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Coxe On The Power Of Zero

Tyler Durden's picture


The one "must read" report this weekend comes from Coxe Advisors LLC. A phenomenal summation of all the relevant economic, financial, and political trends and how these will impact both the near- and the longer-term.

Key highlights from the report:

On the big picture:

  • Highlights: takeovers of General Motors and Chrysler, a deficit of 12% of GDP, $790 billion in handouts and assistance under the rubric of economic stimulus, a costly new national health care system, and a vast array of tax and trade global warming programs whose tentacles will reach into almost every sector of the economy.
  • Only Lehman was allowed to experience the Schumpeteresque-slaughter reserved for capitalist cupidity and stupidity. Operating with scripts and strategies conceived on the fly, varying prescriptions of emergency assistance were extended, under panic conditions, to Citigroup, Merrill Lynch, Morgan Stanley, AIG and Goldman Sachs.
  • The cheerful Reagan charmed voters by teasing his opponents. He summed up Democratic economics as, “If it moves, tax it; if it keeps moving, regulate it; and if it stops moving, subsidize it.” He summed up the goal of his policies toward the Soviets: “We win; they lose.”
  • The Pelosi-Obama stimulus package passed with no Republican votes in the House, despite heavy lobbying from some segments of the business community, notably General Electric, which became Obama’s most dedicated corporate cheerleader—itself and through MSNBC [let's not forget CNBC here]—after receiving many billions in low-cost loans to its flagging finance subsidiary, GE Capital.
  • [Obama] remains the most charming and charismatic President of modern times, and is still, quite probably, liked by more Americans—and more people abroad—than any American President. He and his radiant wife are, as The New York Times notes, America’s greatest global brand. But the reality of the Presidency is that handsome is as handsome does. His approval ratings have descended from the Heavenly to the ordinary. All polls disclose that while most Americans still like and admire him personally, they disapprove of his policies.
  • Despite a brilliant campaign, adoration from the media, a divided Republican party, and a flagging economy, he was actually behind the Bush-baggaged McCain in the polls until Lehman imploded, and suddenly it looked as if the world could end. As Larry Summers would later joke, a new Messiah was what was needed. (It hasn’t come to an end, although a recent New Yorker cartoon shows a gentleman consoling a friend, saying, “It isn’t the End of the World.” Just around the corner, riding furiously toward them, are the Four Horsemen of the Apocalypse.)
  • Based on our recent trip to visit European clients, and numerous emails from foreign clients across much of the world, many global investors are alarmed about Obama’s policies and are reducing their exposure to US assets accordingly. The dollar’s decline may be one symptom of these doubts about the actions of Obama and the Democratic Congress.

On Zero interest rates:

  • Why shouldn’t the economic recovery be at least as strong as Reagan’s—if not even more robust? It’s because those Zero rates tell us that the financial system’s problems that triggered the economic collapse aren’t going away quickly—and could even be getting worse.
  • The Administration’s forecast through 2019 assumes that foreign creditors’ appetites for Treasurys will grow at least as fast as the national debt. It predicts sustained real GDP growth of 3% per year, with no recessions, no increases in taxpayer cost for health care, and—despite sustained deficits and a doubling of the national debt-to-GDP ratio (excluding Fannie and Freddie debt) from 41% to 82%—long Treasury yields will not rise more than 1%. (We spoke at a Canadian financial conference last month at which Niall Ferguson was the star. He flashed that forecast up on the screen and said, “Those aren’t real forecasts: they’re Mickey Mouse numbers.”)
  • There has been one little-remarked change in the investment strategy of America’s Sugar Daddy #1: in recent months, China has been rolling over its maturing Treasury notes into T-Bills. It thereby chooses to forgo interest of 2%–3.4% in favor of near-Zero yields. What power, one wonders, does Beijing think, comes from a Zero return in a weakening currency? And why is that putative power growing so relentlessly?
  • Led by the Fed, central banks across the OECD have been Japonized.
  • Wherever his spirit rests, Benjamin Franklin must be livid. When the hardearned savings of ordinary people are looted to enrich greedy bankers, and when they are told that this process is necessary to make America prosperous again, no wonder so many citizens have displayed so much anger at “Tea Parties.”
  • Amid all the enthusiasm about soaring stocks and an economic recovery, it is wise to retain one’s perspective about what has happened to investors. Last week, the Bank of America summed up the disappointments of our era for institutional investors. It noted that there were 42 trading days left this year, and the S&P would have to rise 42% to deliver a Zero rate of return for the past decade. By some calculations, on a compounded basis, long Treasurys have outperformed the S&P since the beginning of the Reagan bull market. The problem with those data is that they assume sustained reinvestment of interest at the long end of the curve, but most bond managers would have been below benchmark duration for extended periods, which meant their cash income would have been reduced.

On excess reserves

  • The amount of Cash and Excess Bank Reserves in the US economy is at all-time records, mostly because of Bernanke’s panicky doubling of the Fed’s balance sheet. But this is a construct, not a solidly-based financial reality.
  • Cash was splashed among the B5 to array their balance sheets, which were looking Gandhian in their skinniness. But the B5 re-deposited a huge slug of those funds with the Fed as excess reserves: why go through all the nuisance involved in making loans to individual companies? They also bought up the Treasury curve. These bankers toil not much, but they spin like mad: they keep trying to convince us that they didn’t cause the Crash, and they really deserve their big bonuses.

On the biggest threat with mortgages:

  • All those math and physics PhDs who built the products, and the bankers who distributed them, never thought about a principle in mortgages that dates back to the 14th century and the emergence of Courts of Equity. (That’s where the word “equity” comes from.)
  • Equity was based on the Chancellor’s religious-based concern for welfare of people of the middle- and lower-classes who suffered under the rigors of Common Law.
  • If more US courts decide that those ancient protections for homeowners need to be protected against derivatives, the results for the B5, Fannie and Freddie would be very…..interesting.

On market and portfolio volatility and risk:

  • Zero Cash means big problems for overall construction. Assuming
    that a Fund needs to earn a nominal 7% overall, net of fees and costs,
    then the higher the Cash component, the higher must be the rate of
    return assumptions for the other asset classes. Without tinkering with
    those assumptions, then the higher the Cash component, the higher the
    risk and volatility the portfolio must assume. Such asset classes as
    Junk Bonds, Leveraged Loans, and small Emerging Markets might have to
    be quite big commitments for the Fund to meet its objectives
  • The price of oil in recent months has traded almost in inverse lock-step with the value of the dollar. This isn’t the longer-term adjustment that characterized the 1970s—it’s occurring in real-time. This daily activity mocks the reliance traders used to place on actual data about oil supplies and demands—particularly the weekly data about US supplies of oil and refined products. Many of the metals—notably aluminum—no longer trade primarily based on LME inventory data. They dance to the global risk music of the markets. Stocks trade together globally on a day-to-day basis. Yes, Emerging Markets continue to outperform the S&P, rising more than New York on bullish days, and not falling as hard, on days risk is being unwound.
  • The Barons of the B5 are reporting record trading profi ts, which means, as Nouriel Roubini warns, that systemic risk is increasing, not decreasing. The locus of this new risk has moved from toxic, untraded products whose values are shielded against market pricing to marketable investments of nearly all stripes.

On those "easily forgotten" daily problems like CIT:

  • CIT’s bankruptcy is a synecdoche for Main Street America’s problems. As the largest factoring company, it has been—for many decades—a reliable backstop for small and medium-sized businesses across America. Companies assigned their receivables to CIT, thereby allowing them to continue to sell their output profitably, even to sophisticated giants such as Walmart and Amazon, which are famously successful at boosting their cash flows by delaying their payments to suppliers for months. Their local banks would assist in financing inventories and making loans for capital investment secured by real estate liens and owners’ personal guarantees. CIT is now operating in bankruptcy, but it is hardly in shape to perform its historic functions as demand for factoring rises in response to an economic recovery.

