Cohodk -- I agree with both of your key points -- although would point out that the power of unions has been diminishing for quite some time, due in part to globalization, and this is one reason for relatively mild inflationary pressures over the past 20 years.
One other factor that could add to deflationary pressures -- baby boomers will almost certainly increase savings rates. As it dawns on people that they will not be bailed out by equity returns, a fairly high percentage will choose to save rather than hope for a meager dole. This will be healthy for the economy long term, and could help to restore balance, but it may be deflationary mid-term.
"The union membership rate for public sector workers (35.9 percent) was substantially higher than for private industry workers (7.5 percent). Within the public sector, local government workers had the highest union membership rate, 41.8 percent. "
<< <i>Cohodk -- I agree with both of your key points -- although would point out that the power of unions has been diminishing for quite some time, due in part to globalization, and this is one reason for relatively mild inflationary pressures over the past 20 years.
One other factor that could add to deflationary pressures -- baby boomers will almost certainly increase savings rates. As it dawns on people that they will not be bailed out by equity returns, a fairly high percentage will choose to save rather than hope for a meager dole. This will be healthy for the economy long term, and could help to restore balance, but it may be deflationary mid-term. >>
Agreed. The very situation you express has been happening in Japan for the last 20 years. You have an aging population with no population growth which has translated into a dormant economy with little inflation. I believe the same in now happening in Europe and will in China in about 25 years.
<< <i>Cohodk -- I agree with both of your key points -- although would point out that the power of unions has been diminishing for quite some time, due in part to globalization, and this is one reason for relatively mild inflationary pressures over the past 20 years.
One other factor that could add to deflationary pressures -- baby boomers will almost certainly increase savings rates. As it dawns on people that they will not be bailed out by equity returns, a fairly high percentage will choose to save rather than hope for a meager dole. This will be healthy for the economy long term, and could help to restore balance, but it may be deflationary mid-term. >>
Agreed. The very situation you express has been happening in Japan for the last 20 years. You have an aging population with no population growth which has translated into a dormant economy with little inflation. I believe the same in now happening in Europe and will in China in about 25 years. >>
Savings are not deflationary. Savings become the basis for credit expansion and that's a good thing.
<< <i>Cohodk -- I agree with both of your key points -- although would point out that the power of unions has been diminishing for quite some time, due in part to globalization, and this is one reason for relatively mild inflationary pressures over the past 20 years.
One other factor that could add to deflationary pressures -- baby boomers will almost certainly increase savings rates. As it dawns on people that they will not be bailed out by equity returns, a fairly high percentage will choose to save rather than hope for a meager dole. This will be healthy for the economy long term, and could help to restore balance, but it may be deflationary mid-term. >>
Agreed. The very situation you express has been happening in Japan for the last 20 years. You have an aging population with no population growth which has translated into a dormant economy with little inflation. I believe the same in now happening in Europe and will in China in about 25 years. >>
Savings are not deflationary. Savings become the basis for credit expansion and that's a good thing. >>
Eventually, but perhaps not for decades. Just ask Japan.
Money saved is money not spent and that hurts economic growth. No consumption means no jobs. No jobs means no consumption.
And given the amount of debt we have, it will take years and years of savings just wipe out the debt. Then we can actually save something.
Crude oil lost $2.98 to settle at $43.81, natural gas fell 31.7 cents to finish at $6.03, heating oil closed lower by 6.95 cents to $1.5145 and RBOB gasoline ended down 7.08 cents to $0.9727 (all Jan contracts)
North Sea peak oil has been in the media for a year, since about March of '07 and also in the news this week as well. The North Sea was a stable producer for many years but the current discussions are how they can go deeper and farther out into the North Sea to get more production. Russia has had some news items about speculation regarding their peak oil problems with the same discussions, more remote locations and deeper wells. Russia thinks they are going to do some good with Venezuelan oil but they have a thick, difficult to refine oil and I believe (may be mistaken) that the US has the only refineries capable of dealing with their oil, and I don't believe the Ruskis have the refining capability for the Venezuelan crude so this will be interesting to watch. Ruskis have used oil as a weapon as they supply much of europe and have used rationing and cutting off supply as a stick to dole out pain when they need to. But since they are going into peak oil, they are probably wondering just what to do. they may have to buddy up with the Chinese
Resource acquisition is going to be a big item as soon as we get over the commodity doldrums we find outselves in; China has played the resource acquisition card very well with their involvement in the African continent so they will be well positioned for resources...but I digress.
<< <i>Savings are not deflationary. Savings become the basis for credit expansion and that's a good thing. >>
Eventually, but perhaps not for decades. Just ask Japan.
Money saved is money not spent and that hurts economic growth. No consumption means no jobs. No jobs means no consumption.
And given the amount of debt we have, it will take years and years of savings just wipe out the debt. Then we can actually save something. >>
Japan is a different animal all together. Their bank reserves are much higher and they don't print $ like we do.
Dave, the only bad thing you can do with cash is stick it your mattres (I left off the last S for savings). A savings deposit to day is a potential loan tomorrow.
Quite a shocker around here that the Comical would even acknowledge this story.
I read it this morning(on-line), of course I've been following it for a long time.
