Three Useful Blogs

Not cartoon blogs, but blogs about the economy and investing.

I bring them up here because a) I don't think a lot of industry folk ... or people in general ... have enough knowledge about what makes the financial world, and therefore our day-to-day lives, tick.

And b) when things go south, it's important to have some road maps to which you can refer. ("Where the hell are we? How the hell can we get away from here?!")

Books are good, but an accessible blog might be a useful. ..and cheaper ... aid. You can read a few posts, check out the author, and see if it fits your needs, all without an outlay of cash at Barnes and Noble.

Today I talked with a wise veteran animator who recommended this financial blog to me. It goes by the name of "Marginal Revolution", and I found this in particular to be a useful primer:

Eight reasons why we are in a depression

1. We have zombie banks.

2. There is considerable regulatory uncertainty in banking and finance.

3. There is a negative wealth effect from lower home and asset prices.

4. There is a big sectoral shift out of real estate, luxury goods, and debt-financed consumption.

5. Some of the automakers are finally meeting their end, or would meet their end without government aid.

6. Fear and uncertainty are high, in part because they should be high and in part because Bush and Paulson spooked everyone.

7. International factors are strongly negative.

8. There is a decline in aggregate demand, resulting from some mix of 1-7.

I have two simple points, First, a large fiscal stimulus addresses factor #8 but fares poorly in alleviating the other problems. Of course it may give a band-aid for #5 or #6 and you can tell other stories but we are in a multi-factor depression.

Second, forecasting will prove very difficult. These factors interacted with each other in a unique manner on the way down and they may well interact in an unpredictable manner on the way back up, whenever that comes ...

When I got into the cartoon business, I was blissfully ignorant about economic markets and how they worked. I knew zip about Modern Portfolio Theory or Value Investing or anything else related to increasing my net worth. I just blundered along, relying on my friendly old stock broker, who lost me plenty of money over the years.

Investing is an ongoing journey that really never ends. (And why should it? You're growing and protecting your money.) Just when you think you've maybe figured out the supreme investing strategy, new information pops up to whisper "No, you don't."

Two other good sources of investment information are the blogs Calculated Risk (which provided the handy chart up top) and The Big Picture. Unlike Marginal Revolution, run by univerty economists, CR and BP are run by industry pros.

Below, the Big Picture offers up a sample of its careful, non-judgmental analysis:

Time to Fire Ken Lewis of Bank of America

By Barry Ritholtz - January 14th, 2009, 9:14PM

Step right up to the bar here in Bailout Nation, 2009 version. Open 24 hours, we never close. No bailout too big, no investment/money pit too dumb. Yes folks, we can handle your bad assets, recapitalize your bank, no muss, no fuss. Yes, here in America, we cannot be bothered with things like plans and strategies and maximizing returns for taxpayers.That’s right, we avoid the planning, and pass the savings onto to you, the home viewer!

Really, how the hell did we ever win WWII?

# # # # # # #

So the horrific deal Citibank cut with Treasury was a blueprint, an example for the next foolish investment — and here it is: Bank America, a supposed good bank, that couldn’t wait to get their hands on Merrill Lynch, now a bad bank.

And now that we all see what a terrible decision that was by supposedly sophisticated private sector players, well, then rather than take the hit, BoA has their grubby hands out begging for some taxpayer loot to paper over their idiotic decision-making. First they bought that giant manure pile CountryWide, and now they own another stinking pile of enzyme-free donkey-fazoo, Merrill Lynch.

There are hundreds of other financial blogs on the internet, and everyone no doubt has their own favorites. The examples above are three that I've found to be worthwhile.