On the outlook for the middle class and small and medium-sized businesses:

  • The realization that the trillion-dollar deficits are destined to continue, even when the economy gets back to sustained growth, frightens the [small and medium sized businesses]. They hear that they will be subject to much higher taxes on “the rich,” and hear that the term “rich” means people who earn more than $500,000 a year. (According to The Wall Street Journal, if the tax rate in 2007 were 100% on Americans earning over $500,000 a year, that would have generated just over a trillion in Treasury receipts.)
  • The 1990-page health care legislation not only has the “millionaire’s taxes” on those earning above $500,000, but imposes high extra taxes on small businesses which do not offer health care to their employees. Doubtless, local bankers will be looking at the effects of these permanent tax increases and mentally marking down their customers’ ability to service their loans in future years

On Gold:

  1. It’s a risk asset, so it’s benefiting from the rush to risk.
  2. Borrowing at Zero to buy something with Zero yield is income-neutral.
  3. It’s the only asset that, based on history, outperforms under both horror stories—Depression and Hyperinflation.
  4. Its upside breakout came at the time of Halloween.
  5. India announced purchase of half the hoard on offer from the IMF, which had been weighing on gold prices, and there are rumors that China will take up the rest. This was the second surprising announcement from India within a fortnight. The other was that the United Arab Emirates had displaced such nations as the US, China and Germany as India’s biggest trading partner in recent months. Apart from tea, and gold in the form of baubles, bangles and beads, what big-ticket exports other than bullion could India be sending to that collection of gold-loving states? It’s no longer exporting rice or sugar.
  6. Statistics from across the world confirm that the economic recovery is gaining steam, so the specter of inflation is moving stealthily from deep in the primeval forest toward the main path. Travelers beware.
  7. Barrick CEO’s statement in London about the continuous decline in new gold mine output, suggesting, “There is a strong case to be made that we are already at ‘peak gold’.’’ The golden rule of commodities has been that the cure for high prices is high prices: when the price of stuff goes up, big new production always follows, and the price goes down. Gold’s price has more than quadrupled, but new-mine production keeps falling. With central banks apparently switching from the sell to the buy side, this may be a new world for the oldest store of value.
  8. All of the above.
  • Is gold overvalued? In terms of a reliable historic indicator, it may depend on how you define a gentleman. The Economist once sought to fi nd a true value of gold with a study showing that, for most of the time since the Middle Ages, an ounce of gold would buy a gentleman’s suit in London. That was not the case on Jermyn Street from 1981 through 2007 even for the less prestigious tailors. With the recent decline in the pound, it is now applicable to the shops located more than two blocks from St. James’s Street. (It hasn’t, we believe, applied at Savile Row since King Edward’s time.)

The outlook:

  1. The root cause of the financial and economic collapse—the demographically driven plunge in real estate prices at a time of serious over-leverage in the housing sector—remains a clear and present danger to banks and other financial institutions.
  2. All the US government’s home mortgage lending institutions are experiencing rising losses, despite the slight uptick in house prices. That barely-observable bounce is due to most drastic price maintenance program in history—taxpayer bailouts of lending institutions, the Fed’s huge subsidy to mortgage rates through purchases of Fannie and Freddie paper, and 10-year notes, and the First-Time Homebuyer Subsidy of $8,000. It took all those trillions to get house prices to rise 4% from their panic lows. Why should investors be confi dent the rally will continue? “Stein’s Law”, which has never been repealed, may be ready to be proved anew: “If something cannot go on forever, it will stop.”
  3. Bernanke will have used up his entire declared quota of purchases of long Treasurys and mortgage-backed paper within a few months. Then what?
  4. Commercial real estate grows sicker each month, as office and condo vacancy rates rise, and more and more regional banks go to the wall.
  5. The biggest contributor to the 3.5% economic growth of the Third Quarter came from the Cash for Clunkers program. That is gone.
  6. The only US auto company to report positive cash fl ow in the Third Quarter—Ford—still struggles with a boom-year-negotiated UAW contract that means its labor costs are much higher than the other members of what used to be known as The Big Three. Since the UAW and Washington effectively own those competitors to Ford, there’s slim chance the union
    will do anything to strengthen Ford: if Ford collapses, so much the better for the union-owned Big Two. Chrysler has no hot new products in the pipeline and an ambiguous management agreement with Fiat. GM is adjusting to a shrunken product base and its finance subsidiary, GMAC, has already received four emergency cash infusions from Washington since the bankruptcy. Hyundai, no friend of the UAW, is the hottest company in US sales. The current noise on Detroit assembly lines could turn out to be a death rattle.
  7. What may have been the most useful consumer economic stimulus—the collapse in gasoline prices—is fast becoming a cherished memory. Gasoline prices have already retraced roughly half their plunge. That most useful of all “tax cuts” is being chipped away, as other taxes at federal, state and local levels face inevitable increases.
  8. Although overall consumer inflation remains near the Zero level, food prices continue to rise relative to other costs, and natural gas prices are no longer at remarkably cheap levels.
  9. And it looks to be a cold winter—atmospherically and otherwise.

Full report:



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Sat, 11/14/2009 - 14:34 | 130706 Anonymous
Anonymous's picture

yup, everything looks rosy fersure.


Thu, 09/09/2010 - 03:03 | 571201 qrs521
qrs521's picture

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Sat, 11/06/2010 - 18:05 | 705619 sohbetme
sohbetme's picture

I like your ideas and thoughts. While chat and sohbet with my friends talking about it...

Sat, 11/14/2009 - 14:38 | 130709 spekulatn
spekulatn's picture




Sat, 11/14/2009 - 16:20 | 130761 MsCreant
MsCreant's picture

Do you have like, dude pom-poms?

Sat, 11/14/2009 - 17:27 | 130799 . . .
. . .'s picture

He wears them on his chest.  His avatar, John Goodman, is endowed with bigger breasts than many women.

Sat, 11/14/2009 - 18:16 | 130823 D.O.D.
D.O.D.'s picture

Ohhh if we could all have the class and depth of insight of MsCreant. Why are you worried about it?  Or is owning your own home and being employed, debt free not turn out as thrilling as you would have hoped?

Let me dumb it down for you, you might be missing my point...

Say something smart, I'm calling you out

this is Fight Club... you Have to fight...

Sat, 11/14/2009 - 19:23 | 130857 MsCreant
MsCreant's picture

"Nobody fucks with the Jesus."

Is that the problem here? Did I fuck with the Jesus?

For some reason, you have to draw some kind of line in the sand, here, now? You have never spoken to me before and this post, of any post I have ever posted, you gotta have an attitude about?

Or has it been building up for a while and finally, you are all pissed off and you just gotta do something about me, some, as you characterize it, "home owning, debt free, employed, unthrilled with her life," poster?

Yep, I'm a real menace. An obvious threat. I'm sure he could not respond to the comment and needed you to jump in and help. I know he is grateful.

Nah, you just basically told him you think he is a pussy by, "Calling me out."

You are suffering an illusion. Your reactions are yours, not my problem.

Wonder what offends you?

You think I am attacking him? Asking about Pom-poms? Hmmm... ya know, he could just answer me. It might be funny. We might get to know more about him, he says so little.

For the record, I have a cat who is "The Dude," "Mr. Dude," "Dude-a-rino," and "Dude-a-riffic." He is a laid back Tom who is only 8 months old and already 12 pounds and no fat. He very much abides, thank you very much.

Now what is your real problem? It ain't his pom-poms.

Probably lives in this comment: "if we could all have the class and depth of insight of MsCreant."

Whats up?

Sat, 11/14/2009 - 19:35 | 130867 D.O.D.
D.O.D.'s picture

As I suspected... not an intelligent comment in there.  Several leaps in logic, with [lack luster] attempts at back handed ad hominem attacks. 

You could try and pin the tail on me (this is the genral solace of the guilty), but the truth be told, you are the instigator and I am the finisher.  If you honestly don't know who started this, then you really are as dumb as your posts infer. 

If you are looking to back out now, I will let you.  I don't want to embarrass you in front of all your friends, but you should know, I will.  Your call smart guy.  You might want to think about this one; just a word from the wise.

Sat, 11/14/2009 - 19:38 | 130872 MsCreant
MsCreant's picture

You can say there are leaps in logic, show us.

Sat, 11/14/2009 - 19:58 | 130883 D.O.D.
D.O.D.'s picture

If you don't see them, that is my point, ignant fool.

Sat, 11/14/2009 - 20:16 | 130891 MsCreant
MsCreant's picture

Ya got nothing. So basically you are going to huff and puff and bloooow my house down.

If you are going to pick a fight, best you believe in the cause. Do you believe in the cause? Or is this going to turn into:

D.O.D.: You're stupid.

MsCreant: No, you're stupid.

D.O.D.: No, you're stupid.

This is turning into a real lame fight club fight. You are correct, I am embarassed.

Sat, 11/14/2009 - 20:36 | 130906 D.O.D.
D.O.D.'s picture

Actually, I tend to be a bit more creative with my insults than stoopid.  You see, I have a grammar level beyond 5th grade.

Again, you are pulling things out of thin air that have nothing to do with the discussion at hand, lending more creed to my accusation; You are tarded.  Don't worry scro, lots'a people are tarded these days. You've got plenty of company... bahhahhahh bahahhahh

Sat, 11/14/2009 - 20:48 | 130922 MsCreant
MsCreant's picture

"Discussion at hand," there is one?

All I see you doing is calling me names and huffing and puffing. You are not saying anything, this is going nowhere, we are in the land of the absurd. There is no issue, you know it and now you can't back out.

