matt138 - 23 September 2009 11:27 PM

no vaseline - got any good books to change my mind?

Das Kapital

no_vaseline - 24 September 2009 01:14 AM

ukyo116 - 24 September 2009 01:01 AM

Greenspan used to be a good Austrian economist and somewhere along the line, he threw that all into the trashcan.

And Rothbard is far from a crackpot.

Or, Greenspan didn’t change at all, and what he “became” is the end of the road of all Austrian economists - failure when you go to implement it.

Which world governments follow the Rothbardesque perscription, and are they in better or worse condition than the US?

Do Austrian economists or Keynesian economists believe in government intervention with regards to interest rates?

No_Vas, answer these 3 questions for me:

Absent the artificially low (let’s goose the economy) interest rates circa 2002, would we still be in the mess we are in?

Absent the artificially low (let’s regoose the economy) interest rates circa now, would we avoid the next mess we will be in?

Do you see a trend here?

no_vaseline - 23 September 2009 11:48 PM

matt138 - 23 September 2009 11:37 PM

If people are bad, and government and regulators are people…

The move over the past 30 years from “highly regulated” to “less regulated” resulted in the regulatoree failing - twice (once in the S&Ls; during the 1980s, and todays mess). Your solution is abolish the Fed - because obviously what we need is more deregulation!

Talk about circular logic.  No wonder people never learn.

I bet that guy also believes in trickle down economics.

matt138 - 23 September 2009 11:27 PM

no vaseline - got any good books to change my mind?

I don’t think anything will change your mind, but Krugman recomends:

http://www.guardian.co.uk/books/2009/aug/30/keynes-return-master-robert-skidelsky

matt138 - 24 September 2009 04:00 AM

Do Austrian economists or Keynesian economists believe in government intervention with regards to interest rates?

No_Vas, answer these 3 questions for me:

Absent the artificially low (let’s goose the economy) interest rates circa 2002, would we still be in the mess we are in?

Absent the artificially low (let’s regoose the economy) interest rates circa now, would we avoid the next mess we will be in?

Do you see a trend here?

There’s only two questions, further, it ignores the biggest factor in this collapse - the Fed is charged with a regulatory function that they (for political reasons) decided to stop enforcing.

This current crisis is not a failure of the FIAT currency but rather the end result of the failed experiment in government deregulation.  Graph posted a link from CR where Volker essentially eschewed a return to Glass-Stengel. 

People – this is a regulation problem!  Reagan was wrong then and he was wrong now.

gypsyuma - 24 September 2009 06:03 AM

I bet that guy also believes in trickle down economics.

Why wouldn’t he?  Trickle down works – but some animals are more equal than others.

For the technical junkies out there.  (R - Resistance, S - Support)

Reverse Head and Shoulder   &  Ascending Triangle Formation

Watch for a breakout to 1050 and intermedium term target 1150, near term support 925-950, if it breaks below that level, money could be made on the short side.

Keynesianism got us into this mess.  Anyone denying this well, I’m sorry.

The synergy of deregulation along with a Keynesian goosing of the economy made for a bad mix.

In a sane world, wall street gets creative, investors invest, homeowners overleverage, and all 3 get put on the auction block for making poor decisions.  People who shouldn’t be giving investment advice lose their jobs, investors who were dumb enough to get bilked lose their money, and renters go back to being renters.  There is nothing wrong with this.  They were all less than saavy.  Smart people saw the problems well in advance and side-stepped or profitted.  This is how the real world works.  Risk, reward, consequence.  Otherwise we just become a big pool of dumb, putting faith in the government to police everything.  Judging by the size of the problem, we’re already there.

And regarding trickle down, now is a great time to drive business and those with money away.

COMMODITIES IN A SECULAR BULL MARKET

We believe that the commodity market entered a secular bull market right
around the same time that the equity market entered its secular bear market —
a tad later actually, in November 2001. Not surprisingly, the last secular bear
market in equities, from the mid-1960s to the early 1980s, also took hold
alongside a secular bull market in commodities; we are seeing something very
similar take hold this time around but for very different reasons.

As an aside, the way to view the 40% slide in the commodity complex last year is
the same way that the crash of October 1987 should be treated; at the time, it felt
like the end of the world, but in fact, it was a deep correction from a bubble that
formed in the spring and summer of that year. Who knew at the time that this was
the fifth year of what was turning out to be, as we know with perfect hindsight, a
classic 18-year secular bull market? That would have been an impossible story to
sell back then, but that is exactly what it was. When you take a look at the longterm
charts today of the Dow, S&P 500 or Canada’s TSX index, the brutal 35%
slide in the fall of 1987 now looks like a speck of dust, and if you overlay the
experience of last year’s commodity meltdown with the equity market performance
that year, it looks eerily similar. A steep correction from dramatically overbought
levels in what is still the early stage of a secular (ie, multi-year) bull phase.

