hellsten + economy   227

Hallmark of an Economic Ponzi Scheme - Hussman Funds
Moody’s observed last week that since 2009, the number of global nonfinancial companies rated as speculative or junk has surged by 58%, to the highest proportion in history. Despite the low rate of defaults at present, Moody’s warns that future periods of economic stress will cause a “particularly large” wave of defaults (h/t Lisa Abramowicz, Jeff Cox).
economy  ponzi  market-timing 
june 2018 by hellsten
A Platform for the Decentralized AI Economy

The free and open market for AI technologies, built on smart contracts. Create, combine and monetize AI technologies at scale.
ai  blockchain  economy  singularity 
november 2017 by hellsten
The Four Hundred--As I See It: Ricardo's Law
Gutman puts it this way: "Ricardo's Law was true then and is true now: unless there is a scarcity of labor, wages tend to drop lower and lower, till they reach a point where they equal the minimum amount required to keep a worker alive." Granted, what it takes to keep a person alive, in an economic sense, is relative. Suffice it to say that, as The New York Times reported, hunger is spreading into the suburbs. There is even a sanitized phrase used to describe it, "food insecurity," which I suspect means not knowing where your next meal is coming from.

Since food insecurity is directly tied to job security, it should come as no surprise that it has risen 15 percent over the last four years while nearly 3 million American jobs have disappeared. Tens of millions of Americans live paycheck to shrinking paycheck, one economic misfortune away from insolvency. Last year alone, one in 73 households filed for bankruptcy--a telling monument to economic desperation.

In more extreme climes, we see Ricardo's Law applied in factories and sweatshops in places like China and Vietnam. Foreign subcontractors employed by American corporations often force women and children to work excruciatingly long hours for just enough sustenance to get them back to work the next day. The arrangement works nicely for both the factory owners, who make the bulk of the production profits, and the domestic corporations, which can disavow any knowledge of labor conditions overseas, blaming foreign subcontractors who conveniently operate beyond the reach of U.S. law.
ricardo  law  economy  salary  wage  capitalism  work 
may 2014 by hellsten
How The Economic Machine Works by Ray Dalio - YouTube
Don't have debt rise faster than income, because debt burden will crush you.

Don't have income rise faster than productivity, because you'll eventually become uncompetitive.

Do all you can to raise your productivity, because in the long run that is what matters most.
ray-dalio  economy  economics  debt  debt-cycle  video 
october 2013 by hellsten
Economics of Strategy - David Besanko, David Dranove, Mark Shanley, Scott Schaefer - Google Böcker
A firm's profitability depends jointly on the economics of its market and its success in creating more value than its competitors. The amount of value the firm creates compared to competitors depends on its cost and benefits position relative to competitors.

Whether a firm has a competitive advantage or disadvantage depends on whether it is more or less successful than rivals at creating and delivering economic value.

As we will see, a firm that can create and deliver more economic value than its competitors can simultaneously earn higher profits and offer higher net benefits to consumers than its competitors can.

Cadbury Schweppe's choice of sugar or corn syrup is immaterial; the final product tastes the same.

Given this, Cadbury Schweppe's maximum willingness-to-pay for ADM's corn syrup depends on the cost economics of corn syrup versus the cost economics of sugar.

Suppose Cadbury Schweppe's best available alternative to corn syrup is sugar.

If the price of corn syrup (including other materials cost, process costs, packaging costs) were any higher (than the cost of sugar), the soft drink maker would not purchase corn syrup and would use sugar instead.
economics  business  economy  strategy  profitability  business-strategy  competition 
july 2013 by hellsten
Internet Trends
Internet growth remains robuts, rapid mobile adoption still in early stages. 29% of adults in the USA own a table or e-reader. Mobile traffic 10% in 2012, 4% in 2010. USA e-commerce growth 10-15% between 2008 and 2011. 153% CAGR between 2008-2012 in mobile advertising revenues. eCPM 5 times lower on mobile than on desktop ($3.5 vs $0.75). Top 3 mobile eCPM by category: 1. Weather - $1.24 2. Education - $1.17 3. Lifestyle - $0.89 Average revenue per user 1.7-5 times lower on mobile than on desktop. ~2% of companies accounted for ~100% of net wealth creation of 1,720 tech IPOs in the USA (1980-2002).
startup  future  e-commerce  desktop-advertising  advertising  ecpm  mobile-advertising  economy  investing  startups  business  usa 
may 2012 by hellsten
The Shortest Quarterly Letter Ever
We have gone from having been notably upwardly mobile during the Eisenhower era to having fallen behind other developed countries today, even the U.K.! The net result of these factors is a growing feeling of social injustice, a weakening of social cohesiveness, and, possibly, a decrease in work ethic. A healthy growth rate becomes more diffi cult.
economy  jeremy-grantham  gmo 
december 2011 by hellsten
An Interview with Seth Klarman and Charlie Rose | Facing History and Ourselves
Seth: financial industry doesn't add value.

Things that can kill you. Getting in bed with bad management, underestimating leverage.
seth-klarman  economy  value-investing  value-investing 
november 2011 by hellsten
Barel Karsan: Economic Indicators Brightening
Back in 1992, Fisher argued that "when this ratio is rising sharply, always be bullish" and "when it is falling, adopt your most bearish posture". Based on those assertions, it would appear that this indicator started to warn of the current recession in late 2006, well before the market recognized that there were any problems. Furthermore, this ratio started to tick up in early 2009, which was exactly the right time to buy stocks.

