Tuesday, September 22, 2009
A glimpse of the past
Out with my wife's relations on Saturday in the Black Country (the old coal-fired industrial area). One elder recalled that when they were poor, his mother would put the kettle on the stove on a Sunday, so the windows would steam up and the neighbours would think that they were cooking lunch.
Up with bonds, down with equities, out with with-profits
After the stockmarket ructions, pension funds are getting more cagey and thinking about weighting more towards bonds (htp: Pension Pulse). (A seminar I went to maybe 10 years ago predicted this trend.) Bill Gross of Pimco is also thinking that way; at the same moment when others reckon the recession's over, or nearly so.
My concern is that the market is now so volatile that only active traders will be interested. The smoothing approach of British with-profits funds has been undermined by downswings so sharp that more than once recently, they have had to apply penalties to investors seeking to exit early; which in turn will make those investors less inclined to reinvest in with-profits, and indeed quite possibly put them off investment generally.
That, plus the need to take more income as the population ages, plus a poorer next generation that will work longer, be taxed more and have less in State and other pension provision, plus the burgeoning of the world population, the gradual equalization of world average income (and it's a very low average), plus increasing ecological limits to fast-buck-type growth, all tend to make me more a bear than a bull for as far as I can see, whatever may happen in the short term as a result of desperate overstimulation with fiat cash.
Yes, there'll be opportunities for the agile financial player; but for the mom-and-pop saver?
My concern is that the market is now so volatile that only active traders will be interested. The smoothing approach of British with-profits funds has been undermined by downswings so sharp that more than once recently, they have had to apply penalties to investors seeking to exit early; which in turn will make those investors less inclined to reinvest in with-profits, and indeed quite possibly put them off investment generally.
That, plus the need to take more income as the population ages, plus a poorer next generation that will work longer, be taxed more and have less in State and other pension provision, plus the burgeoning of the world population, the gradual equalization of world average income (and it's a very low average), plus increasing ecological limits to fast-buck-type growth, all tend to make me more a bear than a bull for as far as I can see, whatever may happen in the short term as a result of desperate overstimulation with fiat cash.
Yes, there'll be opportunities for the agile financial player; but for the mom-and-pop saver?
Monday, September 21, 2009
Where's the gold, really?
As the price of gold continues to float above $1,000, I do wonder where it all is, really. Thinking about the Federal Reserve, I suddenly remembered Joanna Southcott's box.
At its peak, the Fed held 12,700 tonnes of the metal, but it's hard to establish even what it claims to have now - try making sense of the prose the Fed issues on the subject here. Some think the vault now contains no more than a lottery ticket and a horse-pistol.
Could they be snorting with laughter over their glasses of Petrus as they look down at us trusting plebs?
At its peak, the Fed held 12,700 tonnes of the metal, but it's hard to establish even what it claims to have now - try making sense of the prose the Fed issues on the subject here. Some think the vault now contains no more than a lottery ticket and a horse-pistol.
Could they be snorting with laughter over their glasses of Petrus as they look down at us trusting plebs?
Sunday, September 20, 2009
The coming tide
Thanks to Tyrone for his comment directing us to a YouTube presentation by W E Pollock, someone I've viewed with interest before. The comment was in response to an FTAphaville piece that asked why the Dow was rising so strongly.
Pollock, whose presentations are useful to the layman because he is at pains to be clear and calm, notes that the volume of trade is low, which may mislead us as to the value of the market as a whole. It is as if, in a slow-moving housing market, your neighbour suddenly manages to sell his house for much more than expected, because the purchaser has certain private reasons to get in.
He also notes that the gains on the Dow are counteracted by the fall in the dollar's value, and this is a theme I've touched on many times. You have to look at real gains; and even when you think you're beating the present rate of inflation in your country, currency exchange movements may be the early indicators of higher future inflation. This is why, comparing where we are now to the period 1966 - 1982, I think we may yet see the real-terms equivalent of Dow 4,000 and FTSE 2,000.
