THE CAPTAIN OF THE TITANIC
would you let the captain of the titanic drive your boat? president bush would. even as 77 year old sir alan was under the knife getting his prostate repaired, the president was answering questions about mr. greenspans future employment prospects. and it seems he will not be added to the ranks of the unemployed anytime soon. even after questioning the presidents economic jobs & growth package, a.k.a "tax cut for the rich", the president still wants sir alan to run the country's money. this endorsement is a bit confusing as the president has replaced every chairman, secretary or advisor who has not fully supported his policies.
criticism of alan greenspans stewardship of the economy over the last few years has been widespread in the aftermath of the stock market bubble, yet most wall street types think he is the best man for the job and that's good enough for the president. "president bush's decision to reappoint alan greenspan as chairman of the federal reserve is like inviting the captain of the titanic back for a second round," says dean baker, co-director of the center for economic and policy research, who faults greenspan for, among other things, managing "to ignore the largest financial bubble in the history of the world." not exactly a glowing endorsement from a usually well respected organization that seemingly has no 'axe to grind' with regards to politics or economic forecasts.
the other end of the greenspan evaluation spectrum would be the presidents comments yesterday issued by ari fleisher, who stated that the president thinks mr. greenspan has done "a very good job stewarding the economy." mr. fleisher went on to say that the president thinks mr. greenspan "has done a very able job as a steward of the economy making certain that we had the proper monetary policies in place."
so, with the fed chief and his cronnies all singing the same tune about the economy and their ability to keep it from imploding, president bushs current support for mr. greenspan seems well reasoned. the fed has been consistently telling the public that the economy is "fundamentally sound" and the "productivity gains" have made the economy much stronger and more resilient. the fed has also made it clear that even if they are wrong about the economy, it has "lots" of "tools" at their disposal to adjust to further weakness. none of the so called "tools" have been tested, but they are confident in their power nonetheless. we will soon see if thats the case, as the economic challenges persist and at least a few economists are now saying a second recession is a possibility.
if we do "dip" again, it will have been in the face of unprecedented moves by the fed to lower interest rates and flood the capital markets with liquidity over the last 2 years. it will also show just how out of touch the fed is with whats really going on and how poorly they managed the economy after a finacial bubble. lastly, if the next leg down is a result of a housing slowdown, a.k.a. the housing bubble popping, it will be greenspans second miss in "bubble spotting" a.k.a. titanic captaining, during his illustrious tenure.
have a grateful day!
larry
Wednesday, April 23, 2003
Wednesday, April 16, 2003
S.A.R.S.-suddenly another recession syndrome
more commonly known as severe acute respiratory syndrome, a virus that is spreading around the world and causing fears wordlwide. the WHO has issued warnings and advisories, the CDC has done the same. doctors are trying to figure out what it is, why its spreading and how to cure it. for investors, SARS could stand for something else.
S.A.R.S causes a low grade fever, headache, dry cough and difficulty breathing. all the symptoms that may soon be felt by market players and strategists that have enthusaistically grabbed hold of the recent market rally. recent economic data has clearly shown that whatever recovery was starting is now hitting the wall. the data was released as we toppled statues in baghdad so much of it was overshadowed by the war news. when the economic data was focused on, the weakness was blamed on the war. now the war is "over" and companies say they cant give good business guidance because of the economic weakness(caused by the war). go figure?!
what i do know is that corporate cost-cutting cannot continue at the current rate if we expect the economy to improve. people that cant find work cant be good consumers. corporations working off debt burdens and over capacity will not increase capital spending no matter how low rates are. retirees wont spend money if they fear for there financial well being as their wealth continues to errode and there incomes decrease.
as unpopular as it may be, some economists have begun putting up the "red flags" signaling the onset of a new recession. even our president, in his effort to get his tax package passed, has started whining about how bad the economy is. in his last effort to get the word out and promote his plan, he said "in january, when i first discussed the tax plan, the economy was in urgent need of an economic stimulus plan and now the need is even more urgent". yet he and his advisors all say the economy is fundamentally sound and most of the weakness is due to the war, so why pass tax cuts...mostly for the rich? the answer is political. he wants to get re-elected in 2004.
