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rogerk2's Comments Stream Stats
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TARP Oversight Panel's First Report: What a Crock
From the perspective of Congress and the Administration, Plan A bailouts are far better than Plan B failures and unemployment - even if Plan A has a very small chance of success. Under Plan A, Congress keeps racking in those campaign contributions. Under Plan B, unemployed people don't contribute much to political machines, and when all hope is lost, they tend to organize, riot, and throw the bastards out.
Besides, giving away other people's money is easy. Being responsible for causing, and then failing to fix, the collapse of the world's economy is a much tougher problem.
U.S. Dollar: The Trade of the Decade
I've been trying to think through the broad implications of your strong dollar/weak commodities arguments. By the way, UBS came out today with a similar projection of oil at $20 and gold at $300 next year.
My conclusion is that the whole question hinges on whether or not Uncle Ben, backed by The Fed and Treasury and our singing printing presses, can pull off a global refinancing deal. It has to be a global solution because everything is so interconnected.
The US has been the global growth engine for the rest of the world for decades. China, India, etc. may be developing their own internal demand structures, but their economic growth is still tied to exports, principally to the US. They need to keep our consumption engine going or their production engine shuts down. If demand/production falls, they lose jobs, and their unemployed population won't have money to buy cell phones or pay taxes to build roads and new factories.
The producing nations are already getting hit harder than anyone expected, due to falling consumption in the US and Europe. Look at Brazil, Australia, to see some of the impacts of falling oil and metals prices. These were very strong economies, now having to scramble.
The point is, none of these countries can survive for long economically without foreign capital coming in to buy their goods and services. That's how they keep their people employed and roads paved. Govts fear high unemployment more than anything else. They can control food prices and gas prices somewhat, but having too many people standing around with nothing to do foments riots and coups. Look at Obama's plan. Step 1 is to create 2.5 million jobs. Get people working, off the streets, and off welfare.
So, Uncle Ben needs a strong dollar to support all those foreign govts holding gigantic piles of dollars and treasuries, and they need to continue buying our low-yield debt so we don't go under. They buy our junk money so we can keep buying the junk products their huge populations produce. It's a delicate balancing act, on a global scale.
It's pretty clear that the dollar's fundamentals are crap. The only way you could get the dollar to look strong while you are creating billions more of them out of thin air is by concerted actions across the world. Nobody can afford to rock the boat too much because they all realize, if the dollar crashes, the US crashes, and every other economy in the world crashes right behind us.
Finally, you can't have a strong dollar if oil and gold are going up. We already know that oil futures are manipulated by traders (primarily the big banks who are market-makers), and I suspect Uncle Ben and the NY Fed are pulling some strings to keep the spot price low. How else could you get "demand" still falling when the price is cut by two-thirds? "Gee, I'm just gonna leave my big new SUV sitting in the driveway." Sure!
Gold is another case. Demand is surging, but the big depository banks (the same guys "fixing" oil prices) are hoarding the physical metal. Spot price $800 - here, have this certificate (IOU) for an ounce. You want actual gold? Go to a dealer. Of course, he'll charge you $1100 an ounce. The spot gold price is being artificially pressured, perhaps again to support the appearance of a strong dollar.
So, I think it is entirely reasonable for Uncle Ben and his local and global cohorts to be manipulating commodities, and many other aspects of daily life we take for granted, to support a strong and rising dollar. It's a very fine line they're walking, with global disaster hanging on every step. Can they pull it off? It seems to be working so far, but I still only give it about a 30% chance of success. Every new bailout, every new pile of money they throw at it, makes the fine line thinner and thinner.
The other 70% of me says it's all going to fall like Humpty Dumpty one of these days. I'm learning how to grow carrots in my back yard.
Exploring Madoff's Ponzi Scheme Will Unveil the Causes of This Global Monetary Crisis
In the US, and world wide, we're underfunded for future needs in health care, education, energy, environment, and retirement, to name a few. We are spending money we don't have today, in all these areas, and expecting future generations to pay it off, in addition to saving for their own needs. Good luck.
In today's reality, everybody is running a Ponzi of some sort. Paying by credit card instead of cash. Buying a house with a 30-year mortgage. Borrowing against your house to buy stock or a new car. It's all a "buy now, pay later" deal, with huge penalties if you can't pay on time.
The world's economy is based on people spending more than they currently have, going into debt to the bankers, and spending the rest of their lives paying high interest and low principle on the maximum amount of debt possible. This is just the current version of the "indentured servitude" model the dark overlords have been using for thousands of years.
12 CNBC Pet Peeves
The "second string" down in the pits are probably at least reasonably competent reporters, although they only get 10 seconds each to give you all the news you're really interested in. All the new "politically correct" additions are unintelligible idiots. Am I supposed to understand someone with a heavy accent who blasts out 500 words in ten seconds without even taking a breath?
I haven't been able to watch CNBC for more than a few minutes at a time in over two years. Every time I turn it on, I get pissed all over again and switch out. I don't watch Fox news; too much like CNBC. I put both of them in the same league as Oprah for providing objective news.
I pay extra to get Bloomberg on my cable. My major concern there is the ads. They play the same ones over and over. You're lucky to get two minutes of news for every two minutes of ads. It almost seems like they spend more time telling you what's coming up after the break than they did on the last news story. I usually leave the sound off and just watch the news ticker.
