Is the economy heading down again or is it just panic selling?

Posted By on August 8, 2011

marketsdown350_110808Double dip or not? That is the question investors are facing, especially if they are holding stocks and bonds. After lunch today the markets are still seeing heavy selling … panic selling perhaps after the S&P downgrade this weekend. Realistically though, companies and even banks are much stronger than they were back in 2008 and therefore the selling may be over done, IMHO. On the other hand, perception is reality when it comes to those who would rather hold cash, purchase high rated low returning bonds or hide out in precious metals like gold (over $1720/ounce).

NEW YORK—U.S. stocks fell sharply Monday and gold surged as investors fled from risky assets in the first activity since Standard & Poor’s downgraded the federal government’s credit rating late Friday.

The Dow Jones Industrial Average dropped 370 points, or 3.2%, to 11073 shortly after 1 p.m. Eastern time, staging a selloff that added to last week’s losses. The blue-chip measure fell by as much as 385.12 points early in the session.

WSJ

What will the week after a credit downgrade bring?

Posted By on August 7, 2011

panicfingersPanic … it is going to be the big issue for financial markets come Monday morning. It won’t be pretty.

Is there really a difference between where we were last week (after the debt ceiling increase) and where we will be on Monday morning?  No, not really, but unfortunately Standard and Poor’s downgrade (PDF) of the United States is the perception which is going to be reality.

It is far too easy to point fingers at politicians who have borrowed and spent our way into a mess, but Americans as a whole have emulated the government with their own borrowing and spending and living beyond their means as well. Adjustments are going to require everyone to tighten their bootstraps to get spending and debt under control. The two points that came out of the “five pillars” S&P looks at when downgrading credit (politics, the actual economy, fiscal and monetary policy and externalities), was that politicians aren’t working together to address the problem and that the policy legislation passed doesn’t go far enough to address U.S. debt.

These things being said, panic is going to be the biggest issue with the US credit downgrade. The reality is that US Treasuries are still considered very safe, in fact in my judgment far safer than many on the list below which have triple-A ratings. As a post in the Weekend WSJ pointed out, do you really think a Luxemburg bond is safer than the United States? I think not. If the world economies collapse, I’d rather both be in the US and own US treasuries. As Mark Gongloff pointed out in a Q&A:

Q: What’s the difference between AAA and AA+? That doesn’t sound so bad.

A: It’s not so bad — and there’s not much difference. Technically, AA+ is considered “high grade” credit, while AAA is “prime.” The likelihood of getting paid back by a AA+ credit is considered “very strong,” while a AAA credit’s likelihood of paying you back is “extremely strong.” See the difference? Me neither. And the U.S. is a special case, given its status as the world’s largest economy and printer of the world’s reserve currency. If your personal credit score falls, then you will almost certainly have to pay more to borrow. The U.S. can get away with a slight credit-rating downgrade without having to pay more to borrow. In fact, many other large, developed economies, including Japan, Canada and Australia, have lost AAA ratings in the past and not had to pay more to borrow in the long run.

s&pdowngrade201108

Ratings by company

The S&P will monitor the U.S. for about six to 24 months to see whether its fiscal position deteriorates further or if political gridlock gets worse. John Chambers, the group’s managing director, said Sunday it would take stabilization of the debt as a share of the economy to determine the direction of S&P’s rating, and it’s no easy task to get it to rise.

"If history is a guide, it could take a while. We’ve had five governments that lost their AAA that got it back. The amount of time that it took for those five range from nine years to 18 years," he told ABC’s "This Week."

READ

Coming up with a new idea from an old Pardey book

Posted By on August 6, 2011

j-hookI started trying to make my own J-hook fitting in order to create a quick release/connect attachment point for the forestay on Encore. My 3/8” thick blank of 6061 aluminum proved to be too much for my bandsaw blade (hopefully due to age) last night so I’ll need to order a replacement.

Every once in a while an attempt to re-engineer a part on my own has me questioning my own sanity. What I’m hoping to end up with is a way to clear Encore’s deck forward of the mast “simply enough” to be able to stow the hard dinghy. The plan is to be able to slip the baby stay through the dagger board slot of the Trinka and refasten the stay for passages. Quick measurements had me thinking that this would be possible and work, but I’m starting to question my logic?

===

forestay trinka

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pardeycapablecruiser3rd

Lin and Larry Pardey’s Capable Cruiser

Markets continue downtrend – NASA prepares for Mars launch

Posted By on August 5, 2011

While checking the stock market over lunch, it was again another depressing day. The Dow continues to march down as does the Nasdaq even on relatively positive news that we did have some private sector job grow and a slightly backed off unemployment claims rate of one tenth. It now stands at a high national unemployment rate of 9.1%.

launchmarsmission

Thankfully there was a little distraction for me from work at the economic woes. I’ve pulled up the feed and news from NASA as it prepares to launched its Juno spacecraft – currently on hold at T minus 4 minutes and extending holds.

