George Kesarios

Moody's Doomsday Default Scenario Doesn't Play Out

Moody's estimate is wrong and has been wrong for the past 5 yeas that I follow such numbers.

They have never been right.

The Dollar's Long Term Trend Appears to Be Set in Stone

You all foget how bad things are on the other side.

@the.bighouse, I second that

Dangers of a Dollar Collapse

Everyone forgets that the US is ahead of the curve as far as quantitative easing is concerned. When the ECB starts doing the same things (if not worse), then things will balance.

Let’s not forget the quantitative easing done by the Japanese all these years.

Don't Count the Dollar Out

Personally I’m not counting the dollar out at all. I think that eventually we will 1:1 or even lower with the euro.

seekingalpha.com/insta...

U.S. Consumers Are Changing Habits and Lifestyles

To be honest, I am also not that optimistic that Americans will change their ways soon. However, I do believe in market forces and if a recession or high debt levels force them to change then that’s good enough for me.

Having said that, I do agree with Carlos Lam that we need to see more data.

I also agree with the points made by RiskReturnOptimizer and also Donald Ingram that the savings rate will be high for many many years.

Soaring Debt + Fed Monetization = Higher Interest Rates

My question is, what If people dont want to get a loan, what will interst rates do then?

Why We Shorted the QQQQ

TIme to cover!!!

A Sign That Housing Is Approaching Bottom

US houses are up in euro's ans many other currencies. Has anyone noticed that one?

What's up with the Dollar and Gold?

Perhaps people are getting out of the euro as well.

Evidence That Big Inflation Is Coming

The problem is not monetary deflation but asset deflation. These are two different issues.

I cant understand why analysts don't make this distinction.

As far as inflation, well, people have to have money in their hands and have to believe that this money will lose value over time.

For the time being, this is not the case.

As demonstrated by Japan, you can have rapid expansion of the money supply and deflation (asset and price deflation) at the same time ... for many many many years.

Credit Where Credit Is Due

Peter I have long been very skeptical of the inflation argument. I have been afraid of deflation (especially asset deflation) ever since 2001.

Why is it that everyone insists on inflation when we are in the middle of the greatest asset deflation of all times?

Granted, your economic arguments are sound and I find myself agreeing with you, but why do you insist on inflation?

Foreign Governments Dumping U.S. Assets

Who's doing all the buying and why has not the bond market not tanked by now?

Greece and Italy Suffer: Let the Game of EU Chicken Begin

Cnic, you are correct, this is an exaggeration on my part. It’s a scenario of extremes so far, but I am afraid that if Greece doesn’t get its act strait, it might become a reality. But like I said, we are in the middle of a game of chicken and I am sure that in the end the EU will help Greece pull itself out of its predicament.

I am not suggesting that Greece and Italy will leave the euro because they want to, but that they might do it out of necessity.

As far as the 60% drop in bond prices, I think its conservative, especially for Greece.

And yes (as another reader said) Greece’s bond market is insignificant by itself, but with Italy in the picture, it is a serious matter.

Indeed, the euro has benefited Greece in many ways, but the problem is that Greece is in a very dangerous situation with the very high debt. Need I remind you that Greece (with Italy) have the highest level of debt among the OECD block.

My hope is that the Greek government comes to its senses and initiate reforms as such to avoid the worst possible outcome. However, until I see such reforms, I am not very hopeful that many things will change.



On Dec 27 02:31 AM cnic wrote:

> I am sorry George Kesarios, but this is a badly written and cynical
> article based on exaggerations. It is easy to be cynical and to
> sensationalize the situation. Your suggestion that the Greek And
> Italian governments will even consider leaving the Euro to print
> more Lira and Drachma is a short-term solution with no lasting positive
> effect. Staying in the Euro is a long-term option. What makes you
> think that the Italian and Greek government would even consider leaving
> the Euro to pay even higher spreads (which you yourself suggest will
> happen). Also how did you derive your figures of a 60% fall in bond
> prices? I even question your 800 billion figure. Did you pull these
> figures out of your behind? The Euro is benefiting counties with
> a high debt not straining them. Greece and Italy will most likely
> tighten and spend public money more efficiently and try to get more
> money from tax evaders. Greece is still planning to keep its budget
> deficit below 3% of GDP and even the most pessimistic economist still
> predicts positive growth for the Greek Economy in 2009 even though
> most of its partners are in recession. And lets not assume that
> the world will not be in recession forever. I am sure both economies
> will ride out the storm because they are in the Euro, especially
> considering their banks were not directly exposed to losses from
> mortgage products and will not need to borrow as much capital as
> you suggest.

What Is the New S&P Normal?

I totally disagree. Earnings growth over the past several years is more a product of globalization than cheap credit.

The concept of platform company is the main reason.

Western companies have outsourced their production, so all that remains is R&D and marketing.

They have become lean and mean (and remain so today) and that's why balance sheets (ex banks) are is so fine condition.

I think that once we get over this credit mess, earnings will once again rise to record levels and maybe even higher.

One can argue about the western consumer, buts that's another story.

Deflation We Win, Inflation We Win Big Time

Theoretically, central banks can simply write off all the assets they have exchanged with the banks and harm will be done. The problem with that is this: Who will determine who will get a free lunch?

If every central bank simply forgives the banks and everyone who has taken advantage of the system, then everyone will do it and you have what we call moral hazard.

However, your assumption is correct. In terms of monetary aggregates we will end up with a zero sum scenario. However, then all this liquidity will end up on the main street and it will have inflationary results. How much however is anybody’s guess, especially since as I think that we need more liquidity in the world and not less.



On Nov 24 08:04 PM Bobco23 wrote:

> Your article stirred a concept I have been wrestling with for a while.
> This is a bit simplistic, but perhaps you can flesh it out.
>
> If we do include credit in the definition of money, then the constriction
> of credit reduces the total of the combined components of "money
> supply," i.e., cash and credit. If we print a few trillion dollars,
> are we not merely replacing the "lost" credit component of the "money
> supply?" Don't we just get back to zero at some point (from very
> negative), and given the unimaginable amout of credit losses is it
> not unlikely that we will not get above zero (inflation comes after
> we exceed zero) any time soon? Monetary inflation thus becomes a
> low probability.