Tuesday, July 6, 2010

It's Good and Broke Now

I would strongly suggest to any and all taking a mental checkout break from time to time. Since last Thursday I can say that I did not think about work, the markets, things economic, or even football! I would say that of course my man #29 Kevin Harvick won the Saturday night race at Daytona Speedway!

I think my point (there is one?) is that a real break from the normal can do one plenty of good.

It's Good and Broke Now
With the above in mind, I wanted to open up this Tuesday morning with a fresh look at things and try to put aside my own thoughts on things to just read news and watch things happen. Of course what I was reading was not confidence boosting. A small section of headlines:

-Older, More Educated Workers Have Highest Length of Unemployment
-APC Halted As 200 Shares Trade At $100,000 (was a $39 stock!)
-After Repeated Facts Presented That Stress Tests Are Scam, Europe Relents To Disclose Testing Methods, Even As Tests Still Remain A Scam
-IMF - BIS Engaged in Gold Swaps to about 380 Tons; Organized Looting of Sovereign Wealth
-Massive Stock Rally Melts Away, Time To Go Back To Worrying About Great Depression 2.0

There were others, but that should set the tone.

I could parse all this, and when I get back in the swing of things I will, but for now just a couple of unifying thoughts to keep in mind.

First, stock indices were in shouting distance of recent highs not that long ago; with several million people having lost their job and several million more losing their home this should be alarm bell time. The US economy has become too dependent on the financial sector and asset inflation for growth. If the economy does not need millions in the workforce, something is very wrong.

Second, everyone is focused on jobs. Calculated Risk often writes the government should be focused on "jobs, jobs, jobs!" but one has to ask "How, how, how?". Besides the usual pay a guy to dig a ditch and another guy to fill it, how can the government really target job growth?

This leaves us with the third macro consideration. Free money has done next to nothing for the broader economy, though it has allowed record banking profits and the US government to sell tons of debt to banks they loaned said money to (I know, seems like it makes no sense, but it is how it is done!). I think the FED never thought things would take this long to recover, and in fact they are not even making strides towards that end. How much longer the status quo will be accepted in the biggest question facing the economy right now.

It seems good and broke now.

Have a good night.


GawainsGhost said...

Good to see you back, GYC. I hope you enoyed our holiday.

As to your macro-economic post, well, there really is only micro-economics.

Look. Suppose you're a capitalist, a businessman. You own a company and it shows a profit. What would you do?

Well, a real capitalist, a busisnessman, would re-invest in the company. He would raise wages, hire more workers, purchase equipment, whatever, to make the company grow and become more profitable, make more money.

Not these guys. They can only cut wages to increase their bottom line. So they can pay themselves bonusses. In other words, they pay themselves at the expense of their workers.

This is not capitalism. It's looting. Bankruptcy for profit. And it sucks, in the worst way. Especially since they expect the taxpayers, who aren't even employed by the company, to pay for it.

I'm disgusted. I really am. I want indictments, prosecutions and prison sentences. I want claw-backs of fraudulent profits.

But I'm not going to get that. Not with these guys.

So all I can do is just do my job. Save as much money as I can, not invest in any manipulated market or fraudulent scheme, and hope for the best.

Of course, they could destroy the currency. In which case, I'd be screwed. But I'm already screwed, so I fail to see the difference.

It's only a matter of time before the real revolution takes place. The majority of us have guns and ammo. So it will suck to be them when the time comes.

Jeff said...


Your best post IMO.

Your analysis is so good.

Some Monday morning QB feedback here:

Spend more time on giving your insights versus highliting others.

You have an incredible mind and your thoughts are just as insightful as any other blogger on the net.

I love it when you focus on your own personal takes on the economy.

Keep up the great work. I enjoy reding you everyday.


getyourselfconnected said...

yeah, its always good to get back to regular life. I would agree in the short term/close view there is only the micro, but for a chump like me looking to make afew bucks on as few a trades as possible while minimizing risk, macro is all I can use.


Thanks so much, that was a very kind compliment, made my week.