Sigmund

Will Government Spending Work?

Certainly jobs are important. Are they the core problem that we must address immediately, No!. What is critical and needs immediate attention is the orderly liquidation of excess debt. Do we have the necessary tools to accomplish that, Yes! Honor the contract! If that means bankruptcy then do the bankruptcy. Will that put a lot of people out of work? Indeed it will, even more than are now unemployed. Will they be unemployed for a long time, yes! The government actions todate have done little to help the problem because the problem is beyond the capability of current actions. All the government is doing now is trying to stall so that the banking system can recapitalize itself. That is where the core problem is, a large number of very big banks are insolvent. They need to be liquidated and/or restructured. Get that fixed and a recovery will be possible. Along the way it would be wise to improve the purchasing power of the dollar. So, if we have to have some form of socialism, lets nationalise the insolvent banks, restructure them and sell them to private equity, and most certainly not the same people who created this mess. As to financial regulation, we need some competent regulators and some rerasonable regulations. If we cannot achive self regulation, then formal laws are clearly a reasonable approach.

The Shedlock-Schiff Affair: A Chronicle

If one has the turn in the market right, one can still lose mightily by not acting appropriately. Very few money managers have been able to protect their clients from the current correction. As noted above Grantham, Mauldin and Roach have been on point as to the economy and the market. Do they have clients that have lost money, they probably do. Preserving capital in a bear market is incredibly difficult and even more so if you are managing large sums of money. To the extent that some investors have placed money with a money manager and they have not closely followed the management of their funds, those folks are entitled to all the loss that can be achieve. It comes to this, you have to think for yourself. Investing is not calculus and statistics, it's arithemetic and common sense!

2009 Outlook and Beyond: Let Truth Be Your Guide

The truth is that the body politic has spent more than it can repay. The resolution of that truth is bankruptcy. When debt is extinguished, we will have the opportunity to expand. Until then then it will be a lot of noise.

In Madoff We Trust

In its general form, the Social Security System is comparable to a Ponzi scheme. If the government is truly beneficient, there is a limited problem. Here is where the great difficulty arises. What if the government is malicious because it is ignorant. We have a fiat currency, backed by the full faith and taxing power of the governement. We have an SEC that eliminated the up-tick rule for shrot selling, then imposed bans on short selling all the while declining to fully examine the operation of Pnozi scheme. We have a Treasury Department and a Federal Reserve System that combine to create cash so as to ameliorate any all economic slowdowns. Now there's a Ponzi scheme that is a marvel of sophistication. We have an insurance company that wrote credit default swaps contracts for which they made no capital reserves, moreover they did not have sufficient capital to honor the contracts should defaults occur. Now that strikes me as fraud. In our idealogue zeal to pursue free market capitalisim we seem to be ignoring that the concept of free market capitalisim does not mean that there are no rules. And there is the problem. Reasonable rules have either been erased or repealed. History will record this administration as being the most intellectually inept and incompetent in the history of our Federal Republic.