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  • Is Inflation Next? [View article]
    "Yes that fight rekindled later in US history, several times. Always with the same eventual outcome - finance and capitalism win."

    Yes, the first battle over a US central bank featured the same result as we have today: Corruption on the grandest scale available won out. Washington got the capitol moved from New York to Virginia abutting his Mount Vernon property and Congressman and insiders were easily able to scour the country to pay veterans and other bondholders 2 cents on the dollar ahead of the slow-moving news that war debt was to be nationalized and the war bonds would be redeemed.

    Hamilton was quite the "realist" and was perfectly comfortable with the graft that centralized power and banking bring as a "permanent engine of corruption," (Jefferson) and while the Supreme Court found this "Constitutional," they found the same with slavery.

    Yes, reminding us of the first US central bank also reminds us that as part and parcel of centralized government the aim was as it is today, to stick the public with as much debt as possible by any means necessary especially for the enrichment of insiders who know that the power of the state has their back no matter how recklessly they lend.
    May 6 08:25 AM | 2 Likes Like |Link to Comment
  • Japan's Two-Decade Deflationary Spiral Is About To End [View article]
    stocknerd - Even a house built on sand may stand for awhile.
    Apr 27 02:09 PM | 4 Likes Like |Link to Comment
  • Japan's Two-Decade Deflationary Spiral Is About To End [View article]
    A well laid-out explanation of the mathematical impossibility Japan's policymakers have created in their quest to buy votes with printed currency.

    All the major Western nations are facing the same problem they have systematically imposed on the third world wherever possible: Major Western banks lend money for major corporate projects that are supposed to pay for themselves using pie-in-the-sky projections which fail. The populace then faces multiple tax hike or immediate national ruin while the elites who made vast commissions and employment via nepotism with the inception of these projects, then escapes responsibility for the ensuing bust via bailouts. The national ruin is generally postponed in favor of the ruinous tax hikes while the US military enforces the status quo and the Western banks and major corporations continue to receive their cash flow.

    This is now the situation faced in the major Western nations all of whom feature submerging economies and impossible levels of debt. They have the added "partner" to support: Supersized vote-buying governments and entitlements which have long metastasized on the backs of their value-adding private sectors which arose mostly during the Industrial Age. The policies of raising and rolling over debt endlessly to support bloated parasitical public and banking sectors won't buy widespread prosperity for the West any more than it does in the third world, and tax hikes rather than sound economics will prove counterproductive as usual.

    Japan may be the first major Western economy to test the actual limits of heretofore limitless sovereign debt production in the West and bring about sufficient inflation that debts can be nominally "repaid."
    Apr 27 10:12 AM | 17 Likes Like |Link to Comment
  • Microsoft Report: Mr. Nadella Steps Up [View article]
    "I like what I have heard so far. Execution is another thing. I have my fingers crossed."

    And Microsoft's long fixation on a past where it was once such a dominant presence in the fastest-growing areas of IT has made the idea of Microsoft something to shun in the minds of many in the fastest-growing areas of today. Any business that has gotten away with imposing excessive prices and troublesome products on it's customers for so long has issues not only with potential partners and customers but with it's own internal organization and compass.

    This is actually some very large baggage that has been masked for a very long time by the company's very large resources that will take a very large change of leadership, direction and corporate culture to preserve Microsoft as a very significant player in a future that is evolving very fast in it's areas of business.
    Apr 25 12:18 PM | Likes Like |Link to Comment
  • The Curse Of Riches: Resource Wealth And Social Progress [View article]
    A very interesting picture of the interaction of social conditions, regardless that this can only be a relatively rough measurement, with resources and currency valuations in a large sample of polities and that "point source" resource riches tend overwhelmingly to result in an unhealthy inequality and dependence upon politics for economic rewards.

    The US has been blessed with the kinds of multiple resources that favor widespread prosperity however there must be great caution regarding the monstrous centralization that has taken place under Washington DC and it's systemic reliance on debt and funny money in tandem with TBTF Wall Street which buys votes sufficiently with government checks and bribes derived from financial engineering and bailouts to obscure the decline of the once-lauded privately employed middle class. This has reached the point where government employment is now equal to private employment and the single klieglight of government and it's cronies glares so brightly that the US is slipping into the same plantation economy and mentality that afflicts third world nations while entirely eclipsing the "thousand points of light" that once described opportunity in America.
    Apr 25 11:45 AM | Likes Like |Link to Comment
  • Wall Street Breakfast: Must-Know News [View article]
    "The bigger problem is how to get equal opportunity for the preschool and K12 level, so they can actually earn their merits."

    Tuition vouchers and school choice is the answer. This alone would solve more problems with inequality and lousy education than all the other ridiculous hyper-spending "solutions" and mandates combined. Too bad it's politically unpalatable with the very self-described "advocates" for the disadvantaged who disproportionately work for teachers unions and the bureaucracies that have made US public education a joke.
    Apr 23 09:40 AM | 8 Likes Like |Link to Comment
  • Wall Street Breakfast: Must-Know News [View article]
    Note to treehuggers - Something like 95% of the results come from the first 5% of effort and expense.

