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  • Initial Jobless Claims: 386K vs. 365K consensus (prior week revised to 388K from 380K). Continuing claims +26K to 3.27M.  [View news story]
    True, no signs of serious improvement. We need jobless claims in the 100k range, and nonfarms in the 500k range.
    Apr 19, 2012. 09:23 AM | Likes Like |Link to Comment
  • Why I Am Buying The Pain In Spain [View article]
    Good point. It's probably better to have a European misunderstanding of Europe.
    Apr 19, 2012. 08:40 AM | 6 Likes Like |Link to Comment
  • Understanding The Risks Of Fed Policy [View article]
    "that I've followed for decades"

    "In short, the Fed is way too easy today, and this portends higher inflation in the future."

    "We saw a similar situation in the late 1970s, when capacity utilization surged but it took the Fed several years before it got the nerve"

    Go back and look at job losses over this same period. What happened in 2008 and 2009 dwarfs anything before. You won't get the kind of inflation CB is talking about here until either:

    1. All those jobs are brought back

    2. Stimulus gets to be so large that it drastically begins to outpace the capital creation abilities of the US populace and/or there are better currencies at the time that attract people away from the US dollar

    Until either of those happens, what you really have is inflation in equities and bonds via Fed subsidies. The bond market and equity markets are inflated (bubble), but not so much so that make the multiples or yields to look out of whack, but in the face of 8 million lost jobs you might tend to wonder why are they so high. In other words they are the highest deck of a sinking ship, that could take years and years to sink.

    As long as we don't get crazy monetary policy (i.e. a 5 trillion QE or GDP targeting) and we don't get any more repressive fiscal policy (i.e. drilling for oil is guaranteed to bankrupt you), then this environment could go on for 10 yrs and the inflation that CB is worried in his article about won't really show up. People without jobs don't buy TVs and radios and other things in the CPI with abandon. Whatever money they get, they save, and with bank yields and fixed income yields so low, one of the attractive places after they think they have enough in cash is equities, because equities are going up, right?

    If that is indeed the scenario that plays out, then equities would be the subsidized place to be, and any pull backs would then logically be a buying opportunity, because a fall off in equities means more subsidies from the Fed which means another rally for equities. Also, capital scares from Europe means a flight to safety, and thus dips in treasury yields. So again, the logic would be to buy a 10 yr at 2.40, and then sell it for a gain when a flight to quality causes it to go back to 1.90.

    As this goes on, I imagine there will be those that get pretty good at timing this, and allow the Fed's ability to transfer wealth, to transfer wealth their way.
    Apr 18, 2012. 03:12 PM | 1 Like Like |Link to Comment
  • 'Miserere Nobis': More Pain In Spain [View article]
    No tyrant ever came to power promising to be a tyrant. They all promised to be reasonable saviors. Just as any conartist never tells you they are a conartist. Its up to you to figure it out. Anybody that advocates control of an economy via gov and its guns is advocating the control of people via gov and its guns, since people are the economy, and controlling people with guns is tyranny, and a free market is not free to do whatever it wants, its free because it is free from tyranny.

    The same reason you separate church and state are the same reasons you separate the economy and the state. Spain is no different today than it was when the King and the church controlled things. The names are different and institutions are different, but the principles are the same. Spain's only hope is for subsidies from others. If the subsidies don't come, then they will suffer even more austerity. Their so called experts have trapped them in this system of dependency, and they are supposed to believe this is a benefit or a better alternative to prosperity from their own hands. The so called experts that were supposed to be in charge to prevent the problems of "uncontrolled" markets, have created the very problems they were supposed to prevent. Thus, if their price blindness couldn't design the right system from the start, there is no reason their price blindness will now design a system that prevents failures in the future. The very fact that Europe is in the mess it is, is the evidence that these so called experts can't do what they claim they can do.

    Expect nothing but austerity out of Europe to the extent they attempt to use gov for something its price blindness can never do, manage prices. All it will do is transfer wealth via gov guns (stealing), and stealing is a natural deterrent for wealth production. Find the wealth receivers and bet on them, but don't bet on the general populace because they are going to get pummeled. And they will go along with it because they will be convinced that their pummeling is a benefit because they would be pummeled even more if it were not for their pummelers. That's what suffices for logic these days.
    Apr 18, 2012. 12:02 PM | Likes Like |Link to Comment
  • 'Miserere Nobis': More Pain In Spain [View article]
    "wouldn't last long or grow"

    There's your scare tactic of gloom and doom, and it has been used by centuries by the advocates of tyranny. They always claim you will be a victim, you can't do anything on your own. You need someone else to take care of you.

    "is clear nonsense" .

    Now you have been reduced to a lack of logic. The evidence of private wealth creation is all around us. In fact, there is no evidence of public wealth creation, because if there were you would have lots of examples of govs without populaces to support them, or you would have a populace where everyone has everything they have ever wanted with no downturns, no mistakes, and never any talk of austerity. Of course, no such situations exist, as such you have no evidence.