Our newspaper has been losing so much circulation over the years, it's rare to see newspapers on lawns anymore on an early morning drive.
The fact is they are so anti-christian and a polar opposite to the vast majority politically certainly has had something to do with it.
Most people only buy one on Sundays for the coupons and use the rest to line birdcages or start the fireplace.
"Lenin is certainly right. There is no subtler or more severe means of overturning the existing basis of society(destroy capitalism) than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and it does it in a manner which not one man in a million is able to diagnose." John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
Interesting reading for those who believe that US Treasuries are the way to go right now... or investing in insurance companies. The article also mentions who the entities are that are taking deliveries from the Comex this month. Just may surprise you.
<< <i>Interesting reading for those who believe that US Treasuries are the way to go right now... or investing in insurance companies. The article also mentions who the entities are that are taking deliveries from the Comex this month. Just may surprise you.
<< <i>There is no other leveraged commodity market where short sellers increase their positions, materially, as the price rises, and increase them even more when prices are exploding, except gold and silver. The reason traders don’t normally do that is that it exposes short sellers to unlimited liability and risk. Yet, in both March and July 2008, and on countless occasions over the past 21 years, vast numbers of new gold and silver short positions were temporarily opened up, with the position holders seemingly unconcerned about the fact that precious metals had just risen exponentially, and that there was a very real potential they would bankrupt themselves with unlimited upside potential. Normal traders would not expose themselves to such unlimited risks. >>
Balderdash! The large positions taken are part an an offsetting trade strategy based on currency arbitrage called "carry trade". No sane trading desk would EVER take a naked risk like the writer is implying. EVER!
<< <i>Interesting reading for those who believe that US Treasuries are the way to go right now... >>
We took a strong postion in 10 and 30 years Treasuries a few weeks ago. Been happy so far but if and when rates turn up it's going to be a blood bath. We're covering our tails with some puts.
I definitely agree that treasuries have been the place to be recently. But like you mentioned, when those rates turn.... Wonder where the money will go then?
Hard to say what is going on right now, but deflation is winning out. The question I have is whether the buying pressure on the long end of the curve is from institutional buyers or from the fed itself driving mortgage rates down. This kind of move into treasuries reeks of manipulation by the fed, which is supported by the crazy expansion of its balance sheet...OR...the market is pricing in extreme deflation of a depression type.
Very interesting essay. It would probably be beyone any of our capabilities unless we had a project manager and several volunteers to verify each major point in that article but very interesting at the least. You know that old saw"If if quacks like a duck...etc. well, that's kind of what comes to mind here. That being said, it may not be exactly as the article suggests but even to the lay observer of the recent economic activity like rising stock prices in the face of (a) no new capitalization...actually in the face of major failures, (b) falling gold in a period of major cash expansions/infusions, (c) major collapses of markets like housing and oil/commodities in the face of falling demand from shrinking growth, that one can easily stand on the sidelines and can be able to repeat that old Bob Dylan line from the ballad of the thin man, "You know something is happening but you don't know what it is, do you Mr. Jones." There is definitely some major boogie woogie going on and it is cloaked and dark and what ever the media is saying, what ever our leaders are saying, what ever the heads are saying...it is not that.
You know, there really isn't any place to hide except in metal and even that is not a sure bet. The game has become so grand, so intricate, so symbiotic that it is really chaos. Managing the world economy in this manner is certainly most akin to trying to hold a lightning bolt; somebody could get hurt. It's like a bunch of cowboys chasing a racoon at night with a pack of dogs; the dogs scream and howl and the cowboys ride hard after the noise and then the coon gets in the water and the dogs go quiet again until the dogs pick up the new scent and run and howl again and the cowboys chase hard again until they either have a coon in a tree or they just go home and drink whiskey and shoot at cans until the next time they go hunting. This racoon of an economy seems to be very good at running.
The truth may come out if they make a run at the COMEX, we'll just have to wait till those dogs start howling again or if everybody just goes back to camp and drinks whiskey.
OH, and one more thing...There is a lot of economic pain at the personal level out there this year. If you have the opportunity and wherewithall, please try to spread a little wealth or food or or toys or generosity around to those that are in need. I'm sure we all do that but this year is particularly hard for a lot of people. We are often a little smug about those that got caught up in this mess but caught up they are and for those of us that were well positioned, we can be a little grateful and spread a little help around.
That is all, please return to your regularly scheduled program.
"You know, there really isn't any place to hide except in metal and even that is not a sure bet. "
That's it in a nutshell. There is no safe place. The old rules no longer apply, and it is difficult to determine what the 'new' rules are since there is no transparency. The FED is refusing to disclose much of what is taking place and who is getting what money and what they are doing with it.
IMO having equal amounts of stocks, fixed accounts, and gold/silver (physical) is the mixture to go with, and hope that one of the trio will survive and do ok. Very risky to put all of your assets into one area at this time.
