Heyer Capital, LLC

Linked here is an extraordinarily interesting CSPAN commentary & Q&A with Janet Tavakoli.

Retail sales fell last month, despite the “cash for clunkers” taxpayer transfer to the auto companies.  As it turns out — don’t tell Washington this and burst their bubble — but when poor people (that drive old cars) sign up for a boatload of consumer debt on a rapidly depreciating new clunker and a new monthly payment, they don’t actually run to the mall right away to spend like mad.

Austerity is the new ‘in.’  But now that Congress has shifted the demand curve back to present, expect a vacuum-collapse in auto sales now that the layer of demand is instantly removed.

Before they get too far with the “cash for house clunkers” program, recall that something like 30% of Americans would sell their house if they could get a good price.  That’s a heck of a price overhang and pending supply.  Do the world a favor and laugh out loud whenever someone on the TV or in polite company says, “Housing prices are coming back.”

“Investor’s Business Daily” founder Bill O’Neil provides an insightful interview on KOA radio earlier last week. Here’s the link if you need browsing background-sound.

http://www.investors.com/MediaCenter/default.aspx?mediaID=482737

The three key take-aways are that 1) he believes a new secular bull market began in March; 2) tune out Wall Street noise and predictions from the overeducated talking head. Discern what the facts of the market tell you;  3) entrepreneurial America will thrive, regardless of Washington’s follies.

Now that the political classes and leeches are clamoring for another stimulus, now is as good a time as any to dissuade you from this nonsense.

The “Economy” is often discussed as a detached entity that can be controlled, poked, prodded, studied, enhanced, depressed, and manipulated at will.   In reality, the “Economy” is you and me.  That’s it.  What’s good for you and me is good for the Economy.  The converse is true.  What’s bad for you and me is bad for the Economy.

Now let me ask you this:  is your household and neighborhood suffering because you are not spending more than you have each month?  Or are things a bit tight now because you, your neighbors, or your company already spent more than was available, and now you’re tightening your belts because of that prior excess?  If the latter is the case — and it is– then how is spending more and more of the money that you don’t have going to ‘cure’ the problem. It won’t.

Spending more won’t. Saving will.

Savvy Mish relates another analytical post, and with the miracle of the internet, I’ll repost here for your edification.

Mish’s Global Economic Trend Analysis.

JPMorgan $29 Billion WaMu Windfall Turned Bad Loans Into Income – Bloomberg.com.

Needless to say, all those pundits that heaped scorn and wrath on “mark to market” write-downs seem eerily silent when banks do the opposite.

A caller to Rush the other day asked the MahaRushie why no politician is getting agitated about this financial mess.  The only politician that the caller could think of is Daniel Hannan, a Member of the European Parliament representing a part of Britain. 

If you have not yet seen Mr. Hannan’s electrifying throw-down at the “devalued” PM Gordon Brown, take three minutes. It should not be a surprise that an entrepreneur has started to compare MEP Hannan  as John Galt, asking, “Who is Dan Han?”   

(Edit:  Here is a compelling interview of MEP Hannan by WND columnist Vox Day.  Hannan’s own blog is here.) 

The obvious question is yes, where are the American politicians that can stand up like this?  The meek me-too Rep. Paul Ryan wants to play with the big boys, but he is already arguing for bigger government, just not as blatantly big as the destroyers.  How does that describe any victory?

Advocates of liberty and responsibility should always view Sodom-on-the-Potomac as a defiling sewer of corruption, and not a hot tub in which to soak and linger. Has the dark shadow of Bush’s false leadership brought us a generation of spindly-legged spokesmen?

Here’s the best summary I could steal and call my own: 

Brian Saint-Paul: The popular media is blaming the economic collapse on the free market and “laissez-faire capitalism.” And yet these same commentators seem largely ignorant of what a laissez-faire economy actually involves. So first things first: What is free market capitalism?

Thomas Woods Jr.: Well, it’s not nearly as scary as people think it is. Free market capitalism simply involves the free exchange of property between individuals. The idea is that you’re free to enter into contracts with other people. These contracts are reached on a voluntary basis; both parties must consent to the terms. The system proceeds along the lines of mutual respect. In other words, the free market is civilized behavior, institutionalized: You can’t initiate physical force against somebody else to make him do something — you have to get his consent. It’s a system based on private property and free exchange. And that’s really it.

Order the book Meltdown by Dr. Tom Woods through this link.

Last May, I cautioned blog-readers against investing in banks. Using the BKX as a general proxy, big banks had fallen about 30% from the peak;  Bear Stearns had been wiped out in March, big banks were reaffirming the dividends are safe, and the calls were being made: “January and March lows have held, so the bottom is in.”

But….

If you bought M&I Bank, or Lloyds, or Citigroup, or General Electric (a bank in drag) your investment is eviscerated. I mention those stocks specifically because I know from interviewing clients that area brokers were pushing those stocks.   Your broker gave you the sweet song of “juicy dividends” and “bank safety” and “buy and hold and cash the dividend checks”… and you just lost 50-80% of your capital and the dividends have evaporated.

In retrospect is seems it should have been obvious to anyone with just a cursory knowledge of economics:  banks were struggling for a mighty good reason: lack of un-impaired capital.

Sometimes the best investment is just staying out of the way.

Mish Shedlock deserves your daily attention (or at least let your RSS feed bring it to you.) Here is his blog web site: http://globaleconomicanalysis.blogspot.comThe most stunning news he’s delivered lately is an analysis of a recent mortgage pool with an incredible  15% already in foreclosure. Yet 92% of that pool is still rated AAA.  Toss in the muni market stress, and month-end statements will look darn ugly.