Ned S

Expect a New Direction for Crude Oil

The Arabs only have one shot at this - After the oil is gone who'll want to buy sand/camels/niqab clad maidens or sharia law? .... Give them a break - $500 US/bl please!!! - It's not like the USD is worth much anymore. Smile!

You Can Spend Your Way Out of a Recession

The British Prime Minister James Callaghan put the original argument quite elegantly back in 1976:

"What is the cause of high unemployment? Quite simply, and unequivocally, it is caused by paying ourselves more than the value of what we produce. There are no scapegoats. That is as true in a mixed economy under a Labour government as it is under capitalism or communism. It is an absolute fact of life, which no government, be it left or right, can alter. We used to think that you could spend your way out of a recession, and increase employment by cutting taxes and boosting government spending. I tell you in all candour, that that option no longer exists, and that insofar as it ever did exist, it only worked on each occasion since the war, by injecting a bigger dose of inflation into the economy, followed by a higher level of unemployment as the next step. Higher inflation, followed by higher unemployment; we have just escaped from the highest rate of inflation this century has known; we have not yet escaped from the consequences, high unemployment. That is the history of the last 20 years."

Bitain got a loan from the IMF that year and the US and Germany used the IMF loan as a means to force Britain to make major domestic policy changes:

yalepress.yale.edu/boo...

Obama's Financial Reform - A Distraction from the Real Issues

Obama is just one more mouthy American president. A spin doctor who reckons 4.5% of the world's population having 50% of the world's firepower and 23% of the world's GDP is good and would be way better if the GDP figure was 30%. Because Americans are such an enlightened and benevolent mob that remain inherently fit to lead the world. Despite every possible practical indication to the contrary. Which Americans seem to choose to believe. But noone else. Toodle pip America - I may not live to see it, but your days are numbered. This century will see you out. Asia's turn next.

PS: Old Joke - How do you you tell a politician is lying? His lips are moving.

Sure It’s Legal … But Is It Right?

Didn't read your article past the "morality or ethics" bit - Don't be a goose - America has to rate right up there with the most amoral nations the world has ever seen.

How $30/Barrel Oil Could Save the World

I can just see messers Putin and Medvedev happily coughing up their oil at USD 30 per barrel to drag the West out of its own debt induced meltdown.

Re all the pathetic political claptrap, I'd actually rather rely on a source like the following than what sounds suspiciously like dribble that may have come out of the mouth of a man who reckoned Iraq had weapons of mass destruction:

en.wikipedia.org/wiki/...

But seriously, if you just want Iran's oil on the cheap then write your congressman a letter saying you reckon it would be a good idea to go and take it off them. But would it be OK if your allies stayed home this time please?

Who Should Have Skin in the Game?

It's just a matter of perspective KD - One could also argue that what shouldn't happen is that the snake oil salesmen cry foul if their patsies find a way to tar and feather them and give them a ride out of town on a rail - Depends on whether one is a snake oil salesman or a patsy I guess? And on whether the fraud was knowing or more just a case of Willful Negligence.

It doesn't matter how one dresses it up to sound good for the snake oil salesmen, I sure get the feeling there's a degree of culpability from that end.

The unfortunate thing for America is that if one sees an investment product nowadays with Made in America stamped on it, I think even an American would have to wonder if it just mightn't be the equivalent of getting an email from a Nigerian who seeks assistance with a bank transaction?

Who Should Have Skin in the Game?

I'm no economist and I might have a bit of the detail wrong, but it seems to me that America decided lending out 10 times bank holdings wasn't enough so 50 times sounded better. And decided to offload the risk so it could make it lots more. Plus gobble up petrodollars and BRIC surpluses along the way and leverage them as well. And if that's not enough, well heck, the country can print whatever the shortfalls happen to be. It sounds to me like America is chronically debt addicted.

If one wants to say That's how the game works, that's OK, but do be aware that the game just could stop working quite so nicely as the patsies reduce their risk exposure.

As for having skin in the game - Why should banks care - The American tax payer will bail them out regardless.

The Anti-Stock Rhetoric Is Overblown

Re the statement "just four-and-a-half years to regain the losses", I'm curious as to whether that applied to the "average" 1929 pre-crash investor? What about the investors who had their money invested in companies that went bankrupt between 1929 and 1932 during the downhill run? (I assume there were some?)

Still, shouldn't be sceptical I suppose - It wouldn't do to see Wall Street deprived of an opportunity to get its claws into too much of that 9.5 trillion that's been parked up.

