When S&P experienced a 58 % drop from the peak to the trough. the barrel of oil lost 3/4 of its value, dropping from $147 to less than $40. Now the same people who assured you that hundred bucks per barrel was a bargain are telling you to buy oil to insulate your portfolio from the next bear market...
The year is drawing to a close. Time to look back. [more]
1.3 billion Chinese have finally caught up with 130 million Japanese. Congratulations!
So Republicans scored a point with their constituents by refusing to vote for debt increase? Does anybody in his right mind believe they would vote the same way they voted today if they were in the majority? After all: [more]
1. We will never see 666 again. [more]
I am often amused to see how few Americans understand what Socialism means. In a way, this ignorance parallels the Soviet people's ignorance about Capitalism. Except, of course, that the Soviets always took the official line with a grain of salt. This doesn't seem to be happening here. From what I see, it appears that the party line (or the two party lines, for that matter, but they are parallel anyway) is being accepted blindly without questioning. [more]
My comment on this blog: [more]
Basic summary of the healthcare debate in Congress: the Democrats were so stupid that their stupidity was noticed by the Republicans.
Wednesday brought the news that Yegor T. Gaidar, the architect of Russian "shock therapy", has kicked the bucket. [more]
Does he feel that by postponing the inevitable till the day the US population quadruples, he will advance his "pro-life" cause, or does he think the population pyramid can grow indefinitely? The second reason he is an idiot is because, contrary to his belief, the bill (which never subsidized anything except HMO profits anyway) specifically mentions that the federal government will not subsidize abortion coverage. [more]
As a staunch believer in the inflationary outcome, I was not surprised to see a 1.8% jump in wholesale prices. But, to contradict myself a little bit (well, actually, to reiterate the nuanced view that I have expressed on several occasions before), I will not make an all-out inflation call today. I think inflation will jump very suddenly, very unexpectedly, sometime in 2011, but for the next 6-12 months at least it will remain firmly under control. So I still wouldn't jump into TIPS, gold, and junk bonds based on today's report. One reason I think this report is a false start is that 75% of the increase was due to energy prices. That is, we are dealing with the echo of the second bubble in oil (the first bubble being the one that burst in 2008, and the second - the one that burst a week ago). So this component should fall back to the trendline in the months ahead, and it will even help support the illusion of low inflation for a while when stuff begins to hit the fan for real. I am sure Bernanke is going to take the same view tomorrow, and give the same promise to continue QE indefinitely that he had been giving for the past year and a half. Still, we should treat today's report as the first warning. Expect more warnings to follow in the next year. [more]
The lesson from last week is that we now know how many big banks have honest management, and the number turns out to be zero. It is clear that the return of TARP funds could not be justified from the business perspective. In all cases, the bank had to sell equity at the worst possible moment, or to deplete its cash reserves just when return on capital was the highest, or both. In one or two cases one could even argue that the banks were putting themselves at a risk of another bankruptcy down the road (i.e. they will return the funds now only to beg for cash again next year while executives make the best use of the time available). Unfortunately, it also means that shareholders will get fleeced as CEOs hurry to repay the government. [more]
Volcker may be right about the limited capacity to export, but to suggest that we have too little capacity to invest...If there's anything we can do well, it's to create capacity to invest. Tens of trillions of dollars printed by Bernanke invested for a 3% yield...because all the opportunities yielding 4% have been taken by other trillions of dollars printed by Greenspan. We've just had a crisis when all those tens of trillions of dollars realized that they were chasing diminishing returns. But what the heck...let's free up another ten trillion bucks to be invested into derivative swaps... [more]
I always keep marveling at the market's ability to react to secondary events stronger than to the primary events that preceded them, rising on bad news and dropping like stone when news become less bad. [more]
Major bank seeks a CEO [more]
That should be a good lesson for all cleptocrats who can't hold a government job for 4 years without stealing a private oil company. Some comments:1. This decision shows that European leaders no longer believe in peak oil.2. Yukos shareholders should count themselves lucky if they win the full amount ($100 billion) or even half that much, because the real value of Yukos would now be substantially less. 3. Expect a wave of privatization, during which the government will let go of its foreign property, which will rapidly find its new, "private" owners, and a wave of lawsuits as Europeans attempt to arrest these "private" assets anyway.4. Expect a wave of nationalization in Russia as Putin tries to compensate himself for his loss. http://www.guardian.co.uk/commentisfree/2009/dec/07/yukos-putin-russia-billions-damages [more]
"Capital is as terrified of the absence of profit or a very small profit as nature is of a vacuum. With suitable profits, capital is awakened; with 10 percent, it can be used anywhere; with 20 percent, it becomes lively; with 50 percent, positively daring; with 100 percent, it will crush all human laws under its feet; and with 300 percent, there is no crime it is not willing to dare, even at the risk of the gallows. " [more]
Finally, Mish has a good blog about Bernanke, though he weakens his case by making a positive reference to Austrian economics. [more]
Foreign Policy Magazine gets an A+ in the stupidity contest for putting Ben Shalom Bernanke and Barack Hussein Obama as numbers 1 and 2 on their list of 100 top global thinkers. Other unlikely "thinkers" featured in the list include Pope Benedict XVI (#16), Paul Krugman (#29), Kofi Annan (#30), Henry Kissinger (#51), and Gordon Brown (#74). Mercifully, Dick Cheney, at #13, is a lesser thinker than Hillary Clinton at #6. I don't think Foreign Policy's outstanding stupidity achievement will ever be surpassed. I am as speechless as I was on that day when Obama received a Nobel Prize for the contribution to global peace that he made during his first 11 days in office. [more]
My collection of idiots continues to fill up. Today Rep. Dave Camp gets the Top Idiot award with his insight that "Death should not be a taxable event". Dead voters will be happy to hear this. [more]
Let's give back all those bonuses we took from AIG executives, and enjoy the trickle-down! [more]
In the next few weeks am going to close all my remaining emerging markets outperforms and red-thumb the most high-flying stocks in that category. From now on any outperforms I enter will be US-based. I will make an exception for our staunchest ally, Airstrip One, but this is the only exception I will make. From now and till we hit Dow 14000, I will be US bulls' best friend, and a permabear on all emerging markets, especially China, but other markets as well. That doesn't mean I am going to stay bullish forever. There will be an excellent time in the future to short the crap out of S&P, and/or pick the best stocks from emerging markets' rubble. It's just not the right time for that now. For now, BERNANKE.OB is the bullish trade of the day. Remember, there are no permanent red thumbs and no permanent green thumbs, but there is a permanent profit motive. [more]
This time it's about gold. Now the assumption is that a few dozens of central banks have formed a conspiracy to drive down the price of gold. If any gold bug cares to explain to me what motive could compel central banks to devalue their gold assets, I will be very interested to hear his reasoning. [more]
Total public debt $12,113,047,538,115.42 on Nov 30. Congratulations, lquadland10!