On the supply side, we have a much more concentrated sector with fewer
players than in past cycles following the wave of global consolidation over the
last decade in particular. Moreover, the executives of these resource companies
are business people, not geologists, and as such have been much more
disciplined from a production standpoint.

On the demand side, emerging Asia climbed out of its depression just over a
decade ago with restructured economies, vastly improved balance sheets and
changed political landscapes. What we refer to as emerging markets once
commanded more than half of global GDP before the industrial revolution, and
are on track to regain that lost share in coming decades; likely sooner rather
than later given China’s critical mass and double-digit growth rates — its
economy just surpassed Germany on the third rung of the world GDP ladder.

‘Gold has proven historically to be a poor hedge against major inflations’

But, if the original owner were here today, it is likely that he – or she – would be satisfied with the way bullion has retained its real value.

Professor Roy Jastram, of the University of California, conducted the longest-term analysis of this precious metal’s purchasing power, stretching back to 1560 when Elizabeth I ordered new coinage to restore the reputation of the English currency.

This had been debased by coins being clipped and passed back into circulation while people hoarded the full-weight unclipped coins. That criminal practice was the basis of Tudor financier Sir Thomas Gresham’s law “bad money drives out good money” and the original reason for coin rims being milled; to make it obvious when they had been clipped and metal removed.

Professor Jastram found that, over a period of more than 400 years, gold had proved an effective store of value and an ounce would usually buy a good, but not luxurious, outfit of clothes. Extreme pessimists may note that he added: “When the Four Horsemen of the Apocalypse galloped, a stock of gold pieces, cunningly concealed or surreptitiously carried, has often meant the difference between living and dying.”

His book, The Golden Constant, has been updated by Jill Leyland of the World Gold Council. You can see that, since gold prices were allowed to float freely in 1971, they have enjoyed two major bull rallies – including the current one – and endured a 20-year bear market.

Paul Marson, chief investment officer at Lombard Odier, a Geneva-based private bank, calculates that since 1971 bullion has risen by an average of 8.5pc per annum, compared with average annual inflation of 4.5pc. But if you had bought the last time prices peaked, in January 1980, gold returned just 1.2pc per annum compared with inflation of 3.3pc.

Perhaps surprisingly, Mr Marson argues: “Gold has proven to be historically a poor hedge against major inflations but has performed particularly well during periods of deflation.”

In a surprise move today, the Reserve Bank of Australia became the first G20
central bank to raise rates – by 25 bps to 3.25% (Israel was the first to do so
last month). The commodity-based currencies are flying high on this move – the
Aussie dollar rallied nearly a full cent on the move. The CAD has moved in
lockstep. Investors are ostensibly left wondering that if a global play like
Australia can manage to raise rates in a surprise move then the world economy
must of course be on a sustained upward track and so commodities are
benefitting big-time. Copper is firming for the second day in a row and gold is
back flirting near its all-time highs (I almost got stopped out of my DZZ this morning,
but I couldn’t be happier with my long term gold positions).
The flip side is the U.S. dollar getting trashed again…....

no_vaseline - 15 September 2009 04:10 PM

ukyo116 - 15 September 2009 03:41 PM

Is that silver I see in backwardation?

I was going to make the same obervation.

Seems to have happened again? Sort of..

Oct 2009 17.255 n/a n/a 17.370 16.990 17.273s -0.018
Nov 2009 17.200 n/a 16.680 17.405 16.680 17.284s -0.084
Dec 2009 17.220 n/a 16.670 17.440 16.625 17.295s -0.075
Jan 2010 17.305 n/a 16.645 17.350 16.645 17.305s 0.000
Mar 2010 17.250 n/a 16.975 17.450 16.890 17.326s -0.076
May 2010 17.330 n/a 16.705 17.330 16.705 17.343s -0.013

More reason to be short. $1041.40

Beware the gold bubble

Einhorn:

However, the recent crisis has changed my view. The question can be flipped: how does one know what the dollar is worth given that dollars can be created out of thin air or dropped from helicopters? Just because something hasn’t happened, doesn’t mean it won’t. Yes, we should continue to buy stocks in great companies, but there is room for Grandpa Ben’s view as well.

