Shiny Happy People

We have seen the secret villain behind the economic crisis and it is....

...us.

Yeah, the truth hurts.  As no doubt have you, I've listened to all the pundits and read all the analyses and blogs and am dizzy from all the finger-pointing.  Most of it is the two political parties trying to shove each other under the wheels of the bus with snippets of video or quotes which conveniently support their position (and none which don't).

But here's one column that really resonated with me.  It's clear, reasoned, and written in plain English from an investor's perspective. 

Good investors don't get emotional.  They analyze circumstances and look for opportunities.  Emotion clouds judgement going forward.  It also clouds the rear-view mirror as you try and analyze how you got to where you are.  Check out Dylan Jovine's take on the crisis in "Seeking Alpha" and tell me you don't find yourself fogging your own mirror a little.  I certainly did.

BTW my fond regards to the late Walt Kelly for the cartoon.  Where is Pogo when you really need him???

PLAN B.  AND C.  AND SO ON.   The issue is how to free up credit.  There are a chorus of informed voices saying that a financial injection from Congress (translated: debt shifted to other countries which must be paid back with interest starting immediately, long before any of the real estate or other collateral held by the government could rise in value and be liquidated) is not necessary to do that.

The most intriguing is the controversial call to do away with accounting rules known as "mark to market" which effectively devalue assets held by financial institutions.  There are others.  Here's a great article in today's Washington Post that explains the options in plain English. 

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Note that the views expressed on this blog are mine alone and do not necessarily represent the views of Raycom Media or KPLC.  Please note that links frequently take the reader to third-party sites.  Raycom and KPLC are not responsible for content on these sites.   -Jim S.

Comments

[Ed]

Well said Jim, but you have overlooked a very important point.

Common stocks are not 'investments' in the purest sense of the word. Recent failures have proven common stock has no book value in today's mixed up mania. Any so called investment that has no tangible link to fixed assets is purely speculation, and that is what common stock purchases have become. Dissolving companies' assets are parceled out to creditors and preferred stock holders first, and todays publicly traded companies leave nothing but wistful memories for their common stockholders. ....It has been repeating over and over again!

This mantra we listen to from the media is all directed at propping up the intact system. That system is flawed from the common stockholders' perspective, and leaves their only chance for returns based on speculative appreciation of a piece of paper tied solely to the company's current performance. ...When performance drops, the value of that paper descends in a manner befitting the lack of value it represents.

So, if a person likes gambling, the stock market(common stocks and products derived from them) is a good place to take a shot at it. But if you want investments, you should look elsewhere to find products that will still exist after all the dust has settled.

~

[Jim Serra]

Excellent points, Ed, and the nation is littered with thousands (millions) of people holding reams of worthless stock options to prove it.

BTW, surprised you didn't latch onto the last sentence of the column, which sure as hell got my attention: "Sometimes liver disease is the only way to get someone to sober up." Hopefully the verdict this time is not quite that...sobering.

best rgds/jim

[David]

Jim,

Thomas Jefferson stated the following,

"I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation and then deflation, the banks and corporations that will grow up around the banks will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from banks and restored to the people to whom it properly belongs."

No matter how much money we throw at the problem, it does not solve the central issue, Monetary Policy. The dollar is worthless. The Federal Reserve has unchecked power and is the reason we have the problems we face today. Greenspan and his cronies gave away practically free money for years and that caused the "Bubbles".
It caused people to spend like there was no tomorrow, but tomorrow has arrived. And Paulson is giving more booze to the drunken sailors. Its time for our country to have a financial "AA" meeting. We must make everyone involved stand and say, " My name is ________ ( ex.; Congress, the President, K-Street, Wall Street, Main Street, etc.) and I am a SPEND-AHOLIC!! We need to get off the sauce and try to think clearly. Instead, our congress went for a fix and I don't mean a repair. An opium like injection to mask the pain, but nothing to really cure the illness. But we the sheep are to blame, we allowed this to happen, and now our children are indentured servants with a millstone of debt literally tied around there necks. The chickens are coming home to roost, can the foxes be for behind?

[AJ]

Hi Mr. Serra -
This is off-topic, so please remove this.
My post is in regards to tonites DDA meeting, and specifically speeding. I have seen vehicles moving through the intersections of the 600 and 700 blocks of Downtown Ryan Street at a very, very scary rate. Only twice have I used the side-of-the-street parking available, and both times I felt that strange "I'm gonna kick your ass if you come too close" attitude that I'm rather reluctant to admit here. Both times I had my 1 year old son with me, and was getting him out of the car. The cars were WAY faster than 25mph.

I don't for one-second believe this report. These vehicles are NOT moving at a pace that reads to me that they are looking out for the other person. In fact, on several occasions during the Du Lac LIVE pub crawls, I have seen vehicles purposely speed up along Broad street while we have the closures up.
I don't know if the answer is for more 25MPH signs or for more cops. I would personally prefer a bit of both.
If we are actually working as hard as a city as we say we are about our progressive and 90 mil. bond, then we deserve our patrons to be safe crossing the street.
I have the same beef on my South Lake Charles Street, in University. Luckily, I live two blocks in either direction of a school. I must add, however, that during the Summer months, and especially after Katrina, the average speed down our 'main' street became fast, angry, and total bull. The Downtown businesses aren't as lucky as me and need your voice.
Thanks for giving the public an outlet, and I really LOVE the viewer net thing, , great possibilities!
Sorry for being off-topic,
Amie

[Robert L. Mark]

Jim, just thought you would like to know that I was speaking with some thrity somethings over here in Galveston County and made a reference to Pogo. They had never heard of it, even after I quoted the famous "We have met the enemy and he is us."

Are you sure we fifty somethings might be too long in the tooth to make cultural references that appropriately communicate with folks younger than us.

Still in all, what brought Pogo to mind was the very same kind of thinking that obviously occurred to you when you sat down to blog.

[Alan Hunt]

Hello, Jimmy.

I'd be interested to know how MANY People in the Lake Charles SMSA Area actually HAVE Stock?

Also the average amount they each have in the Market?

Also the amount that the 10 top stock investors have tied up in the market?

Statistically, women out-live their Husbands and live out their lives on Stock Investments. Last week when the market took such a tumble, how many old ladies dropped dead with heart attacks around here on the day the market dropped over 900 points?

Most people I know have their money tied up in beer and bar-be-que and I have to wonder whether THEY are happier???