Tuesday, February 16, 2010

Back to the Future....

Stocks roared back to life on Tuesday after the President's day holiday on the back of Merck's cost cutting and oil nearing $80 again. We're just about done with earnings at this point so the markets direction will largely depend on sentiment and outside influences (geopolitical, etc).
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To get a sense of the growing pension time bomb that is facing everyone in the US consider the case of Illinois.

In the last 11 years their shortfall (amount by which their promises exceed their assets) has grown from $14 billion to $89 billion.



"On Jan. 7 the state sold $3.5 billion of "pension obligation notes." In simple English, the state borrowed money to finance the state's contribution to its five retirement systems."

When you couple pension promises that real market returns you get a lot of red ink. Illinois is but one state facing this type of crisis. Either we are going to be forced to bailout the pensions in 2011 or states will have to tell retirees "Ooopsie, you see we promised you X but we can only pay you 70% of X. Now, if you'll let us buy Credit Default Swaps on Spain maybe we can get you back to 80%. Come on, every good gambler knows you have to double down when you're losing".

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I really miss NJ sometimes. While browsing the local paper I saw a full page ad for a 36 mth lease on a new 2010 Porsche Panamera - google it, it's stunning - for the low, low monthly payment of just $1,349 per month...

I'll assume that you are now wiping the coffee off of your screen that you spit out when you read that. Thankfully, that's the price for the low-end model, the Turbo would be about 40% more.

In the same newspaper roughly 25% of the paper (14 of 55 total pages) were dedicated to sheriff's foreclosure notices! Yikes.

Finally, while cruising through my old stomping grounds I saw the biggest house I've ever seen. It had to be 30,000 sq ft. It was about 70% done and already listed. Sweet.

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Finally, 12" of snow brought the US East Coast to a standstill. That's not a snowstorm --- these are pictures of a snowstorm.....




Cheers!

1 comment:

Life Insurance BC said...

Thank you for all the great posts from last year! I look forward to reading your blog, because they are always full of information that I can put to use. Thank you again, and God bless you in 2010.