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JEleazarian
Trad climber
Fresno CA
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Nov 20, 2009 - 03:39pm PT
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Interesting, indeed. I have just one word to say, and it's not "plastics." [sorry for those of you too young to remember The Graduate. It came out as I started college and part of it was filmed at Berkeley, where I did my undergrad work, so it left a big impression on me] It's inflation.
John
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Dave
Mountain climber
the ANTI-fresno
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Nov 20, 2009 - 08:18pm PT
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This was the most bearish of three cases, says the article. What were the other two????
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jstan
climber
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Nov 20, 2009 - 08:29pm PT
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In 1968 when The Graduate was released "plastics" was actually good investment advice. I, too, am preparing myself for inflation. The dollar is devaluing at 20% per year and the ability of the government to tax is very limited, in practical terms. John, you are the first person I have heard saying they expect inflation. The parallels between 1967 and 2003 are staggering.
The main gotcha floating out there is, will the US government honor its agreement to pay interest on US debt held internally in the US???
An external default may not be in the cards but an internal default, I am not so sure.
Oh, and you started college the year I started working.
You're just a youngster!
Edit:
Karl, the tricky ways work up to a point. Then the demand for wheelbarrows to carry our money for a big Mac cuts through the smoke.
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Karl Baba
Trad climber
Yosemite, Ca
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Nov 20, 2009 - 10:05pm PT
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"
The main gotcha floating out there is, will the US government honor its agreement to pay interest on US debt held internally in the US???
An external default may not be in the cards but an internal default, I am not so sure. "
They make up the money out of thin air, why not pay the interest the same way?
They have way tricker ways of being insolvent than defaulting
Peace
Karl
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Jingy
Social climber
Flatland, Ca
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Nov 20, 2009 - 10:42pm PT
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A friend of mine sent me this a couple days ago....
I'm thinking most of us are pretty safe in that we don't really have enough money to be hit by the kind of issues being discussed in the article.
Also, this
"As yet, nobody can say with any certainty whether we have in fact escaped the prospect of a global economic collapse," said the 68-page report, headed by asset chief Daniel Fermon. It is an exploration of the dangers, not a forecast.
Personal Note:
I thought this would be a good sign.. My impression is that homes should not cost any more than the land it's on, and the cost of building the home...
When the article mentions:
Under the French bank's "Bear Case" scenario (the gloomiest of three possible outcomes), the dollar would slide further and global equities would retest the March lows. Property prices would tumble again. Oil would fall back to $50 in 2010.
I tend to be a bit happy... Things are getting back to reality based economics.. none of the unregulated speculation we've had for so long.
Many of the comments are pretty clear as well.. lots of good advise.., but I'm not convinced this would impact the have's more than the have-nots. Have-nots have nothing to loose..
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jstan
climber
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Nov 20, 2009 - 10:46pm PT
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Have nots have nothing to lose. Only their supply of food.
Chaz:
Chaz, are you a fan of the movie "Trainspotting?" Sounds like it.
Oh and on movies, we just watched "Death At a Funeral." As usual it is a very proper British production. But it has its moments. Take my advice. Rent it.
On a more serious note, there was no rim to which anyone could cling during the defense of Stalingrad. That there will be safety anywhere during a collapse is a construct.
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Chaz
Trad climber
greater Boss Angeles area
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Nov 20, 2009 - 10:47pm PT
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When it all goes down the toilet, I'll be the one clinging to the rim.
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Mighty Hiker
climber
Vancouver, B.C. Small wall climber.
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Nov 20, 2009 - 11:00pm PT
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The sad thing is that the US government may not have provided enough economic stimulus a year ago, in the right places. And that it gave the banking and financial industries hundreds of billions of dollars without their agreement to significant reform in return.
The quiet steady depreciation of the US dollar was predictable, but at some point fairly soon they'll have to start raising interest rates.
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stevep
Boulder climber
Salt Lake, UT
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Nov 20, 2009 - 11:50pm PT
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Yeah, I have to say, despite being a pretty big Obama fan, I'm fairly disappointed in how the stimulus has been executed. Seems to have been largely a welfare check to the Wall Streeters, and so far no reform to stop them from once again assuming too much risk. Something is definitely wrong when the market is going up at the same time as unemployment.
While we should probably give the current stuff some time, the New Deal seems to have done better for the average guy.
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Ray Olson
Trad climber
Imperial Beach, California
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Nov 20, 2009 - 11:56pm PT
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the market is going up
because new technologies
are getting financed.
unemployment is going up
because the old business model
is going out of business.
nothing is wrong.
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Robb
Social climber
The Greeley Triangle
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Nov 20, 2009 - 11:56pm PT
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Doc F
Thanks for enlightening those of us educated in math & economics. To return the favor, have you thought of trying one of the tricyclics, perhaps Elavil?
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rockermike
Trad climber
Berkeley
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Nov 21, 2009 - 12:37am PT
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I'm currently taking a graduate level portfolio management class. In the class we've had guest speakers each week; some of the most successful and powerful people in the money management industry on the west coast. Hedgefunds, private equity, mutual funds, REITs, quant managers, Venture Capitalists, pension fund managers et al. The whole lot. These people run literally Billions or even hundreds of billions of dollars. In their formal presentations they each tell us about there particular sectors and industries and the investment policies and philosophy for their firms. But at the end of class we get to ask questions. So we've asked each one the same question, "personally, what's your outlook for the next few years?". None have offered optimistic news. (edit out the retail stuff on fatrad's advice - the danger of inferring - ha; here's one look at the topic (ie. who is moving the markets), I don't know anything about the blogger
http://www.tradersnarrative.com/what-if-retail-investors-are-smart-to-ignore-this-rally-3219.html )
Its quite possibly just another bubble. But if you look at the economic fundamentals things are no better than a year ago. National, corporate and household debt, default rates on various sectors of bank lending, unemployment, household spending, housing prices. Nothing's going up. Corp profits are up a bit, but based only on cost cutting, not new ideas or growing markets. Personally I've learned the hard way, I can't read the future, but if the consensus of this crowd is given any weight things don't look good.
