LilBob's Comments RSS Syndication from SeekingAlpha.com http://seekingalpha.comuser/222958/comments http://seekingalpha.com/article/179052-bending-the-federal-health-cost-curve-maybe?source=feed#comment-815255 815255

On Dec 20 12:03 PM PastTense wrote:

> There is no serious interest in controlling health care costs in
> Washington; instead both the Democratic and Republican parties have
> been captured by the health industry whose primary interest is in
> increasing the size of the health industry.
>
> There are two workable methods for controlling costs:
> 1. Free market competition (which would include the ability of any
> American to switch his insurance to any company--instead of being
> locked into what his boss decides).
> 2. Single payer--as in the European systems.]]> Sun, 20 Dec 2009 21:18:33 -0500

On Dec 20 12:03 PM PastTense wrote:

> There is no serious interest in controlling health care costs in
> Washington; instead both the Democratic and Republican parties have
> been captured by the health industry whose primary interest is in
> increasing the size of the health industry.
>
> There are two workable methods for controlling costs:
> 1. Free market competition (which would include the ability of any
> American to switch his insurance to any company--instead of being
> locked into what his boss decides).
> 2. Single payer--as in the European systems.]]> http://seekingalpha.com/article/179052-bending-the-federal-health-cost-curve-maybe?source=feed#comment-815121 815121
As it turns out, for those Americans who are struggling with 8 and 9 dollar an hour service sector jobs, health-care can become secondary to concerns such as having a place to live or food to eat; especially when we live in an age when a routine trip to the doctor for a sore throat can easily result in 3 to 4 thousand dollars worth of tests before being told you should start taking an antacid like Omeprazole (which you probably already knew to begin with). By catching potentially life-threatening conditions early and providing proper preventive care the long-term cost of health care can be reduced while the quality of care is dramatically improved.

Diabetes is a perfect example. Many Americans from poor families don't get any help in the way of diet or weight counseling and have little to no access to a physician until they end up in an ambulance or a police car-and find out after their evaluation that they have "The Sugar", at which point they become eligible for Medicaid. The diet and weight control counseling that could have helped to prevent the development of full blown Diabetes costs a tiny fraction of Diabetic monitoring and treatment, especially if those treatments end up resulting in hospital stays and amputations. ]]> Sun, 20 Dec 2009 20:16:11 -0500
As it turns out, for those Americans who are struggling with 8 and 9 dollar an hour service sector jobs, health-care can become secondary to concerns such as having a place to live or food to eat; especially when we live in an age when a routine trip to the doctor for a sore throat can easily result in 3 to 4 thousand dollars worth of tests before being told you should start taking an antacid like Omeprazole (which you probably already knew to begin with). By catching potentially life-threatening conditions early and providing proper preventive care the long-term cost of health care can be reduced while the quality of care is dramatically improved.

Diabetes is a perfect example. Many Americans from poor families don't get any help in the way of diet or weight counseling and have little to no access to a physician until they end up in an ambulance or a police car-and find out after their evaluation that they have "The Sugar", at which point they become eligible for Medicaid. The diet and weight control counseling that could have helped to prevent the development of full blown Diabetes costs a tiny fraction of Diabetic monitoring and treatment, especially if those treatments end up resulting in hospital stays and amputations. ]]> http://seekingalpha.com/article/178880-still-looking-for-a-turnaround-in-lending?source=feed#comment-813268 813268 Sat, 19 Dec 2009 07:34:25 -0500 http://seekingalpha.com/article/178801-have-you-learned-anything-from-the-crisis?source=feed#comment-813105 813105 On Dec 18 08:57 AM yellowhoard wrote:

> In order to profit from investing you need to observe and act accordingly to long term trends.

I agree with Yellowhoard. Personally I think more in the investing business should revisit the work of Voltaire-specifically the plays Candide and Zadig. Maybe even take a swipe at Eric Hoffer's book The True Believer.

