unclej0

The Next Leg of the Crisis: Unavoidable Catastrophe

I am not an economist but I am scientist enough to know that quoting von Mises or Bastiat is not a good substitute for having a decent computer model of the economy.

It is clear that our economic system is not very stable and as it hangs in the balance between inflation and deflation very careful management is needed to avoid excess in either direction. If that is Keynesianism, then it is the only sensible game in town.

Yes, disaster is possible but crying wolf without any good quantitative data is just ambient noise.

Marc Faber: Equities Safer than Dollars

There are plenty of culprits and you can find one in any direction you care to look. The elephant in the room is corporate money for lobbying and the venal congress that sells our birthright so cheaply. Just this week I was given to understand that the health insurance industry has for some time been legally exempt from the Sherman anti-trust act (along with major league baseball).

It seems that freedom from competition leads to big profits. I am shocked, shocked! As we have seen, the corporations will fight ferociously to avoid competing. Is that free market capitalism?

Oh yes, big agribusiness has its hand in our pockets also and most of our manufacturers have quietly folded their tents and departed for the lure of cheap labor. The treasury will pick up the tab for unemployment benefits and social services, the congressmen will continue to spend for all of their various constituencies, and the fed will create dollars out of thin air.

May I modestly suggest that there is a world of difference between prudent longer term economic stewardship and near term squabbling in unproductive ways: lying, spinning, smoke and mirrors. Obama may not be the messiah and he may have come along too late but he is the best we have had in a long time.


On Sep 30 07:39 PM TeresaE wrote:

> Nancy Pelosi has written and submitted the THREE largest single year
> budgets this country has ever seen.
>
> Clinton may have cut spending, but he still borrowed from social
> security AND raised taxes on everything and everyone (and when Bush's
> tax cuts expire, you will see why they were cut). And the SOB sold
> out our wealth generating base to a declared enemy. Which is a huge
> reason why there are no jobs now.
>
> Bush 1 was just worthless, and Reagan managed to lower taxes AND
> reduce the deficit, during a recession. Clinton couldn't do that
> in our largest ever economy.
>
> Quit picking sides and realize that in order to fix this mess, we
> first have to realize BOTH SIDES ARE AT FAULT.
>
> BOTH sides. Pointing fingers and thinking Obama is your savior is
> a prescription for our demise.

Don't Be Fooled by Inflation

On Jun 17 02:52 PM austrian63 wrote:

> Ricard,
>
> One error in your response. Bernanke has not taken unconventional
> steps to "DEFLATE" asset bubbles. He has taken unconventional steps
> to RE-INFLATE asset bubbles and therein lies the rub. There will
> be a very high price to pay.
>
> Each subsequent market deflation is much more horrific than the previous
> one and thus requires a much larger dose of the re-inflation drug
> than the previous one. This is what Hayek decrobes as having "A
> Tiger by the tail." The cure is the disease and more cure only makes
> the disease worse until finally the party is unsustainable and even
> the U.S. Treasury and Federal Reserve with their infinite wisdom
> and money creation abilities will not be able to sustain the booms.
>

You are describing a very unstable system. It seems to be the case that mathematical stability is achievable through mathematical controls, not through political bullcrap - which has been our typical tool.

The macroeconomic controls over government investments and expenditures, monetary policy, and tax infrastructure would be better controlled by a carefully designed computer algorithm than by the fed, the treasury department, and the congress.

Why is that not done? Well, people who possess power, however poorly they exercise it, seldom voluntarily give it up. People who have risen to their levels of incompetence usually remain in denial.

What I have said about myself also applies to the movers and shakers of this world: they have the cognitive equipment of hunter-gatherers and an inordinate interest in the rear ends of females.

Don't Be Fooled by Inflation

I am not a trader and I recognize that markets are formed by highly divergent opinions, as we can see here. We are still at the mercy of the banksters who also run the fed and treasury. That is much like being at the mercy of the fickle ancient Greek gods.

So what is a minnow to do? One tack is to invest in things that people will always need, for example, food, green energy, water purification, etc.

The counter argument is chilling: "the market can remain irrational longer than you can remain solvent." That also applies to governments - most of them.

For the individual, rationality also requires understanding the irrationality of others. My evolutionary history did not prepare me very well for that task. Basically, I have the cognitive equipment to be a hunter-gatherer and to have an inordinate interest in the rear ends of females. At age 84, that is not of much use.

Sucker's Rally Approaching an End

I don't pretend to be able to time the market. My guess is that "methods" based upon retrospective analysis will work until they stop working and I don't know when that will be.

Fundamentals have a longer lifetime of consistency. In view of the near certainty of rising inflation, it seems that a selection of appropriate stocks is not such a bad idea. Naturally, I have no idea whether they will go up or down next week.

Expect a Market Reversal after the Next Payrolls Report

Predicting the market is a tough row to hoe unless you have a strong stomach and sell advice. Fortunately, we have plenty of guidance:

Leeb: super inflation ahead

Weiss: super deflation ahead

or both, sequentially. Fortunately, either of them will tell you how to profit magnificently - for a modest price.

I won't.

Wall Street Breakfast: Must-Know News

I think you are either misguided or else careless in ignoring clear facts. Obama's ultimate outcome cannot now be known but his budget and his recovery plan are certainly not more of the same. That is why the Republicans, who represent more of the same, are so fiercely opposed.

Haven't you noticed?


On Feb 27 09:19 AM hanson001 wrote:

> The table of contents of Obama's new budget displays a heading Inheriting
> a Legacy of Misplaced Priorities. The verb, Inheriting, is used
> by Mr. Obama every time he communicates with the American population
> about the economy. This is a word he must use as he leads the country
> into greater problems. Use of this verb, he hopes, will get the
> blame off him. He is already looking out four years.
>
> I can not wait for the next president to come and use the verb inherited.
> What happened to hope and change Mr. Obama. It looks like more of
> the same. Dang!

Wall Street Breakfast: Must-Know News

The price of stability, as in any dynamical system, is properly designed control. Unfortunately, human beings have not yet learned to stabilize economic activity A large part of the problem is ideological. The nearly religious belief in the "invisible hand" of the market bears no relation to reality; it holds only for idealized models.

Human behavior does not exclude irrationality and cheating. Where, in the idealized model do we find monopoly, cartels, insider trading, deception, excesses of greed and fear, externalizing costs through pollution, conditions near slavery in many parts of the global labor market, etc.

Government intervention can reduce the worst offenses but governments are considerably influenced by the worst offenders. We have a lot to learn.


On Jan 02 10:01 AM JasonR wrote:

> "Investors, meanwhile, are hoping 2009 brings a turnaround, but aren't
> counting on one."
>
> Sure glad we have the Wall Street Journal to tell us investors what
> we want. Buffett seems to be the only voice of sanity in a sea full
> of weasels whining for a bailout. I, for one, don't care how the
> market performs in 2009. I am much more concerned about my government's
> intervention in the automobile, housing, banking, steel, healthcare,
> and whatever other industry I didn't think of. If all the cries for
> a bailout were dismissed at the beginning, by now we would be halfway
> out of the storm and looking forward to a full-fledged recovery.
> Americans apparently prefer stability, but stability comes at a price.
> Nothing is free.

Wall Street Breakfast: Must-Know News

There has always been a power elite. That is a given in human societies because of human nature and human culture.

That said, the power of the elite has always been opposed and, when the elite oversteps the mark of common sense and prudence, social instability sets in. If the instability does not result in bloody violence, there is a chance that conditions may be rationalized for some time.

This may be such a time. I don't expect miracles but I am hopeful.