Dear rss free blog,
Apologies
for yesterday’s newsletter which some did not receive. Paid subscribers are
reminded that they can always log on to their account at www.global-investing.com to read
the latest issue. The problem may have been that the newsletter was very long
because there were 5 quarterly reports covered; it may also be that our
chocoholic webmaster placed 5 ads for Valentine’s Day chocolates under my
signature which triggered spam-blockers.
We will
soon have changes in how we distribute the newsletter. Watch this space.
Paul
Krugman in today’s New York Times
spelled out the argument for deficit spending during an economic recession and
accused his opponents of “fear-mongering.” He compared the present misinformation
campaign to the buildup to the Iraq War.
Deficit spending is what was preached by Lord
Keynes and practiced by FDR and lots of awful European Fascists. Deficits are
not of the left or the right despite U.S. perceptions to the contrary.
All you need to do is recall George W. Bush’s taste for red ink.
I know hawks are not going to listen to me or a Nobel-prize winner if they want
to attack Obama over the deficit. (My Washington DC cousin Ralph this morning said
some of his neighbors are even blaming Obama for its blizzard.)
Here’s
another opinion balanced-budgeteers can also scorn, since it comes from
Dominique Strauss-Kahn, the Frenchman who currently heads the International
Monetary Fund (suffering the blizzard and also a ban on extramarital sex which
does not apply to cousin Ralph, a bachelor.) The sex ban may be why S-K plans
to resign early and re-enter French politics (as a Socialist). Anyway, you can
also discount what he has to say on many grounds.
But I
think Strauss-Kahn makes sense stating that if stimulus is removed too soon and
it has to be resumed after a gap the world economy will suffer more than if it
is removed a bit too late. Deficits are the least of our worries now.
US markets fell
because of concern about the eventual deficit when the economy revives; worry
that the economy will not revive because unemployment remains high and there
will be more housing busts. Either the first reason for panic or the second
pair suffers from incompatibity with the others. That lack of logic marks a
panic.
Meanwhile
the Euro is collapsing as foreigners seeking a haven put their money into U.S.
Treasury bills to finance our deficit at miniscule rates of return. If these
inflows keep up the US
deficit will be easy to finance.
The panic
selloff was so severe that normally I would advise going in with cash and
buying. However, it is Friday, never a good day for stock markets with the
prospect of a weekend ahead. Two statistical experts (whom I will forebear
naming) say that yesterday was respectively “an overreaction” and “an outside
move” on charts. They share their newsletters to get mine and will remain
nameless.
*Yesterday
afternoon paid subscribers received an update on a new stock.
