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Dialectical Materialist

Dialectical Materialist
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  • All Bubbles Are Equal, But Some Are More Equal than Others [View article]
    I wondered the same thing... Have we seen a bubble that didn't involve credit? Surely as high returns are "guaranteed" in one place, money is borrowed from other places more cheaply and put into the higher yielding return. The dot com bubble was full of financing that allowed ideas such as lightbulbs.com to take form. A laboratory clean example of a fund that explodes 500% but then settles back to 50% returns might look like a harmless bubble, but there are people borrowing to participate in the run up to 500% and there are inevitably pipers to be paid when it comes back to earth. It may be the problem with the idea that a non-credit bubble is not dangerous is that there is no such thing as a non-credit bubble.


    On Nov 10 10:19 AM Nick36 wrote:

    > Whenever there is a bubble, there is always somebody building up
    > debt and leverage to fuel it.
    >
    > In the present speculative bubble, it's various governments and the
    > Fed who are building up leverage and borrowing a lot of money.<br/>
    >
    > The current $1.4 trillion per year US government deficit is nothing
    > to sneeze at. And the Fed is loading up its balance sheet with all
    > kinds of debt securities too.
    >
    > Debt is debt. And it needs to be repaid regardless of whether it's
    > private entities or governments who owe the money. But it's not
    > really the governments who owe the money. It's the taxpayers.
    >
    >
    > The taxpayers are now leveraging themselves up to fuel the most recent
    > speculative bubble. And things won't go well for taxpayers when
    > this latest bubble bursts. Because the financial system hasn't been
    > reformed. Banks are now gambling with taxpayer money. And if they
    > loose. Then taxpayers will pay.
    Nov 10, 2009. 11:05 AM | 3 Likes Like |Link to Comment
  • All Bubbles Are Equal, But Some Are More Equal than Others [View article]
    There is something elegant and unintentionally revealing in the notion that "if policy makers were so smart (that they could understand the market) they'd be rich." You can't invite a bunch of friends over for dinner and then when you serve them a bad meal say, "Look if I could cook I'd own a restaurant." By the same token you can't be responsible for setting economic policy but demure, "Look if I understood how any of this worked I'd be rich, okay?"
    Nov 10, 2009. 10:52 AM | 9 Likes Like |Link to Comment
  • Elliot Wave: The Dollar Is Set for a Major Rally [View article]
    You'll get no argument from me. You are accurately describing the Fed's strategy to sink the dollar in order to inflate away our debt.

    The problem is:
    1) It's not likely to work
    2) The consequences of it not working are worse than doing nothing to begin with.


    On Nov 09 01:49 PM philais wrote:

    > Dialectical Materialist,
    >
    > But, the Fed and Treasury won't allow long days and saving money
    > for our future. Their goal is to inflate the dollar and erode purchasing
    > power to force the dollars to be spent now, or put into the high
    > risk current stock market bubble. We are constantly being encouraged
    > to continue to spend spend spend. Cash for Clunkers, Home buyers
    > tax credit, cheap mortgage rates, Federal Stimulus dollars, <2% taxable
    > savings rates, 0% at the Fed window etc.
    >
    > I refinanced my house early this year when the interest rate went
    > to 4.5%. I received a letter saying that Fannie Mae was now holding
    > the note. I'm a very low credit risk. What does this say to me? The
    > rates are so low that no non-government entity will touch any type
    > of mortgage and the only way homes are being financed now is by having
    > the government virtually take over the mortgage industry.
    >
    > Banks know that the interest rates are too low. Look at how they
    > are ramping up short term credit rates prior to government controlled
    > interest rate caps. They not only are expecting government control
    > , but future punishing inflation.
    >
    > What to do?
    >
    >
    Nov 9, 2009. 04:01 PM | 2 Likes Like |Link to Comment
  • Elliot Wave: The Dollar Is Set for a Major Rally [View article]
    Banks aren't being encouraged to lend by near zero interest rates... they are simply investing in the market and helping to drive another asset bubble which had scant basis in fundamentals. How we "get past the unemployment rate and increase consumption" as you suggest has been this administration's obsession. Unfortunately it is the wrong goal. We should be taking our lumps like anyone who goes on an extended spending spree they can't afford. We should reduce our expenditures, not try to see if we can re-ignite them.

    If we weren't spending so much money we did not have, I would be all for a stimulus as a way to cushion the blow of the slowdown, but since borrowing trillions to prop up our indebtedness only leaves us further in debt, it is clearly the wrong way to go. QE should be ended, one quarter point at a time. Yes stocks would fall, but the dollar would rise and that would bring a new sanity back to investing and help restore global confidence in the dollar (which is our real natural resource in the country). This renewed stability would lend itself to organic business growth not growth fueled on short lived dry gas bursts. We'd be in for years of slowing down, but that is a good thing, as the speed we achieved simply can't be sustained (as proved by where we are now). We'd have decades of national debt to pay down, but then that isn't really going to be inflated away without a collapse of the dollar to such ridiculous levels that we default anyway.

