Some of the credit card changes has more do with changes in the laws that apply to credit cards that go into effect soon. Essentially, it will crack down on a lot of the worst actions of the cc companies, but in the run up they essentially have been enticed to push as many of their holders as possible into as poor terms as possible.

 

We really are throwing a crap load of money and easy money at that at the situation, which should help mitigate the situation. I do agree that we are in a perverse cycle - you can bet that when everyone is absolutely certain that we have reached the end of the modern industrial economy and that we start eating each other then things will perceptibly rally because the calmer heads prevail and folks think that maybe things can't be really that bad, then on the other side when folks think that maybe all of this is a dream and that we've successfully made our way through the rocky waters and its onward and upward then you can guarantee that the natural continuation of bad news will hit like a tsunami and down we go again.

 

I think we'll know that something has changed for the better when the bi-polar response weakens. Eventually, the mood will settle - I'm guessing in a mildly depressed state for the next 3-5 years, but it could be mildly optimistic - stranger things have happened.

 

Look, the Great Depression was caused by a series of perfectly poor decisions. We could end up in a poor situation but by making a couple decisions better things won't be quite so bad. Right now we are in the painful deleveraging process, which also includes wringing out parts of the economy that had survived due to the overinflated growth.

 

I firmly believe we will not have runs on the banks 30s style, because the feds will completely devalue the currency if necessary, by literally printing money to keep the monetary economy flowing. The big death spiral of Depression came when money disappeared in some places (Toledo esp., Cincy not at all).

It's far from over. We are still entirely reliant on cheap oil. If OPEC gets together and decides to take out the United States, we're done. All it takes is one quarter of oil prices over $200 a barrel, and the United States as we know it is history. It's scary as hell. We are at the mercy of other people. That's what happens when you're addicted to something. Even if we did emergency drilling here in the states in all our protected areas, it wouldn't be enough. The United States in no way, shape, or form can handle high oil prices. I'd say gas just being as high as $5 a gallon would ruin us right now. We've got to change our entire way of living, and we've got to change it fast. We don't know when oil prices will spike again.

 

Now the big question is, would they ever actually do this? After all, we are their biggest consumers. Does a drug dealer quit selling coke to his customers because he doesn't like them?

 

I agree. We continue to miss allocate our finite resources and money at a lifestyle that is not sustainable in the future. But, in my line of work I run into a lot of people that still today think the cul-de-sac is Shangri-La. I do think some American's are starting to get it, but it is a very slow process and may not change things fast enough.

The oil thing is big, but I actually think that we'd be able to handle the shift better in a downdraft than an updraft. If you are already changing your perspective, then perhaps a move to greater localism would accompany the shift. The last Depression wiped out a lot of mid-size companies, but also sprouted many small companies that really grew after WWII. I wonder if you might see a return to a more localized economy in some places - so long as they haven't fallen off the cliff.

Here the first few paragraphs of two articles posted in their entirety starting at:

 

http://www.urbanohio.com/forum2/index.php/topic,2706.msg381513.html#msg381513

 

---

Rising Fear of a Future Oil Shock

By JAD MOUAWAD

March 27, 2009

 

Sharp reductions in investments and low oil prices could curb future supplies by almost eight million barrels a day within the next five years, according to a study scheduled for release Friday, the latest warning that the world could face a new energy shock when the economy picks up.

 

The report by Cambridge Energy Research Associates, an oil consulting firm, said that the potential drop in production capacity is a “powerful and long-lasting aftershock following the oil price collapse.”

 

...

 

http://www.nytimes.com/2009/03/27/business/energy-environment/27oil.html?_r=1&th&emc=th

 

---

Financier sees oil shock from credit crunch

Thu Mar 26, 2009 8:56am EDT

By Christopher Johnson

 

LONDON (Reuters) - The global financial crisis and collapse in the oil market have stalled vital investment in oil exploration and production and are likely soon to lead to a sharp spike in prices, an energy consultant and financier says.

 

Matt Simmons, founder of Houston-based investment bank Simmons & Co, argues the underlying rate of decline of the world's aging oilfields is as much as 20 percent a year and only high levels of investment can reduce that to single digits.

 

With credit tight and oil prices almost $100 a barrel below their highs last year, oil companies are unable to sustain previous levels of spending and the result is falling production, he said in an interview on Thursday.

