Financial topics

Investments, gold, currencies, surviving after a financial meltdown
John
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Re: Import tax to be placed on Chinese tires

Post by John »

Dear Higgie,
Higgenbotham wrote: > http://online.wsj.com/article/SB1252718 ... lenews_wsj

> Announced today. It's a big tax.

> Smoot Hawley all over again? Any comments from those more familiar
> with this history from a generational standpoint?
The BBC is reporting that the Chinese are furious about this, given
the sanctimonious statements by visiting American officials, lecturing
the Chinese on avoiding protectionism. The Chinese already blame the
US for the entire financial crisis, and what they view as enormous
American hypocrisy is making things worse.

Interestingly enough, the BBC analyst made a rare criticism of Obama
by blaming the crisis on his intransigence.

The Chinese announced today that they're retaliating by imposing
tariffs on car parts and chicken meat.
http://www.nytimes.com/2009/09/14/busin ... lobal-home

John

aedens
Posts: 4753
Joined: Tue Nov 04, 2008 4:13 pm

Re: Import tax to be placed on Chinese tires

Post by aedens »

John wrote:Dear Higgie,
Higgenbotham wrote: > http://online.wsj.com/article/SB1252718 ... lenews_wsj

> Announced today. It's a big tax.

> Smoot Hawley all over again? Any comments from those more familiar
> with this history from a generational standpoint?
The BBC is reporting that the Chinese are furious about this, given
the sanctimonious statements by visiting American officials, lecturing
the Chinese on avoiding protectionism. The Chinese already blame the
US for the entire financial crisis, and what they view as enormous
American hypocrisy is making things worse.


Interestingly enough, the BBC analyst made a rare criticism of Obama
by blaming the crisis on his intransigence.

The Chinese announced today that they're retaliating by imposing
tariffs on car parts and chicken meat.
http://www.nytimes.com/2009/09/14/busin ... lobal-home

John
I admire there irony "tired" of playing "chicken" with the cry baby's
but the issue still is Dumping and the taxpayer's Obama "put" on banking.
Given the Senate's inability to be fiscal is the play. The regional bank's
who played by the rules are being screwed. I would suggest measures
and that is what it is. They have enough issues of there own plate.
Really, after the Speech by Mr. Obama he needs to clean some clocks to fiscal
sanity on both sides of the isle. It is tough to be a bear which I am not by nature
so i sit sidelined waiting for the Adults. Pilgrims pride http://www.msnbc.msn.com/id/27999537/
All I see intellectual blindness from Washington brain trust.
As they say "Kill a chicken to scare the monkeys"

“We expect demand from tyre makers in China to fall by 30% in the fourth quarter as they already hold at least one month’s inventories and will only purchase on a need-to basis,” a Chinese synthetic rubber producer said.

Prices of natural rubber, which is used as substitute for synthetic rubber, fell on Monday in Asia on the back of the new US policy. Natural rubber futures prices fell 7% at the Tokyo Commodity Exchange (Tocom) to Japanese yen (JPY) 195.0/kg ($2.1/kg) and 5% at the Shanghai Futures Exchange (SHFE) to yuan (CNY) 17,710/tonne ($2,593/tonne) this morning.

John
Posts: 11478
Joined: Sat Sep 20, 2008 12:10 pm
Location: Cambridge, MA USA
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Gordo

Post by John »

I've had some communication with Gordo, and he's given me permission
to post the following:
Gordo wrote: > I'm short and lost some money, but I haven't gone crazy with
> leverage or anything like that, so I'm OK. Also I made a lot of
> money earlier in the year on the long side. I think we will see
> new lows next year or by 2011 at the latest, so I will wait
> patiently. I see no reason to be long this market. The idiots
> may run it up higher in anticipation of the positive 3rd quarter
> GDP report though, so I would not be surprised by this.
John

aedens
Posts: 4753
Joined: Tue Nov 04, 2008 4:13 pm

Re: Financial topics

Post by aedens »

No words needed.
Enjoy your bull run as they loot America with no end in site.
Mr. Obama will show them Wall Street patriots.
Benjamin Franklin seen a new sun rise on a Country. Ask your neighbor's, City planners, State Representative
and basically after that total disconnects to this Nation. Think hard all....what direction are we going.

http://www.dailymail.co.uk/home/moslive ... ssion.html

The current downturn is the worst in living memory and more severe even than the slump of the early Eighties, Palsson believes.

