Inventory Corrrection and Diminished Production

There continues to be massive amounts of information generated on why this is not a bear rally and why it is one. Technocrats, fundamentocrats and others all arguing thier position. An interesting comment from Senior Economist on Bloomberg - regardless of many mmeasures, the reality is there needs to be an inventory correction, there is substantial excess production capacity. Right sizing has begun in earnest.

Bloomberg's interview with Warren Buffet (still the second wealthiest person in the world AFTER losing $25B - collectively the top three lost $68B last year) gave us these tidbits: operate with lots of cash, certainly no less than $10B, do not rely upon the kindness of strangers OR the kindness of banks, in reference to excessive debt - with your head underwater for 10 minutes - only happens once. Warren recommended buying US equities in late fall last year - and all we've seen is more precipitous plummeting? If you're going to have a ten year position - Equities will be better than Treasuries. Plain and Simple. The Headline? He said he didn't write the headline.

On Mish's blog this morning, the headline screamed at me.

In Search Of Common Sense "I have been seeking economic common sense in high places. It's very difficult to find on either side of the Atlantic. And in the ever escalating displays of lack of common sense."

You Can't Spend Your Way Out of the Crisis are the words from NZ's Prime Minister. "We don't tell New Zealanders we can stop the global recession, because we can't," says Prime Minister John Key, leaning forward in his armchair at his office in the Beehive, the executive wing of New Zealand's parliament. What we do tell them is we can use this time to transform the economy to make us stronger so that when the world starts growing again we can be running faster than other countries we compete with." His thoughts continue in relation to efforts to prop up growth. That's "risky," Mr. Key says. "You've saddled future generations with an enormous amount of debt that then they have to repay," he explains. "There is actually a limit to what governments can do."