Subject: Derivatives Strike Again!

Have you been following the saga of John M. Rusnak? He's a currency trader at Allfirst Financial. In the last year or so he bet heavily on the yen thinking it was going to appreciate against the dollar. Of course this was a poor bet. The Japanese are printing yen like crazy in a vain attempt to head off a depression. To cover his yen loses he sold in-the-money options to the banks. Too late the banks discovered Rusnak doesn't have the money to cover his options positions. $750 million is "pooft".

Which illustrates the point I keep trying to make. Derivatives don't eliminate risk, they only SHIFT risk. If the risk is shifted to somebody who can't hold up his end of the bet this new form of "portfolio insurance" is WORTHLESS (remember the Panic of '87).

Total Aggregate Debt for the United States is now $29 Trillion backed up by at least $100 Trillion in derivatives positions which cannot possibly be paid off in a crash. There are more Enrons, Global Crossings and Kmarts coming (yes stodgy old Kmart was involved in derivatives). Only time will tell how it will all end.

"Robert--To a large extent, I fear you're right. Add overpopulation and environmental exacerbations to that, and...Katie, bar the door!"

"I fear you're right"??? Croaker, Croaker! Ribbit, Ribbit! Since when does one fear a wet-dream?

Good Grief, Croaker, if you had your way, we'd be burning churches tomorrow, shooting Christians en masse, and well on our way toward environmental utopia!

Right, Croak! :smile:

I got some good news yesterday. My publisher called and told me that Barnes and Noble is going to place my book Stock Cycles in all of their stores nationwide. Its supposed to be on shelves towards the end of March. I'm pretty pumped :smile:

Mike--Congrats, I'll be sure to pick up a copy. What does it say about the future? BTW, there's one of mine through B&N: "Great Moments In Evolution/A Trilogy" (ISBN 0-9645882-1-8). It was banned in Bremerton!


<font size=-1>[ This Message was edited by: Croaker'39 on 2002-02-15 08:47 ]</font>

On 2002-02-15 06:04, Mike Alexander '59 wrote:
I got some good news yesterday. My publisher called and told me that Barnes and Noble is going to place my book Stock Cycles in all of their stores nationwide. Its supposed to be on shelves towards the end of March. I'm pretty pumped :smile:

Congratulations! I'll send any interested acquaintances of mine over there.

On 2002-02-15 06:04, Mike Alexander '59 wrote:
I got some good news yesterday. My publisher called and told me that Barnes and Noble is going to place my book Stock Cycles in all of their stores nationwide. Its supposed to be on shelves towards the end of March. I'm pretty pumped :smile:

Congratulations! :smile:

Wow, two published authors in our midst! Congrats to both of you!

On 2002-02-15 06:04, Mike Alexander '59 wrote:
I got some good news yesterday. My publisher called and told me that Barnes and Noble is going to place my book Stock Cycles in all of their stores nationwide. Its supposed to be on shelves towards the end of March. I'm pretty pumped :smile:

Mazel tov! :smile:

I'm sorry Mr. Alexander. When I saw your post I wrote down the name of the book and spaced out all else. Congratulations! It must feel good. God knows there are few things to feel good about these days. You are a poster child for the beleif that life goes on. Your book is on my ever growing list. I look forward to reading it. If you don't mind I'll cretique it later. I have always admired those who persevere through long nights, self-doubts, criticisms, and circumstance. WE on this forum have given you enough pre-arguments for or against certain points. If you have a theorum you must follow it through to the end. Again, congratulations.

On 2002-02-15 06:04, Mike Alexander '59 wrote:
I got some good news yesterday. My publisher called and told me that Barnes and Noble is going to place my book Stock Cycles in all of their stores nationwide. Its supposed to be on shelves towards the end of March. I'm pretty pumped :smile:

Congratulations!

Kiff '61

Thank you everyone. I wish to make a clarification. The book going into Barnes and Noble is not the book I have just been working on. It is my *first* book, published in fall 2000, which is called Stock Cycles: Why stocks won't beat money markets for the next twenty years.

The title, combined with the fact that it was written *before* the bear market began, provides a catchy combination that B&N figure will move books. The fact that I have been selling steadily (600+ books over 15 months) online, which is pretty good for online sales from a no-name author, implies that the book probably doesn't stink.

Thus, it is a probably non-stinky book with a title that is very relevant to today's stock market, but which has instant credibility because it is a prediction made *before* the market went to hell.

All this has convinced B&N to buy 2500 of these non-refundable books and put them on the shelves. The belief is that they will move and more will be ordered. Time will tell.

