Archive - Dec 2009 - Blog entry

Considering it was just a year ago when we were jolted into this banking-induced recession, you can imagine my astonishment when I read this recent Forbes headline:

“Dubai's Failure Exposes A U.S. Advantage
The well-regulated U.S. financial sector has a lot to show for itself.”

Clearly Bubble Ben has shown his hand but don't be so convinced that the Fed will not raise rates in 2010. If the recovery comes in stronger than anticipated, you might see some significant rate hikes in the second half of 2010. That's when the markets will really get interesting.

Innovation, in and of itself, is a very good thing. The issue currently at hand is that it was not financial innovation that got us into this mess. It was fraud! Financial engineers attempted to create methods of circumventing regulations, laws, prudent risk management, common sense and mean market returns. This lying, in turn, was labeled "innovation", which it absolutely was not, and the moniker has been carried on in the media ever since.

Christina Romer is one of Obama's chief economic advisors. But she has absolutely no clue what to do about this crisis. Her recent letter defending the Administration's policies is just the usual hack political stuff one would expect from them. She is typical of the problems in Washington. She means well, but she is fabricating the truth in order to justify their actions. Their approach to using government power is one we should all be afraid of. She spells it out quite clearly.

Volcker, Soros, Taleb, Krugman and many others call for old-timey banking ...

Just a quick perusal of news (and an analytical fact or two) in the CRE space that makes one wonder why Goldman Sachs thinks that anyone would believe them. Then again, looking at the ($19 billion) bonus pool, much of which was just nearly halved by the UK government, it appears as if enough people believe them. Let's see what we can to do alleviate that...

A Detailed Technical look at the DXY / US Dollar Index on the 34-minute, 55-minute, 89-minute, 144-minute, daily, weekly and monthly time-frames.

“It is alarming to look at what the Europe and Central Asian countries are soon to face as the region continues to age,” said Schwarz. “Future pension system deficits can be threefold than what is currently expected, and are expected to remain at that level for more than 20 years before slightly improving. Policymakers need to use the opportunity of the current crisis to address long-term issues, which could bankrupt pension systems precisely when the numbers of people who need them are growing.”

A Detailed Technical update of the DJIA Cash, S&P Cash, Gold Futures, US Dollar Index and Goldman Sachs

Japan has been the poster child of what not to do. They are a textbook case for the failure of Keynesian stimulus. After 20 years of repeating the same mistakes with the same results, you would think they would learn. They haven't. Now they may enact a policy that will lead to depression level unemployment. Remember the definition of insanity: do the same thing over and over and expect a different result?

It's a scam ...

I don't want anyone to think this is a Goldman bashing exercise. I actually admire their prowess. Not for operational excellence (as many mistakenly consider them to have when not adjusting accounting returns for risk), but for the way they seem to get away with murder, time after time. You gotta give it to them. I want readers to take time to go through the anecdotal evidence here and decide if it is more profitable to invest with Goldman, or actually attempt to put your bid in to get a slice of that $19 billion, middle class taxpayer funded, regulator protected bonus pool.

Large public pension funds in New York, California and Ohio are looking increasingly to alternative investments in hedge funds, private equity and emerging markets in a global hunt for yield, senior managers and trustees said. What does this mean for the rest of us?

Oh great ...

Gold takes a hit to the chin, Nobel 'Peace Prize' winner Obama escalates in Afghanistan, doctored jobs report causes mayhem in sentient AI, ECB to discuss potential Greece debt default, Yahoo threatens Cryptome over leaked surveillance document.