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  • Analysis Of The Fed's Options: Taper Or Minsky Moment [View article]
    Christopher,

    I agree that indebtedness is a big factor but in this case we are worried about margin debt as it relates specifically to stock market assets which is at an all time high. With SPY going up like a rocket yesterday on news of tapering and very modest growth, the potential for a sustained drop that turns into a Minsky moment is high.

    And Minsky was clear that financial market instability is an ongoing characteristic of the capitalistic system so avoiding Minsky moments requires ongoing action by regulatory bodies like the Fed.

    Let's hope they are successful so we don't have a Minsky Moment.
    Dec 19 10:09 AM | Likes Like |Link to Comment
  • Fonzie Or Ponzi? One Theory On The Limits To Government Debt [View article]
    You don't read the criticism very carefully in any case.

    I never said they didn't balance the budget. I said "the USA didn't consistently run a balanced budget until Clinton in the 1990's".

    And I never said Truman and Eisenhower were Keynesians. I said "deliberately bringing the budget into balance after a recession is a Keynesian idea" - You should know this as Krugman complained about Bush's not balancing the budget just like he is complaining about Obama's reducing the deficit today.

    The fact that Eisenhower criticized Keynes is not surprising - he was a politician. Reagan (who had a degree is economics) did the same but ran Keynesian deficits to generate jobs. If Obama just spent like Reagan did we would have a much lower unemployment rate. But Obama is a lawyer, not an economist.

    And the General Theory was written in 1936 so there was a "Keynesian lobby" in Truman's period - if you mean economists who supported these ideas.
    Oct 29 01:03 PM | Likes Like |Link to Comment
  • Fonzie Or Ponzi? One Theory On The Limits To Government Debt [View article]
    Sorry for confusing you. I'll type slower.

    What I said was you can't learn anything about today by looking at the post-WW2 debt decline. As I am sure you know, we are in a balance sheet adjustment period with interest rate against the zero boundary. Interest rates left the zero bound in July 1947 (or June '42 by some measures). The end of a total war with massive gov spending requires different monetary and fiscal responses to a balance sheet recession rooted in excess private (not public) debt.

    And deliberately bringing the budget into balance after a recession is a Keynesian idea - the question is why are you talking about balancing the budget when we are still in a technical depression, hard against the zero bound?

    On RR: Eventually there are problems with debt - the question is when. The RR's math error removed the 90% cliff which was the reason there was a panic. If you go by the Japan experience public debt can get to 220% without disaster if you have debt in your own currency.

    RS financial repression is a neat theory that can be used to justify less government regulation - and not much else. As they said, "Governments do not call these actions financial repression,
    of course, but characterize them as part of “macroprudential
    regulation,” which is designed to ensure the overall health of
    the financial system."

    Seems like a lack of "financial repression" is how we got in the current mess.
    Oct 25 11:51 AM | 2 Likes Like |Link to Comment
  • Fonzie Or Ponzi? One Theory On The Limits To Government Debt [View article]
    Oh, I see. You are still trying to prop up the discredited Reinhart 90% debt disaster fallacy.

    Don't topline the numbers like you did in your "63" article and you can see what really happened.

    In both the UK and US balanced budget scenarios you try to make something out of, they stopped fighting a total war so government spending plunged.

    In the US, Federal spending went from 41.9% of GDP in 1945 to 15.6% of GDP in 1950. The cut in defense spending was from 37.5% of GDP in 1945 to 5% of GDP in 1950. Non-defense spending increased from 4.4% of GDP in 1945 to 10.5% of GDP in 1950.

    They weren't deliberately trying to balance the budget, they were trying to make sure that they didn't fall back into the Great Depression - something that you can confirm in the contemporary press was a concern of business leaders in 1945.

    So, you are not going to duplicate the 1945-50 "balanced budget" events today and they are of no use in predicting what is going to happen tomorrow.
    Oct 24 09:12 AM | Likes Like |Link to Comment
  • Fonzie Or Ponzi? One Theory On The Limits To Government Debt [View article]
    "In every large country episode in which debt was successfully reduced below 90% of GDP without slamming creditors, this was achieved by balancing the budget."

    Except for Great Brittan after 1814 and the USA from 1945 to 1980.

    If you will recall, the USA didn't consistently run a balanced budget until Clinton in the 1990's which was promptly blown up by Bush.

    Look up the "law of motion of government debt" if you want to understand the basic math.

    And before you say inflation - it was growth that did most of the debt reduction. If we had the growth of 1945 to 1980, we would not have a debt problem.
    Oct 23 08:51 AM | 5 Likes Like |Link to Comment
  • Summer 2013 Snapshot Of Expected Future S&P 500 Earnings [View article]
    "Earnings recession" revealed by revisions! Good stuff.
    Minsky's theories predicted that reducing the deficit would result in reduced earnings - but it didn't appear in the initial earnings. Looks like the revisions have shown Minsky is correct. If Minsky continues to be correct, the continuing precipitous fall in the federal deficit will reveal itself in downwardly revised second-quarter earnings and ongoing earnings that are far below projections.
    Can't see how this is good for the market.
    Aug 22 10:45 AM | Likes Like |Link to Comment
  • What Will Pop The Gold Bubble - Update [View article]
    Thank you. Noticed you do VC. If you need in-depth analysis of a VC idea, please feel free to contact me.
    Apr 12 06:19 PM | 1 Like Like |Link to Comment
  • Short-Term Gold Profits From Euromageddon - Soros Style [View article]
    I looked at financials in the third quarter 13 F and you're correct that Soros is holding a tremendous amount of nonmajor bank financials. As I only looked at the major banks, I missed these additions.