I have seen many people debate whether gold is a bet on inflation or deflation. As I see it, it is neither. Gold does well when monetary and fiscal policies are poor and does poorly when they appear sensible. Gold did very well during the Great Depression when FDR debased the currency. It did well again in the money printing 1970s, but collapsed in response to Paul Volcker’s austerity. It ultimately made a bottom around 2001 when the excitement about our future budget surpluses peaked.

Prospectively, gold should do fine unless our leaders implement much greater fiscal and monetary restraint than appears likely. Of course, gold should do very well if there is a sovereign debt default or currency crisis.

I’m going to agree here. Gold as an investment only makes sense when the currency and markets are being manipulated by the government. I think it’s been hovering in a range because no one really understands what the hell our government is up to.

Bubble bubble toil and trouble…it must be close to haloween.

Some Begin to See a Gold Bubble

morekaos - 09 September 2009 08:19 PM

Don’t get too used to this guys. I am thinking very seriously of puttin on the shorts again.

morekaos - I went back and tried to find the most recent post where you said you were short gold, but I could not find it.

awgee - 20 October 2009 07:47 PM

morekaos - 09 September 2009 08:19 PM

Don’t get too used to this guys. I am thinking very seriously of puttin on the shorts again.

morekaos - I went back and tried to find the most recent post where you said you were short gold, but I could not find it.

First posted on the “I THINK THE MARKETS HAVE BOTTOMED” thread

Posted: 18 September 2009 08:12 AM   [ # 365 ] 

I will state it here. I am officailly long the dollar and shorting gold.

morekaos - 20 October 2009 07:52 PM

awgee - 20 October 2009 07:47 PM

morekaos - 09 September 2009 08:19 PM

Don’t get too used to this guys. I am thinking very seriously of puttin on the shorts again.

morekaos - I went back and tried to find the most recent post where you said you were short gold, but I could not find it.

First posted on the “I THINK THE MARKETS HAVE BOTTOMED” thread

Posted: 18 September 2009 08:12 AM   [ # 365 ] 

I will state it here. I am officailly long the dollar and shorting gold.

I’ll back up the dollar short too. And give me odds on all the hardways.

Should You Bet against the Dollar?

Paul Tudor Jones Says Now Is Time, Place for Gold as an Asset

Seekingalpha article and Q3 letter to investors

Roubini Says Rogers’s Forecast for $2,000-an-Ounce Gold `Utter Nonsense’

ukyo116 - 04 November 2009 05:11 PM

Roubini Says Rogers’s Forecast for $2,000-an-Ounce Gold `Utter Nonsense’

Does roubini realize filling holes in bank balance sheets is nonsense and has consequences?

I’m certain he does.  It’s his contention the rise in gold is the carry trade on steroids and nothing more.

Anyone see the YOY chart for copper?  Yowza.  Enough to break a goldbugs heart.

matt138 - 04 November 2009 06:54 PM

ukyo116 - 04 November 2009 05:11 PM

Roubini Says Rogers’s Forecast for $2,000-an-Ounce Gold `Utter Nonsense’

Does roubini realize filling holes in bank balance sheets is nonsense and has consequences?

I think its an interesting debate from two people who come from very different backgrounds.  One is in the private sector while the other is an academic.

no_vaseline - 04 November 2009 07:15 PM

I’m certain he does.  It’s his contention the rise in gold is the carry trade on steroids and nothing more.

Anyone see the YOY chart for copper?  Yowza.  Enough to break a goldbugs heart.

Copper is an industrial commodity, not a store of value. Production of anything electrical or used in moving electricity is down, so copper is down to match the lowered demand. Gold, while it has some uses in production, is up because people expect inflation to spike in reaction to the dollar’s ubiquitous disemination. It’s not that gold bugs are wrong, they just aren’t right… yet. If inflation (or the fear of inflation) gets high enough, anyone who buys it today will look brilliant, as long as they sell before everyone rushes for the door.

.

MojoJD - 05 November 2009 01:06 AM

I’m just wondering when our proficiency with materials manipulations will reach a level where gold can be synthesized for less than market prices.  There are already a few methods involving particle accelerators and nuclear reactors, which have been shown to work.  Some clever and entrepreneurial physicist is going to get the jump on this one day and THEN we’ll see about gold prices.

I would imagine that even news of such a venture would send prices tumbling.

When these hit the shelves, gold will be worthless… but our need to work will be removed so it balances out…

There are billions of tons of gold in sea water.  I don’t know how much it cost to get it out, but it certainly is a limiting parameter to the price of gold.  It is cheaper than the particle accelerator method for sure.  We just need some bright chemists to work on this, but I am sure it is a Top Secret project, and on the day the research is done, all of them will accidentally poisoned by some chemical they used in their lab.