Financial topics

[aedens]

Last year, Gordo said that he'd been able to borrow $300,000 through
credit cards, using techniques from fatwallet.com. I never knew what
he was talking about, but I stumbled across a place that explains it.

The summary is given on this page:
http://www.wired.com/threatlevel/2009/0 ... ditmarket/

The complete story is in the referenced page:
http://www.uic.edu/htbin/cgiwrap/bin/ojs/index.php/fm/article/view/2583/2246

John

http://www.cbo.gov/ftpdocs/103xx/doc103 ... ranges.xls
Whats the difference? Are not the public being looted also as ATM'S
Check the OBM blank amount on a bill to pump there well.
also,
http://hosted.ap.org/dynamic/stories/N/ ... TE=DEFAULT
Farmers enrolled in a program that rewards them for storing greenhouse gasses have not gotten payments this year due to a depressed carbon credits market.
Totaly broken system so collapse whenever, where ever. All bubble heads

[Higgenbotham]

Payroll losses for last month "worse than expected" but better than the past few months according to ADP. Large company layoff announcements increased from the low of last month according to Challenger.

http://finance.yahoo.com/news/ADP-says- ... l?x=0&.v=1

The US stock market continues to be buoyant with stock futures up slightly over yesterday's close at the moment.

I think the herd in New York has collectively lost its mind. I try to keep an even keel but feel disgust and revulsion this morning. If job losses had been 1.2 million per month (instead of 0.6 million) and they "improved" to 0.8 million (instead of 0.4 million) that would be considered good news? I believe a crash is almost certain.

[JonLaw]

I just wanted to point out that so far, Mike Alexander and Bob Bronson have been "mostly right" during this secular bear.

Mike's buy call last fall was good so far and the market finally intersected Bob's predicted market path.

I think Mike is now estimating an end to this secular bear about 2020 (having finally found his K-cycle vortex in 2008) and Bob is still saying that it ends in 2014.

[MarshAviator]

Here are two contradictory articles on CNN:
http://money.cnn.com/2009/08/04/news/ec ... 2009080412
and
http://money.cnn.com/2009/08/04/pf/cons ... 2009080417

This along with the previously mentioned ADP numbers.

So we have rising commodities prices, continued unemployment and personal bankruptcy filings.

I know that John has argued the deflation prospective, but at the same time it is beginning to look like stagflation.

over on theoildrum.com, a great little piece about how complex systems collapse:
http://www.theoildrum.com/node/5633#more

It appears that we are entering a structural change, and I guess it's just a mater of how fast the crash is going to proceed.
While the onset is later that most would have estimated, the slope (steepness) could be nearly vertical.
If anything shocked the average investor into sober look at things absent propaganda from the M.M, it would not take long for things to run their course.

One thing is certain, the general macroeconomic model we all had crammed into us in college just is useless for any kind of prediction.

[John]

> I just wanted to point out that so far, Mike Alexander and Bob
> Bronson have been "mostly right" during this secular bear.

> Mike's buy call last fall was good so far and the market finally
> intersected Bob's predicted market path.

> I think Mike is now estimating an end to this secular bear about
> 2020 (having finally found his K-cycle vortex in 2008) and Bob is
> still saying that it ends in 2014.

As I recall, Mike lost a great deal of money about a year ago, and
recently said that he was giving up K-cycles. I guess he's changed
his mind.

John

[Higgenbotham]

I just wanted to point out that so far, Mike Alexander and Bob Bronson have been "mostly right" during this secular bear.

Mike's buy call last fall was good so far and the market finally intersected Bob's predicted market path.

I think Mike is now estimating an end to this secular bear about 2020 (having finally found his K-cycle vortex in 2008) and Bob is still saying that it ends in 2014.

Not to bash Mike, but his calls simply do not appear to have been profitable overall because he was already substantially IN the market when it crashed in 2008. Therefore, he was able to deploy very little cash in November 2008, although that was very well timed. Repost from November 22, 2008 "Where is the Dow Heading" thread :

> Here is Mike Alexander's latest forecast.

> http://www.safehaven.com/article-11887.htm

Thanks for pointing that out.

Having said all that, the safehaven article is crazy. It's so far
from reality that I can hardly believe he wrote it. Actually, I can,
since I understand enough of what his methodology is, but if he keeps
following that path with his own investments he's going to be very
badly hurt, which I don't like to see.

Sincerely,

John

Well, I get the idea that he already has been hurt a bit, since he would have been intending to follow that trajectory and sell about now, then wait for the previously predicted drop to 750 in 2010 (which has now already occurred) to buy it back. So I assume he's actually deploying a fairly small amount of available spare cash into the market at this point.

[John]

A female friend from the past just sent me this:

> Dan was a single guy living at home with his father and working in
> the family business.

> When he found out he was going to inherit a fortune when his
> sickly father died, he decided he needed a wife with which to
> share his fortune. One evening at an investment seminar, he
> spotted the most beautiful woman he had ever seen. Her natural
> beauty took his breath away. "I may look like just an ordinary
> man," he said to her, "but in just a few years, my father will die
> and I'll inherit $200 million." Impressed, the woman obtained his
> business card .... and three days later, she became his
> stepmother.

