El-Erian: U.S. Outlook Darkens

El-Erian: U.S. Outlook Darkens

This guy's pretty sharp.  I always try to listen when he's talking.  He paints a picture that I'm not happy to hear.
People, both foreign and domestic, are in cash because of uncertainties and valuations that were artificially inflated by QE2 and don't reflect the realities.

Additionally, we are in a debt overhang that has the following characteristics:

1 - Unusually sluggish growth on advanced economies, partiularly those that rely on financial services industry
2 - persistently high unemployment that eventually becomes structural and embedded in the system
3 - Regulatory response that raises uncertainties.
4 - Recurrent balance sheet issues.  Formerly clean balance sheets will become troublesome.

Possible solutions to debt-overhang for a government are:

1 - Impose austerity.

2 - restructure debt

3 - inflate their way out of the problem

4 - impose financial repression (tell creditors to go jump in a lake)

UK opted for austerity.  US is using financial repression.  Greece did almost all of the above.

An unusual convergence between emerging and developed markets.  The wealth gap will narrow as they get richer and we get poorer.

Europe lurching from crisis to crisis.  It has structural problems and problems with execution.  Needs to be broken up or truly consolidated.  They're in a 'tweener.

We need a sputnik moment in the US.  There is currently no credible approach for removing structural impediments.

Find the CD Key. Wow. That was easy.

http://ehacks.wordpress.com/2008/01/11/how-to-find-your-windows-xp-product-key-on-the-windows-xp-cd/

How-To: Find Windows XP Product Key from the Windows XP CD:

1) Insert Windows XP cd into a working computer.
2) Exit the Autorun introduction.
3) Open “My Computer”
4) Right Click on the Windows XP cd-rom drive and select explore.
5) Open the USWXP32P_ZX folder. (It may be as a hidden folder. If you cannot locate the folder, you may also search for unattend.txt and mark “Search Hidden Files”.)
6) Open the sysprep folder.
7) Open unattend.txt

Your CD’s product key is contained within the unattend.txt file.

UBCD4WIN bootable windows xp recovery

Wonderful system recovery application.
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Absolutely amazing :-)

What's happening in the world today ...

So, here's what I think is going on in the world: The Euro is being killed given the problems in Greece, which are severe.  This is driving the dollar up, which is driving commodities and securities down.  Added to some weaker than expected economic data, we've had a correction that started on 5/2 and has taken roughly 8% off the S&P 500.  It's been a long, slow, choppy downward slide. I've not seen any sort of capitulation selling yet, so I believe we go farther, with the catalyst for reversal perhaps being the meeting in a few weeks where Europe finally does what it should do.

Timothy Geithner on Jobs, Debt, Taxes, Bailouts, and More (3)

On long-term debt reduction and RyanCareThe balance between revenues and savings is so important. The House Republican budget illustrates what you have to do if you are unwilling to touch revenues. If your objective is to leave in place these exceptionally low tax rates for the most fortunate Americans, then you are going to have to dismantle the basic commitments to our seniors, to the poor and to the elderly.
It's just not realistic, it's not going to happen, it's not possible. Balance is important not just for fairness, but for the credibility of the plan.
If people up there try to solve this by assuming away the problem, by using growth assumptions that create the illusion that we are going to solve it, by assuming there will be political courage in the future, that kind of magical thinking -- then the markets will say it's not real.

Timothy Geithner on Jobs, Debt, Taxes, Bailouts, and More (2)

Will "dark forces" undermine financial reform?

It's very clear they're trying to starve the agencies of funding so they can't enforce protections for investors, and they are trying to block appointments as a way to get leverage over the outcome, and they are trying to slow down, so that they can weaken over time, those reforms.

They won't have success ultimately.

Timothy Geithner on Jobs, Debt, Taxes, Bailouts, and More

This kinda cracked me up.  One or two of you might get a chuckle as well. 
Tim Geithner on threats not to raise the debt ceiling (from Motley Fool):

"I mean, really think about it: As a negotiating strategy, you are going to go say, "If you don't do things my way I'm going to force the United States to default?" It's not a credible negotiating strategy."

On Treaury's Plan B

"Our plan is for Congress to pass the debt limit. Our fallback plan is for Congress to pass the debt limit. Our fallback to the fallback plan is for Congress to pass the debt limit."