COMFORTABLY NUMB
great title, great song, great way to deal with current world and economic events. a bit of a twist on "ignorance is bliss" but nonetheless it seems to describe the way many of us are feeling lately. its the feeling that we verbalize by saying "well, since theres nothing i can do about whats going on, i hope it will work out OK". we've all said it and we all feel it. so as events unfold and the world changes under our feet, we all use "everything will work out in time" as the mantra for seeing through the scary headlines and 24 hour war coverage. we use the power of positive thinking and repeat over and over to ourselves the comforting saying "things will work out fine, they always do". yet in the back of our minds we all know that this time things seem much more dangerous and uncertain.
as the media floods us with breaking news and our government does daily press conferences to reassure us, it all becomes a blurr. if you think about it too much it immobilizes you. if you try to ignore it you feel out of touch. yet going to work and spending time with family doesnt seem the same lately. there is a pall of nervousness and anxiety that hangs over us. even though it isnt affecting most of our day to day activities its still there. my fear is that soon it will affect us in a more direct and personal way. for our brave troops and their families its very personal. for us its just news.
maybe watching it so much is in some way preparing us for a more intimate relationship with it all. we are definitely becoming more callous about bombs exploding in cities and u.s. soldiers being held as POW's. we are getting used to the nightly reports about our soldiers getting killed. we are learning more about why most of the world dislikes america. we are learning more about the middle east and what it means in the world history. and we are learning that we have had it pretty good for a very long time. we are learning that things can change very fast. i hope they change back just as fast.
so until this all ends, i think i'll go listen to some pink floyd and hope things work out OK!
have a grateful day!
larry
Friday, March 28, 2003
Wednesday, March 26, 2003
RALLY IS OVER...LOOK OUT BELOW!
hopefully you have enjoyed the mini-bull market we have experienced since the war began. now its time to get ready for the war to begin for real and it wont help the market add to its gains. in fact, i believe the news flow will change dramatically for the worse and president bush will not be able to passify investors when it happens. as much as our leaders are telling us how well things are progressing in iraq, the war is getting out of control and very "off plan". we are fed a constant flow of conflicting reports from u.s. media presenting a positive 'spin' on the war progress, while non-u.s media interprets the news in an un-biased and often un-american way. each and every bit of information coming from the front is subject to wildly varying interpretation and analysis, none of which helps much in understanding whats really happening.
soon, that news will turn very bad by all interpretations as the battle for bahgdad begins and our soldiers start to be killed in large numbers. saddam hasnt been detered, and may in fact be emboldened by the world outrage at the u.s. aggression. now he has a chance to go down in history as the arab leader that defeated the american invaders. this is basically saddams nirvana for a perfect ending. my guess is he will not let any of his prophets down. i hope our soldiers and leaders can take it. unfortunately, the market will not be able to.
have a grateful day!
larry
hopefully you have enjoyed the mini-bull market we have experienced since the war began. now its time to get ready for the war to begin for real and it wont help the market add to its gains. in fact, i believe the news flow will change dramatically for the worse and president bush will not be able to passify investors when it happens. as much as our leaders are telling us how well things are progressing in iraq, the war is getting out of control and very "off plan". we are fed a constant flow of conflicting reports from u.s. media presenting a positive 'spin' on the war progress, while non-u.s media interprets the news in an un-biased and often un-american way. each and every bit of information coming from the front is subject to wildly varying interpretation and analysis, none of which helps much in understanding whats really happening.
soon, that news will turn very bad by all interpretations as the battle for bahgdad begins and our soldiers start to be killed in large numbers. saddam hasnt been detered, and may in fact be emboldened by the world outrage at the u.s. aggression. now he has a chance to go down in history as the arab leader that defeated the american invaders. this is basically saddams nirvana for a perfect ending. my guess is he will not let any of his prophets down. i hope our soldiers and leaders can take it. unfortunately, the market will not be able to.
have a grateful day!
larry
Tuesday, March 25, 2003
NOT SURE WHEN BUT VICTORY IS CERTAIN
each day we give the world good reason to think we are arrogant. in a confident, and what some might say brazen statement, president bush said today that "we cannot know the duration of this war, but yet we know its outcome. we will prevail." even as we have faced some of the fiercest fighting and weather difficulties of the conflict so far, with casualties mounting and POW's in the hands of saddams torturers, our president has committed himself to the war, no matter the cost. that was obvious in his supplemental budget request for $75 billion to fund the war and coerce allies to stay the course.
a list of them follows...
things that have gone 'wrong'
1) the u.s. could not get the u.n. to authorize the military action against iraq.
2) the u.s. could not get turkey to allow us to use it for a northern front.
3) "shock & awe" was a nice show but did not get saddam to surrender.
4) civilian casualties are mounting daily.
5) not 1 iraqi has greeted an american soldier with an american flag.
6) the weather is hampering our progress.
7) we have not found any chemical or biological weapons.
8) we have not fully prevented oil well fires.
9) worldwide protests are getting worse.
10) domestic support is waning rather than rising as we march towards bahgdad.
things have also gone 'right'
1) most of the oil is safe...at least for now.
2) some iraqi soldiers are surrendering...not as many as in the last gulf war.
3) the u.s. marines are 50 miles from bahgdad in 6 days...scared to cross 'red-line' and face saddams wrath.
4) many cities are secure, we think, and humanitarian aide has started to arrive, but much more is needed.
5) opec has not started an oil embargo...yet.
6) u.s. military casualties are minimal...so far.
7) chemicals weapons have not been used against our troops...yet.
8) israel has not been engaged by saddam...yet.
9) kuwait has not been successfully attacked...yet.
10) no terrorist attack/retaliation has occured in the u.s....yet.
11) no refugee crisis has developed...yet.
as you can see, the things that have gone right could still end up going into the 'wrong' column, but for now the lists are about even. unfortunately, i think that could change for the worse, regardless of how optimistic our president and military leaders are. and until they know for sure that we will 'win', and i'm not sure what a win will look like, we shouldnt be bragging about the victory.
have a grateful day!
larry
each day we give the world good reason to think we are arrogant. in a confident, and what some might say brazen statement, president bush said today that "we cannot know the duration of this war, but yet we know its outcome. we will prevail." even as we have faced some of the fiercest fighting and weather difficulties of the conflict so far, with casualties mounting and POW's in the hands of saddams torturers, our president has committed himself to the war, no matter the cost. that was obvious in his supplemental budget request for $75 billion to fund the war and coerce allies to stay the course.
a list of them follows...
things that have gone 'wrong'
1) the u.s. could not get the u.n. to authorize the military action against iraq.
