“It was the banks doing crazy loans, it was borrowers taking crazy loans and a failure by government and regulators to do their jobs properly,” said Sean Kay . . .. “There was no adult supervision.”
Sounds like the U. S.
Instead it's Ireland, in a Bloomberg article about Ireland on the Brink.
Right now the U. S. is in a "Japanese" phase of my concept of a duality I have dubbed going or being Japanecian (or, Grecianese). The Irish are going Grecian. They are accepting austerity (a depression with debt deflation and high real interest rates) to stay in the good graces of lenders. So long as the U. S. can keep adding to its debt with central bank money created out of thin air, a la Japan, said debt replacing income to the government coming the traditional way from private sector taxes, then interest rates can continue to trend down. If that happens, then the long end of the yield curve will break to very low levels, no matter how high traders price the yields now. With 3-month T-bills at the same level as Japan's, at a trivial 0.12% annualized yield, that's my working hypothesis now.
At some point, however, the Grecian phase of a debt crisis can come to America.
Got gold?
Copyright (C) Long Lake LLC 2010
Showing posts with label Grecianese. Show all posts
Showing posts with label Grecianese. Show all posts
Thursday, November 11, 2010
Thursday, June 24, 2010
Financials Breaking Down
The default rush to Treasuries despite more than abundant supply is a bad sign. The well-regarded but fundamentally pricy regional financial services/bank company with the symbol UMBF has hit a 12-month low today. Northern Trust has broken down. GS and JPM have been in classic bear configurations for some time. BAC is close to a technical breakdown, as well.
As the financials broke down well before the stock market topped in 2007, it is feared that the breakdown of these companies' stocks may presage a general "correction". Given national and global economic situations objectively, without judging the future, it is hard to see that the stock market should not trade at fair value, which observers I find credible peg at anywhere from 20-25% below current prices.
Investors must learn the investing lesson of Japan. This is that persistent ultra-low government borrowing rates that are associated with a sluggish economy eventually lead to stock prices reflecting said sluggishness rather than the growth expectations that are priced in. Thus, investors should ignore the current relative attractiveness of 2-3% dividend yielders except to the extent that said dividends derive from globally attractive markets, such as India and Brazil.
EBR feels that given the chimeric Japanecian (Grecianese) risk our government's finances bear (also called fat tailed possibilities), caution is appropriate. AAPPL and gold, as stated here recently, are both flat to up as of this post while stock averages are down. This reflects relative and absolute performance over various longer time periods, and while no bells are rung during trend changes, I see no valuation or other reasons for said trends to change.
Cash may be "trash", but sometimes it's less trashy than other assets.
Copyright (C) Long Lake LLC 2010
As the financials broke down well before the stock market topped in 2007, it is feared that the breakdown of these companies' stocks may presage a general "correction". Given national and global economic situations objectively, without judging the future, it is hard to see that the stock market should not trade at fair value, which observers I find credible peg at anywhere from 20-25% below current prices.
Investors must learn the investing lesson of Japan. This is that persistent ultra-low government borrowing rates that are associated with a sluggish economy eventually lead to stock prices reflecting said sluggishness rather than the growth expectations that are priced in. Thus, investors should ignore the current relative attractiveness of 2-3% dividend yielders except to the extent that said dividends derive from globally attractive markets, such as India and Brazil.
EBR feels that given the chimeric Japanecian (Grecianese) risk our government's finances bear (also called fat tailed possibilities), caution is appropriate. AAPPL and gold, as stated here recently, are both flat to up as of this post while stock averages are down. This reflects relative and absolute performance over various longer time periods, and while no bells are rung during trend changes, I see no valuation or other reasons for said trends to change.
Cash may be "trash", but sometimes it's less trashy than other assets.
Copyright (C) Long Lake LLC 2010
Tuesday, June 22, 2010
Obama to Kick McC's Ass? But Problems Are Deeper and Broader
Is Rolling Stone happy that even before the official publication of its scoop about General Stanly McChrystal and his team of trash talkers, said General has resigned or is close to so doing? Talk about an impactful story . . .
In any case, the U. S. and NATO body counts are rising rapidly in Afghanistan, the Marja invasion has been a fiasco, the planned takeover of Kandahar is now in good measure a sweet-talking tea-sipping make-nice operation, and at best a growth slowdown in the economy appears baked in the cake. You know things are difficult at home when Walgreen's misses earnings estimates by a mile.