<< <i>Hard to say what is going on right now, but deflation is winning out. The question I have is whether the buying pressure on the long end of the curve is from institutional buyers or from the fed itself driving mortgage rates down. This kind of move into treasuries reeks of manipulation by the fed, which is supported by the crazy expansion of its balance sheet...OR...the market is pricing in extreme deflation of a depression type. >>
I think it is largely institutional. During the depression I believe Treasuries did quite well also. This is exactly how deflation has panned out in the past. This is creating a bubble of all bubbles in Govt debt, but I believe yields will go lower. I wont be surprised to see the 30 yr yield 2.5% within a few months, possibly even 2%.
I would love to see rates with a 2 handle. I have a 30yr fixed mortgage with 23 years remaining at 6.375%, my payment will be the same with a 4.5% 15yr mortgage. Go bubble go!!
Edited to add....treasuries are VERY overbought at this time and a pullback is more than likely in the near term.
Ebaytrader, yes, Japan is a different animal. It is like a kitten compared to the tiger we are dealing with. This is a GLOBAL problem, not a country specific one.
"...would love to see rates with a 2 handle. I have a 30yr fixed mortgage with 23 years remaining at 6.375%, my payment will be the same with a 4.5% 15yr mortgage. Go bubble go!!"
Yepper, we're standing in the same line, watchin', waitin'.
...new gold and silver short positions were temporarily opened up, with the position holders seemingly unconcerned about the fact that precious metals had just risen exponentially, and that there was a very real potential they would bankrupt themselves with unlimited upside potential.
1) There is not a very real potential of unlimited upside.
2) I've always Shorted when prices are too high. Didn't realize I've been doing it the wrong way...
<< <i>"...would love to see rates with a 2 handle. I have a 30yr fixed mortgage with 23 years remaining at 6.375%, my payment will be the same with a 4.5% 15yr mortgage. Go bubble go!!"
Yepper, we're standing in the same line, watchin', waitin'. >>
No sane trading desk would EVER take a naked risk like the writer is implying. EVER!
That's the point. The trades at the JPM, GS, Lehman, BSC, etc. were not always sane. The may have taken extreme risks in gold shorts/derivatives in order to further other goals, such as a stronger dollar where their bets should have been much larger. And having the "backing" and approval of the FED/PPT/JPM certainly cannot hurt one's trading desk as long as you are trading in the same direction as the "boyz."
From The Economist print edition Saturday December 6th 2008
“Those Americans who have been methodically putting money into pension plans (often known in America as 401(k) schemes) must be wondering why they bothered.
Figures from Morningstar, an investment-research firm, show that an American who put $100 a month for the past ten years into the average equity fund would have accumulated just $10,932—$1,068 less than he invested (see chart 1). Even a balanced fund (one that mixes government bonds and equities) would have lost money. A European who invested a flat amount every month for the past decade would have lost almost 25% of his money, according to Lipper, another research firm.”
<< <i>Europeans are now calling our 401K’S “SCHEMES” >>
The word "scheme" doesn't have the same sinister connotation in British English as in American English. (Though maybe it should? ) The Brits use "scheme" in the same way as we use "plan." Link to example.
"Men who had never shown any ability to make or increase fortunes for themselves abounded in brilliant plans for creating and increasing wealth for the country at large." Fiat Money Inflation in France, Andrew Dickson White (1912)
<< <i>They should figure out the difference between a 401k and a pension, first. >>
It's a good point. 401(k)'s are really savings plans. In my opinion, to qualify as a pension plan, the plans needs to provide defined payments over the remainder of the participant's lifetime. (Social Security, annuities, and traditional defined benefit pension plans provide this form of benefits.)
A 401(k) doesn't provide that; once your money runs it, it's gone. However, I've heard that some 401(k) plans now offer to convert your lump sum account value at retirement into an annuity (you use the money to purchase the annuity). If all the plans offered that, they would have the same structure as pension plans.
Sorry for the digression but it's an interesting distinction that many people don't appreciate.
"Men who had never shown any ability to make or increase fortunes for themselves abounded in brilliant plans for creating and increasing wealth for the country at large." Fiat Money Inflation in France, Andrew Dickson White (1912)
NEW YORK – For the hundreds of camera-toting tourists who visit Wall Street every day, the New York Stock Exchange presents an imposing sight.
The building-sized American flag draped over the exchange's towering Corinthian columns. The sculptures on the facade that symbolize the prosperity of a capitalist nation. The stern-looking statue of George Washington across the street.
These icons of national pride mark Wall Street as both a site of business and a symbol of the risk-taking and financial success that have spurred American global dominance and helped shape this country's identity.
But with the nation's top investment houses shuttered, sold or changing into staid commercial operations, doubts have emerged about whether the city that for generations has been known as the world's financial capital can retain that title — or the daredevil swagger that has defined Wall Street for so long.
It is a transformation that some say was under way long before the meltdown of 2008.
I have lost all faith in the stock market and my 401K. The only advantage of the stock market is for those who trade daily, not for long term investors who cannot play that game. I don't believe in dollar cost averaging investing in the stock market anymore either. Just another ploy to suck more money out of your hard earned income. The 401K is a scheme to suck as much money as it can out of honest hardworking Americans who really have no other means in trying to beat inflation and try to make some return on their money in the stock market. The wild swings of 1000 points of the DOW will be common for next few years I believe and will further deplete your stock portfolio for those who dollar cost average in the stock market. JMHO.
