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Dialectical Materialist

Dialectical Materialist
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  • A Look Inside the August Consumer Confidence Numbers [View article]
    I agree that cash for clunkers has pulled forward demand. But by putting some cash into the hands of the dealers (who pay the salesmen, who buy lunch and tip the waitress who pays her daycare who pays the daycare workers, etc.) this is more honest stimulus than some of the other shenanigans.

    Please don't think I am endorsing the effectiveness of this program or flashing the all clear on the economy... But I do think we should expect the impact of all these car sales to ripple out into the economy. This will give a temporary boost to a bunch of numbers, but as since it is not sustainable, it will fizzle over time. But not before many cheerleaders get to tell us how good things are getting!
    Aug 25, 2009. 12:43 PM | 5 Likes Like |Link to Comment
  • No, This Is Not a Recovery [View article]
    Economic Joker:

    Your glib comment reflects either insensitivity or ignorance. A person could be using credit responsibly and then, for example, lose his job. This new inability to manage expenses can result in a bill or two being paid late. This can result in a default rate of 35% replacing what was until that point a manageable rate (say 7%). The new rate compounds the problem of cash flow and the whole thing spirals downward. That is the point.

    Of course you could "avoid using your cards." Just like you can become rich if you save 20% if your income and invest it with 20% returns. By definition it is true, but in practice it is not. Many people can NOT save 20% of their income NOR find 20% returns. And many many people -- even those who are smart enough to try to use credit only sparingly and for emergencies -- can find themselves in trouble with credit. Of course it usually takes an illness, a personal crisis event like a divorce, or a financial bomb like the loss of a job to trigger the problem in the case of the responsible credit user, but what are the odds that any of those things will happen?

    And of course the theme of the year is this time when you lose your job you may not get another one, at least not anytime soon.

    I am glad for you that your life is comfortable, but I am sad that you have no understanding and compassion for the challenges many hard working and well meaning people are facing in this economy today.

    On Aug 24 10:55 PM The EconomicJoker wrote:

    > There's a very simple way to avoid paying 35% interest rate. (And
    > one that Robert Kiyosaki would drool over)
    > You simply stop using your credit cards. Is that really so hard?
    > I don't think so. Credit cards are a supposed to be a privilege,
    > not a right. Consumers ultimately control their own fate.
    Aug 25, 2009. 12:00 AM | 6 Likes Like |Link to Comment
  • Is It a Stock Market Rally or a Dollar Devaluation? [View article]
    You sound really out of touch with the reality facing many baby boomers.

    The "alternative" may actually be a painful and crippled life working a part time job to make ends meet. Sell the house for hip replacement so that retirement can be enjoyed? Indeed....

    Have you been selling financial products all your life?

    On Aug 23 12:05 PM lorddarley wrote:

    > <<I doubt that Gen X'ers and beyond will be willing to pay for them
    > if they have to go without basic health care.>>
    > If they don't pay, you will (gladly), even if you had to sell your
    > house to do it.
    > The alternative is a crippled and painful retirement. The business
    > of SYK is "can't miss."
    Aug 23, 2009. 09:34 PM | 1 Like Like |Link to Comment
  • Prepare Yourself for the Inflation Invasion [View article]
    Good luck Captain. I think you are right that coins can make a great investment -- they are like art and precious metals rolled into one. But be careful. There are a lot of unsavory people who make a lot of money selling coins to non-experts. A small difference in grade (or more obvious difference like mint mark) can make a huge price difference. Many coin sellers are very much interested in the profits they make from retail markup (like jewelry stores), so it can take a long time to recoup what you paid if you pay too much. The right coins can outpace inflation by a wide margin, but you have to be on your toes. Your report of an auction of an "1870 something or other" makes me believe you might want to tread carefully.