    There is no quick fix, and asking for one is a symptom if the disease that got us here. We need to think long term sensibility and, like the couple that just got back from the vacation they can't afford and had no business taking, we need to put in some long days and start saving for our future. Not quick but fairly simple really.


    On Nov 08 12:56 PM Mr. G wrote:

    > I never see any real alternatives from all the doomsday prophets
    > to fix the current economic mess. Raising the FED rate to put a halt
    > on the dollar decline would depress economic growth because it would
    > not encourage banks to lend.
    >
    > If we can get past the current unemployment rate and increase consumption,
    > modify the sins in real estate lending, and stabalize our economic
    > imbalances, there may be light at the end of the tunnel.
    >
    > Any economic geniuses with a quick fix?
    Nov 9, 2009. 12:49 PM | 4 Likes Like |Link to Comment
  • Labor Market Still Grim, But the Worst Is Over [View article]
    I can't figure out if you are the most bearish sounding bull I have read or the bullest bear. You have a tendency to paint a really ugly picture of the economy and then say that the recovery is moving forward. And the odd thing is that I mostly agree with you. I think that both the rampant recovery folks and the apocalyptic crash camp are probably both wrong in the long run.

    Having said that, I'm not sure I agree the "recovery" will be "sustained" in the short run. We are a long ways away from gaining traction due to the number of unemployed and its impact on consumer spending. So while I think we'll pull out of this, I think we are in for a very long period of sluggishness.
    Nov 8, 2009. 05:25 PM | 2 Likes Like |Link to Comment
  • Consumer Credit Down - But Does It Show Deleveraging? [View article]
    I agree with most of what you're saying, and I suspected consumers would spend as much as they could out of habit/culture as well. However, when you say "can't afford to save" that might be true, but anyone can afford to belt tighten. Cutting expenses is not the same as saving and I think we are seeing many folks reduce or delay purchases. Also, some people are at the end of their ability to accumulate debt. Whereas 7 years ago there would always be another credit card offer in the mail to help consumers extend their indebtedness, now many families are seeing their limits cut and their interest rates increased.

    So my point is while I agree with you that the "new age of savings" has certainly not dawned on us, we are certainly seeing, and will continue to see, decreased consumer spending that will impact on how quickly our economic cauldron gets back to full boil.

    You are very right that the Fed is being dragged kicking and screaming into this slowdown. If they could set negative interest rates they would..


    On Nov 08 03:52 AM jimboy wrote:

    > It seems to be accepted wisdom that the consumer is turning thrifty
    > and we are in for a long period of belt-tightening. I never really
    > bought this argument for 3 reasons:
    >
    > - profligacy is too ingrained in the psyche and culture
    > - a big chunk of the country can't afford to save
    > - the Fed and the government won't let a savings culture take hold
    > and will continue to set policy (zero rates, clunkers, housing credit)
    > that encourages debt accumulation
    Nov 8, 2009. 02:29 PM | 2 Likes Like |Link to Comment
  • Option Trader Friday Outlook: Is the Dollar Going UUP? [View article]
    No, I don't have to look at investments when the argument is to buy dollars(!). Your analysis proved that my gold did okay from 1980 as compared to the dollar. My point wasn't that there was no better investment nor that you shouldn't buy stocks.

    I agree with your analysis somewhat (I certainly wouldn't use GE as my hero stock). But tell me where in the above article the author is advising us to buy GE?


    On Nov 07 12:53 AM untrusting investor wrote:

    > Fair enough to point to gold as a possible investment. But you have
    > to compare investments then, not just raw dollars.
    >
    Nov 7, 2009. 01:52 PM | 1 Like Like |Link to Comment
  • Option Trader Friday Outlook: Is the Dollar Going UUP? [View article]
    I have never trusted analyses that assume the people on the other side of the trade are a hoard of people who are bad at math... The goldbugs I know are pretty good at math. They understand that $1 now is less than $1 in 1980 while 1 oz of gold now equals 1 oz. of gold in 1980. Which would you rather have held on to for the last 30 years?

    I have a $100 bill from 1950. It is not in uncirculated condition and as such it has no collectors value. It is worth $100. But I can't spend it, because I think it is cool that it is so old. What is not cool is thinking about how much that bill was worth when it was printed. The original owner could have taken his family for a three day weekend at a cabin on the lake. Today he could get dinner and drinks with a few buddies at a TGI Fridays.

