, I know that all
> you government workers will all jump in here and tell me how your
> job was so hard, and your hours were so long or whatever special
> reasons you have for justifying this dirty little DOUBLE STANDARD.

Labor Costs Are Down, but Who Really Benefits?

Sat, 02 May 2009 11:44:25 -0400

It doesn't matter what you 'prefer'. The Asians are destroying the US economy industry-by industry because they are smarter, they work a lot harder for less money, and they can find a way around most intellectual property.

Like you I'd PREFER not to have to compete every day in an industry where hyper-competitive Asian competitors have driven aggregate profit levels below zero. But it doesn't matter, neither you nor I have that choice unless we do something that they can't do more productively, which usually means cheaper. And as technology is commoditized there will be fewer and fewer industries where much matters other than having the lowest cost structure.

You can whine all you want about the globalist plutocrats - the reality is they run the markets, not you and your 'preferences'. US wages simply must come down significantly for intelligent managers to do anything but offshore to the countries with the lowest costs.

Last time I checked a kidney was a kidney and if they'll sell one for $40, then yes I'll sell mine for $39.

On May 01 09:39 PM sether wrote:

> I prefer not to compete with children, or anyone who is content to
> sh*t in a bucket during a 12 minute break in their 13-hour day. The
> increasing exposure of the US workforce to global competition by
> Globalist Freemarketeers has only served to gut this place out completely.
> We could have used the wealth of this nation to bring the rest of
> the world up by degree, but instead we allowed it to be bled away
> by Globalist plutocrats, who are rapidly reducing us to developing-nation
> status in most major socio-economic statistics. mgcolin won't be
> happy until he can get a new kidney for $40 at the corner organ-mart.
> Or maybe he'll be selling. What a dick.
>
> On May 01 04:16 PM mgcolin wrote:

Labor Costs Are Down, but Who Really Benefits?

Fri, 01 May 2009 16:16:03 -0400

I don't understand all the hand wringing over lower wages in the US. The need for significantly lower employee costs is neither good or bad. It is reality - the US is a lousy place to do business because workers are just too expensive.

In the global economy the US worker must become more cost effective to compete, and with the mediocre education and poor work ethic of the average US worker vs. those in Asia and elsewhere, economic reality will force wages down.

Healthcare costs also need to be cut for US business to compete - people should either pay for their own healthcare or we need a cheap national insurance plan with everyone in a massive pool.

Without lower total costs per employee US business leaders with a choice will continue to offshore as much labor as they can and who can blame them?

And it won't kill corporate earnings when US consumption declines - consumption will more than be made up by the emerging middle class in Asia and Latin America.

I think over the next 20 years you'll see real CEO and executive earnings increase by double GDP (so about 2% per year) since the best cost cutters and accountability drivers (the real key to value creation in a mature economy) will be richly rewarded by Boards of Directors and shareholders.

The professional/skilled workers and middle managers will have real wages cut by 40% or so to get on par with the rest of the world, and the unskilled workers will be cut by about 60%.

You've already seen this in deregulated global industries like airlines, automobiles. Airline pilots now make a competitive wage, not the insane union pay they were getting 10 years ago.

What's wrong with having a competitively priced workforce?

Return of Consumer Strength Less Likely than Expected

Thu, 30 Apr 2009 14:13:31 -0400

This rally is a classic bear market trap. After consecutive quarters of 6% GDP declines (worst in 50 years) of course once in awhile a piece of data will come out suggesting the economy is 'bottoming'.

But it doesn't mean we'll get a V shaped recovery which is what the market is pricing in.

Real data about the economy and valuations are still terribly negative. The Bond market is a disaster, insiders are still selling and buybacks are nonexistent among cyclicals.

The macros in the US economy are the worst since the depression, and that 3.5X GDP debt load isn't going away anytime soon.

Yesterday Cramer said the US is not Japan in 1989.
What more data than that do you need?

The US is Japan in 1989. S&P is going to 400.

Personalized Medicine: The Next Big Thing

Wed, 29 Apr 2009 20:38:42 -0400

An important question with personalized medicine is whether this innovation will be cost effective and who will pay.

