punk_ash

The Government Sponsored Bubble

sadly, civilizations know of no other way to grow economically, other than by increasing the money supply. For happy days to come back, the money supply must start increasing again...

Markets Are Starting to Roll Over

there were plenty of posts like these from march until August. One down day and we got these posts again. This is a bear market rally and only the best traders will be able to get out in time. Most of us are better served if we do not play.

Scary Drop in Velocity of Money: Is Deflation Knocking?

Unless the Feds are printing many more Trillions of dollars, we will not see inflation. The money that we all thought was funny money and all based on credit. Any money being earned right now is being hoarded. Most are buying only what they have to. The new money is not chasing anything.

This housing mess would have been long taken care of if it were not for the real estate taxes.

Is a Crash Impending?

There will be a time for buying the real assets, but it is not now. We are still in a deflationary phase.


On Sep 01 10:57 AM Albert Ling wrote:

> Yes, we should all sell our stocks, except:
>
> BENJAMIN SHALOM BERNANKE WANTS EQUITY HOLDERS TO GET RICH AND CASH/DEBT
> HOLDERS TO GET POOR
>
> So buy oil buy gold buy quality stocks, miner stocks, ag. stocks,
> etc.
> These are FAKE green shoots, the economy will tank, but so will the
> USD. Make money from the depression and buy real assets.

Is a Crash Impending?

On Aug 31 11:13 PM derryl wrote:


> Yesterday I made a bet and put a sticky
> on the fridge, "Within 2 years the US government will either be outright
> giving people money to revive the consumer economy, or the US will
> be falling into Great Depression 2.0." I don't mean ad hoc George
> Bush stimulus checks. I mean a more systematic creation and distribution
> of free money (or possibly consumption coupons that can be converted
> to dollars by retailers who accept them as money for the purchase
> of goods) to be given to all Americans. And I mean a real freefalling
> deflationary depression with collapsing asset prices and 1000s of
> bank bankruptcies and millions of private and small business bankruptcies.
>
>
> We are in the midst of the deflation of asset prices that had been
> supported at bubble levels by debt. Now that the defaults are rolling
> in it is clear that the debtors cannot make good so the price levels
> supported by their debts are not sustainable. As credit fueled spending
> reverses and becomes increased savings and debt paydowns, first the
> retail sector and the commercial real estate it occupies falls putting
> many out of work, exacerbating the deflationary spiral. This is
> what the real economy is doing, deflating down from unpayable levels
> of debt fueled consumption.
>
> The first consequence of this is that the banks who lent all the
> money to those defaulting borrowers are now insolvent, especially
> the big Wall St 'too big to fail' who marketed and lent against all
> the MBS and other derivatives based on these now deflating real estate
> assets. But the powers that be are desperate not to lose their wealth
> and power.
>
> Rather than accept their capitalist punishment and ignobly slink
> off into bankruptcy, the powers are cheating by transferring their
> private losses onto the public via TARP and all the Fed's invisible
> machinations with the US currency. The powers, including the administration,
> Fed, and big banks, are blowing desperately to reflate asset prices
> to stave off insolvency. But to save these banksters from insolvency
> they are risking national insolvency with unrepayable levels of government
> debt.
>
> Taxpayers buy $4500 clunkers from their neighbors to reflate the
> auto sector. Taxpayers make first time homebuyers' $8000 downpayments
> to reflate real estate. Taxpayers who have savings suffer near 0%
> interest rates on their savings so that banksters can borrow cheap
> money from the Fed to play the stock and commodities markets to manufacture
> imaginary 'profits'. Obama wants taxpayers to buy overpriced windmills
> and solar farms and pay carbon taxes so that cheap coal power costs
> more than expensive wind and solar. But 1/2 of the taxpayers are
> already underwater or insolvent or unemployed so how can they be
> expected to do 'more' to save the banksters from richly deserved
> bankruptcy?
>
> The deflationary forces are too large for the present reflation measures
> to succeed. The entire economy is deflating. To succeed, reflation
> must be at least as large scale as the economy wide deflation that
> is now happening. I've written in a previous comment that for $2.5
> trillion the government could send out a $1000 check to every American
> with a SS number, each month for a year. If the economy is still
> deflating after a year they can do it again, and keep doing it until
> deflation is arrested and some inflation starts to surface.
>
> In behind the scenes play the Fed has already created and doled out
> about $2.5 trillion to "undisclosed recipients", so it's not as if
> the $2.5 trillion price tag is out of the ordinary in the current
> environment; and it's not as if the Fed has any qualms about nakedly
> creating and handing out that quantity of money. I think this is
> about the right scale and method of counterdeflationary measure that
> might actually work to prevent GD 2.0.
>
> The banksters don't have to go bankrupt, and neither does America.
> If insolvent banksters can be "relieved" by injections of freshly
> created money, then the insolvent American consumer can be relieved
> in the same way.


