As government officials flounder trying to explain why the most important fiscal maneuver in U.S. history is so necessary, I offer a potential Presidential speech.  With footnotes.

Books will be written about this financial crisis, but no one has brought up one important factor,  and it is summarized by this single soundbite, from Friday September 17, 2008, at exactly 4:00pm EST:

"...and there's the closing bell, I'm Bob Pisani, and I just have to say in my 18 years at CNBC, I have never been more proud of my news team than I am now...."

They are good reporters, dedicated and hardworking, I'll give him that, but was the reporting itself better than it was on other days?  What else would there be to be proud of?

Gun to head, this is the bottom.

They didn't cut rates, but they did issue new Treasuries because the Fed needs money.  And no, there's no inflation, because banks are deflating hard.  We may come out of this alive, who knows.  (Though for current retirees who had money in "buy and hold" safe financials-- or anything else, for that matter-- well... there's always Social Security.  I know, I know, I know.)

They also stopped naked short selling, which is huge.  I thought that was already illegal?

For you technical traders:

Choose:

$5 today or $10 in a year.

It started with the Vytorin study, and my belief that doctors purposely misstated the results in order to support/portray an anti-Pharma bias.  The stock tanked, but I predicted that  eventually reality would set in, and so the American College of Cardiology was giving me the  opportunity to make 20%.

A bird in the hand is worth two in the bush if that bush is a pricker bush.  And only if people actually want birds, not bushes.

It's not good.

And by implodes, I mean that the government herds us into recession and into psych clinics.

Today Secretary Paulson says he doesn't want to rush into more rate cuts-- or any economic stimulus.  "Thoughtful" and "patience."

I guess surgeons can be thoughtful and patient, too, when they're doing, say, breast augmentation.  But when the spleen and the pancreas both have grenade fragments in them, well, get cutting, Doc.

This is how I know we're entering a recession.

That's a still from Jay-Z's video, "Blue Magic."  The significance of the shot should be obvious to anyone, whether or not they trade currencies.  Why it's not obvious is the real question.

So I was pretty much dead on: GS went to from 190 to 240; GOOG went to Pluto; oil closed at $93 yesterday; and gold went from $720 to $792. As for Dow 15000, wait a month. I was even right about Angelina Jolie; I was wrong about the corn, though.

Tomorrow the Fed will cut .25 because, and this is important, everyone expects them to. I think they would rather not cut, because they see an inflationary picture, high oil, high gold, and strong employment, and no obvious slowdown in consumption. But the Fed game is about managing expectations, because surprise actually hurts the market more than the "wrong" decision. In this case, though, it's the right one. The inflationary picture only applies to rich people; to the others, the picture is recessionary: they're living on credit. Or off their house's value, which turns out is made of gingerbread.

If you want the next investable tip, it's Vegas: put money down on a Republican President. Or, if I am wrong and they don't cut, double down on Clinton.

(Long GOOG, gold, oil; still short Iran, and about to cover on Angelina Jolie.)

 

 

The quote, "what hath God wrought" comes from Numbers 23:23, about the Israelites, but it was popularized by Samuel Morse when he sent it as the first message over the telegraph.

I've been telling everyone who will listen to buy Google-- it's up 140 points since I wrote about it a month ago-- because it is more than an investment, it is a paradigm shift.

Wow.  Wow.  Fed cuts 50 basis points.

The Fed did the only thing it could do, given the circumstances.  Now people can maybe keep their homes, maybe we don't slide into recession.

But oil goes to $93 and gold to $800, and people think twice about buying corn.  Meanwhile GS goes to 220 and the Dow to 15000.  And the split between rich and poor becomes visibly wider.

Oh, you want a psychiatry angle.  Ok.  Zero percent chance of universal healthcare in the next 5 years.

 

(disclosure: long gold, GS, GOOG; short Iran and Angelina Jolie.) 

It really depends on what you're asking. But the answer is yes.  But don't by LLY yet.

So the Fed has an interesting problem: whatever it does-- raise rates, cut rates, etc-- it causes a Moral Hazard, but to different people.  To whom does it want to teach the wrong lesson?

Or, choose: rich get decimated, poor get poorer; or rich get richer, poor get by? 

 

 

Here’s what’s happening in the stock market: people bought stocks on credit, and now they can’t pay it back because the interest rates are too high, and their collateral caught on fire.  And the lenders want their money back, now. 

This has everything to do with psychiatry. 

 

Hi.  Vote for me for Best Medical Blog.

http://www.medgadget.com/2006bestmedical.php 

These are five more steps.  This is tentative; what I plan to do is consolidate and reorganize  the 10 steps into one post.  But I think there is still value in this draft.