Tuesday, April 7, 2009

Random Thoughts

I am now officially back at my post as yesterday was a little crazy with the Final Four championship last night. As you can imagine being near East Lansing the whole town was experiencing the fever and Ford Field was crazy, up until 3 minutes in when it turned into a morgue basically.

Tough to lay an egg in the biggest night of your career but none the less a stellar season so congratulations to State on a fine season.

I notice the 'rewriting of history' has become quite popular amongst the financial masters of the universe. The Maestro Allan Greenspan has drawn the template for it as he goes on tour lecturing to absolve himself of any and all responsibility for this fiasco.

Today we got another dose with Lloyd Blankfein doing the same. Funny we haven't seen former King Henry Paulson on the circuit as he is probably holed up in the alps of Switzerland or a bunker in Paraguay. Who's next ? Lets see.... Robert Rubin, Franklin Raines, maybe? Take your pick. Just expect the road show to continue. Pathetic. I would have more respect for them if they would just take their tens and hundreds of millions of dirty money they looted and just disappear.

Anyway, last night prior to the game, I ran into a friend in Greektown, which was teaming with fans, who knows what I do for a living and asked what I thought of this rally and when it would end. I didn't want to get into a lengthy disertation on all the reasons or thoughts about the market so I replied, "it will end when it ends, just as it did at the top north of 14,000 on the Dow back in late 2007." His next question was how will we know. My reply was just as brief, "when we start making a series of lower highs and lower lows. "

About 4 minutes into the 2nd half of the game I started pondering my answers to him. I thought were they too simple at first but the more I thought about my answers the more I liked them. It really is that simple. I have quite a few stocks that I am watching in this rally with an eye to getting short as soon as some of these signs I am looking for appear and will be posting some charts on them in short order.

That said, I have been sitting back watching the tape action and listening to the punditry and their commentary, however shallow it may be. I have listened to these purported experts wax at length about how the fix to our problems with the likes of;

  • abolition of mark to market accounting rules
  • restoration of the uptick rule
  • banning short ETF's and other like instruments

The above are just 3 of the more half witted, asinine recommendations spewing from the naive and just plain stupid. Sorry but I just don't know what to call recommendation like the above. Okay how about less than thoughtful. I could go on as there are many more but I hope you get the picture as these have the most vociferous backers. Man kills neighbour with hammer. Recommendation, immediate call to ban hammers. Yes, real cerebral contribution to the discussion. As I have said before, water seeks its own level.

Yes the powers that be and their influencers will fix everything. We just have to let them at it! If you look closely you could conclude that everything the government touches in its attempt to make it more accessible and more affordable turns into an unmitigated disaster resulting in the polar opposite result. You doubt this?

They tried to make home ownership more accessible and affordable to all and we got a housing bubble.

They tried to make elementary level education more accessible and affordable and we rank near the cellar in reading, writing and arithmetic.

They tried to make student loans and college education more accessible and affordable and we got the highest tuition ever seen resulting in the most useless pieces of parchment to show for it.

They tried to make credit more accessible and more affordable and we got the mother of all credit bubbles via their surrogate banks.

They tried to make securities markets safer for the layperson to venture into (think SEC with Chris Cox) and we get Bernie Madoff, Sir Allan Stanford, AIG et al.


Now I am no Nobel prize winning economist who has blown up an Ivy League endowment or pension fund, now residing on the board of a Fortune 500 company, global think tank or Federal Reserve position but what I am is smart enough, no check that, NOT DUMB ENOUGH to........

get caught in the wrong neighbourhood.
play poker at a table where I cannot see the sucker.
give my money to someone with a criminal past.
bank my money with Bank A at 7% when others pay 3%.
give more crack to a crack addict thinking it will cure him.
let the drug dealer run the rehab clinic.

Maybe just maybe we should start soliciting and more importantly taking advice from cats who in the least saw this coming and prepared for it.

I hear your moans and complaints already.

Okay, then explain to me why a banker in Streetsmartville, USA who didn't lend to people who couldn't pay, who didn't lend to people they didn't know, didn't lend to people without investigating their background, who didn't lend to big shots with Canali suits who had none of their own skin in the game, is paying the price, (re: FDIC premiums) while the morons who concocted this have not?

Is the distortion of the natural creative destruction of capitalism lost on all these purported sophisticates? Of course it is not, they know it so well they can recite it by heart but that matters not a whit when your net worth is tied to Citi and B of A or Goldman being made whole. Ahhhh now we start to peel the onion back and get to see the true motivations of the likes of Bob Doll, Geithner, Paulson, Bernanke, Summers not to mention the 3 Amigos over at Pimco.


So to reiterate for the 6 to the exponent 12th time, maybe just maybe the answer to this whole boondoggle is to buy a mirror (remember you need to look in said mirror),swallow hard, and do absolutely nothing. We will get through it contrary to what the shallow, yellow bellied, saviors that be in government tell us. We are better than that and the sooner we understand that the better off we will be for it.


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