Grumpy Old Permabear

Suddenly, a growing number of commentators are suggesting that the worst is behind us -- in housing, employment, manufacturing, the auto sector, the technology industry, and elsewhere in between.

Aside from the fact that, historically at least, bursting bubbles have generally been followed by drawn-out and messy overshoots to the downside (e.g., more than four years), while genuine bottoms have, historically at least, gone unrecognized until well after their arrival, I have one question: why are share prices approaching intermediate term highs at the same time that bonds yields are hovering near record lows?

(Source: The Globe and Mail)

The truth is that it doesn't make any (economic) sense -- unless, of course, you attribute the development to unprecedented central bank intervention. In that case, the notion that things are returning to "normal" would seem to be a complete crock of sh*t (if you'll pardon my English).

I know -- I'm just a grumpy old permabear. Grrrr.

Comments

[SurvivalAndProsperity.com]

I believe a good number of those commentators who think the worst is behind us are obviously emboldened by last week's job numbers. But just what kind of jobs are they? Peter Morici, professor at the Smith School of Business, University of Maryland, and former chief economist at the U.S. International Trade Commission, revealed on the FOX News website earlier today:

"Many of the jobs created in recent months don't pay well, and too many well educated Americans are relegated to low skilled and part-time work for lack of opportunities. Gains are concentrated in areas such as restaurants, health care and education, and business services categories—lots of waiters, and more nurse's aids than nurses, record keepers than teachers, and clerical workers than architects and lawyers. Manufacturing, a bright spot, historically pays quite well; however, many of the new jobs created don't pay terribly high wages."

[Bill Mcdonald]

If Mr.Gross or Mr. El- Erian start telling me these things, then I might think it could happen.

Instead Mr. El-Erian said 2012 might be make or break, either start a recovery or go into a global depression.

Hardly news to stand up and cheer about.

Guess I am just an average bear.

[Sense or cents?]

Will Big Banks Get Free Pass in Robo-Signing Mortgage Mess?

The State AG’s are supposed to settle the enormous mortgage mess for a mere $25 billion. The alleged fraud has been reported to be in the neighborhood of $13.5 trillion. Will the crooked big banks who perpetrated this scam on America get a free pass in the so-called “robo-signing” mess? There have been multiple lawsuits over the rip-offs, and there are at least a few states that are holding up the settlement for a better deal and the right to proceed with possible criminal investigations. NASDAQ.com is reporting some of the negotiations going on with a story filed yesterday that said, “New York Attorney General Eric Schneiderman expressed confidence Friday that his main concern with a pending settlement of alleged foreclosure abuses by U.S. banks would be resolved, but he didn’t commit to participating in an agreement. Schneiderman also said the settlement is being structured so as to not interfere with a separate probe into the packaging of shaky loans into mortgage- backed securities, a practice that preceded the financial crisis.”

http://usawatchdog.com/will-big-banks-get-free-pass-in-robo-signing-mortgage-mess/

[Tom]

Good comments, all, and i prefer the term "realist" to that of permabear. All the 'happy talk' we are bombarded with daily is reminiscent of the old communist propaganda and has the same Orwellian effect - it actually makes matters worse because we can't believe anything the government or the banking sector says any longer!

[up for the wrong reasons?]

Has Derivatives Deleveraging Fueled the Stock Rally? (February 7, 2012)

In this light, it's no wonder stocks have been rising. If even a modest percentage of CDS are tied to stock indices, then those deleveraging their derivatives positions must acquire the underlying assets. They can no longer count on all counterparties paying off as promised, and so they are raising cash and buying the underlying assets needed to make good their obligations.

The whole thing is a farce, just like The Producers. The moment the default is recognized, then all the CDS become due and payable, and it will only take handful of failed counterparties to bring the entire system down.

No wonder the Eurocrats and central bankers are twisting everyone's arms to accept a 70% loss--the alternative is a Greek default and the collapse of the banking cartel's profitable scheme. It is beyond absurd--what is a 70% loss but default? When banana republics default, their bondholders don't necessarily absorb a 70% loss. yet now, to "save" the despicably parastic shadow banking system and the "too big to fail" financial institutions, a default cannot be called a default: it is a "voluntary haircut."

Greece, please do the world a favor and openly default--right now, today. Declare a default and pay nothing. Force the shadow banking system to recognize a default and bring down the entire rotten heap of worm-eaten corruption.

At that point, there will be no reason to buy equities.
http://www.oftwominds.com/blogfeb12/deleveraging-rally02-12.html

[GCT]

I am not a Bear or bull for that matter, what I am trying to be is a realist. The last time a bubble like this popped it took 10 to 12 years for home prices to start rising. What are we in year 5 or 6? I think some parts of the country will indeed hit bottom on home prices but then they were not really inflated to start with in those locations.

The hardest hit states are going to take the full 10 to 12 years to recover. Jobs may be increasing but they are low paying jobs or part time jobs. Housing in those areas have alot further to drop. What bothers me is will the real jobs ever return or what will those of us do that are 55+? We are basically screwed right now. I am not a big savy investor and all I am trying to do is prepare for retirement. Saved most of my life invested wisely and have stayed out of the stock market since april of last year.

When I look at the governement reports I want to puke. This is an election year and the statistics will be all hope and joy and most that do research know better. This is just another farce for the people to believe in and it is just getting worse.