Rob Viglione

Ben Bernanke: Ultimately Destructive?

Mr. Brown, another great article. Please keep spreading the word. I'm doing my best to spread your writing via Twitter & Facebook.

My question is how historians will ultimately paint the picture of America's decline & fall? Will it be attributed to pollution, barbaric incursions, destructive emperors, etc.? Or will history remember the words of the few, like yourself, who have been predicting this for decades?

Has Capitalism Failed?

Rather than an "adversarial relationship" between government and business, how about NO relationship?

Just as business should not have power to use government to its advantage, so too should government be shackled in using its power to disturb free commerce.

Arguments for who should have the right to use what powers against whom always come down to unjust favoritism. Rather, we should be questioning whether or not these sorts of powers should even exist.

On Sep 06 08:07 AM EEB wrote:

> This article seems to state that the big, bad government has become
> increasingly powerful over the last forty years, and, despite the
> efforts of valiant capitalists, that's why the economy is so bad.
> What hogwash. Rockefeller and J.P. Morgan were two of the most successful
> capitalists ever, and they basically controlled the federal government.
> A look inside the federal government right now, and especially during
> the last thirty years reveals a very cozy relationship between corporations
> and government. These relationships exist across all industries
> from defense to agriculture.
>
> If you want real liberty, then you need to have a more adversarial
> relationship between the government and corporations. In fact, the
> more adversarial relationships that exist between government, business,
> the media, established religion, etc. the better off the average
> person is. When all the power is in the hands one part of our society:
> government or the corporations or the churches, the group in power
> becomes tyrannical.
>
> But the idea that a care-taker government could exist that only guards
> a few minimal individual liberties is a fantasy because such a weak
> government would be overwhelmed and corrupted by powerful business
> interests. This was already occurring during the last Bush administration
> because the regulation of important business activities, such as
> finance, was a joke.
>
> In other words, the libertarian rant that all evil comes from government
> is wrong, and it is usually either naive or disingenuous. There
> are many sources of evil in our world, and bad government is certainly
> one of them. But corporations, religion, evil individuals and many
> other factors can be sources of evil as well.

Who's Selling Wholesale Volume, and Why?

Option sellers should be loading up VIX to hedge volatility expansion. I'm not buying "Green Shoots" or any of the other non-sense ideas that spending will once again make us prosperous.

I am selling options and covering with long VIX.

Norway Swapping Government Debt for Mortgages

The concept of multilateral currency debasement executed in tandem leading to "stability" is insane. Rather, I should state it as being "unethical," since it equates to central banks robbing its citizens savings to prop up a decaying system that will go one way or the other.

This is collectivism at its best, but because we talk of monetary phenomenon that are so removed from individual affairs we forget the real implications of these actions. Debasing currency is akin to stealing savings and siphoning real output towards government use (or private banker use, in the current case).

Is the Free Market System Broken?

Todays' economic ills are not the result of free markets. So much of our economy has been distorted and politicized for decades that to call FNM, FRE, the Fed, Congressional edits, and thus far ~ $11T in deficit spending (fiscal stimulus?) attributable to free markets is nuts.

If anything, the debilitated state in which we now find our economy is evidence that government intervention and political economics do, indeed, have long term consequences.

It is a shame that the public's memory is so limited, and the economy so complex, that it is not easy to attribute direct consequence to each public policy. Too many politicians and bureaucrats get away without blame for decades of bad legislation and social engineering gone bad.

Bond Expert: Friday Wrap

Agreed that the Fed and feds will put pressure on the bond market to suppress yields. Federal budget is far too sensitive to rates, and the Treasury still have a few trillion more in securities to dump onto the market over the next couple years. Letting rates move too high now could be devastating for the Man Behind the Curtain.


