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  • Sovereign Yields: Woe, To Be in England [View article]
    My suspicion is that there will not be the political will to address the deficits in sufficiently timely fashion. Which in turn suggests that the end-game will be currency driven, or perhaps more accurately flight-from-currency driven. Sterling is undoubtedly one of the weaker men globally whereas the Dollar will, one presumes, be the last man standing. At a perhaps overly simplistic level, it strikes me that the prudent conclusion is to cut out the middleman and vote for gold and silver where practicable.
    Apr 10 04:44 AM | 1 Like Like |Link to Comment
  • Sovereign Yields: Woe, To Be in England [View article]
    Walter Wriston, in the process of proving that Citigroup is serially managed by idiots, once said that governments don't default. Most of Latin America then did. From a technical perspective, the market is suggesting that western governments no longer represent the "risk free rate", and that a degree of credit and default risk is now part of the equation. Reinhart and Rogoff strongly suggest that both the US and UK administrations are, debt-wise, past the point of no return. Either way, the future course of bond markets will now be determined as much by the actions of politicians as it will be by investors.
    Apr 9 11:38 AM | Likes Like |Link to Comment
  • Led by Donkeys [View article]
    I would heartily commend Jens Parsson's 'Dying of Money: lessons of the great German and American inflations'. This is admittedly difficult, and expensive, to acquire now, but well worth the effort. In addition to a stunningly simple account of how most governments fall prey to inflating the monetary base, Parsson also tackles the political failings that accrue to any democracy faced with a severe inflation. Written in 1973, its message is still acutely relevant today - perhaps ominously so. Parsson suggests that any population gets the democracy it deserves. I hope he's wrong on that score, but fear that he is sadly correct.
    Apr 7 05:51 AM | Likes Like |Link to Comment
  • Led by Donkeys [View article]
    I would own up to being in the City, but not necessarily of it. Financial services is a broad church. I'm not a banker, but a partner in a private client wealth management business, and one that behaves as ethically as it can and surely should. I work for a small enterprise that hasn't received a penny in taxpayer support but has been hit like many by the recession. I also stand by my record (in investment returns and by way of public market commentary over the last decade). I'm as disgusted as others by the banking culture and by the success of the banking lobby in the face of monumental crisis largely but not wholly of its own causing. I honestly don't believe I've been patronising here, but I believe politicians have been, and continue to be. Suffice to say there is much we are going to disagree about.
    Mar 30 08:59 AM | 1 Like Like |Link to Comment
  • Gold Transforming into a Completely Demonetized Wealth Asset [View article]
    You misinterpret the meaning of the word 'fiat'. Fiat currency is given its apparent legitimacy by government proclamation. Fiat or paper currency is intrinsically worth no more than the politicians' promises that underpin it. Gold has legitimacy as a currency not least because it has been a store of value for thousands of years, but also because it is the ultimate means of exchange. Alan Greenspan has himself admitted that in extremis, people may shun fiat currency but they will always take gold. The value of gold expressed in fiat currencies will fluctuate. Personally, I'm with Shayne McGuire of the Teacher Retirement System of Texas who recently commented, "I don't think the question really is what is gold worth but what are currencies not worth". We are starting to see the answer to that question, and everybody should care. I'm not trying to sell anything, merely to defend gold from those who put undue faith in politicians.


