Double Dip

[KissMy]

Yeah, that's true. Demographics work in America's favor. Unfortunately, the population doesn't grow fast enough to offset the deleveraging that is occurring.

BTW, Japan is on the brink of disaster, IMHO. I've started shorting the yen using long-term options and I want to short Japanese long-term bonds. If you think America is in trouble, Japan is far worse. It is mind-boggling to me that the yen it approaching all-time highs. That is absolute gift, in my opinion, one of the clearest long-term trades I have ever seen.

Wouldn't Gold be a safer alternative to shorting bonds. What if all western countries & Japan just inflate like crazy or monetize debt? You will just have a pile of paper. It is just a matter of time before a majority of the worlds producers have an epiphany about a whole host of currencies.

Shorting bonds that are yielding almost nothing is one of the safest bets around. I'm trying to buy options on 5 and 10 year JGB interest rates.

In Japan, total tax revenues will pay for social security and interest on the debt, and that's it. There are other sources of revenues, such as dividends and interest from government-owned assets, but most of the shortfall has to be borrowed. The biggest buyers of JGBs have been Japanese pension funds, but they are now in run-off mode as the working population in Japan peaked in 2008, thus they are net sellers of bonds. Plus, they have been ordered to get their returns up because they aren't earning enough to meet obligations. You can't do that owning JGBs yielding 1%<. The savings rate in Japan has fallen from 15% to 2% today. Americans save more than the Japanese. There is a budget gap of ~$400 billion that has to be funded each and every year. To do so, interest rates are going to have to rise to attract foreign capital, unless the Chinese are willing to accept virtually no interest income on their reserves. But if interest rates rise, then the budget gets out of whack because debt is 200% of the economy. It is virtually impossible to cut spending in Japan because of the ossified Japanese political system, and they can't raise taxes because the economy tanks when they do. Japan is truly fracked. And this week, the yen hit a 15-year high. A-fucking-mazing. Unless Japan radically reforms its society, there is no way out. And usually, countries don't reform until there is a crisis. I am betting on a crisis, or at a minimum, a rise in Japanese interest rates as they have to tap international markets. It is a matter of when, not if.

Their currency is strong & the Chinese are willing to accept virtually no interest income on their reserves because they are doing it for US also. If interest rates overwhelm Japan, they may choose to monetize debt. I am betting we will be in the same shape in 12 years because foreclosures & this depression will worsen until November 2012 & we have a lot of off balance sheet debt. We will monetize debt just like Japan will. Currencies are going to take a massive hit.

The countries in red will have a currency crisis within 25 years.

 

[georgephillip]

Thank you, Friedrich Engels.

Paul Craig Roberts, former editor of the Wall Street Journal and Assistant Secretary of the Treasury during the Reagan Administration:

"In America today there is no longer a connection between profits and the welfare of the people. Unregulated greed has destroyed the capitalist system, which now distributes excessive rewards to the few at the expense of the many.

"If Marx and Lenin (and Engles) were alive today, the extraordinary greed with which Wall Street has infected capitalism would provide Marx and Lenin (and Engles) with a better case than they had in the 19th and early 20th centuries."

You're welcome, David Rockefeller.

 

[Oddball]

*yawn*

I guess we should've just continued with the 12+% inflation and 20%+ interest rates, eh?

 

[georgephillip]

*yawn*

I guess we should've just continued with the 12+% inflation and 20%+ interest rates, eh?

"Had Don Regan and I known that the high speed Internet was in our future and that American corporations would use it to destroy the jobs traditionally filled by US university graduates, possibly we would have decided to save the regulated telephone monopoly and to deliver the economy over to stagflation.

"The reason is that sooner or later something would have been done about stagflation, but nothing whatsoever has been done about offshoring. Saving the economy from offshoring would have been a greater achievement than saving the economy from stagflation. However, in my time stagflation, not offshoring, was the problem.

"I regret that I did not have a crystal ball."

Go back to sleep.

 

[Oddball]

Oh great...The next boogerman of the populist ignoramus, who has no other argument: Offshoring.

Sheeeeeesh!

 

[georgephillip]

Speaking of Populist ignoramus, Ronald Reagan championed at least three malignant economic "ideas" during his reign:

Government helping the rich get richer lifts all boats.
Markets are inherently self correcting.
The US has no need for any economic strategy.

