Dave Wrixon

Looking at $5 Trillion in Losses and Zombie Debt in Residential Mortgages

Bernanke is hoping that he can devalue the dollar sufficiently so that he does not even have to explain reality. Which is just as well because he hasn't a clue what reality is anyway!


On Nov 27 10:37 AM D. McHattie wrote:

> 1) As a culture, we lack the courage to face this reality.
>
> 2) We also, mistakenly, tend to not think of government money and
> obligations as being connected directly to our own personal savings
> and income.
>
> The result is that we throw our own money, future, children into
> the bottomless pit, thinking it's someone else's money, future, children
> we're sacrificing.
>
> Such a pitiful race we have become.

Spending, Durables: Basically, Stuck

What he actually means is that he is hoping he can keep the lies going for another term.

On Nov 28 10:55 AM conceptwizard wrote:
> Bernake says no significant increase in GDP for 5-6 years.
>

Spending, Durables: Basically, Stuck

L-Shaped scenarios are for losers. Economies are like sharks, they keep swimming forward or they die.


On Nov 28 08:07 AM logicalthought wrote:

> As Chris Coonan comments above, the unemployed don't buy durable
> goods. Perhaps equally important, though, is that because the credit
> card companies all seem to have raised their rates on unpaid balances
> to 25% or more (even for folks with perfect credit), NO ONE (employed
> or not) will buy much of anything unless it can be payed for with
> cash, and we all know how tight cash is these days.
>
> The author points out that personal spending appears to finally have
> flatlined (i.e., stopped getting worse). If so, this is completely
> consistent with the "L-shaped" scenario, by which at some point the
> economy stops getting worse, but doesn't necessarily get better.
> If this is the case (and I believe that it is), there's no way that
> the S&P 500 will be able to maintain its current multiple of
> 17x to 18x run-rate earnings of $63 (based on Q3 annualized), as
> 17x to 18x is a GROWTH multiple, not a "flatlined" one.

Yen, Gold and the Perfect Desert Storm

You guys live in some kind of a dream World. Bretton Woods died 38 years ago!

en.wikipedia.org/wiki/...

"The chief features of the Bretton Woods system were an obligation for each country to adopt a monetary policy that maintained the exchange rate of its currency within a fixed value—plus or minus one percent—in terms of gold and the ability of the IMF to bridge temporary imbalances of payments. In the face of increasing financial strain, the system collapsed in 1971, after the United States unilaterally terminated convertibility of the dollars to gold."


On Nov 27 03:40 PM Jason Rines (iThinkBig) wrote:

> Their is no consensus on what would replace the existing monetary
> framework of Bretton Woods. I am not talking about replacement of
> the reserve currency, that is now obvious as to where it is heading...
>
>
> The solution of an evolved monetary framework takes time and must
> include serious debate from a lot of conflicting interests. The
> global public at large has no say in the matters this time around?
> It should or a lot less participation in the supply chain will be
> the result.

U.S. Unemployment: From Bad to Worse

Yes, but basically Obama lied about the Infrastructure bit. That was just for the consumption of foreign investors. What he has always been about is buying a second term and that means splurging on low to medium income voters.


On Nov 27 10:38 PM Moon Kil Woong wrote:

> Government sector job growth is not real growth or recovery at all.
> Like unemployment payment, it is just another economic burden placed
> on taxpayers except it tends to become systemic even in a recovery
> if we ever get a decent one after abusing capitalism the way we are.
> Keynsians will hate this proclamation, but it is true.
>
> The author is right, government investment in infrastructure and
> cap-ex that will be accretive to the economy when it recovers is
> what's needed, not more bureaucrats clinging to our national debt
> lifeline.

Dubai: Gauging the Impact

It is easy to make such assumptions but Dubai is definitely an emerging International Centre. It is arguably the financial centre of the Middle East and it is essentially underpinned by huge financial forces most of us have difficulty grasping. I have been doing a bit of research on the Middle East lately, and some of those countries could actually redeem ever single unit of currency in circulation from their Foreign Reserves. No Western economy has ever been in such a position or ever will be.

Yes, clearly Dubai has got ahead of itself and some consolidation is required. There are not going to be any eye catching developments over the next five years. But don't jump to the conclusion that this is the end of the story. It is simply the end of a chapter.


On Nov 27 10:32 AM Moon Kil Woong wrote:

> Everytime I think of Dubai I think of the foolish man who built his
> house upon the sand. If there was ever a sign of the massive real
> estate speculation that plauged the world this decade it would have
> been Dubai. It's not like no one could have seen it coming. It's
> fall was about a 2 year lagging indicator.

Analyzing the Dubai Chaos

Dubai is not "Oil Rich" and therein lies part of the problem.

It would seem that the British Government is back to where it a century ago. Owning most of the place, as the Nationalized Banks seem to be among the biggest creditors!

The U.S. Dollar: Now at Parity with the Swiss Franc

I'll take the Franc, Thanks!

Another 'V' Sign: Sharp Upturn in Consumer Spending

Its a bit like a tanker with a flooded engine room rising out of the water at the bow.

Case-Shiller Still Predicts Massive 45% Fall from Today’s Values

It all depends on interest rates and wages. If inflation is not well controlled then in the short-term house prices could remain buoyant. Eventually interest rates will be forced up and that will cause prices to fall back very sharply, but much depends how long it takes Ben to react, as to whether the number in dollars is more or less than today. If you believe, he does not understand the problem in the least, the don't expect Quick Draw McGraw here. However, it matters not a lot really. If they are more then it will be a currency that worth an awful lot less, if anything at at all.

Euro Breaks to the Upside

This has sweet FA to do with Euro fundamentals. The Dollar is taking a hammering all the way round and this is just the start!

ECB and BOE: Adding Fuel to the Dollar Liquidity Fire

Soon be cheaper to burn than Natural Gas!

Is the Other Oil Shoe Dropping?

Yes, the other shoes is dropping. Oil won't be priced in dollars for much longer.

Foreign Treasury Holders: What Is China Doing Now?

If you take away purchase from UK and Japan which probably consist largely of purchase made on behalf of the Fed, then Treasuries are flat lining. That is not adequate because the US needs very substantial growth to cover it borrowing requirements.

Look for a Dollar Rebound and Stock Selloff This Month

No the dollar is headed South. You can see that in the Gold price. Interest rates will rise but only in half hearted manner. But even relatively small hikes in interest rates will kill the equity market stone dead.