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Machiavelli999

Machiavelli999
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  • Bernanke has gotten a lot of grief for his confidence that any recent inflation is "transitory." (I, II, III) But after this week's commodities rout and the latest jobs data showing no wage pressures at all, ol' Ben's starting to look pretty good, isn't he?  [View news story]
    There is absolutely no difference between people like MarquisdeLafayett and the people who say that the world is going to end on May 21st.

    All their beliefs are based on faith. They don't care about textbook economics or science. And most importantly, they can never be proven wrong.
    May 6 07:40 PM | 29 Likes Like |Link to Comment
  • Grownups have gone quiet on both sides of the political aisle, Kash Mansori writes, as a growing number of Democrats join Republicans in threatening to vote against raising the debt ceiling. "The dangerous game in which the possibility of U.S. government default is a bargaining chip does not seem to be over, and in fact seems to be getting new players."  [View news story]
    This SA thread is amazing. It's equivalent to a treatment of a cocaine OD patient. The doctors get together and one of them says, "OK, we need to give him an adrenaline shot right now or he'll die!"

    And then the other wise ones are like: "Ehh..he is a druggie anyway. This will be just another bailout for him. Just let him die"

    The hilarious thing is that all of you actually think you won't be affected by a US default. Or if you think you'll be affected is that you think that maybe your portfolio will fall a bit in value. This really will be ARMAGEDDON. The end for the USA. It's not, "Oh shit, I lost my job" bad. It's "Oh shit, how am I going to get food for me and my family" bad.

    The hilarious thing is that conservatives are always warning us that if we continue our current policies it will be the end of Social Security and Medicare and the government will go bankrupt.

    So, their solutions for this mess is to....... end Social Security and Medicare and send the United States into bankruptcy.

    Lets be serious though. I want a plan from all of you who are against raising the debt ceiling on how we avoid default. Here are some hints: it will require you to close a trillion dollar deficit TODAY! For this you will need to end Social Security, Medicare & Medicaid, as well as all of our foreign adventures RIGHT NOW!

    So, go ahead. Try to detail this plan out for me.
    Apr 29 07:42 PM | 20 Likes Like |Link to Comment
  • The "Giving Pledge" gang - Gates, Buffett, et. al. - are not representative of the "wealthy" whose taxes Obama wants to raise, Evan Newmark writes. "These are the local doctors who treat your mother, the McDonald’s franchise owners who feed your family, the Toyota dealers who sell you a car... America badly needs these 'wealthy' families to do well."  [View news story]
    What these people who are against tax increases on the rich don't understand none of these rich business owners, even the Toyta dealer owners or McDonald franchise restaurant owners would change one thing if you raise their tax rates 3% points. They would grumble and bitch about "socialist Obama" but then they would just keep on doing what they are doing.

    Because they don't make business decisions and definitely not hiring decisions based on 3% points in their tax rate. Their hiring is purely based on how many people they need to meet demand. They don't just hire people because they have some extra money because of lower taxes. They only hire them if they see more consumer spending and more demand. It's all about DEMAND!
    Aug 5 07:05 PM | 18 Likes Like |Link to Comment
  • Obama and the Fed are "killing the real economy to save the banks," Chris Whalen asserts. By allowing banks to heal their wounds through low rates, they embrace a policy of deflation that has horrible consequences for all manner of savers - retirees, companies, non-profits, municipalities - in a "massive, reverse Robin Hood scheme."  [View news story]
    Wow. This is just insane and depressing. As one of the few Obama supporters still left, I see at this point that absolutely no sequence of events will ever get his critics to admit they were wrong.

    For the past year and a half, the line against Obama was "He wants to spend, spend, spend, print, print, print, inflate, inflate, inflate, etc., etc.,etc." And there are still people who are saying it.

    However, for some pundits it has become hard to deny the undeniable deflation percolating through the system. So, what do they do? Do they admit they were wrong? NO!

    No, instead they turn it around and claim that they knew all along that what Obama wanted to do was "embrace a policy of deflation". Are you SERIOUS? How stupid do you think people are... OK, don't answer that.
    Aug 31 06:25 PM | 17 Likes Like |Link to Comment
  • Dr. Keynes is killing the patient, Michael Pento writes. Most Americans know intuitively that reducing their debt burden is in their best interests, but "a few hundred individuals in government believe they know better than the collective wisdom of the entire free market... they are forbidding us from following the common sense path to fiscal health."  [View news story]
    Pento is an idiot. He is doing what all of you are doing. You are making economics into a morality play.

    Answer me this one simple question. If everyone is saving and paying down debts, who is buying? Ultimately, the economy is driven by spending. Someone has to spend.

    There are three choices of who is spending. Private sector. They can't. They are unemployed and in too much debt. Foreign buyers (aka exports). Nope. They are too busy dealing with either their own indebt private sector (developed world) or they are too busy holding down the value of their currencies hoping that they can continue the farce of a world trade system we have today (China).

    So, no private sector. No exports. There is only one entity left that can spend. I know it goes against your religion (I mean idealogy) but it's the governement. Real yields are close to 0%. People are almost paying the government to hold their money. The government must spend it if it is to trigger any growth. And in the long run, the debt burden becomes even worse with no growth.