tax cuts, rate cuts, job cuts, cost cuts...the cutting will continue. probably in all areas. yet none will alleviate the economic pain that we will endure as a result of the economic boom we all experienced. time is the only cure for what is happening. the economic cleansing is in full swing and will continue for a few more years. the double-dip is upon us and there is no quick fix to ease its effects.
have a grateful day!
larry
more commonly known as severe acute respiratory syndrome, a virus that is spreading around the world and causing fears wordlwide. the WHO has issued warnings and advisories, the CDC has done the same. doctors are trying to figure out what it is, why its spreading and how to cure it. for investors, SARS could stand for something else.
S.A.R.S causes a low grade fever, headache, dry cough and difficulty breathing. all the symptoms that may soon be felt by market players and strategists that have enthusaistically grabbed hold of the recent market rally. recent economic data has clearly shown that whatever recovery was starting is now hitting the wall. the data was released as we toppled statues in baghdad so much of it was overshadowed by the war news. when the economic data was focused on, the weakness was blamed on the war. now the war is "over" and companies say they cant give good business guidance because of the economic weakness(caused by the war). go figure?!
what i do know is that corporate cost-cutting cannot continue at the current rate if we expect the economy to improve. people that cant find work cant be good consumers. corporations working off debt burdens and over capacity will not increase capital spending no matter how low rates are. retirees wont spend money if they fear for there financial well being as their wealth continues to errode and there incomes decrease.
as unpopular as it may be, some economists have begun putting up the "red flags" signaling the onset of a new recession. even our president, in his effort to get his tax package passed, has started whining about how bad the economy is. in his last effort to get the word out and promote his plan, he said "in january, when i first discussed the tax plan, the economy was in urgent need of an economic stimulus plan and now the need is even more urgent". yet he and his advisors all say the economy is fundamentally sound and most of the weakness is due to the war, so why pass tax cuts...mostly for the rich? the answer is political. he wants to get re-elected in 2004.
tax cuts, rate cuts, job cuts, cost cuts...the cutting will continue. probably in all areas. yet none will alleviate the economic pain that we will endure as a result of the economic boom we all experienced. time is the only cure for what is happening. the economic cleansing is in full swing and will continue for a few more years. the double-dip is upon us and there is no quick fix to ease its effects.
have a grateful day!
larry
Wednesday, April 09, 2003
I OVER-ESTIMATED IRAQS WILL
this is not easy for me but here goes. i wrote back in late march some of my thoughts about the war and since then things have transpired that would prove fairly clearly that i was wrong about how the war would progress. i was wrong about how saddam would respond to our invasion and i was wrong about how the arab world would react to the u.s. aggression. at least so far.
i have said all along that i was confident that we would be successful militarily, i just thought it would be a bit more difficult. in fact, i think what i was most wrong about was the will of the iraqi people. i have always thought that no matter the reason or result, arabs would not accept american troops on their soil. now that our marines have landed and the masses havent picked up arms against them, it seems that we will be able to set democracy in motion in the heart of the arab world. obviously this would be a very good thing as that would dispel the idea that the arabs would reject the americans even as they were being liberated from tyranny. yet if history is our guide, this warm welcome may not last.
i am not perfectly sure the situation will remain so welcoming for our troops, but so far so good. and thats a good thing even i believe would eliminate one boogy-man from the whole mix of uncertainties that still remain in what we are doing in the middle east. theres still many battles to be fought in the war for the hearts and minds of the arab world but so far i have over estimated their hatred of americans.
have a grateful day!
larry
this is not easy for me but here goes. i wrote back in late march some of my thoughts about the war and since then things have transpired that would prove fairly clearly that i was wrong about how the war would progress. i was wrong about how saddam would respond to our invasion and i was wrong about how the arab world would react to the u.s. aggression. at least so far.
