30 SPX points or 30 inches of snow (more like 3 feet)?No shock that the market's initial reaction to the Geitner is bad. Interesting that everyone on Friday, while the market was going up, said the market would go down on the news.
It is not snowing today so I need to dig out the car and the woodpile.
16 comments:
I hope your snow doesn't come too far east. It's high 50s today in Chicago and it's a nice break in the weather.
You look foolish in the picture.
I call photoshop on this one. Global warming doctrine says it ain't gonna snow where you are now or ever, so help me Gore.
SD it is coming your way.
10:48 you look gutless in the comment.
I like the global warming joke--this is more snow than we have ever had in the 11 years we've had this place.
Roger,
Thought I would pass along this article with El Erian and how he explains how to reduce risk and reap rewards in a fast changing world...
http://www.kiplinger.com/magazine/archives/2009/03/interview-with-mohamed-el-erian.html
lol, i have that article open in another tab yet to be read, and possibly to be blogged about. thank you
Salt River Project is releasing water from lakes. Hopefully, this breaks the drought here in AZ for a while. Southern CA is a different story. WSJ article today on the agriculture disaster going on there. Central Valley of CA is a big food basket for U.S. Implications?
I know farmers is Blythe that fallow their land and sell their water from CO river to San Diego and Los Angeles. Is water supply going to be a bigger story than state's fiscal problems?
Kiplinger's has been kind enough to extend my subscription for free. El Erian's portfolio idea is interesting enough that I'm considering adding it to the list I follow. It doesn't seem to be detailed in the online version; I might post it tonight.
IIRC it was 50% bonds; he may have avoided a specific commodity recommendation.
I second Roger's comment about the Anon 10:48 comment. It is the most useless comment I have ever read on this blog.
My reason for posting. Treasury Secretary Geithner made a speech at 11:00 AM ET and the market has done nothing but go down since. His speech was sorely lacking in anything concrete/definitive. Roger, do you have an opinion that you would share concerning the new administrations intentions and/or ability to positively impact the markets?
Thank you,
JCarr
Let's see. So far Mish, Jim Rogers, and Peter Schiff (sp) have trashed the plan. I'm not sure any of them have offered alternatives.
Krugman doesn't like the plan 'cause it's not big enough.
I'm not sure I've seem comments from Roubini.
i doubt i have a lot to offer in terms of solutions--not my focus and more realistically i'm not smart enough.
one idea i heard that i like, although tough to then claw back, would be relief on payroll taxes. very few people needed to put that into place and would help in the micro so maybe the macro too. self-employed making $106,800 or more and you are paying about $1300 a month on ss and m-care.
Obama's philosophical starting point is so far from mine that it is difficult to grasp where he is coming from and whether he understands, I mean really understands the consequence of what he thinks is best. i would feel better if he convinced me he understood the downside of his ideas (all ideas will have a downside) and how they are at least partially mitigating that downside.
Maybe this is buy the rumor and sell the news.
Decent article on safer bond investments for retirees...
http://www.indexuniverse.com/sections/features/5374-four-safe-.html
I just wish Obama would read Bastiat:
"There is only one difference between a bad economist and a good one: the bad economist confines himself to the visible effect; the good economist takes into account both the effect that can be seen and those effects that must be foreseen.
"Yet this difference is tremendous; for it almost always happens that when the immediate consequence is favorable, the later consequences are disastrous, and vice versa. Whence it follows that the bad economist pursues a small present good that will be followed by a great evil to come, while the good economist pursues a great good to come, at the risk of a small present evil.
Obama and his peeps are playing the role of the bad economist.
This week's issue of Barron's includes an interview with Ray Dalio, here are some excerpts:
“Basically what happens is that after a period of time, economies go through a long-term debt cycle -- a dynamic that is self-reinforcing, in which people finance their spending by borrowing and debts rise relative to incomes and, more accurately, debt-service payments rise relative to incomes. At cycle peaks, assets are bought on leverage at high-enough prices that the cash flows they produce aren't adequate to service the debt. The incomes aren't adequate to service the debt. Then begins the reversal process, and that becomes self-reinforcing, too.
“What the Federal Reserve has done and what the Treasury has done, by and large, is to take an existing debt and say they will own it or lend against it. But they haven't said they are going to write down the debt and cut debt payments each month. There has been little in the way of debt relief yet. Very, very few actual mortgages have been restructured. Very little corporate debt has been restructured. The reason it hasn't actually produced increased credit activity is because the debtors are still too indebted and not able to properly service the debt.
“If you think that restructuring the banks is going to get lending going again and you don't restructure the other pieces -- the mortgage piece, the corporate piece, the real-estate piece -- you are wrong, because they need financially sound entities to lend to, and that won't happen until there are restructurings.
“By the way, in the bear market from 1929 to the bottom, stocks declined 89%, with six rallies of returns of more than 20% -- and most of them produced renewed optimism. But what happened was that the economy continued to weaken with the debt problem. The Hoover administration had the equivalent of today's TARP [Troubled Asset Relief Program] in the Reconstruction Finance Corp. The stimulus program and tax cuts created more spending, and the budget deficit increased.
“You print a lot of money, and then you have currency devaluation. The currency devaluation happens before bonds fall. Not much in the way of inflation is produced, because what you are doing actually is negating deflation. So, the first wave of currency depreciation will be very much like England in 1992, with its currency realignment, or the United States during the Great Depression, when they printed money and devalued the dollar a lot. Gold went up a whole lot and the bond market had a hiccup, and then long-term rates continued to decline because people still needed safety and liquidity. While the dollar is bad, it doesn't mean necessarily that the bond market is bad.
“I can easily imagine at some point I'm going to hate bonds and want to be short bonds, but, for now, a portfolio that is a mixture of Treasury bonds and gold is going to be a very good portfolio, because I imagine gold could go up a whole lot and Treasury bonds won't go down a whole lot, at first. Buying equities and taking on those risks in late 2009, or more likely 2010, will be a great move because equities will be much cheaper than now.”
to anon 6:02
thank you very much for the link to a very informative article. just what I was looking for.
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