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  • Fed Intervention And The Market: New Update [View article]
    "so it's too soon to make a firm pronouncement the success of this strategy for lowering interest rates"

    I've read the intent of this was to defeat rises in commodity prices. After claiming QE had nothing to do with commodity prices, BB engages in a policy that he seemed to claim would prevent commodity prices rising like they did in the last rounds of QE.

    It seems the logic is that people were borrowing very short with the very low rates and buying commodities on margin. So instead of the Fed buying on the short end and pushing rates down there which was essentially pushing up commodity prices, the Fed starts buying on the long end. So instead of pushing up commodity prices, the Fed started pushing up long bond prices (with the hopes of pushing down mtg yields and thereby reinflating the housing bubble and bringing back jobs and fixing the poor jobs situation).

    So I guess when OT ends, we should expect to see long bond prices go down as yields go up, but only until rising commodity prices ($7 gal gasoline) starts to take a bite out of earnings, people start to dump out of equities and risk and flee to quality, which would then push long bond rates back down and prices up, yet again.
    Apr 11, 2012. 02:57 PM | Likes Like |Link to Comment
  • Handicapping The Obesity Race [View article]
    One night on Johnny Carson George Burns appeared. George Burns had turned 96 that year. Johnny asked George how his doctor felt about him drinking, smoking, and chasing women at his age.

    George Burns replied, "My doctor's dead".
    Apr 11, 2012. 02:31 PM | 2 Likes Like |Link to Comment
  • The Prius Economy [View article]
    Did you see where people that are buying Priuses (or is it Priui), were doing so for fashion? They pay more for a vehicle that does about the same as other hybrids, but because it looks like a hybrid, they are willing to pay more for it.
    Apr 11, 2012. 02:05 PM | Likes Like |Link to Comment
  • "Europe 2012 is NOT Europe 2011," writes Macro Man, not discounting the economic difficulties of Spain, but arguing the LTRO has removed systemic risk from the equation. "Disillusionment with LTRO is misguided," says Genevieve Signoret. "It showed (the) ECB won't let (the) banking system collapse. Period. (It's) designed to contain crisis, not cure."  [View news story]
    If they were really worth their salt, the crisis never would have happened in the first place. You don't call an abortionist a hero for doing abortions for free for the people he has raped.
    Apr 11, 2012. 12:50 PM | 2 Likes Like |Link to Comment
  • The Prius Economy [View article]
    "Practically, it doesn't matter what government type there is and who rules the nation nor whatever Central Banks do or do not do."

    It absolutely matters. You are conflating the prosperity of the few (the men of the minds as they are called to produce even in trying circumstances) with the overall health of the economy and the prosperity of the looters that gain wealth by using the system to take it from others. To say that wars and govs don't matter is to exclude what it meant to the people that were killed or the Jews that were slaughtered in the concentration camps under these rules "that don't matter". To say that that doesn't matter because you are doing well, therefore that that suffering is completely acceptable to you is very short sighted.

    The alternative is, not that some people got rich during tyrannical gov systems or did well during the wars, is to not have the tyrannical system in the first place and thus to not have the war or the tyranny and to have a system that protects all rights equally. In such a system you will have exponential prosperity where everybody that chooses to participate does far better than they would under a tyrannical, war-like system.

    Instead of having a few traders and investors that make 25% to 35% returns and everyone else making 3% returns with inflation at 5%. You have a few traders and investors that make 45% to 55% returns and everyone else making 25% returns with no inflation. In fact you would have constant deflation of consumables and constant inflation for assets that produce constantly lower costs for consumables.

    Take your scenario above and multiply it by 10, and then take your current net worth and multiply it by 10. That's what you are giving up. That's your tradeoff for your assumption that "it doesn't matter". Your disregard for your fellow humans is understanable, but if you could realize that by caring about them by caring about what sort of system we have will also be caring about yourself. It will make you and them far better off. So its not about what we have, but rather about what we could have had that really matters.
    Apr 11, 2012. 12:45 PM | 3 Likes Like |Link to Comment
  • The Prius Economy [View article]
    "Central Banks are Banks of Last Resort."

    That indeed is the sales pitch, but like all sales pitches the proof is in the pudding. So it matters not what the claim is, all that matters is what actually happens. Below a gov and its price blind policies still exists real markets. In fact markets are hard to kill. Just look at drugs. There is a huge demand for drugs, and even though many are illegal, people are willing to risk their lives to trade in them. The law didn't destroy reality, it only shifted the markets. There will still be winners in the markets, it will just be that they become fewer and fewer, so you have to look harder and harder, but they will be there.