Pollock goes on to consider gold, over which he puzzles (but then, there's a lot of dirty work and hugger-mugger in that market); and oil - if foreign economies begin to recover and industrial production rises, increasing the demand for oil, then if the dollar continues to be weak the price of energy in the USA will become so high as to damage growth prospects there.
So, where are we with all this?
Even academic economists are beginning (very belatedly) to question the validity of their models. Across the world, the games are so weighted and rigged, the rules so suddenly variable, that we are talking about how things ought to work, rather than how they really do. This is why it's now a fertile ground for conspiracy theorists: there really is a lot of conspiracy. Trouble is, we don't know all of the plots, all of the players, and all of the details.
What I think we can do, is look at the ocean tide, and not at the individual waves.
Historically, Western countries became wealthy on technological advances and were able to sell goods not just to each other, but to undeveloped countries in exchange for cheap resources. Then the latter countries began to industrialise, and goods could be carried at low unit cost in vast bulk across oceans and continents. All that remained was to break down political barriers to trade, as Nixon began to do with his visit to China in 1972.
Trouble is, controlling the rate of change. It's one thing to turn on your oil-fired central heating, another if your fuel storage tank catches fire. We want to carry on as we are (or as we used to be), but poor people are in a hurry to attain our wealthy lifestyles, and are disinclined to progress more slowly. Vast international businesses and globe-trotting billionaires stand to do very well out of facilitating this trade; national politicians are under pressure from their voters to resist it - but on a personal level, will know how rich they themselves will be when they leave office, so long as they don't try too hard for the people who elected them.
So, while I don't quite subscribe to the Dick-Dastardly-and-Mutley view of politician's summits (G-name-a-figure, Bilderberg, et al.), I can see the natural attraction for them of a world (or at least supranational) government. It means being further away from the Great Unwashed, mixing with all the Right People, fine wines and yachts etc; it means going with the flow, helping wealth and power to gather into certain centres, and organising dole handouts to regions that lose out as a result. Only the fools will try to play King Canute.
Imagine the world economies as a series of canal locks descending a steep hill. We are in the top section, the poor countries lower down. Now if all the gates are opened at once, there will be a destructive gush of water; the narrowboats in the top lock sink into the mud; the ones at the bottom float on a higher tide; a brave soul on a surfboard (the international trader) rides a thrilling wave down the hill.
Free-traders will argue that trade brings mutual benefits; but I don't think the argument works when world income disparities are so great. A Dutchman bought Manhattan from the occupying tribe for $24, but I doubt they'd get it back for that price now, not even with 400 years' interest.
It's coming, it's coming fast, it's coming destructively; and the people we pay to stop it are telling us the lies we want to hear and planning their personal advancement*. Let us return the favour.
* “It is a totally wrong notion of people to assume that the government does anything for the people; the government is there to do something for itself, and not for the people” – Marc Faber on GoldSeek, 12 September 2009
Pollock, whose presentations are useful to the layman because he is at pains to be clear and calm, notes that the volume of trade is low, which may mislead us as to the value of the market as a whole. It is as if, in a slow-moving housing market, your neighbour suddenly manages to sell his house for much more than expected, because the purchaser has certain private reasons to get in.
He also notes that the gains on the Dow are counteracted by the fall in the dollar's value, and this is a theme I've touched on many times. You have to look at real gains; and even when you think you're beating the present rate of inflation in your country, currency exchange movements may be the early indicators of higher future inflation. This is why, comparing where we are now to the period 1966 - 1982, I think we may yet see the real-terms equivalent of Dow 4,000 and FTSE 2,000.
Pollock goes on to consider gold, over which he puzzles (but then, there's a lot of dirty work and hugger-mugger in that market); and oil - if foreign economies begin to recover and industrial production rises, increasing the demand for oil, then if the dollar continues to be weak the price of energy in the USA will become so high as to damage growth prospects there.
So, where are we with all this?
Even academic economists are beginning (very belatedly) to question the validity of their models. Across the world, the games are so weighted and rigged, the rules so suddenly variable, that we are talking about how things ought to work, rather than how they really do. This is why it's now a fertile ground for conspiracy theorists: there really is a lot of conspiracy. Trouble is, we don't know all of the plots, all of the players, and all of the details.
