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  • The Room – 05/15/2009

    After a week of engaging in all manner of healthful activity, I am ready once again to tilt my lance against the armies of absurdity that assault the senses more or less constantly these days.

    This week, for instance, Alan Greenspan opined that the economy has bottomed, and the stock market actually rallied in response! It’s akin to Bernard Madoff announcing he is opening a new money management service from the secure facility where he now resides, and having investors rush all over themselves to hand him their money.

    Or how about these headlines......
  • The Room – 04/17/2009

    Being new to a profession is always a challenge. The neophyte wants to impress his superiors, but lacking experience, is left to rely upon what natural skills he possesses. And, often, will try to make up for any shortcomings in specific skills by displaying a double dose of enthusiasm and energy.

    Our new president, for example, has a great many skills related to successful politicking, but none at all specifically related to the task of being president of the world's most powerful country. This is not a job that one can prepare for.

    And so We the People, his new bosses, are left to observe Obama leaning heavily on his considerable political skills – and his obvious energy – in an attempt to impress.

    He is trying to do so through a constant stream of new pronouncements emanating from the White House, or wherever Mr. Obama happens to be standing at the moment. On one day he wishes to put an end to nuclear weapons, on the next to reach an accommodation with the Iranians. While he’s at it, he'll be (maybe) pulling the troops out of Iraq, but redeploying them into Afghanistan and maybe even Pakistan....
  • The Room – 04/03/2009

    In the March 6, 2009 edition of this missive/blog/column/whatever you want to call it, I listed three 'Desperate Measures' the U.S. government might turn to next in its futile attempt to rearrange the ruined economy into something more resembling a perfect world.

    Suspend 'mark to market' rules. At the time of my initial write-up (which you can read here), highly placed sources within the financial services industry that I spoke to were of the opinion that no significant changes would be made, for the simple reason that to do otherwise would risk destroying what little credibility was left for the financial sector.

    As you now know, the government has strong-armed the FASB into modifying the rules, essentially allowing companies to 'mark to model.' Which simply means that the same financial wizards who helped create the models so pivotal to causing the mess in the first place are now free to dust those models off, give them a little tweak, and use them to fabricate more attractive values for the toxic waste than the market was willing to assign. Some might term these rule changes outrageous, fraud even... I call it business as usual.

    Bad bank. The government has moved forward with this initiative as well, essentially rigging up a system that literally guarantees that a very small handful of firms -- likely just four or five -- will receive the sweetheart deal of the century, at the same time that the U.S. taxpayer gets the short end of the stick... right up the side of the head.

    Fed buys long-term Treasuries. This, too, has now come to pass and is likely to accelerate. While there are many ways that one could describe this latest initiative, I find it best to keep these things simple... it's called inflation....
  • The Room – 03/27/2009

    For this edition of The Room, I'm going to try to tell a story, but using snippets from other sources with, perhaps, a side comment thrown in now and again.

    I am taking this approach because, frankly, since hopping on the plane to Las Vegas last week, the sheer volume of proposed new regulations, legislation, and plain idiocy have outstripped my processing abilities. It seems that every hour or two over the past week, there has been a breaking story that has me saying out loud, 'What, are you kidding?' Or, 'Wow... we're really in trouble now!'

    It came to me as I started writing to you this morning, that these many stories – rather than just random spatters of inanity – together form a distinct pattern. And the pattern seems to point to a new paradigm now materializing here in the U.S. and, by extension, the world.

    As I think the following stories demonstrate, the new paradigm is not one any thinking person will embrace....
  • The Room – 03/06/2009

    Of late, it seems as though I have gotten sideways with the technology deities. First, as reported recently, was my accidental deletion of an hour-and-a-half recorded interview with trading gurus Dave Hightower and Terry Roggensack. Then, yesterday, while waiting to put in a phone appearance on the U.S. Global Funds Webinar that many of you sat in on, I carefully put my speaker phone on mute (you can tell it's on because the button lights up) and set about trying to wolf down a chicken salad sandwich before it became my turn to talk. This led to being reminded of several of life's little lessons. Including....
  • The Room – 02/27/2009

    This morning, as I was looking over dispatches from correspondents around the world -- from Ed in Alberta… Sadia in the UK… Baldy in Indonesia… the 'General' in Portugal...and Nitin in Katmandu -- I began to appreciate what it must have been like to be on the news desk during World War II. I am trying not to be overly pessimistic, but there’s no denying the mass of bad news coming to us from all fronts: the forces of collectivism are using the cover of the crisis they largely created, aided and abetted by capitalism’s quislings, to roll over the individual. Even so, contained within the dire reportage is also some very good news for you personally, and I’ll touch on that as well in today’s missive....
  • The Room - 10/24/2008

    I have woken in the pre-dawn to find our direst predictions coming true, with global stock markets taking yet another pounding and U.S. stock futures limit down. Serving as a proxy for the mindset now gripping governments around the world, French President Sarkozy has announced that the French government will, henceforth, buy shares in important French companies in an attempt to prop them up. 'We will intervene massively whenever a strategic enterprise needs our money,' said Sarkozy, a supposed economic conservative, as he pounded the table on behalf of nationalizing industry. The New Age of big government is upon us. Armed with Harry Potter-like magical monetary wands, they are wildly conjuring a deluge of money from thin air to bind the free market and keep it from facilitating the resolution of economic and investment dislocations created over decades. Bud Conrad tells me he is having a hard time adding up all the fiat money that has been committed to the battle for economic - and, by extension, political - survival over the past couple of months. The numbers rolling off the lips of officialdumb have progressed well past the hundreds of millions, or even hundreds of billions, and have now reached the trillions. In that theme, the Fed announced this week that it would drop over half a trillion - $540 billion, to be exact - on the purchase of suspect commercial paper now clogging the portfolios of 'safe harbor' money market funds. Given that there is a total of $3.4 trillion of your money resting in those very same funds, the commitment of $540 billion - about 16% of the total - should be taken as an indicator of just how bad the problem really is....