Daniel Harrison

Japan's finance minister escalates his warnings against a soaring yen, calling the currency's rise to a fresh 14-year high "one-sided" and threatening to intervene if the rapid ascent continues. (ETF: FXY)

Respectfully, I disagree. Japan has been doing relatively little to stabilize its currency lately; indeed, Japan's finance minister was even caught saying that a continued rise in the yen could be "a good thing for Japan."

When Japan does finally decide to intervene however, it will be in the trillions of dollars, and its effects will be random and quite wide-ranging.

On Nov 27 06:06 AM damienhaas wrote:

> Japan has been intervene with the currency market consistently to
> reduce Yen strength but this time the force of the market is too
> huge even for the Japan Central bank to deal with now.

Expect to See the FDIC Go Deeper into Debt

Kirby: I was initially going to ask you what specifically caused you to write this pithy insult, but looking through just one page of the comments you have written on this site under others' material I can see that they are all equally bombastic and insubstantial:

Comment #1: I would like to know how 3 years of prepaid FDIC Fee's will put any bank unto trouble? Don't you have just a basic knowledge of accounting. By your article it shows that your completely devoid in comprehending how the process works ... I think you should take a financial class to fully understand the process. Back to your Bomb Shelter "Chicken Little"

Comment #2: Do you know what your talking about?? Maybe you need to revist your data. Maybe you should go back to MoMo day trading or are you broke already?

Comment #3: You better go back to Finance class 101. Write about some thing you may understand & that is a little easier for you to comprehend.

Comment #4: What a bunch of B.S. Are all you Socialists putting up your moronic idea's. Do you want to stop all commerce??

Comment #5: Glad to see you had enough courage to get out of your bomb shelter for awhile to sniff the fresh air.

Comment #6: Evidently you know nothing about banking per your comments.

Comment #7: Evidently you don't like how people chose how they live or where they want to work & raise a family.You probably would make a good Nanny director

Kirby, it's fine to disagree, and even to disagree emotionally with a commentator's opinion. But for the sake of staying engaging to everyone else on the site, can I suggest that you tone down the personal-attack rhetoric and instead tackle the arguments in the posts head-on?


On Nov 26 07:12 PM KirbyJF1 wrote:

> Daniel
>
> Maybe you should write about a topic that you have an understandong
> of what is happening. Why don't you try Tech. Good Luck
>
> Kirby

In an op-ed, World Bank chief Robert Zoellick warns central bankers to heed the danger of asset bubbles: "The revival of John Maynard Keynes should not lead us to ignore Milton Friedman: where will all that money go? For a hint of the future, look to Asia, where a new risk is emerging: asset bubbles."

Generally that's true enough ... but Asia has ALWAYS been a boom-bust economy. Plus, given the state of the current economic climate in the west, there is arguably a much greater asset bubble here than there is in Asia right now.

NY Times lashes out at Lloyd Blankfein's (GS) non-apology for "participating in things that were clearly wrong and we have reasons to regret." Times wants Goldman to give "a multibillion-dollar gift to the federal Bureau of the Public Debt... The donation can come from the bonuses; that way, it would not harm shareholders, because they only get their cut after the bonuses are paid."

When is everyone going to realize that Goldman's $500 billion was not a charitable donation, but rather, an investment/market test for entering the small business financing/lending business.

Asset bubble warning watch: Nouriel Roubini says "there is the beginning of a bubble" and that part of a 70% jump in crude prices this year is speculative, "money chasing commodities." And Hong Kong central bank chief Norman Chan says with abundant liquidity, they face the risk that assets will become more disconnected from fundamentals.

Absolutely. The other problem here is that the leverage is supported by an increase in printed money. That's because in order to keep monetary policy loose, you are forced to keep printing.

And here is the big problem with that policy: you leverage asset prices, causing price inflation, you by default cause monetary inflation by keeping interest rates low, and overall you eventually push prices up for the consumer, while putting pressure the median of the monetary base in the economy. In the meantime, speculators are the only actors in the economy who are getting richer: everyone else is struggling to pay the bills. In the end, the disparity between the value of your asset base and the price others are willing to pay for it disappears. That's when stock prices collapse.

Here's the thing: In every game of leverage, there is ALWAYS a margin call. The reason brokers implement one on investors is that they know eventually the bank would be the one left will the bill. In this case, the Fed is going to be left with the margin call. In order to pay back the margin call, it won't be able to print more money, keep monetary policy any looser, and it may have to borrow at sky-high interest rates, pushing T-Bills up through the roof if it doesn't want to default.

U.S. productivity has to shoot through the roof very soon in order to support the kind of leverage that's embedded in the economy right now.

On Nov 20 11:49 AM tunaman4u2 wrote:

> Dan you bring up a big point... its not printed money thats hitting
> the market as much as leverage. Yeah printed money is out there but
> releveraging, borrowing dollars at 0% to play the market is the most
> likely source of the rally.
>
> I would love to see a real break down of printed money vs. borrowed
> money hitting the market to know for sure

Asset bubble warning watch: Nouriel Roubini says "there is the beginning of a bubble" and that part of a 70% jump in crude prices this year is speculative, "money chasing commodities." And Hong Kong central bank chief Norman Chan says with abundant liquidity, they face the risk that assets will become more disconnected from fundamentals.