What I think we can do, is look at the ocean tide, and not at the individual waves.
Historically, Western countries became wealthy on technological advances and were able to sell goods not just to each other, but to undeveloped countries in exchange for cheap resources. Then the latter countries began to industrialise, and goods could be carried at low unit cost in vast bulk across oceans and continents. All that remained was to break down political barriers to trade, as Nixon began to do with his visit to China in 1972.
Trouble is, controlling the rate of change. It's one thing to turn on your oil-fired central heating, another if your fuel storage tank catches fire. We want to carry on as we are (or as we used to be), but poor people are in a hurry to attain our wealthy lifestyles, and are disinclined to progress more slowly. Vast international businesses and globe-trotting billionaires stand to do very well out of facilitating this trade; national politicians are under pressure from their voters to resist it - but on a personal level, will know how rich they themselves will be when they leave office, so long as they don't try too hard for the people who elected them.
So, while I don't quite subscribe to the Dick-Dastardly-and-Mutley view of politician's summits (G-name-a-figure, Bilderberg, et al.), I can see the natural attraction for them of a world (or at least supranational) government. It means being further away from the Great Unwashed, mixing with all the Right People, fine wines and yachts etc; it means going with the flow, helping wealth and power to gather into certain centres, and organising dole handouts to regions that lose out as a result. Only the fools will try to play King Canute.
Imagine the world economies as a series of canal locks descending a steep hill. We are in the top section, the poor countries lower down. Now if all the gates are opened at once, there will be a destructive gush of water; the narrowboats in the top lock sink into the mud; the ones at the bottom float on a higher tide; a brave soul on a surfboard (the international trader) rides a thrilling wave down the hill.
Free-traders will argue that trade brings mutual benefits; but I don't think the argument works when world income disparities are so great. A Dutchman bought Manhattan from the occupying tribe for $24, but I doubt they'd get it back for that price now, not even with 400 years' interest.
It's coming, it's coming fast, it's coming destructively; and the people we pay to stop it are telling us the lies we want to hear and planning their personal advancement*. Let us return the favour.
* “It is a totally wrong notion of people to assume that the government does anything for the people; the government is there to do something for itself, and not for the people” – Marc Faber on GoldSeek, 12 September 2009
Saturday, September 19, 2009
And another thing
BBC economic journalist Robert Peston recently professed himself "nauseous" on reading of the paltry £9 million per head earned by the hapless Rover Four; yet when I read his book "Who Runs Britain?" this year, I failed to see him confess a similar gut reaction to Sir Philip Green's £1.2 billion dividend raid on Arcadia Group. (Actually, the money went to his wife, who is domiciled for tax purposes in Monaco, but that hardly improves the flavour.)At the time, this monster cash extraction (done with freshly borrowed money) was more than three times Arcadia's operating profits, but I'm sure the banks that (expensively) approved the loans didn't care. And it was legal.
However, if, in the economic downturn, turnover and profits are savaged, and tangible assets decline sharply in value, and Arcadia becomes very weak, or even goes bust, what will Peston say then? Arcadia Group employs 27,000 people; was it really OK, other than in a strictly legal sense, to put such a heavy yoke around its neck? Had the dividend not been paid - and especially, not been funded by humungous bank loans - what more might the group have achieved? The consolidated balance sheet for 31 August 2008 is here; what will the 2009 one look like?
What are the implications for our so-called democracy when captains of industry become so gigantic, and the rest of us become relatively as insignificant as crablice?
Running out of bigger fools?
What's been powering the market? Max Keiser recently opined that the rich have been moving their wealth out of the USA since 9/11, Jesse has alerted us to insider selling, Mr & Mrs Average have been selling their holding and paying down debt, so...?
According to FT Alphaville (htp: Michael Panzner) it's technical/leveraged buying/betting:
Very likely it is still a combination of program trading, short coverings and portfolio managers desperately trying to make up for last year’s epic losses.
And when it becomes painfully clear that there are no more mugs to buy the rubbish off you?
