American Madness

Today’s NYTimes contains an article by Ron Lieber that I’ve read hundreds of times in different guises by different authors.

The basic argument is “buy and hold”: keep your money in the stock market during this blip because you’ll be sorry if you miss a resurgence. Articles like this explain that, yes, it would be great to put money in cash and wait until the market decides to rebound, but there’s no way to know when that is, so you’d better stay invested.

What always strikes me as funny is the basic logical fallacy of this argument. The author says if you sell now you’re market timing and no one can know when to get back in, but at the time time he’s basically telling you to invest NOW. There is no actual distinction between not redeeming money now and putting in new money. They work out to the same result, and both actions involve timing.

Since there was no way for me to comment (why do some NYTimes articles allow comments and others do not?), I wrote the author an email, adapted from my post of the other day: Read the rest of this entry »

Via Daily Kos:

I’m quitting my job today to become a tour guide. I’m going to offer fanny-packed, fat asses from the Midwest a personal tour through what was once New York’s financial center.

We’ll start the tour in Grand Central, and make our way to the building formerly known as Bear Stearns, and talk about the greatest real estate steal since beads were passed to Indians. I’ll make up some nonsense about secret passages between that building and JPMorgan, because tourists like that stuff.

Then it’s over to Lehman Brothers Barclays, where people can have their picture made with the largest, ugliest sign of monkey bile blue in the world. Who would’ve thought Lehman’s original monstrosity would one day be considered tame when compared to what Barclays put up. We’ll also be sure and stop by 2 CPW so people can see where Erin Callan had racks of cloths brought to her since she was too busy making up numbers to have time to eat and shop. 

We’ll definitely make our way downtown. The New York Fed will be a good stop. I’ll point out the corner where John Thain put his nuts in a jar and handed them over to Ken Lewis. I’m sure people will want to see the street formerly called Wall Street and its symbolic bull’s sudden case of blue balls.

Finally, we’ll be sure and wave as we pass by the Wall Street Journal’s offices, the same way they waved off excess leverage without bothering to stop and talk to anyone.

Chart from U.S. News and World Report (included here to scare the hell out of you)

Many of the assorted pundits of the financial press are trying to call a bottom to the current market crisis.

Some of these pundits are just silly, but many others are willfully ignorant of how many hurdles we face. Also, a stock market bottom is not very meaningful, as I’ll explain below.

What we need to know is when we’ll be in a position to rebuild our economy based on something other than paper shuffling. But in any event, I can’t see clear to a bottom until a few events occur: Read the rest of this entry »

From someone who would rather remain anonymous:

The recent uproar over fallen Lehman Brothers President Richard Fuld has raised a number of interesting questions. Protesters held aloft signs that read “shame” and “cap greed” during his testimony at a congressional panel yesterday, and the web site Gawker even reports he was cold cocked by an unknown assailant at the gym this week.

Fuld has become a symbol of excessive greed on Wall Street but the truth is that he became a lightning rod for committing one cardinal sin: failure. Read the rest of this entry »

The Great Schlep from The Great Schlep on Vimeo.

Message to Your Grandma: Vote Obama

From a Newsweek article I (apparently) started reading in the middle (and haven’t completed reading quite yet:

Now when they say “They did not immediately know who she was” is this really because of how secretive McCain kept the selection process or because Palin was a nobody before she was thrust onto center stage of this three ring circus?

When congress was finally able to effectively market the bailout to constituents, one of their best arguments was that normal businesses were coming close to a situation in which they would be unable to access the credit markets to meet payroll.

This would have been terrible, but it made me wonder just how many major corporations rely on short-term debt to meet something as simple as payroll. Obviously, with a working credit system it makes sense that you wouldn’t want your cash deployed or credit lines accessed except at the last possible moment. I wish I could pay my landlord using a credit card, because I’d be able to earn more interest on my cash. As it is, he rarely deposits my check earlier than the 10th. He’s also the only reason I need to maintain a checkbook.

However, even though this is a benefit I might want, I wouldn’t ever allow myself to have $0 in my checking account, relying on my credit card company to make my rent. Similarly, I am absolutely astounded that corporations actually rely on someone to extend credit to them so that they can meet their payroll, the most fundamental of obligations. This really is the equivalent of corporate America keeping no cash around for a rainy day.