"What followed was a thirty year period where America's working families were abandoned in favor of the rich.

"Inequality rose as middle class income and wealth declined. As corporate power increased, unions were systematically undermined. As CEO salaries soared, fewer families earned living wages."

"The Federal government has to intervene and create jobs that the greedy, shortsighted private sector hasn't provided."

The Jobs Crisis

 

[KissMy]

Speaking of Populist ignoramus, Ronald Reagan championed at least three malignant economic "ideas" during his reign:

Government helping the rich get richer lifts all boats.
Markets are inherently self correcting.
The US has no need for any economic strategy.

"What followed was a thirty year period where America's working families were abandoned in favor of the rich.

"Inequality rose as middle class income and wealth declined. As corporate power increased, unions were systematically undermined. As CEO salaries soared, fewer families earned living wages."

"The Federal government has to intervene and create jobs that the greedy, shortsighted private sector hasn't provided."

The Jobs Crisis

Free markets are self correcting. It was the government that took over and started bailing out the greedy rich & Unions who contribute generously to their campaigns. Government Bailed out the savings and loans in 1980's, Long-Term Capital Management (LTCM) in the 1990's, & now the Big Banks in 2000's. If it weren't for the government these greedy rich would not have acquired their massive wealth or they would have lost it & be busted broke poor like many of us are now. Government also awards lucrative contracts to & bails out greedy unions who kill jobs & take from the private sector to pad their greedy fat failing pensions.

The TEA Party are the only people who stood against the government bailouts. Most Democrats & some Republicans are the culprits. After leaving office Bush admitted that the bailouts were a big mistake. Yes it prevented a larger market correction but it created a huge moral hazard & chose winners & losers. This is Communism. If you do not stand with the TEA Party then you support this bailout of select groups & Communist rulers who fuck the average citizens.

 

[georgephillip]

Speaking of Populist ignoramus, Ronald Reagan championed at least three malignant economic "ideas" during his reign:

Government helping the rich get richer lifts all boats.
Markets are inherently self correcting.
The US has no need for any economic strategy.

"What followed was a thirty year period where America's working families were abandoned in favor of the rich.

"Inequality rose as middle class income and wealth declined. As corporate power increased, unions were systematically undermined. As CEO salaries soared, fewer families earned living wages."

"The Federal government has to intervene and create jobs that the greedy, shortsighted private sector hasn't provided."

The Jobs Crisis

Free markets are self correcting. It was the government that took over and started bailing out the greedy rich & Unions who contribute generously to their campaigns. Government Bailed out the savings and loans in 1980's, Long-Term Capital Management (LTCM) in the 1990's, & now the Big Banks in 2000's. If it weren't for the government these greedy rich would not have acquired their massive wealth or they would have lost it & be busted broke poor like many of us are now. Government also awards lucrative contracts to & bails out greedy unions who kill jobs & take from the private sector to pad their greedy fat failing pensions.

The TEA Party are the only people who stood against the government bailouts. Most Democrats & some Republicans are the culprits. After leaving office Bush admitted that the bailouts were a big mistake. Yes it prevented a larger market correction but it created a huge moral hazard & chose winners & losers. This is Communism. If you do not stand with the TEA Party then you support this bailout of select groups & Communist rulers who fuck the average citizens.

Is it even possible for markets to operate freely of any government interference?

My eyes are starting to open to the corrupting influence of public unions and their role in our current Recession, but I still believe "government" operating independently of private investment banks is our best choice for a level playing field.

Numerous important factors are off the table as long as Republicans and Democrats, i.e., Wall Street, control government:

Federal Reserve Board policy.
Free trade for doctors and lawyers.
Copyrights and patents.

According to Dean Baker: "Freeing trade in professional services should be an easy one. The economic gains from having free access to doctors and other professionals from India, China, and other developing countries vastly exceed the potential gains from trade deals like NAFTA and CAFTA that make the 'free traders' so excited.

"The savings on these services will make health care much more affordable and make other prices lower, effectively raising the real wages of workers who are already facing competition from workers in developing countries."

The Conservative Nanny State

While I usually agree with most of your observations, I think you're mistaken about the TeaParty. There were definitely others opposing the bailouts, including Dennis Kucinich, for one example.

When it first burst on the scene I thought the TP could, over time, morph into an international labor/renters' rights party with the potential to Really Change Everything.