1. 401s as compared to fixed pensions, relieve the employer of the cost of any underfunding liability.
2. It replaces a stable retirement earnings with a variable and more risky pension device.
3. The 401s also have supported mutual funds and investment advisers as the steady inflow of fresh money allowed for an inflated stock market valuation.
4. While many supposed experts claim that the stock market is a one way road to financial Nirvana, it is not. Many periods in our history have shown long periods where the market has not gone anywhere and other periods, like today, when folks have lost almost everything. Not everyone has a 40 year work horizon. When folks are 55 and above, their productive years are indeed limited.
5.For the last 20 years, working men and woman have been sold a bill of goods that the good times would always roll and that this was the best of all possible worlds. Further we were inundated with facts how each 401K holder would be able to retire with millions of dollars in assets. Well now you know, IT JUST AIN'T TRUE. Human nature insures, that it was never true for most of us.
Free Trade brought lower prices but it caused outsourcing and a tendency to go in debt for the average working person. Further, It cause a continuing lose of quality manufacturing , administrative and professional jobs, to first Mexico, then India and finally China.
Failure to make American cars fuel efficient has cost all Americans a dependence on foreign oil as well as the potential collapse of the American Auto Industry.
Our regulatory Agencies now in actuality, regulate nothing and protect nothing. All of them are being run by former executives and lobbyists , of the very industries they are supposed to regulate.
Public lands are being raped by industry, for pennies on the dollar.
The result of wrong policy, wrong taxing and a failure to consider the welfare of working men and woman, have now placed us well on the way to a 21st Century Depression.
We can and we will dig our way out of all of this, but it will be painful, expensive and may take a decade or longer, to repair the fundamental damage to our National economy and industrial base. It's going to be a long white nuckle ride folks, strap your selves in real tight.
The taxing structure changes placed a disadvantage on savings, with low interest rates.
<< <i>Further we were inundated with facts how each 401K holder would be able to retire with millions of dollars in assets. Well now you know, IT JUST AIN'T TRUE. >>
Of course it's true. Look into City of Galveston employee opt-out of Social Security and see what those retirees are receiving compared to SS. Look into the privatized Chilean retirement funds and the 95% approval ratings. SS is nothing more than a prooly run Ponzy scheme.
<< <i> The result of wrong policy, wrong taxing and a failure to consider the welfare of working men and woman, have now placed us well on the way to a 21st Century Depression. >>
You meant to call it the Dodd-Frank Depression, right?
The people have been abuse by both political parties.
There is certainly enough blame, to touch each and
every member of our elected Government.
As for Social Security, that is the single finest and most altruistic act ever performed by our Government. What ever it takes, the SOC SEC program will be adjusted and saved foe the security of all Americans. Saving it will not take a miracle, just a little common sense and courage by our elected officials.
<< <i>The people have been abuse by both political parties.
There is certainly enough blame, to touch each and
every member of our elected Government. >>
As opposed to a Congress in the 90's that balanced the budget but was vilified in doing so. I seem to remember the "Contract ON America" mocking by the left.
<< <i>SS is nothing more than a prooly run Ponzy scheme. >>
Actually, it was the perfect pyramid scheme; as the victims hadn't been born yet.
"Lenin is certainly right. There is no subtler or more severe means of overturning the existing basis of society(destroy capitalism) than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and it does it in a manner which not one man in a million is able to diagnose." John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
<< <i>Then I take it that you gentleman will decline to accept
you social security checks in true upholding of your opposition
to the great Ponzi Scheme.Why to do anything else would make
you hypocrites. >>
I'll have to respectfully disagree. We didn't/don't have a choice regarding the "joining in" of this pyramid.
Now if I were given the option to opt out many years ago, I certainly would have. Those same funds would now be worth a great deal more if wisely used in my private hands. The Galveston example supports this. While many might not have used those funds wisely, that is frankly not my problem. Nor should it have ever been allowed to have been "officially" swallowed up in the general revenue fund by LBJ, but there you go and that's the reason that socialism never works. But I digress, the sad fact is that many, if not most in this country, never expect to see anything at all and after having it stolen from me for most of my life I will certainly take it back in whatever form it may show itself.
If this were a voluntary "Ponzi", then I would have to agree with you. But it wasn't; and showing the facts that it is a Pryamid scheme by any definition has nothing to do with hypocrisy. Nor does the recovery of any of those funds that were stolen via threat of prison.
I've always said that the SS checks written to those who have been receiving them should be printed in RED INK once the amount received becomes greater than the amount that was initially taken via FICA. For me, it's nearly always been nothing but an additional 15%(approx.) tax, even if it has been called a contribution.
Let me out now and give me the total with no interest and I'd be happy and never expect nor apply for any sort of handout.
To even get back a fraction of that which was stolen from me, to accept such a check, has nothing to do with hypocrisy.
"Lenin is certainly right. There is no subtler or more severe means of overturning the existing basis of society(destroy capitalism) than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and it does it in a manner which not one man in a million is able to diagnose." John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
As opposed to a Congress in the 90's that balanced the budget but was vilified in doing so. I seem to remember the "Contract ON America" mocking by the left.