2) the u.s. could not get turkey to allow us to use it for a northern front.
3) "shock & awe" was a nice show but did not get saddam to surrender.
4) civilian casualties are mounting daily.
5) not 1 iraqi has greeted an american soldier with an american flag.
6) the weather is hampering our progress.
7) we have not found any chemical or biological weapons.
8) we have not fully prevented oil well fires.
9) worldwide protests are getting worse.
10) domestic support is waning rather than rising as we march towards bahgdad.
things have also gone 'right'
1) most of the oil is safe...at least for now.
2) some iraqi soldiers are surrendering...not as many as in the last gulf war.
3) the u.s. marines are 50 miles from bahgdad in 6 days...scared to cross 'red-line' and face saddams wrath.
4) many cities are secure, we think, and humanitarian aide has started to arrive, but much more is needed.
5) opec has not started an oil embargo...yet.
6) u.s. military casualties are minimal...so far.
7) chemicals weapons have not been used against our troops...yet.
8) israel has not been engaged by saddam...yet.
9) kuwait has not been successfully attacked...yet.
10) no terrorist attack/retaliation has occured in the u.s....yet.
11) no refugee crisis has developed...yet.
as you can see, the things that have gone right could still end up going into the 'wrong' column, but for now the lists are about even. unfortunately, i think that could change for the worse, regardless of how optimistic our president and military leaders are. and until they know for sure that we will 'win', and i'm not sure what a win will look like, we shouldnt be bragging about the victory.
have a grateful day!
larry
Friday, March 21, 2003
SHOCKED & AWED
the u.s military has bombed bahgdad. the pictures on tv are amazing and the force being used is incredible. if saddam is still alive he cant be very happy about what is happening to his palaces or his empire. if the arab world is watching they are probably not happy either. now that the u.s. has decided to unleash all its fury on the arab world, we need to be ready for them to respond in-kind. obviously they will not try to invade the u.s. and they wont bomb washington d.c., at least not from the air. what we have started will take on a life of its own and will not end with our deafeat of saddam and occupation of iraq. saddam may be gone but the arab world will not soon forget the images of bahgdad being destroyed by the u.s. military. i worry about a day when the favor is returned.
the u.s military has bombed bahgdad. the pictures on tv are amazing and the force being used is incredible. if saddam is still alive he cant be very happy about what is happening to his palaces or his empire. if the arab world is watching they are probably not happy either. now that the u.s. has decided to unleash all its fury on the arab world, we need to be ready for them to respond in-kind. obviously they will not try to invade the u.s. and they wont bomb washington d.c., at least not from the air. what we have started will take on a life of its own and will not end with our deafeat of saddam and occupation of iraq. saddam may be gone but the arab world will not soon forget the images of bahgdad being destroyed by the u.s. military. i worry about a day when the favor is returned.
Wednesday, March 19, 2003
1/2 THE TAXES WITH 2x THE RISK
originally written 1/6/03
the newly proposed and soon to be implemented tax package is getting lots of investors very excited. its being billed as a $600billion tax cut over 10 years with the 'centerpiece' of the plan being a sizable cut in taxes paid on dividends paid by corporations. many market bulls are touting this as a superb reason to buy stocks that pay dividends. and so nobody gets left out, even stocks that dont pay dividends are rallying as some believe the new tax code will inspire them to start paying a dividend...microsoft was 1st and probably wont be the last... there, everybodys happy.
now for the reality of the situation. first of all, the tax plan is just a proposal. i know, i know...bush has control of the congress so his plan will get passed without any problems. NOT! the democrats have a few cards in their hand that they have yet to play and tax plans are notoriously watered down and in most cases they come too late to help in the way they were intended to.
secondly, lets say the prez gets what he wants. will it stimulate the economy? only time will tell. the problem may come when the companies that do pay dividends need to cut them if business continues to struggle.
thirdly, lowering tax rates on dividends doesnt reduce the risks of investing in stocks. in fact, it creates a false sense of security and even some speculative frenzy as investors 'bet' on an outcome that may or may not happen. in addition it encourages companies to payout earnings instead on reinvesting them into the business. thus it favors value rather than growth investments.
fourthly, (i know that sounds silly) any incentive for businesses not to reinvest earnings to grow their business is a "dis-incentive" for growth...which is what stock values are based on. if a company choses to pay-out earnings rather than reinvest them in the business, well then the earnings are taxed and growth slows. the result is not good for future capital expenditures or business growth.
with this so called 'bold' proposal, the administration is embarking on a new economic strategy of targeting the stock market and in fact is talking up the equity markets by promising this 'new and improved' stimulus. his advisors have convinced mr bush, as if he wasnt aware, that the economy will be more important in the next election than the war. they may have something there. being that the war will be quick and painless(according to the same advisors), we will need something else to focus on and that will be our stock portfolios.
bold is a good word but its an inappropriate one for this particular plan. stupid, ill-concieved, and ridiculous are adjectives used by more intelligent commentators than myself, but i think they fit much better. if we need stimulus now, then stimulate us now. and there are many ways to do that, yet none of them are in the plan proposed by mr. bush. maybe he is working this backwards, propose crazy stuff, then let the dems change it to be more for the middle class and then take credit for being a centrist and a president for the masses. im not sure his tact but so far he seems to be headed the wrong way on the economic path to recovery.
have a grateful day!
larry
originally written 1/6/03
the newly proposed and soon to be implemented tax package is getting lots of investors very excited. its being billed as a $600billion tax cut over 10 years with the 'centerpiece' of the plan being a sizable cut in taxes paid on dividends paid by corporations. many market bulls are touting this as a superb reason to buy stocks that pay dividends. and so nobody gets left out, even stocks that dont pay dividends are rallying as some believe the new tax code will inspire them to start paying a dividend...microsoft was 1st and probably wont be the last... there, everybodys happy.
now for the reality of the situation. first of all, the tax plan is just a proposal. i know, i know...bush has control of the congress so his plan will get passed without any problems. NOT! the democrats have a few cards in their hand that they have yet to play and tax plans are notoriously watered down and in most cases they come too late to help in the way they were intended to.
secondly, lets say the prez gets what he wants. will it stimulate the economy? only time will tell. the problem may come when the companies that do pay dividends need to cut them if business continues to struggle.
thirdly, lowering tax rates on dividends doesnt reduce the risks of investing in stocks. in fact, it creates a false sense of security and even some speculative frenzy as investors 'bet' on an outcome that may or may not happen. in addition it encourages companies to payout earnings instead on reinvesting them into the business. thus it favors value rather than growth investments.
