hksche2000

Market Believes in Economic Positives, We Remain Skeptical

One of the most encompassing and cogently reasoned overviews in a long time. Could agree with just about all its conclusions and predictions on the rational level. Unfortunately, therefore, those predictions are probably a better way to lose your shirt with your investment decisions, because Wallstreet doesn't use "reason", as you point out. There, between the crazy "overbought" and "oversold" extrems, it's all about MANIPULATION (= market making) and TIMING (= technicals). Hence, smart analytical guys rarely make, rather mostly lose money on WS. It's those who put their money into the "Sands" @ $1.42 (or Genworth or just about anything in 3/09), who do. Try buying into Nat Gas as your "Sands" surrogate right now? Good luck!
Loved your article anyways for the "Big Picture". Kudos & Thanks!

ETF Update: Time for Caution

With (nearly) all west european etf's represented on you list, how come EWG is missing? Poor outlook, unsat past performance or both?

Two Strong Africa ETFs

Compare HAO, TAO China etf's performance to EZA, AFK Africa etf's and you see where the action flows and the money goes, notwithstanding econono-political instabilities in both of those billion-people economies.
Plus, China is not a bad proxy to take advantage of african (same as brazilian/south amaerican) natres pearls prescreened -thank you- by savvy chineses on the ground.

Warren Buffett's Stock Portfolio: Part III

Nobody is perfect and, believe it or not, that includes WB.
Peter Lynch, Fidelity's Magellan Golden Boy, is the one "nobody" who broke that rule and comes to mind. But then he also and mainly was just lucky to run the M Fund during the uninterrupted behemoth WS boom, the 80's AND got out in 1990, just before the next WS bust started.
Thanks for your laborious/great work, Jae June. So many of us still keep an eye on what the WB guru is doing, especially now that we know most his money will be going to good and very important causes where, incidentally, much less money will be going to from "the usual gov't/taxpayer sources" who are broke themselves. Thanks again, JJ!

Stay Away from AIG - Barron's

C'mon, just say that ain't true! Do you know of similar State Insurance Dpt actions in other states and wouldn't that require/prompt a federal inquiry?


On Aug 30 05:33 PM ECHealthInsurance wrote:

> I have a more interesting story to post about this, we are a life
> and health insurance agency in Florida, and we received a letter
> from the department of insurance in Florida warning us not to replace
> our AIG policies or risk license suspension.
> Forget about the stock it doesn't matter, but would you keep your
> life insurance policy or annuity with them? If you had a whole life
> policy with a significant cash value or even a term policy with none
> would you AIG as the company that was supposed to pay the claim?

What Might Happen with America's Unemployment Rate

As John McLaughlin would say:

The unemployment rate WILL be >11% , the real unemployment rate is already >20%! and will go higher.

Sorry to say!

West and East Germany have had these UER for decades! despite much better exports and trade balances than ours.

We rely on the US consumer (>70% GDP) who, together with the Gov't, is tapped out for years to come; the lack of jobs just adds to the vicious cycle.

Highly restrictive bank lending to (especially the job generating) SMALL businesses will con't because of banks' trillions of toxic assets will haunt them/us for yrs/?decades to come.

Not to mention US asset deflation >$15T in the last 2yrs (how many of us are still feeling rich?) and huge unfunded boomer legacy costs looming.

We'll have to bring out the best in us and we will. And I'm sure about that!

Peter Schiff vs. the Fed

You actually do "help drunks by giving them another drink", (like EtOH i.v.), if necessary to control life threatening DT's (delirium tremens). So the D-comparison between drunken sailers and credit-drunk bubble Americans, including D-treatment, has eminent merrit.
The difference is fine tuning of treatment: not EZ in DT's, perhaps impossible to do well in macroeconomics with tens of millions of binged-out credit drunks! Make no mistake, though, providing credit in the initial treatment round was and will continue to be essential to prevent (economic) death as by symptoms similar to the "Great Depression". Now though, as in the ER, we have to subplant the "EtOH" with alternative measures. THE most critical step therein is the expedient but judicious direction of (TARP etc) money selectively to economic incentives with short and long term payback!
Think SMALL businesses that create the most of the (good) jobs or transportation projects on roads, tracks, water/airways, pipe/power grids etc, many of them overdue, that will keep going and going like the Energizers. That part of BB's liquidity (EtOH) infusion, even to the tune of trillions, will pay for itself short plus long term with hugh compound interest. You don't even have to fine tune the the amounts too much if the investments are chosen right for their economic (not political) merrits. And they actually will make us come out stronger from this near death recession experience (Wrigley's B.I.O.N!)
BUT ARE WE FOCUSING ENOUGH ON THE RIGHT INVESTMENTS AND MINIMIZING THE WRONG ONES?




