Smartocracy

For me the current elections are so much different from the 2000 and 2004. I feel relaxed.

In the past, I felt like the country is attacked by the evil empire and the majority of population is cooperating with the aggressor.

This time, I have no negative feelings toward any of the candidates. They both are very decent people, deserving respect and capable to be among the leaders of this country.

What is driving my choice now, besides the obvious parallel with teh FDR, because the country is economically in the similar condition compared with 1930s and requires similar policies, is pure qualification.

What I see is that one candidate is very smart, definitively much smarter than I am. When I watch him answering questions I understand that I’m simply not capable to think that fast. He is also perfectly educated, better than I am. In him, I see what I want – a manager. A macro manager to lead the country. A micro manager to deal with every small issue, in complex or separately.

Then I see another candidate. First on all I doubt that he is smart at all. Maybe he is simply lost when he speaks to the camera, but it looks desperate. I can answer almost every question better than he does. Sometimes I feel that he has nothing to say and he simply squeezes out some meaningless word soup.

I also see how badly educated he is. His education is far inferior to mine. I don’t even compare him to another candidate’s education – that’s just a joke. I compare him to myself and I see that compared to me he is almost a high-school dropout. But I’m not running for president – he does.

I also see his judgement in action. The most important desision before elections is to pick a VP. And he chose the candidate even less qualified than himself. That is worrisome, because in order to be a successful president he must chose every single cabinet member to be at least 10x smarter than himself. And I doubt that he can.

Otherwise, he is a very nice guy and I wish him long and happy life. Somewhere away from the White House.

Please go and vote. That’s not only a duty, that’s more a privilege, one of those rare days when your opinion is worth more than zero.

 

The Brown Swans

The mounting losses from mortgage papers forced financial institutions to raise capital. While capital inflows seem to be healthy the dangerous trend is developing.

(continued…)

 

New RSS feed and mobile-friendly website

Mobile Site

That Guy Drinks Beer asked me to make an RSS feed that could be easily read from the mobile phone, i.e. includes the complete text of every post.

• http://www.google.com/gwt/n?u=yellowroad.wallstreetexaminer.com/blogs/

If you want to view my spring widget plese see it here:

• http://www.springwidgets.com/widgets/view/40237

New RSS feed

I want to offer you better content and have more control over RSS feed. For example, I want to add some content to my RSS feed that is not published at the wallstreetexaminer.com site, like thie message.

So I’ve created the FeedBurner feed for the site:

• http://feeds.feedburner.com/YellowBrickRoad

Initially I was looking for some feed creator that will let me to make RSS feed not from the original website RSS feed but directly from HTML, which would let me to publish the complete content in RSS but still have the split-post feature used. I failed to find any solution to do that. So I would suggest you to re-subscribe to this new feed above instead of the original RSS.

The real life demands compromises. The traffic at the new site is less than here so far (here I had ~500 cl/day, there ~200), but the “quality” of the clicks is much netter. A lot of people are coming directly from the “wallstreetexaminer.com” page and I’m sure they are very interested in what I’m writing. Here a lot of people are coming after googling for “stupid people”, “florida vacations” or “bear”. I don’t think they read anything.

About ads – they are quite annoying but please take into account that WSE is a for-profit enterprise. It’s different from me because I have a full-time job and I’m blogging to communicate with people and share ideas, I’m not interested to earn extra $20 from ads. For now I’m not getting anything because the readership is too low and there is nothing to share yet. But if new people will come I’ll get few bucks.

 

The last bubble in the investment desert

Please read new post:

 

The anatomy of Consumption

New post is here.

Please support the new blog (and Web 2.0) by subscribing to the RSS feed using the button below:

It will take you to the list of all major RSS aggregators. Click the logo of your favorite aggregator and are subscribed!

Thanks a lot!

 

The seasonality of carrots

The new post at Wall street Examiner is here, please enjoy!

Note: there are RSS feeds to subscribe :

• http://yellowroad.wallstreetexaminer.com/blogs/feed/

for posts and

• http://yellowroad.wallstreetexaminer.com/blogs/comments/feed/

for comments. If you use Firefox it supports the dynamic feeds (RSS) directly, just click the link. Otherwise there are plenty of RSS feed readers, list is here: http://en.wikipedia.org/wiki/List_of_feed_aggregators

There is a bunch of online feed aggregators, which is probably easier to use. I prefer http://bloglines.com. The list of aggregators I suggest is:

• http://bloglines.com
• http://my.yahoo.com
• http://www.google.com/reader/
• http://www.netvibes.com/

If you have a “Digg” account please support the new site by digging it with this link:

• digg it!

