Wednesday, October 31, 2007
The times are projecting a formation of the first decade of the 21st Century. I believe that the "balances" that define our lives - economically and socially will quickly change and result in the basis of how we do things over the next 12 years. The precursor to this kind of change is usually a disruption of our daily lives as we know it.
Tuesday, October 30, 2007
When trading is compared to gambling, the implication is generally negative: that traders are little more than people who roll dice in hopes of a big payout. There is another side to gambling, however, typified by the card counter. The card counter, dealt a hand, is aware of the odds of winning with those particular cards. The counter also follows which cards have been dealt already, dynamically updating the odds that new, favorable cards will be forthcoming. It is this knowledge of odds--and the ability to update them in real time--that makes card counters so formidable that they are banned in many casinos. - Dr. Brett
Monday, October 29, 2007
Thursday, October 25, 2007
After nearly five fat years, the global economy is headed for trouble. This will come as a surprise to policy makers and investors, alike-most of who were counting on boom times to continue.
At work is yet another post-bubble adjustment in the world's largest economy - this time, the bursting of America's massive property bubble. The subprime fiasco is the tip of a much larger iceberg - an asset-dependent American consumer who has gone on the biggest spending binge in the modern history of the global economy. Seven years ago, the bursting of the dot-com bubble triggered a collapse in business capital spending that took the US and global economy into a mild recession. This time, post-bubble adjustments seem likely to hit US consumption, which at 72% of GDP, is more than five times the share the capital spending sector was seven years ago. This is a much bigger problem - one that could have grave consequences for the US and the rest of the world. -Stephen S. Roach Chairman of Morgan Stanley Asia
Saturday, October 20, 2007
Stagflation: Stagflation occurs when the economy isn't growing but prices are, which is not a good situation for a country to be in. This happened to a great extent during the 1970s, when world oil prices rose dramatically, fueling sharp inflation in developed countries. For these countries, including the U.S., stagnation increased the inflationary effects. A decrease in the general price level over a period of time.
Thursday, October 18, 2007
Wednesday, October 17, 2007
Sooner or later - they come out - and this is how Inflation is about to arrive in this country - It will affect "Core Inflation" - the big lie - "All the Kings Horses and All the Kings Men" will not be able to keep it at bay!
Demand from China, along with other fast-growing emerging economies, has driven up the price of oil and a wide range of other commodities for the past several years. But what's really worrying many economists is the sudden appearance of relatively high inflation within China and the ripples that might cause abroad. Despite five interest-rate increases this year by China's central bank, the country's consumer price index has been stubbornly on the rise. In August, inflation climbed to a 6.5% annual rate, the fastest clip in more than 10 years.
The government and some economists blamed the jump almost entirely on sharply higher prices for meat and poultry, which surged 49% since mid-2006. Beijing maintains that the rise in food costs, which make up more than one-third of China's consumer price index, was largely the result of more expensive livestock feed and a one-off event: an outbreak of a porcine disease that killed 70,000 pigs and prompted the mid-September release of 30,000 tons of pork (about a quarter of the amount of pork China consumes in a day) from a national reserve to help stabilize prices.
But other costs are rising as well — property prices are going up countrywide at an annual rate of about 10%, according to UBS economist Jonathan Anderson — and Beijing's actions speak louder than its soothing words. After the August inflation figures were released, the government took the unusual step of freezing all state-controlled prices, including those for gasoline, water and electricity. Aware of the potential that high rates of inflation have for fomenting social unrest, officials also warned businesses against gouging consumers; in August, authorities accused instant-noodle makers of illegally conspiring to raise prices. Meanwhile, to allay public anxiety about eroding paychecks, Beijing has been encouraging local governments to raise minimum wages, which cities including Beijing, Shanghai, Shenzhen, Guangzhou and Nanjing have done.
Remember the Concept: "The Domino Effect" - It's about to happen:
Saturday, October 13, 2007
From Definitions Below:
Recession: An extended decline in general business activity, typically two consecutive quarters of falling real gross national product.
GDP = consumption + investment + government spending + net exports
GDP = consumption + (residential (new homes only) and nonresidential investment spending (not stocks and bonds) - but corporate expansion etc.) + government spending + (exports - imports)
So what we really are encountering is that the GDP is increasing at a decreasing rate - like an airplane climbing as it runs out of fuel - higher and slower until it Stalls out. In the components of GDP; we see New Residential Homes - standing still, Government spending increasing only to support the war and certain Big Business (so for Growth to be effective it must benefit the greater population) and finally, Exports increasing (as a reduction of a negative) at the cost of the falling dollar.
Calculation of Historic Concepts - is now tempered by "Floating Decimals." - Much more difficult to quantify.
So what may be appearing as Growth (stripping away "Floating Decimals") in actuality we are running out of "Oxygen."
An example of "Floating Decimals"
Energy for Life consists of Food and Nutrients and for living - fuel for comfort and electricity to make everything run correctly. These items are excluded from REAL inflation to get to "CORE" inflation. WHOSE DECISION WAS THAT? Was it a correct decision - and if not why are we still following the concept?
The POWERS TO BE - have spun us into complacency - from weapons of mass destruction to what is and what is not inflation - and the American Public feels helpless to act. After all, Al Gore won the popular vote and lost the election - whose rule was that?
So what America sees and believes, is the "spin" - Fuck the truth!
The dollar is continuing its slide. In a recent article in the Financial Times, Fred Bergsten suggested the dollar could slide another 15-20% on average. Dr. Woody Brock sees the potential for another 5-10% drop.
Bergsten writes: "The good news for Europe is that most of the remaining decline of the dollar should take place against the currencies of the East Asians and the oil exporters. They are running the counterpart surpluses to the US deficits. They have piled up massive foreign exchange holdings that already far exceed any plausible needs. They are enjoying rapid economic growth that could most easily accommodate the reductions in external surpluses."
China has allowed its currency to drop about 10%. But that has not helped Europe, where the dollar has dropped more than 10% in recent years. This week, we started to hear a small chorus of European finance ministers complaining about the manipulation of the Chinese currency. Expect that chorus to grow even more pronounced as the euro rises to $1.50 and beyond.
What may be the resolution to this complex matter - a recession in the USA followed by a worldwide recession - I hear it - "Ya Know it's you kind of folks who are always predicting doom and are "shorting" the markets - It's UnAmerican - remember - "Love it or Leave it!
Is the sky falling? No, and how would we know - no one's looking up!
Monday, October 1, 2007
In the past, rate cuts have led to either stock market or housing market gains, but the unstated assumption there was that the dollar and the interests of dollar/bond-holders were non-factors. This time around, I believe that assumption will be false. Since the rate cut, the dollar has fallen 2.5%, the 10-year has risen 0.12%, gold has risen 3.8%, and crude oil has risen 1.5%. This has taken the dollar to all-time lows, and gold and crude to all-time highs. Long-term interest rates remain near all-time lows -- given the previous sentence, does that make sense? The question is will foreign dollar/bond holders tolerate a weakening US currency, and will Americans continue to buy the 2% core inflation story with gold at $1000 and crude at $100. If 2007 were the year of subprime, 2008 will be the year of the dollar and central bank standoffs. So if you want to know where stocks are going to go, pay attention to interest rates in the US, Japan, and Europe. Pay attention to gold and crude. Pay attention to overnight LIBOR rates. Pay attention to wheat, corn, copper, and nickel. These will be the drivers of the economy, not earnings from Google or Goldman Sachs, or statements from the Fed." - From Conor @ http://www.ronsen.blogspot.com