Financial topics

[OLD1953]

When I say manufacturing is returning to the USA, I don't mean monster steel mills and giant mines. What I'm referring to is "smart" products that could not even be imagined a few decades ago. For example, the newest thing in solar panels has nothing to do with the panel, it's a small inverter that knows how to keep in phase with all the other small inverters on that bus, and you get 120vac directly from the panel. From the pictures I've seen, they are tiny. Are they viable or junk? I don't know, but they don't add much of anything to the cost of the panel, and they surely will save on copper (higher voltage = same power over smaller diameter wire), and copper is pricey lately.

Nanosolar is cranking out solar sheets at a huge rate, and reportedly very cheaply - at mfr cost of almost nothing. They use a special dip process that sets up the solar cell on the nanometer scale, by arranging the cell structure as it dries.

Credo petroleum is reopening dead gas wells they buy for a song, and getting millions of cubic feet of gas from them with their high tech smart pumps (calliope).

Pocket computers are everywhere, the hunger of the world for more interconnectedness and computing power is amazing.

We've hit the leading edge of the singularity, and it's already overwhelming.

[Higgenbotham]

When I say manufacturing is returning to the USA, I don't mean monster steel mills and giant mines. What I'm referring to is "smart" products that could not even be imagined a few decades ago.

Peter Drucker wrote something about manufacturing 10-15 years ago that stuck with me. He said agriculture used to be the biggest part of our economy and as it became smaller some of our agricultural production (he may have mentioned sugar specifically) was no longer competitive with the rest of the world. He said something to the effect that it was deemed a good idea to keep that food production in the US for security reasons and the new wealth created in manufacturing was used to subsidize it. He then went on to say that basic manufacturing will work the same way in the future. He said the basic manufacturing would be brought back into the US and subsidized out of new wealth created by the new technologies.

[Higgenbotham]

The generational concept of the "crusty old bureaucracy" comes into focus in this "manufactured" up cycle from 2009. ... All "crusty old bureaucracy" stuff.

That's a fantastic analysis, Higgie. Thanks.

John

Much of the knowledge required to go more in depth would probably need to come from those familiar with the industries involved. Retail is an interesting case because the large retailers are relatively new companies - the crusty old retailers like Woolworth and K-Mart have mostly gone away. But I'm not so sure Wal-Mart and Target, etc., are really all that different. I mainly looked at areas where there are government spending and government loan bubbles - housing, finance, education and health care. It's become almost Un-American to say we shouldn't be wasting money in those areas. The defense industry would be another one.

[Higgenbotham]

This gist of this article is that, after Hurricane Katrina, the large US insurers with deep pockets pulled out of the gulf coast market, leaving it at the mercy of small undercapitalized insurers who were forced to rely on Bermuda based reinsurance companies. The reinsurance companies charge about $5 per every $1 of actual risk coverage. And now we find out "who" it is once again ripping off the public, none other than the likes of AIG and Goldman Sachs, the Vampire Squid.

After Hurricane Katrina, some of the highest rollers providing $33 billion to recapitalize the reinsurers of Bermuda included Lehman Brothers and Goldman Sachs, and private investors recruited by Jeff Greenberg, son of former AIG chairman Hank Greenberg.

These new players demanded paybacks equal to or better than the heady profits rolling off mortgage-backed securities. They sought return percentages from the mid-teens to high 20s, Mike Millete, a managing director of Goldman Sachs, told reinsurance executives during a 2006 industry forum in Bermuda.

In the end, Bermuda reinsurance investors saw a record return on equity, according to a Guy Carpenter analysis. Greenberg had a 26 percent return on Validus Holdings. Lancashire Re gave its New York private equity fund investors a 33 percent return. And in 2009, the largest reinsurer of Florida carriers reported a 38 percent return.

Being in Bermuda, the profits were tax-free.

On the other hand, Florida regulators limit property insurers to a 3.7 percent annual profit on their underwriting activities.

"Putting aside the tremendous human cost of natural catastrophes, as an investment category, cat risk is actually quite wonderful," Greg Richardson, vice president of Harbor Point Re, told his peers at a summit in 2008.

AS INSURERS SPEND more on reinsurance, they have less money to set aside for future storms.

The U.S. hurricanes in 2005, particularly Katrina, left the Bermuda reinsurers that provide most of Florida's hurricane coverage with net losses of $2.1 billion.

Those same reinsurers reported profits of $11.6 billion in 2006 -- a record -- and $11 billion in 2007.

http://www.heraldtribune.com/article/20 ... ?p=7&tc=pg

State Farm is an investor in a Bermuda reinsurance firm called DaVinci. After State Farm, pulled out of the gulf coast market, DaVinci increased its concentration in that market, with rates of up to 10 times the technical value of the insurance.

A risk assessment done for state regulators shows Northern Capital's coverage from DaVinci had a technical value -- the average annual expected hurricane loss -- of no more than 4 cents per $1 insured.

But DaVinci demanded to be paid 10 times the actual risk. That cost landed on homeowners.

A Herald-Tribune review of scores of reinsurance contracts found similar terms for other companies.

In 2009, Southern Fidelity paid 52 cents for every $1 of protection bought from DaVinci and RenRe. Homeowners Choice paid the two companies 43 cents per $1 of protection. Capitol Preferred also bought high-risk coverage last year at 57 cents on the dollar; Gulfstream paid 32 cents for every $1 of coverage.

http://www.heraldtribune.com/article/20 ... ?p=7&tc=pg

[vincecate]

Being in Bermuda, the profits were tax-free.

On the other hand, Florida regulators limit property insurers to a 3.7 percent annual profit on their underwriting activities.

I bet these regulators don't even know why all the insurers moved out of Florida. Central planning is not as easy as they think. Markets are slippery things. The harder you squeeze the more they slip through your fingers.

