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867046

867046
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  • How's That Austerity Working? [View article]
    Burning up money to maintain economic activity is still an intelligent option at this point:

    1) This is still a once an epoch time with the rest of the world building out, i.e. India, China, and the Americas and perhaps Africa. If any stability comes to the Middle East, you have a huge amount of pent up desire to join the middle class. So the thesis of a long term slow down is in question with the amount of potential consumers still in play.

    2) If there is any validity to 1), the Euros for all their acclaimed central planning abilities, certainly aren't showing it. With money so cheap it's time to borrow a page out of the corporate playbook. This is a time to spend on European infrastructure with the goal of lowering the cost of governing in the future. Do really mean to tell us that there are no 100 year old sewers left, that your municipal water utilities are up to date, that the addition of higher speed train track couldn't lower the cost of travel by reducing the dependance in inter-European travel on airplanes? Is there an intelligent way to reduce Europe's energy footprint in the future by making targeted investments? Would expanding educational opportunity temporarily sop up unemployed youth and make your work force even more competative?
    Jan 16 09:10 AM | 3 Likes Like |Link to Comment
  • Also in Merkel's response to the S&P downgrades comes this chilling idea: She says she will consider legislation to bar institutional investors such as insurance companies from selling bonds when ratings are downgraded, or fell below investment grade. If banning short sales doesn't work, why not step it up a notch and ban selling altogether?  [View news story]
    One issue with Merkel's suggestion would be that companies would go for the BB paper to maximize profits or lower costs. Ultimately this is another kind of socialism, the corporate kind, which would increase the already large amount of financial engineering and opacity found in corporate financial statements.
    Jan 15 11:59 PM | 1 Like Like |Link to Comment
  • By Buying Motorola, Google Can Now Do Whatever the Heck It Wants [View article]
    One other thing that hasn't been pointed out is the software engineering synergies. MMI has just been bonded to an organization (GOOG) which knows a thing or two about software generation. This is a vulcan mind meld to a bunch of software brainiacs. This will be a huge competitive advantage. Because the software guys are now in the driver's seat, the tie up of GOOG and MMI will provide further impetus to drive the evolution of mobile processing hardware (ARM and INTL).
    Aug 16 09:27 AM | Likes Like |Link to Comment
  • What Buffett's Probably Buying Right Now [View article]
    No matter what the Buffmeister or the market is doing there are certain incontrovertible facts:

    0) We are in the midst of a century long one time build out of the planet Earth.

    1) World wide, the consumer population is increasing.

    2) There is lots of money looking for a home.

    3) "The economy of the United States is the world's largest national economy. Its nominal GDP was estimated to be nearly $14.7 trillion in 2010, approximately a quarter of nominal global GDP. Its GDP at purchasing power parity was also the largest in the world, approximately a fifth of global GDP at purchasing power parity. The U.S. economy also maintains a very high level of output per capita. In 2009, it was estimated to have a per capita GDP (seekingalpha.com/symbo...) of $46,381, the 6th highest in the world. The U.S is the largest trading nation in the world. Its three largest trading partners as of 2010 are Canada, China and Mexico." (Wikipedia)

    4) The US has 20% of the world's manufacturing output.

    5) The plays the Buffmeister has been making are consistant with 0) through 4), with 2) complicating his analysis of "value".


    Comments:

    a) The supreme irony of the US political situation is that right wing "patriots" are the most negative in terms of the future of the US.This innumerate negativism is in contradistinction to Items 3) and 4). Items 3 and 4) are not going to change overnight.

    b) The 20% of global manufacturing that the US has is going to participate in 0) and 1).

    c) Whether people understand it or not, the US is really in a stealth confederation with Canada. This is only good.

    d) The US has another steath advantage: the world's largest market coupled to a great IP legal system. The product of these two is an overwhelming advantage. This can only incentivize the growth and creation of technology companies.