On Aug 08 12:02 PM Robert Martorana wrote:

> Kudos to Peter.
>
> The ballooning deficit is an even bigger problem than quantitative
> easing by the Fed. At some point, the Fed will be able to reverse
> course and unwind the monetary stimulus. Counter-cyclical monetary
> policy makes sense from a Keynesian perspective, and the Fed will
> be able to withdraw liquidity without partisan bickering over minutia
> (whether the Fed WILL withdraw liquidity at the right time is another
> question entirely).
>
> But counter-cyclical fiscal policy is notoriously difficult to unwind.
> Once a government program is in place, it takes on a life of its
> own. That's why long-term government programs are a terrible way
> to fight a recession--any recession.
>
> Peter Schiff points out the core of the problem: The U.S. is addicted
> to debt. We "solved" the tech bubble with easy money that created
> the housing bubble. Now we are "solving" the housing bubble with
> even more cheap money. Today's massive monetary and fiscal stimulus
> is creating the "Mother of All Asset Bubbles". You don't help a drunk
> by giving him another drink.
>
> Peter focuses rightly on our trade deficit. We simply cannot consume
> without producing, and we need to restore competitiveness. The U.S.
> has been getting away with massive Treasury issuance because the
> dollar is THE global reserve currency, so it benefits from a flight
> to quality during times of stress. But as the U.S. government loses
> its creditworthiness, we risk a catastrophic collapse in the dollar.
> Even without a collapse, we will certainly face a weaker dollar.
> This will lead to higher import prices and higher inflation. A weak
> dollar only exacerbates the inflationary pressures created by massive
> monetary and fiscal stimulus.
>
> As for healthcare, this is a perfect example of fiscal stimulus that
> does NOT fight a recession. We are drowning in debt, and we need
> reform that does not add $1 trillion to the deficit. I believe that
> we need a safety net for the weakest members of society, and this
> should be a spending priority. But we should not kid ourselves that
> healthcare spending will fight the recession. It merely creates a
> long-term program that will be impossible to cut back once people
> get accustomed to the benefits.
>
> We need healthcare reform in the context of a balanced budget. Otherwise,
> we will put debt on the backs of our children for generations to
> come.
>
> Thanks Peter.

Shift in U.S. - China Dialogue Is Louder than Words

Our Military and its "good-old-boy" Industrial Complex literally live on borrowed money. If China and other lenders want to reign in our imperialist military activities around the globe, they can do so at any moment. They'll just turn off the financial spigots and we will have to pay our good soldiers (and expensive bad contractors) with IOU's. It's a joke! Or is it?
The real power in todays global world is with those who own the money and hold the economic powers. That used to be ourselves, but no more. Because of our failed Educational System, we are even losing our famous brain powers fast and depend on importing that, too, from India, China and wherever young kids (and their parents!) recognize that a good education is an absolute "sine qua non" to make it in this highly competitive new global world.
Wake up USA kids/parents, 2.5 billion Chinese, Indians etc are in line to eat your lunch and make you cook it for them. And most of us can't even do that any more.
What ever happened to this great Nation of ours since we raised the flag over Iwo Jima?! It wants to make you cry.


On Jul 29 03:46 PM Pax Americana wrote:

> The USA is not, and will not, be "swept aside" as easily as you presume,
> the US military still is the Arbiteur of Global power reach, and
> maintains a tenuous peace in extremely fractious corners of our planet.
> Without Americas overiding Military power in these regions, Ancient
> and deep enmities would again raise their head. Secondly America
> is the "Bread Basket" of the planet, and food is, and will become
> increasingly important. We also issue more scientific patents than
> anyother Nation, "right off America at your peril!

What Is the Steepening Yield Curve Telling Us?

Great work, as always. Keep it up.
Thanks!

