“So, is it possible that we’ll invade someone? I suppose. Is it likely? Slim (…and none under this Prez).”

However, what if things fell apart so bad south of the border, like when production at Cantarell has fallen by 50%- 70% and the drug cartels take over the gov’t, such that we had to ‘temporarily’ occupy…, oops, I mean station troops to ‘stabilize’ the situation?

Why not continue to make them mark to market so that investors have a better idea of what’s going on and the banks have incentives to fix the problems themselves one way or another over the years?

Why not assume that if the toxic banks won’t be able to lend or grow as much as they would like, others will grow to take their places?

Why not assume that if investors see opportunities for sound banks to take share from the toxic banks, they’ll capitalize the sound banks and help them grow?

Is it correct to assume that if the toxic banks can’t lend, the economy won’t recover as quickly as it would if they could?

Nationalization will not help. Nationalized economies perform badly all the time. Capitalist economies (such as they are) perform badly from time to time. Consider: what caused the tulip bubble?

What to do? There is money. There is real capital (power plants, robotic machine tools, etc.). When lower prices cause supply and demand to begin to equalize things will start moving again. Everything government does to maintain prices impedes recovery. What will that do to help the economy besides getting it moving? It will weed out the high cost producers. i.e. there will ultimately be less waste in the economy. The last thing we want to do is carry the wasters. It is not ecological. Nor is it economic.

They’re tanking due to lack of RESOLUTION of the situation, and one way of reaching resolution is nationalization. There are other ways.

You know better than most that markets hate uncertainty, and while the Obama administration has said “no, we’re not going to nationalize” their ultimate failing that that they have not proffered any alternative plan with the resolution that nationalization has. They’re just going to keep flinging cash into black holes on balance sheets on an ad-hoc basis.

Sure, the best plan might be nationalization, but it isn’t the only solution out there that would resolve the situation.

Look at how military guys lead – they don’t always have the perfect plan. Sometimes people get hurt or killed. But they observe, they analyze, they decide and then they act — all very quickly. Their troops have to know that “the old man has a plan” – else they lose confidence in him.

The Obama administration is showing an increasing lack of leadership on this – and for the same reasons as the Clinton administration did: they’re lawyers. They like to talk about how many angels can dance on the point of a pin.

I’m not a market pro like you, but I’ve been trading and investing long enough to see that the market just hasn’t a friggin’ clue what to do. They’re becoming crazier than shithouse rats from the indecision, the data, the lack of clear, unequivocal financial leadership. We get trial balloons, then they get shot down. We get promises of plans with details, we get hand-waves. We get told that they’re going to “stress test” the banks when everyone already knows the outcomes for several of these banks a priori – we want to know what are they doing to DO with the insolvent banks.

FDR didn’t do any of that. He came into office with a bold move: he declared a bank holiday.

Did it solve the insolvency in the banks? Hell no. But it was a BIG move – it showed a clear, unequivocal decision and action – big, bold action that the WHOLE country could see – regardless of whether your bank was in trouble or not.

Again, using the military analogy – sometimes, a CO of a naval ship will sound GQ (general quarters) when something happens, but yet he doesn’t know exactly what is going on. Why? He wants the crew DOING something rather than asking questions, and he wants the whole crew knowing that the “old man is engaged in the situation.” The “old man” doesn’t have to tell the crew that he hasn’t a ‘firm’ clue what is really going on. He just shows that he can decide and will lead.

By comparison to this, FDR’s bank holiday was a stroke of PR genius.

Obama might not want to nationalize, but he must come up with some other plan that has resolution.

March 2nd, 2009 at 9:24 pm
businessword.com is proof you should have at least a high school diploma to post on here.

Paul S,

would you be meaning — so that one may have sufficient background and maturity to grasp, and reflect upon, some of the larger themes that he is describing?

I assumed that your great uncle was making $50K in 1955 — that translates into approximately $400K today. So, definitely good money, but well short of what people in similar positions would demand today.

Oh, I don’t know for a fact, but I suspect he was probably paying a higher marginal tax rate than Jeff Skilling or Angelo Mozilo or whoever…..

The highest marginal tax rate in 1955 was about 90% — that applied to incomes of $400K or more, which is about $3.2 Million today.

There were a lot of tax scams available at that time, so it’s a little hard to compare apple/apple, but somehow the US economy didn’t fall apart in a haze of socialism/Communism due to high taxes.

So when I see people on this thread say things like higher taxes led to the Great Depression and Hitler, I blame the liberal MSM ;-).

“Midweek Marketmail Update”
“This is Louis Navellier. It is Friday, February 27th.”
“The stock market officially broke through the November 20th lows on Friday morning, but that was good news because it rallied right back. So, we’ve now retested the lows three times: first on October 10th, where we had a big intraday reversal; then on November 20th, which we had a huge rally off that low – in fact, it was the biggest rally for the Dow since 1932; and then of course, today’s new low. If you drew a line across all these lows, it’s just a further confirmation that the market is bouncing along the bottom. You know, back in 2002 to 2003, we bounced along the bottom for 7 months and retested the lows three times. We’ve essentially done that already. You know, we might continue to retest the lows, but I’m remaining very, very encouraged that the market is bouncing along the bottom on a valuation basis.”

Note: 10-10-08 closing interday low Dow: 7882, SP500: 839.8
11-20-08 closing interday low Dow: 7506, SP500: 747.8
02-27-09 closing interday low Dow: 7033, SP500: 734.5

Even though on 2-27-09, the Dow is 850 points lower and the SP500 is 105 points lower than the 10-10-08 low, THIS IS A SUCCESSFUL RETEST?

WHEN WOULD IT NOT BE A SUCCESSFULL RETEST??

BTW, I’m astounded by the anti-capitalists who frequent Barry’s blog. Where will you all go when things turn around and Barry’s making money betting for America and not against it?

“He has also submitted a budget promising the greatest deficit spending in the history of America. How, in as tough of an environment as it is, are investors supposed to react to these policies?”

I guess deficits are only bad for the market when a democrat is in charge. Reagan’s deficits were no problem.

http://www.thestreet.com/story/10467201/1/cramers-mad-money-recap-obama-is-hurting-the-market.html