Financial topics

[Higgenbotham]

December 17, 2011

Richard Russell talks about generational issues again this week. Hard rain coming.

http://kingworldnews.com/kingworldnews/ ... e_End.html

Richard Russell continues:

Nobody in America under the age of 70 has ever seen truly hard times. Most under 70 have never even heard stories from their parents about hard times (their parents had never experienced hard times). Ever since World War II Americans have sipped at a punch bowl that was a mixture of borrowing, greed, impatience, debt and inflation. I believe we are now on the path to once again see really hard times, times that force us to think about our current dire situation.

For years America was the shining beacon that allowed the world to see what freedom and free speech and wealth and democracy were all about. America was the dream-land, the ideal. In the years since WWII, that has changed. America is now seen as the meddling, fat, money hungry, war-loving immoral land where you can do what ever you want, and if you have a good lawyer you can get away with it.

Now turning to the stock market, which happens to be my special interest, I believe the stock market is on its way to teach us a hard but needed lesson. I believe that we're still in a great, mysterious bear market. My thought is that ever since May, 2011, we've been building a massive top. The top has been built while the Dow was fluctuating above 10,000. If, or when, the Dow breaks decisively below 10.000, the top will have been completed.

I grew up as part of what is now termed ‘the Greatest Generation.’ Most of us survived the Great Depression and World War II. Compared to today, those were moral times, a time of trial and great hardship.

As I write, I'm watching the quotes on my computer. The Dow two hours after the opening is up one point. The talkers on Bloomberg are discussing stocks to buy. They are unswerving bullish. It never occurs to them that hard times lie ahead and that this is not the time to buy stocks...

My advice -- sell any stocks you still own -- sell into all rallies, or stay out of stocks completely.

[aedens]

Hard rain coming.
Yes alot of us would agree here. We would be in remiss if we do not remember what we are dealing with
as in aged parents to care for in severe decline, sacrfices self imposed by duty to one family and nation.
People who could not survive 72 hours in the real world of nature since many regard it as a nusance.
Meanwhile, we provide the most advanced products the planet has ever seen by people who also construct a
narrow view on human purpose of there bent of mind to imposed cultural purpose.
What I basically mean is the slow and steady progress in spite of central planning thinking they
can spend a few years reading and never living or understanding how the independant mind truly
aspires to solve pressing issues of the day to serve a customer since they are to busy spending
time wasting capital. What you get is department survey that convey we are from the government
and we are here to help. I do not have a dim view of the future but the actual thought of there
wisdom does dim the landscape. We read how the currency swaps in the zones are internal audits to affairs
of commerce which must ensue for obligations. As for a percentage of of younger adults I contact they are conveying
a lost generation since the reality was ignored to there expense and they are correct in direct context
to pending issues they cannot solve since events, they realise are the disconnect that will not cease.
They are motivated to the extent to ignore at all costs the desease was never in doubt given to them
by design. Koo may be brillaint in His own discernment from the top down but the buttum up from what I have gathered
has another term for the thoughts from above. Insane.
They are educated, determined, and the State has destoyed there reality. Get out there way.

http://rwer.wordpress.com/2011/12/12/rw ... chard-koo/

[jdcpapa]

Great Koo article brother Aedens. I like this quote:

real-world economics review, issue no. 58
The world in balance sheet recession:
causes, cure, and politics
Richard C. Koo (Nomura Research Institute, Tokyo)
Copyright: Richard C. Koo, 2011

"There will be plenty of time to pay down the accumulated public debt because the next balance sheet recession of this magnitude is likely to be generations away, given that those who learned a bitter lesson in the present episode will not make the same mistake again. The next bubble and balance sheet recession of this magnitude will happen only after we are no longer here to remember them."

[Higgenbotham]

Koo may be brillaint in His own discernment from the top down but the buttum up from what I have gathered has another term for the thoughts from above. Insane. They are educated, determined, and the State has destoyed there reality. Get out there way.

http://rwer.wordpress.com/2011/12/12/rw ... chard-koo/

Great Koo article brother Aedens. I like this quote:

real-world economics review, issue no. 58
The world in balance sheet recession:
causes, cure, and politics
Richard C. Koo (Nomura Research Institute, Tokyo)
Copyright: Richard C. Koo, 2011

"There will be plenty of time to pay down the accumulated public debt because the next balance sheet recession of this magnitude is likely to be generations away, given that those who learned a bitter lesson in the present episode will not make the same mistake again. The next bubble and balance sheet recession of this magnitude will happen only after we are no longer here to remember them."