'Back then the majority of the crash was for tankers carrying crude oil. Today we have almost every aspect of shipping affected - bulk carriers, tankers, container carriers... the lot.


Read more: http://www.dailymail.co.uk/home/moslive ... z0R88pynTs
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Gordo
Posts: 122
Joined: Mon Sep 22, 2008 11:18 am

Re: Financial topics

Post by Gordo »

Hey, just checking in. I've been real busy lately doing software development and pet projects... At any rate, this current rally has certainly exceeded my expectations, I thought 40% was likely, which would be similar to the 1930 bounce, but we are now above a 55% bounce. As John I'm sure is sick of saying by now, nothing has really changed at all. As more and more investors have begun to believe that the worst is over, and they are putting money back in the market (sell low, buy high) in reality the probability of an intense stock-market retreat has increased substantially. Baron's says 80% of economists believe the recession is over, that's quite a consensus. In the meantime, valuations are sky high, and there are many important diverging indicators which you would expect near a top.

Nobel laureate Joseph Stiglitz said in an interview over the weekend that not only was the credit crisis not at all fully behind us despite Wall Street strategist and economist prognostications to the opposite, but went on to say that “the problems are far worse than they were in 2007 before the crisis.” . I personally expect new lows over the next two years, but that doesn't mean we won't see S&P 1300 before year end. There will be a lot of hype as we print that much anticipated positive GDP number for Q3 and then Q4, never mind that this is all government stimulus nonsense, and already beyond fully factored into the market.

I really don’t understand Obama. He has basically said in the past that the lesson learned from the Great Depression was that spending like mad was a good way to reduce economic hardship for everyone (which I think is historical mis-interpretation, but that’s another story). Wasn’t another lesson learned from the same era that competitive tariffs and trade barriers do net economic harm? I thought that was pretty much universally accepted? It’s like they are doing everything they possibly can to destroy the economy.

Image

Hussman today says: “With mortgage delinquencies and foreclosures still pushing new records, and little reason from employment data (and particularly temporary hiring) to suggest a turnaround in job creation, it appears very likely that we will observe further deterioration in the balance sheets of major financials over the coming quarters. My impression is that significant balance sheet losses are already mounting unreported (but don't show up in gleeful “operating profits” because of weakened mark-to-market rules earlier this year). Eventually, push will come to shove, but it's not clear when, so it's not particularly useful to sit at the edge of one's seat waiting for the other shoe to drop. It might very well take until next year. In any event, the likelihood is strong in my view that the credit crisis is not over. I believe it is a large mistake to treat current economic conditions as if we are in a typical post-war economic recovery. “

aedens
Posts: 4753
Joined: Tue Nov 04, 2008 4:13 pm

Re: Financial topics

Post by aedens »

Gordo wrote:Hey, just checking in. I've been real busy lately doing software development and pet projects... At any rate, this current rally has certainly exceeded my expectations, I thought 40% was likely, which would be similar to the 1930 bounce, but we are now above a 55% bounce. As John I'm sure is sick of saying by now, nothing has really changed at all. As more and more investors have begun to believe that the worst is over, and they are putting money back in the market (sell low, buy high) in reality the probability of an intense stock-market retreat has increased substantially. Baron's says 80% of economists believe the recession is over, that's quite a consensus. In the meantime, valuations are sky high, and there are many important diverging indicators which you would expect near a top.

Nobel laureate Joseph Stiglitz said in an interview over the weekend that not only was the credit crisis not at all fully behind us despite Wall Street strategist and economist prognostications to the opposite, but went on to say that “the problems are far worse than they were in 2007 before the crisis.” . I personally expect new lows over the next two years, but that doesn't mean we won't see S&P 1300 before year end. There will be a lot of hype as we print that much anticipated positive GDP number for Q3 and then Q4, never mind that this is all government stimulus nonsense, and already beyond fully factored into the market.

I really don’t understand Obama. He has basically said in the past that the lesson learned from the Great Depression was that spending like mad was a good way to reduce economic hardship for everyone (which I think is historical mis-interpretation, but that’s another story). Wasn’t another lesson learned from the same era that competitive tariffs and trade barriers do net economic harm? I thought that was pretty much universally accepted? It’s like they are doing everything they possibly can to destroy the economy.

