This extract (highlight mine) from Robert P. Murphy's essay on the Mises Institute website explains some of the process whereby hard times help the rich get richer and the poor, poorer:
If the Fed doubles the money supply, in the long run, that will roughly double the prices of all goods and services. But if the Fed restricts the injection of new money into only the hands of a few privileged recipients, those people will be at a fantastic (albeit temporary) advantage relative to everyone else in the economy. They will get their hands on the billions in new dollars, while prices still reflect the old reality. The new money will then flow from sector to sector, pushing up prices as it ripples throughout the economy. But the last people in line receiving the new influx of twenty- and hundred-dollar bills will be much poorer than others, once prices settle down. Their paycheck was the last to rise, while they watched helplessly as more and more prices began doubling.
Friday, March 06, 2009
Thursday, March 05, 2009
Apocalypse now - Denninger
... those indicators are painting a picture of the Apocalypse that I simply can't believe, and they're showing it as an imminent event - like perhaps today imminent...
... says Denninger, but I still don't believe it. But maybe that's just me.
... says Denninger, but I still don't believe it. But maybe that's just me.
Wake Up!
Jim Mellon and Al Chalabi, authors of "Wake up!" , have emailed their latest interesting and useful newsletter. It concludes:
Our strongest recommendations are as follows:
• Prepare for rising inflation – continue to buy gold;
• Sell government bonds;
• Look for cheaply valued strong stocks – BAE and BP in the UK are two examples, and in the US we like Pfizer.
• Deploy cash wisely – our current favourites are, believe it or not, the British pound; the yen is weakening, but at 100 yen to the dollar it is a buy again.
• Avoid the US dollar and the Euro.
Like that bit about the pound - I was scratching around looking for something to save what's left of the savings.
Our strongest recommendations are as follows:
• Prepare for rising inflation – continue to buy gold;
• Sell government bonds;
• Look for cheaply valued strong stocks – BAE and BP in the UK are two examples, and in the US we like Pfizer.
• Deploy cash wisely – our current favourites are, believe it or not, the British pound; the yen is weakening, but at 100 yen to the dollar it is a buy again.
• Avoid the US dollar and the Euro.
Like that bit about the pound - I was scratching around looking for something to save what's left of the savings.
Dow 4,500 within 12 months - Cederholm
Fred Cederholm gives a Dow target close to the one I'm thinking, though I think we may have a reality-denying rally before then, so I don't necessarily agree with his timescale.
Wednesday, March 04, 2009
FDIC could fail - update
I've passed on the bad news about underfunding of the FDIC before - latterly here - and now it come to the fore again in a post from Karl Denninger.
UPDATE (7 March 2009): Jesse has a piece on it now, too. But "deposits would remain fully backed by the government,", says his source - not much comfort for the taxpayer, then.
UPDATE (7 March 2009): Jesse has a piece on it now, too. But "deposits would remain fully backed by the government,", says his source - not much comfort for the taxpayer, then.
Webcam: gold vault at the Federal Reserve
Live picture (updated every 30 sec)According to GATA, they ain't got it no more, nor they don't want it back, neither. (htp: Jesse)
What happens when everyone knows?
Tuesday, March 03, 2009
Do buy, Dubai
P.S. Did you think I was joking about Dubai as a world leading financial centre? Where the footballers lead...
It was said years ago that 90% of £20 notes in London bore traces of cocaine - because footballers have 90% of the notes. Sadly for some footballers and Old Etonians, possession of cocaine in the UAE is punishable by death. Nevertheless, lovely weather and no crowded, litter-strewn South East England commuter trains.
Could you stand Paradise? Or are you hooked on that museum of past industrial glories, the UK?
It was said years ago that 90% of £20 notes in London bore traces of cocaine - because footballers have 90% of the notes. Sadly for some footballers and Old Etonians, possession of cocaine in the UAE is punishable by death. Nevertheless, lovely weather and no crowded, litter-strewn South East England commuter trains.
Could you stand Paradise? Or are you hooked on that museum of past industrial glories, the UK?
If GE falls...
Karl Denninger notes that there is heavy betting that GE, the world's tenth largest company, will fail by summer.
Engineering Analysis
Positive feedback is a term used by scientists and engineers to describe a feedback loop process where the output of a system drives increased input to the system.
In human terms, one such example is drug addiction, where increased use leads to increased desire for the drug.
