"This Is The Worst Of All Possible Worlds," The Fed "Is Borrowing Returns From The Future"

Tyler Durden's picture

Felix Zulauf, James Montier and David Iben: Three legendary investors share their views on financial markets. Everything is pricey ("we will continue to swim in a sea of liquidity; but there might be other events and developments that may not be camouflaged by liquidity which could cause a change of investor expectations.") the European periphery is a bubble ("The Euro crisis is not over...the European economies are not going to change for the better for years to come despite all the cheating and breaking of laws"), Value investors need to venture to Russia ("when you look at today’s opportunity set, you’re left with a set of assets where nothing looks attractive from a valuation point of view") or buy gold mining stocks (" The down cycle could be much bigger than anybody believes if the market realizes that all the actions taken in recent years do not work.") Summing it all up, "there is no question that [sovereigns] lack the fundamental economic base to finally service their debts," trade accordingly.


Submitted by Gregor Must and Stefan Rehder of Finanz Und Wirtschaft,

Felix, a bit more than a year ago, the mere announcement of tapering by the US Federal Reserve triggered a shock wave through financial markets. You called this the butterfly effect which might feed into a worldwide correction. Now we have had tapering since the beginning of the year, and all major asset classes are gently moving up on very low volatility. Is tapering really a problem?
Felix Zulauf: It was a butterfly effect for the moment because the world feared a liquidity tightening which immediately sent emerging market interest rates higher and their currencies lower while the dollar firmed as capital flowed back to the US. The Fed will be done tapering by September or October, but other central banks will take over. We have seen for many months now that the Chinese are printing more money than the US. On average, they have created Renminbi for the countervalue of 50 bn $ per month over the last six months. This is an enormous amount.  Then the European Central Bank is willing to add 1100 bn € over the next two years which equals an expansion of 50% of its balance sheet. So we will continue to swim in a sea of liquidity. The question is whether there might be other events and developments that may not be camouflaged by liquidity which could cause a change of investor expectations. Liquidity is one thing, but there are fundamentals also.

What fundamental development could that be?
Zulauf: We think it could be China. In every cycle you have a dominating excess which reinforces the cycle on the upside, but when it turns, it reinforces it on the downside. Last time, it was US and parts of European housing and in the previous cycle technology investments that created excesses and overcapacity. In the current cycle it is emerging markets, and the big gorilla is China.

Can’t Beijing control that?
Zulauf: The dimension of the Chinese cycle was enormous. In 2011 and 2012 alone, China has consumed as much cement as the US had in all of the 20th century. The credit creation in the last five or six years is mounting to the total loan outstanding by the US banking system. The excesses are mind boggling. Now anecdotal evidence tells us that the Chinese investment and construction boom has not broken yet, but it has cooled. But when it cools after a boom like we had, it’s probably the end of the cycle. However, investors still believe that the Chinese authorities can manage it because it is an autocracy. Once this assumption changes, it will have a negative effect on markets, but we do not know when exactly that will be.

After the end of QE1 and 2, equity markets corrected. Could the completion of QE3 be a trigger for the scenario you mentioned?
Zulauf: I doubt that we will see real monetary tightening by central banks. That’s the interesting thing about the current cycle. Investors are prepared for a conventional ending of the cycle with higher growth and capacity utilization resulting in higher inflation, rising interest rates and tightening liquidity that leads to a bear market. But it could be very different this time. If all of a sudden something went wrong in China, we would have another deflationary episode. If China’s currency goes down 20%, this affects pricing in traded goods and, therefore, corporate profits. All of a sudden, investors might look at the valuations of their stocks and realize that the emperor has no clothes.

Spanish, Italian and French bond yields trade on 200-year lows. Is the Euro crisis over?
Zulauf: The Euro crisis is not over. The intensity of the crisis was terminated by Mario Draghi’s famous “whatever it takes” speech in July 2012. The authorities have elevated the existence of the Euro to dominate every other issue. Of course, economics is such that you can’t have all variables fixed. If you can’t deflate to reduce the differences of the economic structures of the different economies and you can’t devalue your currency, the adjustment goes through the real economy. That’s what’s going on. Euro sceptics have taken almost one third of the seats in the recent European parliamentary elections which is a reflection of the unsatisfactory and discontent situation in the majority of the European economies. I do not see that the current set-up for the Euro and for the European economies is going to change for the better in years to come despite all the cheating and breaking of laws and contracts and treaties that is going on.