    Gov can only be used to protect wealth or transfer it. When it protects wealth, then those that create wealth, can create even more. When gov transfers it, then those that create it lose their incentive to create more, and austerity follows.

    Europe and the US aren't looking at experiencing austerity for the first time, they already are austere. Their GDPs could be twice what they are now. Their unemployment rates could be 2-3%. Immigration would be welcomed, because there would a demand for that labor. Healthcare would constantly be becoming cheaper and more plentiful. More and more people could retire at 45 and actually be able to afford to do that because of sustained wealth creation and not because the taxpayers are being forced to sustain it. Like all aspects of markets that are free from force and fraud, people work less and have more. The evidence is all around us. There is no evidence for your claims.

    Your advocacy for tyranny (gov controlling the economy which means controlling people) is an age old con, and always rests on peasant thinking. Wherein the peasant is convinced that their only alternative is the austere crust of bread their elite rulers provide, or even deeper austerity of no crust of bread via the wrath to the rulers. As opposed to the ever present observations from nature that show the alternative is the austere crust of bread from a ruler compared to having your own bakery.

    Perhaps the wild-eyed, extremist advocacy of tyranny disguised as "managed economies" will finally come to an end and then finally an end to austerity, but with all the peasant thinking that is taught in gov schools, the best bet is to play the gov wealth transfer game and not fall for the frauds of its advocates and their lack of evidence.
    Apr 18, 2012. 11:07 AM | Likes Like |Link to Comment
  • 'Miserere Nobis': More Pain In Spain [View article]
    What do you think "lender of last resort" means? You think that is intended to let failed institutions pay for their mistakes? Whose capital do you think a central bank is lending out? It is forcing the general populace to put their capital at risk, for failed risk takers. So a person may benefit by taking a loan, but that benefit is not offset by the fact that at some point they lose their job and cannot get another for 10 yrs.

    The alternative to gov monopolized banking is private banking, bankers must learn what is good underwriting and what is not. There would be bank failures, and those failures would produce better knowledge about what is better banking. Eventually what we think of banking would probably be radically different, and it just wouldn't be a branch system. Retail stores, car manufacturers, farmers, single individuals, almost anyone could be a bank. As such, the ability to create and achieve a monopoly would be impossible (just as JP Morgan found out, so he turned to gov to cartelize the system).

    So there would still be small business loans, mgts, car loans, boat loans, and every other sort of loan and many more that we have never thought of because the regulated system creates austerity.

    Your doom and gloom is a typical scare tactic. We would have far more wealth, far more choice, and far more stability. Our standard of living would be many fold what it is now because the concentrated benefits for the few would not have to be offset by diffused dimished benefits for the many.

    Again, the point still stands that a CB is a subsidy for current wealth. If it weren't then the net 6 million jobs we lost, we would have back by now. In fact we never would have lost the 8 million jobs in the first place and seen trillions in wealth wiped out. That's hardly a benefit. If you fail to figure that out and invest accordingly, you will still continue to lose money. Thus, it is time for you to face up to reality and not fantasy scare tactics if you want to protect yourself. This system is not going away, so you better learn to survive in it.
    Apr 18, 2012. 09:28 AM | 2 Likes Like |Link to Comment
  • 'Miserere Nobis': More Pain In Spain [View article]
    In its current form, the benefits are to the few at the cost of the many. Figure out how to be one of the few in order to benefit. Its never going to change. The FRB is a subsidy for current wealth. It can do nothing to create new wealth. If it could, then the net 6 million jobs we lost would have been made back by now. Recognize CBs for what they really are in their current form, not what their advocates say they are. Doing that just makes people suckers. Reason is the acceptance of reality.
    Apr 18, 2012. 08:37 AM | 1 Like Like |Link to Comment
  • Ghost Rally [View article]
    Maybe sterilization is more likely than Qe3. It's a way to keep ot going without calling it ot.
    Apr 18, 2012. 06:25 AM | Likes Like |Link to Comment
  • Does Another Cruel Summer Lie Ahead For Stocks? [View article]
    "It is effectively QE3 by everything but name. The only difference is that under Operation Twist the Fed is exchanging cash equivalents in the form of Short-Term U.S. Treasuries with the banks instead of cash as they did with QE1 and QE2."

    Its not QE if you view QE as a growth in the size of the balance sheet fo the Fed.

    It is QE, if you view QE as the Fed trying to induce risk. In OT the Fed is trying to get people to reinflate the housing bubble by getting people out on the longer end of the curve. In the Fed's mind, fixing housing means fixing employment, thus addressing one of their mandates. It also seemed to burst the commodity bubble, by affecting short-term borrowing costs and taking away the idea that the Fed's balance sheet was going to grow larger.

    Then, in theory, if the Fed stops twisting, we should revert back to where we were before OT, but with one important difference, the size of the ECB's balance sheet. Its like having your sprinkler system watering your yard at the same time you are dowsing it with your hose. We had LTRO and OT at the same time (risk-on X 2). All that may happen when OT ends, but LTRO continues (ECB BS stays where it is), is a bit of a shift of the risk-on from LT bonds back to commodities. If its commodities, and say gas goes to $7/gal, then this could cause a backing away of risk-on, and another flight to safety. However, the risk-on may not go back to commodities since the Fed's balance sheet isn't growing. The risk-on may shift to equities instead. So equities rally a little further, and LT treas yields tick up slightly.

