jeff m110

Emerson Electric CEO: Washington Is Destroying U.S. Manufacturing

Yep. Why should our ruling class (lawyers and govt. employees) put up with unsightly manufacturing and resource extraction? It's been a good time to be in the business of crippling American business.

Profiting From Bernanke's Super-Fed and Obama's Newer Deal

My limited understanding is that a central feature of Quantitative easing is a commitment to keep interest rates low for a long time. Can't expect banks to lend long, if they think there's a risk that their short borrowings will soon cost more.

But I wonder. Would our current government not mind another collapse, perhaps featuring mobs protesting banks lending mostly into the carry trade? Borrowers taking a low yeilding currency, and loaning it out in countries with economic prospects not relying only on govt. spending? Low interest is needed to sell their crappy paper, and also to create lending to business's. If they can't trick banks into putting their shaerholders necks on the chopping block before short rates skyrocket, plan B (or maybe it's A) may be more bank takeovers, as liquidity is destroyed by Fed demands that banks repurchase bonds on deposit?

Thanks for the article, very good explanation of a tricky subject that I'm just starting to research.

Options Trader Tuesday Outlook: Double Top?

Cetin does a service by reminding us that there IS a bull side. It seems like many people feel the same lately. Seeking alpha does have a bearish bias, which is probably due to it having many who understand just how bad things are, in the long run.

But in the short run, markets can rise, and I'm interested in hearing what the bulls are thinking.

The Market's Pearl Harbor

The government wants bondholders to forgo their property rights, so that political supporters (unions) can benefit. And new laws assuring that unions will take over many business's. The banks that are under govt. control accept this deal, and others are threatened into it. This can't end well

Missing_link & hypnobama :
here's a link that explains a lot about Obama's ability to enthrall people. It explains Ericksonian hypnotic techniques, and makes a convincing case that obama deliberately uses these techniques. Notice how well he called the bottom - he clearly has a lot of influence over people, and the bottom coincided with a change in his rhetoric. A climate of fear was encouraged, to ease passage of those horrible idiotic spending bills.
www.pennypresslv.com/O....

The Economy: Optimism vs. Fact

I've come to appreciate cetin's comments. If nothing else as a reminder of the bull case, which has had a lot of validity lately. The website he links to has some interesting articles.

I'm not optimistic about the prospects for America's economy, but at the very least its worth considering the bull case. Considering that stocks are measured in dollars, and what is likely to happen to the value of a dollar, it wouldn't be too surprising to see gains in stocks. The stimulus being applied by the government is being spent foolishly, but it's still a lot of spending.

Green Shoots or Green Shorts?

Economies really weak, looking for an L recovery. But Cetin and donkey kong may be right to estimate S&P 2000, SPY 200$. But will 200$ still buy a lunch?

Is Socialism Coming Back to Haunt U.S.?

Good job. A concise well written explanation of the true underlying problem. People act like the problem is due to excess liquidity creating bubbles in assett prices. As if all our economic ills are because interest rates were not exactly right.

Closer to the truth, to say that cheap money policies are the medicine thats kept this ponzi scheme alive. Politicians like the keynesian idea that government spending helps people. Voters respond well to benefits.

I think we've had partial socialism for years, just the shitty parts. Massive benefits go to favored constituencies, with little benefit to the productive classes. Socialisim requires methods to transfer wealth from the productive, & is likely to become totalitarian.

We are ruled by an Oligarchy of Lawyers, government workers and environmental organisations. They control energy and industrial policy on a case by case basis, at great profit. Their wealth allows them to influence politicains. Property rights have been hollowed out - people are deprived of the use their property without compensation. Only the very wealthy (people or corporations) can afford the lawyers and political clout to protect themselves. I'd rather have Stalin in charge - at least his totalitarian stupidity didn't have a profit motive behind it.

Impoverished and scared people vote for the party promising benefits. Roosevelt got elected four times, while doing very anti-business policy. People need to understand that "shitty end" socalism is the cause, not the cure.

Federal politicians should not be allowed to subsidize anything. Thats the basic method of buying popularity with tax money. Also, in the "information age" its not expensive to "get the message out".
Government should provide candidates with cheap info tech, then campaign finance law could be "it's illegal to give a politician money".

Dollar's Purchasing Power Annihilated - The Chart They Don't Want You to See

Politicians can't be trusted with power or money. They use either to buy popularity, any way they can. The fedral government should not be allowed to subsidize anything, even if they do it with tax breaks. Subsidies force taxpayers (or inflation victims) to pay for senseless stuff that no sane person would buy. Think corn ethanol fuel. Federal funding is also used to force states to follow federal policy, contrary to the wise intent of the constitution.

Subsidies should be left to the states, if at all. people can "vote with their feet" easier, without having to emigrate from the US. States with excessively generous policy will suffer the results

The Worst Case Scenario (Someone Has to Say It)

on the lawyer thing - The true cost of litigation can't be measured by the amounts of wealth transfered, the 1/3rd cut on each side going to attorneys, or even the cost of insurance.

The true cost is the way that litigation risk causes cover your ass decisions on the part of potential defendants. Its the lack of Obstetricians in John Edwards home state. Its the smartest young people avoiding high risk activities like medicine, and experienced doctors eager to retire so they aren't risking their life savings with every day at work.