    Sure the dollar is going to go up and down, but don't try to paint those who put some savings into gold and silver as a bunch of simpletons.
    Nov 6, 2009. 09:02 PM | 12 Likes Like |Link to Comment
  • Consumer Credit: Dreadful [View article]
    When you say "Nothing good in here," I think I have to disagree. It is very good that credit is falling. It needs to fall much further. Sure I hear what you're saying about how that means the recovery ain't one, but it is still great news that we are not just out there drinking the Kool-Aid and diving further into debt. A weak holiday shopping season this year may seem like a bad thing, but it will do us a world of good down the road. I'm hoping we continue to see credit fall. Then maybe when jobs do come back they can be sustained with a stable economy, not this house of cards.
    Nov 6, 2009. 07:35 PM | 9 Likes Like |Link to Comment
  • How Apple's Market Share Will Propel Stock to $500, Part 2 [View article]
    I've heard this argument before. I'm not sure why Exxon Mobil is the only company that gets to be the biggest but the "That would be bigger than Exxon" is thrown around a lot. I think the worlds largest company could be any company with a global footprint, a huge brand recognition, and a product line that is essential to the way of life for much of the world's population. Great margins don't hurt. So when I think world's largest company, I have no problem with it being a large tech firm instead of an oil company. It does not surprise me that it is Exxon, but if it were Apple, I don't think were stretching the imagination too far. It's not like we're talking about facebook or travelocity. Apple is a legitimate world class company with a very desirable and very profitable line of products. There are arguments against a $500 stock price, but I think "that would mean it was the biggest company on earth" is not one of them.


    On Nov 06 02:31 PM Brad Johnson wrote:

    > If the price of Apple goes to $500 a share, it will be the largest
    > publicly traded company ever.
    >
    > I really doubt Apple is going to be "worth" more than Exxon Mobil
    > (the largest company on Earth)
    >
    > Look, I love Apple's products, but anything north of $200 a share
    > is overpriced, imo.
    Nov 6, 2009. 03:44 PM | 4 Likes Like |Link to Comment
  • How Apple's Market Share Will Propel Stock to $500, Part 2 [View article]
    In the world of trees, there are dogwoods and giant red woods. Neither grows to the sky, but one gets a lot higher than the other. Same for stocks. Whereas some huge tech names like MSFT will likely hover around their present level for years to come, some will continue to grow. There are many compelling reasons (and Jason has presented some of them in his articles) that AAPL will continue to grow revenue and market share. $500 is a nice sounding round number. I don't know if Apple will get there in today's dollars anytime soon. But it does have room to run. $300+ easily if the economy starts to recover and their business continues on its present path.

    Regarding macs getting old... It is not the bulk of their company anymore, but having said that, just watch what happens this winter. It will surprise you. An unusual "refresh" is coming.


    On Nov 06 09:11 AM Techtrader10 wrote:

    > Time to give it a break Jason. The market is awash in smartphones
    > and while none to date has caught the fancy of the public enough
    > to de-throne the consumer driven iPhone (although that new Mototola
    > might do it). The other problem for Apple is the company is letting
    > their MAC lines get old. They are pushing their toys and letting
    > the staple of their line go stale. Trees don't grow to the sky and
    > neither do stocks.
    Nov 6, 2009. 10:55 AM | 8 Likes Like |Link to Comment
  • Silver Prices Are About to Fall [View article]
    And I have to say the number of commenters who think that silver can only go up from here gives me pause. I like silver, but I never like seeing all out bullishness, as it so often signals that the top is near (at least in the short term).
    Nov 6, 2009. 10:16 AM | 4 Likes Like |Link to Comment
  • Silver Prices Are About to Fall [View article]
    I was going to say the same thing, except I get an itchy finger around 15. Anything under 15 and I'm starting to buy. If it goes as low as 14, I'm all in.


    On Nov 05 12:46 PM yellowhoard wrote:

    > I agree with the author on nearly everything.
    >
    > I've sold my AGQ and am now waiting for the big pullback with more
    > cash than I've had in quite a while.
    >
    > Personally, I won't wait for 11 per ounce. I'll buy some at around
    > 14.50 and more if it moves a couple dollars below that.
    >
    > But, damn, it's painful to hold cash.
    Nov 6, 2009. 10:13 AM | 4 Likes Like |Link to Comment
  • Financial Greed and Christianity  [View instapost]
    And of course if it is a PR offensive, then the cost of travelling to the churches of the world to justify your greed is tax deductible as a business expense. Clue #1: If you take a business expense write off to go to church, you are not there for the right reason. (And oh yeah, can I get a receipt for the collection plate offering...?)
    Nov 5, 2009. 10:57 AM | 3 Likes Like |Link to Comment
  • The Hindenburg Omen (Extended) [View instapost]
    Defining coarse and vulgar are tough. I know I am generally put off by crude stuff, but I try to look past it if there is content worth getting to.

    I share your desire for a civil and constructive discourse. I am certainly not a member of the Renegades (not even knowing what that means) but I do know that I have enjoyed much and learned more from comments made by you, YH, OG, HTL, DG, and yes even Arocks. I hope you all come to terms because I really enjoy reading what you all have to say. I even disagree with much of the prevailing politics in the group, but I learn a lot about why you folks feel the way you do and it helps me understand more about what is going on in the world and even affects some of what I feel politically.

    I probably have no business commenting right here, but I wanted to say that I too would expect that all comments everywhere could be free from gratuitous sexual or crude commentary. There's just no need for it. On the other hand, when I see it, I might give it a thumbs down and move on.

    Ultimately content should be community policed and if you're not happy with something, respectful people will note that and try to check themselves.


    On Nov 04 06:12 PM Freya wrote:
    >
    > Coarse is one thing, Vulgar is totally inappropriate.
    Nov 4, 2009. 10:27 PM | 7 Likes Like |Link to Comment
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