According to FT Alphaville (htp: Michael Panzner) it's technical/leveraged buying/betting:
Very likely it is still a combination of program trading, short coverings and portfolio managers desperately trying to make up for last year’s epic losses.
And when it becomes painfully clear that there are no more mugs to buy the rubbish off you?
Spiralling round the black hole of inequality
"Economist's View" argues that the Gini Index will go on rising until someone positively stops it:
Once income concentration becomes a reinforcing cycle of the kind we are witnessing, it is never stopped by pure market forces. Only extensive government intervention, of the kind that will inevitably create high controversy, reverses this trend.
Read the rest of Mark Thoma's piece here.
Once income concentration becomes a reinforcing cycle of the kind we are witnessing, it is never stopped by pure market forces. Only extensive government intervention, of the kind that will inevitably create high controversy, reverses this trend.
Read the rest of Mark Thoma's piece here.
People get ready
We're going to be splatted by a headlights-on-full-beam, diesel-pluming, horn-honking road-train of debt. Fred Goodwin, CEO at Nomura (i.e. not the RBS wrecker who scuttled to his hideout in France - the private gated resort may be the one between Cannes and Mougins) has used the colourful phrase "clear and present danger" of the British economy. Unfortunately, shouting "Look out!" usually doesn't prevent disaster.
Karl Denninger, still indignant and vengeful but now also beginning to sounding the Cassandra note of inevitable defeat ("We are one cycle away from a collapse - if we're lucky"), graphs debt against GDP for the USA and it's clear that there must be a break in the smooth lines at some point.
And however bad it is for America - a country which periodically falls over, picks itself up, dusts itself down, and starts all over again - it'll be far worse for Britain, a country where the management has never quite lost that 1066 sense of being quite unconnected with the indigenous peasantry subjected to their cruel alien rule. This is why our overlords find it so easy to flee the country to take their place in the new pan-European aristocracy currently under construction, an unlovely amalgam of big-business swindlers, venal politicians and their marketing men. They're allying with old money smart enough to know which side its bread is buttered; history is made in the bedroom and the backroom (“Let others wage wars: you, fortunate Austria, marry”).
There is a long history of England's rulers employing foreign mercenaries (especially Germans) to put down uprisings of the overwrought population, both here in the sixteenth century, and in the American colonies in the eighteenth. In the modern world, where the predominant avatar of Power is money (Bertrand Russell's 1938 book is illuminating on the three-headed helldog), we are being driven off our business smallholdings and made day-labourers for giant enterprises owned abroad or by equally huge collective investments in which the individual shareholders' voices are lost "like tears in rain".
Karl Denninger, still indignant and vengeful but now also beginning to sounding the Cassandra note of inevitable defeat ("We are one cycle away from a collapse - if we're lucky"), graphs debt against GDP for the USA and it's clear that there must be a break in the smooth lines at some point.
And however bad it is for America - a country which periodically falls over, picks itself up, dusts itself down, and starts all over again - it'll be far worse for Britain, a country where the management has never quite lost that 1066 sense of being quite unconnected with the indigenous peasantry subjected to their cruel alien rule. This is why our overlords find it so easy to flee the country to take their place in the new pan-European aristocracy currently under construction, an unlovely amalgam of big-business swindlers, venal politicians and their marketing men. They're allying with old money smart enough to know which side its bread is buttered; history is made in the bedroom and the backroom (“Let others wage wars: you, fortunate Austria, marry”).
There is a long history of England's rulers employing foreign mercenaries (especially Germans) to put down uprisings of the overwrought population, both here in the sixteenth century, and in the American colonies in the eighteenth. In the modern world, where the predominant avatar of Power is money (Bertrand Russell's 1938 book is illuminating on the three-headed helldog), we are being driven off our business smallholdings and made day-labourers for giant enterprises owned abroad or by equally huge collective investments in which the individual shareholders' voices are lost "like tears in rain".
