Tag: Economic crisis

This is surely going to end in tears!

US and UK Stock markets continue to defy gravity and common sense.

Those of you regularly reading the Blog (and Thank You!) will notice that Karl Denninger of Market Ticker is frequently referred to by this author.

My own view is that the fundamentals do not support what is happening but that’s amateur talk compared to the research and detail that Denninger puts into his Blog.

So here’s another very rational view of why small investors could be heading for burnt fingers, yet again.  Private investors: always the last in and the last ones out!

UPDATE: And yet another convincing piece of information from Dave Rosenberg of Gluskin Sheff.

August 6, 2009

Some bad news for the long-range housing outlook
The home ownership rate surged to nearly 70% during the bubble and has since fallen back to 67.4%, but still well above pre-bubble norms. A just-released study by the University of Utah shows that the rate of home ownership in the U.S.A. is poised to decline to 63.5% by 2020 (where it was in 1985). At a time when there are still some 800,000 units in excess that are vacant AND for sale, this secular decline in demand spells one thing and one thing only, a secular deflation in residential real estate. The periodic months of “green shoot” stability will very likely prove to be little more than noise along a fundamental down-trend in pricing.

By Paul Handover

(Written on the 4th for publication at 9.00 am MT on the 6th.  Markets at the time of writing are: Dow Jones 9295, S&P 500 1,001, NASDAQ 2002, FTSE 100 (now closed) 4671.)

Disclosure:  No market investments, neither long or short on the indexes, heavily invested in US Treasuries.

Pattern matching.

How we attract ideas that support our behaviours

The problem in the way that some stories are selected for this Blog, mainly the financial and economic ones, is that one tends to be attracted to those news items that support one’s own hypothesis.  Anyone who has followed the Posts on this Blog will know that this author thinks that the recession is not over, that a sustainable recovery is a long way off and that anything other than extremely risk-averse investments is, well, risky!

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Financial integrity in the news

Applauding balanced arguments about the global economic crisis.

Unwittingly, when tripping across the web site of Gluskin Sheff, as reported on this Blog earlier the full extent of David Rosenburg’s background hadn’t been clear.  As well as being Gluskin’s Chief Economist & Strategist, David was previously Chief North American Economist for Merrill Lynch, so this guy is no slouch.  Here is DR’s short bio as it appears on the Gluskin web site.

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Where were the drama pundits? (by Janet Tavakoli)

I am indebted to Janet Tavakoli for giving me permission to re-publish her article.

Where Were Drama Pundits [Whitney, Taleb and Gasparino] When It Mattered?

TSF (Opinion) Roundup Commentary – July 29, 2009

By Janet Tavakoli

Hundreds of people from clergymen to lawyers have claimed decorations for bravery that they never earned.  Why should finance be any different?
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Making sense of (financial) markets

Financial news and reporting

If there was an award for the most intriguing corporate name Gluskin Sheff ought to be in with a chance!  What an interesting and unusual name – perhaps someone will explain the origins.

Anyway, in my quest for balance in financial reporting and predictions (a hopeless quest as many of you will be quick to point out) the name of David A. Rosenburg came to light.  He is the Chief Economist and Strategist of aforementioned firm, Gluskin Sheff.  Rosenburg caught my eye because his opinion was that inflation is years away simply because consumer demand is likely to remain depressed for a long time and without growth in consumer demand there can’t be inflationary pressures – something that is in accord with my own thoughts and financial planning strategy  (not that I am even daring to compare my own very inadequate knowledge with D.A.R.’s).

Anyway, a quick trawl around Gluskin Sheff’s website (that is such a lovely name!) found that one may subscribe to a number of free reports.

Seems like a good thing.  Thank you Gluskin Sheff! (Did I mention what a great name that is!!)

By Paul Handover

Well said Robert G. Wilmers!

Robert Wilmers, chairman and chief executive of M&T Bank, (i.e. an insider) writes about the causes of the banking crisis in the The Washington Post.

No excuse is made for the preponderance of posts on financial matters.  If ever there was an issue that goes right to the heart of integrity and honest behaviour, it is the economic crisis that we are all in.

So it was particularly gratifying to read from someone within the industry that reforms are sorely needed.

The article is well worth reading.  Thanks to Baseline Scenario for referring to the article.

By Paul Handover

The End of a Wall Street era.

Michael Lewis, author of Liar’s Poker, writes about what went wrong for Wall Street.

As with all great events, and what is going on in the world just now is certainly a Great Event, artists, poets and writers always capture the essence of change.

In December of 2008, Lewis wrote a wonderful essay for Conde Naste Portfolio.  Read and be impressed.

By Paul Handover

Can’t see the wood for the trees.

Debt, Inflation, Recession, Depression?  Finding some truth!

How blessed we are with almost instant access, via the Web, to mind-numbing amounts of information.  So, for example, it was easy to check the origins of the quote that forms the subject line.

Yes, the saying is at least five hundred years old, and probably a century or two could be added to that, for it must have been long been in use to have been recorded in 1546 in John Heywood’s ‘A dialogue Conteynyng the Nomber in Effect of all the Prouerbes in the Englishe Tongue.’ He wrote ‘Plentie is no deinte, ye see not your owne ease. I see, ye can not see the wood for trees.’

From here.

Anyway, to the substance of this Post.

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This crisis of Capitalism

Yesterday, a Post asked the question “Are we now living through a historic turning point in terms of attitudes and behaviours?”

Further browsing found a very thought-provoking article in The Guardian newspaper, online version, of the 6th May 2009.  Let me encourage you to follow the link and read the article by quoting the opening and closing paragraphs:

What do we want to see emerge from the greatest crisis of capitalism for 70 years? If I had to answer in a single phrase, I would say: new models for a sustainable social market economy. This requires us to change as well as our states.

And the article closes with this (my underlining):

What you end up with is not just a systemic conundrum but also a personal challenge to every one of us. The challenge is to find a new balance in our double-lives as producers and consumers, at the same time consciously contributing to a larger set of new international balances between economy and environment, oversaving east and overspending west, rich north and poor south. That, too, is what I mean by a sustainable social market economy.

By Paul Handover