Financial topics

Investments, gold, currencies, surviving after a financial meltdown
StilesBC
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Re: Financial topics

Post by StilesBC »

JLak wrote:
Higgenbotham wrote: I'd lke to hear what the Millies have to say about this one too if they are out there because I feel they might have some fascinating insights. We don't hear from enough Millies on these kinds of subjects.
Many of us early millenials have nearly given up hope on this question. It's been clear to me that most of our economy is obsolete, finance and media in particular, since I learned to program a computer in grade school. The early part of the 90s was middle school for me and we ('hackers?') really believed that our revolution was upon us. Check out he Hacker's Manifesto to get a feel for the zeitgeist, 'cheesy' as it is. More importantly, however, that angst was directed in real terms against those ivory-tower structures in education, media and finance that our parents wanted us to submit to and have faith in the way they did their entire lives. I think we collectively gave in some time in 1999 when we realized that the technology revolution was only making the three aforementioned superpowers more powerful, and more protectionist. Our parents kicked us out of the house unless we went to school and incurred debt, so we had to get jobs. Now look at me: government job, boomer boss, 401k, starting another MS degree and paying Stanford tuition for it ... again! There's no substance to it, just playing a game to get ahead. In the end, I just make a lot of people rich from the bottom of this ponzi scheme and there's not a single one of the massively complex institutions that I submit to that could not be replaced in superior form by a simple computer program; school, bank, media, and government.
Higgs,

You don't hear from many of us because we are still too scarce. The oldest of us are only in our mid twenties - able to think for ourselves a full 5 years max. Many who do have an understanding of how screwed they are have receded into Gen-X tendencies of their slightly older friends or siblings (to get while the gettin is still good). The rest are still doing what their boomer parents and teachers have told them to - play nice. Go to college. Pay your taxes. Get a mortgage.

But as the years wear on and more of us make our exits from the government training camps we call colleges, we'll start to figure out that much of what we've been taught no longer has any practical application to the real world. This will be easily highlighted by the inability to find work. I suspect in the ensuing fear, many will be susceptible to being sent off to fight some crazy war. Others will increasingly be relied upon to craft a new social order completely removed from what older generations can even comprehend. I imagine some advanced form of electronic barter/competing currency standard will take root.

But this will take time. It can't happen yet. We're too small a voice, and will easily be drowned out by the cries of our boomer parents who don't understand it and by GenXers who can't see how it could immediately benefit themselves.
John
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Re: Financial topics

Post by John »

MarshAviator wrote: > Looks like these "Journalist" are reaching a Generational Dynamics
> view by circumnavigating the subject.

> One thing to take from this article that's pretty funny; The
> savings cycle was backwards, which they try to rationalize by so
> called wealth effects, but while they mention the GD1 and 75
> years, never really broach the subject of permanent changes to
> behaviors due to people's birth date.

> They even recognize the current predicament as some sort of
> journey. The close is hysterical suggesting a lottery solution to
> investing, which we sort of had. Looks like in a year or two the
> mainstream news may have it.
They're never going to get it. I've been watching this for over
seven years now, and I've seen pundits and analysts and "experts"
come up with the most Byzantine explanations for things, even when
the generational explanation is so obvious it almost hits you over
the head with a mallet.

The easiest one I always point to is the 1990s dot-com bubble.
Journalists, pundits, and "experts" either have absolutely no idea
why it happened, or they make up some incredibly outlandish
explanation that's close to gibberish. But not a single one even
suggests the most obvioius explanation -- that it occurred when the
survivors of the Great Depression retired.

People criticize me for saying that these "experts" are morons, but I
just can't think of a better description.

Sincerely,

John
John
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Re: Financial topics

Post by John »

mannfm11 wrote: > But, from what I understand the US government is less in debt
> relative to GDP than the Japanese government.
This comparison is not valid because when the Japanese government was
in crisis, struggling to get out of debt, the rest of the world was in
a huge credit bubble. That won't be true of the United States
crisis.

Sincerely,

John
John
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Protectionism and the Fallacy of Composition

Post by John »

-- Protectionism and the Fallacy of Composition

The Canadians and the Europeans are in a dither because some of the
language being discussed for the trillion dollar fiscal stimulus bill
calls for "Buy American" for all supplies. For example, if you build
a bridge with fiscal stimulus money, then you have to purchase steel
from American steel mills, to protect American jobs.