    It has really gotten to the point of arguing with religious fanatics.
    Aug 20 06:32 PM | 17 Likes Like |Link to Comment
  • Despite cries that letting the Bush tax cuts die would kill any recovery, few dare utter an uncomfortable reality, according to Gregg Easterbrook: Taxes should rise for everyone, not just for the rich. Americans think they're clobbered by onerous taxes, but U.S. taxes are relatively low compared to the rest of the world, and federal income taxes have fallen dramatically.  [View news story]
    Here is a very simple and unrefutable piece of evidence that taxes are low in the United States. Look at the US's last fiscal budget. See the tax revenues.

    Then look up the GDP, which measures the total size of the economy.

    Divide tax revenues / GDP. Write down the percentage value.

    Now pick two or three first world, developed countries of your choice. Go through the same exercise.

    I'll give you a nickel if you find another large, industrial developed country with lower tax revenue as % of GDP than US.
    Jul 29 06:36 PM | 15 Likes Like |Link to Comment
  • The economic lesson the U.S. needs to learn from Japan's disaster: Get your fiscal house in order. Although U.S. government debt as a percentage of GDP is much lower than Japan's, the U.S. depends much more on foreign investors, making it much more vulnerable to events it can’t control.  [View news story]
    I am surprised there is one person in this thread that understands the issue (Tack).

    Soooo...no one actually cares that on this day Japanese bonds actually rose. No one cares? Seriously? OK, then move along, nothing to see here.
    Mar 14 06:44 PM | 14 Likes Like |Link to Comment
  • Permabear David Rosenberg offers 17 reasons to be bullish - seriously! But it's short-term, and the market is still a "meat grinder": "The bulls have the upper hand, but only until the next shoe drops in this modern-day depression..." Whew, that's more like it.  [View news story]
    "do you really believe earning will surpass current estimates?"

    They have been for the past 4 quarters.
    Jul 23 06:54 PM | 14 Likes Like |Link to Comment
  • The Unsustainable Lie of Inflation [View article]
    Well, someone has to stick his head out there into this morass of morality plays and make a case for mild inflation.

    First, let's look at the most objective evidence. What happens when we have deflation? We had basically a deflationary spiral during the Great Depression. Everything got cheaper. Was this a great time for the country then guys?

    What about Japan? It has had mild deflation for the past 20 years (despite 20 years of 0% interest rates and lots and lots of government spending). Is this a great performing economy?

    The answer to both of these questions is NO. The reason? Well, a deflationary spiral creates many problems. The biggest of which is the inability of the private sector to deleverage. For example, in this crisis, everyone agrees that the American private sector is way too overleveraged. And the process of deleveraging is a long one. If everyone tries to deleverage at once, it causes a great drop in demand and hence deflation. The problem with that is that eventhough the private sector might be trying to reduce the nominal value of its debts, if you allow deflation, the real value of its debts will not fall and may even rise. For example, if the private sector pays off 1% of its debts this year but prices are allowed to fall by 2% then effectively the real debt levels have increased. This is what is called a deflationary spiral.

    The second piece of evidence for inflation is that it has worked. Yes, prices have gone up a lot since 1932, but incomes have gone up even more. So, again the nominal value of goods have gone up with mild inflation, but with respect to our incomes, prices have gone down and our purchasing power has increased.

    Finally, its often cited by the goldbugs and Austrians that the dollar has lost something on the order of 90% of its value since the Fed came to be in 1913. Well, I ask, would you rather be a person in the United States before 1913 with these supposedly more valuable dollars or be you right now in 2009 with your supposedly devalued dollars?

    One more thing. Conservative love to blame Keynes for everything. But it is not Keynes who was the main proponent of the mild inflation argument, but the icon of free market economics, Milton Friedman. To appease the Tea Baggers, conservative economic pundits today never mention that had Milton Friedman been alive today he would support pretty much everything the government is doing to battle this recession except for the fiscal stimulus package.
    Nov 10 08:33 AM | 14 Likes Like |Link to Comment
  • Treasury's Geithner warns Congress again with direct details: Inaction on the debt ceiling will drive interest rates up, household wealth down, "catastrophic" defaults on entitlements and service member pay - and a double-dip recession.  [View news story]
    Unreal talk here. We have come completely unhinged. This entire thread is a microcosm of the debate on this topic. Facts DO NOT MATTER AT ALL.

    Yes, neutrinman, the market will love a default. Because you know creditors love NOT getting paid back. Because you know when a homeowner defaults on his mortgage and comes into the bank with a "real plan to cut his spending down", the bank really will give a sh*t at that point.

    I don't think this can be pointed out enough times. So called free market conservatives warn us all the time that if we don't take the necessary hard steps then Medicare and Social Security as we know it will end and the government will go bankrupt. So their solution to this catastrophic outcomes is to............end Medicare and Social Security as we know it and force the United States into bankruptcy.

    The idiocy of this cannot be overstated. It is like the CFO of McDonalds coming into the board meeting of his company and saying, "We have $11.5 Billion in outstanding long term debt. The number has continued to rise over the last several years (This is true) It's so much! We need to declare bankruptcy and end our debt ridden corporation."

