20 Year Reunion

My 20-year high school reunion was this weekend....

It could have looked like this:



And as funny as that clip is, it didn't look anything like it. It was a blast.

I was a bit nervous to see the old gang I used to hang with because I had really only kept in touch with one of them (who is my best friend to this day). But as soon as we all saw each other it was as if not a day had passed. We laughed, talked, joked, and well yes, threw back a few just like we had seen each other yesterday.

I was amazed at how great everyone looked and the people putting the reunion together could not have done a better job.

Many in my graduating class (MVHS 1990) had done well for themselves professionally and financially. Though it is hard to tell, I had a feeling some of them were even doing OK personally and emotionally. (Success cannot be measured in dollar terms only.)

But anyway, thank you to my good, old friends and THANK YOU to anyone who reads and listens to my ranting on this blog - you have no idea how much I appreciate the readership!

(Also, to anyone following, please leave a link to your blog (if you have one) in my comments section. This will let me know it is ok to link it on my site.)

Thanks for a fabulous weekend!

Aayan Hirsi Ali

I just got done reading "Nomad" last week. Ms. Ali is absolutety brilliant. She is also extremely brave. She is a real feminist and is willing to put her life on the line to speak out for women's rights.

She spoke at a conference in Aspen today - very enlightening.

Market Indicators To Heed

From the NY Times:

http://www.cnbc.com/id/38589702

Romer quits? Wow, perhaps she got sick of spinning.

http://www.cnbc.com/id/38586136

Deflation Is Here

Question: How likely is a sustainable market rally in a deflationary environment?

Answer: Not likely at all.

Fed Sees Deflation

I have repeatedly written about the risk of deflation, arguing that this is what we are headed for.

http://econmom.blogspot.com/2009/11/inflation-vs-deflation-not-so-simple.html

Now, voting members of the FED seem to agree, or at least are proclaiming it in public.

http://www.nytimes.com/2010/07/30/business/economy/30fed.html?src=busln

Depression Averted?

Please read:
http://www.cnbc.com/id/38443309

Apparently, economists now freely admit that we were facing a Depression. And, miraculously, the government saved us from this terrible fate.

I am not buying it. The stimulus measures taken by the Fed and the Treasury only postpone the inevitable while adding a massive drag to future economic growth in the form of a higher debt burden.

The idea that a Depression has been averted rests on the assumptions that housing has bottomed, the consumer has recovered, and the banks are solvent.

None of these things are true. At best, we are in for a 10-15 year Japanese style recession.

Corporate profits driving the recent run-up in share prices are mostly based on cost cutting, not revenue growth. This is not sustainable without increasing the pace of layoffs.

Aggregate demand has not recovered. It has been propped up with toothpicks.

Again, to fully understand the nature of the fall-off in aggregate demand we are seeing, one has to ask what was driving GDP in the 15 years preceding this recession. The answer is this: primarily credit growth and increasing debt levels. Now, of course there was real growth in there, of course there is a healthy base under our sick economy, but the PRIMARY driver of the growth was DEBT.

From the Prudent Bear (who has clearly done more research than I have):
http://prudentbear.com/index.php/household-sector-debt-of-gdp

So, buy your stocks (not really), celebrate the "recovery". Enjoy... because it won't last.

Timing Is Everything

Obviously, Keynes was correct about one thing: markets can stay irrational longer than you can stay short.

That is where I am at right now. The investment banks must be making a killing, running the market up, only to short it and then make $ on the way down too.

I, however, am not a short term trader. I am placing directional bets with moderate time horizons, based on economic fundamentals.

Patience...