The Stress Test Is So Stressful

By iamned - Last updated: Friday, April 24, 2009 - Save & Share - Leave a Comment

Stocks surging yet again…the stress test is so stressful. Please for the love of god make the stress stop. I can’t take the stress anymore of watching my Google, Potash, and Mastercard stock keep going up. The worst fake financial crisis of the last seventy years is finally over. By printing over a trillion dollars in bailout and stimulus the supposed problem has been fixed. We can stop pretending the economy isn’t fundamentally strong. I agree with McCain:

Being right almost all the time does have its drawbacks, namely detractors. In the past few weeks some of my commenters have been asking if I’m really serious regarding my economic and stock market opinions, or this blog just a joke. I take offense at those who question my brilliance (I am the third wisest human on earth), those who doubt my stock picking skills, or my integrity as a smart economist. I know almost everything about economics, stocks, finance, and market history; or at least as much as some of the supposed experts. Economics doesn’t always have to be the gloomy science, hence I’m presenting a proactive, alternative viewpoint (and one that also happens to be correct, too).

My question to these doom and gloomers that populate the forums and blogosphere is: why do you want to see the United States economy and the stock market fail? Why do you oppose supply side even though empirical evidence for the past thirty years shows that it’s superior to any other school of macroeconomic thought? Why do you want to see millions of Americans lose more of their hard earned savings in the stock market? Why are you opposed to prosperity and economic favoritism for those who create wealth such as entrepreneurs?

g

Yesterday on Seeking Alpha author Zachary Scheidt expressed concern regarding tax payers having to front the stimulus and bailouts, as well as doubts regarding the stress tests. Once again, I don’t see why people are getting so worked up about the stress tests or taxes. My response is as follows

I think we’re getting bogged down with minutia. What you have to understand is that the one trillion is set aside already, and the fed is going to use it to restore liquidity to the banks because they need it, and regardless of stress tests, the bailouts are working as evidenced by the surging market and falling LIBOR rates, as just a examples.

Keep in mind though that deficits don’t matter in potentially deflationary environments. Debt isn’t necessarily bad for the economy. Tax payers don’t pay for the stimulus & bailouts because income taxes have not increased one penny since George W. bush’s original tax cuts. I expand on this here http://iamned.com/blog/?p=190

In addition, Tyler Durden wrote an article containing the following fallacious statement:

All in all it is not surprising that even as equity markets rally on unfounded green shoot rumors and technical liquidity aberrations, credit is preparing for a contraction and is ignoring the equity “rally” less and less. At some point, the fundamentals will catch up with stocks as will credit implied risk. Until then, the technicals are in charge and with liquidity marginalized, it is easy to see the markets will have significant spike on little to no volume for the foreseeable future.

I responded:

Maybe green shoots are justified because look at Apple, for example, it crushed estimates and reporting no slowdown despite recession hype.

There is plenty of credit and liquidity left for people who want to buy imacs, iphones, macbooks, and ipods.

I concur. I’s a misnomer to call this a ‘liquidity crisis’ or ‘credit crunch’ when companies Apple, amazon.com, Google, Potash, Wallmart, McDonalds, Research in Motion, the Facebook, Twitter continue to see huge growth and or crush wall street expectations. There is still huge credit and tons of liquidity.

gtb

Craig Brown, another seeking alpha, contributor writes:


A couple of points here. First, subprime is near or at a bottom. That is the good news. The bad news is that the dollars loaned in prime and Alt-A far exceed subprime and the dollars in delinquency on these loans now outstrip the dollars on defaulting subprime - go figure. Second, just when you think the worst might be past, mortgage defaults are setting new records in California.

My response:

But the market is ignoring all of that and surging because subprime isn’t a big deal. The market is looking ahead and saying ‘hmmmmm maybe things aren’t so bad after all’ lets rally.

Mortgage defaults are still, and will always remain, a very small percentage of total homes. Most of the defaults are, obviously, in bubble stricken areas that were written off long ago.

Agree. Why are we still talking about mortgages? That’s sooo 2007-2008. The market has already priced all future foreclosures.

I’ll conclude with with another easy listening song. Enjoy.

Posted in Uncategorized • • Top Of Page

Write a comment

You need to login to post comments!