Send Message
View as an RSS Feed
  • Accidentally released Fed staff projections have dovish tilt  [View news story]
    FED has "to promote sustainable growth, high levels of employment, stability of prices to help preserve the purchasing power of the dollar and moderate long-term interest rates.", that is a wild bunch of contrasting targets, could have spelled simply "to bring Heavens in Mamaroneck & surroundings". What does this means ? that FED has to keep a keen eye on what happens abroad, not just on domestic matters. Now ECB has a (in my opinion) bright, resolute President, who has a desperate need to lower the exch rate of EUR [this comes out of the flaws in EUR rules, tearing EUR itself]. Will FED play his game ? rise interest and you'll see USD become very expensive against EUR. But [source TSE] EUR area accounts [2014 data] for 16 % of US export and 15 % of imports ... Will Ms Yellen be so eager to rise interests ?
    Jul 25, 2015. 03:20 AM | 1 Like Like |Link to Comment
  • Could We Still Be In The Middle Of The Business Cycle?  [View article]
    @Dennis : you said "You got to love it [fiat money] or move to Mars! ". I think there aren't many thinking it that way, but, in case, I'm number two.

    It took me some midnight oil to reach that conclusion, then I have been stricken by a gedankenexperiment more or less as follows.

    Let's imagine that a research lab discovers a pill that, taken for X days, will give you a minimum survival of 186 years on top of your age, illness free and with the full strenght and health of your 20s for all 186 years minimum. It's hurgently needed a production of 7B multiplied by X pills, plus, of course, packaging, handling, transport etc.

    An enormous venture, impossible because there are no enough capitals available, and there will never be. With fiat money you just have to start breaking soil to build the gigafactories needed, get in touch with subcontractors & suppliers and start the ball rolling. It's a new world, not intuitive, hard to grasp, but it's like that. We have reached the level where capital is no longer governed by the supply side, but from the demand side
    Jul 23, 2015. 08:12 AM | 2 Likes Like |Link to Comment
  • Could We Still Be In The Middle Of The Business Cycle?  [View article]
    Divid, in short.
    1)I dont contend the reality of bc, I simply think that lenght of bcs is no longer the same we are accustomed to, new research & data are needed

    2)not all were, and most won't

    3)my thought do comes out of Hiroshima & Nagasaki. together with evolution in bombs & vectors. That tragedy is now at field howitzers level. BTW if Okinawa would have been defended with less insanity, I'm 99% sure that Enola Gay would have never made its takeoff. But there was no way (nor there is now) to know, and so the bombs likely saved a some millions Japanese lives and over a million of Allied, or possibly not. Truman had to choose. Personally I think that with the informations he had I would have made the same decision. Not politically correct, but that's it
    Jul 22, 2015. 04:10 PM | 1 Like Like |Link to Comment
  • Could We Still Be In The Middle Of The Business Cycle?  [View article]
    David, pleasure discussing with you.
    1) digital revolutioon is just tearing these well known rules apart. JIT (Just In Time) manufacturing, Japanese style, has been the first attempt, in the '80s now 3d printing is leading the way. I my times, you needed a large R&D department, the larger the higher technological level (remember Skunk Works at Lookheed ?). Now situation has changed, you have a lot of calculating power, and THE NET (funny, not such scientific development happened in finance, here you can still see a seven months battle on a 6th math degree problem ..)

    2) what about dot coms, ipos & bioengineering stocks ? most are business not just not yielding profits, but with very low chances of simply survive, let alone profits. How do you set fiat money and QE in capital formation ? to me, as I said, are reversing the order of the game

