Krugman's Missed Call; Europe/China/Japan; Sideways Markets; Profit Margins; Microsoft

Vitaliy Katsenelson's picture

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Thu, 12/29/2011 - 17:23 | 2020391 NoClueSneaker
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Microsoft ?

Oh, yeah ... I'll be back @WIN 13...

Left the crap by 2K, and never looked back .....


Thu, 12/29/2011 - 17:22 | 2020390 CTG_Sweden
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If Japan prints money in order to build wind mills that will reduce the need for imported oil. And if that happens, increased supply of yen is followed by (a non-artificial) extra demand for yen. Hence, the exchange rate and inflation rate will be affected to a smaller extent than if they would print in order to pay for imported consumer goods or bridges to nowhere, for instance.


Furthermore, it seems as if Japan just got to raise its low taxes. Of course, that will reduce aggregate demand in the economy and therefore the unemployment will rise. But if less money is spent on foreign energy sources and more money is spent on domestic energy sources, then aggregate demand will increase in Japan and more jobs will be created which will compensate for the reduced demand for labour caused by increased taxes.


Perhaps reduced consumption of foreign oil would not compensate fully for the reduced aggregate demand caused by increased taxes. But I reckon that it would help a lot.


Furthermore, Japan´s demographics is probably an advantage for Japan if aggregate demand is reduced and the demand for labour is reduced. The same is probably also true for Europe and the US. If the EU and the US could not print money, the need for labour would probably shrink by 10 % or more. And then the governments in these countries would have to give these people unemployment benefits and food stamps, respectively, which would cost a lot of money. Unemployed people do not contribute to the economy but rather the opposite, regardless of age. Therefore, you are probably better off with a smaller supply of labour than now in the EU and the US.

Thu, 12/29/2011 - 15:33 | 2020045 disabledvet
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Just in case you were wondering Viataly...I like to think of the comment sections here as an angry herd of Velociraptors...and since they have already completely devoured one Greek guy they have a penchant for...wanting seconds.

Thu, 12/29/2011 - 15:27 | 2020021 steve from virginia
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Windows 8 might be the upgrade needed for this box post Win-7.  I'd go w/ Linux but no native support for Wimax.

This computer cost $200 ... tell me again why +$1000 'ultrabooks' are going to be hot properties ... in a depression?

Thu, 12/29/2011 - 15:43 | 2020074 LowProfile
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Adjusted for inflation, the price will be ~5 oz of silver.

...Doesn't sound that bad now, does it?

Thu, 12/29/2011 - 15:23 | 2020002 onebir
onebir's picture

More biases:

#3 - land sales at inflated prices, and property taxes have been a great way for local govt to raise funds

#4 - said land sales provide wonderful opportunities for bribe-extraction by local officials

#5 - local govt has been able to lean on banks to fund white elephant projects via CP officials implanted in banks. (Even hospitals in China have "CP secretaries"...)

#6 - large impressive buildings are great for 'face' & particularly useful for showing off to CP visitors from Beijing...

Thu, 12/29/2011 - 14:44 | 2019848 PulauHantu29
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"Council on Foreign Relations: According to the property agency Homelink, new home prices in Beijing dropped 35 percent in November alone. And the free fall may continue for some time. Centaline, another leading property agency, estimates that developers have built up 22 months’ worth of unsold inventory in Beijing and 21 months’ worth in Shanghai.

A crash of this magnitude is clearly an unwelcome event for Party officials as they begin to prepare to deal with this issue. A 35% correction in a month feels like a panic, but this event has been in the making for some time. A glut of development projects and easy money available for developers (both debt and equity) had been widely discussed over two years ago. In fact this may not be unique to China, with “bubble” property and other asset markets correcting across several nations of Asia (again discussed over two years ago)."

How depressing is this?!

Thu, 12/29/2011 - 15:12 | 2019956 onebir
onebir's picture

A 35% drop in one month for housing seems... quite implausible.  Has anyone heard of a similar-sized MoM drop in a house price index for a large city?

