Kunst

The Worst Case Scenario (Someone Has to Say It)

So when in all this do we stop spending a trillion dollars a year on our military empire? When do we pull our troops out of the more than 100 countries where they currently reside? If this scenario comes true, America's days as a superpower are over.

Obama's Role in the Market's Next Breakout

"Obama's main chance to make a difference comes when he recieves the resulting document, all 1,257 pages of it. He could look at it for about 5 minutes and say something along the lines of "not what I had in mind."

Now THAT would be leadership!

Expect Oil to Approach $100/bbl Again By Summer

Somehow, that picture of you does not inspire confidence.

Time for the U.S. Economy to Reindustrialize

You don't create manufacturing out of nothing. As long as American workers are overpriced and undereducated, it isn't going to happen.

Nine Ways to Profit in 2009

Watch out for those ultrashorts (SRS, FXP, SCC, etc). They lose value fast if you hold them for any length of time. FXP (2x short China) lost 50% in 2008 while FXI (1x long China) also lost 50%. SRS (2x short real estate) was down 45% despite an awful year in that sector. Also, some of the ultrashorts (SCC, REW) have very low volume, which can cause extreme price movements.

I used the ProShares ultrashorts (and to a lesser degree ultras) for much of 2008 until I realized how much they lose just be the passage of time. Beware!

Best Stocks for 2009

Perhaps you should take your own advice.


On Dec 24 03:03 PM nyka wrote:

> Much ado about nothing. Far too many wasted words; bloated with
> excessive puff. Blessed is he who has nothing to say and cannot
> be persuaded to say it.

10 Technologies that Will Rock 2010

The more advanced and complex our technology-based society becomes, the greater the risk if the infrastructure fails. Things we didn't used to have -- electricity, cars, computers, the internet -- are now life necessities. If any of them collapse, life will become very difficult in the technologically advanced parts of the world. But that could never happen, right?

More on White House's Strong-Arming of Chrysler Hedge Fund Hold Outs

When people resort to name-calling, I figure it means they don't have any rational argument to make.


On May 02 10:22 PM bricki wrote:

> Fascist has been used as a pejorative term applied to so many people
> and organizations over the years that it has no longer has any real
> meaning or definition. Pick some other word.
>
> From Wikipedia:
>
> The word ‘Fascism’ is almost entirely meaningless. In conversation,
> of course, it is used even more wildly than in print. I have heard
> it applied to farmers, shopkeepers, Social Credit, corporal punishment,
> fox-hunting, bull-fighting, the 1922 Committee, the 1941 Committee,
> Kipling, Gandhi, Chiang Kai-Shek, homosexuality, Priestley's broadcasts,
> Youth Hostels, astrology, women, dogs and I do not know what else...
> almost any English person would accept ‘bully’ as a synonym for ‘Fascist’.
> – George Orwell, What is Fascism?. 1944.
>
> Richard Griffiths argued in 2005 that the term fascism is the "most
> misused, and over-used word of our times".
>
> On May 02 02:57 PM yellowhoard wrote:

Things We Don't Talk About (But Should): National Debt and $2 Trillion Deficits

On Jan 08 10:45 AM Jubilee Year wrote:

> The solution to all of our problems is quite simple, but quite "outside
> the box": we need to cancel our debt. All of it. With no debt load,
> price levels could harmlessly deflate, and our productive economy
> would get a stimulus like no other.

I think this is more or less what will happen.

DOES ANYONE REALLY BELIEVE WE ARE GOING TO PAY BACK ALL THIS DEBT, EVER?

Since our debts are in our own currency, we could just write every creditor a check and say see-ya-later. The dollar would drop like a rock, and don't plan to borrow in dollars ever again, but as a one-time escape, it could happen. It probably won't be that extreme, but increasing the money supply (e.g., the Fed "buys" treasuries with dollars it creates out of thin air) will lead to inflation and a drop in the value of the dollar. Theoretically, creditors can force up interest rates by withholding their dollars until that happens. But with the USG able to create money instead of debt, they don't have control. Japan recently suggested the US issue yen-denominated bonds. What a non-starter that was in Washington.

There are some up-sides to all this. Inflation will largely "solve" the financial and foreclosure problems by reinflating asset values. Homeowners will have equity and lower mortgage payments compared to higher cheap-dollar incomes. Mortgage-backed securities have some backing again. A cheaper dollar will make the US more competitive and reduce the trade deficit. On the other hand, prices will rise faster than incomes (especially imports -- we WILL use a LOT LESS oil) and Americans as a whole will be poorer. Those on fixed incomes will be hurt the worst.

Time To Short Treasuries?

It doesn't seem likely that the Fed will raise short-term rates any time soon. In fact, their statement with the latest cut to 0-0.25% specifically said they intend to keep rates down for a considerable time. Being in TBT, I'm more concerned about whether (and how much) they might buy long treasuries to keep those rates down. However, I don't think rates can stay this low indefinitely.