    The problem with greens is the pink objectives that they are really pursuing since there is no government program based initially on plausible objectives that doesn't ultimately serve primarily as a vehicle for mission creep and "unintended consequences" resulting in perennial calls for more revenue, mandates and regulations.
    Apr 23 08:37 AM | 11 Likes Like |Link to Comment
  • John Hussman: The Federal Reserve's Two-Legged Stool [View article]
    "The implication is very consistent – price/revenue and market capitalization/GDP are generally more reliable metrics of long-term valuation than earnings-based valuation measures that quietly embed the assumption that profit margins will remain permanently depressed or elevated."

    It's been true for a long time, and unless this time it's different, and Fed-induced perma-stimulus and government perma-deficits can be counted on to keep valuations at historically elevated levels permanently, most stocks in this stock market will certainly prove to be unprofitable going forward from these levels, for long.
    Apr 21 11:50 AM | Likes Like |Link to Comment
  • Will Apple Ditch Google For Yahoo Search? Never Say Never [View article]
    Right you are, MChen.

    Google's weak spot is clearly the growing dysfunction of their lauded search engine since they are expending more effort monetizing it than they are improving it. Hence, what comes up is so far from rational results when a search is typed in due to paid promotions and advertisements, somebody besides MChen and I has to be noticing that online search has become an ordeal that is worsening.

    GM made crappy cars for decades before the lights went out for them, and the excesses and misdirection on simple search entries will have a similar effect on Google if it keeps worsening except it won't take as long since the online world is much faster. They are handing Yahoo a clear opportunity via this abuse of the preponderance of search they have attained if there is any way to bridge enough of the wide technological lead Google still manages to hold.
    Apr 17 08:18 AM | 5 Likes Like |Link to Comment
  • Is Inflation Next? [View article]
    "This happens at every level, in every business, organization or culture on the planet. It's human nature. It's noise and mostly unpredictable, and hence doesn't need to be part of the analysis."

    Except that only government, or "private" interests with government backing, have the "legitimate" right to take at the point of a gun. Therefore, it would be refreshing for advocates of ever-increasing government involvement to stop excusing equal and lower standards for government work.
    Apr 16 01:53 PM | 3 Likes Like |Link to Comment
  • Wall Street Breakfast: Must-Know News [View article]
    Facebook's e-money effort should present a significant threat to Paypal. Paypal, like Ebay which overcharges small sellers, is always focused on it's immediate cash cow, which is high fees on it's captive Ebay customers and excessive currency conversion rates for customers outside of the dollar.

    Thus the door has been left open to meet unmet needs throughout the world in e-commerce that Facebook has a chance to fulfill if they can avoid resembling the cable company or the taxman to it's customers. Furthermore, as Robert Wagner has written about repeatedly on SA, there could be an opportunity for a useful e-currency in global e-commerce that would require a company with strong imagination and focus to bring to realization.
    Apr 14 07:30 AM | 4 Likes Like |Link to Comment
  • Is Inflation Next? [View article]
    "Why will the taxpayer rescue me? What if my derivative is profitable?
    Will I still get rescued?"

    No, and especially if you're GS and bet on the right side, you walk away with profits even if the counterparty can't pay. If you're systemically important on Wall Street, take the losing side, cannot pay off and that triggers an avalanche of defaults from whatever house-of-cards leverage has been set up on Wall Street since their last 2008 debacle, a tooth fairy will need to cover the bets and pay off Jim Myrtle and anyone else who can now only profit if the Fed and/or the taxpayer ponies up for the losing TBTF counterparty.

    Their managements will retain their bonuses, of course, even if they have been rating junk as AAA prior to selling it and playing with derivatives based on movements of that paper. The noise of, "no one could have seen this coming" will be deafening by all politically protected parties who are responsible for it. Or, at least, that's how it played out in 2008.
    Apr 13 12:01 PM | 2 Likes Like |Link to Comment
  • Is Inflation Next? [View article]

    Jim Myrtle - "Why would it wreak havoc? The bank on one side of the bet makes money, the one on the other loses money."

    One more time: Counterparty risk. As in: Wall Street, 2008.

    You people are so blithe, so casual about situations that have and will again if permitted, require socializing Wall Street's risk on the backs of the taxpayer.
    Apr 12 09:47 PM | 2 Likes Like |Link to Comment
  • Is Inflation Next? [View article]
    JasonC - In capitalism, outside of TBTF Wall Street if enough of someone's customers or tenants have always been expected to "take the hit when lots of other people stopped paying their debts and defaulted," a business may go bankrupt whether or not they are "deadbeats" or in a "fundamentally sound business in a fundamentally useful and profitable industry." Usually paying the bills and paying the notes is considered the test of whether the business is viable, as bankers apply to everyone else.

    But no, prices have been effectively raised throughout the economy to protect bankers' balance sheets, and hundreds of $billions of their MBS paper has been moved onto the Fed's and the taxpayer's balance sheets, while the privileged especially receive the benefit ZIRP loan rates and lush financial asset price increases to create the highest wealth disparity in US history.

    This is about crony capitalism, not merit.
    Apr 11 02:56 PM | 3 Likes Like |Link to Comment
  • Is Inflation Next? [View article]
    DL and T - I think you two should get a room.
    Apr 11 11:34 AM | 2 Likes Like |Link to Comment