Hussman today says: “With mortgage delinquencies and foreclosures still pushing new records, and little reason from employment data (and particularly temporary hiring) to suggest a turnaround in job creation, it appears very likely that we will observe further deterioration in the balance sheets of major financials over the coming quarters. My impression is that significant balance sheet losses are already mounting unreported (but don't show up in gleeful “operating profits” because of weakened mark-to-market rules earlier this year). Eventually, push will come to shove, but it's not clear when, so it's not particularly useful to sit at the edge of one's seat waiting for the other shoe to drop. It might very well take until next year. In any event, the likelihood is strong in my view that the credit crisis is not over. I believe it is a large mistake to treat current economic conditions as if we are in a typical post-war economic recovery. “
Many in Corporate are hording cash to survive. Measure had to be done on key sectors players. The point is Company's have numerous product lines. A line in the sand is just that to key sector's and there ability to serve and protect national core interests.
Last edited by aedens on Tue Sep 15, 2009 3:14 am, edited 2 times in total.

Higgenbotham
Posts: 7436
Joined: Wed Sep 24, 2008 11:28 pm

Re: Gordo

Post by Higgenbotham »

John wrote:I've had some communication with Gordo, and he's given me permission
to post the following:
Gordo wrote: > I'm short and lost some money, but I haven't gone crazy with
> leverage or anything like that, so I'm OK. Also I made a lot of
> money earlier in the year on the long side. I think we will see
> new lows next year or by 2011 at the latest, so I will wait
> patiently. I see no reason to be long this market. The idiots
> may run it up higher in anticipation of the positive 3rd quarter
> GDP report though, so I would not be surprised by this.
John
The market hasn't been very dramatic since Gordo and I started shorting. But there haven't been many pullbacks to take advantage of so it's been a constant drain on the shorts. Gordo and I started shorting the same day, July 17, with the S&P at 940. At that point, it was 41% from the 667 low. Today the S&P closed at a new high of 1049 which is up a little less than 12% from 940. It looks to me like this rally is within 0-3 days of being done based on looking at the chart. If the S&P rises another 30 points, I will exit and take my loss.
While the periphery breaks down rather slowly at first, the capital cities of the hegemon should collapse suddenly and violently.

aedens
Posts: 4753
Joined: Tue Nov 04, 2008 4:13 pm

Re: Gordo

Post by aedens »

Higgenbotham wrote:
John wrote:I've had some communication with Gordo, and he's given me permission
to post the following:
Gordo wrote: > I'm short and lost some money, but I haven't gone crazy with
> leverage or anything like that, so I'm OK. Also I made a lot of
> money earlier in the year on the long side. I think we will see
> new lows next year or by 2011 at the latest, so I will wait
> patiently. I see no reason to be long this market. The idiots
> may run it up higher in anticipation of the positive 3rd quarter
> GDP report though, so I would not be surprised by this.
John
The market hasn't been very dramatic since Gordo and I started shorting. But there haven't been many pullbacks to take advantage of so it's been a constant drain on the shorts. Gordo and I started shorting the same day, July 17, with the S&P at 940. At that point, it was 41% from the 667 low. Today the S&P closed at a new high of 1049 which is up a little less than 12% from 940. It looks to me like this rally is within 0-3 days of being done based on looking at the chart. If the S&P rises another 30 points, I will exit and take my loss.
It will and I stick with my October best guess true earnings technical break down and tearup's. I have read some may be pushed up "tearups"not down lately also. Cut more jobs go ahead and who will produce what or buy anything by the numbers standing? We agreed on so many issues but as we said the market is a political economy and its direct attributes warned of. We where separate on a few data points and maybe 4 to 6 weeks. The G20 meets soon and will promise anything to save there political collective ass. Are things better, based on cash flow we will see. No, since what fundamental change is there. Mr. Obama conveyed a few lucid points and Business is defined by law. As a taxpayer we see exactly what has been done and the mood is not good. People are passed pissed off now. This runup is what it is and no I do fight tape. As for going equity with these bastards no f@&^in way. Bonds and contracts, Screw them. They knew this was coming and another slaughter will ensue, but who cares im just a taxpayer. Rent dissipation issue's in a mixed market is life or death now period. http://www.opensecrets.org/lobby/top.php?indexType=s
Gold - Equity survived the big dance then. Muni Bonds where crushed.
http://www.opensecrets.org/pres08/contr ... =N00009638
Last edited by aedens on Mon Sep 14, 2009 9:24 pm, edited 1 time in total.