You think I'm ignant, tarded, and? So?

Sat, 11/14/2009 - 21:02 | 130925 D.O.D.
D.O.D.'s picture

The issue at hand is your intelligence.  You have yet to make an intelligent statement in 5 comments.  In fact all of your comments have been designed to deflect from the question of your intelligence.  I wonder why?  You can continue to try and make this out to be about my intelligence, further proving your own ineptitude, or you can make an attempt at an intellectual debate.  The choice is yours.  Oh and the debate is; whether or not you, MsCreant, have the mental capacity to make logical, thought provoking sense.

Sat, 11/14/2009 - 21:20 | 130941 MsCreant
MsCreant's picture

I posted this: "Do you have like, dude pom-poms?"

You said this:

"Ohhh if we could all have the class and depth of insight of MsCreant. Why are you worried about it?  Or is owning your own home and being employed, debt free not turn out as thrilling as you would have hoped?"

Somewhere in that is the topic of discussion. If you can't talk about the topic you brought up with me, and you want to change the topic to how retarded I am, then that is what you want to type about, type away, free country. But you have already lost simply because you lost the topic. And yeah, each one of these I answer makes me dumber and dumber, you are right about that, because there is nothing going on here at all.

Sat, 11/14/2009 - 21:28 | 130947 D.O.D.
D.O.D.'s picture

You might want to read that post again...

"I will dumb it down for you, you might be missing my point

say something smart, I'm calling you out"

I am still waiting. Do you actually have any idea what you are saying, or do you just grab at random words and hope they make sense?

Sat, 11/14/2009 - 21:40 | 130952 MsCreant
MsCreant's picture

You win.

Careful there...

Now what?

Sat, 11/14/2009 - 21:42 | 130956 D.O.D.
D.O.D.'s picture

ok, that is smart, I'll give you that...

Sat, 11/14/2009 - 21:59 | 130965 MsCreant
MsCreant's picture


Non-Zero-Sum game.

Sat, 11/14/2009 - 23:02 | 130992 Cognitive Dissonance
Cognitive Dissonance's picture


What the fuck was that? I've never seen anyone have a nervous breakdown in public until now. Steer clear of that one cause the edge is real close. Must be a sleeper cell let loose from the meds that calmed the savage beast.

Sat, 11/14/2009 - 23:21 | 131003 MsCreant
MsCreant's picture


I think that was an experiment in fight club. He did not like my comment. He called me out. I think it was settled just fine. But I appreciate where you are coming from and thank you for it. If this place is going to use the fight club motif, we need to be free to use the motif. It may actually be an excellent enforcement mechanism for random trolling (which apparently is how some see me and I will adjust my posts now that I know).

Folks are wound tight CD.

Sun, 11/15/2009 - 03:38 | 131076 D.O.D.
D.O.D.'s picture


If you've never experienced someone who is willing to fight for their own dignity, perhaps that is the problem in this country. 

Wait... Are you from Canada? honest...

Sun, 11/15/2009 - 08:22 | 131107 Cognitive Dissonance
Cognitive Dissonance's picture

What a fucking ass wipe. Go somewhere else and piss to your hearts content. I had my fill of bullies in first grade and never tolerated them again. A couple of shots to the face sends them running to momma.

My dignity is based upon my own standards and can never be insulted or challenged unless I lower myself and allow it. I don't worry what other people think of me except those I respect. You are not in that category and clearly never will.

Get lost fool.

Sun, 11/15/2009 - 12:26 | 131174 D.O.D.
D.O.D.'s picture

This is where you are way off base CD.  Just because you are a coward doesn't mean those who are willing to stand up for themselves are bullies.  You can ask MsCreant who started this; because it wasn't me.  I simply defended myself. If you really call defending yourself being a bully, then you absolutely have no place telling anyone what to do.  Avoiding the Canada question?  I wonder why?  Panzie...

Sun, 11/15/2009 - 14:37 | 131227 11b40
11b40's picture

A pox on both your houses.  Please take this somewhere else.

Sun, 11/15/2009 - 14:55 | 131229 D.O.D.
D.O.D.'s picture

pox on your house; it seems ad hominem attacks were the weekend flavor.  Don't like 'em, don't use'em...

Sun, 11/15/2009 - 15:12 | 131242 11b40
11b40's picture

A pox on both your houses.  Please take this somewhere else.

Sun, 11/15/2009 - 20:07 | 131266 D.O.D.
D.O.D.'s picture

Sticking with the theme of the post, and as a demonstration as to the level of commitment to my beliefs, I will choose 0.

Sat, 11/14/2009 - 23:10 | 130998 msjimmied
msjimmied's picture

Newbies wanna be badasses...let it go, you have never displayed bad form, with them, you would have to. Nah, keep it for the deserving. I've always enjoyed your posts.

Sun, 11/15/2009 - 09:22 | 131123 Chumly
Chumly's picture

freaking hillarious!

Sun, 11/15/2009 - 12:46 | 131182 anynonmous
anynonmous's picture


Sun, 11/15/2009 - 21:32 | 131401 JR
JR's picture

Gee, this kinda made me homesick for a weekend at home with Mom and Dad.  It’s better than the Bickersons!  Let me know where to tune in next Sunday. It'll probably be syndicated by then... :-)

Sat, 11/14/2009 - 20:25 | 130900 justrichard
justrichard's picture

Nothing worse than "lousy logic, tempestuously waged"  -W.F. Buckley

 D.O.D. -- enjoy your posts.  Ms Creant -- not so much.

Sat, 11/14/2009 - 21:54 | 130964 SRV - ES339
SRV - ES339's picture

Richard, you enjoyed these posts?

Seems like a pompous bully to me. 

Sat, 11/14/2009 - 22:06 | 130968 D.O.D.
D.O.D.'s picture

Most panzies have that opinion...

Sat, 11/14/2009 - 22:45 | 130988 Anonymous
Sun, 11/15/2009 - 02:41 | 131070 SRV - ES339
SRV - ES339's picture

Sorry... a "spell check" challenged pompous bully

Sun, 11/15/2009 - 03:08 | 131071 D.O.D.
D.O.D.'s picture

I reserve artists' discretion, by right of profession... bitxez...

Sat, 11/14/2009 - 19:38 | 130871 Anonymous
Anonymous's picture

Allow me to poke my fat long haired head in here
and begin singing innapropriately for a business environment



-64 minus 20 = -84

Math question (answer) cannot be longer than two characters but is currently three characters long.

Here is my two character answer:


Sat, 11/14/2009 - 23:43 | 131014 Problem Is
Problem Is's picture

MsCreant : "Nobody fucks with the Jesus."

"Eight-year-olds, Dude... He had to go door to door to tell everyone he was a pederast."

Sat, 11/14/2009 - 17:02 | 130790 jongreen
jongreen's picture

I h8 sigs - Not lean at all. Then again, neither is commenting on them.

Sat, 11/14/2009 - 17:02 | 130791 jongreen
jongreen's picture

Although replacing the word "dude" with "hedge" would be funny for a while.

Sat, 11/14/2009 - 14:43 | 130714 Stevm30
Stevm30's picture

2010 is going to hurt, bad.

Sat, 11/14/2009 - 15:42 | 130745 rigger mortice
rigger mortice's picture

and 2011 and 2012 and...

Sat, 11/14/2009 - 14:46 | 130715 JamesBrrando
JamesBrrando's picture

raise % rates. kill gold, roast the usd carry traders, crash the  market, strengthen the usd.


i can dream cant i......

Sat, 11/14/2009 - 14:49 | 130717 Anonymous
Anonymous's picture

And that's why Obama has gone to China.
By mid-next week, we will have a press release saying the Chinese will support the USD through continued purchase of treasuries (a stronger USD is in China's interest and this is a 'supply and demand'driven equation). They could support the USD through some independent mechanism, not sure what.
The USD will reverse and show a gentle, bullish trend. Stocks will begin to decline, but gently. Commodities will continue rising gently because they were over-sold.
USD increasing strength, improves confidence and markets will begin to show break-outs to the upside (recent company results continue to show suprisingly strong returns). There will be a further decrease in the number of people speculating doom and gloom scenarios.

Sat, 11/14/2009 - 15:04 | 130722 Harbourcity
Harbourcity's picture

"USD increasing strength, improves confidence and markets will begin to show break-outs to the upside (recent company results continue to show suprisingly strong returns). There will be a further decrease in the number of people speculating doom and gloom scenarios."

Interest rates will stay low yet the USD won't be the carry trade.  Suddenly, the trillions in debt will miraculously disappear.  Obama will be elected to a second term.

Stay tuned for more rose colored clap trap.