    On Nov 07 11:22 AM jacflash wrote:

    > Gold's return versus a properly-managed global stock portfolio is
    > paltry. It will continue to be paltry indefinitely, as gold is ultimately
    > just another fiat currency. (What is the actual intrinsic value of
    > a lump of soft metal? Not much. What's it worth? Whatever a bunch
    > of folks like this guy say it is. Who cares?)
    >
    > Anyone who says otherwise is selling something, including, it would
    > seem, FOFOA.
    Nov 7 01:46 PM | 5 Likes Like |Link to Comment
  • Dow 10,000: Show Me the (Real) Money [View article]
    Gold is demonstrably higher today than it was in 1980. But my argument is not that it made sense to buy gold 29 years ago; it is that it makes sense to own some gold now. Equities equally made terrific sense in the early 1980s; but they then enjoyed one of the biggest equity bull markets in history. You are looking at the future by way of the rear view mirror. In any event I'm not recommending gold as the entirety of a portfolio, but rather as a holding to hedge against currency devaluation and default risk. And I'm not anti-stocks; but I am anti-western fiat currencies, for reasons that seem eminently straightforward and transparent to me.


    On Oct 19 07:27 AM CLH wrote:

    > Somehow Tim you see things different then I do. If you bought gold
    > in 1980, you have just broke even. Great investment? No way!!! However,
    > the Dow in 1980 was 1000 and its now 10000. I'll take the Dow anyday.
    Oct 19 09:02 AM | 1 Like Like |Link to Comment
  • Dow 10,000: Show Me the (Real) Money [View article]
    I'm not saying the sky is falling, merely that given the fundamentals, the US dollar and Sterling will be. In time, hugely manipulated western market government bond prices will be falling, too. But how long it takes us to get there is the trillion dollar (and pound) question. In the meantime, there are, I believe, simply better risk / rewards out there.


    On Oct 18 09:19 AM JMBishop wrote:

    > Goodness gracious Tim: The sky is falling! The sky is falling!
    > I'm not a V shape recovery enthusiast, but neither am I a Chicken
    > Little. We are headed back exactly to were we should have drawn
    > the line a year ago. That is as follows.
    > 1) Allow the too big to fail to fail.
    > 2) Allow commodity speculators to create virtual supply and demand.
    >
    > 3) Allow the "free" market to fail along with the too big to fail
    > and the commodity speculators.
    > Then the following will happen.
    > 1) The real free market will kick in.
    > 2) China's export economy will shrink.
    > 3) Consumer goods manufacturers will make goods for their own people
    > in their own countries with their own labor.
    > 4) The labor force at all levels in all countries will be back to
    > work.
    > 5) Technologies will become the United States' main export and not
    > jobs.
    > 6) More jobs will then be created for both US citizens and for the
    > countries that purchase our technologies.
    > 7) Real free markets will create a world trade in technologies and
    > wealth distribution.
    > 8) This new economy will be fair, prosperous, and sustainable.<br/>9)
    > Finally, people like Ambrose Evans-Pritchard will be living in caves.
    Oct 18 12:42 PM | 2 Likes Like |Link to Comment
  • Markets Aren't as Benign as They Look [View article]
    Not sure what "we guys" like to use as valuations - for the purpose of this piece I'm using purely stock / index level prices, let alone derivative metrics. I'm certainly not talking about homebuilder prices, as the piece itself should make clear. I agree that people will continue eating - that seems a reasonable bet. But with the unemployment rate rising fast in the Anglo-Saxon economies, and with many individuals rebuilding their own balance sheets and savings, I doubt whether personal consumption expenditure is exactly going to knock the ball out of the park any time soon.


    On Aug 21 03:33 PM Deepv wrote:

    > " the rally is taking valuations back toward those that pertained
    > when the world was rolling orgiastically in credit"
    >
    > the rally has yet to take the S&amp;P above the "panic" selling days
    > of early October dude. One issue is the only valuations you guys
    > like to use are P/E which is stupid because it uses only a "spot"
    > in time earnings and not NORMALIZED earnings. If one looks all these
    > crazy P/Es are underpinned by stocks still trading near, at, or under
    > book value. If you look at SHLD for example, people scream bloody
    > murder about its P/E ratio but fail to see it trades well under adjusted
    > tangible book. Another way to look at this: Homebuilders share
    > prices PEAKED on say 5x "E". That E was a cyclical peak. One had
    > to understand that down the line that "E" would not be recurring.
    > When the world prints money, asset prices will rise. In the meantime
    > people will be eating and buying stuff; not only in the US but overseas
    > where standard of living is rising. I really think everyone has
    > lost the plot.
    Aug 21 04:07 PM | 21 Likes Like |Link to Comment
  • When Will the Music Stop for Government Bonds? [View article]
    What's so wrong about intellectual respect for someone worthy of it ? Better, surely, than respect - of any kind - for the banksters and politicians who collectively landed us in this unholy mess. And the exquisite irony is that Mises seems to have suffered the fate of the prophet wholly unloved in his own land. As I tried to make clear, there's the world as it would be under the Austrian School - and the world we actually inhabit. But we can at least dream..


