Going Off The Rails In My Crazy Train

Watching the markets and keeping up with the financial media is enough to drive a person insane. Before you fly over the cuckoo's nest let's clear a few things up.

1) We are in a recession. There is now way to sugar coat it. Sugar coating does no one any good (no matter heads of retail brokerages are telling brokers and clients). Recessions, like rain, can be depressing, but are an unavoidable part of life. As with rain, things are rosier when it is over. The economy was riding a bubble and now the correction has to occur.

2) The Fed is causing the dollar to weaken and Fed easing is helping to slow the economy. What? Lower rates are slowing the economy? Yup, lower rates are inflationary. A good portion of record-high energy prices are the result of accommodative Fed policy. If this is the case, why doesn't the Fed pause or reverse course? The answer is because the banking system is so screwed up. In spite of eternal optimists blowing sunshine up investor's butts, many banks are bad shape. The Fed is risking a deeper, lengthier recession than what we have become accustomed to avoid a bank failure-driven depression.

3) Buying opportunities abound, if investors manage expectations. The problems are two-fold. Investors expect too much. They want high returns, low risk and no volatility. Yeah, I want that too. Why not just ask for eternal life.

Brokers are no better. Many brokers new to the business (entering in the past five or ten years) have little or no product knowledge. These incompetent buffoons are no better than appliance salesmen. The will read a script, tout past performances and point fingers when something blows up

Well this will the clueless advisers out there: The government agencies are not in danger. If one understood why they were formed and their functions, one realizes that their more needed now than any time in the past. MBS backed by agencies are buying opportunities.

I could go on, but I am pressed for time. Maybe next time I will explain why the issuing bank does not matter one bit when considering the purchase of MBS.