ARCHIVES Click here to read Mish's 2005 and 2006 Archives
01/09/2008 - Ponzi Financing and the S&L Crisis Revisited
Greg’s Note: I called Mish today and asked him where Countrywide and other troubled banks are getting money to lend. He proceeded to tell me about the moral hazard of high rate government guaranteed CDs and savings accounts. There are some valuable lessons here to be learned from the S&L crisis of the ‘80s, except it seems we did not learn them. Is history about to repeat itself? 12/12/2007 - Balance Sheet Stress and Vulture Buyers
Greg’s Note: I called Mish today and asked “What do you make of these circling vultures?” Mish replied that although some vultures have landed it’s still far too early for any truly great deals. Mish went on to talk about the kinds of things that vultures were feeding on. So far most of it is convertible debt or convertible preferred. That is a sign the bottom is not in. Meanwhile, Mish says there is a huge disconnect between the credit markets and the equity market and a wave of bank failures is coming. 12/07/2007 - Mining Profits from the Gold Bull
Greg’s Note: Many successful investors have made a big play in their career. Sometimes it’s luck, sometimes you can just see it coming. Mish is back and telling us how you can find yourself a potential goldmine and why the timing could now be perfect. No bull. Gold isn’t just for Mr. T. anymore and it would be real pity to miss out on something this big. 11/26/2007 - I Want My Buybacks Back
Greg’s Note: Mish called me today and said, “It’s too late to rethink buybacks.”
“You are going to have to explain that,” I replied. And so he did. Over 400 corporations have been buying back stock at high prices and regretting it. Some now need to raise capital. But the worst part of it is that most of the shares that were “bought back” simply went to insider options. The percentage is staggering actually. What’s the percentage and who are the worst offenders? 11/19/2007 - Every Which Way But Me
Greg’s Note: Mish is back and he’s talking more about Greenspan. The former Fed chairman is still on his media blitz and he’s deftly dodging criticism left and right. Who caused the housing bubbles and who deserves the blame for the bursting now? Greenspan isn’t looking in the mirror…he’s looking for scapegoats. The usual suspects are on his mind and like any American who lived between World War II and the 1990s, Greenspan has come up with an easy target. “It was the Russians!” 11/13/2007 - Double Standard Time
Greg’s Note: Mish called me today and said “Congress is looking at speculation in Google.” “Really?” I replied. “That makes no sense.” It seems Mish was pulling my leg. Congress is actually looking into speculative oil trades. “That makes more sense,” I suggested. “Not really,” replied Mish. Confused? You won’t be for long. Mish plays a little game of “Mad Libs” to see if he can’t prove it. 10/30/2007 - Which Comes First: The Cart or the Horse?
Greg’s Note: If you have questions, Mish has answers. Today he’s telling us why we can’t expect any free handouts from the Fed, yet we can expect them to do everything they can to stimulate more borrowing. If you still don’t understand what’s causing inflation in this country, we’ve got you covered. Learn what’s going on and what can and will be done. 10/15/2007 - The Next Shoe to Drop?
Greg’s Note: Mish is back and he’s got some scary news about the housing crisis. The dilapidated housing market has been a financial eyesore for months, but now the property values of the surrounding markets are starting to take a serious hit…taking other financial sectors down with it. Read on to find out why and how you can protect yourself. 10/10/2007 - Poole Party — No Housing Lessons Learned
Greg’s Note: Mish called me today wanting to talk about Poole parties, lessons from the housing bubble, and onions. “That’s quite a combination,” I said. “Are you sure you can tie that all together?” Mish went on to talk about Federal Reserve President William Poole’s recent speech on housing and the U.S. economy. Poole stated there were “no new lessons.” Mish thinks the Fed does not even understand what the problem is and that’s why no lessons were learned. 10/01/2007 - Time to Aim High?
