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July 10, 2010

Financial Briefing: Weekly Wrap-Up

The upswing continues in equities, leading the major indices the the best week in nearly a year. The S&P 500 ended the session up more than 7 points to close at 1,077.94, and the Dow closed up nearly 59 points at 10,197.65. At least my 401(k) isn't sucking wind quite as badly as it's done since, oh, April....

How the recession has changed American spending habits. I do know that I tend to hunt hobos locally now rather than going on safaris to Detroit or Cleveland, and I've started being rather more picky about which fences I will use for my stolen goods. I also tend to haggle more when hiring hit-men for jobs I cannot do myself.

As the Baltic Dry Index (BDI) continues to plunge, everyone wonders what it means. I'm one of those Eeyores who thinks that it presages a major slowdown in industrial output, and thus in international trade.

Do not fear the death-cross!

Chart of the day. Check out the change in NYSE volume between 2003 and now. Great googly-moogly!

This must be how the mouse feels when the shadow of the hawk darknens the sky...and then departs, passing the trembling little creature by.

Where is the average Joe and Jane putting their money now that the stock market has gone bonkers? Back to the basics: bonds, gold, and cash. This would seem to argue against a sustained equities rally as no new money is entering the markets.

Even South Korea has accepted the obvious and bumped the rates on their bonds. The worldwide QE binge is losing steam, with Uncle Sugar one of the last holdouts. Buyers of American debt might as well get used to zero coupon for a long while to come.

I'm cuckoo for Cocoa Puffs! Screw gold, man -- I'm going to the store tonight and am buying every box of Cocoa Puffs and Cocoa Pebbles I can get my grubby mitts on.

The newest players in the "stretegic default" confidence game? Rap moguls, hedge-fund managers, and dippy socialites. Perhaps you remember the sad tale of Mr. Chamillionaire, who found paying the mortgage on his $2 million property an onerous burden and decided to sink his savings into a llama-ranch in Peru instead.

Amity Schlaes (who's been opinionating at a high rate the last few days) thinks that Bammer is really doing his best to emulate FDR, including all of FDR's worst mistakes. Obama is much like FDR in that he subscribes fully to the "class war" idea, in which the "soak the rich" approach is punitive as much as palliative. Like many Democrats, Obama sees the success of one person or firms not in terms of an absolute good, but as a burden on someone else. Ronald Reagan once said that a liberal couldn't see a fat man standing next to a thin man without thinking that the fat man had somehow taken advantage of the thin man, and that holds true with Obama as well.

I am not a fan of James K. Galbraith, and articles like this are the reason why. Galbraith is a Statist and Keynesian, bone and blood, and sees "rule of law" mainly as a way of keeping the plebs in line. Note that while he inveighs against Wall Street's excesses and shouts for frog-marching CEOs of corrupt firms to the clink, he completely forgets to mention the K Street axis and connivance of folks like Barney Frank and Chris Dodd. He notes the greed of the financial whiz-kids in New York, but fails to note the stupidity and corruption in Washington, D.C. Like Krugman, Galbraith is a leftist political ideologue hiding behind an economics-professor facade. His faux populist sentiments about the poor man on the street (another trope right out of the Democrat playbook) make me want to puke. He is, in a word, a stooge -- a perfect apologist for this Administration.

The de-valuing of men is one of the great cultural stories of our age, but probably will not be chronicled in full for many decades, if ever. The Great Recession hit men far harder than women for the simple reason that the various governments -- municipal, state, and federal -- made sure that women had support and quota structures that men did not have. Further, the recession hit those industries that men predominate in -- construction, manufacturing, finance -- while hitting service industries where women predominate much less. Women now outnumber men in the job market, 51%-49%, and the ratio is increasing. Yet there is no cry in Washington to provide an EEO for men; no shirt-rending at how men can't get an even break in a female-dominated world; no thumb-sucking editorials on how men can't break the "glass ceiling" with their gender-biased female bosses. I kid, but only a little: a civilization that marginalizes the input of males into the economy is not long for the world. We are only beginning to see the wages of this madness. (Men suffered disproportionately in the Great Depression as well. Another data point: women serve less time for comparable crimes than men do.)

