GeminiAtlas

As Gross Says, The Fed Provides 'Return-Free' Risk

exactly, and as everything goes up, the diversification of the risk becomes moot. I could take the WSJ and some darts and start picking stocks that way, and then come out looking like a genius stock picker because everything I would pick is going up. Yeah, happy times are here again!!
On another note, not that I'm into conspiracy theories, but it does seem to me there are those banks and institutions on the "inside" (ahem, GS) with everybody else left outside of the loop. Classic "pump and dump" exercise, except that if it is the mob that does it, they go to jail, but if it is the Fed helping out a few friends, it's "sound monetary policy."


On Nov 20 03:03 AM Ad Orientem wrote:

> Spot on. There is only one rational explanation for the concurrent
> rise in the bond market, equities, and commodities... and that is
> the ocean of liquidity that is desperately looking for a place to
> go. What we are witnessing is just the tip of the inflation iceberg.
>
>
> The next time someone says there is no inflation ask them what is
> driving up all of these different and often opposed asset classes
> at the same time.

Bill Gross: Anything But 0.01%

hmmm?...as a derivative play, maybe I should short Maple Syrup since less waffles going around will mean less need for syrup.


On Nov 20 01:48 AM History Buff 24/7 wrote:

> So you heard about the coming Eggo shortage because of problems in
> two of the manufacturing plants for them?

Bill Gross: Anything But 0.01%

hmmm?...as a derivative play, maybe I should short Maple Syrup since less waffles going around will mean less need for syrup.


On Nov 20 01:48 AM History Buff 24/7 wrote:

> So you heard about the coming Eggo shortage because of problems in
> two of the manufacturing plants for them?

Stock Market Returns Lost in Translation

Alternatively, would the expectation of weakening dollar also incentivize US-based investors to put their money elsewhere to take advantage of the carry trade? I know I am incentivized to diversify my holdings in other currencies given the weakening of the dollar.

Why Won't Obama Just Create the Jobs?

"This whole issue of how to best stimulate the short-term economy is a big puzzle to me."
Big puzzle to me as well. Why would they be so focused on the short-term in any case (a la stimulus)? Just to create jobs that last a year and then go away thereafter. Why? That makes no sense. The exact solution is to let things work themselves out to create better jobs that stick around for a little bit. The stimulus just creates zombie jobs that add no value to the economy except as a vote to entrenched politicians. Ahh, now I understand...

The Demise of Japan as an Economic Power?

I will have to agree with Nagano Jim here.
The role that the Japanese goverment has played in the business affairs has created more or less a state capitalist society ( i.e. Japan, Inc.) or neo-mercantalist policies to produce an export driven economy. Basically the investment decisions are driven by high level industrial policy of the government. So investments haven't gone to what the Japanese domestic population would want to buy. Also, would add to Jim's comment that the high level of government intervention also produced risk averse enterprises, or at least 'zombie' entities that produce less value than they are worth.


On Nov 05 04:35 PM Nagano Jim wrote:

> I disagree with the premise of the article. The problem is not that
> the Japanese don't spend enough. Nations do not become wealthy because
> simply because their people spend a lot. This is kind of like saying
> a child becomes tall because he eats a lot. If the child is not growing,
> eating a lot will just make him fat. What makes the child taller
> is growth. That Japan's citizens don't spend a lot is a symptom,
> not the disease.
> To generate growth, the private enterprise in a nation must create
> new and better products and services. What made Japan flourish in
> the 1970s and 1980s was primarily that its manufacturing might was
> constantly finding new ways to produce high quality products that
> people wanted faster, cheaper, and at better quality.
> What Japan needs now is a major injection of entrepreneurship. I
> read a statistic somewhere recently that as much as 80% of all the
> companies in Japan date from the Meiji period (starting in the 1860s).
> Japan needs to unleash its creative minds to generate the new items
> and services that will capture the world's imagination. It needs
> to remove the barriers in its legal and economic system that are
> strangling entrepreneurship. Entrepreneurship is risk taking, and
> the Japanese are highly risk averse. Therefore, there needs to be
> a concerted push to come from the top to get people to try to make
> their ideas into reality. Only then will Japan be able to create
> value and start to significantly grow again.

Is This the End of 'Too Big to Fail'?

Not sure why Congress likes to make big complicated to police regulatory schemes (and too easily gamed) that will in all likelihood fail to prduce the desired outcome. Unless of course, failure to regulate IS the real desired outcome. Given the current campaign finance structure, it would not take too long to figure out why...