Higgenbotham
Posts: 7436
Joined: Wed Sep 24, 2008 11:28 pm

Re: Gordo

Post by Higgenbotham »

aedens wrote:It will and I stick with my October best guess true earnings technical break down and tearup's.
The price levels I've seen so far haven't surprised me as the rise has been quite muted, although longer lasting than I anticipated. I expected it was possible to see 1052, but saw less than a 50% probability of that. However, if the S&P clears 1080, I will be surprised. I would put the chance of that in single digits, so we will see because it is my line. We're close enough that I am willing to draw it.
While the periphery breaks down rather slowly at first, the capital cities of the hegemon should collapse suddenly and violently.

John
Posts: 11478
Joined: Sat Sep 20, 2008 12:10 pm
Location: Cambridge, MA USA
Contact:

CNBC Interview with Nouriel Roubini, 9/14/2009

Post by John »

-- CNBC Interview with Nouriel Roubini, 9/14/2009

The following is my transcription of a fascinating interview this
morning of Nouriel Roubini:
Nouriel Roubini wrote: > [Q: Observations about the one-year anniversary.]

> Well the first observation is that the interpretation if we'd
> only saved Lehman things owuld have been fine and the cause of
> these meltdown and financial crises was letting Lehman go.

> But I think people forget that by the time Lehman was gone, the
> housing recession had started two years befrore, the actual
> economic recession had started the previous November,

> We had a severe financial crisis, 300 plus non-bank mortgage
> lenders had gone out of business, ????? had gone out of business,
> Bear Stearns had collapsed, Fannie and Freddie had collapsed,
> Merrill Lynch had the same problem as Lehman, Bank of America and
> Citigroup had hundreds of billions of dollars of toxic assets,
> finance companies were in trouble, the interbank market had seized
> the year before, so we were already in the middle of a very severe
> crisis.

> So saying that if we'd only bailed out Lehman everything would
> have been ok is just nonsense. It's not understanding the
> difference between cause and effect. Lehman was a symptom, an
> effect of the crisis, not the cause of the crisis. If we'd bailed
> out lehman, we would have had to bail out everyone else.

> [Question: Didn't the crisis provide political cover to the
> regulators to put new tools into effect?]

> Yes, certainly, a wide variety of unconventional tools,
> monitoring credit policies and rescuing the financial system were
> implemented, some of the before Lehman, some of them after Lehman.
> The support and the backstopping of the financial system has been
> a commitment of at least 12 trillion dollars of resources. 3 out
> of 12 had already been spent. There's liquidity provision,
> recapitalization, guarantees, insurance, you name it. but many of
> these things occurred well before Lehman, many of them occurred
> after Lehman.

> [Q: Do you feel better or worse than you did pre-lehman? At the
> time, you said that a Depression was not an impossibility you
> think that's been taken off the table, but we're replaced it with
> an unimaginable amount of debt.]

> Yeah, that's one of my concerns about the economy ahead. That's
> why I see the risk. First of all, a U-shaped recovery that's
> going to be anemic, below trend, and then even a risk of a W.
> Why?

> We still have all the leverage of the private sector, highly
> leveraged housing sector, highly leveraged corporate sector,
> highly leveraged financial system, and as a way of socializing
> some of the private losses, we've socialized them.

> And now there's a massive releveraging of the public sector, and
> that's why I see a situation in which many agents of the economy
> cannot borrow as much, cannot spend as much, there's not going to
> be consumption growth, there's not going to be as much capex
> [capital expenditures] spending, because of this burden of having
> to reduce the leverage by saving more, and because of that the
> recovery is going to be at best anemic for the next couple of
> years.

> [Q: But we need to delever, don't we? We need to spread it over
> a long period of time, so we can handle it all]

> Absolutely. The consumer has to deleverage, which means he has
> to save more and spend less. If consumption growth, which is 70%
> of the GDP, is going to be anemic, below growth of the economy,
> then the growth of the economy is not going to be as high as
> otherwise.

> So that's part of the problem we're facing. we need to
> deleverage, we need to save more, because of that, growth is going
> to be weak for a while.

> [Q: Opinion of Bernanke, Paulsen, Geithner, etc.]