Sat, 11/14/2009 - 15:38 | 130741 Anonymous
Anonymous's picture

You take the blue pill - the story ends, you wake up in your bed and believe whatever you want to believe.

Sat, 11/14/2009 - 17:34 | 130803 anynonmous
anynonmous's picture

#130717 you make an interesting point - he certainly has been sucking up big time in the pre China part of the visit; reference his speech in Japan.  Apart from him being in way over his head in dealing with his Chinese counterparts - whatever outcome they desire will be the outcome of these meetings. And it may just be that they want him to look good and so I think you are right in your speculation about the dollar. It might be a good time to go short equities  long dollar on Monday.

Sun, 11/15/2009 - 00:29 | 131040 Doc
Doc's picture

And in return China gets to annex California : D

Sun, 11/15/2009 - 06:30 | 131089 wackyquacker
wackyquacker's picture

we can only hope

Sat, 11/14/2009 - 15:01 | 130721 Harbourcity
Harbourcity's picture

2012 isn't just a movie.  If the Mayan's knew about the economic collapse, why didn't wall street?


Sat, 11/14/2009 - 15:43 | 130746 sgt_doom
sgt_doom's picture

A suitable answer: because the Mayan culture was an advanced culture, capable of inventing the wheel, still considered far too technologically advanced for those debt leveraging "geniuses" of the Street, who consider anything related to industry, mechanics and technology to be "magical."

"The root cause of the financial and economic collapse...."

Waaaay off there...the root cause is the financilization of the American economy along with concurrent de-industrialization of said economy, thus allowing for debt-financed billioniares --- the actual root cause of the continuing financial collapse....

Sat, 11/14/2009 - 16:47 | 130771 Cognitive Dissonance
Cognitive Dissonance's picture

The ultimate irony in life is the outright hubris and arrogance of modern man, who believes if something wasn't thought of, discovered or manufactured in the last 100 years, it's worthless and of little value socially, financially and spiritually. 

Our culture is on the express train to mass suicide through a vile combination of Kool-Aid flavored poison, asphyxiation and modern civilized disease. But only if we manage to avoid killing each other outright with various weapons of mass destruction lying around. And we call ourselves civilized.

Why is it that the more we destroy our one and only land base in the glorious pursuit of production and consumerism, the more each and every one of us feels in our bones that something is seriously wrong and it isn't getting better? And yet we do nothing but add more crap to the pile already in our back yard.

Why is it considered the height of civilization to work 8 to 10 hours a day in a mind numbing "job", to commute 1-3 hours per day, to eat processed and manufactured food, to live in wood and steel cans isolated from mother nature and the very land base we are destroying, all to finally collapse at the end of the day in front of a brightly colored display of moving pictures and sound that feeds various violent or sexual fantasies directly into our brains, only to repeat the next day?

I can see how a nation where 19% of it's adult female population has been raped and another 28% have fought off a rape attempt, where 60% of its citizens are either grossly overweight or obese and in a constant state of drugged servitude to authority figures and celebrity worship, would be considered the apex of human evolution.

But I digress. Where is that half gallon of mint chocolate chip fudge death for dessert? GI Joe is out on Blue-Ray. Time to fire up the 50" LCD for some civilized entertainment. Honey, let's go see that new movie "2012" Sunday afternoon before we stop at Best Buy and Wal Mart, OK?

Sat, 11/14/2009 - 17:05 | 130793 jongreen
jongreen's picture

You sound like a Daniel Quinn reader?

Sun, 11/15/2009 - 10:29 | 131150 Cognitive Dissonance
Cognitive Dissonance's picture

I am not but will be, now that you've directed my attention in that direction. Thanks.

Sat, 11/14/2009 - 17:11 | 130797 RozzertheDropsky
RozzertheDropsky's picture

Good thoughts. The factors you name (though I might call "land base" simply "Earth") surely do give rise to cognitive dissonance for all of us. Your comments echo Clive Hamilton's "Growth Fetish," as well as a book by Jerry Mander of several decades back called "Four Arguments for the Elimination of Television." And of course, the old gold standard himself, Henry David Thoreau.

Sat, 11/14/2009 - 17:43 | 130808 vomitparty
vomitparty's picture

Very true.  "Four Arguments..." is a great book. 

Sat, 11/14/2009 - 23:05 | 130939 Cognitive Dissonance
Cognitive Dissonance's picture

I say land base because I'm responsible for my local land base, that area measured by how far out and back I can walk in a day. When you measure every one's land base, that is Earth.

I find when I use the words "Earth" and "save" or "conserve" or "clean" in conversations, people's eyes glaze over because it seems so big and unmanageable. How can I possibly work to save the earth?

But when I break it down to my (or your) land base, people understand what I mean and there is a connection. And suddenly the problem is something they would at least consider considering making an effort to possibly think about taking a few minutes to at least look at.

Small steps is all I ask of everyone. Small steps like a toddler.

It's amazing how many people are insulted if I pee in their pool but not in their back yard, as long as they don't have to clean it up. Insanity comes in many forms and the most common type doesn't appear to be fatal if measured in days or weeks, not years. So we delude ourselves into thinking we're fine.

Sun, 11/15/2009 - 00:45 | 131024 milbank
milbank's picture

It's amazing how many people are insulted if I pee in their pool but not in their back yard, as long as they don't have to clean it up.

Wow, how many test subjects were used in the making of this observation?

Is this an ongoing experiment in human behavior for you?.

Oh yeah, the original post you made was . . . groovy, man.

Sun, 11/15/2009 - 08:12 | 131106 Cognitive Dissonance
Cognitive Dissonance's picture

Not sure of your intent with the comment but......

I was simply saying that people will tolerate tremendous amounts of pollution and other disgraces to the land around them (in their back yard) as long as they aren't held responsible for cleaning it up or paying for it. 

But they won't tolerate it in the least if it's done directly to them and their property (pee in their pool) because then it intrudes into their lives directly. I used the word "pee" because no one ever pollutes (it's also someone else) but everyone pees.

Since it's obvious that pollution 100 or 1000 yards away is nearly as dangerous as pollution 10 yards away, it doesn't make any sense. But we are all insane to do what we do to ourselves on a daily basis anyway so what's another outrage. 

Sun, 11/15/2009 - 10:01 | 131140 Winisk
Winisk's picture

A dog would rather shit in someone else's yard.  We're animals.

Sun, 11/15/2009 - 10:33 | 131146 Cognitive Dissonance
Cognitive Dissonance's picture

I read your post further down and you make an excellent point, one I've constantly thought about.

We humans (careful, we aren't animals, right?) have consistently claimed we are by any measure far above and removed from all other creatures in the world, including non-human species, otherwise known as animals. This also applies to plants and minerals.

Of course, one can not use, abuse, rape or destroy unless and until one has dehumanized or demonstrated the "thing" about to be abused and destroyed is not worthy of life or existence.

I can't remember who but someone talked about how we have it all wrong when we talk about "survival of the fittest." In fact, it is survival by those that fit, as in how well they "fit" into and with their surroundings. No species of animal or plant survives long that strips its local environment of it's own life sustaining elements.

Insanity by any measure.

Sun, 11/15/2009 - 14:08 | 131212 milbank
milbank's picture

I was playfully poking your analogy.  Unfortunately, the internet precludes melody of statement and expression of the facial.  I guess I should have put down a "LOL" but those things besides being the annoying internet equivalent of using fingers to make quote signs in the real world, ruin the scan of a post.

"Groovy" was a response a "Boomer" would have said about forty years ago when another "Boomer" said just about what you are saying.  Of course, that was before. . . 

they took over.

Sun, 11/15/2009 - 17:55 | 131301 Cognitive Dissonance
Cognitive Dissonance's picture

Thank you for taking the time to respond. I suspected this might be the case, which was why I said I wasn't sure of your intent and why I didn't snap but simply explained myself. The "Groovy" was why I thought you were playing. My 25 year old son calls me an "old fart" when I use the same term, along with "Dude". I tell him that I am a card carrying old fart and proud of it.

I agree that it's impossible to convey body language on the net or in the forums, which as we all know is a major part of communication. I also have been playful in the comment section only to be jumped on. I've learned a lot about myself and my own triggers over the past few years posting on ZH and other blogs. So I'm beginning to act more like my 50+ years and not jump to conclusions.

While "they" may be taking over, I'm immensely disappointed that it's my generation, the so called "peace and love generation", that has brought the world to the brink of financial and environmental suicide over the past 20-30 years. While I'm not going to identify with the US government by saying "we" did this or that, my generation is deeply involved and to deny this is impossible after just a little reflection.

