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  • Paul Krugman still an idiot [Edit or Delete]2 comments
    Jun 7, 2011 10:16 AM
     On a Tuesday morning stocks are finally rallying after a prolonged slump.

    I'm still a buyer. This looks like a repeat of Spring/Summer 2010 when stocks dipped on unfounded double dip fears, only to rebound to new highs in Q4. Odds are we'll see another huge 4th quarter rally in stocks and commodities, but treasuries (TLT) will fall just slightly and interest rates still won't go up until dow 14,000 at least. Expect more talk of low rates for ‘extended period’ 'slow growth' and ‘economic headwinds’ blah blah blah by Bernanke in upcoming FOMC meetings.

    Paul Krugman still an idiot

    1. The government is ineffectual at creating jobs no matter how much money it spends. Full employment is not optimal for any economy, and especially not the US where productivity and efficiency are more important. Trillions have been spent on homeland security, war, and stimulus and unemployment is still very high.

    2. Despite the high unemployment the economy is not dying. Even after the 100% rally from march 09 lows the PE ratio of the S&P 500 is still just 15-16. Earnings from tech companies like AAPL NFLX continue to be blowout quarter after quarter.

    3. Quit with the fear campaign, Mr. Krugman. There is a 0% chance of default according to the bond market. There will be more spending and a higher debt ceiling, but it won't be for liberal programs. It comes as no surprice that house majority leader Eric Cantor came out opposing a debt ceiling. 

    Main street’ pessimism is still good for stocks

    Check out this chart

    The ’right direction’ line averages around 30%, reflecting overall negativity. Also note every time optimism enters the 10-20% range such as in 1994 and 2008 a huge bull market begins. One’s own personal perspective on the economy isn’t usually an accurate one.

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  • 5 Stars for the headline alone. That's a reusable headline, kind of like "Bernanke speaks, stocks fall"

    Here is the gold-plated rock-solid reason that: "There is a 0% chance of default according to the bond market"

    The Obama administration has any number of choices in how to deal with the debt ceiling limit, and stiffing the bondholders would be a strictly voluntary choice. They could stop govt payments, furlough workers, etc. If default is going to lead to global cataclysm, then OF COURSE the Obama administration could simply put the interest payments at the head of the line and go through a govt shutdown and/or delay of social security payment instead. That would also cause heartburn, but if it impacts voters, you can be assured the Congress will quickly be put on notice and pass something pronto. Problem solved.

    The 'default' claim is them crying wolf solely to get the Republicans to cave on their commitments to cut spending. Sooner or later, a deal will be worked out, one that will cut the spending and increase the debt ceiling, and at NO TIME in the process does default even need to be talked about.
    7 Jun 2011, 10:16 PM Reply Like
  • You think MAYBE the Bond market is saying that direct manipulation by CB purchases (direct and indirect) via QE distorts the price signals? Making ANY claims about what the Bond market "says" is naive at best, and intentionally misdirecting at worst.
    15 Jun 2011, 12:05 PM Reply Like
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