Investors interested in determining the strength of the economy in the short-term should keep an eye on this ratio, and can do so here.
economy  ken-fisher  value-investing  market-timing  Value_Investing 
september 2011 by hellsten
The Global Double Dip and the French Bank Run | Credit Writedowns
My greatest concern is the French Banks SocGen, Agricole and BNP Paribas. A wholesale funding run on these three is like a run on JPMorgan Chase, Citigroup and Bank of America in the US or HSBC, RBS and LLoyds TSB in the UK. This is major. Look at my posts on Chinese shunning trade with French banks or The European Bank Run. The French must do something. Unfortunately, that means one needs to consider not just the sovereign, but quasi-sovereign debt that creates contingent liabilities which the sovereign could be reasonably expected to cover in the event of crisis. In France, we may well see this problem crystallized next due to the liquidity crisis affecting French banks. As I see it, these banks will need a commitment from the EU on liquidity. I believe we have that. But they also need a commitment from the sovereign on capital. Look for a statement by the beginning of next week.

I still do have hope even now that policy makers will get it right and prevent worst-case scenarios.
european-banks  bnp  us-banks  economy  fed 
september 2011 by hellsten
Twist and Shout? - Thoughts from the Frontline Investment Newsletter - John Mauldin
My guess is that the European Central Bank made a presentation to the other central bankers of the realities on the ground in Europe, and the picture was plug ugly.
ECB are clearly seeing a credit disaster at nearly every major European bank. As I keep writing, this could and probably will be much worse for Europe than 2008.
The last update to the European Union’s bailout program was agreed to July 22, but might not be ready for use before December. In contrast, the key policymakers in the American system can in essence gather at a two-top table for an emergency meeting and have a new policy in place in an hour.

if the ECB was forced to go into the open market for dollars, the euro would plummet. As in fall off the cliff. Crash and burn. Which would make US products even less competitive worldwide against the euro.

If the Fed does nothing, you do not want to be long. If they go “all in” you do not want to be short.
european-banks  economy  john-mauldin 
september 2011 by hellsten
The Oracle of Manitoba Is Buying - Forbes
First is the idea that the global economy is fragile. In 2007, at the last economic peak, global GDP came in at $65.4 trillion. Four years later, in 2011, global GDP is forecasted to be around $78 trillion. The world economy has grown 19.2%

The second disconnect is that corporations are hurting. The media is extrapolating weakness in the banking industry to the rest of Corporate America. That fact is that corporate profits are growing nicely.

Third…Right now, corporate insiders are buying their own stock with their own dollars—a strong sign of corporate health.

I’m very optimistic about the future of this company because it appears that Visa, by choosing to litigate rather than work with the major players in China, has made a strategic mistake that has given Mastercard an opportunity to ultimately overtake Visa.
randy-mcduff  value-investing  ma  visa  economy  guru-investor 
september 2011 by hellsten
Danger: Children at Play - GMO Quarterly Letter - August 2011
Freakishly High Corporate Profits Looking at corporate profit margins, one could argue the same for them – that they do not seem to be connected to economic reality. A sub average economic recovery, threatening to become painfully sub average, has not stopped corporate profits from quickly rising to a level that is about as high as they have ever gotten.

What to Buy?
- For those with a long horizon, I am sure well-managed forestry and farmland will outperform the average of all
global assets.
- I think it is likely that resources in the ground, hydrocarbons, metals, and fertilizer will also win on a 10-year

I would continue to overweight quality stocks, which may well be on a roll. They are not priced to make a fortune, but they are priced to give approximately 4.5% to 5% real return

the imputed 7-year return of the package today would be about 6.5% real!* Quality stocks, especially in the U.S. but almost everywhere, continue to handsomely outperform
gmo  jeremy-grantham  value-investing  prediction  2011  bubble  economy 
september 2011 by hellsten
And If There Was Any Doubt... | ZeroHedge
While we can only hope we are wrong, if we are right this means the short squeeze on the market is about to slam shut and Goldman will make out like a bandit as usual, with the S&P soaring several hundred points on ever worse macroeconomic and geopolitcal data" now you know.
gs  european-banks  us-banks  economy  prediction 
september 2011 by hellsten
Aquamarine Fund - September Report

the best buying opportunity since 2008/2009…I see substantial opportunity are Japanese smallcaps, and US money center banks.

Fortescue Metals Group (FMG AU)

I had found and invested in FMG through my regular study of Leucadia's investment moves.

International Coal (ICO)

At the time that I saw it, both Prem Watsa of Fairfax Financial and Wilbur Ross had taken substantial positions

US Financials

When the Fed expands its balance sheet…it does not put money directly into the hands of individuals and small businesses, it purchases highly rated securities from the banking system.

…easy money for the banks combined with elevated interest costs for consumers of credit creates high profitability for those banks…for as long as the Fed decides to hold down interest rates, and / or do quantitative easing, money center banks will have a very cheap source of funding and likely very profitable operations.

