Financial topics

[Trevor]

if that comment about "The Center Cannot Hold" is referring to the poem I think it is, I think it's correct. The center cannot hold and is currently falling apart as we speak. We either don't fully realize this yet and the analysts are either lying or deluding themselves. After all, they can't very well say we're headed to disaster if their job is to promote investment in the business they work for.

One thing I think will end up making a difference is that this bubble has lasted longer than the 1920's one. That one lasted about 6 years before it started deflating; ours lasted even longer and is still holding steady, although I sometimes wonder why that is.

[OLD1953]

We had an out of cycle original infrastructure build that has cushioned a lot of shocks by forcing faster movement towards greater efficiency earlier in the cycle than would otherwise have occurred. That infrastructure was the build up of the Internet. Normally, infrastructure builds are started earlier in the cycle. Young Nomads have little interest in infrastructure, and old Prophets don't see the point. And there were a LOT of just ridiculous things going on, such as Bill Gates blowing off the Internet as a fad, the notion that PC's would never need a meg of ram, AT&T simply walking away from the opportunity to make 100 billion dollars, and so forth. It was a very strange and organic infrastructure growth, that I doubt will ever happen again.

That said, I don't think the center will hold past the coming defaults by various countries. If it does, there will be a very orderly wave of cutbacks, layoffs and mergers, with corrosponding drop offs in wages every time a job title changes. The upper end already got theirs:

http://www.nytimes.com/2012/01/21/busin ... .html?_r=1

CEO's will be next.

But that will trickle down MUCH faster than big pay raises, and it will trickle all the way down.

I absolutely would not take any bets against the minimum wage being lowered in 2013 - 2014 time frame. I think it's at least a 50/50 chance.

[aedens]

The cards were stacked against the taxpayer and as we reported and we see who paid for that.

"They wanted to make sure that everyone understood their intent. So they also added language that amended the Securities and Exchange Acts of 1933 and 1934 to make sure that the definition of a “security” didn' t include “credit default swaps” or certain other swap agreements as derivitives, and they forbid the SEC from any such regulation."

Call options back in 1973, the general public is able to trade call options under the performance guarantee of the OCC and the liquidity provided by the market maker system. This structure continues to be used today. By 1977, put options were introduced by the CBOE, creating the options trading market that we know today. Since then, more and more exchanges were set up for options trading and better computational models for the pricing of options were introduced.

We covered that which is the Black Scholes Model and others to important concepts of so called modern financial theory. It was developed in 1973 by Fisher Black, Robert Merton and Myron Scholes and is still widely used today and even before that, and it was regarded as one of the best ways of determining fair prices of options which is past false. They even admitted it was mistake, and yes we seen who paid for that again. Many of the papers are linked here to the effects still resonating in the market on the forums as others. These lockups from the TBTF are utter bullshit caused from the hubris we all know about and there are no financial Luddites here either at GD. What chaps us is as a taxpayer the fatal deciet we all know of as construct from Hayek and others who pointed out to the roles the Libertarians and Austrian camp wrongfully scorned for from the Statist contempt. This is another round on a topic older than the current reality spewed Ad Hominem to so called free market proponents today. No, the public knows how and who, so game theory apply's. No move is the correct one. Meanwhile we trend the financial repression reality imposed on vunerable savers and the theft tax of inflationary scope. It is not inflamatory rherotic but failure top to bottum of a process of intent. No thinking measure of society denies prudent defence forces and a Sheriff who executes his duty to the means of public nature of proper supports. If you look at the nature of candidates today it is appalling.

[Carl Lieberman]

Old said "Unless there is another major round of stimulus, which is very unlikely IMHO, then we are not going to see consumption of metals undergo much change upwards"

Why is it unlikely? The Fed has committed to whatever is necessary to keep the system afloat. When Europe collapses, it will surely make the Dollar stronger. The Fed will intervene to weaken the Dollar. There will be many more iterations of "Quantitative Easing" in our future.

I'm curious as to how those of us on the GD list are understanding the Presidential election. I look at the Republican candidates relative positioning as a proxy for the timing of the generational collapse. Both Obama and Romney represent the status quo and as such their pairing in the election makes me think that the crisis is not yet imminent. Gingrich on the other hand, represents the crash happening during this coming year. His religiosity and apocalyptic bent are congruent with a generational collapse. Any thoughts on how the election pre-figures the generational collapse?