The Juno spacecraft will soon be on its way to Jupiter on a mission to look deep beneath the planet’s swirling curtain of clouds to find out what lies beneath. The answer might confirm theories about how the solar system formed, or it may change everything we thought we knew.

"The special thing about Juno is we’re really looking at one of the first steps, the earliest time in our solar system’s history," said Scott Bolton, the principal investigator for the Juno mission. "Right after the sun formed, what happened that allowed the planets to form and why are the planets a slightly different composition than the sun?"
Starting the 4-ton spacecraft on its five-year journey to the largest planet in the solar system is the job of a United Launch Alliance Atlas V equipped with five solid-fueled boosters. Even with that much power, Juno will still require a flyby of Earth to get up enough energy to swing out to Jupiter.

With three 34-foot-long solar arrays and a high-gain antenna in the middle, the spacecraft is reminiscent of a windmill. It even spins slowly as it goes through its mission. Those arrays will be the sole power source for Juno as it conducts its mission, a first for a spacecraft headed beyond the asteroid belt between Mars and Jupiter.

The Atlas V has proven a reliable option for NASA’s Launch Services Program, or LSP, the organization that oversees NASA launches and chooses the best launchers for different spacecraft.
"It’s flown 28 times, pretty challenging missions, pretty challenging payloads," said Omar Baez, launch director for Juno. "It’s got a heritage that goes back to the Atlas I in some of the components and in the upper stage, so it’s an evolution of a family in its current configuration and shape and form. I’d say it’s pretty robust."
The spacecraft is to lift off at 11:34 a.m. on Aug. 5 from Space Launch Complex 41 at Cape Canaveral Air Force Station in Florida. The mission faces a limited launch window to get off Earth before Jupiter’s orbit took it out of alignment.

"Juno only has a 22-day launch window, or else we’re down for another 13 months until our next opportunity," said John Calvert, mission manager for Juno. "So it’s those kinds of challenges with making sure you do all the little things necessary to maximize the opportunities you get for those 22 days."

After arriving at Jupiter in August 2016, the spacecraft will spend about a year surveying Jupiter and its moons to draw a detailed picture of its magnetic field and find out whether there is a solid core beneath its multi-colored clouds.

The research is building on what previous missions found about Jupiter, particularly the data Galileo gathered during a mission that ended in 2003. It may even provide clues about what to look for in planets outside the solar system. "If we could start to understand the role that Jupiter played and how the planet formed and how that eventually governed the creation of the other planets and the Earth and maybe even life itself," Bolton said, "then we know a little bit about how to look for other Earth-like planets, maybe orbiting other stars and how common those might be and the roles that those giant planets that we see orbiting the other stars play."

With Juno on its way, the LSP team is looking at the moon as it prepares the GRAIL mission for launch in September. Following that, the next mission beyond Earth also is being prepared at Kennedy as teams ready the roving Mars Science Laboratory "Curiosity" for liftoff in late November. "Really, all these missions that LSP is involved in, that NASA’s involved in, they’re all precursors to the bigger picture of getting humans out beyond Earth orbit, to Mars, to an asteroid," Calvert said.

LINK

Another even bigger down day on Wall Street – Dow – 512.61

Posted By on August 4, 2011

After the agonizing debates in order to come to a half solution to control our deficit, debt and raising the President’s ability to borrow these past several weeks, the debt ceiling agreement did little to help the world’s financial markets – Europe’s banking problem does little to help. Today Wall Street returned the largest lost since the plunge in October of 2008. The Dow closed at 11395, down for eight of the last nine days for a 4.3% loss of 512.61 points. Besides erasing the gains we seen in the first two quarter of 2011, it also pushed us 500 points under the 2010 year end close – that’s a pretty dire negative for those long in about any stock or mutual fund you can name … besides gold. In fact, I just heard that since July 25, the S&P 500 companies have lost a combined market cap of 1.3 TRILLION dollars … TRILLION with a T.

marketdownagain110804
Ten day chart of the DJIA

The slide down (chart above since July 22) has many worried that with the quality of leadership being demonstrated on either side of the political spectrum in Washington DC, there doesn’t look to be a chance that recovery around the corner. Previously, the experts, who read corporate balance sheets, had indicated that 3rd and 4th quarter earnings would be stronger; what happened? My best guess is that politicians demonstrated that they have little ability to address real problems in any serious way. Besides not really reducing spending and deciding to balance a budget, they haven’t done squat to encourage private sector job creation. BeatADeadHorseA few steps in the right direction by the “big government solution” Obama Administration would be to back off the Washington regulate and tax more solution and instead ease (remove) many of the new regulations and tax burdens on those who invest and hire in America. I fact they might want to try the polar opposite and actually reduce the burden and get our corporate taxes more in line with growing economies of the world? (but saying this is like beating a dead horse)

 

Bothersome school bus video clip

Posted By on August 4, 2011

This is really just a filler post from a few weeks ago since I’m busy traveling today … but I saw a short clip of a school bus driving down the street with a pull down screen in the front window. Huh?