Sun, 11/15/2009 - 00:45 | 131028 milbank
milbank's picture


Sat, 11/14/2009 - 17:33 | 130802 Winisk
Winisk's picture

We give the human brain more credit than it deserves.  We are not far removed from the naked ape and once that is acknowledged, our seemingly bizarre behaviour makes more sense. Ultimately it's about survival, and what worked in the past generally will work in the future provided it's environment remains stable. Animals are creatures of habit.  It's a risk to stray from the embedded patterns that allowed the parents to be successful.  When resources are a plenty, more risk taking can be afforded.  Bears will tolerate each other in a salmon choked river.  Ordinarily that would be an extraordinarily risky venture.  If hungry, bears are known to even cannibalize it's own young.  In times of scarcity it makes sense to consume what you can because the next meal is not so certain. 


So if you view our current condition in this light it kind of makes sense.   Most people are chained to the routine because that is all they know.  They trust the environment they were born into.   We at ZH recognize the environment is changing.  We are entering a period of scarcity.  Risk takers may have their head handed to them because they haven't adapted to the changed environment.  As the scarcity becomes more pronounced, expect more violent, greedy, brutish behaviour.  Civilized society will become strained. 


What scares me is that one can easily envisage  a scenario where power rules the day.  The desperate mobs will not gracefully accept their poverty.  The outrage that you have been calling for will come eventually but it will be when the living conditions deteriorate sufficiently to provoke desperation of the masses and the status quo becomes untenable.  How close we are to that point remains to be seen but I suspect we are fast approaching that point.  People on the whole still believe that their environment will get back to normal.  I hope we are a bunch of paranoid doomsayers.  Once that belief is broken, like after another bout of financial destruction, and obvious treachery, the distrust and fear of the unknown will manifest itself.

Mon, 11/16/2009 - 06:57 | 131601 Anonymous
Anonymous's picture

There are some thought leaders that think Apes may be an advanced evolutionary species, that humans are in fact less evolved than our simian bros.

Sat, 11/14/2009 - 18:42 | 130840 Anonymous
Anonymous's picture

I'll have you know I like the crap in my back yard. It's pretty and makes me feel pretty. And I will find a way to stuff it all in the coffin with me....

Keep preaching, you have it right, most don't...

Sat, 11/14/2009 - 20:24 | 130898 Anonymous
Anonymous's picture

Ahhh, the insanity of "modern" Man! You summed it up perfectly.

Is there any hope for the world?

Can I recommend the vision of an amazing recluse living in the Siberian cedar forest? Her name is Anastasia, and she is literally a time-capsule from a far more intelligent time. She is the proof that modern history has erased our previous intelligence. She has the solution.


Ron (from Down Under).

Sat, 11/14/2009 - 23:37 | 131010 TimmyM
TimmyM's picture


A century from now our ancestors will consider us lunatics for embracing what will be disdainfully called the era of the car. 

Sun, 11/15/2009 - 18:52 | 131316 Anonymous
Anonymous's picture

CD - your rape stats are waay off (to the high side).

Please do a little more in-depth looking into it before spouting off.

Sun, 11/15/2009 - 22:30 | 131421 Cognitive Dissonance
Cognitive Dissonance's picture

Nope, they are low. I said "I can see how a nation where 19% of it's adult female population has been raped and another 28% have fought off a rape attempt." I'm not being confrontational but I find men often say this number is high and women say the number is low.

I'm not talking about rapes per year and I don't say this. I'm talking about during their life time, meaning if you were to ask every woman in the USA [adult female population has been raped] 19% said they had been raped and 28% had fought off an attempt. To prevent misunderstanding I should have specifically said that. But I didn't imply it was during a year. That would be ridiculous.

And women tell women's rights activists and rape specialists that the attempted number is way too low. Both numbers are higher than I report because rape and attempted rape is under reported. If you're using official government numbers to dispute me, consider what a fine job the government does with every other official number.

The FBI reported 2 years ago in the NY Times that they consider their own reported rape numbers to be low by at least 40% and attempted rapes to be low by 70%. Many women just want the whole thing to go away and not receive publicity. Too many women have been accused of "asking for it" and they want no part of that shit.

A female doctor friend tells me I would be surprised how many married men don't know their wife has been raped (not by the husband) during the marriage. They don't wish to tell their husbands because many men reject their wives once they have been violated. That conversation was memorable.

Sat, 11/14/2009 - 15:11 | 130729 JR
JR's picture

When it come to inflation, what’s good recompense for the goose, i.e., you, isn’t always necessarily good enough for the gander, the government.

The government calls inflation at –1.3 percent so far in September.  So the banks give savers 1.69 percent earnings on their nest eggs for the year, the corporations give wage earners either wage cuts or raises up to 3 percent, and the government will give Social Security retirees 0 percent next year as an inflation adjustment.  Yet the “non-profit” government currently gives itself 6-10 percent or up to the sky to recompense itself for inflation.  You see, reimbursement for inflation’s ravages is registered on two sets of books—one for the people and one for the government.

Case in point: education costs have tripled the “rate of inflation” over the past decade until many parents, after putting away cash for years in tax-exempt Education Savings Accounts, still have to take out a government loan before their children go onto college.  In short, as parents save, inflation peels off the value of the money they are saving.

For the 2009-2010 college freshman year, the subsidized federal Stafford loan rate, based on financial need, according to Suze Orman, is “a low 5.6 percent;” the unsubsidized rate a fixed 6.8 percent. 

Another option touted for many students is a federal PLUS loan, which parents can take out on a student’s behalf.  The interest rate is a fixed 7.9 or 8.5 percent, “depending on whether it is part of the Federal Direct loan program.  Repayment is the parents’ responsibility and doesn’t begin until the student is out of school.”

That’s inflation, in a nutshell.

But, says Suze, “Try to avoid a private loan from a bank.  These loans are often expensive…”

Of course, here’s why college students can’t believe the low inflation propaganda:

Tuition and fees for public four year colleges, says, were up 6.5 percent this past year; private up 4.4 percent.  When room and board are added, the average sticker cost for a year at public college was $15,000;  $35,000 a year for private.

As usual, middle class parents are hit the most, said WSJ. They don’t get any government subsidies.  And it’s going to get worse, says Daniel Henninger of WSJ. Private college loans dropped by 50 percent last year while public federal subsidized loans rose 15 percent. Congress is putting private loan programs, with their countervailing price pressure, out of business, says Henninger, as college more and more becomes a wholly owned subsidiary of the federal government.

All the while, college loans and savings accounts and government subsidies push up tuition costs in a classic chase your tail syndrome …for higher and higher university staff salaries and greater and greater college outlays…on fancy food programs, elaborate landscaping and, now, wi-fi in the bathrooms!

Sat, 11/14/2009 - 15:38 | 130742 Anonymous
Anonymous's picture

Brick and mortar higher education is as outdated as the record or video store. Kids are paying out the ass for worthless liberal arts degrees they could get on the internet for $19.95 .

Sat, 11/14/2009 - 17:51 | 130812 Harbourcity
Harbourcity's picture

Education is quickly becoming a concept that is not only overvalued but almost worthless.  Better to go apprentice in the industry of your choice and learn real time like they did eons ago.

Sat, 11/14/2009 - 16:36 | 130772 Mark Beck
Mark Beck's picture

Assuming that the 4 year degree really takes 4.5 years of school at $35K per year that = $157.5K, for a degree, and as we know a degree is no promise of work. If you take out loans at 6.8% for this total amount, that is a lot of debt, along with sizable down sized risk, unless they can guarantee you a job after your graduate. Now don't get me wrong, higher education can be very rewarding. But, at some point the costs produce diminishing returns.

I was considering getting my Masters In Computational Finance from Carnegie-Mellon, I liked everything about the program, except the costs. Hmm, should I get my masters, or start a hedge fund. There is a point to how much one can "invest" in higher education. 

Sat, 11/14/2009 - 20:21 | 130896 slickrock
slickrock's picture

I agree with you on a liberal arts degree ... who cares???  How about for an advanced degree that actually requires study and effort, such as engineering or Biotech?  I doubt if a study-at-home student would be capable of designing the next computer architecture, a 12GHz SERDES for a SAS2 interface or even be able to isolate a gene in a DNA strand that is causing cancer.  For someone to actually advance knowledge, education is a prerequisite.  Yes, there are a few Einsteins in our midst but they are few and far between.  I'm certainly not but have contributed to the advancement of my area of specialty.  For those seriously interested in education it is a tough choice given the price of today's schools.

Sat, 11/14/2009 - 21:04 | 130929 torabora
torabora's picture

A degree in gunsmithing would be far more useful in a collapse than in IT. Bullets send messages too.

Sun, 11/15/2009 - 07:20 | 131101 wackyquacker
wackyquacker's picture

you go boy

Sat, 11/14/2009 - 21:04 | 130930 torabora
torabora's picture

A degree in gunsmithing would be far more useful in a collapse than in IT. Bullets send messages too.

