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James A. Kostohryz

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  • The Fed Has Ended QE, Should We Dump Annaly? [View article]
    Reasonable, as always, RS.

    I personally think the dividend may be significantly cut in future years. And I think another interest rate scare -- ala taper tantrum -- is in the cards and could drive this stock to test the prior lows. But I think at current prices, most of that is already priced in.

    Even at half its current dividend I reckon that NLY is pretty good long term value.

    Will the stock give people a shot to buy it lower? I think perhaps so. But it seems that the value here is reasonably good from a long term point of view.

    Oct 30 08:28 PM | 2 Likes Like |Link to Comment
  • Gold Manipulation: What Investors Should Do Now [View article]
    Robert, ALL commodities often fall under their cost of production in a cyclical manner -- often for prolonged periods of time. That has nothing to do with manipulation, that is an entirely free market phenomenon.

    At some point I will write about the relationship of gold prices and the cost of production. There are many myths out there.
    Oct 23 07:53 PM | Likes Like |Link to Comment
  • Unisys CEO Departure Highlights Bleak Outlook [View article]
    Hi Jon:

    Just to be clear, I have no skin in this particular game so my comment was just an observation.

    I honestly have no idea what the correct figure for the pension liability should be. The author might be able to provide an insight. My only point is that whatever it is, it should be added to EV. And yes, the stock may still be cheap. My point is merely that it is less cheap than may appear at first glance without that adjustment.

    Oct 20 05:36 PM | Likes Like |Link to Comment
  • Unisys CEO Departure Highlights Bleak Outlook [View article]

    The EBITDA multiple does not look nearly as great if you add any reasonable estimate of the pension liability to the EV (as conceptually you should).

    Oct 20 02:19 PM | Likes Like |Link to Comment
  • Unisys CEO Departure Highlights Bleak Outlook [View article]
    Excellent Article, Dylan.

    Hope springs eternal with "cheap" stocks. But unless there is a turn-around in their operating revenue profile, it is hard to see this stock going much of anywhere.

    Clearly, the board did not think the growth initiatives were going anywhere, and it will be a considerable time before whomever comes on board can make a substantial impact. This is an even bigger challenge with an old business that has been in decline for a long time.
    Oct 18 01:08 AM | 1 Like Like |Link to Comment
  • Gold Is Not In A Bear Market [View article]
    Hi Doug:

    Thanks for the clarification.

    FYI, the page you linked to, I can only see a blank space where the chart is supposed to be. Thus, I cannot see the trend line you are referring to that would signal a bear market.

    Oct 2 02:48 PM | Likes Like |Link to Comment
  • Gold Is Not In A Bear Market [View article]
    Hi Doug:

    Thanks for your answer. A couple of follow ups:

    1. As you know, bear markets in equities have typically be defined as a move of 20% or more from the peak. By this definition, gold is in a bear market with respect to most major currencies, including the ones you cited. And it is also in a bear market with respect to the USD. Now, it is not necessary that you accept the 20% definition. But I'd like to know specifically what your definition is. We can't very coherently make the claim that gold is not in a bear market, if we don't have a definition of what a bear market in gold consists of.

    2. If gold WERE in a bear market, that does not mean that people should sell. It's often a good idea to buy things after they have gone through a bear market.

    3. Regarding "unsustainable debt" and other fundamental factors you cite in favor of gold, it is not clear to me how that impinges on the issue of whether gold is in a bear market or not. The fundamentals of gold (or any asset) could look fabulous and still be in a bear market. In other words, you can argue that the fundamentals or technicals for gold look great, but still acknowledge that it is in a bear market.

    Oct 2 10:30 AM | 3 Likes Like |Link to Comment
  • Gold Is Not In A Bear Market [View article]

    What is your definition of a bear market? By your account, what would need to happen in order for a bear market in gold to be confirmed?
    Oct 1 11:59 PM | 3 Likes Like |Link to Comment
  • Misperceptions About Hayek: A Response To Soros [View article]

    I sincerely appreciate your contributions. Many points that you make go well beyond the scope of the article, which was about Soros's characterization of Hayek. So despite the fact that those points raise very interesting questions I will decline pursue them.

