Financial topics

[Trevor]

The latest news on the economic front is that Moody's has launched another wave of downgrades on the European economies. It seems my prediction for 2012 is already beginning to come true.

http://www.bloomberg.com/news/2012-02-1 ... ative.html

A wave of downgrades by all three major ratings agencies over a time period of less than two months? That's definitely an ominous sign and signals that all their efforts to solve this crisis have been ineffective. We'll see what effect it has on bond prices.

[OLD1953]

Thanks for the information Higgs, I've found so many manipulated statistics over the last couple of decades that I hesitate to take anything at face value now, especially if it deals with markets.

Savings are in that manipulated class, if comparing countries.

http://www.oecd.org/document/34/0,3746, ... .html#t_24

Note the part that singles out the US and Canada.

The assumption that prices will go up in includes the velocity of money going up. I'm not seeing what will cause it to go up. There are so many millions of people now dependant on government money to stay in the middle class, and the government is under a great deal of pressure to cut those payments (often from the people getting them) that we are highly likely to see middle class spending just stop. There is a lot of replacement possible too, not just LNG for gasoline but soy for meat and cheap beer for whiskey. It's going to be very chaotic.

Now all the chatter is about Obama's proposed budget. Any bookie would say this: odds of Obama getting the budget he proposed - zero - odds of a budget being passed this year - zero - odds of anything being done to control spending before the December session - zero - odds of a real statesman coming forth and speaking the truth to America - zero - odds of any organized group making the lack of budgets a major election issue - 1/10 - odds of program reductions in December - 2/1 - odds of coming pain for the middle class - 1/1.

Our politics have degenerated into shouting matches over philosophy, and that's no way to run a country. This is our number one problem in everything, leadership that can't get past philosophy to do anything. A good example is schools, yes, the US probably spends enough per pupil ON AVERAGE, but the system of distributing funds is horrible in many states. This results in schools with a ton of money being sited not ten miles from schools that depend on federal funds to survive, because the primary funding is property tax based. There are states that have modified this, usually on court order (Kentucky, for example, and their student graduation rates shot up rapidly immediately after) but many haven't. And when any attempt to fix anything is made, it is deemed a failure if it doesn't try to fix everything all at once, it's stealing from whoever and communistic or socialistic or union busting, depending on whatever they've tried to do. It's worse than inmates in charge of the asylum, it's more like animals in charge of the Zoo. It is impossible to fix anything bigger than a wristwatch without offending someone, and since we no longer compromise, we just freeze in place and wait for things to quit working entirely.

Sorry for the polemic this morning but I'm feeling frustrated. I just read two intelligent pieces on our budget problems, one from the NY Times and one from the old CSM. I'm not surprised to find out that now nearly 2/3 of "safety net" payments are going to the middle class for such things as unearned tax credits and free school lunches, etc, I already know figures were close to that. I'm also not surprised to find out that their polls show 70% support tax increases, over 50% support budget cuts and 44% say to do both at once. There's obviously support for doing the right thing, but we can't elect anyone who will, because they fear backlash.

I think we will see things change this year, but I'm not saying we'll see actual painful bills passed before the election. And I really doubt we'll see an actual budget. I'm not happy about any of this.

[RDRUNR]

This is the velocity of money, split out for M1 and M2:

I like Hussman's article explaining how interest rates impact velocity of money:

Show some respect to John.

I for one agree 100% with John, that guy is mega smart. I'll go with John's deflation. There will be no hyperinflation Vincecate at all so you better sell your gold and silver now, or hold it and I'll buy it for $4oz for silver and $250oz for your gold.

[aedens]

I think we will see things change this year, but I'm not saying we'll see actual painful bills passed before the election.

Morton's Fork forward.

No change will ensue my friend since its 1/10 years view on the hill to assert stability they convey.
What will change is to be soon since credit and equity have disconnected. Hedge accordingly.
Local taxes are up 9.73 percent of base, and Home value SEV is down 22 percent from Assessor's Office I recieved.
The reality is the math, not the statistics. I think we had this discussion back some time ago that the
net effect will be local. I asked some Elders and did some research on who took over, the Banks or
Assessor's. The answer was the State not the Banks in observation from that period. The shift is on
in Michigan and local sample conveys the other side of Inflation from unbalances ongoing.
The CPI is meaningless to me and has been. What we do know and have already conveyed
in the forums is what you have will be worth less, and what you need forward will cost more.
It does not fix the $6 million structural deficit in the city.
A “rainy day” fund and an emergency capital account beginning in 2006 that helped weather this storm
has been depleted. They did not listen to what we seen coming.
The liberal bent of mind continues so it will not change. From there report. They are still disconnected from reality.
Conservative estimates had predicted gains of 1.5 percent to 2.5 percent in property tax collections from 2012 to 2016.
We are not at the bottum of the crack up boom.
Over in Euroland
http://www.youtube.com/v/pry5iL4TIa8?
http://www.youtube.com/watch?v=iFyLMs-K ... re=related Look out the window not at the barometer.