Sat, 11/14/2009 - 15:31 | 130737 Anonymous
Anonymous's picture

Well I've just read all 43 pages.
Utter drivel.
I took it seriously until I read that one of the reasons to own gold is that, "the upside breakout came at Halloween."
The only redeeming feature of this document is that on the first page, the BMO state that the document is written by a third party, it has not been verified by them and they do not in any way support the views of the author.
And then there's the rather tainted anti-democrat, pro-republican flavour which is fine if that's your flavour, but not really proper in a supposedly professionally written financial review.
I repeat, utter tosh.
Tyler, stop circulating shite.

Sun, 11/15/2009 - 08:36 | 131109 Anonymous
Anonymous's picture

Yup, RNC talking points , appeals to the "I'm alright Jack" crowd.

Sat, 11/14/2009 - 15:37 | 130740 JR
JR's picture

Not to detract from the report: it’s brilliant.

But, it’s misleading to identify Barack Obama at this stage as “America’s brand.”  Yes, millions adore his speeches but since the sting of his administration began to be felt he has become one of the most polarizing presidents in the history of the Republic.  And the story has just begun.

Sat, 11/14/2009 - 15:50 | 130748 spekulatn
spekulatn's picture

Don't forget too he be the most astute Prez when it comes to protocol.

G** help us all.




Sat, 11/14/2009 - 18:42 | 130839 Anonymous
Anonymous's picture

Obama may have bowed deeply to the Japanese, but he'll soon be on his knees in front of the Chinese.

Sun, 11/15/2009 - 23:33 | 131458 Anonymous
Anonymous's picture


Sat, 11/14/2009 - 16:16 | 130759 Anonymous
Anonymous's picture

Of course he is America's brand!!!! Just take a look at this product:

Sat, 11/14/2009 - 16:52 | 130785 anynonmous
anynonmous's picture

like them or not Bush was "America's brand" so now  Obama is "America's brand"

Sat, 11/14/2009 - 17:21 | 130798 Anonymous
Anonymous's picture

obushma is america's asswipe...

Sat, 11/14/2009 - 16:04 | 130752 Anonymous
Anonymous's picture

I don't know where this group is getting their information from, but they are clearly wrong. Just ask the Fed, the Treasury, and the broadcast media. 2010-2012 is going to be a new era of American greatness, prosperity, and economic milestones! I am SO excited!!!!

Sat, 11/14/2009 - 16:09 | 130756 CB
CB's picture

"Politicians must be taught, in no uncertain terms, that the only real way to economically 'stimulate' the Productive Class is to stop stealing their fucking money! If the government announced a total tax amnesty, as well as a complete, permanent end to individual and corporate taxes — repealing all unconstitutional economic regulations would help, too — this depression would be over by the end of the week.". ~ L. Neil Smith

I saw this quote on a news website this morning. I don't know who L Neil Smith is (a really pissed-off person?), but it seems appropriate at the moment.

Sat, 11/14/2009 - 20:07 | 130889 tomdub_1024
tomdub_1024's picture

He's a liberatarian Sci-Fi author...has some really good stuff...:)

Sat, 11/14/2009 - 16:21 | 130762 delacroix
delacroix's picture

lets put together a priority list of action and aquisition for anyone who wants to position himself for whats coming, but isn't sure whats necessary or not. let's get all the good and informed ideas into a cohesive basic action plan. the more prepared, and level headed people there are, the better we will be able to offset greater breakdown of frightened majority

Sat, 11/14/2009 - 16:23 | 130764 Anonymous
Anonymous's picture

My mother nears retirement. She has at no point in her existence invested in the stock market or bonds, not understanding how to invest and therefore fearing investing. She has, nonetheless, and without a college degree, managed to save hundreds of thousands of dollars of cash simply by living extremely frugally. Thank you, Ben, for backstopping big banks and the welfare class instead of her.

Sun, 11/15/2009 - 12:48 | 130767 anynonmous
anynonmous's picture

February 2000 (Nasdaq at 4500, S&P 1400)

WASHINGTON -- The nation is celebrating its longest economic expansion ever. The government is running a record budget surplus. Inflation might be quelled. And the Nasdaq Stock Exchange, the home of technology stocks, is trading at stratospheric levels.

Yet some pension consultants, investment advisers and economists are recommending that pension funds walk away from the table with their winnings by loading up on long-term, long-duration bonds such as 30-year Treasury zero-coupon bonds and the benchmark 30-year Treasury bonds.

The longer a bond's duration -- a measure of bond price volatility -- the more sensitive it is to changes in interest rates. Long-duration bonds allow pension funds to eliminate interest rate risk because their prices move in same direction as pension liabilities and in the opposite direction of interest rates.

These experts suggest that changes in the economic environment warrant pension** plan sponsors' re-examining their long-term asset allocations.

Some of those subscribing to that view include Donald Coxe...


and this

The Rule of Page Sixteen
Never invest on the basis of a story on Page One, that is the efficient market.  Invest on the basis of a story on Page Sixteen—that’s on its way to Page One.

I’m a historian by training.  I look for the big themes, the ones historians will be writing about in a hundred years—the Page Sixteen stories.

Don Coxe
Chairman, Coxe Advisors LLC.


Sat, 11/14/2009 - 16:34 | 130768 Anonymous
Anonymous's picture


- US spends 50% of world's military expenditures ... using money borrowed from foreigners. That worked well for the Romans too.

- US has NO universal health care unlike the rest of the civilized world, so its citizens find it difficult to switch jobs or start new businesses.

- US spends 16% of GDP on health care - double most others, making the real economy a mess.

- Until China unpegs the Yuan the crisis does not even start to heal.

- Americans have 1.01 cars per driver (Canada .70). Like so many other features of US society - unsustainable.

- Obama. Stuck with the impossible job of trying to salvage a mess made by 2 Bushes and a Reagan. Poor guy.

Sat, 11/14/2009 - 21:00 | 130926 torabora
torabora's picture

I got a big truck, a little junker truck, a big sedan, and a little gas sipper...and a motorcycle. 5 ways to get to work all for about 4% of my pay, gas, insurance, and repairs included.

That is NOT 1.01 cars. Do your own wrenching and your car costs almost go to the noise floor.

Sat, 11/14/2009 - 16:56 | 130788 Anonymous
Anonymous's picture

sorry but barry soetoro from kenya-indonesia does not charm me.....

Sat, 11/14/2009 - 17:11 | 130796 Anonymous
Anonymous's picture

Superlative work Tyler but at the risk of sounding sophomoric could we go beyond the use of "greedy" to describe our dear loved banksters. From here are a few alternatives;acquisitive, avaricious, avid, carnivorous, close, close-fisted, covetous, craving, desirous, devouring, eager, edacious, esurient, gluttonous, gobbling, gormandizing, grabby, grasping, grudging, gulping, guzzling, hoggish, hungry, impatient, insatiable, insatiate, intemperate, itchy, miserly, niggardly, omnivorous, parsimonious, pennypinching, penurious, piggish, prehensile, rapacious, ravening, ravenous, selfish, stingy, swinish, tight*, tight-fisted, voracious

Sat, 11/14/2009 - 18:38 | 130836 Stevm30
Stevm30's picture

I like gormandizing and prehensile

Sat, 11/14/2009 - 17:44 | 130809 chindit13
chindit13's picture

Even Heaven cannot help us in the eternal debate over inflation vs. deflation...all I found in the Good Book was more confusion:

Assets to ashes, or debts to dust?

Sat, 11/14/2009 - 18:26 | 130825 Edna R. Rider
Edna R. Rider's picture

I don't manage other peoples' money but I do manage my own "family office," as I'm sure some of the ZH readers do.  I subscribe to 2 dozen or so "leading" newsletters, including Grants, 13D, and many others, some occasionally dropped off by some hedgie friends.  I don't mean to be a skeptic but EVERY GODDAMN ONE OF THEM recommends exactly the same portfolio mix:  Canada/Australia, China (because there are skeptics), Brazil (because why again?), precious metals companies, ag companies (yet POT, MOS, AGU all trade like AIG), occasionally water companies (no replacement, wow! who would've thunk it?), gold and gold miners (we're running out of gold, oh shit, I won't be able to have yet MORE gold coins in storage in the country where I'll never use them unless someone lets off a nuke across the river in NJ's ports in which case I'll probably never get the dumb things out because I forgot the combo), silver (um, what?), coal, and all sorts of other stuff that comes out of the ground.  I trade events more than direction but I simply cannot see how every single "plugged in" hedge fund, prop desk, and rich "guy" is going to be right if we all own exactly the same thing.  I mean, there are days when I simply cannot buy enough FCX because I start to feel like a kid loading up on too much cotton candy and the next week when it drops $10 in an hour I feel that sickness leaking out.  I would suggest that the reason we all read the same theories is because the REALLY smart guys like to repeat what the other really smart guys say until all the "smart" and cool people who manage lots of money all talk themselves into buying the POTFCXXMEMOOPHOXLE stock with tons of leverage and then it blows up and they scratch their head, close down the fund, and then search for a new pack of smart guys to listen to.  The only compelling comment above (although there are many smart ones, mixed amongst the tin foil hat weirdness) is that the guy thinks the pg. 16 ideas make more sense (you know, Cramer being the ultimate pg 1 investor).  I tend to agree.  I also think really rich "guys" I know are rich because they're lucky and have that risk tolerance gene that I simply couldn't grow if the Incredible Hulk scientists shot me full of the green gooey potion.  May we all float to heaven with the same EXACT trade.

