Financial topics

[StilesBC]

StilesBC

Please respond to this ....http://www.europac.net/externalframeset ... ype=schiff

Thanks
Gtate

I refuted all of those arguments in my two posts. I agree with Schiff that the Fed are totally insane. But they are not nearly as powerful as he claims. If they could stop the deflation train in its tracks, they would have done it by now. Schiff (and many others) have been saying the same thing since the Fed lowered the discount rate on Aug 17, 2007. Hyperinflation, dollar collapse, yada yada.

Schiff would be a better politician than economist. I'd vote for him in a second.

[John]

-- Request for volunteer

I'm on the mailing list for a top-notch expert who sends out
extremely valuable and interesting mailings on financial,
geopolitical and generational issues.

I've been trying to coax him for several months to post his mailings
on this forum. He's said that he'd like to, but he keeps putting it
off, I believe because doing so would be so time consuming. It's
much easier to send out an e-mail message to a list than to both send
it out via e-mail and also post it on a forum.

So I'd like to propose to him that someone else will do the posting
for him.

Is there anyone here willing to volunteer to take on this task? He
sends out about 10 messages a week, so I'd estimate that it would
take someone 1-3 hours per week to do it. It would be a big
contribution to this forum.

If anyone is willing to volunteer, please write to me privately at
john@generationaldynamics.com , and then I'll make the proposal to
him. Thanks.

Sincerely,

John

[MarshAviator]

From:
URL: http://www.rollingstone.com/politics/st ... g_takeover

It's over — we're officially, royally fucked. no empire can survive being rendered a permanent laughingstock, which is what happened as of a few weeks ago, when the buffoons who have been running things in this country finally went one step too far. It happened when Treasury Secretary Timothy Geithner was forced to admit that he was once again going to have to stuff billions of taxpayer dollars into a dying insurance giant called AIG, itself a profound symbol of our national decline — a corporation that got rich insuring the concrete and steel of American industry in the country's heyday, only to destroy itself chasing phantom fortunes at the Wall Street card tables, like a dissolute nobleman gambling away the family estate in the waning days of the British Empire.

You know it's really bad when you agree with an financial article in Rolling Stone, while they don't understand the Generational aspect, at least they
understand what is happening.

and this tidbit too:
http://www.portfolio.com/views/blogs/ma ... r?tid=true

Revolution in the Air

It's getting impossible to keep up with the rhetoric and political noise surrounding AIG, the banks, and executive bonuses. Will the government try to rein in executive pay generally, rather than just at AIG? Is this an example of the kind of misguided policy and mass hysteria which results when you try to put politicians in charge of for-profit businesses? Will it wreck the economy outright? Or is the real problem that "the administration's officials are too marinated in the insiders' culture to police it, reform it or own up to their own past complicity with it"?

I don't have any answers, but I do have a question: might we might be seeing the first real rumblings of class warfare -- the genuine article, not the Republican talking-point -- in this country?

Revolution may be in the air, but at present the market is up around 300pts (DOW).
Wonder how long this last....

[malleni]

StilesBC

Please respond to this ....http://www.europac.net/externalframeset ... ype=schiff

Thanks
Gtate

I refuted all of those arguments in my two posts. I agree with Schiff that the Fed are totally insane. But they are not nearly as powerful as he claims. If they could stop the deflation train in its tracks, they would have done it by now. Schiff (and many others) have been saying the same thing since the Fed lowered the discount rate on Aug 17, 2007. Hyperinflation, dollar collapse, yada yada.

Schiff would be a better politician than economist. I'd vote for him in a second.

With all respect,
I do not understand why people who calling themselves "deflationists" picking on Peter Shiff - and pretended that Peter "is wrong" and They are quasi "right".
Typical example of this group is Mike Shedlock / Mish, but I think that there we can include also John and some people from this side.

I personally have difficult to see difference in general view of both groups.

Only (main) diference is that "deflationists" believe that deflation is something very... very...very... - bad. (Same as helicopter Ben)
I think that is sad to call those people "deflationists", because simple - that is not true... They are not that.