I think FASB 157 is a natural result of accountants wanting to cover their asses from liability. After enrons accountants were prosecuted (rightly or not), it's only natural that others would prefer the safe course. By marking to market values, accountants avoided risky judgement calls about the performance of mortgages, but this created a self-perpetuating cycle of destruction, by impairing banks ability to lend.

Lawyers perform a valuable service by protecting rights - they're very important to a society based on laws and property rights. But the situation has gotten out of hand. I think its a major conflict of interest for lawyers to be writing the laws - they are naturally biased to think in terms of settling issues in court, which is a disaster for everybody else.

I think we are ruled by an oligarchy of lawyers, government employees and activist organisations. Outright communism would be an improvement over defining industrial and energy policy in court, one case at a time.

Gary Shilling Continues to See Deflation on the Horizon

It seems to me that the government needs a deflationary environment to keep selling their paper. At least until the next bunch of mortgages are reset at lowish fixed rates? And the immense financing needs of our government have been met, long enough to win the next election or two?

I'm thinking we'll see cycles of seizure,and downtrending volatility for a long while yet. As money moves out of bonds and into the market, lack of funding for govt. spending and higher mortgage rates will abort improvements in the financial markets - resulting in fresh waves of fear supressing bond yeilds? Like japans decade long downtrend, except that we are starting off in worse position - eye deep in debt.

Excess productive capacity built up at the peak of the business cycle would normally be a deflationary force (if inlation = too much money chasing too few goods) But too much of that productive capacity is in foreign lands, particularly oil. I think we're headed towards a situation where Americans will have limited ability (or inclination) to buy. Only the government ablility to spend borrowed money will keep the economy on life support.

Its a treacherous tightrope the government is on. Clearly they prefer the risk of inflation to deflation, and have the means to ensure it. But will they prefer hyperinflation over deflation? Or a severe stagflation, with no-one having purchasing power except the government? Deflation might well be the preferable course politically, and too bad about the business's who are unable to repay loans in a deflation/stagflation - more opportunity for government "bailouts" ( I think this bunch might like the idea of more nationilization).

A comment I saw here a while ago, speculating where the next bubble would form, due to all the easy money - said that the next big bubble would be government. seems plausible

The Closed-End Fund Discount Quandary

Nuveen has a site, with info on closed ends, from many companies. They mention that some closed end funds use leverage. by selling preffered shares or auction rate securities they leverage up. Not all, but many of them. I think the chronic discounts may be because of this. The nuveen site is handy for this info, which might otherwise have to be gleaned from prospetus's.

www.etfconnect.com/sel...

A Once-In-A-Generation Budget

Who invited the political advertisement?

End of the Recession in 2009?

I don't think the bottom will be seen, until we repeat al the mistakes of the Roosevelt era, for the same reason - the populist appeal of protectionism, attempts to pump up pay with pro-union measures resulting in increased unemployment, Mommy government hiring resulting in tax increases so that govt. jobs can be provided.
In addition, this time we have a government w/ veto proof majority who are going to promote alternate energy. OK, but they'll likely reduce competition by taxing low cost electric producers.
health care plans will make workers more expensive, Free child care ( called pre kindergarden education) will result in welfare moms being paid to babysit each others kids.
Stimulus spending will take a back seat to pork plans, then be implemented at great cost on top of whatever pork has been served.
I may be wrong, but I'm not in any haste to pick a bottom until every possible asinine liberal wet dream has been announced.

Mark-to-Market: Poor Way to Disclose Bank Positions

The best time to change this horrible rule would have been when the market for mortage backed securities was at its peak, and the high valuation of these assetts allowed banks to get carried away with their risk taking.
The second best time would have been before the credit contraction started doing real damage to the real economy, which put us into a deflationary viscous cycle, which may result in a lot of debts becoming impossible to repay.
Marking assetts to reflect future cash flows has now become rather uncertain, because of fears of deflation, as well as the very real possibility of a democrat government giving judges the right to make adjustments to mortages.The lawyers must be ecstatic at the possibility.
Setting values which will not further erode banks ability to lend is going to require some certainty as to government policy. Government policy is going to be the crucial factor determining the value, might be the government should provide a floor for the market, by garunteeing loss's will be limited. The government is printing loads of money, in indirect attempts to influence this situation, they could garuntee willingness to print another pile, so that purchasers of ABS will be assured of getting ?40%, 60% or ? of the value. no garuntee what the dollars would be worth, of course.
Arresting the deflationary spiral would assure the govt. garuntees would be little needed, and if not, the further printing of dollars would be the course of action the govt. will follow anyway.
The purpose of the markets is to allocate capital where it's needed and safe. Markets need certainty in order to provide credit. What we've got now aren't really markets, but casinos.

Beware of Market Performance Myths

freddyv : thanks for the link , he's got some very interesting ideas there..
Something I've been wondering about - will succeeding generations be much inclined to work actual jobs, considering the debt load and increasing contributions to the social security ponzi scheme will tend to make bartering or subsistence farming look more attractive , relative to a job paying a debased currency and with large deductions? Also, I think theres an attitude shift underway, towards less consumerist lifestyles.
One thing I remember from the 70s, barter became rather popular. A continuation of policy which passes debt to future generations seems likely to run into some limit. Debt = slavery.