Altucher: Economy and Market Going to Blast Off from Here
By Barry Ritholtz - October 27th, 2009, 11:45AM
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Source:
Economy and Market Going to Blast Off from Here, Altucher Says
Henry Blodget
Tech Ticker, Oct 27, 2009 10:00am
http://finance.yahoo.com/tech-ticker/article/361005/Economy-and-Market-Going-to-Blast-Off-from-Here-Altucher-Says
October 27th, 2009 at 12:32 pm
Holy cow…
Where to begin? CRE, alt-a, credit cards, massive and growing shadow housing inventory, deteriorating dollar causing raw materials & fuel to cost more, interest rate swap exposure…
While what he says is possible, gold would also be at $3000 and oil at $200, and the standard of living will be in the toilet.
Jokers like this guy just can’t seem to fathom that government stimulus doesn’t stimulate unless it somehow increases the nation’s general productivity (more nuclear plants, high-speed rail, more interstates, elimination of toll booths, etc. would do this, for instance). Just spending the money isn’t enough – It has to be spent WISELY. You know, as opposed to giving it to the people who caused the problem in the first place.
Far more likely is another big bank problem, resulting in more intervention, less confidence, and lower equity prices.
October 27th, 2009 at 12:33 pm
First off I really have to give Barry Ritholtz huge kudos for consistenly introducing his readers to content which is both contrarian to his own views and the more general consesus (in the past this has often been easy as BR’s view was contrarian when compared to the aggregate)
I think in general this video does not represent a terribly credible perspective. Altucher rambles on about in a kind of “Business Cycles 101″ rant but never gets to a thesis as to WHY he believes this recovery will happen, with the excpetion of the idea that only 10% of stimulus money has been doled out so 2010 will be the “Year of the Shovel-Ready-Job”.
Okay I buy that argument, but what about the following:
Bank lending continues to collapse. Can there be a rceovery on new shovel ready jobs alone? Can we recover without a recovery in bank lending?
Unemployment is still oficially near 10% and realistically around 15% if you include the “shadow job market” (Seasonal labour, etc). Will the stimulus money create 30 million shovel ready jobs?
Does Altucher believe in a secular trend in consumer de-leveraging/saving?
Are the freshly “to poor to retire” going to get some of those shovel ready jobs?
How much more money will the banks need to steal from the tax payer in order to not implode in 2010?
…and for me this is the big one, Will local and state governments need to use all that stimulus money just to maintain the status quo, thus completely negating the effect of stimulus money all together?
October 27th, 2009 at 12:35 pm
“Will local and state governments need to use all that stimulus money just to maintain the status quo, thus completely negating the effect of stimulus money all together?”
You are a master of the rhetorical question.
October 27th, 2009 at 1:17 pm
“Will local and state governments need to use all that stimulus money just to maintain the status quo, thus completely negating the effect of stimulus money all together?”
If stimulus money is used to maintain the status quo, then it was not negated, rather it was used to prevent losses which didn’t occur. That would be the positive/accretive effect of the stimulus.
If it would have gone to -10, and stimulus let you stay at -4, then that’s not nothing.
October 28th, 2009 at 10:46 am
“If stimulus money is used to maintain the status quo, then it was not negated, rather it was used to prevent losses which didn’t occur. That would be the positive/accretive effect of the stimulus.”
Yes Steve I completely agree. Unfortunately Mr. Altucher’s thesis was that all that stimulus money would produce GROWTH. Again, less bad or not bad is not equal to good.