Koo seems to think the same source of funds that magically pays his salary will magically pay off all this debt. Um, what he doesn't seem to understand is his salary is being paid by the rapidly accumulating debt. On the micro scale, Koo and the other nonproductive like him, are the entrepreneur's parasite.

Which brings me to another point that has been observed, but not articulated fully. Somebody popped up on the forum a few months back and indirectly asked Vince and me why we don't do something productive with our time and energy, then he said, carry on, and disappeared. Others have said they will never stop being productive.

It's a moral dilemma. Do you feed the parasites and allow them to continue their behavior, or do you chop them off by sucking the blood out of them that they have in turn sucked out of the entrepreneurs? Ideally, any individual would want to do both, but it's not possible. However, if a group of individuals can work together to do that collectively, the group effort constitutes the system boundary. It is a war and right now the productive are losing. This is my answer to the poster who popped up and disappeared. Without saying so directly, I believe Aedens understands this concept. Google [Bot] will be stopping by soon to read this.

PS I see Google[Bot] has now joined the session. It only took about 10 seconds.

[jdcpapa]

Koo may be brillaint in His own discernment from the top down but the buttum up from what I have gathered has another term for the thoughts from above. Insane. They are educated, determined, and the State has destoyed there reality. Get out there way.

http://rwer.wordpress.com/2011/12/12/rw ... chard-koo/

Great Koo article brother Aedens. I like this quote:

real-world economics review, issue no. 58
The world in balance sheet recession:
causes, cure, and politics
Richard C. Koo (Nomura Research Institute, Tokyo)
Copyright: Richard C. Koo, 2011

"There will be plenty of time to pay down the accumulated public debt because the next balance sheet recession of this magnitude is likely to be generations away, given that those who learned a bitter lesson in the present episode will not make the same mistake again. The next bubble and balance sheet recession of this magnitude will happen only after we are no longer here to remember them."

Koo seems to think the same source of funds that magically pays his salary will magically pay off all this debt. Um, what he doesn't seem to understand is his salary is being paid by the rapidly accumulating debt. On the micro scale, Koo and the other nonproductive like him, are the entrepreneur's parasite.

Which brings me to another point that has been observed, but not articulated fully. Somebody popped up on the forum a few months back and indirectly asked Vince and me why we don't do something productive with our time and energy, then he said, carry on, and disappeared. Others have said they will never stop being productive.

It's a moral dilemma. Do you feed the parasites and allow them to continue their behavior, or do you chop them off by sucking the blood out of them that they have in turn sucked out of the entrepreneurs? Ideally, any individual would want to do both, but it's not possible. However, if a group of individuals can work together to do that collectively, the group effort constitutes the system boundary. It is a war and right now the productive are losing. This is my answer to the poster who popped up and disappeared. Without saying so directly, I believe Aedens understands this concept. Google [Bot] will be stopping by soon to read this.

PS I see Google[Bot] has now joined the session. It only took about 10 seconds.

Good afternoon Higgy,

I view, Koo’s article as an interesting interpretation of the comparative fiscal experiences from different generations and cultures. I cannot speak to the accuracy of his work product, however. I do not follow his work.

The issue of productivity is a matter of priority. I recall a poster that came and went too and made the comment that some of us including myself needed to “get a life.” I appreciate all the valuable information and interaction on this site, preferring to have rounded edges whenever possible.

What I do consider to be relevant and undeniable is the fact that we are going through a period of de-leveraging. What that means to me is that in the broadest sense the debt will be eliminated whether it be by paying it down, forgiveness, default or any other “magically” contrived way. PS: google bot was instant

Regards,

John

[Higgenbotham]

What that means to me is that in the broadest sense the debt will be eliminated whether it be by paying it down, forgiveness, default or any other “magically” contrived way.

