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(Written yesterday. Didn’t intend on posting, but it’s interesting to read my thoughts before and after mid-term elections and the FOMC announcement) Bottom of the third, Bernanke on the mound. How much money will he pitch into the US economy through quantitative easing? Maybe he’ll pitch a fastball, of $500B - the average estimate. Or, he’ll probably pitch a changeup of $200B, to avoid the (inevitable, if not already prevalent) currency war/crisis. He may even pitch a curveball - a whopping $800B in asset purchases (causing high rates of inflation, low interest rates - hoping there’d be an increase in consumer/biz spending, or a comparative trade advantage). Oh, the uncertainty; just makes the US - small investors, institutional investors, hedge funds, etc. - want to rage. Right now. #fearthebeard This is the World Series I’m currently watching. The US is the largest economy in the world, yet we are facing one our most troubling times. We’re still damaged by the mortgage crisis, further pained by faulty housing foreclosures (er’hem, BoA) . Low unemployment. Low spending (consumer and business). Why blog about this? Our economy is crazy; markets are whipsawing. Perceived bubbles are forming across tons of commodities. People are incredibly cautious; uncertainty is growing faster than gold prices. Plus, it’s interesting and relevant. Think of it this way. If you wanted to save your money for a house, car, grad school, etc. - where would you put it? Let’s see: If you leave it in the bank (“risk-free” investments), your investment will wither away with inflation (govn’t pumping more money into the economy, devaluing the dollar). Put it in bonds and watch your investment rocket down as prices are the highest they have been in decades, due for a correction (shorting bonds, btw). Put it in stocks and ride the volatility; if QE2 doesn’t work, it won’t be too long before the honeymoon effect of monetary stimulus nosedives into a hangover effect. Anyways, in the short term, I think equities (stocks) will rally. Sentiment and momentum seems to lean this way; “buy the rumor, buy the news”. But even if we hit a home-run, so to speak, I think we have done it under the use of “anabolic steroids” - monetary policy - and not through pure “pain-and-gain” methods, fiscal policy. Speaking of fiscal policy, if Senate and House achieve gridlock, divided by Dems/Rep, I wonder what fiscal stimulus they’ll implement. Import levies? Extend Bush Tax cuts? Create, essentially, a “phantom” tax? We, the US, are a $13.6 trillion in debt. Wonder how these two teams will collabo to fix that one. Btw, wow. Meg Whitman spent $142M on her failed campaign? That’s nearly 1% of California’s budget.. Ssstrike.

(Written yesterday. Didn’t intend on posting, but it’s interesting to read my thoughts before and after mid-term elections and the FOMC announcement)

Bottom of the third, Bernanke on the mound. How much money will he pitch into the US economy through quantitative easing?

Maybe he’ll pitch a fastball, of $500B - the average estimate. Or, he’ll probably pitch a changeup of $200B, to avoid the (inevitable, if not already prevalent) currency war/crisis. He may even pitch a curveball - a whopping $800B in asset purchases (causing high rates of inflation, low interest rates - hoping there’d be an increase in consumer/biz spending, or a comparative trade advantage).

Oh, the uncertainty; just makes the US - small investors, institutional investors, hedge funds, etc. - want to rage. Right now. #fearthebeard

This is the World Series I’m currently watching. The US is the largest economy in the world, yet we are facing one our most troubling times. We’re still damaged by the mortgage crisis, further pained by faulty housing foreclosures (er’hem, BoA) . Low unemployment. Low spending (consumer and business).

Why blog about this? Our economy is crazy; markets are whipsawing. Perceived bubbles are forming across tons of commodities. People are incredibly cautious; uncertainty is growing faster than gold prices. Plus, it’s interesting and relevant. Think of it this way.

If you wanted to save your money for a house, car, grad school, etc. - where would you put it? Let’s see:

If you leave it in the bank (“risk-free” investments), your investment will wither away with inflation (govn’t pumping more money into the economy, devaluing the dollar). Put it in bonds and watch your investment rocket down as prices are the highest they have been in decades, due for a correction (shorting bonds, btw). Put it in stocks and ride the volatility; if QE2 doesn’t work, it won’t be too long before the honeymoon effect of monetary stimulus nosedives into a hangover effect.

Anyways, in the short term, I think equities (stocks) will rally. Sentiment and momentum seems to lean this way; “buy the rumor, buy the news”. But even if we hit a home-run, so to speak, I think we have done it under the use of “anabolic steroids” - monetary policy - and not through pure “pain-and-gain” methods, fiscal policy.

Speaking of fiscal policy, if Senate and House achieve gridlock, divided by Dems/Rep, I wonder what fiscal stimulus they’ll implement. Import levies? Extend Bush Tax cuts? Create, essentially, a “phantom” tax? We, the US, are a $13.6 trillion in debt. Wonder how these two teams will collabo to fix that one.

Btw, wow. Meg Whitman spent $142M on her failed campaign? That’s nearly 1% of California’s budget.. Ssstrike.