John Lounsbury

On Leverage

derryl gave an exceptionally good essay comment on the Instablog version of this article. seekingalpha.com/insta...

On Leverage

c smith - - -

I made a projection in the referenced article. Here is the link again.
seekingalpha.com/artic...


On Nov 27 11:05 AM c smith wrote:

> ...the added improvement in GDP per dollar of debt has been declining
> for the past 40 years and is approaching only ten cents of increased
> GDP for every added dollar of debt.
>
> Is the inverse then true? Does each decremental dollar of debt at
> this point have a lessened decremental effect on GDP than it might
> have previously? IOW, where does the function you describe go from
> here?

On Leverage

Jack - - -

I think the cleverness of your comment may have been lost on some. (Or maybe I have misinterpreted it.) It seems your point is that the financial system is a weight upon the lever and not a supporting fulcrum.

Of course, if I have missed you point, you can correct me (gently, please).


On Nov 27 08:56 AM john s. gordon wrote:

> the famous (infamous) Laughter Curve of 1980 was used by certain
> politicians who will not be named here to justify massive tax cuts
> on wealthy individuals combined with massive increases in military
> spending (and gutting of major domestic programs). the result was
> midwest rust belt in depression while california/texas boomed.<br/>oddly
> the laffer principle seemed to work once in u.s history. after 8
> yrs of eisenhower stagnation JFK saw that tax rates were too high
> &amp; congress was willing to legislate a reduction. the result was
> increased economic activity &amp; increased federal tax revenue with
> lower marginal tax rates. this occurred because jack was pres &amp;
> the public felt good, not because marginal rates were reduced. i
> notice prince arthur is still mouthing off on larry kudlow's show.
>
> in your chart above i will award a passing grade on cartoons #1-2
> but in the case of #3 on the bottom a free-body diagram would indicate
> that it won't work as shown. the fulcrum (triangle) needs to be on
> the top of the lever not the bottom.

Leverage to Move the World

derryl - - -

Is your view that some level of inflation is necessary to support consumption in a stable society? That is what I gather on my first rather careful reading of your comment. I think that is a logical argument and I have given that as a possible answer when questioned about whether inflation is good or bad and whether it is needed for growth or not. I am not totally convinced that is the case, so I also still have your final dilemma:

<<'Fiscal conservatives' and others are aghast at this idea of the government creating and giving away free money. They say there are always new innovative growth opportunities to keep the credit cycle pumping new money into the economy. Okay guys, it's up to you. Show me these profitable opportunities that lead to jobs and incomes and buying power to keep the economy running and I will believe monetary innovation is not necessary.>>

BTW, you were one of the people I thought of when I wrote this piece. And your comment is better than the article.

The Supreme Court of South Carolina issues Admisitrative Order Suspending Forelcosure actions and sales citing HAMP Law

Here is a New York Post article www.nypost.com/p/news/...

On Nov 24 05:30 PM John Lounsbury wrote:

> Reviewing links between government and banksters (a la tripleback),
> I saw a suggestion by Matt Taibbi that Jamie Dimon was be suggested
> as a replacement for Geithner as Secretary of the Treasury. (Sorry,
> I don't have the link at the moment.) Keep an eye open for that gen
> to start getting into the gossip mill.
>
> Why have a second class bankster when you can get one of the mob
> bosses.

Wells Fargo Thinks It Doesn't Have to Reserve Against Bad Loans

Reza - - -

Can you explain what you mean by Indy Mac costing the government $100 billion? I am not aware that there was any cost to the government. According to the records www.fdic.gov/news/news... , the FDIC sustained costs between $4 and $8 billion to resolve the Indy Mac failure. Even that was not government money because the FDIC obtained its funds from fees paid by member banks. There could not have been any TARP funds or government guarantees involved because Indy Mac failed in July, 2008 and that nonsense had not yet started.

Please explain what you mean.

On Nov 23 10:59 PM Reza M. wrote:

> Do you know how much government saved by Wells buying Wachovia? Indy
> M cost government $100 billion. Can you imagine Wachovia's cost to
> tax payers?
> As strange as it sounds, it was Wells who bailed out the tax payers
> from Wachovia going under. It was a win/win for both taxpayers and
> Wells. Unfortunately, the media has made all financials bad guys
> and people can't tell the difference.