Any budgets claimed to be "balanced" in the 1990's were done so by wrongly including revenue streams such as social security payments. Take out that non-GAAP foolishness, and no balanced budgets have been achieved since Andrew Jackson.
BHO's stimulus plan pays no regard to deficits. "...we can't worry short term about the deficit." Perpetuating the problem is what I see here. Spend, spend, spend our way out of this crisis(?) Public Works Two.
BHO's stimulus plan pays no regard to deficits. "...we can't worry short term about the deficit." Perpetuating the problem is what I see here. Spend, spend, spend our way out of this crisis(?)
If you have an economy in recession with a declining GDP, the current deficit becomes larger in proportion to GDP even if you don’t spend another dime. The goal would be to get the economy rolling again so that the growth in GDP exceeds the growth in the deficit. Can the gov’t achieve this? That’s the question.
<< <i>BHO's stimulus plan pays no regard to deficits. "...we can't worry short term about the deficit." Perpetuating the problem is what I see here. Spend, spend, spend our way out of this crisis(?)
If you have an economy in recession with a declining GDP, the current deficit becomes larger in proportion to GDP even if you don’t spend another dime. The goal would be to get the economy rolling again so that the growth in GDP exceeds the growth in the deficit. Can the gov’t achieve this? That’s the question.
CG >>
Can you point out just one single time that gov't spending cured a recession?
The WPA type programs of the 30's didn't solve the problem. Unemployement went from 25% in 1932 to 20% in 1939 so I have little hope this will solve the problem unless we get into another WWII which is what pulled us out of harms way.
Comments
One other factor that could add to deflationary pressures -- baby boomers will almost certainly increase savings rates. As it dawns on people that they will not be bailed out by equity returns, a fairly high percentage will choose to save rather than hope for a meager dole. This will be healthy for the economy long term, and could help to restore balance, but it may be deflationary mid-term.
would enjoy lower prices, the end net result would be to lower
our standard of living, as the rest of the world increased their
standard of living. We are now beginning to see the direction of
the end point. Our children will have less then their parents and
many things that we have taken for granted, will not be the same
in our lifetime , if ever.
Camelot
unions
"The union membership rate for public sector workers (35.9 percent)
was substantially higher than for private industry workers (7.5 percent).
Within the public sector, local government workers had the highest union
membership rate, 41.8 percent. "
<< <i>Cohodk -- I agree with both of your key points -- although would point out that the power of unions has been diminishing for quite some time, due in part to globalization, and this is one reason for relatively mild inflationary pressures over the past 20 years.
One other factor that could add to deflationary pressures -- baby boomers will almost certainly increase savings rates. As it dawns on people that they will not be bailed out by equity returns, a fairly high percentage will choose to save rather than hope for a meager dole. This will be healthy for the economy long term, and could help to restore balance, but it may be deflationary mid-term. >>
Agreed. The very situation you express has been happening in Japan for the last 20 years. You have an aging population with no population growth which has translated into a dormant economy with little inflation. I believe the same in now happening in Europe and will in China in about 25 years.
Knowledge is the enemy of fear
<< <i>
<< <i>Cohodk -- I agree with both of your key points -- although would point out that the power of unions has been diminishing for quite some time, due in part to globalization, and this is one reason for relatively mild inflationary pressures over the past 20 years.
One other factor that could add to deflationary pressures -- baby boomers will almost certainly increase savings rates. As it dawns on people that they will not be bailed out by equity returns, a fairly high percentage will choose to save rather than hope for a meager dole. This will be healthy for the economy long term, and could help to restore balance, but it may be deflationary mid-term. >>
Agreed. The very situation you express has been happening in Japan for the last 20 years. You have an aging population with no population growth which has translated into a dormant economy with little inflation. I believe the same in now happening in Europe and will in China in about 25 years. >>
Savings are not deflationary. Savings become the basis for credit expansion and that's a good thing.
<< <i>
<< <i>
<< <i>Cohodk -- I agree with both of your key points -- although would point out that the power of unions has been diminishing for quite some time, due in part to globalization, and this is one reason for relatively mild inflationary pressures over the past 20 years.
One other factor that could add to deflationary pressures -- baby boomers will almost certainly increase savings rates. As it dawns on people that they will not be bailed out by equity returns, a fairly high percentage will choose to save rather than hope for a meager dole. This will be healthy for the economy long term, and could help to restore balance, but it may be deflationary mid-term. >>
Agreed. The very situation you express has been happening in Japan for the last 20 years. You have an aging population with no population growth which has translated into a dormant economy with little inflation. I believe the same in now happening in Europe and will in China in about 25 years. >>
Savings are not deflationary. Savings become the basis for credit expansion and that's a good thing. >>
Eventually, but perhaps not for decades. Just ask Japan.
Money saved is money not spent and that hurts economic growth. No consumption means no jobs. No jobs means no consumption.
And given the amount of debt we have, it will take years and years of savings just wipe out the debt. Then we can actually save something.
