http://www.popmodal.com/video/2066/Vint ... propaganda
Are you better off today? Talk to any Farmer and ask what inflation has done.
The margin of the 400 acre farmer would not support that model.
Been there done that. Our family farms survives to date.
They have no idea...
Financial topics
-
richard5za
- Posts: 898
- Joined: Sun Sep 21, 2008 10:29 am
- Location: South Africa
Re: Financial topics
Debt and more debt
Extract from today’s Morning Money newsletter. Interesting view:
A front page photo in Tuesday’s Financial Times shows lightning striking near the Parthenon. Zeus has his limits.
Greece is supposed to cut its public spending by an amount equal to 10% of its GDP. Even so, its public debt is expected to rise to nearly 150% of GDP by 2016 – or three times the level of Argentina when it defaulted in 2001.
It should be obvious that the Greeks owe too much. But so does almost everyone. Every kind of debt is so heroic it poses an affront to nature and a challenge to the gods. Much of it is un-payable. Private debt. Public debt. Short term. Long term. US. England. Europe. All kinds of debt in all kinds of places. In America’s private sector, for example, debt exploded six-times faster than GDP since 1950. And today, the whole world staggers under debt, with more than $3.50 of debt for every dollar of GDP.
Today’s global economic problem is breathtakingly obvious: too much debt. The solution is obvious too; debt that cannot be repaid must be destroyed – by defaults, foreclosures, bankruptcies, write-downs, and restructurings.
Nouriel Roubini, writing in the Financial Times this week, is on the right track. Greece cannot bear the weight of all its debt, he says. Since it will default sooner or later, better to restructure the debt now... reducing it to a level the Greeks can actually pay. Fair enough. Creditors would take their losses in an orderly way.
When the debtor cannot pay, the creditor should take the loss. But practically the entire burden of modern economics over the last three years has been a scammy effort to shift the losses to where they don’t belong.
To bring the readers fully into the picture, the great debt build-up began with Reagan in the White House and Thatcher at number 10. Reagan added to deficits. Thatcher cut them. On the west side of the Atlantic, economists called on Reagan to stop spending. On the east side, 346 economists implored Maggie Thatcher to spend more.
Reagan’s young budget director, David Stockman, resigned in protest when the Republicans wouldn’t bring deficits under control. Meanwhile, Maggie Thatcher was told that her austerity policies would “deepen the depression, erode the industrial base and threaten social stability”. She should do a U-turn immediately, said the august economists. “This lady’s not for turning,” she replied.
It didn’t seem to matter what anyone thought or did. Markets triumphed over politics. Interest rates were coming down. The US 10-year Treasury yield fell from 15% in 1980 down to under 3% today. In that tender, delightful world, debt was no problem for anyone. Even if you wanted to default, the banks wouldn’t let you. They offered to refinance your debt at a lower rate. Both Britain and America grew; their debts grew too.
Private-sector debt peaked out in 2007. Households and corporations have been de-leveraging ever since. But as the private sector taketh away, the public sector giveth more debt. And this time, markets are not cooperating. This time bad debts are rising; someone will have to pay. Who?
The world’s economists had no better idea what was happening in the 21st century than they had in the 20th. They neither saw the crisis coming, nor knew what to do when it arrived. Their panicky ‘rescue’ attempts wasted $10trn. They claimed they had put the world on the road to ‘recovery’ and claimed victory over the credit cycle. They might just as well have claimed to have conquered sin or exterminated cockroaches.
Neither governments nor their economic advisors can make bad debt disappear. They know that as well as we do. All their sweating and grunting has another purpose – to decide who gets stuck holding the bag.
Taxpayers, for example. That is the general drift of the Germano-Anglo- Canadian proposal. ‘Austerity’, as they call it, means higher taxes, fewer services, and bailouts of the financial sector. The big banks won’t pay for their mistakes. The public will. Martin Wolf and Paul Krugman are wrong about many things, but they’re probably right that the side effects of this bitter medicine; it will probably deepen and prolong the slump. It will cause a ‘third depression’, says Krugman.
