Financial topics

[John]

Dear Joe,

> I'm wondering what you folks might think about quantitative easing
> being the cause of the current bear market rally. After reading
> this post from Zero Hedge, this idea does make some sense:
> http://www.zerohedge.com/article/correl ... s-start-qe

I think that's true -- and not just the Fed, but countries around the
world, especially China, are pouring huge amounts of money into
stimulus packages.

John

[John]

Dear Freddy,

> Yes, it is...so far. The problem is that from my POV it appears
> that the bubble was SIGNIFICANTLY LARGER than the one proceeding
> the Great Depression (I know of no one who will disagree with me
> on that) and it took longer to build up and so it appears, to me
> at least, to be a slow-motion version of the 1929 to 1932 decline.
> Our crash happened a year after the market began to decline. This
> time the market took 5 months to hit bottom after the crash (in
> October 2008) began instead of a month. OUR DEPRESSION, IMO, is
> far from over. Just as most make the mistake of thinking that the
> crash of '29 was no big deal in the spring of 1930, you and Jim
> Cramer are failing to look at a bigger picture that looks
> extremely ominous from my POV.

Not only that, but we're only part way into the current crisis.

It's like the guy who falls off of the roof of a 50 story building.
As he passes the 20th floor, someone yells out the window, "How are
you doing?"

He yells back, "Everything's fine so far!"

John

[Higgenbotham]

Dear Joe,

> I'm wondering what you folks might think about quantitative easing
> being the cause of the current bear market rally. After reading
> this post from Zero Hedge, this idea does make some sense:
> http://www.zerohedge.com/article/correl ... s-start-qe

I think that's true -- and not just the Fed, but countries around the
world, especially China, are pouring huge amounts of money into
stimulus packages.

John

Yes, I didn't read the article, but that does appear to be what is happening. Bernanke has cast doubt on the viability of the dollar with the QE program. Therefore, the bubble is being extended as those who hold dollars become fearful and revert to previous bubble behavior out of fear instead of greed, but of course not everyone will (like my Silent dad born in 1933 - he and his wife told me there is not a chance they are holding their money in anything except US dollars from here on out after being quite giddy about playing the market through the early part of 2008).

As has been stated (in reference to China especially), governments can create stimulus, but they can't control where the stimulus money goes. The fact that it is going into stocks is probably a sign that there isn't anywhere else to put it because the economy is poor and not recovering. Therefore, the money has been pushed into stocks instead of real growth generating investment.

Yesterday the stock market pushed back over the level it reached a couple days after the early October crash. This might indicate to some that the economy has recovered, but seeing as it is really the result of QE money, more likely we are setting up for a more severe crash down the road as the QE money vaporizes and only the debt remains.

[JLak]

How would you explain the existence of highly successful Gen-X businesses like Google ?
.

Google IS full-fledged nihilism; although perhaps only the 'good' parts of it. By that I mean that Google will eventually destroy every major newspaper, magazine, television station and who knows what else. "Don't be evil" can either be interpreted as an internal ethic or a declaration of war.

[jecht8]

Regarding what happened in 1995, here is an article I read a while back.

The gist of the article is that ~1992, the Fed created classes of money with a 0% reserve requirement. This was done because they felt there wasn't enough cheap credit available.

From the article:

"It may surprise you to learn that, as the table above reveals, there exists a 0% reserve class of money, and we'll return to this later. For now, let us see what the Fed had to say about these 1990-1992 changes (my emphasis):

' Following the passage of the MCA in 1980, reserve requirements were not adjusted for policy purposes for a decade. In December 1990, the required reserve ratio on nonpersonal time deposits was pared from 3 percent to 0 percent, and in April 1992 the 12 percent ratio on transaction deposits was trimmed to 10 percent. These actions were partly motivated by evidence suggesting that some lenders had adopted a more cautious approach to extending credit, which was increasing the cost and restricting the availability of credit to some types of borrowers.' "

This may not be the cause, but it seemed worth a look.

[Higgenbotham]

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?

