Chancer

The Next Crisis: Spiraling Inflation (Part 2)

I would like some timing predictions on inflation as recognized by the U.S. government, since the Federal Reserve is predicting 2011 inflation at no more than 1.9%.

I do believe we have more inflation than the government recognizes. But I am focused on when the Fed will raise interest rates. I do not believe they will until they recognize (admit to) inflation over 3%.

This means less likely to raise rates until after 2011. With high unemployment as far as the eye can see, and probably slower growth than Fed wants, their recognition of inflation and rate increases may not come for 3 to 5 years. The Fed is probably more inclined to put up with more inflation, maybe 5+%, before raising rates due to poor growth, and high unemployment.

When Fed finally raises rates, 3 to 5 years from now, the dollar will get some rally (possibly only temporary).

I am seeking some good forecasts on rate increases.

Video: Why Obamacare Will Be a Budget Buster

I think it is really dumb for ignorant people to compare the U.S. healthcare sytem with that in most European countries.

1- European hospitals are built by government. Let's have the U.S. government pay fair market value for all the hospitals they want, and close all the rest. Americans would not be happy with that.

2- Doctors in Europe work for about $75,000 per year. Let's limit doctors income, cut their fees drastically (so there would be no millionaire doctors), or make all doctors government employees. There is no political will to do that. I heard the CEO of a non profit Medicare Advantage company state that if you are really serious (which libs are not) about controlling cost, you must cut doctor fees at least 22%.

3- European healthcare plans control cost by rationing. Let's do the same. When the budget is spent for healthcare each year, make everyone wait until January 1 of the next year to get more healthcare. Americans will not be happy with that; but may be getting it now.

If we are going to talk about comparing U.S. healthcare with Europe, put EVERYTHING on the table; including limiting malpractive awards and attorney fees, as many states already do for Workers Compensation.

Those who argue against the current U.S. system versus Europe are "cherry picking" what they want to compare, which is intellectually DISHONEST.

Inflation Worries: Here's What We Can Learn from Japan

Forget razor blades. 99 cent store was selling 15 disposable razors for $1. I bought 150 for $10.

After that, they cut package size to 12 for $1- a 20% cut.

But government says: there is no inflation.


On Nov 25 06:05 AM Davewmart wrote:

> Depressingly accurate. I think I will go and slit my wrists.
> Hey! There might be a play in razorblades!
> Things are looking up!
> Recovery is here, one industry at a time!

U.S. Economic Recovery and the Housing Sector Mirage

Jeff:

My gut feeling is the good housing numbers now is demand fueled by temporary Fed loan support programs (buying mortgages) and the $8K tax credit ending 4/1/10. About the same time, a plunge in commercial prices may spook home buyers. Will housing fall of the cliff after April? Those shopping for a home may find better deals next Spring and Summer than now.

My big question is how fast will mortgage rates increase? Conventional wisdom says Fed will not raise for 1 year. With slow growth, high unemployment, and the interest cost of financing the deficit, my bet is Fed will keep rates low much longer than current forecasts. I believe they will resist the urge to increase rates unless inflation gets really bad.

My guess right now for the next 5 years is: slow growth (2-3%), unemployment of 50% to 2X what we had after previous recoveries (6-8%), interest rates about where they are (up to 1% higher), inflation higher (4-6%). (That is government inflation, not real; since I already believe the government's CPI inflation numbers are under stated).

What do you think?

U.S. Running Out of Ways to Cheaply Finance Debt

The simplest method, although a very tricky act, is to refi by selling 10 year treasuries to the "independent" Federal Reserve. The Fed prints the money (created out of thin air on cheap paper) to buy the T-bills.

Then in a daring trick of accounting magic, the Treasury Dept. and the Fed agree to gradually write off this debt on both sets of books; Treasury writes off the payable, and Fed write off the receivable. "Gradually" writing off depends on how much they can get away with and how fast.

Isn't that better than selling to China, paying interest and redeeming with real money, and taxing Americans to pay for all this?

I do doubt this will happen. Instead, the government must convince China to refi and also present a plan for China's approval of how the debt will be repaid. It is kind of like submitting the USA balance sheet for credit approval by China. Kleinschmidt of the Toqueville funds said if the USA was an investment it would be a junk bond.

Raising income taxes will not work. So, the liberal Democrats will no doubt give us a VAT (value-added-tax) in Obama's second term.

With Housing So Affordable, Time to Go Long Homebuilders

I have to disagree on homebuilders- unless they are building apartments. I think the nation is overbuilt on: homes, office buildings, malls, and shopping centers. Only apartment buildings will have steady demand for the forseeable future.

The housing bubble was built on demand by borrowers who could not afford the homes they bought; and they are not coming back. They are renters. Demand right now is supported by government programs. What will happen when the tax credit expires 4/30/2010? Will housing fall off a cliff? Will the commercial plunge predicted to begin in Q2 of 2010 scare home buyers? Buyers are rushing to get the $8,000 tax credit. They might save much more in reduced prices after the credit and federal loan support ends.