i have said all along that i was confident that we would be successful militarily, i just thought it would be a bit more difficult. in fact, i think what i was most wrong about was the will of the iraqi people. i have always thought that no matter the reason or result, arabs would not accept american troops on their soil. now that our marines have landed and the masses havent picked up arms against them, it seems that we will be able to set democracy in motion in the heart of the arab world. obviously this would be a very good thing as that would dispel the idea that the arabs would reject the americans even as they were being liberated from tyranny. yet if history is our guide, this warm welcome may not last.
i am not perfectly sure the situation will remain so welcoming for our troops, but so far so good. and thats a good thing even i believe would eliminate one boogy-man from the whole mix of uncertainties that still remain in what we are doing in the middle east. theres still many battles to be fought in the war for the hearts and minds of the arab world but so far i have over estimated their hatred of americans.
have a grateful day!
larry
Tuesday, April 08, 2003
COUNTING ON THE "SHORTS"
lots of market strategists are counting on the "shorts" to add buying pressure to the markets recent run-up. the so called "melt-up" scenario where stocks vault higher as short sellers and long buyers all get on the stock buying locomotive to launch the market higher...much higher, is a widely held hope on the part of the bulls. counting on that might be the last BIG mistake these perma-bulls and market optimists make in the ongoing bear market that we are still in.
why you might ask? well, being firmly in the "bear camp" i continue to be encouraged and bolstered in my dismal outlook and pessimistic views of the future by the economic data that gets worse and worse. i know that it "always seems darkest before the dawn" and that "a bottom has to be put in sometime" and "all the bad news is baked in" and that we are "closer to the bottom than the top" and all those other bull mantra's that sedate and pacify investors. but the facts remain very clear...the economy is tilting towards another downturn (that would be a RECESSION) and nothing that happens in iraq will change those facts.
so hoping and in some cases praying for the shorts to save your portfolio from further capital destruction may well prove to be another error made by the masses and professionals as they all hope the bear market ends with a surge of enthusiasm upon saddams death or any other non-economic factor that will not improve business revenues, earnings, debt burdens, capital spending, hiring or any of the other real problems that are ailing the economy. so dont count on the shorts for a better market.
have a grateful day!
larry
lots of market strategists are counting on the "shorts" to add buying pressure to the markets recent run-up. the so called "melt-up" scenario where stocks vault higher as short sellers and long buyers all get on the stock buying locomotive to launch the market higher...much higher, is a widely held hope on the part of the bulls. counting on that might be the last BIG mistake these perma-bulls and market optimists make in the ongoing bear market that we are still in.
why you might ask? well, being firmly in the "bear camp" i continue to be encouraged and bolstered in my dismal outlook and pessimistic views of the future by the economic data that gets worse and worse. i know that it "always seems darkest before the dawn" and that "a bottom has to be put in sometime" and "all the bad news is baked in" and that we are "closer to the bottom than the top" and all those other bull mantra's that sedate and pacify investors. but the facts remain very clear...the economy is tilting towards another downturn (that would be a RECESSION) and nothing that happens in iraq will change those facts.
so hoping and in some cases praying for the shorts to save your portfolio from further capital destruction may well prove to be another error made by the masses and professionals as they all hope the bear market ends with a surge of enthusiasm upon saddams death or any other non-economic factor that will not improve business revenues, earnings, debt burdens, capital spending, hiring or any of the other real problems that are ailing the economy. so dont count on the shorts for a better market.
have a grateful day!
larry
WHEN WAR SMOKE DISIPATES THE ECONOMY'S PROBLEMS WILL BE EASIER TO SEE
militarily, this has been a remarkable couple of weeks. first the bombs started raining down on baghdad, some 13,000 precision guided ordinance were dropped throughout the country. then 100,000 ground troops stormed into iraq, took control of every city, reached saddams palace in 10 days, and secured all oil wells, bridges, dams and airstrips. today we have found the 'smoking barrels' of chemicals. and finally american flags can be seen waving in the streets. and one more thing, we've killed saddam and his sons twice...so far! all thats left is putting in place some type of interim government and we can start bringing our troops home. are we good or what?!