A few months ago we had some people trying to sell the line that "Gold will no longer be valued according to any traditional standard..." now Gold is down and we're seeing the "Stop being such a wimp and take it like a man," argument. Chances are sometime around the middle of next year when the economy really starts showing signs of improvement we'll hear rationalizations for record executive salaries and complaints that "this recovery would have happened much sooner if all that Government stimulus money hadn't polluted the business environment and diverted talent away from more productive means." Of course, those arguments will preface calls for the repeal of the new legislation that will be put into place to keep all of this from happening again...which it will, in another 7 to 8 years probably, maybe a little longer. ]]> Fri, 18 Dec 2009 23:35:34 -0500 On Dec 18 08:57 AM yellowhoard wrote:

> In order to profit from investing you need to observe and act accordingly to long term trends.

I agree with Yellowhoard. Personally I think more in the investing business should revisit the work of Voltaire-specifically the plays Candide and Zadig. Maybe even take a swipe at Eric Hoffer's book The True Believer.

A few months ago we had some people trying to sell the line that "Gold will no longer be valued according to any traditional standard..." now Gold is down and we're seeing the "Stop being such a wimp and take it like a man," argument. Chances are sometime around the middle of next year when the economy really starts showing signs of improvement we'll hear rationalizations for record executive salaries and complaints that "this recovery would have happened much sooner if all that Government stimulus money hadn't polluted the business environment and diverted talent away from more productive means." Of course, those arguments will preface calls for the repeal of the new legislation that will be put into place to keep all of this from happening again...which it will, in another 7 to 8 years probably, maybe a little longer. ]]> http://seekingalpha.com/article/178624-housing-sales-moving-to-l?source=feed#comment-811280 811280
1. High unemployment means downward pressure on wages.

2. A decline in average wage-rates means fewer people able to buy homes.

3. Less demand for homes means homes sit on the market for longer and greater pressure from Realtors for sellers to reduce their price expectations.

4. Prices continue to slide...

I'm not saying it's impossible to make money in real estate. A developer who wanted to market compact single story bungalows with senior friendly features (36" 'wheelchair wide' doorways, pre-mounted 'railing ready' wall studs, etc), tons of insulation and Energy Star appliances could still sell homes. ]]> Thu, 17 Dec 2009 17:53:00 -0500
1. High unemployment means downward pressure on wages.

2. A decline in average wage-rates means fewer people able to buy homes.

3. Less demand for homes means homes sit on the market for longer and greater pressure from Realtors for sellers to reduce their price expectations.

4. Prices continue to slide...

I'm not saying it's impossible to make money in real estate. A developer who wanted to market compact single story bungalows with senior friendly features (36" 'wheelchair wide' doorways, pre-mounted 'railing ready' wall studs, etc), tons of insulation and Energy Star appliances could still sell homes. ]]> http://seekingalpha.com/article/178415-first-stocks-then-the-economy-is-job-growth-next?source=feed#comment-809446 809446
Green technology is also an option, but we don't really need more technology or government stimulus at this point. What green technology needs is a "Henry Ford of Windmills" (I may end up being that guy-I'm working on it at the moment) who will focus on affordability and durability rather than packing as many electronic controls and monitoring circuits into a flimsy plastic shell as possible. ]]> Wed, 16 Dec 2009 21:52:08 -0500
Green technology is also an option, but we don't really need more technology or government stimulus at this point. What green technology needs is a "Henry Ford of Windmills" (I may end up being that guy-I'm working on it at the moment) who will focus on affordability and durability rather than packing as many electronic controls and monitoring circuits into a flimsy plastic shell as possible. ]]> http://seekingalpha.com/article/178444-slide-of-doom-u-s-housing-markets-have-peaked?source=feed#comment-808409 808409
Real Estate will continue to decline steadily until the unemployment rate is brought back down to less than about 6 to 7%-what some have projected as the "new normal". Until we reach that threshold, we will continue to see a steady decline in the majority of real estate markets. ]]> Wed, 16 Dec 2009 11:05:54 -0500
Real Estate will continue to decline steadily until the unemployment rate is brought back down to less than about 6 to 7%-what some have projected as the "new normal". Until we reach that threshold, we will continue to see a steady decline in the majority of real estate markets. ]]> http://seekingalpha.com/article/177495-one-recovery-scenario?source=feed#comment-802638 802638

On Dec 10 10:20 PM tuckfinitee wrote:

> Lilbob you meant risk costs. What type of entrepreneurship are you
> referring to? Above ground, underground, or the freebie enterprise
> system?