I am positioning Aquamarine Fund accordingly
2011  prediction  aquamarine-fund  guy-spier  value-investing  us-banks  fed  economy  prem-watsa 
september 2011 by hellsten
Guest Post: Where Is Our Oil Price Collapse? | ZeroHedge
“In the longer run, unless we take serious steps to prepare for the day that we can no longer increase production of conventional oil, we are faced with the possibility of a major economic shock—and the political unrest that would ensue.” – Dr. James Schlesinger – former US Energy Secretary, 16th November 2005

We were warned. We failed to heed the warnings. If we had begun making the dramatic changes to our society 5 to 10 years ago, we may have been able to partially alleviate the pain and suffering ahead. Instead we spent our national treasure fighting Wars on Terror and bailing out criminal bankers. Converting truck and bus fleets to natural gas; expanding the use of safe nuclear power; utilizing wind, geothermal, and solar where economically feasible; buying more fuel efficient vehicles; and creating more localized communities supported by light rail with easy access to bike and walking options, would have allowed a more gradual shift to a less energy intensive society.
oil  prediction  economy  peak-oil 
september 2011 by hellsten
€tanan sääasema: Pankkien ongelmaluotot kasvussa heinäkuussa
Finanssivalvonnan tuore tilastopäivitys kertoo, että pankkien järjestämättömien saamisten yhteismäärä kasvoi heinäkuussakin, jo seitsemäntenä kuukautena peräkkäin. Loppusummaksi tuli 1 382 miljoonaa euroa, mikä on 42 miljoonaa euroa enemmän kuin kesäkuussa. Arvonalentumistappioita kirjattiin lisäksi 11 miljoonan euron arvosta.
Tilastonikkareita saattaa kiinnostaa sellainen nippelitieto, että järjestämättömien saamisten yhteismäärä kohosi heinäkuussa jo suuremmaksi kuin vuoden 2009 huipussa.
housing-bubble  finland  debt  economy 
september 2011 by hellsten
You Can't Make This Stuff Up
So far, creditors have been generous in extending ever-greater loans to the US — by buying its debt — at very low interest rates. It clearly can’t go on forever.

To see how this works, look back to 1982. Then you could earn 15% on a Treasury bond. No wonder the price-to-earnings ratio of the entire Dow Jones industrial average fell to just 7 times in 1982. (The current ratio is about 14 times.) That was a bleak time, too, with a deep recession, bank troubles and raging inflation rates.
For many of these governments, the situation is desperate. Another gem: The Russian finance minister told the Russian people they should drink and smoke more to help boost tax revenues. “People should understand,” he said. “Those who drink, those who smoke are doing more to help the state.” And the Irish finance minister said his ministry is considering selling T-shirts that read, “Ireland is not Greece.” As I say, you can’t make this stuff up. Maybe Italy will hold a bake sale to help raise money!
interest-rate  economy  bubble 
august 2011 by hellsten
Value Investing World: Howard Marks and the economic cycle
I stated earlier that cycles are self-correcting. The credit cycle corrects itself through the processes described above, and it represents one of the factors driving the fluctuations of the economic cycle. Prosperity brings expanded lending, which leads to unwise lending, which produces large losses, which makes lenders stop lending, which ends prosperity, and on and on.
howard-marks  economy  finance  debt 
august 2011 by hellsten
The Recession of 2011? - Thoughts from the Frontline Investment Newsletter - John Mauldin
Notice that with Rosie’s combined index where it is today, we are either at the beginning of a recession or already in one. And the Philly Fed Index is consistent with a 90% chance of a recession.First, note the increases in the index with the onset of QE1 and QE2 and the sharp drops when QE ends.

I could go on and on about the negative data, and may do so in future letters

To say that the government of Europe is dysfunctional is an no-brainer.

they unequivocally said “non” and “nein” to the idea of eurobonds, which everyone else says is vital if the euro is to survive.

“It won’t take much for the interbank market to collapse. It’s not that serious at the moment, but it feels like it could very easily become that way and that everything will freeze.” (hat tip, Art Cashin)

If we are headed into recession, and I think we are, then the stock market has a long way to go to reach its next bottom
recession  john-mauldin  prediction  economy  europe  debt  2011  best  torevisit  macroeconomics 
august 2011 by hellsten
The German Example - Economic Scene - NYTimes.com
That role starts with serious regulation. American regulators stood idle as the housing bubble inflated. German banks often required a down payment of 40 percent.
Inflation-adjusted average hourly pay has risen almost 30 percent since 1985 in Germany, the kind of gains American workers have not enjoyed since the ’50s and ’60s. In this country, hourly pay has risen a scant 6 percent since 1985.Germany also managed to avoid a housing bubble, unlike the United States, Britain, Ireland, Spain and other countries. German children have stronger math and science skills than ours. Its medium-term budget deficit is smaller. Its unemployment rate is like a mirror image of ours: 6.1 percent, well below where it was when the financial crisis began in 2007. Our rate has risen to 9.1 percent.
And us? Well, lobbyists for the mortgage bankers and the N.A.A.C.P. have recently started pushing for less stringent standards for down payments…
economy  politics  germany  housing-bubble  comparison  europe  banks  regulation 
june 2011 by hellsten
Stockmarket valuation: In defence of the Shiller p/e | The Economist
In short, if you don't like what Shiller is telling you, it is because you are a bull who thinks "this time is different".
p/e  strategy  economy  finance  investing  value-investing  robert-shiller 
june 2011 by hellsten
The Sinking of QE2
February 2011, after the market had doubled from its lows and gained 30% since August, investors finally decided it's a good time to go back in the market. In one week in February, investors poured more money into funds than they had in all of 2010.

investors tend to chase after the mutual funds that have been doing well, and tend to sell the funds that have been doing poorly…the funds attracting the largest amounts of new investment tended to underperform after all the money arrived…the funds that suffered the heaviest outflows tended to outperform after all the money left
“Successful investors don’t rely on predicting the market’s next move. Indeed, both Buffett and Soros would be the first to admit that if they relied on their market predictions, they’d go broke. Prediction is the bread and butter of investment newsletter and mutual fund marketing — not of successful investing.”
most important about investing, Carret (101 year old value investor) had a one-word answer: Patience
qe  ben-bernanke  investing  economy  phil-carret 
may 2011 by hellsten
The False Hope of Higher Prices The Reformed Broker
"Why do we want home prices to rebound in the first place?"This is brilliantly insightful from a few different standpoints.  He is a Gen X-er like myself.  He sees the national obsession with getting house values up as merely the Boomers looking to protect their main assets.  He asks why it isn't a good thing that the X and Y kids like us can buy at depressed prices, giving us more disposable income as a result.He looks at it like "Since when were higher costs a good thing?"
housing  economy 
april 2011 by hellsten
The next housing shock - 60 Minutes - CBS News
Linda Green, Vice President of 20 banks at the same time, was hired at a sweat shop for signing missing documents.

