Juggling Dynamite

This week Obama's acceptance of the Nobel Peace Prize came as an ironic reminder of the ethics and change so many had hoped he would bring to American politics. At this point one year in, I believe that he is a massive disappointment. The trouble is Obama set himself the high bar; he promised morality, fairness and an ousting of the status quo. A breach of this trust hits people harder than regular disappointments. His elegant words inspired the hope of the masses. So many believed.
This week a Rolling Stone article examines how Obama has sold out the American trust to Wall Street. In “Obama’s Big Sellout”, Matt Taibbi argues that President Obama has packed his economic team with Wall Street insiders intent on turning the bailout into an all-out giveaway. Rather than keeping his progressive campaign advisers on board, Taibbi explains how Obama gave key economic positions in the White House to the very people who caused the economic crisis in the first place. Taibbi also points to the ties Obama’s appointees have to one man in particular: Bob Rubin, the former Goldman Sachs co-chairman who served as Treasury secretary under Bill Clinton.
The full story is available online here. — Rolling Stone
Here is also a video clip of Taibbi giving a breakdown of his argument in which he identifies the major players on Obama’s economic team, untangles the web that ties them to Rubin and points to how these relationships play into the financial “reforms” the Democrats are currently pushing through Congress.
But hey, it is Christmas. Maybe there is still hope? What do you think: will Obama be able to do an about face, and remedy his breach of trust in 2010? Is it too late?

Great piece from the WSJ's Liam Denning today: Gold Trades on Luster and Bluster reminding gold bugs and the rest of the world that unlike food, water or oil, gold is not consumed, it is mostly just hoarded. Lately gold has been acting an awful lot like other risky assets riding on zero rates and speculative in-flows. Meanwhile gold parties today are about as popular as Tupperware parties in the 70's. HMMMMM…..What's that rule about investing in unpopular themes and avoiding the madness of crowds?

“Above all, phrases like peak gold should trip alarms. Investors buying into similar arguments at the height of the energy bull markets suffered big losses as recession hit and supplies turned out to be ample. And those commodities really get used up, rather than merely stored in the hope someone else pays more for them later.
Another bull argument, recalling the days of the gold standard, observes that the money supply has expanded far faster than gold reserves. Yet even if proponents could agree on the metrics to be used—narrow or broad money? Official reserves? global stocks?—the argument hasn't held over time. Gold was range-bound after the early 1980s bubble until the middle of this decade, even as U.S. money supply expanded, and has displayed little correlation with movements in broad money-supply measures. Lately, it has even disconnected from measures of observed and anticipated inflation.
The gold price's reaction to recent events like the unexpected drop in the U.S. unemployment rate and worries about Dubai and Greece is more telling. Gold has dropped at even the slightest foreshadowing of monetary-policy tightening or signs the financial system faces another bout of fragility. Its correlation with the S&P 500 has leapt from about zero in May to more than 40%. For all the talk of fundamentals and being a safe haven, gold is behaving more like the risk assets against which it is supposed to offer diversification.”

Upset you missed out on this year's mega stock market rally? Don't be.
John Mauldin of Millennium Wave Investments says long-term investors should ignore the temptation to get a piece of the action. In his view, there's only one metric to pay attention to: Valuations. And, for now, stocks are at “nosebleed” valuations.