economically, it has also been a remarkable couple of weeks. not one economic data point showed anything but weakness in the economy and yet the stock market rallied nicely in the face of all the lousy fundamentals. a victory of sorts if you dont care about whats really going on with businesses and the economy. but why bother worrying about fundamentals when every company is blaming the war, which is almost over, for their problems. the logic goes something like this. business is bad because of the war, so when the war is over, which should be any day now, business will be much better. so ignore our dismal earnings and lack of guidance going forward because everything will change soon.
why all the focus on the war? plain and simple, its a great excuse for a terrible business environment and it gives managements another few months to address the problems that have nothing to do with the war. i'll bet most ceo's hope the war wont end too quickly because then their excuse will be gone.
and when the war smoke screen is lifted, business and the economy will look much worse then it does now.
have a grateful day!
larry
militarily, this has been a remarkable couple of weeks. first the bombs started raining down on baghdad, some 13,000 precision guided ordinance were dropped throughout the country. then 100,000 ground troops stormed into iraq, took control of every city, reached saddams palace in 10 days, and secured all oil wells, bridges, dams and airstrips. today we have found the 'smoking barrels' of chemicals. and finally american flags can be seen waving in the streets. and one more thing, we've killed saddam and his sons twice...so far! all thats left is putting in place some type of interim government and we can start bringing our troops home. are we good or what?!
economically, it has also been a remarkable couple of weeks. not one economic data point showed anything but weakness in the economy and yet the stock market rallied nicely in the face of all the lousy fundamentals. a victory of sorts if you dont care about whats really going on with businesses and the economy. but why bother worrying about fundamentals when every company is blaming the war, which is almost over, for their problems. the logic goes something like this. business is bad because of the war, so when the war is over, which should be any day now, business will be much better. so ignore our dismal earnings and lack of guidance going forward because everything will change soon.
why all the focus on the war? plain and simple, its a great excuse for a terrible business environment and it gives managements another few months to address the problems that have nothing to do with the war. i'll bet most ceo's hope the war wont end too quickly because then their excuse will be gone.
and when the war smoke screen is lifted, business and the economy will look much worse then it does now.
have a grateful day!
larry
Friday, April 04, 2003
PATRIOTIC BEAR
i need to get something off my chest. if you are reading this blog you are probably someone who i've been speaking to for the past few months about my views and opinions about well, everything. mostly, i express my strong opinions about the economy and the geo-political events going on around the world. and mostly those opinions are well, negative. and i'm not a negative person. in fact i grew up in a very positive home and my mom sold self improvement and motivational tapes! you know brian tracy's "be the best you can be", wayne dyers "you'll see it when you believe it", dale carnegies "how to win friends and influence people", zig ziglars "reach for the top", etc., etc., etc.
that doesnt mean i cant be "bearish" in my investment outlook. it also doesnt mean that i cant think something bad will happen. and just because i'm bearish and think bad things will happen doesnt mean i'm not patriotic and it doesnt mean i am not a postive person. i am very patriotic. and i am positive more bad things will happen. i love america. i hate saddam hussein and all he stands for. i think he should be burned at the stake on pay-per-view! i don't want to see our troops die in the desert of iraq or afganistan or any where else. i don't want our country to be devastated by another terrorist attack. and i believe that sometime in the future the risks and uncertainties of all that may change and will be reduced. but not now or anytime soon!!!!
my economic outlook has nothing to do with my patriotism or saddam hussein. i am just being realistic about the ramifications of the war on the economy and the potential uncertainties and risks it creates for the world going forward. i am not 'rooting' for bad things to happen, i am just certain that they will happen. so if and when they do happen, i believe the "shocks" will cause further emotional, economic and geo-political damage.