"So you're Linda Green"? "How many banks were you Vice President for during one day?" "5 banks." "How much were you paid." "10$/hour." Names other than Linda Green used in legal documents: "Bogus Assignee", "A Bad Bene".
housing-bubble  banks  economy  2011  wtf  corruption  banking  legal 
april 2011 by hellsten
Look out below: Why skyscrapers are classic bubble indicators: Tech Ticker, Yahoo! Finance
In China, five of the world’s ten largest buildings are now under construction. Look out below!, says Vikram Mansharamani, a financial services veteran and part-time academic who has developed a multidisciplinary framework for sniffing out bubbles.v
If you look through Mansharamani’s lenses, it’s clear to see there’s a bubble going on in China. Tall buildings aren’t just symbolic of reckless ambition. “Skyscrapers are manifestation of easy money, overconfidence, and hubris,” he says. And they are excellent indicators of a top. “In New York in 1929 there were three buildings competing to be the world’s tallest skyscraper,” he notes. In 1997, the massive Petronas Towers in Malaysia were completed just in time for the Asian financial crisis. The Burj Dubai rose in 2007 to snatch the title of world’s tallest building – just in time for the financial crisis to his the Persian Gulf.
finance  economy  bubble  housing-bubble  china  communism  free-market  capitalism  gold 
april 2011 by hellsten
Diary of a Mad Hedge Fund Trader » March 17, 2011 – QE2 Just Ended Early
I think the earthquake is masking the true causes of the liquidation, the end of Ben Bernanke’s quantitative easing.

When the market would start discounting the demise of this free lunch for all asset classes and the hedge funds that trade them has been one of the great guessing games this year in the financial markets.

You can see this in the violence and the severity of the sectors that have sold off the most. The ones that flaunted the biggest gains since QE2 started in August are now suffering the worst of the damage.

The implication is that this sell off may continue longer and go farther than many traders realize. What will be the next driver to take stock prices skyward? QE3? You must be smoking something. The political balance in Washington will permit no more support for the economy.

I don’t think the abundant “crash” gurus are going to get any satisfaction this year either. The news is bad, but it is not that bad.
qe  finance  economy  prediction  2011  investing 
march 2011 by hellsten
Germany's new boom: making money by making stuff | World news | The Guardian
Are there lessons in this for Britain? Yes, says Martin Zeil, deputy prime minister of Bavaria. "All the countries that have kept the nucleus of their industry are more successful." Bavaria has invested carefully in the region's science and technology base, identifying future growth sectors such as green technology and life sciences and building up clusters of excellence that act as a magnet for investment. It takes more than a clutch of world class companies to provide a solid industrial base.

And yes too says Mayer at Deutsche Bank, who spent eight years in London watching the boom-bust come to grief. "You have to realise that Gordon Brown was wrong when he praised economic stability and high growth as the result of his policies. It was an illusion.

"A large part of the world was living on the drug of credit. The UK economy is so reliant on housing. It has a high social value. Everybody is obsessed with it. In Germany almost everybody rents.
bubble  uk  germany  usa  finance  economy 
march 2011 by hellsten
Hussman Funds - Weekly Market Comment: Cash and Credit - Implications for the Financial Markets - February 28, 2011
Last week, the S&P 500 pulled back by less than 2% - certainly not sufficient to clear the overvalued, overbought, overbullish, rising-yields syndrome that we observe in the market.
It's widely believed that somehow, QE2 has created all sorts of liquidity that is "sloshing" around the economy and "trying to find a home" in stocks, commodities, and other investments. But this is not how equilibrium works.
Here's how equilibrium does work. Every security that is issued has to be held by someone, in precisely the form in which it was created, until that security is retired. Period. That means that if the Fed creates $2.4 trillion in currency and bank reserves, somebody has to hold that money, in that form, until those liabilities are retired. The money ultimately can't go anywhere. If someone tries to get rid of their cash in order to buy stock, somebody else has to give up the stock and hold the cash. In the end, every share of stock that has been issued has to be held by somebody.
economy  finance  value-investing  hussman-funds  2011 
february 2011 by hellsten
Priceless: How The Federal Reserve Bought The Economics Profession
The Federal Reserve, through its extensive network of consultants, visiting scholars, alumni and staff economists, so thoroughly dominates the field of economics that real criticism of the central bank has become a career liability for members of the profession, an investigation by the Huffington Post has found.
economics  fed  politics  corruption  economy  finance  government  consultants  ben-bernanke 
february 2011 by hellsten
The Bernank on What Caused the Bubble, Arnold Kling | EconLog | Library of Economics and Liberty
The reduced capital requirements for AAA_rated securities created a regulatory hole through which the European and American banks drove the proverbial truck. It was not that the GSG countries dumped cheap money into the U.S. housing market. The problem was a financial sector that grew like a tumor in the U.S. and Europe, thanks to regulatory capital arbitrage that was, if anything, encouraged by the world's top banking regulators.
banks  ben-bernanke  corporatism  economy 
february 2011 by hellsten
Predicting the Effects of Savings Extortion and Abuse of the Middle Class
If free market capitalism existed and worked these banks would have been allowed to collapse, their losses eaten by bond and stock holders, and civil and criminal charges filed against institutions and individuals. However, to do so would have exposed the rot and common criminality in the interlinked global system. Accountability would have indicted the people and connections behind the curtain, so the entire anarchic enterprise has to be covered up and its costs shifted to taxpayers, in a vicious downward cycle, which only accelerates rapaciousness and irrational incentives and punishes savings and responsibility.
banks  corruption  fraud  fed  government  economy 
february 2011 by hellsten
CMSAttachmentDownload.aspx (application/pdf Object)
Which other developed country has had no improvement in fuel efficiency because it has reinvested the considerable technological advances in heavier SUVs, with no real need for most other than the nurturing of their macho instincts?