Greg’s Note: Mish called me today talking about the Fed, risk taking and advice from some columnists to “Aim high.” But the only way the Fed can avoid a recession is if more risk is taken by consumers and businesses alike. Risk taking has been rewarded for so long that everyone thinks it will continue to be rewarded. But just two years ago, everyone thought the same about housing. What this boils down to, then, is whether this is a midcycle correction or something more severe. Is the Fed back in control with that 50 basis point cut in rates? If so, is it time to aim high? 09/21/2007 - Maestro Memoirs
Greg’s Note: I called Mish today and asked about Greenspan’s hot new book, The Age of Turbulence. As expected, Mish suggests, “It’s primarily a whitewash of his years as Fed chairman. Greenspan has no regrets and admits no mistakes.” However, Mish went on to say that Greenspan’s promotion of his book is actually quite funny. Jon Stewart took him apart on Comedy Central, and we have a few clips, as well as a video link, for Whiskey readers to see. 09/11/2007 - No, Greenspan, Conditions Are NOT Like 1998
Greg’s Note: I called Mish last week, asking if he believed credit conditions are "identical" to 1987 and 1998, as Greenspan said. Boy, did I get an earful (but an expected one), so I asked Mish to write it up for Whiskey readers. What follows is an interesting history of Greenspan being wrong at nearly every turn as Fed chair, as well as 10 major differences between what is happening now “condition-wise,” compared with 1987-1998. Some of those points will be real eye-openers for many of you, so please read on and find out. 08/21/2007 - Index Points to Economic Expansion
Greg’s Note: Mish called me today, laughing. After a bit, he stopped and told me that the “Conference Board” wrote this silly headline: “Index Suggests U.S. Economic Expansion.” Mish, of course, found this preposterous. 08/16/2007 - Is Your Money Safe?
Greg’s Note: Mish called me today and asked, “Is your money safe?” “What do you mean, safe?” I responded, “I follow the Survival Report, and haven’t you been stressing capital preservation and safety?” “Of course we have been striving for safety,” replied Mish, but nonetheless, he went on to ask, “Where is your spare cash parked?” 08/08/2007 - Top Calls and Catcalls
Greg’s Note: Mish called me today, talking about top calls and catcalls. In one of those rare moments, I actually understood what he was talking about right off the bat. “You didn’t, did you?” I asked. Mish replied that he did. Yes, on July 10, Mish stepped up to the plate and declared a market top right on his daily blog. He has been taking catcalls from bulls ever since. 07/24/2007 - Is $100 Oil Coming? $200, Anyone?
Greg’s Note: I called Mish today asking about an update on crude and the U.S. dollar. It sure seems like people are complacent over gasoline prices. “To an extent,” said Mish, but he also noted how inelastic the demand for oil is. You have to drive and you have to eat. While one can cut back eating expenses by switching from steak to hot dogs, there is no cheaper substitute for gasoline. 07/12/2007 - Six Phases of the Housing Bubble
Greg’s Note: Mish called me today talking about real estate phases. “What phase are we in?” I asked. “Panic for some disillusionment for others,” Mish replied. He warned that the panic phase could last a long time. So what are all of the phases? 07/10/2007 - The Value in Big Pharma
Greg’s Note: Mish called me today with a voice considerably lower than his usual volume. He politely asked me to run this excerpt from the last Survival Report about a specific Big Pharma stock that he sees considerable value in. That’s a good idea since Mish’s Whiskey shots are generally in more of a macro vein — why not share some of his stock-specific research? 07/06/2007 - Cleanup Business Booming
Greg’s Note: Mish called me today and said, "Business is booming.” "Wow, that’s great,” I said. “Does this mean the economy is starting to turn around?" “Not exactly,” responded Mish. What’s booming is the cleanup business. There are mosquito-infested pools, possum-infested houses, birdcages, and mounds of trash left in yards. Counties in California are even hiring aerial photographers to find algae- and scum-filled pools before the mosquitoes get worse. This is all in the wake of mounting foreclosures. 06/26/2007 - Running a Car on Salt Water
Greg’s Note: Mish called me today and said that he was optimistic. After my associates picked me up off the floor, I regained my composure and calmly asked, “About what?” Mish replied, “Salt water.” Fortunately, those who picked me up off the floor the first time were still standing nearby. They managed to catch me before I did a crash landing on the floor a second time. Regaining composure, I replied, “Salt water?!” It seems Mish has been busy sniffing out new technology. 06/18/2007 - Will China Dump U.S. Treasuries?
