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B4 The Bell Weak-end Thread.


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#31 machinehead

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Posted 13 March 2004 - 10:28 AM

M.H,

How high do you think inflation and rates eventually get to in the U.S.?

Predictions don't mean much. The best thing we can do is follow the trend.

For now, real interest rates are negative. The funnymentals say to borrow at negative real rates and buy hard assets that will go up. I'm focusing on crude oil. Others may choose precious metals or real estate (though r.e. is more interest-sensitive now).

GDP growth is being overstated because CPI inflation (and PPI, and GDP deflator, etc.) is being understated. If they ever do get GDP to grow and suck up some of the excess industrial and labor capacity, CPI will rise to the mid-single digits (and that's systematically understated by at least 3% to 5%).

Longer term, if the govt tries to escape its $44 billion in unfunded promises by inflating, the CPI will again test the 15% level of 1981. Either a "Volcker II" shows up to restore sanity ... or not. If not, a northside break of 15% inflation would take us MUCH higher.

The current situation is ideal, from the debtor's (govt's) point of view. They are depreciating the dollar by 10% annually, but the CPI (and Social Security payments) are rising only 2% annually. That's an 8% benefit to the debtor.

20% dollar depreciation with only 5% CPI would be even better (15% benefit to the debtor). So they will do exactly that, I think. Why wouldn't they? There's nothing to stop them anymore.

Madmen like Al and Benny can go public with their insane rants, and no one bats an eyelash. Personally, if I were them, I would be emboldened by the sleepy sheeple response to adopt far grander, more radical monetary schemes. "The serious printing starts after midnight," as they say down in Mad Al's monetary laboratory.
"GOLD -- it's not just for misers anymore."

"Dollahs -- fire-starters for the K-wave winter." - Drano

"Three humps and a dump." - anotherone, 21 SEP 2004

"No gold was harmed in the making of this movie." - Bizarro Greenspan

[i]"Da Track. Da place where Morons bet on Animals Controlled by Criminals."
- our jickiss

#32 machinehead

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Posted 13 March 2004 - 10:36 AM

Health insurance is already suffering the "lay-off" effect as the newly unemployed cannot afford it if it has to come out of their pocket. Health insurance pools are shrinking, meaning fewer insured to divide the "costs" pressuring rises in premiums leading to fewer insured. It's not hard to see where that leads in a few years, a major insurance crisis as carriers go under. Already the medical system is suffering from the declines in insured and they really can't raise prices at this point. The medical system in this country went through major expansions in the 90's anticipating the aging boomers. What they didn't foresee was the failing finances of those boomers.

The Democratic candidate for president has hinted that govt would step in and underwrite health insurance for all, in the situation you're describing.

I'm not predicting the election result, or advocating that policy. But it would be an example of how artificially-created govt. purchasing power can and will substitute for flagging private demand.

The U.S. fiscal deficit is currently running at 4% of GDP. Sounds small, but it's very important at the margin, when even a 1% difference in GDP growth is considered important. If another recession or deflation symptoms appear, I don't doubt at all that the authorities are crazy enough to push the deficit to 10% or 15% of GDP. Their yellow-striped backs are to the wall, and like a paranoid crackhead junkie on angel dust, they'll do anything.
"GOLD -- it's not just for misers anymore."

"Dollahs -- fire-starters for the K-wave winter." - Drano

"Three humps and a dump." - anotherone, 21 SEP 2004

"No gold was harmed in the making of this movie." - Bizarro Greenspan

[i]"Da Track. Da place where Morons bet on Animals Controlled by Criminals."
- our jickiss

#33

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Posted 13 March 2004 - 10:42 AM

Here's an example that has become all too common for me.  A couple in their early 60s wanted to finance an inexpensive RV, about $12,000. The payment would have been about $115 per mo at 6.5% for 12 years . (Yeah that scares the helll of out of me financing this toy stuff for that long, but what he hell, I'm non-recourse) Combined incomes of about $60K - plenty to live comfortably in this area.  Their credit app didn't look too bad on the surface, but it displayed some very disturbing clues.  They owed $87,000 on a house "they" think is worth $93,000.  They owed $23,000 ofn a truck "they think is worth $30,000.  They owed $20,000 on a 2 year old car they think is worth $25,000.  The credit report was a disaster, credit card debt up the wazoo, many late pays, etc.  Nobody would touch them with a 10' pole.  So here they are , near retriement age, in debt up to their ass, no savings, and out of credit.