fourthly, (i know that sounds silly) any incentive for businesses not to reinvest earnings to grow their business is a "dis-incentive" for growth...which is what stock values are based on. if a company choses to pay-out earnings rather than reinvest them in the business, well then the earnings are taxed and growth slows. the result is not good for future capital expenditures or business growth.
with this so called 'bold' proposal, the administration is embarking on a new economic strategy of targeting the stock market and in fact is talking up the equity markets by promising this 'new and improved' stimulus. his advisors have convinced mr bush, as if he wasnt aware, that the economy will be more important in the next election than the war. they may have something there. being that the war will be quick and painless(according to the same advisors), we will need something else to focus on and that will be our stock portfolios.
bold is a good word but its an inappropriate one for this particular plan. stupid, ill-concieved, and ridiculous are adjectives used by more intelligent commentators than myself, but i think they fit much better. if we need stimulus now, then stimulate us now. and there are many ways to do that, yet none of them are in the plan proposed by mr. bush. maybe he is working this backwards, propose crazy stuff, then let the dems change it to be more for the middle class and then take credit for being a centrist and a president for the masses. im not sure his tact but so far he seems to be headed the wrong way on the economic path to recovery.
have a grateful day!
larry
Tuesday, March 18, 2003
ONE THING HAS NOTHING TO DO WITH THE OTHER
war and the economy have nothing to do with each other. not a popular viewpoint but the fact of the matter is its true. so far there hasnt been a shot fired yet almost every company and economic report has cited the war with iraq for causing uncertainty that has resulted in poor business performance and outlooks. nice scapegoat but the facts do not support that reasoning. let me try to elaborate.
computer sales are not down because of the war, they are down because we all have enough computing capacity to surf the web and balance our checkbooks and businesses have only recently finished upgrading their hardware. there is no 'killer app' and there is over capacity in every area of the technology industry which may take many more years to work off.
auto sales are not being affected by the war, in fact they have continued to stay strong in spite of the war. what is causing auto sales to slow is the deteriorating jobs market and almost two years of 0% financing and other gimmicks that pulled demand forward. in addition, cars on the road are 'younger' and better built than 5 years ago so they do not need to be replaced as often.
the airline industry may have been somewhat affected by the war issue, but they have had almost 2 years to adjust and still the bankruptcies will continue due to over capacity and high fixed costs. the airline industry has needed a complete re-organization for many years and todays enviroment will force that to take place.
advertising is always cyclical and we are in a down cycle currently.
telecommunications is a mess regardless of the war. can you say "over capacity", "debt" and "chapter 11"?
insurance is dealing with its own problems including guarantee loss benefits and poor actuarial management.
homebuilding has been positively effected by the FED, cant blame problems here on the war.
entertainment should be doing great as its an easy and inexpensive escape from the war news...so dont blame the war.
defense is certainly not being adversely affected by the war, more bombs and military equiptment should be a boon to this industry but other factors are having a more detremental effect on their busines than the DOD orders are helping.
banking is being affected by higher credit loss rates and lower demand for loans.
brokerage is being affected by the bear market, conflicts of interest scandals, fraud, corporate malfeasence and lousy advice to clients.
retail is being effected by the employment market and its own over capacity.
restaurants are being affected by higher costs of labor, healthcare and energy plus how many new stores can be opened without canabalizations.
oils should be doing better with the war concerns as they should be benefiting from higher energy prices and firm demand.
transportation is being hurt by higher costs and lower rates combined with too much capacity.
capital goods are being affected by higher costs and lower revenues.
commercial property is suffering form 'phantom' tenants, rising vacancies and lower lease rates. these problems are a result of the boom time when companies over leased planning for further expansions. in addition, companies are downsizing to meet more realistic needs.
what will affect business and the economy is if the war spreads outside of iraq or becomes a "real" battle within iraq. then every industry and the world economy will be affected in a very bad way. for now though its just a plain old recession-like economic enviroment that is causing business to be difficult. that will not change by defeating saddam hussein or capturing osama bin laden. most americans have not changed the way they live or spend due to the war or the 'high' terror alert level. thats what makes us great, i guess. to blame the economic malaise on the war is just a bad excuse and once the war is over, which it will be shortly, the real issues that are effecting the economy will rise to the surface. then we may hope for a war with north korea so we can blame the economic problems on kim jong il.
have a grateful day!
larry
war and the economy have nothing to do with each other. not a popular viewpoint but the fact of the matter is its true. so far there hasnt been a shot fired yet almost every company and economic report has cited the war with iraq for causing uncertainty that has resulted in poor business performance and outlooks. nice scapegoat but the facts do not support that reasoning. let me try to elaborate.
computer sales are not down because of the war, they are down because we all have enough computing capacity to surf the web and balance our checkbooks and businesses have only recently finished upgrading their hardware. there is no 'killer app' and there is over capacity in every area of the technology industry which may take many more years to work off.
auto sales are not being affected by the war, in fact they have continued to stay strong in spite of the war. what is causing auto sales to slow is the deteriorating jobs market and almost two years of 0% financing and other gimmicks that pulled demand forward. in addition, cars on the road are 'younger' and better built than 5 years ago so they do not need to be replaced as often.
the airline industry may have been somewhat affected by the war issue, but they have had almost 2 years to adjust and still the bankruptcies will continue due to over capacity and high fixed costs. the airline industry has needed a complete re-organization for many years and todays enviroment will force that to take place.
advertising is always cyclical and we are in a down cycle currently.
telecommunications is a mess regardless of the war. can you say "over capacity", "debt" and "chapter 11"?
insurance is dealing with its own problems including guarantee loss benefits and poor actuarial management.
homebuilding has been positively effected by the FED, cant blame problems here on the war.
entertainment should be doing great as its an easy and inexpensive escape from the war news...so dont blame the war.
defense is certainly not being adversely affected by the war, more bombs and military equiptment should be a boon to this industry but other factors are having a more detremental effect on their busines than the DOD orders are helping.
banking is being affected by higher credit loss rates and lower demand for loans.
brokerage is being affected by the bear market, conflicts of interest scandals, fraud, corporate malfeasence and lousy advice to clients.
retail is being effected by the employment market and its own over capacity.
restaurants are being affected by higher costs of labor, healthcare and energy plus how many new stores can be opened without canabalizations.
oils should be doing better with the war concerns as they should be benefiting from higher energy prices and firm demand.
transportation is being hurt by higher costs and lower rates combined with too much capacity.
capital goods are being affected by higher costs and lower revenues.