    Thanks again, though, for your interesting remarks.
    Oct 1 11:31 AM | 1 Like Like |Link to Comment
  • Misperceptions About Hayek: A Response To Soros [View article]
    Hey Roger:

    Hayek explicitly said in various places that he did not believe socialist calculation was "impossible" in the sense of being a logical impossibility. He thought that as a practical matter, it would yield an inferior result to a free market. This is a subtle distinction that did not matter in terms of Hayek's and Mises's ultimate policy stance, but it highlights an important methodological difference between them.

    Furthermore, his conclusions were not derived from a priori reasoning. He flat out rejected this method of economic analysis. His conclusions were based fundamentally on empirical observations about how information flowed and markets worked.
    Sep 29 11:07 PM | 1 Like Like |Link to Comment
  • Misperceptions About Hayek: A Response To Soros [View article]

    I believe you are incorrectly attributing certain fallacies to Hayek. Briefly: The issue is really not about whether Hayek believed in the concept of truth. The question is: What sort of claims can be asserted as true, and in what sense can they be true? There are different accounts of the concept of truth, as I pointed out in my last response. Hayek clearly believed -- at minimum -- in a coherence theory of truth. It's important to understand this, because, at least in this sense, Hayek was a firm believer in truth and in the power of reason to discern it.

    Mises adhered to a very different conception of truth: A correspondence theory of truth, whereby he believed that he could make absolute truth claims about a number of things deduced from unquestionably true premises. Hayek implicitly believed that Mises over-reached in terms of the sort of truth claims he made in the economic sphere.

    It's important to understand this: One can believe -- as I do -- in the concept of absolute truth. One even believe that with respect to every single question a single true answer exists. But that does not mean that such truths are always going to be available to us. We can work really hard to discover the truth about certain matters, and in the process may make progress in uncovering absolute truths. (That is how science works.) However, as a practical matter, there are a great many things about reality that, given the current state of knowledge and technology we cannot know the Truth about. Indeed, there are many things about the world that only an omniscient being will ever know the absolute Truth about.

    With respect to many things, Mises made his case through his praexeological method. Hayek - and many others - were not convinced that he successfully made his case on the terms he set out. Hayek usually agreed with Mises's conclusions; he simply did not believe that Mises's methods for arriving at those conclusions were valid; he did not believe that those methods were persuasive.

    Final point: This does not apply to you Mark; only to certain Miseans. I really think Miseans need to stop thinking that everybody that does not see what they see is an idiot. Miseans tend to think that if somebody does not agree with Mises, it must be because they did not read him or that they simply did not understand him. Rather they should perhaps pause to reflect on the fact that if people as intelligent as Hayek -- and thousands of others -- that faithfully read Mises do not believe Mises successfully made his case on logical terms, it may very well be because he didn't. The fact of the matter is that if Miseans have not been able to convince more than a tiny number of people, then the failure is truly theirs. It's a failure because it can only mean one of two things: 1) Their logical construction has failed; 2) The have grossly overestimated the capacity of human reason AND the capacity of reason to guide human affairs.
    Sep 29 08:35 PM | 2 Likes Like |Link to Comment
  • Misperceptions About Hayek: A Response To Soros [View article]

    I'm glad it helped!

    Sep 29 01:48 PM | Likes Like |Link to Comment
  • Misperceptions About Hayek: A Response To Soros [View article]

    Great points. I think I agree with 95% of it.

    In particular, I agree that -- as least with respect to many things -- there is such a thing as a true statement. 1 + 1 = 2. And on such things compromise is ultimately illogical.

    Having said that, we need to lay out specifically WHAT we are making a truth claim is about. Then we can argue specifically about whether it is appropriate to be convinced that a particular argument is absolutely true with no exception. It is appropriate to be uncompromising defending in absolute terms the position that 1+1=2. (Even then, though, it should be done within established norms of civility and mutual respect). But, there are other sorts of propositions where a claim of absolute certitude and an uncompromising attitude cannot be justified.

    In other words, the need to "compromise" arises from situations where we cannot really be sure about the truth of a certain proposition. The question is: In the realm of political economy, what are the sort of things worth talking about (excluding obvious and easy cases) were we can REALLY assert the absolute truth of a proposition?