The fi nancial resources of the carbon-based energy companies are particularly terrifying, and their effective
management of propaganda goes back decades. They established and funded “independent” think tanks and even
non-profi t organizations that have mysteriously always come out in favor of policies favorable to maintaining or
increasing the profi ts of their fi nancial supporters.

The financial industry, with its incestuous relationships with government agencies, runs a close second to the energy
industry. In the last 10 years or so, their machine, led by the famously failed economic consultant Alan Greenspan...seemed perhaps the most effective.

in fi nance they had the “regulators,”deregulating up a storm, to the enormous profi t of their industry.
history  america  gmo  corporatism  economy  finance  corruption 
january 2011 by hellsten
The Republican Deficit - Diary of a Mad Hedge Fund Trader » January 14, 2011
Of the current $13 trillion the US government owes the world, roughly 75% was run up by Republican administrations. Do you believe that the Democrats are the big spenders?

George W. Bush was the mother of all big spenders, taking the debt from $5 trillion to $10.5 trillion.

The overwhelming portion of this profligate expansion came from two whopping great tax cuts that were primarily borrowed from the Chinese.

I bet that if someone conducted a poll asking which party was primarily responsible for running up such gargantuan numbers as these, 90% would answer that it is all the fault of Democrats.
republicans  economy  democrats 
january 2011 by hellsten
ACM_The Great Vega Short.pdf (application/pdf Object)
Oddly when it comes to the economy many talking heads are not smart enough to differentiate between a healthy financial system and one sedated by unprecedented amounts of stimulus.
finance  economy  filetype:pdf  media:document 
january 2011 by hellsten
Global Economics Weekly (PDF)
...their 10-year long-term averages. The N-11 as an aggregate performed better than the three major developed markets
The other N-11 indices all dipped through 2008, except for Vietnam, which has consistently underperformed its peers since 2007, sharing little of the rally both before and after 2008.

As these systems improve, strong growth should continue apace, and the poorest of the N-11 should be able to climb the income ladder to join the ranks of the BRICs and their own N-3.
global  economy  investing  emerging-markets  e-commerce  bric  n-11  2010  filetype:pdf  media:document 
december 2010 by hellsten
Lunch With Robert Reich - Diary of a Mad Hedge Fund Trader » December 31, 2010
Bob warned me not to take his investment advice, as he bought his home in Berkeley at the 2006 market top, just before it dropped in value by half. On top of that he has had to eat a 10% cut in his Berkeley professor’s salary forced on him by drastic state budget cutbacks.

Bob says that easy money is creating new bubbles around the world, especially in China (FXI) and commodities, that will only end in tears. The Middle Kingdom is the first country where inflation may break out to the upside.
funny  humor  economy  prediction  china 
december 2010 by hellsten
Hussman Funds: Market Valuations During U.S. Recessions
When you isolate the periods where the US economy was in recession, the analysis shows that the market's current valuation - while not rich – may not be extremely cheap either.
history  valuation  bear  bull  economy  2009  investing  research  market  value 
december 2010 by hellsten
Quote of the Day - Diary of a Mad Hedge Fund Trader » December 28, 2010
We have been pretending that we’re too big to fail. We’re not too big to fail, You can jump off of a 90 story building and feel fine for the first 89 stories. It’s the sudden stop at the end that tells you you’re not.” said Tom Friedman, New York Times columnist and author of Hot, Flat and Crowded.
quote  economy  wisdom 
december 2010 by hellsten
Charlie Rose - David Einhorn, President of Greenlight Capital
"I'm not a believer in an efficient market."

On how the FED is manipulating the market and stocks:
"The FED didn't really know what the problem was [talking about markets in Europe down, because of rogue trader]. They simply saw that the market was down [and lowered interest rates 0.75%]."
david-einhorn  economy  2010  best  apple  aapl  finance  bubble  fed  government 
december 2010 by hellsten
QE2: Beware the Perils of its Success | Vitaliy Katsenelson Contrarian Edge
However, when the bubble bursts the money will flow to its rightful owners.

The Fed doesn’t want to you to be in cash, it wants you to reach for yield and speculate – but don’t.

The US, like Japan, will be locked into unsustainably low interest rates.

The Fed wants to create asset bubbles, praying for the wealth effect – stock and real estate appreciation that will make people feel wealthier (at least on paper, for a while) so they will spend their phantom gains.  However, the Fed is like a Judas goat leading gullible (yield-deprived) savers to the slaughterhouse. 