Here is the thing people keep forgetting: the market environment we are in today is MORE leveraged than it was during the days of CDOs, MBS etc. Banks are pumped full of government-aided debt, which amounts to leverage, and interest rates are zero, which amounts to even more leverage.

That means that we can expect a lot more volatility -- both on the upside, but also on the downside. In 2009 there has been unprecedented growth in asset prices; on the flip side, whenever there is a slide, you can be sure it's going to be pretty steep.

UNG: The unNatural Gas ETF

Good enough article, but you are a little bit misleading when it comes to the sweeping statments. UNG is actually linked solidly to the natural gas price, as long as demand for the underlying commodity starts spiking soon. For most investors (and potential investors), that is the reason they are drawn to UNG. If prices remain stagnant, then you are correct: the enormous discount UNG presents to market, along with the increasing lack of correlation between natural gas spot and UNG will remain in place.

But you cannot claim "that this is in no way linked to natural gas any longer," since the reason people would buy it is entirely because they see the latter, not the former scenario materializing.

Oct. Housing Starts: -10.6% to 529K vs. +1.7% to 600K expected, and +0.5% to 592K in September (revised from 590K). Permits -4% to 552K vs. +0.9% to 580K expected and -0.9% to 575K last month.

Coupled with bank earnings and stock market performance, this is clear evidence that Treasury bailout packages have simply inflated asset prices and trading volumes, but have had negligible impact on the average U.S. consumer.

Meredith Whitney: 'I Haven't Been This Bearish in a Year'

It is true that Paulson has been buying various financial firms, but he's also been stocking up heavily on gold for a 12 - 18 month play. I get the feeling the bank trades are more something he is doing short-term, to keep his portfolio churning out alpha, but that the gold trades are his next "big picture" bet!


On Nov 16 10:30 PM E Nuff Sed wrote:

> Meridith says sell the banks; John Paulson is buying copious amounts
> of Citi? What to do?

Blankfein Defends Goldman, Is Flippant with Facts

How so?


On Nov 10 12:30 PM ggscott wrote:

> Delusional analysis. Kind of "Don't confuse me with the facts." The
> writer clearly needs to go to banking school before he subjects us
> to further drivel.

Q4 Outlook: Real Life Stress Tests Begin

Yeah, it was very minimal.


On Nov 02 02:31 PM Lockstep Investing wrote:

> Woops! I hope it was a small position. It sounds like you did not
> hedge it at all.

CIT Group Announces More 'Restructuring', But Bankruptcy Outcome Still Unclear

I'm sorry that you feel this way. Of course, in the end CIT ended up filing for bankruptcy, but it was my (erroneous, as it turned out) opinion that a Chapter 11 filing was being overplayed by the media at the end of last week, based on all the different interests of the various actors involved.

I should add that I own a materially insignificant amount of stock, but it is a matter of proper disclosure to make even that clear. I also waited until after market close Friday to publish this piece, since it wasn't designed to affect trading in the stock in any way. Rather, it was just a point of view that turned out to be way off. For that, I make no apologies, since in this case the egg is already on my face!


On Nov 01 07:01 PM mahram wrote:

> wsj just reported cit declares bankruptcy, case closed. You make
> decent seekingalpha writers look bad man. Please respond.

Blackstone Group - Awash in Hilton Debt - Is Getting Back to Basics

The market doesn't seem to think so!


On Oct 29 08:55 AM tennvol30736 wrote:

> This is dumb commentary. Hilton has added over 150k rooms to its
> family since the BX acquisition, these brands provide incremental
> fee revenue. Why is reduction of debt, infusion of equity a negative?
> This is simply another case of the dumb leading the dumber. I bought
> HLNQs at about $8, yielding 30% annually and has gained in appreciation
> 75% but to read articles like these, they think I

Will Hutton sums up competing proposals to reform the banking system (spinning off the riskier arms of banks vs. demanding more capital), and concludes: Mervyn King is right – the time has come to break up the megabanks.

Will Hutton is an (albeit able) radical left-wing politico (even by British standards), not an economist. Mervyn King has shown himself to be utterly incompetent in his capacity as a protector of the British retail investor this year. The paper in which this article is written, The Guardian, has a transparently far-left populist political agenda which it doesn't attempt to hide all that much. In summary, I wouldn't pay too much attention to this kind of headline-grabbing analysis of how to restructure the banking system.

Hold the champagne before celebrating China's economy, says the American Enterprise Institute's Michael Auslin - there's an asset bubble and resource-allocation problems on the underside that make the country look a lot like '80s Japan.

Finally, someone with some understanding of the ways that Asian economies function! China today is a whole lot like Japan in the 1980's, not least in the sense that it is the world's latest pet growth project with which America is madly in awe. An enormous bubble in asset prices is bound -- by the law of common sense -- to appear when a country which is totally unacquainted with market economics adopts it for the first time: that bubble is bound -- by the laws of economics and history -- to blow up at some point. This is what happened in Japan, and this is what is happening in China.

During the 1980's the world went Japan-mad -- kids were being taught Japanese at high school; reams of books were published on the Japanese economy and management techniques; tradeable Japanese investments such as warrants were all the rage. The same process is getting underway now. When the bubble bursts, that's not to suggest that China won't be in some way transformed -- it will. But the bubble will burst.