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Re: The State of the States

Postby GJJIM » Sat Jun 02, 2012 10:26 am

The word "devaluation" seems to be making the rounds in countries like China, Japan, Argentina, etc., and it will be a given when countries like Greece, Spain, and Portugal are kicked out of the EU. People are not as ignorant as politicians might assume, and many are pulling their money out of the local banks and moving it into currencies with less perceived risk. Ben Bernanke's scheme of financial repression here in the U.S. is working (for now) as huge inflows of foreign cash have driven yields on Treasuries to historic lows. The interest rate for a 30-year FHA mortgage is now 3.75%. The Federal government has no problems borrowing all the money it needs to operate, and boy does it need a lot of it!

The second part of Benanke's scheme is also becoming clear. He is setting up a "roach motel" where foreign money checks in, but it might never be allowed to leave. All the pieces are now in place for full-blown capital controls. When the time comes, Obama or his successor will flip a switch and the funds placed here for safe-keeping will be "stranded" in the U.S. banking system. Last man standing "wins".

Good luck to all as people in high offices (with no interest in our well-being) play chess with our lives and fortunes.
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Re: The State of the States

Postby Andres » Sat Jun 02, 2012 11:38 am

GJJIM wrote:The second part of Benanke's scheme is also becoming clear. He is setting up a "roach motel" where foreign money checks in, but it might never be allowed to leave. All the pieces are now in place for full-blown capital controls. When the time comes, Obama or his successor will flip a switch and the funds placed here for safe-keeping will be "stranded" in the U.S. banking system. Last man standing "wins".

In general, yes.
But I suggest there will probably be exceptions for some. For example, I doubt the Chinese government will look kindly on such an action in respect to its funds, funds of companies it owns and perhaps privately-owned Chinese companies. The golden rule* will probably come into play.
Also, privileged organisations (with well-placed people) like Goldman Sachs are likely to do very well out of their ability to be an "exception".

*"He who owns the gold makes the rules."
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Re: The State of the States

Postby GJJIM » Sat Jun 02, 2012 11:49 am

Andres wrote:
GJJIM wrote:The second part of Benanke's scheme is also becoming clear. He is setting up a "roach motel" where foreign money checks in, but it might never be allowed to leave. All the pieces are now in place for full-blown capital controls. When the time comes, Obama or his successor will flip a switch and the funds placed here for safe-keeping will be "stranded" in the U.S. banking system. Last man standing "wins".

In general, yes.
But I suggest there will probably be exceptions for some. For example, I doubt the Chinese government will look kindly on such an action in respect to its funds, funds of companies it owns and perhaps privately-owned Chinese companies. The golden rule* will probably come into play.
Also, privileged organisations (with well-placed people) like Goldman Sachs are likely to do very well out of their ability to be an "exception".

*"He who owns the gold makes the rules."



Ah yes, the Chinese and their massive investment in Treasuries...

http://www.nytimes.com/2012/05/22/busin ... rkets.html

That new link works both ways, buy or sell. 8)

Of course this is all predicated on the Chinese "playing nice" and not pissing on Uncle Sam in some future crisis.
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Re: The State of the States

Postby admin » Sat Jun 02, 2012 1:50 pm

JHyre wrote:Vintage Steyn, the funniest bad news around. And sadly, he is correct. Key quote: Too many citizens of advanced Western democracies live a life they have not earned, and are not willing to earn. Yep, we are all entitled.

http://www.nationalreview.com/articles/ ... mark-steyn

John Hyre


Yea, he has a good point about the shrinking economic years in the west. I have a photo of myself hanging in my office, at about 6 or 7 years old, standing in front of a hand painted sign. My father owned a camp ground. I got the idea to sell firewood to the campers, because they were not allowed to cut down any trees but still needed firewood. So I sold them small bundles of fallen trees and branches for a $1. I made like $50 over the course of a couple weeks that summer. It was such a good idea, my older brother that was manager of the campground at the time got out his chainsaw and decided to supplement his income doing the same thing, but on a bit more industrial scale. By 10 years old I was making money with paper routes, selling night crawlers to fishermen, mowing lawns. I didn't need to work, or even make money doing it. It was an adventure and a challenge. I must have had dozens of different types of businesses / jobs (half I have forgotten about) and some better than others by the time I was like 11 or 12 ( I think that was about the time I got a social security number, and it quit being all that fun).

I think about all the kids under 16 (in the States, and everywhere else), and how few I know or see that are engaged in some sort of work or business venture on their own. I was raised that kids working was not a bad thing. In fact it was one of the great adventures of being a kid, and an important part of learning to be independent. Now it is viewed as robbing kids of their childhood, or some form of Child labour exploitation (even toy businesses, or play work). So, we wonder why kids grow up either deferring to mom or dad or the state to get by. Not to mention acquiring any sort of real world skills by the time they finish with their second or third free masters degree in whatever fluffy thing they might study. It might also explain the unemployment among those under 30 years old running between 30% and 50% in most of the western countries, with countries in the EU clocking sometimes 80% unemployment for the under 30 crowd.