Shiff on the other side has ALWAYS (from early beginning more that 10 years ago!!!) - proclaimed actually deflation as THE BEST (!) solution for American economy. (If he warned for high inflation - it is logical that he SUPPORTED the opposite (!) i.e. - deflation (!)). That is actually - absolute opposite inflationary Ben - so we can for sure understand Shiff as - REAL deflationist!
What he since 10 years try to say is that - Fed WILL (and obvious try to made!) - is to create huge inflation AND even currency destruction i.e. - hyperinflation.
What Shiff always said (even today) - IS that market correction i.e. contraction (or deflation if you like) - IS the best "medicine" for US economy, BUT the government - for the same reasons as so called "deflationists explained" ("bad, bad, bad - deflation!") - interfere with market and does not permit it!

What is "wrong" with Shiffs "view"???
- It is obvious that government try to re-inflate the economy.
- It is obvious that they can not succed in it.
- It is obvious that this attempt can destroy the currency (hyperinflation)
- It is also obvious that since hyperinflation (has nothing to do with "normal" inflation) - the end game is known - even with currency destruction. It is exhaust of the big balloon - you can call it "deflation" if you like too. Unfortunately - this time with destroyed currency and impoverished citizens.



Please - if anybody (especially "deflationists") understand different - would be nice to see what is so very wrong with Shiffs (oh so... "inflationary") view?.

[wtf]

Put that together with the fact that many of the media outlets are still using Q3 earnings until Q4 is complete and suddenly we will see the P/E ratios that the media uses jump up to 50 from 10 just two weeks ago. I know that people BELIEVE that P/E's are around 10 because I hear and see them repeat it all the time. I believe it was John who stated that the media is using operating earnings but that's not the case, they are using Q3 earnings and that means they will HAVE to switch to Q4 earnings all of a sudden as they are now 99% complete.

I noticed something that seems to support your belief that people are using Q3 PEs the other day when I was charting stuff at bigcharts.com. If you plot the S&P and select lower indicator of PE, the chart stops in mid Nov.

S&P PE stops in Nov 08

pe ratio.png (10.15 KiB) Viewed 7092 times

wtf

[freddyv]

With all respect,
I do not understand why people who calling themselves "deflationists" picking on Peter Shiff...

Because Shiff has been right about our current economic situation but wrong about how to play it. On top of that he fails to admit he has been wrong and simply says he's in this for the long term...WHAT! I just don't get any strategy that says you just sit around and take losses because your strategy will eventually be right.

Anyone with a brain knew many years ago, perhaps as far back as the early 1990's or even in the 1980's, that we were building towards a massive bubble that would someday pop. As I see it there are three ways to play that:

1. Get out of the market at the first sign and possibly wait 10-20 (or even more) years before the market comes back to its current level.

2. Buy and hold and deny the market is overpriced and lose most of what you gained when the bubble pops.

3. Become more and more wary as the bubble inflates and pay attention to obvious signs that the market is ready to correct.

Shiff saw it coming but he chose the wrong strategy; basically #1. It has always been obvious to me that the market is about the very basic human drives of greed and fear and that the way to win in the stock market is to keep your response just as simple. Currencies and geopolitics is a losing game for most because they are too easily manipulated by individuals and events we have no control over. The stock market, however, is a reflector of our society and is almost impossible to manipulate or distort for long, except by the people as they fool themselves into believing they deserve a bigger car and house and a million-dollar salary and that it will all last forever. Schiff was a bit too slick in trying to predict HOW things would play out when he would have been much better off just saying, "The economy stinks, sell your stocks." Simple is better, IMO.

So is Peter Schiff a bad guy? No. But it needs to be pointed out where he was wrong. He got most of the basics right and then he failed to predict the correct outcome and so his initial thesis went to waste.

--Fred

[freddyv]

I have recently subscribed to Gene Inger's newsletter and thought I would share some comments he made today:

Perhaps the most shocking statement he made and has made clear for some time is that he believes we will not see our economy fully recover from our current fiasco until 2020-2030. I thought this was pertinent to this site because it fits in with the Fourth Turning that is expected to last some 20 years. I haven't heard any specifics to suggest that he subscribes to "Fourth Turning" theory but he certainly seems to incorporate the basic premise that we are in a crisis era as he has also mentioned how such economic problems are likely to lead to social instability and wars.