Yobobbie!

They were trying to finance that RV because it is where they are hoping to retire...when they disappear from the credit radar.

Picture how many former home owners will reside in RVs in the future...no address, no phone, no creditors hounding them...just living off the land with a cane pole and some worms and some moonshine... at the end of some dirt road along a river in the south. Frightening, and real.

#34

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Posted 13 March 2004 - 10:46 AM

Green Speak:

"In his testimony Thursday before the House Education and the Workforce Committee, the Federal Reserve chairman did not use the word "fraud," but he did make clear that free trade, including trade in jobs, benefits our country in a variety of ways. Because imports keep prices down, our standard of living is higher than it would be with less trade. The competition from abroad makes our own industries more efficient and productive, thereby making the nation richer. Penalize firms that outsource jobs to other lands, he warned, and you will invite retaliation. A trade war would cost more jobs than it would save.

If you want to do something to keep more of those outsourced jobs in the United States, Greenspan said, improve education. Make sure our young people acquire the skills that would enable them to undertake those jobs that are leaving our shores for lack of qualified applicants."


So, we should all train to be software engineers, right? How do you think the thousands of unemployed software engineers in the U.S. will feel about that?

If this country were a net exporter, and our consumers were not the engine of global growth, the trade war argument would make a hell of a lot more sense. I know a trade war would cause a big mess, but we're already in a big mess. Pick your poison. If you leave the American consumer underwater, with no job, the fact that Chinese produced trinkets are available at ChinaMart for an artificially-low price is irrelevant. Cost is relevant. If a Nintendo game is on sale for $35, but you can't afford to eat, does it matter? "Sport-shopping" is a dying passtime.

http://www.capitolhi...icle_4220.shtml

#35

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Posted 13 March 2004 - 11:02 AM

The U.S. fiscal deficit is currently running at 4% of GDP. Sounds small, but it's very important at the margin, when even a 1% difference in GDP growth is considered important. If another recession or deflation symptoms appear, I don't doubt at all that the authorities are crazy enough to push the deficit to 10% or 15% of GDP. Their yellow-striped backs are to the wall, and like a paranoid crackhead junkie on angel dust, they'll do anything.

Agreed - but wouldn't that result in Ten Year Treasury yields exploding higher and the end of the housing market...or does Al just buy all of his own paper in a virtuous circle jerk while the rest of the world scratches its collective head?

It occurs to me, the next data points to become invisible will be the foreign inflows into bonds. That number is going to get so ugly, it needs to go into hiding...along with the PPI

#36

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Posted 13 March 2004 - 11:15 AM

Weekly layoff report


http://www.hrlive.com/layoffs.php


I've noticed the the number of large layoffs has declined the past couple of weeks. No hiring to amount to anytthing, but I'm sure the powers to be will start bullhorning the reduction of layoffs.

#37 brian4

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Posted 13 March 2004 - 11:18 AM

Some very good thoughts have been posted this morning by some very wise people. We will be very lucky if the wheels stay on until the election. I posted yester day about the deficit for February being $96 Billion and that $15.2 Billion of that went to interest payments to service the debt. Any bank, biz or entity with numbers like that would have keeled over long ago. With business dying on the vine revenue for all levels of Government will continue to decrease and entitlements already account for most of the budget. The election puts the focus squarely on the deficit and on jobs ensuring all the rot will bubble to the surface and then the game really does begin.