And when the Empire falls, as it must, as all do, the great forgetting will descend. Perhaps we can take comfort in the thought that after the bloody cataclysm, the Dark Ages, so named because untroubled by the scribes and accountants of expansive rulers, were, quietly and anonymously, as sunlit as ours.
Thursday, September 17, 2009
The night they raided Minsky
Australian economist Steve Keen summarises Hyman Minsky's Financial Instability Hypothesis, which is that you get bubble after bubble, each time increasing the debt, until the process simply cannot continue and all will be catastrophically revealed.
So he's another forecasting and fearing systemic collapse - like Marc Faber and Max Keiser recently - and now Karl Denninger.
As the Dow heads for 10,000, the FTSE soars above 5,000 but gold seems now to be consistently drifting beyond the $1,000 breakwater, I feel of the bankers, traders and politicians, as Talleyrand said of the Bourbons, that "They have learned nothing and forgotten nothing."
So he's another forecasting and fearing systemic collapse - like Marc Faber and Max Keiser recently - and now Karl Denninger.
As the Dow heads for 10,000, the FTSE soars above 5,000 but gold seems now to be consistently drifting beyond the $1,000 breakwater, I feel of the bankers, traders and politicians, as Talleyrand said of the Bourbons, that "They have learned nothing and forgotten nothing."
Wednesday, September 16, 2009
Evolution of Creationism
In the 150 years since the publication of Charles Darwin's 'Origin of Species', the Theory of Evolution has been refined and strengthened on a daily basis. For 100 years, it has been the best-supported model that we have, and is settled science.
Culturally is a different matter.
Biblical literalists, principally in the US, with some in Canada, Australia, England, Ireland and elsewhere, have fought a public relations rearguard action, retarding US science and education. Even as they lose in the scientific arena, they also have lost in legal battles.
Ironically, this pressure has caused their arguments to evolve:
CREATION SCIENCE (ruled religion and not science by the US Supreme Court in 1987)
A used-car salesman in a cheap suit. Tries to convince you that a rusted-out junker is better than a new car.
INTELLIGENT DESIGN (Kansas and Ohio School Board hearings)
Salesman has a nicer suit. Paints over the rust, and tells you that the car IS new.
'ONLY A THEORY' and 'STRENGTHS AND WEAKNESSES' (Cobb County, Georgia and Dover, Pennsylvania court cases)
Salesman caught on video turning back odometer. Hides car and denies everything. Points out 'major defect' in new car next door. Closer inspection shows defect to be dead bug on windshield.
Culturally is a different matter.
Biblical literalists, principally in the US, with some in Canada, Australia, England, Ireland and elsewhere, have fought a public relations rearguard action, retarding US science and education. Even as they lose in the scientific arena, they also have lost in legal battles.
Ironically, this pressure has caused their arguments to evolve:
CREATION SCIENCE (ruled religion and not science by the US Supreme Court in 1987)
A used-car salesman in a cheap suit. Tries to convince you that a rusted-out junker is better than a new car.
INTELLIGENT DESIGN (Kansas and Ohio School Board hearings)
Salesman has a nicer suit. Paints over the rust, and tells you that the car IS new.
'ONLY A THEORY' and 'STRENGTHS AND WEAKNESSES' (Cobb County, Georgia and Dover, Pennsylvania court cases)
Salesman caught on video turning back odometer. Hides car and denies everything. Points out 'major defect' in new car next door. Closer inspection shows defect to be dead bug on windshield.
Sunday, September 13, 2009
20:20 hindsight and the coming stock collapse
Look at this fascinating interactive graphic from the New York Times, about the shrinking and swelling of the major US financial firms. They may not have seen it coming, but boy can they see clearly in the rear-view mirror. (htp: Barry Ritholtz)
So, is all well again?
Denninger thinks not. To get back to where we were in 2000, either debt has to be slashed (this isn't the path chosen by the powers-that-be over the last couple of years) or GDP and incomes have to soar (how? Who are we suddenly going to sell loads more to?).
Given a choice of the impossible and the merely unpleasant, it looks as though there must be a large-scale default sometime - either of actual debt, or of current and/or future government-provided benefits (or both).
