Recession Chatter: It's amusing to see how difficult news seeps into the collective knowledge base. The R-word, as offensive as the "F" word in polite conversation, seems to be avoided at all costs. However, in the last week it has finally been said. Whereas previous conversation was whether or not we were or were not (or going to be) in a recession, current conversation has moved into acknowledging that we are in one and SPECULATING on how long and deep it will be. I made my first prediction here. Sometime later, I mentioned that I thought we would be in a recession by Spring. But, I could STILL be wrong!
Greenspan: Remember my post on judging apple zone decisions in an orange zone? Isn't that what we are doing to Greenspan? Can that possibly be fair? The fickle public. He was universally lauded as rescuing our economy, now the public is trying to make him a goat. A contributing factor to this mess, is that interest rates were too low for too long. But the real culprit, to my eye, is a collective of bankers/investment bankers. Smart folks that gorged themselves on the fresh carcass of CDO's knowing full well that it would start rotting. As long as THEY were making huge fees, why raise a hand and say, "Hey, this can go very wrong--much greater risk with very small reward."
I'm just an average person, and that point is quite clear to me. And certainly, Greenspan failed to see (or speak to) the consequence of the dangers of taking on risk with an ill-priced reward. However, he, like many, publicly stated that he believed that these default swaps and the like distributed risk rather than ensnared everyone in a downward death spiral. Or perhaps folks knew, but this money was funding lots of home construction and keeping the economy going.
Regardless, with the word "recession" now part of our current vernacular, we'll continue a witch hunt to find the culprits rather than accept that business cycles ebb and flow. Further, when cycles ebb they expunge the foolish excesses and give folks time to dream up other schemes that "will be different this time." Right. The catharsis is always fleeting until the inner greed magpie is busy squawking about something else that is new, different, better and oh-so-lucrative. And, worse, we'll talk endlessly about how long and deep the recession is to be. Who really knows with certainty? I'll refrain waxing poetic on the recession in this space; however, I'll say this: Food, energy and debt service weigh very heavily on the average consumer. It will not be the high end consumer that will pull us out (do you remember those 'stories'?). And a consumer-led recession is a much broader based recession, AND it effects world economies, not just our own.
An aside: Warehouse clubs are great--but watch for non-food discretionary items to take a hit.
How I Might be Made a Fool: My everyday life provides a limitless inventory of possibilities. FAST reports on Friday. I've some APR $45 puts. The stock has been surprisingly strong, but it is one of those stocks where there is selling into strength. It's a bet--and I'll be sorry to lose my premium next week if I'm wrong. But, you can watch with me on Friday. I should note that FAST was mentioned as having a "moat" in the book review that I provided. Hopefully, I will not be swimming in it with ravenous crocodiles!
Another fool opportunity: I increased my SMN. Probably not smart given that it is the strongest frickin sector. I don't think that this contrarian stance is a smart one on my part. I was expecting a correction in these areas in the short term. Here's a perfect example of my entering into a transaction without any real clarity. I have real clarity on FAST. I don't think that with housing/commercial construction ebbing, the high cost of metals, that these guys can offer much in the way of optimism. If I'm wrong, I'll accept that, but at least I have clarity. SMN--I've opacity with maybe a pinhole in the middle--and I'm afraid that I'm letting a personal bias (incredulity) that commodity prices can continue to go higher (look at X in the last week), get in the way of my objectively evaluating the price action.
I did order some incense yesterday--perhaps there will be an anti-stupidity scent in there!
You'll be so proud of me. I'm continuing increase my mobility. I still cannot walk by the time that I get to bed at night, but the foot/leg get stronger daily and the swelling, while pronounced, is not nearly
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