Resolving The Crisis: Remembering What Makes Us Great [View article]
"What will our children and grandchildren have to deny themselves on account of the 2008 bail-outs? Will they really raise taxes on themselves to pay for our borrowing, or will they realize that so long as interest rates remain low (because dollars are worth having because vendors everywhere are still accepting them), higher taxes are unnecessary?"
Typical monetarist claptrap. There is no free lunch. A dollar borrowed by government today on the basis of forever low interest rates is the same type of decision as the one to borrow money on an ARM. Greece had low interest rates once upon a time too. Japan has had them for so long that they've borrowed much more than the Greeks.
Borrowing money NEVER makes finiancial sense if it's consumed. While the costs of this borrowing may not come due today, they will come due, and to deny that is to accept the fantasy that interest rates will be low forever.
My 3 Must-Short Dow Stocks For 2012 [View article]
My shorting strategy is to pick out the weak members of the herd. In 2007-08 this was a very successful strategy, especially with so many companies headed for 0. Since I believe the economy is ready to implode as well as the stock market, it's likely to be a successful strategy in 2012-13.
Here's my second grouping: WHR, PAG, CRZO, DNR, CVC, TWC, MINI, IN, MRGE, NCR, SYMC, ITRI and UIS.
Buy some Jan 2013 puts, which is always a good strategy in terms of limiting risk. Only 100% downside with multiples of upside if right. That eliminates one reason investors typically have a bullish bias - limited upside in shorting.
How Post Credit Bubble Fiscal Austerity Leads To Depression [View article]
The recession either has already began or will by Jan 2012. As far as stocks go, it's highly likely, in my opinion, that we'll see the March 2009 lows again within the next 12-24 months.
This is not an environment to own risk assets. There's nothing wrong with staying in cash, and waiting for a buying opportunity. But the S&P and average stock around the globe seem expensive to me.
How Post Credit Bubble Fiscal Austerity Leads To Depression [View article]
I'm not long Germany either. I'm of the firm belief that a depression is coming, and am short many European and US banks - have been for a long time.
Unemployment is a lagging indicator, and today's number is likely the best it'll get for at least a year or two. Don't be fooled by the headline number of 8.6%. The marginally attached workers, and the continued drop of the labor force (the divisor in the UE rate) better report the employment picture.
How Post Credit Bubble Fiscal Austerity Leads To Depression [View article]
Westcoaster,
First I'll answer your questions and then get to the point.
1. The employment picture has hardly improved despite the "all the kings' horses and all the kings' men" attempts at the opposite (Just look at the U-6 number or employment to population number). 2. Without such stimulus measures we'd be closer to the end of this depression as opposed to having an artifical bounce in the middle of it. 3. We aren't going to double dip because of stimulus, we were going to do it anyway. Those measures do little to alter that reality, it's only delayed. 4. Yes, eventually, even countries with currency soverignty will default. I'm not talking about an imminent US default, but that which can't be paid back won't. There's no realistic possibility of the US government ever becomming debt free, and it eventually will default, though there are many other defaults that will happen first. 5. Austerity worked quite well in the US from the end of the Revolutionary War until the early 1900s. Austerity, combined with default works every day for companies that go through bankruptcy. Every family has to practice austerity, so why should it be any different in the aggregate for citizens' government? 6. Before this depression is over unemployment is likely to hit 25% with or without additional "stimulus."
NOW, ON TO MY POINT:
Let's take Greece as an example. The government spent so much more money than they took in that no real lender is willing to finance further debt.
My point is this, "Every government on the planet that does what Greece has done eventually defaults."
QE (or other asset purchases) and fiat money financed debts all lead to one road eventually, and that is default. If this were not the case then the 14 trillion "stimulus" (to use a Keynesian/monetarist term), or debt in Austrian terms, that the US has accumulated should have been more than enough to keep an economy afloat.
But, because 14 trillion worth of debt hasn't keep the US economy humming, Keynsian and monetarist clowns call for even more stimulus. "It hasn't worked yet, so let's try more of it" is the familiar refrain, which can be stated regardless of how much stimulus is attempted, because it will NEVER actually WORK.
While there's little doubt that foolish games like QE, operation twist and deficit spending can appear to goose things in the short run, there should be no doubt that when these gambits are taken to their logical extremes, the endgame has always been and will always be default.
How Post Credit Bubble Fiscal Austerity Leads To Depression [View article]
Tim,
You like most Keynesians and monetarists make the mistake of failing to recognize that governments that spend more than they take in sucks money out of the private sector.
