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Monday, February 16, 2009


Inscrutable Valentine's Present from Treasury

The Treasury's "Bad Bank" plan did not seem to be a plan at all, just a random collection of ideas that could be called upon to rescue the banking system. Since the financial markets have already endured eight months of Treasury and the Fed playing blind man's bluff with the economic crisis, this was not really bracing. Traders were somehow hoping that the Obama team actually had a set of specific steps to make progress against the crisis, but it soon became clear,as Mr. Gaithner rambled on, that the new team had about as much of a handle on things as the Bush team, and so everyone sold stocks and anything else they could get rid of, other than gold and short dated Treasuries. In fact, we have said here that it was pretty clear that the Obama team did not have the answers or they would have given the Bushies some tactical direction during the transition (why take over an economy in even worse shape?).

We have also said that while there are steps that can and should be taken, there is some aspect of letting slumps just run their course that is, in fact, necessary. I have been cheered the last few days to hear more economists and commentators talking about the advisability of relaxing mark-to-market rules. Without belaboring the need for that, it seems like it could happen, and that would set off a rally, I think.

Otherwise, the market is in sell and see mode, not exactly wait and see. It is a good thing that this will be a four day week. We're not exactly looking for more opportunities to trade.

Probably the least surprising test result in history was when Alex Rodriguez came up positive for steroids. A-Roid would be rightfully indignant about the publicizing of individual results of what was supposed to be an anonymous survey test if he wasn't such a liar and hadn't repeatedly denied using performance enhancing drugs. Worse for baseball than having him outed, following the paths of Bonds and Clemens, is the overall result of the survey showing over a hundred players with positive results.

The major concern about performance enhancing drugs is that it pressures all the players to use them to compete, and that would cause all to risk their long term health. This seems to be exactly the result that occurred during what is now called the steroid era. So does that absolve everyone or cast doubt on their stats and accomplishments? Sadly, it's the latter.

So will A-Rod, Barry and Roger join Shoeless Joe and Charley Hustle on the outside of the Hall of Fame looking in? Ultimately that is a call to be made by the Baseball Writers Association. Maybe we can have a Devil's Hall Annex for those who are otherwise qualified but ethically challenged.

We had a very nice Valentine's dinner at one of the better local restaurants, La Bussola in Glen Cove, and I have to say it was quite busy with people still coming in to fill the tables after 9 PM. This in a reasonably expensive watering hole. The recession is clearly bad, as the statistics make clear, but it is spotty. My wife reports the malls are as busy as ever. People are still spending money, just less than when the economy was riding high.


Cutting this post a little short so that I can get to Dave Barry's blog (blogs.herald.com/dave_barrys_blog/) before "24" starts. I have to say that his blog and the 500 or so comments that will be posted between 9 and 10 PM are as funny as anything you would ever see on TV, and put the show's gratuitous violence and insipid dialogue in perspective without taking away from its fast paced action. So, my priorities being in order, it's almost Jack Bauer time!

Last Monday, I bought 300 more shares of Rupert Murdoch's News Corp (NWSA) at 6.97. Print media is depressed, and so is network TV but Murdoch has much more than that and my guess is that this business will find a way back to strong profitability as the economy improves.

Looking at what to do tomorrow, the formula came back with Bank of Granite (GRAN) but frankly, the recent quarter was so bad, and the questions about this bank's health so serious that I elected to do something else for tomorrow without removing GRAN from the buy/hold list. The upside of the Bank's recovery is much better than the downside of holding it, but that doesn't mean we have to slavishly follow the formula by dong something stupid. Adding more shares of this holding right now might just be stupid. We'll buy something else.

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