Comments on: A rally that is both rational and crazy Thu, 21 Jul 2016 07:57:19 +0000 hourly 1 By: scheng1 Wed, 18 Nov 2009 08:40:21 +0000 As long as the positive sentiment is powerful enough to move the economy, the stock market rally can sustain.
Hopefully the politicians keep their mouths shut. You just need one stupid sentence from them to send the DJIA below 10,000!

By: Casper Mon, 16 Nov 2009 07:28:53 +0000 You are more prolific than Salvador Dali, James. Stonking meaning an artillery stonk ? Let’s forget about interest, with reflation the Fisher Effect nullifies it. What is worrying though, is that individuals and entities are borrowing to deal in equities. Maybe it was not such a bad thing that the banks were made custodians of the stimuli packages after all, rather them than reckless speculators.

By: Paul Rosa Sun, 15 Nov 2009 22:20:08 +0000 Mr. Saft: Since you posted my first comment I have been able to talk to some of those who have been recently re-hired at the only large employer in town (no names).

The plant fired about 70 people last year who were full time workers with some limited benefits. Health insurance was always an option at the expense of the employee. There was no employer contribution to health insurance at the non unionized plant even before the layoffs. They recently hired back about 69 of those people but as temporary workers (at least according to one person I talked to). No benefits and no increase in pay apparently. Other mills – a paper mill in particular – has been rearranging workers hours where they have longer shifts using fewer people. It did not appear that they are giving overtime pay when three – eight hour shifts are combined to make two, twelve hour shifts.

This is a very graphic portrait of what a shrinking standard of living means. The ground of being for all manufacturing in this country is and will be for the indefinite future, the low wage of workers in the developing countries.

I occurs to me that China could let it’s Yuan appreciate quite a lot and still not loose its ability to undercut global competition. In fact, the stronger yuan will give it more clout to get what it wants cheaper. Mr. Buffet must appreciate this fact. But his purchase of Burlington Northern may only mean that he does not expect the US to experience a revival of manufacturing but to become a third world type of economy where the basic commodities like lumber, coal and food stuffs are harvested to be processed into higher value goods overseas.

The Chinese may eat the coal totally,, and the food imports (in part) but you can be almost certain that the lumber will be coming back here in the form of furniture, dimensional lumber and other components for the building industry – if it ever revives. They don’t build with lumber – they use masonry for most residential and commercial construction. Most of the world uses masonry – reinforced concrete or concrete masonry units, brick and structural tile – for everything.

I suppose, eventually, we will loose the argument about preserving federal forests lands to the lumber industry and they will be raped as well. It will appear to be a luxury and anyone still worried about the health of the natural landscape will be seen as hopelessly out of touch with reality.

A shrinking standard of living is not going to be pretty.
It is not just standards of living as defined by material well being – but quality of life as defined by issues of civil liberties and equal protection under the law that will also be at risk. People who cannot maintain the first will very likely sacrifice the second merely to stay alive. It is conditions like this that can feed the fascist (that is the power of “the people” to bully the population into blind conformity) instincts of so many. China does not offer a heart warming portrait of human rights.

And although I am not an economist – it does not appear that protectionism will offer much support to a falling standard of living. The only large employer in town is owned by a European company. We all wonder how long it will survive if the dollar continues to loose value? Our untrained instincts tell us – not long.

I can’t say that I couldn’t imagine how quickly -The tables could be turned – and with a “made in China” stamp on the bottom at that. But what bothers me most about the discussion in most media here, is the lack of emphasis on maintaining standards of living in anything more than the material sense.

By: The Bell Wed, 11 Nov 2009 20:00:35 +0000 No, allow me to put that in humans terms : “We, fellow G20 bankers all, have salvaged at great taxpayer expense the financial system we’ve been sordidly mismanaging [applause!] The taxpayers are getting absolutely nothing in return, which is exactly how our system is designed to function. Should the rabble happen to notice this and protest that There Is No Upturn, we can always argue that they are too stupid to understand the financial system as we have redefined it to the point of uttermost obscurity, for the sake of rescuing our noble economic system. In other words, everything is going as planned. Now, fellow bankers, let’s all have a nice game of golf – remember, it’s deductable!”

By: M Wed, 11 Nov 2009 02:17:27 +0000 James, the few big players have a huge pile of money on the side. They either eye the devaluation of the whole pile seating idle in a hostile environment or try safeguarding the value by having chunks played in hopes of attracting new money with the promise of better returns. Overall, the big players hold their part of the bargain, lifting the market quite a bit. Small players know that the game is rigged, but this time, in their favour. Nevertheless, they are nervous no less, since nobody expects an announcement when the game is over. Consequently, they amass whatever gains in liquid assets with low or no return, depriving of capital the end target, the main street. This is a blow to the scope of the whole exercise. Big or small, we all stand to lose.

By: Joe Brown Tue, 10 Nov 2009 19:42:29 +0000 There is just too much money being ‘printed’ and provided at virtually no interest to large institutions. That money chases all sorts of assets, from stocks to gold, that is why all classes of investments move higher (when the money supply is in balance, the gold price usually moves in the opposite direction of stock prices).
Very little of the ‘stimulus’ money is seen by the small businesses and the working people.
Inflation is already taking its course, the official statistics are clearly inaccurate – conveniently excluding prices that would negatively affect the rosy picture.
If we continue down this path, we might become a third-world country, a nation with a weak currency, an ultra-rich upper class, and a bankrupt middle class.

By: judd m. mills Tue, 10 Nov 2009 19:30:00 +0000 James: I love your column, but haven’t you ever heard of “the trend is your friend” and “don’t fight the tape”.
What the stock market is telling us, is that in 6 months the economy including unemployment will be better than they are today. Case closed.

If I were the Republicans (the Party of No) I wouldn’t be counting my votes in the 2010 mid-term elections just yet.

By: C.D. Walker Tue, 10 Nov 2009 19:23:03 +0000 Notice how with all these PROFITS and BONUSES, none of these banking/commodity/financial monstrosities are even thinking of paying off the TRILLIONS in toxic debt that THEY foolishly created.

And NO GOVERNMENT on this earth is even THINKING of making these economic terrorists and thieves to take responsibility for their own actions!


pretty obvious isn’t it? Finance has taken over the Governments of the G20.

By: john terrone Tue, 10 Nov 2009 18:14:27 +0000 ok dear James, I know all this from march-april this year, but now you and me are not much happy of this original rally, the fats cats that all we know are smiling as usual as they use to be in the past, present and future. Try to arrange some hair inserts like my president Berlusconi on your head just to be more latin lover

By: Derek Small Tue, 10 Nov 2009 17:32:58 +0000 Great commentary James, I couldn’t agree more as many of my peers and I have discussed the scenario you have painted for us. It is challenging to the person who calls the emperor on the fact he is not wearing any clothes and I congratulate you on being so bold.

It is challenging to sit by and watch the folly unfold and run to participate in the market as it moves through wave after wave of movement based on irrational reaction to mixed news at best (eg. unemployment still climbing).

I hope that at some time governments move down the path of stopping to prop-up financial institutions with essentially free money and allow a few to be nationalize if only until an orderly restructuring can take place.

Currently I see no incentive for the financial giants who are “too big” fail to change their structure or their behavior.