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Saturday, January 03, 2009

Saturday Morning Reading

I hope you're having a good weekend. I didn't have time to post yesterday, as I was caught up with meetings, interviews and work, work, work.

There was a wonderful smackdown on CNBC on Friday. Michelle Caruso-Cabrera was on her usual rant that Washington shouldn't use the Madoff scandal (or any failure by Wall Street) to over-regulate Wall Street. Newsweek's Dan Gross delivers a fine rebuttal, and educates Caruso-Cabrera on stuff she should know. You can see the whole thing at:
The interesting part of the video starts at 7:35. As usual, most of the content at CNBC is fluff and distraction. But that segment running from 7:35 to 9:39 is must-see TV.

In other news, US factory activity slumped to 28-year low. Wall Street took this news by rallying 250 points and going to the first close above 9,000 in two months. In fact, all the major indexes shot up more than six percent for the week. I know it makes no sense -- blame it on light volume if you want to, but the market's recent pattern has been to take bad economic news in stride, a pattern that began to emerge after it touched multiyear lows on Nov. 20. That doesn't mean we've seen THE bottom. But probably a bottom for awhile, until the "Obama Inauguration Rally" runs out of steam.

Meanwhile, Jim Rogers is still bullish on commodities. No big surprise there, but his argument is worth reading.

Also, Wall Street "leaders" continue to enrich themselves at the expense of everyone else. I'll let Talking Points Memo explain this one ...

Last Fall PIMCO chief Bill Gross was on the airwaves raising the alarm bell about how the backlog of toxic mortgage-backed securities were on the brink of crushing the US economy. And he certainly had some unique insight into the problem since over 60% of his firm's $830 billion in holdings were made up of those mortgage-backed securities. At the time, Gross was on the airwaves (on CNBC in particular) pledging that just out of a sense of patriotic duty he'd be willing to have his firm manage the government bail-out (i.e., government purchase of the crap CDOs) for free. Just for the sake of patriotism.
So now that his firm is one of the four that got a contract to run the program from the Fed, is he following through on the pledge? Doesn't seem like it. So far we've gotten through to three of the four firms, each of which has declined to comment on the fees the four companies are making for administering the program. PIMCO is the only one that hasn't responded at all. So it's seeming like the patriotic do-it-for-free plan hasn't panned out.
Finally, when I press "publish" on this post, I'm then going to go for a bike ride. Maybe it's time I buy a new bicycle, because bike sales are TERRIBLE.

After a summer of their dreams, bicycle store owners are facing a grim reality this winter.
Big increases in business this year led some shop owners to think that they were largely insulated from a slowing economy. But the economy has continued to spiral downward, taking bicycle sales and much else with it.
Check out my new gold and energy blog at