Knowledge is the enemy of fear
NYMEX Energy Closing Prices
Crude oil lost $2.98 to settle at $43.81, natural gas fell 31.7 cents to finish at $6.03, heating oil closed lower by 6.95 cents to $1.5145 and RBOB gasoline ended down 7.08 cents to $0.9727 (all Jan contracts)
Knowledge is the enemy of fear
Click Here
North Sea peak oil has been in the media for a year, since about March of '07 and also in the news this week as well. The North Sea was a stable producer for many years but the current discussions are how they can go deeper and farther out into the North Sea to get more production. Russia has had some news items about speculation regarding their peak oil problems with the same discussions, more remote locations and deeper wells. Russia thinks they are going to do some good with Venezuelan oil but they have a thick, difficult to refine oil and I believe (may be mistaken) that the US has the only refineries capable of dealing with their oil, and I don't believe the Ruskis have the refining capability for the Venezuelan crude so this will be interesting to watch. Ruskis have used oil as a weapon as they supply much of europe and have used rationing and cutting off supply as a stick to dole out pain when they need to. But since they are going into peak oil, they are probably wondering just what to do. they may have to buddy up with the Chinese
Resource acquisition is going to be a big item as soon as we get over the commodity doldrums we find outselves in; China has played the resource acquisition card very well with their involvement in the African continent so they will be well positioned for resources...but I digress.
<< <i>Savings are not deflationary. Savings become the basis for credit expansion and that's a good thing. >>
Eventually, but perhaps not for decades. Just ask Japan.
Money saved is money not spent and that hurts economic growth. No consumption means no jobs. No jobs means no consumption.
And given the amount of debt we have, it will take years and years of savings just wipe out the debt. Then we can actually save something. >>
Japan is a different animal all together. Their bank reserves are much higher and they don't print $ like we do.
Dave, the only bad thing you can do with cash is stick it your mattres (I left off the last S for savings). A savings deposit to day is a potential loan tomorrow.
<< <i>Interesting Supreme Court News
Click Here >>
Quite a shocker around here that the Comical would even acknowledge this story.
I read it this morning(on-line), of course I've been following it for a long time.
Our newspaper has been losing so much circulation over the years, it's rare to see newspapers on lawns anymore on an early morning drive.
The fact is they are so anti-christian and a polar opposite to the vast majority politically certainly has had something to do with it.
Most people only buy one on Sundays for the coupons and use the rest to line birdcages or start the fireplace.
John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
We've got more hydrocarbons in the US than all of the Middle East combined. The problem is extracting it over the objections of the tree huggers.
we supposed to wrap our fish and chips in?
Camelot
ManipulationsNow
<< <i>Interesting reading for those who believe that US Treasuries are the way to go right now... or investing in insurance companies. The article also mentions who the entities are that are taking deliveries from the Comex this month. Just may surprise you.
ManipulationsNow >>
<< <i>There is no other leveraged commodity market where short sellers increase their positions, materially, as the price rises, and increase them even more when prices are exploding, except gold and silver. The reason traders don’t normally do that is that it exposes short sellers to unlimited liability and risk. Yet, in both March and July 2008, and on countless occasions over the past 21 years, vast numbers of new gold and silver short positions were temporarily opened up, with the position holders seemingly unconcerned about the fact that precious metals had just risen exponentially, and that there was a very real potential they would bankrupt themselves with unlimited upside potential. Normal traders would not expose themselves to such unlimited risks. >>
Balderdash!
The large positions taken are part an an offsetting trade strategy based on currency arbitrage called "carry trade".
No sane trading desk would EVER take a naked risk like the writer is implying. EVER!
<< <i>Interesting reading for those who believe that US Treasuries are the way to go right now... >>
We took a strong postion in 10 and 30 years Treasuries a few weeks ago. Been happy so far but if and when rates turn up it's going to be a blood bath. We're covering our tails with some puts.
siliconvalleycoins.com
You know, there really isn't any place to hide except in metal and even that is not a sure bet. The game has become so grand, so intricate, so symbiotic that it is really chaos. Managing the world economy in this manner is certainly most akin to trying to hold a lightning bolt; somebody could get hurt. It's like a bunch of cowboys chasing a racoon at night with a pack of dogs; the dogs scream and howl and the cowboys ride hard after the noise and then the coon gets in the water and the dogs go quiet again until the dogs pick up the new scent and run and howl again and the cowboys chase hard again until they either have a coon in a tree or they just go home and drink whiskey and shoot at cans until the next time they go hunting. This racoon of an economy seems to be very good at running.
The truth may come out if they make a run at the COMEX, we'll just have to wait till those dogs start howling again or if everybody just goes back to camp and drinks whiskey.
Peace
In effect, they are now debt free. This may be the first of many repudiations
of Nation,s Federal Debt.
Camelot
That is all, please return to your regularly scheduled program.
That's it in a nutshell. There is no safe place. The old rules no longer apply, and it is difficult to determine what the 'new' rules are since there is no transparency. The FED is refusing to disclose much of what is taking place and who is getting what money and what they are doing with it.
IMO having equal amounts of stocks, fixed accounts, and gold/silver (physical) is the mixture to go with, and hope that one of the trio will survive and do ok. Very risky to put all of your assets into one area at this time.