 

...

 

http://www.reuters.com/article/reutersComService_3_MOLT/idUSTRE52P2D620090326

One of my greatest fears is that we will only act on this after the full pain has been administered. We will wait until we are forced to change how we live. American's in general are determined to live the oil lifestyle to the bitter end. Maybe we have already waited to long (I don't know). But, I do know it takes years to build a quality mass transit system, to change our building patterns, etc... America needs to have a real down to earth reality check on how it built environment is not working. I just hope the reality check is not at the edge of the cliff.

I think people have already forgotten about last year's $4 gasoline and $5 diesel.  Last year some subdivisions started their own van & carpooling services...I'd love to see follow-ups on how many still operate.  In a more sustained oil shock I'd expect those sort of start-up carpooling services to expand significantly before government caught up.

 

I also think we'd see municipalities buy or rent charter buses (in any condition) to make up for inadequate suburban bus routing, and quickly adjust laws and contracts to make it possible, but again this would take upwards of six months for that to really get going, long after suburbanites had organized their own carpooling.  I also think this could work better than in the past because cell phones make it so much easier to coordinate and make last-minute changes.   

^

sort of a modern jitney thing.

 

I think people have already forgotten about last year's $4 gasoline and $5 diesel. Last year some subdivisions started their own van & carpooling services...I'd love to see follow-ups on how many still operate. In a more sustained oil shock I'd expect those sort of start-up carpooling services to expand significantly before government caught up.

 

I also think we'd see municipalities buy or rent charter buses (in any condition) to make up for inadequate suburban bus routing, and quickly adjust laws and contracts to make it possible, but again this would take upwards of six months for that to really get going, long after suburbanites had organized their own carpooling. I also think this could work better than in the past because cell phones make it so much easier to coordinate and make last-minute changes.

 

Most likely, gone for disuse.

 

Americans, and society in general, will opt out for transport with the lowest of ease -- the automobile. You can drive off from your driveway, remain fairly comfortable inside a weather-shielded vehicle, and arrive at your destination. It's generally the quickiest, not accounting for congestion.

 

There are a lot who view the European model with jealousy. They have an extensive highway and rail network, yet the reason they use mass transit over driving in any viable numbers is that their fuel tax is much higher than ours. If we increased our fuel tax to match theirs, I guarantee that we would be using other modes of transit - buses, followed by the construction of other modes as demand increases.

 

Price is generally the number one factor to using mass transit.

They also make vastly different choices about cars. They tend to buy smaller cars that are loaded up with all kinds of fru-fru stuff - the result is BMW's I-Drive system. This is why Ford and GM have long made great Euro market small cars and can't make them work here.

 

Anyway, some think gas could still touch 3 dollars a gallon before the spring gas rise is over.

Throughout this economic meltdown there has been moments when you step back and realize we are taking another significant step into another world. I think today may very well be one of those holy crap moments. The Goverment, Wall Street and the FEDs are in pure panic mode now.

 

"To assure consumers reluctant to buy GM or Chrysler cars, the government plans to take the unusual step of guaranteeing all warrantees on new cars from either company. These guarantees would lapse back to the companies once they return to health."

http://online.wsj.com/article/SB123841609048669495.html

 

"On Friday I was in Washington for a meeting with administration officials," Mr. Wagoner said in a statement released by GM. "In the course of that meeting, they requested that I 'step aside' as CEO of GM, and so I have."

http://online.wsj.com/article/SB123841609048669495.html

 

"In a White House speech, Obama said the IRS will start notifying consumers who purchased cars after Feb. 16 that they can deduct the cost of any sales and excise taxes. The program would remain in effect till year's end."

http://news.yahoo.com/s/ap/20090330/ap_on_go_pr_wh/obama_autos_incentives;_ylt=Av9RYh4RmMFi44Jv9bXBAK6yFz4D

How can we even possibly predict the length and depth of the current US Recession when they keep radically changing the rules all the time?

 

How can we even possibly predict the length and depth of the current US Recession when they keep radically changing the rules all the time?

 

 

I think confusion is part of the plan.

This can not and will not end well. What is most disturbing about this is we are not done pledges and providing money.