    On Aug 23 02:24 PM capt Brian wrote:

    > ... I am not selling any PM's except to get
    > a better grade of 'stuff'. I just started trading my Krugs and double
    > eagles for numismatics, which in my opinion will be very interesting.
    > An 1870 something or other, just went for over $70,000 at the auction.
    > Hmmm. So I am beginning to slightly belive in the demand of the emerging
    > countries, wanting toys of all kinds, and the markets are saying,
    > things will be okay after all. So.. I am trading my scrap metal,
    > (mine rounds etc) in for nice shiny objects in plastic slabs. Anyone
    > ever heard of "Impressions of Liberty"? This may be the new way to
    > invest in metals, coins.
    Aug 23, 2009. 06:51 PM | 4 Likes Like |Link to Comment
  • Sex Sells - But Sometimes It Shouldn't [View article]
    I disagree. Not all publicity is good publicity. has very reasonable rates for hosting, but many folks like me would never go near it simply because of its marketting message. I would be embarrassed to be associated with the prodcut. Having made the mistake of clicking on the above link, the same would go for that product as well. And oh yeah, what was it they were selling again? Bad ads don't just fail to inform, they create negative branding.

    On Aug 21 11:37 AM Albert Ling wrote:

    > Just the fact you posted the ad in an online blog proves the marketing
    > team got it right.
    Aug 23, 2009. 03:55 PM | Likes Like |Link to Comment
  • What’s Really Going on with Apple, Google, AT&T and the FCC [View article]
    Author: "Reality: This strongly suggests that the Google Voice app replaces much of the core Apple iPhone OS function."

    It is statements like this that kill your argument. Apple is merely saying a PHONE app replaces the core functionality of their PHONE. And they have a point. They are not saying it replaces the OS and implying that this is what they're saying is misleading in the extreme.

    I like both companies and I think the whole VOIP thing needs to be (and will be eventually) worked out. But I don't begrudge Apple for saying, "Gee no Google, you can not put your phone app on our phone, thanks." Who would expect them to do otherwise?
    Aug 23, 2009. 02:29 PM | 5 Likes Like |Link to Comment
  • Zero Hedge's Bloomberg Podcast: Why Did Bloomberg Delete It? [View article]
    I did listen, and the only annoying thing was that every time it got interesting, there was a break. I could have listened to an hour long program. This is stuff that, as a small time retail investor whose only been doing this for five years, is very new to me. The more I learn, the more I see how much more to learn there is. And succinct explanations of these reasonably complex processes are hard to come by.

    These are interesting times to be an amateur investor, and the things I have been reading on ZH and SA are just incredible. I often read something so compelling I am forced to share it with others (to the annoyance of my friends). Thanks for the link to the podcast and for all your other great work.

    On Aug 23 08:39 AM Edward Harrison wrote:

    > Dialectical Materialist, I agree with most of what you said, so I
    > have to clarify a little here.
    > By the way, listen to the podcast as well.
    Aug 23, 2009. 01:07 PM | 2 Likes Like |Link to Comment
  • 51.68% in 165 Days [View article]
    It sucks getting old. Everyone starts to look like a 15 year old...

    On Aug 22 10:14 AM sether wrote:

    > Why should I care what a couple of 15 year-olds have to say?
    Aug 23, 2009. 03:24 AM | 3 Likes Like |Link to Comment
  • Zero Hedge's Bloomberg Podcast: Why Did Bloomberg Delete It? [View article]
    The Federalist Papers were written by multiple people all using the pseudonym "Publius" (among the authors were Alexander Hamilton and James Madison for those who need to a high school history refresher). The reason the multiple authors used the same fictitious name was to give focus to the message with the clarity that anonymity affords. In other words, there was the intention that the merits of the case for the Constitution would best be served without the distraction of who wrote it. You could only buy the argument if you bought it, not because so-and-so was saying it.

    I have no problem with multiple bloggers all using the Tyler Durden name as long as the information they report is factual and verifiable. It is their right to interpret this info as they see fit and to make as compelling a case as they can.

    Zero Hedge has been an amazing resource for a lot of people and I disagree that it matters who is writing it. It could be Warren Buffett and Ben Bernanke for all I care (actually that would be really funny for obvious reasons).
    Aug 23, 2009. 02:09 AM | 16 Likes Like |Link to Comment
  • Private Prisons: A Reliable American Growth Industry [View article]

    I take no issue with folks who want to invest in things I may think are unseemly. While I think personal ethics should play a part in all investment decisions, I also think those decisions are PERSONAL. You may be able to find a reason not to invest in any company -- for its environmental or social policy for example, or maybe it does business with an axis of evil country, or maybe it tests on animals, or supports offensive politicians etc. I don't mind others investing in areas I may not want to go near.

