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Last year's failed stimulus was temporary, targeted, and timely.
A better plan (but not ideal from a supply-side or libertarian perspective) would be John Taylor's: permanent, pervasive, and predictable.
Obama's recently proposed plan appears to be helpful, hopeful, and humongous.
Critics fear it might end up being pointless, political, and pork-filled.
Larry Summers now calls for stimulus that is speedy, substantial, and sustained.
Some of his readers think Obama's plan will end up being:
- big, bloated, and borrowed
- immodest, immoral, and imbecilic
- clumsy, corrupt, and counterproductive
- expansive, extensive, and expensive
- weighty, worrisome, and wayward
- politicized, pandered, and pathetic
- socialized, silly, and sorry
- random, record-setting, and ridiculed
- ultimate utilitarian utopianism
- absolutely abjectly apocalyptic.
4 comments:
Current valuations have nothing to do with fundamentals. It is easy for someone who doesnt get judged on a daily/weekly/monthly P&L to tell you markets are cheap, and it is hard to disagree. You need to understand liquidity http://www.amazon.co.uk/Liquidity-Theory-Asset-Prices-Finance/dp/0470027398 And the fact that every trade has 2 sides, and often these sides may be leveraged, and often they may be forced to delever. Swap spreads do not reflect an improving situation here, they are liquidity driven.
Scott,
I have been thinking of buying Cheesecake Factory stock (Symbol: CAKE).
It's selling for about 7 bucks a share and a P/E of about 7 to 8.
What do you think?
Rat: I don't disagree with you at all. A recurring them in this blog has been that valuations are so awful that the don't reflect a forecast of the future, but rather a market that is suffering from illiquidity and terror. Deleveraging is undoubtedly a factor. Another theme however is that while there is no shortage of money, there is a shortage of willing buyers.
Spiral: You most likely know more about CAKE than I do, which is next to nothing. I would guess that it is selling cheap because the market expects a depression in which people virtually stop eating out. I'm not that pessimistic.
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