Waiting ...

The hot air in DC and the dens of the press is oven-like. But what is the point or use in speculating or even discussing what Obama might do, or whom he might appoint ? Why not just wait and see what he actually does ?

Here's some real news: China announces $586 billion stimulus plan. That's real money. Stock futures are up on the news worldwide.

WSJ has a story that jobs in many parts of China are hard to find. That means trouble for that authoritarian / communist government. So they had to act.

I read that five large beefer managers are called before Congress on Thursday. Good. I hope they are skewered. Hedge funds are a fundamental, root cause of much of the problems the world faces. Trillions of $ speculating in trading schemes instead of making real investments caused massive stress and dislocations.

AIG bailout is being re-written. From the looks of it, the troubles in the credit default swap "market" are quite intense. Obviously, that entire casino needs eviscerated. Writers of credit default swaps should be required to put % collateral in Treasuries in isolated subsidiaries and regulated as insurance companies. Anything less is fraud and or mere gambling.

Barron's had an article about the recent rush to "alternative" investments by college endowments and pension funds. We now see most of those "investments" were just speculation in commodity futures - not real assets at all - and hedge funds. Buying timber, farmland and venture capital are real investments. Hedge funds, commodity funds, private equity and that ilk are just leveraged speculations.

Everyone now agrees the LEH bankruptcy was a huge mistake. Some world leaders blame the US for letting it happen. Hindsight is so clear. But at the time, the "moral hazard" police were quite strident. Politically, I don't see how the US could have done anything else. The fallout from BSC was quite bad.

The LEH failure did bring to light hitherto unknown or unappreciated financial interconnections and leverage, such as from "rehypothecation".

Actions

Doing nothing. I will buy more of my stocks IFF they drop to buy points. By the way, IFF means "if and only if".

I've deferred re-balancing Krypto Fund as I am contemplating some transfers and exchanges that will let me take a valuable tax loss on some ETFs held in a taxable account. This will save me real money and not affect my overall asset allocations.

Tax loss selling for the rest of this year will be heavy. But I wonder if the money will just be shifted around. I plan to just shift the money around.

Word of the Day

"Conceit" - noun [$10]
Conceit means 1. personal vanity, pride; 2. (literary) a. a far fetched comparison, especially as a stylistic affectation; a convoluted or unlikely metaphor; b. a fanciful notion.
Sentence: All the information conveyed by one person speaking directly to another is subsumed in the Anglophone world under their conceit, "personal chemistry". [adapted from a thought in "Travels with Herodotus" a very fine book by R. Kapuscinsky, cf. page 185 top.