That was one of the most refreshing post in a long time. So, I am not the only one thinking that we could literally see distribution of dollars.

I however think that the only way to address the problem is by coming to terms with the future expectations of our standard of living and focusing on value creation.

Due for a Correction? Market Is Already Priced for Grim Future

It will be interesting to see a full disclosure from the author.

- What is he long and short?
- Under what scenarios does he personally benefit.
- What are the positions that his clients have (if he does have any)

It is hard to make money on the short side and so most people have to make money on the long side and so they pump and make themselves believe in the same.

I suggest to the author that he sells all his assets and buys stocks.

Spread the Wealth with Gold: Three Longer Term GLD Option Strategies

Here lies the problem with our economy:

The author who surely is above average chooses to talk options strategy rather than work in an engineering field and create value.

Have Americans Been Brainwashed by the Deflation Bogeyman?

Bravo on this article. One of the best ones I have read on seeking alpha. Most people just do not understand what high inflation can do to them. Inflation is in more than food and electric bills, expect to pay higher inflation in everything you pay, but somehow do not expect the salary to be inflated by the same amount.

A Reality Check on U.S. 'Economic Recovery'

scenario 1: Market goes to 20K by the end of 2010. We miss the chance to double the money, but the economy is great, and we will get by.

Scenario 2: Market goes to 5000 and things are really bad, and we have all the money that we have now.

I will take the scenario 2 and stick with it. I will not regret missing the boat

New York Fed Model: No Chance of Recession in 2010

For some reason, I am never worried about recessions, after all they are important cleaning mechanism for the excesses. What does worry me is the lack of exports, and the fact that there is nothing that I can see far out which we can export in the coming years and balance the current account deficit.

Forget the 1930s; We're Reliving 1975 (Part 1)

everyone wants to play statistician now. 13 recessions are studied as if they were 1300. 13 is not enough data. That is why I like Bayesian view point, that is, when we have the extra information, why not incorporate that in our model, and it seems that the unknown information about the current things is not that great.

Has anyone every bothered to consider that the baby boomer generation had better work ethics than we do.

Am I missing something, unless, I see some serious exports, I do not see a way out of it. Yet, GW took vacations every week with each vacation costing 100k and Obama wearing 3k suits and going out for a night on the town. May be I am old school, if I were running an administration, I would even limit useless trips by government officials all over the world.

Dennis Kneale Says the Recession Is Over: So What?

What do the unemployed economists think?

Beginning of Another Big Market Decline? Not Quite

It seems like you get into your Porsche from the garage in your suburban home and go into the garage of the posh downtown building, and take the express elevator from there. Your secretary then wishes you good morning and gets you your coffee. You do not have a clue what is going on outside the Ivory Tower.

The U.S. Financial Structure - Why Nothing Is Really Changing

Keep your questions for a well groomed president in worldly matters, someone like Ron Paul.

Americans have to elect a president more for what he has to show for rather than the 6-pack abs. Too bad, Ron Paul does not have the 6-Pack abs like Obama.

We're Due for a Serious Pullback

These risky assets could triple in price only to come back to where they are now.

I kicked myself for not getting into the emerging markets action in 2005, but I chose not to chase the returns, I kept seeing those markets fly, I kept kicking myself, but did not buy, and now these markets are back to 2004-2005 levels.


On Jun 05 07:48 PM E Nuff Sed wrote:

> While I don't know what will happen 6 months from now I do know that
> three years from now a lot of people would be kicking themselves
> for not buying into risky assets now.