    Comments such as Dow 2000 and a future US debt economic crash are intellectually irresponsible. The supreme irony of all the talk on the debt mess is this: politicians listening to small business owners on what's financially wrong with the US. The logical disconnect is this: If IBM hired as their CFO or CEO somebody who had previously run a hot dog stand or a dry cleaners, IBM would take a 40% haircut in their stock price. The US government is an even more complex financial entity than IBM and further removed from the Quicken bookkeeping world.

    In terms of trading decisions in this panic, the most conservative moves for the author will be to look at entry points for OIH and AAPL.
    Aug 8 05:05 PM | Likes Like |Link to Comment
  • Don't Worry About U.S. Downgrade [View article]
    Ultimately the USD problem is more subtle, how do you compete against someone who is artifically controlling their exchange rate? Well one answer is to find methods to devalue the USD that don't start a major war.
    Aug 7 05:40 PM | 1 Like Like |Link to Comment
  • So the U.S. lost S&P's AAA rating for the first time in a 70-year history; so what? Mark Thoma says this is S&P erring on the only side it can after blowing the pre-crisis situation. Always pragmatic Warren Buffett says solvency's not an issue when the debts are all in currency the U.S. can print; inflation, that's another story. Ready to buy on this coming dip?  [View news story]
    Tack,

    For once I agree with a post of yours. To me it's a question of logic. The Chinese can spout off about the USD. Ok, then do something about. Well the consequences of the do something about it part means that your currency has to be traded on the foreign exchange markets. This means it will reach equlibrium with all the other currencies and that the USD will go down.

    Here is a further logical disconnect from the fuehrerbunker crowd: You guys claim that the US is headed towards some downward spiral because of our "socialist" democratic government interfers with your freedom to make money and yet you claim that a corrupt, centrally planned, economy (China/ Russia) will be triumphant?
    Aug 7 05:12 PM | Likes Like |Link to Comment
  • So the U.S. lost S&P's AAA rating for the first time in a 70-year history; so what? Mark Thoma says this is S&P erring on the only side it can after blowing the pre-crisis situation. Always pragmatic Warren Buffett says solvency's not an issue when the debts are all in currency the U.S. can print; inflation, that's another story. Ready to buy on this coming dip?  [View news story]
    WhackJob,

    With these comments you have demonstrated that you have totally lost it:

    1) I wish I could understand the fundamental whack job premise that we have to destroy the US in some sort of Goetterdammerung extreme-right-wing fantasy to save it.

    2a) China: In terms of any military activity, you are a drug addled rube. First of all, while the infantry side of the US military is tied up, the reality is that the USN and the air force are barely breaking a sweat. In order to invade Taiwan, there would have to be a huge movement of material/men towards the coast. Taiwanese spys (which are all over China) and US recon satellites would immediately detect this. The first step in a soft power response to this would be to sell tons of military hardware (can you say F-16?) to Taiwan that the Chinese really hate and levy a US import tariff on Chinese goods. Additional irritating steps would be to upgrade relations with Vietnam and establish a Phillipines/US base in the spratleys. If it comes to war in the Taiwan straits, there are a bunch of restless US subdrivers and 6 USN carrier battle groups just sitting around. Oh and a little known unclassified feature of several platforms (B-2, B-52, and US submarines) is that they can dump naval mines. The Air force will come up with further creative ways to participate. I wonder how the Chinese have wargamed their LST's versus drones with Hellfire missles? On the economic side, oil will shoot up for the worlds number one manufacturer, shipping insurance to China will skyrocket and all those clever outsourcing decisions based on cost by US corporations will now be hedged.

    2b) Russia. Russia's military is in a decrepit state. If I use the logic of right wing extremist's, since we are fat and happy, then the socialist paradises of Europe should be ripe take over targets, not! Russia would lose against Finland and the US/western Europe would be shoveling weapons by tons into eastern Europe. Finally, in terms of south Russia, have you forgotten the first Afghanistan/ Russia friendly? In just the Ukraine alone, Russia would get chewed up.

