Financial topics

[aedens]

Notes as the exhaustion curve is not done suffocating.

Small business—the engine of growth—will continue to decline for structural reasons. Uncertainty, globalization, recession, and higher taxes and regulatory fees have eroded the incentives to risk capital and time in starting or expanding a small business.

I would attest to this trend as I work and support this market every day. But the statement made as to "incentives to risk capital" misses the point as this assumes ample capital is available to support small businesses. This really isn't the case as most small businesses secure capital from savings (hammered over the past five years by either market conditions or having to tap to support personal needs), real estate equity (wiped out in the housing bust), or from FF&CBAs (family, friends, or close business associates). As for the last source, family and friends are dealing with the same issues on savings/real estate whereas CBA's are either still rebuilding their business's financial strenght and/or allocating capital for the next downturn.
So on top of dealing with uncertain business conditions (making sales difficult to manage/drive) and an overbearing regulatory environment (taxes at every level, Obamacare, and added state laws just to name a few), the lack of readily available capital just adds insult to injury for small businesses and reinforces the severity of the structural problems plaguing this segment of the economy.
What is the core problem on the capital front is simple. The capital markets are no longer deploying capital to its most productive use and are without question, broken. Not when you have structural US deficits running at $1 trillion per year (consuming capital in the public sector at the expense of the private sector), not when the largest corporations sit on piles of cash and issue new debt to raise cash at incredibly low costs (even if they really don't need it), not when the banking industry in the country is basically nationalized with almost no incentive to take normal credit risks, and not when you really look at the PE and VC industries and realize that they basically don't even want to look at a deal that's less than $10 million in funding requirements (not when you have a billion dollars to deploy/manage).
Too much capital is concentrated in too few hands chasing too few quality deals. Remember that 4 to 5 years ago, capital and new business formation was almost non-existent during the height of the Great Recession. So companies that would have normally formed during 2008 through 2010, did not, producing much fewer quality businsses looking for growth capital 2 to 4 years later (a normal incubation period for new companies to execute a business plan and grow).
To me, this is even further supported by the velocity of money graph/chart provided in that while the amount of "cash" produced and made available during the past 4 years has basically increased 3x/4x, the velocity is diving at an unprecidented rate. The flow of cash is simply dying as a result of the inner circle of Washington, the Fed, the banks, and the largest corporations simply hoarding the funds as passing back and forth among themselves with no real benefit to the ecomony. Just one big circle jerk that has left Main Street high and dry. h/t del

You can feel the business being crushed. Liberals who get beaten totaly senseless turn into realist or eat there own.

[John]

Reminded me of a story when my father was in the military during Eisenhower
and a guy in Texas got 20 years for taking a loaf of bread.

I didn't know that Javert lived in Texas.

[aedens]

Reminded me of a story when my father was in the military during Eisenhower
and a guy in Texas got 20 years for taking a loaf of bread.

I didn't know that Javert lived in Texas.

Javert was a fictional character. Javert was incapable of compassion or pity, so yea, they are all over. Reminds me also of pressed service
the south was adapt at for some time. Pops was there for tech training for the DEW line then. Also he mentioned, as the world was soon to be wiped out
since basically a solution for wheat rust was about five or more pages inside the paper and no one had a clue, or seen they had no bread coming.
If the guy did not solve that wheat rust issue it was a dirt nap for countless people and no one got it. Being from Michigan when you see a brutal winter kill and just one to many deer in an area you can see the nature of economy.

The UN Food and Agriculture Organization (FAO) estimates that 29 countries in East and North Africa, the Near East, Central and South Asia, accounting for 37 percent of global wheat production.

Another cycle so we shall see.
Victor Hugo "Javert in his formidable happiness was to be pitied, as is every ignorant man who triumphs. Nothing could be so poignant and so terrible as this face, wherein was displayed all that may be designated as the evil of the good."

[aedens]

At the same time, a low tolerance for losses will remain a latent issue. An even greater propensity for performance-chasing and trend-following dynamics would seem a safe bet. But the dilemma of “weak handed” traders will continue to leave markets vulnerable to sudden (think “flash crash”) market downdrafts. Moreover, I suspect that many of the more sophisticated market operators are in this to play “blow-off” excesses for all they’re worth – yet with one eye planted on the exits. I’ll paraphrase hedge fund titan Leon Cooperman’s apropos comments this week from his CNBC interview: In the hedge fund industry, if you’re early you get killed. And if you’re late you get killed.
http://prudentbear.com/index.php/credit ... t_id=10746
The Masters of the Universe, naturally, believe they will identify bearish catalysts ahead of the crowd. But as the Masters’ assets under management swell to unimaginable dimensions, they’ll have reason to fret more about market liquidity and the tactics of fellow Masters. But for now, with the world awash in liquidity and the Draghi Plan having smothered European “tail risk,” they may be keen to keep playing – for “dancing.” “Right tail” happenings are not a low probability scenario.

