VVV

The Cult of Peter Schiff - Is It Deserved?

Peter Schiff - down 70% 2008

George Soros - up 10% 2008

Nassim Taleb - up 55-110% 2008

This Is Just the Beginning

Peter Schiff- Permabear -down 70% 2008

George Soros - Permabear- up 10% 2008

Nassim Taleb - Permabear- up 55-110% 2008

"Res ipsa loquitor"

Look it up Petey. Probably didn't get to that chapter at Bezerkley...

Citigroup 'Crisis': Some Perspective Is In Order

Your analysis is deeply flawed. You are confusing the assets that Citibank managing- $2.3 trillion is the number you suggest- and Citibank's own equity capital- which is a fraction of that. The $2.3 trillion is not Citibank's own money. It's yours. It would be like Citibank diping into your bank account to pay off its subprime losses. Also, your assertion that $2.3 trillion is 2X Citibank's debt (over a trillion dollars) is absurd.

Citigroup 'Crisis': Some Perspective Is In Order

Your analysis is deeply flawed. You are confusing the assets that Citibank managing- $2.3 trillion is the number you suggest- and Citibank's own equity capital- which is a fraction of that. The $2.3 trillion is not Citibank's own money. It's yours. It would be like Citibank diping into your bank account to pay off its subprime losses. Also, your assertion that $2.3 trillion is 2X Citibank's debt (over a trillion dollars) is absurd.

Investing In Silver

"Silver Wheaton Corp., a mining company, engages in the silver production. It purchases silver from Luismin mines in Mexico and the Zinkgruvan mine in Sweden, as well as purchases silver from the Yauliyacu Mine in Peru. The company was incorporated in 1994. It was formerly known as Chap Mercantile, Inc. and changed its name to Silver Wheaton Corp. in 2004. Silver Wheaton is headquartered in Vancouver, Canada."

The Bubble Theorists Have Shanghai Wrong

I'm convinced...

This time it's REALLY different- from every other single mania financial market history.

To paraphase that infamous Yale professor Irving Fisher:

"Chinese stocks are on permanently high plateau." ;-)

Memorial Day Through Labor Day Outlook? That Depends On Today

I guess you missed that first day in stats class.

You know, the one where they wrote "Corrleation isn't causation" in ALL CAPS on the blackboard...

The Inevitable Collapse of China's Banks

"All truth goes through three stages:

First, it is ridiculed.

Second, it is violently opposed

Finally, it is accepted as obvious"

-Arthur Schopenhauer

The fact that China is an open (trade oriented economy) does not alter their banks' "soft budget constraint" behavior. Again, I refer you to Kornai for the more technical aspects of the microeconomic argument. Arguably, China has it worse. The Soviet Union was autarkic- insulating itself from world trade flows. China's open economy execerbates the pressure the Chinese policymakers to live up to the Potemkin Village economy they have created. The China Mania reminds me of the "this time its different" praise heaped upon the Soviet Union in the 1930s. Check out Paul Johnson's Modern Times for some juicy quotes. Also with respect to Communist party "cronies," check out the prospectuses of any of the Chinese megabanks. The corruption in these banks is rampant. One official was even given a (suspended) death sentence. But in securities law "disclosure cures all" - so there won't even be a cause of action against the banks or their underwriters when the banks implode.

When should you invest in FXI? After it's dropped 90% from its peak, and Business Week is running a cover story on corruption in Chinese banks dwarfing the corruption in Worldcom or Enron by a factor of 10 to 1.

Burgernomics: Profiting from the Big Mac Index

As a follow up to the ETF currency piece above, Ryder has just launched a Japanese currency ETF (FXY). This is the best way to profit from the decline of the yen- (on the short side, if you're a trend follower) or from its inevitable rebound (on the long side, if you prefer fundamental analysis.)

I have several issues with the comment on the weakness of the dollar. First, it's too much the conventional wisdom. Always a bad sign. Second, purchasing power parity shows that virtually all other currencies are over valued by about 20% versus the dollar. The U.S. is getting very, very cheap by international standards. That cannot last forever. Third, neither the U.S. economy or the dollar in nearly as parlous a state as headlines would lead you to believe. It never is. Finally there are some (sadly) very abstruse arguments made for the dollars current state by Ron McKinnon at Stanford on the page often WSJ and blog entries in the FT. I parsed a small handful in a Global Guru piece U wrote back in December. www.theglobalguru.com/...;offer=GURU001

A Reality Check On China Mania

Nice comment from Daniel Su relevant to this entry:


"I speak English, Korean, and Chinese. End of December, I watched Chinese news program which featured a story about 70 year old lady who was hit by truck, so the police tried to call the ambulance, but she insisted that she did not need ambulance service, because she urgently needed to get to brokerage house to purchase stocks. People massively withdrew their life savings to purchase stocks especially low price, speculative stocks. People waiting in line four to five hours in the brokerage houses to open accounts, people quit their regular jobs, and huddle around price quote TV screens in the brokerage houses. Sounds familiar? US 2000 Tech bubble is repeating in China right now. No gurantee how long this rally will continue, but my expectation is that a lot of small companies will go under with people's life savings."