[Higgenbotham]

I'm curious as to how those of us on the GD list are understanding the Presidential election. I look at the Republican candidates relative positioning as a proxy for the timing of the generational collapse. Both Obama and Romney represent the status quo and as such their pairing in the election makes me think that the crisis is not yet imminent. Gingrich on the other hand, represents the crash happening during this coming year. His religiosity and apocalyptic bent are congruent with a generational collapse. Any thoughts on how the election pre-figures the generational collapse?

Carl, I'm very curious as to what others are seeing today too. Thanks for bringing this up.

Some of my thoughts this morning are that I see Gingrich or Ron Paul as potential Grey Champions, but not the others. So if we need a Grey Champion now, then Gingrich should surge in South Carolina and win, then go on to win the nomination. Or the alternative might be that Ron Paul overtakes Gingrich later and goes on to win the nomination.

Another thought that I had is two years ago a fellow named Brown won an election in Massachusetts. This election occurred on January 19, 2010 and by now everyone has forgotten about it. As I recall, there was a surge of optimism the day of that election because supposedly it meant that the election of Brown was an indication that the voters were turning away from "tax and spend".

Some of us may know that Gingrich has stated he will fire Ben Bernanke the first day he sets foot in office. That loops back to your first paragraph and what OLD said. Here is my thinking on that. Let's say Gingrich wins today. What would the Fed do come next week? I believe I "know" that Bernanke is a political animal with an agenda, though he makes every attempt to hide it. Does Bernanke like a drunken gambler triple up on QE in order to stimulate the economy, counter the Gingrich threat, and get Obama reelected? Or does he chicken out and do the safe thing, fearing a Gingrich victory in 2012? For one thing, we know that Gingrich really can't fire Bernanke outright and maybe Bernanke will take the gamble that if he has been a "good little boy" Gingrich will lay off of him and let him finish his term without issue.

[John]

Another thought that I had is two years ago a fellow named Brown won an election in Massachusetts. This election occurred on January 19, 2010 and by now everyone has forgotten about it. As I recall, there was a surge of optimism the day of that election because supposedly it meant that the election of Brown was an indication that the voters were turning away from "tax and spend".

Maybe it's been forgotten elsewhere, but it hasn't been forgotten here in Massachusetts, nor
by Democratic party activists across the country, particularly the super-corrupt Emily's List.
All of them are pouring tons of money into Massachusetts so that ultra-feminist
Elizabeth Warren will beat Scott Brown in November. This is going to be a very nasty campaign,
but it should be good for the Massachusetts economy until November.



http://www.theatlantic.com/politics/arc ... up/251693/

John

[John]

I'm not sure what this says, but look at those pictures. Warren
is always portraying herself in her ads as the little old Boomer
lady, while Brown portrays himself as the young, virile Gen-Xer.
Maybe the Boomers have more clout in Massachusetts than I
realized.

John

[Higgenbotham]

The late surge by Mr. Brown appeared to catch Democrats by surprise, causing them to scramble in the last week and a half of the campaign and hastily schedule an appearance by Mr. Obama with Ms. Coakley on Sunday afternoon.

“Understand what’s at stake here, Massachusetts,” Mr. Obama said in his speech that day, repeatedly invoking Mr. Kennedy’s legacy. “It’s whether we’re going forwards or backwards.” He all but pleaded with voters to support Ms. Coakley, to preserve his agenda.

As voters went to the polls, Robert Gibbs, the White House press secretary, made it clear that the president was “not pleased” with the situation Ms. Coakley found herself in. “He was both surprised and frustrated,” Mr. Gibbs said.

Although the race has riveted the nation largely because it was seen as contributing to the success or defeat of the health care bill, the potency of the issue for voters here was difficult to gauge. That is because Massachusetts already has near-universal health coverage, thanks to a law passed when Mitt Romney, a Republican, was governor.

http://www.nytimes.com/2010/01/20/us/po ... ction.html

This was exactly 2 years ago, and look what has happened since: Health care has been passed even though the one state that had universal health care gave a clear mandate against its passage, and now the former governor of Massachusetts who was responsible for its passage is the leading Republican contender.

Let's see if Gingrich surges and overtakes Romney as Brown overtook Coakley in a late surge exactly two years ago. I agree with Carl - that's a key element as to whether GD timelines will be met.

[John]

Maybe the reason that Warren portrays herself as a little
old lady is to remind everyone how much she needs
health care.

John

[Trevor]

I'm sure the sympathy factor is definitely hoped for. I still find it amazing a Republican was able to win in Massachusetts at all.

In addition, I don't think we're going to be able to bail everyone out again. There was an enormous amount of anger when it was done the first time around; imagine the outcry if there's another wave of bailouts.