morph366's Comments RSS Syndication from SeekingAlpha.com http://seekingalpha.comuser/224836/comments http://seekingalpha.com/article/171839-a-global-problem-with-no-solution?source=feed#comment-748321 748321
Over the last 9 years since the Nasdaq bubble popped the White House, Fed and its various incumbents have had a plan - keep encouraging the financial sector to find new bubbles to inflate.]]> Fri, 06 Nov 2009 12:57:00 -0500
Over the last 9 years since the Nasdaq bubble popped the White House, Fed and its various incumbents have had a plan - keep encouraging the financial sector to find new bubbles to inflate.]]> http://seekingalpha.com/article/171826-dear-fed-the-problem-is-solvency-not-liquidity?source=feed#comment-748069 748069 It's reminiscent of the way that Japan dealt with the bursting of its bubble since 1990.]]> Fri, 06 Nov 2009 11:09:36 -0500 It's reminiscent of the way that Japan dealt with the bursting of its bubble since 1990.]]> http://seekingalpha.com/article/171726-does-anyone-actually-believe-in-market-efficiency?source=feed#comment-748011 748011 Fri, 06 Nov 2009 10:45:09 -0500 http://seekingalpha.com/article/170433-u-s-accounting-irregularities-not-exception-to-the-rule?source=feed#comment-739486 739486 Sun, 01 Nov 2009 14:40:02 -0500 http://seekingalpha.com/instablog/394803-andrew-butter/33246-s-p-case-shiller-rolling-over?source=feed#comment-738553 738553
Can I make a suggestion about what would be a good wheeze?

When you buy a car under certain credit arrangements you end up borrowing a certain amount over a period of 3/4 years and then you pay off a balloon payment. This makes the monthly debt servicing costs more palatable for the typical budget constrained consumer.

Why not use similar logic and have the Treasury and/or Fed re-structure the public finances in a similar manner so that the annual debt service is reduced and that a large portion of the debt is re-classified as a balloon which doesn't get paid off until the end?]]> Sat, 31 Oct 2009 14:20:23 -0400
Can I make a suggestion about what would be a good wheeze?

When you buy a car under certain credit arrangements you end up borrowing a certain amount over a period of 3/4 years and then you pay off a balloon payment. This makes the monthly debt servicing costs more palatable for the typical budget constrained consumer.

Why not use similar logic and have the Treasury and/or Fed re-structure the public finances in a similar manner so that the annual debt service is reduced and that a large portion of the debt is re-classified as a balloon which doesn't get paid off until the end?]]> http://seekingalpha.com/instablog/394803-andrew-butter/33791-the-us-recession-is-not-over-but-the-party-is?source=feed#comment-738535 738535 If one wants to apportion blame it is hard to know who is the more reprobate - the great pretenders or those gullible enough to indulge their pretences.]]> Sat, 31 Oct 2009 13:55:22 -0400 If one wants to apportion blame it is hard to know who is the more reprobate - the great pretenders or those gullible enough to indulge their pretences.]]> http://seekingalpha.com/article/170147-how-and-when-will-the-fed-reverse-the-huge-addition-to-bank-reserves?source=feed#comment-738511 738511
"For every problem there is one solution which is simple, neat, and wrong."]]> Sat, 31 Oct 2009 13:29:58 -0400
"For every problem there is one solution which is simple, neat, and wrong."]]> http://seekingalpha.com/article/170282-down-fridays?source=feed#comment-738379 738379
There are a lot of traders on the short side hoping that Monday will see exactly that kind of follow through... perhaps too many!]]> Sat, 31 Oct 2009 11:13:19 -0400
There are a lot of traders on the short side hoping that Monday will see exactly that kind of follow through... perhaps too many!]]> http://seekingalpha.com/article/170228-dollar-delight-at-equity-slump?source=feed#comment-738375 738375 When you say that "the global economy requires a strong dollar to more easily make the next leg higher in business cycle trade." it is not at all clear whether that is either required or what the policy-makers want to see happen. As long as the dollar doesn't plummet or become too erratic the conventional wisdom seems to be that the dollar should remain "cheap" to promote US exports.

