Sunday, April 5, 2009

Gimme two on GM to cover, and let the rest ride...

Ramblings Post #22
Capitalism is broken. But much like my car, when it breaks down I fix it, I don't park it in the garage and walk everywhere I need to go. Let me explain to you the idea of my morning commute. There are a lot of things wrong with the current system, but the current system is the same system that got us here. I shudder to think of the alternatives.

I stopped watching financial news when it turned into a Monty Python sketch. Let me explain.

If you ever really watched the financial news on CNBC, Bloomberg or Fox Business News or really anybody in the whole financial news sector, you'll notice that it's not about the actual occurrences at the business, or actual profits or anything silly like that. If you look and pay attention, it's really all about expectations and hopes and dreams. Just like gambling. No, really.

For example, at We Know What We're Doing, really any bank or industry in 2007, well at WKWWD Inc., last year they earned .37 per share and were doing real good. Well this year, they made .34 per share, but they were supposed to make .41 per share, so they're doing horribly.

Did you see that? Were you paying attention?

They just ran a Vegas Line on you. The touts, I mean financial experts, picked them to turn a profit this year of .41 cents per share, and they only made a profit of .34 cents per share. They turned a profit this year, just like last year! They almost made as much as last year! But just like your favorite team who won, but because they didn't ...cover the spread... you still lost. They don't make what the touts, I mean experts, expect and it's like they used the company funds to binge on cocaine and Thai hookers. Stock price drops, disproportionately and millions in value are lost on sheer expectations.

And this was in the good times!

And if you do that now, it all sounds even worse. Each round of layoffs to protect a irrational share price and reduce an over leveraged core businesses only accelerate the market's decline. Now? Now they're worried about fiduciary responsibility? I mean when WKWWD Inc., lowers it's expectations to .22 cents per share, most folks don't realize THEY'RE STILL FORECASTING A PROFIT! But to the touts, it's as though predicted the end of the world. Maintaining isn't good enough, everybody has to always get better according to Wall Street, and that is breaking down. Spend fifteen minutes with the Journal and you'll see what I mean.

But reporting-wise in the past few months, however, it's become a race to see who can put out the bad news the quickest. After they failed to see the obvious patched over problems in the financial markets and institutions for the past five years, no one wants to be the news source that didn't ring the alarm. One can almost see the news anchors hopping in excitement as they wait for whatever catastrophe to roll off the wire. Unemployment is up! Foreclosures are still skyrocketing! Troubles in Europe! Mars needs women! China looks to repossess Taiwan! Credit markets have marked down the lima beans, but the chicken doesn't look fresh! We warned you! We warned you!

The whole thing has turned into a parody of a Python sketch that for years I've called "Drinking Chateau" but is better known as the Four Yorkshiremen. That sketch is hilarious. In it four men try their best to make their past situations sound insanely difficult to have made it though. And if you switch the channels, you can almost see the reporters smirking and going, let's see them at Competition Network Channel top this bad news!

And if it wasn't really happening to me and those around me, retirement plans withering and dying, homes destroyed, well watching the financial news would be funny too.

Our current market is built on two things: Trust and confidence. That's it. I wish there was more to it, but when a guy sends another guy he never met except via telephone a few million dollars because of a promise....that's trust and confidence. More than a few million jobs in the country are built on just that. And right now, as a lot of folks are finding out everyone isn't so trustworthy and a lot more are faking the funk, all the doom and gloom news isn't helping.

It's hard to stop being depressed if all you ever hear is depressing news. And depressing news is killing the confidence that runs the markets.

We need to get back to fundamentals. In the past few years, we've turned our lives into that of overgrown kids who expect the best and most for the least possible effort. And for a while we thought we'd figured it out. Only it turns out my mother was right:

"If it sounds to good to be true, too fantastic to be real, then that's probably the case."

And since we were all gonna get rich doing nothing...guess what? It seems kind of obvious looking back.

Barkeep. Whatever my friends want...within reason. Beer-wise. Let's not get silly.

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