No I meant Opportunity Costs Tuck. Risk costs refer to the costs of taking on credit to start a business, those remain relatively unchanged. Opportunity cost refers to the wages and benefits one gives up by opting to forgo continuing their association with their current employer. Although the idea sounds far-fetched to some, in the current economy I expect to eventually see a return of businesses largely patterned after Medieval Guild systems. ]]> Sat, 12 Dec 2009 04:15:55 -0500

On Dec 10 10:20 PM tuckfinitee wrote:

> Lilbob you meant risk costs. What type of entrepreneurship are you
> referring to? Above ground, underground, or the freebie enterprise
> system?

No I meant Opportunity Costs Tuck. Risk costs refer to the costs of taking on credit to start a business, those remain relatively unchanged. Opportunity cost refers to the wages and benefits one gives up by opting to forgo continuing their association with their current employer. Although the idea sounds far-fetched to some, in the current economy I expect to eventually see a return of businesses largely patterned after Medieval Guild systems. ]]> http://seekingalpha.com/article/177495-one-recovery-scenario?source=feed#comment-799493 799493
When wages and benefits from existing employers decrease the opportunity costs for those considering starting their own business are minimized, and we are likely to see an increase in entrepreneurship. Right now it's just a matter of "finding the bottom," the point where enough people get sick of what they are getting with the jobs they have and they decide to jump ship and start out on their own. Unfortunately that process is rather hard to predict, it's analogous to what has to happen before a drunk decides he's had enough and it's time to stop drinking. ]]> Thu, 10 Dec 2009 08:15:11 -0500
When wages and benefits from existing employers decrease the opportunity costs for those considering starting their own business are minimized, and we are likely to see an increase in entrepreneurship. Right now it's just a matter of "finding the bottom," the point where enough people get sick of what they are getting with the jobs they have and they decide to jump ship and start out on their own. Unfortunately that process is rather hard to predict, it's analogous to what has to happen before a drunk decides he's had enough and it's time to stop drinking. ]]> http://seekingalpha.com/article/175004-too-big-to-fail-vs-too-political-to-regulate?source=feed#comment-775204 775204
The means of investment and regulation are incidental. The cause of all this mess is the foible of human nature which Voltaire described to us several hundred years ago. Adding regulation is just a means of deciding there are more things that really aren't honest enough to be considered strictly legal so those who work on the edges ideas such as honesty and legality have to be a little more creative. ]]> Tue, 24 Nov 2009 11:04:12 -0500
The means of investment and regulation are incidental. The cause of all this mess is the foible of human nature which Voltaire described to us several hundred years ago. Adding regulation is just a means of deciding there are more things that really aren't honest enough to be considered strictly legal so those who work on the edges ideas such as honesty and legality have to be a little more creative. ]]> http://seekingalpha.com/article/174675-is-the-market-reversal-already-happening?source=feed#comment-772095 772095
This could be more than just a little market correction, this could be the second half of that "W" shaped recession we're heading into. ]]> Sun, 22 Nov 2009 15:10:23 -0500
This could be more than just a little market correction, this could be the second half of that "W" shaped recession we're heading into. ]]> http://seekingalpha.com/article/174455-oil-weakness-could-intensify?source=feed#comment-769873 769873
We may have reached the point where the market has worked it's pricing magic and fuel prices have reached a plateau, $20/gallon oil will never happen as we've reached the price point where people are getting hit badly enough at the pump to start thinking about how to change their consumption habits. As high unemployment continues to exert downward pressure on wages-and this effect will be long-term; likely lasting for the next 5 to 10 years cumulatively-we can expect oil prices to remain relatively constant over that same 5 to 10 year period regardless of inflation in other components of the CPI. ]]> Fri, 20 Nov 2009 19:34:12 -0500
We may have reached the point where the market has worked it's pricing magic and fuel prices have reached a plateau, $20/gallon oil will never happen as we've reached the price point where people are getting hit badly enough at the pump to start thinking about how to change their consumption habits. As high unemployment continues to exert downward pressure on wages-and this effect will be long-term; likely lasting for the next 5 to 10 years cumulatively-we can expect oil prices to remain relatively constant over that same 5 to 10 year period regardless of inflation in other components of the CPI. ]]> http://seekingalpha.com/article/174486-velocity-of-u-s-money-supply-is-finally-edging-up?source=feed#comment-769865 769865