 

Financial Rescue Nears GDP as Pledges Top $12.8 Trillion (Update1)

By Mark Pittman and Bob Ivry

 

"March 31 (Bloomberg) -- The U.S. government and the Federal Reserve have spent, lent or committed $12.8 trillion, an amount that approaches the value of everything produced in the country last year, to stem the longest recession since the 1930s.

 

New pledges from the Fed, the Treasury Department and the Federal Deposit Insurance Corp. include $1 trillion for the Public-Private Investment Program, designed to help investors buy distressed loans and other assets from U.S. banks. The money works out to $42,105 for every man, woman and child in the U.S. and 14 times the $899.8 billion of currency in circulation. The nation’s gross domestic product was $14.2 trillion in 2008."

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=armOzfkwtCA4

That's since last summer. We are DONE.

That's since last summer. We are DONE.

^Completely and totally unsustainable....I hope everyone on here who has their eyes open to this is making preparations for what's coming down the pike, i.e. monster-inflation, food shortages, civil unrest. The government's actions make those likelier as the days go by. Do not trust what the media/govt is selling. Purchase as much precious metal as you can, have a stockpile of food, learn how to grow as much of your own as possible, have the means to protect your family and property, and pray for the best. The piper must be paid....it's gonna be a brave new world here in the good old USA if things don't radically change (I fear it's too late already).

"Hope for the best, prepare for the worst"

You know i would rather lost 10 million jobs than add 13 trillion to what we and our kids will owe.

You know i would rather lost 10 million jobs than add 13 trillion to what we and our kids will owe.

 

I think you will get both this time around  :x

 

Anyway, what the media doesn't report when the monthly job numbers is that the US economy needs to generate about 250,000 new jobs each month to absorb the population growth.

 

So when the gov't reports this friday that 650k jobs were lost last month, what they are really reporting is that we fell 900k short of generating needed jobs last month.

Speaking of changing the rules!

 

What is that I hear, click, click, click, there is no place like home, there is no place like home, .....

All the wishing and dreaming and click of shoes will not change the long term reality of the paper crap on the bank's spreadsheets. I would think people would be running out of the stock market realizing all reality has been suspended for fairytale hopes and dreams. When the final shoe finally drops on this ponzi scheme there will be dead silence in the room as everyone looks around in total shock.

 

FASB discussing changes to mark to market rules

 

"WASHINGTON (MarketWatch) - Responding to pressure applied by lawmakers on Capitol Hill, the Financial Accounting Standards Board on Thursday morning engaged in discussions to give auditors more flexibility in valuing illiquid mortgage assets that may have long-term value and strong cash flow. The agency is expected to approve the new guidance later today. The rules are expected to boost bank operating profits when they report first-quarter results later this month. It alters so-called mark-to-market rules, which require banks and other corporations to assign a value to an asset, such as mortgage securities, based on the current market price for the security. Banks have complained they can't sell non-distressed assets because of a lack of a market. The measure allows corporations to use "significant judgment" when valuing these securities-in other words, they can estimate the value based on cash flows on their balance sheets rather than using the value the asset would receive if sold immediately."

http://www.marketwatch.com/news/story/FASB-discussing-changes-mark-market/story.aspx?guid=%7BD4468C73%2DBF63%2D4738%2D80D6%2D7F973499E984%7D

I'm no economist, but this seems an altogether more reasonable way to value assets than the current "it's worth what the next sucker will pay" system.  I think that a lot of the economic troubles we've had over the last decade or so are based on that mentality driving our asset valuation.  Tech stocks, housing, oil, all these bubbles because people think something is worth what they can get the next sucker to pay for it- that's your ponzi scheme, not changing the rules to value things otherwise.  Base economic value on what revenue something can actually produce, and we wouldn't be facing this same story over and over again.

On the other hand (and I'm no economist either) I remember something about Enron getting into trouble with this kind of thing.  They trumped up values for worthless assets, by falsely attributing present vaules of estimated future revenues they imagined those assets might produce.  This is not to say that it couldn't be a valid way to price these mortgage bundles, but it sounds like they're doing it once again because it raises the value of a questionable asset from "squat" to "something other than squat."

Details of the valuation process matter, I'm sure.  And from there, I'll leave it to wiser economic heads than mine.

If one had a certain cast of mind, one might see the maintenance of mark to market for so long into the decline as a quiet (well not exactly quiet) way of bursting a bubble and forcing people to deleverage quickly.

So you mean: live by it, die by it?