    His board would tell him.."Ummm..are you retarded? We are one of the world's richest companies and creditors are falling over themselves to lend money to us.."

    "But..but..but we must declare banktruptcy!"

    By the way, those were all true figures about McDonald's debt.
    May 14 03:52 PM | 13 Likes Like |Link to Comment
  • Dollar's Purchasing Power Annihilated - The Chart They Don't Want You to See [View article]
    This is so stupid, I don't even know where to start. This is like an invitation for all of the gold bugs to come out.

    Why doesn't Tyler Durden make a chart of the purchasing power of the average American over the past 76 years? What he'll see is that it continues to increase. Who cares if an individual dollar is declining in value if everyone is making more and more money. Yes, the inflation rate might be 3% one year, but if wages increase by 5% then purchasing power has increased by 2%. That is the important thing to track here.

    And to archman82011, I guess the decline in the stock market this past fall and winter wasn't so bad either because the dollar had its biggest rally in a generation during that time?

    The point is the Fed WANTS TO make "cash trash". So, that people have to get out of cash and start investing in other asset classes.
    May 9 10:50 AM | 13 Likes Like |Link to Comment
  • The next time you hear Republicans declaring their concern about deficits because of the future of our children, "remember that the clear and present danger to the prospects of young Americans isn’t the deficit," Paul Krugman writes. "It’s the absence of jobs."  [View news story]
    Monetary policy has been and still is TIGHT. It was incredibly tight around last August when the TIPS spread was implying an expected inflation rate of less than 1.5%. Now, it's no longer as bad.

    www.bloomberg.com/apps...

    How can I say that monetary policy is tight? I mean like 'eggfaced' said the Fed basis target is between 0-0.25 points. Well, one of the many forgotten lessons of Milton Friedman is that interest rates are not indicative of a monetary policy stance. Interest rates are just something the central bank decided to target in hopes that it affects the inflation rate. But just because the Fed and all the other central banks of the world have decided to buy a lot of short term government debt and lower the short term rates to 0% doesn't mean that they have been effective in loosening monetary policy. Inflation rates are still low. They are actually better now mostly because of QE2. But up until recently, it has been terrible.

    The BOJ has had 0% interest rates for 20 years. I am sure most people would say it has run loose monetary policy. But in reality? Well, it has had 20 years of deflation and 20 years of falling asset prices. Does that sound like loose monetary policy to you?


    Ultimately, I don't care how low the interest rates are. As long as the expected inflation rate is low, the central bank's monetary policy is tight.
    Mar 18 04:46 PM | 12 Likes Like |Link to Comment
  • The next time you hear Republicans declaring their concern about deficits because of the future of our children, "remember that the clear and present danger to the prospects of young Americans isn’t the deficit," Paul Krugman writes. "It’s the absence of jobs."  [View news story]
    Krugman is wrong but not for the reasons SA readers think.

    In our current environment, it is monetary policy that needs to become less tight rather than fiscal policy. In addition, looser monetary policy doesn't leave us with a huge national debt that has to be paid with future tax revenues. The only risk with monetary policy are possible capitol losses for your central bank because of all the required asset purchases. A risk well worth taking in this environment.
    Mar 18 03:49 PM | 12 Likes Like |Link to Comment
  • Moody's places the U.S. Aaa bond rating on review for downgrade, citing the possibility a debt ceiling deal will not be reached.  [View news story]
    The interesting thing is that US has absolutely no problem meeting its debt obligations. Unless of course it's explicitly disallowed to pay its debts by the Republicans.

    I have said this before and I"ll say it again...

    Republicans have always told us that we spend too much and if we don't get this problem under control we will default on our debt, go bankrupt and ruin our economy.

    The Republican solution for this?.... Default on our debt, go bankrupt and ruin our economy.
    Jul 13 05:08 PM | 11 Likes Like |Link to Comment
  • Texas draws praise for adding jobs faster than other states, but MarketWatch draws back the curtain, saying it's not just a pro-business low-tax approach driving extra payrolls. Critical factors include a rising population and the willingness of residents to work for below-average wages, a recipe not easy to match in other states.
     [View news story]
    "willingness of residents to work for below-average wages"

    This has got to be one of the dumbest things I've ever read. It's almost like the liberals are saying "Those stupid Texans. Can't they see they are being ripped off. Why are they so f*ckin happy?! They need to hate capitalism like the rest of us!"

    The reason that Texans are "willing to work for below-average wages" is because the cost of living in Texas is so much lower. The cost of living is so much lower because of government policies of low taxes, limited regulations and most importantly very limited land use regulations that encourage development and keep the cost of housing low.

    Those are all good things and a credit to the Texas government. What it means in business terms is that a business operating in Texas does not have to pay out as much money to acquire and retain top talent. To put it another way, top talent looks for high quality of living. It takes less money to obtain the high quality of living in Texas than it does in a state like California. Hence, more companies are trying to move to Texas.
    Jul 8 04:39 PM | 11 Likes Like |Link to Comment
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