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Mason
Trad climber
Yay Area
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Nov 21, 2009 - 03:58am PT
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But we have NAFTA. How can we create a global economy where free trade reigns if we can't have the countries' currencies which are involved at par?
Most crises, economic, biological and other have been the springboards which helped usher in new eras and new innovations which shaped the world we know today.
So, the Peso may not be at par now, but what if one day it's much closer?
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AP
Trad climber
Calgary
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Nov 21, 2009 - 10:46am PT
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Read Dmitri Orlov. I think his blog is cluborlov.com
He is from Russia and moved to Boston while a teenager. He saw the USSR implode and thinks the US will do the same. He is talking about major societal collapse and has a lot of interesting ideas. In 2006 we would have said "No Way" In 2009 we would saw "Holy Sh#t, even if unlikely this is definitely possible"
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ionlyski
Trad climber
Kalispell, Montana
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Nov 21, 2009 - 11:34am PT
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The trillions Bush just flushed down the toilet in Iraq, and tax breaks for the rich
Surely you don't think the spending is any less under the Osama administration, I hope?
Arne
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WBraun
climber
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Nov 21, 2009 - 11:43am PT
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When you build a world foundation based on MONEY it's bound to collapse.
A foundation can not be built on MONEY.
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mazamarick
Trad climber
WA
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Nov 21, 2009 - 12:28pm PT
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What if we were to pull all the troops out of Iraq, how many are reserves that would then be plugged back into the domestic workforce? Not sure how the numbers would work, but my guess is we could see unemployment bump another 1% or 2 upon their arrival home.
The stimulus program only gave us nudge just like cash for clunkers, temporary at best. Feel-good programs that have no staying power. Politicians love em. Inflation is going to clobber us in the next few years, but it may be the only way our national debt gets whittled down.
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blahblah
Gym climber
Boulder
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Nov 23, 2009 - 12:53am 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.
Hmmm, looking at the recent track record of these "successful and powerful people in the money management industry," the above is about the only reason I've heard to be bullish.
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Captain...or Skully
Social climber
Mare Infinitum
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Nov 23, 2009 - 12:59am PT
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Metallica~And Justice For All
Whoops, Wrong thread....or is it?
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Lynne Leichtfuss
Sport climber
Will know soon
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Nov 23, 2009 - 01:08am PT
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Klimmer's post link says Big Bankers say they are doing God's Work ..... that is the biggest oxymoron I have ever heard in my lifetime.
WBraun, " you can't build a foundation on money." Yo......only on a rock. Something solid and unmoveable. I know who and what my Rock is. :D and I'm glad. Peace, lynnie
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Mason
Trad climber
Yay Area
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Nov 23, 2009 - 01:22am PT
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John D. Rockefeller, when attacked for his greed and destructive ways, was completely oblivious to why people would hate him so much.
He said that he was making money because God told him to make money. He was doing God's work.
That seems to be a recurring delusion in bankers and the elite.
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paul roehl
Boulder climber
california
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Nov 23, 2009 - 02:17am PT
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The end is near! Don't you believe it. Predictions of apocalypse are just plain common. The chiliastic effect... collapse, the inevitable Armageddon is upon us... nonsense!
I don't see the end or the onset of some economic disaster, I have too much confidence in the resilience of humanity to believe it. Those abandoning the market in the early part of this year, the fearful and cowardly, are now poor; I am rich.
Believe what you must, but remember: the world, the market, might just leave you behind.
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Mason
Trad climber
Yay Area
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Nov 23, 2009 - 12:00pm PT
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If one doesn't read the financial news and study and dabble in markets it's hard to have a gauge on the direction of your investments. So, a lot of people were blind-sided by the housing collapse.
But people that are dipping back in and buying up properties and bidding on stuff they think is cheap are going to get a lesson in falling knives.
Jeff - why aren't more asset managers active traders? I would think that with the volatility in the market that management companies would want to employ a more active trading strategy to capitalize on the mini peaks and troughs of the day-to-day, week-to-week and month-to-month cycles of the market. Because in the past six weeks the market's gone up a bit more. It has pulled back a couple times but the trend is still up. I do see a correction coming on the horizon, though.
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Eric Beck
Sport climber
Bishop, California
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Nov 23, 2009 - 12:13pm PT
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My perspective on our economy goes a bit beyond a purely financial analysis. Two summers ago, we got our first real taste of peak oil with oil touching $147. Growth in the economy stopped in it's tracks and the most overleveraged sector, housing, began to implode.
Since then, almost all analysis has focused on the credit implosion. Here, I believe we have an instance of fighting the last war, although this time it is economists, not generals doing the fighting. The stimulus is a pure Keynesian response, attempting to fight deflation as we did in the 1930s. There are two important differences from the 1930s, however. Then the dollar was strong and backed by gold. Also, debt loads were much lower. In 1929 the ratio of total debt (government, corporate, mortgage and misc consumer debt) to gdp was 1.6. Today this ratio is 3.6 putting severe limits on our ability to borrow.
Our financial system of fractional reserve banking requires constant expansion to survive. Yet we note that the volume of bank loans has fallen for the first time in a post WWII recession. This is the mechanism by which we increase the money supply. So, I view it as a tossup whether we head into serious inflation or deflation. Both would be very bad.
I am a big Obama supporter and support a stimulus, but not for Keynesian reasons. I would put the stimulus entirely into energy. The twin spectres of peak oil and global warming are not addressed by a Keyesian stimulus and if the economy recovers some, it will run right back into an energy wall.