This opens up a new can of worms in that how you accuratly estimate what something will generate.  If most of the people that are going to be doing this could I would hope we wouldn't be in the mess we currently are.

That's a good question.  It's also worth asking if one way or another we allow them to knowingly inaccurately estimate. 

We are knowingly allowing them to inaccurately estimate value. (legal fraud)

 

This is no different then telling a person, we know your TV would sell for $100 but, since its not good for you economically, we will let you tell us its worth $200.

 

The real issue is, its not worth $200 and will never be worth $200, but, this may give the banks a chance to unload more of this trash on the taxpayer down the road at inflated fantasy prices.

Is the TV only worth what it can be sold for?  Is everything exchange value?  Have we abandoned the notion that things have use value?  Why exchange them at all otherwise?  What if the TV (really the worst possible analogy, isn't it) can somehow generate me revenue?  Shouldn't how much revenue it can generate determine what it's worth?

I think when it comes to these assets that are based on physical property then it is only worth what someone else is willing to pay for it. Today. Could its value go up or down in the future, yes. But, buyers must be allowed to calculate the risk along with the physical value (which includes a calculation of what the property could generate).

 

I would agree that this 'paper' does have the value to generate revenue but, it has become very apparent that it is unable to generate what the original book value stated it would generate.

 

I agree that its value should be what it can generate. The problem with what the banks have done is that risk was not calculated into the book value correctly, so its worth is less than the booked value. Now, reality is showing that the risk was massive and that must be factored into its value (mark to market).

 

Is or will the market over correct, maybe, but with the value of these assets still declining on a monthly bases who knows. What is know is that the banks assessed values have already been proven inaccurate.

 

So why would we let the ones who incorrectly valued these assets in the first place, get to say that the outside market is still wrong on their value?

 

The problem I have with this 'valuation' process for banks is that you are letting the holder place a wish price on their assets, which have proven already not to be worth their original perceived value because the calculated risk that was used has already been exceeded.

I'm guessing real unemployment will reach 20% before it starts coming down. I think we are headed toward serious shifts in the labor market (remember married women were basically forced out of jobs during the Depression and the labor movement was invigorated by the idea of a family wage, that one man could support a family of 5 or 6). I'd also add that the family wage part of the labor ideology is absolutely essential to understanding why the car industry (and steel and most manufacturing) ended with such high labor costs. The unions aimed for a wage that could support a family rather than our current model which is basically set for supporting the individual and maybe another person.

^

Given the historical evidence in the surviving 19th / early 20th century neighborhoods I think the living wage or subsistence wage was enough to support fairly widespread homeownership in Midwestern citys like Dayton.  Yet Women were in the workforce back then, though (in Dayton in certain industrys like tobacco), and there wasn't the 8 hour day (which was a big goal of the early labor movement).

 

@@@

 

Good news (though I dont trust the stock market as it seems pretty volatile as an indicator).

 

Orders placed with U.S. factories actually rose in February, ending a six straight months of declines, the government reported Thursday. Earlier in the week, there was better-than-expected reports on construction spending and pending home sales. And last week a report showed that consumer spending — an engine of the economy — rose in February for the second month in a row — after a half-year of declines.

 

The job market traditionally doesn't rebound until well after a recovery starts. But the stock market generally bottoms out before the economy, and stocks have been rising for three weeks.

 

You know the BLS provides labor force stats by metro area.  You can take any metro area in the state and run various numbers by month.  The most recent month they have is this February, which is pretty recent.

 

 

 

 

I think we are headed toward serious shifts in the labor market (remember married women were basically forced out of jobs during the Depression and the labor movement was invigorated by the idea of a family wage, that one man could support a family of 5 or 6).

 

dmerkow,

 

Can you elaborate on this?  You have obviously studied local labor trends to a great degree.  What kinds of changes in labor markets do you anticipate over the next 20 years?  As to me, I can't see where housholds can afford to cut back on wage-earning potential one dime in this economic environment.  The only changes I can foresee is that a lot more part-time jobs will be created and filled, by would-be retirees, underemployed piecing together several jobs to make a living, etc.  Maybe the concept of a 40-hr/week full-time job with benefits will disappear?

