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  • Will We Know When We've Made a Low? [View article]
    The author makes a good point.

    Personally I am not trying to 'catch the bottom'. I wish to catch the gains during the next bull market and avoid the losses of the current bear market. There is a significant difference.

    Patience pays.
    Oct 17 11:23 AM | Likes Like |Link to Comment
  • Is the S&P 500 at Just the Right Level? [View article]
    The author should repeat the chart 1 exercise with the Dow and start drawing the straight line in 1932. He will find that the market jumps far above the 60 year straight line trend beginning at the point where the author starts his exercise in the early 1980s.

    The bubble started in the 80s with the government's increased deficit spending. The period shown by the author's straight line is growth generated by credit expansion and the sharp jump upward in the mid 90s is the start of the frothy stock bubble. Greenspan's irrational exuberance.

    Extend the longer term straight line growth from the 30s and you will arrive at a more modest estimate for the S&P 500 around 500 instead of 900.

    Reversion to the long term mean will require further drops in the major indices.
    Oct 17 11:18 AM | Likes Like |Link to Comment
  • The Problems of a Non-Independent Fed [View article]
    "The most common asset (US Treasuries - in maroon) has disappeared, and has actually gone negative"

    'Gone negative' implies we have begun printing new money to deal with the current crisis, doesn it not? If the Treasury is creating new debt for the FED to use, it follows that the FED must be creating new money to lend in exchange.

    The FED is out of non-inflationary ammunition. Any future problems will be met by application of the printing press (or its digital equivalent).
    Oct 17 11:04 AM | Likes Like |Link to Comment
  • Have Investors Reached the Point of Maximum Pessimism? [View article]
    The bottom will be near when 'stock' is a dirty word no decent person would dare utter.
    Oct 17 10:44 AM | Likes Like |Link to Comment
  • Not All Recessions Are Equal [View article]
    One other point the author overlooks is that this is the first recession where US savings have been nearly non-existant for some time. Past recessions of note (ie. the more severe ones) began with a much higher rate of personal savings than is now the case. We have less capital cushion to fall back on when riding out the storm.
    Oct 17 10:12 AM | Likes Like |Link to Comment
  • Bear Markets Are Time For Action [View article]
    Mr. Market is providing one more chance to hop on board the gold bull at discount prices. An option worth considering in this economic climate.
    Oct 17 10:04 AM | Likes Like |Link to Comment
  • Financials: Is Fiscal Prudence Too Much to Ask For? [View article]
    The best 'fix' for the financials is for every depositor to remove all of their deposits from the entities which take government bailout money. Let them figure out how to operate without any reserves at all.

    Remove their entire reserve basis so as to expose them for what they are. Central Bank fiat distribution agents.

    While we're at it, everyone should cease doing any business with them at all if possible. Don't even get a loan from them. Let them stagnate and die.

    They deserve no less.
    Oct 16 05:00 PM | Likes Like |Link to Comment
  • Can We Prevent Asset Bubbles? [View article]

    Concentration makes my brain hurt. All those cards to remember when you're trying to find a match.

    Once I failed the "don't EVER use Austrian Economics" portion of the test for President I was disqualified for a lifetime at the FED. C'est la vie.

    I have been reduced to annually doubling (or more) my account balance by speculation in order to survive. Sigh ... it's a hard life, but now that I have secured a really big interest only adjustable rate loan I'm ready to get started. I figure if I can make 0.01 per share for 100,000 shares a day I will be able to get by.
    Oct 16 04:44 PM | Likes Like |Link to Comment
  • Can We Prevent Asset Bubbles? [View article]
    Cherokee wrote:

    "Since most 'asset bubbles' are created by people looking for the 'get rich quick' option, and since the unnatural upward spiral in price is the product of a feeding frenzy of speculators buying and selling in the short term. (ie Day trading in stocks and commodities or property flipping in real-estate) "

    Partially true. The greed aspect of inflating the bubble is usually present, but what enables it is an easy access to funding in one form or another so that anyone and everyone can participate. The easy funding can take different forms. Fractional reserve banking and margin limits are two of the more common avenues.

    Simply blaming speculation is too narrow a brushstroke. The only way 'pure speculation' can run up a price is if there are a plentitude of eager buyers, each believing the asset is still undervalued.