One thing to remember about all these channels: they're not in the news business, they're in the advertising business. That's how they make their money. It's all about getting and holding eyeballs. CNBC and Fox seem to be focused on younger, upwardly mobile trader-types whom they expect to have short attention spans and want instant gratification. Bloomberg seems to relate more to serious (older?), long term types interested in the broad picture and understanding the trends.
Quite frankly, I haven't made any hot trade money from any of these channels. The closest I've come is to short whatever Cramer pitches, since lots of sheep buy high on his recommendations and then bail when they realize they got in way too late. Cramer keeps telling them, don't buy today ... but sheep are sheep.
Just my own personal opinions.
Dividend Investing for Monthly Income
This method let's me compare a variety of dividend yields on a consistent basis, i.e., what does it take to generate $100/mo net returns from dividends?
Destruction of Wealth?
What we are actually seeing is destruction of unrealized or paper wealth, the writedown of imputed values of stuff that aren't tangible assets. We're getting killed by failed insurance policies, not failed companies...and by the bankers and rating agencies and insurance companies that pitched this stuff like it was real.
Chuck Schumer: The New Chairman of the Board
An Outcry from Emerging and Developed Markets Alike
1) Hedge funds put a lot of money in emerging markets because of their growth potential. The funds are now withdrawing investments, taking profits where they can get them, to pay for mounting redemptions. Every market tick down now equals 10 ticks up on the margin call meter, and all that leverage has to get paid down quickly.
2) My biggest fear is that, if the coordinated response to the global crisis actually works, it will "justify" consolidation of the global financial system under one central body. That body won't be the World Bank (nobody trusts them), but it could be a global oligarchy of the few "too big to fail" banks left standing - a global shaddow government controlling worldwide commercial activity through its control of credit.
And, it'll be basically the same guys running the new global financial system as screwed up the current "national" ones. A global meltdown of the existing systems sure seems convenient, if the plan is to build a new consolidated global system for fun and profit. At least, it should give all the "new world order" conspiracy theorists something to chew on.
The Financial Axis of Evil, Past and Present
Unfortunately, most Americans are closet socialists - share the wealth, regulate to keep prices artificially low, provide free education, pay for my old age, etc.
That's why we can't seem to get our political system to function efficiently. We keep sending mixed messages about what's important ... protect me from getting screwed (socialism), but give me freedom to screw somebody else (capitalism).
Don't Take Over the Free Markets to Save Them
That's the banking system. It was balanced and functioning reasonably well until the bankers started stacking higher and higher leveraged derivitives on it. Then a butterfly flew by....
We've only seen the first few phone books hit the ground so far. There's still at least $14 Trillion worth of toxic derivitives (the net imbalance between up bets and down bets) that has to get written off at some point. That's more than the GDP of the World.
Mike, don't pine too much for the free market. It never was free. We're just buying it back from the banks that have owned it for the last 100 years. Of course, they've already sucked it dry, which is why we can buy it back at such low prices.
Bailout Datapoint of the Day, AIG Edition
That's how the financial system collapse hit AIG and others insuring counterparty risks. If one company fails, the insurance reserves are sufficient to pay off counterparties who took out insurance. If 100 companies fail at the same time, there's not enough reserves available to cover all the counterparties' policies simultaneously.
If you owned a house in Florida and Katrina destroyed it, you're still on the hook for the morgage. You probably had mortgage insurance to cover such a loss. But if your insurance company also insured thousands of other homes that got destroyed, overrunning it's financial capabilities and causing it to go belly up, your insurance is worthless. And you're still on the hook for the mortgage, on a now non-existant house.
Insurance is a necessary evil to protect against unforseen events, but no company carries enough reserves to cover really major catastrophies...6 Katrinas in a year, a major earthquake along the San Andreas fault in California, a nuclear war, a meteor impact, etc. We all know these events are going to happen sooner or later, but we're not willing to pay the upfront cost to build a reserve large enough to insure against them.
How Have Credit Unions Survived the Crisis?
Other major differences apply. Many credit unions have restricted membership, e.g., teachers, public employees, local residents, etc., so they aren't spending tons of money on advertising. They are small and local, so they don't pay huge salaries.
Their depositors are their shareholders. They pay interest on deposits more than dividends on shares, so there is less pressure to pad quarterly results. Depositors/shareholder... are more interested in making sure their money is safe than in generating short term gains.
And probably most important, the bank manager is local. You know who he/she is, and the home phone number. If there's a problem, you can go right to the top.
That's actually how most banks got started - real peoplle loaning money to real people. Now, the "banking system" is just a bunch of abstract number-crunching with everybody trying to make more paper profits off the same dollars.
We need to get back to basics. We need to break up the banks, not consolidate them. Yes, there are efficiencies of size, but there are also higher costs is they fail. The bigger you are, the harder you fall. That's what we're seeing today.
My money is in my local credit union.
American Express to the Sell Block - Cramer's Mad Money (10/2/08)
Maybe that's why they're mired in credit defaults...they'll give you a card even if you're already in over your head in debt.
Exposing the Hedge Fund Industry's Soft White Underbelly
Grandma and Grandpa saved all their lives and now live on the income from their long term investments. All of a sudden (to them), their stocks are worth crap because a bunch of shysters have shorted them into oblivion. All they can do is sell, and get peanuts. That's all they know how to do.
While all you sophisticated traders are crying the blues about the death of your golden calf, how about considering that you have ruined a whole lots of people's lives. People who believed in prudence, frugality, and the fairness of the American free market system.
Why Should I Own Gold?
Who sets the price on COMEX - you and me, or the "highest bidder" who has access to that exchange?