I'll be honest, I don't know where we are headed, but clearly tectonic plates are shifting. We are in the process of losing the labor sponge of the last 30 years (retail). The call center world has been under attack for awhile due to outsourcing, I can't imagine call centers can create enough demand in a down market to keep their numbers high enough - unless it specializes in collections.

Manufacturing played that part for awhile, but always tended toward boom/bust. The biggest undiscussed shift in the labor markets between 1929 and roughly 1950 was the elimination of domestics as a dominant sponge of under utilized labor, especially women. To be middle class before 1929 was to support at least one domestic. We replaced people with washer/dryers, gas/electric stoves, microwaves, and so on. 

 

When we start to get a sense of what sectors of the economy survived, then we can start figuring out where the growth comes from. One option is that we really do become European for a decade or more as the feds soak up excess unemployment with increasingly large gov't industries. If we get stuck at our current level of unemployment (after getting worse for a while and then better as I expect), then I'd expect gov't to become the employer of last resort. Essentially our current labor picture is what Europe has had for 20 years or so - I'm talking straight line of course, not angle of the decline.

Do you mean stuck at around 8%-9%? 

 

 

Yeah, I imagine the official rate will get sticky around 8+%, with real unemployment running at the beginning of the recovery in the low 20s and trending down toward 15 or so over a few years. I doubt see any labor side inflationary pressure for quite a while. 

dmerkow,

Thanks for you comments on labor and employment.

The G20 moves the world a step closer to a global currency

The world is a step closer to a global currency, backed by a global central bank, running monetary policy for all humanity.

 

By Ambrose Evans-Pritchard

Last Updated: 2:06PM BST 03 Apr 2009

 

"A single clause in Point 19 of the communiqué issued by the G20 leaders amounts to revolution in the global financial order.

 

"We have agreed to support a general SDR allocation which will inject $250bn (£170bn) into the world economy and increase global liquidity," it said. SDRs are Special Drawing Rights, a synthetic paper currency issued by the International Monetary Fund that has lain dormant for half a century.

 

In effect, the G20 leaders have activated the IMF's power to create money and begin global "quantitative easing". In doing so, they are putting a de facto world currency into play. It is outside the control of any sovereign body. Conspiracy theorists will love it.

 

...

 

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/5096524/The-G20-moves-the-world-a-step-closer-to-a-global-currency.html

 

Has the process to potentially replace the dollar as the world currency begun? I think we have stepped forward towards a new world currency. Weather or not it becomes reality is yet to be seen.

dmerkow,

 

Thanks for your input.

 

I know a thing or two about call centers.... First, they are rapidly evolving into customer service centers since probably 50+% of customer orders in a large number of fields come over the web these days.  You don't need many order takers these days, but you do need a fair number of people to handle customer questions, returns, problems, etc.  I don't see much of that actual 'service' work going overseas.  The order-taking, yes.  But that represents a disappearing function for traditional call centers.

 

Secondly, call centers tend to be stepping stones in the employment path.  They are low paying.  They provide entry-level work for people, who tend to move on to better jobs after awhile (assuming they don't drop out of the call center jobs).    Right now there may not be many jobs to "move on to".  But in general, the low pay of the call center makes the economics of outsourcing less desirable than some other job tasks.

 

 

 

If I hadn't decided to waste away a decade in grad school, I would have had a call center lead to real job career path for one of the big textbook publishers in the region. The question becomes more about who is having enough economic activity to use the call/service center and thus to employ lots of people. This is essentially the return/continuance of the old clerk jobs that were so prevalent before the rise of the computer. 

The great commercial unwinding has begun.

 

Vacancies at U.S. Retail Centers Hit 10-Year High, Reis Says

By Hui-yong Yu

 

"April 8 (Bloomberg) -- Vacancies at U.S. malls and shopping centers rose to their highest in more than 10 years as consumer spending fell and stores closed in the recession, according to first-quarter data released today by Reis Inc.

 

More empty stores and lower rents are ahead “unless conditions change dramatically,” said Victor Calanog, director of research at the New York-based real estate research firm. He forecast the declines would last through next year."

http://www.bloomberg.com/apps/news?pid=20601087&sid=ag2nw7_BPdCI&refer=home

 

Something tells me there must be some real ugliness here if the FEDs are willing to basically say they are going to purposely delay this for Wall Street's benefit. I think it is also telling that they may just release a general view not company specific. What happened to the 'promised' transparency?