The 90 and 180 day year on year average growth rates as measured by Consumer Metrics Institute (http://www.consumerindexes.com/) are in the single digit of all percentile year on year growth rates per BEA data going back over 60 years. The new government in Britain has announced austerity, complaining that 1 of every 4 pounds of gov't expenditure are borrowed. In Congress, however, where at least 1 of 3 dollars spent by the Feds are borrowed (printed), the powers that be are planning no budget at all for the upcoming fiscal year beginning in the fall. The excuse that they are waiting for the deficit commission (which needs more money than anticipated to complete its work!) to report in December is beyond lame. Said commission will either be ignored or say things that could be said by any poli-sci or econ college major. Spend less/tax more.
Duh . . .
Speaking of spending less, the President needs to reconsider his one-year surge in Afghanistan. It's one thing to print money to keep Medicaid clinics alive. It's another to kill Afghans. And while he's in a kick-ass mode, let him consider kicking the derriere of a certain senior economic adviser who used to be president of Harvard and whose pro-deficit, pro-Wall Street policies are failing the country even more than Stanley McChrystal, whose frustrations may have been uber-legitimate but were shared too openly.
The stock market responded well to the austerity package proposed by Team Cameron in the U. K.
If Barack Obama were to kick some Keynesian ass, the same would happen here. Maybe Paul Krugman would dump all his stocks, but the market would survive that blow.
It's time for more major mid-course changes we can believe in. But don't hold your breath.
Three assets continue to act well, two of which have good fundamentals: Gold, Apple Inc. stock, and Treasuries. Guess which of them lacks fundamental support (hint: supply is rising rapidly)?
Thus guess which one EBR views as a trading vehicle rather than (for now) a buy-and-hold asset?
Further hint: it's the asset the downside of ownership involves the U. S. going Grecian rather than Japanese.
Japanecian (or Grecianese) is the flavor of the day.
Copyright (C) Long Lake LLC 2010
In any case, the U. S. and NATO body counts are rising rapidly in Afghanistan, the Marja invasion has been a fiasco, the planned takeover of Kandahar is now in good measure a sweet-talking tea-sipping make-nice operation, and at best a growth slowdown in the economy appears baked in the cake. You know things are difficult at home when Walgreen's misses earnings estimates by a mile.
The 90 and 180 day year on year average growth rates as measured by Consumer Metrics Institute (http://www.consumerindexes.com/) are in the single digit of all percentile year on year growth rates per BEA data going back over 60 years. The new government in Britain has announced austerity, complaining that 1 of every 4 pounds of gov't expenditure are borrowed. In Congress, however, where at least 1 of 3 dollars spent by the Feds are borrowed (printed), the powers that be are planning no budget at all for the upcoming fiscal year beginning in the fall. The excuse that they are waiting for the deficit commission (which needs more money than anticipated to complete its work!) to report in December is beyond lame. Said commission will either be ignored or say things that could be said by any poli-sci or econ college major. Spend less/tax more.
Duh . . .
Speaking of spending less, the President needs to reconsider his one-year surge in Afghanistan. It's one thing to print money to keep Medicaid clinics alive. It's another to kill Afghans. And while he's in a kick-ass mode, let him consider kicking the derriere of a certain senior economic adviser who used to be president of Harvard and whose pro-deficit, pro-Wall Street policies are failing the country even more than Stanley McChrystal, whose frustrations may have been uber-legitimate but were shared too openly.
The stock market responded well to the austerity package proposed by Team Cameron in the U. K.
If Barack Obama were to kick some Keynesian ass, the same would happen here. Maybe Paul Krugman would dump all his stocks, but the market would survive that blow.
It's time for more major mid-course changes we can believe in. But don't hold your breath.
Three assets continue to act well, two of which have good fundamentals: Gold, Apple Inc. stock, and Treasuries. Guess which of them lacks fundamental support (hint: supply is rising rapidly)?
Thus guess which one EBR views as a trading vehicle rather than (for now) a buy-and-hold asset?
Further hint: it's the asset the downside of ownership involves the U. S. going Grecian rather than Japanese.
Japanecian (or Grecianese) is the flavor of the day.
Copyright (C) Long Lake LLC 2010
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