On the other hand, Krugman, Wolf and the other neo-Keynesians have a bagman of their own. “Governments are obsessing about inflation when the real threat is deflation, preaching the need for belt-tightening when the real problem is inadequate spending,” writes Krugman.
If too little spending were the real problem, it would invite the most agreeable fix since sex therapy. Alas, the real problem is debt, not spending. More government spending cannot make the debts go away. But it can dissolve them into inflation and slip them to the unwary.
Extract from today’s Morning Money newsletter. Interesting view:
A front page photo in Tuesday’s Financial Times shows lightning striking near the Parthenon. Zeus has his limits.
Greece is supposed to cut its public spending by an amount equal to 10% of its GDP. Even so, its public debt is expected to rise to nearly 150% of GDP by 2016 – or three times the level of Argentina when it defaulted in 2001.
It should be obvious that the Greeks owe too much. But so does almost everyone. Every kind of debt is so heroic it poses an affront to nature and a challenge to the gods. Much of it is un-payable. Private debt. Public debt. Short term. Long term. US. England. Europe. All kinds of debt in all kinds of places. In America’s private sector, for example, debt exploded six-times faster than GDP since 1950. And today, the whole world staggers under debt, with more than $3.50 of debt for every dollar of GDP.
Today’s global economic problem is breathtakingly obvious: too much debt. The solution is obvious too; debt that cannot be repaid must be destroyed – by defaults, foreclosures, bankruptcies, write-downs, and restructurings.
Nouriel Roubini, writing in the Financial Times this week, is on the right track. Greece cannot bear the weight of all its debt, he says. Since it will default sooner or later, better to restructure the debt now... reducing it to a level the Greeks can actually pay. Fair enough. Creditors would take their losses in an orderly way.
When the debtor cannot pay, the creditor should take the loss. But practically the entire burden of modern economics over the last three years has been a scammy effort to shift the losses to where they don’t belong.
To bring the readers fully into the picture, the great debt build-up began with Reagan in the White House and Thatcher at number 10. Reagan added to deficits. Thatcher cut them. On the west side of the Atlantic, economists called on Reagan to stop spending. On the east side, 346 economists implored Maggie Thatcher to spend more.
Reagan’s young budget director, David Stockman, resigned in protest when the Republicans wouldn’t bring deficits under control. Meanwhile, Maggie Thatcher was told that her austerity policies would “deepen the depression, erode the industrial base and threaten social stability”. She should do a U-turn immediately, said the august economists. “This lady’s not for turning,” she replied.
It didn’t seem to matter what anyone thought or did. Markets triumphed over politics. Interest rates were coming down. The US 10-year Treasury yield fell from 15% in 1980 down to under 3% today. In that tender, delightful world, debt was no problem for anyone. Even if you wanted to default, the banks wouldn’t let you. They offered to refinance your debt at a lower rate. Both Britain and America grew; their debts grew too.
Private-sector debt peaked out in 2007. Households and corporations have been de-leveraging ever since. But as the private sector taketh away, the public sector giveth more debt. And this time, markets are not cooperating. This time bad debts are rising; someone will have to pay. Who?
The world’s economists had no better idea what was happening in the 21st century than they had in the 20th. They neither saw the crisis coming, nor knew what to do when it arrived. Their panicky ‘rescue’ attempts wasted $10trn. They claimed they had put the world on the road to ‘recovery’ and claimed victory over the credit cycle. They might just as well have claimed to have conquered sin or exterminated cockroaches.
Neither governments nor their economic advisors can make bad debt disappear. They know that as well as we do. All their sweating and grunting has another purpose – to decide who gets stuck holding the bag.
