SAR #9288

Let's not confuse cause and effect.

Perspective: The Dow closed at over 10,000 on Wednesday. This is not 'news' – the Dow broke 10,000 back in 1999 and the dollar has shrunk quite a bit since then. Those who don't remember that at 10,000 the Dow is down 40% from its high are either delirious or work for CNBC. But I repeat myself. This miracle was brought about by the repeal the Glass-Steagall safeguards created after the Great Depression, shipping millions of jobs overseas, issuing mountains of unrepayable debt, restructuring the Dow by replacing such irrelevant firms like General Motors and Citigroup, and of course the devastation of the US dollar, the US worker, and the US family.

Deflation, Anyone? Employees around the country are taking deeper and deeper pay cuts to retain their jobs. Except in lower Manhattan.

Divorce: US stocks and the US dollar are going their separate ways, and much of the raise in the Dow but reflects the drop in the dollar. A weakened dollar is good companies that export, but bad for customers who shop at Walmart, where 90% or more of the goods are imports. Companies benefit, customers don't – has a familiar ring, doesn't it?

Reckoning: Retail sales – ignoring the government's car giveaways – were up 0.5% m/m and off 5.7% y/y. Good news: government intervention seems to have stopped the free-fall. Wonder how they plan on juicing up the Xmas shopping marathon.

Done With Mirrors: Consumer spending has gone down, yet it now makes up an even larger part of GDP because other contributors to GDP have gone down even faster.

We're Number One! Moody's says commercial mortgages are failing at a record pace, getting worse faster. Soon they'll report that securities backed by commercial mortgages aren't a good bet, either.

What's Wrong With This Picture? JP Morgan Chase, which pushes paper about but doesn't actually make anything, reported enormous earnings growth. Goldman Sachs 2009 bonuses will be double last year's - some $23 billion, which could send 460,000 kids to Harvard, or buy health insurance for 1.7 million families.

Steps: As the US continues to borrow increasing amounts of money, the dollar's fall will continue to accelerate until eventually the US government “goes bust”. So says Marc Faber.

... a Dark and Stormy Night: In the cold dark of the Russian Arctic's Yamal peninsula, the snows are late coming this year to cover the land where “permafrost entombed for 10,000 years crumbles into the sea at the top of the world.” Scientists fear that the collapsed river banks, rising tidal waters, and warmer winters in far northwestern Russia could be the prelude to a disastrous “methane bomb.” Or maybe scientists have taken up creative writing...

The Best of Possible Worlds: Uncle Sam has decided that US multinationals don't have to pay their fair share of taxes after all, saving them about $200 billion in tax bills that would have been inconvenient. After all, what's good for General Motors is good for...

Plan B: The UN FAO says food production must increase by 70% over the next 40 years to feed the extra 2.4 billion people we seem to have invited over for dinner. Could we tell them we're busy that night?

Performance Art: Fitch Ratings estimates that 60% of the remaining mortgages in the 2006/7 bundled residential mortgage-backed securities are underwater. To expect the RMBS performance to improve, or even remain at its current disappointing level, would be overly optimistic, in that house prices are expected to fall another 10% as unemployment goes higher next year.

Ponzis are Us: Mankind has long taken greedily from Mother Nature, sure that there would always be more. About 1950 we started taking out more than was sustainable, but kept on growing and consuming. Consuming more than gets replaced it is like a Ponzi scheme and cannot go on forever. Ask Mr. Madoff what comes next.

Porn O'Graph: People with jobs predict that people without jobs will have to take a number.