Friday, November 21, 2008

"Unexpected Jolt of Confidence" for Timothy Geithner

Bitter cold and ripper winds set for tomorrow. Did I ever mention that I am not fond of the cold? No? Well, I am not. Monster football game on Sunday with the New England Patriots having their season on the line against the Miami Dolphins. I cannot believe I just typed that! How things can change in one off season and 1 quarter of one game into this season.

Gold Watch
All right, I am officially worried. Today's action in the miners, most up almost 30%(I own GG and KGC), was scary. I read at least three pro gold mainstream stories. Now Mish himself has come out and said he likes gold right here! Either this is a very good thing or gold is about to collapse.

Here is Mish's piece:

And from the Australian:,28124,24687337-643,00.html

The Problem of Savings
A common theme that is in play right now concerns the "problem of savings". You see, when spend happy Americans sit on their money and try to pay down debt, the economy that has been built on them spending every dollar they have, and quite a few they do not, goes down in flames. If you are an ivy league trained economist you see only one way to solve this issue. No, the textbook says nothing about making an effort to transform a dysfunctional economic system into a productive and dynamic one! That was in the remedial class at the community college. The big boys know the real way out of a "liquidity trap". You may have even seen it fleshed out by the likes of Krugman and others. The answer is of course:
Separate People From their Savings By Any Means Necessary

Now this can take many forms. The old school idea is to lower interest rates so much that a saver cannot keep up with inflation by saving their money and so must spend it or try and invest it. The new wrinkle in this scheme is to use the government as a proxy to spend people's future income far in advance (through bailouts and other tax black money holes) that effectively will claim those future savings from the people through higher taxes and/or high future interest rates. As you can see, taking money from people can be done either with their agreement or without.

And that is why I get so crazy mad about all the bailouts. Set aside the fact that many banks/auto makers/ whatever firms were so badly run that they are now busted. What burns me up is that the FED and Treasury are in effect stealing your future savings and handing them over before you ever get the chance to get your little hands on them. This is the true injustice of what has been going on. By higher taxes and/or higher interest rates you will be getting less going forward. While everyone loves a good bailout, how would they feel if the headline instead read "GM to be saved; Average American just lost 3% of their yearly raise! WHOO HOO!". I bet that would not go over as well. Try to remember that nothing is for free.

"Unexpected Jolt of Confidence" for Timothy Geithner
First of all, I am going to refer to the next Treasury Secretary as Timmy G, because that last name of Geithner just does not roll of the keyboard at all.

I was a bit disappointed that Paul Volcker did not get the nod. There are plenty of reports that say Obama and his people tried very hard to get Volcker the Viking, but to no avail. If that is true I applaud the effort. I think he would have been great.

So Timmy G was tapped instead. I will leave the merits of this choice for another time. All I can say is that I cannot remember even ONE time Timmy G voted against Greenspan or Bernanke, so are we really getting something new? Instead I would like to take a look at some very silly behavior and news headlines that were out today.
From the Yahoo Finance main banner:
Dow ends up nearly 500 in surprise comeback after report Geithner will be new Treasury secretary
Wall Street staged a surprising comeback Friday, with the major indexes jumping more than 5 percent and the Dow Jones industrials surging nearly 500 points in a late afternoon rally, ending another volatile week that saw stocks reach six-year lows. Stocks erased about half of the losses that came in steep selling Wednesday and Thursday after investors got an unexpected jolt of confidence late Friday following an NBC News report that President-elect Barack Obama plans to name New York Federal Reserve President Timothy Geithner as Treasury secretary.

So how was it that the possible pick of Timmy G resulted in an "unexpected jolt of confidence"? The only way for that to be so is if common wisdom along Wall Street was that Obama would pick George Bush to be the Treasury head. Or Richard Simmons. Or Jessica Simpson. I mean, is Timmy G some rare genius that can count cards in blackjack and walk on water? Just where is all this confidence coming from?

To be fair anyone other than Paulson was probably going to generate some wild excitement. But really this seems a bit much. maybe it was an "oversold bounce" predicated on a "retest of a higher low" or something. Whatever. I just wanted to point out the funny nature of the headline.

Friday Night Entertainment
After yet another wild and crazy week, it is time to cut loose and have some fun.

Film Clip
One of my guilty pleasures is watching any film that has sword fights, boxing, or martial arts. Along this line I would like to pay homage to the greatest low budget martial arts film of all time "Kill and Kill Again". The lead actor play the character Steve Chase and while the films acting and just about everything else is as weak as can be, the fighting is pretty good. Take a look at the final showdown here:

Melodic Interlude
And now onto the tunes.

Combining my love of fight films and music, I love the song from "Rocky IV" called "No Easy Way Out" by Robert Tepper:

I guess we will stick with the soundtrack theme. I really like the Jon Bon Jovi song "Blaze of Glory" which was made for the film "Young Guns II":

The band called "The Blasters" amke great music and often are included in flm soundtracks. They are featured in the great film "Streets of Fire" and they also had material on the film "From Dusk Till Dawn". Listen to "Dark Night":

While not a film tune, I was listening to Simon and Garfunkel this week and I am putting up their great song "the Boxer":

Have a good night.


Anonymous said...


I'm going to call Timmy G, Mr. Mono, short for Mr. Monetization of the debt.

As for gold, the biggest derivative shorter of gold JMP broke threw 20 and was getting kicked all day until that last hour. Today was option expiration so short covering most likely. I added to my short fund at the close and will be adding nest week. Market is usualy up the Friday after Thanksgiving.

There's something happening here
What it is ain't exactly clear
There's a man with a gun over there
Telling me I got to beware

I think it's time we stop, children, what's that sound
Everybody look what's going down


getyourselfconnected said...

Right on. Kind of the same feel right now, though I was not "in the mix" when Vietnam happened. I wish you well.

watchtower said...

Tim G =

“If the American people ever allow private banks to control the issue of our currency, first by inflation, then by deflation, the banks and the corporations that will grow up will deprive the people of all property until their children wake up homeless on the continent their fathers conquered.”

Thomas Jefferson

In other words :

"same as it ever was (except for a brief shining moment when our nation was young), same as it ever was"

watchtower said...

Did anybody see the SNL skit on the big 3 automakers "bailout" last night?
Now that was funny.

Anonymous said...

Me thinks Santa is going to come down the chimney this year with a big stick and a can of Whip-Ass for the markets.


Anonymous said...

Hey all,

Business as usual. Gas is cheap and so are things from China. Go on with your lives, shop till you drop and move along nothing to see here...


PS: Hope everyone has a wonderful Thanksgiving!