The Worst Case Scenario (Someone Has to Say It)

InvestBamboo commented on May 03 01:38 PM (Lengthy comment so I won't repeat it in full, but a few points):

Re your "Prediction #1 – this great nation that survived and thrived its way through dozens of big and small crises since its founding will actually step up and lead the world out of the current quagmire which it was largely responsible in causing." - It would seem to me that a lot of the world just might have had enough of being led by America for now thanks? Perhaps if you think in terms of how America can work in with the "global team" and what America's realistic place in that team might be mid to longer term instead of so much in terms of "leadership" you'll be a bit closer to the mark.

The same theme comes through in your Prediction #2 where you comment "We will emerge on top of the food chain being the master designers of products and services for consumption by us and the rest of the world." - Your thinking is a bit grandiose for mine - Sort of the antithesis of the nutty Russian professor you mention who is predicting a disintegration of the US. I think those sorts of predictions are a bit nutty too - But I also think it is a bit nutty for America for think it is going be master of the universe again anytime soon - Let's face it - America had its chance - And blew it really badly (sadly) - And the Chinese are onto it and France and Germany and Russia - Plus a few others I suspect.

Re Prediction #6 - The good old American way of offering "the best unfettered system for an entrepreneur to build a business with the least amount of regulations" sounds like a fundamental part of the problem to me rather than the solution? Might be wise to have a real good think about that before American business continues happily on its unfettered, unregulated way perhaps?

Not that America shouldn't come out of this mess relatively OK - After a lot of hard work and pain with its citizens ultimately accepting that the good old days are gone - Because America really does have a very great amount going for it from what I can see.

A final point: A fair few of the perspectives from the main article reminded me of what happened in the 1990s when Russia collapsed catastrophically in a debt based, money printing, hyerinflationary scenario - I can only hope Mr Obama and Co don't lose their way on the QE thing or America might not come of things nearly as well as I guessing at this stage. Still, Volcker is on the sidelines waiting to be let off his leash. That's encouraging. But a reverse black swan? Doubt it - More like a lot of pain I'd say.

Sucker's Rally Approaching an End

Some silly questions maybe but I'll ask anyway: If I understand things correctly the Dow went up to 14,000 using lots of leveraged money - That means "borrowed" Yes? So, who exactly is going to be borrowing that same amount of money again over the next few years, and from whom, to drive the Dow back up to 14,000 and/or beyond? Or will everyone just smile happily if it gets to 10,000 and sits there? Or are we relying on lots of inflation to do the trick for us? But how does that make our assets worth more in real terms over time?
Forgive my asking - I'm obviously a simpleton when it comes to money.

Investor Psychology: Where We Are on the Rollercoaster

A smart man said to me once You shouldn't invest in something you don't understand.

Is the Rally For Real?

If George Soros believes policymakers “did not succeed in recapitalizing the banks to the point where they can lend freely” then I'm inclined to take his word for it rather than that of policymakers - Or the banks.

Lots of comments here I particularly appreciated. Including those of Dave Wrixon Apr 14 02:13 PM that "Markets are not looking forward. They are looking back to the Good Old Days of 2006. They have no clue what lies in front of them!"

And that of Carl Spackler on Apr 14 03:12 PM who finished off by saying "We are in the washing machine cycle of this market - it will kill the bulls and bears each time as they try to predict a major breakout. Reality is that we are in a sloping sideways to down trading channel and the only way to make money is to be long as it falls below 700 and short it above 800."

Thanks.

U.S. Banks Merely Papering Over Losses

It does seem to be currently being rebuilt on sand rather than on Mr Obama's publically stated preference for a rock. But then perhaps it does all just take time - What do I know - Except that the big game is rigged and any small players need to be very cautious.

The Unexpected Retail Decline

mac123449 - Nothing's guarenteed - Too much "funny money" flooding the system with no signs of that flow abating if the current stimulus doesn't stimulate.

> On Apr 14 10:22 PM mac123449 wrote:

> Did anyone seriously expect the retail data to be good give me
> a break only a complete moron would believe that. dow 3500
> in 6 months guaranteed

The Unexpected Retail Decline

Cetin - I find it genuinely interesting that I bother noting your comments or commenting on them - My guess is that it is because they are usually the antithesis of mine. And I value contrarian thoughts greatly.

But in answer to your comment below; I suspect it is because some people have other people in the world whom they care about and who they suspect might not die before them and to whom they'd like to leave some assets/a bit of a start/cushion against the uncertainties of life perhaps?

> On Apr 14 06:48 PM Cetin Hakimoglu wrote:
> It seems the consensus here is that it's better to die with tons of
> money under your mattress while living like a pauper than enjoy a > higher standard of living. I'm relieved you guys don't work in the
> federal reserve or on the Obama administration.