About 11 million home “owners” are under water. That means they owe more to the bank than the house is worth. I’m guessing most commercial real estate is under water also. Jamie Dimon says he’s wary of a double dip recession. AIG, now losing more money than Carter had liver pills, says it will need even more bailout monies from the Feds. It reported a fourth-quarter loss of $8.9 billion this morning and its shares tanked. Who in their right mind owns AIG shares?
Jim Rogers predicts the British Pound could completely collapse within weeks, sending shockwaves throughout the global economy and heralding the beginning of a downturn that would make the recent economic crisis look tame in comparison.
“Other currencies aren’t strong and the Euro has real problems, with cracks much wider than Greece beginning to show,” Rogers said.
“But it’s the British Pound that’s most vulnerable. In real terms, it’s already devalued against virtually every currency barring the Zimbabwean dollar and it’s especially exposed over the weeks running up to the UK election. In a basket of currencies, the Pound is potentially a basket case. And that will put Britain in an extremely bad position for the shakedown.”
There’s talk that hedge funds are going massively short on the pound sterling.
My savvy financial contact in London emails me this morning
No, I don’t think that Jim Rogers is the next George Soros. I think that the sterling has been slipping because there is not much good news coming from economic indicators. Last quarter of 2009, UK economy grew by 0.3%. That’s not fantastic, but as the global economy crawls out of a deep recession, its not bad either – note that they expected 0.1% before!. So you see, the scenario described in the article below would need negative news, which is different to “we don’t have positive news”
The other reason is probably the wishy-washy (is that a word?) state of UK politics. There is not that much confidence in Brown and his peeps. But will this seriously affect the ability of an economy to generate value and produce output? Probably not…
I think that financial watchdogs, politicians etc. are on a look-out for exactly these kind of doomsday-sayers who could create a self-fulfilling policy. From that sense, they are probably happy that the Greece fiasco took place. They know what to watch out for, and they are now alert. It was funny to see various top level EU political figures, finance ministers (of the Southern European countries of course!) come out and blame the greedy wall street bakers who were making speculative attacks on the currency. Not completely undeserved, but it was really Greece that piled on the debt and made poor investments (“Greece built/but they did not come”)
So all in all… No. The markets are inefficient, they could get better if the stupid government would stop supporting dead models, and let the markets do their work. The fact is that the government will resist. So the markets will attack inefficiencies (read: “I can burst this bubble and make money” situations). At a certain point government will be exhausted – you can only print so much money, raise taxes, borrow money from us (through the financial markets) before we (the consumers/employees) give the government the finger.
But this is not going to happen in the next few weeks. And not with her Majesty’s “quid” 😉
Meantime, my local senator Kirsten Gillibrand tells the world “We cannot fix our economy or help working families unless we address the health care crisis and lower costs for everyone.” Meanwhile, I see estimates that Obama HealthCare will cost us maybe $1 trillion. My tennis club locker room — the source of all worldly wisdom — is agog with talk that there’s no one in Obama’s cabinet with business experience. There’s no one who has ever met a payroll.
Today may be the day I stop reading the financial press and re-read Lewis Carroll’s Alice in Wonderland.
Alice: Would you tell me, please, which way I ought to go from here?
The Cat: That depends a good deal on where you want to get to
Alice: I don’t much care where.
The Cat: Then it doesn’t much matter which way you go.
Alice: …so long as I get somewhere.
The Cat: Oh, you’re sure to do that, if only you walk long enough.
Change the “walk” to “talk” and you catch my drift. Washington has become Wonderland.
I am thinking, Why is our government setting interest rates anyway? Why not flour, eggs and bread?
Maybe that’s in the cards, along with healthcare.
Facing the next crisis unarmed. Arthur Leavitt who was SEC chairman froom 1993-2001 writes in the Wall Street Journal:
There is now a high probability that the greatest financial crisis in three generations will yield not one piece of meaningful financial regulatory reform.
He explains:
Too many regulators, politicians, bankers, credit rating agencies and others have believed failure was not an option. In financial markets, when people take risks and don’t anticipate failure, they take greater risks and the resulting failure becomes far more damaging.
There is still time for the White House and Congress to re-institute the principle of failure in our financial marketplace. It may not be as sexy as the creation of a consumer protection agency or a reorganization of the federal regulatory landscape. But it is essential.
It can be done in two ways. First we should address the problem of “too big to fail,” in which large financial institutions are not allowed to fail because of the impact their failure would have on the rest of the market. Second is the problem of “too interconnected to fail,” which is a variation on the same theme: when a financial institution’s positions in the unregulated and non-transparent derivatives markets are so complex, so secretive, and so leveraged that to unwind them quickly is either impossible or dangerous.
Leavitt is currently an adviser to Goldman Sachs. Go figure.
Always Buy and Hold. My wife says I have the attention span of gnat. Let my stocks run and they’ll all come back. Have patience. Stop fretting. Good idea. Exhibit one is a chart from Silicon Alley Insider yesterday:
Silicon Alley Insider writes:
Palm shares dropped 20% today after the company warned that its smartphones aren’t selling as well as expected. The announcement follows a few downgrades of its stock, on the premise that RIM, Apple, and Google Android are running away with the smartphone industry, while Palm will be an also-ran.
Palm’s day-low of $6.30 is in the same range as Palm stock traded in mid-January 2009, just after the company unveiled the Pre smartphone and WebOS platform that represented the future of the company. Since then, shares have been all the way up to $18.09 — and all the way back down.
Answers to software problems. This site is semi-useful. Online Tech Tips.
Defying logic. We trust the Internet to provide us the logic that our eyes could figure all by themselves. Without the benefit of the Internet. Item:
Yesterday morning God is dropping huge flakes on New York. I wonder what’s happening at La Guardia Airport … Screw that. I know what’s happening. They got delays up the whazzo. But not according to Weather.com:
When I grow up, I want to look like him.
I tore the ad out of Esquire and showed it to Muriel, my wonderful assistant.
Muriel quipped, “It’s easy. Just go to one of the tanning salons near my house. They’ll paint all those ripples on your abs, just like they did for him.”
PhotoShop fixes the pictures. Paint fixes the body. Nothing is real any longer.
Why is he wearing underpants with a drawstring and mini-tassles?
Great Jewish Sex.
The Italian said to his two friends, “Well, last night my wife and I had sex. I rubbed her body all over with olive oil. We made love, and she screamed for over 10 minutes at the end!”
The Frenchman boasted, “Last night when my wife and I had sex. I rubbed her body all over with butter. We then made passionate love and she screamed for 20 minutes at the end.”
A Jewish man boasted, “Last night, my wife and I had great sex. I rubbed her body all over with schmaltz (chicken fat), we made passionate love, and she screamed for six hours at the end.”
The other two were stunned. The amazed Frenchman asked, “What could you have possibly done to make your wife scream for six hours?”
The Jew said, “I wiped my hands on the bedspread.”
Harry Newton, who’s wondering if the snow will ever stop falling and whether his “BUY” recommendation is really a great contrarian signal, i.e. SELL. Two thoughts are uppermost this morning: When in doubt, stay out. And Cash is King.
Palm is an awful stock, I've been trading the markets for over 10 years. Whenever they get a new product they would hype themselves, and I got burnt once when they warned. This happened multiple times, so when I saw they hype up the Pre and Pixi I new they would warn again. They made major strategy missteps about 3-4 years ago, when they split the Operating Division from the hardware side. They then adopted Windows Mobile, only to realize they needed there own os and created Web OS. It's a shame they were once an important company and now can barely keep up. I