Sean’s Rant

Which of the above is the United States? It seems to be a mesh of the three and the socialism portion is growing.

I called this bull market in oil. Heres my post when oil was at $35/barrel. I am not as bullish on it now because of the massive run up we have seen. I still see it going up in the long run but there has got to be a correction because the supply funadmentals still don’t support the bullish action. There is still way too much oil sitting around for it to be at these levels. I wouldn’t necessarily short oil but I would wait for a bit to buy more of it and you can do this with USO.

Take a look at the following charts. The first chart is one of the market crash of 1929 and the following recovery.

The next chart is the  market crash of 2008 and the recovery up until now.

The company that hires slave workers from other countries, ruined whole ecological systems through deforestation and oil spills, laid you off right in the middle of a depression, raised interest rates on your credit card and cut your credit line when you most needed it after you were laid off while interest rates were actually going down, hired and paid the CEO a $200 million bonus to ruin the company, conned you  into your Adjustable Rate Mortgage when mortgage rates were at all time lows with clearly astronomically low chances of interest rate benefit but almost guaranteed loss, drove the price of gas past $4 a gallon, ruined your retirement account……

So now companies have the same assets, but they will look different on the balance sheets of companies like banks with ‘distessed’ assets. The stock market has already discounted for these assets with their own valuation models so the fact that these changes will now be reflected on the actual balance sheets will not really change anything although it is good for a ‘pop’ today in the market. This change was expected to happen so this is not exactly a shock and might have a limited effect on the market considering how much time the market had to rally before this announcement.

Massive government interaction is definitely the most inefficient way to run a market. Instead of just detaching capital requirements from mark to market and allowing the banks to use mark to model for regulatory reasons and maintain mark to market for reporting, as mentioned by Karen Finerman on CNBC’s Fast Money mentioned as I had been wondering myself even before I heard from Karen the seemingly obvious alternative to the capital requirements problem.If the reason the assets need to be bought by the PIPP program is because the banks need more capital in order to lend, then change the system for capital requirements.

The new ‘idea’ being thrown around is to incentivise top management through stock options rather than cash in order to avoid risk taking. Its like everyone has forgotten Enron and the fact that the stock price was manipulated because that was their main form of incentive. We are apparently stuck in a feedbackless loop where we continue to do the same things over again even though they didn’t work last time.