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Poor Texan

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  • The recession has bottomed and Q2 earnings will probably beat estimates, Laszlo Birinyi says, predicting the S&P 500 will soon resume its powerful ascent. Since Birinyi predicted S&P to 1,700 within 2-3 years in May, the index is down 0.5%.  [View news story]
    "According to economists' predictions compiled by Bloomberg, the economy may expand by 0.5% in Q3." Meanwhile, most companies may beat their greatly reduced forecasts. Well, these two mays sound like a great foundation for a bull market. Unemployment is supposedly a lagging indicator and is projected to rise further. I guess those companies who had their programs enacted in the stimulus will do all right but I don't hope that will create a bull market. I don't see anything that indicates that we will have other than an L shaped economy.
    Jul 7, 2009. 03:15 PM | Likes Like |Link to Comment
  • Bankslaughter [View article]
    Just what we need. More opportunities for lawyers to shake down companies.
    Jul 7, 2009. 02:19 PM | 4 Likes Like |Link to Comment
  • Mortgage insurer PMI Group says home prices may fall in more than half of the country's largest cities through Q1 2011, as the market struggles with "a demand shock of high unemployment and a supply shock of distressed foreclosure sales."  [View news story]
    How did this story get out? We're supposed to believe that all will be well by year-end. Or were we just supposed to hope? Is the harsh sun of reality scorching the green shoots?
    Jul 7, 2009. 01:45 PM | Likes Like |Link to Comment
  • Zubin Jelveh says Stan Liebowitz's WSJ piece on negative-equity forelosures is another instance of the walk-away myth: "With the economic picture as gloomy as it currently is, and the government having just bailed out big institutions to the tune of $700 billion, is it crazy for an underwater homeowner to keep paying his/her mortgage and hope for assistance from the government?"  [View news story]
    All this is fine if you're still working. But if you lost your job, your wife can't stand the stress and leaves you, what's the incentive to hold on. Then you run your credit cards up to the max to get some cash, declare bankruptcy, pack up and move to a different state to avoid child support and try to start over. Put a few variations on this theme and you have a 'walk-away'. Do you think all those 'drifters' during the great depression didn't have good jobs and families at one time? Unless you have a good reason to hope, you quit trying and just go into self-survival mode.
    Jul 5, 2009. 01:12 PM | 5 Likes Like |Link to Comment
  • California: The Haves and Have-Nots [View article]

    So who's going to enforce the law? Those who are being paid in cash? Look at what happened to GM and Chrysler to see how important the law is!

    On Jul 02 04:22 PM Carneades wrote:

    For those of you speculating as to the constitutionality of California's
    IOU issuing tactics, I have provided below a pertinent portion of
    Article 1, Section 10 of the United States Constitution.

    "Section 10. No state shall enter into any treaty, alliance, or confederation; grant letters of marque and reprisal; coin money; emit bills of credit; make anything but gold and silver coin a tender in payment of debts; pass any bill of attainder, ex post facto law, or law impairing the obligation of contracts, or grant any title of nobility."

    If you equate issuing IOU's with printing money - ask yourself what
    a dollar bill really is - then the Constitution seems to be pretty
    clear on the topic.
    Jul 2, 2009. 09:26 PM | 1 Like Like |Link to Comment
  • Bank failure number 52 for the year and number 7 for the day: Founders Bank, Worth Illinois.  [View news story]
    It's a dumping ground for Democrat patronage. It won't go down because too many of the faithful would be hurt.


    On Jul 02 08:31 PM herbert hoover wrote:

    > How the hell does Citigroup stay open?
    Jul 2, 2009. 08:49 PM | 2 Likes Like |Link to Comment
  • Employment Numbers Uniformly Horrible [View article]
    I think we're losing hope. The change isn't what was expected. The recovery keeps getting pushed further out. The green shoots keep withering. Raising taxes is necessary because there is no politically acceptable way to cut government employment or expenses as we are seeing in California. Cap and trade will increase utility bills causing more delinquencies and then the government will force the utilities to reduce rates to 'help the people' and investments in utilities will follow GM and Chrysler. Meanwhile the dollar becomes less accepted in international trade, major companies redomesticate to avoid confiscatory taxes, and we get new rules and regulations to 'help the people'. As investment and the opportunity to invest dry up, employment continues to rise and our best and brightest engineers and other productive types find opportunities in other countries. Honest, hard working undocumented aliens are returning to their countries due to the lack of work here and we are keeping only the losers of that group. The bounce from the oversold positions in March is over and all I see is slow deterioration in the market as we recognize the true scopeof our economic problems. Sorry but the law of unintended consequenses is as alive as Murphy's law.
    Jul 2, 2009. 04:14 PM | 12 Likes Like |Link to Comment
  • WSJ Real Time Economics says $70 oil is a great growth sign - if it's about demand. But where's the demand? The IEA outlook suggests other factors: tightened supply or speculation.  [View news story]
    There are two determinants of price; demand AND supply. While there is plenty of supply, it is getting more expensive to extract it. So the quantity of demand may fall, but if the new supplies are more expensive, the price will still rise. The 'speculators' are those who are betting on which way the price will go. They don't control the price of one hundred million barrels a day.
    Jun 30, 2009. 05:55 PM | Likes Like |Link to Comment
  • SA's Mick Weinstein backs up author Chris Anderson after The New Yorker's Malcolm Gladwell questions his premise that businesses can be built on non-monetary incentives: "There are very real rewards that are not immediately monetary. It's a partnership between our contributors and SA, not 'getting people to work' for anything but mutual benefit."  [View news story]
    The best non-monetary incentive is good management. When you have poor management you hate to go to work you wind up with a lot of extra expenses like alcohol and ulcer medications. To offset that expense you need monetary incentives.
    Jun 30, 2009. 01:29 PM | Likes Like |Link to Comment
  • The jobless rate climbed in all 372 U.S. metro areas in May, the Labor Department reports (.pdf). Fifteen areas reported jobless rates of 15% or more, and 112 areas had rates of 10% - up from six areas a year ago. Highest rate among large cities: Detroit, at 15%; lowest: Oklahoma City, 5.7%.  [View news story]
    Didn't you get the memo from the experts yesterday? The recovery will now take place in Q1 and Q2 of 2010 (subject to revision).


    On Jun 30 12:14 PM Chandragupta wrote:

    All the experts who claimed there will be a "recovery in the second
    half of the year" - brace up now! The second half of the year starts
    tomorrow!
    Jun 30, 2009. 01:24 PM | 1 Like Like |Link to Comment
  • April S&P/CaseShiller 20-City Home Price Index: -18.1% vs. last year, narrower than last month's 18.7% drop, and the third straight monthly improvement. "While one month’s data cannot determine if a turnaround has begun; it seems that some stabilization may be appearing in some of the regions, David Blitzer says.  [View news story]
    There was a book back in the 60's called "Been down so long it looks like up to me". I guess if you're used to home prices falling at 18% it looks like stabilization. The only green shoot is sooner or later we'll get to zero value and the prices won't drop any further. Or will they? You might have to pay someone to take your real estate off your hands.


    On Jun 30 09:13 AM CautiousInvestor wrote:

    Am I reading into the comment sight of green shoots with housing
    prices falling at a "stabilized" rate of 18%? I'm sure its great news to both borrowers and lenders alike.
    Jun 30, 2009. 01:06 PM | Likes Like |Link to Comment
  • The U.S. consumer-led recession could end by Q1 2010, followed by a period of slow growth, KBW analysts Frederick Cannon and Brian Kleinhanzl predict. They believe government hiring will impact unemployment sooner than thought, resulting in a peak of 11% vs. more dire predictions.  [View news story]
    This is not good news. Q1 2010 is two quarters away and all our 'experts' were predicting an end to the recession in Q3 or Q4 of 2009. And an unemployment rate of 11% is higher than the assumptions in the 'stress' tests. Are the green shoots withering?
    Jun 29, 2009. 05:46 PM | 1 Like Like |Link to Comment
  • An optimistic Jeff Immelt (GE) says the worst of the crisis is "behind us" and "we have almost a fully functioning capital market." GE plans to pump up its R&D spending, focusing on the "two big seismic themes of the 20th century" - energy and health care.  [View news story]
    Energy and Health Care. Two heavily government subsidized areas. Well, he has hope (hype). Herbert, he is really sucking.
    Jun 29, 2009. 04:17 PM | 1 Like Like |Link to Comment
  • From David Rosenberg's newsletter this morning: "So wages and salaries are down 1.1% from a year ago. Interest income is down 5.2%. Dividend income has fallen 12.4%. Proprietary income is off 4%. The only income source in the green column are government transfers (food stamps, welfare, unemployment insurance) which is a booming industry at over 12% YoY growth." (via)  [View news story]
    Just read that our unemployment department is hiring to handle the flood of unemployment claims. Of course, the corallary to this is that tax revenues are shrinking. Maybe soon the government employees will be the only ones paying taxes.
    Jun 29, 2009. 04:11 PM | Likes Like |Link to Comment
  • "The big impact starts to hit from about now onwards... I still hold out hope it will be a V-shaped recovery. It might not be the most likely scenario but it is not as unlikely as many people think." - Christina Romer, chairman of the U.S. president's council of economic advisers, on stimulus package  [View news story]
    Well, she has hope. That's what this administration is all about. Or was that hype.
    Jun 29, 2009. 04:02 PM | 1 Like Like |Link to Comment
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