> Women are so much better at financial planning than men.

John

[aedens]

Our activity choice between falling on head or feet was never the issue. "Looking for the floor today"
I think to many forgot how many already lost $/hr to nominal wages "concentric bubbles" before the first onset we
are looking at in the eye of the storm today. CPI plays have diverse regional effects and many
have not linked that loss of nominal wages/benefits trimmed coming into this current consumer woodchipper.
http://www.zerohedge.com/article/anothe ... d-baseball
Notes: 8/1/09 yoy reality surface lag
Overall sales were down 38% primarily due to decreased selling volumes of 30%, reflecting lower volumes across all regions North America , Latin America, Asia, Europe/Middle East/Africa and all product lines due to the continued global recession as well as destocking by our customers. We were lucky and adjusted and senior management made tough choices.
I was rather close to initial estimates it was 40% as posted in GD.
My opinion was a 40 percent lagging drop Sun May 24, 2009 6:14 pm<====== then, to overall demand. I do not know now at all
when stabilization will accure; October IMO is a tipping point <----------- best guess appears sooner to net settlement issues.


Interesting curves here from David A. Rosenberg

jmotb080409image001_2C536F9F.jpg (55.2 KiB) Viewed 5466 times

jm073109image001_79C3DDD7.jpg (27.04 KiB) Viewed 5466 times

Renewable energy’s share of total U.S. energy consumption was over 7 percent in 2008, compared to 6
percent in 2004
Explain to me in this new predicated business cycle that the Fed can pivot
to sanity.
The president conveyed some direction but we seen
what there direction is. This is not dilute his statement it is just
reasonable to question his energy path on capital draw.

[John]

Dear Higgie,

> Not to bash Mike, but his calls simply do not appear to have been
> profitable overall because he was already substantially IN the
> market when it crashed in 2008. Therefore, he was able to deploy
> very little cash in November 2008, although that was very well
> timed.

A couple of months ago, one of the "old gang" sent me an e-mail
message calling my attention to a posting by Mike Alexander which said
the following:

> Back when I considered the saeculum as empirically real, I had
> come to embrace the anomaly, not exactly as S&H describe, but for
> other theoretical reasons. That is, I had changed my mind. However
> when I redid my empirical analysis and found that my earlier
> empirical demonstration that saeculum was real was wrong, I gave
> up on a scientific approach. An honest investigator of things that
> may not exist like alien spacecraft or historical cycles, cannot
> continue to assert that there is something there when his
> investigations keep coming up negative. If he does he becomes a
> crank.

> Once I was no longer sure that I was investigating something real,
> I stopped. I wrote no more books on cycles. No more articles on
> generations. I stopped working on my model pages and left them in
> their current unfinished state.

> I still continue to find the topic interesting, just as I find
> philosophical or literary ideas interesting. It's just no longer
> useful or predictive.
> http://www.fourthturning.com/forum/show ... tcount=181

I interpreted "no more books on cycles" as meaning that he'd given up
on K-cycles. I wrote back, copying to Mike:

> As for financial cycles, Mike, you might want to reconsider giving
> up. As I've said before, the Kondratiev cycle is valid, but it's
> independent of the generational cycle. Right now, the
> generational crash is swamping the Kondratiev cycle, just as a
> tsunami would swamp the normal tidal cycles on the beach. I
> expect the generational crash to bottom out around 2012 (at about
> Dow 1500 or S&P 150), and at that time the Kondratiev cycle might
> reassert itself. You could target a new book at that period.

Unfortunately, there are too many threads in the FT forum for me to
even come close to knowing what's going on there any more, but if
Mike is talking about K-cycles again, then he's changed his mind in
the last couple of months.

John

[Higgenbotham]

John,

You were the only person over at The Fourth Turning Forum that I was able to have any substantive discussion with. I can recall that one of my points back in 2005 was that, in order to do a proper generational and cyclical study of current conditions in the financial markets, one had to take a look at the (at the time) relatively unknown world of financial derivatives. And I did try to make it simple by saying that the debt was in housing (as in CDO's, ALT-A, liar loans, etc.) this time around and not in stocks (as in two percent margin). There was no response to that. A couple years later, I did a search on The Fourth Turning Forum for key words such as CDO, etc., and the only poster in the entire forum who had ever used any of these critical terms was you (John). The real estate cycles I was following pointed to a top in real estate in the 2005-6 time period and I remember specifically posting that over there referencing the HGX (Philadelphia Home Builders Index). Another thing that was mentioned was the 1857 model and how the real estate bubble had played out in the 1850s generational cycle (Western land investments in particular). I recall, and I don't know if it was on that forum or not, trying to warn people that once this real estate bubble burst it would topple the entire world economy due to its relative magnitude. That fell on deaf ears for many reasons. Again, you (John) seemed to be the only person who could grasp that. And I have to admit that it took a year longer than I had estimated for all of that to play out.

The stock market is one measure of the cycles and it is objective in that a price is always available but it is just a proxy for the cycle. I don't feel the stock market can be used as a timing device without taking other factors into account and the ones mentioned above are but a few of many. In my opinion, it is very important to dig into these cycles and look at the specific events and markers that drive the particular cycle. Stocks are not equivalent across all cycles and don't play the same role.