Wikinvest Wire

It's Friday!

Friday, March 03, 2006

Another week is about to go into the books as the dual non-events of the opening of the Iranian Oil Bourse and the cessation of M3 reporting later this month draw nearer and Ben Bernanke completes his fourth full week at the helm of the Federal Reserve.

Mr. Bernanke is rapidly approaching the two-months-in danger period associated with the transition from one Fed chairman to the next. Alan Greenspan in 1987, Paul Volcker in 1978, and Arthur Burns in 1970 all presided over significant stock market declines about two months after they began their term.

Ill will is not wished upon the new Fed Chair, it is just that the timing of these three non-events is far too intriguing to not consider the possibilities.

On Dark Matter and Wedgies

BusinessWeek seems to be getting a lot of mileage from the comment that your humble scribe left at Barry Ritholtz's Big Picture blog about a month ago (search on 10:27:18 to go directly to the comment, although Barry's remarks and most of the other comments are quite good as well.)

There is an upcoming March 13 print article, titled "Do I Deserve a Wedgie?" and a search on "wedgie" at BusinessWeek Online reveals a post on Michael Mandel's blog by the same name along with a few other entries. Michael and two others penned the original BusinessWeek story, Unmasking the Economy, which many found so reprehensible.

OK, if you were too lazy to go read the comment, here it is - fairly short and sweet, but lacking any real substance for reasons clearly stated (see the entry by trader75 two comments prior for a well reasoned reply to the BusinessWeek arguments):

I haven't read the article yet (I will), but seeing that Mike Mandel and Chris Farrell are two of the authors goes a long way in understanding what its about.

I subscribed to BusinessWeek for many years, just to get another Wall Street perspective, but they have become so over-the-top with their non-inflationary growth, Larry Kudlow, supply-side Nirvana that it became unbearable.

Both of these guys are so far out of touch with Main Street - one of these days some laid-off worker is going to give both of them a wedgie.
More meaningful remarks on the subject of dark matter have been offered in this space (see here and here), but the wedgie comment was by far the funniest.

Hi Yo Silver!

Wow! Look at what a not-so-little mining strike can do for the price of silver. This news combined with the soon to be available exchange traded fund for the white metal caused a sort of rocket launch yesterday as the poor man's gold shot past ten dollars an ounce without even stopping to admire the roundness of the number.

Of course, silver sometimes goes down even more quickly than it goes up, but "ten dollars" and "silver" in the same sentence certainly has a nice ring to it even if it is only temporary.

As with all hard goods when measured in dollar terms, the long-term trend is up. In a few years we'll all probably look back at ten dollar silver as being cheap, but as always, the timing is uncertain, and silver has almost assuredly not seen the last of the single digits.

The discussion of the illiquidity of silver relative to the launch of the ETF is kind of interesting. There have been stories of silver short positions at the Comex which were selling something like five years of future production into the market a the same time that margin requirements were being raised for buyers, so if yesterday is any indication, look for lots and lots of big swings.

Don't be surprised if sometime in the not too distant future silver swings $10 in just one day, as it did back in the 1980s.

Dollars Not Making Sense?

Related to the topic of the relative value of the U.S. dollar comes this editorial from the Asia Times regarding the cost of the Iraq war. There were hopes for some juicy references to "printing money" or discussions of "debasing the currency", but they never came.

What was found, however, was a new clock that tracks U.S. dollars.

There is now a Cost of the War in Iraq clock to go along with the National Debt clock, and out here on the left coast, there is of course the California Budget Debt clock. Note the line on the National Debt clock where it shows the increase in the debt just since you logged in - it's good to keep a sense of humor at times like this.

Don't Ask the Needy

It looks like another bit of unpleasant data collected by the government is about to be suspended. The M3 money supply reporting will cease in a few weeks and now the Washington Post reports that Census Bureau is planning to stop collecting information on the needy.
A Commerce Department proposal to eliminate a Census Bureau survey on the economic well-being of U.S. residents is drawing fire from researchers and lawmakers concerned about losing a source of information about the impact of government social programs on needy families.
The survey, which costs $40 million annually, follows people for two to four years, asking about their use of welfare, unemployment insurance, Medicaid and other government programs.
Based on a quick back of the envelope calculation it seems that continuation of this survey and four others just like it could be funded with a single pallet of one-hundred dollar bills.

A Room with a View

In Australia it seems sellers of homes are seeking every possible advantage when trying to get full price in a difficult real estate market:
In the dead of night, shadowy figures armed with axes, drills and poison are leaving a trail of death around Sydney's wealthiest suburbs.

Their victims are trees, and the perpetrators are property-obsessed Sydney homeowners seeking to increase the value of their land by adding or improving views of the city's world-famous harbor and beaches.
Water views can add tens of thousands of dollars to the price of a house or apartment.

Sydney housing was once the most expensive on the planet before the property bubble burst in 2003, with the speculative excess of its harbor-hugging homeowners even dragging on the national economy.
Somehow this seems almost normal or routine.


L'Emmerdeur said...

And then, a couple of years down the road, when these people are brutally murdered by a mudslide caused by rapid erosion and deforestation, I laugh as I read about it over my morning coffee.

Enjoy your view. In hell.

Worker 17 said...

I don't see why the commenter lost respect for fiat currency when he saw those bills being unloaded. Seems like an irrational reaction. Would he have felt better if it came by wire transfer?

Anonymous said...

Oh, won't someone answer Mr. Mandal's qestion for him?
Yes, Michael, you deserve a wedgie - not the atomic variety, just a regular one.

Anonymous said...

the silver etf story is interesting.

"The Silver Users Association, a nonprofit lobby group interested in keeping an orderly silver market, has opposed the new fund."

"The group fears a silver ETF would remove large amounts of silver from the open markets, and a lack of supply would drive prices higher."

talk about an oxymoron. Looks like the silver industry is scared about new-comers.

and i said...

The Federal Reserve oficially published the fact that they would stop publishing the M3 Monetary Aggregate. It got the tiniest little mention...


  © Blogger template Newspaper by 2008

Back to TOP