Wednesday, July 27, 2011

Quote Of The Day

From Megan McArdle, who recently spoke to some finance people about why the stock market was not reacting badly to the news out of Washington:
No, they're relatively calm because they simply cannot bring themselves to believe that we're not, in the end, going to raise the ceiling.  It's too outlandish that we would, through the collective action of our congressmen, suddenly and for no apparent reason shoot ourselves in the head.
 The Dow is currently down for the fourth straight day but still relatively modest in its downturn. Right now it's the annoying cat scratching your leg to wake you up. Next Tuesday, it could a tiger eating us all alive.


Charlie said...

There's a more interesting indicator out there, in my opinion, and it's totally counter-intuitive.

Long bonds are actually holding firm or going up in price.

Generally, in times of uncertainty, this is called a "flight to quality".

CNBC had a hysterical headline yesterday calling this a "flight to mediocrity"

But for now, despite the rhetoric, the world markets not only believe US long term treasuries are safe bets, but they think that today's low interest rates are safe, too.

Chew on that for a bit,It's hard to digest.

griftdrift said...

I think it's indicative of two things. We are in such uncharted territory that we don't know if traditional indicators are still valid. And Congress always waits for a clear crisis to act. Right now they are not fathoming the crisis is already here.

Charlie said...

Amazingly, our crisis is still a few years farther away than Europe. And the other emerging countries (China, India, et al) may still prove to be bubble economies (ie. Japan).

Jim Rogers, CNBC contributor and George Soros' partner when he made his billion betting against the collapse of the British Pound, anticipates the total elimination of the Euro. He's just now started to short long term US treasuries, but his long term view as I understand it is that Europe blows up first. We have another kick or two at the can.

As for me, I'm very, very interested in Brazil right now. I think they may actually have it figured out - at least for my remaining lifetime. Doubt I'll pick up and move there, our downturn won't be so much collapse as malaise if done wrong. But my nieces and nephew will likely be looking to them as an economic powerhouse when they're my age.

griftdrift said...

Always the optimist Charlie

Charlie said...

Do you know how much I would have to drink if I wasn't?