    This in itself is not a problem as true speculation is a zero sum game. One party wins what the other loses once the price goes back down. If the loser has enough of his own money to cover the loss then he is the only party that suffers from his mistake.

    However, if the loser borrowed heavily to buy and then lost, he not only suffers the loss, but is now in debt as well. If he goes bankrupt then the lender suffers too.

    This is what we are seeing today. Too many eager participants in the housing market 'playing' with borrowed money and putting themselves in a position where even a small move against them is enough to bury them forever and put a strain on the next domino in the chain.

    Enough failed, one-sided positions in this manner will put so much strain on the next domino that it too will give way and topple into the next domino, ad nauseum.

    Too many people making "all or nothing" bets with borrowed money, whether stocks, real estate, South Sea trading companies, tulips, or CDOs usually comes to a very bad end.

    Speculation is the vehicle, excess leverage is the dynamite which destroys the vehicle.

    The old adage "Don't risk more than you can afford to lose." has been ignored on a massive scale this time around. From low-rate interest only adjustable loans, to packaged MBS with leverage, to CDOs on those packages. Everyone along the line risked more than they could truly afford to lose.

    Now we are all paying for it.
    Oct 16 04:26 PM | Likes Like |Link to Comment
  • Can the Global Financial System Be Updated? And By Whom? [View article]
    "I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs."

    President Thomas Jefferson, Letter to the Secretary of the Treasury Albert Gallatin, 1802
    Oct 16 03:46 PM | Likes Like |Link to Comment
  • Another Great Depression... Not [View article]
    Validity of most of the data claimed is dubious.

    1) "We're nowhere close to the 17.1% average unemployment rate of the 1930s" estimates current unemployment at 15% using the calculations previously used Pre-Clinton. That's pretty "close".

    2) "On a per capita basis, real GDP is 7.6 times higher today than in 1932"

    According to the Bureau of Labor Statistics CPI calculator the cost of a fixed basket of goodies is nearly 16 times higher now than in 1932. So the per-capita GDP buys less than half what it used to buy back then. Seems you could buy more stuff with your share of the GDP 'back in the day'.

    3) "Food, clothing and shelter consumed about about half of disposable income in the 1930s, compared to only about 1/3 today"

    2008 Median house = $219,000, (Realtors Survey)
    6.5% monthly mortgage payment PI only = $1380
    Taxes = $100/mo
    Insurance = $150/mo
    Total housing = $1630

    3x housing = $4890/mo = $59,000/Yr estmate for median income?

    NOT! 2007 median income = $50,233.00. (census)

    The median income can't even afford the cost of a median home at 1/3 of income, much less food and clothing too.

    The author should try to cite sources for data before drawing conclusions based on apples/oranges comparisons.
    Oct 16 03:36 PM | Likes Like |Link to Comment
  • If This Is a Bottom, Is It Secular or Cyclical? [View article]
    "It's tough making predictions, especially about the future"

    Yogi Berra
    Oct 16 03:05 PM | Likes Like |Link to Comment
  • Baltic Dry Shipping Index: If It Really Is a Proxy for the Economy, We're in Trouble [View article]
    <b> Bold OFF! </b>

    I hope this works.
    Oct 16 02:51 PM | Likes Like |Link to Comment
  • Can the Global Financial System Be Updated? And By Whom? [View article]
    Isn't it bliss?
    Don't you approve?
    The FED keeps a-changin' their rate,
    Which way will it move?
    Where are the clowns?
    Send in the clowns.
    Don't bother, they're here.

    So let's hazard a guess. Instead of moving back toward a fixed and knowable value for any particular currency, we're moving toward a coordinated, global band-aid squad instead. Great. Just what we need.
    Oct 16 02:44 PM | Likes Like |Link to Comment
  • Destruction of Wealth? [View article]
    I've got a broker, her name is Fay,
    15% down on the Nasdaq today
    She's a good old worker when a rally's underway,
    15% down on the Nasdaq today

    We've made some profits in our day
    buying upgrades all the way
    And we know every tick of the way from
    breaking even to making the dough.

    Low sales, everything is down
    Low earnings for the economy's slowin' down
    And you'll always know your broker will be thinkin' your way
    If you've ever traded stocks in the bourses today
    Oct 16 12:30 PM | Likes Like |Link to Comment