What does that mean for the EU?
Zulauf: That leads to a change in the political sphere which established parties are ignoring. Instead of taking it up and trying to change the direction of the Euro and EU from a more centrally planned  EU to a EU of subsidiarity, they are just ignoring it. If you’re ignoring the warning signs, it will get worse over time. The changes to the European situation will not come from financial markets. It must come from politics. But the established parties will not change for a long time and therefore the conflict will intensify in the political arena. So my hunch is that the European recovery is not really leading up to expectations and will continue to disappoint citizens and voters. That will be expressed at the next elections. The problems could be dampened along the road if Germany agrees to a mutualization of debt and mutually financed infrastructure programs and so on.

So you distrust the current rally in European equities and bonds?
Zulauf: For the time being, European financial markets have a honeymoon that can continue for a while longer, but this is based on the expectation that the European economy will normalize. But this expectation could eventually be disappointed.

James, we have slow growth, no inflation, low interest rates and easy monetary policy as far as the eye can see. Are we living in the best of all worlds for investors?
James Montier: How I wish that that were true. The problem with the policy of raising asset prices is that you borrow returns from the future. You can think of it as the front loading of return. So what you’re really doing is pushing down future returns. So it doesn’t really help anybody a great deal in the longer term. Of course, in the short term the effect is positive as you get some sort of balance sheet repair through rising asset prices. At least that’s what central banks hope. But when you look at today’s opportunity set, you’re left with a set of assets where nothing looks attractive from a valuation point of view.

Even if interest rates stay low for a long time?
Montier: Even if we factor in low interest rates for the next twenty years, we’re still not seeing great opportunities. We can find stuff that may be fair value in that scenario, but it’s far from obvious. This is a very difficult time – in contrast to 2007, when risk assets were expensive but cash and bonds were priced to deliver reasonable returns, which is not the case today. It’s much harder to find anywhere to hide. So far from being the best of all possible worlds, this is almost the worst of all possible worlds.

Do your clients still believe in the much-cited low return environment? The further markets move up, the more you might have a credibility issue.
Montier: No doubt. We haven’t yet reached the kind of loathing that was displayed towards us in 1999 where we were just told we were complete idiots and several clients banned us from their buildings. I think there is a broader acceptance of the power of valuation, but the longer the rally goes on, the shorter people’s memory gets. Galbraith used to talk about the extreme brevity of financial memory and I fear that’s kind of what we’re experiencing now. People are looking at last year and say look, it can go up 30%, why on earth are you saying future returns are going to be dismal.

But markets have been expensive for quite some time. How opportunistic should a value investor be?
Montier: There are two possible states of the world: either they keep rates low for a very long period of time or they don’t. Anyone who says they know which one is going to happen is either a liar or a fool or possibly a linear combination with unknown weights. The reality is, nobody knows the future, particularly when it comes to policy rates. By second guessing we’re playing some sort of ridiculous beauty contest. Therefore we should try to build portfolios which are robust and can survive different outcomes.

How do these portfolios look like?
Montier: That’s a challenge because the portfolios you want to hold in those two different worlds are almost diametrically opposed. If financial repression continues, you want to own the least bad thing out there, which is equities. In the other world, the only asset which does not hurt you when rates move to normal, is cash. So you end up with this bizarre portfolio where you own some equities where they are cheap. And you want to own some dry powder assets which protect you against inflation, provide liquidity and real return.

Does cash do the job?
Montier: Cash historically has done all three of those things very well, but in a world where rates are kept very low, cash does not do at least two of those things very well. So in addition to cash, you have to include some long-short strategies, TIPS and bonds which offer at least some yield. The really unsatisfying thing is that no matter what is going to happen in the future, you won’t hold the best portfolio. But at least, this portfolio allows you to survive.

Felix, do you come to a different conclusion?
Zulauf: I’m a believer in cycles. This cycle is very unusual in many ways. It is a long cycle because we compress interest rates while high risk aversion has kept certain asset prices low. It is also unusual because we won’t get monetary tightening in a long long time. That gives some investors comfort that there is not much risk in the market. Many of those also subscribe to the view that eventually the bull market will end with the hurrah of the retail public coming in in a big way. I have to put a little bit of cold water on that theory.

