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  • Does Germany Get The Yoke?  [View article]
    "But the market seems to be saying that Germany faces a choice between being a prime credit, and saving the euro. Which does she want?"

    I am afraid it might be the former. Germany often seems to have a deep rooted pessimistic view of the world whereby, somehow, it feels compelled to use punishment as an advancement tool. One can easily see this by following its public statements and policy in the current European crisis, which almost exclusively focuses on austerity measures and fiscal responsibility and stays away from anything that remotely resembles direct aid.

    Germany seems to make sure that Greece and the other nations pay the price and suffer first from their mistakes so they "learn" not make them again. The problem with this approach, naturally, is that, in spite of their past mistakes, Greece and the other countries desperately need help right now and Germany's position, instead of helping in the short term, is actually exacerbating their problems and deepening and spreading out the crisis.

    As a result, there is plenty of punishment to go around and almost everyone is starting to suffer. Sadly, by the time Germany is satisfied that enough "punishment and learning" has been achieved it may be too late for Europe.
    Nov 25, 2011. 08:31 AM | 2 Likes Like |Link to Comment
  • Fixing Wall Street: Abolish Credit Default Swaps  [View article]
    it is a fair question, Peter. You will always find at least 5 types in the market place plus an overlapping of some of the types:

    1 - The average retail investor.
    2 - The professional journalists and the bloggers who do not directly invest but write plenty of commentary about it.
    3 - The theoreticians and economists who have plenty of theoretical knowledge but no practical experience. Unfortunately, these tend to become regulators, as well.
    4 - The pure traders who have lots of practical experience but little theoretical knowledge, and
    5 - The professional traders and managers who have both theoretical knowledge and practical experience. These, unfortunately, tend not to write much about the marketplace.

    They are all entitled to their opinions and we must try our best to discern who is who and what to believe.

    I tend to smile when I read a post with strong opinions only to read the disclosure: " I have no positions and don't intend to open them in the next 72 hours." It doesn't mean the author is wrong, of course, it only means, he doesn't have anything ridding on his opinion, which makes it easy and risk free to say whatever you want.
    Nov 17, 2011. 09:23 AM | 3 Likes Like |Link to Comment
  • An early preview of what all will be looking for to prevent another Sunday night meltdown: A new Italian government led by former European Commissioner Mario Monti. Reports have even Berlusconi shaken enough by yesterday's events to quickly step out of the way and other politicians dropping requests for new elections.   [View news story]
    The remark is an unsuccessful attempt at comedy, and it would actually be somewhat smart if it were close to being true nowadays. In the last 10 years there have been only two Prime Ministers in Italy: Berlusconi (8 years) and Prodi. Both were also Prime Ministers the previous decade, as well.

    Now, Berlusconi has been a complete disaster for Italy, but that is a different story.
    Nov 10, 2011. 04:17 PM | Likes Like |Link to Comment
  • Fixing Wall Street: Abolish Credit Default Swaps  [View article]
    The author is proposing abolishing CDS not banning them and allowing them back.

    Besides, the need for better regulation is already there. It always has been there. Hence, there is need to ban CDS to "create the need of better regulated instruments." The best way to achieve this is simply to design and implement better regulation. The instruments themselves have no bearing on this. What is lacking is the political will.
    Nov 6, 2011. 06:42 PM | 1 Like Like |Link to Comment
  • Fixing Wall Street: Abolish Credit Default Swaps  [View article]
    This is an interesting article, Mr. Kuttner. I believe most knowledgeable people probably agree with the depiction of events and the premises used but disagree with the conclusion of abolishing CDS as a solution. CDS are simply a financial instrument and clearly not the cause of the problem; a combination of lax legislation, very poor oversight and, most especially, a greedy and corrupt banking system is.

    Proposing to abolish CDS is akin to the husband who goes home only to find his wife cheating on him with his banker on the sofa and, as a solution, decides to sell the sofa!
    Nov 6, 2011. 08:52 AM | 2 Likes Like |Link to Comment
  • Eur-eversals  [View article]


    Writing the articles and sharing your ideas takes time and effort. I am grateful for your generosity. I read and appreciate your articles and fully recognize the value you provide.

    I don’t mind divergence of opinion. In fact, I mostly read authors who, I believe, will provide a thoughtful storyline, a well-constructed point of view and, hopefully, one that is different from my own. I don’t have the need to reassure myself by reconfirming my own points of view. Thus, I don’t mind that we have discrepancies; I expect this and enjoy it.

    Nevertheless, in this particular piece I not only, respectfully, disagree with the conclusion, which I find beyond naïve (I confess I am taken aback by the fact that you don’t seem to recognize this transparent naïveté), but I also find the supporting argumentation and analysis from TF Market Advisors, superficial, unrealistic and frankly, quite ignorant of the European context. It is the type of commentary that a narrow-minded, self-centric, inward-looking, insular individual or organization would make.

    Hence, as I wrote, I don’t believe it deserves serious commentary, other that to say that it displays a blatant lack of understanding about what the European Union is and how far reaching the real consequences of leaving the Union would be (these would go way beyond a simple, straightforward default. Do we really need to spell this out?).

    As for the rest, I am looking forward to your next piece, which I am sure I will enjoy and find valuable, as always.
    Nov 4, 2011. 01:52 PM | 1 Like Like |Link to Comment
  • Eur-eversals  [View article]
    Interesting article, IT, but quite uneven. Other than as a piece of pure satire, the TF Market Advisors' analysis is complete nonsense, though. Utter rubbish, which doesn't deserve serious commentary.

    "The main takeaway here is that it is probably not the case that leaving the eurozone leads to a new Ice Age."

