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  • Putting The 'Collapse' In Japanese Government Bonds In Perspective [View article]

    Let's engage in a little thought experiment:

    What happens when yields START to rise?

    Several things: First, investors start to move towards bonds to capitalize on those higher rates, reducing investment and slowing economic growth (the reverse of this effect is what the US Fed is aiming for with QE - driving investors away from bonds). Slowing growth and lower investment means diminishing corporate revenue, lower employment, and a recession. A recession drives people out of risk assets and back into "safe havens" - bonds. So, there is a built in stabilizing mechanism, both here and in Japan.

    Paul Volker artificially raised rates to induce a recession and break an inflationary cycle. The total outstanding debt was small, so the rate increase required was quite large. The more debt is outstanding, the smaller the rate rise needed to induce recession and bring rates back down.

    Chart the US 10 year rate since 1980 and overlay that chart with US recessions. Recessions are always preceded by a rise in nominal rates. The rate level required to trigger recession is lower each time. US 10 year rates at 4% would do the trick now, and thus, rates won't have an opportunity to pass 4% for long at all. The threshhold level in Japan, becuase they have much higher outstanding debt, is much lower.
    May 16 10:33 AM | 3 Likes Like |Link to Comment
  • The Obama Administration's Natural Gas Policy Is Tragically Misguided [View article]
    That methane, locked in frozen methane hydrates, was mostly laid down while the earth's surface was inhospitable to life, with an atmosphere of mostly CO2 and no free O2.

    There's also plenty of methane locked in permafrost in the artic. Once that permafrost melts, and all of that methane (a much more powerful GHG than CO2) is released the warming process will really get rolling.

    It was only after the acretion of massive amounts of carbon (in the form of hydrocarbons) into the earth's crust did the earth develop an oxygen rich atmosphere capable of supporting life.

    We seem determined to find and burn every molecule of hydrocarbons currently deposited in the earth's crust, thus reversing the process that made the earth hospitable to life.

    All in the name of progress.
    May 10 12:51 PM | 3 Likes Like |Link to Comment
  • Chinese Housewives Buy All The Gold U.S. Money Managers Sell...And Then Some [View article]
    I know I take all my investing cues from Chinese housewives.

    Seriously, is this the best the [gold] pump monkey's can muster these days?
    May 6 06:24 PM | Likes Like |Link to Comment
  • There Are Even Bigger Problems In The Reinhart And Rogoff Thinking [View article]
    Morons all over the world are offended by the comparison to fiscal and monetary authorities.
    May 3 12:39 PM | 2 Likes Like |Link to Comment
  • There Are Even Bigger Problems In The Reinhart And Rogoff Thinking [View article]
    At one time, it was deened intuitively obvious to the entire world, it's political and religious leaders, and the entire scientific community that the earth was flat and that the sun, moon, and stars revolved around it.

    It was equally obvious, intuitively, that heavier objects fell faster than lighter objects.

    Obvious, as well, that man cannot influence the earth's climate and that evolution is impossible.

    Intuition has its place, the horse track is one, but science is often counter to intuition.
    May 3 12:37 PM | 2 Likes Like |Link to Comment
  • ECRI: Conditions Still Consistent With Recession [View article]
    Q1'13 the federal government actually took in slightly more than went out.
    May 1 01:07 PM | Likes Like |Link to Comment
  • ECRI: Conditions Still Consistent With Recession [View article]
    ECRI is the proverbial broken clock.
    May 1 01:06 PM | 1 Like Like |Link to Comment
  • ECRI: Conditions Still Consistent With Recession [View article]

    My job is in manufacturing (as an owner), I'm turning work away because I'm already comitted to about 50% more than I should be.

    As is every other machine shop in this area.

    Maybe the problem is what you're selling.
    May 1 01:05 PM | 1 Like Like |Link to Comment
  • What China Should Do About The Gold Crash [View article]

    China has been dealt a bad hand - huge population, poor water supply, few natural resources - and is doing remarkable things in a short period of time.

    India, with similar population and resources, who never experienced totalitarian communism, and who escaped British rule almost 70 years ago, has done far less.

    In the first 70 years or so after independence, the US itself was a 'copycat' nation. We shamelessly duplicated whatever was brought here from the continent - furniture, architecture, technology, etc. It wasn't until we produced our first international super-star (Samuel Clemens aka Mark Twain) that we suddenly developed an interest in protecting intellectual property. Before that, we were shamless copyists. Charles Dickens refused to tour in America because his books were being printed (pirated) and sold here without his receiving any royalties.

    China and it's people should be proud of how far they've come in such a short period.
    Apr 26 01:37 PM | Likes Like |Link to Comment
  • Is Gold Useless - Part III [View article]

    And I wish the goldbugs weren't so dismissive of any critique that their horde might not be worth as much, post crash, as they think.

    As it happens, at any given time, my machine shop has in inventory +/- $50,000 worth of cutting tools (end mills, drills, taps, etc) and materials (aluminum, alloy steel, tool steels, brass, bronze, etc).