Taxpayers, for example. That is the general drift of the Germano-Anglo- Canadian proposal. ‘Austerity’, as they call it, means higher taxes, fewer services, and bailouts of the financial sector. The big banks won’t pay for their mistakes. The public will. Martin Wolf and Paul Krugman are wrong about many things, but they’re probably right that the side effects of this bitter medicine; it will probably deepen and prolong the slump. It will cause a ‘third depression’, says Krugman.
On the other hand, Krugman, Wolf and the other neo-Keynesians have a bagman of their own. “Governments are obsessing about inflation when the real threat is deflation, preaching the need for belt-tightening when the real problem is inadequate spending,” writes Krugman.
If too little spending were the real problem, it would invite the most agreeable fix since sex therapy. Alas, the real problem is debt, not spending. More government spending cannot make the debts go away. But it can dissolve them into inflation and slip them to the unwary.
Re: Financial topics
Yes, I've noticed that once again the market shills are trying to push the nonsense earnings, all the way from the banks' bogus numbers to using forward operating earnings. This won't stop overnight.
I see a day about 10-15 years in the future when the Jim Cramer's of the world are long gone and bankers and businessmen are once again respectable, conservative and mostly honest and we will be way past the bogus stimulus and debt induced bloated earnings and are once again using as-reported earnings. An overpriced market will be anything over P/E 15 and it will not be unusual to see average P/E ratios under 10 and dividends over 5%.
I am finding my biggest investing weapons these days is patience and discipline. I killed in 2007 and 2008 when the market was going down and then lost most of what I made because I was too impatient and not disciplined enough. I believe that the next 5 years will provide tremendous opportunities as the markets slide down the "slope of hope". The key will be to have something to invest when opportunities arise. Remember, the darkest nights are followed by the brightest days. The best part is, if I'm wrong I'll be happier than if I'm right.
Fred
http://www.acclaiminvesting.com/
I see a day about 10-15 years in the future when the Jim Cramer's of the world are long gone and bankers and businessmen are once again respectable, conservative and mostly honest and we will be way past the bogus stimulus and debt induced bloated earnings and are once again using as-reported earnings. An overpriced market will be anything over P/E 15 and it will not be unusual to see average P/E ratios under 10 and dividends over 5%.
I am finding my biggest investing weapons these days is patience and discipline. I killed in 2007 and 2008 when the market was going down and then lost most of what I made because I was too impatient and not disciplined enough. I believe that the next 5 years will provide tremendous opportunities as the markets slide down the "slope of hope". The key will be to have something to invest when opportunities arise. Remember, the darkest nights are followed by the brightest days. The best part is, if I'm wrong I'll be happier than if I'm right.
Fred
http://www.acclaiminvesting.com/
John wrote:Here's the video:MarshAviator wrote:http://www.zerohedge.com/article/bill-f ... pure-nonse
As was mentioned by John last year, PE numbers are a con job.Bill Fleckenstein Says You Can't Trust S&P PE Multiples As All The Financials' Earnings "Are Pure Nonsense"
Now more and more are catching on.
Can't be long now until reality sets in.
http://www.youtube.com/v/P-o2AG8TFAE
John
Re: Financial topics
aedens wrote:Last fall:
Imagine two neighbors. Both are unemployed, yet neither are worried about it at the moment. One neighbor has a stash of gold coins. The other has a FICO score of 800. One has equity, the other has credit. For the time being they can each live on what they have. Eventually both will have to get a job, but hopefully you can see the difference.
....
The neighbor with the good credit may well be better off if he is a realist and plays the cards reality deals him. Let's say he uses that credit to start his own business and ends up self sufficient and even more in debt but owning his own company that easily allows him to pay off that debt? hmm....he'd be better off than someone hoarding gold in the basement. Now do I own gold? Sure, I do. I do what everyone should do: I appraise MY situation and do what is best for me and mine.
Even as I criticize my government for all the debt they are ringing up I see the incredible wealth enjoyed by her people; wealth created by the same system that generated the debt. It is important to have perspective and not to got overly caught up in the social mood or we will simply be pawns in someone else's game of chess.