In fact "who will pay?" will be the key question for all health care spending in the future, and there is no doubt the current US system is fatally flawed - The proof of this is that the US spends a far higher proportion of GDP on Health care than any other country on the planet and we have mediocre outcomes at best (quality of life and lifespan). Far too much money in the US is wasted on health care that doesn't really improve life, big $$ ICU stays for terminal elderly for example. At the opposite end of the spectrum, too many people have no coverage at all so they don't treat chronic problems or wait too long and wind up in really bad shape in emergency rooms - the most expensive place health care can be delivered.

I believe the solution to this mess will be market based - culturally I don't think single payer will ever work in the US. But the status-quo is just not the right answer anymore - Health care costs are putting US businesses at too big a disadvantage in the global economy.

Yes - capping the drain to the US economy from health care to some will look like a sacrifice to some. But we cannot afford $100K ICU bills for 90 year olds anymore. We cannot afford branded drugs hawked by $100K per year sales reps whose MBAs from good schools have prepared them for the challenging job of carrying pizza into doctors offices every day. We cannot afford $50,000 courses of exotic chemo to eke out an extra 2 months of life in pain. We cannot afford 80% gross profit margins for me-too medical devices. And we cannot afford more multi-million windfall payouts to 'victims' of non gross negligence malpractice cases.

Yes the new system will look more like Europe than the current system (God forbid) but at least we will get some of the current wasted GDP back and deployed into something more productive.

Why Jim Rogers and Robert Shiller Aren't Buying U.S. Stocks Yet

Sun, 26 Apr 2009 12:04:19 -0400

Not only are stocks not nearly cheap enough yet, the fundamentals for the US economy are a disaster. Not to say some companies won't do well (especially multi-nationals with strong brands who benefit from weak dollar) but US equities overall have little or no value.

The Fed can delay the inevitable for awhile, but with no long-term real growth or job creation, the ponzi scheme will collapse eventually. The US is finished as an economic power. Our economy is the equivalent of General Motors.

--- Aggregate Debt is 3.5X GDP, highest in history, worse than '29
--- Ugly Demographics; Boomers aging from productive consumers to overweight leeches, young people are rightly hopeless and angry, their futures have been stolen.
--- Consumer spending is 70% of the economy, service spending is easy to curtail and Healthcare system is a disaster, it's counted in GDP but doesn't create any value.
--- $50 trillion present value of medicare and social security liability
--- Housing must drop 40% further in many places just to get back to 1998 levels
--- Banks are insolvent zombies - see Japan, and the Fed can only prop things up for so long
--- All this means US GDP will be flat in real terms for next 20 years...how eager will foreigners be to buy our debt with zero real growth?

Relating S&P 500 Price Levels to GDP Growth Rates

Sat, 25 Apr 2009 11:32:49 -0400

With all of the headwinds facing the US economy over the next 20 years I think fair value for US companies is 6X trailing 10yr earnings (about 400):

Situation in US is as bleak as Japan in 1989 for different reasons:
--- Unfathomable Trade and Budget deficits
--- Aggregate Debt is 3.5X GDP, highest in history, worse than '29
--- Ugly Demographics; Boomers aging from productive consumers to leeches, young people are rightly hopeless and angry, their futures have been stolen.
--- Consumer spending is 70% of the economy, service spending is easy to curtail
--- $50 trillion present value of medicare and social security liability
--- Housing must drop 40% further in many places just to get back to 1998 levels
--- Banks are insolvent zombies - see Japan, and Government can't seem to figure this out. Stress tests are an insult.
--- All this means US GDP will be flat in real terms for next 20 years...how eager will foreigners be to buy our debt with zero real growth?

6X trailing earnings is about where the S&P was in 1979, and it would be a 20 year low or so, still not as bad as Japan.

This equity rally is beyond me, but corporate credit markets are still a nightmare which is reassuring.

The Growth of Japan's Working Poor

Tue, 21 Apr 2009 23:54:05 -0400

Unfortunately this is a healthy development to counteract offshoring to cheaper countries. Already seeing it in the middle management ranks in the US, will be interesting to see if it happens to executives in the US too.

Can a Stock Market Meltdown Happen from Here?

Mon, 20 Apr 2009 18:21:44 -0400

I predict two more quarters of really ugly underlying earnings from non-levered, well managed, non-financial, global companies will really freak people out.

