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Ricard
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10/15/09 I am an individual investor 'seeking alpha' with over 10 years of experience. I've made several mistakes and also have plenty of extraordinary successes, many of which I attribute to a near-religious application of prior lessons learned, and a fundamental outlook on this business called... More
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  • The Election And The Economy - Prescient Views From Beth Myers

    "I didn't have a full appreciation of how frugal we were going to have to be and how profligate their spending was."

    Beth Myers, senior Romney aide

    This above quote from the WSJ analysis on election day results caught my attention. In the context of the article, it was in regards to the widely reported belief that a strategic decision by the Obama campaign to ramp up spending during a hush time for Romney's campaign served to win the election for Obama by more forcefully defining Romney when he was defenseless.

    There's no question that the Democrats are spend and tax, and the Republicans are about austerity and frugality at the public level; taken in this context, I think the election campaign, and in particular the above quote, can also serve as a microcosm of how effective policy decisions may be for the country in the long run. If applied in this metaphorical manner, I think Beth Myer's quote may be prescient as to how the US economy will fare in the coming years and decades. If the Krugmam-ish spending mentality does take hold, it may become a gross understatement to define it as "profligate". If the Tea Party-ish austerity measures take hold, it may cut so much as to leave the country defenseless, especially after the crippling in-fighting that would have to take place between entitlement beneficiaries and the Republicans axing their programs. Given how this microcosm of the general election played out, it becomes easy to conclude that Keynesian deficit spending will have to take its course in order for this country to remain strong and show as few signs of weakness as possible. To do otherwise may put us in an indefensible position, much like where the Romney campaign found itself before August - such a position may result in ultimate defeat in the long run.

    Although it is this author's position that no small amount of austerity is necessary in this country, my position remains that strategic, short-term deficit spending is a necessary evil.

    Nov 07 11:13 AM | Link | Comment!
  • Brace Yourself... Bearish on 2012

    (<<Editor:  Thanks for the feedback!  I like how you guys have incorporated feedback into the submissions process - it makes further editing much easier.

    I've decided to just submit the bearish case, since that was my original position and far easier for me to write.  I wrote the bullish case out of guilt for how strong the bearish position was, lol.  I'll post the other article to my instablog if that allows for this article to get published.  Thanks!!>>)
     


    2012 finds us at a bit of a crossroads.  All the doom and gloomers are still out there, but so is America, doing just fine thank you.  We've had some pretty harrowing politics last year, mainly financial...bin Laden is dead, and the war in Iraq is officially over.  Yet, there is no question that we have also kicked the can down the road, and now we are up against an election year.
     

    Brace yourself...


    Occupy has occupied our hearts and minds for a mere four months, and yet (I find it most appropriate to quote Wikipedia on this) "By October 9, Occupy protests had taken place or were ongoing in over 95 cities across 82 countries, and over 600 communities in the United States.  As of December 20 the Meetup page "Occupy Together" listed 2,751 Occupy communities worldwide." 


    I live close to Oakland, and her mayor finds herself on the brink of a recall because of her reaction to Occupy.  This is only the beginning of veryvery,veryvery many violent outbursts, I'm afraid. These guys just aren't going anywhere...


    The supercommittee was a super failure.   First, there was the spectacle of Geithner telling the nation that you could be late on your debts, that's ok, but if you're TOO late YOUR ENTIRE COUNTRY is going to default.  Thank goodness we waited until the final hour to resolve it!   Then we were told, six months later, that oops!  We're going to need a couple more trillion... and there's still this thing about the last $1.2 trillion in cuts that we couldn't quite get done.  Super job!


    Now just remember folks, these things take time to solve.  We want you, the voter, to understand this, because with our unlimited campaign contributions, we want you to elect us again to represent YOUR interests.  Like Health Care.  Or Social Security.  Or Defense Spending.  Oh and, by the way, that $1.2 trillion in cuts?  Yup, guess where it's coming from...you're not mad are you?  You're not going to take to the streets like those "pack of louts" on Wall Street?   Wait...what?  You're not employed??  


    Brace yourself..