Why is that?
Zulauf: When you look at equities as a percentage of financial assets in the US, it is exactly at the extreme it was at the end of 1999 and in 2007. So the retail public is there where they always have been at the end of a cycle. They do not have the financial means anymore to create the final bubble move some are expecting. Maybe institutions could, but the retail investor won’t do it. Therefore I think this cycle will probably more likely end with a whimper than with a bang. It might continue for another year or so, maybe with a scary correction sometimes late summer or fall this year, followed by another run to the upside which firms the belief that you always have to be fully invested.

What follows thereafter?
Zulauf: We have thrown so much stimulus into the system, and all we see as an outcome is mediocre fundamental growth with real incomes eroding after fixed costs for average households in industrialized economies. The down cycle could be much bigger than anybody believes if the market realizes that all the actions taken in recent years do not work.

Dave, you like scarce assets. Are they still undervalued?
David Iben: In a world where gold is scarce and fiat currencies are anything but scarce, what do you do when stocks get expensive? Do you really run for the safety of cash when cash is no longer scarce and therefore no longer valuable? That’s a dangerous thing to do as the Fed has quintupled its balance sheet, so what is not scarce is fiat currency. Holding it for the short term maybe makes sense, but for the long term this is almost a guaranteed disaster. Therefore some of your money should be in gold.

How do you value gold?
Iben: I read all the time that if you can’t come up with a present value of discounted future cash flows, it doesn’t have value. Therefore gold or a building which is not rented out have no value. I think people have it backwards as value will create future cash flows. Mona Lisa has no cash flow, but does it have no value? I think it has, as it is scarce and can be turned into cash anytime. So instead of looking at the discounted cash flow of gold, people should ask what is cash worth relative to gold.

Do you have other examples?
Iben: Does a hydroelectric dam have value? I think it has. It is scarce. You can’t dam the same river in the same place. Once you have dammed it, you have a huge competitive advantage as you get clean electricity at almost no cost. Now regulators sometimes let you capture the value and sometimes they don’t, but the value is there. We prefer to buy it when the regulators aren’t letting you capture the value because then you can buy it – as is the case now – for 10 cents on the dollar. If the regulator only gets kind of mean in the future, you can make a lot of money.

What about farmland?
Iben: Farmland is an amazing thing. Over the last fifty years, the world’s population has more than doubled and the money supply has gone up ten times or whatever while the amount of farmland has barely grown and in, the developed world, has even gone down. That is scarce. Uranium (Uranium 28.3 0%) is very scarce. At 300 $, it is not scarce at all, but at 28 $, it is incredibly scarce. Infrastructure is scarce too as there is the tendency to monopolies. Once you’re the market leader, it’s hard for somebody to replicate. You’re also going to find that energy is scarce. They are not making more oil. Natural gas is more debatable, but even there, the success of the US has not been replicated elsewhere. You can find scarce assets that are good assets that meet the needs of the population for food, communication or energy.

So what do you buy today?
Iben: We’re always looking for the thing the market hates. Two of the most disliked things I have ever seen in my life are miners of gold and Russian equities. So contrary to 2007 when everything was expensive, gold and Russian energy stocks look very cheap. Sure, Russia might be less a part of the European economy, but it might be a bigger part of the Asian economy, so when the market wants to sell us a barrel of oil equivalent for 1 $ by owning Gazprom (OGZD 8.81 -1.34%) at 2,5 times earnings, I’m going to do it. Then there is a big dislocation between the amount of currency printed and gold. But you don’t even have to like gold at all to buy gold miners at current valuations. They are pricing in a gold price of 1000 $ or less. So you get a free option on a rising gold price which is the icing on the cake. In general, we prefer companies which have long lived reserves while the market likes reserves that can be turned into cash quickly. We like the optionality of something that’s going to be hard to find and replaced. We’re more owners of assets in this market.

