Financial Reality posted an article with a quote from Economic Cures Are Like Booze for an Alcoholic: Caroline Baum

The Baum commentary addresses a number of financial and economic issues in a very readable article. She points a finger at several guilty parties. She explains the current mess and how we got here. It sheds some light on the problems and addresses the only viable solutions – stop spending, stop expanding credit. The “fix” is long, drawn-out and painful. Until the government get’s that and takes the appropriate measures, things will continue to get worse, not better.

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Friday is the end of the month, so I do the record keeping. That means
downloading the transactions from all the accounts – checking,
savings, visa, brokerage – into Quicken. All but one can be done
electronically. Some start from the bank site and select download.
Others can be “Updated” from Quicken so Quicken logs into the bank as
me, and downloads the new transactions. Same result, different
process.

There is a bit of work to review every transaction and make sure that
it is allocated to one of the expense or income accounts in Quicken.
The first time is tedious, but after that, Quicken remembers that
Safeway transactions are Food expense.

I pay most bills online. They are easier to include in the electronic
updates. We almost never write checks any more.
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Don Coxe thinks basics like food and energy are the places to be. For food, he suggests farm-equipment. A friend was telling me that her financial adviser had her back in Caterpillar CAT. She has been in and out of the stock over the years, each time with significant returns. She is sure that this time is no different. So, maybe it is time to add some Caterpillar. It isn’t exactly into food productions, but roads and infrastructure are pretty basic, and in need of maintenance and repair. Dividends are currently over 4% so this is in the income asset class.

Good old John Deere DE could be poised for good things. Now that is your basic food production bet. We visited Landmark Winery in Napa. The great grand children of John Deere are the owners and still in the agra-business. They have the best assortment of John Deere merchandise – napkins and key ring for first brother who is restoring a vintage Deere tractor. Some John Deere stock for me. The dividend yield around 3.4% isn’t too wonderful, but this is the stock equivalent of comfort food.

Fred says…

• S&P PEs need to get to about 7. Given that they are currently almost 19 today in November 2008, there is a way to go there
  http://tal.marketgauge.com/dvMGPro/charts/charts.asp?chart=PERATI
• Gold will go back up. The current $740 is a result of the carry trade unwinding – the US dollar is strong right now and gold is cheap briefly. Gold ETF (GLD)
• Gold producers in stable countries will be good bets. AEM
• good tech stocks will be ok, especially solid software companies – Microsoft (MSFT), Sybase (SY), Adobe (ADBE)
• Bonds aren’t a good idea, especially given Bernanke’s determination to avoid the mistakes of the past – deflation and depression, at all costs.