commercial property is suffering form 'phantom' tenants, rising vacancies and lower lease rates. these problems are a result of the boom time when companies over leased planning for further expansions. in addition, companies are downsizing to meet more realistic needs.
what will affect business and the economy is if the war spreads outside of iraq or becomes a "real" battle within iraq. then every industry and the world economy will be affected in a very bad way. for now though its just a plain old recession-like economic enviroment that is causing business to be difficult. that will not change by defeating saddam hussein or capturing osama bin laden. most americans have not changed the way they live or spend due to the war or the 'high' terror alert level. thats what makes us great, i guess. to blame the economic malaise on the war is just a bad excuse and once the war is over, which it will be shortly, the real issues that are effecting the economy will rise to the surface. then we may hope for a war with north korea so we can blame the economic problems on kim jong il.
have a grateful day!
larry
Monday, March 17, 2003
WINNING BEFORE THE GAME IS PLAYED or COUNTING THE CHICKENS BEFORE THEY HATCH
as predicted and promoted by the various interested parties, the market is greeting the start of war with a rally. in fact, its playing out exactly according to the gulf war 'playbook'. so far, the market has tacked on about 9% from the intra-day low of 7418 on march 12th without a shot being fired or a U.S. troop in bahgdad. with its special x-ray vision its seeing through all the risk and uncertainty to a better day. once the troops begin the assualt oil will drop to $25/brl, gold will fall back into oblivion below $300/oz., and business will resume to pre-war levels. whew. glad thats over with. all this waiting and wondering how and what will happen was killing me. only thing i dont understand is how and what will REALLY happen and how it will REALLY effect the world or the U.S. economy. so far its just alot of guess work as nobody knows the actual outcome of the impending conflict.
throughout my life i've been cautioned not to count on things happening the way i foresee prior to them happening, thus the cliche', "dont count your chickens before they hatch". obviously, this does not apply to wars conducted by the U.S., as victory has already been declared and the equity markets are 'chicken counting' already. problem is the chickens havent yet hatched!?!
detatils, details. why worry about that when we've been told what to expect and that we can handle whatever happens, even though we dont know what will happen, in the process of dethrowning saddam. so now that we have the uncertainty of actual hostilities behind us we can look forward to "normal" economic news flows and business news that will not blame war fears for earnings shortfalls, now we will have war outcomes to deal with. we can take it a step further if we want, and the market seems to want to, and foresee that businesses will spend again, rehire fired workers and stop cutting employee benefits. the resolution to the iraq situation will also allow pensions to become over-funded again, automobile manfacturers will eliminate incentives, airlines will fill up all the seats, retailers will see mall traffic improve, unemployment will head back to 4%, bankruptcies will fall back to normal levels, and we may even go to a blue terror alert. the list of potential positive results goes on and on but none of them have occured yet.
all i know is that i'd like to get this result from all my personal endeavors...i.e. winning prior to playing. not the usual course of events but nevermind that, just put a notch in the 'win' column and lets move on to the next game.
have a grateful day!
larry
as predicted and promoted by the various interested parties, the market is greeting the start of war with a rally. in fact, its playing out exactly according to the gulf war 'playbook'. so far, the market has tacked on about 9% from the intra-day low of 7418 on march 12th without a shot being fired or a U.S. troop in bahgdad. with its special x-ray vision its seeing through all the risk and uncertainty to a better day. once the troops begin the assualt oil will drop to $25/brl, gold will fall back into oblivion below $300/oz., and business will resume to pre-war levels. whew. glad thats over with. all this waiting and wondering how and what will happen was killing me. only thing i dont understand is how and what will REALLY happen and how it will REALLY effect the world or the U.S. economy. so far its just alot of guess work as nobody knows the actual outcome of the impending conflict.
throughout my life i've been cautioned not to count on things happening the way i foresee prior to them happening, thus the cliche', "dont count your chickens before they hatch". obviously, this does not apply to wars conducted by the U.S., as victory has already been declared and the equity markets are 'chicken counting' already. problem is the chickens havent yet hatched!?!
detatils, details. why worry about that when we've been told what to expect and that we can handle whatever happens, even though we dont know what will happen, in the process of dethrowning saddam. so now that we have the uncertainty of actual hostilities behind us we can look forward to "normal" economic news flows and business news that will not blame war fears for earnings shortfalls, now we will have war outcomes to deal with. we can take it a step further if we want, and the market seems to want to, and foresee that businesses will spend again, rehire fired workers and stop cutting employee benefits. the resolution to the iraq situation will also allow pensions to become over-funded again, automobile manfacturers will eliminate incentives, airlines will fill up all the seats, retailers will see mall traffic improve, unemployment will head back to 4%, bankruptcies will fall back to normal levels, and we may even go to a blue terror alert. the list of potential positive results goes on and on but none of them have occured yet.
all i know is that i'd like to get this result from all my personal endeavors...i.e. winning prior to playing. not the usual course of events but nevermind that, just put a notch in the 'win' column and lets move on to the next game.
have a grateful day!
larry
Friday, March 14, 2003
MARKET PERFECTION
the bulls have been talking about it for months now, and as sure as winter will turn to spring in just a few days, the market will rally when the bombs drop, so why not get a jump on it? thats what seems to have happened yesterday with the markets having their best day of the year (maybe three years). even as the economic data showed continued weakness, the anticipation of war was enough to scare the bears and the battered bulls into equities in the most frenentic activity of the year, and again possibly in three years. if we could only predict the weather so well? market perfection is here again. or is it?
what exactly was the catalyst for such an exciting move in the market? was it the 7 years lows for all the european borses? was it the 20 years lows for the japanese indexes? was it the terrible rift going on in the UN? could it have been the all-time highs for gasoline? or the 40 year lows on treasuries? was it the mass demonstrations and denunciations of america all around the world? was it the looming prospect of a multi-year occupation of the middle east to spread democracy? maybe it was the hope that all these things are about as bad as they can get and they are sure to get better soon? i guess the last one is it, as none of the 'real' things that are ongoing would justify a rally of yesterdays proportion.
but after such a long and pronounced downturn, investors will take it and hope that theres more to come. as a voice of sensability, i will point out that every rally that has occured over the last 3 years, no matter the strength or size of it, has FAILED. and failed miserably causing further destruction of capital. therefore, before we get too happy about what happened and may continue to happen, heed this warning, until the economic and geo-political problems are resolved, each rally in the market is a selling opportunity and a chance to liquidate holdings at better prices.
