Weekend reading

For your reading pleasure, here is some entertainment while we're waiting for the market to reopen next week.


 How to put out Greece fires

Here's a truly excellent analysis from Stratfor that explains the whole Greek problem in some pretty stark terms: Preparing for Greece's Failure.  It's a video, and while I normally would rather read than watch some talking head read to me, Peter Zeihan manages to present a clear, concise analysis in a succinct 3 minutes and 41 seconds.  This video gets 4 hoots up from the Night Owl.

And along the same lines, here's a brief excerpt from this week's Wells Fargo Weekly Economic Commentary:

"Will the ECB Cut Rates?
After implementing two 25-bps rate hikes earlier this year, the ECB appeared to have moved to an “easing bias” at its September policy meeting. We had been expecting the ECB to cut rates by 25 bps on Thursday until the “flash” estimate of CPI inflation printed much higher than expected. (Preliminary data showed that the overall rate of CPI inflation rose from 2.5 percent in August to 3.0 percent in September.) It may be difficult for the inflation-phobic ECB to sanction a rate cut if the current rate of inflation is 3.0 percent.

However, the pace of economic activity in the overall euro area is very weak, and the ongoing sovereign debt crisis poses significant downside risks to the Eurozone. Moreover, some European banks are having difficulty securing financing due to concerns about their balance sheets. Therefore, we look for the ECB to announce that it will allow banks to tap its liquidity financing operations for longer periods. We also think that the ECB will eventually cut rates. Although we do not rule out a rate cut at the October 6 policy meeting, we believe that the ECB will want to see inflation receding again before it takes that step."

The Night Owl believes that there will be no recovery in the US until the Europeans get their act in gear.

Kodak's Death Throes

 This Greek tragedy of a company is now entering the final act, complete with wailing chorus.  Turns our my obituary last Sunday called "The Rise and Fall of Eastman Kodak" here has become my all-time number one hit.  Talk about perfect timing.  Just before I wrote that piece, Kodak closed last week at $2.38.  It closed yesterday at $0.78.  You can buy a tank of gas or 100 shares of EK now.  Same price.

Now consigned to pink sheet hell, the bottom feeders are already all over this one.  Yes, had you bought Kodak at its Friday low of 54 cents and sold at the close, you would have had a 20% profit in 90 minutes.  Some people are buying it now simply on the theory that it can't go much lower so it has to go higher (no it doesn't).

Jim Jones Kool-Aid Korner

Don't drink the Kool-Aid

And if you're not already depressed enough, check out this blog post from MISH'S
Global Economic Trend Analysis: FICO Survey: “Sharp and Deep Turn to Pessimism” on Housing, Credit Card Lending, Auto and Student Loans.  I quote:

"According to the survey, 73% of bank risk managers expect mortgage foreclosure to rise in the next 5 years and 49% predict housing prices won't return to 2007 levels until 2020, at the earliest."

As Count Floyd used to say on Second City TV, "Scary stuff, eh kids?"

That's all she wrote.