    2c) Iran's military is mostly tied up making sure the average joe uses the crosswalk.

    3) Finally as a response to your China/russsia uber alles fantasy, they have many problems. Russia is demographically collapsing due to the huge loss of life from WW2. China has many off balance sheet liabilities such as corruption, pollution, clean water, rule of law and food importation among other mundane issues. Both China and Russia will fight a losing war against the internet.

    While the financial expertise of the extreme right wing doesn't extend beyond understanding the chart of accounts for liquor stores and pawn shops, the US has lost good will because the perception of a good part of the world will be that white guys get the easy debt extension and people of color get hassled. As a reminder the Chinese, Japanese and all the other non-Europeans don't see themselves as "white".

    Finally I never have any of the following right wing cogitative disconnects explained:

    i) If you worship in the primacy of markets, barring our recent attempt to shoot ourselves in the foot, why aren't the markets reflecting your Goetterdammerung fantasies?

    2) If the majority of the country thinks like you, then why are you guys going the Fuehrerbunker route since you'll be surrounded by like minded individuals like yourselves?
    Aug 7 04:46 PM | 1 Like Like |Link to Comment
  • A Quick Look at the Jobs Report [View article]
    Actually as a backup to Karl's noting manufacturing picking up, the upside of the downgrade will be a weaker dollar which should help US manufacturing. A further interesting point is how much falling commodity prices cushion decreased growth.
    Aug 6 12:45 PM | Likes Like |Link to Comment
  • So the U.S. lost S&P's AAA rating for the first time in a 70-year history; so what? Mark Thoma says this is S&P erring on the only side it can after blowing the pre-crisis situation. Always pragmatic Warren Buffett says solvency's not an issue when the debts are all in currency the U.S. can print; inflation, that's another story. Ready to buy on this coming dip?  [View news story]
    G2Bob,

    With your republican sympathies, I'm not sure you realize the base ironic content of your comments when you allude to the third world paradise that you currently inhabit.
    Aug 6 12:36 PM | 3 Likes Like |Link to Comment
  • So the U.S. lost S&P's AAA rating for the first time in a 70-year history; so what? Mark Thoma says this is S&P erring on the only side it can after blowing the pre-crisis situation. Always pragmatic Warren Buffett says solvency's not an issue when the debts are all in currency the U.S. can print; inflation, that's another story. Ready to buy on this coming dip?  [View news story]
    Dr. Reality comments:

    I see that as usual, our conservative brethren have avoided thinking at all costs:

    1) Why are all you conservative yutzes spouting off when a significant portion of your teat party brethren specifically said that a debt default will have minimal or no consequences? The S&P "downgrade" hasn't even approached the impact of an actual default. Any TP republican who is running for elective office will have "No Default Consequences" tatoo'ed to their low forehead by the Democrats.

    2) The republicans claim to be the party of business. The bright side of the AA+ downgrade is that this has to put further pressure on the dollar. This can only be good for US based manufacturing. Of course if you are the party of companies who have off-shored all your manufacturing capacity, it is bad. The Chinese in particular are in a bind because this only increases the pressure on the yuan/dollar exchange rate. Today's Chinese calls for a second reserve currency only serve to undermine efforts to keep the yuan cheap.

    3) The further irony is that since many countries directly or indirectly tie their currency to the USD, it will be interesting to see what the impact is on our trade deficit.

    4) The anti-tax republicans now see a further involuntary tax on the economy in terms of higher interest rates. I wonder have corporate America likes having their borrowing costs go up?
    Aug 6 12:26 PM | 5 Likes Like |Link to Comment
  • We've heard the $1T-coin idea and the exploding-option scheme - but maybe a gentleman's agreement outside Congress could buy three months for Treasury to wait out a debt-ceiling solution? A golden handshake between Bernanke and Geithner could see the Treasury exercise an $11B option to buy Fort Knox's bullion and (temporarily) sell it back to the Fed at its $418B market value.  [View news story]
    There are several logical conundrums that you conservative teat party types never quite clarify:

    a) Up until this self inflicted moronic move, the markets had not priced in all this end of the world because we owe money nonsense. So if the US is facing debt Armageddon why isn't the market pricing in? Either the market is wrong or the debt disaster scenario is wrong. Since you conservative types believe in the oracular nature of the markets, maybe the debt disaster on the horizon is not there? If you open the door to market inefficiently, then as any astute SA reader would do as second nature, why wouldn't the US borrow as much as possible since the market is mispricing our T notes?