I'm sure house prices in Beijing are dropping pretty quickly, but I doubt Homelink's figure is based on a proper index - house price indices are pretty difficult to compile. So the reported drop's likely overstated (eg due to shifts in the composition of the sales in Nov - eg to smaller or cheaper units) & need to be taken with a pinch of salt...

Thu, 12/29/2011 - 14:13 | 2019762 LowProfile
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Good point on MS's stock, but why not wait until the DOW:GOLD ratio reaches 1:2 or 1:1.5 first?

MS may have a bright future, but it will be submarined with everything else when this sucker goes down like a hurtin' crack ho.

Thu, 12/29/2011 - 14:12 | 2019758 Stuck on Zero
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Thu, 12/29/2011 - 12:28 | 2019365 Shizzmoney
Shizzmoney's picture

I agree with Krugman’s assessment.  What perplexes me is why the Nobel Prize-winning economist wrote this column now, when the problems he describes are plain for all to see, and not a few years ago. 

Because he isn't paid to?

BTW, how funny does this read when I fix it up a little:

One of the things Krugman pointed to was the lack of reliable data from the United States government. To what extent does that cloud your analysis, and how certain can you be in your forecast and your analysis, given the uncertainty, or unreliability, of United States government data?

Thu, 12/29/2011 - 12:30 | 2019375 WALLST8MY8BALL
WALLST8MY8BALL's picture

That's ManBernKrug = Half man and half Bearded Delusional Psychotic Keneysian!

Thu, 12/29/2011 - 15:28 | 2020025 riphowardkatz
riphowardkatz's picture

Who has  a better beard? The krug or the bernank

Thu, 12/29/2011 - 12:29 | 2019359 Shizzmoney
Shizzmoney's picture

BTW, I look forward to Chinese-style internet here in the States.  I can set an over/under of DMCA notices I see daily at 420.5

Thu, 12/29/2011 - 12:23 | 2019348 Fuh Querada
Fuh Querada's picture

When are you guys going to admit that the stock market is frucked ?

Thu, 12/29/2011 - 12:21 | 2019338 Georgesblog
Georgesblog's picture

The general mood in 2008 was that everyone knew their neck was on the block. They just didn't want to hear that the axe was going to fall, right now. At the time, China's exports would indicate that they had no problem. I never gave any thought to their economy coming apart, internally. As it turns out, the present situation proves my point. No production economy can prosper by selling into a declining market. We know that there will be plenty to write about, in 2012.

Thu, 12/29/2011 - 12:03 | 2019278 Bartanist
Bartanist's picture

I am thinking that the economic world needs to re-brand the word "austerity" to something akin to "right-sizing". If we "right-size" we are balancing inputs and outputs whereas we suffer austerity, which is a hardship.

But maybe that is the point. The powers that control the propagandists semingly want to foment polarization and discontent so that they have an excuse to persecute and execute people. It would be much more convenient for them, ya know, to have less people around ... lot easier to control... and they will be sure to keep their favorite servile slaves.

... but when that has taken place they will have no need for a military or a police force... and certainly not the size it is currently. Odd how sociopaths and psychopaths seem to think that they are the only ones capable of making the rules for others to live by.

Thu, 12/29/2011 - 12:15 | 2019324 Clueless Economist
Clueless Economist's picture

Feck You Vitaliy...when you win a Nobel Prize, then come back and criticize me!

"The only logical solution to the debt crisis, is to add more debt"

Paul Krugman

Nobel Prize Winner

Thu, 12/29/2011 - 12:43 | 2019425 onebir
onebir's picture

Kruggie baby's sounding a bit Celtic today ;-)

Thu, 12/29/2011 - 15:38 | 2020062 NotApplicable
NotApplicable's picture

He was probably taken by surprise at this attack. After all, who expected anyone to take Krugman serious enough to debate his "ideas?"

As always, it's akin to wrestling with pigs, where you both get dirty, but the pig likes it.

Any rational person would merely point out that Krugman is a pig, and move on. To engage him in debate is to legitimize him as a source of ideas (even if they are misguided). He is but a sophist tool of the status quo, and should be recognized as such. One should no more debate him than they would Bart Simpson, or Borat as they are all fictitious personas created for public consumption.

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