Montier: I agree that there are opportunities in Russia such as Gazprom, Lukoil (LKOD 61.47 0.94%) and Rosneft (ROSN 7.24 2.19%), which are all incredibly cheap. The reason for being cheap is because they are in Russia. That’s fine because they can lose half of their money or have it stolen and are still on a PE of 4. So what? The downside is reasonably muted in those kinds of stocks.
But Russia has been cheap for a long time.

Iben: We buy when the discount to intrinsic value is large enough. Value eventually plays out.

You don’t worry about China?
Iben: I agree China is a bubble. They have been overdoing everything. But when China collapses, is that worse for China or is worse for certain industries? Maybe this is bad for building materials and luxury goods everywhere, but owning China Mobile (CHL 49.2 0.02%) at 8 times earnings is not such a bad thing even if China messes up.

Apart from Russian energy stocks and scarcity assets: What other cheap assets do you find out there?
Montier: The other area where we have found some value is within Europe. We like some of the European value stocks. Over the last few years, each time the Eurozone crisis has erupted, we have been presented opportunities to own some pretty decently priced badly run companies – which is fine, I even buy crap if it’s priced appropriately, and it has been. Right now, that’s diminishing, but as Felix said, the Eurozone crisis is fundamentally not over. It’s a little bit like putting a band aid on a missing limb – it might look ok, but it doesn’t work for the long term as you can’t have monetary union without fiscal union. Until you get those two things together, you’re going to have periodic crisis that will be opportunities to look at Europe again.

Anything else?
Montier: Something which is just showing up on our radar screens is Japanese value. We did own Japan in the wake of the earthquake and sold out after the market decided that Prime Minister Shinzo Abe was the answer. Now it has become less obvious that Abe is the answer, and the market has gone down a lot. Then we like selected emerging markets. However, as the credit cycle is extraordinarily extended in places like Brazil, Turkey or China, one wants to be selective about the kinds of stocks you are buying.

Are high quality companies such as Nestlé still attractive after their recent runs?
Montier: As they have become more expensive, we have been exiting them since the end of last year. They are priced to deliver 2.5% real return over the next 7 years. Fundamentally low risk, but investors are paying quite a lot for that area of the market.

Do you see outright bubbles anywhere?
Montier:  From a valuation point of view, there aren’t any hugely obvious bubbles. In some ways, I find the term bubble unhelpful anyway because it’s not obvious that it helps a lot to know something is a bubble. From our perspective, the difference between something that is overvalued and something that is in a bubble is irrelevant. We’re not going to own it anyway. The places where we do see evidence of bubbles though is within the emerging market credit cycles, particularly in China.

What about high yield?
Zulauf: High yield is low yield today. The world is so yield hungry that quality spreads have gone back to the extremes we saw in the previous cycle. You can sit there for a while, but this is certainly not an attractive place.

But is it a bubble?
Zulauf: When you say bubble, it implies that it is going to burst soon. I’m not sure that’s what’s going to happen. We see a lot of bubbles, but they keep inflating. For instance, peripheral European government debt is a bubble. There is no question that they lack the fundamental economic base to finally service those debts. Spanish debt to GDP is at 95%, Italian debt is at 140% and the economy might eventually not service it. You can’t tighten the tax screw further because it means that the economy goes downhill again. Those are bubbles in the making. People keep buying Greek debt despite what happened before. Some of the emerging market currencies that are sought by yield hungry investors such as the Turkish Lira or Turkish bonds are bubble-like investments. They could inflate a bit further, but once they burst, it is going to be very painful.

To finish up, what are your three favourite investment ideas – long or short?

Montier: European value stocks, some parts of the yield curve and cash.

Zulauf: Cash to buy cheaper later, gold to sell later higher and some high-quality long duration bonds as a trade to sell later.

Iben: Long gold, long uranium and short consumer stocks.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
QQQBall's picture

USG Issue bonds, FED buys them after prime dealers skim the vig. Debt service? NO problem.

flacon's picture

That's what BONDS are - BORROWING FROM THE FUTURE. Tell your mother that next time you see her - tell her that she has been cashing-in on the fruits of YOUR labour. Ask her if she thinks that is IMMORAL.  BOND = BONDAGE. 

Kirk2NCC1701's picture

Time for Soylent Green. 

Starting with all the retired fucks who made this possible.  Eg. Soylent Greenspan...

