Financial topics

[aedens]

Gallop is under DOJ scrutiny for theft of hours so never in our lifetime is there polls of any credit anymore.
Gallup effectively kept two sets of books on its federal business.

[OLD1953]

When I say the social contract is the same everywhere, what I mean is this, there's always some provision for the elderly and the incapable, there's always the need to educate children, and there's always the need for an orderly means of making sure this happens. Health care, a place to live and physical security are all part of this same social compact. The real shift has been shifting the bulk of this load from the church to the state. The difference to the economy is nil, the shift happened largely because the churches weren't able to demand attendance and tithes by law as formerly. This contract can be via mutual agreement, by law of church or by law of the land, it can be enforced by taking goods from the descendants of the person in question or the parents, it can be subsidized by government or church or not, but there is always such a provision in any lasting society.

The basis of all social contracts is economic, that's how humans primarily interact in any group larger than immediate family. The existence of gifts to associates does not negate this, an equivalent gesture of some sort in the future is assumed. The primary power of both church and state is the power to demand goods or equivalent and redistribute same. This is simply how we function.

The US is still conflicted about this because US history includes a long period of capital that could be taken by simply taking possession, adverse possession as far as the natives were concerned, but legal by US law. Free capital means you don't have to deal with a LOT of issues that you'd otherwise be dealing with, and this is our history. If 5 million acres of prime agricultural land in 400 acre lots were suddenly made available for filing costs, and no citizen could file more than once, we'd suddenly have a lot fewer problems. I suppose we'll eventually settle down to it, but the legacy of this period is still a strong influence on our thinking.

Here's a page with some information about a popular pollster:
http://electoral-vote.com/evp2012/Info/rasmussen.html

Bernake opened his mouth and the markets went up. He's still got the power, for a while anyhow.

[vincecate]

Doug Noland looks at how during war we went from "don't bomb civilians" to dropping Nukes on Japan in 6 years. There is a "do whatever it takes" attitude that keeps pushing the envelope on what is acceptable. He then looks at how this seems to be the attitude in monetary policy now. I think this is an interesting comparison. People are talking of bazookas and nuclear options for monetary policy. And I do expect things to blow up at some point.

http://www.safehaven.com/article/26655/ ... r-it-takes

[vincecate]

Mish now expects a "currency crisis".

http://globaleconomicanalysis.blogspot. ... ional.html

I have long expected one. Looks to me like the history of "fractional reserve banking" has a pattern of trouble that repeats over and over:

1) Banks take in demand deposits and loan most of them out long term like 10 or 20 years
2) At some point banks get into trouble because as there is always some amount of withdrawals from the demand deposit accounts that they can not handle. This is called a "Banking Crisis".
3) Government bails out the banks.
4) Government gets too much debt and gets into trouble = "sovereign debt crisis".
5) Central bank bails out the government = monetizing debt = printing money.
6) Currency Crisis

http://pair.offshore.ai/38yearcycle/#banksgobust

I think the type of currency crisis will be hyperinflation, which Mish is not yet saying.


PS I tried to post this to the gold thread but I could not after repeated attempts.

[John]

I'm glad you got something posted. You may have been hit by the
bizarre phpbb bub.

This has been going on for 2-3 years, through several new versions of
phpbb, including at least one major upgrade. If you're logged in, and
you try to post a message containing the word "e cho" (or e choing or
e choes -- all without the space) or the word "dys function" (or "dys
functional), then you can't even Preview the message, or submit it.
There may be other magic words as well. I have no explanation for
this.

If you try to preview a message and you get no response from phpbb,
all you can try to do is find the magic word that's causing the
problem, and either remove it, or put a space into the middle of it.

As I said, I have no explanation for any of this.

You say that you tried to post this message in the gold thread, and
now you're posting it here. If it's the exact same identical message,
then the bug is working differently for you than it does for me.
If you have some time, perhaps you could experiment with this problem
in both threads, and see if there's a magic word involved.