<< <i>Hard to say what is going on right now, but deflation is winning out. The question I have is whether the buying pressure on the long end of the curve is from institutional buyers or from the fed itself driving mortgage rates down. This kind of move into treasuries reeks of manipulation by the fed, which is supported by the crazy expansion of its balance sheet...OR...the market is pricing in extreme deflation of a depression type. >>
I think it is largely institutional. During the depression I believe Treasuries did quite well also. This is exactly how deflation has panned out in the past. This is creating a bubble of all bubbles in Govt debt, but I believe yields will go lower. I wont be surprised to see the 30 yr yield 2.5% within a few months, possibly even 2%.
I would love to see rates with a 2 handle. I have a 30yr fixed mortgage with 23 years remaining at 6.375%, my payment will be the same with a 4.5% 15yr mortgage. Go bubble go!!
Edited to add....treasuries are VERY overbought at this time and a pullback is more than likely in the near term.
Ebaytrader, yes, Japan is a different animal. It is like a kitten compared to the tiger we are dealing with. This is a GLOBAL problem, not a country specific one.
Knowledge is the enemy of fear
6.375%, my payment will be the same with a 4.5% 15yr mortgage. Go bubble go!!"
Yepper, we're standing in the same line, watchin', waitin'.
1) There is not a very real potential of unlimited upside.
2) I've always Shorted when prices are too high. Didn't realize I've been doing it the wrong way...
<< <i>"...would love to see rates with a 2 handle. I have a 30yr fixed mortgage with 23 years remaining at
6.375%, my payment will be the same with a 4.5% 15yr mortgage. Go bubble go!!"
Yepper, we're standing in the same line, watchin', waitin'. >>
Hey, hey, stop pushing!
That's the point. The trades at the JPM, GS, Lehman, BSC, etc. were not always sane. The may have taken extreme risks in gold shorts/derivatives in order to further other goals, such as a stronger dollar where their bets should have been much larger. And having the "backing" and approval of the FED/PPT/JPM certainly cannot hurt one's trading desk as long as you are trading in the same direction as the "boyz."
roadrunner
Europeans are now calling our 401K’S “SCHEMES”
From The Economist print edition
Saturday December 6th 2008
“Those Americans who have been methodically putting money into pension plans (often known in America as 401(k) schemes) must be wondering why they bothered.
Figures from Morningstar, an investment-research firm, show that an American who put $100 a month for the past ten years into the average equity fund would have accumulated just $10,932—$1,068 less than he invested (see chart 1). Even a balanced fund (one that mixes government bonds and equities) would have lost money. A European who invested a flat amount every month for the past decade would have lost almost 25% of his money, according to Lipper, another research firm.”
They should figure out the difference between a 401k and a pension, first.
<< <i>Europeans are now calling our 401K’S “SCHEMES” >>
The word "scheme" doesn't have the same sinister connotation in British English as in American English. (Though maybe it should?
<< <i>They should figure out the difference between a 401k and a pension, first. >>
It's a good point. 401(k)'s are really savings plans. In my opinion, to qualify as a pension plan, the plans needs to provide defined payments over the remainder of the participant's lifetime. (Social Security, annuities, and traditional defined benefit pension plans provide this form of benefits.)
A 401(k) doesn't provide that; once your money runs it, it's gone. However, I've heard that some 401(k) plans now offer to convert your lump sum account value at retirement into an annuity (you use the money to purchase the annuity). If all the plans offered that, they would have the same structure as pension plans.
Sorry for the digression but it's an interesting distinction that many people don't appreciate.
NEW YORK – For the hundreds of camera-toting tourists who visit Wall Street every day, the New York Stock Exchange presents an imposing sight.
The building-sized American flag draped over the exchange's towering Corinthian columns. The sculptures on the facade that symbolize the prosperity of a capitalist nation. The stern-looking statue of George Washington across the street.
These icons of national pride mark Wall Street as both a site of business and a symbol of the risk-taking and financial success that have spurred American global dominance and helped shape this country's identity.
But with the nation's top investment houses shuttered, sold or changing into staid commercial operations, doubts have emerged about whether the city that for generations has been known as the world's financial capital can retain that title — or the daredevil swagger that has defined Wall Street for so long.
It is a transformation that some say was under way long before the meltdown of 2008.
Meltdown weakens NYC as global financial capital
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
Box of 20
the employer of the cost of any underfunding liability.
2. It replaces a stable retirement earnings with a variable
and more risky pension device.
3. The 401s also have supported mutual funds and investment
advisers as the steady inflow of fresh money allowed for an
inflated stock market valuation.
4. While many supposed experts claim that the stock market is
a one way road to financial Nirvana, it is not. Many periods in our
history have shown long periods where the market has not gone
anywhere and other periods, like today, when folks have lost almost
everything. Not everyone has a 40 year work horizon. When folks are
55 and above, their productive years are indeed limited.
5.For the last 20 years, working men and woman have been sold a bill
of goods that the good times would always roll and that this was the best
of all possible worlds. Further we were inundated with facts how each 401K
holder would be able to retire with millions of dollars in assets. Well now you
know, IT JUST AIN'T TRUE. Human nature insures, that it was never true for
most of us.
Free Trade brought lower prices but it caused outsourcing and a tendency
to go in debt for the average working person. Further, It cause a continuing
lose of quality manufacturing , administrative and professional jobs, to first Mexico, then India
and finally China.
