www.CostaRicaTicas.com

I love having doom and gloomers around. The stock market "climbs a wall of worry". Skeptisism is good for the markets.

The time to worry is when everyone and their mother is on board for the joy ride. That is how the bubbles form.

I don't think the bottom is too far off on the Financial Stocks. They are getting the shit beat out of them these days, even banks that almost no exposure to Sub-Prime. Those bastards at Goldman Sachs are brilliant. They shorted the Sub-Prime market at just the right time and made a kiiling off of its collapse, yet their stock got dragged down with the others. Amazing.

There are going to be some deals to be had very soon.

I usually stay away from financial discussions. Those of you who know me well know why...

One comment, this is exactly right. Those of us who play the waiting game will be paid off handsomely.

This post as well as your others are nothing more than media sound bites.

I think you have your words mixed up, but like you said, you are no financial expert. "high oil revenues??" I've heard some complain about high oil profits so I'll assume you meant profit.

So Exxon isn't allowed to make a profit? They aren't allowed to profit from years and years of investment in oil discovery. Do you think Exxon's only job is hauling oil from abroad? Have you ever read about oil exploration and the huge investment required? If you think we are being gouged, prove it, if you think there is some sort of oil conspiracy, prove it beyond yet another media sound bite. I've heard all the gouging stories and the conspiracy stories, but I've yet to see any oil executives on trial much less go to jail.

If you didn't say the same about drug companies I'd be very surprised. They too are in the field of discovery. They too need to capitalize on successful discoveries to 1. pay those very high risk-taking stockholders a handsome return and 2. fund more research for the next successful discovery.

"War profiteering" - media sound bite. You give absolutely no concrete details.

http://thepopulistblog.com/wordpress/20 ... s-to-jail/

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Cigar smoking doesn’t reduce us, it elevates us; It makes us more content to be alone, or it helps us to enjoy our companions. It encourages us to dwell on the simple moments and celebrate the sublime.
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Hung like Einstein and smart as a mule.
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You're not drunk if you can lay on the floor without holding on.

It is a misunderstanding to think that the oil companies set the price of oil.

These prices are set in the Commodity markets. These are very efficient markets that are extremely difficult to manipulate. OPEC has tried for years and years to control the price of oil and has been largely unsuccessful. NO ONE WAS TALKING CONSPIRACY WHEN OIL WAS $20 A BARREL. Where was their power to manipulate the market when the price was lower than the cost to bring it out of the ground? If any of the players in the oil game had the ability to manipulate the market price it NEVER would have hit $20 a barrel. NO WAY!

It is even more difficult for a Corporation to manipulate these markets because they do not really control the supply. All the Oil Corporations can do is process the supply of oil that is brought to the market by the oil producing countries. The price of the oil is set before the product even gets to them.

Market price is the market price. Just like gold, or Wheat, or Pork Bellies, or Copper, or and other commodity. All of these other commodities have been going up just like Oil because of increased demand in the emerging industrialized countries. The only difference is that the market for oil is HUGE! and as such it is even MORE difficult to manipulate. The trend for higher commodity prices extends to virtually ALL classes of commodities and there is no reason to think that it is not going to continue. The demand will continue to increase, the supply AT BEST will stay consistent. There is only one direction for the price of oil to go. Yet Americans go insane when the cost of this one particular commodity goes up. IMHO that says a deal more about us than it does about the integrity of the market.

This has nothing to do with the subject at hand.

One last post by me on this subject. You say the Dow is up 8%. Retail price index was up 4%. The US dollar has dropped over 7%. To my eyes that rather wipes out an 8% gain in stock prices.

You say: We go through a similar debacle and we barely miss a beat. Two points here. First, by NO means are we 'trough' the debacle. Housing inventories are at record levels, something like 10 months supply at current sales rate, assuming no more houses are added to the market. Everybody knows that builders are still building, though exactly why requires an explanation I'm not ready to tackle. This also doesn't take into account the rising number of foreclosures, which will add houses to the market. Which brings me to my second point. To say we have barely missed a beat is to ignore people losing their homes. Close to my old hometown of Sacramento is Stockton, where one of every 23 houses is in foreclosure. Stockton is an extreme example, but there are other areas where there are ghost town subdivisions... Arizona, Southern California and perhaps parts of Florida. The adjustable rate mortgages that were touted so enthusiastically by Alan Greenspan have only just begun the interest rate resets from the height of the housing bubble. We aren't through the woods at all, and the pain is very real to real people.

Using GDP to measure the economy's health is a common but delusional method. GDP counts consumer spending as if it were a product. It's not.