    On Jul 30 10:36 AM Ferdinand E. Banks wrote:

    > There it is again - adoration of von Mises. Hmm. I begain teaching
    > economics in the l960s. I held professorships in a dozen universities,
    > probably went to hundreds of seminars presided over by persons from
    > every country and corner of the political spectrum, some of them
    > brilliant and some hopeless, and read I dont know how many hundred
    > articles dealing with macro in 'learned' journals. And so on and
    > so forth. I don't remember a single mention of von Mises - although
    > I'm sure that there must have been one from the windbags holding
    > forth at some of these meetings, and also don't remember any of my
    > students wasting my time with talk about 'Austrians'.
    >
    > Now I hear about him all the time. Of course they might have been
    > talking about him at the Club Rendezvous in Vienna's Graben when
    > I was in the American army and occasionally visited the place, although
    > for the most part I wasn't in condition to know..
    Jul 30 11:09 AM | 5 Likes Like |Link to Comment
  • When Will the Music Stop for Government Bonds? [View article]
    A nice idea, but the maths doesn't look like it will work. According to Eric Sprott's data, private ownership of Treasuries is entirely dwarfed by intragovernmental holdings (42% of the market) and foreign holders (28%). Mutual funds come in at just 6% and private pension funds at 3%. I doubt if there is any way on earth that private individuals could possibly replace international institutions. I agree that private savings will and should rise, but there will likely be much better places to park those savings than in return free risk assets such as US Treasury bonds.


    On Jul 30 04:14 AM Nick36 wrote:

    > Perhaps people in USA will increase their saving rate a lot due to
    > lack of economic growth. And they will keep buying US government
    > bonds for the foreseeable future. Which might mean that the collapse
    > of US bond prices might be a very long way away.
    >
    > Japan is a good example of that. The Japanese government keeps issuing
    > even more government bonds relative to their GDP than USA has been
    > issuing until now. And their bond prices aren't collapsing because
    > Japanese citizens are saving their earnings like crazy and buying
    > Japanese government bonds.
    >
    > When a country relies on foreigners to fund its deficits. Then such
    > funding is insecure. But if the country's own citizens begin to
    > save more and buy more of their government bonds. Then such funding
    > is secure for as long as the people keep saving. This won't last
    > forever. But domestic savers will probably keep buying US government
    > bonds longer than foreign investors would.
    Jul 30 04:38 AM | 5 Likes Like |Link to Comment
  • Jon Stewart Takes on Goldman Sachs [Video] [View article]
    They would have survived without the bailout ? I beg to differ: between July and November last year, Goldman's share price fell by over 70%. And then a brokerage company mystifyingly is allowed to convert to a bank holding company and thus qualify for all sorts of state support. And short selling is temporarily imposed. Sometimes, there are none so blind as those who cannot see.