Greg’s Note: I called Mish today and asked him to write about the possibility of China dumping U.S. Treasuries. It seems to be on everyone’s mind. Is it going to happen? What are the implications? Is this what’s behind the current bond rout? Are these even the right questions? Mish takes a stab at answering all of those questions and more. 06/11/2007 - Rampant Inflation
Greg's Note: Mish called me today talking about rampant inflation. "Isn't the CPI back in the Fed's comfort zone and are you a deflationist?" I responded. "Yes and Yes" said Mish. With that response I was momentarily confused. No longer. Mish went on to talk about the definition of inflation and how the meaning of the word has changed over the years to the advantage of the bubble blowing Fed and Government. 06/01/2007 - $59 Trillion in the Hole (and Counting)
Greg’s Note: Mish called me today asking for $11,000. $11,000?! I silently pondered, as I almost fell to the floor. Regaining composure, I calmly responded, “What for?” “To be precise,” said Mish, “you need to put up $11,434 as ‘your fair share.’” “Fair share of what?” I asked. It seems that in spite of what this administration is saying about reducing the deficit, expenses are soaring through the roof. Costs are simply hidden off the books. Medicaid, Medicare, and Social Security seem to be the culprits. 05/24/2007 - Health Care Costs Soar: What Are We Getting for It?
Greg's Note: Mish called me today and said healthcare costs are soaring. "So what are we getting for our money?" I asked Mish. It seems like not much. The U.S. has the highest costs and the worst performance of six nations studied. There are a half dozen programs out there from Bush to "The Arnold" to Families USA all with their own ideas. 05/18/2007 - Stir-Fried Stocks
Greg’s Note: Mish called me today, wanting to talk about “stir-fried stocks. “That doesn’t make any sense,” I said to Mish. “Of course it does,” he replied. “It’s all part of the same tune but with different lyrics.” I was afraid to ask just what that meant, so I sat back and listened. Mish went on to talk about the bubble in the Shanghai index and the sound bites that some are using as justification. He even has a chart comparing the bubble in China with the Nasdaq. 05/10/2007 - Retail Sales Bomb
Greg's Note: Mish called me today talking about the disaster in retail sales. Sales were supposed to be weak because of the weather and an early Easter. "Weak" does not begin to describe what happened. Results were horrid pretty much across the board. Is this finally the start of a sustained pullback in consumer spending? If so the result will be ominous. Read on and find out. 05/04/2007 - Real World vs. Financial World
Greg's Note: Mish called me today talking about the real word as compared to the financial world. "And how is the real world?" I asked. "Just fine," said Mish. "Fine!?" I asked incredulously. "Sure," responded Mish, "as long as you exclude housing, capital spending, jobs, a sinking GDP, the negative savings rate and everything else, too." Mish has some charts and commentary supportive of his position. Read on and find out. 05/01/2007 - Flationed Out
Greg's Note: Here's some vintage Whiskey I dusted off since more and more people have started writing about stagflation. Here you go... Mish called me today talking about stagflation. Immediately, I became suspicious, but, in a rarity these days, the conversation proceeded along normal terms and I understood (more or less) what he was saying. I asked him if he was on the verge of throwing in the towel on deflation. "Oh no," he said, "and I want to explain why." 04/25/2007 - The Knowledge-Based Economy
Greg's Note: Mish called me today talking about "The Knowledge Based Economy." It seems someone sent Mish a write-up based on the idea that we no longer need manufacturing jobs and the U.S. can thrive on R&D, branding, marketing and other value added services. The concept is summed up in what is known as the "Smile Curve," with manufacturing right at the bottom. 04/17/2007 - The Vista/Dell Experience
Greg's Note: Mish called me today to talk about "the Vista/Dell experience." "Did you actually upgrade to Vista with all the problems people are having?" I asked. "No, no upgrade, per se -- I needed a new laptop, and my requirements and timeline forced me into the choice I made," responded Mish. Still, I was laughing my head off at the things Mish went through to get the new computer running properly. Some were his fault, and some were not. Mish has some choice words to say about Dell support and a hilarious episode involving opening software boxes from Microsoft. 04/10/2007 - Containment Is Spreading
Greg's Note: I called Mish today asking about "containment." The reason I called is that Ben Bernanke is saying that housing is well contained, and Bush is bragging about the unemployment rate being better now than under Clinton. "Just what is the containment story?" I asked Mish. Mish calmly replied that "Containment is spreading." "That doesn't make any sense," I replied. "Indeed," said Mish, "but you would never understand that from all the news articles talking about containment." He went on to explain containment myth and reality. 04/03/2007 - Capital Spending: Myth and Reality