What is the reason behind invoking 1150 on the S&P 500 and why does it have to be next month?]]> Sat, 31 Oct 2009 11:10:07 -0400 When you say that "the global economy requires a strong dollar to more easily make the next leg higher in business cycle trade." it is not at all clear whether that is either required or what the policy-makers want to see happen. As long as the dollar doesn't plummet or become too erratic the conventional wisdom seems to be that the dollar should remain "cheap" to promote US exports.

What is the reason behind invoking 1150 on the S&P 500 and why does it have to be next month?]]> http://seekingalpha.com/article/168533-warning-the-coming-credit-dislocation?source=feed#comment-734404 734404 Now (as per Borat) not so much!]]> Wed, 28 Oct 2009 15:51:45 -0400 Now (as per Borat) not so much!]]> http://seekingalpha.com/article/168911-here-s-why-asia-must-eventually-ditch-the-dollar?source=feed#comment-732042 732042
Not to be pedantic but it was Nixon in 1971 who cut the convertibility to gold]]> Tue, 27 Oct 2009 08:43:43 -0400
Not to be pedantic but it was Nixon in 1971 who cut the convertibility to gold]]> http://seekingalpha.com/article/167606-ppi-an-economic-frost-warning?source=feed#comment-722311 722311 A deflationary spiral is part economic and part psychological and to get out of one is a very tricky proposition even for the Fed with its control of effectively unlimited public funds
So far despite all of the efforts to boost asset prices, there is no urgency in the supply chain and no real pricing power because those in the front line know that there is still a notable timidity in final demand.]]> Tue, 20 Oct 2009 13:10:36 -0400 A deflationary spiral is part economic and part psychological and to get out of one is a very tricky proposition even for the Fed with its control of effectively unlimited public funds
So far despite all of the efforts to boost asset prices, there is no urgency in the supply chain and no real pricing power because those in the front line know that there is still a notable timidity in final demand.]]> http://seekingalpha.com/article/166695-the-gold-dollar-inverse-relationship?source=feed#comment-716470 716470

There is at least one currency where gold has appreciated more than it has against the dollar over the last five years - UK sterling.]]> Thu, 15 Oct 2009 12:33:27 -0400

There is at least one currency where gold has appreciated more than it has against the dollar over the last five years - UK sterling.]]> http://seekingalpha.com/article/166652-spare-a-dollar-why-we-need-a-new-monetary-system-now?source=feed#comment-716067 716067 What I don't understand is the assertion by Martin Wolf that dollar weakness will help to alleviate deflation in the US. When many of the nations that the US would want to export to are pegging their currencies to the US dollar doesn't that mean that deflation is in fact being exported back to them?]]> Thu, 15 Oct 2009 07:41:01 -0400 What I don't understand is the assertion by Martin Wolf that dollar weakness will help to alleviate deflation in the US. When many of the nations that the US would want to export to are pegging their currencies to the US dollar doesn't that mean that deflation is in fact being exported back to them?]]> http://seekingalpha.com/instablog/343824-yellowhoard/31022-i-nominate-miss-alabama-for-the-nobel-peace-prize?source=feed#comment-710342 710342
"When Henry Kissinger won the Nobel Peace Prize in 1973, the distinguished musical satirist Tom Lehrer decided that he could no longer perform. "It was at that moment that satire died," says Lehrer, "There was nothing more to say after that." ]]> Fri, 09 Oct 2009 10:48:43 -0400
"When Henry Kissinger won the Nobel Peace Prize in 1973, the distinguished musical satirist Tom Lehrer decided that he could no longer perform. "It was at that moment that satire died," says Lehrer, "There was nothing more to say after that." ]]> http://seekingalpha.com/article/165248-the-time-for-diversification-away-from-the-dollar-is-upon-us?source=feed#comment-708890 708890
Sad to say but I think the world is losing faith in Washington DC and Wall Street ]]> Thu, 08 Oct 2009 12:52:23 -0400
Sad to say but I think the world is losing faith in Washington DC and Wall Street ]]> http://seekingalpha.com/article/165439-the-currency-cabal?source=feed#comment-708776 708776 "Although a nation whose currency enjoys reserve status is given a great many advantages, the privilege does come with responsibility."

It is the sense that the US has abdicated its responsibility with respect to being the custodian of the reserve currency, in order to look after its internal agenda, which is driving the move towards another - more diversified - model for international settlements]]> Thu, 08 Oct 2009 11:56:51 -0400 "Although a nation whose currency enjoys reserve status is given a great many advantages, the privilege does come with responsibility."