    On Jul 19 05:56 PM spqrusa wrote:

    > Why bash GS for its excellent management of employee and shareholder
    > value? Their doing exactly what any good company would do in these
    > times - watch out for their interest.
    >
    > Is it their fault that Bush, Obama, most Democrats, and a handful
    > of Republicans bailed them out? They would have survived the storm
    > without the bailout - hell, it would have further weakened competitors
    > if there was no bailout.
    >
    > The Court Jesters always have a twist that makes themselves look
    > humble and self-righteous while they lambast the evil doers.
    Jul 20 03:39 AM | 5 Likes Like |Link to Comment
  • Jon Stewart Takes on Goldman Sachs [Video] [View article]
    As a Brit I don't claim specialist knowledge of the US contribution scene. I just hate what I see. And what I see looks a lot like special interest groups buying off politicians. And I'm not letting Washington off the hook (not that I have a vote in the US) - but the explicit-seeming link between Goldman as big contributors and Goldman as bigger recipients (of other people's money) looks and smells extremely rank to me. As Matt Taibbi has written elsewhere, what's most galling about the GS results is that they're being widely attributed to trading acumen as opposed to, say, vast political largesse.


    On Jul 18 02:36 PM A. Corinne wrote:

    > Are politicians forced to take political contributions? YOU'RE point
    > is crap. Don't let Washington off the hook for the part they're
    > playing in this Goldman scheme.
    Jul 20 03:25 AM | 4 Likes Like |Link to Comment
  • Jon Stewart Takes on Goldman Sachs [Video] [View article]
    I think Goldman Sachs' staff were the single biggest contributors to the Obama campaign so I think your point is essentially crap.


    On Jul 18 03:37 AM Wisdom vs. Information wrote:

    > GS is not writing the laws and hiring the bureaucrats that are taking
    > away your money and rights-- that would be the politicians (that
    > jon stewart supported, BTW). stewart is funny, but he is a symptom
    > of the problem
    Jul 18 12:16 PM | 14 Likes Like |Link to Comment
  • The Geeks Shall Not Inherit the Earth [View article]
    What I get from 'The Origin of Wealth' is the unwise adoption of accepted principles of physics into the nascent "science" of economics. So with hindsight it's not going too far, I think, to suggest that there is a causal relationship between Walras and LTCM - what was the latter if not an object lesson in putting too much faith in (flawed) financial modelling ? And LTCM also works as a case study in "too big to fail" - so having got hugely overleveraged and threatening the stability of the financial system, it was bailed out, or at least allowed to wind down in orderly fashion. Sound familiar ? The largest banks are actually still going, but they don't necessarily deserve to be.


    On Jun 22 11:23 AM Ferdinand E. Banks wrote:

    > Well Tim, I'm a great teacher of math economics and finance, but
    > I'll be hanged if I see the relation between Walras and LTCM. Incidentally,
    > I've heard people say that Myron Scholes probably should have been
    > a lawyer instead of an economist, while his fellow Nobelite Robert
    > Merton could have been a Notel laureate in physics if he had gone
    > that way.
    >
    > What about the fall of LTCM sewing the seeds of the present troubles.
    > I don't think that I can buy this, but since Greenspan's bailout
    > of those NY banks worked fine, maybe someone thought that bailouts
    > were something to always keep in mind if the wolf appeared at the
    > door.
    >
    > By the way, before I forget, this is an interesting article.
    Jun 22 11:33 AM | 3 Likes Like |Link to Comment
  • For Market Volatility, Blame (or Credit) the Media and the Internet [View article]
    I respectfully disagree. There is a fascinating interview on Bloomberg between Tom Keene (if memory serves) and David Goldman of Asteri Capital. Mr Goldman suggests that hedge funds that report on a monthly basis (and that offer their investors regular liquidity) are facing a potential catastrophe of serial liquidation. There are too many crowded trades out there and many hedge funds are sufficiently flimsy in orientation and structure that they can get taken out on a malign tide of redemptions. The "little guy" doesn't have to report to external investors and can more easily weather extreme volatility in price variation. Right now, I think the "little guy" is very well positioned in these markets - provided he or she has the emotional discipline not to panic at noisy price action that moves against them.
    Sep 12 04:39 PM | 1 Like Like |Link to Comment
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