the bulls are very quick to jump all over the rally and proclaim victory over the bearish story about double-dip recessions and war/terror fears. long waiting optimists are also jumping up and down saying that they knew that the war was the problem and now, even before the war situation is clarified, the economy will begin to improve. just like that, easy as pie, back to bullish forecasts and optimistic outlooks. not so fast.
first of all, the war thing isnt resolved just yet. secondly, the economy isnt better today then it was last week, last month, or last year. thirdly, there are still a miriad of risks and uncertainties looming out there that havent been addressed or resolved to any degree. so to think that things are turning is just plain speculation. there is no fact or reality in the thesis that once the war with iraq is resolved, either with or without force, our economy or geo-political situation will improve. in fact, theres much more evidence to the contrary. i dont want to throw cold water on all the good feelings created by yesterdays rally (well, maybe i do) but to treat it as anything more than a short covering panic and buying surge of one day would be foolish and dangerous.
the bulls and the market have alot to prove before the bear market will be pronounced dead. maybe yesterday is the beginning of that and maybe its not. for the time being, caution and skepticism would be the better part of valour. and as the song by the who goes, "we wont be fooled again!"
have a grateful day!
larry
the bulls have been talking about it for months now, and as sure as winter will turn to spring in just a few days, the market will rally when the bombs drop, so why not get a jump on it? thats what seems to have happened yesterday with the markets having their best day of the year (maybe three years). even as the economic data showed continued weakness, the anticipation of war was enough to scare the bears and the battered bulls into equities in the most frenentic activity of the year, and again possibly in three years. if we could only predict the weather so well? market perfection is here again. or is it?
what exactly was the catalyst for such an exciting move in the market? was it the 7 years lows for all the european borses? was it the 20 years lows for the japanese indexes? was it the terrible rift going on in the UN? could it have been the all-time highs for gasoline? or the 40 year lows on treasuries? was it the mass demonstrations and denunciations of america all around the world? was it the looming prospect of a multi-year occupation of the middle east to spread democracy? maybe it was the hope that all these things are about as bad as they can get and they are sure to get better soon? i guess the last one is it, as none of the 'real' things that are ongoing would justify a rally of yesterdays proportion.
but after such a long and pronounced downturn, investors will take it and hope that theres more to come. as a voice of sensability, i will point out that every rally that has occured over the last 3 years, no matter the strength or size of it, has FAILED. and failed miserably causing further destruction of capital. therefore, before we get too happy about what happened and may continue to happen, heed this warning, until the economic and geo-political problems are resolved, each rally in the market is a selling opportunity and a chance to liquidate holdings at better prices.
the bulls are very quick to jump all over the rally and proclaim victory over the bearish story about double-dip recessions and war/terror fears. long waiting optimists are also jumping up and down saying that they knew that the war was the problem and now, even before the war situation is clarified, the economy will begin to improve. just like that, easy as pie, back to bullish forecasts and optimistic outlooks. not so fast.
first of all, the war thing isnt resolved just yet. secondly, the economy isnt better today then it was last week, last month, or last year. thirdly, there are still a miriad of risks and uncertainties looming out there that havent been addressed or resolved to any degree. so to think that things are turning is just plain speculation. there is no fact or reality in the thesis that once the war with iraq is resolved, either with or without force, our economy or geo-political situation will improve. in fact, theres much more evidence to the contrary. i dont want to throw cold water on all the good feelings created by yesterdays rally (well, maybe i do) but to treat it as anything more than a short covering panic and buying surge of one day would be foolish and dangerous.
the bulls and the market have alot to prove before the bear market will be pronounced dead. maybe yesterday is the beginning of that and maybe its not. for the time being, caution and skepticism would be the better part of valour. and as the song by the who goes, "we wont be fooled again!"
have a grateful day!
larry
Wednesday, March 12, 2003
MAYBE THE ECONOMY IS NOT FUNDAMENTALLY SOUND
over the past few years one of the key mantras for many of the die hard believers in the stock market and the economy is the unsubstantiated statement that proclaims "the economy is fundamentally sound". so ambiguous and non-specific is the statement that it is unrebuttable and even more unrefuttable. at least today. looking out a bit, we may get some 'real' proof to back up this theory of soundness or we may get a rude awakening proving otherwise.
as i observe the economic landscape, there seems to be a number of 'unsound' things occuring in our economy that look alot like looming crisis rather than economic health. instead of broad brush statements, i will point out what i am seeing and why it is the farthest thing from economic stability or soundness.
currently, the airline industry is on the verge of a "domino" bankruptcy and reorganization. two of the 10 largest carriers are in chapter 11 bankruptcy and a third is going to file shortly. one of those already in chapter 11 is not far from a chapter 7 filing or liquidation. capacity, costs and management all need fixing. and anyone who blames this on 9/11 or the looming war is just using that for cover as the industry was in dire straits prior to these events. so to think that once the war is over it will be ok is just plain wrong and uninformed. the model is broken and the industry must reorganize and operate differently going forward, war or no war.
the auto industry is flooding the market with vehicles in order to keep production lines running. the model for success in detroit has become a model of failure as manufacturers are controlled by their costs and unions rather than supply and demand. the past two years has forced the issue for these american industry dinosuars compelling them to try and maintain demand when its really not there. the result will be similar to what happened in our steel industry where we couldnt compete and capacity vs. demand became so out of balance that the businesses implodded on themselves. add the pension problems to the mix and i see nothing healthy in one of the countries most important industries and employers.
in all economic downturns, banks get particular attention. for one thing they are the ones who hold all the notes from when things were booming. when the recession comes, their business slows as demand for money drys up and credit losses increase under the strain of the downturn. this past boom was unique for the banks which could potentially prove extrememly challenging for this industry. during the boomtime, banks became financial 'superstores' selling a whole variety of financial services, all linked to the health of the borrower and the economy, both of which are now struggling mightily. add to this the newly outted derivative concerns and this seems like a volatile mix of financial risk that has not yet manifested itself. when it does, the health of our banking industry will be in question.
previous industry leaders such as enron, kmart, worldcom, adelphia communications in addition to many other technology, telecommunications, and energy companies are all operating under the protection of the bankruptcy courts due to there mismanagement or fraud. these huge companies add to the financial challenges of the 'good' companies in their respective industries and forces unfair competition in an already difficult economic enviroment. when its one or two bad apples it can be worked through. when its a list as long as we have now, its unhealthy and unsound and puts even more strain on our free market system.