This kind of protectionist phrase is considered to be dirty language.
Everyone recalls the history of the Smoot-Hawley Tariff act of June,
1930, that was devastating to world trade. Everyone agrees that it
made the Great Depression much worse, and I've referred to it as the
first act of World War II, because of its devastating effect on the
Japanese.

The problem is that the protectionist approach is consistent with the
theory presented by Richard Koo. Insofar as the mind-boggling clown
circus going on in Washington these days has any theoretical support
at all, the protectionist approach is part of it.

** The effects of massive fiscal stimulus.
** http://www.generationaldynamics.com/cgi ... 24#e081224


** The effects of massive fiscal stimulus - Part II
** http://www.generationaldynamics.com/cgi ... 12#e090112


What's important is that all the money that goes out in stimulus must
come back into the Treasury. I've used the word "leakage" to refer
to the situation where some of the money leaves the country, and is
used to purchase foreign goods.

Another way of looking at this issue is to apply the Fallacy of
Composition. We hear a lot about the Fallacy of Composition when it
comes to families saving money. If a family saves money and avoids
debt, that's good; but if every family does that, then it's bad for
the country.
> The Fallacy of Composition is reasoning that says: because one
> person in the crowd can do it, everyone in the crowd can do it.
> For example, one person can get out of the theater through the
> doors in one minute -- but if everybody in the theater tries to do
> that at once, people get killed. Just because one person from the
> group can do it doesn't mean that the whole group can do it. In
> this simple model, it is the same with increasing saving. Society
> as a whole can save no more than it invests. One person can
> increase her saving, because other people's saving drops in
> compensation. If everybody is trying to increase saving at once,
> that doesn't work, and income drops instead.
The Fallacy of Composition is important when in the current crisis
because everyone is saving -- either putting money in the bank or
paying down debt -- which is good, but since everyone is doing it,
stores are going bankrupt.

But the interesting thing is that you can also apply the Fallacy of
Composition to countries. If a country in financial crisis becomes
protectionist, it's good for that country. But if every country does
the same thing, then all international trade becomes frozen.

Sincerely,

John
John
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Executive pay

Post by John »

New York Times wrote: > Understandably, pay is a touchy subject for financial executives
> these days, with reports last week that total bonus payments at
> New York financial companies last year reached $18.4 billion.

> But with tighter regulations on risk-taking and greater public
> scrutiny, the pay for top bankers could fall into line with pay
> for other professions, like doctors and lawyers.

> Indeed, high pay on Wall Street is an episodic phenomenon. A
> recent paper by two economists studied pay in finance from 1909 to
> 2006, comparing the industry’s pay levels with the private sector
> as a whole, seeking to adjust for education, skills, age and
> gender of the workers.

> In their National Bureau of Economic Research working paper,
> Thomas Philippon of New York University and Ariell Reshef of the
> University of Virginia found that the difference in pay between
> finance and the rest of industry was slight, if any, except in the
> late 1920s to 1930 and then again from the mid-1990s to 2006. In
> those boom years, compensation in finance was 30 percent to 50
> percent higher than in the rest of industry.
> http://www.nytimes.com/2009/02/05/busin ... ml?_r=1&hp
I wonder why?

John
John
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Warren Buffett

Post by John »

A web site reader told me that he "got an incredulous laugh out of
this one." I can see why.
Buffett's metric says it's time to buy

According to investing guru Warren Buffett, U.S. stocks are
a logical investment when their total market value equals 70% to 80%
of Gross National Product.


Image

http://money.cnn.com/2009/02/04/magazin ... /index.htm
I cannot for the life of me understand how this chart provides any
kind of buy signal.

This chart was below the 70-80% point at all times between 1924-95,
which means that it provided a buy signal in 1929, according to
Buffett.

If we're to interpret anything from this chart, we should apply the
Law of Mean Reversion, and realize that this metric is going to fall
to the 5-10% range for many years.

As I wrote last year, it't hard to believe that Warren Buffett hasn't
completely lost his marbles.

** Warren Buffett joins the kool-aid crowd
** http://www.generationaldynamics.com/cgi ... 18#e081018


Sincerely,

John
freddyv
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Re: Warren Buffett

Post by freddyv »

John wrote: I cannot for the life of me understand how this chart provides any
kind of buy signal.

