Wednesday, January 6, 2010

Treating the Symptoms

Black Swans Abound as Year of Tiger Shows Teeth: William Pesek

Markets are hardly discounting hyperinflation, hyperdeflation, a global pension crisis, a collapse of North Korea’s repressive regime, social unrest in China or Iran, major earthquakes in Tokyo or California, or Somali pirates getting their hands on more than oil.

And, more basically, what if optimism that we dodged another Great Depression is hubris and markets tank anew? Treating the symptoms of the financial crisis isn’t the same as removing the causes.

Speaking of treating the symptoms, I've been coughing up stuff of a questionable color for the past few months and finally decided to see the doctor yesterday. I'm mostly better but wanted a second opinion. It's just been dragging on so long. No fever. Blood pressure was good. Throat looked okay. Chest sounded okay. The doctor gave me a prescription for antibiotics but suggested that I don't fill it unless I started feeling worse. I really don't like taking medications unless they are proven to be absolutely necessary. I was therefore an easy sell on that advice.

I also told my doctor that it felt like 2004. I turned bearish then because I felt we were borrowing our recovery. I really do think we're doing it again, only bigger!

I do have some good news though. I just saved 35% on my car insurance by... No wait. That's not it. I saved 35% on my office visit by using "prompt pay". That means that that I paid before leaving the building.

On the one hand, we see payday loan stores selling cash at a premium to people who desperately need it.

On that same hand, we also see businesses willing to accept less cash up front for services rendered rather than risk getting even less cash later.

So where's the other hand? Cash sure doesn't seem like trash to me, regardless of what the government has tried to do to its value. I guess one could point to oil. I stick to my theory that it is overpriced though. I thought $80 would hold but also acknowledged that it could hit $100. I just don't see it staying there since I think China is in a lot more trouble than most can believe. High oil prices hurt them more than us, since high oil prices imply high food prices (poor people spend more of their money on food).

And lastly, being self-insured since April hasn't hurt me so far (knock on wood). It cost me $100 to see the doctor. That's my total medical expenses for the past 8 months. Maybe I should write the insurance company a note and thank them for denying my application (due to a minor acne problem on the outside of one of my eyelids that has since been cured).


EconomicDisconnect said...

Mark, while I am not a doctor (never played on on TV!) my Mom has been a nurse for over 20 years and Economic Disconnect gets a chest cold every fall and winter since age 4 so I have some idea about these things. Oh yeah, and I am a molecular biologist!

-What is a questionable color? Deep yellow, brown, greenish?
-Worse after a hot shower or in the morning first thing?
-Any change to your breathing patterns (can be hard to notice if you dont notice usually)
-Has it been dry where you are?

It sounds to me like you have the dreaded NSI bug (Non Specific Inflammation) and of course not much to do but get through it. NSAIDs will help (Alleve, Naproxen) if it is inflammatory and a humidifier will be get aid if it is dry (A needed item here in the winter to avoid bloody noses!).

"I thought I had mono once but it turned out I was just really bored"
-It could be this as well!

Oil at $80, yet another "it does not matter" event for the markets. It a far cry from $140 I guess.

Stagflationary Mark said...


Great questions.

One particular day a month ago was the worst. I'll describe the symptoms then.

* I was coughing up green first thing in the morning most days.
* I'd cough every time I took a deep breath.
* It felt like I was breathing through a straw.
* Tried to use the stair climber but it just plain wore me out even on the lowest setting.

Some days I'd feel fine though, so I'd think I was getting over it.

Here are my current symptoms.

* Two days ago I coughed up a golden color first thing in the morning. That's it over the last week though.
* I do not cough when taking a deep breath.
* It does not feel like I'm breathing through a straw.
* I can use the stair climber normally now (at my normal twice as fast pace).

The doctor told me that the most important symptom was simply how I felt. I feel much better now and he said I could therefore mostly ignore the coughing. The coughing is probably going to be with me for quite some time. I am coughing less and my coughs are much drier though. I also feel that my throat is doing better (not that it ever was sore).

I was using a personal steamer for 30 minutes a day at my worst. It helped. I also took an expectorant and tried to drink more fluids.

My sister said to make a hot drink using water, a teaspoon of cinnamon, and a tablespoon of honey. Drink often. That really seemed to help too. I'm a fan. If nothing else, it really soothed my throat.

Stagflationary Mark said...

Fed Missed This Bubble. Will It See a New One?

I expected to read the shortest article in recorded history.



EconomicDisconnect said...

it sounds exactly like non specific inflammation. Sorry but not much to do on that. The hot drink idea is great and using the steamer will help alot. If you want to experiment like a scientist (who doesn't?) try the Alleve if symptoms return and if you see big improvement case closed. Let me know via email if anything else comes to mind.

Good luck!

Stagflationary Mark said...


Whatever it was, I think it has pretty much finally run its course.

I don't really feel the need to use the steamer or drink the hot liquids now. I'm feeling pretty good.

Although when it comes right down to it, I see no great harm in drinking the best part of a cinnamon roll (cinnamon and honey). Perhaps it is better to be safe than sorry. :)

mab said...


I also told my doctor that it felt like 2004. I turned bearish then because I felt we were borrowing our recovery. I really do think we're doing it again, only bigger!

2004 is when we really started doing permanent damage.

