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  • Recession Risk: The Threat Of Rising Interest Rates [View article]
    I agree. Bernanke's actions are analogous to a ship's captain who, finding himself in the eye of a hurricane, declares calm seas.

    The financial winds are coming; they always do.

    For decades, every single business cycle has seen Fed moves FOLLOW rising interest rates, not lead, as increasing economic activity lead to increased capital demand.

    There's no demand. We're between bubbles and in a deflationary environment.

    When capital demand returns this time, we'll lack the national consensus Paul Volker enjoyed in 1980 that inflation could quickly impoverish us.

    Dangerous times...
    Dec 8 11:35 AM | 6 Likes Like |Link to Comment
  • Q4 Outlook: Caution - Radioactive Markets [View article]
    You make a valid point about the wall of worry always being with us.

    In normal times, now past, the worry wall served as the voice of the midget in the chariot beside the victorious Roman general during his victory parade who constantly whispered a reminder that, "You are only human."

    My increasing fear is that our current market-conquering-hero... Ben Bernanke, has no midget to caution him. Instead, adoring stock market crowds, who see little harm in his thinly veiled beggar-thy-neighbor currency race to the bottom, and simultaneous zero interest savings confiscation programs, are instead cheering him on.

    I've been out of the stock "market" since April, 2007, going to TLT at that time. I felt driven to cash in December, 2011 and remain there.

    Time and events will eventually tell if I'm a victim of bearish tinted lenses...or not. My only certainties at this point are: I'm ahead so far, and things look far worse to me now than they did in 2007.

    Beware rose colored glasses also.
    Sep 30 11:48 AM | 11 Likes Like |Link to Comment
  • Fed Gets Aggressive: Willing To Risk Some Inflation [View article]
    Thanks. Excellent points. Very little is being written about the likely deflationary effects of interest rates running away from the Fed. Many businesses facing higher capital costs will be forced to respond by cutting costs elsewhere. Eighty percent of "elsewhere" is usually people: more layoffs, reduced consumer demand, etc., and all from the Fed trying to build just a little bigger fire in the inflation gas tank.
    Sep 16 10:37 PM | 1 Like Like |Link to Comment
  • Fed Gets Aggressive: Willing To Risk Some Inflation [View article]
    1.There were just under 48,000 business bankruptcies in this country last year. I'd wager that not one of them filed due to excess cash from having increased their prices.

    2. I used the Minneapolis Fed site's inflation calculator to arrive at the US's last one hundred year's annualized inflation rate of 3.2% per annum. Keep in mind this period covered world wars, depressions, even four years of Jimmy Carter, URL below.

    3. I used MIT's Daily Online Price Index data for the 56 months beginning November, 2008,the beginning of QE1, through July, 2012. During this period, the index went from 99 to 105.5 or roughly 1.35% per annum, this during a period of unprecedented Fed easing. URL below.

    I think this money is fueling the Stock market and commodity casinos, driving oil and gasoline prices, etc., but real business and therefore real jobs, are still dead in the water. I think the Fed panicked and fired...again.
    Sep 16 10:06 PM | Likes Like |Link to Comment
  • Why QE3 Can't Work: Understanding The Liquidity Trap [View article]
    Excellent article and defensive replies, and the best I've read on SA in some months. The article has attracted comments of matching quality, overall.
    The liquidity trap is the sick economy's symptom. The Fed doctor is repeatedly treating the patient's symptom with ever higher doses of QEx, a highly addictive and extremely dangerous drug, but the Fed views it as the only drug in it's bag.
    The root causes of our economic illness lie in decades of massive malinvestment in housing and health care, along with consumer addiction to credit card spending.
    Toss in the lowering of trade barriers during this same time period, along with massive productivity improvements from technological innovation, and the Fed is using obsolete, national economic policy tools on a new, world economy.
    QE3 is a de facto form of currency devaluation; others will follow when their economies begin to be hit in six months or so.
    I eagerly await your article on this root problem: fragmented currencies in an integrated world economy. I think the race to the bottom is on...again.
    Sep 16 12:57 PM | 2 Likes Like |Link to Comment
  • Fed Gets Aggressive: Willing To Risk Some Inflation [View article]
    Thanks for sharing your good thinking Jim, a scarce resource, but one with limited demand.
    I have a hunch you're wrong on inflation. There's a reason that an extra two trillion or so injected in the money supply hasn't ignited a firestorm of inflation: Worldwide competition coupled with lack of demand.
    Technology deployment, along with reduced trade barriers over the past few decades have combined to make it virtually impossible to raise prices today without an almost instantaneous loss of volume in almost any good or service that a firm might be producing.
    If, and when, this changes, the trailing symptom will be increased capital demand, read increasing interest rates, to which the Fed has always lagged in response with their own tightening moves.
    I think the latest Fed move is merely the latest, rather large step in a currency race to the bottom. Others will follow; they must.
    Sep 15 05:19 PM | Likes Like |Link to Comment
  • Fed Gets Aggressive: Willing To Risk Some Inflation [View article]
    I sincerely hope you are right because virtually all of my friends and loved ones are invested exactly as your retired parents: No fear, the Fed's got your back.
    I suppose I'm just overly cautious and cynical by nature. I got out of stocks and went to TLT in April, 2007. I got out of TLT and went to cash in December, 2011.
    My game plan is to go back into stocks when the S&P falls through 700 or TLT falls through 105. I think we'll see both before Ben's through. Good luck..
    Sep 15 04:50 PM | 2 Likes Like |Link to Comment
  • Fed Gets Aggressive: Willing To Risk Some Inflation [View article]
    The Fed can run, but it can't hide from de-leveraging. Today's statement merely reiterated that the plan is still to run.