Failure to make American cars fuel efficient has cost all Americans a dependence
on foreign oil as well as the potential collapse of the American Auto Industry.
Our regulatory Agencies now in actuality, regulate nothing and protect nothing. All of
them are being run by former executives and lobbyists , of the very industries they are
supposed to regulate.
Public lands are being raped by industry, for pennies on the dollar.
The result of wrong policy, wrong taxing and a failure to consider the welfare of working
men and woman, have now placed us well on the way to a 21st Century Depression.
We can and we will dig our way out of all of this, but it will be painful, expensive and may
take a decade or longer, to repair the fundamental damage to our National economy and
industrial base. It's going to be a long white nuckle ride folks, strap your selves in real tight.
The taxing structure changes placed a disadvantage on savings, with low interest
rates.
Camelot
<< <i>Further we were inundated with facts how each 401K
holder would be able to retire with millions of dollars in assets. Well now you
know, IT JUST AIN'T TRUE. >>
Of course it's true. Look into City of Galveston employee opt-out of Social Security and see what those retirees are receiving compared to SS. Look into the privatized Chilean retirement funds and the 95% approval ratings. SS is nothing more than a prooly run Ponzy scheme.
<< <i>
The result of wrong policy, wrong taxing and a failure to consider the welfare of working
men and woman, have now placed us well on the way to a 21st Century Depression. >>
You meant to call it the Dodd-Frank Depression, right?
Camelot
There is certainly enough blame, to touch each and
every member of our elected Government.
As for Social Security, that is the single finest and most
altruistic act ever performed by our Government. What
ever it takes, the SOC SEC program will be adjusted
and saved foe the security of all Americans. Saving it
will not take a miracle, just a little common sense and
courage by our elected officials.
Camelot
<< <i>The people have been abuse by both political parties.
There is certainly enough blame, to touch each and
every member of our elected Government. >>
As opposed to a Congress in the 90's that balanced the budget but was vilified in doing so. I seem to remember the "Contract ON America" mocking by the left.
<< <i>SS is nothing more than a prooly run Ponzy scheme. >>
Actually, it was the perfect pyramid scheme; as the victims hadn't been born yet.
John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
you social security checks in true upholding of your opposition
to the great Ponzi Scheme.Why to do anything else would make
you hypocrites.
Camelot
<< <i>Then I take it that you gentleman will decline to accept
you social security checks in true upholding of your opposition
to the great Ponzi Scheme.Why to do anything else would make
you hypocrites. >>
I'll have to respectfully disagree. We didn't/don't have a choice regarding the "joining in" of this pyramid.
Now if I were given the option to opt out many years ago, I certainly would have. Those same funds would now be worth a great deal more if wisely used in my private hands. The Galveston example supports this. While many might not have used those funds wisely, that is frankly not my problem. Nor should it have ever been allowed to have been "officially" swallowed up in the general revenue fund by LBJ, but there you go and that's the reason that socialism never works. But I digress, the sad fact is that many, if not most in this country, never expect to see anything at all and after having it stolen from me for most of my life I will certainly take it back in whatever form it may show itself.
If this were a voluntary "Ponzi", then I would have to agree with you. But it wasn't; and showing the facts that it is a Pryamid scheme by any definition has nothing to do with hypocrisy. Nor does the recovery of any of those funds that were stolen via threat of prison.
I've always said that the SS checks written to those who have been receiving them should be printed in RED INK once the amount received becomes greater than the amount that was initially taken via FICA. For me, it's nearly always been nothing but an additional 15%(approx.) tax, even if it has been called a contribution.
Let me out now and give me the total with no interest and I'd be happy and never expect nor apply for any sort of handout.
To even get back a fraction of that which was stolen from me, to accept such a check, has nothing to do with hypocrisy.
John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
Camelot
<< <i>Then I take it that you gentleman will decline to accept
you social security checks in true upholding of your opposition
to the great Ponzi Scheme.Why to do anything else would make
you hypocrites. >>
I would gladly decline my future SS checks if they would stop withholding FICA out of my current paychecks.
Random Collector
www.marksmedals.com
Any budgets claimed to be "balanced" in the 1990's were done so by wrongly including revenue streams such as social security payments. Take out that non-GAAP foolishness, and no balanced budgets have been achieved since Andrew Jackson.
roadrunner
If you have an economy in recession with a declining GDP, the current deficit becomes larger in proportion to GDP even if you don’t spend another dime. The goal would be to get the economy rolling again so that the growth in GDP exceeds the growth in the deficit. Can the gov’t achieve this? That’s the question.
CG
<< <i>BHO's stimulus plan pays no regard to deficits. "...we can't worry short term about the deficit." Perpetuating the problem is what I see here. Spend, spend, spend our way out of this crisis(?)
If you have an economy in recession with a declining GDP, the current deficit becomes larger in proportion to GDP even if you don’t spend another dime. The goal would be to get the economy rolling again so that the growth in GDP exceeds the growth in the deficit. Can the gov’t achieve this? That’s the question.
CG >>
Can you point out just one single time that gov't spending cured a recession?