Via Insty, a very revealing chart.

Jonah Goldberg posts a bracing piece on NRO about how institutional liberalism becomes paralyzed by mission-creep.

Liberalism has become a cargo cult to the New Deal, but many of the achievements of the New Deal would be impossible now. Just try to get a Hoover Dam built today.
Liberals also suffer from a profound historical ignorance, and what many of them think they know about FDR and the Great Depression is at best hagiographic, and at worst completely and utterly wrong. (Goldberg also gets off a nice shot at a favorite whipping boy of mine, Tom Friedman.)

See, baby? Back then, nobody liked you. You were gawky, old-fashioned, a wallflower. You were't hip or "with it". Now? Everybody loves you, baby. They may smack-talk, but they're still admiring your curves. Those other girls were all flash and no substance; you're the one they want.

I haven't given the Euro a shot to the nuts in a while, so let me rectify that right now. Pow!

This is what comes of marrying your money rather than making it.

NRO's Uncommon Knowledge is running an inteview with Michael Boskin and Edward Lazear, both former chairmen of the Council of Economic Advisers. It's worth a look, even though it will probably be familiar material to most of you already.

I'm in the wrong business. Who knew that doing the Lord's work could be so remunerative?

As Kratos reminds us oft and anon: Chaos always wins in the end. You cannot control markets, or even guide them, really -- all you can do is ride the river and hope the boat doesn't overturn.

Yet more on the Microsoft KIN fiasco. This interests me on a deeper level than that of a simple product-failure, mostly because of what it says about the kind of company Microsoft is these days, versus how it sees itself and how it wishes to be seen by everyone else. Remember back in the 1995-1996 era when Apple couldn't even get arrested in the tech sector, and Microsoft was the company driving the technology ship forward? But then Microsoft's fortune has always been tied to the desktop PC; when that market goes down (as it's doing right now), then Microsoft goes right along with it. They've never broken out of the desktop-software paradigm, even with the XBox video-gaming console (which has been a money-loser for most of its life and is notorious for hardware problems). I expect that Microsoft will end up doing what IBM did and give up on packaging hardware and software for the masses, and try to become a pure services company.

The US Department for Investigating the Completely Fucking Obvious (DICFO, or "dickfo", as we financial types call it) concludes that the US economy might "cool" just a bit. I'm going to pause here for a moment so you can catch your breath, or maybe get a drink of water. For the shock, you know.

If you're a man (or a gay woman, I suppose), you know how it is when your wife or girlfriend comes out in a new dress and says, "How do I look in this?". You feel a sinking dread: do you tell the truth and say that the dress makes her ass look as big as a drive-in movie screen, or do you lie and say that she looks great in that dress? Any man with an ounce of the sense God gave him always takes the latter course. White lies of this kind are the foundation of successful relationships. Just ask Tim Geithner.

Another "Whatever shall the Fed do?" thumbsucker from the drama-queens at CNBC. Basically, the Fed has two tools: lowering interest rates on the debt; and printing money. That's pretty much it. The first tool is used up: you can't reduce rates below zero. The second -- printing money, or inflation -- has already been used once (QE-1). The question now is whether to heat up the presses for QE-2. Inflation is low right now, but many of us naysayers aren't convinced that it's going to stay low over the long term, which is why we view another monetization move as pure madness. If money is disappearing into hoards rather than flowing freely, the Government has only itself to blame: get rid of the uncertainty, and build a more pro-business climate, and the money will come back.

And you thought that I was guilty of labored economics metaphors? How about this one: The Lady Gaga Economy.

Today's briefing brought to you by old-fashioned love.

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posted by Monty at 08:09 AM

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