In any case, if they are too big to fail, it means they are too big, period. Accordingly they would need to be charged a risk premium to be "too big to fail" as right now they are free-riding the risk to the taxpayers. Since the congress is so keen on "progressive" tax schemes, then maybe it can be progressive in leverage ratios (fat chance). in that regard, the risk premium to be paid would be in reigned-in lending ratios. Basically, the bigger you are as a bank, the more conservative the lending ratio you are allowed. So the huge mega-banks are required to be 10-to-1 or something like that, and the smaller regional banks can be allowed a higher ratio, since if they fail, it is not systemically risky as if Citi were to founder. Of course, one might suppose that the big banks might try to make riskier loans to make more money under such a regime. But that would happen anyways, much better bad loans at 10:1 then 30:1. On another note, under such a scheme, maybe the big banks would be "encouraged" to spin-off/sell-off disparate operations/portfolios into different smaller companies in order to shrink themselves and be able to lend at higher ratios again.

Why Too-Big-to-Fail Shouldn't Be Codified

I'd say either add a chapter to bankruptcy or to the anti-trust. If they are too big to fail, it means they are too big, period. Accordingly they would need to be charged a risk premium to be "too big to fail" as right now they are free-riding the risk to the taxpayers. Thus, either A: use anti-trust to break up the company a la Ma-Bell into smaller companies and see which ones fail and which ones succeed thereafter. Or B: Since the congress is so keen on "progressive" tax schemes, then maybe it will be progressive in leverage ratios. in that regard, the risk premium to be paid would be in reigned in lending ratios. Basically, the bigger you are as a bank, the more conservative the lending ratio you are allowed. So the huge mega-banks are required to be 10-to-1 or something like that, and the smaller regional banks can be allowed a higher ratio, since if they fail, it is not systemically risky as if Citi were to founder. Of course, one might suppose that the big banks might try to make riskier loans to make more money under such a regime. But that would happen anyways, much better bad loans at 10:1 then 30:1.

The Great Shift: China Rising, U.S. Falling

Not so sure about the thesis you put forth due due to some of the challenges faced by China in many of the comments above.
I would add that some other trends are emerging in manufacturing which might render the manufacturing investments China has made obsolete.
There is the myth of US "de-industrialization." The manufacturing jobs have declined but overall industrial output is as high as ever due to ever increasing automation. This will probably continue until it's much like the agricultural industry, 1%-2% of the population to run the robots that make everything and more of it each year.
The percentage of GDP relative to overall GDP attributed to Manufacturing will also shrink, but there will still be more "stuff" that is made. This trend is also starting to take hold in sectors of the service industries. Have you called up a travel agent lately to book airline flights? I thought not. Increasing levels of automation and innovation will continue these trends. Soon we might have robots making other robots that perform services, such as cleaning or fighting wars, etc. for us (roomba anyone?).
Even in engineering, I see these trends, increasing use of ever-more powerful software that automates certain low-level engineering design work are increasing the output of each engineer. The effect is better designed products that are developed with increasingly faster product-development cycle times.
Also, the diversity of products being designed are proliferating. The cost-effectiveness of these products will come from "flexible" manufacturing cabilities that can run low-number production numbers easiliy and with less and less set-up costs. Pretty soon, the cost/part of a one-off part will be almost the same as a million part-run. Companies will be able to make parts "on-demand" and thus try out ideas quickly, letting the market itself tell them to make more or not. Read about "the long tail" coined by Chris Anderson to get the idea. What effect will this have on jobs? Well, I'll tell you, those that are the most creative, the most agile, most networked, most innovative will be the winners, and those that cling to the way things are will be the losers. And the need for strong technical skills is a plus but increasingly, even those are becoming "commoditized" so that even those without technical skill but have creativity, can compete by having good ideas and "innovation networks" to get the idea out there. Incidently, the cost of failure is getting lower and lower (due to the agile manufacturing mentioned above) and the fact that one can "rent" the talent/resources on-demand, and thus there is no need to invest (take the added risk) in capital equipment/skills that you can just contract out to someone who specialized in that area. Of course, that also means you have competition from everyone else too, but that will make everyone better I hope.

Is There Really a Global 'Cabal' Aiming to Dump the Dollar?

It's like a good old-fashioned Mexican standoff.
The Chinese with its hand on the "dump the dollar button" and the US with its hand on the "Monetize the debt" button. Beads of sweat gather on Uncle Sam's brow, the Dragon's eye twitches slightly. Makes for a good movie. I'll have to make some popcorn and watch the show...

Will the Dollar Decline Forever?

