Tick Talk

I've been eyeing that Shlaes book for a while now. Any good? I would love a review.

Everyone knows I'm the pollyanna-esque optimist. But what does scare me is the populist rhetoric coming from politicians and commentators calling this a strict market failure. This is at best an oversimplification and at worst a fraud.

Although I'm still optimistic (about as optimistic as one can be considering the circumstances), I fear that a move towards socializing financial institutions and uber-regulation may well turn a recession into the Great Depression part deux.

1. The Forgotten Man was placed in my hand approximately 36 hours ago - and yes, that means I'm a slow reader because I've not finished it yet. It was gift from my thoughtful wife. What I'm about to say will enrage the fairer sex: It is written from a woman's perspective and is encumbered with low relevance person to person emotion reporting (as opposed to strict tactical reporting - of which some existed, just not enough for me). I (like most men) would prefer to read hard hitting, play-by-play, blow after bloody blow of the time and sales participants and the motivations and settings of those. You know, with the Water Gate documents recently being released, we get a pretty good picture of politics "behind the scenes." The market, like a pirate ship, knows that dead men can't lie. With that in mind, it is no coincidence that it, never releases documents that show what went on "behind the screens."

2. AGREED! The markets are doing exactly what they must do - reflect supply and demand. As for fraud, here is my 6 point conspiracy theory:

1. The U.S. Gov. got robbed in broad daylight by banks.
2. The lenders deliberately lent money to unfit consumers.
3. The profits from service costs and commissions were the objective.
4. The lenders plotted to force the bad debt onto the government by virtue of the implicit relationship it has with Fannie Mae and Freddie Mac.
5. Consumers got pinched by inflation (energy and domino effect) and defaulted.
6. Banks gave Uncle Sam the ultimatum: Pick up the tab or we'll stop lending.

In a zero sum game, someone must lose. The lenders ran a high probability strategy: Best case senario, expansion occurs. Worst case senario, Uncle Sam covers the bad debt. Either way, there are huge profits in the transactions. The debts were never a considered a risk.

3. Part Deux it is, and that is why it will have a few new twists. It's like a recent review of The Sound of Music: "If it was made today, the critics would pan it, the academy would ignore it, the public wouldn't know it existed, and even the Sundance Channel wouldn't show it. Yet somehow it endures." The same goes for our economy. We've seen this song and dance already. If we've learned from history, the fraud we're discerning will be checked by the economic law of diminished returns. (First donut is great, second isn't as great). This principle is THE ONLY reason I harbor ANY optimism. Then again, there's no guarantee that the current administration won't make mistakes that make Great Depression look like a red rock candy mountain.

Thanks LJ63! I'm not sorrowful either (yet). I like that you bring up the election cycle. In the year preceeding Roosevelts election the market was down 27%. That is only 2% lower than current conditions. I'm reading the The Forgotten Man by Shlaes and the similarities between the Great Depression and now are uncanny. It's fascinating, and kind of fun! :-)

I like the clip- I am certainly not a MofCS however the election cycle needs to play out before I take any trades