The current crisis is near the end….

This post is by Jim Fitch of Some Assembly Required.

When someone tells you the current crisis is
“near the end”, ask them which end.

Resiliency : Proving once again their resourcefulness, American consumers ran up twice as much credit card debt in June as economists thought possible, increasing their total Visa bill to $2.59 trillion. And even with that, retailers continue to fail.

Participation: Some have pointed out that we are participating in spirit, if not in fact, in the oil miss-adventure in the Caucasus. And that’s The Truth, or at least Pravda.

Clues: A 200:1 return. Pretty good for a ‘put’ with a nine day shelf-life. Too good, according to options experts, who suggest that the only way such a wager (against Bear Stearns) makes sense is if whoever put up the $1.7 million engaged in a very concerted effort to drive Bear Stearns out of business. They did – within 4 days – and gained over $200 million. Bears looking into.

You Can’t Get There From Here : Wachovia, fourth largest US bank, is getting out of the mortgage origination business in 19 states. The action is related to Wachovia’s struggle to swallow the bad debt it got when it spent $24 billion to buy doomed mortgage lender Golden West Financial. The bank is eliminating over 10,000 jobs. Wachovia stock closed up on Friday.

A Run Walk on the Bank: UBS reports that its private-banking clients withdrew about $5 billion from the bank in the second quarter, the first net withdrawal in eight years.

Click Your Heels: In another triumph of hope over experience, by holding overnight rates steady at 2% this week, the Fed once again put forth its belief that despite a cascade of horrific financial data, the US economy is bulletproof.

Spinning Top: The Russians are referring to the the troops that invaded Georgian South Ossetia as ‘peace-keepers’; the US holds the copyright on ‘liberators’.

Change for a the Dollar: The sudden run-up in the dollar suggests everything has changed. It hasn’t. The US is still massively in the red, and there is no prospect of its breaking even in the near future or paying back its debts in the longer term.

Click Your Heels: Most Americans believe that their consumerist way of life is going to last forever, that nothing can derail their economy, that the economists or the financiers or the government or god or somebody has decreed that collapse cannot and will not happen in the US. Wrong.

Years of Living Dangerously: Rules to live invest by; simple, basic, and apparently very hard to apply.

Some Assembly Required reflects my somewhat cynical view of the world on a daily basis. Think of it as having coffee with a curmudgeon. Come visit; bring your own coffee.

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  1. Anonymous

    I like the ‘strikeouts’ the best.
    Don’t stop your world view!

    I’ve booked marked your site and visit it every day after the market closes.

    Hope your numbers go up!

  2. Marsha Keeffer

    Mr. Fitch: You have my respect! Yves – thanks for people who maintained your excellent quality. Welcome back!

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