[aedens]

Hi everyone,
I'm wondering what you folks might think about quantitative easing being the cause of the current bear market rally. After reading this post from Zero Hedge, this idea does make some sense: http://www.zerohedge.com/article/correl ... s-start-qe
Joe

Yea it is very hard to be a bear. Note the G20 conveyances and I will give a short cut to a arcticle that really puts thing in a nuetral spin to reality.
When you get time read the forums here to catch up... http://www.voxeu.org/index.php?q=node/3421
* Debt to actual Free Cash Flow
*CPI longer term issues- Nominal slippage in wages we see versus there bias and interferences in wage structures and natural interest rates.
* Ratio of private to public nominal wages
To Name just a basic few in regional scope. The forums have covered these issue's albeit there spread out. The Fed mentions traction which is a
Governmental oxy moron many here have trended for many decades. It is not that we are looking in the rear view mirror, and drove into the ditch
but we see things in terms I would suggest over 95 percent cannot or do not have the time to factor in to there economic survival. The mainstream thought
in a Governmental capacity warrants support of a system corupt, and as we have been watching the carnage that decades built they assume a few years to turn. Sorry not going to happen this year or next given the inertia going in and the bigger picture.

[aedens]

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?

I would suggest measures. Also, if I remember correctly only six percent of GNP later was affected under that initial act but need to confirm that number again. http://www.huppi.com/kangaroo/GDPreal.htm Remember tires are synthetic chemical crosslinkers now also, and Harvey Firestones were not. If tires are not flooding the market its paper chemicals or water treatment chemicals or precise pressure points playing the trade system. The nature of most Business supply chain management is not about management since I have written Congress numerous times on this issue and they always defer the aspect that it was never about us anyway. The point that needs to be discerned is this. Americans need to clearly understand that balances are the Gatekeepers true function. The rest is sematics to leverage ignorances in market play. Corporate does not care about boundry's but cost per unit on labor only. All party's over produced. In Europe they tossed a paper standard out to exclude our tires some years back also, and no one said a word. The real truth of the matter is the current technology is woefully obsolete anyway and they know that also, so you need to factor in 6 or more Geopolitical zones anyway to touch the current technological overproduction issues. Capitalization to production of newer product can be done, but they will push the market to the zero margin since who owns what Company is the issues anyway and simply they do not care. They trade positions as we supply the material assembled by who? Of course we see the trends but are we not the ghost in the machine since Company's where we work in the Dynamic Basic Material Sector Intellidex Index Like me. Let us accustom ourselves, then, not to judge things solely by what is seen, but rather by what is not seen. Mises further conveyed the sophism on this point consists in showing the public what it pays to the middlemen for their services and in concealing what would have to be paid to the state. Once again we have the conflict between what strikes the eye and what is evidenced only to the mind, between what is seen and what is not seen. Austrian economists are in general agreement with the proposition that market forces must be traced back to the plans of market participants, particularly the plans of entrepreneurs. Analytical differences arise over whether emphasis is to be placed on the expectations and decisions in which plans originate (an ex ante perspective) or on the experience the testing of plans provides (an ex post perspective). It seems to me that both perspectives are necessary for the analysis of dynamic economic processes, and that neither should be allowed to eclipse the other permanently. * Profit is then seen as the reward not for superior foresight, as Mises viewed it, but for the discovery of a piece of knowledge which others lack.

AMERICAN INSTITUTE for ECONOMIC RESEARCH GREAT HARRINGTON MASSACHUSETTS
1948 : The Economic Cooperation Act of 1948 has already been discussed at length. Although we have emphasized that great economic benefits may be derived from this measure, there will benobasis for predicting them until the conditions precedent to aid are firmly established by the Economic Cooperation Administration.The Taft-Hartley Act apparently was a major step in the furtherance of better employer-employee relation-ships.
That it did not solve the problem of monopoly power invarious unionized industries has become obvious. However, the fact that Congress dealt with the problem as effectively as it did in the year preceding a Presidential election suggests that the next Congress may do even better. At least, virtual control of the National Legislature by the trade unions, as is the situation in England, seems improbable in the foreseeable future. By reducing individual income taxes, Congress restricted substantially the Treasury's power to cope with inflationary developments. However, we believe that the actual curtailment of Government revenue will be less than is generally expected. Although reduction of the Federal debt is most urgently desirable, the burden of taxes was great. Furthermore, under present conditions a large Treasury surplus may encourage expenditures rather than debt retirement. If the only way of forcing economy is to give the Government less money to spend, tax reductions at least have this virtue