    Seriously? I hope you don't base this opinion on the pathetic piece by TF Market Advisors.

    "I am amazed that the referendum, which seemed like a masterstroke from Papandreou, was canceled – and I can’t imagine that normal people in Greece are particularly pleased about having a voice in the matter snatched away by the eurozone elites."

    The referendum was a political plot to align internal forces with the government and the bail out. It turned out to be be a gross miscalculation both internally and externally. Besides, Greece hasn't had a referendum since the 1970s and it is unconstitutional to call one on fiscal matters.

    ...“see what happens when we put an Italian in charge of the central bank?”

    I am glad it is not you thinking this because this is a cheap stereotype of the worst kind. Why not ask instead: “see what happens when we put a US (MIT) trained economist in charge of the European central bank?”

    "To be sure, Trichet’s policy to tighten into a recession and sovereign/banking crisis was absurd,..."

    Absolutely correct. Besides, Trichet had a dual mandate but, as it often happens with central banks, unemployment doesn't seem to factor into the equation.
    Nov 4, 2011. 11:34 AM | Likes Like |Link to Comment
  • Ben Bernanke's response (video) to a question on low interest rates isn't likely to give a warm fuzzy to savers stuck with sub-1% rates. He argues savers would miss out on improved stock market returns without an ultra-low interest rate policy in place to hold off a recession. The pickle: The answer doesn't quite cover the millions of retirees who rely on CDs, Treasurys, and savings accounts to cover their cost of living.   [View news story]
    If you think the market is a casino you are in the wrong website.
    Nov 2, 2011. 05:38 PM | 2 Likes Like |Link to Comment
  • Those Millimeters Do Add Up  [View article]
    The FT has recently turned markedly to an anti-european and, most especially, anti-euro stance. Often have the markets gone down lately after the FT has published some rumor harmful to the pan-european project. This is why, I suppose, that continental europeans may have turned to other newspapers such as the Guardian.
    Oct 19, 2011. 02:31 PM | Likes Like |Link to Comment
  • Those Millimeters Do Add Up  [View article]
    I think your overall assessment is correct, IT. Nevertheless, the main point is to restore confidence and lower fear, escape the vicious circle and reenter the virtuous circle.

    People would like to believe that markets are fully rational and have the ability to instantly price in available relevant information. Perhaps in the very long term but certainly not so in the short to medium term.

    Markets, especially equity markets, trade on perception. So if the markets believe that the actions taken move the economies away from certain catastrophe, they will react positively, relieving pressure on companies and individuals whom, in turn, will most likely invest and spend more than before, helping the real economy and restarting the virtuous circle (moving the markets higher up, and so on).
    Oct 19, 2011. 08:57 AM | 1 Like Like |Link to Comment
  • Catching Falling Knives With A Pillow  [View article]
    Great. Thank you DT. Very much appreciate it.
    Oct 12, 2011. 12:38 PM | Likes Like |Link to Comment
  • The Only Investing Strategy That Always Works  [View article]
    Good first article, Tyler.

    I have only one suggestion, which I believe would prove much safer and fruitful in the long run for retail investors: when the markets are down, especially if they are down big, it makes sense to buy equities but not individual stocks. This is important because down markets usually come with extreme volatility and very high uncertainty when buying individual stocks can prove disastrous.

    So instead of buying individual stocks buy the overall market (plus international ones) through market-wide ETFs such as SPY, DIA, IWM, EEM, EFA, FXI or EWZ. This way you make sure you can always participate and, most importantly, since individual companies go bankrupt but the entire market never could, you can keep on buying and buying even if the markets continue to go down.

    The overall markets will, sooner or later, come back up. An individual stock, on the other hand, may never come back (i.e. Lehman, Wamu, Bear Stearns, Tyco, Enron, etc.)
    Oct 11, 2011. 05:08 PM | 2 Likes Like |Link to Comment
  • Catching Falling Knives With A Pillow  [View article]
    Very interesting. Thank you.

    Would you advise doing this trade with broad ETFs such as SPY, DIA, or QQQ? What about broad and leveraged ETFs such as SSO, DDM or TNA?

    I suppose the advantage these types of ETFs share is the fact that they are market-wide ETFs, which carry less stock specific risk than an individual stock and, hence one might want to own, at any rate. On the other hand, the leverage ETFs have added volatility inherent in their leverage (would this help?).

    If you would indeed trade them, would you be kind enough to provide a sample trade as you have done with the individual stocks? Thanks.
    Oct 10, 2011. 03:49 PM | Likes Like |Link to Comment
  • Fire Hoses Pumping Again  [View article]
    You are correct in that it may be difficult to achieve both with the economy stalling. Nevertheless, there ought to be a balance and priorities established depending on the circumstances and the economic cycles.

    When the economy stalls, inflation is usually not the main problem, unemployment is. At this point of the cycle the FED should tackle unemployment by promoting economic growth (naturally, I am not suggesting that the FED is the only government entity that ought to do this, all other relevant ones should do it, as well. Nevertheless, were are solely discussing the FED's role right now).

    Once growth comes and inflation starts to pick up the FED can switch to tightening and controlling it. The FED has decades of experience doing this and controlling inflation is far easier to do, for the FED, at any rate.
    Oct 7, 2011. 04:27 PM | Likes Like |Link to Comment
  • Fire Hoses Pumping Again  [View article]
    Would that person rather have a job to pay for the pricier milk and gas or stay unemployed and pay for the cheaper ones? Not much hope there without a job Joe, is there?
    Oct 7, 2011. 04:10 PM | 1 Like Like |Link to Comment