Tuesday, June 9, 2009
(Cont'd from above)...

Jim (cont'd):   

Okay, as surely, I mean when I think about it… what could derail the economy as certain as the Department of Corrections derailed the speeding locomotive in the “Fugitive”… the one that let Dr. Richard Kimble get away… by the way, for the record, I am still not sure of his innocence… alright, how about the negative Street Journal, it reports this morning that the state of the consumer is so weak, that the consumer led recovery is on borrowed time… the year of easy credit is over… the consumer is borrowing less… talk about something that will most certainly… you got it… derail the economy… don’t take a ride on the Redding, you could crash into the Baltic.

Even the occasional friend of the optimist, the USA Today, has a lead story about prime foreclosures… nope, not just sub prime, but prime clients are rapidly going the way of the defaulters… and something that mostly certainly will…. derail the economy… as certainly as the fabulous crash at the end of the fantastic movie “The Train”, which my staff could not get… I heard another one today… get this, apparently the paying back of the TARP money, will crimp lending… and create a two tiered banking system that will… yep, you guessed it… derail the economy… made me think of Alec Guinness pressing down on the dynamite plunger destroying the Japanese train at the end of the bridge over “The River Kwai”… an Oscar winning derailment that I will have to reenact because my staff could not get the clip.

Last week, we learned that the sudden shock in bond yields to ultra high levels, which of course, are barely up when you consider where they were last year… is absolutely, positively, you guessed it… derail the economy… as housing sales are going to be ground to a halt… just like one, two, three… if you believe the press, train wrecks are everywhere… the closing of the GM & Chrysler plants, the healthcare revamping, union card check, cap-n-trade penalties… all certain derailments of the economy… every one of them… not unlike the Turkish train in “Lawrence of Arabia”… all this talk of derailing makes you wonder, doesn’t it… if all of this stuff is going to derail the economy… what could happen that could lack of a better word, rail the economy?

I mean I know what is going to derail the economy… but what keeps it on the rails chugging along… why, if you read all of these negative stories, is it even on the rails at all… you see you can spin every bit of information in the news in a way that could lead you to believe that the economy is going to be… you guessed it… derailed… my issue is that for every single case where the press says we are getting derailed… I see something that actually keeps us on the rails… higher gasoline prices… hey maybe that means that we have some genuine demand… as gasoline has been going down, when there was no demand… now it is going up… maybe people are using more gasoline… I see it as a sign of strength.

The consumer on borrowed time… not using credit cards as much… holy cow, what a head scratcher… I mean just a second, if the economy is on the rails without borrowed money… isn’t that good… isn’t that what we want… less leverage, but still some robust retail sales… how could that be bad?

TARP being paid back… weren’t the banks supposed to bounce their checks back to the government… I read it, a University of Chicago business text, was it Samuelson at MIT… no it was the great economic guru Steve Miller, take the money and run… instead, Treasury cleaned up on these forced borrowers… the banks, they were chumps for once… a bunch of smokers, tokers, and perhaps even midnight jokers, if not Morace in space cowboys.

How about those mortgage rates going higher… despite Uncle Ben, he is no longer that, we love him… Ben Bernanke’s attempts to keep them down… maybe, just maybe, the economy is riding on the rails of a housing recovery… as surely as you want to own the Pensi, or the always funny name Beano… the most amazing things happen when everyone comes off the sidelines at once and starts buying houses… do you know what they do… they start charging you more money… plus investors are selling treasuries that they bought out of fear… and they are actually buying mortgage bonds… yep, those toxic, poisonous bonds that we used to talk about… they are now buying them for double what they were paying just a month ago… toxic… are these buyers suddenly swimming in the Guana’s Canal, if not the Love Canal… or maybe, just maybe, the pollutants have been immolated and it is time to come on in cause the water is fine… I spot an intact tressel… if rates start going up, there is a rush to buy… it is happening right now.

How about the next big rush of foreclosures… for prime borrowers… that is a railment, not a derailment… prime borrowers, no doubt age 28 days, have a ton of equity in their homes… I think that banks may very well want to take some of these homes back… don’t believe me, ask Ron Hermanse, he makes prime loans in the third rail of the New Jersey, New York area… as CEO of Hudson City Bank, I think that he is actually routing for foreclosures… because he is taking in houses that are worth much more than what was borrowed for… remember the amazing thing about prime loan, I mean a stop trading as we say it… the 247 thing with the wonderful, fabulous one… do you know what happens with a prime loan… they put money down.

You have got to wonder… is the media creating the gloom… do they want the recovery derailed… is the media overreacting to the charges that it was a cheerleader of the economy… first of all, that was a wild charge, made for a flew fleeting minutes in late winter of 2009, of course, made against me, as I was indicted by the media… anyway, what I am saying is simply the idea that whatever piece of news that could derail the economy… always presumes two bizarre positives… one, that the economy is on the rails at all… and two, if things are so bad, how could it not be falling off the rails every day… or at least be stuck in the station… although of course a station that is filled with nocuous pathogens that are about to explode.

Do you know what I would like to explode… what goes on behind the scenes in the media… having founded three publications while I was running money in trading… I believe that there is a preponderance of editors out there, people who really call the shots… who think that the medias job is to be skeptical of virtually anything, any piece of data, and to put a negative spin with the skepticism… I call it corrosion… but just because the editors have a bias toward negativity… and everything you read may sound negative… that does not mean that you should not be positive… or even read positives into their down beat stories.

What do I want… I simply want the media to be skeptical of both the positive and the negative… by only being skeptical of the positive, they give a false impression of the data… as someone who was ridiculed for being too negative in 2007... and then skewered for being too positive in 2009... I keep thinking, why am I the darn target… shouldn’t the people who had it backwards be on the firing line… you wanted to be negative in 2007... you wanted to be positive in the generational low called by Doug Cass, my colleague at RealMoney.com, part of TheStreet.com where I am chairman… he called in March when the Dow was at 6500... that was the bottom that he called and I tagged along… because I felt the downside was minimal… that was right… not wrong… that was successful… that is when the train which was totally and completely off the rails… somehow jumped back on them… let me put it very simply… if the people in the media are still using all the negatives all the time scenario… they are distorting things… man is it easy to be negative… it is so easy to tell you what could derail the economy… I just want you to remember that some things actually rail the economy… and the stock market is like the tracks… which last I looked are going higher.

Here is the bottom line…

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The Bottom Line!:     Maybe the market is the little engine that could… as it was today when the Dow rallied down from its low, ending down one itsy, bitsy point… and the Nasdaq, you know I love the NASDAQ, up 17 points… or maybe it is the Orient Express, and we are being pulled along with it… it does not matter… despite all of the stories about how we could be derailed… something is keeping us on the rails… I just wish that every now and then the press would write about something… as a locomotive, which is this market, powers ever higher… and higher.

[verbatim recap]

[end of segment]

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