Then I noticed Dick Armey was involved.
Dick's career has been dedicated to helping the greedy rich.
Had Dick been born in Russia, I'm pretty sure he would have had at least as much success as a Communist as he had here as a Republican.

There is an authentic class war going on in America, but from what I've seen Dick Armey and most TeaPartiers are on the wrong side.

 

[KissMy]

Many people & groups are trying to hijack or coop the TEA Party. Rick Santelli's Rant of the Year is what brought the people to the streets. No More Bail-Outs! No More Government Propping Up Greedy Criminals & picking winners & losers! That is what the TEA Party is about. Democrats want to label them as racist & kill the movement & Republicans are trying to pull them into their tent. The TEA Party is affecting things & it needs the support of more Americans. Do not believe what other groups tell you. Tea Party people are not Republicans or Racist. There are Fake TEA Partiers performing evil acts for TV to try & bring the group down. The Rich Greedy Bastards are trying their hardest to hold onto power.

Any group sponsored by government is ripe with corruption. Fannie & Freddie are backed with tax payer money yet they have paid off most of congress & the president. Government & Civilian Unions have tax payer backed pensions & get government bail-outs yet they have bought off half of congress & the president. Banks are backed by the Federal Reserve yet they have paid off most of Washington D.C. These organizations are paying off government to allow them to rip-off the citizens of this country.

Many of us tried to put a stop to this crap in 1992 when we voted for Ross Perot but that lead to a Clinton victory. More of this country had best wake up & stop voting the party line or there will be hell to pay.

 

[Oddball]

Speaking of Populist ignoramus, Ronald Reagan championed at least three malignant economic "ideas" during his reign:

Government helping the rich get richer lifts all boats.
Markets are inherently self correcting.
The US has no need for any economic strategy.

"What followed was a thirty year period where America's working families were abandoned in favor of the rich.

"Inequality rose as middle class income and wealth declined. As corporate power increased, unions were systematically undermined. As CEO salaries soared, fewer families earned living wages."

"The Federal government has to intervene and create jobs that the greedy, shortsighted private sector hasn't provided."

The Jobs Crisis

Who said anything about Reagan, moonbat?

 

[Trajan]

... is coming.

Or something close to it.

I think there is a fairly high chance that the economy with contract some time in the second half of the year. It may be happening now.

I think you're right on...


Zero Hedge had an article last week, making the case that due to the bottoming out of exports and some other trends they saw, they are going to have to re-adjust, again, the Q2 GDP % to 1% or even lower....I am sure that will be in the usual Friday night, hope you don't notice media dump.

 

[Trajan]

Yeah, that's true. Demographics work in America's favor. Unfortunately, the population doesn't grow fast enough to offset the deleveraging that is occurring.

BTW, Japan is on the brink of disaster, IMHO. I've started shorting the yen using long-term options and I want to short Japanese long-term bonds. If you think America is in trouble, Japan is far worse. It is mind-boggling to me that the yen it approaching all-time highs. That is absolute gift, in my opinion, one of the clearest long-term trades I have ever seen.

Wouldn't Gold be a safer alternative to shorting bonds. What if all western countries & Japan just inflate like crazy or monetize debt? You will just have a pile of paper. It is just a matter of time before a majority of the worlds producers have an epiphany about a whole host of currencies.

Shorting bonds that are yielding almost nothing is one of the safest bets around. I'm trying to buy options on 5 and 10 year JGB interest rates.

In Japan, total tax revenues will pay for social security and interest on the debt, and that's it. There are other sources of revenues, such as dividends and interest from government-owned assets, but most of the shortfall has to be borrowed. The biggest buyers of JGBs have been Japanese pension funds, but they are now in run-off mode as the working population in Japan peaked in 2008, thus they are net sellers of bonds. Plus, they have been ordered to get their returns up because they aren't earning enough to meet obligations. You can't do that owning JGBs yielding 1%<. The savings rate in Japan has fallen from 15% to 2% today. Americans save more than the Japanese. There is a budget gap of ~$400 billion that has to be funded each and every year. To do so, interest rates are going to have to rise to attract foreign capital, unless the Chinese are willing to accept virtually no interest income on their reserves. But if interest rates rise, then the budget gets out of whack because debt is 200% of the economy. It is virtually impossible to cut spending in Japan because of the ossified Japanese political system, and they can't raise taxes because the economy tanks when they do. Japan is truly fracked. And this week, the yen hit a 15-year high. A-fucking-mazing. Unless Japan radically reforms its society, there is no way out. And usually, countries don't reform until there is a crisis. I am betting on a crisis, or at a minimum, a rise in Japanese interest rates as they have to tap international markets. It is a matter of when, not if.

watching Chinese bond trends, its easy to see were they are going and may be making their bets now, they have little faith in our ability to grow ourselves out of this, even long term. They have quietly been dumping their US Bonds, the article I saw had them dropping 12% of their holdings on the last 4 months.