"Imagine if the US Government ran surpluses from here until eternity......"
This is absurd thought experiment since there's no reason for a government to run a surplus indefinately. Instead imagine this. From day one, a government spends only what it takes in - not more not less.
A gold standard does NOT have to exist. All that's needed is to prevent governments from spending more than they take in, and preferrably have a free market in money.
I'm not sure how pointing to Europe proves your point, as it seems to prove mine. If these soverign governments would have only spent what they took in, they wouldn't have spent themselves into bankruptcy.
How Post Credit Bubble Fiscal Austerity Leads To Depression [View article]
The title has the causality backwards. Austerity is the cure not the cause of depression. Yes, a depression is coming, but it's not because governments are going to spend more responsibly in the future, it's because they spent so irressponsilby in the past.
The past irressponsible spending sent false signals in a typical crack-up boom. Since that path is unsustainable, let's not blame a balanced budget (or at least smaller deficits) for causing the problems.
Recessions are not only unavoidable, they are necessary and healthy, it's the preceeding unsustainable spending that are the real cause of depressions. Only a failure to prepare for recessions is a major difficulty. Prepare now or pay later.
The Dow Class Of 1991: Where They Are Now [View article]
There's plenty of fuel for this bear to continue. The European banking system is on the verge of having its overnight funding window shut ala Bear Stearns. Here's the thing: we're likely going to get a Bear Stearns moment in Europe followed by a recovery rally back to near current levels after the "contagion" doesn't spread. Then, the real horror starts in 2012. A 5% dividend can't possibly make up for a 30-40% decline.
The Dow Class Of 1991: Where They Are Now [View article]
I think holding cash or being short stocks for the next several years is the best idea going. It seems likely, based on our Elliott wave analysis, that a major bear market is unfolding now. I see a move back below the '09 lows as almost a certainty. Therefore, I'd rather hold cash than the S&P 500.
If we're talking a 20-year timeframe, then maybe stocks will be higher. But regardless, you'll have a better chance to buy stocks over the next few years (meaning they'll be lower) than to buy and hold them from today's levels.
The Dow Class Of 1991: Where They Are Now [View article]
Siegal's case for buying "stocks for the long run" is a weak one in the current environment. Essentially his case is stocks will go up so buy and hold. That's a poor strategy when stocks are at historically high valuations and we're in the midst of a global debt unwind that could last another 5 years.
Buy and hold is dead - the strategy now should be sell and hold (cash).
Resolving The Crisis: Remembering What Makes Us Great [View article]
Typical monetarist claptrap. There is no free lunch. A dollar borrowed by government today on the basis of forever low interest rates is the same type of decision as the one to borrow money on an ARM. Greece had low interest rates once upon a time too. Japan has had them for so long that they've borrowed much more than the Greeks.
Borrowing money NEVER makes finiancial sense if it's consumed. While the costs of this borrowing may not come due today, they will come due, and to deny that is to accept the fantasy that interest rates will be low forever.
Fudged Jobless Numbers? Buckle Up [View article]
BBVA, STD, LYG (Financials in general, especially European ones), CAR, CENX, AA, X, GT, F, PAG, MGM, PNK, MWW, OMX, ODP, DIN, OSTK, SHLD, HOT, CETV, CEDC, CIEN, JDSU, NCR, UIS, ONNN, AMKR and WFR.
They all failed my technical and fundamental screens - there's 98 in all. These are very vulnerable.
My 3 Must-Short Dow Stocks For 2012 [View article]
Here's my second grouping: WHR, PAG, CRZO, DNR, CVC, TWC, MINI, IN, MRGE, NCR, SYMC, ITRI and UIS.
Buy some Jan 2013 puts, which is always a good strategy in terms of limiting risk. Only 100% downside with multiples of upside if right. That eliminates one reason investors typically have a bullish bias - limited upside in shorting.
My 3 Must-Short Dow Stocks For 2012 [View article]
AA, CENX, X, F, CEDC, CETV, SHLD, MWW, HOT, CAR, PNK, MGM, DIN, ODP, OMX, CIEN, JDSU, AMD, ONNN, AMKR, WFR and DYN.
Happy shorting!
How Post Credit Bubble Fiscal Austerity Leads To Depression [View article]
This is not an environment to own risk assets. There's nothing wrong with staying in cash, and waiting for a buying opportunity. But the S&P and average stock around the globe seem expensive to me.
