Archive - Apr 2015

Beijing has reportedly threatened to shut down Sina Weibo which China’s internet czar claims is disseminating false information, providing a platform for terrorists, questioning the “facts,” not exercising enough censorship, and, much like the townsfolk of colonial era Salem, “propagating heresy”.

Gold “Going Higher” and “A Big Buy Here” ...

In his recidivist attacks on the gold standard Prof. Krugman tediously resurrects and refutes straw man arguments drawn from marginal thinkers. Prof. Krugman sets his phaser on stun and points it at the ghost of Ayn Rand rather than tangling with his peers. But boiled to its essence, Krugman's sciencefictiononomics is a tug of war between believers in mathematical modeling and believers in common sense. One also can cast this as a war between elitists (i.e believers in the ability of an elite to manage society’s affairs better than can the society itself) and populists (i.e. believers in the ability of society to manage its own affairs better than an elite can do so for it).

In 2007, she was "In... and In To Win," and now 8 years later...the moment has arrived (again)...

*HILLARY RODHAM CLINTON ENTERS WHITE HOUSE RACE: AP

SNL summed it up well: "Citizens, you will elect me... I will be your leader."

Things are shifting and unraveling awfully fast in the West Pacific region.  Some observations by us that may have escaped the mainstream media.

"The policy actions that cause financial repression entail a number of unintended consequences. These include potential asset price bubbles, convergence in asset allocation strategies of otherwise heterogeneous financial market participants and an increase in economic inequality. With regards to the latter, the impact of foregone interest income for households and long-term investors is substantial. At the same time, the equity rally has predominantly benefited society’s wealthiest." The hit to US savers: nearly a half trillion.

“What’s going on is the customers don’t have the f***ing money. That’s it. This isn’t rocket science.”

Money can't buy me love... happiness... or class; but, as The Washington Post reports, the billionaire chase for the fountain of youth may just mean that money can buy immortality. For example, "death has never made any sense to me," stated Oracle founder Larry Ellison who has donated more than $430 million to anti-aging research and has proclaimed his wish to live forever. And doctors seem to be a step closer to performing the ultimate breakthrough surgery in anti-aging (nicknamed HEAVEN): transplanting a human head onto another body.

"The greatest danger to american freedom is a government that ignores the constitution."--Thomas Jefferson

GE’s announcement that its getting out of the finance business should be a reminder of how crony capitalism is corrupting and debilitating the American economy. The ostensible reason the company is unceremoniously dumping its 25-year long build-up of the GE Capital mega-bank is that it doesn’t want to be regulated by Washington as a systematically important financial institution under Dodd-Frank. Oh, and that its core industrial businesses have better prospects. We will see soon enough about its oilfield equipment and wind turbine business, or indeed all of its capital goods oriented businesses in a radically deflationary world drowning in excess capacity. But at least you can say good riddance to GE Capital because it was based on a phony business model that was actually a menace to free market capitalism. Its deplorable raid on the public purse during the Lehman crisis had already demonstrated that in spades.

The mood between Greece's leftist government and its euro zone partners, especially Germany, has deteriorated in the last few weeks, with personal recriminations flying between ministers and calls from Athens for Berlin to pay war reparations. The paper said at last week's meeting the Greek representative just asked where the money was "like a taxi driver", according to sources, and insisted his country would soon be bankrupt. The euro zone sources told the paper that Greece's creditors do not believe this is the case and that it would be a domestic political issue if Athens is unable to fully pay salaries and pensions.

A prime minister admitting that his government has been arrogant and has screwed things up? Am I reading this correctly?

Mohamed El-Erian's comments this week caused a stir among the status quo-huggers, as they were clearly a valuation call on the financial markets suggesting that currently having capital invested was likely to yield substantially lower or negative return in the future. This is an extremely important concept in understanding the "real value of cash." Not unlike the rhetoric of the late 1990’s or mid-2000’s, there is no shortage of rationalizations for why such currently extraordinary valuations are reasonable and justifiable. The fact remains firmly in place, stocks are expensive. Of course, since Wall Street does not make fees on investors holding cash, maybe there is another reason they are so adamant that you remain invested all the time. 

A look ahead into next week's macro forces.

How’s this for a provocative thought: what if the very earthly economic cycles somehow responded to the solar cycle? Unusual as this may sound, actually there is evidence of a relationship between the two.