Using my super scientific ball bark estimate for Q4 2009 real GDP I offer the following:

Real GDP growth for the last decade was ~ 1.7% annualized. On a per capita basis, real GDP growth over the past decade was ~ 0.6% annualized. Barely better than the period from 1930 to 1940.

But it gets worse - the trend is decidedly down! Real GDP over the past five years was ~ 1.1% annualized (near zero on a per capita basis). Over the past three years, GDP was NEGATIVE and even more negative on a per capita basis.

Oh well, at least we gave it our level best to artificially pump up asset prices and make people think they were getting wealthier while they were impoverishing themselves with debt.

Keep up the good work Bennie!

Stagflationary Mark said...


"We can't win at home. We can't win on the road.. As general manager, I just can't figure out where else to play." - Pat Williams, Orlando Magic general manager, on his team's 7-27 record (1992)

EconomicDisconnect said...

glad you are on the mend!

The Patriots could not win on the road this year either, but they did win a "road" game at Wembley Stadium in England so there ya go!

Remy said...

I'm pretty sure uncles Ben and Alan knew about the housing bubble... They just stated otherwise.

mab said...


Remy's comment above:

I'm pretty sure uncles Ben and Alan knew about the housing bubble... They just stated otherwise.

That's the way I see it too. The housing bubble wasn't exactly hard to spot.

From the NYT link:

To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble. - Paul Krugman

Pimco, Greenspan, Krugman, Bernanke, Goldman Sachs, scores of bloggers, etc. all recognized the housing bubble. What caught the fed and banks by surprise was the suddeness of its implosion and the ineffectiveness of bank hedges (AIG). The suddeness caused banks to get stuck with too much of their own cooking on their books when the the music stopped. Wow, that was a really bad mixed metaphor.

mab said...


Gasoline prices are at 15 month highs:

Woohoo! I really couldn't take another few months of gasoline deflation. It was horrible while it lasted. I much prefer budget busting gas prices and record breaking oil company profits. Especially against a backdrop of declining house prices.

All joking aside, in its efforts to ward of deflation, the Fed is creating a perfect storm for the American middle class. Falling home prices, high unemployment, stagnant wages and a soaring cpi-ex rent.

Think about it. In order to take advantage of the price drops in rents, many homeowers must recognize huge losses on their housing "investments".

Oh well, at least we saved Wall St.

Here's a thought. If Bernanke had not saved Wall St., he would have been fired. It's a good thing we have an "independent" Fed.

G.H. said...

"Pimco, Greenspan, Krugman, Bernanke, Goldman Sachs, scores of bloggers, etc. all recognized the housing bubble."

Add the FBI to that list, from 2004:

Stagflationary Mark said...

Remy & mab,

I'm not quite as convinced that Bernanke did see the housing bubble. I think there's at least a chance that he was blindsided by looking at "average" data (in the Flow of Funds) without factoring in the rising income inequality.

I'm not saying that it is the case, but it would certainly help to explain how he was caught by surprise by the "implosion".

If true, then he will be similarly surprised again someday.

Stagflationary Mark said...


"Woohoo! I really couldn't take another few months of gasoline deflation. It was horrible while it lasted. I much prefer budget busting gas prices and record breaking oil company profits. Especially against a backdrop of declining house prices."

Hahaha! Sarcasm is always "appreciating" here. :)

I was hoping that gasoline prices would come down to meet natural gas prices (as seen in a recent post comparing the two here), but unfortunately that does not seem to be the case.

Natural Gas Spot Prices Rise With Increases Over 10 Percent

"Frigid temperatures throughout most of the lower 48 States and rising crude oil prices appear to have contributed to rising natural gas prices."

Bernanke must be loving it. Hell is freezing over and it is leading to snowball temperature inflation.

Stagflationary Mark said...


Nice find. I managed to turn bearish two weeks before the FBI did. Woohoo!

It was those mortgage offers in the mail that did me in. They all looked like some sort of payday loan scam, especially when reading the fine print.

My favorite fine print example was the negative amortization loan that had payments go up a MINIMUM of 7.5% each year for the next 5 years.

Guess what? It's 5 years later!

Stagflationary Mark said...

For those interested...

The 10 Year TIPS auction was announced today. It will take place on the 11th. I'm buying a bit just like I do every year. It's going to be yet another lousy rate though.

It might be just in time for another oil inspired deflationary event too. WooFrickinHoo.

Stagflationary Mark said...

One more thought.

I think one reason I'm posting less these days is that I simply have less to say.

Picture this as a roller coaster ride. We're currently working our way up to the top at a relatively slow speed. This would be a good time to chat about the weather and what not.

The "fun" doesn't happen until we reach the peak again and are utterly surprised by the next ride down.

I'll be plenty chatty then. There will be lots of screaming and hand waving, lol.

Just one request. If you are sitting ahead of me once the "fun" starts again, please don't vomit. I know you'll be tempted, especially when we see Congress attempting to repair the track in front of us using nothing more than a roll of duct tape and a used piece of chewing gum. Sigh.

EconomicDisconnect said...

I have the same feelings. I am a bit tired of writing the same stuff every night (though of course I wrote a long piece tonight!). We are waiting for the inflection point, the point of recognition. Until then most is just retreads of the same stuff. We can always talk football, women, music, health issues, or Halo 4 development to pass the time!

Anything mab has to say is always great too!

Stagflationary Mark said...


I think that "point of recognition" will be first seen in China.

Could be wrong though!