i think wall street strategists and our political leaders are way too optimistic about the level of risk that still remains in our economy and the world. when the current "war celebration" is over, revenues, earnings and JOBS will matter. unrest and violence around the world will also matter, and it will be much worse than any of us are used to. at least thats what i think. i could be wrong and that would be great. but i could also be right and that would not be so good.
even with the recent military successes, companies have shown no signs of turning up their production or hiring. and since capacity has been cut over the past 12-18 months, even if demand did pick up over the next few weeks or months, companies would have difficulty satisfying a surge in demand. in fact, they may not even believe that it could last so they would be hesitant to increase capacity right away. state and local government budgets have all been cut and will be cut further due to lower tax reciepts. the federal government hasnt cut its budget because it continues to pile on the debt, which will cause its own problems in the future. none of this can or will change when the war is "over", whatever "over" means. and therefore we should be prepared for further economic weakness.
so i'm not unpatriotic and i'm not 'rooting' for bad things to happen. i would love all this bad stuff to go away and revisit the carefree and heady days of the 1990's. unfortunately thats not in the cards right now. so in a way i can control, in an enviroment where i feel so out of control, i am investing for the worst and hoping for the best. i am "bearish patriot"...and thats not an oxymoron.
have a grateful day!
larry
i need to get something off my chest. if you are reading this blog you are probably someone who i've been speaking to for the past few months about my views and opinions about well, everything. mostly, i express my strong opinions about the economy and the geo-political events going on around the world. and mostly those opinions are well, negative. and i'm not a negative person. in fact i grew up in a very positive home and my mom sold self improvement and motivational tapes! you know brian tracy's "be the best you can be", wayne dyers "you'll see it when you believe it", dale carnegies "how to win friends and influence people", zig ziglars "reach for the top", etc., etc., etc.
that doesnt mean i cant be "bearish" in my investment outlook. it also doesnt mean that i cant think something bad will happen. and just because i'm bearish and think bad things will happen doesnt mean i'm not patriotic and it doesnt mean i am not a postive person. i am very patriotic. and i am positive more bad things will happen. i love america. i hate saddam hussein and all he stands for. i think he should be burned at the stake on pay-per-view! i don't want to see our troops die in the desert of iraq or afganistan or any where else. i don't want our country to be devastated by another terrorist attack. and i believe that sometime in the future the risks and uncertainties of all that may change and will be reduced. but not now or anytime soon!!!!
my economic outlook has nothing to do with my patriotism or saddam hussein. i am just being realistic about the ramifications of the war on the economy and the potential uncertainties and risks it creates for the world going forward. i am not 'rooting' for bad things to happen, i am just certain that they will happen. so if and when they do happen, i believe the "shocks" will cause further emotional, economic and geo-political damage.
i think wall street strategists and our political leaders are way too optimistic about the level of risk that still remains in our economy and the world. when the current "war celebration" is over, revenues, earnings and JOBS will matter. unrest and violence around the world will also matter, and it will be much worse than any of us are used to. at least thats what i think. i could be wrong and that would be great. but i could also be right and that would not be so good.
even with the recent military successes, companies have shown no signs of turning up their production or hiring. and since capacity has been cut over the past 12-18 months, even if demand did pick up over the next few weeks or months, companies would have difficulty satisfying a surge in demand. in fact, they may not even believe that it could last so they would be hesitant to increase capacity right away. state and local government budgets have all been cut and will be cut further due to lower tax reciepts. the federal government hasnt cut its budget because it continues to pile on the debt, which will cause its own problems in the future. none of this can or will change when the war is "over", whatever "over" means. and therefore we should be prepared for further economic weakness.
so i'm not unpatriotic and i'm not 'rooting' for bad things to happen. i would love all this bad stuff to go away and revisit the carefree and heady days of the 1990's. unfortunately thats not in the cards right now. so in a way i can control, in an enviroment where i feel so out of control, i am investing for the worst and hoping for the best. i am "bearish patriot"...and thats not an oxymoron.
have a grateful day!
larry