Generational Dynamics Forum - New Site

Still, many of the critics expect they will be proved right when, as they predict, the Fed's policies lose their power. When that happens, a big loss of confidence will occur, which will roil the markets and the economy, they forecast. "They've gotten themselves boxed into a corner," Mr. Gundlach said. Mr. Grantham said that he thought the Fed's largess would drive stocks so high that they will become vulnerable to even the slightest nudge.

"We all feel like old-fashioned gramophone records," he said. "It is the same old game and we keep saying the same old things."

Higgenbotham wrote: > A few years back, people here were criticizing Lazlo Biryini for
> saying the S&P 500 would get to 1500 or something like that.
> Recently, Lazlo gloated that, "Short sellers have learned their
> lesson." By and large, he may be right, but not this one.

> http://www.zerohedge.com/news/2014-02-1 ... -1900-june

malleni wrote:

Higgenbotham wrote: ...
I understand that you are espousing the viewpoint that there is nothing left of the US economy or the dollar system besides confidence and the confidence is rapidly eroding. Very little productive capacity, no ability to support the military, very little ability to tax, and not enough to maintain the dollar as international reserve currency. Therefore, in your view, a little bit of confidence is all that remains. That will soon evaporate and the dollar will become worthless very quickly.

My opinion is that the US is just not to the point yet where you believe it is. There is more left than just confidence. It is mostly a problem of corruption, which you've also discussed, and it's not known yet whether that can be turned around in time to save the country and the currency. Obviously, everyone is very nervous about this. It does seem unbelievable that the Congress and executive branch of the US could be so derelict in their duties.

Perfect conclusion.
That is exactly the point.
And that was the reason that I was confused reading your discussions... Sometimes, it looks that your explanations perfectly fit, but sometimes I could not understand what you are talking about.
Simply, the "timing" of events in your and my model are not "in phase" jet.
OK.
Lets see what happened.

Thanks for good discussion.

Best regards

John wrote:

Higgenbotham wrote: > A few years back, people here were criticizing Lazlo Biryini for
> saying the S&P 500 would get to 1500 or something like that.
> Recently, Lazlo gloated that, "Short sellers have learned their
> lesson." By and large, he may be right, but not this one.

> http://www.zerohedge.com/news/2014-02-1 ... -1900-june

I criticized Laszlo Birinyi because he was lying about price/earnings
ratios, based on some bizarre psychological model. And I wrote about
it because the Wall Street Journal was republishing his nonsense.

** Laszlo Birinyi provides insight on his fantasy price/earnings computations
** http://www.generationaldynamics.com/pg/ ... tm#e090522

Joining everyone else in riding a bubble doesn't make him a genius.
As the ZeroHedge story shows, he's still pretty much of an idiot.

Higgenbotham wrote:First, but not in this particular quote, Biryini says that all fundamental information is irrelevant.

Second, Biryini says that technical measures do provide some information, but they should not be used to predict things.

Third, after some discussion of technical measures, Biryini goes on to predict that the S&P will go to 1500-1700 over the next 2 or 3 years. He even calls it a prediction. The only conclusion I can draw is that his prediction must be based solely on the fact that he feels pretty good about where things are headed.

Then why not pull somebody in off the street to have this discussion?

Higgenbotham wrote:But here's what I would say about productivity and the service economy. We know that as the accounting stands today, Americans import about 5% more than they export (as a percentage of GDP). That can easily be turned around. The first step is for Americans to consume about 10% less, maybe 15% less. That can easily be done. In my observation, Americans could easily consume 50% less. Most could eat 50% less. The second step is for Americans to produce more. Once most Americans are eating 50% less and can bend over to pull weeds and use a hoe, etc., then they can probably grow 50% of their own food if they need to. If they don't need to, it will be because they are too busy producing something else of value. A lot of this is already happening at the grass roots level, but Washington and the rest of the world haven't caught on yet. The media doesn't run any stories like "10,000 Americans Worked Hard Today Cutting Consumption in Bangor, Maine" because that doesn't sell very well.
_________________________________________________________________________

Here's a link to the monthly trade numbers:

http://www.census.gov/indicator/www/ustrade.html

It looks like the monthly trade deficit has been cut in about half in the past 3 or 4 months. The change has occurred very quickly and I was asleep at the switch on this one. I changed what I wrote above to "Cutting Consumption" because that's the first step in the process of reducing the trade deficit. The second step will be to produce and sell more of our own products. While harder than cutting consumption, that shouldn't be too difficult once the deflationary jolt hits and the cost structure comes down. In the not too distant past, Americans were very good at producing high quality goods, much better than the junk we import from overseas nowadays. Once the cost structure comes down, producing in America and buying American will be a no brainer.