American Financial Outlook

I like the Inflation Trader:

"In my view, the significance is this: these are not horrible data. Clearly, things are better than they were a year ago, and perhaps even six months ago. But they are only marginally better, while a big fiscal rock is rolling down the tunnel like the boulder in Raiders of the Lost Ark rolled after Harrison Ford. The economy needs to be in much better shape to withstand what is coming."


"...That’s what Christina Romer, chair of the Council of Economic Advisers may have been thinking yesterday when she resigned from the economics team. This is more important than the resignation of Peter Orszag (OMB) in July, although most people believe Geithner and Summers run the show. People are already talking about how Romer “wasn’t vocal enough” about ways to solve the economic malaise."

As for me, there's no way to prove the Recovery Act and its stimulus "helped to save the American and world economies." And the "it could have been worse" line is the worst kind of logical fallacy. Who is to say it couldn't have been better for instance?

Stimulus is (likely) not working because it's a mentality we're facing. It's not a "throw money and hope it all goes away problem." You can't keep superficially throwing money at an economy this messed up. It's wrongheaded and wasteful.

Something else is obviously at work here.

That something is else is speculation.

I'd tread carefully with the financial reform. Aside from the cynicism of having the same people who brought the sucker down were still in power to "fix" it, speculation remains (even among investors) and banks are still engaged in hedging and risky programs.

Look, when you have an investment environment where the perceived value of a stock is more important than the actual fundamentals then it's a mentality problem on your hands. And we all know changing a mindset is the dickens.

My lousy, two cents kept under the mattress.