[aedens]

(G-T) = (S-I) – NX
(G is government spending, T is taxes, S is savings, I is investment and NX is net exports).

Will not matter until it does as they say guys. Central planning will fail.
MMT pays considerable attention to the operational reality of interactions between government, the central bank,
and the commercial banking sector.

Good insight
http://traderdannorcini.blogspot.com/20 ... lling.html

[OLD1953]

Central planning fails if sanctions are not enforced. Much current news shows interest in the enforcement of sanctions on the increase. Oil speculators charged, ABA asking for commodity traders to be forced to take physical delivery of at least a part of their trades, Senators joining forces to fight against the Administrations (classified) secret reinterpretation of the Patriot Act, businessman charged with stealing millions to in a Ponzi scheme to support gambling habits and pay off homes, the stories just roll on and on.

As John has often said, when every day brings the fall of another business idol, the change is underway.

Enforcement of the sanction is no longer unpopular.

[aedens]

Central planning fails if sanctions are not enforced. Much current news shows interest in the enforcement of sanctions on the increase. Oil speculators charged, ABA asking for commodity traders to be forced to take physical delivery of at least a part of their trades, Senators joining forces to fight against the Administrations (classified) secret reinterpretation of the Patriot Act, businessman charged with stealing millions to in a Ponzi scheme to support gambling habits and pay off homes, the stories just roll on and on.

As John has often said, when every day brings the fall of another business idol, the change is underway.

Enforcement of the sanction is no longer unpopular.

I agree other than rent dissipation, another fact projection on not coming home capital expansions but CAPEX to support roles if you wish to correlate
to trend as linked earlier on a few Corps. Heinz estimates sales in emerging markets will make up more than 20 percent in fiscal 2012. "This is where the growth is in the 21st century," Heinz CEO William Johnson told investors at its annual meeting Thursday. Heinz earned $223.9 million, or 69 cents per share, for the quarter. That's up from $192.4 million, or 60 cents per share ,a year earlier, but it was short of the 72 cents per share Wall Street anticipated. Energy Xport and revenue drains will decide if they export or even stay in addition besides the factory closings, Heinz also said it will spend about $160 million to improve its manufacturing and speed up productivity in the fiscal year. The closings will include two factories in the United States, two in Europe and one in the Pacific region. It will shed approximately 800 to 1,000 positions and be left with 76 factories.

[OLD1953]

Commodities collapse will kill emerging markets. China is no longer emerging, for the most part, they've arrived. Ending speculation in commodities will result in deflation being evident to everyone, but will also end the speculative bubbles in commodities - unless they simply collapse first. Very hard to say which will be worse for the public. Greek defaulting will cause the ratings for Portugal and Italy to be downgraded, and rescue attempts will probably downgrade the rescuers. As money is pulled back from commodities to pay for increased reserve requirements, the value of commodities will plummet, overall net will be the deflation that has been present in the currency for a time now will suddenly become evident in retail prices. With high risk high yield profits no longer possible, we'll have a long period of retrenching - ending with the next world war.

News to amuse:
http://finance.yahoo.com/news/At-WellPa ... l?x=0&.v=1
http://online.wsj.com/article/SB1000142 ... l_business
http://online.wsj.com/article/SB1000142 ... nvesting_0
http://www.bloomberg.com/news/2011-05-2 ... keene.html
http://www.bloomberg.com/news/2011-05-2 ... 0-01-.html
http://www.wired.com/dangerroom/2011/05 ... triot-act/
http://finance.yahoo.com/news/The-Case- ... 9.html?x=0
http://finance.yahoo.com/banking-budget ... -budgeting

Thus we find lawyers eating their own, Ballmer finally griping about Chinese theft, traders being jailed, savers being screwed, free money for the banks, classified interpretations of the legal code (how the HELL do you avoid breaking the law if you don't know what the AG thinks it MEANS?), Greenspan begging for higher taxes and an end to the politics of joy, and pensions piling into hedge funds again as if they didn't lose enough money last time. Crazy world.

[aedens]

As we know in the forums. Malinvestment is crackup boom, since the political economy is the economy it appears China is willing to IMO stall
"place in nuetral/auto pilot" progress since Inflation and mother nature is there largest problem at the moment. I made some ears bleed on that call a few weeks ago.

Aspect two is sticky wages to aggregate reality so the Company Store is back from my rent dissipation observance in the West given ad nauseum printing press ink flow.

The polito is we reap what we sow and I forwarded highlights from arcticles.

The United States faces a fundamental disconnect between the services that people expect the government to provide, particularly in the form of benefits for older Americans, and the tax revenues that people are willing to send to the government to finance those services.

“It seems like you’re only focusing on one half of the problem,” the constituent contended. “You’re trying to balance the budget on the backs of seniors and sick people.” House Democrats think they see an Easter miracle in the making in which the seniors who voted so strongly for the Republicans in 2010 shift back to Democrats in time for 2012.

And the reason for the blowback is that Ryan’s budget ends Medicare, the program where the federal government pays healthcare providers to treat elderly Americans, and replaces it with a voucher program where seniors are given money to help pay for private insurance. It also reduces taxes on the wealthiest Americans to their lowest levels since the 1930s. It cuts taxes on corporations while giving big tax breaks to oil companies.
Despite its long-term insolvency, Medicare remains very popular among seniors whose lives literally depend on it.

Truly when it's your money how can you ask others to care for it as a faithfull Steward? The Forums here cover this so exact in the past it numbs the mind how taxpayers truly deserve this. If you cannot discern the syndicalism and corporativism in the market condition there is no hope to convince them
anyway. Point being the market is SWF so get over it because now given reality they have no choice because no one could stop it. Another note from a truly trusted person I know. "They will kill us for what we have"