kelm

BlackRock: Goldman's Q1 Profit Non-Recurring and a Result of AIG Unwinds

I have seen comments from a number of news sources indicating that the Goldman earnings were a sham. Time will likely unveil the truth. Watching the Wall Street investment house CEOs I have continually gotten the sense that Blankein doesn't get it. He is still living in the masters of the universe fantasy. It is not hard to see that we are in a period here they are all trying to post a profit, raise new equity and get out from under TARP. Likely there will be some who are very premature and who proceed to fail which will cause yet more intrusive regulation and loss of confidence amongst the rest.

As stated above, these guys are not as smart as we, or they, think they are. Further, we have a "TARP Cop" who has stated that he is looking specifically for banks "cooking the books" to get TARP funds and one presumes to falsely justify paying them back as well. It will all end up in indictments. Move over Andrew Falstow.

Seven Uncomfortable Predictions for the Economy

Over the centuries it has been shown that inflation rate and crime rate are highly correlated so the Fed's QE strategy will lead to higher crime. Indeed, the local police force, at least where I live are expecting it now that the weather is warming up.

Added Debt Won't Rescue the Great American Ponzi Scheme

The argument that has been made is that inflation is better than depression yet I can name multiple nations that have been flattened by massive inflation but am at a loss to name one that lost its standing because of a depression. Japan, it could be argued, has had a lost two decades of growth and they are losing their standing but I have to think the massive debt we are accumulating is a structural impediment that will send us down the path of a greatly diminished dollar, high interest rates and massive inflation. That will surely destroy the US position in the world leaving China, a nation unencumbered by debt, in the ascendant.

Preview from Europe: The Bears Are Back

There needs to be a massive strengthening of the regulations and associated laws but that takes deliberation. What we are getting instead is ad hoc laws being passed retroactively on activities that achieve nothing in he grand scheme. Think about how much time congress spent on the "bonuses" ($170 millionish) vs the trillions of other problems. When do we see SEC leadership getting the axe or indeed, arrested for abject failure to detect a Madoff or Stanford? When are the congressmen and senators who had oversight over the SEC called to account?

Markets Have a Long Way to Go

Seriously, the American consumer needs to repair their personal balance sheets and get back to fiscal discipline at home. That will be painful for the economy but it is completely necessary. We cannot just go back to the mass leveraged consumption that created this mess.

Markets Have a Long Way to Go

"Shoot, a guy could have a good time in Vegas..." because all the hotels are really cheap because no one is there!


On Mar 04 06:29 AM plumstupid wrote:

> Anyone else out there beginning to feel like Maj. Kong?

U.S. Debt Watch: Paths to Repudiation

I urge everyone to take a look at the Yen over the past few weeks as an example of how quickly things can unravel. Three weeks ago we were stll hearing about the "flight to quality" to the Yen. Last week that al turned to the yen no longer being a reserve currency and being in for a long hard slide. No brass bands - it ended in a whimper.

The US dollar as a reserve currency is a blind spot for virtually everyone and blind spots are where trouble strikes.

I agree with the analysis above, we are on the glide-path.

As my readers know this forms the fundamentals of my market positions with trades built off of this. Short treasuries, short dollar, long precious metals.

Misunderstanding the Great Recession

The comments on technology need amplification. We did in fact develop technology The internet and all it's attendant tech is the prime example. But we have gotten into a mindset that we do "creative" work here and the rest of the world can do the dreary production. We came to believe that work in the virtual economy substituted for production. So we have great computer games, awesome special effects in movies, more "web site developers" than we could have imagined but we import anything solid and physical from abroad. We have also grown fond of those technologies as many of them do not require a college degree to become expert in. A kid with great creativity who formerly would have gone into science and engineering can spend his/her time creating video games. That hurts our competitiveness as well. That culture has then fostered a raft of feel good careers such a massage therapist of which we also have an overabundance. We will see an unwinding of the service orientation of the economy as this crisis resolves itself.

Government Risk Rises: Credit Markets Face Structural Collapse

This is a very good article. It is going to be very interesting how the treasury auctions go. I think what is missing from this debate and others is lack of data. We should start getting data soon on the auctions and see how the foreign buyers are, or are not, participating and what the Fed's response is. The author is correct that there are various ways that a government can engineer something like a default which isn't an outright default. Credit creativity is not limited to Wall Street.