This chart was below the 70-80% point at all times between 1924-95,
which means that it provided a buy signal in 1929, according to
Buffett.

If we're to interpret anything from this chart, we should apply the
Law of Mean Reversion, and realize that this metric is going to fall
to the 5-10% range for many years.

As I wrote last year, it't hard to believe that Warren Buffett hasn't
completely lost his marbles.

** Warren Buffett joins the kool-aid crowd
** http://www.generationaldynamics.com/cgi ... 18#e081018


Sincerely,

John

As with all the big wheels who lost fortunes in the 1930's Warren Buffet is incapable of seeing the truth because he has built his fortune and reputation on the very system that is now collapsing. Also, there is little he could do to shield himself from the stock market collapse. If he were to pull all his money out of the companies he's invested in he would help to create a panic that he does not want to be resonsible for and could be hurt by as he tries to get out of his holdings. Being rich is a catch 22...poor guy. :-)

In a sense he's in the same position as GM in that he simply doesn't want to packpeddle and give up his position of power. GM would be much healthier if it were to face reality and restructure but they just can't bring themselves to do it. Warren Buffet and all the other Wall Street powerbrokers are in much the same position and this crisis era we are in is the cleansing agent that will clean things up and allow us to start with a clean(er) slate.

I would think it would be obvious to anyone looking at that chart that the market should fall to 1/3 and probably less, of current value, if it is to be consistent with past revaluations. The continued weakness in just about every aspect of our economy and the predictions of our leading analysts, at least those who have so far been right, reinforce that view.

--Fred
freddyv
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Re: Financial topics

Post by freddyv »

Am I stupid or is this article,
http://www.cnbc.com/id/29015689
either dishonest or wrong?
Pulte Homes narrowed its quarterly loss, and sales at the homebuilding company rose from the same period last year.

The homebuilder reported a loss of $1.33 a share in its fourth quarter on sales of $1.65 billion, compared with a deficit of $3.54 a share on sales of $2.9 billion in the same period last year.

Analysts who follow Pulte expected the company to turn in a loss of 71 cents a share on sales of $1.44 billion, according to a consensus from Thomson Reuters.

Pulte shares [PHM 11.39 0.56 (+5.17%) ], which closed Wednesday at $10.83, fell over 3 percent in extended trading.

That is the entire article and what I got from the numbers reported is that Pulte did narrow its loss compared to last year but that sales this year are only 57% of last year. As well, analysts expected a loss of $.71 a share but the actual loss was $1.33, almost twice the prediction.

I am seeing this more and more. I don't know if it's because I am paying closer attention, the quality of the people writing these reports is dropping or if it's an actual attempt to subvert the truth.

I would say that as many as half of these reports have some sort of error like this. In most cases it is the conclusion, which shows up in the title, that is wrong. This may seem like a small thing but it is not because I am seeing this EVERYWHERE! Analysts, politicians, even those who run mult-billion dollar companies don't seem to be able to think critically or tell the truth.

--Fred
StilesBC
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Re: Financial topics

Post by StilesBC »

Fred,

Yes. I don't even trust the "straight facts" from mainstream media anymore. Even "skimming the headlines" can be misleading.

These guys have fact checkers and schools of editors at their disposal. People like John and myself do everything on our own, yet somehow still manage to avoid simple factual errors like that one.

Integrity is absent from today's journalism. There is no doubt left in my mind that it is being done maliciously. There's simply no other possible explanation.

But something funny happened when I read that clip. I didn't notice anything wrong the first two times I read it. I automatically skipped over the words and just read the numbers. My conclusion was: "Pulte had a terrible quarter." I think I've trained myself to ignore the lies, because I know exactly where they will be inserted.
John
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From the Dept. of Treasury

Post by John »

A web site reader has directed my attention to the following press
release on the Dept. of Treasury web site:
Dept. of Treasury wrote: > February 4, 2009
> TG-10

> Report to the Secretary of the Treasury from the Treasury
> Borrowing Advisory Committee of the Securities Industry and
> Financial Markets Association ...

> http://www.treas.gov/press/releases/tg10.htm
The press release goes on to describe the current economic situation
in extremely alarming terms. It doesn't use the word "default," but
it says that there'll be big problems funding the fiscal stimulus
plan.

Sincerely,

John
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