Friday, April 24, 2009
Life goes on!
Yesterday was a fine day. My wife meets our neighbour's mother, wheeling her 15-month-old granddaughter in the pushchair. The child is holding a measuring jug with an animal fridge magnet in it. "What's with the jug?" asks my wife. "That's mine," says grannie, "we've had to take the pussycat for a walk."
Wednesday, April 22, 2009
'Swhat I think...
At some point the equity market will start moving higher and keep going, to fantastic levels perhaps, if a serious inflation sets in. The stock markets in the Weimar Republic were spectacular, if one ignored the reality behind the appearance. We think it is far too early in the game for this, but are keeping an open mind to all possibilities.
- Jesse
But before then, I think we have a date with Mr Stockmarket Crunch. I just don't know when that date is.
- Jesse
But before then, I think we have a date with Mr Stockmarket Crunch. I just don't know when that date is.
Tuesday, April 21, 2009
Time for a Little Socialism?
It is a long-standing argument by US conservatives that progressive taxation is unfair, and that the answer to our economic ills is tax cuts for the wealthy.
In support of that argument, the often-quoted figure is that the top 10% of earners pay 40% of the taxes. That sounds unfair, doesn't it?
According to the IRS, in 2005, the top 10% of earners had 48.5% of the income. The top 1% had 21% of all income.
In other words, the top 10% earned about 8.5 times the average of the bottom 90%, the top 1% earned 26.3 times the average of the other 99%.
In addition, when calculating the taxes per dollar earned, using the conservatives' own figures, the lower 90% pays at a rate which is 1.4 times that of the top 10%.
In support of that argument, the often-quoted figure is that the top 10% of earners pay 40% of the taxes. That sounds unfair, doesn't it?
According to the IRS, in 2005, the top 10% of earners had 48.5% of the income. The top 1% had 21% of all income.
In other words, the top 10% earned about 8.5 times the average of the bottom 90%, the top 1% earned 26.3 times the average of the other 99%.
In addition, when calculating the taxes per dollar earned, using the conservatives' own figures, the lower 90% pays at a rate which is 1.4 times that of the top 10%.
Still not the truth
J. S. Kim (htp: Jesse) considers the $700 trillion derivatives market (worth maybe 23 times all the stockmarkets in the world), and notes that it's being used to disguise the true woeful state of the banking system. It is as though, when listing his personal assets, a compulsive big-time gambler could include all his current Lottery tickets and horse-racing betting slips:
"... when FASB suspended mark-to-market accounting rules recently, major international banks were allowed to re-value some of their derivative products closer to their notional value on their books to pad their balance sheets. Due to this change in accounting law, I can almost guarantee you that before market open Friday, Citigroup will announce better than expected financial results as they carried huge amounts of illiquid mortgages and financial derivatives on their balance sheets."
I fear that many major banks may be thoroughly ruined, and until the lying stops, effective action cannot be taken.
"... when FASB suspended mark-to-market accounting rules recently, major international banks were allowed to re-value some of their derivative products closer to their notional value on their books to pad their balance sheets. Due to this change in accounting law, I can almost guarantee you that before market open Friday, Citigroup will announce better than expected financial results as they carried huge amounts of illiquid mortgages and financial derivatives on their balance sheets."
I fear that many major banks may be thoroughly ruined, and until the lying stops, effective action cannot be taken.
Monday, April 20, 2009
Straws in the wind, the flight of birds
Yesterday, I read the entrails and thought the market was due to tank. Today, the FTSE drops 102 points, the Dow 290. Tomorrow - "¿Quien sabe?"
Sunday, April 19, 2009
The deflationary bust
Looking around "Financial Sense"...
Professor Antal E. Fekete revisits his deflationary theory: we have passed a crucial point in debt accumulation. From now (actually, from 2006, he says) onward, the more politicians attempt to stimulate it with debt, the faster the economy will shrink. Gold, the machine's "governor" that set limits to debt, was decoupled from the system a century ago - it got in the way of war financing.
Stephen Tetreault says if there's a rise in stocks, sell: "I do not see a positive bullish catalyst in the making as we head into the earnings sector other than a potential short squeeze, relief rally that should which should be sold into." He notes that deflation means those that can, are paying down debt, but also lenders are widening the margins between the interest they pay and the interest they charge, which gives further impetus to deflation.
Tony Allison says, sooner or later energy is going to cost more. He's thinking about the right point to speculate, the rest of us should consider the effect of higher energy costs on family budgets, and therefore on how reduced disposable income will be allocated.
Captain Hook foresees a time when "the public finally gives up the ghost on stocks in general, correspondingly they will fully embrace the likelihood of deflation, which will trigger a temporary collapse in commodity prices, led by their paper representations." He thinks this will be the time when physical gold will win; I wonder whether that is so, when most of us are so dependent on an electronic system. We're not farmers, selling corn and cattle to each other; the machine cannot be allowed to stop. That's why I think there will be, for a time, a switch to currency inflation; then perhaps a rerun of the early Eighties, as someone public-spirited in public life takes unpopular action to prevent the dive into the abyss.
For E. M. Forster's extraordinarily accurate vision of the future, written in 1909, please click the last link above. Telephone, TV, a populace paralysed by lethargy and wealth in its bedrooms...
Professor Antal E. Fekete revisits his deflationary theory: we have passed a crucial point in debt accumulation. From now (actually, from 2006, he says) onward, the more politicians attempt to stimulate it with debt, the faster the economy will shrink. Gold, the machine's "governor" that set limits to debt, was decoupled from the system a century ago - it got in the way of war financing.
Stephen Tetreault says if there's a rise in stocks, sell: "I do not see a positive bullish catalyst in the making as we head into the earnings sector other than a potential short squeeze, relief rally that should which should be sold into." He notes that deflation means those that can, are paying down debt, but also lenders are widening the margins between the interest they pay and the interest they charge, which gives further impetus to deflation.
Tony Allison says, sooner or later energy is going to cost more. He's thinking about the right point to speculate, the rest of us should consider the effect of higher energy costs on family budgets, and therefore on how reduced disposable income will be allocated.
Captain Hook foresees a time when "the public finally gives up the ghost on stocks in general, correspondingly they will fully embrace the likelihood of deflation, which will trigger a temporary collapse in commodity prices, led by their paper representations." He thinks this will be the time when physical gold will win; I wonder whether that is so, when most of us are so dependent on an electronic system. We're not farmers, selling corn and cattle to each other; the machine cannot be allowed to stop. That's why I think there will be, for a time, a switch to currency inflation; then perhaps a rerun of the early Eighties, as someone public-spirited in public life takes unpopular action to prevent the dive into the abyss.
For E. M. Forster's extraordinarily accurate vision of the future, written in 1909, please click the last link above. Telephone, TV, a populace paralysed by lethargy and wealth in its bedrooms...
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