My second book (the one I have been working on and talking about here at this site) is called The Kondratiev cycle: a generational interpretation. No catchy title here! *This* book will never make it on to the shelves of *any* bookstore.

OK. So the big author wants us to know that he has two books instead of one. (Just kidding). When will the second one be available?

Mid to late April at online bookstores only. I will post when it come out.

On 2002-02-15 14:49, Mike Alexander '59 wrote:

My second book (the one I have been working on and talking about here at this site) is called The Kondratiev cycle: a generational interpretation. No catchy title here! *This* book will never make it on to the shelves of *any* bookstore.

Never bet against the flagship Borders in Ann Arbor. Also, you might just convince someone to use it in a college course in economic history.

Subject: DOW 200

Kudos to Mike on his books. I'm thinking of writing a book myself. You know those idiotic stock market books with titles like "DOW 36,000" or "DOW 100,000". (Total Aggregate Debt would have to increase by 100 times to pump the Dow Balloon up to 36,000 much less to 100,000. Never happen.) Well, I'm thinking of calling my book "DOW 200: How You'll Lose Your Shirt In The Market In the Oh Oh Decade!". Since the link to gold was broken in the early '70's of course our entire financial system is based completely on DEBT. If you defaulted on our Total Debt which now amounts to 29 Trillion dollars this would cause MASSIVE sympathetic deflation in the Stock Market Bubble and you'd wind up with a Dow Jones Industrial Average of about 200. Don't scoff too hard this is precisely what is happening in Japan. (One of the Japanese ministers recently compared the losses in the Nekkei Index to a bad case of "diarrhea".)

By the way, despite Greenspan's pronouncement that the recession is over, Industrial Production fell again in January. Deflation is winning out over inflation.

Tough Times are Here to Stay writes Yoichi Shimatsu, a reporter from Japan at the Pacific New Service on 15 February 2002. A 50 to 60 year slump?

<font size=-1>[ This Message was edited by: Virgil K. Saari on 2002-02-19 07:57 ]</font>

Thank you for that, Virgil. Now I'm disturbed for the rest of the day. A strong sense of deflation arises with the winter sun.

Subject: Happy Days Are Here Again!

Needless to say, I rather doubt it. Greenspan says the Recession is over. How would he know? He certainly didn't see it coming. It all reminds me of a movie I saw as a child back in the 60's. When I would come home from grade school at 3 PM every weekday the local CBS affiliate would run a movie from the 30's, 40's or more rarely the 50's. One movie in particular I remember had Shirley Temple in it as a drum majorette marching down the main street of Everytown, USA at the head of a brass band and with a banner overhead proclaiming "THE DEPRESSION IS OVER". I can't remember too much about the movie because I saw it so long ago but the gist of the plot was that magically, the 30's Depression had somehow disappeared and everything was all right now. The only other thing I remember was the date the movie was made (they always gave the copyright date right at the end in Roman numerals at the end of the credits). It was 1938. Much later in college I learned that 1938, far from being the end of the Depression, was really the worst year of the Depression. Industrial Production in 1938 was LOWER than Industrial Production in 1933 the first real year of the Depression. I suppose the movie was an attempt by someone in Hollywood to jolly the country out of its collective funk. Wishful thinking at its worst.

The point is nobody really knows what will happen. The economy is so complex there is NO way to predict what will happen. It is entirely possible the current slightly good economic news is merely the result of the HUGE amount of money Mr. Greenspan has created and pumped into the economy in the past year. And when the effects of this huge injection of funny money wear off we will slump down into recession once again. It is precisely analagous to a junky getting a fix and then coming down from his high when the drug wears off.

Don't be fooled, all the problems we had two years ago at the start of this recession are STILL THERE and if anything have been MADE WORSE by Mr. Greenspan and his Debt Machine.

Subject: The Recession That Never Was

Greenspan says the recession is over. O'Neill says there never was a recession. How was this miraculous recovery accomplished? How was it purchased? What price was paid?

Easy enough to figure out, the latest figures for Total Aggregate Debt are in for the final quarter of 2001 over at the Federal Reserve Website. Total Aggregate Debt (ALL the debt owed by EVERYBODY in the United States, my credit card bill, your mortgage payment, the kid down the street's student loan, EVERYTHING) is now 29.4 Trillion dollars. This is up by 1.975 Trillion dollars over 2000. (By the way this is the TRUE National Debt, not the piddly 4 or 5 Trillion the Federal Government owes.)