    In the case of Hayek he was very modest -- some might even say pessimistic -- in this regard. He believed that the amount of things that we could really KNOW through application of abstract reason alone, was quite limited. So, he believed that with respect to a great many things, the only way we could come to "know" certain things, or come to a greater approximation of the truth about such things, was through a sort of "groping" -- a kind of process of inductive reasoning. With respect to the sort of things that cannot be known with absolute certainty, I have described the sort of methodology that he proposed toward approaching theses problems in my previous post.

    I shall approach this issue from a different angle: In philosophical terms I believe it would be fair to say that Hayek was a kind of coherentist and a pragmatist (e.g. Pierce and Dewey). I do not believe he ever described himself this way, nor did he ever discuss these issues in such terms, to my knowledge (indeed, I suspect that Hayek may not have been familiar with the American pragmatist tradition in philosophy led by Pierce and Dewey). However, in strict philosophical terms -- and you seem interested in philosophy -- this is, I think, a constructive way of trying to make sense out of Hayek's mode of thought.

    By contrast, Mises would seem to adhere to certain type of correspondence theory of truth, along Kantian lines.

    Let us recall that Hayek explicitly parted company with Kant in crucial respects and sided with the empirically based skepticism of Hume. This difference alone can explain many of Hayek's fundamental differences with Mises.

    In conclusion, I don't think that the utopianism of Rothbard lies merely in the idea that Truth exists. The problem at issue here is that Hayek believed people like Rothbard were too confident about the extent of their knowledge of Truth -- or more generally the kinds and extents of things that we can absolutely know as True. It's this sort of immodesty, if you will, this sort of "constructive rationalism" as Hayek would call it -- that causes a tendency toward Utopianism. And Hayek thought that was dangerous.

    Another way of stating this is that you cannot adhere too fervently to any particular construction of Utopia that is founded on the philosophically deflationary accounts of truth that Hayek seemed to believe were possible. I think Hayek believed the best mankind could do was to seek improvement in the condition of mankind through a kind of project that I think we could associate with a philosophically "pragmatic" account of truth -- and one that is specifically built around the sort of principles that I laid out in my previous post.

    In sum, I don't necessarily think that Hayek commits the fallacy you ascribe to him. I think he was ready to accept as true anything that could actually be logically deduced as such. At worst, he would have been a minimalist in regard to his approach to truth. And I think he was at least agnostic about the possibility of non-minimalism. Certainly, Hayek would clearly accept a coherentist account of truth. And I think that this would be sufficient to avoid the problem that you have ascribed to him.

    Sep 29 04:30 AM | 1 Like Like |Link to Comment
  • Misperceptions About Hayek: A Response To Soros [View article]

    Yes: Hayek and Mises, shared many of the same basic goals as far as the direction that they wanted economic policy to go. But they had very important differences in methodology -- or in how to get there -- and this is what the debate is about.
    Why is methodology important? Once the battle against communism and extreme forms of socialism had been won, I think these methodological differences come into sharper view. Those differences did not matter much at the time because they were both battling the same mortal enemy. But when it comes to determining the "degree" of social democracy that is optimal in a liberal society -- and this is the sort of debate the US is having today, not a debate of Soviet communism versus capitalism -- the different methodologies can make a difference in terms of what sort of practical policy prescriptions might arise from these methodologies in this context.
    I think it is fair to say that Hayek would be somewhat more circumspect about drastically rolling back the welfare state and the regulatory apparatus. For him, the optimal degree of government intervention in the economy was ultimately an empirical matter. It would also have to be something done gradually so as to not disrupt the social order excessively. Rothbard would have no doubts at all about this -- he was a radical and an anarchist. He had no qualms about smashing up the place to achieve his utopia. Mises was somewhere in between - more strident in his laissez faire than Hayek, but more flexible than Rothbard.
    Locating Mises in relation to Rothbard or Hayek can be explained in this way: Mises did not believe in Rothbard's "Natural Law" basis for liberty. The basis for Mises's liberalism was a purely rational appraisal based on certain assumptions he made about human nature and their relation to human action. However, liberalism was not an END for Mises. It was still only a means to an end. This means that if push came to shove, he was ready to sacrifice absolutist conceptions of liberty and/or free markets in certain situations. And he did; much to the chagrin of many of the American Austrians.
    Sep 29 03:34 AM | Likes Like |Link to Comment
  • Misperceptions About Hayek: A Response To Soros [View article]

    This is a subject that many hundreds of pages have been written about, so I won't go over all of that here.

