Sweet Thursday
We're selling all the stocks
We're selling all the houses
Also selling bonds
Great Depression for us
And so "it" just keeps tanking
It seems "they" couldn't help us
But Ben the dove is crying
As "they" offer tax breaks
We'll walk back to the 'burbs
No gallons... minivans
There's no jobs on Wall Street
There's no jobs at the malls
We'll pay just like forefathers
Back in 1929
And so we stopped our driving
We had no oil to fuel them
The dust bowl it reminds us
Of Hoover's plans before us
Just short a trillion
Dollars will be spent
Sweet Thursday's repoing my new backed up margin truck
Backed up margin truck
As bankers started hedging
"They" took the house "they" loaned me
Foreclosure kept reminding
Of pages in history
Sweet Thursday's repoing my new backed up margin truck
Backed up margin truck
Stag,
ReplyDeleteI bet you're looking forward to the weekend. Heckling is becoming a full time job. You're putting out tributes faster than Stephen King puts out novels.
Anyways, I think a herd of baby boomers made a stampede for the exits at today. Too bad we can't take out more than we've earned though. It's not a liquidity problem, it's just a big pile of uncashable checks.
Funny thing about faux wealth. It's there until you need it.
MAB,
ReplyDeleteI bet you're looking forward to the weekend. Heckling is becoming a full time job. You're putting out tributes faster than Stephen King puts out novels.
Gallows humor all the way. This is my therapy.
The Stephen King reference made me laugh out loud. Good thing I wasn't drinking something at the time.
I'm reminded of an old Saturday Night Live skit making fun of him. He was being interviewed but he continued to type. He was asked what he was writing and he had to read what he was typing to find out what the story was about.
Later in the interview he stopped typing. Several seconds passed and he looked like he was in shock. Momenets later he resumed typing. He was asked what happened and he said it was writer's block.
I think that's how I feel doing these musical tributes. I could certainly use a break from the breaking economy. Couldn't we all though?
My TIP fund lost a bit more today. Not much in the grand scheme of things. I'm getting nickled and dimed. In sharp contrast, the market's getting dollared.
Once the deflationary forces subside (assuming they do), people will begin to rethink how many babies and how much bathwater has been thrown out. A few days ago I got the notion I might do a bit of baby shopping. Glad I resisted the urge! Damn we've got a collection of ugly babies these days and that bathwater is seriously foul.
My TIPS are looking like the best looking bathwater money can buy though. If I lose my entire nest egg (possible), I doubt very seriously I'll be the first.
Glad I resisted the urge! Damn we've got a collection of ugly babies these days and that bathwater is seriously foul.
ReplyDeleteI've had the urge to buy stocks recently too. I'm glad I resisted!
I've even tried to purchase real estate recently. The real estate bagholders are completely delusional. They still want to escape with profits from deals that are only a year or two old. That tells me we haven't reached capitulation yet.
Beyond that, show me a historic deleveraging that had a "V" shaped bottom. I've looked and have not found one - 1929, dotCON, 1987, Nikkei, nifty fifty.
I'm not even sure of the rules governing our financial system anymore. Good thing I kept all that wampum I bought at Stuckeys years ago.
I see tough times ahead. Too many have borrowed too much.
MAB,
ReplyDeleteThe real estate bagholders are completely delusional.
They just need to match up with completely delusional buyers. For example, let's say a buyer thought a house was worth a lot more if it had a freshly painted lawn.
Beyond that, show me a historic deleveraging that had a "V" shaped bottom.
If you are interested, I'd be willing to paint you a "V" shaped bottom for $200. It's not a real bottom but it would look like one from a distance.
Economy Drives Some To Paint Their Lawns Green
http://www.nbc11.com/technology/17621610/detail.html
The city of Stockton, the epicenter of the state's mortgage meltdown, has hired Nick to green-up more than 3,000 homes. He paints dead lawns green -- at $200 per lawn.
He told NBC Bay Area he is in constant demand.
"So when you spray it, it looks lived in," Terlouw said. "It blends in with the neighborhood so it doesn't stand out anymore.
He's missing a huge opportunity. Think how much he could charge if he painted a refreshing pool surrounded by pots of gold. Who wouldn't want that?
Stag,
ReplyDeleteA couple more thoughts on buying stocks.