    3) a robber can shoot and kill, happens frequently, it is a definite possibility you have to account if you are unlucky enough to be there. His chances of survival are small, but not zero. A Country cannot use an atomic bomb since, once done, it will no longer exist FOR SURE (and if is large enough like USA or Russia will certainly be almost destroyed in the best outcome), zero survivability rate
    Jul 22, 2015. 03:30 PM | 1 Like Like |Link to Comment
  • Could We Still Be In The Middle Of The Business Cycle?  [View article]
    David, thanks for your time. I was (and am) making some comments on a specific matter, that is the LENGHT of business cycle, as per Mr Cullen's article. I, of course, don't contend the definition of b.c., I just wonder if right now is the same, or similar to what we have known in near (or not so near) past. Nowadays, e.g., I am pretty sure that a business has learnt to how respond to increased demand without increasing manpower, and thus no longer lays employees off when demand goes down (at the extreme, of course, in true world simply at a reduced rate). Then there is one more question mark : is still capital formation limited by the ability to make profit ? You need capital to make investments, and thus, traditionally, you had to make profit before. But if capital becomes available just because you can make profit, that is capital is available a priori, just beacuse there is a NEED for it ? I strongly suspect that the thing is known as QE, sitting on fiat money, that is an operative "image" of money. Am I mad ? I draw a simile, to be (hopefully,) clearer : an atomic bomb is a bomb ? I do not think so, since an atomic bomb is a bomb you can't use, you can just deploy but not use, so it isn't a bomb, is something else
    Jul 22, 2015. 02:54 PM | Likes Like |Link to Comment
  • Could We Still Be In The Middle Of The Business Cycle?  [View article]
    I am more and more puzzled by the effect of the crysis we have gone thru (or are going thru, I don't know). Once upon the time, wars had the effect of propelling research, production and in general economy (please, let's stay away from ethics, here). Most of the life after WWII has been strongly imprinted by war time discoveries, from electronics (born there) to metallurgy to health care, communications ... the world after has been quite different from before. War removed conservatorism from heads, made things faster. I have got the idea that the economic crysis has had more or less the same effect, and that the fuel here has been digital revolution. How much paper (material sheets of, I mean) were you seeing in a business in 2005 ? how much today ? how many stamps a business was buying at that time, how many today ? and, more important, to get the same output, how many workers were needed, how many today ? Digital revolution has made engineering far more efficient, better projects, lower cost of production and better products. How many man-hours were needed to make a car, or a coffee grinder, or a jet freighter then and now ? Is it possible that such revolution hasn't changed anything in business cycles, in financing, in banking strategies, in investments ? I'm a bit puzzled
    Jul 22, 2015. 12:45 PM | 1 Like Like |Link to Comment
  • U.S. Rooftop Solar Is Rapidly Gaining Support  [View article]
    @Rengaw : if you want that there is only a couple of things to do : use just nuclear power generation (closing down first coal fired, then fuel fired and last gas fired power plants) and switch to electric transports. Period. BTW new generation reactors will make electric bills quite lighter, too, and so perfectly marry with electric cars. Solar, wind, biomass are just expensive, wasteful chats
    Jul 21, 2015. 10:39 AM | Likes Like |Link to Comment
  • Why National Bank Of Greece Is Going To Zero  [View article]
    @Debutant : "Scusi, derr izz vann morr tingghe". GREAT ! Bravo !
    Good luck to you, enjoy.
    Jul 20, 2015. 10:39 AM | Likes Like |Link to Comment
  • Why National Bank Of Greece Is Going To Zero  [View article]
    @Debutant : if you happen to come back in Italy, you would be surprised. Things went worse and worse, believe me, but try yourself if you have a chance, Italy's still beautiful. I, very frankly, don't care a damn about Greece. I simply say that Greece tragical comedy has put an unforgiving light on the flaws of EUR, the shortcomings of various EU (notice the difference) councils, the shortsightness of European politician, their only interest in a fistful of votes. What I find very dangerous is to conceal facts under a cover of pseudoethical reasoning. If EU politicians were thinking not to their coming elections, but to needed actions, would have put Greece out of EUR, paid back the debt and forgotten all the matter. EUR can be flawed, but has to be like Ceasar's wife. No, they started that useless ranting about Greek behaviour, sins and such, as if the problem was sitting just there. Used old, pitiful rethoric instead of brains. This leads to a crash against the stone wall of reality. The only way out for EUR should have been speedy increase in GDP in ANY and EACH Country over 1 debt/GDP ratio. Saints or crooks, they should have reduced taxation, increased investments. Threy did the opposite. If you do not increase income, you have to cut debts. So Mr Draghi started devaluating EUR vs USD, THE covered, but efficient, haircut. Up to now (1.42 vs 1.08), 23%. Even saints up in the North are taking, gratefully, a BIG haircut on THEIR debt, isn't it ? the only condition is ... please do not say it loud, or Bavaria will vote against. If you are an European like myself, you should be a bit worried about having leaders using rethoric instead of knowledge.
    Jul 20, 2015. 09:49 AM | Likes Like |Link to Comment
  • Why National Bank Of Greece Is Going To Zero  [View article]
