James K Galbraith on Bill Moyers Journal

You know, when you take taxpayer money, you can't pay outrageous bonuses. Watch this video, it is fabulous. It is full of great historical economic information. Watching the son of John Kenneth Galbraith, who wrote the most famous book on the Crash of 1929, talk about the era we are now entering is both sobering and enlightening.

http://www.pbs.org/moyers/journal/10302009/watch.html

I do love Bill Moyers Journal, even if I disagree with him often on political issues. He is like the George Will of the Left. He is classy, well reasoned, and has a sort of anarchist disdain for power that I am drawn to.

One of the best points that comes out in the discussion is that the Obama administration is trying to restore what was, instead of dealing with what is. We cannot and should not restore what was. We must move forward and deal with what is. This is a fundamental shift in the economy, and fighting it is like fighting the tide. Debt levels must me reduced. Economic activity must shift toward investment and away from unsustainable consumption. If we are to ditch this bubble economy and experience real, healthy, sustainable growth, this must happen.

I share in common with Moyers, Galbraith and Will the astonishment and outrage at the behavior of the large financial institutions. Many of them ran themselves into the ground and took massive amounts of taxpayer dollars to bail their stupid selves out. Now they have the audacity to celebrate their so called return to profitability by paying egregious bonuses to traders who have access to FEDERAL FUNDS at nearly 0% and are risking taxpayer money manipulating stock prices. I apologize for the long sentence, but it really makes me mad! Worse, they have the gall to call themselves capitalists and so too are guilty of ruining capitalism's image for the good guys!

People, the outrage against the behavior of these money lenders is entirely justified. Their behavior is indeed outrageous, if not outright criminal.

Here We Go

Here we go, the VIX has spiked 25% so far today. Hold on for the ride, hope you sold last week.

That GDP number wasn't so great after all.
http://www.cnbc.com/id/33549682

I heard on NPR that Obama has proof that his stimulus has created or saved about 600,000 jobs. Too bad 500,000 were lost last week.

GDP 3.5%? No, "Cross-Addicted" Economy

3.5% Really? No, reeeeeeeeaaaaaaaaaallllllllllllly?

Here are the questions you should be asking yourself: Is it sustainable? Is it real? Is it accurate? Unfortunately the answer to all three is a big fat NO.

This guy came up with the term "cross-addicted" and I agree with him:

http://www.cnbc.com/id/33530661

What About Risk?

I get very irritated when people who are supposed to be investment "experts" talk about return without relating it to risk.

Over the last six months I have been wrong about the direction of the stock market. The bounce from the lows in March has been much bigger than I thought was possible. But then one of my failings is that I fail to realize the human minds potential to delude itself for long periods of time. (I do not exempt my own mind from this judgement.)

But to all of you who are so worried about missing the unprecedented run up we have has since the March low, I tell you this: you are ignoring risk. Return is a meaningless concept if risk is not considered.

Is a bond yielding a 16% annual return a good investment? Is it better than cash? The answer to both of these questions (as my favorite professor from CSOM said) is, IT DEPENDS. In this case it depends on a lot of factors, the most important being risk of default.

So, if you are an investor, not a trader, do not fret about missing this last run-up. It probably isn't sustainable (if you were in and stay in you will likely lose most if not all of your gains). If you are a trader, missing that run-up was a huge bummer. If you didn't miss it, lock in your profits now.

In the following video Rosenberg is right:

Worse Than The Great Depression?

Could the period we are entering end up being as bad or even worse than the Great Depression?

My humble answer: Yes. I simply do not buy the idea that because our economy is bigger, it is more resilient.

Now, I am not trying to depress you, just give you a chance to prepare for what may be coming. The temporary relief we are feeling from massive government stimulus is not sustainable.

As I have said before, our economy will recover, but it will take from 7-10 years for it to do so. The changes we are seeing are fundamental. They are going to change our economy from a debt driven one, to a more balanced one, where investment and exports catch up with consumerism.

The recovery process, though, while painful like withdrawal, is necessary if the healing of the economy is to be sustainable.

I just hope we don't have to hit rock bottom before we change our overspending, over consuming ways.

Here is an informative article for those who think things can't get as bad as the Great Depression this time:

http://www.cnbc.com/id/33481862

"Elliptical Delusion"

Kids are the best.

We have had a long month at our house. Two cases of H1N1, Strep, an attempted break-in, etc.

My son, after recovering quickly from H1N1 (Thanks Tami flu!) and being back at school healthy for a week, now has another low grade fever. (99.5) He is a bit congested and very tired. My daughter - after three weeks and a few days out of school (first Flu, then strep, then an allergic reaction to anti-biotics, and then a sinus infection) is finally healthy and back at school.

Perhaps I am losing it at this point, but in the midst of all this, my son was messing around on an ipod touch and says, "Look mom, I made an elliptical delusion." I haven't laughed so hard in a long time. "Honey, its an optical illusion," I said. "I don't care," he said, "To me it's an elliptical delusion!"

Kids are so wonderful. So we looked at some new elliptical delusions together.

Fear

Sometimes inspiration is hard to come by. This past few weeks have been that way for me.

Both of my kids were sick, one more so than the other. Mercifully, they are both doing fine.

If your kids having H1N1 doesn't scare the crap out of you, well then maybe having someone try to kick down the door into your house from the garage at 6:24am in the morning will.

Oh, all is well, the alarm system went off and scared them away. The police were here in minutes, and everyone is safe.

But I tell you what, if you haven't had that kind of experience you don't want to. It brings you face to face with FEAR.

On my journey toward inner peace, I have visited a state where fear is absent. Several times. Sometimes for long periods of time. The last few weeks have been a reminder that I have not defeated my demons for good. There is still much fear in me. So I have been asking myself after several sleepless nights, what is it exactly that I am afraid of? The answer seems to be so scary to talk about, perhaps even read about, be cause it is the ultimate fear for us all...Death.

The truth is that every single fear we have is rooted in one fear - fear of death. Go even deeper and you will realize it is a fear of life. How? We are afraid that what we view as our most precious gift, life, will be taken from us if we live it fully. Being unaware of this, many of us do not live life to its fullest.

Our ego falsely believes that fear of death will save us from it. It won't. We are all going to die someday. We don't know how, or when. Just if.

So what is the solution to this human conundrum? Mine is this:

Look Fear in the face and keep walking. Try to love as much as possible. Know fear is there, but don't let it control you. Believe me, if you don't know it's there, it will control you.

Know the difference between what you can control and what you can't. Control is sometimes beneficial on the physical level. (Alarm system, motion lights & perhaps a move to a better neighborhood, maybe even become a pistol packin' momma!)

At the same time realize who is really in charge. It is not us. Whatever, or whomever it is apparently thinks this Odyssey called human life is necessary.

My life is really pretty easy, abundant, and wonderful compared to that of most. I have won the lottery of life by just being born in the good old USA.

But regardless of class, race, or sex, we all have to face the same FEAR. Perhaps doing it early on on life makes us able to enjoy the rest more fully.