#38 brian4

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Posted 13 March 2004 - 11:19 AM

3M that was one hell of a game-you're right! ;)

#39 Guest_Icky Twerp_*

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Posted 13 March 2004 - 11:51 AM

Health insurance is already suffering the "lay-off" effect as the newly unemployed cannot afford it if it has to come out of their pocket.  Health insurance pools are shrinking, meaning fewer insured to divide the "costs" pressuring rises in premiums leading to fewer insured.  It's not hard to see where that leads in a few years, a major insurance crisis as carriers go under.  Already the medical system is suffering from the declines in insured and they really can't raise prices at this point.  The medical system in this country went through major expansions in the 90's anticipating the aging boomers.  What they didn't foresee was the failing finances of those boomers.

The Democratic candidate for president has hinted that govt would step in and underwrite health insurance for all, in the situation you're describing.

I'm not predicting the election result, or advocating that policy. But it would be an example of how artificially-created govt. purchasing power can and will substitute for flagging private demand.

The U.S. fiscal deficit is currently running at 4% of GDP. Sounds small, but it's very important at the margin, when even a 1% difference in GDP growth is considered important. If another recession or deflation symptoms appear, I don't doubt at all that the authorities are crazy enough to push the deficit to 10% or 15% of GDP. Their yellow-striped backs are to the wall, and like a paranoid crackhead junkie on angel dust, they'll do anything.

Just when I reach a breaking point in frustration at the political dichotomy we are offered here, either racist-fascist-misogynist neo-cons or socialist-statists trying to stuff us all into pidgeon-holes, I recently have been able to relax, and recede from the edge of the abyss of insane frenzy by reminding myself "The Market Will Straighten Everything Out".

Not the manipulated markets in which we trade, tho', I mean the Uber-Market, the quantum level where in the Laws of Economic Gravity and where the rules of Economic Calculus still hold sway.

We WILL return to the mean, and I choose to take comfort in that.
Everything will make sense again, to us ... to the sheeple the opposite will be their plaint "Nothing makes sense anymore", but I will be consoled by the tempestuous chaos.

Yellow dog democrats planning to brace up social security & medicare, "protect" our jobs, and boost the number of troops overseas "to finish the job" (and spite the neo-cons) are in for a heinous shock when they find out the cupboard is bare. The neocons, I hope will be frog-marched to war-crimes trials, then paraded down city streets past disgruntled (not to say, awakened) sheeple heaping abuse and vegetables on them from curbside.

I see in my fondest fantasies the slack-jawed, wall-eyed Kudlow & Cramer stumbling through such a gauntlet, bleeding, torn, panicked, restrained by chains, towed by rose-bowl mardi gras floats especially constructed for the occassion.

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Posted 13 March 2004 - 11:58 AM

I see in my fondest fantasies the slack-jawed, wall-eyed Kudlow & Cramer stumbling through such a gauntlet, bleeding, torn, panicked, restrained by chains, towed by rose-bowl mardi gras floats especially constructed for the occassion.

Icky, you tease! Stop with all the sexual fantasy...this is an investment web site!

#41

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Posted 13 March 2004 - 12:33 PM

You have got to read this article...a classic for the archives.

http://www.dailyreck....cfm&qs=id=3807

#42 brian4

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Posted 13 March 2004 - 12:40 PM

click here By the way they tried to cover this up and the vast number of people who got sacked-Washington and B.C. are lucky they are still here. "Broken Arrow"

#43 The End

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Posted 13 March 2004 - 12:53 PM

Mauldin ain't a bad read today. B)
NONE of what I type, should be taken as financial advice.

And when you loose control, you'll reap the harvest that you've sown
And as the fear grows, the bad blood slows and turns to stone
And it's too late to loose the weight you used to need to throw around
So have a good drown, as you go down, alone
Dragged down by the stone.


--Waters

#44 brian4

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Posted 13 March 2004 - 01:19 PM

TE-is right Maudlin hinted last week that "muddle through" wasn't working now he is outright, scary bearish a real good read.

#45 Stinky

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Posted 13 March 2004 - 01:20 PM

MH:

You say you are investing in oil.

What in particular are you investing in? Oil and gas stocks? Futures?
More particulars would be appreciated.

Thanks,

Stinky





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