    I think the simplest way to describe the difference is that Hayek was a Classical Liberal, but he was METHODOLOGICALLY empirical in his adherence to liberal principles. The ideological laissez faire "wing" of the Austrian School employed what one might call an ontological approach. One such approach was the a priorism of Mises, which Hayek rejected. Another was the natural law approach of Rothbard, which Hayek also rejected. For the Mises and Rothbard, the advocacy of free markets was a simple matter of deductive logic which flowed from certain premises. As such the free market was a sort of reified Truth, that could never be denied or compromised. Hayek rejected this approach. He believed that as a practical matter concepts such as "liberty" had to be given a practical shape in the real world. For example, in the real world of jurisprudence, no "right" is absolute. Rights many times come into conflict and hard decisions have to be made by judges and legislators how to limit one right or another in particular ways. The ontological approach of Mises and Rothbard was not amenable to this. Theirs (particularly Rothbard's) was a Utopian project in the sense that they believed that all of this could be solved through logical deduction, with no need to make any compromises. For them, if there seemed to be a conflict, it was simply that the problem had not been analyzed carefully enough (Mises was a bit more realistic and was willing to recognize at times that logical deduction could only take you so far). Once one concedes that rights are not absolute, then one must set about the practical task of trying to figure out how best to implement them in the real world. Hayek believed that this would be best achieved by a trial and error sort of process.

    As his thought matured late in his career, Hayek ultimately developed a working model which he patterned after certain processes associated with the emergence of "spontaneous order" in various contexts. As models he cited English common law, biological evolution, as well as the evolution in languages and cultures. Under this conception, Hayek argued that the institutions of liberty should be accorded a sort of privileged or precedential "benefit of the doubt," as such institutions had withstood the test of time and much of modern prosperity was owed to them. At the same time, to survive in the long term, such a structure had to have the capacity to adapt; it had to be enabled to adjust to historical circumstances through a process of trial and error learned through experience. Same with the institutions of a market-based society: Hayek believed that as a matter of theory, various different configurations of a successful and prosperous market-based economy were possible, but one could not know in advance precisely which one of these configurations would, in fact, work best. Thus, one had to be flexible and work through all of these through the hard test of empirical experience. However, this was not a "free-for all"; it was an incremental approach that had to work within a previously established constitutional framework that has been established through a long process of successful evolution.

    It would be wrong to characterize Hayek as a "social democrat" in the modern sense of this term. Having said that, Hayek was an independent thinker and he was not averse to anything if it worked, no matter what source they came from. Hayek embraced certain "social democratic" ideas because he believed that, as an empirical matter, a limited and careful implementation of some of these policies would better enable the flourishing of well-functioning market and a liberal society more generally.

    I don't believe it is profitable to characterize anybody in ideological terms. But if one insists, it is clear that Hayek will seem to be an "extreme" advocate of laissez faire to modern social democrats (even though Hayek explicitly rejected Laissez Faire throughout his life).

    At the same time, if you are an extreme anarcho-capitalist such as Rothbard or some of his followers such as Hoppe, Hayek will appear "indistinguishable" from modern social democrats. But this is obviously simply a function of their ideological blinders which do not enable them to detect any GRADATIONS when it comes to certain principles. These folks see the world as black and white; you are either right or wrong, with them or against them. Therefore, for them, Hayek is a man that is despised. Particularly since they believe he is simply "masquerading" as a liberal and that he has used his reputation as such to smuggle dangerous heretical ideas amongst lovers of liberty. They see him as a "Trojan Horse."

    As a result of all of this, Hayek's thought is condemned by the left, condemned by the right and ignored by an indifferent center.
    Sep 28 10:12 PM | 3 Likes Like |Link to Comment