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Dave
Mountain climber
the ANTI-fresno
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Nov 21, 2009 - 12:43am PT
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They seriously say its being driven by the retail investor? The retail investor is still scared shitless around here.
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Captain...or Skully
Social climber
Mare Infinitum
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Nov 21, 2009 - 12:45am PT
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Anarchy, Baby. I'm poised. Cheers.
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jstan
climber
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Nov 21, 2009 - 12:47am PT
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When we were selling more oil, timber, steel, electronic goods, chemicals, manufactured goods, pharmaceuticals etc. abroad and we had a positive current accounts balance I could see the fundamentals. The current accounts deficit just surged up again last month even though unemployment is at 10% and rising. How can that be true?
It can be true if people are convinced government creation of money and debt has pulled us out of it.
When money is involved and everyone thinks the same thing...........................................
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Mighty Hiker
climber
Vancouver, B.C.
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Nov 21, 2009 - 01:33am PT
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No need for another thread, but November 21st will be the centenary of the court decision breaking up the Standard Oil Trust, under the Sherman Anti-Trust Act. A great achievement by a progressive Republican, Theodore Roosevelt, and a rebalancing of the scales, which had for decades been tilted toward corporations. Maybe Obama will get some inspiration from it, screw his courage up to the sticking point, and provide somewhat more assertive leadership?
http://timestraveler.blogs.nytimes.com/2009/11/21/court-orders-dissolution-of-standard-oil-co/
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Mason
Trad climber
Yay Area
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Nov 21, 2009 - 02:22am PT
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Rockermike,
That's partly true. They failed to mention the $1.25 trillion the Fed agreed to use to purchase Treasuries and Mortgage backed securities back in March or April of this year. That money is being pumped into the system to stave off deflation.
Anyone playing in the market for the last 7 months knows that this market is wacky and that there are dark forces manipulating it behind the scenes.
Here's an article in the NY Times about high frequency trading and how Quants (super smart mathematicians with PhDs from MIT) use algorithms to trade and manipulate prices and markets faster than the blink of an eye.
http://www.nytimes.com/2009/07/24/business/24trading.html
And another article about how one trader stole codes from Goldman Sachs to use for his own benefit. Goldman Sachs has the largest bank balance sheet and was a DIRECT counterparty to AIG bailout money.
http://www.brightsideofnews.com/news/2009/7/7/goldman-sachs-code-stolen-e28093-a-key-to-manipulating-stocks.aspx
AIG "insured" Goldman Sachs' mortgage backed securities with their Credit Default Swaps (CDSs) products and when AIG almost went belly up, the Fed had to bail them out because those CDSs nearly bankrupted the company. Goldman would have lost billions had AIG defaulted on its obligations. But thanks to the Fed, they were able to launder our tax payer money into Goldman's coffers.
Goldman Sachs, people say, is basically an extension of the Federal Reserve. They run the world, next to the Fed, IMF and World Bank.
The largest banks of the world, the Monopolies of Banking are the beneficiaries of the money that the Fed is supplying in terms of Treasury purchases and Mortgage purchases. And they are the beneficiaries of our tax payer money.
And don't forget the interest on that money the Fed loans out. We, and generations to come get to pay it back through income tax. Carbon credits. Our Medicare and Social Security funds are being used to currently pay that interest off. Those will be gone soon and how will the Fed get paid back then? By people having to work longer, retire later and basically be a slave to the Fed for the rest of their lives.
Born into slavery, basically.
1913, the country went bankrupt. The Fed bailed out the government. The Fed then said, you can't afford to pay this money back, so how are you going to pay us back? So, the government mortgaged our lives at that point. That is the point the federal income tax was created as well as the Federal Reserve Bank.
1836, Andrew Jackson vetoed the rechartering of the Bank of the United States for 1840, I believe. Anyway, it's all there in economics books for you to read. People just don't understand it and don't want to care.
Basically, this scenario is going to unfold: The dollar is eventually going to collapse due to the $9 trillion dollars in US debt. It's going to come into parity with the Mexican Peso and the Canadian dollar. The country is most likely going to go bankrupt but won't be able to pay the money back. There will be a call for a new currency to peg things to. There are already calls from China and other countries for another currency to use to peg oil and gold to. ( http://www.huffingtonpost.com/2009/03/23/china-calls-for-creation-_n_178271.html ) So the dollar will be eliminated as the reserve currency pegged to oil and other commodities. Geitner and Bernanke keep paying lip service to keeping a 'strong dollar' but what you keep seeing is a slow bleed of the value of the dollar. This happened during Bretton Woods. The president at the time kept talking about keeping the value of the dollar near $35 in relation to gold to maintain the gold standard but eventually the gold standard failed and the dollar began to float. It's all there in the history books as if it happened yesterday and it's happening now.
The world will be one step closer to globalization envisioned by these people who control the money supply.
Sorry for the long winded post but I'm studying this stuff and I'm pretty passionate about it if you can't tell.
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Mighty Hiker
climber
Vancouver, B.C.
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Nov 21, 2009 - 02:33am PT
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The Canadian and US dollars are already almost at par, about 95:100. Back to where they were about a year ago, and in the late 1970s. Stronger economy = stonger currency, although it may not last.
Comparing either the US or the Canadian dollar, or those countries economies, to the Mexican peso or economy, is apples v oranges.
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