Return to Normalcy?

In normal times (whatever those were), rising oil prices and interest rates would be a cause for worry. Oh for the early ‘80s when the Hollywood actor became president and there was a USSR trying to tame Afghanistan and Paul Volcker targeted bank reserves!

In these fascinating days, hikes in energy prices and bond yields should be welcome. The not so hidden agenda of the controlling authorities is to inflate away debt and worry about the consequences later. Krugman and others insist that inflation Cassandras are false prophets and that deflation is the enemy. They may well be right, but Kev thinks the Nobelist and his ilk are betting as wrongly as Kev did on baseball this past week.

Though rates dropped after spiking earlier last week, they can only go up this year. If they don’t, then the Obama presidency will be a failure because it will mean the problem that was thrust upon it – restarting economic activity – has not been solved. Fiscal and monetary captains will not turn off the spigots until the prices of goods, services and money go up. Lock in a mortgage now if you have a job.

And jobs data will be key this week. ADP will report corporate layoffs on Wednesday, and the Labor Department will tell us on Friday how many more lined up at the soup kitchen in May. Any negative number below 550,000 will be greeted with cheers in the equity market.

But there are no normal times. They have never existed. What’s good for General Motors is good for the USA? It has taken Kev, because it’s all about him, well into his later years, to realize his expectation that eventually all secrets would be revealed was a mirage. Yet, we still court Miss Market. We can do no less. Finer minds than Kev’s summon her. Be nimble, be quick, and believe in God or not, but take your time on putts.

Still in with PALM, F, AMD, and looking to get back into DXO. Get out of government bonds while the getting is good.

Lenin Is Relevant

Of course, many unpredictable things can happen, but straws in the wind suggest that life goes on -- existing and new home sales data, bullish talk from chastened banks, Obama's grace under pressure, inflation rising.

The short sellers and Rush Limbaughs cheering for failure might have to return to shouting about the nation's moral shortcomings and forget the apocalyptic economic rants.

I know, perhaps instead of straws in the wind, I am grasping at straws. After all, I once thought the market bottom was in November! So my imagination may be just that.

However, optimist that I am, I prefer to believe that the next shot is hitting the green from 200 yards out and putting for birdie. I base this on the evidence that stimulus in the pipeline and the economic data point to earnings gains and higher equity prices this year.

Mr. Geithner, the Treasury secretary is wrong, saying today the market cannot handle the crisis. No, the market will solve the problem. What he really means is the market's terrible swift sword would tear such gaping holes in the social fabric that a world lit only by fire would result.

Distasteful as it may be in some quarters, government must intervene aggressively to keep those who would let the market work its "magic" from losing their shirts, not to mention their heads. It's called saving capitalism from itself. Joseph Schumpeter (the economist of "creative destruction" fame) thought it couldn't survive.

Lenin's strategy of accentuating contradictions, i.e., things must get worse before they get better, works for Bolsheviks, but it only leads to dropping those who have the most to lose on the ash heap not only of history but a foreclosed McMansion.

Sticking with PALM, AMD and F, despite the Sooners' demise (OU held the Tar Heels to well below their average point total but still couldn't score themselves!). Oh well, it's just a game and I'm aiming for the green and replicating Woods' miraculous touch with the putter.