Financial topics

[John]

Keynesian view of debt




http://globaleconomicanalysis.blogspot. ... esian.html

[vincecate]

Keynesian view of debt




http://globaleconomicanalysis.blogspot. ... esian.html

After the Keynesians print enough money the money becomes worthless, as does the debt. So it is kind of true.

[xakzen]

...
The other big problem is that US interest rates will have to go up and as they do the yield on stocks has to keep pace, but since earnings will not go up that fast the price on the stocks will have to go down to get a competitive yield. So again, "major long term drop" seems to be coming.

I'm certainly no expert on inflation, but how can you be predicting hyperinflation (in the Inflation vs Deflation thread) and also predicting Capital depreciation (Market going down)? Aren't the 2 mutually exclusive?

[vincecate]

...
The other big problem is that US interest rates will have to go up and as they do the yield on stocks has to keep pace, but since earnings will not go up that fast the price on the stocks will have to go down to get a competitive yield. So again, "major long term drop" seems to be coming.

I'm certainly no expert on inflation, but how can you be predicting hyperinflation (in the Inflation vs Deflation thread) and also predicting Capital depreciation (Market going down)? Aren't the 2 mutually exclusive?

Sort of. If inflation starts gradually then interest rates will go up and the stock market will go down (competitive yields). But longer term inflation increase the prices of everything, including stocks, so the market will go up. However, it could happen so fast (like over a weekend) that you never really notice the stock market going down. My guess is that the inflation will start out gradually enough that there will be time for a substantial drop in the stock market before inflation starts pushing it up.

Some numbers. If interest rates go from 3% to 6% it can cause the stock market to cut in half, or lose 50%. So it would take years of 6% inflation to put the stock market back up where it was.

But if over the weekend the dollar loses a factor of 4 then don't expect the stock market to go down Monday.

[aedens]

http://online.wsj.com/public/resources/ ... ng0622.pdf

http://video.godlikeproductions.com/BP_Presentation.pdf

http://video.godlikeproductions.com/vid ... 4acb841471

My Brother Inlaw called Sunday from Florida. Not good, Seven foot Sharks dead floating in and
yea the Locals know all about local norms.

Anyway welcome to our Detroit.
http://video.godlikeproductions.com/vid ... 51d8726d28

http://video.godlikeproductions.com/vid ... af8f3cc84a

Flippers anyone?
http://hamptonroads.com/2010/06/navy-lo ... es-norfolk

Meanwhile, see if by the weekend:
User ID: 908606
Switzerland
6/22/2010 3:20 PM

Inside informants from BP have told me that well casing has only days left before collapsing due the high pressure tear, which has lasted for over two months.
They predict BOP to fail in the wake of the well. These are collogues from BP, back when I worked for Transocean.

I hope there wrong as they do also.

[OLD1953]

I'm figuring it's about to spit that casing string at the sky myself.

[aedens]

http://www.dailymail.co.uk/news/budget/ ... uture.html

Lets see how long the fuse is? Billions of dollars to the TBTF

[aedens]

A final note: an entire generation has grown up thinking that economics is all about predicting market behaviour. Even very smart people take this view for granted, instead of pausing to ponder what the word economics actually means. But then again, they don't think about what democracy means, either. In the age of economics as market analysis, we call it representative democracy, probably because it merely represents democracy instead of being the real thing.

From Hellasious

http://suddendebt.blogspot.com/2010/06/ ... ft-er.html

Meanwhile back at the ranch.
http://www.business.auburn.edu/~boultwr/4corecmp.pdf

[aedens]

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.
Now we have the situation the Austrian School is most afraid of since the government’s attempts to avoid readjustments from an asset bubble have simply prolonged the concurrent bubbles and made the potential fall worse. We have some time since the dimes are cashing in on the nickels housing contracts. In our area alone a $68k went for $11k cash 68:11*X Another was $160k default for $30k cash. The average time spread I am seeing is ~5.5X this year for the sake of argument. I did not bite this round, the taxpayer took it in the…. which is absurd going into the next round of resets soon, and the dimes are walking along gathering nickels in a easily pace, since the risk is speculation funded now, built in on subordinate debt tranches http://en.wikipedia.org/wiki/Subordinated_debt on Tax Payers Back Ad infinitum
Back of the envelope in pencil.
The CPI is used to calculate how prices have changed over the years. Let's say you have $28K in your pocket to purchase some goods and services today. How much money would you have needed in X to buy the same amount of goods and services?