Another point he made that I thought was very important is that the new toxic-asset plan is a lose-lose situation for investors in that they may end up losing their investments, but if they do well the government almost certainly will be looking to clawback and punish anyone who makes money off of any of these government programs. I would add this: taxes for all above-average earners will be going sky high over the coming years so even if they don't go after you for a specific reason they will catch you in their net of taxation.

I do most of my trading in my SEP IRA and that tax-free vehicle is looking better and better all the time. Hopefully I will not be drawing on it until taxes come down once again.

--Fred

[malleni]

...
So is Peter Schiff a bad guy? No. But it needs to be pointed out where he was wrong. He got most of the basics right and then he failed to predict the correct outcome and so his initial thesis went to waste.

--Fred

Freddy,
I can agree just partly with your logic.
Namely - that Shiff until now did not predict things "perfectly", i.e. exactly in time perspective.

But - if we taking a short look on the GFC until now - how long it lasted jet?.... 14-15 months....
How long (at least) many of the pundits predict it will last?... At least 3-5 year (some of them predicting even 20 years!)
With other words - we are at the beginning of the crises!

It is really difficult to me to understand this kind of reaction: "... He got most of the basics right and then he failed to predict the correct outcome..."

Who did it?

Perhaps John and Mish and "deflationists" group?

As we looking what happening now at the early beginning of GFC - Shiffs comments are not at all so wrong.
His "predictions" were perhaps little bit too early.


If you looking now - FED try to print "little bit of money" and to put it in the "black hole".
I understand that many from the "deflationists" group defending their stand point with thesis - that "re- inflation" is impossible like for example StilleBC.
(And even that this "printings" will partly "soften" the deflationary impact!... I do not agree - of course with it.)

Even if 1.2 trillion $ is just a drop in the see - how we can be sure that FED tomorrow will not print additionally 5 trillions... or additionally 10 trillions...
If anybody could say to you just one year ago that FED will "print" calmly - 1.2 trillions (and with perspective for more "printing") - could you believe him at that time?

From your today perspective it looks impossible that FED and Treasury "producing" so much money - out of thin air...
BUT - what is to happened tomorrow...? .... hmm...
(Today is just yesterday for tomorrow - so I am not so sure, that more "printing" will not come!)
Who (you think) going to prohibit it?
(I do not see so much "forces" on the opposite group.)

How much is "necessary" to fill "black hole"?
10 trillions?
30 trillions?
100 trillions?...

If you are able to "produce" 1 trillion - I can not see any obstacle in production of the "second" one... and "third" one.... and 57th one.... too.
Do you?

[StilesBC]

Malleni,

The vast majority of what you hear about "printing" isn't actually printing. It is fiddling around with numbers on a screen. You need to understand the difference between money and credit (Geld und Schuld. Es gibt ein grosse Unterschied). We have been tricked into believing that they are the same thing. For decades they were the same, because debt was "liquid". Now it is illiquid. Creating more of it does nothing.

Even if it was attempted to actually print physical notes on a scale that would have some overall impact on the total supply of money and credit, you need to have the demand for those notes to be used for accumulating assets in order to create inflation. If the Fed creates notes and gives them to the banks, they will just sit there. Nobody needs them to carry out their activities. If the Fed just shipped the money to every American (which is preposterous and likely illegal), people would just take it to the bank and pay off some of their debts. The bank would have all the money again, and send it back to the Fed.

There is only demand for physical currency at a certain proportion to the size of the entire economy (~5%). The problem is that debt is 400% greater than the entire economy. It's like pissing in the ocean. Sure, if you piss enough, you might start changing the sea levels. But it's not going to create Mel Gibson's Waterworld all over again.

[John]

From a web site reader:

> I have been reading the recent postings from StilesBC and Malleni
> regarding inflation vs deflation. Specifically StilesBC thinks
> that the Fed printing money will be ineffective due to the fact
> that money would not go into circulation because IF the government
> could manage to get a large enough quantity directly to the
> people, the people would use it to pay down debt or deposit it
> into their bank accounts. In this case I understand that it would
> not stimulate the economy (I think) and there would be a slim
> chance for inflation, but what if the government handed every
> family in the USA a prepaid credit card with $10,000. The card
> would have an expiration date of 3 months and no money could be
> withdrawn from the card, nor could the card be used to pay down
> old debt? In this preposterous hypothesis wouldn't inflation be
> possible?