    The problem is getting liquidity right is a pricing mechanism, and since gov entities have access to force, they are blind to prices. This is why central banks can sink economies because they misprice who should get liquidity and who should not. They misprice how much liquidity there should be, and they can offer so much that the relationship between capital creation and money medium creation becomes dilutive and people become incented to consume rather than produce (ie expenses are more than income, creating capital erosion). When capital erosion occurs the availability of capital is dimished (regardless of how many money mediums there are) and so too economic opportunity is dimished.

    So yes, if a central bank gets policy absolutely right, then they do exactly what an economy needs. The question then is, how will a price blind institution get a price sensitive question right? Clearly, if they do, it will be blind luck (regardless of how many phds they have). As such, what they will more than likely do as a gov entity that is being misused, is to transfer wealth. To ignore these types of realities, makes analysis of CBs just as blind as the CBs are.

    Realize that CBs don't function as they are sold. Instead realize that they function the only natural way they can based on the rules of reality and not ideology. They transfer wealth. They don't create it. Figure out where the wealth is going to be transferred to, and be there when it gets there. Recognizing reality is the best way to protect yourself. Its a far sight better than blind ideology.
    Apr 11, 2012. 10:46 AM | 3 Likes Like |Link to Comment
  • The Prius Economy [View article]
    Central banks can tax the general populace and transfer that wealth to the financial markets as long as the general populace continues to generate wealth. The threat is when central banks and other gov policies go too far and stifle the wealth creating power of the populace too much. As long as gov policy doesn't do this, then good news for equities will be good news and bad news for equities will be good news, because the bad news means more subsidies for financial markets via the wealth transference mechanisms of central banks. This is, after all, the reason central banks are created.
    Apr 11, 2012. 09:56 AM | 3 Likes Like |Link to Comment
  • U.S. Treasuries Bubble: Beginning To Burst? [View article]
    "It may be that events cause the 10 yr to move back to 1.80"

    Are we heading back to 1.80?
    Apr 10, 2012. 01:29 PM | Likes Like |Link to Comment
  • Bond ETFs To Buy As Rates Rise [View article]
    Looks like the timing for this was a bit premature. We may still have a lot longer for rates to go up than we think.
    Apr 10, 2012. 01:27 PM | Likes Like |Link to Comment
  • U.S. Treasuries: This Is The End? [View article]
    U.S. Treasuries: This Is The End?

    Not just yet.
    Apr 10, 2012. 01:25 PM | Likes Like |Link to Comment
  • Treasury Bond Yields Will Continue Upward Climb [View article]
    Treasury Bond Yields Will Continue Upward Climb

    Apr 10, 2012. 01:24 PM | 1 Like Like |Link to Comment
  • Long-term Treasury yields remain higher as Bernanke hints at additional Fed ease - saying faster growth will be necessary to lock in and add to recent labor market improvements. The long bond +4 bps to 3.35%, the 10-year +3 bps to 2.26%.  [View news story]
    We may still have to wait a while for interest rates to take off. The next opportunity will either be US QE or a big gain in the ECB balance sheet via LTRO.
    Apr 10, 2012. 01:21 PM | Likes Like |Link to Comment
  • U.S. Treasuries: Bears May Be Disappointed Once Again [View article]
    Are we going to settle into the 1.90s as the new range for 10yrs?
    Apr 10, 2012. 01:19 PM | Likes Like |Link to Comment
  • Is The U.S. Healthcare System An Economic Bubble? [View article]
    "insurers lobby government to keep competition out"

    Since gov regulations can do nothing about increasing supply, all they can do is discourage supply via increased fix costs via price blind regulations or they can encourage more demand via subsidies for buyers. Either way the physics of supply meeting demand is polluted via the introduction of force from gov that is blind to physics and the result is a pullback from optimal performance to suboptimal performance.

    Insurance companies are prohibited from crossing state lines, they are exempted from antitrust legislation so they can have virtual monopolies within states so the states can mandate price blind regulations that FORCE insurance companies to cover things based on politics not the physics of supply and demand.

    Think about it, via gov force we subsidize health care buyers and regulate (raise fixed costs) health care providers, and have health care costs been going up or down?

    We subsidize buyers of education and regulate providers of education, and have education costs been going up or down?