The Supreme Court of South Carolina issues Admisitrative Order Suspending Forelcosure actions and sales citing HAMP Law

Reviewing links between government and banksters (a la tripleback), I saw a suggestion by Matt Taibbi that Jamie Dimon was be suggested as a replacement for Geithner as Secretary of the Treasury. (Sorry, I don't have the link at the moment.) Keep an eye open for that gen to start getting into the gossip mill.

Why have a second class bankster when you can get one of the mob bosses.

Precious Metals, Agriculture Stocks Are Way To Go

Maya - - -

Thanks for the link - I am now following Nathan.

The Supreme Court of South Carolina issues Admisitrative Order Suspending Forelcosure actions and sales citing HAMP Law

It seems we may be dragging a bottoming process out for 2-3 years longer than it should have been, and at much greater expense than just lost home values.

Precious Metals, Agriculture Stocks Are Way To Go

Maya - - -

In case you missed it, here is an Associated Press article on 2012.
www.poughkeepsiejourna...?

Could Sovereign Debt be the New Subprime?

Mark - - -

TBT may have some tracking error problems. I started some early work on this but have not followed up. I hope to get back to it. What needs to be done is compare TBT to the inverse of 2x TLT. For a long term holding, I would want to know if shorting TLT (even with paying the dividends while short) outperfoms TBT or not.

Maybe I'll get to it or maybe someone else will do it. It may already have been done and I haven't seen it.

Is The Fed Getting Real About Valuation And Bubbles?

Andrew - - -

I can't read!!! There is no typo - I failed to detect the difference between is and was. You might say I could be accused of not knowing what the meaning of "is" is. (Bad joke.)

Sorry.

PS: I still like the article.


On Nov 21 04:37 PM John Lounsbury wrote:

> Andrew - - -
>
> Like your discussion. It all comes back to accounting trickery that
> is still allowed.
>
> BTW, there is a typo in the following:
>
> <4: IVS recognises only two values (1) Market Value (i.e. mark-to-market
> when the market is working properly), and (2) Other-than-market-value
> which is an estimate of what the mark-to-market value would be if
> the market was working properly.>
>
> In point (2) a not is missing in "...what the mark-to-market value
> would be if the market was NOT working properly." I doubt that the
> typo is misleading because the context is clear.

Depressed Detroit: The Sale of the Pontiac Silverdome

TinyTim - - -

The reason the deal fell through last year was the buyer (1) turned out to have no resources to complete the purchase and (2) would not have been able to maintain the property.


On Nov 21 02:58 PM TinyTim wrote:

> I don't know which is more appalling. That the city let it go for
> $583,000, or that $55.7 million in 1975 is up to $227 million in
> 2009 dollars.
>
> If a deal for $17M fell thru just last year, one has to wonder about
> other issues. Many of these issues question the competency of the
> city.

Is The Fed Getting Real About Valuation And Bubbles?

Andrew - - -

Like your discussion. It all comes back to accounting trickery that is still allowed.

BTW, there is a typo in the following:

<4: IVS recognises only two values (1) Market Value (i.e. mark-to-market when the market is working properly), and (2) Other-than-market-value which is an estimate of what the mark-to-market value would be if the market was working properly.>

In point (2) a not is missing in "...what the mark-to-market value would be if the market was NOT working properly." I doubt that the typo is misleading because the context is clear.

The Twenty Year Stock Bubble Is Still Inflated

drbob66 - - -

If you take the time to read the comment stream you will learn the purpose of the article - generate a good discussion. If you find someone who has put all the good discussion covered by this comment stream together in one article, please post a link. I would be an interested reader.


On Nov 21 03:02 AM drbob66 wrote:

> "For this analysis to be more rigorous these factors should be included."
>
>
> Yeah, there are MANY factors that should have been taken into consideration....if
> you wanted to do a THOROUGH analysis of current stock valuations
> vs. historical averages. I guess you opted not to bother, and used
> ONE metric. Pretty lame effort, imo. Why'd you even bother?