I Apologize, Again

by JDH on November 14, 2009

Last week I said that you are reading the visual observations of a blind man, since I have no clue what’s happening. I still don’t, so I will keep my comments short and sweet this week. Well, short, anyway.

For the week, the Dow gained 247 points or 2.4%. The S&P 500 and Nasdaq Composite also gained just over 2% while the Russell 2000 was up 1%.  All is well with the world. The markets are up, and perhaps are very close to breaking the long standing down trend line.

SP500Nov13-09

A decisive move next week above 1,100 on the S&P 500 may show mathematically that the bear market is over. Happy days are here. All is well, unless you actually read the news:

U.S. Treasury Confident Congress Will Increase Debt Ceiling, reports Bloomberg.   Apparently the national debt is getting close to the statutory $12 trillion limit, so more money is needed. Yup, hard to live on $12 trillion. No wonder the markets are happy. What could possibly go wrong with $12 trillion in debt?

Banks keep failing, according to the FDIC Failed Bank List. Good news! Only three banks failed this week, with only 36 branches! That’s great news. Of course more banks failed this week than in all of the year 2000, but still, that’s why the markets are up, I guess.

One million people are infected with the flu epidemic in the Ukraine. Fortunately only 161 people have died from the H1N1 flu in Canada, so far. The numbers continue to worsen in the USA as well. Oh well, I guess if everyone gets sick that won’t have any economic impact.

President Obama is considering his options in Afghanistan. He was elected on a platform of ending the wars in Iraq and Afghanistan, but the war in Iraq is still going strong, and more troops will soon be devoted to Afghanistan. Probably 40,000 more troops, to go with the 68,000 troops already there. No foreign army has ever won a war in Afghanistan. The Russians, with all of their might, couldn’t do in. Neither can the U.S. In fact, 10% of all military expenditures in Afghanistan are payments, in effect, to the Taliban, to allow American military cargo to reach their bases. That’s right. We are funding the people we are fighting against. The more we fight, the more we pay them.

In other words, it’s an un-win able war. Countless lives and billions of dollars will be wasted before America, and Canada, pulls out.

I apologize for being the bearer of bad news. I would like to write happy talk and tell you that everything is fine. But I just don’t see it.

Massive government spending has inflated the stock market, and the real estate market, and the cash for clunkers market, so everything looks great. But it isn’t. You can’t spend your way out of debt.

I seriously misjudged the impact of this government spending. I should have realized that during the “pump up” phase markets will increase. I should have been long the market. I was, and am, in cash, so I haven’t lost, but I’ve left a lot of profits on the table.

So be it. I will continue to be wrong, until I’m correct.

(Yes, I still hold some gold and silver stocks, and yes, they did well this week, thanks for asking).

And, since I have nothing good to say, I will take my mother’s advice and say nothing.

Until next week.