KSengineer

Essay on Macroeconomics: Where Krugman Fails

How about 1.6T?

On Sep 07 01:45 PM Roger Knights wrote:

> "very little stimulus spending (something like $100bn)"
>
> How about one trillion in QE to hold down interest rates and thereby
> bolster the stock market and real estate market?

A Historical Perspective on U.S. Debt Growth

"However as long as the Chinese and other friendly governments are willing to “pay the piper” we are in good shape."

If the Chinese (or anyone else for that matter) are expected to continue financing the debt, doesn't that imply a continued, large current account imbalance? Enough to offset the increase in treasury borrowing. Otherwise, where will the foreigners get the dollars to fund our ever increasing debt?

I'm not an economist, perhaps there are other ways. But if not, isn't that just more of the same thing that got us where we are today, overextended on credit?

How The Federal Reserve Is Monetizing Debt

How much agency debt remains out there? Is there more than enough to outlast the current economic trouble? If not, what happens when Ben has bought is all? Net imports have shrunk, sending fewer dollars overseas each month to fuel foreign investment in treasuries. Could this become a problem?

Just wondering.

Reappointing Bernanke Is a Mistake

IMHO, the president was simply doing what he was told to do.

51.68% in 165 Days

Was there a Goldman Sachs in 1929-1932 with a direct dollar pipeline to the Fed? Much of what we see today, IMO, is smoke and mirrors designed to make us feel good. In today's America, feeling good is more important than reality. Or, perhaps we believe feelings create reality.

Japan has languished because they refused to deal with their economic colapse according to reality. Aren't we doing exactly the same? Did the investors who created this mess lose their money? Not yet. But a lot of others have. Have the bad loans been dealt with? Not yet. And we all know it. What has happened is the Fed has pumped dollars into the "too-big-to-fail" companies (the one's who should of lost it all) and the government has handed money to it's citizens to "stimulate" things.

Oh yes, and the media has pumped persistently positive news to the citizens designed to change moods rather than report fact.

Bernanke thinks he has it figured out. That he can engineer a graceful recovery and save the world. I think he's convinced has a lot of new tricks up his sleave that will make it different this time. I'm just afraid that his power is still inferior to the market's even though he has a infinite number of dollars to play with.

And when the market decides to take over once again, look out below.

No Great Depression Redux

"... these leaders are very determined not to repeat the mistakes of the 1930s. They may make other mistakes ..."

Your article implys that since today's leaders won't make the same mistakes of the 1930's we won't get a similar market drop (other than the normal corrections). In my view, that logic is flawed. Not repeating the same mistake doesn't preclude the same result.

I really think today's Keynesian philosophy is being grossly misapplied. The fundamental truth is that the "price" for the incredible scam perpetrated by banks, mortgage lenders and wall street and aided by government malfeasance, must be paid. It'll be paid by those responsible or it'll be pushed off onto those not responsible. But it MUST be paid at some point.

I'm "blown away" daily by the underlying concept perpetrated by Wall Street, the media and the government, that urges the population to believe we can avoid the consequences by dumping liquidy on the economy and then removing it at just the right time.

The pain is being pushed forward, certainly. And, it's being transfered from the quilty (too-big-to-fail companies, yada, yada) and onto the innocent (massive public debt). The great assumption being imployed today, IMO, is that the economy will strengthen to a point where this pain can be successfully "hidden" and slowly removed. This is where I believe the next big mistake is being made.

Our society has been conditioned to live in the present and ignore the future. Refusal to deal with our problems, which are obvious and huge, at the present time, will only add "interest" to the pain.

Why This Rally Will Continue

I believe this rally is mainly about the Fed pumping billions into the stock market to put a positive spin on market psychology. What about the realities of the market? The banks that brought this disaster upon us got off scott free. In fact, they're making billions now. How is it that we have escaped the consequences of the massive theft that took place the past few years?

There are no green shoots. The headline writers continue to write misleading headlines every single day. Many countries, in their back rooms, are plotting the demise of the dollar as the reserve currency. I guess we can push that problem into the future too (it's become the American way). The US debt is already increasing exponentially from severe lack of self control and all our leaders want to do is pile more and more costs on us as healthcare reform and save-the-plant initiatives (then lie about how it'll be cheaper in the future). I feel like I live in the Twilight Zone. Serious problems face the citizens of the US, but what we mostly get is marshmellow news.

