Sunday, January 24, 2010

A couple of down days and the double dippers come out of the woodwork

I've been pretty consistent stating my opinion that absent another stimulus package we are likely to see another dip back into a recession in late 2010 or 2011. However, it took a couple of down days in the stock market to get the rest of the gloom and doomers on board.

“I think global growth is going to be anemic and I’d put a 40 percent chance on a double dip at some point in the next couple of years,” Stephen Roach, chairman, Asia of Morgan Stanley, told CNBC Friday.

Having spent a little free time this weekend reading Cormac McCarthy's "The Road" a 5% drop in stocks and 10% unemployment seems downright cheery.

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It looks like Timmay is going to be in some pretty hot water over the AIG emails. More details leaked out today over at the NY Times.

I'd say there is a 80% chance Geithner doesn't last to the end of 2010 and there is a 10% chance he could be out this week (Friday night would be convenient b/c it would follow the State of the Union and the public could be distracted by the Healthcare reconciliation vote).

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When I hear people casually toss around budget numbers like $200 billion, $1.9 trillion, etc., I wish I could sit them down for a second and tell them this story....

Imagine that the Federal Government stopped spending more than we take in right now and our national debt clock stopped ticking at roughly $12.3 trillion (for this exercise, I'll ignore the trillions in Social Security and Medicare obligations outstanding).

Now let's also assume that by some miracle we develop a plan to take in one more dollar than we spend every second of every day. If we could do this consistently for an entire year we'd be able to pay down $31.6 million over the course of a year. Yeah, that's all. At that pace it would take almost 32 years to pay down $1 billion. And if we could maintain that level of fiscal restraint (assuming our debt paid 0% interest) and bring in $1/sec we could have our entire debt wiped out in a mere 390,364 YEARS! Houston (and NY, Boston, LA, Chicago, etc) we have a problem.

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I don't normally focus on the various terror threats around the world because it's a dangerous world and I think it's naive to assume that we can spend our way to safety. However, it is interesting that at least 17 nations have quietly increased their threat levels based on recent intelligence. Perhaps what's most disconcerting for the "let's profile them" crowd is that "Al Qaeda is believed to have taken to employing in their European networks typical Westerners of Caucasian appearance, quite different from the stereotypical Muslim."

Cheers!

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