Eurotrader

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    • Mon Jan 21st 14:11 PM | Rating: 0 0
      Commented on:
      Economic Policy: Don’t Fight The Next War With The Last War’s Tactics
      I agree with the author on many fronts, but believe that we have to go a big step further.

      Much of the consumer madness in this country and around the globe has been driving unsustainable trends in terms of business models that put a premium on producing goods cheaply by only attaching direct production costs, rather than including indirect costs, such as complete carbon emission cost and above all the negative value of all of those goods that are overproduced without finding a true market.

      This massive global overcapacity of production is unsustainable in terms of capital allocation as well as in terms of the finite resources our planet has to keep driving this madness.

      Topping it all off, the consumer is driven to excess consumption by the 20 year-plus availability of extremely cheap credit, resulting in the current crisis of intense proportions, where a large number of US consumers live well beyond their financial means. To me, 30 - 40% of the US consumers are financially defunct without realizing it. Moderating US consumer's insatiable appetite for conspicuous consumption would be the responsible thing to do, but this takes leadership and the current poilitical and economic stakeholders are in no way interested in doing this, as they want to keep the gig going....
      IN addition, this country is hooked on the economic growth theory, come hell or high water, hence the current ANGST over the potential for recession.

      Without being told just how tenuous his position is, US consumers will one day wake up and realize that they cannot extract themselves from the mess they unwittingly helped to create without a big change of attitude towards consumption versus savings. If this country experiences any kind of substantial job loss in the US, the credit edifice that has been built in the past 20 years will collapse with millions of bankruptcies. The current housing crisis in this sense is only the proverbial tip of the iceberg.

      The remedies that the Treasury and the Fed have at hand are very limited. I agree with the author that there should be immediate action to dramatically reduce the Fed Funds rate and create positive carry. This would at least keep the banks liquid in the short-term and preserve confidence in the system.

      However, over the longer term, this country needs to come to grips with its allocation of credit to consumers and consumers need to come to grips with their relationship towards conspicuous consumption. The current systemic problem cannot be solved by pouring more credit on a consumer already hobbled by his inability to service the credit he currently has on his books.

      The fact that the US is no longer productive enough to fund its own investments in research and development via internal capital markets due to the negative savings rate has to be driving most economists mad. The point will come when foreign stakeholders will no longer male available cheap enough credit for pure unfettered consumption without the guarantee that those funds will be repaid in full.

      Without a major change in money consciousness in this country by both consumers as well as the political class and the economic stakeholders, the economic model of buy now, pay later will be driven against the wall. Had this nasty consumer credit bubble been allowed to be deflated gently (via higher rates in 2002/03/04) rather than with the current bang (the housing crisis), we might have been able to prevent the massive acceleration in housing prices which proved to be too juicy for way too many people to stay away from and thus hooked many consumers (and, alas, banks) into the largest single credit excess in history. What strike me most negatively in this entire context is the fact that those Americans who are saving money, are the ones who are being sacrificed due to the sharply contracting interest rates, thereby being penalized for doing the right thing in terms of national economic theory. What a terrible example to set for the country!!!


      Back to the change in business modeling:
      If new business models were created that could measure and analyze true consumer demand quicker on the local level and produce goods more to that tune and in synch with total carbon cost attached, then we would see not only more local jobs emanate, as the lead-time to satisfy new demand could only be met by local production (when the total carbon footprint cost were calculated and included in the price of consumer goods), but we would as well see a more sustainable management of the finite global resources. But I guess, such a system would be termed as Un-American by politicians as well as economic stakeholders, inclined to maintain their grip on power and keep their fiefdoms....

      It will be interesting how this current crisis will play out - and if the political will can be summoned to fashion a more moderate approach towards consumerism that can survive in sync with the dwindling resources of this wonderful planet.