The paper wealth that is created will vanish as bubbles burst (they always do), wealth will be destroyed, and consumers will find themselves further in debt.

Yogi Berra (allegedly) said – “In theory there is no difference between theory and practice. In practice there is.”
fed  inflation  history  value-investing  bubbles  best  investing  economy  prediction 
december 2010 by hellsten
Whitney Tilson's monthly email with articles and links
The US is writing down loans faster. "We are 60-70% through our writedowns 2-3 years into the crisis," says Tilson. Meanwhile "Japan still isn't 60% through, 20 years later." They should be writing down more aggressively [in the US], he says, but they are writing things down.

Great news, right? Not so fast.

The US will spend years muddling through this mess, says Tilson, who expects 2-7 years of feeble economic growth.

5) My partner Glenn Tongue was quoted in this article (www.bloomberg.com/news/2010-11-08/buffett-s-buyout-search-aided-by-biggest-cash-hoard-since-2008.html) about how Buffett has rebuilt Berkshire’s cash hoard and is ready once again (only a few months after acquiring Burlington Northern!) to bag an elephant:
brk  economy  whitney-tilson 
november 2010 by hellsten
Robert Scheer on _The Great American Stickup: How Reagan Republicans and Clinton Democrats Enriched Wall Street While Mugging Main Street_
Robert Scheer on The Great American Stickup: How Reagan Republicans and Clinton Democrats Enriched Wall Street While Mugging Main Street
government  wall-street  corporatism  capitalism  economy  banks  democracy 
november 2010 by hellsten
GMO Quarterly Letter – Night of Living Fed – October 2010
take another look at Exhibit 1, my personal
favorite. What a powerful and noble experiment! We
tripled debt to GDP ratio over 28 years, and yet GDP
growth slowed! And it slowed increasingly, especially
after 2000. The 3.4% trend line had been intact for over
100 years, from 1880 to 1982.
debth  growth  jeremy-grantham  economy 
october 2010 by hellsten
How Google's Refusal To Pay US Taxes Means US Taxpayers Fund Its Innovation, Resulting In A Benefit Of $100/Share | zero hedge
Google’s income shifting -- involving strategies known to lawyers as the “Double Irish” and the “Dutch Sandwich” -- helped reduce its overseas tax rate to 2.4 percent...

Google, the owner of the world’s most popular search engine, uses a strategy that has gained favor among such companies as Facebook Inc. and Microsoft Corp. The method takes advantage of Irish tax law to legally shuttle profits into and out of subsidiaries there, largely escaping the country’s 12.5 percent income tax. (See an interactive graphic on Google’s tax strategy here.)

The earnings wind up in island havens that levy no corporate income taxes at all. Companies that use the Double Irish arrangement avoid taxes at home and abroad as the U.S. government struggles to close a projected $1.4 trillion budget gap and European Union countries face a collective projected deficit of 868 billion euros.
google  evil  tax  economy  fraud  tax-haven 
october 2010 by hellsten
Is America In Decline? 24 Statistics About The United States Economy That Are Almost Too Embarrassing To Admit | Phil’s Stock World
#8 The United States has lost approximately 42,400 factories since 2001. Approximately 75 percent of those factories employed at least 500 workers while they were still in operation.

#9 The United States has lost a staggering 32 percent of its manufacturing jobs since the year 2000.

#10 Manufacturing employment in the U.S. computer industry is actually lower in 2010 than it was in 1975.

#11 In 1959, manufacturing represented 28 percent of all U.S. economic output. In 2008, it represented only 11.5 percent.

#12 The television manufacturing industry began in the United States. So how many televisions are manufactured in the United States today? According to Princeton University economist Alan S. Blinder, the grand total is zero.
usa  economy  statistics  history  globalization 
october 2010 by hellsten
Guest Post: Consumer Deleveraging = Commercial Real Estate Collapse | zero hedge
There are 105,000 shopping centers in the U.S. In comparison, all of Europe has only 5,700 shopping centers.

This grim story began between 2004 and 2007. The horrifying ending will be written between 2011 and 2014. Commercial real estate loans for office buildings, malls, apartment buildings and hotels usually have 5 to 7 year terms. If you thought the debt induced bubble in real estate only affected residential real estate, you are badly mistaken.

Shockingly, the Wall Street banks, run by MBA geniuses, loaned developers a half trillion dollars at the very peak in the market. Sounds familiar. Thank God the taxpayer has bailed these Einsteins out so they could live to make more bad loans and collect big fat bonuses.
bubble  economy  quote  bankers 
october 2010 by hellsten
The Automatic Earth: August 31 2010: Bubble case-studies: Ireland and Canada
When Ireland joined the eurozone, interest rates plummeted to levels the Irish hadn't seen before...people had access to cheap credit, and the EU pumped in enormous amounts of money for upgrading infrastructure...What followed was a staggeringly large property bubble, fuelled by extremely cheap credit that gave rise to almost insatiable demand. Property prices rose by a factor of 15 in 15 years. For a few years, the Irish were called the second richest people in the world (after Icelanders, who had managed to turn their entire country into a hedge fund in an even bigger credit boom). This is not riches, however. This is simply accumulating a veneer of material prosperity at the cost of digging oneself into an inescapable debt trap.

