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Thoughts From The Frontline

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  • Further Thoughts on the Continuing Crisis

    When confronted about an apparent change of his opinions, John Maynard Keynes is reported to have said, 'When the facts change, I change my mind. What do you do, sir?' The earnings season for the 4th quarter is almost 80% complete, and the facts are dismal. It is worse than the current data shows, and could get uglier. Unemployment is increasing, and consumers are both saving more and spending less as incomes are not keeping pace with what little inflation there is. All in all, a very different set of facts than a few quarters ago. This week we examine some of the new facts, and start out by analyzing how Thoughts from the Frontline has done over the past two years with some of the more important predictions. It should make for an interesting letter....
  • The Problem With Deleveraging

    In general, we consider it a good thing to save money and to 'owe no man anything save love.' But what happens when a debt-happy society wakes up and decides that saving is a good thing for everybody? What happens when banks and hedge funds decide (or are forced) to reduce their debt? What happens when businesses of all sizes find it harder to get loans to operate? In this week's letter we discuss 'The Great Unwind,' that process of deleveraging that we are now in the midst of. We also explore some recent economic data on the economy. It's a lot of ground to cover, so let's jump right in....