First, despite what is often parroted as fact, stock prices do not increase because earnings increase (especially in the short run). The only thing that really causes stock prices to rise is the willingness of new buyers to pay higher prices. That willingness is suspect for numerous reasons including a lack of trust and demographics.
Another thing that keeps me from pulling the trigger is wealth concentration. Most have little or no net worth. They just can't buy. At the other end of the spectrum, the wealthy minority are now aware that deflation is a real possibiility. Our entire inflationary mindset is being widely questioned. In a deflationary scenario, the wealthy have less need for appreciation from stocks or real estate. And they certainly will have a hightened sense of risk for depreciating asset values.
Going forward, I'm guessing the fraudulent wealth will be squeezed from the system as leverage unwinds. We may yet see record profits - on the low side. That's not good for market psychology.
Stocks are definitely a better value here than the last few years. However, they are by no means cheap on a historical basis. In fact they are near long term trend valuations. Unfortunately, our economic future looks to be below trend.
Boo Radley remains in bunker mode.
MAB,
ReplyDeleteOur entire inflationary mindset is being widely questioned.
My short-term inflation mood switched to neutral many months ago (as seen in the upper left corner of my blog). It was not an easy thing to do.
It is quite possible that the long-term mood should have changed with it. If so, my name should change to Deflationary Mark. I've certainly toyed with the idea in the past.
The activity in TIP is screaming at me to change my name. There are so many uncertainties going forward. My gut simply refuses to believe that all this fiat paper will be worth more if it is buried in backyards for decades though. Maybe I'm too stubborn.
TIP is down another 3.5% today (from 97.34 to 93.99). Deflation is a very real possibility.
At one point (assuming I can trust Yahoo's financial stats) today it was predicting a Great Depression though. It spiked down to 84.15. That's a jaw-dropping 14%. Wow. Somebody really thought the inflation baby was completely dead. Fortunately, someone managed to revive the baby from the frozen bathwater.
That's the kind of capitulation one would expect to see near a bottom. There's "still" some optimist left in me it seems. It would not surprise me much if we're near the bottom (both in TIPS and stocks), not that I'm betting on it.
The other thing that concerns me about TIP right now is the quality of investors it has attracted. Yahoo shows that it has a 7.06% yield. I'm amazed how many people don't realize that's using the rear view mirror. Anyone expecting a 7.06% yield now that oil has fallen and the global slowdown is here, would be much better served buying nutrolls at Stuckeys.
My gut simply refuses to believe that all this fiat paper will be worth more if it is buried in backyards for decades though.
ReplyDeleteNo way fiat will be worth more in a decade. Not even five years. Not on a CPI basis anyway. I seriously think most investors have no idea how the CPI is constructed. I also seriously doubt they understand TIPs.
My understanding is that even under deflation, a hold to maturity investor is gauranteed his principal by the government.
I see irrational pricing. That said, it doesn't mean the irrationality can't continue.
If it makes you feel any better, I've got some legacy stock index investments that are just getting crushed. Poned! Life goes on. I played golf this morning for therapy. Didn't help though. My mind is on so many other things.
Hang in there.
My gut simply refuses to believe that all this fiat paper will be worth more if it is buried in backyards for decades though.
ReplyDeleteNo way fiat will be worth more in a decade. Not even five years. Not on a CPI basis anyway. I seriously think most investors have no idea how the CPI is constructed. I also seriously doubt they understand TIPs.
My understanding is that even under deflation, a hold to maturity investor is gauranteed his principal by the government.
I see irrational pricing. That said, it doesn't mean the irrationality can't continue.
If it makes you feel any better, I've got some legacy stock index investments that are just getting crushed. Poned! Life goes on. I played golf this morning for therapy. Didn't help though. My mind is on so many other things.
Hang in there.
MAB,
ReplyDeleteMy understanding is that even under deflation, a hold to maturity investor is gauranteed his principal by the government.
You are correct. They can be inflated higher, then deflated lower. However, TIPS won't pay below face value at maturity.
I see irrational pricing. That said, it doesn't mean the irrationality can't continue.
Yeah, I'm a believer now. I think that's partly what must be driving both the banks and the government somewhat insane right now. I feel their pain.
Check out the video I just posted from Jim Jubak. We're not alone. He nails it in my opinion.