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Dave
Mountain climber
the ANTI-fresno
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Nov 23, 2009 - 12:25pm PT
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I work in one of the few commodities that has no influence from investment funds, ETFs, or hedge fund buying. Only true producer / buyer demand with the odd trader buying trucks here and there.
We saw price and sales bottom in Feb-April, hit a mini-peak in July, and find a new floor here in late September-October. Sales have picked up, price is inching back up, and the outlook for next year is improving.
This gist is, I think that those who think the world is still ending and the stock market rally is way overblown don't really have their fingerss on the pulse of the real economy. Industrial production is picking up, home sales are slowing wobbling their way up, and productivity gains have done all they can for companies. Temp hiring is picking up (44,000 in the last 3 months, 30,000+ of that in October). It won't be too long before all this translates into job growth.
Yeah, the market is probably due for a correction ... a world-ending bear markey down-leg? Nah. Buying opportunity.
So, Jeff... how much money have you lost your clients in the last 6 weeks shorting this market? LOL.
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Mason
Trad climber
Yay Area
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Nov 23, 2009 - 01:00pm PT
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I see. So that must be why hedge funds trade so much more actively to offset capital gains. It makes sense because trading fees and taxes are so high.
But it must be hard to survive as a hedge fund since there are so many out there and the risks are much higher, no?
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Mason
Trad climber
Yay Area
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Nov 23, 2009 - 03:43pm PT
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Rj - have you tried the "show me the note" trick, yet?
There is a lot of legislation out right now to help protect people from foreclosure and other stuff.
But it sounds like you're more at the first stages of trying to get your mortgage refi'd so you can lower your payment so I might be off topic.
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Ray Olson
Trad climber
Imperial Beach, California
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Nov 23, 2009 - 03:57pm PT
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Eric Beck's post makes a lot of sense to me,
and although this question may be off-topic -
I'd still like to ask;
How can we strengthen the GPD?
(gross domestic product)
is this unrealistic?
just curious...
thanks
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jstan
climber
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Nov 23, 2009 - 10:05pm PT
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Pimco’s Gross Increases Government Debt to Most in Five Years
By Daniel Kruger
Nov. 24 (Bloomberg) -- Bill Gross, who runs the world’s biggest bond fund at Pacific Investment Management Co., increased his holdings of government-related debt to 63 percent, the highest proportion since July 2004.
Gross boosted his $192.6 billion Total Return Fund’s investment in Treasuries, so-called agency debt and other U.S. government-linked bonds from 48 percent of assets in September while reducing his position in mortgages to the smallest since May 2004, according to data on Pimco’s Web site yesterday.
Gross said in his December investment outlook last week that the “systemic risk” of new asset bubbles is rising with the Federal Reserve keeping interest rates at record lows. Under what Pimco has termed the “new normal,” investors should be prepared for lower-than-average historical returns with heightened government regulation, lower consumption, slower growth and a shrinking global role for the U.S. economy.
With unemployment at a 26-year high of 10.2 percent, Gross said the central bank is unlikely to raise interest rates until nominal gross domestic product increases 4 percent to 5 percent for another 12 months.
“With unemployment in the double digits and likely to stay close to that for the next six months despite job creation ahead, the Fed has no where to go,” Gross, co-founder and co- chief investment officer of Pimco, said in a Bloomberg Television interview on Nov. 19 from Newport Beach, California.
Fed Chairman Ben S. Bernanke said after a Nov. 16 speech in New York that it’s “not obvious” that asset prices in the U.S. are out of line with underlying values after a 64 percent jump in the Standard & Poor’s 500 Index from its March low.
Government Debt
Treasury three-month bill rates turned negative on Nov. 19 for the first time since financial markets froze last year on concern that the rally in higher-yielding assets has outpaced the prospects for economic growth.
Mark Porterfield, a Pimco spokesman, said in an e-mail that the company doesn’t comment on fund holdings.
Pimco’s government-related debt category can include conventional and inflation-linked Treasuries, agency debt, interest-rate derivatives and bank debt backed by the Federal Deposit Insurance Corp., according to the Web site.
The fund’s holdings of mortgage debt fell to 16 percent of the portfolio by market weight from 22 percent the month before, matching their smallest percentage of the assets since May 2004. Investment-grade corporate securities rose to 18 percent of the fund from 17 percent in September, while high-yield bonds fell to 1 percent from 2 percent, according to the Web site.
Cash Equivalents
The Total Return Fund returned 19.7 percent in the past year, beating 54 percent of its peers, according to data compiled by Bloomberg. The one-month return is 1.04 percent, outpacing 85 percent of its competitors. Pimco is a unit of Munich-based insurer Allianz SE.
Cash and equivalent securities comprised negative 7 percent of holdings in October. These assets can include commercial paper, short-term government and mortgage-backed securities, short-term company bonds and money market derivatives.
The fund can have a so-called negative position by using derivatives, futures or by shorting.
Derivatives are financial obligations whose value is derived from an underlying asset such as debt, stocks or commodities. Futures are agreements to buy or sell assets at a later specific price and date.
Shorting is borrowing and selling an asset in anticipation of making a profit by buying it back after its price has fallen.
To contact the reporter on this story: Daniel Kruger in New York at dkruger1@bloomberg.net.
Last Updated: November 23, 2009 17:27 EST
http://www.bloomberg.com/apps/news?pid=20601087&sid=aN78quNzqd5Y&pos=1#
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