On Nov 20 07:22 PM LilBob wrote:

>
> On Nov 20 09:49 AM enigmaman wrote:
>
> ...the Fed has to consider when to start to reduce]]> Fri, 20 Nov 2009 19:24:14 -0500

On Nov 20 07:22 PM LilBob wrote:

>
> On Nov 20 09:49 AM enigmaman wrote:
>
> ...the Fed has to consider when to start to reduce]]> http://seekingalpha.com/article/174486-velocity-of-u-s-money-supply-is-finally-edging-up?source=feed#comment-769863 769863 On Nov 20 09:49 AM enigmaman wrote:

...the Fed has to consider when to start to reduce
> liquidity so that inflation can be controlled, start to early and
> we fall into a double dip recession, to late and we face the problems
> of higher inflation for the foreseeable future, It seems like we
> are approaching the economic tipping point and all eyes will be on
> the Fed.

It's sort of like a Mexican standoff Enigma. Banks won't start lending capital for new ventures utnil we see an upswing in consumer spending, which isn't going to happen until we see an improvement in employment figures, which won't happen until we see employers start hiring again, employers aren't going to start hiring again until banks start lending so it's less difficult and less costly to get short term payroll financing...]]> Fri, 20 Nov 2009 19:22:41 -0500 On Nov 20 09:49 AM enigmaman wrote:

...the Fed has to consider when to start to reduce
> liquidity so that inflation can be controlled, start to early and
> we fall into a double dip recession, to late and we face the problems
> of higher inflation for the foreseeable future, It seems like we
> are approaching the economic tipping point and all eyes will be on
> the Fed.

It's sort of like a Mexican standoff Enigma. Banks won't start lending capital for new ventures utnil we see an upswing in consumer spending, which isn't going to happen until we see an improvement in employment figures, which won't happen until we see employers start hiring again, employers aren't going to start hiring again until banks start lending so it's less difficult and less costly to get short term payroll financing...]]> http://seekingalpha.com/article/173769-christmas-comes-early-key-retailer-cds-equity-relationships?source=feed#comment-764227 764227
Some more realistic advice, and personal observations lately seem to be bearing out this prediction: focus on discount retailers-such as those I've named above-that get a lot of their stock from other retailers' closeouts. The quality of items in these stores is surprisingly good this season because with so many retailers going out of business they've been able to pick up enormous quantities of high quality stock. Those companies that are positioned to profit from the wreckage of others' failed business plans are the ones to watch right now. ]]> Tue, 17 Nov 2009 15:19:02 -0500
Some more realistic advice, and personal observations lately seem to be bearing out this prediction: focus on discount retailers-such as those I've named above-that get a lot of their stock from other retailers' closeouts. The quality of items in these stores is surprisingly good this season because with so many retailers going out of business they've been able to pick up enormous quantities of high quality stock. Those companies that are positioned to profit from the wreckage of others' failed business plans are the ones to watch right now. ]]> http://seekingalpha.com/article/173714-marc-faber-doesn-t-think-gold-will-go-below-1-000?source=feed#comment-763592 763592
I'm also convinced that the increasing stock market is largely a result of millions of retail investors who've cut back on personal spending and-having few other options-are sinking a greater portion of their income into equities based retirement plans. I predict limited growth in equities value as growth in employment and consumer-spending is complemented by an increased willingness by consumers to spend a little more freely. With a bit of luck there is the possibility that recent growth will plateau rather than fall as this phenomenon occurs. ]]> Tue, 17 Nov 2009 09:36:49 -0500
I'm also convinced that the increasing stock market is largely a result of millions of retail investors who've cut back on personal spending and-having few other options-are sinking a greater portion of their income into equities based retirement plans. I predict limited growth in equities value as growth in employment and consumer-spending is complemented by an increased willingness by consumers to spend a little more freely. With a bit of luck there is the possibility that recent growth will plateau rather than fall as this phenomenon occurs. ]]> http://seekingalpha.com/article/173502-is-jeff-matthews-call-for-a-growth-surprise-mistaken-or-early?source=feed#comment-762742 762742 Mon, 16 Nov 2009 17:36:35 -0500 http://seekingalpha.com/article/173390-time-for-the-u-s-economy-to-reindustrialize?source=feed#comment-761083 761083 Sun, 15 Nov 2009 14:03:49 -0500 http://seekingalpha.com/article/173397-the-real-reasons-behind-our-stupidity-economy?source=feed#comment-760731 760731
The real source of this recession-as I see it-is (as you mention) the concentration of wealth in the hands of too few families; and this is largely a result of too many Americans buying into the "be a team player" and "keeping up with the Joneses" mentalities that have permeated American culture for years. We have been trained as a subservient people and are instructed to think that American Business is all-knowing and all powerful and you shouldn't worry too much about starting your own business because "anything you can think of "The big guys" have already thought of and if they aren't doing it there's probably no money there anyways."

