Sunday, January 31, 2010

If Ben Bernanke Were an NFL Head Coach

At the end of every NFL season the pink slips come quickly. I think it was Jerry Glanville who once said that NFL stands for "not for long". That is especially true if you are a head coach with modest results. In the NFL modest results could mean winning as often as losing. A simple .500 record. This past week the US Senate offered a verdict on Ben Bernake's tenure as Chairman of the Federal Reserve and in my opinion their decision was the equivalent of bringing back a coach with multiple 5-11 and 4-12 seasons in his resume.

Am I being too harsh on Helicopter Ben the bubble blower? The video above, courtesy of my friends at The Daily Bail demonstrates Bernanke's fecklessness. It might be unfair not to assign equal blame to Ben's mentor and partner in money printing, Alan Greenspan, but Greenspan is off on the big money speech circuit now. Why anyone would be interested in what Greenspan has to say is another matter.

Prior to his stint at the Fed, Ben's claim to fame was that as a Princeton professor he was viewed by many academics as one of THE experts on the Great Depression. Think about it. The world's largest economy is in the hands of a guy who has no practical business experience.He has read a lot of books though. It's like making self-proclaimed NFL draft expert Mel Kiper Jr. head coach of your favorite franchise.

Two issues surrounding the Bernanke confirmation still perplex me. Why is Obama and fellow Dems defending and pushing forward the appointment ? The Republicans have largely abandoned support for Bernanke, yet he and his predecessor Greenspan are and were Republican administration appointees. Why take the heat for the other guys poor pick?

Why do we have this fairy tale belief that the Fed can somehow manage a multi-trillion dollar economy. Wasn't one of the great fallacies of the Soviet system this idea that you could somehow centrally plan a national economy. It's so easy for us to see the error of the Soviet's on this, yet we insist on believing that we can somehow do similar central coordinating via the Fed.Is it any wonder we have witnessed multiple bubbles and an almost total destruction of dollar purchasing power over the almost 100 years of the Fed's existence.

If these Fed Chiefs are going to "get credit" for saving the system, they need to be held accountable for setting the stage for the system to need saving in the first place. Being accountable does not mean a contract extension. I am very disappointed with the US Senate and the current Administration on this one. If Bernanke were my head coach he'd be looking for a new job.

Saturday, January 16, 2010

Martha Coakley.... Good Riddance

I see the President is making a trip tomorrow to campaign for the Democratic Senate candidate in Massachusetts, Martha Coakley. This Senate race epitomizes everything wrong with our current system. Watch what goes on the next couple days. It will be political March Madness. The wackos on the left ( the DailyKos crew) and the wackos on the right ( the Hannityites) will be out in full force making this political race a major event for all of us.

This election is being portrayed as a referendum on Obama's first year in office --- and maybe it is, but really, if Obama is unable to push his agenda through the Congress, sans a Democrat in MA. and with a mere 59 votes in the Senate something is wrong. (I'm saying this as a supporter of universal health care-- I am not opposed to the agenda in principle).

Maybe I'm naive as I do expect the people who ask for the honor of representing "the people" to be true leaders in every sense of the word. With that being said, a big thanks to the Daily Bail for posting the recent Dorothy Rabinowitz article in the Wall Street Journal revisiting the Amirault case and Martha Coakley's role in that case.

This case was one of several sensational cases in the mid 80's of wild child molestation charges that bordered on the absurd:

The accusations against the Amiraults might well rank as the most astounding ever to be credited in an American courtroom, but for the fact that roughly the same charges were brought by eager prosecutors chasing a similar headline—making cases all across the country in the 1980s. Those which the Amiraults' prosecutors brought had nevertheless, unforgettable features: so much testimony, so madly preposterous, and so solemnly put forth by the state. The testimony had been extracted from children, cajoled and led by tireless interrogators.
Gerald, it was alleged, had plunged a wide-blade butcher knife into the rectum of a 4-year-old boy, which he then had trouble removing. When a teacher in the school saw him in action with the knife, she asked him what he was doing, and then told him not to do it again, a child said. On this testimony, Gerald was convicted of a rape which had, miraculously, left no mark or other injury. Violet had tied a boy to a tree in front of the school one bright afternoon, in full view of everyone, and had assaulted him anally with a stick, and then with "a magic wand." She would be convicted of these charges.
Other than such testimony, the prosecutors had no shred of physical or other proof that could remotely pass as evidence of abuse. But they did have the power of their challenge to jurors: Convict the Amiraults to make sure the battle against child abuse went forward. Convict, so as not to reject the children who had bravely come forward with charges.

Martha Coakley had a chance to show true leadership when she became Middlesex County DA in '99. Obama agenda or not, I just don't see why she should be rewarded with a promotion given role in this pathetic mess. That is not to say that her opponent, Scott Brown is offering anything of substance either. It's part of the reason we are in the sad state we are in. Rabinowitz says it well as she concludes her piece:

What does this say about her candidacy? (Ms. Coakley declined to be interviewed.) If the current attorney general of Massachusetts actually believes, as no serious citizen does, the preposterous charges that caused the Amiraults to be thrown into prison—the butcher knife rape with no blood, the public tree-tying episode, the mutilated squirrel and the rest—that is powerful testimony to the mind and capacities of this aspirant to a Senate seat. It is little short of wonderful to hear now of Ms. Coakley's concern for the rights of terror suspects at Guantanamo—her urgent call for the protection of the right to the presumption of innocence.

Thursday, January 7, 2010

Betting Against China

Very interesting article in the NYTimes today detailing crack short-seller Jim Chanos and his growing unease with the Chinese economy. At this point I don't have a particular take on this issue but I think it makes sense to be aware of the Chanos concern. He has gone against the crowd before in a big way (Enron) and profited big-time. At the same time Jimmy Rogers' comment is also worth noting:

I find it interesting that people who couldn't spell China 10 years ago are now experts on China,” said Jim Rogers, who co-founded the Quantum Fund with George Soros and now lives in Singapore. “China is not in a bubble.”
Colleagues acknowledge that Mr. Chanos began studying China’s economy in earnest only last summer and sent out e-mail messages seeking expert opinion.

The bottom line is that we are still in very difficult economic waters. It wouldn't take much to tip us back into the financial danger zone. If the Chinese run into economic problems in the near term all bets are off for the rest of us. The situation deserves monitoring.

Tuesday, January 5, 2010

Fish Where The Fish Are

The maxim, " Fish where the fish are," is as relevant to markets and investing as it is for selling or fishing. Thanks to Jesse at his Amercain Cafe for the chart above. It's been popular in some forums to label the yellow metal's move over the past several years " a bubble". I don't know about that but what I do know is that gold is in a Bull Market.From my experience bull markets tend to have quite a lifespan. Think about the lastgreat equity bull market we experienced. It began in 1982 and had a run to 2000 ---- almost 18 years.

That's not to say that there aren't some hair-raising corrections in the interim but as Jesse Livermore was reported to say, " I made my money by sitting not by thinking ". ( In other words he sat with his positions and let his profits run rather than trading in and out --provided we are in a bull market of course).

The point here is that we are in the fourth or fifth inning of a nine inning gold bull and the major fireworks are still to come . Stay long, stay strong the numbers to come will be breath-taking.