It is the sense that the US has abdicated its responsibility with respect to being the custodian of the reserve currency, in order to look after its internal agenda, which is driving the move towards another - more diversified - model for international settlements]]> http://seekingalpha.com/article/165446-china-wants-a-global-currency-here-s-how?source=feed#comment-708752 708752
1. It is not clear that the mature, post-industrial economies, with the exception of those endowed with lots of natural resources (e.g. Canada and Australia), have sufficient goods and services to offer emerging market economies to really address the fundamental imbalances in current account
2. Many service based businesses in the US are inherently localized and do not provide an exportable offering.
3. It is not clear that emerging market consumers with discretionary income will exhibit similar appetites for binges to those indoctrinated with the notions of "lifestyle entitlement" ("Spoil yourself - you deserve it") which is endemic in the US, and elsewhere such as the UK and parts of the EU.
4. Prices of US produced goods (and the wages for those who produce them) would have to come down a lot in order to be affordable even for the aspiring consumers in the BRIC world.
5. More pertinently prices would also have to erode further to be affordable to the domestic consumers in the US and EU if, in the spirit of unregulated exchange rates and freer trade, there were no longer the protections supplied by these governments to "manage" trade and macro-economic policy.

There were many reasons behind the bubble of the early part of this decade as alluded to in the post from Cautious Investor, and the suspicion is that the new efforts to inflate the bubble again are a recognition that a laissez-faire approach with freely floating exchange rates, free trade and other mythology from neo-classical economics does not provide a solution as proposed.]]> Thu, 08 Oct 2009 11:42:45 -0400
1. It is not clear that the mature, post-industrial economies, with the exception of those endowed with lots of natural resources (e.g. Canada and Australia), have sufficient goods and services to offer emerging market economies to really address the fundamental imbalances in current account
2. Many service based businesses in the US are inherently localized and do not provide an exportable offering.
3. It is not clear that emerging market consumers with discretionary income will exhibit similar appetites for binges to those indoctrinated with the notions of "lifestyle entitlement" ("Spoil yourself - you deserve it") which is endemic in the US, and elsewhere such as the UK and parts of the EU.
4. Prices of US produced goods (and the wages for those who produce them) would have to come down a lot in order to be affordable even for the aspiring consumers in the BRIC world.
5. More pertinently prices would also have to erode further to be affordable to the domestic consumers in the US and EU if, in the spirit of unregulated exchange rates and freer trade, there were no longer the protections supplied by these governments to "manage" trade and macro-economic policy.

There were many reasons behind the bubble of the early part of this decade as alluded to in the post from Cautious Investor, and the suspicion is that the new efforts to inflate the bubble again are a recognition that a laissez-faire approach with freely floating exchange rates, free trade and other mythology from neo-classical economics does not provide a solution as proposed.]]> http://seekingalpha.com/article/165420-the-great-shift-china-rising-u-s-falling?source=feed#comment-708276 708276 As the old saying goes, man does not live by bread alone and the need for "circuses" and powerful "memes" as well is very much a part of the overall mix that will continue to shape global commerce.
The contributions that Hollywood has made to "branding" the US dollar as a globally accepted instrument of value are a powerful counter-force to the ineptitude of its bankers ]]> Thu, 08 Oct 2009 06:43:41 -0400 As the old saying goes, man does not live by bread alone and the need for "circuses" and powerful "memes" as well is very much a part of the overall mix that will continue to shape global commerce.
The contributions that Hollywood has made to "branding" the US dollar as a globally accepted instrument of value are a powerful counter-force to the ineptitude of its bankers ]]> http://seekingalpha.com/article/165468-political-will-for-reform-and-the-concept-of-corporate-communism?source=feed#comment-708271 708271
The takeaway from Bak's experiments was that the sand piles are examples of self-organized criticality and highly unstable where there is no linear relationship between the cause (the addition of one tiny grain of sand) and the disproportionately large effects i.e. a massive avalanche or to apply the metaphor to the financial world - a potential systemic meltdown.

The only economist that I am aware of that has put this fundamental and inherent tendency towards financial instability at the heart of his economic analysis is Hyman Minsky.