It use to be that most anyone with the skills would wonder off to start their own business when no jobs were around. They would go from not being able to find a job, to often being job creators. At least they might get by until there were some better jobs. We are not hearing a whole lot about the kids in their basement this time that could not find a job, and are now starting the next big thing. Yea, there are "incubator" programs all over the world, but they are more of the same. People starting business, with tax money incentives. Many, If they did not get free money, would not likely be there. It is another form of welfare, or extension of the college loan system. I still subscribe to the idea that if a start up business needs a large injection of outside capital to start, you should probably take another look at your business plan. State money to help expand a small proven business, great; but, show me the money and show me it is viable idea. My concern is that many of them, now at say 25 years old or so, totally lack the skills and experience to start a business on their own; because, at best, most of their job experience involves being in a cubicle somewhere working 9-5 or playing video games. Not exactly the best business school out there. Hell, you just have to look around some of the ideas that have been floated on the forum over the years, to get a sense of the lack of basic skills that are absent these days.
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Re: The State of the States

Postby john » Sun Jun 03, 2012 12:52 am

One must care about a world one will not see.
--- Bertrand Russell
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Re: The State of the States

Postby JHyre » Sun Jun 03, 2012 10:30 am

http://etfdailynews.com/2012/06/01/nobe ... k-euo-vwo/

I despise and disagree with Krugman. Nonetheless, the old saw about a stopped clock comes to mind.

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Re: The State of the States

Postby GJJIM » Sun Jun 03, 2012 10:47 am

JHyre wrote:http://etfdailynews.com/2012/06/01/nobel-laureate-says-globe-headed-for-financial-breakdown-and-radicalism-ewg-fxe-vgk-euo-vwo/

I despise and disagree with Krugman. Nonetheless, the old saw about a stopped clock comes to mind.

John Hyre


In Paul Krugman's world, debt and wealth are interchangeable. The real world (outside of NYC and Washington DC) teaches different lessons than the good professor, and admin's earlier comment touches on the important differences between the mindset of a Keynesian academic and any successful business owner.

I do give Krugman credit for using the "D" word lately. Depressions are much worse if the responsible parties walk around with their eyes closed pretending that everything is "improving" because they can still borrow money. :alien:
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Re: The State of the States

Postby admin » Sun Jun 03, 2012 11:16 am

You know, I had a look at the first post of this thread. That was started in 28 Jan 2008, so over 4 years and 68 pages later, has anything improved in the States?

More exactly, are you better off today than you were 4 years ago (for those still with one foot in the door)?

In fact, it has gotten worse as we sit on the verge of a total collapse of the EU, property prices still have not reached rock bottom, credit for most is tight, unemployment off the charts for almost the entire globe, and we still await many shoes to drop (post election budget crisis, student loan implosion, hard run of inflation [those printing presses are not free]). So, even if the politicians are not inclined to use the 'D' word, I think everyone else is more than warranted in using it.

My guess, if everything went just right and we dodged every single bullet out there, we are looking at least another 3-4 years of this. Chances are we are not going to dodge even half of the bullets out there, and we could very well be looking at a new global economic normal for the rest of our lives.
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Re: The State of the States

Postby thisisreallycomplicated » Sun Jun 03, 2012 12:09 pm

admin wrote:You know, I had a look at the first post of this thread. That was started in 28 Jan 2008, so over 4 years and 68 pages later,

I've seen this thread a bunch of times, but never read any of it. But for some reason, I decided to read the first post a few minutes ago. And then I skipped to the end, and read this one. Maybe something important's about to happen?

admin wrote: has anything improved in the States?

No

admin wrote:More exactly, are you better off today than you were 4 years ago (for those still with one foot in the door)?

If you ignore the pending nuclear apocalypse, then maybe.

admin wrote:In fact, it has gotten worse as we sit on the verge of a total collapse of the EU, property prices still have not reached rock bottom, credit for most is tight, unemployment off the charts for almost the entire globe, and we still await many shoes to drop (post election budget crisis, student loan implosion, hard run of inflation [those printing presses are not free]). So, even if the politicians are not inclined to use the 'D' word, I think everyone else is more than warranted in using it.

My guess, if everything went just right and we dodged every single bullet out there, we are looking at least another 3-4 years of this. Chances are we are not going to dodge even half of the bullets out there, and we could very well be looking at a new global economic normal for the rest of our lives.

I can't see things going back to the way they were. And I'm wondering what's going to happen when Japan (the 3rd largest economy?) collapses.
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Re: The State of the States

Postby admin » Sun Jun 03, 2012 12:55 pm

I am likly repeating myself, but China is the mother of all bubbles to burst, and it will take Asia with it. China is a super paper tiger, with little difference between corruption and government. Nothing, and I mean nothing, in terms of economic data that flows out of China can be trusted. Even if a single piece of data is accurate, the underlying economic activity it is based on is all smoke and mirrors.