Washington's Dilemma: This Isn't a Recession, It's a Collapse

Just 2 points:
CA & TX march to different drummers than the rest of the country and they (say they) are grown ups and big enough to do without the rest of us. I think the rest of us should giv'em the chance to do what they'll do anyway, that is not care what the rest of us have to say. They will have to do some unwinding over the next few years to get their spending/cash flow in line with their (still immense!) wealth and richess; but they'll do just fine.
As far as righting the financial fortunes of the less well healed rest of us, front loading the recovery with stimulus money is not a problem as long is the money is strictly earmarked AND monitored to be used for 2 things and 2 things only:
1. productive investments that will pay and keep paying for themselves (even exponentially!) for years to come, like (among others) modernizing/replacing our medieval power grid, our air/ground transportation systems and harnessing boundless THERMO-solar energy sources to secure our exponentially growing energy needs while extricating ourselves from our unbearable hostage situation to all our oil producing "friends" around the world. (Think what FDR's great FWY/TVA projects are srtill doing for us today!).
2. the 2nd essential criterion for borrowing/spending money (instead of saving it) now is that this money MUST create jobs that pay enough from the start so people can make a decent living; no more but also no less. No Wallstreet jobs or pay included. Job generating efficient SB's (not behemoth corps) should be the primary loan recipients, exactly the opposite of what is currently happening.
Bill Clinton, after first paying off our consideralbe budget deficit when he came into office, then left us a multitrillion dollar budget surplus on his way out of the oval office, pretty much by stimulating economic PLUS job growth (filling fed/state tax coffers and minimizing unemployment outlays) and, importantly, matching this with PAGO fiscal responsibility.
Beats throwing good money after bad into black holes like unsavory banks, brokerages, insurances and "dinosaur" car manufacturers that, after restructuring/bankruptcy, are still not getting; same old cronies, same old dogs trying to learn new tricks at the helm, buzzing around in their private jets, helicopters, yachts or golf carts. Duh! And I thought now that we owned all of this as taxpayers, we should have something to say about this.?!

Winter's Coming for the Boomers: Part 2

There was NO baby boom (BB) during WWII, especially not the final 2yrs of it when most young men were at war's front. But there was a GI-homecoming BB enhanced by a booming US (and world) economy that lasted into the mid 60's. I haven't read strauss&Howe and I don't want to be a quick judge. Yet, sharp authors typically don't stumble over simpletons' issues like the above?
The gloom&doom scenarios with all the aspects addressed in Quinn's original and many equally enlightened commentaries, are well taken. However, not all Americans share the sense of "inevitability" conveyed in the article. Don't count the American spirit out, ever! Americans have started saving even while their Congress is still spending. Who would've predicted that even 6mos ago? If we fix the salvageable part of the housing market by bringing mortgage rates temporarily down to 4-4.5%, probable the fastest and least expensive approach to unload the housing overhang, the economy could get well underway toward recovery. Global economies of scale (China's 7.9% GDP, Germany's pick-up in export orders yesterday et al) are showing verifiable "green shoots" and may become locomotives to us, for a change, instead of the other way around. Thermosolar energy, (not bioethanol, for Pete's sake!) is the best green technology currently available to solve our own (if not the world's) increasing energy needs. At Desertec Foundation's 7/13/09 meetg of Siemens, EON, Munich-Re et al. at Munich, predictions included that 50 % of Germany's energy requirements could be met that way as early as 2020 with thermosolar energy from Spain (AndaSol) and/or North Africa. The US itself is actually a leading protagonist in the field since the 80's (Mojave Desert Project). However, we do need a new grid to distribute the electricity to EVERYWHERE in the country including a nationwide electrical train system. Expensive, yes, but paying it's own way like FDR's Interstate Freeway System. What would we do without it?! Same is true for the grid: we've got to have it as much as our FWY's! And, compared to building the FWY system, not to mention Manhatten Project, Man-on-Moon and Space Station, this one's EZ because the technology's there. That's where stimulus money should go, to projects ready for take-off and instant exponential payback; not to banks and other black holes.
Education is the other big one that must be solved to keep/get us globally competitive, but that's a different ball of wax. The current system obviously is kaputt and money is not going to fix this one.

On Jul 13 04:07 PM James Quinn wrote:

> Again, if you read the book their definition of Boomers is those
> born between 1943 and 1960. It differs from Demographers definition.
>

Winter's Coming for the Boomers: Part 1

"I will point out that the expectations of linearity (as mentioned early in the article) are not the problem. It is the expectation of exponentiality built into our entire economy and industry that leads us to failure."
Thing in nature -including the human herd- tend to follow natural log e-functions. Vicious feedback loops on Wallstreet (greed/fear, leverage, derivatives...) and in politics (wars go on and on, missions rearly accomplished; SS/medicare problems not addressed grow exponentially even absent boomers ...), if anything, tend to exaggerate this exponential feature. Hence, more often than not, it is our NOT anticipating and dealing preemptively with this "exponentiality built into our entire economy and industry (and politics!) that leads us to failure."


