24 replies to this topic

[stocks]

How the financial media operates:

•First, they believe people read financial news to get good news on their investments, so they spin every piece of information in a positive light, and they quote every economist willing to tell people what they want to hear.

•Second, they will repeat their spin in groupthink fashion until it becomes conventional wisdom

•Third, they squelch any dissent from their groupthink wisdom with dismissive articles ridiculing contrary ideas or attacking the credibility of contrary messengers

•Fourth, when reality proves them wrong — which happens quite often — they disremember the bad information they disseminated and respond incredulously to reality.



http://ochousingnews...s-2014-dog-ate/

[stocks]

The so-called housing recovery is really the reflation of the housing bubble built on an unstable foundation lacking fundamental support.


A stable housing market requires strong job and wage growth that stimulates household formation among potential homebuyers. These first-time homebuyers drive up prices and creating equity for move-up buyers, stimulating a chain of move-up
sales. At least that’s how it’s supposed to work. Unfortunately, job and wage growth stagnates, first-time homebuyer participation languishes, and although prices are rising, much of what would be move-up equity is instead restoring collateral value
to underwater mortgage loans or accruing to investors who crowded out first-time homebuyers when prices were lower. In short, the foundation of the housing market as well as its upper floors are completely unstable.



http://ochousingnews...ble-foundation/

[stocks]

Getting a grip on the realities of the federal budget

Two-thirds of all federal spending comes from just three programs -- Social Security, Medicare/Medicaid and national defense. Add interest on the federal debt, and you've accounted for 71 percent of the federal budget.

What this means in simple terms is that anyone wishing to cut government spending must address the issues of Social Security, Medicare/Medicaid and national defense. This problem is magnified by the fact that these areas account for about 85 percent of the spending growth anticipated in coming years. That number would be even higher if it weren't for the recent winding down of foreign wars.

On Social Security, politicians should get out of the middle and let workers select their own retirement ages. Those who want to retire earlier could pay more in Social Security taxes. Those who want to retire later could pay less. This can easily be structured to make the system financially solvent for future generations of retirees.

On Medicare/Medicaid, the answer cannot be found in some budget gimmick. The only solution is to lower the cost of medical care. This will require a fundamental change in health care policy so that individuals can make the decisions about their own medical care. The current approach of letting the government and insurance companies decide will never reduce costs.

When it comes to national security, the key question is to define our military mission. The current strategy is for the U.S. to play the world's policeman. A less expensive approach would be to focus our military efforts on defending the vital interests of the United States.



http://washingtonexa...article/2544040

85% of Pension Funds to Fail in Three Decades

Bridgewater Associates did an analysis of pension funds recently and concluded 85% of them will fail if returns average 4%.

Bridgewater notes that public pensions have just $3 trillion in assets to invest to cover future retirement payments of $10 trillion over the next many decades. It would take an investment return of roughly 9% a year to meet those obligations.



Read more at http://globaleconomi...DPptHIHT5W60.99

[stocks]

Paul Krugman, Vanquished - Krugman Completely Missed the Financial Crisis (as did Greenspan & Bernanke) & Has Been Consistently Wrong About the Euro

Compare Michael Burry with Krugman; one predicted the crisis in detail and made a fortune, the other completely missed it (and won a Nobel Prize )

UCLA Commencement 2012-- youtube

The great financial crisis is far from settled. You'll face a recession when in your 20's and a debt/gdp ratio of 200% when you are 40. Greece was at 160%.

All this was not a black swan, it was predictable. When the 'entitled' elect themselves, the hangover will be brutal. I profitted from the financial meltdown because I predicted it.

Life is not fair. It is not fair the hand you are being dealt. But accept the world as it is, exploit the opportunites as they arise, and be as just as you can. Work hard, but work smart. Doubt traditional education and teach yourself.

I wrote an op-ed in the NY Times questioning the government explanation of the crisis. Within 2 months, my 6 defunct funds were audited. History is being written wrong and ignorance is willful. In government, questions are not tolerated. Markets are not efficient but the individual is adaptable.

History shows that nations can postpone the moment of crisis. This will even more true of the US with the strongest economy and central bank. Thus your quality of life will decline as government attempts to manage it's faltering finances. You will see declines in the quality of our currency.

If you work in Washington or Wall Street, be aware that you will see many doing questionable things which obviously make money & earn the respect of your peers. Consider that life is not that short; life is long enough to regret loss of long term risk for short term benefit. This is what many did during the boom of the last decade, and what our government did in egging on the boom. The individual can think and act differently than those that got us into this mess.

[stocks]

The so-called housing recovery is really the reflation of the housing bubble built on an unstable foundation lacking fundamental support.

A stable housing market requires strong job and wage growth that stimulates household formation among potential homebuyers. These first-time homebuyers drive up prices and creating equity for move-up buyers, stimulating a chain of move-up
sales. At least that’s how it’s supposed to work. Unfortunately, job and wage growth stagnates, first-time homebuyer participation languishes, and although prices are rising, much of what would be move-up equity is instead restoring collateral value
to underwater mortgage loans or accruing to investors who crowded out first-time homebuyers when prices were lower. In short, the foundation of the housing market as well as its upper floors are completely unstable.

http://ochousingnews...ble-foundation/

Banksters war against the young

For most of postwar history, a house cost about 1.5 to 2.5 times more than a person earned in a year. Today, even after the much-whined-about correction, it is more than four times as much.