The CPI for 1982 = 96.5
The CPI for 2009 = 213.2
Use the following formula to compute the calculation:
1982 Price = 2009 Price x (1982 CPI / 2009 CPI*)
X (96.5 /214)
I used 214 since there number really is no better than any other for margin puts.
28k*(96.5/214) = $11000 /$62157 5.6 versus 5.5 observed, close enough I say for now.
I had to go back to ~1982 dollars for our regional context today. That is a lot of nickels with no risk to the dimes. Who have many contracts built on
http://www.markit.com/en/products/data/ ... icing.page?
that are out there if you like it or not. Rinse and repeat and this dime will wait until correlation trend observed uptick. As I told my wife it is worth what you will pay for it in our current economy based on what we do make? They sits vacant on a lovely balance sheet with what value. Pick one…. I wait, and will wait until the adults can get back to business. http://www.physics.utoronto.ca/~qocmp/i ... .10.05.pdf
Why should the American taxpayer, at the behest of Senators like you, bail out those Wall Street bankers who have levered themselves beyond comprehension through complex financial instruments like naked CDOs, MBS, and credit default swaps, i.e., derivatives?

Currency peg will shift since both the parents die and the baby starves....

Thu Nov 12, 2009 7:18 pm

freddyv wrote:
An interesting article on "shadow inventory" of housing and other housing-related topics.
http://www.cnbc.com/id/33834317
I find myself learning great patience. Just sitting here waiting for the pot to boil. As we all know, it will not boil if watched and so I am quietly listening for the bubbling sound.... --Fred

Ah the love of money and we define avarice as a process given the vice it contains worthy of one course since it contains demise.
No unpopular Government will last in the long run as they "insure" there own winter on the people. Those trying to make are innovating as we are
but there is so much headwinds and noise even when doing things better politics distort fact. Internal wrecking ball and they wonder what the hell just hit us.
The apathy top to bottum will give way to humilty before the last crash it appears as was the last event we remember in the 70's we had to tough out.
Pointless from here on to convey there ass kicking and misery to come. They never learn... but must suffer.

Sun Nov 15, 2009
I was early out equity as posted until spring now as conveyed earlier.
Assume a move coming from hubris and not fundamantal's. Do not know on convexity correlation but it was factored in
as was conveyed in forums on risk management. More fundamantal pressure coming to actual jobs that are value added
to capacity and demand given polital inertia which is another layer of malinvest the British endure since the climate is votes
to a party line from manufacturing to Bureacratic centric mentality.
http://generationaldynamics.com/forum/v ... dens#p4359

Local: Seen that the brits saw the light, but wish our cousins well well, and PEG float was announced as China loosened float finally in there terms
given there realities.
http://generationaldynamics.com/forum/v ... dens#p4350

As we know watch the usual suspects.
http://generationaldynamics.com/forum/v ... 2140#p4361

Stocks and interest rates fell sharply Thursday as investors grew more pessimistic about the economic recovery. Reports on initial jobless claims and durable goods orders contributed to investors' darker view of the economy.

Rates on 30-year fixed mortgages fall to 4.69 pct., lowest level on records dating to 1971 <----------- It will not matter as discussed in Forums.

In thus altering the configuration of income distribution in favor of taxpayers and to the disadvantage of political tax consumers, the rabattage effect of fiscal deflation results in a new structure of consumer demands and pattern of resource pricing and allocation that more accurately reflect the preferences of those who earn income from the production and exchange of goods on the market. From the standpoint of Austrian welfare economics this result represents an improvement in social welfare and economic efficiency because, even if the precise pre-tax pattern of income and wealth distribution is
not restored, fewer resources are siphoned off from producers in the social division of labor mitigating the distortion of economic calculation inherent in all government activities.

"The case that all government expenditures introduce calculational chaos and economic inefficiencies into
the market process is elaborated in Rothbard 1970, pp. 125-49. See Salerno 1993, pp. 130-31 for the
argument that the “preferences and demands” of the participants in the social division of labor “must serve
as the sole and ultimate standard of socially efficient resource use” and that the market demands of tax
consumers falsify monetary calculation and lead to “a socially inefficient reallocation of productive
resources.”

This deflationary process effectively involves the extinguishing of pseudo property titles to the money
commodity, in this case the paper currency embodying the fiat dollar. As argued above,
the suppression of fictitious property titles to any commodity ends the distortion of
economic calculation and realigns the pattern of productive activities with actual
underlying resource scarcities.

http://www.huffingtonpost.com/2010/06/2 ... 24096.html

[OLD1953]

Interesting article, but I'm not sure what he means at the end. Does he mean we should tiptoe around the bombs till they go off, or does he mean he wants them defused, but is afraid the defusing will set them off?

Sounds like the donkey that starved between two precisely equal piles of hay to me. Except in this case the hay is explosive and time will eventually solve the matter.

http://finance.yahoo.com/banking-budget ... t-disaster

The subprime disaster was a result of financial bombs -- derivatives -- exploding in financial institutions such as AIG and Lehman Brothers, as well as banks and financial institution throughout the world. After the bombs AIG manufactured exploded, AIG received $181 billion in taxpayer funding and immediately sent $11.9 billion to France’s Societe Generale, $11.8 to Deutsche Bank, and $8.5 billion to Barclays Bank of Britain. U.S. taxpayer money was going to bail out banks around the world. During the last three months of 2008, AIG was losing more than $27 million an hour. That is how powerful these derivatives can be. The problem I see is this: There are many more such bombs still sitting in balance sheets all over the world.