On Jul 13 03:00 PM Dirtnap wrote:

> As a research scientist, I greatly prerer hard numbers and fundamental
> analysis to material such as this. This type of reasoning is essentially
> anecdotal philosophy; it is interestng, but can never be proven or
> disproven.
>
> I will point out that the expectations of linearity (as mentioned
> early in the article) are not the problem. It is the expectation
> of exponentiality built into our entire economy and industry that
> leads us to failure.

Are Airlines Going Bankrupt Again?

COMMENTARIES EZ TRUMP ORIGINAL ARTICLE!
The two resonating the most:

1. "Most other airlines operate as if customers have no alternative but to accept the costs, inconvenience and general nickle-and-diming that they rather arrogantly offer. In reality, many cutsomers have two options: 1) don't fly or 2) fly another friendlier carrier, like SWA.

As in all business segments, the efficient and cutsomer-minded will propser, while others struggle or perish. Frankly, it's been rather amazing to me that the airline sector, generally, has been so incapable of recognizing this reality for so long."


2. "After my recent flight experience, I looked into getting a train ticket across the country for the first time in my life. Personally, and I know alot of this it out of airline control due to security constraints, but I'm really fed up with the airline experience to the point I'm looking for alternatives at this point. I don't remember having so many chronic problems 10 years ago. It seems every single time I take a flight, something goes wrong. Flights cancelled, baggage rerouted, and now nickle and dime fees like $15 luggage check in or $7 meals are the norm. Lots of people seem to come down with a few days illness after the trip, whether this is due to being packed in with so many other people, recirculated air, changing pressure, etc. "

Customers dreading to fly to the point of having "nightmares" about the ordeal, obviously disn't a good business model for any air service provider that desires to be here to stay. Many people would gladly pay extra, though not necessarily the outrages first/bus class price differences, if they could count on a safe, havock-free and, yes, pleasant travel experience. I know I would! Being herded, coerced and mistreated like cattle, or worse, should be outlawed. Since the airline lobbies have beaten down passenger rights to the point of "non-existence", they themselves may well go the way of the Detroit dinosaurs after beating down MPG requirements having their lunch eaten by their non-US competition. What a loss for all of US! We must be able to do better than that. Bring back real customer service, bring back real pride, bring back THE BEST CARE IN THE AIR! Americans are waiting!

Madoff's Investors Don't Deserve Compensation or Sympathy

Unfortunately the SEC was aiding and abetting Madoff instead of policing him. It actually willfully obstructed the many bonified requests for M's investigations, those by Marcopoulos just receiving the spotlight for pointing out the most egregious SEC failures. The revolving door relationship between our Gov't Agencies and Corporate America, Wallstreet in particular, are at the core of this mutually protective relationship for the benefit of the (not so) few but to the detriment of Mainstreet which suffers the fallout and then typically pays it again through involuntary taxpayer bailouts. In Madoff's case, he secured an additional level of SEC protection by marrying one daughter to the SEC's vice chairman. A son in law in the highest office making sure your Ponzi remains undisturbed.
Only time will tell, whether new congressional regulations (in progress?) will provide any better protection for Mainstreet America. In the meantime, however, the culprits at the Bush SEC must be held accountable for justice and to mitigate against more brazen abuse.
Last time I checked my passport, it says "...that Government of the People, by the People, for the People shall not perish." Alas, trillions and lots People's livelihoods have indeed perished and much more fallout to come. Isn't it time we the People take our Government back? Abe Lincoln and your Whitehouse successor/fan from Springfield, help us if you are listening!

Is the Dollar Dead in the Long Run?

The US is the ultimate "TOO LARGE TO FAIL BANK" and the rest of the world knows it.
China's economic, social and political problems might topple the regime, if their main customer didn't buy their goods any more. You don't bite the hand that feeds you.
Europe and the rest of the world, with few exceptions, would suffer in different ways and degrees, but all would suffer more in most cases even than we would. "Atomic" economic warfare isn't something many big countries are tempted to try out. No models are available to predict any one of the all horrific potential outcomes.
However, "conventional" economic warfare may be tampered with by some for political et al influence along the lines of talking down the dollar or proposing alternative reserve currencies (China, Russia, Middle East etc) and therein may lie the real risk for US.

Saving and growing ourselves out of our spendthrift old ways is possible, though, and may even have started just ever so sudly. If anybody can do it, we are the most flexible and best equipped as a Nation to get it done.