 

UPDATE 1-US to delay bank test results for earnings-source

 

"* Delay would avoid 1st quarter results period

* Source: Treasury still mulling stress test disclosure (Adds details on stress tests, byline)

By Karey Wutkowski

 

WASHINGTON, April 7 (Reuters) - The U.S. Treasury Department is planning to delay the release of any completed bank stress test results until after the first-quarter earnings season to avoid complicating stock market reaction, a source familiar with Treasury's discussions said on Tuesday.

 

The Treasury is still talking about how results of the regulatory stress tests on the 19 largest U.S. banks will be released, and may disclose them as summary results that are not institution-specific, the source said."

http://www.reuters.com/article/marketsnews/idINN0747118320090407?rpc=33

 

Next, Next, Step right up and get you taxpayer funds. Just amazing what we have become.

 

Reported U.S. aid lifts life insurance stocks

 

"NEW YORK (MarketWatch) -- Shares of U.S. life insurers rallied on Wednesday morning after a published report said the Treasury Department has decided to extend bailout funds to several struggling companies in the sector.

 

According to a report in The Wall Street Journal, the extension of the Troubled Asset Relief Program is expected to be announced in the next several days.

Keeping life insurers on a solid footing is seen as crucial to maintaining confidence, the report said."

http://www.marketwatch.com/news/story/Life-insurance-stocks-rally-report/story.aspx?guid=%7BB28EF085%2D2491%2D42D6%2DBBB1%2DAF0B1D867855%7D

This unfortunately is the problem with a trust/paper based financial system. If you lose faith in the pieces of paper you hold, it is hard to keep from all values heading toward zero. It become a form of economic nihilism. Three years ago every piece of paper was worth the sun and now they aren't worth the paper they are printed on.

OK, let me put on my 'tinfoil hat' and layout what I think the plan is. Rewrite mark to market allowing the banks to have a 'suprising' quarter (TARP money will also help). Develop a stress test that will basically show everyone is going to make it, which will give Wall Street a reason to party. This will then make things stable enough, for the moment, to send GM into bankruptcy without completely destroying the market. Main street on the other hand will feel this pain in many different ways.

 

FDIC BAIR(S) TEETH

TAKES TREASURY'S TIM TO TASK ON TALF STRESS TEST

By MARK DeCAMBRE

 

"The stress tests the government are about to conduct on some of the nation's largest banks is being blasted by insiders at Sheila Bair's Federal Deposit Insurance Corp., who say it's a pointless exercise that's more sizzle than steak.

 

The FDIC's basic beef with the stress test is that it is not a credible way to assess how much additional cash beaten-down banks will need to weather what many Wall Street experts predict will be more losses in the coming months.

 

The tests are conducted by the Treasury Department and the Federal Reserve on the nation's 19 biggest banks, including behemoths Citigroup, Bank of America and JPMorgan Chase.

 

"It's a sham," one source told The Post, describing the test as an "open-book, take-home exam" that doesn't actually work."

http://www.nypost.com/seven/04082009/business/fdic_bair_s__teeth_163380.htm

 

GM preparing for possible bankruptcy: report

 

"NEW YORK (MarketWatch) -- The U.S. Treasury is directing General Motors Corp. to lay the groundwork for a bankruptcy filing by a June 1 deadline, despite GM's public contention that it could still reorganize outside court, the New York Times reported Sunday, citing unnamed people with knowledge of the plans.

 

Members of President Obama's automotive task force are holding ongoing meetings and conference calls with GM officials and their advisers in Detroit and Washington, the report said, with the goal to prepare for a fast "surgical" bankruptcy."

http://www.marketwatch.com/news/story/GM-preparing-possible-bankruptcy-report/story.aspx?guid=%7B9BE2FACB%2DAE20%2D4915%2DACC0%2D382664116BBC%7D

 

If I had money in the game right now, I know I'd be heading for cash and fast. The first rule of surviving big bad bear markets is to sell the rallies and buy at the troughs. If this happens to be the beginning of the bull (and I have a nice house in the desert right by Las Vegas to sell ya), then you can buy in six months. When we head back down, then you haven't lost it all.

If I had money in the game right now, I know I'd be heading for cash and fast. The first rule of surviving big bad bear markets is to sell the rallies and buy at the troughs. If this happens to be the beginning of the bull (and I have a nice house in the desert right by Las Vegas to sell ya), then you can buy in six months. When we head back down, then you haven't lost it all.