We in this nation are going to have to pull ourselves out of this recession by our boot-straps. If the government were really interested in fixing our economy we'd see a lot more anti-trust legislation aimed at fostering free-market competition, and a lot less of these massive government programs that appear to do little but provide an excuse for distributing more tax money to institutional interests.

What we really need at this point is a modern day version of the French Revolution, only this time we'll do it with sustainable business practices and free-market competition rather than angry mobs and guillotines. ]]> Sun, 15 Nov 2009 07:54:15 -0500
The real source of this recession-as I see it-is (as you mention) the concentration of wealth in the hands of too few families; and this is largely a result of too many Americans buying into the "be a team player" and "keeping up with the Joneses" mentalities that have permeated American culture for years. We have been trained as a subservient people and are instructed to think that American Business is all-knowing and all powerful and you shouldn't worry too much about starting your own business because "anything you can think of "The big guys" have already thought of and if they aren't doing it there's probably no money there anyways."

We in this nation are going to have to pull ourselves out of this recession by our boot-straps. If the government were really interested in fixing our economy we'd see a lot more anti-trust legislation aimed at fostering free-market competition, and a lot less of these massive government programs that appear to do little but provide an excuse for distributing more tax money to institutional interests.

What we really need at this point is a modern day version of the French Revolution, only this time we'll do it with sustainable business practices and free-market competition rather than angry mobs and guillotines. ]]> http://seekingalpha.com/article/173301-japan-parallels-are-too-close-for-comfort?source=feed#comment-759490 759490
Entrepreneurs are needed to bring us out of our current economic malaise. And until there is a general understanding that the bearers of the status quo probably aren't the ones we should be looking to for guidance then we aren't going to see any real change or improvement. Alternative energy has the potential to bring us a good ways towards prosperity but until we start to see more (like myself) who are assembling business plans and working through those SBA tutorials and less of existing corporate entities whining to the government for corporate welfare subsidies we aren't likely to see any real or permanent improvement. ]]> Fri, 13 Nov 2009 19:03:12 -0500
Entrepreneurs are needed to bring us out of our current economic malaise. And until there is a general understanding that the bearers of the status quo probably aren't the ones we should be looking to for guidance then we aren't going to see any real change or improvement. Alternative energy has the potential to bring us a good ways towards prosperity but until we start to see more (like myself) who are assembling business plans and working through those SBA tutorials and less of existing corporate entities whining to the government for corporate welfare subsidies we aren't likely to see any real or permanent improvement. ]]> http://seekingalpha.com/article/173300-consumer-sentiment-continues-to-falter?source=feed#comment-759368 759368

On Nov 13 04:59 PM robert.b.ferguson wrote:

> While I'm as baffled as David Fry is about consumer indexes the Dollar
> General (DG) and Rue21 (RUE) IPOs from Friday are up 6% and 26% respectively.
> Consumer discretionary any one?