    If that's the case then its a reflection of where equities and LT treas yields would have been all along if OT had existed but LTRO did. To me one of the things to watch is the size of the CBs balance sheets. If the size is maintained, this is probably support for equities, and eventually the liquidity sloshing between safety and risk will eventually find some equilibrium.

    So probably no big run up in equities anytime soon (maybe a small one), but any pullback based on headline scares will be healed over the next few days after the pullback, as long as the CBs balance sheets are maintained at current levels (liquidity sloshing affect).

    If the Fed doesn't replace OT with Sterilize (the same thing), then perhaps S&P in the high 1400s and the 10yr between 2.40 and 2.50, with some headline scares from Europe that cause the occasional flight to safety that push the 10 yr back to 2.00, with little impact on equities.
    Apr 17, 2012. 04:46 PM | 1 Like Like |Link to Comment
  • Does Another Cruel Summer Lie Ahead For Stocks? [View article]
    Apr 17, 2012. 03:53 PM | 1 Like Like |Link to Comment
  • How The 2012 Presidential Election Will Affect My Investments [View article]
    Don't forget the bureaucracy. Part of the rules for gov workers is to get people in that agree with a certain political mindset, and then make sure they stay there regardless of who is in the legislature, executive, or courts.

    It is way easier to cause more problems than to fix things. Even if there is a change, at best we can only hope for nibbling around the edges. Odds are we are still looking at malaise for quite some time, and CBs determined to subsidize the equities markets.
    Apr 17, 2012. 02:20 PM | Likes Like |Link to Comment
  • Signs Of A Stock Market Top? [View article]
    Maybe it was QE EU style via LTRO.

    OT is ending in June. Need to factor that in. Overall, the CB strategy seems to be, "subsidize equities markets at all costs". If the subsidies don't go hog wild and multiples stay within historic norms (even slightly to the upside), they may be able to keep this up for years. It seems one destination for the wealth transfer will be equities. It may be good to be there when it gets there.

    One way to do it will be to watch the fluctuations of the subsidies (end and start of QEs, LTROs, their size and duration, etc) to take advantage of peaks and valleys and have some of that wealth transfered your way.
    Apr 17, 2012. 01:09 PM | 6 Likes Like |Link to Comment
  • Monetary Sedition [View article]
    "The simple rule is a politician cannot increase taxes."

    Or better

    The simple rule is a politician cannot increase taxes that people can see.

    Unfortunately, the society at large bears all the costs of gov. It is buried in the cost of everything we produce, and it is buried in the cost of everything gov makes too expensive and so doesn't get produced. In short, it is buried in how much all of our standards of living are reduced. The poor could be richer and the rich could be richer, but since the poor and the rich alike don't see all the taxes, they think they don't pay them. As such, they argue over the Buffet Rule like it really matters, instead of arguing over what really matters. Its your basic rope-a-dope.
    Apr 17, 2012. 09:35 AM | 5 Likes Like |Link to Comment
  • The Problem With Small Surprises: The Inflation Paradigm Shift [View article]
    Right. Kill an economy and kill inflation. Good job.
    Apr 16, 2012. 09:42 PM | Likes Like |Link to Comment
  • 'Miserere Nobis': More Pain In Spain [View article]

    Depends on what you mean by "save the day". If you mean a vibrant growing economy with GDP north of 5%, unemployment in the 3% range, rising real wages (deflation in consumables and consistent wage levels), health care that is not rationed (rationed in the sense it is illegal to have), energy that is not rationed, education that is not rationed, and an ever climbing standard of living for an ever growing number of people - then no way.

    The history of Europe (and to an ever growing extent for the US) is one of fuedalism/socialism/co... wherein a small group of elites do very well by controlling everyone else (the peasant class). They are still running with this model. They just aren't educated with the principles of enlightment.

    Their growth and prosperity will forever be stunted. The very price-blind people that designed their disfunctional currency system will be the very same price-blind people that will propose the solutions to the system they designed that has caused yet more bubbles.

    Every proposal will revolve around the semantical fraud of aggregate demand and better redistribution mechanisms. Well they designed redistribution systems for the current system, and that has led them to austerity yet again (not that they weren't very nonaustere before this). So the new systems they come up with, will just lead to another bubble and debt "crisis" in a few more years, and then yet again, the very same people that designed the "fixed system" will yet again complain about the system they advocated for in the first place in favor of yet another system based on the same failed assumptions of aggregate demand and redistribution and around they will go again.

    The only thing you can count on from Europe will be debt scares that create flights of quality to US treas. Then yet another subsidy program, like LTRO, that creates a stimulus QE risk-on effect, to be followed by yet another debt scare and another flight to quality.

    If you can time these bubbles, you can enrich yourself by the ignorance of the experts.
    Apr 16, 2012. 02:44 PM | 1 Like Like |Link to Comment