    b) Let's out one more issue that is referred to more elliptically, the value of the dollar. Currently China is maintaining a predatory exchange rate environment in which to no surprise, benefits them. Our present fiscal policy, much to the mattress money crowd's chagrin, is really to weaken the dollar. Short of a trade war which would include tariffs, it's the only lever that we have to combat the yuan. We can go the strong dollar route upstanding fiscal citizen route, but we probably would have to be willing shave 10% - 20% off the GDP. But, the teat party is a friend of big business and I have to think that they along with the foreign manufacturers that the red states court, have an unadvertised interest in a weak dollar.

    The only entities that are deriving any benefit from current teat party actions are our economic competitors.
    Jul 30 11:50 AM | 4 Likes Like |Link to Comment
  • We've heard the $1T-coin idea and the exploding-option scheme - but maybe a gentleman's agreement outside Congress could buy three months for Treasury to wait out a debt-ceiling solution? A golden handshake between Bernanke and Geithner could see the Treasury exercise an $11B option to buy Fort Knox's bullion and (temporarily) sell it back to the Fed at its $418B market value.  [View news story]
    Excellent post.

    My irony module needed maintenance when I read that the Teat Party deluxe edition, South Carolina, the place where the damage to the statehouse from the Civil War goes unrepaired as a historical reminder, gets 20% of it's state budget from the feds.
    Jul 30 11:18 AM | 2 Likes Like |Link to Comment
  • The Senate votes to table the Boehner debt plan 59-41.  [View news story]
    Rabbit,

    Glad to see that your thinking ahead, but your own comments demonstrate how the priorities of the teat party are out of whack. In the next 90 years there will be much larger issues:

    1) Global warming is a fact, its just a matter of 2 to 7 degrees of average worldwide temperature increase. If 7 degrees, parts of the US will become uninhabitable on a year around basis. Not even going into the consequences for agriculture.
    2) The population of the planet is expected to increase to 10 billion.
    3) Petroleum from the ground will be a scarce commodity.
    4) Bug fritters will be a dietary staple of the lower classes.

    You conservative types worship the "markets". If the US is heading down some debt disaster path, why aren't you listening to the markets which up until this latest self inflicted move, rated the US securities as the most credit worthy?

    How do the Scandinavians get by without owning Ford expeditions?
    Jul 30 11:08 AM | 2 Likes Like |Link to Comment
  • Ahead of what is expected to be a weak GDP report tomorrow, U.K. Business Secretary Vince Cable ventures into monetary policy, calling for the BoE to consider additional QE. No reaction yet from the supposedly independent central bank.  [View news story]
    From the Guardian (this weekend):

    "Vince Cable has launched an extraordinary attack on "rightwing nutters" in America who are trying to block the raising of the US government's debt ceiling and who are, he said, a bigger threat to the world economy than problems in the eurozone."
    Jul 25 09:17 AM | Likes Like |Link to Comment
  • Nassim Taleb told us of the rare, unpredictable events that our minds are poorly equipped to deal with: "black swans." So what about the swans that are flashing neon because their imminent arrival is blindingly obvious? A debt-ceiling cataclysm looks more certain every day, and yet investors are closing their eyes.  [View news story]
    Tack,

    Actually the blue states own a piece of Utah because Utah has chronically been getting more back in federal dollars than it's citizens pay in federal taxes.
    Jul 24 04:08 PM | Likes Like |Link to Comment
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