Financial topics

[jwfid]

While I'm here. I have a 401k with rather limited investment choices. I can choose between some bond and stock funds that I think are very vulnerable. Right now I have my funds in this 401k invested in a money market fund that I believe has exposure to what Higginbotham refers to as poor dollars or CDS's (I forget the term he actually used, sorry). I've tried to find out if I can take a distribution, but my company doesn't allow this unless there are certain extenuating circumstances or I leave the company. I'm at a loss. Any suggestions?

Also, what do some of you think about a short term treasury ETF (BIL)? I have move some of my IRA money into this. It seems about as safe as a treasury MMF to me, but I'm definitely out of my league here.

Thanks,

Joe

[aedens]

Higgy, China has organic growth room and I read there target is 8% GNP target this year.
As posited earlier in an GD article I forwarded about green Shoots was there raw material
input segment in Commodity Chemical's and who it was also.

by aedens » Wed Apr 08, 2009 1:51 am
China:
Larry Kantor, global head of research at Barclays Capital, also said in the bank's global outlook
report that the "green shoots" of recovery have arrived. He said there were signs of a turnaround
in parts of Asia and a bottoming out in the US economy.
Many missed this article true context of intent then.
I would factor first there actual commodity flow data in context to renewal measures when they
restock raws. There back to previous number but not outward, but infrastructure expansions with
room to expand as they progress.
What I would convey is they did over build some commercial property and just auctioned some.
Now our condition https://www.realpoint.com/RPLogin.aspx <------------- Many older post on GD include CRE monitoring
VERY closely.
China can reign in some rope. Given our numbers on CRE implosions it is night and day contrast to theres.
Also we know Citi today in lending just like when Japan bought what building in there lost decade? Soon critical mass
is coming and I stated watch secondary markets also to include what you seen on outlet services was my broader meaning.
Watch commodity credit close here since we know where consumers is also. Focus on interenal's for a few quarters
for latency curves on supply. LEAN models account for ~20% forward supply stocking.
Higgy nailed it here tho "So here's one main point and I can't stress this enough. These junk dollars were not created by the US government or the Federal Reserve. They were in fact created by private banks."
CRE is the SCDS and CDS waterloo as forwarded a contractual passing of legal title sliced and diced how many times. Been there done that now it is just called CDS et. al. messy

[Higgenbotham]

Higgy, China has organic grouwth room and I read there target is 8% GNP target this year.
As posited earlier in an GD article I forwarded about green Shoots was there raw material
input segment in Commodity Chemical's and who it was also.

Under the current realities, the Chinese can buy material and they have a sufficient untapped labor pool to continue growing. That's 2 out of the 3 necessary ingredients for growth. The third would be a functioning global monetary system. The problem is what happens outside of China. The Chinese were in Washington yesterday smiling and talking about cooperation. They want Bernanke and Geithner to stop acting stupid but it's too late. The immediate trouble I see is the potential lockup of the payments system given the severity of the deflationary jolt that I expect to be forthcoming. I don't think any entity can prosper under those conditions if tied into the global system, whether it be an individual, a municipality, a state, or a country. We hear talk today about how such and such a place is prospering or immune to what has happened. Last week I was talking to a woman from Michigan who was just transferred down here to Texas. She said people down here just don't get what this Depression is all about. I said they won't until it hits them.

PS Those retail muffler and car repair shops I heard about are in areas of the midwest where the economy has been hit hardest.

[xakzen]

I suppose it could turn around and go down today in China, but it's making new highs at the moment.

Sornette had July 17-27 for the top of the bubble and I have July 29 (in the US) if it follows the Tulip Mania.

I'm guessing that Sornette may be giving a 2 standard deviation time window or something like that.

From the short paper: "The darker shaded box with diagonal hatching indicates the 20%/80% quantiles
of the projected crash dates, July 17-27, 2009. The lighter shaded box with horizontal hatching indicates the range of all 10
projected crash dates, July 10 - August 10, 2009."

So it sounds like they are projecting a slightly less likelihood of the crash happening as late as 10 Aug 09. Personally I don't give these types of modeling much credence especially when global warming models are listed as prior work. Even if a mathematical model could be developed to exactly predict market behavior using only preceding data, the perfect markets theorem states that it would be in the knowledge domain of some market participants and therefore be factored into the market behavior going forward; thereby making it useless for future predictions.