In the meantime, the monetary pumping may erode the dollar's value and cause a highly misleading leap in nominal stock prices. Like I said yesterday, I think we could be looking at a re-run of the mid-70s to 1982. I remember an old financial adviser colleague reminiscing about the stockmarket "boom" of 1974, but he didn't mention the inflationary context, which is what concerns Marc Faber - the fundamentals are still all wrong.
So, is all well again?
Denninger thinks not. To get back to where we were in 2000, either debt has to be slashed (this isn't the path chosen by the powers-that-be over the last couple of years) or GDP and incomes have to soar (how? Who are we suddenly going to sell loads more to?).
Given a choice of the impossible and the merely unpleasant, it looks as though there must be a large-scale default sometime - either of actual debt, or of current and/or future government-provided benefits (or both).
In the meantime, the monetary pumping may erode the dollar's value and cause a highly misleading leap in nominal stock prices. Like I said yesterday, I think we could be looking at a re-run of the mid-70s to 1982. I remember an old financial adviser colleague reminiscing about the stockmarket "boom" of 1974, but he didn't mention the inflationary context, which is what concerns Marc Faber - the fundamentals are still all wrong.
What's good for the [Dow] ISN'T good for the country
Jesse: It is possible that the Fed monetizes sufficiently to reinflate an equity bubble, essentially whoring out the Dollar and the real economy for the sake of the financial or FIRE sector.
This is what I have been thinking - that the stock indices are now fundamentally disconnected from the health of the economy.
This is what I have been thinking - that the stock indices are now fundamentally disconnected from the health of the economy.
Predicting the 2010 General Election Result
A new invention has allowed us to access newsfeed from the near future. One of our early scoops is that the next General Election in 2010 will be the first to allow the electorate to vote on-line from their homes (those without computers will still be allowed to vote by post). Another is the surprising (to some) result, and we have pleasure in copying you in on some of the follow-up.
We must warn you that the technology is still in its infancy, and so there may be glitches in the transcription. For example, the article below appears to have been affected by some kind of crossed line with BBC News from 2009. We'll keep you updated from time to time on the progress of our researches and technical developments.
Brown Poll trick 'confuses' voters
Gordon Brown: 'It was just a trick' from Gordon Brown - How to Win the Election', courtesy of Channel 4. Many voters and critics have been left confused by Prime Minister Gordon Brown's explanation of how he appeared to predict Thursday's General Election results.
Some 4.6m viewers saw him claim to have asked 24 people to guess the successful candidates for the 646 commons seats and use an average of the total for each to predict the result.
But some mathematicians have dismissed his explanation as "complete nonsense".
And on blogging site Twitter one fan said he was "still confused", while another called it a "massive letdown".
IT trickery
On Brown's own Twitter account, he said: "Well there you go. I trust all is clear now."
He also added that his blog, which has been set up for people to comment on his tricks, has received 5 million hits.
However, it is currently not working.
Thursday's show on Channel 4 attracted 2.7 million people - beating the actual Election 2010 programme on BBC One, which 2.4 million tuned in for.
Brown successfully produced the correct numbers during The Live Event programme, at the same time the actual results were announced on the BBC's coverage.
He then promised viewers they would discover the secret of the trick on Friday's Channel Four News.
During How To Win The Election - which attracted a peak of 4.6 million viewers - he revealed that he had worked out the election numbers by asking a group of 24 people to guess them.
Once he had their answers Brown said he added the numbers up for each candidate and divided them by 24.
However, Alex Newton, a professor of Pure Mathematics at the University of Oxford, has dismissed Brown's explanation.
"Mathematically it is complete rubbish. It is a bluff on his part," he said.
And Roger Penwiper, professor of psephology at the University of Cambridge added: "There is a difference between guessing between the weight of an ox and guessing election candidates, which is un-guessable.
"That is just a clear wind-up and complete nonsense. There is absolutely no way he did that."
Other theories, that have been suggested in the newspapers, claim Brown used IT hacking trickery or a wall of postal votes to help him complete the stunt.