Great Basin Gold: A Prime Acquisition Candidate

WGW was already acquired by New Gold (NGD).

Japan's Not Out of the Woods Yet

Japan's problem is that they have no resources to pay their debt. They can only pay interest on the debt. Piling on more debt for stimulus will only make it worse. Their citizens cannot afford massive tax hikes.

Maybe, they can act like U. S. Federal Reserve buying T-bills from U.S. Treasury. Bank of Japan could begin buying government debt.

Then, they gradually write off the debt on both sets of books: government debt (payable) and Bank of Japan (receivable).

It is called "creative accounting" or "voodoo economics".

In 2010 It'll Be Jobs, Jobs, Jobs

Why wait until 2010 to concentrate on jobs?

Can't they walk and chew gum at the same time?

Is healthcare buy itself more important then jobs and the entire economy?

It must be for Obama and the Democrats.

Sturm & Ruger's Brief Burst of Value

Whoever did the title should be told it is not like Smith & (AND) Wesson.

It is Sturm, Ruger NOT Sturm & (AND) Ruger.

'Too Big to Exist' Bill Would Impose Market Discipline

Break up the banks that are "too big to fail."

Simple common sense.

B of A can be broken up into 4 to 5 regional bank; etc., etc.

They did it with the phone company.

This saves us from another incompetent, expensive government regulatory bureaucracy to control too big to fail, which then becomes too incompetent to regulate.

Global Markets in Review: Is the Risk Trade Back On?

Real unemployment is more like 17.5% to 20%. The government understates by half.

I believe they also understate inflation, which in my opinion is increasing now. Food package sizes are being reduced while the same price is charged for the previous larger package.

Utility prices are increasing. Services increase prices or reduce services while charging the old price. Medicare premiums are increasing 14.5% in January; but Social Security is not, because the Feds claim there is no inflation. So, what is the Medicare increase?


On Nov 08 03:43 PM nobby73 wrote:

> Remember, people have to have actively sought work, as an architect,
> in the previous four weeks to qualify as an unemployed architect.
> If people are aware there is simply no work in this field, they will
> either have not looked or will have sought other work.
>
> As the U6 measure has underemployment at 17%+, it stand to reason
> architects are either not seeking work or engaged in other part time
> jobs.

The Reluctant Bull: My Portfolio

Old Trader:

I have held KMR for years. During Fall meltdown, I added (for income) KCAP, PFF, and TICC.

I also added to my FRO holding- which disappointed; and IRE, which suspended dividends, but price has gone up nicely.

I would like to know what you think of:

DDI (industrial)
DKA (oil)
CGW (water)
DGG (telecom)

The Glide Path Option

"If Congress and the president decided to lay out a real (and credible) plan to reduce the deficit over time, say 5-6 years, to where it was less than nominal GDP, the bond market would (I think) behave. Reducing deficits by $150 billion a year through a combination of cuts in growth and spending would get us there in five years."

I believe the Obama liberal Democrats plan to deal with this (in Obama's second term) is a VAT (value-added-tax) which can accumulate to any amount as an increase in the cost of purchases (goods only or both goods and services).

The liberals can reduce the deficit and have lots more money to pay for even more socialist programs and gain even greater control of the economy and all citizens. This will drive up the cost of living with a major decrease in American living standards, reduce freedom, and make us all wards of the state (Federal government).

They will look to Europe for models for their policy agenda. In Denmark a gasoline car has a 25% sales tax and a 180% environmental tax. A $20,000 gas powered car costs $70,000. Denmark used this to steer buyers away from gas cars to electric cars; but they confessed the real reason was they wanted the tax money.

U.S. Healthcare Legislation Investment Impact

You claim spending of $1000 per household. But liberal Democrats have to give subsidies, because households lack $1000 to spend. They have to get the money from OPs (other people) after passing through the hands of the middleman (government) to skim off their bureaucracy cost.

It is a fact (by polls) that those who can afford healthcare, but do not want to spend "their own money" for it, are willing to spend only $100 to $200 per month (unrealistic).


On Nov 09 02:45 PM zagrebzagreb wrote:

> We all due respect, I find it absurd that the author does not account
> for the vast increase in market that most all device manufacturers,
> pharma corporations, etc will witness: More people covered, more
> healthcare coverage, more money spent on the industry...
>
> Currently the budget office is estimating roughly $120 billion a
> year in added expenditures. That's around $1,000 per household. Any
> other industry would be jumping for joy, but healthcare is next to
> the energy industry when it comes to playing nice with government
> and the public... ANYTHING that restricts freedom is greeted negatively,
> never mind the necesity of it.
>
> Additionally, if you don't think taxes on devices will simply be
> past along to the patient / insurer you haven't been paying attention
> to business in America. Companies will not lower margins; they will
> not absorb taxes.
>
> Just my opinion, but I work for a device manufacturer and help set
> pricing and deal with insurance reimbursement issues everyday.