Where the credit markets lead, the real economy will follow. If people cannot get financing, there will be no price support for real estate at anything like current housing prices.
ireland  canada  finland  housing  housing-bubble  economy 
september 2010 by hellsten
The Dangers Of Mass Psychology (Or Why Overwhelming Majorities Are Always Wrong) | zero hedge
Any time people overwhelmingly believe that an asset is a ‘sure thing’ it inevitably has to be otherwise. It was John Kenneth Galbraith who astutely noted that, “In economics, the majority is always wrong”. This is the great paradox in the world of finance and it is exactly why the contrarians always prosper.

consumers who had been scarred by the stock market decided that real estate was the new safe bet, and the real estate boom began...As home prices began their ascent, more and more people piled in. Home ownership rates soared. Lax lending standards in both Canada and the US (the ‘prudent Canadian banking system’ fallacy will be addressed in a later post) led to a deluge of new buyers. Rising home prices then became the justification for rising home prices. Eventually everyone became convinced that real estate rises forever, it is a great investment (which it can be when the fundamentals are normalized), and everyone should own.
contrarian  economy  finance  bubble  housing  canada  psychology 
september 2010 by hellsten
AAA Ratings Are A Grim Fairy Tale - Great Speculations - Buys, holds, and hopes - Forbes
a long-running Senate study determined that over 91% of the AAA mortgage-backed securities issued from 2006-2007 have since been downgraded to “junk” status of BB or lower. Surely, a screw-up this gigantic can only be attributed to some extremely smart people.

“Their quantitative models appeared to have a Mensa-like IQ of at least 160,” bond legend Bill Gross sums up nicely, “but their common-sense rating was closer to 60, resembling an idiot savant with a full command of the mathematics, but no idea of how to apply them.”

You can pick your metaphor. It’s like a student who pays his teacher to grade his papers. Or a plaintiff paying the judge’s salary.

S&P rated Iceland “A+” in March 2008, about six months before its currency collapsed.

Late last month, Chambers helped knock Spain down to AA, a “bold” move, defying Moody’s and Fitch’s AAA rating on Spanish debt.
banking  economy  quote  best  funny  bankers  spain  iceland 
august 2010 by hellsten
James Berman: Reports of the Death of Equities: Greatly Exaggerated
The Dow is at 6,547, down 54% from its high of 14,164 back in October, 2007. This terrible bear market now exceeds the market losses of 2000-2002.

It may seem counter-intuitive to make the case for stock investment against such a backdrop, but so much value now resides in so many stocks that there's never been a better time to remain in stocks -- or to buy more with bonds or cash
contrarian  history  2009  03-2009  investing  psychology  economy  valuation  value-investing  best  indicator 
august 2010 by hellsten
Mish's Global Economic Trend Analysis: Fooled by Stimulus - Structural Problems Still Intact
The regime change that Bill Watkins mentions, actually began in 2005 with the busting of the housing bubble. It took a couple more years before economists noticed because commercial real estate kept the game going for a while longer.

Nonetheless, Watkins is light-years ahead of most economists and economic cheerleaders in understanding that we did have had a massive regime change, that the regime change is lasting, and that stimulus efforts to date have done nothing to fix the structural problems at hand.
economy  housing  bubble 
august 2010 by hellsten
W.C. Varones: Incompetent paid shill Frederic Mishkin in his own words
The guy is also a former Fed governor, in case you were wondering what kind of corrupt idiots are running our entire financial system.

Here's his 2005 take on Too Big To Fail: What, Me Worry? Then there's his great housing bottom call in April 2007.

And congratulations to the Columbia Business School for allowing this man to remain a professor.
economy  iceland 
august 2010 by hellsten
Diary of a Mad Hedge Fund Trader » August 13, 2010 – Why We Need Six New Saudi Arabias
The IEA was first set up as a counterweight to OPEC during the oil crisis in 1974, and has since evolved into a top drawer energy research organization.

World GDP will grow an average 3.1%/year through 2030, driving oil demand from the current 84 million barrels/day to 103 million b/d. That means we will have to find the equivalent of six Saudi Arabias to fill the gap or prices are going up, possibly a lot. His conservative target has crude at $190 in twenty years. Some 39% of that increase in demand will come from China and 15% from India.
oil  prediction  investing  economy 
august 2010 by hellsten
charles hugh smith-The Con of the Decade Part I
The con of the decade (Part I) involves the transfer of private debt to the public (the marks), who then pays interest forever to the con artists.

The circle is now complete: in "saving our financial system," the public borrowed trillions and transferred the money to private Power Elites, who then buy the public debt with the money swindled out of the taxpayer. Then the taxpayers transfer more wealth every year to the Power Elites/Plutocracy in the form of interest on the Treasury debt. The Power Elites will own the debt that was taken on to bail them out of bad private bets: this is the culmination of privatized gains, socialized risk.

In effect, it's a Third World/colonial scam on a gigantic scale: plunder the public treasury, then buy the debt which was borrowed and transferred to your pockets. You are buying the country with money you borrowed from its taxpayers. No despot could do better.
finance  democracy  corruption  fraud  economics  economy  fed  investing  best 
august 2010 by hellsten
Financial Steroids | SEO Book.com
If you have no debt and a bit of savings they can only screw you a bit. If you are loaded up on debt there are some risks you can't take. They own you.

