ezrasfund

Chart: Value of U.S. Stocks as a Percent of GNP

Important point with one caveat...

What percentage of all US businesses were public companies?

The Scariest Chart Ever

This is one notion that should be put to rest.

We are 5% of the world's people producing over 20% of the world's manufactured goods. This fact is indisputable.

Not towels, and shoes, and toys...

Airplanes and computers and media content and cars ( OK, Toyotas and BMW's) and lots of other things that are made with low labor content and very high productivity.

I agree with the point of the original chart and the notion that the US economy and the world economy are in for very rough times due to the deleveraging of the financial system...

But this argument doesn't need the above falsehood to be true.

Our annual exports are about $1.15 Trillion, about the same as China's $1.2Trillion and much more per capita. It's the imports and consumption that are our problem.

This misinformation is a perfect example of the notion that if something is repeated enough times people think it is true.

We've got serious problems, but the fog of this falsehood won't help solve them.


On Jan 20 05:27 PM JohnAl wrote:

> "Debt as a percentage of GDP ended up at %120 in 1946, which is about
> where we'll be when the bailout is complete.
>
> The world in 1946 looked shaky, but things turned out fine, as it
> happened. "
>
> Yeah? We made stuff to sell to the rest of the world in 1946. What
> do we sell them now?

Are Uncle Sam's Creditors Heading Towards the Exits?

Swiss Franc


On Jan 22 10:37 AM Chris B wrote:

> If foreign investors stop buying treasuries, the government will
> resort to money-printing to fund itself. This would devalue the
> currency, so this possibility suggests that US and foreign investors
> should be diversifying out of the dollar.
>
> But what currency should we go into? The British pound is even worse
> off, and Willem Buiter has suggested that it could go the route of
> Iceland's currency. Both the Euro and the Yen seem unattractive
> due to debt/GDP ratios that are far beyond even the US's levels and
> demographic graying. The Canadian and Australian dollars seem to
> track commodity prices more than fiscal policy or obtainable yields,
> so you might as well be buying commodities. The Chinese yuan is
> issued by a communist export country that has an interest in keeping
> its value down. India has chronic inflation. Commodities such as
> precious metals and oil are volatile gambles on future inflationary
> sentiments, and don't really fit the definition of a safer investment
> than the USD as their fluctuations are far greater than the dollar's.
> What's left?

60 Minutes on Oil: Did Anyone Verify Anything?

Don't forget the airlines and others who bought oil at $140 to "hedge" and are now losing their shirts.

One factor that pushed up the price of oil was big money fleeing from real estate and other investments into the next big thing. Speculators and investors are always looking for the next hot market.

Don't Be Scammed by Madoff Investor Sob Stories

Risk and Return

There still seems to be a correlation.

The Deflation Scam

"Decrease in the money supply"

My question? To what extent did the increase in leverage by financial institutions (and everyone else) have the same effect as an increase in the money supply?

Can the increase in the money supply overcome the effect of this enormous deleveraging?


On Dec 19 10:38 PM austrian63 wrote:

> Good article. The correct definition of deflation however is a decrease
> in the money which results in a decrease in the general price level.
> The money supply is growing so there will be no long term sustained
> decrease in the general price level. As noted in your article, most
> of the products and services Americans buy on a daily basis are increasing
> in price. The only sustainable "deflation" that is here to stay
> is the value of the dollar. Dollars will become worth much less
> over the next few years.
>

A New Bull Market Is Born

TA tries to predict short term "noise" in the market.

FA predicts long term trends.

Short term might well be up...

Long term will probably be down...

Longest term markets will rise, inflation will return, we'll all be dead.

Let's Hope the Auto Bailout Has Failed for Good

Bailout Solution???

Please explain to me why this is a stupid idea!

Auto Workers Pension funds must have enough $$ to buy a significant portion, if not all, of the debt of F and GM at pennies on the dollar.

Covert those bonds into preferred shares, equity, what else (experts?) and relieve a good part of the financial pressure on these firms.

In short, surely the auto workers, with the value of their pension funds, must have enough equity to bailout their employers. Maybe they could own the companies!

All their eggs in one basket!? That's the life of a real entrepreneur.

Automaker Bailout Fails: This Is Not Good

Bailout Solution???

Please explain to me why this is a stupid idea!

Auto Workers Pension funds must have enough $$ to buy a significant portion, if not all, of the debt of F and GM at pennies on the dollar.

Covert those bonds into preferred shares, equity, what else (experts?) and relieve a good part of the financial pressure on these firms.

In short, surely the auto workers, with the value of their pension funds, must have enough equity to bailout their employers. Maybe they could own the companies!

All their eggs in one basket!? That's the life of a real entrepreneur.

Playing the Auto Bailout With Yields as High as 45%

Bailout Solution???

Please explain to me why this is a stupid idea!

Auto Workers Pension funds must have enough $$ to buy a significant portion, if not all, of the debt of F and GM at pennies on the dollar.

Covert those bonds into preferred shares, equity, what else (experts?) and relieve a good part of the financial pressure on these firms.

In short, surely the auto workers, with the value of their pension funds, must have enough equity to bailout their employers. Maybe they could own the companies!

All their eggs in one basket!? That's the life of a real entrepreneur.

Friday Outlook: Commodities, Emerging Markets

SPY moved in a 10.5% range yesterday.

EEM moved in a 17% range yesterday.

Could anything be a sign of greater uncertainty in the markets?

These values are about as certain as the values of CDOs and CDSs, and about as likely to fall off the cliff again.

If you were leveraged 20 to 1 (like our banker friends) you would have gone from rich to insolvent and back again in one afternoon.

Ask how is it possible?

Go back and look at a few normal decades. The only example is the black swan of Oct 1987 until you get to the great depression.

Lots of money made timing the bounce in 1932 and here's your chance again. Or is this more like 1930? Still a leg down to go?

Can We Please Have Some Sanity When It Comes to Taxes?

Maybe if all the guys at the top at Lehman, Bear Sterns, etc had to pay a bit more in income taxes on their over-sized bonuses they would have left a bit more in the company, or been a bit more cautious about betting the ranch? At least the government would have had a few more dimes to help pay for cleaning up the mess. Higher taxes at very high income levels are not only fair but have a dampening effect on some of the excesses.

Signs of the problem? Warren Buffett challenging any CEO to show that they pay taxes at a higher rate than their secretaries...no one spoke up.

Surgeons in NYC feeling like paupers next to their ne'er-do-well college chums who make 10 times more than they do (or is it 100 times?)

Rent vs. Buy Datapoint of the Day

Careful that they were not cherry picking the data points...interest rates on home mortgages have fluctuated from 10%+ to 4.5% over that time...

Lehman: The Bottom Is In

No facts about the LEH balance sheet here! Maybe they should go private so that transparancy would be less of an issue...except with that messy "counterparty risk" issue.

The corporate boardroom fatcats who stood behind LEH as a good value at $60 should be happy buy up the company at 80% off.

Who's to Blame for IndyMac's Failure?

What if there really is a fire in the theatre?