    Were the economy to completely collapse and the source of those items no longer be available, I would expect to see on the order of 10 to 100 fold appreciation in their value. The amount of gold above ground won't change at all. Relative to each other, which do think will experience greater appreciation.

    And, in the mean time, I operate my business using those assets.
    Apr 26 01:34 PM | 1 Like Like |Link to Comment
  • Is Gold Useless - Part III [View article]

    You've hit the nail exactly on the head. Hyperinflations occur NOT because of monetary debasement (sorry, Milton Friedman) but because there is NOTHING to buy with your money, fiat or otherwise. In mining camps in the California goldrush fresh eggs were exchanged for gold in equal weight.

    If there is an apocolypse, those who horde gold may find it far harder to purchase with it, than with something with intrinsic utility - things like hardware, hand tools, edged weapons, ammuntion, BOOTS, farm implements, or SEEDS. If one wanted to insure against complete economic collapse, fill a few 55 gallon drums with common hardware, saw blades, hammers, axe heads, etc. then top them up with heavy oil or grease and bury them in the backyard - this could be done for the price of a very few ounces of gold. On top of that, fill your attic with military surplus boots. You would find yourself very wealthy with easily exchanged and badly needed trade items if TSHTF.

    But in reality, it won't ever be a sudden collapse a la "The Road Warrior". It will be a slow motion decay into anarchy. It took hundreds of years for the Western Roman Empire to collapse, and hundreds more after that until the fall of Constantinople. Even in Somalia, 20 years without a functioning government, and there are still auto repair businesses, coffee shops, restaraunts, and markets. It's chaotic, but it's not armageddon.
    Apr 26 01:28 PM | 2 Likes Like |Link to Comment
  • Precious Metals: Massive Paper Selling Begets Unprecedented Physical Buying [View article]
    It is exactly what would happen in the US if a major bank failed.

    Many, many people lost many millions of $$$ in the collapse of Lehman Brothers. These were un-insured deposits.

    If a major US bank failed, the FDIC would re-imburse losses of up to $250,000 (If I recall correctly), but if a depositor had $1M in a savings account (why would they?) they woud lose a significant portion of the $750,000 above the deposit limit.

    This is black letter law, backed by decades of precedent, and has been the case ever since the FDIC was established in the 1930's. Prior to that, if the bank went bust you lost it all.
    Apr 26 01:06 PM | 1 Like Like |Link to Comment
  • The Tragedy Of Long-Term Unemployment [View article]
    Besides the free healthcare, most of the rest of the OECD nations also provide university education, free of charge, to those who are qualified.

    So, yes, taxes are much higher in Europe, but healthcare and higher education are free.

    Take the US tax bill, add to it $3.5T in healthcare spending and another $1T at least in university tuition, and then see who's getting more bang for the buck.
    Apr 23 07:08 PM | Likes Like |Link to Comment
  • The Tragedy Of Long-Term Unemployment [View article]
    So you discriminate against tobacco users. I'm not one, but tobacco is a legal product in the US. Many states have passed laws prohibiting disrimination in employment based on tobacco use.

    How does one's credit history affect one's job performance, exactly? How can someone do anything about debt, etc. if they can't find a job? Perhaps the very cause of their poor credit history is job discrimation such as you describe.
    Apr 23 07:04 PM | 2 Likes Like |Link to Comment
  • The Tragedy Of Long-Term Unemployment [View article]
    I'd like to see a chart of duration of unemployment vs. age.

    With our system of employer-provided health benefits, delivered by our fabulously bloated, costly and inefficient private for-profit healthcare system, employers have good reason to stay away from older workers - those same workers likely to have had higher earnings at their last position, and perhaps somewhat out of date skills.

    The same drive for "efficiency" that has reduced manufacturing employment in the US to levels not seen since the end of WWII (even as output has increased every year since that time) is now attacking the service and professional ranks. Need legal research? Sub it out to a firm in India. Need MRI's read? Ditto.

    I spoke to a teller at my bank yesterday, thefirst time I've set foot inside a branch in months. I'm able to just about all of my banking either at the ATM, night deposit, or on-line. In this case, however, the ATM wouldn't accept my check deposit. The teller was telling me they're bringing out a new, improved ATM that will include live, 24 hour assistance, and allow things like cash back from check deposits, select different denominations for cash distributions, etc.

    And I can flat damn guarantee that the "24 hour live assistance" will be provided by a call center worker in Mumbai.

    Personally, I feel that even though these people won't be physiclly located in the US, they are most certainly WORKING here. But they won't be subject to US employment law, won't pay US taxes, and will displace US workers.

    When there is no longer any need for teller lines in the US, will those 40 and 50 somethings who've worked as bank tellers for a decent number of years and have little other experience easily transition to other careers? Or wil they, too, join the ranks of the long term unemployed?
    Apr 23 12:18 PM | Likes Like |Link to Comment