Secular Stagnation

Financial Sense ^ | July 13, 2009 | Peter Navarro, Ph.D.

[anonsquared]

Market Pulse

Two weeks ago, I indicated that I had gone into a full, risk neutral hedge on my call options portfolio. This, of course, was equivalent to a call to cash in light of weakening market conditions. Since that time, the market has continued to deteriorate technically, and this technical deterioration clearly reflects uncertainties over economic fundamentals. This call to hedge or cash remains in play.

[anonsquared]

Paragraph four and five are the best...

That neither the Obama administration nor the Federal Reserve seems to have a clue of China's intent is all the more troublesome. Memo to Barack: We cannot spend our way out of this crisis. We need a manufacturing base, and we can't have a manufacturing base if we continue to allow the Chinese to engage in mercantilist and protectionist policies that continue to destroy our manufacturing base.

It's useful to remind readers here is that the concerns I expressed during the presidential campaign about Barack Obama was that he was a really smart guy but he had no economics training and his top economic adviser was a micro-economist not a macro guy. This problem is playing out in full now. Obama seems dazzled by the brilliance of Larry Summers when the reality of Larry Summers is that all he is is a rabid Keynesian who doesn't know how to do anything other than stimulate the demand side of the economy while the supply side of the economy withers and dies. Meanwhile, Treasury Secretary Timothy Geithner is no more than a competent bureaucrat when in this time of crisis what is needed is someone with extraordinary skills. Of course, the third part of that brain trust is Ben Bernanke and loyal readers will know how I feel about that dollar-debasing idiot. So many smart people making so many dumb choices -- it boggles the mind.