I'm surprised those IPO figures aren't the other way around RBF. The Dollar General near me is second only to the Dollar Tree and Salvation Army stores in customer traffic. ]]> Fri, 13 Nov 2009 17:05:07 -0500

On Nov 13 04:59 PM robert.b.ferguson wrote:

> While I'm as baffled as David Fry is about consumer indexes the Dollar
> General (DG) and Rue21 (RUE) IPOs from Friday are up 6% and 26% respectively.
> Consumer discretionary any one?

I'm surprised those IPO figures aren't the other way around RBF. The Dollar General near me is second only to the Dollar Tree and Salvation Army stores in customer traffic. ]]> http://seekingalpha.com/article/172489-analyzing-u-s-economy-in-terms-of-housing?source=feed#comment-756335 756335
It also appears that the top of the real estate market-homes over 1 million are beginning to stabilize. Buyers of these homes are obviously wealthier individuals who are seeing some of the value returning to their investment portfolios, although many homes in this part of the market have lost hundreds of thousands and sometimes even millions in market value over the course of the last three years.

The big losers right now are those stuck with suburban McMansions which originally sold for anywhere from $350k to 600k. Literally thousands of homes in this price range were thrown up during the real estate boom and purchased by individuals who didn't seem to realize that they were buying more home than they could afford. Add to that, many of these homes were built by unscrupulous developers and it's not uncommon in neighborhoods in this price range to see literally pathetic examples of poor quality materials and workmanship on full display. There are some neighborhoods right near where I live and it's not uncommon to see paint falling off of homes in large flakes because boards weren't properly primed, sides of homes being dug up because basement walls have collapsed or improperly placed landscaping has caused foundation problems, sagging and cracking brickwork, etc. There is no bottom for many of these homes which were built by fly-by-night developers with no sense of integrity or quality. These homes will likely end up being purchased by the municipalities where they reside and bulldozed. ]]> Wed, 11 Nov 2009 19:57:46 -0500
It also appears that the top of the real estate market-homes over 1 million are beginning to stabilize. Buyers of these homes are obviously wealthier individuals who are seeing some of the value returning to their investment portfolios, although many homes in this part of the market have lost hundreds of thousands and sometimes even millions in market value over the course of the last three years.

The big losers right now are those stuck with suburban McMansions which originally sold for anywhere from $350k to 600k. Literally thousands of homes in this price range were thrown up during the real estate boom and purchased by individuals who didn't seem to realize that they were buying more home than they could afford. Add to that, many of these homes were built by unscrupulous developers and it's not uncommon in neighborhoods in this price range to see literally pathetic examples of poor quality materials and workmanship on full display. There are some neighborhoods right near where I live and it's not uncommon to see paint falling off of homes in large flakes because boards weren't properly primed, sides of homes being dug up because basement walls have collapsed or improperly placed landscaping has caused foundation problems, sagging and cracking brickwork, etc. There is no bottom for many of these homes which were built by fly-by-night developers with no sense of integrity or quality. These homes will likely end up being purchased by the municipalities where they reside and bulldozed. ]]> http://seekingalpha.com/article/172386-don-t-believe-long-term-oil-forecasts-part-ii?source=feed#comment-755051 755051 Wed, 11 Nov 2009 07:51:52 -0500 http://seekingalpha.com/article/172728-u-s-wages-are-out-of-balance-as-we-well-know?source=feed#comment-755036 755036
Right now there seems to be a growing mass of business leaders and investors out there who are convinced that we need to do two things to get the economy on track:

1. Get American consumers to start spending again.

2. Get American workers to accept lower wages-including elimination of the minimum wage laws.

We all know that Wall Street and Political types are perfectly willing to enage in a seperation from reality when it suits their political or financial interests, but to anyone who lives on planet earth, it should be obvious that trying to reconcile the two goals listed above makes about as much sense as trying to take the cure by having a shot of whiskey with your bowl of bran flakes every morning.

