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wkl

wkl
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  • Dr. Keynes Killed the Patient [View article]
    I guess we now know what Maynard meant when he answered his naysayers with "don't worry about it, we will all be dead by then".
    Aug 18, 2010. 06:49 PM | Likes Like |Link to Comment
  • Fed Avoids Finding an Exit Strategy [View article]
    $200 billion of treasuries may seem symbolic for this purchase, but what about next month and the next month and so on. This is just the next option the fed has with the fed fund rate near zero and no way to go lower. I am convinced the feds motive is to slowly burst the bubble in treasuries, and force the investors hand into moving to riskier assets. This notion of deflation is nonsense. How can you pump over a trillion dollars into an economy and deflation occur? I don't think this was in Maynard's playbook. I think the Fed should fear what they ask for. With the path they are laying out, it is possible for us to go from a very low interest environment to a very high one in a short period of time.
    Aug 15, 2010. 06:37 PM | 1 Like Like |Link to Comment
  • Does the Money Multiplier Exist? [View article]
    Edward,
    Such are the times we live in. An economy based on consumerism and borrowed money. At the end of Greenspans term as fed chief, and the beginning of Bernankes reign, the fed raised rates 15 times to 4.5 % up to June of '06. I am convinced the Fed burst the housing bubble on purpose. I am also convinced with the Fed's latest program to buy treasuries this week, their purpose will be to burst the bubble that exists now in treasuries to force investors into riskier assets and to spend on business and job creation. You can call it money multiplier, or velocity of money, or any other term. It is nothing more than spending money to make money. If one fears he will spend money to lose money, it is money that is never spent. You are correct, we can print all the money we want with no effect, because the money supply is sufficient now. It is a matter of money flow from one account balance sheet to another. Fear must be replaced by confidence. You may state that Milton Friedman's theory was baloney, but one thought of his I agree on is his statement that the Fed always gets it wrong.
    Aug 15, 2010. 12:13 PM | 2 Likes Like |Link to Comment
  • Can Treasuries and Stocks Both Be Right? We Think Not [View article]
    The stock market needs volume on days like today. I don't see this changing until we have a reversal of the inflows into bond funds, and the shorts start getting haircuts.
    Aug 2, 2010. 07:21 PM | Likes Like |Link to Comment
  • Is Wall Street Undervaluing American Oil Companies? [View article]
    A well written argument for the bullish case for oil demand going forward. Throw in the demand from the emerging economies and you are spot on. Also OPEC will keep supply artificially low to prop up prices to stay above $75 a barrell. When the world economies do return to solid growth, and money does leave the safety of treasuries, I believe this asset class will be the first to benefit.
    Aug 1, 2010. 12:31 PM | 5 Likes Like |Link to Comment
  • The China Property Bubble [View article]
    With China's desire to urbanize the rural population, and the governments willingness to stimulate, the demand will be in the formula. Unlike the US where affordability is driving down demand and prices, China will subsidize home ownership.
    Aug 1, 2010. 11:36 AM | 1 Like Like |Link to Comment
  • The China Property Bubble [View article]
    Tim,
    What is the percentage of home ownership in China vs the 70% ownership in US? I would expect it to be smaller and demand for housing may cushion the blow to any bubble.
    Aug 1, 2010. 09:23 AM | 2 Likes Like |Link to Comment
  • 5 Undervalued Basic Materials / Energy Dividend Stocks [View article]
    I also own SCCO and considering adding to my position. The mine in Mexico you mentioned has been closed for about 3 years, and just received a favorable ruling from the Mexican Supreme Court against the striking miners. It is the largest mine in Mexico, and company wide their copper reserves are among the largest in the world. Also SCCO is the lowest cost producer per ton in the industry.
    Jul 20, 2010. 12:03 AM | 2 Likes Like |Link to Comment
  • 5 Undervalued Basic Materials / Energy Dividend Stocks [View article]
    Jarco,
    I think unrest is a major risk for most mining and other commodity stocks. SCCO does seem to have more labor problems than most. Only you can determine what risks you want to take for the reward.
    Jul 19, 2010. 10:52 PM | 1 Like Like |Link to Comment
  • Misunderstanding Modern Monetary Theory [View article]
    Edward,
    Your assertions may be correct, but see my posts below. The theories that are being stated can never be implemented in a free democratic society with as diverse political opinions as our society is blessed with. Only in an authoritarian type system, such as China, are these theories plausible. In our two party system, one party never wants to tax and spend, and the other party never knows when to stop. Also because of political favors, stimulus will never be directed where it should be. And we are in constant election cycles, where politicians can never lose their base.
    Jul 18, 2010. 09:42 PM | 2 Likes Like |Link to Comment
  • Misunderstanding Modern Monetary Theory [View article]
    My comment will only add to your question. One of the main reasons Milton Friedman was opposed to central banking lies in the answer. His opposition to the Fed was, how effective can their policies be if everyone knows what their next move will be. I think this is the main reason the Fed has always been so secreative and opposed to opening up their balance sheet.
    Jul 18, 2010. 03:58 PM | 3 Likes Like |Link to Comment
  • 5 Undervalued Basic Materials / Energy Dividend Stocks [View article]
    It is part of Grupo Mexico, and Grupo Mexico is a public company. I beleive their is a family that holds a large stake in the company. This may explain how they are able to manuver the political environment in Mexico. I may be wrong on this, but I beleive the Mexican government may have a stake in Grupo Mexico.
    Jul 18, 2010. 02:13 PM | 5 Likes Like |Link to Comment
  • Misunderstanding Modern Monetary Theory [View article]
    Krugman and Keynes view is that you flood the economy with money in depressed times, and soak up the liquidity in good times with high taxes to avoid devaluing the currency. But what has people scared now and hoarding dollars is the policy with the current administration and future tax policy. In other words, we are afraid the policy will be to tax and take the liquidity out of the system when we are still in a deflationary environment. These are directions we are looking for from Washington. If congress sits on their hands, we know the tax cuts will expire. It sometimes looks like the Fed and this administration are not playing with the same playbook. The Fed is using a monetary solution, our elected officials are using a political solution. This has always been my one complaint against Keynes theory, it can never be implemented. Politics never pulls the correct levers at the correct time.
    Jul 18, 2010. 02:03 PM | 4 Likes Like |Link to Comment
  • Time to Focus on Protecting Assets [View article]
    Agree with most of what you write, and will add one question? What about the personal responsibility from the borrower who took on debt they knew could not be paid back. I beleive individuals who take on debt that they know can not be paid back are quilty of fraud. But with our bankruptcy laws it is just, oh well.
    Jul 18, 2010. 01:38 PM | 5 Likes Like |Link to Comment
  • Misunderstanding Modern Monetary Theory [View article]
    Edward, I think you hit the nail on the head. Paul Krugman is stuck in Keynes world of the past when we were on the gold standard. I do not think he has a full understanding of fiat currencies. If he thinks society will flock to lumps of coal, does he not think people will now flock to gold or other commodities? I beleive FDR even made it illegal to own gold and bought up private stocks of the yellow metal. He knew people would hoard it, just the way banks, business, and households are hoarding dollars today. As for assets being electronically created, I am not so sure they are not now. Do we yet know the toxic assets sitting on the banks balance sheets? Or whatever happened to those assets?
    Jul 18, 2010. 12:19 PM | 3 Likes Like |Link to Comment
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