 

I agree.  I don't think we've seen the worst yet.  We can't begin to turn around this year or next.  I just don't have faith that a turn around is going to happen.

Does anyone else find this almost funny (in a sad way)? How can this type of data still be a surprise? When does the 'analysts' finally lose all credibility? In general 'they' keep being surprised month after month. Here is a simple thought, unemployment continues to rise meaning less and less people have money to spend. Along with all the other economic issues that our country is facing, this 'prediction' should be pretty easy.

 

Retail sales fall unexpectedly in March

 

"WASHINGTON—Retail sales fell unexpectedly in March, delivering a setback to hopes that the economy's steep slide could be bottoming out.

The Commerce Department said Tuesday that retail sales dipped 1.1 percent in March. It was the biggest decline in three months and a much weaker showing than the 0.3 percent increase that analysts expected.

 

A big drop in auto sales led the overall slump in demand. Sales also plunged at clothing stores, appliance outlets and furniture stores."

http://www.denverpost.com/business/ci_12138619

 

It does makes you wonder how these people became analysts.  This, the fact that nobody seems to have learned anything, is why I think there should be a lot more management/analyst turnover mandated as part of any bailout.  The current people have been flat out wrong this entire time.  I'm serious when I direct them to our country's dire shortage of nursing assistants.  I don't think our economy is going anywhere until these idiots are relieved of command.

If I had money in the game right now, I know I'd be heading for cash and fast. The first rule of surviving big bad bear markets is to sell the rallies and buy at the troughs. If this happens to be the beginning of the bull (and I have a nice house in the desert right by Las Vegas to sell ya), then you can buy in six months. When we head back down, then you haven't lost it all.

 

I agree. I don't think we've seen the worst yet. We can't begin to turn around this year or next. I just don't have faith that a turn around is going to happen.

 

I thought we proved in the dotcom boom of the 90s that that kind of day trading can't possible be feasible in the long run.  The costs of running in and out of the market like that will not outweigh the gains without significant luck.  If you're going to buy at the trough, do it, and keep it.  You bought at the trough for a reason.  These financial analysts at Morgan Stanley, BofA, and that independent entity formerly known as Merrill can't beat the market.  There's no reason to believe that we can.  If they have, it's from taking significant risks in derivatives, risks entirely more dangerous than that of the market.  And this simply isn't sustainable.

And about analysts, I find market analysts, specifically portfolio managers, to be a joke of a profession (a six figure joke of a profession).  Yes, the world needs financial advisers, simply because people don't know what to do with their money for their unique financial goals.  But after reading Malkiel's Random Walk, there's no reason to believe that portfolio managers, driven purely by market returns, will ever outsmart the well-oiled market.

I agree that playing the micro market is a losing game (though oddly day trading seems to have rebounded with the downhill slide, because people get a kind of itchy trigger finger that they also get when things are booming). However, if you have ridden in down to 6000 and need that money in the near term, it would seem like a good idea to get out now rather than hope for a run back to 10,000.

 

You can't beat the market but I think there are psychological patterns that if you got skin in the game are worth watching. When everyone thinks the sky has fallen and we will be living in caves next week, things will turn up and contra when gravity and reason no longer applies and the economy will be purring along any day now, then run and hide your money.

Retail sales fall unexpectedly in March

 

 

It would be interesting to see retail sales adjusted for population growth.  The US population grows about 1% a year.  So all things being equal, retail sales should rise about 1% year over year.  Now, all things are not equal, but as a baseline, sales each month should be higher than the previous year's by roughly 1% + the rate of inflation (currently around 1.8%?).  So if you ain't hitting 2.8% increases, then you are sliding backwards.

And about analysts, I find market analysts, specifically portfolio managers, to be a joke of a profession (a six figure joke of a profession). Yes, the world needs financial advisers, simply because people don't know what to do with their money for their unique financial goals. But after reading Malkiel's Random Walk, there's no reason to believe that portfolio managers, driven purely by market returns, will ever outsmart the well-oiled market.

 

I read that book while in in grad school at UC for Finance. The gist of it really was that most analysts are mediocre at best, an insight that our professors reiterated on an almost daily basis -- interesting considering that was what most of us were looking to do for a living.