Monday, Oct. 07, 1985
In 1932, with international trade in collapse, Franklin Roosevelt denounced Smoot-Hawley as ruinous. Hoover responded that Roosevelt would have Americans compete with "peasant and sweated labor" abroad. Then, as now, protectionism had a strong if superficial political appeal: by election eve, F.D.R. had backed down, assuring voters that he understood the need for tariffs. Protectionist politicking, however, could not save the Republicans in 1932. Smoot and Hawley joined Hoover in defeat. The Democrats dismantled the G.O.P.'s legislative handiwork with caution, using reciprocal trade agreements rather than across-the-board tariff reductions. The Smoot-Hawley approach was discredited. Sam Rayburn, House Democratic Speaker from 1940 until 1961, insisted that any party member who wanted to serve on the Ways and Means Committee had to support reciprocity, not protectionism.

http://www.dw-world.de/dw/article/0,214 ... 98,00.html
http://www.nti.org/e_research/profiles/ ... _2962.html
http://news.bbc.co.uk/2/hi/europe/2591351.stm

They could care less about tariff now in China or Russia Higgy. Americans are still painfully clueless about needs to there economic survival anymore. Ask Pelosi or there mindless and clueless hordes and ilk about not in my back yard semantics bent on emotional blackmail and not fact of law or contract or proper funding. Yes some Company's are ruthless and follow the political chain to its ultimate conclusion of special interest's. Rent dissipation issue's in a mixed market is life or death now and the coruption will envelope more very soon it appears to wasted capital. As we are the Internal socialist's have destoyed more economic security than the free world competion had ever dreamed of which is only brought up to pacify the simple of mind dominating the population.
Mr Obama nailed there ass to a board and each party cannot see the writing on the wall about fiscal sanity or walk out the room given avarice unabated with that board nailed to there ass with mind numbing greed. Currently the Fed still spews debt is wealth, I rest my case on these insular realities of elist rambling.
http://seekingalpha.com/article/160619- ... sb_popular
http://www.reportlinker.com/

http://www.dtcc.com/about/business/statistics.php Transaction Statistics and Performance
In today's U.S. capital markets, billions of shares of securities change hands every day. Brokers, banks, investment managers, fund managers, exchanges and many others play prominent roles in this daily drama.

Nice how the taxpayers are doing there civic duty only in relationship of Government's basic duty to the citizens from 1929 to 1948 through untold
hardship. Today the citizen seem to expect something while the Government actively secures more tax resources to provide more of the same to unproductive elements to secure voting base. Since the Middle class is being exterminated as we have observed to date pronounced from NAFTA many have enumerated the far left and right cannot but claim there reward which is the demise of the standard of living we have observed since the divergence pronounced since 1995 we trended and noticed, or in my opinion early to Nixons warning which only a few remember now anyway about policy and really I am not a Nixon fan but he did relay some very cogent points.

About the current dollar: http://econmkts.blogspot.com/
Slowly walking out the door as we mentioned all some time ago: http://www.financialsense.com/editorial ... /0909.html
And http://market-ticker.denninger.net/ so be advised.

[aedens]

http://danericselliottwaves.blogspot.co ... ollow.html

The march on Washington yesterday was an obvious display of negative social mood and the crowd size was quite impressive as these pictures show. I think it caught the "authorities" off guard. What were they mad about? Obviously a wide range of topics from the health care bill to handing over tax money to crony bankers. Overall I think government intrusion in general and particulalry out-of-control government spending and the feeling people are getting screwed and not being heard.

Crowd estimates are easily in the hundreds of thousands maybe well over a million. The People are pushing back.

[John]

-- Futures down

The Nikkei is down sharply this evening (Monday morning in Tokyo).
http://www.nni.nikkei.co.jp/e/fr/tnks/marketlive.aspx

Wall Street futures are also down sharply. Usually they're flat.
http://www.bloomberg.com/markets/stocks/futures.html

John