At each moment in time we should be viewing our situation with perspective so that we do not under or overreact to the current buzz. We should attempt to be self-sufficient and yet not isolated; we should reach for the sky yet not forget to wear a parachute in case we make it; in times of depression we should not simply accept that the world is a terrible place but look to how we will rebuild OUR world even as we simply seek to survive, knowing that a better day will soon enough come our way.
But that's just my opinion.
Fred
http://www.acclaiminvesting.com/
Re: Financial topics
Fred I agree with your post but with a caveat "about others agendas".
I will of course miss a points being brief on observation's.
In our current Corporate internal affairs the issue is information filters.
"SALIGIA"
When the collapse comes in any period, the people who are left long on goods and land [and stocks] always make a great outcry and start a political agitation. Their favorite device always is to try to inflate the currency and raise prices again until they can unload. If you doubt this facet hope is lost to you for now. This very well could soon be the turning point as the end of the downward price pressure in most sectors inflicted by the downturn to adjust, and the beginning of what could eventually become a wicked and devastating hyperinflation from a poor Capital accumulation process we witness to locality markets to properly form and survive. Geopolitical agenda weighs thin, if so you doubt it, look at the money base as we are aware to cover the synthetic financial products we noted in the forums to the inertia of context as they print Fiat. The issue is not outside thoughts but inside the contention of inflection of consumer preference to which we are now defenseless, which only as described above will convey the element I choose as the term Utility to focus the thought in North America. I have noted also many so called media accept it is only worth what it sells for so the truth unfolds slowly to the third step of acceptance. Watching the process of millions implode financially in the next wave already underway is very painful and I am hopeful Products can emerge to serve their needs produced of locality as I witness also the apathy duly recorded to unbalances unchecked for decades. As we study the Human Action we already know the current that undermines the decision processes as GD monitors the upcoming period’s duly noted Globally by John. As many have posited we are the eyes of an event few to many understand for all our good. As we are also reminded the Meek will see and remember it is about the seal in the forehead and the weight it truly bears. The conclusion is to be written by the Consumer to whom it belongs. Business loathes uncertainty and it is so thick to date the stalemate in intellectual convictions will wear thin the safety and assets conditions to asserted verbiage we see in the press. Meanwhile we continue on the current predicated cycle. The internal disconnects will continue and as we say the beatings will continue until moral improves since newer management teams press hyperboles of effective change to Capital Improvement the market bears. I do not attribute these affairs to Mistakes but the painful choices of consequences as ethos defined as a component of argument of individuals who would be formed by the values of their culture filtered to assert deception to the nature of avarice and the path it presents. Not to stray to far from the secular, six things the Boss hates, and the seventh His soul detestes. The cure is only a few thoughts away. For me to be painfully blunt Wages to Savings which Generates income form investments. Stay the course, and invest Locally to balance, and trust to our Trading partners aboard for our services.
As mentioned in a reference post.
http://www.business.auburn.edu/~boultwr/4corecmp.pdf
Ways to core competency Loss.
1. Outsourcing critical components - leaves the firm vulnerable and does little to build competency
2. Not committing to core competency in strategic alliances
3. Failure to build competency in evolving markets forfeits opportunity
The costs of a lost competency cannot be fully calculated in advance. Major industry shifts may be missed altogether. Also, since the development of core competencies is a long-term task, companies that fail to invest may have difficulty re-entering the market later.
http://www.youtube.com/watch?v=A3oIiH7BLmg&NR=1
As was warned a long time ago it was never about you. The Senate was dismissed to local affairs only with NAFTA inertia of intent in crafting as we posted in forum.
Closer to Home we are dealing with this.
http://www.sanluisobispo.com/2010/07/29 ... =mirelated
I will of course miss a points being brief on observation's.
In our current Corporate internal affairs the issue is information filters.
