EconoFinancio Meanderings

Here are some observations on financial markets and our current
economic situation :

- Monday is the 40th anniversary of the "Bretton Woods" deal. You
can read about the significance of "Bretton Woods" on Wikipedia.
For me, it was a free and care free license for politicians to escape
accountability.

- People are talking about an "impending recession", "double dip
recession", "slow down" etc., but they don't realize that we never
really left it in the first place. Global growth of below 2% is a
recession, and it certainly feel like one. We are in the midst of one.
Next stop is a long winded Japan like deflationary depression.

- When the Federal Reserve says that they are inclined to keep rates
low for the next two years, they are essentially admitting that all
their machinations to prop up asset prices have failed and, that there
will be no growth in the economy. The 5 year bond yield is below
that of the prior move down in financial markets, the 2 year yield is
basically like that of a treasury bill, and the XLF (Index of financials)
is below that when TARP went into effect. What does all this mean?
Well, the bond market is telling us that there will be no growth of any
significance for the next two years. We are in the midst of, or headed
towards a deflationary depression.

- In prior blogs, I've written about the way private sector debt (financials
that were "rescued") turned into public sector debt (through tax payer
funded purchase programs). Even though SP500 companies are sitting
on gobs of cash, why would they want to spend it on hiring people if
they have nobody to sell to?

- Don't buy into these idiot wall street analyst types telling you that
SP500 valuation are great. There is a huge variance and huge errors in
the "Earnings" prognostication. P/E (Price/Earnings) ratios may look
great until the "Earnings" come down hard. There will be no earnings
growth!!!

- On a blog entry dated Oct 29th, 2008. I wrote :

"Credit excesses have not been wrung out of the system. All we've done
by the machinations of the TAF, PDCF, TSLF, CPFF, MMIFF,
ABCPMMMFLF....er, Yes, I mean the "TAF, PDCF, TSLF, CPFF, MMIFF,
ABCPMMMFLF" is to shift the problems onto the public balance sheets.
by risking taxpayer money. These stunts will sooner or later lead to a revolt
in the fixed income markets and will likely lead to a currency devaluation.
We will be a banana republic."

Make no mistake : Our idiot politicians have allowed this to happen all
these years and the public blindly chooses to vote against itself. Its illogical.
This is the result of us not being honest with what assets and liabilities we
have.

I also opined :

"As crazy as it may seem, the passing of the modification of the Mark to
Market rules is not coherent with the Geithner Plan (Public Private
Partnership)!! The Financial Accounting Standards (Rule 157e) will allow
banks to use their own models to value their assets and will allow them to
push the assets onto their Level 3 boxes. The Geithner "Public Partnership"
plan calls for "price discovery" and the FAS157e plan circumvents this
in a way. Go Figure!"

Now…COGITATE!

- aLV
Aug 14, 2011