lorddarley

Show Me Economic Expansion, Chairman Bernanke

It's just history, rhyming away. It happened in Rome. It happened in Europe. It's inevitable in the US.

Don't count on a self-interested Republican to be any better than a self-interested Democrat. None can keep their position in a democracy by saying "no" to spending borrowed money for voter entitlements. Whether it's Bush with Part D Medicare, or Obama with whatever comes from Harry and Nancy, you can only be a hero in a democracy by spending money to buy votes.

What's non-unique in the current crisis is as natural as the tides. National wealth has encouraged the import of affordable goods and affordable immigrant labor. That makes it harder for local working people to compete, so the state subsidizes. Whether it's bread and circuses, or cradle to grave welfare, the politician-rulers are required to provide these nets for political stability. In the process, these politician-rulers -- elected by the donees -- make a great life for themselves.

The result, of course, is that these nations decay from within. An external crisis, which could have been blunted by a strong-minded citizenry, eventually topples the thing, because people will not sacrifice to save their entitlements. Don't moan. This is just history and it cannot be prevented.

It's probably best, for people who can afford it, to emigrate once you retire. You need to plan. It's no big deal to forfeit social security payments of depreciated dollars, and Medicare is already not worth the money, and it will be less valuable with time. They already charge over $300 monthly for Part B if you make a good income, so who needs it, when you also have to shell out for drugs and a private medicare supplement?

Neutral countries which are not superpowers are the best candidates. You can still keep ties here, but it's crazy to keep assets within the borders. Eventually, you will lose the freedom to keep what you have earned.

Meredith Whitney: 'I Haven't Been This Bearish in a Year'

This has been a zero stimulus program, because all of its blood has been pumped into the part of America which is gangrene. The dead industries in Detroitand the obese structures of state government, are not job creators, just voting blocs. As for Wall Street, it creates jobs, but the price is too high.

Obscene opportunists, who mask as patriots but who have been purchased, do not love this country. They love what they can pry out of it. The average American is learning the lesson they teach, and we are unraveling as a great nation.

And Bernanke Didn't Think Unemployment Would Reach 10%

There is nothing in all this stimulus from Washington that would induce me or any of the businesses I work for to hire a single individual.

In fact, the IRS seems to be th big winner. It got ovr 2/3 of a BILLION extra, and with its enhanced audit budget it is already wreaking mischief through audits. The goal is to catch employers on technicalities in our obscenely complex employee benefits laws, and to grab penalty taxes. Better not to provide benefits is my advice quite often.

This is not a friendly country for employers, so unemployment should be no surprise, except to those who spin theories and do not have to deal with the real world.

Market: Spooked Today, But Panic Attack Is Likely Temporary

This rally was bought through currency manipulation and an obscene transfer of wealth to the major banks by government.

View the rally (and your portfolio) through the lens of a person who owns EUROs. There was no rally at all.

I guess they can keep running the dollar into a hole and prop the market in dollars, but it has not appreciated in real terms, and the market is anticipating something we have never seen before. The Fed (and the laughable Congress) is not able to prevent the inevitable: a multiyear period of near-zero growth and a collapsed federal balance sheet.

Where's the Outrage at the Banks?

The country would have been just as well off without these large banks, that were so poorly managed, and which decided that traditional banking was not profitable enough.

It was sheer politics that kept them afloat, rather than allowing the bad ones to collapse. The smart survivors could have easily picked up the slack. In fact, they would have more money to lend if we had not wasted so much on the big banks.

If a "bank" wants to derive its revenues from leveraged gambling and speculation, rather than lending, the FDIC should withdraw its insurance.

Bond Market Expects Inflation to Be Only 1.75%

I do want to follow up on my recent comment. In that, I noted that many of the purchasers of US debt were foreign export countries. I did not mention, and it's probably needless to say, that the biggest purchaser of our debt is Ben B.

In today's Barrons, it is noted that the US is buying 75% of its issued debt!!! It's an effort, through the printing press, to keep rates (especially mortgage rates) low, and to pump the economy.

That is a little bit head spinning, But the basic premise of Mark's article (sorry Mark) was that low rates means that a "market" has judged against accelerating inflation for our future. This is simply market manipulation by governments. The US consumer has the loss of purchasing power (my own term for inflation, which is a manipulative concept) in his or her destiny.


On Oct 17 08:48 AM lorddarley wrote:

> The massive buyers of our debt are not shrewd private institutions.
> Is PIMCO buying US debt? Hardly.
>
> This is a war of exporting governments, forced to prop the dollar
> to support their own export-led economies. Gradually, as the world
> economies improve, and as they sell more to each other and rely less
> on the US market, their intervention will cease. US interest rates
> will soar. That is as sure a bet as you can find on this planet.