"SALIGIA"
When the collapse comes in any period, the people who are left long on goods and land [and stocks] always make a great outcry and start a political agitation. Their favorite device always is to try to inflate the currency and raise prices again until they can unload. If you doubt this facet hope is lost to you for now. This very well could soon be the turning point as the end of the downward price pressure in most sectors inflicted by the downturn to adjust, and the beginning of what could eventually become a wicked and devastating hyperinflation from a poor Capital accumulation process we witness to locality markets to properly form and survive. Geopolitical agenda weighs thin, if so you doubt it, look at the money base as we are aware to cover the synthetic financial products we noted in the forums to the inertia of context as they print Fiat. The issue is not outside thoughts but inside the contention of inflection of consumer preference to which we are now defenseless, which only as described above will convey the element I choose as the term Utility to focus the thought in North America. I have noted also many so called media accept it is only worth what it sells for so the truth unfolds slowly to the third step of acceptance. Watching the process of millions implode financially in the next wave already underway is very painful and I am hopeful Products can emerge to serve their needs produced of locality as I witness also the apathy duly recorded to unbalances unchecked for decades. As we study the Human Action we already know the current that undermines the decision processes as GD monitors the upcoming period’s duly noted Globally by John. As many have posited we are the eyes of an event few to many understand for all our good. As we are also reminded the Meek will see and remember it is about the seal in the forehead and the weight it truly bears. The conclusion is to be written by the Consumer to whom it belongs. Business loathes uncertainty and it is so thick to date the stalemate in intellectual convictions will wear thin the safety and assets conditions to asserted verbiage we see in the press. Meanwhile we continue on the current predicated cycle. The internal disconnects will continue and as we say the beatings will continue until moral improves since newer management teams press hyperboles of effective change to Capital Improvement the market bears. I do not attribute these affairs to Mistakes but the painful choices of consequences as ethos defined as a component of argument of individuals who would be formed by the values of their culture filtered to assert deception to the nature of avarice and the path it presents. Not to stray to far from the secular, six things the Boss hates, and the seventh His soul detestes. The cure is only a few thoughts away. For me to be painfully blunt Wages to Savings which Generates income form investments. Stay the course, and invest Locally to balance, and trust to our Trading partners aboard for our services.
As mentioned in a reference post.
http://www.business.auburn.edu/~boultwr/4corecmp.pdf
Ways to core competency Loss.
1. Outsourcing critical components - leaves the firm vulnerable and does little to build competency
2. Not committing to core competency in strategic alliances
3. Failure to build competency in evolving markets forfeits opportunity
The costs of a lost competency cannot be fully calculated in advance. Major industry shifts may be missed altogether. Also, since the development of core competencies is a long-term task, companies that fail to invest may have difficulty re-entering the market later.
http://www.youtube.com/watch?v=A3oIiH7BLmg&NR=1
As was warned a long time ago it was never about you. The Senate was dismissed to local affairs only with NAFTA inertia of intent in crafting as we posted in forum.
Closer to Home we are dealing with this.
http://www.sanluisobispo.com/2010/07/29 ... =mirelated
Re: Financial topics
While it's true that savings rates are important, I think destructive actions by corporations are a trigger for many things. Savings drop because debt goes up and debt goes up because large (corporate) banks issue vast sums of credit for luxury expenses. As long as inflation is maintained the actual cost of repaying debt is low, and the game keeps being played. This is the reason why deflation is considered THE END OF THE WORLD AS WE KNOW IT! It is TEOTWAWKI as the world we have known for 35 years or more has included easy access to credit. Without that easy credit, there's much less money for consumer goods, and that translates directly to lower sales and a lower GDP.
Savings will increase in large part because with no access to credit, people who have to have a new car must save for it, and that makes them nearly 100% resistant to blandishments to add on extras they don't really need. The same goes for technical improvements that sound good but aren't necessary for functionality.
If the economy goes further into the crapper, and deflation denial is no longer possible, look for 3D entertainment to be quietly dropped as a non starter. At least the TV portion of it. A lot of other gimmickry will go the same route.