> On the first issue, I criticized Bernanke for many of the mistakes
> he made before the crisis, not understanding the nature of why
> this would become severe, but I gave him credit for the fact that
> his actions had led to avoiding another Great Depression. That's
> why I supported his reappointment.

> On the issue of the banks, let's be realistic about it. 350
> non-bank mortgage lenders have gone out of business more than 100
> banks have gone out of business. The banks that are on the list of
> the FDIC that are in trouble are already 400. So at the end of
> the day we might have over 1000 financial isntitutions, and even
> some of the big ones, like Fannie and Freddie, Bear Stearns, AIG,
> Lehman have gone bust.

> So this is a severe financial crisis. Now, how would I have
> dealt with the issue of the banks?

> My view of it is that there are still many losses that have not
> been acknowledged. There's now massive forebearance. For
> example, $2 trillion of commercial real estate is in trouble.
> They have default rates of 30%. But now the regulators have said,
> "Forebearance. Let's pretend that these assets are now worth face
> value. We're going to wait."

> And eventually, there's going to be trouble -- for regional
> banks, and for smaller banks.

> If you think about it, subprime went to near prime and prime.
> Now it's commercial real estate, credit cards, auto loans, student
> loans, leveraged loans, industrial and commercial loans, corporate
> bonds, muni bonds -- all these losses slowly slowly are adding up.
> It's going to be death by a thousand cuts.

> We're not going to have another blow-up like Lehman, because
> we've decided that nothing that's systemically important is going
> to be allowed to collapse again like Lehman.

> But the financial system is severely damaged. It's not just the
> banks. Most of the shadow banking system has completely
> disappeared. There is no securitization, there is no credit
> growth. So how is the economy going to grow?

> Let's recognize that things are much better than a year ago, of
> course, and I credit the policy makers and their strong actions,
> but there is still huge amount of damage in the financial system,
> and in the real economy.

> [Q: About interest-only mortgages]

> Absolutely. Right now, delinquencies are rising from sub-prime
> to near-prime and prime on the interest-only mortgages.

> There is now, by the way, a moratorium on foreclosure. Because
> of that, the excess supply of homes on the market has been
> limited, but eventually this moratorium is going to disappear, and
> people who looked at the data, they see a massive increase in the
> supply of existing homes that are going to come on the market in
> the next six to 12 months.

> So while the quantities in the housing market have now stabilized
> because they fell 80% from the peak demand and supply, the gap
> between demand and supply is so huge, you can stop producing
> homes for a year to get rid of the inventories. And about 1/3 of
> all existing home sales are distress sales, short sales or sales
> of foreclosed homes, and that's going to increase.

> So the price adjustment, in my view, is going to continue for
> another year, and on a cumulative basis, 40% reduction in home
> prices some time next year from the peak. That means that half of
> the people that have a mortgage are going to be under water, with
> negative equity in their homes. That's what we're facing right
> now.

> [Q: You expect prices to go down another 15%?]

> I would say 12%. It's gone down 28%, I see the cumulative down
> by 40%, some time next year.

> [Q: Why do you believe there won't be blowup like Lehman?]

> Extreme events can occur - you have to assign probabilities.
> Last year the G7 said that we're not going to let anybody that's
> systemically important collapse in a disorderly way, and they've
> not allowed it. They've backstopped the financial system in 20
> different ways, and therefore the blow-up of a major institution
> right now, even if it were to be insolvent, is unlikely. That's
> not going to happen.

> Now on the dollar, of course, there's a risk that if we're going
> to be using the inflation task as a way of wiping out the real
> value of public debt, and as a way of dealing with the debt
> deflation in the private sector, if this is the rap we're going to
> take down the line, eventually there could be the collapse of the
> dollar. That's why I'm worried about the dollar.

> The runaway fiscal deficits that are not being addressed are going
> to lead to the temptation of using monetization of this debt could
> lead to inflation. In that case, the dollar could collapse. But
> again, you have to assign probabilities, and to me, it's still a
> low probability scenario, but it's a risk we've got to be aware
> of.
Nouriel Roubini has changed his mind a number of times during the
last few years. He's flip-flopped on how deep the recession will be,
and on whether the recession has ended. He has absolutely no
"top-down" vision of the economy, although his "bottom-up" vision is
absolutely brilliant.

There are many comments to be made on this interview, but for now
I'll just say that the economy has much, much farther to go down than
Roubini realizes.

John

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