The Chatelaine's Keys

Sharon October 14th, 2009

You had plenty money, 1922
You let other women make a fool of you
Why don’t you do right, like some other men do?
Get out of here and get me some money too

You’re sittin’ down and wonderin’ what it’s all about
You ain’t got no money, they will put you out
Why don’t you do right, like some other men do?
Get out of here and get me some money too

If you had prepared twenty years ago
You wouldn’t be a-wanderin’ from door to door
Why don’t you do right, like some other men do?
Get out of here and get me some money too. – Peggy Lee

 The Dow broke 10,000 again today, and my favorite source of humor news, CNBC, has a range of headlines to make sure that somehow, at some level, they will be right sometime about something.  “October Crash Still on the Way: CEO” and “Dow at 11,000 to 11,500 by Christmas: Market Expert.”  The front story “Stock Market Rally Likely to Continue, but Hedge Your Portfolio:Pros.”  Hmmm… are these the same pros that think an October Crash is on the way or the ones that think that the Dow will be at 11,500?   Must be different pros – the good news is we’ve got a lot of them, and since they all completely missed the mark on the present situation, all of their guesses are equally good!  Yay!

Now my guesses couldn’t possibly be worse than the vast majority of financial advisors, but I make no claim they are better. I  don’t have the slightest idea where the Dow will be by Christmas.

What I do know is this – we still won’t have gotten anything meaningful to most Americans out of 14 Trillion plus in bailouts.  Stock market rallies look good – but they don’t actually help most of us all that much.  Unless they are sustained, those who rely on investments for income don’t get much out of it – and the fundamentals of our economy are deeply unstable - there’s nothing there to sustain a rally when we inevitably stop pouring in funds.  With the exception of a few people who can sell out now in the next few months, this rally isn’t likely to mean much for your long term economic well-being.  Most of us don’t profit from a rally in any deep or immediate way.

This rally, however, is what you bought.  That and a good bunch of road work.  And money for people who happened to have bought giant low mileage cars and wanted to change over.  To me it looks a lot like some rich fool  saying to me “I bought this awesome RV, and a jet ski…I didn’t pay the mortgage or the health insurance, and hey, there’s no food, but lookee at my jet ski.”  Sigh.

Back in December, when I made my annual predictions, I bet that things would go back to normal for a while, and so they have.  It is certainly possible that normal will extend out longer than I’d expected.  The problem, of course, is that “longer than I expected” is not the same as “for a really long time.”  At some point there won’t be enough money to pour into the system anymore – we’re getting awfully close to that point.  At some point we have to pay for the Jet Ski, or start watching out the window for the repo man.  At some point we start singing like Peggy Lee, lamenting what once was, “You had plenty money 1922, you let other women make a fool of you…”  Our turn as the world’s momentarily rich fool may not be over yet, but sooner or later, you got to do right.  And then we’re in trouble.

Sharon

• economy
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Sharon October 7th, 2009

It has been a while since I’ve had people post their updates of what they are seeing, but this article at Huffington Post encouraged me to ask how things are going in your neck of the woods?  Are things as much better as the news reports?  

I find myself fascinated by the insistence of the media that things are getting better – it is true that the stock market is up, and that the rate of job losses has declined slightly (although not nearly as much, we learn, as the reports suggest), but the idea that not losing quite so many jobs constitutes recovery is sort of fascinating.  The definition of “a good sign” or an indication of “recovery” keeps changing, and getting lower. 

Meanwhile, at the practical “affects how you actually live” level, things are getting worse.  Deflation seems to have taken full hold, state budget receipts are falling, leaving deficits that state constitutions don’t permit, and services for those most in need are falling.  The big question is how long the nation can borrow from the future to keep things going.

So what does this look like through your eyes?  Are things getting better?  Worse?  How about for your community?

Sharon

• America , economy
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Sharon September 9th, 2009

One of the things I find myself mystified by is how few people seem concerned about the role that government is taking in housing – recently the WSJ reported that the government now stands behind 90% of all new home loans – and many of those new loans are refinances, done in the face of lowered interest rates – that is, we are gradually moving towards government guarantee of the majority of private home loans.  The problems with this are manifest – Fannie and Freddie are already in trouble, and with no bottom in easy sight on the housing market, we are facing rapidly rising defaults.

 It is common to claim that last year, the economic crisis at Lehman Bros. nearly brought down the US economy.  The crisis at Fannie and Freddie is likely to be much more dramatic than that, and Ilargi does a really good job of explaining why today – it is worth a read.   If you think things have stabilized, seriously, think again.  http://theautomaticearth.blogspot.com/2009/09/september-9-2009-crime-that-will.html

Sharon

• economy
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Sharon August 10th, 2009

The chorus of “all better now” is getting louder.  Paul Krugman has joined the team, noting that even if you have moral objections to the bailout, it must have worked.  Sure.

 In order to believe this you must also believe several things:

  1.  There are no more shocks coming, since, after all, we’re still pretty shaky.  This requires that you pay no attention whatsoever to things like the state of Fannie Mae and Freddie Mac.  2. That a short term recovery now is a recovery indeed. This requires you pay no attention to things depressing consumer spending, like still rising unemployment and increasing debt. 3. That you believe that the government stimulus is not just buying us a cheap jump, but actually stimulating a sustained and sustainable level of economic growth – that is, that we’re going to keep buying cars after cash for clunkers runs out of money, or that we’re going to keep buying houses after we stop paying people to do so.  4. That none of the pipers are going to have to be paid soon. And finally it requires you believe that all the news is realy as good as it seems.  I don’t, and I honestly don’t see how it is possible.

 Here’s just one point, on the recent job numbers that have everyone cheering:

 http://blogs.reuters.com/rolfe-winkler/2009/08/08/beware-the-jobs-number/

 Recovery?!  My Aunt Fanny!

 Sharon

• economy
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Sharon July 29th, 2009

…it is much, much more sinister.  At least according to Bloomberg’s very funny Michael Lewis.

“Rumor No. 5: Goldman Sachs is “a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.”

Those words are of course taken from a recent issue of Rolling Stone magazine and they are transparently false.

For starters, the vampire squid doesn’t feed on human flesh. Ergo, no vampire squid would ever wrap itself around the face of humanity, except by accident. And nothing that happens at Goldman Sachs — nothing that Goldman Sachs thinks, nothing that Goldman Sachs feels, nothing that Goldman Sachs does –ever happens by accident.”

The best I could muster way back in October was a vision of Paulson and Bernanke, in preparation for erotic release, drinking and singing “And no one’s getting fat except Goldman Sachs.”  I swear, I was trying to be funny, not making serious predictions.  Uh-oh.

 Sharon

• America , economy
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