We noted earlier this year that dividends and buybacks had consumed consumed all profits and more since 2004.  This is not healthy given that growth should be at least partially funded out of retained earnings, given the ephemeral nature of capital markets. 

This trend continued into the third quarter of this year.

From Greg Mankiw

I like Nassim Nicholas Taleb.

Lessons for the incoming Obama administration and the clowns in Congress from The Economist.

Here is wishing a happy holidays to all of you and your families.  I hope 2009 is good to you.

T.

A graph on RealMoney.

From Bloomberg

Some uber-bears are expecting the market to fall to extreme valuations.  I am reading one uber-bear predicting that the market is going to fall to either 8x depressed earnings or 8x normalized earnings. 

Can it happen? 

Of course it can.  It has in the past and it can in the future.  The market can go to 4x depressed earnings if it is in the mood. Markets can and will do anything they want.

The uber-bears may very well might be right.

But is relying on the uber-bearish price targets for the stock market prudent?

I am taking a look at oil here.  The front month contract has fallen from $147 in July – remember then? – to $33 Friday.  This is a 77% decline – in six months! 

For what it is worth, the Nasdaq fell top to bottom 77% from 2000 to 2002.

The contango in the futures market is steep.  The December 09 contract was trading at $55 while the December 2010 contract was $62.

Hugo Chavez ain't got nothin' on Newfoundland and Labrador premier, Danny Williams.  Ol' Hugh at least pays compensation for expropriating private assets owned by corporations, unlike Williams, who is just taking the assets of forestry company AbitibiBowater.