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jhooper

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  • The Lesson In China: Don't Go Bubble In The First Place [View article]
    "and increased every month until February of 2007 "

    This is one of those propagandist clich├ęs like, "bubbles happened before central banks, thus you can never blame central banks".

    What these simplistic and uniformed comments miss is that it is the policy of subsidized consumption that causes booms and busts. A central bank is just an example of a gov consumption subsidy. The other things these propagandist comments ignore is the question of volume in light of all the other factors going on in the economy, especially the other venues of gov consumption subsidies that are happening at the same time.

    As such, a single raise in the DR of 25 bps won't necessarily collapse real estate prices, but a series of raises of 500 bps is more likely to collapse them. Thus, we never know where that breaking point is, so all we can do is say a CB engaged in consumption subsidies (ie a DR of 25 bps) will be revealed in prices somewhere in the economy, typically capital assets, like real estate. When the CB starts to reign in those subsidies (ie raising the DR drastically via a series of increases, say from 1% to 6.25%), then asset prices are at risk.

    The Fed has done this many times throughout history. Thus its best to avoid ideological propaganda like, "Bubbles are simply an natural part of the capitalism that occur, on their own, without any assistance from central banks.", or, "It is not possible to have capitalism and not have bubbles." Especially since all the empirical evidence and reasoned logic show otherwise. Thus, you can ignore advice from people making such comments, and learn to take advantage of the wealth transfer that CBs provide by understanding how they operate in the Subsidy Mix.

    Then you too can begin to predict the direction of equities markets and interest rates, and not have your wealth transferred away from you because you fell victim to people shoveling ideological propaganda.
    Jun 19, 2015. 02:53 PM | 1 Like Like |Link to Comment
  • Summary Of My Post-CPI Thoughts [View article]
    "Note that I don't think the Fed tightens in September even with a core CPI at 2% or above"

    Interesting. All the chatter I am hearing is that Sept will be the rate hike date. I also just read that there are those expecting four more rate hikes in 2016.

    Now, if that happens, then add that to rumblings that ECB QE may be coming to an end here in a few months, and insurance companies predicting premium hikes up to 30% in 2016 due to Obamacare and its failures, then we would have some serious "risk-off" conditions forming.

    Of course, the rate hike talk could be just jawboning, so we might just get more delays, but be on your toes for the above circumstances. If they occurred the move would be to move out of equities and into bonds, wait for equities to fall and bonds to rise, then sell the bonds for gains, and go back to equities in anticipation of the CBs reinflating.
    Jun 19, 2015. 01:19 PM | 2 Likes Like |Link to Comment
  • Surprise... Strong Swiss Franc Fails To Sink Economy [View article]
    If you ever look at the Economic Freedom of the World index, you will see that even though Switzerland scores better than a lot of other countries, you will find their weakest scores are in labor laws.

    Your other points about protectionist regulations are valid, but if you think about it, all gov regulations are really some sort of wage regulation. At the end of the day, capital and labor just want to be loved. The job of gov is to protect property and person. Any other laws that are designed to favor one person at the expense of another is really just some sort of wage regulation.

    As such, whatever the Swiss could do to lower their costs of production, what they would find is that their incomes and productivity go up as their costs to produce go down. A country is just a association of individuals just like a company is. They way to attract customers is to provide higher quality at lower costs. As such, let price sensitive markets provide price sensitive products, and allow the gov to keep people free from force which will make them price sensitive.

    Regardless of where the gov imposed higher fixed costs are, the stronger currency is revealing that there are still areas of the Swiss economy that aren't as competitive as they could be.
    Jun 15, 2015. 08:12 AM | Likes Like |Link to Comment
  • Swiss Jeez [View article]
    "I was not one of those who thought it would be a disaster!"

    Sorry, didn't mean to imply that, but it was one of those memes that was running around SA and other media sources at the time. So, it occurred to me to find out what did happen.
    Jun 10, 2015. 03:57 PM | Likes Like |Link to Comment
  • Surprise... Strong Swiss Franc Fails To Sink Economy [View article]
    What this really reflects is that the cost structure of Switzerland is still too high. Labor laws, gov regulatory policies, tax structure, etc., etc. still are not commensurate with what others can afford to pay. Even though Switzerland may be one of the more sane countries in the world, that sanity, especially relative to others, does not mean it is sane enough to have a cost structure that allows others to afford that cost structure. Switzerland would have to improve its cost effectiveness by ridding itself of the necessary gov regulations that raise the costs of what it makes.

