Many Regional and National Banks are as they say "kicking the can" down the road. They have many delinquent and soured commerical loans on the books and with the other "toxic residential loans" still hanging somewhere around they just don't have any strategy to get themselves whole. You really can't blame them, what do you do with a 100% or 50% vacant shopping center or office building once you foreclose?? Hang out a For Sale Sign and maintain these properties for the next five years or longer?
Additionally, the Federal Reserve isn't putting any pressure to bear on these member banks since they also recognize the "catastrophic repercussions" of another financial Waterloo!
So maybe the "elephant" will go hiding somewhere in the back room. Only problem is that its really starting to "stink up" the place!
Monday, July 27, 2009
Monday, July 20, 2009
STOCK MARKET DISCONNECT
Stop "scratching your head" I know you don't understand how you, me, and your neighbors are struggling and falling deeper and deeper in the economic abyss and yet Wall Street is just doing fabulous with corporate earning beating expectations and the Dow, S&P, and NASAQ recovering just nicely.
If your convinced now, you never will be that you and I as small insignificant investors really aren't needed to drive the averages higher. As a matter of fact we never were but just happened to be along for the ride. Corporations have eliminated all the high paying jobs now (cleansed the books) and have reduced inventories and are concentrating on profits from lower sales and pushing for higher margins. Technology has enabled institutions to effectively operate more efficiently with less people and of course is very bad news for the unemployed and the "come back" of high paying white collar jobs.
Additionally, the financial institutions have benefited from the TARP money and still aren't being asked to put a value on the "toxic assets" still on their books as our Treasury is well aware.
Short term I expect the stock market to remain in a positive mode for the next couple of quarters, but as the American Consumer becomes more frugal as their unemployment compensation and their remaining savings evaporate, I expect the "crap to hit the fan" beginning in the first quarter of 2010.
If your convinced now, you never will be that you and I as small insignificant investors really aren't needed to drive the averages higher. As a matter of fact we never were but just happened to be along for the ride. Corporations have eliminated all the high paying jobs now (cleansed the books) and have reduced inventories and are concentrating on profits from lower sales and pushing for higher margins. Technology has enabled institutions to effectively operate more efficiently with less people and of course is very bad news for the unemployed and the "come back" of high paying white collar jobs.
Additionally, the financial institutions have benefited from the TARP money and still aren't being asked to put a value on the "toxic assets" still on their books as our Treasury is well aware.
Short term I expect the stock market to remain in a positive mode for the next couple of quarters, but as the American Consumer becomes more frugal as their unemployment compensation and their remaining savings evaporate, I expect the "crap to hit the fan" beginning in the first quarter of 2010.
Monday, July 13, 2009
CASH IS KING!
How many times have we heard your father's voice in your subconscious say the old saying:
CASH is KING??
I have a very substantial Brokerage Account where my IRA money resides and my Investment Banker, just like the Federal Reserve and Treasury are trying their hardest to convince me that its time to dump my money into Equities to "bet" on higher returns. They have insulted me by posting my portfolio in comparison to a person my age to graphily illustrate what an "ass" I'm by stipulating that I should have at least 55% of my money in Stocks!
At age 63 I'm a complete coward after loosing $100,000 hard from my company's 401k in 2008. I now have 95% of my money in low yielding CASH. My average return is 1.5%! I'm playing a game of "chicken" with the Federal Government that can't continue to run the printing presses and I strongly believe by next year at this time I will get some attractive returns for my cash. So if you are like me, be steadfast and patient because I can't believe in a corporate turn around for some long time to come and I certainly can't afford to be gambling at this stage of my life.
CASH is KING??
I have a very substantial Brokerage Account where my IRA money resides and my Investment Banker, just like the Federal Reserve and Treasury are trying their hardest to convince me that its time to dump my money into Equities to "bet" on higher returns. They have insulted me by posting my portfolio in comparison to a person my age to graphily illustrate what an "ass" I'm by stipulating that I should have at least 55% of my money in Stocks!
At age 63 I'm a complete coward after loosing $100,000 hard from my company's 401k in 2008. I now have 95% of my money in low yielding CASH. My average return is 1.5%! I'm playing a game of "chicken" with the Federal Government that can't continue to run the printing presses and I strongly believe by next year at this time I will get some attractive returns for my cash. So if you are like me, be steadfast and patient because I can't believe in a corporate turn around for some long time to come and I certainly can't afford to be gambling at this stage of my life.
Monday, July 6, 2009
Unemployment Continues to Get Worst!
When the June unemployment numbers were released last week, it scared me because the deeper the numbers increase month after month the longer and more difficult it will become for the economy to show any true signs of recovery. Reason, the people unemployment are also getting more and more frugal and aren't spending and the multiplier affect sets in causing business to fail and laid off more people.
The unemployment rate stands at 9.5% which is the highest since 1983, but the horrifying number is a broader measure established by the government termed "U6" which constitutes workers who have quit looking for jobs or who can't find anything in their fields of expertise.
That rate is up to a whopping 16.5%.
The unemployment rate stands at 9.5% which is the highest since 1983, but the horrifying number is a broader measure established by the government termed "U6" which constitutes workers who have quit looking for jobs or who can't find anything in their fields of expertise.
That rate is up to a whopping 16.5%.
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