Michael Pundit of The Times newspaper rated the show five out of five, saying Brown has turned from "most irritating man on television to the most intriguing".
However, he added: "It was, of course, still one hell of a trick — far too good for him to give away."
Twitter critics of the explanation show include dCameron1966, who said: "I'm still confused about what way he did it to be honest."
T-Benn called the 59-year-old a "massive letdown" and AnthonyCLB said: "Is it just me or was Gordon Brown's explanation last night very disappointing?"
But some voters enjoyed Brown's stunt.
Peterm&elson posted on his Twitter page that the show had been "very interesting & entertaining".
Kjongil added: "Gordon Brown is pretty cool... I can see why people are so skeptical [sic] about him, but I think he's on to something here."
Fashion and the stockmarket
There has been serious research on the connection between what people wear and the state of the economy. I forget who, but a successful investment manager used to look at all sorts of apparently unconnected phenomena, including fashion, to get a clue as to what was really happening and about to happen.
PS: My wife says 80s-style shoulder pads are coming back in the Autumn catalogues. A bullish sign?
PS: My wife says 80s-style shoulder pads are coming back in the Autumn catalogues. A bullish sign?
Saturday, September 12, 2009
Dow now, and then - "Brief Encounter"
Discussing the Dow, I have previously suggested that instead of looking back to 1929, we might use the period 1966 - 1982 as a comparator. I've adjusted January 1966 and December 1999 to = 100 and oddly enough, the beginning of September 2009 sees the Dow past and present at a fairly similar point.Is it too fanciful to say that we're now in the equivalent of about 1976?
Signs of a tipping point in the market again?
Jesse alerts us to this piece about current insider selling, a possible sign that the stockmarket is going to tank.
Stinking fish and red herrings
A fish rots from the head down, is the saying, and a truly rotten government we have. Currently they are busy monstering a venal group of auto company directors who did exactly what the Labour (!) government wanted them to do, which was to keep hope alive for MG Rover for just long enough to get through the next General Election. Equally obedient to his master's voice, the mannered and self-regarding Peston now emotes at them ("I feel slightly nauseous").
Those of us who are old enough will remember the history: how venture capitalist Jon Moulton came with a plan to reduce the money-haemorrhaging plant to a smaller, actually-profit-making outfit specialising in sporty cars. The rest of the enormous site would be cleared and developed as a residential and shopping area. Redundant workers would be suitably paid-off and their pensions preserved - and many of them might then have had a chance of employment with other car makers elsewhere in the country.
Oh, no, this would never do. The land was polluted and quite unsuitable for residential development. Rover still had a future. Moulton was a wicked chancer. His twopenny-halfpenny firm had no business meddling with a great bellwether of the British economy.
Now, the site has been cleared for residential and retail development. There is no car making at all. The workers didn't get the compensation they would have had, nor the pensions, nor the alternative employment. A few men have - legally - made about £9 million each, hardly worth mentioning in the same breath as the outrageous booty brought home by bankers and City gamblers.
And the Fourth Estate plays along with the distraction of the public's attention.
Robert Peston is the son of Maurice Peston, Baron Peston of Mile End, a Labour life peerage created for Peston senior on 24 March 1987.
Those of us who are old enough will remember the history: how venture capitalist Jon Moulton came with a plan to reduce the money-haemorrhaging plant to a smaller, actually-profit-making outfit specialising in sporty cars. The rest of the enormous site would be cleared and developed as a residential and shopping area. Redundant workers would be suitably paid-off and their pensions preserved - and many of them might then have had a chance of employment with other car makers elsewhere in the country.
Oh, no, this would never do. The land was polluted and quite unsuitable for residential development. Rover still had a future. Moulton was a wicked chancer. His twopenny-halfpenny firm had no business meddling with a great bellwether of the British economy.
Now, the site has been cleared for residential and retail development. There is no car making at all. The workers didn't get the compensation they would have had, nor the pensions, nor the alternative employment. A few men have - legally - made about £9 million each, hardly worth mentioning in the same breath as the outrageous booty brought home by bankers and City gamblers.
And the Fourth Estate plays along with the distraction of the public's attention.
