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June 30, 2010

Wednesday Financial Briefing

A few stray rays of sunshine managed to break through the gloom yesterday.

The Ramona, CA Pie Auction and Barbeque fundraiser is set for July 17. Ingenuity! Community! Fair play! It brings a tear to the eye, especially in the benighted Land of the Boned -- California.

In other heartening economic news, a plucky young entrepreneur is starting a small single-proprietorship services business in Exeter, Maine. [UPDATE: I am told that this is actually Exeter, New Hampshire.] Although only a start-up, it has brought in more profit in the last month than the entire state of California made all last year. I see big things ahead for this firm!

But alas, these few stray beams could not dispel the thick black thunderclouds that stretch from horizon to horizon. Lightning flashes, and thunder rolls, leaving a huge echo in its wake: Doom! Doom! Doom!

Yesterday brought a bloodbath on the equities side due to bad news out of China and continued doldrums at home. The Dow dropped nearly 270 points to close at 9,870.30, and the S&P 500 briefly broke down through the psychologically-important 1,040 barrier before creeping back up to close at 1,041.24.

Quoth Mr. Bini Smaghi:

"We are facing", he says, "the biggest crisis since World War II. I think nobody could foresee that".
Nobody except the millions of people who said more than ten years ago that the Euro was a stupid idea. Smaghi's answer to the current crisis, of course, is more "integration" -- EU-speak for having a bunch of unelected bureaucrats usurping sovereign power of the member states and forcing a fiscal policy on the vassals serfs citizens.

How come when anybody compares the United States to Rome, it's always the shitty late-period Rome with its weak Emperors, worthless currency, an inability to maintain the borders, runaway public entitlements, and--oh.

These feckless turds can't even run a God Damn financial summit without racking up huge debts and damages. Why does anyone think they can solve any of the larger economic problems besetting the world? (I have a feeling that Eric Cartman's "Hippie Digger" would have been the perfect tool for the Toronto cops in this situation, but do they ever ask me for my opinion? No. And look what happens.)

"More than forecast?" Is that the Ministry of Truth's new euphemism for "unexpectedly"? Seems to me that an honest admission of incompetence, followed by three head-knocks and a good swift kick in the ass, would do wonders for the accuracy of the government's economic projections.

MarketWatch serves up "The Three Biggest Lies About the Economy", but ends up only getting one correct: the unemployment rate is most certainly higher than 10%. Otherwise, Arends whiffs it. He insists that the market is "not panicking" (though he clearly wrote this before yesterday's massacre); and that the US is not sliding into "socialism", which is a ludicrous statement on its face. The bailouts of the automakers (which shafted debtholders in favor of the unions); the nationalization of Fan and Fred (and General Motors, for that matter); the various bank bailouts (AIG and all the rest); the travesty of the ACA, forced through on a deeply-flawed party-line vote; the pending FinReg, and TARP I/II/III/IV (or however many we end up with before Ben runs out of printer's ink). We may not be inside the Socialist Utopia yet, but we can certainly see the city limits from where we're standing.

Amity Schlaes (author of the superb Depression-era history The Forgotten Man) gives George Soros, Poltroon Estimable, the back of her hand. Soros hisses, "You'll pay, my precious, O yes, you'll pay!", and slinks back to his slimy hole in the Dead Marshes.

Bummer, dude. Like, totally.

Veni, vidi, vici? In the case of the G20, it's more like veni, vidi, deficio.

The Greeks have swung into action, and have brought the nation's assorted Spyri together to protest against reality, and to insist on a return to the land of the magical Keebler Elves.

You can only get well if you accept some short-term pain as your body heals. Pumping yourself full of painkillers and ignoring the warning signs in your own body only leads to greater catastrophe later. Mish has additional commentary. He quotes von Mises:

"There is no means of avoiding the final collapse of a boom brought about by credit (debt) expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit (debt) expansion, or later as a final and total catastrophe of the currency system involved."
Remember: pain is nature's way of telling you something is wrong. Ignore the pain at your own peril.

The ship's is foundering! We're taking on water! Everyone to the lifeboats! Run for your lives! (With bonus horrifying chart-fu!)

Remember all that crummy sovereign-bond debt the ECB bought up, hoping to "clean" it then re-sell it? Well, it turns out that you can't polish a turd.

Well, it must be a day ending in -y, because here's another "Has gold hit its peak?" story. My answer: no. I wouldn't be at all surprised to see it run to $2000/oz before it starts to fall back. My pirate-hoard of gold and silver soaks up all the love and other tender feelings that I withhold from other human beings, so I take insults against it very personally.

An "inflation scare-monger", am I? Bah! Insults! Some day, we'll be hoboing the train-tracks, back roads and byways of this land, scavenging for whatever small trinkets and doodads we can find amongst the desolation. Maybe we'll camp together around a campfire I kindled with my huge pile of worthless million-dollar bills -- the last legal tender bill issued by the US Treasury before the whole country went tits-up. I'll put a nice fat wasteland rat over the fire and cook it to a delicious golden-brown turn. And you know what? I won't share it with you. Because you made fun of me and hurt my feelings. I'll just sit there and eat my rat and remind you that you thought I was a "scare-monger". (I'll also be casting a covetous eye on your gold bridgework. You'd better be a light sleeper, chum.)

Put this one on the same "unlikely, but just maybe possible" pile as the Al Gore "second chakra" story: The US may "politely default" on its debt. I don't think so, at least not in the short to medium term, but...you never know. It turns, as always, on the "deflation or inflation?" question. Like others, I think deflation is going to be the order of the day for at least a couple of years, but I'm not quite as sanguine about hyper-inflation being held at bay forever.

This article reminds me of the old saying: "Gold and Silver are money. Everything else is credit."

I'm I think I'm turning Japanese. I really think so!

"Look, folks! We had solid earnings, and beat both top and bottom-line estimates! What do you say to that?" And the stock market responds with -- a giant kick in the balls! Fundamentals don't mean shit in Thunderdome, pal.

"I know we can't compete with the entire state of California in terms of fiscal insanity," said Harrisburg, PA mayor Linda Thompson, "but isn't there some way we can out-stupid them? Some utterly foolish, moronic, colossally self-destructive gesture that would focus attention on us as the Alpha cretins of the public sector? I need ideas, gentlemen!"

Those damned Russkis were after my gold! Who knew that Pooty was a fellow gold-bug? I wonder if he'd be willing to deal for some British Empire-era sovereigns....

Travis, just take Old Yeller out behind the barn and put a bullet into his rabies-raddled brain. It's the only merciful thing to do.

Now here is a jobs program I can wholeheartedly endorse!

Curse you, DAGGER! Curse you and all your demon-spawn!

Today's briefing brought to you by the late Charlton Heston, who has some truly prophetic words about what happened in yesterday's trading.

digg this
posted by Monty at 07:01 AM

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