Financial topics

[aedens]

http://www.chinahush.com/2009/10/21/ama ... -in-china/

[OLD1953]

Was it Marx or Lenin that used to say a capitalist will sell you the rope you want to use to hang him? The actions of US business in regards to China have proven that statement to be true beyond all shadow of any possible doubt. Not only have they put all our eggs into one basket, the person who owns that basket detests them, but likes their money. Such a relationship can't last for any long term.

Worst recovery in history.

http://online.wsj.com/article/SB1000142 ... 04292.html

Amazing! Took a while, but they finally noticed!

[aedens]

End of February, margin debt was $289 billion, the highest since July 2011
Let me know when they find the MF money.

[aedens]

Worst recovery in history.

http://online.wsj.com/article/SB1000142 ... 04292.html

[OLD1953]

As I've said before, all economic systems have flaws, if you don't run things from a center that understands this, you are doomed to fail badly. And humans being what we are, we forget this lesson on a fairly regular basis.

Fact based reasoning seems to be coming back to popularity again. To me this shows clear evidence of the very early stages of a new turning.

It's interesting to see the world begin to actually take notice of the fact that China is NOT some death trap pollution sink, that China is NOT interested in becoming a pure capitalist state (Russia is actually much more interested in raw capitalism as far as I can tell) sans overthrow of the government, that China has encouraged the world to export pollution to China for the purpose of making it much harder to restart vital industries in the West - rare earth metal refining is just inherently nasty, the Chinese govt KNEW they could get the knee jerk "no pollution" people on board for keeping the refining in China and that means China dominates the West in technology for the foreseeable future - and on and on endlessly.

And now they are even noticing that China isn't a capitalist state and doesn't have any natural goals in common with the West. Wow. Facts rule!

http://www.forbes.com/forbes/2012/0423/ ... chang.html

[Trevor]

Something else that people are beginning to notice is that China's economy cannot grow to infinity. Less than a year ago, many were claiming that by the end of this decade, China would be the world's biggest economy. Admittedly, many still don't see a problem, but now I'm hearing some actual discussion about their economy slowing down.

Another thing: in spite of their rapid growth, most people there are still dirt poor. The richest province in the country has an average income, on a Purchasing Power Parity basis is around 20,000 US dollars. It's Tianjin province, which only has around 13 million people.

[Higgenbotham]

Issues discussed here examined in more detail.

Below is Jim Rickards’ submitted testimony as a witness in the Senate Banking Committee’s Subcommittee on Economic Policy hearing entitled: “Retirement (In)Security: Examining The Retirement Savings Gap”

http://www.financialsense.com/contribut ... ate-policy

[Trevor]

A lot of people don't have any savings to speak of. That or they've put their retirement accounts in the stock market and we all know how that's going to end. We've pumped something like 10 trillion into the economy, if not more than that and the bubbles are still deflating. However, what I don't understand is why the stock market bubble isn't popping the way that the housing market has.

[OLD1953]

As far as savings go, lets be real for a minute. The later silents and the very early boomer cohort had a chance at reasonable levels of savings and having a family. This group would have been born from 1925 ish to about 1948. The surviving silents had generous GI Bill training and they'd been through hell, they could apply themselves well, they'd learned this. The early boomers had the bonus of starting work in a growing economy, thus giving them a chance to get a real start in life, PLUS, there was a real shortage of both labor and low end management - they moved up quickly if they had any ability. In terms of working and making a living, with a chance at savings and advancement, these guys had it much easier than any large group entering the work force from 1972 onwards. For anyone starting in the work force post 1972, things were simply different. First there was wild inflation, then recession, then the constant pronouncements of the rise of Japan and Germany and the entry of foreign vehicles into the US market, the oil embargo and the Iran hostage crisis, and on it went. Starting a family in that era meant starting with debt and staying in debt. Doubtless it's true that people "could refuse to have families", in which case you just set policy against the most powerful of human biological imperatives. Moreover, just what would happen to any country if people didn't have children - pardon me, the GenX cohort did that, and we are looking at the result right now. I suppose you could generalize and say there is a brief spring period in each sacelum where people enter the workforce and have the ability to live with saving and a chance to keep those savings, but it simply doesn't last that long. It always annoyed the hell out of me when someone who'd started life in a time when the wage/expenditure ratio was much lower lectured me on saving. And they'd always focus on "what you make" and never on "what you have to pay out". These guys were always thinking in terms of 20 cents for a loaf of bread as expensive, while the cheapest white bread you could buy when I entered the workforce was about 69 cents. Sure, I was making three times what they made starting out, which I was told repeatedly, but the cheapest I could buy was 3.5 times as expensive as the expensive items when they were in my shoes. That fact kind of kills the idea of saving young.

[Higgenbotham]

Somewhere in there Rickards talks about feedback loops. Rickards in so many words is saying - the only people who have incentive to save are the really good gamblers. Those who aren't good gamblers just can't save. Why - because the only way to get a return over inflation the way things are rigged is to gamble and win. Otherwise, you might as well just spend your money - which of course drives prices up even more. OLD, I think you hit it on the button when you gave the year 1972 because Bretton Woods was dismantled August 15, 1971 and everything moved toward debasement and arbitrage and derivatives. Let's say a situation is created where saving is rewarded. First, I think prices will get reasonable again. Then it will be possible to manufacture almost everything in the US again. The trade deficit will normalize. And so on. Once the people wise up and force Bernanke to remove the incentive to gamble, and/or the incentive is removed when the shitpile collapses for good, then we can move on and regular people will be able to produce things and save money again.