So it cost about Two Trillion dollars to fix the debt junky up and get him on his feet (barely) again. Where did that Two Trillion come from? Why, from you and me and from everybody. Big Al and his banking system just conjured that Two Trillion out of the blue and pumped it into the economy's arm.

The problem is, what happens when the big debt fix wears off? Al has already lowered interest rates about all he can for now. What does he do for an encore? He's shot all his interest rate bullets already. Don't be too surprised if the economy deteriorates further in 2002. I think 2002 will prove to be a pivotal year. This is the year we will realize we are in trouble. This is the year we will enter the Fourth Turning.

<font size=-1>[ This Message was edited by: Robert on 2002-03-11 18:44 ]</font>

LOL... well, well, well... i wondered just how long it would be before someone from the gloom and doom crowd finally could no longer contain themselves after having to stomach all the recent "annoying" good economic news and rising stock prices!

yes, we are going to eventually pay for all the massive debt we have accumulated. yes, eventually there is going to be economic hell to pay. but as the guy said at the end of the movie "gladiator"..."but not today!" nor is it likely to come for the rest of this decade. it is then, around the beginning of the next decade, that we are most likely to see these problems come and haunt us after the necessary catalysts have taken place, but not until.

On 2002-03-11 21:24, enjolras wrote:
LOL... well, well, well... i wondered just how long it would be before someone from the gloom and doom crowd finally could no longer contain themselves after having to stomach all the recent "annoying" good economic news and rising stock prices!

yes, we are going to eventually pay for all the massive debt we have accumulated. yes, eventually there is going to be economic hell to pay. but as the guy said at the end of the movie "gladiator"..."but not today!" nor is it likely to come for the rest of this decade. it is then, around the beginning of the next decade, that we are most likely to see these problems come and haunt us after the necessary catalysts have taken place, but not until.

Sounds like a description of 4T arriving on time, as opposed to way early, like we thought it had last fall. :grin:

Enjolras, there has been no economic good news, unless the good news is that there was no horrible news. Yet.


Are you referring to the fact that the economy is growing, that technically we are not in a recession now? If that is true, it is something 2002 has in common with 1933-36. I would add that the stock market is a good deal weaker than your tea leaves predicted, even though it has not yet (quite) collapsed.

On 2002-03-14 17:57, Brian Rush wrote:
Enjolras, there has been no economic good news, unless the good news is that there was no horrible news. Yet.


Are you referring to the fact that the economy is growing, that technically we are not in a recession now? If that is true, it is something 2002 has in common with 1933-36. I would add that the stock market is a good deal weaker than your tea leaves predicted, even though it has not yet (quite) collapsed.

well brian, i think you really need to speak to most economists around today, as well as alan greenspan, as the evidence is becoming more overwhelming with each passing day that not only is the "recession" likely over but that it was not much of a recession to begin with.

as for my "tea leaves", they are serving me quite well, thank you very much. perhaps you should try a little tea sometime yourself. it would probably do wonders for your financial profile and knowledge about the financial markets in general (not to mention your disposition)...:wink:

now, you must excuse me....i hear the teapot whistling...:wink:

Hi, enjolras. You may well be right and I respect your expertise. I do have a trouble with listening to the economists, though. In light of all of the obfuscation and propaganda/bias in today's media, coupled with media ownership / news as entertainment, how in the heck does one even begin to know they can trust what the economists say? You may have the access to find "from Greenspan's lips to God's ear", but the majority of people don't. It's CNBC and a thorough read of the daily news and the internet for the rest of us.

I mean, ya know?

:smile:

On 2002-03-15 02:23, Barbara wrote:
Hi, enjolras. You may well be right and I respect your expertise. I do have a trouble with listening to the economists, though. In light of all of the obfuscation and propaganda/bias in today's media, coupled with media ownership / news as entertainment, how in the heck does one even begin to know they can trust what the economists say? You may have the access to find "from Greenspan's lips to God's ear", but the majority of people don't. It's CNBC and a thorough read of the daily news and the internet for the rest of us.

I mean, ya know?

:smile:

i understand exactly what you mean barbara. in fact, i have advised people in the past that oftentimes one of the best things they can do is stop reading the newspaper and turn off the tv! LOL

it is all a matter of discernment. measure everything against reality...test it to see if it holds true and then test it again. i personally have the utmost confidence in my "tea leaves" because i have been a professional trader and money manager for almost 20 years now. my ideas and theories are put to a real world test every day, week, month, year, etc. with cold, hard cash and, if they don't work out that cash gets taken away. its that simple.

oops! got to run...there goes the ol' teapot again!