    But to your point about bleeding hearts, there are simpler solutions that would be more cost effective (just drag them all outside and shoot them, for example). However, we have decided as a society to provide better care than that for all but the most hardened criminals. It does not take a bleeding heart to see a problem with shooting a petty thief or relegating a check forger to Siberia.

    The problem I have with the totalitarian solutions of siberian labor camps or dragging them out and having them shot is that these are the practices of societies that take freedoms away from innocent people until anyone who doesn't conform to a narrow definition of behavior are defined as criminals. The irony is that the most "shoot 'em first ask questions later" guy is exactly the kind of person who would be the first to go in a "efficient" nation like North Korea. I don't mind some inefficiency in my justice system if it means not being one of the ones being hauled off to camp!

    On Aug 22 07:02 AM ATWshop wrote:

    > Time to grow up people. It seems to me that none of the people posting
    > here have ever personally known some of the types of people that
    > end up in our prison system. Get to know a few of them and you will
    > quickly understand why they are there! Your "feel sorry for them"
    > attitudes will quickly change when they live next door to you. <br/>I
    > have long thought that an excellent alternative to building and maintaining
    > more US prisons would be to sign an agreement with Russia - for use
    > of their unused space in the Siberian prisons.
    > Seems to me that this would be good for both countrys... We could
    > house our prisoners at a greatly reduced cost and Russia could improve
    > their economy at the same time. They already have the prisons in
    > Siberia...why not use them? We could set up this type of prisoner
    > housing system with a large number of poorer countrys around the
    > world. We send a huge number of our jobs overseas now to get it done
    > cheaper...why not just send the jobs we have in the prison system
    > to other countries?
    > Then we could use the huge amounts of money that we save to fund
    > more worthwhile projects... cancer research, etc. Duh... too much
    > thinking out side the box for the bleeding hearts.
    Aug 22, 2009. 07:03 PM | 3 Likes Like |Link to Comment
  • The 'Yale Model' of Investing...and the Penn Experience [View article]
    How was this "Larry Summers' billion dollar blunder"? It sounds like it was a wise move to hedge the interest on the debt they carried. Didn't pan out, but that is the way it is with insurance -- sometimes you don't need it. The fact that the new school never unwound the position after he left isn't his blunder, is it?

    I wouldn't take issue with this point, but your whole post seemed to be about the importance of being accurate (and not being a Monday morning quarterback).

    On Aug 21 08:45 PM William M. Wright wrote:

    > The author is also unaware of a primary reason that had nothing to
    > do with Harvard's money management team or flaws in MPT. It was called
    > In December 2008, the university sold $2.5 billion worth of bonds
    > according to Standard &amp; Poor’s. Harvard sold those bonds because
    > it needed cash, fast, to cover what sources say was an almost unthinkable
    > $1 billion unrealized loss from interest-rate swaps. The swaps were
    > put in place under former Harvard president Larry Summers in the
    > early 2000s to protect the university against rising interest rates
    > on all the money it had borrowed. Instead, interest rates plunged.
    > Yet for reasons no one can seem to explain, the university simply
    > forgot to cancel its swaps! The result was a $1 billion loss resulting
    > from the Harvard administration staff micromanaging and controlling
    > this investment recession.
    Aug 22, 2009. 02:16 PM | 1 Like Like |Link to Comment
  • If Asset Prices Are Dropping, Why Are Bank Stocks Rising? [View article]

    I agree with some of what you're saying, but I'm going to throw out a few counter arguments, mostly because I'm curious what you think about them

    1) You can have positive cash flow and still be insolvent. General Growth Properties has cash flow but is mired in debt. Bernie Madoff had cash flow (!) These aren't banks of course, but the point is the same. Don't you think that BOTH cash flow and value of assets are important? I agree that valuing performing loans should not be at fire-sale prices. But we do need to account for how some of these loans may not perform so well into the future. This has been a huge recession after all. It's not a stretch to think past performance does not guarantee future returns.

    2) Some of the lending has been curtailed by reduced demand. But it is undeniable that banks have tightened their lending standards. At least that is what they say they are doing with mortgages and car loans (and it is about time frankly). It is also undeniable that many credit limits are being scaled back by the banks and this is a way of curtailing lending. Both the supply and demand sides of this equation are in play, it's not all simply that there is less demand for financing.