Otrader's picture

Who down voted that comment? lol

IronShield's picture

So instead of looking at the discounted cash flow of gold, people should ask what is cash worth relative to gold.


Ain't that a no-kidder.  ;-)

Moe Hamhead's picture

Finance and Witchcraft!?!

knukles's picture

Dude, they're gonna burn you at the stake for that thought.

CrimsonAvenger's picture

They turned me into a newt! But of course I got better.

dirtyfiles's picture

so it is a iceberg

logicalman's picture

I was going to comment, but then my brain melted.

Moe Hamhead's picture

I'll stay out of Salem

rsnoble's picture

Correction.......everyone already knows all the actions they've taken in recent years hasn't worked.

But they will keep doing in order to maintain the system and try to put the hammer down on us more and more.  Eventually shit is going to start squirting out the seams(which it's already oozing) and fucking explode.

Global Observer's picture

Correction.......everyone already knows all the actions they've taken in recent years hasn't worked.

You must be kidding! They prevented the explosion from happening for 7 years. That is no mean achievement. They know they can't hold it off forever, but simply bought enough time for the smart people to prepare for it. The rest are beyond help anyway.

nmewn's picture

"there is no question that [sovereigns] lack the fundamental economic base to finally service their debts,"

Out of the mouths of babes.

Crawdaddy's picture

Bubbleectomy is coming.

This talk of bubbles is a pain though because we can see cause/effect and outcome. Bubble is super secret code for "we all know this shit ain't gonna work"

Bubbles are simply facts TPTB don't want to admit to until after they bust. Magically they will have a pile of power point decks ready to save us all.

deflator's picture

Bet on Big Brother bitchez....where else to put all eggs in basket?

kaiserhoff's picture

This is obviously the Barron's Round Table in the same format it has followed for 20+ years,

  so why is there no attribution?

buzzsaw99's picture

Zulauf: I doubt that we will see real monetary tightening by central banks...

Montier: There are two possible states of the world: either they keep rates low for a very long period of time or they don’t. Anyone who says they know which one is going to happen is either a liar or a fool...


All Risk No Reward's picture

They will blow the debt bubble and they will loot...  just as they have been...  but only so long as it makes economic sense to the debt money power structure.

Once it makes sense to restrict credit and bust the debtors, that is what they will do.

I'm not a fool or a liar...  this is candy from a baby stuff.

Now, the WHEN is impossible to predict...  a fool or a liar claims to know exactly WHEN...  or a Debt Money Tyrant who is in on "the plan."

Renaissance 2.0 - Financial Empire

Debunking Money - How the World Really Works

GooseShtepping Moron's picture

"The dimension of the Chinese cycle was enormous. In 2011 and 2012 alone, China has consumed as much cement as the US had in all of the 20th century."

That is truly a mind-blowing statistic. I'm not sure I can even fathom that one. In just two years China had an infrastructure build-out equivalent to almost the entirety of industrial-era America. I never would have thought we could use the 'America' as a unit of industrial production, similar to how stars are measured in solar masses, but China has literally built  one 'America' in just the last few years.

Let that sink in.

Now it's true that Chinese and American cement consumption are not precisely equivalent in terms of their application, so that one is only a limited proxy for the other; and at any rate the US still has a more modern, more efficient, and more maure economy. But still, the scale of this thing is staggering. Who knows what the long term effects of such rapid expansion will be? I predict it will one day come flying apart at the seams.

FredFlintstone's picture

I find that very hard, no impossible to believe.

magnetosphere's picture

i think it's in the right ballpark.  keep in mind china's coal consumption is about 4000 megatons/yr, which is nearly an order of magnitude larger than america's total energy consumption during the ww1 and ww2 era.

NidStyles's picture

I don't think it's extreme. China is huge and has a massive population.


As for falling apart, I don't see China faultering before the US.

magnetosphere's picture

i love your unit.  and defining a second unit as a rate of coal/steel/concrete usage, the 'USA', china is going at the rate of 5 'USAs'

cbaba's picture

One important difference is the structure type of building materials in construction.