Alas, I think that no matter how we try to re-structure the banking system and even if we should get a less corrupt political system, the nature of complex dynamical systems is such that frequent avalanches are something that have to be factored in, at ground level, in any strategy for risk management that goes beyond the ineffective techniques followed by advocates of Modern Portfolio Theory and Value At Risk.]]> Thu, 08 Oct 2009 06:33:06 -0400
The takeaway from Bak's experiments was that the sand piles are examples of self-organized criticality and highly unstable where there is no linear relationship between the cause (the addition of one tiny grain of sand) and the disproportionately large effects i.e. a massive avalanche or to apply the metaphor to the financial world - a potential systemic meltdown.

The only economist that I am aware of that has put this fundamental and inherent tendency towards financial instability at the heart of his economic analysis is Hyman Minsky.

Alas, I think that no matter how we try to re-structure the banking system and even if we should get a less corrupt political system, the nature of complex dynamical systems is such that frequent avalanches are something that have to be factored in, at ground level, in any strategy for risk management that goes beyond the ineffective techniques followed by advocates of Modern Portfolio Theory and Value At Risk.]]> http://seekingalpha.com/instablog/98115-john-lounsbury/30596-mish-and-karl-fight-over-money?source=feed#comment-707078 707078
Your contribution is wonderfully lucid and provocative.

Regarding the question you pose at the end - may I suggest the following difference between using the gold and using the bank loan to purchase my house - and it comes back to the reason why Nixon abandoned gold convertibility in 1971.

There is only a finite amount of gold in existence (and even still to be discovered) so there is an opportunity cost to consider in using it for any particular purpose rather than another.

Theoretically, if one takes a very relaxed view on capital adequacy, or if one provides a safety net in the case where the capital proves to be insufficient, there is virtually no limit to how much notional credit can be created.
In such a world (very much like the one we live in today) the opportunity cost issue does not arise.

This is a much easier system to live with for those who are reluctant to be disciplined by inter-generational accounting, and while this view prevails the illusory nature of wealth creation through credit expansion will continue.]]> Wed, 07 Oct 2009 12:00:49 -0400
Your contribution is wonderfully lucid and provocative.

Regarding the question you pose at the end - may I suggest the following difference between using the gold and using the bank loan to purchase my house - and it comes back to the reason why Nixon abandoned gold convertibility in 1971.

There is only a finite amount of gold in existence (and even still to be discovered) so there is an opportunity cost to consider in using it for any particular purpose rather than another.

Theoretically, if one takes a very relaxed view on capital adequacy, or if one provides a safety net in the case where the capital proves to be insufficient, there is virtually no limit to how much notional credit can be created.
In such a world (very much like the one we live in today) the opportunity cost issue does not arise.

This is a much easier system to live with for those who are reluctant to be disciplined by inter-generational accounting, and while this view prevails the illusory nature of wealth creation through credit expansion will continue.]]> http://seekingalpha.com/article/165310-securitization-have-we-learned-our-lesson?source=feed#comment-707015 707015 Wed, 07 Oct 2009 11:38:04 -0400 http://seekingalpha.com/article/165308-don-t-blame-trade-imbalances-for-the-financial-mess?source=feed#comment-706962 706962
One strand that I think is missed in your argument relates to the affordability issue and the diminishing incomes of US households as a result of competition from offshore labour.

You mention that "a bubble occurs when prices go up more than dictated by fundamentals like interest rates" - but perhaps more problematically real estate was rising faster than the average household's ability to afford the (non-subsidized) costs of owning their own homes. To make matters worse they used their home "equity" to continue to enjoy a lifestyle that they could no longer afford.
The reason they could no longer afford to consume the way they had for years was because those in the labour markets in the emerging markets, were not yet aware of the "lifestyle entitlement" mentality.
There may be more to the "imbalances" argument than your piece suggests.]]> Wed, 07 Oct 2009 11:18:56 -0400
One strand that I think is missed in your argument relates to the affordability issue and the diminishing incomes of US households as a result of competition from offshore labour.