In 1940 the median U.S. income was $1,368; and the median house price was $2,938, a little more than double the income figure.

In 1960 the income figure was $6,200, while the house price was $17,200, 2.77 times as much.

In 1980 the ratio was 1/2.62, with income at $18,000 and house price at $47,200.

But by 2011, supposedly the bottom of the correction, a house cost more than four times what an American earned in a year: income $50,054; house price $212,300.

It is a massively unfair situation, and like most contemporary unfairness, it is directed against the young, who are looking at an ever-growing chasm between what they earn and what it takes to buy a house.


http://www.nationalr...t-tim-cavanaugh

[stocks]

Deflation Will Return: Europe First, Then the US

Spain is still in the state of economic depression, but the worst is arguably behind. For France and Italy, the worst suffering is clearly ahead. Both countries are in huge need of work rule reforms and pension reforms. Public sector spending must decline. Wages and prices are going to have to decline for France to be competitive.

I have little doubt the Fed (central bankers in general) will step on the money supply spigot in response to another slowdown. But credit dwarfs money supply.

Once again, those who view inflation and deflation in the myopic eyes of money supply alone will come to the wrong conclusions about prices of goods, services and assets, just as they did in 2008 when they thought hyperinflation was just around the corner.

Those who understand credit and credit market to market will get the picture right. I repeat my claim that I made in 2007. The US will go in and out of deflation over the course of a number of years.

Deflation is once again nearly at hand, but Europe will be first.



Read more at http://globaleconomi...FQFEWdGrJm7Q.99

[stocks]

Paul Krugman, Vanquished - Krugman Completely Missed the Financial Crisis (as did Greenspan & Bernanke) & Has Been Consistently Wrong About the Euro

Compare Michael Burry with Krugman; one predicted the crisis in detail and made a fortune, the other completely missed it (and won a Nobel Prize )

Paul Krugman on the minimum/living wage: 1998

"Any Econ 101 student can tell you the answer: The higher wage reduces the quantity of labor demanded, and hence leads to unemployment.

Clearly these advocates very much want to believe that the price of labor–unlike that of gasoline, or Manhattan apartments–can be set based on considerations of justice, not supply and demand, without unpleasant side effects.

the demand for a living wage is ultimately doomed to failure: For the amorality of the market economy is part of its essence, and cannot be legislated away."

http://www.aei-ideas...-2014/#comments


Reminder: 1.1 Percent of U.S. Workforce Makes Minimum Wage

http://www.nationalr...ge-jim-geraghty

[stocks]

Global Banking Crisis is Certain

53% of Chinese Expect War With Japan

The global economy is a tinderbox, waiting for a catalyst to explode.

If China attempts to maintain 7% growth for another decade, where will the energy resources come from?
If China doesn't maintain high growth, what about mounting Chinese unrest due to lack of jobs?
What happens when Abenomics fails?
What about US, EU, and Japanese pushes for higher inflation even though wages don't keep up?
What about Ukraine and the US-EU feud with Russia?
What about ISIS?
What abut Syria?

"The global financial system is certain to face a full blown banking crisis. We don't know when there will be a global banking crisis and how it will play out, but it is certain there will be one."

With the Fed, ECB, Bank of Japan, Bank of China, Bank of England, and virtually every central bank on the planet all engaged in emergency tactics of some sort, with loans made that cannot possibly be paid back, with Japan off the deep-end in Abenomics, with covenant-lite junk bonds again on the rampage in the US and starting to gear up in Europe, with derivatives and unfunded liabilities in the trillions of dollars, and with the ECB recklessly pursuing ways to stimulate lending amidst major structural flaws with the euro, how the hell can there not be a global financial crisis of some sort?



Read more at http://globaleconomi...ucBYpGTS83g5.99

[stocks]

Deflation Will Return: Europe First, Then the US

Spain is still in the state of economic depression, but the worst is arguably behind. For France and Italy, the worst suffering is clearly ahead. Both countries are in huge need of work rule reforms and pension reforms. Public sector spending must decline. Wages and prices are going to have to decline for France to be competitive.

I have little doubt the Fed (central bankers in general) will step on the money supply spigot in response to another slowdown. But credit dwarfs money supply.

Once again, those who view inflation and deflation in the myopic eyes of money supply alone will come to the wrong conclusions about prices of goods, services and assets, just as they did in 2008 when they thought hyperinflation was just around the corner.

Those who understand credit and credit market to market will get the picture right. I repeat my claim that I made in 2007. The US will go in and out of deflation over the course of a number of years.

Deflation is once again nearly at hand, but Europe will be first.



Read more at http://globaleconomi...FQFEWdGrJm7Q.99

Marine Le Pen Soars Into Lead in French Presidential Polls for 2017; Don't Worry, Nothing Can Possibly Go Wrong

Sit back and relax. Repeat after me ... Nothing can possibly go wrong because central bankers are in complete control.


http://globaleconomi...-in-french.html

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David Stockman: The Global Economy Has Entered The Crack-Up Phase

And will be characterized by these 4 developments:

Increasingly desperate moves by the world's central banks
Increased market volatility and losses
Deflation in industrial and commodity prices
Decreasing demand due to Peak Debt


http://www.peakprosp...red-crack-phase