A more interesting example can be seen in the 'sudden acceleration' lawsuits against Audi some years ago. Once the cars were examined, it was determined that the drivers had been pushing on the accelerator pedal, rather than the brake. Because they were convinced that they were right, they pushed harder as they gained speed. In some cases, the drivers injured their own legs from the pressure, and bent the pedal.
The past 30 years have seen such a loop in the housing and financial sector. As house prices went up, they released fiat cash into the system, driving prices even higher. This, of course, led to the 'brilliant' idea of packaging mortgages. At some point, the profit margin became so huge that no 'real' industry could compete, which pulled even more investment capital into housing derivatives, and further crippled manufacturing.
Without a governor in place, by way of careful regulation, these crashes are inevitable. The capacity of the internet in moving money only sped things up a little.
In human terms, one such example is drug addiction, where increased use leads to increased desire for the drug.
A more interesting example can be seen in the 'sudden acceleration' lawsuits against Audi some years ago. Once the cars were examined, it was determined that the drivers had been pushing on the accelerator pedal, rather than the brake. Because they were convinced that they were right, they pushed harder as they gained speed. In some cases, the drivers injured their own legs from the pressure, and bent the pedal.
The past 30 years have seen such a loop in the housing and financial sector. As house prices went up, they released fiat cash into the system, driving prices even higher. This, of course, led to the 'brilliant' idea of packaging mortgages. At some point, the profit margin became so huge that no 'real' industry could compete, which pulled even more investment capital into housing derivatives, and further crippled manufacturing.
Without a governor in place, by way of careful regulation, these crashes are inevitable. The capacity of the internet in moving money only sped things up a little.
Signs of cash hoarding?
The Mogambo Guru relays a statistic: the stock of US notes and coins has increased by $77 billion in 12 months.Some of this may reflect a switch away from use of credit cards and accounts; but I wonder how much is disappearing into newly-bought floor safes and Heinz bean tin hideaways?
UK Government adviser loses its mind
“Only high-quality professional services, financial services and the City of London have any real value and they should be supported at all costs. The rest of the country can be turned over to tourism.”
Coming up next: new financial centre in Dubai forces closure of City of London.
This... or this?
Monday, March 02, 2009
Dow 6,000 this year, FTSE 3,000 - Nadeem Walayat
Sez he, here. I'm still guessing Dow (inflation-adjusted) 4,000 sometime in the next few years, and it seems Jim Kunstler agrees ("I myself called for Dow 4000 two years ago") In which case, maybe FTSE 2,000 at some point, too.
Sunday, March 01, 2009
Harriet Harman declares the end of the rule of law in the UK
Discussing the pension rights of ex-RBS boss Sir Fred Goodwin, Harriet Harman, Leader of the House of Commons, said today:
"The Prime Minister has said it is not acceptable and therefore it will not be accepted. It might be enforceable in a court of law this contract but it's not enforceable in the court of public opinion and that's where the Government steps in."
I propose a plebiscite to dispossess Harriet Harman of all her worldly goods, and exile her permanently from this country. A "yes" vote will have no legal force, but clearly that does not matter, provided it is supported by public opinion.
"The Prime Minister has said it is not acceptable and therefore it will not be accepted. It might be enforceable in a court of law this contract but it's not enforceable in the court of public opinion and that's where the Government steps in."
I propose a plebiscite to dispossess Harriet Harman of all her worldly goods, and exile her permanently from this country. A "yes" vote will have no legal force, but clearly that does not matter, provided it is supported by public opinion.
Anthony Charles Lynton Blair summed up
We spend a long time gathering and shaping our impressions, constructing the two halves of the arch, then the keystone is lowered into place:
September 13, 2001
To London on the 18.47. David Miliband was on the train. He is in a similar situation to the one I was in when I was first selected - enemies occupy every office in his constituency party, although in his case it is nothing personal.
He says The Man - who was once in a similar situation in Sedgefield - advised him 'to go around smiling at everyone and get other people to shoot them'. Advice that The Man seems to have applied throughout his career.
I have often thought that if you want to judge alpha types, especially in public life, it's no use meeting them, since they have spent a lifetime perfecting their persona. You need to look at the people they choose to surround them, and then the agenda will become clear.
"Man smile; man nice man."
On the Endarkenment
Since Sackerson is contributing these very erudite pieces, I have a couple of quotes of my own. I believe that ideas herein complement those that he included from Philip Pullman.