[vincecate]

I posted something else to this thread and was surprised that worked. Then tried to post what I had been trying to post to the gold thread with that note, then when that did not work I took out some parts of the post till it posted. Yes, "e cho" was part of what I removed. So what you are talking about does sound like it explains things. Thanks.

[jcsok]

I'm not finding very many polls along these lines. Gallup keeps asking the stupid question of whether Obama or Bush is more to blame for the bad economy, which isn't useful information as far as I'm concerned.

It seems that since polling is subjective in the framing of the question, it may be that the poll questions are controlled, and repeated and repeated, to keep attention focused away from the bankers. If something is said over and over, or questioned over and over, more people will assign blame to the options presented rather than thinking for themselves.

[Higgenbotham]

Doug Noland looks at...

Mish now expects a "currency crisis".

These 2 posts reminded me of something that might be telling.

In 2003 when the stock market was near its low, I did a study. I collected all the long term stock market forecasts I could find. I think I had 56 in all. All of those 56 forecasts turned out to be wrong except one. The one that was right was published years in advance and is still available pretty much as published. He was off by a year, having predicted a stock market rally that would last until 2006. But he was the only one who in 2003 was anywhere close. This is the site where his charts are found

http://www.cyclelt.com/predictions.html
http://www.cyclelt.com/LTR.htm

and here is his latest long term prediction

http://www.cyclelt.com/comment.html

"Long Term [01/30/2012: The market will head higher towards 2014 , move sideways [large swings] towards early 2017, where a major bear market towards the third quarter of 2021 is expected, followed by a multi year massive rally."

In 2009 when the stock market was near its low again, I kept this in mind. My bias was to think the majority would be correct this time around and the bubble had really burst for good. But I noted one analyst (also a cycle analyst) who thought differently at the time, and once again there is only one that I am aware of who got it right. Paraphrasing, he said the following near the 2009 low: "This is the end of the first part of the bear market. There will now be a 2-3 year long rally in between that will take most everybody by surprise. The longer it goes on, the more dangerous it will become as it convinces everyone the low is behind us. When virtually everyone is convinced, deflation will once again rear its ugly head and the stock market will crash to below its 2009 low." Near the 2011 low, he reiterated that the rally would continue and would continue to take everyone by surprise with the S&P 500 rallying back toward a minimum of 1300 in 2012. As of this month, he expects the deflationary forces to reassert very soon.

[vincecate]

In 2003 when the stock market was near its low, I did a study. I collected all the long term stock market forecasts I could find. I think I had 56 in all. All of those 56 forecasts turned out to be wrong except one.

I think currencies work different than stocks. If people think stocks are going up then they will be in the stock market. If everyone thinks that stocks will be going up then there is nobody else to buy and make prices go up, so they go down. So it makes some sense for the majority to be wrong and contrarians to win.

But the more people who expect the dollar to devalue the fewer will be holding them. The supply of dollars is always increasing so if there are fewer people holding them then percentage wise this is a bigger increase. If fewer people hold dollars then the value will go down faster. So it does not seem that contrarians have the advantage in predicting the future of fiat money.

[Higgenbotham]

I think currencies work different than stocks.

I think you're right that currencies work different than stocks at the point of failure, but only at that point. Until then, there's not much difference.

Only going by memory, the majority of analyst commentary in 2009 said that the Fed actions would cause something between a big inflation and hyperinflation by 2012, or the Fed actions would fail and there would be a disaster by 2012. Neither happened.

One reason there's not much difference, especially in the past 50 years or so, is people look at the 3 major asset classes as stocks, bonds, and cash or currency, and compare their relative values. Today I just read that the 10 year bond is yielding only 0.09% less than stocks, the lowest in 3 months, so investors should switch to the 10 year bond. This is the type of thinking that continues to prevail until just at the point of failure. The prediction of when the point of failure occurs should be like any other prediction in that the vast majority gets it wrong.

I think someone could also point out that the 2 people I cite who made good long term predictions were probably just lucky, and that most smart people don't make long term stock market forecasts because they know they can't. I would readily accept that as being valid. Though I don't think it's a waste of time to take a couple minutes to look at what they have.