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Robert Enstrom

Robert Enstrom
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  • 2015 Outlook: Pain [View article]
    Fishfryer: Alas, there is too much truth in what you say. We've become like the long suffering Russians of the 1980's, without even their realization that:

    What is denied is true.

    What is declared is false.

    What is not mentioned is the most frightening of all.
    Dec 31, 2014. 12:26 PM | 9 Likes Like |Link to Comment
  • Why 0% Rates? Tech, Globalization And Emerging Markets (Not QE) [View article]
    Salmo: While I agree with much of what you write, I advise against TBT. For the last 18 months it has lost its direct correlation with the 30 year yield and has performed badly. This bad performance began about the time the Fed began its reverse repo operation, which may be just a coincidence. Even TBF, which is not leveraged has performed badly. Why this is so is a mystery to me.
    Dec 28, 2014. 12:26 AM | Likes Like |Link to Comment
  • Why 0% Rates? Tech, Globalization And Emerging Markets (Not QE) [View article]
    "Saving rates" no longer reflect the behavior of the mass of the population. Concentration of wealth is world wide. The glut of savings from China is from the ultra rich and not the ordinary citizen, just as it is in the USA. The glut of savings has been fueled by central bank policies world wide and these ultra rich do not buy ordinary products with their savings, they chase financial products - hence the inflation of excess money is in these assets, rather than ordinary products. So the price of bonds rises (yields drops), just as in the rest of the financial asset class.
    Dec 27, 2014. 01:24 PM | 2 Likes Like |Link to Comment
  • Janet Yellen Is Wrong About The Cause Of Wealth Inequality [View article]
    Lawrence: I think the whole problem of excess thrift and the relation of savings and demand in the economy needs an entirely new examination. Small savers are now a statistically insignificant portion of the savings pool and what little savings they do have is tied up by tax law in retirement accounts. The vast pool of disposable savings is now found in corporate and mega rich populations. These savings are not affected in any negative way by interest rate policies - in fact, they ride the back of central bank policy, making far greater gains from these than through simple interest. They are mainly invested in asset classes rather than bank savings and are engorged by asset appreciation, currency differentials and cheap leverage which central bank encourage. Transferring ever greater wealth to these people, while dispossessing the vast majority - which is what central bank policy does - in my view - in no way increases the demand for real products in the economy.
    Dec 12, 2014. 03:25 PM | 1 Like Like |Link to Comment
  • A Brief History Of QE In The U.S.: Focus On Small-Caps Via IWM [View article]
    J.J. Since ZIRP and QE coincide, how do you determine which is having the effect? Is it possible that large caps are better able to take advantage of ZIRP than small caps? Of course, ZIRP made some form of QE necessary to keep the bond market stable, but the question still is which is the causative factor in your calculations. Thanks for the work.
    Dec 10, 2014. 02:19 PM | Likes Like |Link to Comment
  • Is The Fed "Pretending"? [View article]
    What exactly is the "natural interest rate?" This is impossible to tell when governments do not have to borrow from actual savers. Why are savings rates high in a ZIRP environment? Well they aren't. The average saving rates for the bottom 90% of the population is ZERO - just like the interest rate. Only by counting mega corporations and the ultra rich do you get high savings rates - and these folks don't save in any traditional sense. Central bank policy has destroyed the natural saving cycle for families and household formation and you can see the results of this in the declining demographics in all advanced economies.
    Dec 4, 2014. 12:26 PM | Likes Like |Link to Comment
  • S&P 500: Generational Opportunity In The Making [View article]
    Net: Hasn't the near zero cost of credit had something to do with replacing labor with machines? Japanese "productivity" has long be driven by mispriced credit in that economy. The profit of this mechanization (through low cost borrowing) can diminish and disappear if credit servicing costs increase.
    Nov 19, 2014. 12:21 PM | Likes Like |Link to Comment
  • S&P 500: Generational Opportunity In The Making [View article]
    RS: It is interesting, in a disturbing way, to watch central banks nationalize so many of the world's assets with the click of an electronic transfer rather than the click of a rifle cocking as it used to be done. Perhaps they will be satisfied with half the world's private assets, while driving the rate of return on those assets that remain private to zero.
    Nov 18, 2014. 11:00 PM | Likes Like |Link to Comment
  • Central Planners Are In A State Of Panic [View article]
    Lawrence: Thank you for your comment. I'm glad that you are troubled by this activity. While the BOJ promises to use its voting rights benignly, this is a self imposed restriction, and can be changed, just as the BOJ recently changed its rate of purchases. At the current rate, in another year, BOJ will own about 10% of the Nikkei. At some point, it will have effective control.
    Nov 9, 2014. 01:00 PM | Likes Like |Link to Comment
  • Central Planners Are In A State Of Panic [View article]
    Benny: In 2010 the BOJ authorized itself to buy ETFs and J-REITS. All the limits in this program are self imposed and may be changed at any time. I believe the BOJ currently owns about 3% of the Nikkei and all the benefits of this ownership go to the BOJ or government of Japan, including voting rights. While the BOJ did not use force of arms to take these assets - they used electronic transfers - they were effectively nationalized - and the pain of their seizure was spread through the Japanese population and other holders of the Yen through devaluation.
    Nov 8, 2014. 12:28 PM | Likes Like |Link to Comment
  • Central Planners Are In A State Of Panic [View article]
    Benny: If my statement is ridiculous, please explain why. What of value does the BOJ give to the public in exchange for real assets? It gives them debt instruments which must be honored by the rest of the economy - not the BOJ. Not only does it remove real productive assets from the private economy, it simultaneously reduces the rate of return on all the remaining assets by inflating their price. Please explain how this is helpful.
    Nov 7, 2014. 04:20 PM | Likes Like |Link to Comment
  • Central Planners Are In A State Of Panic [View article]
    QE, aside from flooding the asset market with cash, is the easy route to nationalizing productive and yield bearing assets. This nationalization removes these assets from producing demand in the private economy and instead, shifts them into directly producing revenue for the government. Eventually, you are left with a dispossessed public with a pocket full of shrinking cash and a government that owns everything.
    Nov 7, 2014. 12:18 PM | 1 Like Like |Link to Comment
  • Slicing And Dicing The U.S. Savings Rate [View article]
    Thank you for taking the time to present this information. Too often "saving rates" are used to characterize broad population behavior, when in fact the reflect only the behavior of a very small segment of the population.
    Nov 6, 2014. 12:30 AM | Likes Like |Link to Comment
  • Contrary To What Most Market Participants Believe, Our Dollar Is Verging On Collapse [View article]
    Mr. Gruzaiski: You cover a number of interesting areas in your article, but drawing conclusions about sea level rise from a few examples is misleading. Almost all delta areas undergo natural subsidence as they attempt to maintain geostatic equilibrium. For example, New Orleans has been sinking (or sea level has been rising there) for more than two hundred years - long before global warming became an issue. A much larger statistical sample of relative sea levels around the world - especially in more geologically stable areas - is needed to determine if sea levels are rising due to increased ocean volume.
    Nov 5, 2014. 01:56 PM | Likes Like |Link to Comment
  • Consumers' (Accurate) Bifurcated Take On The Economy - And Why That Isn't Good For Democrats [View article]
    One thing you left out of your calculations is debt load/debt service per capita. So long a ZIRP is in effect, things will remain blah. Should interest rate ever increase, the real state of the economy will be revealed.
    Nov 3, 2014. 11:04 AM | Likes Like |Link to Comment