Other than the uppermost economic strata of the US population, most people's wealth has been found in their houses. With falling home prices and the home equity loans that have been taken out, this source of wealth is shrinking rapidly. Savings rates are NEGATIVE. There are people borrowing from their credit cards to make mortgage payments, foolish as this sounds.

One last thing. As far as Ronald Reagan rolling in his grave, figuratively speaking, he was the great tout of 'borrow and spend' economics, the godfather of 'debts don't matter.' Sure, the current crowd has taken it to a new level, Reagan on steroids, but the principles remain.

Okay, I've had my last say. Best of luck to all, bulls and bears alike.

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"The only normal people are those you don't know very well." Joe Ancis

Allow me to respond to your thoughtful post. (Time on my hands today)



Friend: Just a couple corrections. The Economy grew by 4%, not the retail price index. Meaning our Gross Domestic Product grew by 4%.

The dollar dropping by 7% only has an effect the cost of imported goods or those traveling abroad. It really has no effect on domestic inflation.

The 4% growth in the economy is what is most significant. Most of this is due to growth in our export economy.



You are not going to get an arguement out of me. Housing is phucked. If you are involved in Real Estate than you are in a recession.

The truth is th economy is steaming along inspite of these troubles. That is the big news.



I don't ignore, but it is sort of beside the point. The point is that the economy continues to grow dispite these problems.

When Japan went through this, everything fell apart as far as their economy is concerned. Meanwhile we are just plugging away. 4% growth in GDP in the face of these staggering financial problems is truely amazing.




You and I can debate this point. Reality is that this is the means that virtually all economists use to gage the growth of an economy. I am not an expert, I am guessing neither are you. Since this is the measure that Expert Economist use, I will continue to consider it significant. Others can disagree.



There are some people that got themselves in really stupid situations. No question. Maxing out on Interest Only, ARM mortgages was pretty damn stupid. Many people have been hurt. No question.

No question that the Financial Markets are getting the crap kicked out of them right now. But look .......

It is a FACT, that the growth in our Export Economy has more than DOUBLED the amount of GDP that has fallen out of our economy because of this housing mess. Exports are going crazy right now, but that is not as obvious as the guy down the street that may loose his home.

It is also a fact that inspite of the housing mess our economy continues to create net new jobs and to grow our total earnings. This is HUGE!

As long as these TWO facts remain in play, we will get through the housing crisis. If either of those two things change, I will reevaluate.

If it isn't a subprime loan (borrower) then there is nothing wrong with a Interest Only loan or an ARM or an Interest Only ARM. People can elect to pay their own principal when it best suits them. In the end, an Interest Only loan can have the same end effect as its opposite.

(I just heard on KQED the other day that it was 1 in 100 that were in foreclosure in Stockton.)

What I am talking about are the people that maxed out on the size of the house that they could afford based on this type of mortgage. If your interest only mortgage payment is 30% or 40% of your income and the interest rate goes up and the value of the home goes down, you are pretty much phucked. This is a big part of why the sub-prime loans are going to shit. People were paying too much for a home that they could not afford in the first place.

Certainly Exxon is allowed to make a profit. And have they ever!!! $36B in 2005, $36B in 2006; probably over $40B in 2007. This is pure profit, after expenses for exploration, building new refineries (which they have not done), and all other associated costs.

Oil companies are an oligopoly -- a few large suppliers/sellers dominate the market. Not just Exxon, but every oil company's profits have increased incredibly over the last few years. $14B for Chevron. $13B for Conoco. What is fair?

True profits are high.

The disconnect is that YES there are only a handful of companies in the marketplace, but they DO NOT set the prices. Prices are determined in the commodity pits. It is a global market that you and I can participate in on nearly a level playing field. In the past I have played these markets and traded these commodities. You can do the same. It is people that play these markets that set these prices.

Virtually all companies involved in extracting commodities from the ground are making money hand over fist. Gold, Silver, Copper and Oil to name just a few. This is purely a function of rapidly accelerating demand.

High prices for these commodities drives innovation for substitues. The truth is we have been spoiled by cheap oil prices. A barrel of oil is a LOT of oil. $100 for a barrel of oil, while more than we are used to playing, is not that unreasonable. $3 a gallon for gas, is more than we are used to, but not really unreasonable for what it is. To be able to drive your car for 20 or 30 miles and pay $3 is a lot cheaper than a lot of things.

I wish I could get beer for $100 a barrel.

There is an ad running daily othe NY radio stations about energy speculators and energy prices. They say that as much as 40% of the increase in energy costs are due to speculation in the commodities markets, oil I assume.

And they give out this website: http://www.closetheenronloophole.com/

Close the Enron loophole--would change the way traders report their daily trades to the SEC or something. I don't work in the commodity market, so I don't understand it.