Sat, 11/14/2009 - 19:23 | 130858 chindit13
chindit13's picture

Interesting comment.  Often it is difficult to tell what "consensus" is, particularly the consensus that actual HF or PM traders are acting upon.  We're all contrarian, at least in our own minds.  When I speak with former colleagues at the funds and prime brokers, the same picture emerges (as you noted).  Lots of carry with short dollar, long PM's, long EM's, a Black Swan bond event position, natural resource stocks, and of course AMZN, APPL, GOOG and BIDU, plus at least one bank and one homebuilder.  Virtually everyone is convinced Bernanke will not stop until he gets the inflation he seeks.

Maybe Bernanke will succeed and all these funds will live in Lake Wobegon (above average).  At the same time, Bernanke may push on the same string five BOJ governors found once they started easing, and the Obama "stimulus" might run into the same problem the last ten Japanese PM's faced. (Forget Geithner;  he's quickly being marginalized.)

The current consensus profile reminds me of the set-up everyone had going into the LTCM debacle, with a touch of the same "logic" (those guys are Nobel Prize winners, so they must be right).  Today, however, positions are much larger, and even leverage is returning.

Personally, I loved gold in '99 but I've been unloading into this rally, so I'll miss the run to $2K or $5K or wherever.  So be it.  Maybe the retail buyer hasn't jumped on the bandwagon yet, but maybe retail doesn't have any money to jump.  Certainly the rest of the market has jumped (removed hedges by producers, India IMF purchase, Paulson and Tudor and Rogers---plus all the folks who mirror the new Messiah Paulson).  And from what I have seen, Chinese are looking for the Ego Acquisition (car, house, expensive watch---often bought with cheap money) rather than gold.  I could be wrong.

Frankly, I do not like China at all, and with 25 years out here in Asia under my belt, I believe---perhaps erroneously---that I know a bubble when I see it (Japan'89, Asia'97).  With 99% of its population earning less than $6000 per year, China cannot absorb its own output.  It needs outside markets to buy its flotsam and jetsam, especially since so much of their stimulus went into new productive capacity.  Thus, they cannot let the yuan appreciate, which means they probably will not unload their dollar portfolio unless all hell breaks loose at home (possible).  There's joss sticks being lit all across the Middle Kingdom in the hope of bringing good fortune and easy-open wallets to American consumers.

And if anyone has experience with major Chinese firms, especially SOE's, you may have noticed that many do not do feasibility studies.  They just do it, assuming everything always goes up in price, so no matter what anything cost to produce, there is always a mark-up and a profit.  Current steel production, which costs more than they can sell it for, has yet to disabuse them of the notion of ever-rising prices.  At the speed with which China is printing money and erecting surplus capacity in everything, the real contrarian bet might be a yuan collapse.

Sun, 11/15/2009 - 19:44 | 131337 Anonymous
Anonymous's picture

You Sir, have your finger on the pulse. Smart man.

Thu, 01/21/2010 - 00:55 | 200366 Anonymous
Anonymous's picture

China's sovereign credit is actually going into building infrastructure, and is productive. Printing money is not necessarily bad, it worked for hitler and lincoln. As long as the money is being used for industrial capitalism, which it is for the most part. China is fine, its economy is only one-third export based. Whereas america's economy is 70% consumption heavily based upon imports. The Chinese are used to lower living standards, whereas americans are not. The Dollar will collapse, the yuan is just fine as is China.

Sat, 11/14/2009 - 22:11 | 130970 anynonmous
anynonmous's picture

perusing the 13fs of the hedgies the commonality is striking - as is their almost  collective performance during h2 08  and then into q1 09 to q2 09 - going back to 08 however one sees that the Paulsons (and some others) of the world are a cut above their rivals

Sat, 11/14/2009 - 18:35 | 130834 Anonymous
Anonymous's picture

I think the move in gold is more significant than this report makes it out to be. I read an interesting piece about it setting the basis for a move away from the dollar as the world's reserve currency:

Sat, 11/14/2009 - 18:41 | 130838 Anonymous
Anonymous's picture


> US has NO universal health care unlike the rest of the
> civilized world, so its citizens find it difficult to
> switch jobs or start new businesses.

More businesses are started in the U.S. than any other country. And in other countries - like China - you have to have connections to govnerment officials to get a company off the ground.

> US spends 16% of GDP on health care - double most others
> making the real economy a mess.

What should this GDP be spent on? What is the right amount that would magically make the economy not a mess?

Money - GDP - has got to be spent on SOMETHING - and something like Viagra to let baby boomers have sex into their 60s points and other things that improve quality of life is a sign of something good in an economy, not something bad. I suppose you want that GDP to go into taxes.

> Americans have 1.01 cars per driver
One car, one driver. Funny, that used to be a sign of wealth in a country. I guess a successful country like the Sudan with a car per thousand drivers would be a "success".

Sat, 11/14/2009 - 18:49 | 130844 AnonymousMonetarist
Sat, 11/14/2009 - 18:54 | 130845 Anonymous
Anonymous's picture

Joking omission is that George W Bush and his dimwit US Labor Secretary Elaine Chao, Mitch McConnell's (R-Ky) wife, missed their monthly jobs creation target every month for 8 years, abosolute proof that Republican tax cuts do not work to create jobs in the United States (important detail). The labor available in India and China is way too large. I am a Republican and I sure as h3ll did not vote for Bush because I knew he was overseeing the groundwork for an economic disaster (consider unemployment today in the United States). I am amazed that bankers in New York City and dumbbells in the FIRE economy didn't listen to these two morons. How can anyone be dumb enough to think monthly mortgage payment$ could reset to a higher monthly payment?

The United States job loss was planned. Twitmonkey Alan Greenspan and Elaine Chao have both chirped "health sciences" as the only decent paying jobs left in the United States; you can find Alan Greenspan's quote in one of his books. IT to India. Manufacturing to China. How you pay for your retraining in health sciences, a lengthy 3 to 5 year process, is your problem.

Sun, 11/15/2009 - 00:12 | 131029 Anonymous
Anonymous's picture

Yeah economic life under Bush was SO much worse than what we have now. Right.

Sat, 11/14/2009 - 18:54 | 130846 Anonymous
Anonymous's picture

Joking omission is that George W Bush and his dimwit US Labor Secretary Elaine Chao, Mitch McConnell's (R-Ky) wife, missed their monthly jobs creation target every month for 8 years, abosolute proof that Republican tax cuts do not work to create jobs in the United States (important detail). The labor available in India and China is way too large. I am a Republican and I sure as h3ll did not vote for Bush because I knew he was overseeing the groundwork for an economic disaster (consider unemployment today in the United States). I am amazed that bankers in New York City and dumbbells in the FIRE economy didn't listen to these two morons. How can anyone be dumb enough to think monthly mortgage payment$ could reset to a higher monthly payment?

The United States job loss was planned. Twitmonkey Alan Greenspan and Elaine Chao have both chirped "health sciences" as the only decent paying jobs left in the United States; you can find Alan Greenspan's quote in one of his books. IT to India. Manufacturing to China. How you pay for your retraining in health sciences, a lengthy 3 to 5 year process, is your problem.

Sat, 11/14/2009 - 19:06 | 130849 Rollerball
Rollerball's picture

It's called "panic financialism".  

No different than "War Of The Worlds" panic sex (consensual), only this time half of the participants are getting date-raped.  

Beijing got the pre-released version of "2012".  Default by act-of-God.

Sat, 11/14/2009 - 19:29 | 130862 knukles
knukles's picture

The thin veneer of civilisation diminishes exponentially. 

Sun, 11/15/2009 - 11:34 | 131169 Internet Tough Guy
Internet Tough Guy's picture


Sat, 11/14/2009 - 19:35 | 130866 Anonymous
Sat, 11/14/2009 - 19:37 | 130870 Anonymous
Anonymous's picture

"[Obama] remains the most charming and charismatic President of modern times, and is still, quite probably, liked by more Americans—and more people abroad—than any American President. He and his radiant wife are, as The New York Times notes, America’s greatest global brand."