    Still, the reason I pointed out Soros' increased financial investments versus gold is that euromagedon will be very bad for financials but good for gold. However inflation and excess money supply growth generated by efforts to preserve the euro should be good for financials as well as gold so Soros's financial purchasing could mean he was pursuing a different investment strategy than safe haven. Given Soros is a Keynesian/demand side economist, it's unlikely he's doing this but what do I know?

    If Soros is buying gold in anticipation of euromageddon then he will sell the majority of his financials relatively quickly. If the fourth quarter 13 F report shows that he's sold his financials and kept his gold than the likelihood is that Soros is buying gold as a safe haven.

    There are a couple of hints but nothing definitive in the investment strategy shown in the third quarter 13 F.
    Soros appears more defensive on his financial investments versus his gold. He bought $1/2 billion in AIG and paired it with what appears to be a defensive put. For his gold miner stocks, he added an aggressive call.
    Finally, the gld and the gold mining stock together equal around 4.5% of the Soros portfolio, close enough to the 5% I was always taught was the amount you wanted to have in gold, etc. for hedging or safe haven.

    If euromagedon holds off till the fourth quarter 13 F report is issued, we can look at it and try to figure out what he's doing. If it arrives before then I'm sure Soros will tell us exactly what he thinks.

    I'll be making a change to point out the amount of the increase in financials. Thanks for pointing this out.
    Nov 29 11:45 AM | Likes Like |Link to Comment
  • Short-Term Gold Profits From Euromageddon - Soros Style [View article]
    Always follows Soros if you can figure out what he is doing today. I only looked for the majors in the latest 13f - and I may have missed some of them.

    I'll look at it the 13f more carefully and make a comment on the composition of financial stocks.
    Nov 29 10:47 AM | Likes Like |Link to Comment
  • Short-Term Gold Profits From Euromageddon - Soros Style [View article]
    The euro-mess is a structural problem, not a difference in ratio, debt, etc - technically Japan is worse than everybody but is doing better than the Eurozone. This is because the euro was designed without the relief mechanisms that are built into the government structures of the USA, Japan and GB.
    The euro-mess arises from the fact that the Eurozone is not a OCA - Optimal Currency Area like the USA, Japan and Britain. There are 5 factors that make up an OCA with the two most important being risk sharing and labor mobility - neither of which exist in the Eurozone at this time. For example, when the tsunami hit Japan and Sandy hit the NE there was an existing mechanism to share the risk through the Federal governments.
    More directly, in China and in the USA stimulus efforts were focused on areas that needed help rather than those that could pay
    for them. For example, in the USA the most extended unemployment benefits were available in areas that had higher unemployment.
    This article goes into OCA's in more detail: The Euro Deal: Expect Much Greater Economic Contraction Than Forecast http://bit.ly/Wv2P7v
    Note that the predictions in the article, written a year ago, are coming true.
    Nov 28 09:09 AM | Likes Like |Link to Comment
  • No Demand For Gold Except Safe Haven - 3rd Quarter Supply And Demand Analysis [View article]
    China is probably buying gold to depress the price of the RMB without directly buying dollars which will get them labeled a currency manipulator. Also, the Chinese gold demand trend in tonnes was flat for the last 12 months.

    Gold will eventually be much higher than it is today - but it going to have a lots of ups and downs before then. Any dollar crisis is a couple of years off so it's not going to be a factor. Japan crisis is closer but what exactly will it do to the price of gold - this will boost the dollar but only have a short term safe haven effect on gold prices.
    Nov 21 12:14 PM | Likes Like |Link to Comment
  • No Demand For Gold Except Safe Haven - 3rd Quarter Supply And Demand Analysis [View article]
    Hmm. So gold is not a bubble? There was not a peak in September 2011? We'll see.
    In my first article, published when gold was around $900, I gave a sell target of $1600. Fairly good call of the 2011 top for a prediction in 2009.
    In my last article, Second Quarter 2012 Gold Review: Short Term Profit Opportunity, Long Term Sell http://bit.ly/T4yr2U, gold was at $1670 and is now at $1725. This is still the current trend.
    This latest article is just alerting investors of the continuing demand trends and when to sell to maximize the short term opportunity from safe haven investing. I'm working on an article on the technical details of safe haven trading which will be out Friday or Monday, if the editor gods of SeekingAlpha decide to publish it.
    Nov 21 12:01 PM | Likes Like |Link to Comment
  • No Demand For Gold Except Safe Haven - 3rd Quarter Supply And Demand Analysis [View article]
    A questions to ask about where America is in the cycle: Which cycle?
    Cheaper energy than the rest of the world will do a lot to fix the problems that America has endured since the Oil Embargos of the 70's. Fracking is going to change a lot of economic dynamics.

    So where does gold fit in a cheap energy economy?
    Nov 19 10:16 AM | Likes Like |Link to Comment
  • No Demand For Gold Except Safe Haven - 3rd Quarter Supply And Demand Analysis [View article]
    The WGC report showed India was the strongest market in the 3rd qtr up 12% in investment and 7% in jewelry. The report concluded that the 4th Qtr in India would be stronger but not enough to overcome the weakness in the 1st half. Also some news reports that Indians are turning to silver instead of the traditional gold due to cost - as yellow gold is out of style in international fashion perhaps as fashion change also.

    I'd like to hear any comments from India also.
    Nov 19 09:41 AM | Likes Like |Link to Comment
  • The Election Stimulus And Recession - Analysis And Forecast [View article]
    I think you have to separate this into business and consumer confidence. Consumer confidence has been recovering and continues even with the Obama reelection despite very weak income growth. Business confidence has not increased significantly and remains at what are described as recession levels. If rising consumer confidence results in increased retail sales we should see business confidence increase.

    We'll see.
    Nov 16 01:37 AM | Likes Like |Link to Comment
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