On May 09 04:18 PM Timonomics wrote:

> I agree with Bill Gross of PIMCO, the Fed won't allow the long bond
> yield to get beyond the current 30-year mortgage rate of about 4.8%.
> That means the Fed will increase their treasury buy-back Ponzi scheme
> to well beyond the existing $300 billion either after or before the
> current deadline of August 31, 2009. If that is true, mortgage rates
> won't jump that much, but with a slow economic recovery, investors
> may jump at the fixed rate of close to 5% on long-term treasury bonds
> as opposed to the slippery, uncertain returns on equities.

Rising Yields Fight the Fed

I'm long TBT & futures equivalent, but am treading water by writing credit spreads on TLT to earn income to offset time decay for main short bets. Timing this crash is tough, so my recommendation is to exploit a near-term range-bound situation.

When Countries Go to Zero

Every portfolio should be picking up insurance of some kind to guard against black swan events. It's amazing how quickly fear is subsiding in this stock rally!

Now is the time to buy insurance and guard against that low-probabilty, but devastating event.

Sell Bonds and Buy Gold

I've been in the short 30-Year treasury trade since January, where I caught a good initial drop followed by nothing. I'm still waiting, but in the meantime have been buying iron condors on TLT. The income from these credit spreads is nice while awaiting the big bond devaluation.

I'm also long gold, and executing a similar market-neutral holding pattern, buying iron condors on GLD. Good income while the market trades sideways.

Commercial Property Goes South

Commercial real estate has a good deal of devaluation ahead, whether or not current owners acknowledge it. Just because they refuse to sell at market prices does not mean their properties have not declined in value.

Deals will be had with patience. Power is definitely back in the buyers' court here.

Something investors might want to consider is delving back into the single-family residential range. Yields are becoming more attractive and risk can be diversified through multiple acquisitions in diverse markets.

Ideal U.S. Interest Rate Is Minus 5%?

So true! Only government could try the same thing over and over, observe failure, and conclude we should try the same thing again.


On Apr 28 10:48 AM kelm wrote:

> I think this is an indication that our Fed and Treasury have, over
> the past few decades, so distorted the markets by their practices
> (commission and omission) that we come to absurd conclusions like
> a -5% interest rate is needed. Engineers and scientists understand
> that when they get stupid results like that it indicates that the
> model is fundamentally wrong and needs to be fixed. When economists
> get numbers like that they publish a paper.

Ideal U.S. Interest Rate Is Minus 5%?

My advice is to start positioning yourselves for those highly valued "public official" slots...they will be the new aristocracy in our looming serfdom.


On Apr 28 06:27 AM User 353732 wrote:

> A -5% interest rate is, of course, the effective confiscation of
> savings at whim by the State. Why not a 100% income tax rate as well
> , so the citizen can then truly "belong" to the State, in a more
> perfect union? Might be a good idea to also take away our first born
> so the State may raise them and use them for its greater glory ,
> while ensuring our complete loyalty to the Cause( we need not be
> told what the Cause is; all we need to know there is one.......and
> it is much, much ,bigger than we are)
>
> With no savings and no income to distract and divide us, we can all
> then labor with clean hearts and selfless joy for the State, who
> in its great benevolence will take care us with wisdom and compassion
> . To spare us needless anxietyand effort, it will tell us what to
> think, say,and do.
> Let no one falsely accuse our beloved leaders of trying to revive
> the New Deal. Their vison is grander, more heroic. They want to restore
> the Old Feudalism.
> In an inspired moment, it has been revealed to them that all the
> errors, ills and calamaities of our age come directly from the Bill
> of Rights, the Constitution, The Declaration of Independence, the
> Mayflower Compact and ,of course, that original error, the Magna
> Carta Liberatum.
> Rejoice, King John will soon return.

Mid-April Short Interest

Short volume reduction is likey result of many players squeezed out of the trade.

I feel more comfortable shorting when few are doing so.

Wall Street Breakfast: Must-Know News

The one thing I do know is that we should not have seen hundreds of billions in global equity capital destroyed b/c of a bunch of swine.

Two Phases of Recovery for the Economy

Finding the new capacity equilibrium will be interesting, as a return to pre-bust levels certainly will not occur and would not be advantageous to long-run economic health.