Michael_Cohen

The 'L' Factor: Unemployment Still Growing

Dollar devaluation isn't bad for all Americans. Those in the service industry get hurt, but people that are in exporting do fine.

Cost of services stay the same, cost of 'stuff' goes up with a weaker dollar. If your business is 'stuff,' then your income stays the same (relatively) but the cost of services (like getting a hooker or a lawyer) goes down relatively.

Fiscal Policy: What's the Null Hypothesis?

I'd say government spending is worse than lack of it. More government is more inefficiency. A society where the government is a greater percentage of GDP is going to have a lower standard of living than a more free market economy....basically compare us to Western Europe/Japan (or at least how we used to be).

Even Under Reagan, Stimulus Took a While to Work

It's a mistake to compare government waste (Obama) to tax cuts (Reagen). Tax cuts gives businesses incentives to take risks and expand. Consumers (all consumers) have more disposable income to spend and invest.

Government spending (i.e. waste) ultimately just results in higher taxes or higher government borrowing costs. As much as the stimulus 'kicks in,' so do rising interest rates, and every day we are getting ever so closer to the proposed tax hikes in 2011 that Obama has promised us.

The Sound and the Fury of Bond Market Vigilantes

The government isn't worried about inflation. The clearest result of a weak dollar, higher oil, will be blamed on evil oil companies and an oil tax will be instituted.

They will overestimate the proceeds of this tax, just like they are hopelessly underestimating future budget deficits.

The bond market will call this bluff, rates will continue to rise. Within a year, it'll be the 'monetization/inflation vs. depression' debate due to a 7%+ long bond yield. I'll bet inflation will win out...just replace Bernanke with some Obama stooge they push through with their 60 vote majority.

Julian Robertson Bets the Farm on Inflation

I'm not so sure shorting treasuries is a crowded trade.

Yes, all you see on SA and sites like safehaven.com is that treasuries are evil, but these are very specific audiences. You mention something like 'treasury bubble' to your average Joe and he has no idea what you are talking about.

My 'average Joe' contrarian calls still seem to think we'll have an economic rebound near the end of the year. Most people don't REALLY think there is an issue with government borrowing.

Also, most people knew housing was at least sort of a bubble near the top...I don't think housing values dropping in California and Florida were unexpected by many (the depth of the downturn though may have been unexpected. Most people just didn't expect the ensuing meltdown would cause a ripple effect and a huge economic recession.

Not until I see a ticker on CNBC showing the long bond percentage constantly on the bottom right of the screen (like they had with oil at $120+) and some of my idiot average Joe friends saying they are putting all of their money into gold and silver will I say the treasury fade/precious metals buy is over and done with.

Bernanke Testimony Translated

I just wonder what'll happen with Bernanke when his term is up. Now that he is telling Congress the truth and not necessarily what they want to hear, I expect there to be a push for someone who will be even more willing to monetize the debt than Bernanke...someone who will tell Congress they should have another stimulus package and that inflation will never be a problem.....then boom.

U.S. Rating Outlook Stable Despite Debt - Moody's

Who cares what Moody's says anymore?

U.S. Hyperinflation: Is Faber's Prediction Realistic?

100 million % inflation is ridiculous. But we could see 20% or so.

Either way, gov bonds are a terrible investment, and gold/silver are solid imo.

Steer Clear of Treasury Auctions

US GDP: $13.5 trillion (give or take)
Savings rate: 6%

=$800 billion, and I don't think the government can mandate that all of that goes to treasuries. With a budget deficit of $2 trillion+, Krugman an others are living in a dreamland.

I don't think a market crash will trigger a flight into treasuries. Those who did that in October got hosed. While I'm paranoid, I'm also not that paranoid that the Fed will spook the market into sell mode and lead to a flight of treasuries. During that 25% dip in January-March, treasuries went down too.

Think the next month or so will just be more of the same...we'll reach the precipice around August or so, when monetization/inflation or a severe economic downturn as a result of higher interest rates. I'll bet on the former.

China Is Now in Firm Control of U.S. Debt Markets

While I'm very bearish on treasuries, there is no way for China to decouple from us completely. They built their economy around the US consumer. They have a large position in treasuries that is difficult for them to sell. Even if they sold it quickly, that would anger Washington and China could lose out on trade deals.

We're going down, and we're taking China with us. We'll inflate our way out of our debts, which will hurt China. When a ponzi scheme ends, both the scam artist (the US in this case) and the players/victims (China) get hosed.

Casino Stocks Could Be a Long Term Jackpot

Casinos are going bust. The casino market is highly, highly economically sensitive; more so than pretty much anything else. They're highly dependent on upper-middle class and wealthy people blowing a fair amount of money, and that group is getting decimated and will continue to be thanks the political powers that be.

We're going the way of Europe in terms of our economy, and the casinos in Europe are pithy, small, with a small amount of betting.

California: Trailblazing the Road to Insolvency for the Rest of Us?

Wow, legalizing and taxing marijuana. The first sane, pro-freedom thing from California in years

Rising T-Bond Yields Are a Bullish Sign

Or rising T-bills will have the crowding out effect of making it even more difficult for businesses to get credit. If the long bond gets up to 8%, why loan to anyone besides the US government?

Eye on Small Businesses and the Economy at Large

As someone who owns a small business, I won't even bother to visit a bank for a loan. Besides them wanting to charge me a 12+% interest rate on $30k that is secured by my car that is worth more than $30k, who knows if that SBA loan means the government can eventually try to impose some extra taxes or regulations on my little business. Most small business owners are not as paranoid as me, but if my parnaoia turns out correct, it would be an even bigger damper on demand for loans.

Between the proposed higher taxes on anyone making $250k+ (i.e. small business owners) + the government taking up all of the credit available with its massive deficit spending, the Obama administration is every small business owner's enemy.

Obama's Tax Plan Could Devastate Ireland

It's important to remember that Obama isn't ending deferral completely but just eliminating deductions.

Some companies may just fire people in the US that say, handle the Irish division. They may slow down their Irish division too, so the company is hurt, Ireland and the US economy is hurt.

Others that can just jump ship and move completely abroad may decide to do so. These would be the companies that may be based in the US b/c that's where they are founded but are truly global companies and do not major capital investments anywhere (or at least in the US). Many techs and some pharmaceuticals fall into this category. This would be good for Ireland, ok for the company, bad for the US.

Some companies may just take the extra tax on the teeth, which just means more money for the US government, less for the company (and the company's growth is likely to be lower, so net negative for future productivity/jobs). These companies are vulnerable takeover targets by foreign companies.

I don't know enough to say what will happen more often and what the net effect will be in total. The only thing I'm sure of is that it's a net negative for the US economy and that it will be a slow bleed, not something we see suddenly.