In effect, it's a Third World/colonial scam on a gigantic scale: plunder the public treasury, then buy the debt which was borrowed and transferred to your pockets. You are buying the country with money you borrowed from its taxpayers. No despot could do better.
bank  debt  finance  economy  banks 
august 2010 by hellsten
Bubble Psychology and Lessons from History
"Stock prices have reached what looks like a permanently high plateau." - Irving Fisher, Ph.D. in economics, Oct. 17, 1929

Clearly, there was no recognition of the scale of the depression until the point where the credit markets bottomed in 1932/33

"At this juncture . . . the impact on the broader economy and financial markets of the problems in the subprime markets seems likely to be contained". - Ben Bernanke, March 28, 2007, in a statement to Congress’ joint economic committee

We are just past the point labeled 'Return to Normal', which corresponds to just after the end of the great sucker rally of 1930.
finance  history  bubbles  depression  economy  psychology  data  graph  ben-bernanke  prediction  2010 
august 2010 by hellsten
Guest Post: Mass Delusion - American Style | zero hedge
“The continuing shortages of housing inventory are driving the price gains. There is no evidence of bubbles popping.” – David Lereah – Chief Economist for National Association of Realtors – 2005

“We’ve never had a decline in house prices on a nationwide basis. So, what I think what is more likely is that house prices will slow, maybe stabilize, might slow consumption spending a bit. I don’t think it’s gonna drive the economy too far from its full employment path, though.” – Ben Bernanke – 2005

The usual drivel about positive demographics, low interest rates, strong income growth, and limited land to develop were spewed out by the corporate media complex.

“The dominant propaganda systems have appropriated the term “globalization” to refer to the specific version of international economic integration that they favor, which privileges the rights of investors and lenders, those of people being incidental.” - Noam Chomsky
bubbles  quotes  ben-bernanke  economy  finance  collapse  consumer  media  corruption  usa  history  housing  noam-chomsky  globalization 
august 2010 by hellsten
"Horizon" The Midas Formula (1999)
Even the perfect mathematical formula for predicting and hedging markets and two Nobel prize winners can't win on the stock market.
documentary  viewed  8-star  economy  finance  bubble  psychology 
august 2010 by hellsten
2009 Management Report - WTM - White Mountains Insurance Group, Ltd.
Trying to produce a regular stream of quarterly operating earnings often produces disaster. Trying to manage your company according to generally accepted accounting principles can often be silly. We prefer to measure ourselves as we would hope owners measure us — by growth in intrinsic business value per share.

Growth In Revenues

We applaud owners who reward executives on premium growth. This often provides fine opportunities for us later.

Market Share

Often introduced by business consultants. In our personal experience, chasing market share has produced the biggest disasters in our business. Often, we have profited later from that excitement.

Strategic Purchases

We have never made a strategic purchase... maybe we will someday. We often sell to strategic buyers. Our problem is we really don’t have much of a strategy other than to increase intrinsic business value per share.
wtm  annual-report  finance  economy  investing  filetype:pdf  media:document 
july 2010 by hellsten
Op-Ed Columnist - The Third Depression - NYTimes.com
the real threat is deflation, preaching the need for belt-tightening when the real problem is inadequate spending.
idiot  krugman  economics  depression  bubble  finance  economy 
june 2010 by hellsten
Former Central Bank Head Karl Otto Pöhl: Bailout Plan Is All About 'Rescuing Banks and Rich Greeks' - SPIEGEL ONLINE - News - International
“It was about protecting German banks, but especially the French banks, from debt write offs. On the day that the rescue package was agreed on, shares of French banks rose by up to 24 percent. Looking at that, you can see what this was really about -- namely, rescuing the banks and the rich Greeks.”
bankers  bubble  greece  finance  economy  banks  europe  eu 
june 2010 by hellsten
Economic fault lines: Risks remain below recovery's surface - May. 21, 2010
Most economists agree the Great Recession has been over for almost a year, and that the U.S. economy is not poised to fall into a "double dip" recession.
economists  prediction  economy  finance  contrarian 
may 2010 by hellsten
Skyscraper Index - Wikipedia, the free encyclopedia
The Skyscraper Index is a concept put forward in January 1999 by Andrew Lawrence, research director at Dresdner Kleinwort Wasserstein, which showed that the world's tallest buildings have risen on the eve of economic downturns
bubble  construction  housing  prediction  skyscaper  economy 
may 2010 by hellsten
The Myth of Asia's Miracle
First, claims about the superiority of planned over market economies turned out to be based on a misapprehension. If the Soviet economy had a special strength, it was its ability to mobilize resources, not its ability to use them efficiently. It was obvious to everyone that the Soviet Union in 1960 was much less efficient than the United States.

the miracle turns out to have been based on perspiration rather than inspiration: Singapore grew through a mobilization of resources that would have done Stalin proud. The employed share of the population surged from 27 to 51 percent. The educational standards of that work force were dramatically upgraded

all of Singapore's growth can be explained by increases in measured inputs. There is no sign at all of increased efficiency. In this sense, the growth of Lee Kuan Yew's Singapore is an economic twin of the growth of Stalin's Soviet Union growth achieved purely through mobilization of resources.
sovietunion  china  bubble  prediction  economics  history  krugman  best  economy  growth  1994  productivity 
april 2010 by hellsten
Tilastokeskus - 5. Kotitalouksien asuntoluottokanta ja uudet asuntoluotot
“In summary, researchers found that rapid credit growth
is the most important leading indicator of financial
instability. The presence of an asset price bubble is the
second most reliable crisis indicator. Low interest rates
and strong money growth are also good warning signs.”
economy  statistics  finland  sheep  funny  housing  prediction 
april 2010 by hellsten
"Krugman Strikes Again" by Peter Schiff, FSU Editorial 04/09/2010
In today's column, Krugman analyzes the Greek debt crisis, arguing that the best solution for Athens would be to simply inflate away its debt burden with printing press money.
krugman  inflation  economy  government  fed 
april 2010 by hellsten
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