They see a lost decade on the horizon for is ( we are 2 years in imho) and are not going to get fragged if they can help it.

 

[KissMy]

watching Chinese bond trends, its easy to see were they are going and may be making their bets now, they have little faith in our ability to grow ourselves out of this, even long term. They have quietly been dumping their US Bonds, the article I saw had them dropping 12% of their holdings on the last 4 months.

They see a lost decade on the horizon for is ( we are 2 years in imho) and are not going to get fragged if they can help it.

Hell we just lost 1 decade. In inflation adjusted terms we peaked in the 2nd quarter of 1999 (see chart below). We are 11 years into a Japan lost 2 decades & now Japan is fucked. We may have a similar fate.

 

[georgephillip]

Speaking of Populist ignoramus, Ronald Reagan championed at least three malignant economic "ideas" during his reign:

Government helping the rich get richer lifts all boats.
Markets are inherently self correcting.
The US has no need for any economic strategy.

"What followed was a thirty year period where America's working families were abandoned in favor of the rich.

"Inequality rose as middle class income and wealth declined. As corporate power increased, unions were systematically undermined. As CEO salaries soared, fewer families earned living wages."

"The Federal government has to intervene and create jobs that the greedy, shortsighted private sector hasn't provided."

The Jobs Crisis

Who said anything about Reagan, moonbat?

Moonbat?

Aren't we being a bit harsh?

Surely you perceive the connection between Reagan's war on unions and outsourcing?

btw, What have you done with Dude?

Outsourced him?

Extrajudicial assassination?

Rendition?

Bagram or Gitmo?

The Gipper wants to know.

 

[Oddball]

No...Not being harsh at all.

After reading your posts, I'm convinced that you're an economically ignorant populist (redundant, I know) moonbat....One who can't stick to the topic, no less.

 

[georgephillip]

Any "thoughts" on whether slashing the deficit or creating more jobs will minimize the chances of a double dip?

What about restoring controls on currency and capital to Bretton Woods standards?

Amaze me.

 

[KissMy]

St. Louis Fed President James Bullard Seven Faces of The Peril

"In this paper I discuss the possibility that the U.S. economy may become enmeshed in a Japanese-style, defationary outcome within the next several years."

 

[KissMy]

CNBC Just Reported New Jobless Claims now up to 500,000

Weekly Jobless Claims Jump to Nine-Month High

The number of U.S. workers making new claims for jobless benefits unexpectedly rose last week to the highest level in nine months, a distressing sign for an already weak labor market.

Initial unemployment claims rose by 12,000 to 500,000 in the week ended Aug. 14, the Labor Department said in its weekly report Thursday. It was the highest level since Nov. 14, when claims stood at 509,000...

New claims for the previous week, ended Aug. 7, were revised up, to 488,000 from the originally reported 484,000. The rise in claims is particularly troubling because analysts have been expecting an improvement for some time...

The largest increase in claims occurred in California, which saw a rise of 4,393 due to layoffs in the service industry.

 

[KissMy]

Notes from Appraisal Institute&#8217;s 16th Annual Summer Conference

&#8226; 23% of prime borrowers are not making payments

&#8226; 47% of non-prime borrowers are not making payments

&#8226; 90% of properties are upside down on value-to-loan (60% owe more than 150% of value)

Many borrowers haven&#8217;t made a payment in more than two years and have yet to receive a Notice of Default.

These numbers are frightening when considering the inventory that may come into the market in the next few years. Norris added that lenders and the federal government have slowed the foreclosure process to prevent a further deterioration of housing prices. But this artificial slowing of foreclosures belies the fact that there are still major waves of residential mortgage defaults on the horizon. It will be interesting to see if this policy plays out for the best or backfires and causes another flood of foreclosure properties into the market

 

[Truthmatters]

That is riveside county cali only fella