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June 29, 2010

Tuesday Financial Briefing

Equities ended mostly unchanged yesteday. The Dow closed at 10,138.52, and the S&P 500 closed 1,074.57.

My intellectual betters at the Fed think I should just shut up and leave the economic opinionating to the experts. What do I say to that? Only that my mighty two credits of night-school Economics 101 from the Lake Pakawakashchumwatty Institute of Economics, Welding, and Diesel Repair is more than a match for your Ivy League ineptitude, gentlemen! The gauntlet is thrown! I demand satisfaction! From my trailer on the outskirts of town, I stab at thee! For hate's sake, I spit my last gulp of cheap-ass rotgut whiskey at thee!


FinReg may go down in flames thanks to...Scott Brown, R-MA (still a weird feeling to put an "R" there rather than a "D"). Apparently that little $18 billion item that Barney Frank penciled in at the last minute over in the House kind of dampened Senator Brown's enthusiasm for the bill. Given Senator Byrd's recent death and the possibility of a Brown defection, FinReg may not survive a GOP filibuster. The real question is whether the Donks can tip Feingold and Cantwell back to the Forces of Light rather than have FinReg fail. Remember the lesson of Stupak the Craven, children: there is no such thing as a moderate Democrat.

Glenn Beck made Hayek (Friedrich, not Salma) a best-selling author again. And what does the ghost of Hayek do? He gives poor old Glenn something of a rhetorical shot. This seems...ungenerous. (Be aware that Hayek's ghost is being channeled through the brain of a tight-assed Brit journalist, however, who as a breed generally understand as much of Austrian School economics as I do of petit point embroidery.)

Charles Ponzi? Ponzi was an amateur.

The Krugman waxeth sorrowful. One might hope that he's finally seen the light on the madness of continued indebtedness, but alas:

And this third depression will be primarily a failure of policy. Around the world — most recently at last weekend’s deeply discouraging G-20 meeting — governments are obsessing about inflation when the real threat is deflation, preaching the need for belt-tightening when the real problem is inadequate spending.
A Keynesian he has lived, and a Keynesian he shall die, by God!

Gene Epstein over at Barron's didn't get Krugman's memo, however. Based on his reading of the bones, prosperity is just around the corner. Who ya gonna believe, him or your lying eyes?

No one knows. That's probably the real take-away from this article. From ivory-tower eggheads to think-tank wonks to guys who buy and sell on the trading floor: no one knows. Everyone is guessing, hoping, and falling back on ideology when models and forecasts fail (see: Krugman).

Fire up the presses, boys, and have the helicopter gassed up and ready to fly!

The biggest problem with FinReg? It enshrines Too Big To Fail (TBTF) rather than abolishing it. Goodbye, Moral Hazard. We hardly knew ye.

Remember what I was telling you about the "hidden" Chinese debt problem? Yeah. [UPDATE: More evidence that the Chinese "miracle" is a ten-pound bag filled with twenty pounds of horse-shit.]

PIMCO's Mohamed El-Arian agrees: the G20 meeting was a great big nothing. Pull quote:

If anything, the outcome of the G20 is a confirmation of what many expected and feared-namely, and in sharp contrast to the April 2009 G20 London Summit, an inability to reconcile divergent views of the world. If anything, we are being exposed this morning to the realities of different national historical experiences, different national initial conditions, and different national views on how economies should and do work.

An "approaching" double-dip recession? My dear, you're already soaking in it!

Way to keep the consumer-driven economy in the toilet, Mr. Pinchpenny! Get your ass out there and spend!

Euro falls against the Swiss Franc. Pretty soon they'll be using Euro coins at the Pitch-Til-U-Win game in Coney Island, and you can trade them in for stuffed teddy bears and wacky novelty sunglasses and stuff.

What's wrong with a little deflation? Deflation kills producers (and thus drives employment down); inflation kills savers (and drives up indebtedness). Historically, it's been very difficult to strike a balance between the two.

More proof, if any more was needed, that for many (maybe even most), a college education is a huge waste of money. I've said it before, but it bears repeating: a college education should be difficult. If 80% of the population can get a college degree, then a college degree doesn't mean shit in a tin bucket. Engineering and hard-science degrees still carry weight, but liberal-arts and humanities degrees are all but worthless in terms of cost/benefit ratios. If you're a parent who wants to send Junior to college to improve his or her chances of getting a job, you might want to re-think that plan.

July is going to be an "interesting" month for the Spaniards. And by "interesting" I mean "terrifying".

As long as we're re-living the 1970's, we might as well bring back Russian spy cabals. The next step: swank ascots, leisure suits, disco, white dude afros, and funky, funky sideburns.

Today's briefing brought to you by Acme Hand-Mirrors Ltd. You won't believe your eyes!

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posted by Monty at 06:36 AM

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