i would be remiss if i didnt give an honorable mention to the stock market. i know that it isnt an "industry" perse, but it has become increasingly more important to the health and well being of our previously vibrant economy. instead of a long dissertation about how important the equity markets are to our economic system, suffice to say they are very important. in fact, almost every financial projection and forecast is somewhat reliant on the stability and soundness of the stock market. since you dont need me to inform you that the stock market is in serious trouble, its fairly clear that this 'industry' too is in a very bad way and will continue to be if my observations are even a little bit correct. pension returns, insurance actuarial tables, retirement plans of all types, finacial derivatives, etc, etc, etc, all rely on 'returns' of those equities. returns, not losses, which have been prevalent for the past 3 years and now into a fourth, are intricate and vital to the financial system and without them, many financial assumptions and forecasts must be changed. and not in a favorable way. evidence in fact of further economic "unsoundness".
hopefully, you are starting to get the picture of how fundamentally distressed things are. i can pile on some more but i wont, at least not now. we are at a critical time in our country's economic history and it wont be looked back on with much nostalgia. we have been all but guaranteed that things will work themselves out with the help of our omnipotent federal reserve and some politically motivated tax breaks. i continue to argue that financial mechanisms that worked in the past will not work now because we are in a different time with structural problems that need to be fixed the hard way. unless we realize that and learn from what happened in japan (i know we are not japan, but our economy might be) the realizations that are sure to come will be that much harder to cope with and fix.
and just in case you were wondering, i dont think the economy is fundamentally sound.
have a grateful day!
larry
over the past few years one of the key mantras for many of the die hard believers in the stock market and the economy is the unsubstantiated statement that proclaims "the economy is fundamentally sound". so ambiguous and non-specific is the statement that it is unrebuttable and even more unrefuttable. at least today. looking out a bit, we may get some 'real' proof to back up this theory of soundness or we may get a rude awakening proving otherwise.
as i observe the economic landscape, there seems to be a number of 'unsound' things occuring in our economy that look alot like looming crisis rather than economic health. instead of broad brush statements, i will point out what i am seeing and why it is the farthest thing from economic stability or soundness.
currently, the airline industry is on the verge of a "domino" bankruptcy and reorganization. two of the 10 largest carriers are in chapter 11 bankruptcy and a third is going to file shortly. one of those already in chapter 11 is not far from a chapter 7 filing or liquidation. capacity, costs and management all need fixing. and anyone who blames this on 9/11 or the looming war is just using that for cover as the industry was in dire straits prior to these events. so to think that once the war is over it will be ok is just plain wrong and uninformed. the model is broken and the industry must reorganize and operate differently going forward, war or no war.
the auto industry is flooding the market with vehicles in order to keep production lines running. the model for success in detroit has become a model of failure as manufacturers are controlled by their costs and unions rather than supply and demand. the past two years has forced the issue for these american industry dinosuars compelling them to try and maintain demand when its really not there. the result will be similar to what happened in our steel industry where we couldnt compete and capacity vs. demand became so out of balance that the businesses implodded on themselves. add the pension problems to the mix and i see nothing healthy in one of the countries most important industries and employers.
in all economic downturns, banks get particular attention. for one thing they are the ones who hold all the notes from when things were booming. when the recession comes, their business slows as demand for money drys up and credit losses increase under the strain of the downturn. this past boom was unique for the banks which could potentially prove extrememly challenging for this industry. during the boomtime, banks became financial 'superstores' selling a whole variety of financial services, all linked to the health of the borrower and the economy, both of which are now struggling mightily. add to this the newly outted derivative concerns and this seems like a volatile mix of financial risk that has not yet manifested itself. when it does, the health of our banking industry will be in question.
previous industry leaders such as enron, kmart, worldcom, adelphia communications in addition to many other technology, telecommunications, and energy companies are all operating under the protection of the bankruptcy courts due to there mismanagement or fraud. these huge companies add to the financial challenges of the 'good' companies in their respective industries and forces unfair competition in an already difficult economic enviroment. when its one or two bad apples it can be worked through. when its a list as long as we have now, its unhealthy and unsound and puts even more strain on our free market system.
i would be remiss if i didnt give an honorable mention to the stock market. i know that it isnt an "industry" perse, but it has become increasingly more important to the health and well being of our previously vibrant economy. instead of a long dissertation about how important the equity markets are to our economic system, suffice to say they are very important. in fact, almost every financial projection and forecast is somewhat reliant on the stability and soundness of the stock market. since you dont need me to inform you that the stock market is in serious trouble, its fairly clear that this 'industry' too is in a very bad way and will continue to be if my observations are even a little bit correct. pension returns, insurance actuarial tables, retirement plans of all types, finacial derivatives, etc, etc, etc, all rely on 'returns' of those equities. returns, not losses, which have been prevalent for the past 3 years and now into a fourth, are intricate and vital to the financial system and without them, many financial assumptions and forecasts must be changed. and not in a favorable way. evidence in fact of further economic "unsoundness".
hopefully, you are starting to get the picture of how fundamentally distressed things are. i can pile on some more but i wont, at least not now. we are at a critical time in our country's economic history and it wont be looked back on with much nostalgia. we have been all but guaranteed that things will work themselves out with the help of our omnipotent federal reserve and some politically motivated tax breaks. i continue to argue that financial mechanisms that worked in the past will not work now because we are in a different time with structural problems that need to be fixed the hard way. unless we realize that and learn from what happened in japan (i know we are not japan, but our economy might be) the realizations that are sure to come will be that much harder to cope with and fix.
and just in case you were wondering, i dont think the economy is fundamentally sound.
have a grateful day!
larry
Monday, March 10, 2003
LACK OF MARKET FUEL
theres an interesting dynamic within all equity markets that creates the interest and enthusiasm which invariably causes over valued assets. this is what happens during a bull market. during the accumulation period, investors begin to leverage there profits to buy even more equities and thus further over inflating the values. what allows for this is the 'fuel' of ever increasing buying power that feels compelled into the market it was born from. during the ensuing bear market, what was once a source of 'fuel' becomes a vacuum for whatever buying power gets created. the market inevitably "drys up" and trading volumes disappear because with ongoing losses, not only is no new buying power or 'fuel' created, but assets deteriorate and become worth-less.
we have been witnessing a real life example of this phenomenea during the past few months. trading volume on all exchanges has declined by around 30% and much of the volume is in shares that trade at less than $5/share. a dollar weighted calculation of the amount of dollars being traded is probably less than 50% of the volume during the bull market.
you may be wondering whats the significance of this to my investments. first, all bear markets are marked by miserably low volumes. there a saying on wall street that goes something like..."you can go broke on light volume". anyway, the point is this. we can all agree that there is no enthusaism or 'fuel' for the market. yet there are people who need to use there stocks to retire. in order to get the money they need they must sell more "volume" of securities or mutual fund shares in order to provide the same amount of money. so there a lousy supply and demand situation and the market volumes are so low that supply will continue to push the values down. the bear market is in all its glory.