In US most residential houses are made using wood as main load carrying structure. but in China just opposite, most common material used for housing is concrete.


fattail's picture

Now factor in the fact their cement mixes don't always have as much cement as they say, and all of that cement is spread out over an even larger number of fallen over high rises and empty ghost towns.

lasvegaspersona's picture

I've seen the Chinese build out and I believe the cement quote. I suspect that much of it was mixed too weak (to save a few bucks) and we might soon hear of building failures.

If they used it wisely they might have something. The bullet trains are very impressive.

Otrader's picture

If the mix was too weak, then building failures will require additional cement to make it right.

AdvancingTime's picture

America imports around five hundred billion dollars more from other countries every year than they export. This means we have a giant trade deficit, when we add this to our massive government deficit it is easy to see that we are living far beyond our means. The Fed has been superbly entrepreneurial when it comes to Ponzi schemes or pseudo-economics hocus-pocus that has allowed the current situation to develop.

The Fed  must at some point begin to ponder a real exit strategy and end the massive and corrosive stimulus that the economy has come to expect. To make matters worse little has been done to address our structural problems and make America more competitive, this will thwart growth going forward. More on this subject in the article below.


lasvegaspersona's picture

I honestly do not think that there is a plan to correct things in the future.

It will just fall apart.

If we are lucky some pieces will fit back together.

user2011's picture

We, american and people who hold USD, are so fucked... fucked to the power of nth times.


DOGGONE's picture

There ARE consequences to the citizens practicing citizenshit.
"The Public Be Suckered"

kchrisc's picture

“Printed” money is robbery by the banksters--Robbery of your labor and product and future.


"A guillotine does not so much take a bankster's head, but restore the future."

TheObsoleteMan's picture

It's fine to TRADE mining stocks, but you must own and hold the physical. One day, every precious metal mine on earth WILL BE NATIONALIZED. That is as clear to me as the vodka in my glass.

Debugas's picture

servising debt was not meant to be serviced for a longh long time

people were only asked to pay interest payments and forget about the credit amount itself

what else can you expect now ?

enloe creek's picture

talk to people who might get it and they say just don't dwell on it. are they right. just live for today and assume the world wlll get by and your lifestyle will be perfectly fine. am I brain damaged or are the people too tired of focusing on future issues that never materialized. we have threat weary people who still think anything negative should just be ignored til it goes away because the market always comes back and life goes on. there is no volitility because it never pays to insure against something that doesn't happen. are they seeding clouds with happy powder to lull us to sleep or what. the world needs to adress something sometime we are like children eating candy and i e cream and no one seems to care about the upset stomach til it gets here but when it does who you going to call. that wierd nieghbor with the NRA sticker and big garden

Otrader's picture

How the hell did we get here and why are we so f'n helpless to stop it?

The Blank Stare's picture

Printing a middle class. Interesting idea. Could blow up in their faces though, but maybe that's what they want, thin the heard and change the government. Two birds, one stone.


How many nuke reactors are they building? 26 and counting! That's a lot of concrete. 


"China aims at least to quadruple its nuclear capacity from that operating and under construction by 2020"

Cardinal Fang's picture

Yeah, except Chinese reactors will thin our herd too. I won't use Chinese jack stands on my '58 Apache 4x4, why would I want them building nuclear containment out of that shit concrete? Man, we are fucked. But that is Darwin's fault, not the Federal Reserve's nor the crooked Chinese Nuclear Power contractor's fault. Maybe The Statue of Liberty in Planet of the Apes was a victim of a nuclear accident not nuclear warfare...

By the way, there is a scene in the original Planet of the Apes that shows a map of Ape Land that puts the events of the movie in northern NJ. Think about it. Heston is riding on the Jersey Shore when he finds the statue. I mean, how far could it have been catapaulted?

So, basically, Newark, NJ is Planet of the Apes for realz.

AdvancingTime's picture

Sometimes the old guys who have seen it all have the most perspective and the guts to speak up because they have less to lose. What I like about numbers is that when they are not jockeyed, jerked around, and falsified they tend to tell the truth. Looking down the road the numbers do not work.

Allen H Meltzer is viewed by many economist as America’s foremost expert in monetary policy, Meltzer is the author of the three-volume “A History of the Federal Reserve.” For over 25 years he was the chair of the Shadow Open Market Committee, a group that meets regularly to discuss the policy of the Federal Reserve. “We’re in the biggest mess we’ve been in since the 1930s,” he recently stated. “We’ve never had a more problematic future.” More on his thoughts in the article below.


orangegeek's picture

It's just a write off for them .