[Higgenbotham]

Personally I don't give these types of modeling much credence especially when global warming models are listed as prior work. Even if a mathematical model could be developed to exactly predict market behavior using only preceding data, the perfect markets theorem states that it would be in the knowledge domain of some market participants and therefore be factored into the market behavior going forward; thereby making it useless for future predictions.

I tend to look at how the participants react to information. It can be in the knowledge domain more or less, taken into account more or less. It seems to me like this was in the knowledge domain more and taken into account less. We can all remember how Kaufman moved markets in the 1980's. His utterances were taken seriously. Some participants would "know" that past history indicates that crashes are one time events and do not happen back to back. My interpretation is that participants believe that "the crash" has already happened and "know" Sornette is wrong. The evidence is that Shanghai moved higher more or less continuously through the whole time window.

I should add that the "perfect markets theorem" to my understanding assumes that the markets are rational. I think that is also a case of more or less. In today's environment, it appears that emotion has reached an extreme and participants have been less capable of rational thought in the past few years than at any time within the experience of anyone living today (and maybe for several centuries). What participants have tended to do is shrug off information and buy or sell based more on emotion. The reasons for buying seem to boil down to "because it's going up" and vice-versa for selling.

[aedens]

Higgy, China has organic grouwth room and I read there target is 8% GNP target this year.
As posited earlier in an GD article I forwarded about green Shoots was there raw material
input segment in Commodity Chemical's and who it was also.

Under the current realities, the Chinese can buy material and they have a sufficient untapped labor pool to continue growing. That's 2 out of the 3 necessary ingredients for growth. The third would be a functioning global monetary system. The problem is what happens outside of China. The Chinese were in Washington yesterday smiling and talking about cooperation. They want Bernanke and Geithner to stop acting stupid but it's too late. The immediate trouble I see is the potential lockup of the payments system given the severity of the deflationary jolt that I expect to be forthcoming. I don't think any entity can prosper under those conditions if tied into the global system, whether it be an individual, a municipality, a state, or a country. We hear talk today about how such and such a place is prospering or immune to what has happened. Last week I was talking to a woman from Michigan who was just transferred down here to Texas. She said people down here just don't get what this Depression is all about. I said they won't until it hits them.

PS Those retail muffler and car repair shops I heard about are in areas of the midwest where the economy has been hit hardest.

http://www.bloomberg.com/apps/news?pid= ... ElWAbjxwHw

Here is what we know: exports constitute about 35% of the Chinese economy and they dropped over 20% in June, while the Chinese economy (Gross Domestic Product) grew 8%. So the “X” is the growth rate of 65% of Chinese non-export economy.

0.35 x (-20%) + 0.65 x (X%) = 8%. If you were to solve for X, you get 23%.

http://contrarianedge.com/2009/07/25/th ... #more-1156 MV

Identifying such bubbles is a lot easier than timing their collapse. But as we’ve recently learned, you can defy the laws of financial gravity for only so long.

Total chaos higgy http://www.oag.state.ny.us/media_center ... 3a_09.html
The Hill need's to crack the whip to order. I have been warned that justice does not meet the legal system before so i am not
surprised or amused any more.

[Higgenbotham]

http://contrarianedge.com/2009/07/25/th ... #more-1156 MV

Identifying such bubbles is a lot easier than timing their collapse. But as we’ve recently learned, you can defy the laws of financial gravity for only so long.

And the U.S. government isn’t helping: It’s printing money and issuing Treasuries at a fast clip, and needs somebody to keep buying them. If China reduces or halts its buying, the United States may be looking at high interest rates.

I think this is about where we are and what is being discussed in Washington this week. The Chinese are probably going to halt their buying. Fact is, the US consumer isn't paying down much debt and hasn't paid down enough to jumpstart a recovery. So the US consumer isn't yet in a position to take over buying treasuries. The US government is going to have to cut back. In other words, no more bailouts. Or as you've been quoting, the market is going to figure out that the Fed can't guarantee any of this mess. This and a lot of other things indicate the US stock market should take an elevator ride down to about Dow 4000.

On timing. I never recommend that anybody else do it. I make my living this way, but it's not easy. I take my best shot. I was short at the 2007 high but started 2 1/2 months early. I'm short the S&P futures (US market). My guess is that the US market will turn down before China does. In fact, the US futures made their high for the year almost 2 days ago (around midnight Sunday) but they are not down by much. The bears are on the run and they are scared while the bulls are going nuts. That's what we need to see. But it doesn't mean I'll be right. This could be a long bumpy ride to the top.

