Archive - Jun 30, 2010 - Blog entry

After maintaining a low-risk real estate strategy for decades, studies commissioned by Calpers show that it switched gears in 2002, embracing higher levels of risk even as the real estate market began to top out in 2005. By mid-2009, Calpers had a one-year loss of 48.8% in its real estate portfolio and was reporting among the lowest returns of any large pension fund in the country.

Heretic!

The "fat pitch" that was looking good has fizzled into a stinky, foul ball. In all likelihood, we are looking at a bear market.

Despite the pleas of Dr. Athreya to the contrary, Rick Davis of the Consumer Metrics Institute boldly goes where no BLS statistician or Fed economist dares...that is into the upstream consumption data (gathered in real time, no less) that leads the taxpayer-subsidized bean counters' work by up to seven months. While it's no surprise that all is not well on the H2 2010 horizon, CMI tells us specifically what to watch out for.

Hedge funds poured into the currency down under, making it one of the world’s best performing assets this month. The bottom line is that interest rates there are high and rising, while ours are low and stagnant. A procession of central banks have been pulling the ripcord on the troubled euro and landing into currencies with vastly better fundamentals. A proposed 40% mining tax triggers a stunning change in government. Singing “Waltzing Matilda” in the shower. (FXA), (EWA).

Flagstar is the nation's 65th largest bank and without yet another recent capital raise would probably be gone. In truth, there is little Good and a whole lot of Ugly.

Paul Krugman, obviously in total distress over the G20 deficit cut pact, sees a 3rd depression coming to America. Meanwhile, Dr. Doom--Nouriel Roubini--sees a slowdown rather than a double-dip recession in the U.S., and Harvard University professor Niall Ferguson agrees.