How is it a write off ?

They just write it off .

Write it off what ?

Jerry all these big companies they write off everything

You don't even know what a write off is .

Do you ?

No . I don't .

But they do and they are the ones writing it off .

El Hosel's picture

Its only worst for 99% of us.

Jerk_Store's picture

It's just a write off for them .

How is it a write off ?

They just write it off .

Write it off what ?

Jerry all these big companies they write off everything

You don't even know what a write off is .

Do you ?

No . I don't .

But they do and they are the ones writing it off .


Nice one Kramer!

TeethVillage88s's picture

Someday we will be as Strong as the UK.

Household Debt to GDP for United Kingdom©

2011:Q4: 204.34306 Ratio
Updated: 2013-10-01


TeethVillage88s's picture

Obviously the Bankers Screwed the People of the UK

And now they are doing it to the USA for the last 30 Years.

I met a guy from England working in Detroit in 1994. No wonder he was over here trying to get decent wages.

In 2008, median hourly earnings (excluding overtime) for men was £12.50, and £10.91 for women. In 2010, the median wage in the UK for all jobs was £20,801.[11] A year later, a Department for Work and Pensions spokeswoman defined £15,000 as “quite a good wage.”[12]

TeethVillage88s's picture

Same in US as Eurozone.

Comment for Zulauf. I agree the problem is politics and we are waiting for political solutions since they have the power and responsibility. Of course we also believe the politicians have been bribed by Wealthy Interests. Meanwhile most of us appreciate analysis on how to preserve capital.

Zulauf: "...The changes to the European situation will not come from financial markets. It must come from politics."

Changes can come from

1) Voting
2) Mass Movements & Activism
3) Rise of other ideologies like Nationalism, Protectionism, Anti-Immigration, Neofascism, Neonaziism, Syndicated Anarchy, or some kind of fatalism perhaps
4) Some kind of Collapse or End of Faith in Wealthy Elites
5) Inability to Fund resource development, energy, agriculture, water, food
6) Coup
7) Hyperinflation
8) Citizens Feeling they have been Stabbed in the Back

But we are a long way from 1919-1924.

Check page 35 of both TICData reports (2002 & 2013) for Belgium, Cayman Islands, and Luxemburg. LT US Treasuries go from $10 Billion to $366 Billion. (partly due to safe haven effect, but also due to Financial System on Steroids) Or just take a look below to refresh your memory.

Interesting of the $26 Trillion in Foreign Owned US Assets put out by BEA.GOV on IIP Data, looks like about half is accounted for in the 2013 Data Report as Equities, LT Corporate Debt, LT Agency Debt, LT Treasuries. Which leaves me to conclude foreign owned US Real Estate must be about $12-14 Trillion (page 30). But I am not an Economist or Financial guy. Maybe Europeans are also buying US Real Estate.


Last Data is from April 2014.

Belgium 2002 = $10.8 B, then 2013 = $163 B, Today $366 B
Cayman Islands 2002 = $10.7 B, then 2013 = $66 B, Today ??
Canada 2002 = $8.4 B, then 2013 = $46.6 B, Today $60.5 B
China 2002 = $95 B, then 2013 = $1,272 B, Today $1263 B
Hong Kong 2002 = $37 B, then 2013 = $89 B, Today $155 B
Ireland 2002 = $6 B, then 2013 = $91 B, Today $112 B
Japan 2002 = $260 B, then 2013 = $1,023 B, Today $1210 B
Luxemburg 2002 = $20.2 B, then 2013 = $107 B, Today $141 B
Philippines 2002 = $3 B, then 2013 = $36 B, Today $34 B
Poland 2002 = $7 B, then 2013 = $31 B, Today $30 B
Russia 2002 = $3 B, then 2013 = $138 B, Today $116 B
Switzerland 2002 = $28 B, then 2013 = $157 B, Today $178 B
Taiwan 2002 = $0 B, then 2013 = $183 B, Today $175 B
United Kingdom = $45.7 B, then 2013 = $130.6 B, Today $186 B