walkitout (walkitout) wrote,
walkitout
walkitout

the shape of the bottom

The markets, dear reader, the markets!

R. send me this cheerful nugget by Henry Blodget (who I have not very much respect for).
[ETA: And I wrote that having missed the whole barred-from-the-securities-industry-for-life thing. Check him out on wikipedia. Pundits are really amazing people.]

http://finance.yahoo.com/techticker/article/195065/Europe%27s-Crisis:-Much-Bigger-Than-Subprime,-Worse-Than-U.S

I'm an imperfect contrarian. A perfect contrarian would be an amazing thing: always selling at the very tipsy top, always buying at the very bitter bottom. I tend to sell when there's still some run in an up market. I tend to jump the gun a bit and miss the very bottom, partly because I know that once things start to turn, I'll keep talking myself out of buying and miss out entirely.

I know people who are really reliable indicators, too -- they don't buy in until very late in the game, and they sell very close to the very bottom. And while Blodget (whose commentary tends to fall into this latter category) is very paranoid, I can't help but think about that bit of innumeracy on display on CNBC yesterday (no, I am not buying financials, nor am I advising anyone else to do or not do anything at all with respect to any market whatsoever, altho you should probably buy more fruits and vegetables, organics if possible, and eat them frequently).

The current administration is displaying a remarkable capacity to both respond in the short term and plan for the medium -- even long -- term. They are really clearly taking a path that turns the financial sector into a public/private partnership, rather than "nationalizing" or even "preprivatizing". Given the Republicans love in past years of public/private things, I'm a little confused why they are so eager to call what is happening now nationalization, but whatever. Given the previous high regard with which the financial sector's stocks were once held, they must have been and presumably still are in their weakened condition, very widely held (probably loads in things like calpers), so attempts to distinguish between shareholders (who should be wiped out) and taxpayers (who shouldn't have to pick up the tab) seem, um, tricky to make at best.

I don't expect this sucker to come roaring back any time soon. But I'm starting to believe we're through a good bit of the bad part.
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