On Jan 04 11:09 AM John Lounsbury wrote:

> One final thought. What to short in the bond universe is not a trivial
> detail. If the Fed raises interest rates to a point that the entire
> yield curve inverts, shorting short-term bonds can give a better
> return than shorting 20 and 30 year bonds.

Cramer on Ultra-Short ETFs: Just Plain Wrong

These ultra& ultrashort ETFs are extremely dangerous if you hold them for any length of time. Run some charts and you will see.

Examples, YTD:
China: FXI and FXP are both down 50%.
Oil industry: DUG is down 25% and DIG is down 75%.
Financials: UYG is down 85%, SKF is up 25%.
Real estate: URE is down 80%, SRS is down 45%.

DOG (ProShares 1x short Dow 30) is up 20%, DXD (same except 2x) is only up 15%. The single-leverage did better than the double!

If you hold on to these ETFs for more than a few days, you are on a losing track. Beware!

The Shallowest Generation

These problems started before the Boomer generation. When was the last truly balanced federal budget? Under Eisenhower, maybe? Johnson faked one by pushing expenditures into neighboring years. Clinton's "balanced budgets" ignore that we spend the Social Security surplus, leaving nothing to pay the boomers and beyond when retirement comes.

Politicians have long known that they get reelected by spending more than they tax, and borrowing the difference. This has been going on since before most of the boomers were born. When Reagan became president in 1981 (he wasn't a boomer, was he?), the national debt was $1 trillion. When Bush I (still no boomer) left office 12 years later, it was $4 trillion. It increased by $1T under Clinton, who at least made a decent attempt at the problem. Remember all those Republicans telling us how the economy would fall apart because Clinton raised taxes at the beginning of his first term?

And then we come to our current disaster of a President, George Bush II. Yes, he is chronologically a boomer, but in reality he is the Greatest Generation's last gift to its children. What can you say about an incompetent, shallow loser like that, except how sad it is that he was put into this office, in large part by religious fanatics who want to return to an earlier time that we have thankfully left behind. It is the Republicans' unwillingness to tax enough to cover government expenditures that has largely created our financial disaster.

The Greatest Generation deserves far more blame for this mess than their children. At least they are pretty much out the door, having enjoyed the full benefit and left the mess for their descendants. Ultimately, our current situation is the legacy of our military and economic victory in World War II.

Credit Card Catastrophe: Congress Can't Help

Credit cards are financial heroin, and banks are pushers.

The banks know their product hurts most of their customers. They don't care, because that's how they make their money. No different than the tobacco industry. Through credit cards, banks intentionally lend money to people who can't afford it. They make exorbitant profit on obscene interest rates, while many people's balances climb and climb, until they reach the breaking point and they go bankrupt. The banks don't care, because they charge such high interest that it covers the default rate.

Credit cards as an instrument of financial torture are not in the country's interest. Limit the interest rate so something reasonable, say twice the prime rate. But this will cut off many people from credit, the banks will say. Yes, it will. That's the point. Banks lend to people who can't handle it, let them get in deeper and deeper. Only the high interest rates make that possible. At 10-12%, the banks will have to limit credit to those who can actually afford and handle it. The simple fact is that most people should not have credit cards. They are poison and of no benefit to the average person. At best, they make people feel better temporarily (like heroin) at the cost of long-term destruction.

While we're at it, let's legislate an automatic write-off of 50% of credit card debt for anyone who goes bankrupt. Again, that will make the banks lend more responsibly, i.e., to people who are good credit risks.

My Oil Outlook

This is an ideal time to implement a gradually rising gas tax. I know this raises hackles, but we have got to reduce our oil imports, and this is a good way to start. It will encourage conservation and energy-efficiency. A few months ago, I would have said it could be made revenue-neutral by lowering other taxes by an equal amount, but with the debt bomb going nuclear, it might be better to let it be a revenue source instead.


On May 03 09:12 AM The Greatest Rip Off of our Time wrote:

> The best part about oil's plunge into the $40 and $50 barrel in about
> six months?
>
> A de-facto tax cut for American motorists. Each $1 per barrel drop
> in oil increases U.S. GDP by $100 billion per year and every 1 cent
> decline in gasoline increases U.S. consumer disposable income by
> $600 million per year.
> The last 20 years have been characterized by rising U.S. oil consumption,
> but now the U.S. Energy Information Agency. incorporating the most-recent
> changes in U.S. consumer behavior, says there will be no appreciable
> growth in U.S. oil consumption between now and 2030, with biofuels
> accounting for all of the growth in liquid fuels.

Why This Rally Is Unsustainable

The Dow was up 0.54% yesterday (5/1/09). That's a 194% annual rate of gain.

Between 10:22 and 11:25 AM, it was up 1.10%. That's a 130,827% annual rate of gain!

Between 1:35 and 1:40 PM....well, you get the idea. I hope.


On May 02 12:01 AM mwfall wrote:

> that's would be a 43% annual rate of gain.


On May 01 02:07 PM Naufal Sanaullah wrote:

> Market is up about 2.5% since April 9.