[John]

> So it sounds like they are projecting a slightly less likelihood
> of the crash happening as late as 10 Aug 09. Personally I don't
> give these types of modeling much credence especially when global
> warming models are listed as prior work. Even if a mathematical
> model could be developed to exactly predict market behavior using
> only preceding data, the perfect markets theorem states that it
> would be in the knowledge domain of some market participants and
> therefore be factored into the market behavior going forward;
> thereby making it useless for future predictions.

It's true that the "common wisdom" is that there's going to be a
market correction, but no one right now is really expecting a crash,
so the "perfect markets" concept really doesn't apply. I agree that a
crash can't be predicted, as it depends on a chaotic trigger (in the
sense of Chaos Theory) that can't be predicted. However, I do
believe that it should be possible to use modeling to estimate when
the probability of a crash is highest.

Sincerely,

John

[aedens]

See Smets and Wouters (2007) for a complete review of their model. It determines 14 endogenous variables:
output, consumption, investment, the price of capital, the capital stock, capital services, the capital utilization
rate, labor supply, the interest rate, the inflation rate, the rental rate on capital, the wage rate, the marginal
product of labor, and the marginal rate of substitution between work and consumption. The 14 equations include
forward looking consumption, investment, price and wage setting as well as several identities.

Unadjusted CPI has increased four straight months in a row. From Dec 2008 to Apr 2009, unadjusted CPI rose from 210.228 to 213.240. That's a 1.4% increase over four months, which works out to an annualized price inflation rate of 4.3%.
Actual and "seasonal" is now over a four-month period
How to generate severe stagflation in the years 2010 through 2019 right on que thanks Washington provided below.
The Macroeconomic Effects of Tax Changes: Estimates Based on a new Measure of Fiscal Shocks, by Christina D. and David H. Romer (March 2007). (Christina Romer now chairs the president's Council of Economic Advisors). This study found that the tax multiplier is 3, meaning that each dollar rise in taxes will reduce private spending by $3."

http://www.heritage.org/research/featur ... ChartBook/
So who believes the tax mutiliplier and how the Waxman–Markey Climate Change Bill Would Affect the States,
Sun Dec 07, 2008 3:10 pm
By Congressional District is not a disconnect to a run on capital on your future. Trust is a key word and see
where this is going. Patients? I remember clearly Mr. Johnsons war on poverty and Mr. Nixon's energy plan he called for
and sure we know what happened with Gov planning. Plan 2 is exploded as Plan 1 since numerous reason have unfolded as
we know. http://www.criticalreview.com/crf/pdfs/ ... o21_23.pdf Again top to bottum acountability issues.
66 books covers the reason.

Keynes: Trade surplus countries should stimulate their economies; Deficit countries should balance trade.
John Maynard Keynes was the greatest economist of the 20th century and the founder of modern macroeconomics (the economic study of the economy as a whole). American economists consider themselves to be following Keynes' recommendations when they try to stimulate an economy with stimulus packages, but they studiously ignore the fact that Keynes' had different advice for trade-surplus countries and trade-deficit countries.
After graduation from college, Keynes held the same opinion about free trade that is still held in America's ivory towers and still believed in Washington. He thought that free trade is always the best policy.

Free trade only exists to stabilize vunerable democracy's going left and is the same as welfare on your dime as we are bleed dry since Ms. Schwab trade secratary stated there concern is about loopholes and not balance. Susan Schwab, US trade representative, said such exemptions would defeat the object of the talks, to create trade flows. “As we went through the layers of loopholes . . . we discovered that a couple of our trading partners were more interested in loopholes than market access,” she said.

However, as he began to study the economics of the real world, he realized that countries can improve their own lot by practicing strategies that produce trade surpluses. When they do so, they destabilize the trade deficit countries. As a result, during World War II he worked hard to set up a post-war economic institution that would keep trade in balance so that the post-war expansion in trade could be sustainable.