They will operate at a loss since they are sitting on cash. You will not make it across the river Styx, they are the Ferrymen. Energy margins, right sized, Tranny cost and cluster manufacturing sites will survive if they are chosen. The fine to the Bank are pangs to the actors to come.
We can hear the footsteps. This is how the Eurodollar market began back in the early 1950s. The Soviet Union sold gold for dollars, but was afraid to keep the dollars in an account in New York, where they might be blocked for Cold War reasons. Moscow started a dollar-denominated account in an Italian bank known as “Eurobank,” where it felt safer from seizure. In the 1956 Suez crisis, when Britain and France landed forces on the Suez Canal to prevent its nationalization by Egypt, President Dwight Eisenhower looked for ways to pressure London to call off the attack. Clearly, Washington could not take direct military action against NATO allies. Eisenhower turned instead to financial warfare.
The market is dead, long live the market... Emptor https://www.youtube.com/watch?v=EbuLuHsxxlM

nature of economy
https://www.youtube.com/watch?v=yN3bKSP2iDs
Wordsworth saw that ideologies are lethal abbreviations of thought.

What we noted was local Tax Revenue off sheets movements are delaying and not promoting growth. The inclinations to the core are not negating local core reality. We stabilized ours to only waste it on there normalcy bias of intent. Business has only stabilized and augmented to defer risk segments to scale as we noted correctly ongoing. When we get time we can confirm trends that are rather a deeply worn path. The Irish economy, the German economy and the UK, US and Chinese economies do not exist, except by virtue of their integration in the globalized economy. Conversely, each is a localized expression of a global system. At any moment a myriad of final and intermediate goods, commodities, information and people is moving back and forth across borders. Without those flows, which maintain socio-economic function and complexity, economies will quickly collapse. The other thoughts seen I wish to pass.

[Reality Check]

Fed still isn't getting what they want, must be a lot of deleveraging going on.

http://www.shadowstats.com/charts/monet ... ney-supply

Money is going otc and secondary markets we noted. We noted the beta trade algo and packet stuffers
also running riot. Vanilla know's this on who and why. We moved on since they are unwise not to listen to Vanilla.
It may dawn on them to late that printing into algo's and hft is a bad idea. We noted that nominal prints
are not gdp at the margin. They may be slow in DC but they are not that plain stupid. Dullards maybe
but not plain stupid.

And these ramblings have what, exactly, to do with the subject charts ???

[Reality Check]

Japan is "planning" to increase it's defense spending for the first time in 13 years.

Japan is "planning" to buy between one (1) and three (3) U.S. made drones.

China is, and has been, every year, for decades, conducting a massive, ever increasing, investment in it's military capability.

But money matters, and to suggest that Japan has been, or is now, making investments that constitute an arms race with China is, at best, premature.

Money speaks louder than words.

http://www.guardian.co.uk/world/2013/ja ... drone-race

[vincecate]

This idea of minting a $1 trillion platinum coin and depositing it with the Fed so the government did not have to worry about the debt limit is gaining popularity. Both Krugman and Mish say this will not cause inflation.

If the government starts just printing or minting and spending money, without any worry about mounting debt, or interest, or paying back loans, or cutting spending, then spending will get completely out of control. I think minting the first coin would be enough to trigger the start of hyperinflation.

http://krugman.blogs.nytimes.com/2013/0 ... -the-coin/
http://krugman.blogs.nytimes.com/2013/0 ... that-coin/
http://globaleconomicanalysis.blogspot. ... -coin.html

Curious what others think of this #mintthecoin idea?

-- Vince

[OLD1953]

They want actual inflation of about 4% along with a rise in money supply and an end to deleveraging. They aren't getting it.

Next shot in the cyberwar has been fired right at the USA. Direct hit too:

http://www.nytimes.com/2013/01/09/techn ... .html?_r=0

The mint the coin notion is silly, though probably no more silly than the idea of a debt "ceiling". Congress knows exactly how much their bills will add to the debt, voting on this as a budget item then again as a debt ceiling item is just stupid politics. Anyhow, I doubt the coin idea will happen. Far more likely would be a challenge to the debt ceiling before the SCOTUS, on the grounds that Congress can't authorize the spending of money and then deny the means to execute its will.

[Reality Check]

This idea of minting a $1 trillion platinum coin and depositing it with the Fed so the government did not have to worry about the debt limit is gaining popularity.

...

Curious what others think of this #mintthecoin idea?

-- Vince

I believe it is one of those things that nobody believes will ever happen, so they do not think about it before it happens.

Other things that will ( or would ) never happen:

1. A modern western government would never round up millions of people based on their religious beliefs
and murder them in Extermination Camps ( the German government did it in the 1930s and 1940s )

2. The United States would never confiscate everyone's gold ( it happened in the 1930s )

3. The U.S. Government would never seize all the banks and give them to new owners ( it happened in the 1930s )

4. No President could ever issue an executive order to give most illegal aliens Amnesty ( Obama did it 2012 )

5. Obama would never support gay marriage, he is a Christian ( it happened 2012 )

6. Obama would never ban private ownership of guns ( today gun shops are nearly empty because people believe just the opposite )
Half the population believes he will do it, the other half hopes he will.

7. No President would ever use an un-ratified international treaty to register all guns in the United States ( the treaty is being finalized in the U.N. as we type )
Even less people are talking about this one than the magic coin trick.

8. The Magic Coin Trick could of course never happen, unless of course all the above crazy ideas happened.

[Reality Check]

Congress knows exactly how much their bills will add to the deb

Members of Congress admit, on the Congressional record, they do not even read bills before they sign them.

You know, small spending bills like Obamacare and the so-called "Fiscial Cliff Fix".

You are being self delusional if you believe they know ( or care for that matter ) how much debt they are voting for.

You're suggestion that people, like Obama, are justified, in continuing to do the wrong thing ( read running up immoral levels of debt ) just because other people might have taken acts in the past that support such immorality, speaks volumes about your own morals.