God that made me laugh hard. I needed a good chuckle.

Sun, 11/15/2009 - 06:54 | 131094 wackyquacker
wackyquacker's picture

kidden'? Coxe doesn't want the hounds loosed.

Sat, 11/14/2009 - 19:42 | 130875 Anonymous
Anonymous's picture

I have determined after carefully observing modern humans, that they all secretly long to live in small tribes of around 30 individuals roaming the forests and bedding down at night in fluffy hammocks comprised of sticks and leaves, eating only fresh fruit, nuts, berries and the occasional squirrel and taking lots of shamanistic drugs and conducting 'man meets universe' rituals on important astrological alignments.

tell me you think I'm wrong.


Sat, 11/14/2009 - 19:52 | 130879 dnarby
dnarby's picture

This just in - I call bullshit!

FHA boss: FHA is not the new subprime FHA commissioner defends health of housing agency amid concerns over its financial cushion

Sat, 11/14/2009 - 19:56 | 130882 Harbourcity
Harbourcity's picture

hahhaha I had to check to make sure I wasn't at the Onion website.  Yeah, of course, there were no first time home buyers making liar loans.  Let's forget the fact that Barney Frank created the whole fiasco in an attempt to give minorities the ability to own homes (aka first time home buyers). 

Sat, 11/14/2009 - 19:53 | 130881 Harbourcity
Harbourcity's picture

It's 1984.  We live in fear because we have army's to make us safe.


Sat, 11/14/2009 - 20:18 | 130893 max2205
max2205's picture

Don't forget we threw out basic accounting principals, transparency, and SARBOX never meant much. The smoke has been turned up and more mirrors have been installed.

No one since Enron, healthsouth and worldcom has been furnished a 4X 6 cell. You know and the gaming is worse now to protect share prices.

It's all bullshit. I am long above the SPX 4 WK EMA and short under it. Can't wait for the break it should be awesome to see rich bitches not have the PPT's help once the $800 b TARP is pulled to take the deficit down. Let's see 400b removed from the market at 30 X is $12 Trillon of stocks and bonds and whatever being sold by the PD's. Of course they will have their shorts set up well in advance in the dark pools. I love pools.

Sat, 11/14/2009 - 20:25 | 130901 Miles Kendig
Miles Kendig's picture

The fact that this report does such an excellent job of calling forth my favorite autodidact of American history Benjamin Franklin the well spring of my autodidacticism is sufficient for a full review.  I find that happening more and more here thanks to everyone who manages to post such excellent links and commentary.  It makes the process of separating the wheat from the chaff worthwhile for me at present.

Sat, 11/14/2009 - 21:42 | 130954 tomdub_1024
tomdub_1024's picture

Thanks for the new vocabulary, had to look that one up, though I should have been able to break it into parts and figure it out--autodidact--.

Yeah, what I studied in college doesnt have much to do directly with my various work, securitites in the late 80's, musician 90's and now part time, computer science that last 15 years...all self taught...:)

Sat, 11/14/2009 - 22:28 | 130980 Miles Kendig
Miles Kendig's picture

Thanks.  I did that particular spelling for the enjoyment of a reader who likes to comment upon how many syllables I can fit into one word.

Sat, 11/14/2009 - 23:33 | 131007 Cognitive Dissonance
Cognitive Dissonance's picture

Show off!

Sun, 11/15/2009 - 14:57 | 131031 Miles Kendig
Miles Kendig's picture

For you pal.

Sat, 11/14/2009 - 20:48 | 130921 torabora
torabora's picture

The only way BarriO could have topped that 'bow' to the Jap Emperor, would have been for him to lick the bottom of the dude's sandal. He's not 'charismatic'....he's sickening.

Sat, 11/14/2009 - 21:52 | 130963 chindit13
chindit13's picture

When I'm in the US, I keep my shoes on when I enter someone's home;  when I'm in Japan or pretty much anywhere else in Asia, the shoes come off at the door.

On home turf, it's your rules;  in away games, it's their rules.

Courtesy and a touch of cultural awareness are not such bad things.  Not only does the US have a lot to make up for in terms of world opinion, but it doesn't hurt to keep the Paymasters happy.

Whatever Americans might think of themselves, the vast majority of the world sees the US as arrogant, ignorant, extremely violent, rude, obese, hypocritical, wasteful and financially irresponsible.  While these views may or may not be correct, a bow here and a bit of contrition there go a long way toward changing the negative views, especially in Asia, where memories of US lecturing about capitalism, belt-tightening and fiscal restraint are still fresh from 1997.  A polite bow is dignified, not obsequious.  It can even demonstrate quiet strength and confidence.  And it gives "face", which is of even greater significance out here than a US public figure wearing a lapel pin or talking about "family" is back in Middle America.

Nothing is harder to take than the collapse of an empire or the shattering of an illusion. It's like a Hollywood star well past his or her prime shouting "I'm still a leading man (or woman), ignoring the spare tire and sagging jowls and tired eyes. And fragile egos will be offended by "bowing to an Earthly King", even if it happens in the King's house.  Unless the US pulls itself together, however---and quickly---its days as world leader are about finished.  It's high time to put the false pride aside and get down to business;  otherwise, the US will become as stale as post-WWI Britain.

I'm no fan of Obama, but in this instance I am happy he realizes America is greatly in need of friends, and knowing how to make friends is a good quality to have.

Sun, 11/15/2009 - 15:22 | 131246 Anonymous
Anonymous's picture


what do you do when you are in the UK? It seems that bowing is a selective greeting that doesn't include Queenie

but does include such favorites as King Abdullah of Saudi Arabia

Sun, 11/15/2009 - 15:48 | 131257 JR
JR's picture

You say, “Whatever Americans might think of themselves, the vast majority of the world sees the US as arrogant, ignorant, extremely violent, rude, obese, hypocritical, wasteful and financially irresponsible… I'm no fan of Obama, but in this instance I am happy he realizes America is greatly in need of friends, and knowing how to make friends is a good quality to have. “

I respect and appreciate your viewpoint. But from an American's viewpoint, I see Obama's motives differently.

If, as Obama, you’re working for world socialism, and you represent the world oligiarchs who want to control this world socialism, then you will go to the world’s other socialist leaders and you will bow and you will downgrade America’s past greatness and how the free enterprise system forged America's role in history. Clinton, Bush and Obama all work for those same oligarchs.

There’s a strength of character that defines what America was and will be again, regardless of what the world’s socialists may think of it.   The realization of the American dream was individualism, property rights and freedom: its lifeblood, free enterprise  That America should be represented, not misrepresented.

Obama is a puppet of those who control him; he is more interested in putting the U.S. on a par with other countries than being a representative of the American people; he would prefer if all nationalities were melded into a world of mixed cultures with himself as a glorified super leader. It’s obvious he doesn’t have a feel for what made America great; of what built this cornucopia of wealth now shared with the entire world.  Obama’s dream--his life, his meals, his entertainment, his position—has been provided by funds that were taken from producers.  He has no understanding of the American dream that made his dream possible  

As president, as elected leader of the United States, his job is to help support and continue that American dream.  It is not to apologize for it.  It is not to take it and sell it on the world market.

Obama is operating behind doublespeak.  As Frederick Douglass, a self-educated slave of the pre-Civil War era, observed: “[T]o make a contented slave, it is necessary to make a thoughtless one (and) to annihilate the power of reason.  He must be able to detect no inconsistencies in slavery, he must be made to feel that  slavery is right.”

Mon, 11/16/2009 - 04:39 | 131574 Brett in Manhattan
Brett in Manhattan's picture

Most of the world has never been to America. If they actually came here and travelled the country, they would find their pre-conceived notions are false, except for the obesity.

Mon, 05/03/2010 - 22:00 | 330076 velobabe
velobabe's picture

the shoes come off at the door.

you make me laugh with your spontaneous correctness.


my dictionary is my friend.

you are, priceless.

Sat, 11/14/2009 - 21:09 | 130932 delacroix
delacroix's picture

benjamin franklin was prescient with some of his warnings regarding the future

Sat, 11/14/2009 - 21:47 | 130960 Anonymous
Anonymous's picture

The investments recommendations listed in the letter are echoing a crowded trade. I hear it all the time at the water cooler-ditch anything US, bet on oil, commodities, EM, China and buy some gold.

Sun, 11/15/2009 - 10:11 | 131145 Anonymous
Anonymous's picture

I would have to agree. Coxe has figured
out the disease but then prescribes
the wrong antidote.

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cheap uggs for sale's picture

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