You Must Watch Paul Solman on PBS

Paul Solman's recent reporting on the European debt crisis is excellent. If you want to understand the nature of what economic environment the world is facing and how far we have to go it is a MUST WATCH.

The video series is about halfway down on the right side of the page.

http://www.pbs.org/newshour/economy/makingsense/

Summer Parenting

Yes, I am still at home with my kids. When they are in school I have time for other pursuits, and now that they are getting older, I sometimes even have time when they are here.

This morning though, I was questioning my decision to be a "stay-at-home mom". It is mid-summer and I have been with kids every day, all day since summer started. (With the exception of a Mom's getaway weekend at the cabin.) The summer has been great, but I am starting to feel the wear, the need for adult conversation and some intellectual stimulation. Though I love catching tree frogs, I really am not the Martha Stewart type.

I try to care about paint colors, light fixtures, and the such, but in truth...I don't. I have gotten to be a pretty good cook, and though I enjoy the finished product, except for the rare recipe, I find the process rather tedious. Landscaping? Gardening? Forget it. I try to do my best and find joy in it sometimes...especially in the fall if anything I have planted is harvestable (I know, its not a word)...but really, it loses my interest quite quickly. If I had the money I would hire a gardener. Laundry and fashion? BORING with a capital B. And yes, I am a heterosexual woman.

No, I would rather read the Wall Street Journal, trade stocks, read a good book on Finance, Economics, Religion or Philosophy, or engage in a debate about some arcane economic theory.

This morning I found myself wondering why taking care of all the "details" of life is such a soul sucker. Why does being a "stay at home mom" mean hours of domestic drudgery? Sometimes, there is so much to do on the physical level (house keeping, maintenance, etc.) that I feel I am missing out on just "being" with the kids.

Back to this morning: I arose around 6:30am or so, early for summer because I couldn't sleep. Then I checked the stock market, made two separate breakfasts, fed the pets, cleaned the cat boxes, fed the ducks and birds (not necessary, but I enjoy it), started the laundry, made coffee, made a few necessary phone calls, decided what to do for the weekend, made a shopping list, balanced the checkbook, vacuumed, picked up dog doo, etc. etc...you get the point. Anyway, then the neighbor's annoying kid came over uninvited. (I actually like her - but every day?) She stepped in the dog doo doo (not the stuff I picked up, but a brand new pile), ran in my newly vacuumed house and tracked it all over the deck. Simultaneously the dog - who is 15 - had stepped in it too. She also tracked it all over the house, but I wasn't nearly as irritated with her - BECAUSE SHE IS GOING BLIND!!!!!!

So, I tried not to lose it. I tried not to think of all the money I could have made if I had put my career, not my kids, first. Let's see 11 yrs at an average of $100,000 a year - CRAP - $1.1 million! I avoided tears and yelling, but barely.

That is when my 11 year old daughter started cleaning the kitchen, vacuuming the basement, and then came up and gave me a big hug. "It's OK mom", she said. Then I think she said something about what a great Mom I was and how much she loved me and was glad I was home with her.

HOLY SH__!! I love that girl. I would love her even if she never did anything nice. She is just a good egg. But, in that moment, not only did I feel great love for her and from her, but I was proud of her - and myself.

Later this afternoon, in the midst of laundry, my 7 year old son said, "I have a great idea!" "Let's drill holes in this coco0nut and drink the milk out with a straw!" At first I hesitated, feeling I should get more work done, but then I said, "Cool, let's do it!" And we did. I drilled two holes because I thought the first wasn't big enough. He ran to the kitchen to get a straw and came back with two; he got one for me, too! So we drank coconut milk together and he said, with a beautiful grin and a sparkle in his eye, "Can you believe we are drinking from a seed?"

The universe has a benevolent side, and sometimes you see it right when you need it most.

I didn't stay home to be a Homemaker. I stayed home to have moments like that with my kids. I know people that work outside the home have moments like that too, but I am extremely thankful for mine, today.