From Carl Sagan's "Demon-Haunted World":
We've arranged a global civilization in which most crucial elements - transportation, communications, and all other industries; agriculture, medicine, education, entertainment, and protecting the environment...profoundly depend on science and technology. We have also arranged things so that no one understands science and technology. This is a prescription for disaster. We might get away with it for a while, but sooner or later this combustible mixture of ignorance and power is going to blow up in our faces.
And another:
I worry that, especially as the Millenium nears, pseudoscience and superstition will seem year by year more tempting, the siren song of unreason more sonorous and attractive. Where have we heard it before?
Whenever our ethnic or national prejudices are aroused, in times of scarcity, during challenges to national self-esteem or nerve, when we agonize about our diminished cosmic place and purpose, or when fanaticism is bubbling up around us - then, habits of thought familiar from ages past reach for the controls.
The candle flame gutters. Its little pool of light trembles. Darkness gathers. The demons begin to stir.
From Carl Sagan's "Demon-Haunted World":
We've arranged a global civilization in which most crucial elements - transportation, communications, and all other industries; agriculture, medicine, education, entertainment, and protecting the environment...profoundly depend on science and technology. We have also arranged things so that no one understands science and technology. This is a prescription for disaster. We might get away with it for a while, but sooner or later this combustible mixture of ignorance and power is going to blow up in our faces.
And another:
I worry that, especially as the Millenium nears, pseudoscience and superstition will seem year by year more tempting, the siren song of unreason more sonorous and attractive. Where have we heard it before?
Whenever our ethnic or national prejudices are aroused, in times of scarcity, during challenges to national self-esteem or nerve, when we agonize about our diminished cosmic place and purpose, or when fanaticism is bubbling up around us - then, habits of thought familiar from ages past reach for the controls.
The candle flame gutters. Its little pool of light trembles. Darkness gathers. The demons begin to stir.
Saturday, February 28, 2009
The One Percenters
The "real Dow", i.e. nominal value divided by the CPI inflation index, was about 14.6 in October 1928 and is now at c. 33.5.This means that, over the past 80 years and in real terms, the Dow has grown by a tiny shade over 1% per annum, compound.
True, there have also been dividends; but the "get rich quick on the market" idea seems to be a form of riverboat gambling, winners taking from losers.
The biggest winners being the fund managers - so very few of whom even manage to beat the index, long-term, in their own sectors.
Perspective
(Values at 01 Oct 1928 = 1) "There must be some way out of here,"
Said the joker to the thief.
"There's too much confusion here,
I can't get no relief.
Businessmen they drink my wine
Plowmen dig my earth
None of them know along the line
What any of this is worth."
"No reason to get excited,"
The thief he kindly spoke.
"There are many here among us
Who think that life is but a joke...
- Bob Dylan
Does the tree of liberty need watering?
How Britain became a police state
Here is an extract (presentation altered to make visually clearer the catalogue of the State's crimes against liberty) from Philip Pullman's recent article on freedom in the UK - strangely, suspiciously, perhaps tragically and symptomatically, censored from the Internet by The Times:
It is inconceivable to me that a waking nation in the full consciousness of its freedom would have allowed its government to pass such laws as:
the Protection from Harassment Act (1997)
the Crime and Disorder Act (1998)
the Regulation of Investigatory Powers Act (2000)
the Terrorism Act (2000)
the Criminal Justice and Police Act (2001)
the Anti-Terrorism, Crime and Security Act (2001)
the Regulation of Investigatory Powers Extension Act (2002)
the Criminal Justice Act (2003)
the Extradition Act (2003)
the Anti-Social Behaviour Act (2003)
the Domestic Violence, Crime and Victims Act (2004)
the Civil Contingencies Act (2004)
the Prevention of Terrorism Act (2005)
the Inquiries Act (2005)
the Serious Organised Crime and Police Act (2005)
... not to mention a host of pending legislation such as the Identity Cards Bill, the Coroners and Justice Bill, and the Legislative and Regulatory Reform Bill.
For the full article, saved from the memory hole by alert patriots and lovers of liberty, please see here.