For example, housing sales in China, when the Chinese government is ordering the construction. I recall seeing entire modern cities (like dozens of them), able to hold a 100,000 people, sitting vacant in China. That was like 10 years ago. People owning 3 or 4 apartments in new buildings, none were occupied. It goes on an on. The government says jump, and they jump. It is not different than when the communist ordered the country to produce steel and nothing else in like the 30's, at the expense of nearly everything else.

Just taking a look around, what other bubbles/distortions are out there that are set to burst:
In the neighbourhood here, I would say Brazil is the 1 trillion dollar gorrilla in the room. Argentina is such a mess, in the middle of so many messes, no one is even paying attention to their full blown train wreck. They are so far gone, I am not even sure they are a bubble / crisis any more; but the world markets seem to still think they are a player.

The U.S., I already listed most of major ones that are easy to see. I agree that a lot of cans have been kicked down the road to cover up the presidential election, in true gentleman's style agreement. They can only keep it up for a short while after the election, and everything has to come to a head. My sense is within 1 year of the U.S. presidential election, the wheels come off that go cart. The state and municipal debt crisis has yet to really be front page news. You can not have cities and states, with debts larger than many countries, and no tax revenue. I wonder how many cities in America, are essentially in the same position as Greece?

Of course there is the EU. The euro is not even going to be recognizable by the time this is all done. There might still be a euro, but it will be underwritten by some completely new entity. Perhaps they get their act together, and centralize bond offerings for all eu states. Doubt it.

Indian strikes me as a mega bubble in the bursting. Considering there are a billion people to piss off and some nuclear weapons to play with, that could have some serious consequences.

Middle east. The democratization of the middle east, the lack of support from the west to the process, very well could lead to a whole lot of oil falling in to the hands of a whole lot of unfriendly states. No one, not even the U.S., is in a position to haggle when it happens. They will have to suck it up, and pay for the oil.

Then there is Chile. if any of the bubbles on the horizon burst, Chile will obviously take a hit. Copper will fall, but many other hard resources might go the other way (gold for instance). Still, at then end of the day, Chile has the resources to weather a pretty bad and sustained storm, that really have not been tapped (other than for the earthquake). Name one country in the world, with debt to GDP right now, plus the hard assets to deal with this? Not many out there.

Chile can take a 5-6% haircut in the economy, and still be in the green without the government implementing any real artificial stimulus. The wild card coming up will be the election. If we get some moron in to office in Chile, things could go bad. As it stands, even the morons are pretty moderate when it comes to the economy in Chile. I am concerned about the exposure to Spanish investors in Chile. Way too many Spanish and other EU companies in Chile that might cannibalize their Chilean arm to survive in a panic, even if profitable. I find it interesting that Endesa for example, through its local partner, is making up excuses for not going forward with the dam, claiming it is not them but Chile that is in the way. At the same time they dropped a few dam projects in Portugal. Santander banks claims to be o.k., but sold off 30% of its Brazil stake. That is just some examples, of investors and companies battening down the hatches. Of course Chile is vulnerable on the energy front, but what is new?

On the other hand, the 2008 burst, led to a lot of international investment money moving in to Chile as a safe haven buy. On the other hand it also seemed to got rid of a lot of fluffy bubble money that was speculating on Chile before the crisis. Recently, a lot of international investment exhiles from Argentina are appearing in Chile, hoping for greener pastures or at least some stability on this side of the mountains. If Brazil goes, I bet more than a little of that hot money that needs to stay in south america retreats to Chile, and for Chile, given the size of the economy, it only needs a small fraction of that that hot money floating around Brazil. Perhaps a lot of it comes at once, as where else in the world could it be parked these days.
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Re: The State of the States

Postby Victoria » Sun Jun 03, 2012 5:27 pm

admin wrote:China is the mother of all bubbles to burst, and it will take Asia with it...

Brazil is the 1 trillion dollar gorrilla in the room...

Argentina is such a mess, in the middle of so many messes, no one is even paying attention to their full blown train wreck. They are so far gone, I am not even sure they are a bubble...

The U.S...

Of course there is the EU. The euro is not even going to be recognizable by the time this is all done...

India strikes me as a mega bubble in the bursting...

Middle east...

Then there is Chile...?


Charles and Red summed it up pretty well, I think. If all those bubbles burst, then red is right:

Red wrote:All paper will burn.


Maybe Chile should come up with a copper-backed currency! :!: :?: :idea: :arrow: :mrgreen:
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Re: The State of the States

Postby john » Sun Jun 03, 2012 11:21 pm

JHyre wrote:http://etfdailynews.com/2012/06/01/nobel-laureate-says-globe-headed-for-financial-breakdown-and-radicalism-ewg-fxe-vgk-euo-vwo/

I despise and disagree with Krugman. Nonetheless, the old saw about a stopped clock comes to mind.

John Hyre


Now John, it's not like you to be wishy-washy! You either agree with Krugman's economic analysis and outlook or, if not, why not! It seems clear to me that the current economic policies of the "Austerians" are likely to result in another great depression within the next 18 months.
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