As long as the Fed is in charge of the printing presses, of course the dollar will go down forever. That's what's happened in the last 90-odd years, hasn't it? The purchasing power of a dollar today is a tenth (probably less even) of what is was in 1913. That's what the congress wants because it imposes a tax without calling it a tax. Good thing most of the electorate is too stupid to realize it. :)
Except it lets them (congress) spend more than they receive in revenues so that eventually money supply is inflated to pay off its debts in depreciated money. I bet they laugh too "haha, suckers!"

Why U.S. Government Should Cut Federal Workers' Lavish Compensation

Doing some quick calculations 12mosx$15B/month, federal workers take in ~$180B/year. This is out of ~$3T federal budget, or about 6% of the budget. Eliminating federal jobs will not solve the "government is spending too much" problem. Much of the problem of course is the entitlement programs (social security medicare medicaid). Eliminate these programs and you would cut the fed budget in half. Problem solved.
I fully expect never to collect a dime from these programs (as I have probably 35 more years of work ahead of me), so I am planning accordingly. Many of my cohorts know this too. They wouldn't be too surprised to see these programs eliminated either. Of course to eliminate them, it should be phased out over 10 years or more.

Why U.S. Government Should Cut Federal Workers' Lavish Compensation

I agree,
I'm not sure we're comparing apples to apples here. I would like to know how the numbers came about. Are they comparing the same job-types? The federal gov't would tend to have a lot more white collar types (i.e. lawyers, engineers, scientists, accountants).
Also, I would want to know what the breakouts are. What is salary, health, especially what is the OH or Overhead which would be illuminating. This reminds me about the gender pay gap myth. Once every other variable is controlled for, that gap disappears.
Also, what would happen if they also counted the Military personnel as part of this Federal workforce number? I'm sure the aggregate would go down as the officers/enlisted don't get paid that much.


On Sep 08 10:28 AM JOHNCHAP2 wrote:

> Your simplistic presentation substantially distorts the real truth.
> Comparing federal employment which is very heavily weighted in professional
> and white collar jobs to the working population as a whole where
> blue collar and non skilled labor make up a large percentage is simply
> either a dishonest or incompetent comparison. It appears to be the
> same type of distortions that have entered into the anti health reform
> debate that we are currently seeing.
>
> Most of the compensation comparisons, which are required by law to
> be conducted on a job by job basis, show that the Feds lag behind
> the private sector. While it is admittedly an outlier example, look
> at the $175K income of a Cabinet Secretary (e.g., DOD) versus the
> tens of millions of dollars received by top executives in the private
> sector. Now I would call those megabuck compensation packages to
> the CEOs, many of failing companies, lavish.
>
> It is true that Federal employment looks really enticing in times
> of economic instability. But most of the time over the last 40 years
> or so most people looked down with distain on Federal emplyoyment
> and would never consider working for the Feds.

Four Problems Undermining Future American Prosperity

Exactty, we (or our children) will pay the piper one way or the other. Either way it is high taxes to pay back the debt. Inflation after all is just another hidden tax which punishes the most prudent (savers and investors) and let's the least prudent (debtors such as the federal government) off the hook.
But soon the devaluation way is the only way they will be able to go as the debt becomes unserviceable, unless other foreign governments start to demand that our public debts be denominated in their currencies. In one way (long term), that would be good if that happened as it would force some discipline on the Congress because they don't control the printing press of other countries. In the short term, it would have other more burdensome consequences.

On Sep 03 02:03 PM fjd10595 wrote:

> If it doesnt' is still impacts our kids, won't they pay the price
> of devaluation.

Jobless Claims Stuck at 570,000

I would agree. Business owners are wary to hire because of policy uncertainty. They don't know what's coming down the pike or not such as healthcare reform, cap and trade, etc. so they take the "wait and see" approach instead of being proactive. Of course, every business taking the "wait and see" approach at the same time doesn't bode well. So, in essence, the government is making the problem worse by even debating these "business friendly" issues. Same thing for students choosing a field to work in. "Is the gov't going to nationalize healthcare? Not sure, best to go into something else just to play it safe"
And a few years from now , we'll be wondering about a sudden drop in new healthcare workers who are already desperately needed.

On Sep 03 10:10 PM Joe Shareholder wrote:

> Why would anyone be hiring right now with as much uncertainty as
> there is out there. Obama's cap and trade certainly isn't industry
> friendly, and neither are the tax increases Obama has hit businesses
> with. Add health care increases because someone has to pay for the
> public option. Simply put, zero incentive.