By what damning irony is it, that The Times itself should have published this noble extract on June 10, 1788:
THE PROGRESS OF LIBERTY IN ENGLAND
From Mr Pratt’s Poem on Humanity
MARK by what gradual steps Britannia rose;
As the small acorn to a forest grows;
By what variety of adverse fate,
Terrors of war, and anarchies of state,
What direful griefs by foreign fury bred,
Rivers of blood, and mountains of the dead;
She passed advent’rous, e’er her wrongs were o’er,
Complete her triumphs, and confirm’d her pow’r.
When but to look, was treason to the State
And the King’s nod, like thund’ring Jove’s, was fate.
[...]
Thus, in the earliest hour of Britain’s morn,
A Briton’s hate of tyranny was born!
Abhorrence sacred, to repel the hand,
That dares to wrong the charter of the land:
Our sturdy ancestors, tho’ oft subdu’d,
But breach’d from war, and strait the charge renew’d;
Now dres’d as victims, now as pris’ners bound,
The blood of heroes deluging the ground.
In each extreme our brave fore-fathers prove,
Their native courage and their country’s love;
Fierce for hereditary claims they fight,
And ev’n till death maintain a Briton’s right.
Hence rose our liberties, a common cause
To these succeed, their best support, the laws;
Bonds, conflicts, murders, massacres ensu’d,
And many a Saxon, Danish sword embrued
In English blood, and many a Monarch’s life,
And many a Monk’s, submitted to the strife,
E’er Laws were form’d, as now sublime they stand,
The shield, the spear, and buckler of the land.
No wonder they have all but abolished the teaching of English history and literature, as we once knew it.
Here is an extract (presentation altered to make visually clearer the catalogue of the State's crimes against liberty) from Philip Pullman's recent article on freedom in the UK - strangely, suspiciously, perhaps tragically and symptomatically, censored from the Internet by The Times:
It is inconceivable to me that a waking nation in the full consciousness of its freedom would have allowed its government to pass such laws as:
the Protection from Harassment Act (1997)
the Crime and Disorder Act (1998)
the Regulation of Investigatory Powers Act (2000)
the Terrorism Act (2000)
the Criminal Justice and Police Act (2001)
the Anti-Terrorism, Crime and Security Act (2001)
the Regulation of Investigatory Powers Extension Act (2002)
the Criminal Justice Act (2003)
the Extradition Act (2003)
the Anti-Social Behaviour Act (2003)
the Domestic Violence, Crime and Victims Act (2004)
the Civil Contingencies Act (2004)
the Prevention of Terrorism Act (2005)
the Inquiries Act (2005)
the Serious Organised Crime and Police Act (2005)
... not to mention a host of pending legislation such as the Identity Cards Bill, the Coroners and Justice Bill, and the Legislative and Regulatory Reform Bill.
For the full article, saved from the memory hole by alert patriots and lovers of liberty, please see here.
By what damning irony is it, that The Times itself should have published this noble extract on June 10, 1788:
THE PROGRESS OF LIBERTY IN ENGLAND
From Mr Pratt’s Poem on Humanity
MARK by what gradual steps Britannia rose;
As the small acorn to a forest grows;
By what variety of adverse fate,
Terrors of war, and anarchies of state,
What direful griefs by foreign fury bred,
Rivers of blood, and mountains of the dead;
She passed advent’rous, e’er her wrongs were o’er,
Complete her triumphs, and confirm’d her pow’r.
When but to look, was treason to the State
And the King’s nod, like thund’ring Jove’s, was fate.
[...]
Thus, in the earliest hour of Britain’s morn,
A Briton’s hate of tyranny was born!
Abhorrence sacred, to repel the hand,
That dares to wrong the charter of the land:
Our sturdy ancestors, tho’ oft subdu’d,
But breach’d from war, and strait the charge renew’d;
Now dres’d as victims, now as pris’ners bound,
The blood of heroes deluging the ground.
In each extreme our brave fore-fathers prove,
Their native courage and their country’s love;
Fierce for hereditary claims they fight,
And ev’n till death maintain a Briton’s right.
Hence rose our liberties, a common cause
To these succeed, their best support, the laws;
Bonds, conflicts, murders, massacres ensu’d,
And many a Saxon, Danish sword embrued
In English blood, and many a Monarch’s life,
And many a Monk’s, submitted to the strife,
E’er Laws were form’d, as now sublime they stand,
The shield, the spear, and buckler of the land.
No wonder they have all but abolished the teaching of English history and literature, as we once knew it.
"Bang on target!"
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