have a grateful day!
larry
theres an interesting dynamic within all equity markets that creates the interest and enthusiasm which invariably causes over valued assets. this is what happens during a bull market. during the accumulation period, investors begin to leverage there profits to buy even more equities and thus further over inflating the values. what allows for this is the 'fuel' of ever increasing buying power that feels compelled into the market it was born from. during the ensuing bear market, what was once a source of 'fuel' becomes a vacuum for whatever buying power gets created. the market inevitably "drys up" and trading volumes disappear because with ongoing losses, not only is no new buying power or 'fuel' created, but assets deteriorate and become worth-less.
we have been witnessing a real life example of this phenomenea during the past few months. trading volume on all exchanges has declined by around 30% and much of the volume is in shares that trade at less than $5/share. a dollar weighted calculation of the amount of dollars being traded is probably less than 50% of the volume during the bull market.
you may be wondering whats the significance of this to my investments. first, all bear markets are marked by miserably low volumes. there a saying on wall street that goes something like..."you can go broke on light volume". anyway, the point is this. we can all agree that there is no enthusaism or 'fuel' for the market. yet there are people who need to use there stocks to retire. in order to get the money they need they must sell more "volume" of securities or mutual fund shares in order to provide the same amount of money. so there a lousy supply and demand situation and the market volumes are so low that supply will continue to push the values down. the bear market is in all its glory.
have a grateful day!
larry
TALK ABOUT NUCLEAR PROLIFERATION
its an all out sprint to start enriching uranium or build more nuclear weapons as fast as they can, hopefully before washington is done disarming iraq. seems that the other two countries in the 'evil axis', iran and north korea, are moving forward as fast as possible to put in place a sufficiently large nuclear detterant to prevent mr. bush from coming to there hometowns with the dauntingly large disarming force that is now surrounding iraq. and who'd blame them.
as we tee up to launch the largest attack in military history, saddam's buddies are preparing to prevent the same fate from happening to them. or maybe they will call out washington upon the attack of iraq, and let it be known that they really are an 'axis' and will support each other against mr. bush and the u.s. military. not likely but not out of the realm of possibility. if nothing else, both iran and north korea would like nothing more than to keep president bush from even thinking about changing the regimes in their countries. and the best way to do that is to have some weapons of mass destruction to keep the u.s. military at bay.
the recipe seems fairly obvious. if you have nukes washington will not bother you and may even give you more 'aide' for you to steal for your starving population. if you dont have nukes, the u.s military is on its way to make sure you never do and to unseat you from power. simple enough. thus, get nukes fast!
have a grateful day!
larry
its an all out sprint to start enriching uranium or build more nuclear weapons as fast as they can, hopefully before washington is done disarming iraq. seems that the other two countries in the 'evil axis', iran and north korea, are moving forward as fast as possible to put in place a sufficiently large nuclear detterant to prevent mr. bush from coming to there hometowns with the dauntingly large disarming force that is now surrounding iraq. and who'd blame them.
as we tee up to launch the largest attack in military history, saddam's buddies are preparing to prevent the same fate from happening to them. or maybe they will call out washington upon the attack of iraq, and let it be known that they really are an 'axis' and will support each other against mr. bush and the u.s. military. not likely but not out of the realm of possibility. if nothing else, both iran and north korea would like nothing more than to keep president bush from even thinking about changing the regimes in their countries. and the best way to do that is to have some weapons of mass destruction to keep the u.s. military at bay.
the recipe seems fairly obvious. if you have nukes washington will not bother you and may even give you more 'aide' for you to steal for your starving population. if you dont have nukes, the u.s military is on its way to make sure you never do and to unseat you from power. simple enough. thus, get nukes fast!
have a grateful day!
larry
Saturday, March 08, 2003
WOULD YOU LIKE A SINGLE OR A DOUBLE?
with most things, anytime you can get two of them you are happy. one scoop or two? a single or a double? one lump or two? two for the price of one. except when it comes to recessions, thank you. yet, with the latest reading of the employment report, it seems fairly clear to me that the economy has started the next leg down in what will turn into a double dip recession. YIKES!
the words not out yet, so you are one of the first to know. but i'm sure over the next few weeks, it will become more clear to all the polyannas out there, that regardless of how fundamentally sound and strong our economy is, we too can fall into economic downturns that last longer than we want.
and even with all the FED jiggering and jaw boning, no longer can the financial mechanics fix what they admittedly couldnt prevent or recognize while it was happening. the equity market bubble and its devastating aftermath. only time and economic 'cleansing' can resolve our current situation.
the good news is, one dip is behind us and we are about 3 years into the correction process. we can only hope that means its more than halfway over. the bad news is, the second dip is staring us right in the face and it could be worse than the first dip. lets hope not. if it is, we will all be having more singles of everthing we like.
have a grateful day!
larry
with most things, anytime you can get two of them you are happy. one scoop or two? a single or a double? one lump or two? two for the price of one. except when it comes to recessions, thank you. yet, with the latest reading of the employment report, it seems fairly clear to me that the economy has started the next leg down in what will turn into a double dip recession. YIKES!
the words not out yet, so you are one of the first to know. but i'm sure over the next few weeks, it will become more clear to all the polyannas out there, that regardless of how fundamentally sound and strong our economy is, we too can fall into economic downturns that last longer than we want.
and even with all the FED jiggering and jaw boning, no longer can the financial mechanics fix what they admittedly couldnt prevent or recognize while it was happening. the equity market bubble and its devastating aftermath. only time and economic 'cleansing' can resolve our current situation.
the good news is, one dip is behind us and we are about 3 years into the correction process. we can only hope that means its more than halfway over. the bad news is, the second dip is staring us right in the face and it could be worse than the first dip. lets hope not. if it is, we will all be having more singles of everthing we like.
have a grateful day!
larry
THE PRESIDENTS POISON
after watching president bush hold his "Q & A" session with reporters on IRAQ, i came to the conclusion that the president has picked his poison. no longer was his presidency going to be defined by his lack of verbal skills or his cowboy-like gestures. it wont be defined by enviromental achievements or futuristic innovations. and it certainly will not be defined by economic success. george w. bush's presidency will be defined by his effectiveness in conquering all the evils in the world, or he will die trying.
mr. bush is pinning his entire political career and legacy on the war on terror, iraq and any other rouge, undemocratic, tyrannical government in the world. its a bold innitiative and probably a worthy one. its also a very hard and dangerous one. yet by listening to the president, you get the sense that its not only a goal for him but its a calling of sorts. this is his duty and moral obligation. not only protect america but to free the world from oppression and suffering at the hands of vicious dictators.