    @Debutant : you live in US. Myself in Italy. So " "Flawed" or not, "the EU mechanism" is not going to change for the sake of saving Greece. " it's a very sad truth. Greece is like a red LED that goes on in the instrument panel of your car, when you are at 60 on a sloping road with many bends. The lettering around is "BRAKE FAIL". It's not the LED bothering you (Greece all together is 2 % of Euro area) is what's below, the meaning. For the sake of that red you should begin acting, and fast. No, they stood with rethorics, cheap ethics, chats.Stitching to these rules next will be Italy, and it's not so small (since we started doing what Germany & Co made us do, debt/GDP went from 1.21 to 1.31, taxes skyrocketed, unemployment almost doubled, alleluja) Internal devaluation (practically taking purchasing power from individuals & families) has limits. Our GDP is going down, so cost of service to debt adds to debt. But Spain is not different, forget about Portugal (go there, and see how happy are them, I did no long ago), and France is following fast. Red LEDs should be considered even if one thinks he himself is right and perfect. Stop, open hood and check until you have time.
    Jul 20, 2015. 07:32 AM | Likes Like |Link to Comment
  • Why National Bank Of Greece Is Going To Zero  [View article]
    @Debutant : you forgot the core materials they have, SSW, sun, sea, weather. To put these unvaluable materials (as you might imagine, I'm a Greece guest since, say 30 years) at works it is needed sweat, concrete, steel, asphalt, CAD ... that is make tourism environment more 'sound'. No road has been improved since, say 20 years. Moreover, you got a paradox, exports (that is things & services you sell abroad, in foreign ccy) in Greece is ... domestic. If they have ND (NeaDrachma) they would sell tomatoes to tourist in € and buy in ND. IMHO this is the only way out, and it is not involving pseudoethical questions, it's just looking at facts. The excuse that they cheat, not work, have pensions is just a smoke screen to make palatable the basic fact that EUR mechanism is grossly flawed, setting focus to 'sins' vs 'work ethic'. Of course 'sins' require contrition, then penance, and finally absolution. Using such categories in economy makes me shiver. And indeed penance here simply worsens situation, as shown above.
    Jul 20, 2015. 05:10 AM | Likes Like |Link to Comment
  • Why National Bank Of Greece Is Going To Zero  [View article]
    @Debutant : you are a 101% true. But, now, let's make one more step : how do you 'increase local production and profitability' ? with increased taxation to reduce debt ? with a law limiting bread ration to 10 oz per day per person ? no, you need investments, that is available capitals, 180° away from UE requests and ethical rants. I repete once more ...saints or crooks do not have different mathematics, unfortunately
    Jul 20, 2015. 03:17 AM | Likes Like |Link to Comment
  • EU approves bridge financing for Greece  [View news story]
    A guy is already doing, and with an evident outcome, what's necessary. Numbers say that with EUR rules you have to bail out regularly any Country with debt/GDP over 1, since each Country can't bail itsel out with devaluation. Mr Draghi put on two things, QE and exchange rate to make that bail out devaluation, impossible if made by each Country, as a EUR level bail out. This, hopefully, will give cumbersome European decision process time enough to move to U.S.E (United States of Europe), with one treasury and ideally one taxation system (or a few, similar and close eachother systems). In other words, where euroleaders still think in terms of "hard" ccy and rethoric, mr Draghi USES fiat money, math & solid unbiased thinking. His "whatever it takes" without QE would have evaporated. With QE led MARKETS ("guys, I have DEEP pockets") to accept exch rate from 1.41 to 1.08. Will Ms Yellen let him proceed ? If FED raises soon interests, will. This is now THE fight. Poor Greece doesn't matter.
    Jul 19, 2015. 11:04 AM | Likes Like |Link to Comment
  • EU approves bridge financing for Greece  [View news story]
    @Henne : I am sorry, but I have to write down some simple math, and let you draw conclusions. Greek debt is about 427 B€, with a GDP of 237 B€, ratio 1.8. Data say that cost of service is about 2%. GDP forecasts for this year are about -3.5 %. Let's imagine that cost of debt will be 0% in next 6 months. So we now have 4.27, say 4 B€ of added debt. At the end of year we will have debt=427+4=431, GDP=237-8=229, so we get to 431/229=1.88. Situation has got WORSE. If you whish to at least stay at 1.8 you have to take debt to 412 B€, that is write off 19 B€. But wait, we make reforms, and make people pay taxes, collecting, say 5 B€ of ADDED taxes. Those 5 B€ (very optimist forecast, 5 B€ make bigger damage) take GDP to 224 B€, so we happily land to (431-5)/(229-5)=1.90, again WORSE. To remain at 1.8 we have to write off 28 B€, MORE than before without tax increase. The size of write offs are such that simply halting cost of service is not enough, with 8 B€ you do not cover 19 B€. 6th degree math simply tells that under such conditions any 1€ of loss in GDP is equivalent to 1.8€ increase in debt. You need taxation like a shot in your foot. Situation says that Greeks can do anything, but the flaw is in EUR mechanism, that forces to run from one write off to the next. When debt/GDP ratio is above 1 you have only ONE way out, increase GDP, not taxation. To increase GDP you need investments done with a vision and a sound knowledge of what you are doing. All chats of ethics and such are just collateral damages, increasing the EUR damage, and making situation deeper in the fog of commonplaces & political rethoric. Your conclusions ?
    Jul 19, 2015. 10:33 AM | Likes Like |Link to Comment
  • EU approves bridge financing for Greece  [View news story]
    @Henne : I admire your trust and faith and I somehow hope you are right. Unfortunately I have to ask you to review not words, votes, hopes, but figures. Check the figures on Greece (things like GDP, debt etc). I did and I came to some conclusions 180° away from yours. May be you could check figures, and explain me where I'm wrong. It would really be refreshing for me, believe
    Jul 19, 2015. 07:45 AM | Likes Like |Link to Comment