Robert Peston is the son of Maurice Peston, Baron Peston of Mile End, a Labour life peerage created for Peston senior on 24 March 1987.
Another collapsist
Last month, Marc Faber used the word "collapse"; now, Max Keiser says the same: the dollar will halve, gold will leap 50 - 100%, import prices will soar. In this interview, Keiser is a bit less gonzo and correspondingly more credible.
The question is, how bad is it for other countries (e.g. the UK) and what will trading partners do to stop their export markets being hit? If all major countries try to devalue their currency, then maybe only certain commodities will be worth holding on to while the winds blow.
And Keiser says the wealthy have been shifting their capital out of America since 9/11. He's been choosing defensive stocks, ones that will survive high unemployment, consumer boycott and anti-American sentiment. One big and possibly vulnerable name he mentions is Coca-Cola (remember Qibla Cola?) - a staple of Warren Buffett's portfolio.
The question is, how bad is it for other countries (e.g. the UK) and what will trading partners do to stop their export markets being hit? If all major countries try to devalue their currency, then maybe only certain commodities will be worth holding on to while the winds blow.
And Keiser says the wealthy have been shifting their capital out of America since 9/11. He's been choosing defensive stocks, ones that will survive high unemployment, consumer boycott and anti-American sentiment. One big and possibly vulnerable name he mentions is Coca-Cola (remember Qibla Cola?) - a staple of Warren Buffett's portfolio.
Friday, September 11, 2009
Thursday, September 10, 2009
What's Next?
Thanks to the historically unprecedented peace and prosperity in the West since World War II, my life has been blissfully uneventful . Any hardships that I have endured pale in comparison with those of my parents.
My father was a natural scholar, who was pulled out of school at age 14 by my grandmother, on the grounds that 'education would not do him any good'. My mother, raised in Nazi Germany, lost any chance of further education because of the war.
While raising my brother and me, they encouraged us to do our best, and to take advantage of the excellent (at that time) British education system. In doing so, however, they allowed us to find our own paths, and for that I am grateful.
Why do I make these comments?
It is my opinion that, even if we survive the current economic mess, there are cultural movements that threaten to cement in place a caste system worse than the old class system.
On one hand, we have the 'education experts', who have so meddled with schools on the grounds of inclusiveness and diversity, that the education system now produces people qualified on paper, yet unable to do anything useful.
In the US, we have religious extremists on the right trying to kill public education for many reasons, and attacking science and its funding at every turn. In the UK, students now have to pay tuition, leaving them deeply in debt, just like in the US.
We also have a relatively new phenomenon, the 'helicopter Mom' of the middle class, who micro-manage every aspect of their childrens' lives. I have interviewed students for a select medical school program. Full 3/4 are of Indian descent, with both parents in the medical field. They have been groomed from birth to do just the right things to follow their parents.
Just how free will the next generation be?
My father was a natural scholar, who was pulled out of school at age 14 by my grandmother, on the grounds that 'education would not do him any good'. My mother, raised in Nazi Germany, lost any chance of further education because of the war.
While raising my brother and me, they encouraged us to do our best, and to take advantage of the excellent (at that time) British education system. In doing so, however, they allowed us to find our own paths, and for that I am grateful.
Why do I make these comments?
It is my opinion that, even if we survive the current economic mess, there are cultural movements that threaten to cement in place a caste system worse than the old class system.
On one hand, we have the 'education experts', who have so meddled with schools on the grounds of inclusiveness and diversity, that the education system now produces people qualified on paper, yet unable to do anything useful.
In the US, we have religious extremists on the right trying to kill public education for many reasons, and attacking science and its funding at every turn. In the UK, students now have to pay tuition, leaving them deeply in debt, just like in the US.
We also have a relatively new phenomenon, the 'helicopter Mom' of the middle class, who micro-manage every aspect of their childrens' lives. I have interviewed students for a select medical school program. Full 3/4 are of Indian descent, with both parents in the medical field. They have been groomed from birth to do just the right things to follow their parents.
Just how free will the next generation be?
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