You mention that "a bubble occurs when prices go up more than dictated by fundamentals like interest rates" - but perhaps more problematically real estate was rising faster than the average household's ability to afford the (non-subsidized) costs of owning their own homes. To make matters worse they used their home "equity" to continue to enjoy a lifestyle that they could no longer afford.
The reason they could no longer afford to consume the way they had for years was because those in the labour markets in the emerging markets, were not yet aware of the "lifestyle entitlement" mentality.
There may be more to the "imbalances" argument than your piece suggests.]]> http://seekingalpha.com/article/164855-the-uk-moves-first-on-bank-reserves?source=feed#comment-706919 706919
The FSA's proposal regarding the need for UK banks to hold much larger reserves of highly liquid government securities is partly inspired by a new fetish for capital adequacy but also (and perhaps largely) by the need to find buyers for the stunning amounts of gilts that will have to be sold in coming years.
At the moment the Bank of England is buying about one half of all new public debt issuance, and the FSA's motivation in calling for the commercial banks to recognize their civic duty and buy a lot more is to circumvent the nasty situation where, if the Bank stops buying, the UK government might have to finally do what it keeps claiming it will do - but not just yet - and take real steps to put the public finances in order.]]> Wed, 07 Oct 2009 11:04:46 -0400
The FSA's proposal regarding the need for UK banks to hold much larger reserves of highly liquid government securities is partly inspired by a new fetish for capital adequacy but also (and perhaps largely) by the need to find buyers for the stunning amounts of gilts that will have to be sold in coming years.
At the moment the Bank of England is buying about one half of all new public debt issuance, and the FSA's motivation in calling for the commercial banks to recognize their civic duty and buy a lot more is to circumvent the nasty situation where, if the Bank stops buying, the UK government might have to finally do what it keeps claiming it will do - but not just yet - and take real steps to put the public finances in order.]]> http://seekingalpha.com/article/165228-cutting-paulson-some-slack?source=feed#comment-706875 706875 Joe Public is lied to while those inside the magic circle are provided with the necessary and timely information to move ahead of the crowd.
Problem is that Joe Public increasingly doesn't have the wherewithal to be the sucker of last resort.l ]]> Wed, 07 Oct 2009 10:45:31 -0400 Joe Public is lied to while those inside the magic circle are provided with the necessary and timely information to move ahead of the crowd.
Problem is that Joe Public increasingly doesn't have the wherewithal to be the sucker of last resort.l ]]> http://seekingalpha.com/article/165171-gold-hits-record-high?source=feed#comment-706863 706863 Wed, 07 Oct 2009 10:40:03 -0400 http://seekingalpha.com/article/165229-us-dollar-i-m-not-dead-yet?source=feed#comment-706860 706860
The Chinese are increasingly putting their money where they believe it will best preserve its purchasing power - commodities. The world is awash with claims against paper assets and notional wealth, but has a finite and depleting supply of basic resources. These resources are being recognized as a more reliable store of value and according to the simple laws of supply and demand, this will ensure that their value will go up while the value of dollars (and all the other printed stuff) goes down.]]> Wed, 07 Oct 2009 10:37:32 -0400
The Chinese are increasingly putting their money where they believe it will best preserve its purchasing power - commodities. The world is awash with claims against paper assets and notional wealth, but has a finite and depleting supply of basic resources. These resources are being recognized as a more reliable store of value and according to the simple laws of supply and demand, this will ensure that their value will go up while the value of dollars (and all the other printed stuff) goes down.]]> http://seekingalpha.com/article/160717-u-s-begins-to-drain-liquidity?source=feed#comment-669859 669859 Thu, 10 Sep 2009 05:08:19 -0400 http://seekingalpha.com/article/160042-krugman-s-magnum-opus-on-macroeconomics?source=feed#comment-663737 663737
It is sad enough that the most apt description that the great macro-economists can arrive at for the financial economy is that it operates like a casino.
Even sadder when it is becoming increasingly apparent that all of the slot machines and roulette wheels are rigged.]]> Sun, 06 Sep 2009 06:35:31 -0400
It is sad enough that the most apt description that the great macro-economists can arrive at for the financial economy is that it operates like a casino.
Even sadder when it is becoming increasingly apparent that all of the slot machines and roulette wheels are rigged.]]> http://seekingalpha.com/article/158128-the-good-news-about-bernanke?source=feed#comment-645706 645706 Tue, 25 Aug 2009 13:47:35 -0400