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A Baker's Dozen Reasons For Continued Market Volatility (Plus One)

The only one of your list that has major impact possibilities is number 11, the hedge fund leverage and the probability that their books are misrepresented since they have a considerable problem of asset overstatment given the current weakness in their mortgage exposure. The value of these mortgage portfolios is currently being reduced unreasonably due to hysteria and they will shortly return to a level reflective of the true failure rate which is modest, not somthing justifying the current panic. The only question then is, have these funds borrowed against these mortgage assets and subsequently lost on the investments made with the proceeds. In some cases I think the answer is yes and these funds are going to go bankrupt. The effect to the economy and the stock market isn't going to be of major impact and a few months from now it will largely be understood and be behind us. Vic

High Yield Corporate Spreads Decline 6%

While everyone is mentioning the increased spread, I don't see them pointing out that only effects new transactions. The holders of these junk bonds are still getting the same return and will not be marking them down to market. Of course if an institution goes bankrupt, it must then mark to market. My question is, are we making too much out of the problems. Most people aren't defaulting on their mortages, even the sub prime ones, and most institutions holding them won't fold even if they have some asset impairment. The credit crunch will pass very quickly and those foolishly selling into the hysteria are making a mistake. Vic

The View From Friday's GDP Report

I think the thinking public takes government bureaucrat generated numbers with a grain of salt. The media presents them to us as credible, but even if you believed they are trying to present honest data the practical problem is beyond their capacity. Government doesn't do anything very well is the simple fact. Why isn't there any independent organizations generating data, a cost of living index for example? Vic

1Q07 GDP Data Shows Current Rally Rooted in Optimism, Not Profits

Government reported macro numbers are the last thing I will make my bets on. The government can't do anything right much less generate reliable numbers for the entire economy. Most of the time they are putting some spin on whatever they report with some convoluted logic. I'd be skeptical even if some reliable source was producing the numbers for the entire country. There are other sources from industry that we can trust far better. Vic

The Fed's Cautious Optimism Isn't Believable

Interesting to see someone telling it like it is. We are headed for stagflation thanks to GWB's following the lead of LBJ in mismanaging the economy by pursuing a fabricated war on credit. The chickens didn't come home until the Jimmy Carter days then, by passing R. Nixon, but it looks like the time table will be advanced giving the next president the coup de gras. (or however you spell it) The Fed has it's hands tied. It should be raising rates but is unable. Eventually we will need to find another Paul Volker and the pain will be far worse than it would be if Bernake would sacrifice himself for the good of the country now. (but he isn't likely to do it) Vic

Goldman's Chief Economist Now Believes a Rate Cut is Unnecessary

Yes, I made good profits going 180 degrees opposite of Henry Kaufman's public evaluations back in the 80's Vic

CPI vs. PPI Discrepancy Conspiracy: Adjust the Time Frame

Your graphs and the conspiracy remark don't change my mind. Anyone that has been paying any attention to their everyday cost couldn't possibly believe the CPI accurately reflects the ordinary persons cost of living increases. It's a simple as that. Vic

Dallas Fed President Fisher: Dead Wrong On Subprime Woes Not Spreading

You have got to ask yourself, is it believable that GM can attribute a 90% short fall in earnings to the sub prime lending arm of an appendage? This doesn't pass the smell test in my opinion and they are using it as a cover for the phony miraculous recovery reported earlier. In any case it clearly points to the ongoing proof that GM has now and has always had terrible management. I remember the days of Roger Smith and Delorean's " On a Clear Day You Can See GeneraL Motors." Nothing has changed. The bottom line is that all the problems of the auto industry, even the bankrupting union contracts must be placed on the management's door because they were looking after their own interest only, not the long term health of the company. Vic