bobace

Oil Price Economics the 60 Minutes Way

Eddy:

Have you considered the impact speculation had on the price of Tulips in 17th century Holland? The 'quant' on 60 Minutes called it right. If the recession began 4Q07 and Oil demand fell while supply increased the law of demand/supply says the price goes down. The time lag in price decline from July to recent is a matter of financial engineering to de-lever speculators before the 'market' understood what was happening. The Wall Street centered financial sector is the source of the current credit crisis and the speculative (artificial) rise in Oil prices over the past year.

What to Expect from Nortel in '09

1. MEN sale at $500- $750 M would be strategic error when it may be worth more than originally thought ($1B) after the recent (Dec-2008) proof that NT had achieved 100 GB/sec Ethernet transmission over 800KM 100 GB loop.
2. The game plan is to reduce costs and head-count, M's departure may possibly "boost" share price.
3. No doubt that further head-count reduction would be necessary even after the sale of MEN
4. Low probability given that NT can reverse split shares (AGM in May) before the 6 month time to remedy
5. Not going to affect NT or move the stock price.

The Scariest Chart Ever

Bretton Woods set the stage for American monetary leadership post WWII and the baby boom was gasoline to the economic fire that raged for the next 20 year (1946-66). US leadership dominated global economic revival as China and India were non-starters while Sausi Arabian Oil was owned by US BIG OIL. Big differences between now and then. The global theatre now is confused by too many players and subplots that make it diffuclt to appreciate the main story - uncertainty, risk and consumer pessimism on a grand scale. "Hopefully", visibility will clear up by 4Q09.

It's Time to Stop the Economic Gloom and Doom

Understanding the US economy for the past 20 years in terms of Guns (public debt), butter (social programs) and cream (tax cuts)?

Bush41= Guns and Cream
Clinton = Guns, Butter and Cream
Bush43 = Guns, More Guns and Cream
Obama = Guns, More Guns, More More Guns, Hold the Butter and No More Cream

Market Watch: Beware the Ides of February

Agree - another simple accountant.


On Dec 19 02:48 PM The Simple Accountant wrote:

> New Year rally following tax loss selling seems like a sensible near
> term forecast.

Market Watch: Beware the Ides of February

The long run was manufactured by Wall Street with total backing of government and Treasury. Why do you think this story is going to fail? The Media is the Message. It don't matter what the truth is - consider the CPI gerrymandering. The printing press will inflate the economy sufficiently to put the "real" economy back on track. The only losers are asset owners (including stocks). Those fortunate and healthy enough to work will find solace in NOT becoming a statistic in the War on Deflation.

Reports of Equities' Death Are Greatly Exaggerated

It's all relative. Investment continues to be ingrain in our DNA. The question to ask is what is the relative risk/return from investment A, B, C, ...n. How long it takes to exchange asset classes is another issue.

Buying USO Is a No-Brainer

USO objective:

The investment objective of USO is for changes in percentage terms of the units’ net asset value to reflect the changes in percentage terms of the spot price of West Texas Intermediate (“WTI”) light, sweet crude oil delivered to Cushing, Oklahoma (“WTI light, sweet crude oil”), less USO’s expenses.

Waiting for the Death of the Chicago and Keynesian Schools

R eturn of the gold standard, as James Grant also prefers, is an admission that modern governments are not capable of regulating money supply. The current crisis was preceeded by a lack of regulation and over-sight. Adherence to a Gold Standard would not have any effect on the outcome - i.e., they are mutually exclusive concepts. I disagree with your opinion that the Keynesians will fail this time. I also disagree that the remedy is continued deleveraging of assets. (I agree that bad debts from insolvent debtors will need to be settled using the normal bankruptcy laws but this is normal course relief similar to the Resolution Trust liquidations in a prior Epoch.) The massive deficit financing and printing of money focused on retraining, public infrastructure and green initiatives, as Obama policy indicate, will increase consumer confidence and demand. Inflation will reduce real assets values - effective deleveraging. I base my view on the momentum of an Obama rally and a renewed focus on financial regulation and real-economy reorganization to reduce US reliance on foreign energy.

The Pursuit of Wealth and Its Consequences

Each Epoch of economic fall-out raises similar responses that support history repeating itself. If we could stand outside the frying pan and survey economic thought over the past 200 (or so) years we will find those that had considered ethical issues. American political economist and sociologist Thorstein Veblen's The Theory of the Leisure Class (1899) was an early critic of “conspicuous consumption” and waste in the "gilded age".

Tim Duy's comments beg the question: when are we going to learn that leaving economic controls in the hands of few rich and powerful only leads to wealthier and more powerful rich and powerful?

Great American Yankee Doodle Dandy families and their Cannon Fodder conscript children are immersed in the jingoism and rhetoric of the 4th of July while the captains and generals of US enterprise steal, defraud and walk-away from accountability on a super-nova scale.

If Obama focuses on that "commey" technique of economic planning and eschews the noise on the center-right the world may have a chance to rebuild a sustainable economy based on green technologies, better roads, bridges, civic infrastructure and jobs for those less inclined to be hired as brokers, traders and professors with black-box trading techniques for the next LTCM.

Nortel News: Rethinking Bay Networks Acquisition, Delisting Threat

There is considerable discussion on US Bankruptcy Law Chpt 7 reorganization but NT Holding Company that is the listed reporting issuer has several operating units. One of the largest subsidiaries is the Canadian unit that would not fall under US bankruptcy law unless it was 100% owned by the US subsidiary - which would be subject to Chpt 11 filing if NT choose that route. The problem with Chpt 7 for the US subsidiary would be that NT would need to argue that it had no other choice. One theory that continues to be miscommunicated is pension liability. The Canadian pension plan is governed under Ontario (Canada) pension law The Ontario government announced that it will enact pension law changes in May-2009 that will be retroactive to Sept-30-08. The new change would defer pension liabilities from 5 years to 10 years. The US pension industry is in similar reform mode to mitigate the recent credit crisis fall-out in market valuations and credit facilities. The SEC had suspended accounting rules that would otherwise require "mark-to-market" of securities portfolios that have been hammered by the 40%-50% drop in stocks. Finally, there are many companies with a fraction of NT's sales and simple business models that have materially higher valuations. What NT has is the ability to cut costs further to survive. What it needs is manage will to act swiftly to reduce (sell-off) its business model to reorganize into less competitive and higher profit margin product/service markets while cutting costs.

Harvard vs. Yale, Economic Edition, 1980: A Tribute to John Train

Agree with JE'87 Dec-19-08 01:37 PM - especially former Harvard Professor Tobin. If it were not for the Keysians (including Harvard's J.K. Galbraith) the US may have become a lesser nation: a Dickensian state more divided between have and have-nots than today. The current state of affairs was founded on Reaganomics - supply-siders, low taxes, higher deficit (resulting from low taxes) and deregulation of market participants. It was the deregulators that started the Wars on WMDs and Terrorism that will likely equal or exceed the $700 Billion TARP. Ideology on the right and left are equally dangerous. We can decide to rebuild a better economy through real-economy planning (New Deal) or sacrifice millions of poor and powerless people.