Greg's Note: Mish called me today talking about capital spending. "Isn't Bernanke calling for a second half pickup?" I asked. "Yes, he is," said Mish, "but that talk is all predicated on the Goldilocks theory." And the numbers just don't add up. "Goldilocks will be in hibernation the second half," claims Mish. Nonetheless, Mish did have a backhanded compliment of sorts to say about Bernanke versus Greenspan. But that comes with a huge tradeoff. 03/30/2007 - Foolproof Recession Indicators
Greg's Note: Mish called me today to talk about "foolproof recession indicators." Trying to get the upper hand (but failing), I asked Mish, "Haven't economists predicted 16 of the last eight recessions?" It seems Mish has been looking at three excellent indicators that have very good track records on their own accord, but two of them when paired have a perfect seven of seven with no misses and no false positives dating back to 1960. The three indicators Mish is looking at are housing, money supply, and an inverted yield curve. The latter two combine to make a foolproof indicator. 03/19/2007 - Pension Plans and Chasing Yields
Greg's Note: Mish called me today talking about pension plans. It seems several states are seriously in trouble and some have started to chase yields in an attempt to catch up. But it's not just government pension plans that are chasing yields. Do you know what your own 401(k) plan is doing? Are you sure? Mish has some practical advice from "mom" about 401(k) plans. 03/13/2007 - The Easy Society
Greg's Note: Mish called me today and said the first wave of the tsunami has hit. Much bigger waves will follow. Interestingly enough, even Fed governors like Susan Bies are talking about big waves. Those in "The Easy Society" are about to learn a lesson in fiscal prudence that will not be forgotten for a long time. Just what is "The Easy Society"? Read on and find out. 03/12/2007 - Employment Trends
Greg's Note: Mish called me today talking about employment trends. "Do you have any good charts?" I asked. Note to myself: Please remember to be careful when asking Mish for "stuff," or you might get flooded with it. Hot off the presses, here are some very interesting charts annotated by Mish on various employment trends. So what are the implications of these employment trends? Read on and find out. 03/07/2007 - Google, Microsoft and Evolution
Greg's Note: Mish called me today talking about Google versus Microsoft. "Isn't one company a software giant and the other an advertising giant?" I asked. For now, anyway, it seems that is the case. However... "The question is not about the now," said Mish. "The question is about the future." So just how do these giants stack up? Read on and find out. 03/05/2007 - Avalanche of Lawsuits
Greg's Note: Mish called me today and said, "An avalanche is coming." "In Colorado?" I questioned. "Yes," said Mish, "but also in Arizona, Florida, and Ohio." "Avalanches in Florida?" I thought to myself. Further conversation revealed that Mish was not talking about snow, but rather an avalanche of litigation over housing. Back on track with the avalanche issue, I seem to recall Mish predicting this about eight months ago or so. How close is that avalanche in litigation to bottoming? Read on and find out. 03/01/2007 - Pension Envy & Lobster Traps
Greg's Note: Mish called me today talking about pensions and lobsters. It seems that some states are in what amounts to a lobster trap when it comes to promised benefits. How bad things are varies from state to state. States that have over promised are going to be faced with huge tax increases or cutbacks in services or both. Read the article for a link to see an interactive map of how your state is doing. 02/20/2007 - State Tax Revenues
Greg's Note: Mish called me last Friday talking about the huge windfall California is getting in state tax coffers because of Google. "That's interesting," I said. "California must be doing well, then." "Not exactly," said Mish. "Schwarzenegger is more than just a little optimistic." "What about other states?" I replied. Mish wanted the weekend to work on it. He took a look at California, Michigan, Illinois, Georgia, Florida, and Massachusetts. Those states represent a huge chunk of the nation's population. So how are they doing? 02/13/2007 - Focus on Currencies, Part II
Greg's Note: This is Part II of a two-part special report by Mish on currencies. Part I covered technical analysis, politics, and commitment of traders reports. Part II covers the carry trade and currency fundamentals. For those not up with the terminology (dying to know but afraid to ask), Mish even gives a nice easy to understand explanation as to just what the carry trade is. Whether or not you trade currencies, there are huge implications to the U.S. dollar, and to U.S. stocks should the carry trade blow up. Don't get "carried out" by a massive whipsaw when it happens. 02/12/2007 - Focus on Currencies, Part I
Greg's Note: I called Mish today and said, "Everyone wants to know what's happening with the yen. What can you tell us?" Mish said there are five things to look at when it comes to currencies: technical analysis, politics, commitment of traders (speculation vs. hedging), the carry trade and fundamentals. Today's post covers the first three. Tomorrow, we will look at points four and five. Mish explains in easy-to-understand examples exactly what is going on and why it's important to you. 02/08/2007 - Counterfeiting Money -- Crime or Good Economics?