How Post Credit Bubble Fiscal Austerity Leads To Depression [View article]
Typical monetarist claptrap: The "Austrians just don't understand."
Your arrogance is palpable. It's not that I misunderstand the current monetary system - it's that I disagree with it's fundamental principles.
How Post Credit Bubble Fiscal Austerity Leads To Depression [View article]
Unemployment is a lagging indicator, and today's number is likely the best it'll get for at least a year or two. Don't be fooled by the headline number of 8.6%. The marginally attached workers, and the continued drop of the labor force (the divisor in the UE rate) better report the employment picture.
I'd say it's best to take risk off the table.
How Post Credit Bubble Fiscal Austerity Leads To Depression [View article]
First I'll answer your questions and then get to the point.
1. The employment picture has hardly improved despite the "all the kings' horses and all the kings' men" attempts at the opposite (Just look at the U-6 number or employment to population number).
2. Without such stimulus measures we'd be closer to the end of this depression as opposed to having an artifical bounce in the middle of it.
3. We aren't going to double dip because of stimulus, we were going to do it anyway. Those measures do little to alter that reality, it's only delayed.
4. Yes, eventually, even countries with currency soverignty will default. I'm not talking about an imminent US default, but that which can't be paid back won't. There's no realistic possibility of the US government ever becomming debt free, and it eventually will default, though there are many other defaults that will happen first.
5. Austerity worked quite well in the US from the end of the Revolutionary War until the early 1900s. Austerity, combined with default works every day for companies that go through bankruptcy. Every family has to practice austerity, so why should it be any different in the aggregate for citizens' government?
6. Before this depression is over unemployment is likely to hit 25% with or without additional "stimulus."
NOW, ON TO MY POINT:
Let's take Greece as an example. The government spent so much more money than they took in that no real lender is willing to finance further debt.
My point is this, "Every government on the planet that does what Greece has done eventually defaults."
QE (or other asset purchases) and fiat money financed debts all lead to one road eventually, and that is default. If this were not the case then the 14 trillion "stimulus" (to use a Keynesian/monetarist term), or debt in Austrian terms, that the US has accumulated should have been more than enough to keep an economy afloat.
But, because 14 trillion worth of debt hasn't keep the US economy humming, Keynsian and monetarist clowns call for even more stimulus. "It hasn't worked yet, so let's try more of it" is the familiar refrain, which can be stated regardless of how much stimulus is attempted, because it will NEVER actually WORK.
While there's little doubt that foolish games like QE, operation twist and deficit spending can appear to goose things in the short run, there should be no doubt that when these gambits are taken to their logical extremes, the endgame has always been and will always be default.
How Post Credit Bubble Fiscal Austerity Leads To Depression [View article]
You like most Keynesians and monetarists make the mistake of failing to recognize that governments that spend more than they take in sucks money out of the private sector.
"Imagine if the US Government ran surpluses from here until eternity......"
This is absurd thought experiment since there's no reason for a government to run a surplus indefinately. Instead imagine this. From day one, a government spends only what it takes in - not more not less.
A gold standard does NOT have to exist. All that's needed is to prevent governments from spending more than they take in, and preferrably have a free market in money.
I'm not sure how pointing to Europe proves your point, as it seems to prove mine. If these soverign governments would have only spent what they took in, they wouldn't have spent themselves into bankruptcy.
How Post Credit Bubble Fiscal Austerity Leads To Depression [View article]
The past irressponsible spending sent false signals in a typical crack-up boom. Since that path is unsustainable, let's not blame a balanced budget (or at least smaller deficits) for causing the problems.
Recessions are not only unavoidable, they are necessary and healthy, it's the preceeding unsustainable spending that are the real cause of depressions. Only a failure to prepare for recessions is a major difficulty. Prepare now or pay later.
Cramer's Lightning Round - Hudson City Bancorp Doesn't Make Enough Money (9/20/11) [View article]
The Dow Class Of 1991: Where They Are Now [View article]
The Dow Class Of 1991: Where They Are Now [View article]
If we're talking a 20-year timeframe, then maybe stocks will be higher. But regardless, you'll have a better chance to buy stocks over the next few years (meaning they'll be lower) than to buy and hold them from today's levels.
Just one man's opinion. :)
The Dow Class Of 1991: Where They Are Now [View article]
Buy and hold is dead - the strategy now should be sell and hold (cash).
Ben Graham's Assistant's 19 Bullish Stock Picks [View article]