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dwot (99.55)

Sad Vindication

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June 25, 2008 – Comments (3)

I am so far behind on my reading list.  This one is almost a week ago and it is about presidential races of the past.

I remember Ross Perot running for president in 92, although I did not follow the details at all at the time. Financial Amageddon has a story about what he was running for back then and that he is still in public debates.

Skimming the article it appear he was running to control the spending back then and that is what he is still talking about in public debates.

When you at how much trouble America (and Canada) is in with its future promises to people, how sad Americans did not elect someone who would ensure what was promised could be paid for.

I wrote letters to the Canadian government about the unsustainability of promises 20 years ago.  Being early to seeing the problems doesn't mean they will not come... 

Different topic, there is another post on FA, this one on how banks are changing definitions of bad loans to make the bad loan portfolios smaller.

And last point, here's a picture taken as I was driving out of the hamlet on Monday:

Bison on the road

3 Comments – Post Your Own

#1) On June 25, 2008 at 10:04 AM, dwot (99.55) wrote:

My goodness, here's another good one from 8 days ago.  This one is an interview with Jeremy Grantham.  One of the things that it points out, which is a point I've made in a few of my posts, is that declining earnings take a while to work into the stocks.  According to this article:

"But the secondary effects - less consumption, lower profit margins, lower GDP, lower employment, lower global trade - are beginning to work through the system. They're steadfastly ignored because they're still quite slight. It takes a year, 18 months [or] even longer for some of these effects to show up."

I think also the effects of declining profits are slow to work in as a quarter is only 25% of the year, so profits can be down 50% but the year figures that show up will only be down 12.5%.  I often calculate a P/E based on the current quarter and I get comments blasting my calculation all the time and have the previous 3 quarters cited as to why I am wrong...

It is likely the full effects of squeezed margins will take over a year to show up. 

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#2) On June 25, 2008 at 10:44 AM, dwot (99.55) wrote:

Hmmmm, new post or new comment?  When you post a whole bunch in a row the top post buries the ones under it...

More out-of-date reading, this one from two days ago. Yves has a post about banks having problems raising capital.  I think it was Merrill Lynch that worked double shifts over xmas and raised more equity than anyone would have thought they would have needed.  At the time I predicted that that was the action of those who would survive.  They were raising equity while their share prices were still fairly strong and dramatically reducing the amount of dilution that other financial institutions have faced from waiting to raise equity.  And now it looks like raising equity is becoming beyond difficult...

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#3) On June 25, 2008 at 2:07 PM, mandrake66 (94.92) wrote:

Very few in financial services had the foresight to raise money 6 months ago or more. Anyone trying raise significant amounts of money now, after the sovereign wealth funds and hedge funds have been burned more than once, after the debt markets became mostly dysfunctional, after their stock prices have crashed, after the Fed has already pledged half of its holdings of treasuries, is probably not going to make it. And it's not just financial services firms...airlines and automakers also spring to mind, among others. Now is when we get to see who was an ant, and who a grasshopper.

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