Greg's Note: Mish called me today and asked if I had my own personal printing press. "Of course not," I replied. "Who does?" That was not a very careful answer. Someone please remind me to not respond quickly to such questions from Mish. It is a no-win situation. Mish went on to talk about counterfeit money and printing presses running everywhere. The big question is: "Is counterfeiting money legal?" The answer may shock you. 02/05/2007 - Deliquency Footnote No. 12
Greg's Note: Mish called me today and asked if I had read footnote No. 12. Quite literally, this was the easiest question in two years that Mish has asked me. "No," I replied, not even sure what article Mish was referring to, "I am quite sure that I have not read footnote No. 12. After footnote No. 5, no one really bothers." That was a mistake. I got a half-hour lecture from Mish about footnotes. He told me he would send footnote No. 12 to everyone with big red circles around it. And so he did. I have to say that after reading it, footnote No. 12 seems rather significant. But what do you think? Is footnote No. 12 significant or not? 02/01/2007 - Central Bankers Cry Wolf
Greg's Note: Mish called me today and asked me point-blank, "Are the central bankers crying wolf?" This is just the kind of question from Mish that past experience tells me that yes and no are both basically wrong answers. I politely declined to answer. My instincts proved to be correct, as Mish went on to talk about the Fed and the European Central Bank. 01/29/2007 - Relationship Management 101
Greg's Note: Mish called me today wanting to try something different. "What is it?" I asked. "A class," said Mish. It seems Mish has a professor lined up to teach a class in relationship management. There are five "lessons" complete with homework, and an extra credit assignment, too. The class is fun and you don't have to take the exams or do the homework if you don't want to. Of course, tuition is zero. 01/22/2007 - Gold, M3, and Willingness to Lend
Greg's Note: Mish called me today talking about gold, credit expansion, and M3. "Are you extending me credit?" I joked. "There's too much credit expansion already," Mish replied, "but unlike everyone else, I think it is coming to an end." "Credit expansion is coming to an end?" I questioned. Mish said that it was indeed, but like everything else, it starts at the margin and will later snowball downhill. 01/15/2007 - Leading Economic Indicators
Greg's Note: Mish called me today to talk about "leading indicators." Somewhat in jest, I responded, "Are they really leading?" Of course, this is the kind of question that elicits a half-hour reply from Mish. I am careful to not ask such questions right before a meeting, or I would never get to that meeting. Mish went on to talk about leading indicators, and suggested this would be a good "special report" for the official launch of The Survival Report. 01/10/2007 - Q&A on the Psychology of Deflation
Greg's Note: Mish called me today and said "Japan, Weimar Republic and unwavering belief." "Uh-oh. Is this gonna be about religion AND deflation?" "Um, not really - just deflation. Unless, of course, you consider the widespread unswerving belief in the Fed's power to be faith..." replied Mish. I just told him to lay it out for you, and he presented the following Q&A session. 01/05/2007 - Texas Taxes
Greg's Note: Mish called me today talking about Texas taxes. This quickly morphed into state taxes, and even balancing the federal budget. Once Mish gets going, it's hard to stop him. Mish offered his hand at balancing the federal budget, but perhaps you can do a lot better. The following article has a link where you can try your hand at balancing the federal budget. 01/03/2007 - Significant Shifts in Psychology
Greg's Note: Mish called me today and said credit lending standards are being tightened. "That sounds like a significant change," I replied. "It is," said Mish, "but that is only the start of it." It seems there are numerous psychology changes taking place in consumer spending, bank lending, and retail shopping, so Mish pointed them out. The consequences are huge. Read on to find out. | 