A refocus by the consumer on necessity will drop the GDP by a large percentage. Frantic attempts to force the consumer to spend would just move demand forward, thus dragging GDP down further in the future.
We either build infrastructure to lower costs and increase jobs, or we keep on sinking. And that's going to require higher taxes, and that is a totally different direction from the past.
Savings will increase in large part because with no access to credit, people who have to have a new car must save for it, and that makes them nearly 100% resistant to blandishments to add on extras they don't really need. The same goes for technical improvements that sound good but aren't necessary for functionality.
If the economy goes further into the crapper, and deflation denial is no longer possible, look for 3D entertainment to be quietly dropped as a non starter. At least the TV portion of it. A lot of other gimmickry will go the same route.
A refocus by the consumer on necessity will drop the GDP by a large percentage. Frantic attempts to force the consumer to spend would just move demand forward, thus dragging GDP down further in the future.
We either build infrastructure to lower costs and increase jobs, or we keep on sinking. And that's going to require higher taxes, and that is a totally different direction from the past.
Re: Financial topics
http://www.youtube.com/watch?v=41d-vFc7 ... re=related
Enjoy the moment's we have.
Updating the 'real value' of the stock market.
Nothing will change until we do.
http://www.youtube.com/watch?v=NpTDHY6w ... re=related
Enjoy the moment's we have.
Updating the 'real value' of the stock market.
Nothing will change until we do.
http://www.youtube.com/watch?v=NpTDHY6w ... re=related
Last edited by aeden on Mon Aug 02, 2010 11:12 pm, edited 2 times in total.
Updating the 'real value' of the stock market
Updating the 'real value' of the stock market
** Updating the 'real value' of the stock market
** http://www.generationaldynamics.com/cgi ... 03#e100803
Contents:
"Price/earnings ratios and the Law of Mean Reversion"
"Why the Law of Mean Reversion works"
"Attempts to cheat on the price/earnings ratio"
"The 'real value' of the stock market."
"Points of Inflection"
"The P/E10 graph"
** Updating the 'real value' of the stock market
** http://www.generationaldynamics.com/cgi ... 03#e100803
Contents:
"Price/earnings ratios and the Law of Mean Reversion"
"Why the Law of Mean Reversion works"
"Attempts to cheat on the price/earnings ratio"
"The 'real value' of the stock market."
"Points of Inflection"
"The P/E10 graph"
Re: Financial topics
Aedan - why did you change your name? Or are you Aedens's brother?
John
John
Re: Financial topics
If you fit a line to the DJIA on a log plot prior to 1914 you get one slope and if you do it after 1971 you get another slope. The reason is that prior to 1914 the US mostly had a real gold standard and after 1971 they have been printing a lot of money. In the years between there was a transition away from hard money. Since the DJIA is measured in dollars it is disturbed when the number of dollars are growing exponentially and the value is dropping because of this. You sort of have to add the growth rate of companies onto the inflation rate of the dollar to get the new growth rate of the DJIA. So the P/E values that are sensible since 1971 are not the same as the ones that were sensible prior to 1914. So this time is different.
But that said, I too suspect we are in for a crash. I would explain it more from a point of view of any country going too heavily into government control of the economy becomes a bad place for business and investors.
I think there is a non-trivial chance that the Fed can print so much money that in nominal terms the stock market never gets much below where it is now. But if this happens then gold and silver should do very well. So if you are betting that the stock market is going to go down you might want to hedge against what helicopter Ben might do.
But that said, I too suspect we are in for a crash. I would explain it more from a point of view of any country going too heavily into government control of the economy becomes a bad place for business and investors.
I think there is a non-trivial chance that the Fed can print so much money that in nominal terms the stock market never gets much below where it is now. But if this happens then gold and silver should do very well. So if you are betting that the stock market is going to go down you might want to hedge against what helicopter Ben might do.
Last edited by vincecate on Tue Aug 03, 2010 1:35 am, edited 3 times in total.
Who is online
Users browsing this forum: Bing [Bot], Google [Bot] and 2 guests