    The bottom line is that some banks are going to get through this fine and they will play a role in the recovery. But that doesn't convince me that many of these banks are ready for what happens if a new wave of defaults hits their books (as may be coming if the recovery proves slower and more uneven than some folks assume).

    On Aug 22 11:16 AM Tack wrote:

    > As long as the focus remains on distorted mark-to-market asset values,
    > rather than the actual cash flows thrown off by loan portfolios,
    > the wrong conclusions will be reached, again and again.
    > Even after the recent rally, virtually any rated class of bank (and
    > other financials) debt assets are still being priced in the market
    > at values that bear little resemblance to the actual performance
    > of those assets, based on cash flows and valuations based on discounting
    > those cash flows. That's why no banks, rightfully, are in any hurry
    > to disgorge these loans at suicidal prices to lurking predators,
    > who would happily lap them up at giveaway prices.
    > The foregoing is why one needs to focus on cashflows, not the paper-solvency
    > debate. And, if one spends any time examining bank cashflows, they'll
    > discover that the banks, due to their portfolios and the large interest-rate
    > spreads, have been enjoying ever-expanding cashflows, resulting in
    > record liquidty, as of now. This is a far better indicator of bank
    > health than the endless debate over "paper" values, all of which
    > are whimsical and will prove transient over time.
    > Also, contrary to popular belief, lending is not crippled because
    > of some refusal to lend, as the media would have everyone believe
    > with its parade of "rejected" borrowers. Lending is curtailed because
    > consumers and businesses have been paying down debt, reducing demand,
    > not increasing it. It's simply mathematically impossible for the
    > banks to expand lending ratios in a declining-demand envronment.
    > The good news is that as the economy stabilizes, and consumers and
    > businesses regain some confidence, demand will increase, and the
    > banks are well positioned wit their current liquidity to service
    > that demand.
    Aug 22, 2009. 01:30 PM | Likes Like |Link to Comment
  • If Asset Prices Are Dropping, Why Are Bank Stocks Rising? [View article]
    I read a lot that "bears are just upset because they missed the rally." But when the weatherman tells me that we had 2 inches of rain and that we have more on the way and a tornado watch to boot, I don't assume he's just bitter because he's trapped inside all day. The reality is that a lot of bears HAVE participated in this rally. Like me they have held their nose and bought in, at least a little. You have to go where the market is moving if you want to make money. That doesn't mean you have to believe that the sun is shining and all is well. I am not bitter about this rally. I am, like so many others, simply incredulous. And I am constantly scoping out the nearest chair for a place to sit when the music stops.

    On Aug 21 05:25 PM bbro wrote:

    > goldman,rosenberg,roub... all missed this rally....
    Aug 22, 2009. 03:55 AM | 2 Likes Like |Link to Comment
  • Apple Dropped the Ball on an NFL Deal [View article]
    Say what you will about the sport and the league, but NFL viewership is not all walmart and cheap beer. If you watch who advertises closely, you can see that there are upscale targets as well... maybe not PGA level upscale, but upscale all the same. NFL games have a large audience of affluent people in addition to those you might naturally think of.

    On Aug 21 11:30 AM blf wrote:

    > Screw the NFL. Who gives a crap about that neanderthal BS. Football
    > types buy Dell and Microsoft at Wal-Mart because it's cheap. They
    > have no concept of quality or value, only to do what they are told.
    Aug 22, 2009. 12:40 AM | 6 Likes Like |Link to Comment
  • Spike in Mass Layoff Events [View article]
    I'm not sure your two are that far off (though your list was convincing if anyone needed evidence of the troubles we face). I think what Pat was driving at was that when people run out of even the small amount of money that they get from unemployment and they have little prospect for finding work (hence they lose "economic hope") then there is real danger to our society. And I think I agree. Certainly your list of dangers is compelling too and obviously they are all related... but the idea that we will have growing millions of people with no job and no income is alarming. Desparate people act desparately and the impact on our country might be severe.

    On Aug 21 04:49 PM HunterGVL wrote:

    > I am going to have to call you on that coment Pat C.
    > "People running out of economic hope is where our real danger lies."
    > Lack of hope is not the problem.

    Aug 21, 2009. 07:30 PM | 8 Likes Like |Link to Comment