[vincecate]

This is the velocity of money, split out for M1 and M2:

I like Hussman's article explaining how interest rates impact velocity of money:

Show some respect to John.

I meant no disrespect. I think Hussman really has something very interesting about the velocity of money. To me it seems very relevant to what John posted about. If I did not respect John I would not be reading his blog every day.

I think it is possible to have a reasonable discussion between people who disagree on some points. I don't think it is good for anyone to follow someone without questioning them on anything. In any case, that is not my way since I was a young lad.

I agree with John on most things. I hope disagreeing with him on deflation/hyperinflation is not grounds for excammunication.

[John]

> Over in Euroland
> http://www.youtube.com/v/pry5iL4TIa8

This speech is from September 14, 2011, and is worthwhile listening to
if you have a few minutes:



http://www.youtube.com/watch?v=pry5iL4TIa8


Uploaded by europarl on Sep 14, 2011

http://www.ukipmeps.org

• European Parliament, Strasbourg - 14 September 2011

• Speaker: Nigel Farage MEP, UKIP, Co-President of the EFD Group in
the European Parliament (Europe of Freedom and Democracy)

• Debate: European Council and Commission statements - Economic crisis
and the euro (in the presence of President Barroso)

- 'Blue Card' question by Phillippe Lamberts (Belgoium) - Greens

• Speech Transcript:

I noticed during your speech Mr Barroso there was an all pervading
sense of gloom. I saw for the first time, even your supporters shaking
their heads, they don't believe it what you are saying, the European
people don't believe in what you are saying, and I don't really think
even you now believe in what you are saying.

We all know that Greece is going to default; the end game for Greece
is near. And you can't say you were not warned. You were told that
Treaties were fatally flawed, you were all told that Greece should
never have joined the Euro and when I stood up here and talked about
Greek bond spreads you treated me with such utter derision it was as
if I had just been let out of the local lunatic asylum. No, you have
been warned all the way through.

So now what you have got is Economic Governance and everybody here on
the front row supports more European Economic Governance. What is
European Economic Governance? I'll tell you what it is.

It is a plane landing at Athens airport out of which get an official
from the Commission, an official from the ECB and an official from the
appalling IMF. Those three people, the Troika you call them, go in
meet the Greek Government and tell the Greek Government what they may
of may not do. You have killed Democracy in Greece. You have three
part-time overseas dictators now telling the Greek people what they
can and cannot do. It is totally unacceptable.

It is any wonder that the Greek people are burning EU flags and
drawing swastikas on them. Unless Greece is allowed to get out of this
economic and political prison, you may well spark a revolution in that
country.

I suppose there is some good news at least, and that is that people in
Germany, right up to the President are waking up realise that this
process represents the death of democracy. None of this can work and
the German people will simply refuse in the end to pay the bill. The
one achievement is that you have split Europe between North and South,
the Greeks now badmouth the Germans, the Germans now badmouth the
Greeks.

I have one last plea Mr Barroso, will you please help Greece. Help her
to get her currency back, help her to reschedule her debts, help her
to get out of the mess you have put her into. You policies have
failed, stand up, be a man, admit it.

[John]

That was an interesting post on John Morton and Henry VII. I always try
to read your posts quickly, before they disappear ....

[aedens]

That was an interesting post on John Morton and Henry VII. I always try
to read your posts quickly, before they disappear ....

I was going to edit it more clearly since it was incomplete.
A few key themes needed more time.

[Trevor]

With the deflation-hyperinflation debate, I lean more towards the former, but the argument will be settled soon enough, unfortunately. Greece is done for and should never have been allowed into the eurozone. They lied and said they were in far better financial shape than they actually were and their neighbors didn't bother to look and see if they were telling the truth.

[Trevor]

In addition, I've noticed a certain pattern whenever there is an economic bubble. When a country is in the middle of one, most are overjoyed but a few are warning that this can't last forever. Those individuals are blown off as doomsayers and delusional. If they happen to mention a previous economic bubble, the response resembles: "That was back then; things are different this time because..."

When it begins to deflate, most say that there's nothing to worry about, promising that the worst is over and that they will soon be roaring back to recovery. The people who were warning before get slightly more attention, but are generally still ignored.

After everything has gone to hell, those very same people state that "I knew it all along; I tried to warn people." even though in most cases it's BS.