Investors and traders were sweating; It wasn’t the heat.

Posted By on August 3, 2011

Close call.

Blue-chip stocks reversed a steep morning drop to snap an eight-day losing streak. The Dow Jones Industrial Average gained 29.82 points, or 0.3%, to finish at 11896.44. The Standard & Poor’s 500-stock index gained 6.29 points, or 0.5%, to 1260.34, while the Nasdaq Composite added 23.83 points, or 0.9%, to 2693.07, after falling briefly into negative territory for 2011.

Posted via email from RichC’s posterous

Shifting from Google for web searching

Posted By on August 3, 2011

duckduckgosearchengine1

I’ve recently made a switch to a new search engine after reading Google’s Terms of Service Agreement a little more closely. The wording of the TOS along with googletracksduckduckgodoesnmy security conscious friend’s regular reminders regarding web privacy and information security triggered a search for a better search engine.

DuckDuckGo.com offers a free, lean webpage search along with convenient extensions for both browsers that I regularly use … Chrome and Firefox. After a week of using the new search engine, it is very good. I appreciate the fact that it doesn’t track and profile my search results to interested parties – link. (check out the illustrated to better understand why this is important)

If this kind of change is of interest to you, you might want to check out these other privacy tools … although I did find adding the TorProject really slows an Internet response time down. (see donttrack.us)

Abine Privacy suite.

Firefox | Chrome


Adblock Plus Blocks ads.

Firefox | Chrome


AdBlock Blocks ads.

Safari | Chrome


AdSweep Blocks ads.

Opera | Chrome


Beef Taco No ad network tracking.

Firefox


Disconnect No tracking from major sites.

Chrome


Ghostery No third-party tracking.

IE | Safari | Chrome | Firefox


BetterPrivacy No tracking from Flash.

Firefox | Others


NoScript Blocks JavaScript.

Firefox


NotScripts Blocks JavaScript.

Chrome | Opera


HTTPS Everywhere No tracking.

Firefox


Tor No tracking by being anonymous.

Bundle (includes Firefox)

Financial markets: “from a soft patch to the mud pit”

Posted By on August 2, 2011

NEW YORK (CNNMoney) — Economists say the debt ceiling debate has already damaged the U.S. economy, and many worry that a deadlock could send the country hurtling into a double-dip recession.

LINK

Although the US Senate voted to pass the debt ceiling legislation and President Obama quickly signed it, the worries on Wall Street harkened too little and too late. There isn’t much news suggesting that the economy is rebounding at a pace which shows the kind of growth most expected after a recession. piginmudpitIn fact, some economist are even saying that a double dip recession is even more likely now than before.

Investors headed and continue to head for the safety of cash, treasuries and gold … pushing the yellow metal up to nearly $1700/ounce. Financial markets closed down for the day in New York while debate weary representatives in Washington DC headed home for recess … after being told by the “principal” today that when “school” is back in session that they would be focusing on getting Americans back to work. Huh, Mr. President? I thought you told us that all the spending you asked for these last couple of years was suppose to do? Excuse me for questioning your wanting to “double-down” by spending more. How about eliminating some of the heavy handed legislation you passed and actually do something that encourages private investment and businesses to expand in the US?

The Dow Jones Industrial Average was down 265.87 points, or 2.2%, to 11866.62 (creating the longest losing streak since October 2008). The index has lost more than 800 points since July 22nd. Very few investors remaining long in the market have gotten by unscathed … my advice, don’t look at your mutual funds or 401K and IRA statements (daily DJIA chart below).

The S&P 500 was down 32.89 points, or 2.6%, to 1254.05 and Nasdaq Composite down  75.37 points, or 2.8%, to 2669.24.

marketsdown110802

Time to watch the weather IF you’re in the forecast zone

Posted By on August 2, 2011

map_tropprjpath05_ltst_5nhato_enus_600x405

As if the financial news from our country and from around the world isn’t creating enough waves, tropical storm and hurricane watchers are forecasting Emily. This is the first named tropical storm of 2011 to target the islands of the Caribbean, Bahamas and possibly east coast of Florida. Hmm … did I prepare appropriately?

Desultory - des-uhl-tawr-ee, -tohr-ee

  1. lacking in consistency, constancy, or visible order, disconnected; fitful: desultory conversation.
  2. digressing from or unconnected with the main subject; random: a desultory remark.
My Desultory Blog