Volume 25 of his collected writings is full of his plans for the institution that would regulate the world economy after World War II. His institution was to have very different requirements for trade surplus countries and trade deficit countries (pages 79-81), with the goal of keeping trade in balance. Here is what his institution would require of trade surplus countries:


A Surplus Country shall discuss with the Governing Board (but shall retain the ultimate decision in its own hands) what measures would be appropriate to restore the equilibrium of its international balances, including
(a) measures for the expansion of domestic credit and domestic demand:
(b) the appreciation of its local currency ... or, if preferred, an increase in money-wages;
(c) the reduction of excessive tariffs and other discouragements against imports;
(d) international loans for the development of backward countries.
On the other hand, countries with a trade deficit would be allowed to take the following actions:
(i) restrictions on the disposal of receipts arising out of current trade and ‘invisible’ income.
(ii) import restrictions, whether quantitative or in the form of ‘duty-quotas’ (excluding however prohibitions genuinely designed to safeguard e.g. public health or morals or revenue collection);
(iii) barter arrangements
(iv) export quotas and discriminatory export taxes;
(v) export subsidies either furnished direction to the state or indirectly under schemes supported or encouraged by the state; and
(vi) excessive tariff.
Warren Buffet reinvented Keynes' prescription for a trade deficit economy when he put together his Import Certificates plan. This is not really all that surprising. Like Keynes, he has a sound understanding of the way economics works in the real world.

Anyway:

Lawrence Summers, who served as President Clinton's treasury secretary during the headiest days of free-trade enthusiasm, is now having some very public second thoughts. Writing in the Financial Times, he noted that "[e]ven as globalisation increases inequality and insecurity, it is constantly and often legitimately invoked as an argument against the viability of progressive taxation, support for labour unions, strong regulation and substantial production of public goods that mitigate its adverse impacts." But Summers argued that such an attitude was a political non-starter, particularly as globalization "encourages the development of stateless elites whose allegiance is to global economic success and their own prosperity rather than the interests of the nation where they are headquartered." In a subsequent column, he concluded that the "domestic component of a strategy to promote healthy globalisation must rely on strengthening efforts to reduce inequality and insecurity. The international component must focus on the interests of working people in all countries, in addition to the current emphasis on the priorities of global corporations." Mark Thoma, an economist at the University of Oregon who runs the popular blog Economist's View. "There's a growing perception that the political will to keep markets open or open them further depends on solving some of these distributional issues, health care, all of these things. I don't think there's complete buy-in on the welfare state, but what's new is the idea that opening trade further is going to require us to deal with the problem of winners and losers, rather than just acknowledge it. It won't just solve itself, and it won't happen quickly and easily."

Free trade only exists to stabilize vunerable democracy's going left and is the same as welfare on your dime as we are bleed dry since Ms. Schwab trade secratary stated there concern is about loopholes and not balance. Susan Schwab, US trade representative, said such exemptions would defeat the object of the talks, to create trade flows. “As we went through the layers of loopholes . . . we discovered that a couple of our trading partners were more interested in loopholes than market access,” she said.

History conveys: Syndicalism stays veiled from public discernment and will be rendered later for the purpose of Capital and Labor Responsibilities of systemic misnomers. The Austrian’s call it the master builder dilemma and I agree to what I found to be painfully true in any context to date. To many items we do not need from market “global” saturation points and the loss of core sanity hinging on energy petro dollars losses which will sponge out base monetary supports as we have seen given the markets true exchanges noted to date. Basically the vanilla investors have wised up and moved elsewhere from equity it appears as such. Auto can breathe enough for a few years but the tide is going out given forward demand will dissipate since the cart is ahead of the Horse on market demand. For many decades they deny balance and they wonder why we discern that there cheerful to useful idiots may be there maximum liability when they awake. As mentioned in GD forums the water needs established to solve some blatant issues to temper growing summer of discontent fomenting.
These major chock points need to be tempered. USDA numbers where posited for ag produce i.e cpi core issues to consumer cost indices.
http://generationaldynamics.com/forum/v ... ater#p3688 Stock up and plan for Stagflation. Yes we must stabilize given what priority? http://www.dni.gov/nic/special_globaltr ... plications We are at now at the solar minumum so natural effects suggest and do regard to proper planing in detail not pandering to rhetorical up to the neck Global Left nonsense on climate.

[Higgenbotham]

Shanghai is showing preliminary signs of reversing tonight. It popped up to a new high and then dropped below support levels from the past 2 days:

http://finance.yahoo.com/q/bc?s=000001.SS&t=5d

Very preliminary but could be significant.