    We subsidized real estate buyers and regulated financers of credit for real estate and producers of real estate via urban planning, and did prices of real estate go up or down?

    Gov force cannot regulate with regards to increasing supply because that is a function of technology, and only increases in supply will permit sustained increases in consumption (go from knowing how to catch 1 fish to 5, and you now you can consume 5 - an increase in the standard of living). The same is true for every other endeavor of human beings, including health care. Our abiltiy to consume is based on our ability to produce. Gov only has force, thus gov can do nothing with regards to production, except discourage production by using its force to subsidize consumption.

    Producing is hard, but consuming is easy and it feels good. It feels good because nature has programmed us that way for the sake of survival. Politicians capitalize on this by doing things that feel good because it gets votes and helps them get rich (a survival instinct).

    If your plan is to use gov force to redistribute (another term for subsidizing consumption which is another term for theft), the only outcome will be austerity because the incentives to produce will erode. This is why Cuba and N Korea and much of Europe are so poor.

    The insurance companies will go bankrupt and then be nationalized, and the same efficiency you find in the VA system or the DMV or your local SS office will be brought to healthcare. It means rationing not based on price but rationing as in it will be impossible to find or findint it will be against the law. It will not be utopia it will be desparately poor.

    If you enjoy NPR for its pedistrian entertainment value, then have at it. Just keep in mind that you may only be getting a one sided, two dimensional view of things.

    How about this...Why don't you pay for everyone's healthcare? Does the fact that you aren't willing to do this, mean you are willing to let people die because you are selfish? You could work 90-100 hrs a week 7 days a week for the rest of your life, and give all that extra money away in order to save lives. Wouldn't being true to your ideology require you to do this? After all a failure to share means that someone else doesn't benefit and that benefit means their survival.
    Apr 10, 2012. 12:10 PM | 2 Likes Like |Link to Comment
  • Is The U.S. Healthcare System An Economic Bubble? [View article]
    "we spend too much on services that do too little."

    At last. Force makes all the difference in transactions, this is why force is the preferred method of thieves. It is the ultimate in inflation. You give up everything you have for nothing in return in a theft transaction. The same principle applies when gov force is applied in other transactions. It creates a consumption subsidy. As such, force interferes with the intersection of supply and demand.

    Supply is a funciton of our understanding of physics. The more we know about the natural world, the better we become at being able to produce. The cave man that discovers how to use a net instead of his hands can consume more fish because he can produce more fish. Thus, supply is shifted because of the physics of human nature interacting with the physics of the rest of the natural world. The ABILITY to increase supply is also the ABILITY to increase demand via the ABILITY to increase consumption via the ABILITY to increase supply. It is all interconnected.

    However, force does not produce anything, it merely subsidizes the consumption of one individual at the expense of another. The theft transaction is the only basis for one person to become richer while another person becomes poorer. Only in free markets (markets free from force and fraud) can you have transactions that make both parties richer via voluntary cooperation.

    As such, your statement above is a classic representation of gov subsidies for consumers that allows for demand to shift to right that results in increased prices for the same quantities. However, since supply and demand are connected, the greater demand requires more work which compresses margins, which is a disincentive to produce, thus supply shifts to the left, and the result is higher prices for less quantity.

    Now, consider that people are subsidized for indulging themselves by forcing insurance company to cover them no matter how irresponsible they are, and you have created the situation where people are actually paid to make themselves unhealthy via gov policy because people like to indulge and they will vote for people that pay them to indulge. The result is more and more indulging and more and more poor health resulting in higher and higher costs resulting in more and more subsidies that raise prices higher and higher and the rising prices create more and more unrest then you have price controls which leads to less and less incentive to produce, supply shifts to the right, and the result is higher prices and lower quantities.

    What causes all this is the technology that should drive increases in supply and demand is not occurring. The only thing that is occuring is the interjection of force via gov which cause more consumption without a concomitant increase in production aka the mechanics of the theft transaction. The end result of gov into the health care markets will not result in better health because it won't result in prevention or cures, it will result less prevention and less cures because simple physics apply to both prevention and cures, and ideology will not trump physics.

    If you enjoy NPR for its pedestrian entertainment value, that's fine, just realize it is not a source of credible information, thus make sure you question anything they tell you. In this regard it is just like listening to Rush Limbaugh.
    Apr 10, 2012. 09:28 AM | 1 Like Like |Link to Comment