he seems very genuine about his committment to this mission, even if he isnt being encouraged or supported by everyone around him or around the world. but as the leader of the free world, and the oppressed world for that matter, he can decide to take on this project using all his power and americas wealth to achieve it. hopefully he will be successful at changing the way others around the world live and hopefully they will be thankful for what he is doing. but theres a good chance they wont and theirs an even better chance he will fail at this monumental undertaking.
what it will guarantee is the following. if 1 year from now we are in the throws of military conflict with some scary dictator, the debate for the next election will not be about the lousy economy or the broken medicare system. the debate will be about who can lead the country during a time of war and the liberation of the world. and since george w. started it, chances are we will want to let him finish it. in fact, none of the dozen or so dems now vying for the next chance to lead our country will even want the job.
i hope the president is being led to his decisions by some higher power rather than the objective to stay in power. the goals seem worthy and just. i just hope that the motives are as well. good luck mr. president.
have a grateful day!
larry
after watching president bush hold his "Q & A" session with reporters on IRAQ, i came to the conclusion that the president has picked his poison. no longer was his presidency going to be defined by his lack of verbal skills or his cowboy-like gestures. it wont be defined by enviromental achievements or futuristic innovations. and it certainly will not be defined by economic success. george w. bush's presidency will be defined by his effectiveness in conquering all the evils in the world, or he will die trying.
mr. bush is pinning his entire political career and legacy on the war on terror, iraq and any other rouge, undemocratic, tyrannical government in the world. its a bold innitiative and probably a worthy one. its also a very hard and dangerous one. yet by listening to the president, you get the sense that its not only a goal for him but its a calling of sorts. this is his duty and moral obligation. not only protect america but to free the world from oppression and suffering at the hands of vicious dictators.
he seems very genuine about his committment to this mission, even if he isnt being encouraged or supported by everyone around him or around the world. but as the leader of the free world, and the oppressed world for that matter, he can decide to take on this project using all his power and americas wealth to achieve it. hopefully he will be successful at changing the way others around the world live and hopefully they will be thankful for what he is doing. but theres a good chance they wont and theirs an even better chance he will fail at this monumental undertaking.
what it will guarantee is the following. if 1 year from now we are in the throws of military conflict with some scary dictator, the debate for the next election will not be about the lousy economy or the broken medicare system. the debate will be about who can lead the country during a time of war and the liberation of the world. and since george w. started it, chances are we will want to let him finish it. in fact, none of the dozen or so dems now vying for the next chance to lead our country will even want the job.
i hope the president is being led to his decisions by some higher power rather than the objective to stay in power. the goals seem worthy and just. i just hope that the motives are as well. good luck mr. president.
have a grateful day!
larry
Friday, March 07, 2003
THE MORE THINGS CHANGE, THE MORE THEY DON'T!
lots of news, lots of commentary, lots of speculation, and lots of uncertainty. friday march 7th and nothing has changed.
the most significant news that was made today had nothing to do with iraq, osama bin laden, or north korea. the data released on the state of the US labor market was a very significant datapoint that will hold the keys to the US economy for the next 6-12 months. in fact, i believe it will be looked back on as the start of a NEW recessionary period, the dreaded double-dip is upon us. war with iraq, capture of terrorists, or compliance by kim jong il will have NO EFFECT on how we spend our money or live our lives. it hasnt so far and it wont going forward. having a job will!
consumers havent stopped buying cars or houses during our march towards war with iraq or even during the scary orange alert periods. a snowstorm here and there has kept us from the malls but now that the snow is gone and spring is upon us, those of us lucky enough to still have a job or some credit left will be back shopping and doing what we do best...consume. high gas prices may eat into our consumption a bit but i'm sure we'll figure out how to leverage our earnings or assets to buy all that we want.
as for us caring if the war is 3 days or 3 months, i dont think we will care much. businesses may act more cautiously but as soon as the smoke clears, they will spend again as well. what will not change is the weakness in the general economic climate and the deteriorating asset base that all americans have experienced as a result of the 3 year bear market. add to that continued uncertainty about war and terrorism and well, things will remain the same...DEPRESSED. not soft, not sluggish, not cautiously optimistic or any other mollifying adjective trying to explain whats really going on. just plain old DEPRESSED.
i know you feel it. i feel it and i see it. i hear it everyday from clients, friends and family members. the capture of osama or his sons, the conquering of iraq, or some other geopolitical resolution to any number of various problems around the world wont fix whats wrong with the US economy or our personal finances. we are all working off the leftover debt and big lifestyles of the boom time. and that may take some more time rather than the domination of the world.
have a grateful day!
larry
lots of news, lots of commentary, lots of speculation, and lots of uncertainty. friday march 7th and nothing has changed.
the most significant news that was made today had nothing to do with iraq, osama bin laden, or north korea. the data released on the state of the US labor market was a very significant datapoint that will hold the keys to the US economy for the next 6-12 months. in fact, i believe it will be looked back on as the start of a NEW recessionary period, the dreaded double-dip is upon us. war with iraq, capture of terrorists, or compliance by kim jong il will have NO EFFECT on how we spend our money or live our lives. it hasnt so far and it wont going forward. having a job will!
consumers havent stopped buying cars or houses during our march towards war with iraq or even during the scary orange alert periods. a snowstorm here and there has kept us from the malls but now that the snow is gone and spring is upon us, those of us lucky enough to still have a job or some credit left will be back shopping and doing what we do best...consume. high gas prices may eat into our consumption a bit but i'm sure we'll figure out how to leverage our earnings or assets to buy all that we want.
as for us caring if the war is 3 days or 3 months, i dont think we will care much. businesses may act more cautiously but as soon as the smoke clears, they will spend again as well. what will not change is the weakness in the general economic climate and the deteriorating asset base that all americans have experienced as a result of the 3 year bear market. add to that continued uncertainty about war and terrorism and well, things will remain the same...DEPRESSED. not soft, not sluggish, not cautiously optimistic or any other mollifying adjective trying to explain whats really going on. just plain old DEPRESSED.
i know you feel it. i feel it and i see it. i hear it everyday from clients, friends and family members. the capture of osama or his sons, the conquering of iraq, or some other geopolitical resolution to any number of various problems around the world wont fix whats wrong with the US economy or our personal finances. we are all working off the leftover debt and big lifestyles of the boom time. and that may take some more time rather than the domination of the world.
have a grateful day!
larry