That I would agree with. Koo's statement that "There will be plenty of time to pay down the accumulated public debt" reads to me like a statement of belief that millions of new entrepreneuers will appear out of thin air to support his theory if we could only believe hard enough that he is right, regardless of obvious things like population declines in Japan and so on. A recent interview with Kyle Bass that's posted on financialsense.com gives the realistic no nonsense view.

http://www.financialsense.com/contribut ... -the-world

[jdcpapa]

My intention was to capture John's generational comments regarding the depression era generation in the quote as follows:

".............the next balance sheet recession of this magnitude is likely to be generations away, given that those who learned a bitter lesson in the present episode will not make the same mistake again. The next bubble and balance sheet recession of this magnitude will happen only after we are no longer here to remember them." Hence: the Greatest and Silent Generations. History repeats itself.

In summary, Koo makes a point of noting how long it took to de-leverage post depression and with Japan's own winding down. In each instance it took around 20 years to complete. In that sense, we have around a 20 year window to look forward to. In other words " plenty of time".

[vincecate]

What I do consider to be relevant and undeniable is the fact that we are going through a period of de-leveraging. What that means to me is that in the broadest sense the debt will be eliminated whether it be by paying it down, forgiveness, default or any other “magically” contrived way.

Most governments don't seem to pay off debts in the normal way. They magically make new money out of thin air and pay off their debts with that. I am not aware of any in the last 50 years that have used budget surplus tax dollars over a long term to pay down their debt. However, I would not call printing money de-leveraging.

[jdcpapa]

What I do consider to be relevant and undeniable is the fact that we are going through a period of de-leveraging. What that means to me is that in the broadest sense the debt will be eliminated whether it be by paying it down, forgiveness, default or any other “magically” contrived way.

Most governments don't seem to pay off debts in the normal way. They magically make new money out of thin air and pay off their debts with that. I am not aware of any in the last 50 years that have used budget surplus tax dollars over a long term to pay down their debt. However, I would not call printing money de-leveraging.

Good evening Vince,

Old had a good explanation of debt based banking and contraction, etc. in a post in response to your view of printing money. Koo contrasts the pubic and private reaction to the present crisis. He uses the analogy of the brake pedal and the gas pedal and backs it up with his analytical work product. The public (goverment) sector is pressing the gas(and arguably printing money) while the private sector is putting on the brakes and de-leveraging. I am not looking at it from a one dimensional stand point. I would not call printing money de-leveraging either. Objectively and professionally speaking, I call the contraction of debt by whatever means de-leveraging.

Regards,

John

[aedens]

Vin, later, not now for hyper. The current path is swaps to stablize IMF and SDR obligations.
I truly feel the path forawrd will be as we noted parity that was provided in the forums no nominal terms of
current currency deflatiinary trends. The path forward to consider is not how but when nominal gross
domestic product numbers we have followed pan out to date. Koo work provided bears the lessons
and was lucid of the considerations going forward and he did mention demographics we
trend also to genearational dynamics which are fluid in nature but it will run its course.
What I widh to clearly observe if policy which inflates by design which has run its course.
We have good dialog on how consumers have been unbraided by trends to afforded
goods and servives many cannot afford guised by deleverging rhetorin in nature.
The tale of caution has in my opnion only been conveyed as regulation Q on money sweeps
to avert lock up on payments and regulation T which curtails margin cost on
commodity pricing. I assume also on my part the cautionary tale is the FED
is acutley aware to this premise. Linked was also the current mindset to non proforming
assets from the CCC acount that has and is being currently discerned in the market operation
to morgage backed security's with a premium. Futher back we noted lockup fees were
remanded to dark pool participants who to be polite could not see the trees from the forrest
and were as noted pay the lockup fee which we actively captured here to the latter observation
of regulation q being amended which we noted as M2 activity. Also noted was others observation
such as Chris Martenson mention to the effect which confirmed out forums ad hoc discerment.
Also we caught the article from the washington post the unwinding to tear ups to some international
acounts which I feel was derived when the PM from Austrailia has the conversation with washington
to settle the landscape to effects we have noted here. I will not dilute your observation to hyperinflation
and I for one cannnot see it. Jim Rickards also has some very good input to latency of effect of
policy shapers who from latency of effect are indeed concerned namely about there job but the overall
disposition of affairs. Just a few quick notes...

http://oversight.house.gov/images/stori ... timony.pdf