Summer Of 2008 All Over Again

This summer (in the financial markets) feels just like the summer of 2008. That summer the DOW bounced around from 11,000 or so, to around 11,500.

On financial TV the debates went something like this:

Bull: The banks are fine, this sub prime thing is such a small portion of the market. We are way oversold. The market is going back to 14,000!

Bear: We are at the beginning of a major decline. The banks are in much worse shape than they appear. Get out now.

Then, the moderator would sort of snicker at the Bear, laugh with his/her co-moderator, and treat the bear as if they were a sort of cute chicken little.

We know what happened next. The Dow fell that fall from the mid-11,000's to the mid-8000's and didn't "bottom" out until the mid-6000's in March of 2009.

So, Joe Blow's 401k was cut roughly in half.

Now, he has almost made back what he lost, if he is lucky.

But this summer is eerily similar to that of 2008. The market keeps bouncing of that critical support of 1069 in the S & P. It is very painful in you are short, but I am pretty sure how this story ends.

The fundamentals have not changed. The banks in this country are not any better off. They have just been allowed to hide their losses. They cannot trade away their losses, even though they want to believe they can. The "stimulus" is over. It has come at a terrible cost of increasing debt and unemployment has barely budged. Households are still over-leveraged, and so are businesses.

For the average person out there, putting money into stocks just because you have no where else to put it is... well, it's just plain stupid. It is no different than going to the casino.

Of course, the market is way up today (though still in the range) and the media is gushing about the recovery. Home sales are falling off a cliff again and the index of leading economic indicators showed a decline for the third straight month. New jobless claims were also higher than expected today. But still, because of "earnings" the market is up over 200 points.

Makes a lot of sense, doesn't it?

I just noticed that today's volume in VERY LOW. It is Roughly 1/5th of the 10 day average volume. That makes this bounce even less convincing.

Critical Day?

Ok, yesterday turned out not to be THE day...technically speaking. Perhaps this is THE WEEK. Tomorrow's housing numbers will be interesting.

Still short...even if I will be waiting until fall for the payoff.

Critical Technical Level

1069 is a critical level for the S & P. Today is a critical day. If we close below 1069, the rest of the week may be very ugly...for the bulls that is.

Trade is very strange today. It is as if the bears and bulls are duking it out, playing a game of tug of war. Bulls are stubborn by definition, but if revenues continue to disappoint, they will lose this battle.

I am so tired of hearing people (media) say, "Why are banks and corporations hoarding cash?" I'll tell you why - AGGREGATE DEMAND! The economy was so over leveraged, any extra cash is going toward debt reduction and not toward consumption. Even if the extra cash is not being used to reduce debt levels, it is being saved to prepare for the coming severe economic downturn. THIS IS A GOOD THING. It will be very tough in the short run, but it will restore the fundamentals that allow a healthy economy based on innovation and investment, not OVER consumption to emerge.

Behold...the death of Keynesian economics is near.

Goldman Settlement

Really? Only $550 million? Unbelievable. The SEC must be totally in bed with the big investment banks.

Goldman was not required to admit fraud, but says it made a "mistake", by not disclosing to investors that John Paulson (who was short the instruments GS was selling) hand picked the securities in the fund. In other words, it was designed to fail, and Goldman collected money on both sides of the deal.

Big win for Goldman. Big embarrassment for the wimpy SEC.

Who Runs Wall Street?

Today is a great example of how program technical trading (designed by the "quants") rules Wall Street.

It's true: the stock market is a giant casino, manipulated by giant investment banks that are subsidized with our tax dollars. But only in the short run. In the long run they will all be dead, after making obscene amounts of money.(just a little dark humor)

Don't be fooled, this is a technical bounce. If you get in now you will get your face ripped off.

The price differential between near term puts (short bets or downside protection) on many stocks and intermediate term puts (ones which expire this fall) is huge. It is larger than it should be taking time into account.

This tells me this rally will fail. We could go as high as 10,600 first though.