Then everyone will be talking about the macros the uber-bears keep touting:

$50 trillion in Social Security/Medicare Liability
Aggregate debt is 3.5X US GDP
70% of the US Economy is Consumer Spending
Baby Boomers Retiring, new generation is Eco - killing consumption
See Japan, Germany, Scandinavia
Decent Housing and comm'l real estate still needs to drop 30%+
Banks are insolvent whether people want to admit it or not
It's worse than the depression for the US

So I think Stocks are going to way overshoot down to 6X trailing 10 yr earnings< around this 450 level.

Then it will be an epic buying opportunity..because the numbers will really improve for the real companies in Q4 reporting (once the shock is lapped), mid Feb 2010, and the market will double (or more) in the following year.

The Stock Market 'Sucker-Rally-Dead-Cat' Is Still Yowling

Sun, 19 Apr 2009 20:41:37 -0400

$50 trillion in Social Security/Medicare Liability
Aggregate debt is 3.5X US GDP
70% or the US Economy is Consumer Spending
Baby Boomers Retiring, new generation is Eco - killing consumption
See Japan, Germany, Scandinavia
Decent Housing and comm'l real estate still needs to drop 30%+
Banks are insolvent whether people want to admit it or not
It's worse than the depression for the US

Stocks are going to 6X trailing 10 yr earnings

Dendreon Troubles Beyond Provenge Test

Thu, 16 Apr 2009 23:16:39 -0400

DNDN is a cult stock and obviously the believers are very passionate about it and hate anyone who challenges the cult. But until I see some data from real physicians about how frequently and in what circumstances they will prescribe the treatment, learn whether insurance companies will pay for it, and know more about the manufacturing process and expense of marketing Provenge, I think the bulls are getting WAY ahead of themselves.

Even if FDA grudgingly approves Provenge, it is a long, long way from an FDA approval to a multi-hundred million dollar drug. The road is especially long when something totally challenges the medical establishment.

My bet is there are many disappointing quarters ahead with the massive expectations that will come with a $1B+ valuation. If it does get approved and runs to $40 or whatever the longs think it will, there will likely be a great short opportunity.

'The Age of the Unthinkable' - Why Life May Not Return to Normal

Sun, 12 Apr 2009 19:29:45 -0400

I love all this philosophical mumbo-jumbo... "Something profound is going on here". As interesting as it is to indulge in all this speculation, put your money where your mouth is...how do I profit from it? That's what this site is ultimately about.

Is the U.S. Economy More Sound than It Was in the 30s?

Mon, 06 Apr 2009 22:12:44 -0400

We have some massive threats that we did not have in the thirties: peak oil with fully depleted domestic energy sources, demographic disaster leading to massive locked-in medicare and social security liabilities, aggregate debt at 3.5X GDP, enormous trade deficit. Some of these will be solved through hyper-inflation, but US living standards and wages will have to come down a long way.

Mark to Market: Time of Death 8:45AM, April 2, 2009

Fri, 03 Apr 2009 12:30:28 -0400

Everyone knows the best equities should be priced at 6X 10 year trailing earnings and the big banks are bankrupt. They just can't accept it yet. They will - see Japan.

Are Stocks Actually Cheap Now?

Sun, 29 Mar 2009 16:56:32 -0400

It will be clear that valuations are cheap when 2 things happen - Stock buybacks return and/or insider buying picks up. Executives making these decisions have the inside information on the economic fundamentals, and they are still scared to death as far as I can tell - except for Immelt who was buying GE at 40, 30, 8....so he obviously doesn't know what is going on with his company. When the guys at UTX, HP, INTC, start buying then we'll know the bottom is past.

Why the Fed Is Right to Be Worried

Sun, 22 Mar 2009 08:43:43 -0400

Nothing more to say other than I find this extremely illuminating. This data in combination with the massive aggregate debt carried by US consumers, government, and business is why am a long-term bear.

Sun Rise, Sun Set for Japan

Sun, 08 Mar 2009 16:20:40 -0400

No Doubt, Japan is in Big trouble. The society just cannot adapt fast enough to the new economy (which isn't dead) - bureaucracy is still the norm. There are a couple bright spots like solar energy, but beyond these I agree (unlike the US over the longer run) Japan is doomed to an eternity of low/no growth.