      P.S. : The book Affluenza describes the current crisis/ malaise best in terms of its total cost to the society we live in.
      View article »
    • Mon Oct 29th 22:51 PM | Rating: 0 0
      Commented on:
      Why I Sold ISRG
      Great article and great reasoning. I looked at this stock over the weekend and did the same thing - by buying Jan puts against an underlying long positiion. I think that the vertical phase of this stock is about done by a varierty of additional technical factors - at least in the near-term...
      Catalyst for a substantial technical retracement could be a rate cut disappointment on Wednesday (25 bp cut now with a hawkish FOMC statement stating inflation concerns) coupled with a poor employment number that might send most pre-FOMC longs out of the market.
      View article »
    • Mon Oct 29th 22:23 PM | Rating: 0 0
      Commented on:
      Cutting Rates Further Will Only Lead to Disaster
      Sorry for the typos - I typed too fast....
      View article »
    • Mon Oct 29th 22:17 PM | Rating: 0 0
      Commented on:
      Cutting Rates Further Will Only Lead to Disaster
      Exellent article... and I totally agree with the opinion as to what got the US into the financial problems in the first place. The only question that begs is what the political and financial establishment will do to keep the window dressing up as long as possible. I am certain that Ben Bernanke is under huge political and Wall Street pressure, just witness CNBC's constant mantra for another "shock and awe campaign of 50 bps..."

      The problems of the rate cut is not only summed up in the further buying-power degradation of the US-Dollar and further sharp price advances in commodities, but the fallacy that the very people who have done the macro-economically right thing, US savers, are getting the shaft so that the hypsters of real estate and the Wall Street credit bubble interests can rake in their short-term cash !!! The long-term consequences of the credit bubble and its debilitating effect on investment in the US (by devalueing national savings further) will be felt across the US for the next years.

      Access to more and more foreign capital is now the equivalent of the modern financier's crack cocaine. However, Wall Street - the main ticket sellers to the various financial get-rich quick schemes that get perpetrated on the general public and upon failure mopped up by the Federal Reserve or the US tax payer (largely unbeknownst to him or her) - is no longer interested in what is best for the US national interest, as the cry rings out - "Go Global"!!! The economic interests of the citizens of this proud country are going down the tubes along with their home prices and their ability to recoverr from their credit crush, putting seriously at risk their stake in the economic dream that once was creation of capital, rather than creation of debt driven by consumptive madness.
      View article »
    • Mon Oct 29th 22:17 PM | Rating: 0 0
      Commented on:
      Cutting Rates Further Will Only Lead to Disaster
      Exellent article... and I totally agree with the opinion as to what got the US into the financial problems in the first place. The only question that begs is what the political and financial establishment will do to keep the window dressing up as long as possible. I am certain that Ben Bernanke is under huge political and Wall Street pressure, just witness CNBC's constant mantra for another "shock and awe campaign of 50 bps..."

      The problems of the rate cut is not only summed up in the further buying-power degradation of the US-Dollar and further sharp price advances in commodities, but the fallacy that the very people who have done the macro-economically right thing, US savers, are getting the shaft so that the hypsters of real estate and the Wall Street credit bubble interests can rake in their short-term cash !!! The long-term consequences of the credit bubble and its debilitating effect on investment in the US (by devalueing national savings further) will be felt across the US for the next years.

      Access to more and more foreign capital is now the equivalent of the modern financier's crack cocaine. However, Wall Street - the main ticket sellers to the various financial get-rich quick schemes that get perpetrated on the general public and upon failure mopped up by the Federal Reserve or the US tax payer (largely unbeknownst to him or her) - is no longer interested in what is best for the US national interest, as the cry rings out - "Go Global"!!! The economic interests of the citizens of this proud country are going down the tubes along with their home prices and their ability to recoverr from their credit crush, putting seriously at risk their stake in the economic dream that once was creation of capital, rather than creation of debt driven by consumptive madness.
      View article »
    • Sun Oct 28th 18:12 PM | Rating: 0 0
      Commented on:
      Time to Load the Boat With LabCorp - Jeffries
      I guess the big investment houses need to get some support wrestled up ... Looking at the charts I can see a possible retracement towards moving average resistance in the $76-77 range, but have a hard time seeing that new high around $86.00.
      While near-term technicals are oversold, the best entry point for this stock should really be in the $64 -65 range for a 62 -77% re-tracement. At any rate, this would best be "played" with call options and a hair-line trigger, particularly if one sees massive institutional selling once the stock reaches the moving average brick wall that is about to roll over on this issue.....
      View article »
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