The real solution to America's competitiveness problem is to have a greater number of entrepreneurs to challenge the oligopolistic market structures of the US and eat the lunch of the overgrown, over-leveraged corporate dinosaurs that have bought up lobbyists and Congressman and are dragging this country into the gutter. ]]> Wed, 11 Nov 2009 07:28:36 -0500
Right now there seems to be a growing mass of business leaders and investors out there who are convinced that we need to do two things to get the economy on track:

1. Get American consumers to start spending again.

2. Get American workers to accept lower wages-including elimination of the minimum wage laws.

We all know that Wall Street and Political types are perfectly willing to enage in a seperation from reality when it suits their political or financial interests, but to anyone who lives on planet earth, it should be obvious that trying to reconcile the two goals listed above makes about as much sense as trying to take the cure by having a shot of whiskey with your bowl of bran flakes every morning.

The real solution to America's competitiveness problem is to have a greater number of entrepreneurs to challenge the oligopolistic market structures of the US and eat the lunch of the overgrown, over-leveraged corporate dinosaurs that have bought up lobbyists and Congressman and are dragging this country into the gutter. ]]> http://seekingalpha.com/article/172256-bonds-signal-inflation-is-coming?source=feed#comment-754389 754389

On Nov 10 01:32 AM Northern Dancer wrote:

>
> LilBob, I have to respectfully disagree with you about inflation
> being "ultimately a consumer driven phenomena". That isn't the case
> at all, although it appears to be. Inflation is caused by too many
> dollars chasing too few goods. Let's take grains for example. When
> the price of grains is driven up by too many dollars chasing too
> little grain, the price of flour is going to rise whether the baker
> likes it or not...

We seem to be arguing both sides of the same coin Dancer. You are absolutely right about too many dollars chasing too few goods. But also, any good ultimately has to have a consumer to purchase it, or that good is inherently worthless. The use of aggressive leveraging of capital to drive up futures shares can temporarily increase costs, but if consumers revolt and reduce their consumption of goods significantly then prices will eventually fall back down again. That's why I often mention the (much hated by some) Threshold of Elasticity concept-which refers to the price point at which a good which was initially thought to have inelastic demand characteristics begins to show significant signs of increased demand elasticity. Just look at what happened to gas prices in the summer of 2008, after pump prices reached a nationwide average of around 3.85 a gallon, consumers turned to car-pooling and park and ride lots and nationwide fuel consumption dropped by around 4%-which eventually resulted in gas prices falling by around a dollar a gallon. Aggressive leveraging and futures-trading can only push prices up for so long before customer revolt annihilates asset values. We also have to contend with what I call the "Burnt-Finger Effect", which refers to when a run up in prices leads to lingering consumer resentments agains producers that results in a steady decline of the Threshold of Elasticity price point for a given good. American consumers are angry right now and we really are living in an age which bears significant similarities to the "Trust-Busting" age of the early 20th century and the first Roosevelt administration. The notion that market prices are independent of consumer behavior is a potentially dangerous one, and contributes to the formation, and spectacular destruction of market bubbles. ]]> Tue, 10 Nov 2009 17:19:50 -0500

On Nov 10 01:32 AM Northern Dancer wrote:

>
> LilBob, I have to respectfully disagree with you about inflation
> being "ultimately a consumer driven phenomena". That isn't the case
> at all, although it appears to be. Inflation is caused by too many
> dollars chasing too few goods. Let's take grains for example. When
> the price of grains is driven up by too many dollars chasing too
> little grain, the price of flour is going to rise whether the baker
> likes it or not...

