Well, surprise, surprise. Regular readers (both of you) of this blog knew that we were at the beginning of a financial shitstorm, rather than looking for a bottom and quick recovery to what was, and will always be an unsustainable orgy of debt and artificial affluence. AIG has somehow managed to lose over $60,000,000,000 in a mere three months. Based on a standard 40-hour workweek, that comes to over a million dollars an hour. Now that’s talent. The State of California is in crisis because of an annual budget deficit less than half of AIG’s quarterly loss. Holy crap!
The continuing destruction of the US and global economy is likely to continue apace for many years. How long we let the cowboys run their losing rodeo is anybody’s guess, but at some point, the fun and games have to stop. We’re eventually either going to nationalize (government takeover) these losers, or let them file for bankruptcy protection. Bankruptcy is labeled “protection” for a reason. Jobs are protected, but shareholders are generally screwed as share prices hit zero. Just whom we’re protecting by keeping them out of bankruptcy is a really good question.
Well, the Dow fell below 7,000 this morning, marking a fall of more than half since the peak in the fall of 2007. Ouch. How does it feel to lose half of your savings when all you did was work hard, save money and invest in a Dow index fund like the vast majority of financial advisors advised? What if you knew (and I do) that it will fall by half again? How exactly does that feel? I’m thinking “not good”.
So if we head over to the Motley Fool (how I loathe these idiots) they still contend “buy and hold” is the way to go. They suggest that patience is the strategy for now. Patience? Is patience a good strategy when you’re drowning? Anyone here ever heard of cutting your losses? Sheesh.
My favorite abuse by the financial talking heads is the assumption that ten or twenty years of history is meaningful in doing financial analysis. Financial cycles run much longer than that. It’s like making a twenty-minute study of the tides. The data will not be useful.
So where does this leave us? Hell if I know. I’ve been telling those I love, or even like, to avoid debt, stay out of real estate (my outlook since 2004), save money and be frugal. Buy used. Credit scores are an absurdity dreamed up by a marketing team. They will be meaningless in the Depression. Cash is king.
3 comments:
Nice rant Jeff. I never like the motley fools either... a bunch of free market cheerleaders that, like many on Wall Street and in government, can't seem to recognize that the rules have changed.
you have more than two regular readers - found a link to your blog on itulip and delight in your articulation and insight. everyone I am around has their heads in the sand.
Wow. I'm touched. Better keep writing...
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