Comments on: 2008: Annus Horribilis, RIP

By: How the Common Man Sees It

How the Common Man Sees It — Sun, 04 Jan 2009 16:32:56 +0000

Fleck is shedding his bear skin? Amazin’

By: microcap

microcap — Sat, 03 Jan 2009 21:00:37 +0000

John Mauldin is fabulous–and I say that as a 21 year veteran of this industry [if you can call it an industry] who is skeptical of everything and everyone. So Happy New Year Mr. Mauldin and thanks for your writings.

I laughed to myself the other day about the following–at least here’s one headline that we skeptics don’t have to worry about any more:

“Market Rallies as Bad Economic Data Spurs Talk of Fed Rate Cut…”

Another casualty of the ZIRP world LOL

regards to all..

By: debreuil

debreuil — Sat, 03 Jan 2009 18:04:56 +0000

Wow, great letter as always. I read the whole thing thinking …well, this guy is probably a pessimist with numbers at least. Then I read you are reaching the half life mark at — 60. Man, if only our economy was in the shape you are in : ).

Congratulations on that, and here’s to the next 60…

By: Mike in Nola

Mike in Nola — Sat, 03 Jan 2009 16:51:14 +0000

Ya think he’ll get an invite to appear on CNBC?

They seemed pretty scandalized recently when Feldstein said th economy might be worse in a year. Although Feldstein doesn’t seem to get the fact that more consumerism isn’t what will solve the problem long term. We need to actually get used to less consumption and more production.

By: Steve Barry

Steve Barry — Sat, 03 Jan 2009 14:54:55 +0000

@Moss:

Good…I’m betting that, as for the last 25 years, nobody is paying attention. During the last 25 years, it paid not to fight the fed and to buy all dips, and ignore the debt boom…until 2008 came. They are trying to stuff a crazy genie back in the bottle.

By: Moss

Moss — Sat, 03 Jan 2009 14:48:02 +0000

@SB:

I doubt anyone is really paying much attention to the debt to GDP ratios you mention.
Where will all the money go if not into equities even if for a short period?

All these long only fund managers can’t stay in cash or equivalents
I believe all the government intervention and the hope of a huge stimulus are providing many with the hope that the trauma of the crisis is short lived and that the new equilibrium is higher than the lowered P/E ratios suggest.

By: Steve Barry

Steve Barry — Sat, 03 Jan 2009 13:35:09 +0000

This is a great post…must read in its entirety. I loved the viewpoit that;

But even upper-bound estimates pale next to actual measured rises in public debt. In fact, the big drivers of debt increases are the inevitable collapse in tax revenues that governments suffer in the wake of deep and prolonged output contractions, as well as often ambitious countercyclical fiscal policies aimed at mitigating the downturn.”

This one statement ties a lot of my thinking together…you have to realize, the Depression in 1930 began with total credit to GDP at 160% and it shot up to 260%…this “crisis” began at 350% total credit per GDP…it will hit unimaginable levels that threaten our system.

Also great section on analyst estimates…you would think we should see crisis levels of P/E (8-10)…that would put the S&P at 480 or less using trailing numbers and 420 using forward…and these estimates are probaly operating (ie. inflated) estimates. There is no way you can convince me the S&P should be trading above 600 right now.