We seem to be arguing both sides of the same coin Dancer. You are absolutely right about too many dollars chasing too few goods. But also, any good ultimately has to have a consumer to purchase it, or that good is inherently worthless. The use of aggressive leveraging of capital to drive up futures shares can temporarily increase costs, but if consumers revolt and reduce their consumption of goods significantly then prices will eventually fall back down again. That's why I often mention the (much hated by some) Threshold of Elasticity concept-which refers to the price point at which a good which was initially thought to have inelastic demand characteristics begins to show significant signs of increased demand elasticity. Just look at what happened to gas prices in the summer of 2008, after pump prices reached a nationwide average of around 3.85 a gallon, consumers turned to car-pooling and park and ride lots and nationwide fuel consumption dropped by around 4%-which eventually resulted in gas prices falling by around a dollar a gallon. Aggressive leveraging and futures-trading can only push prices up for so long before customer revolt annihilates asset values. We also have to contend with what I call the "Burnt-Finger Effect", which refers to when a run up in prices leads to lingering consumer resentments agains producers that results in a steady decline of the Threshold of Elasticity price point for a given good. American consumers are angry right now and we really are living in an age which bears significant similarities to the "Trust-Busting" age of the early 20th century and the first Roosevelt administration. The notion that market prices are independent of consumer behavior is a potentially dangerous one, and contributes to the formation, and spectacular destruction of market bubbles. ]]> http://seekingalpha.com/article/172256-bonds-signal-inflation-is-coming?source=feed#comment-753362 753362 Mon, 09 Nov 2009 23:31:22 -0500 http://seekingalpha.com/article/172299-today-in-commodities-strength-vs-dollar-weakness?source=feed#comment-753040 753040
I'm also very skeptical of metals right now. We're seeing a lot of "Bubble-Style" pro-gold jingoism in the investment presses right now and that to me is a sure-fire sign of an impending and massive price crash. ]]> Mon, 09 Nov 2009 18:23:23 -0500
I'm also very skeptical of metals right now. We're seeing a lot of "Bubble-Style" pro-gold jingoism in the investment presses right now and that to me is a sure-fire sign of an impending and massive price crash. ]]> http://seekingalpha.com/article/172304-unemployment-retail-numbers-don-t-add-up?source=feed#comment-753033 753033
I don't wish to sound like one of those overly optimistic perma-bull types but this phenomenon is actually a very positive trend because as employment does eventually start to pick up a retail economy that is based more on cash and less on credit cards will result in less money in the hands of Too Big To Fail banks and more money for providers of goods and services. ]]> Mon, 09 Nov 2009 18:09:28 -0500
I don't wish to sound like one of those overly optimistic perma-bull types but this phenomenon is actually a very positive trend because as employment does eventually start to pick up a retail economy that is based more on cash and less on credit cards will result in less money in the hands of Too Big To Fail banks and more money for providers of goods and services. ]]> http://seekingalpha.com/article/171904-consumer-credit-dreadful?source=feed#comment-750138 750138
> Most of the people you know are maxed out? Most of the people I know are not. So neither is a norm then.

I have to side with Neon here. Most of the people that I talk to are in nearly the exact same spot that I am personally-having either recently paid off, or nearing the point of paying off all of their credit cards and minimizing other expenses, they are trying to hustle second jobs or contract work on the side and are talking about trying to use cash more and only use the credit card for things like plane tickets, where using cash involves a huge last minute premium penalty. ]]> Sat, 07 Nov 2009 16:49:15 -0500
> Most of the people you know are maxed out? Most of the people I know are not. So neither is a norm then.

I have to side with Neon here. Most of the people that I talk to are in nearly the exact same spot that I am personally-having either recently paid off, or nearing the point of paying off all of their credit cards and minimizing other expenses, they are trying to hustle second jobs or contract work on the side and are talking about trying to use cash more and only use the credit card for things like plane tickets, where using cash involves a huge last minute premium penalty. ]]> http://seekingalpha.com/article/171904-consumer-credit-dreadful?source=feed#comment-749698 749698 Sat, 07 Nov 2009 08:49:45 -0500