    That's the real way to make your goods cheap (price wise) as opposed to currency debasement.
    Jun 10, 2015. 02:26 PM | Likes Like |Link to Comment
  • Swiss Jeez [View article]
    I did find this.

    http://seekingalpha.co...
    Jun 10, 2015. 02:11 PM | Likes Like |Link to Comment
  • Swiss Jeez [View article]
    How did that affect the economy? Was it the nightmare that was predicted?
    Jun 10, 2015. 02:08 PM | Likes Like |Link to Comment
  • Swiss Jeez [View article]
    "The Swiss economy will shortly be back in deflation"

    Did this occur?
    Jun 10, 2015. 12:58 PM | Likes Like |Link to Comment
  • Money, Commodities, Balls, And How Much Deflation Is Enough? [View article]
    In fact, you could argue that the negative interest rate policy the ECB deployed is designed to chase the money away. You can see sovereign yields drop off shortly after the negative rate policy.
    Jun 10, 2015. 12:54 PM | Likes Like |Link to Comment
  • Wall Street Breakfast: Global Bond Rout Continues [View article]
    "broke above 1% overnight for the first time since September 2014 amid a broader global bond sell-off that's been deepening since late April."

    Like clockwork.

    http://bit.ly/1jsAe3m

    Note how US QE affected bond yields.

    http://bit.ly/1f2DvGH
    Jun 10, 2015. 09:45 AM | 1 Like Like |Link to Comment
  • Don't Fight The Fed - Rising Interest Rate Edition [View article]
    Check the data. Whenever the Fed engaged in QE, rates went up, not down. Conversely whenever the Fed ended QE, rates went down not up. When the most recent QE ended, rates went down AGAIN, in fact the 10 yr got into the 1.60s. This was before the ECB QE. Now that ECB QE is gaining some traction, and the Fed is not engaged in QE, rates are ticking up slowly. Now the Fed is talking about raising the DR. That's risk-off, so that could put some brakes on the rising rate trend the ECB is creating right now. If the Fed raises the DR, does not engage in more QE, and eventually the ECB ends its QE, we won't be looking at 4% on the 10 yr, but somewhere in the neighborhood of 1.50 to or 1.60.

    http://bit.ly/1jsAe3m
    Jun 10, 2015. 09:41 AM | Likes Like |Link to Comment
  • The Fed Will Not Raise Rates... Here's Why [View article]
    "and 2100+ on the S&P and 2.30 to 2.50 on the 10 yr should be the zone."

    2100 has been broken and now zeroing in on 2.50.

    ECB QE is finally getting some traction.

    http://bit.ly/1jsAe3m
    Jun 10, 2015. 09:30 AM | Likes Like |Link to Comment
  • Grab The Reins On The Dollar, Part 2 [View article]
    The dollar is a note. A stock is a note. Is Seeking Alpha a website dedicated to finding companies that constantly make their stocks weaker or stronger?
    Jun 10, 2015. 09:18 AM | Likes Like |Link to Comment
  • Stability Of The European Union June 2, 2014 To December 31, 2014 [View instapost]
    "is all good but when u take it too far as they have here, any country would go into recession and fail."

    No country can force another country to take on bad economic policies. Greece is the classic looter based economy. Violence and the threat of violence form the basis of their social interactions. As such, productivity is damaged, so they wind up spending more than they produce, thus always putting themselves in a vulnerable position.

    So Greece standing up to the Germans is like the welfare recipient standing up to the provider and saying, "how dare you cut off my welfare".

    Whining won't change reality. The Greeks would need to dump their elite ruling class that lives off backs of their general populace and institute a gov that protects property and productivity. Then capital and labor would flow to Greece, and in a few years, Germany would have to borrow from Greece.

    It won't happen, so Greece's only hope is that whining will be enough to keep the welfare flowing from the rest of Europe till the end of time. It just might work. Heck, Greece has been doing this for thousands of years.
    Jun 9, 2015. 12:22 PM | 1 Like Like |Link to Comment
  • Summary Of My Post-CPI Tweets [View article]
    As an individual what you have to remember is that higher food and energy mean you spend less on other things. As such, if you are spending more on things you are already spending on, and thus spending less and getting less of other things you would like to spend on, the result is your standard of living goes down.

    When the IRS taxes you, you spend less on things you would like to spend on, and the result is your standard of living goes down.

    What this shows is that either way you are being taxed as evidenced by your standard of living going down. That's what matters here, so its important not to get sidetracked by the conventional wisdom speak.
    Jun 9, 2015. 10:59 AM | Likes Like |Link to Comment
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