Bond Market Expects Inflation to Be Only 1.75%

The massive buyers of our debt are not shrewd private institutions. Is PIMCO buying US debt? Hardly.

This is a war of exporting governments, forced to prop the dollar to support their own export-led economies. Gradually, as the world economies improve, and as they sell more to each other and rely less on the US market, their intervention will cease. US interest rates will soar. That is as sure a bet as you can find on this planet.

Yahoo's Dispute of Eric Jackson's Articles

I've never seen a company that didn't do it this way. Taxes have to be paid at vesting, even if the offficer wants to continue holding the stock. Because they are compensatory, the company has to pay the taxes, just like with any other form of wage or bonus.

Tax at vesting is a big difference between options and stock. There is no tax owed when an option vests (unless the option is exercised). There is tax owed when restricted stock vests.

By the way, the company gets a tax deduction for the full amount of the shares based on value at time of vesting.

Finally, issuing restricted stock is better for investors, because fewer shares are issued than with options.

Why Exxon Should Significantly Increase its Dividend

Baloney to paying dividends in a double tax environment. I would rather have the company pay one tax (at the corporate level) and redeem shares. Share redemption (i.e. fewer outstanding shares) is a big reason for Exxon holding its value in the recent crash.

For those who need income, sell some shares and pay your second tax. Management should not force shareholders who prefer to accumulate wealth to pay two taxes.

The Arithmetic of Gold: Why Its Price Has No Ceiling

What perplexes me is that there continues to be such demand for the dollar. The interest rate at the last 10 year auction went down.

So who is spending the massive amounts necessary to finance the US debt? Someone is wildly wrong.

My theory is that people see the dollar at a much higher level next year than at present. There will begin to be a cut back in military commitments. There will be a modest raise in interest rates and tax rates because economic activity will pick up. There will be capital inflows back to the US, simply because the EURO is hardly worth its present price and US assets are on sale. The government will also be restricted in discretionary spending due to its assuming so many of the problems of the last bubble.

I'm not down on gold, but it is just one of many commoditis, and they are all having a good run during fearful times. With a return to normalcy, which the bond buyers anticipate, I don't see it behaving better than its asset class.

Dollar Nearing a Critical Level

I am no fan of the disastrous policies that got us into this pickle. However, the dollar is oversold. There are many economies (especially Europe and Japan) that have staggering and dishonestly reported liabilities for the mandates owed to their citizens.

The US dollar is due for a bounce. It is as badly thought of as stocks last March. It's not a long term hold, but the bounce is inevitable.

How Low Can the Dollar Go?

This will be a long term and painful process.

It is inevitable due to our decision (I don't remember voting, but I own a foreign car, so I guess that's a vote) to integrate within the world economy.

US labor is being repriced, and politicians are spending money like mad to shelter labor from the truth. Things won't get better for most private sector people until foreign wages go up, or until we decline further, in the name of "competition." Even privileged civil "servants" will start to feel the sting, but most of them are protected.

It's a sad state of affairs. Americans without jobs and prospects will not be good Americans. We should cut off the oil imports, and limit the junk we buy from Asia. Our favored political class, in Washington and the states, are incapable of solving this as they pursue their own self-interest.

It's Rome, redux. The collapse of a dedicated citizenry caused by imports and a corrupt ruling class. Until its final days, most Romans still thought they were living in a "republic."

Best Risk / Reward Income Investments, Part II: Canadian Energy Infrastructure Stocks

For those interested inAtlantic Power, I just put a couple of posts on Cliff W's other article (Part I).

Working out the math for the units -- Atlantic Power is a combination of a subordinated note and stock -- is not for the faint of heart.

Today's Best Risk / Reward Income Investments, Part I: Canadian Power Stocks

One correction. Note redemption would be $6.05 Canadian, 105% of the Canadian book value of the notes.

Today's Best Risk / Reward Income Investments, Part I: Canadian Power Stocks

Atlantic Power units include an 11% note paired with the stock. The note portion can be redeemed as early as November for $5.75 (105% of Canadian book value). Units currently trade at $8.99 (Canadian).

I hate the thought of losing the yield from the notes, but November redemption would leave you with the stock at a net cost of $2.94 (Canadian) paying a dividend of 15.6% (Canadian).

The main problem (or attraction) is that you get so much cash returned to you if they do redeem, that you will have to find another home for it. Still, that's not such a bad problem.

If they don't redeem, they have been clear that cash flow from projects makes payouts sustainable into 2015. My guess is that they will not redeem and will make another acquisition. Fortunately, they don't overpay, and their project debt is non-recourse to the parent. It's a pretty solid investment. Just don't panic about stock moves, because it is thinly traded.