What has happened to all the bad loans that caused this problem? Where are they? Who is taking the loss? If you believe the news, they must have simply disappeared. There's no word of them, no sign of them. Yet, forclosures continue to climb at an alarming rate. Perhaps bad loans are just one of those "lagging" indicators that don't factor into the future.

The US is self destructing and we're being lead down that path by the so-called smartest of our society. I've had enough of the brainiaks. Give me someone with common sense for a change. The Fed is in the process of creating another bubble by pushing the problems forward. However, the cost of doing that will be too great for us to bear when the time arrives.

Revenues Down, Profits Up: Is This a Problem?

"The very fact that profits rose, despite the fall in sales ..."

I'm pretty sure profits did NOT RISE. For the S&P 500, operating profits are expected to be down about 31% y/y. "As reported" profits will be much worse.

That statement is what's so amazing about the news reporting these past few months. How many times have I heard "green shoots" when what is being reported is a slowing rate of decline. In my garden, green shoots rise up. That is not the same as a slower decline. A month-over-month increase in housing sales would qualify. But the term has been used a million times.

I think the prevailing economic philosophy is that the economy is what people perceive it to be. So our perceptions have been tinkered with in hopes of creating a recovery out of it. Tinkering with the data by not reporting it or mis-characterizing a negative as something positive, is dishonest. Manipulating people is wrong.

My belief is that it will end up hurting people who trust what they read and hear from the main stream media. It will also hurt those trying to invest based on the facts (since the up-front, reported facts are very distorted).

Key Factors Driving the Market

Can someone explain this "sideline" money to me. Every time a stock is sold, an equal amount of money is exchanged. For every dollar going to the sidelines via a sale, a dollar must come from the sideline via a purchase.

I can understand money flowing from bonds to stocks, or cash being added to workers 401k's each month or companies purchasing their own stock.

What am I missing? What is meant by "sideline" money?

On Jul 23 09:08 AM Roger Knights wrote:

> Don't forget money on the sidelines as a driver.

Tipping Point for U.S. Treasuries?

Thanks! Terrific article.

Unemployment Claims: Signaling Recession's End

I see 3 peaks within the 1991 recession green bar and 2 within the 2001 green bar. There's only one within the current green bar. How many peaks will there be? Unless you know, how can you call it the end?

Anatomy of a Giveaway, Or Why Stocks Soared Yesterday

The only way for everyone to come out a winner is if the asset value eventually returns to it's full price. Since the government probably can not cause another credit bubble to push prices back up, the tool they have control over is inflation. Just hold the asset for a few years while Ben inflates the currency. The private investor wins big. The government escapes it's debt. The big problem is dealing with our foreign investors. Maybe that's why the Chinese are currently buying up California real estate by the bucket load.

Why It's Actually Different This Time

My, you're obviously one of those tollerant liberals ... "Throw the beggars that don't think like me in jail!" People like you are dangerous to democracy. Unfortunately, the government is full of your type right now.


On Mar 12 09:06 AM Oquichtli wrote:

> Pathetic fear mongering. You should be punished to the for spouting
> such fear. I know, fear sells papers and gets fools to read pathetic
> blogs like yours. Why don't you inform the dumb masses how to profit
> in this environment(i.e. highly volatile markets make fortunes for
> options trading) instead of scaring the hell out of their weak minds?
> Oh I know why, you are protecting the business agenda of the masters
> who own you. Just like that fool Ron Paul. Trying to scare the zombie
> sheep. You all should be put to justice.

Why This Downturn Won't Be Like 1929

"Depression. It is a word to send shivers down the spine of anyone over 50 years old. It evokes dark images of bread lines and bankruptcies, dust bowls and suicides."

"Bread lines" ... Have you been to Texas Roadhouse lately? If you decide to go on a Friday or Saturday night, make sure you allow plenty of wait time for a table. I don't think these are the bread lines that haunt us. Something is very different about this "depression."

Bernanke vs. Feirman on the Prospects for a Recovery in 2010

Good commentary!

I wonder why there's this desperate attempt to "save" the largest banks. We're told its because their failure will cause the colapse of the entire financial system. However, I'm not sure I buy that. I'm wondering if it has more to do with saving the fortunes of the east coast wealth barrons instead. Otherwise, why not let the weak banks fail? The pieces will be purchased by the stronger banks and life will move on. I'm not naive enough to think that it wouldn't be a shock to the system. Perhaps a big shock. But would it be overwhelming?

I think what we are seeing is corruption at the highest levels. The wealthy protecting their wealth at the expense of taxpayers. Therefore, this fiasco will continue for some time since the real healing is being inhibited.