    Every retired Boomer on the planet should take this as a Fed promise to continue confiscating their savings to buy booze to spike the punchbowl...until the economy sobers up. It won't; there's no demand for money, outside the Bernanke casino table.

    Wonder if this will end badly.
    Sep 13 04:23 PM | 5 Likes Like |Link to Comment
  • The Fed Better Not Fail Us [View article]
    The third round of free booze, purchased with borrowed money, is now in the punchbowl. This party's about over, and the hangover is going to be a dizzy.

    Don't despair. Stay in cash and start buying well managed companies when the Dow goes through 7000.
    Sep 13 02:57 PM | 1 Like Like |Link to Comment
  • Fiscal Cliff Avoided? Senate Proposes Dividend Tax Break [View article]
    Four years of Helicopter Ben's savings confiscation from the prudent, aka ZIRP, along with the SEC's continued suspension of FASB, "you boys value your junk at quarter end however you need to stay alive until we've confiscated enough saver's capital to bail you out."

    We've gone from the FED, "Taking away the punch bowl just when the party gets going," to: We'll keep'em roaring drunk on borrowed booze until everyone is sober and solvent.

    Sure, this market is set to explode alright. Watch out for the shrapnel. Bye now.
    Jul 16 07:43 PM | 2 Likes Like |Link to Comment
  • George Soros' remarkable speech on the "political bubble" of the EU: "The (current) political dynamic makes the disintegration of the EU just as self-reinforcing as its creation has been ... (however) the likelihood is that the euro will survive because a breakup would be devastating not only for the periphery, but also for Germany." He gives the Germans 90 days to come around. Worth the full read.  [View news story]
    George is talking his book again, something every good promoter does. That would be the thought-provoking action.
    The German people are thinking, and increasingly, not buying it: The reaction in this Reflexivity model will be when they dump Merkel and insist on a new deal that doesn't always end with the German worker subsidizing the rest of Europe.
    The result will be messy. Bankers will declare Armageddon..Again. Remember Hank Paulsen's ultimatum? Basically, 'Hand over the taxpayer's cash or God help us all.'
    After four years of that can kicking exercise, the results are in: The bankers are better, and the savers are busted..And the paper they hung is still there, trillions in derivatives floating in FASB suspension fantasy land.
    The politician's, (and in this case, promoter's) fix proposal is always the same: Spend more money now: Yours.

    No politician in Europe can hold onto office talking the truth: Too much spending by too many for too long.

    The bills are due.
    Jun 3 01:20 PM | 5 Likes Like |Link to Comment
  • The Real Fallout From Argentina's Nationalization Of YPF Sociedad Anonima [View article]
    Investing in Argentina is idiocy. This nation has developed a well deserved reputation of international deadbeat via repeated expropriations and sovereign debt default.

    The most effective way to deal with them is vigorous shareholder activism via taking out the management team(s) of any public corporation(s) proposing to squander investor capital there again.

    Deadbeat nations are a symptom...of deadbeat politicians.
    May 9 11:51 PM | 2 Likes Like |Link to Comment
  • U.S. Economy: The Rhythm Is Gonna Get You [View article]
    Your analysis is right on, Eric.

    The mystery to me is why, at this late date, it still needs to be said.

    I think Mark Twain had it right: "A man who carries a cat by the tail learns something he can learn in no other way."

    Governments and central banks have been holding this cat for a generation now.
    Anyone looking for a report on their efforts to date can simply look at a long term graph of the S&P 500; the cat's grown big...and angry!
    Apr 25 09:51 AM | 2 Likes Like |Link to Comment
  • The Prius Economy [View article]
    Disneyland Economy comes to mind also, perhaps because I'm visiting it now with my six year old granddaughter.
    While It was delightful to see her scream with excitement during the fifty foot drop on the Splash Mountain ride yesterday, I couldn't escape the similarities with our Bernanke economy:

    Unfortunately, our Bernanke ride isn't over...not by a long shot.
    Apr 11 10:01 AM | 4 Likes Like |Link to Comment
  • The Impending Nationalization Of Argentina's Oil And Gas Industry [View article]
    There's nothing new here; Argentina, at it's core, is still Peronist. Kirchner's landslide confirmed it.

    Anyone losing a nickel to Argentine demagogues after these many decades of sovereign default and expropriation deserves it.
    Apr 9 09:32 AM | 4 Likes Like |Link to Comment