    MF Global?  No big deal, we've seen much, much bigger debacles from Wall Street.   

    BofA?  Hey, no problem, they're doing aerial acrobatics over there...Got your chute?


    Operation Twist?  Do the boogie!  


    We're obviously solving our problems here like grown men, we're not delaying the inevitable or hiding in a hole until 2013.  Apparently it's quite a cozy hole (maybe it's Jackson Hole!) because he's got some company.


    Brace yourself.


    Seems what we have here is a bit of a conundrum.  What really matters in America is doing just fine, whereas for the rest of us...?  Kinda upset.  And don't even get me started on Europe.

     



    Disclosure: I am long GLD.
    Jan 05 11:12 AM | Link | Comment!
  • Smooth Sailing Ahead? Bullish on 2012

    Smooth Sailing Ahead?

    (Note:  this is a companion piece to “Brace Yourself”)

    2012 finds us at a bit of a crossroads.  All the doom and gloomers are still out there, but so is America, doing just fine thank you.  We've had some pretty harrowing politics last year, mainly financial...bin Laden is dead and the war in Iraq is officially over.  While 2012 may be one of the most important and divisive elections America has had in at least a generation, we may take some comfort in knowing that while what we have is at times dysfunctional, "democracy is [still] the worst form of government except all those other forms that have been tried…”  For investors, does this really mean that we can expect the tide to favor taking a dip?

    Before even contemplating that question, many will be confronted with a gigantic obstacle.  Indeed, many, many, many, many pundits and publications have cited the Great Wall of Worry to be the most imposing barrier against a global recovery.  But who really is on the other side?  Do they have a conscience?  Are they really our Savior and SalvationCan we possibly know what is going on over there?

    I think a lot of the commentary is overblown.  The Chinese may be scrappy, but they’re still small, and in general weak.  They may be growing faster than us, but this growth alone will not save anyone except the 600 million Chinese still mired in rural poverty, especially when their growth stems from such a small base.   In this sense, the converse is also true…if China experiences a hard landing, either 1) it simply won’t be that big a deal for us, or 2) the world would have already experienced something far worse.  So, rah rah rah, cheer China on…!  

     

    I don’t profess to knowing much about Europe… I attribute the poor performance of my portfolio last year to not fully fleshing out the nuances that stemmed from the Euro crisis, especially the (hopefully) short term consequences of a liquidity event originating from Europe.  Nonetheless, I’ve made some general observations going forward:

    1. Europe’s crisis is actually not that bad…it’s just that the structure of their governance has exacerbated the situation.  This ineptitude by government authorities mirrors what is widely cited as leading contributors to our own Great Depression.  The Great Depression saw an upswing after 4 years…we’re in year 3 right now of this Euro mess.
    2. The vast majority of “foreign debt” owed by many European countries would no longer be classified as “foreign” if they underwent political union.  Without “foreign debt”, Europe would not be experiencing a crisis right now.
    3. Bond rates are finicky.  If the Europeans can solve their problems, rates will decline, and fast.
    4. Europe’s overall fiscal problems are very similar to our own, taken in aggregate.  However, that’s the problem…refer to points #1 and #2.  “Europe” as a political entity has proven to be about as effective as the League of Nations, and has thus far produced similar results.

     

    Do I have any idea what will happen in Europe?  Sure I do, but I turn to more experienced hands for this matter. 

     

    And now, the crème de la crème, America.  I am not going to discount America’s political problems this year, which I think are considerable.  I think the solution is to cut entitlement spending and raise taxes on the wealthy, meaning that I would not have a chance in heck running for office here.  If we can somehow accomplish this without Occupy turning into an “American” Spring, then I think we’ve got a decent shot at a full recovery from the 2008 crisis.  It will take time, but it can start here, and now.

    So, smooth sailing ahead?  Only if we stop pretending we’re on the invincible “Titanic”.  And I sincerely hope we’re pretending.

     

    Disclosure: The author is long GLD and select multinational commodity producers.



    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Additional disclosure: See article for full disclosure statement, thank you.
    Jan 04 4:33 PM | Link | Comment!
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