Enjoy!

 

Welcome to the new Wall Street Examiner blog

Hi All! I want to share with you that I was cordially invited to start my own blog at Wall Street Examiner. You probably know this site very well as Russ Winter is contributing there as a blogger and Lee Adler is posting his excellent daily reviews for subscribers.

This is the location of my new blog, it’s titled “The yellow brick road” and I’m opening with a new installment of “Where is my recession?” serial.

Please share your feedback, do you like it, is it working well. I’ll continue to announce every post here for easy transition and I think I will keep this site for all posts that I will consider not applicable for WSE

 

The status of the credit market

You probably know that I like to add the outstanding commercial paper from CP release and banking credit from H8. To some extend it is mixing apples and oranges together but the result looks very reasonable to monitor the trend. It matches what you would expect.

What you see here is that the sum made a top at $11,322 bln at the end of March. By the end of April it stands at $11,189 bln. The credit contraction is only starting now.

I think the troubles of the “subprime” meltdown made all the attributes of a typical recession visible by December-January, but the mainstreet economy fell behind the market turbulences and only now is showing the first tentative signs of the slowdown.

Update: instead of sitting here all night and preparing an extended overview of various bonds issued recently with all interest rates out there I’m cheating, I’m taking a shortcut. All you need to know is here, Fannie Mae raised $7 bln at 8.25%, Freddie Mac will likely do the same.

Wait a minute, the average prime mortgage rate as compiled by Freddie Mac is 6.05%. So those guys are losing 2.2% on every prime mortgage they write. Those are the two most important corporations in our economy and they are in the tailspin that eventually will be stopped by the bail-out. Bernanke cuts rates to 2%, where are those rates? This is what the credit crunch is, the inability of the Central bank to control interest rates on almost anything except treasuries. This is what “pushing on the string” is – Federal reserve can’t push money into economy

 

Kiss this rally goodbye II or Bernanke call

At April 30 I’ve posted “Kiss this rally goodbye“. Well, I was wrong by 2 days and 18 points in the S&P. I’ve said that the peak will be 1404 at April 30 but now it looks like the real peak was fixed at 1422 at May 2 (both intradays). After yesterday 3.5% carnage in financial stocks they are tumbling by another 2% today. Financial sector is a leader in rallies and falls, so we won’t see that May 2nd 1422 level for months and, who knows, maybe years or even many years.

What happened? In this post 2 days ago (and the follow up discussion) I’ve suggested that Feds will have to make sacrifices in order to save the bond market. That had to do something nasty to scare the money out of stock market into bonds. My proposal was that the Feds will either suggest that they will allow Countrywide to fall or they will hint of possible rate hike.

Yes, they made a hint that the rate hike is possible, that worked very well – I was right. Second, the SEC declared that investment banks will now have to disclose the liquidity levels. That worked even better. The market is tanking exactly as Bernanke wants it to.

Yes, we know that Bernanke put exists for the bulls. Now we know that Bernanke call for the bears exists as well. Those who think that he will allow the stock market to rise at the expense of the treasury bonds are terribly mistaken. He will make all necessary sacrifices

 

Stimulus package in full force

I hear that the stimulus package just started in May and its effect will be felt over the next three months.

To this I will say c’mon guys, that stimulus package is already in the full force for the two full months. In early March we all knew how much it will be and when it will come (and if we qualify, unlike me, for example). Most people have credit cards and can pre-spend the check in advance.

That’s what they did, the just released data show that consumer credit in March rose $15 bln, well above expected and above $5 bln in January. I assume that most people are making the best efforts to manage their finances and if they increase debt in the face of obvious economic difficulties I assume they do it within the margin set by this check in the mail. So those who planned to spend the check are already doing so.

The second category of people are those who don’t have any credit lines left and can’t pre-spend the check. I assume that those people have horrible debt situation and whe they get the check it will go straight to pay the pile of bills. Those people will not spend much when they get this check.

And the third category of people are those who don’t plan to spend it at all. It will go to savings, to reduce debt, to pay for the college for the Fall and stuff like that.

Looking at all this I think I can estimate that about $60 bln of the $110 bln stimulus package will be spent and the rate of spending is set in March, i.e. about $15 bln/months. So the last dime will be spent during the 4th of July fireworks. The recession, which is interrupted by now, will resume in July. Plan accordingly.