20 replies to this topic

[A-ha]

i hear that expansion of credit derivatives has essentially put credit into the hands of cons.....some are over-paying for assets and others are using that debt to buy-back shares. if it is the case, then the end could be so dramatic that 29 looks like a fly on elephants back

[arbman]

USD appears to be breaking down... If so, hang on to your hats... Serious decline might follow in its similarity to the 1991 pattern... ... while the party is still hot about the excess liquidity! Certainly this market has given everyone everything that we hoped for... - kisa

[dasein]

I don't know who is fueling the market right now and I think it is an important question.
James

I know it sounds a simplistic old saw, but a big part is derivatives. the leverage is huge, forget listed options. Much is off balance sheet, some have one side in unsupervised jurisdictions, and the ramifications just disappear. Nobody has a handle on the real exposures, and counterparty risk is thus daisychained, everyone knows that we wont know precisely haw good/bad it is til the next blowup - but again, it will be the govt that will have to come in if its a bust. the S&L nominals were nothing compared to even the nominals involved.

So I see the IMF is talking about selling gold, some "more appropriate alignment" etc... I also see European pension funds are planning to allocate more money to the US markets.

In my not sole opinion, privatizations in the 80s were made to goose the growth rate of corporations, they could not make adequate ROI as they were, then corporations were handed the big boost of privatizing everything in the ex east for pennies, now 401Ks have helped funnel all american taxpayers retirement funds to listed corporations. This can keep going until there is no more free liquidity pots to raid and to leverage. Insiders give themselves unlimited stock options, then take on debt in their companies to pull even more money for themselves, with buybacks or whatever, this is a message, and it is not about shareholder values or building a lean company with a future, it is about getting as much out before there is nothing left. I guess its just creative destuction.

klh

[maineman]

Best of luck! May you have contentment and inner peace. Once a market maven, always a market maven, so I suspect you won't be too, too far away.... I am no economist... that's why I mostly scalp trade. But my Investments, my long term holdings, are in stocks, because I believe in growth, prosperity, progress, globalization, technological advances, and world peace. Some of what we are seeing is probably part of the natural ebb and flow of "life", but I can't help thinking that much of what we have been experiening since the early 1980s was set in motion by a group of really smart, determined men brought togehter by none other than Ronald Reagan. His monetary vision along with his vision/luck in nudging the collapse of the Soviet Union and the fall of the wall, with the simultaneous zoom in the rising prosperity in the Far East, have all combined to give many of us throughout the world a better quality of life which should continue... The wild cards, of course, are "terrorism", greed and the EVENTUAL return of the old business cycles... But hey, dammit Jim, I'm a doctor, not an economist.... Best of Luck out there. Don't stay away too long... mm

[da_cheif]

James, good luck in your new job. Even though we were on opposite ends of the spectrum when it came to trading philosophy, I was always impressed with the class you demonstrated in dealing with your critics. Sounds like you are describing the massive worldwide glut of cash (liquidity) that has been driving this market since at least mid 2005.

"I was always impressed with the class you demonstrated"

Gary,
I hope you will change that to present tense. I will still be around. What I am describing may be the massive worldwide glut of cash of which you speak. We all know that it is cash, whether it is a glut or not. My arguement with you (a friendly one I might add) is whether the gut is expanding or shrinking. As soon as it starts shrinking it is dangerous no matter how big it is. What I am interested in is who are the bidders? In 45+ years I have not seen stock accumulated in this way.
I have entertained the idea that all that we are witnessing is a whole slew of institutions accumulating stock in what is now the state of the art technique. If it is just institutions and hedge funds on auto accumulate the market will be in big trouble when they switch to auto distribute.

James

"GLUT OF CASH".....well ur getting warm......its really the accelarating velocity of cash around the globe.......fueled by the world wide flite to free enterprise and capitalism....and of course the unleashing of it via the internet and technology......the collapse of communism which was preordained is now the feeding ground for the world wide expansionary forces you see around u.....wats the problem....none

[James Quillian]

now 401Ks have helped funnel all american taxpayers retirement funds to listed corporations.

Karen:

Economists understand the meaning of incentives but strangely never consider how new incentives might come into existance and others change when new policies are implimented.

The result of 401ks now and private Social Security accounts (coming soon) is that regulaters are participants in the market.

Every politician ends up promoting asset inflation as a means of buying votes.

Economists never factor the creation of new incentives into their policy recommendations.
Even the best, deal only in dead numbers.

James

[James Quillian]

"GLUT OF CASH".....well ur getting warm......its really the accelarating velocity of cash around the globe.......fueled by the world wide flite to free enterprise and capitalism....and of course the unleashing of it via the internet and technology......the collapse of communism which was preordained is now the feeding ground for the world wide expansionary forces you see around u.....wats the problem....none

There are few problems with that.
1.) It is free enterprise and capatilism corrupted by democracy. Democracy puts a time limit on free enterprise and capatalism.
2.) Communism hasn't collapsed entirely. China has a hybrid free market that is subject to totalitarian dictates. The country is still mostly communist in ideology.

Calling something free enterprise and capitalism is not the same as it actually being free enterprise and capitalism. Ostensible conservatives over here are always doing that.

James

[da_cheif]

"GLUT OF CASH".....well ur getting warm......its really the accelarating velocity of cash around the globe.......fueled by the world wide flite to free enterprise and capitalism....and of course the unleashing of it via the internet and technology......the collapse of communism which was preordained is now the feeding ground for the world wide expansionary forces you see around u.....wats the problem....none

There are few problems with that.
1.) It is free enterprise and capatilism corrupted by democracy. Democracy puts a time limit on free enterprise and capatalism.
2.) Communism hasn't collapsed entirely. China has a hybrid free market that is subject to totalitarian dictates. The country is still mostly communist in ideology.

Calling something free enterprise and capitalism is not the same as it actually being free enterprise and capitalism. Ostensible conservatives over here are always doing that.

James

the last remnants of chinese communism are melting......its over....."corrupted"..lol.....not 2 optomistic r u........u got 2 much baggage....must be over 60 ur somethin......

[James Quillian]

the last remnants of chinese communism are melting......its over....."corrupted"..lol.....not 2 optomistic r u........u got 2 much baggage....must be over 60 ur somethin......

I'm still trying to get to 60 but not for off.

We've got to deal in facts Chief when the facts are at hand.
It has nothing to do with optomism.
Demcracy corrupts free markets. Nothing is perfect. It is like oxygen. Oxygen is good but to much of it causes bad explosions. Don't let me discourage you. Go do some back flips.

James

Edited by James Quillian, 01 February 2007 - 11:40 PM.

[maineman]

I don't think it needs to be so complicated. Growth results from hard work. A mom and pop grocery can grow into a supermarket chain. The corner five and dime can grow in an international chain found in shopping malls around the world. People are born. Medicine advances. People live longer. They need food, shelter and goods. And "stuff". The freer people are the more likely they are to get access to that stuff. Competition among free people leads to innovation and more progress. More growth, more prosperity, more stuff. Pretty simple from where I sit. Smart, or just moderately smart, but patient, investors can piggyback on that growth through prudent investing. Traders, on the other hand, better be fully aware that they are playing a very different game - a zero-sum game, in which there is a winner and a loser. Good traders know this, and could care less about macro economics, world politics, or whether people are saving enough money or buying too many flat screen TVs. When, as a technical trader, I go long using Vehicle X based on certain trading rules and exit 2 points later, what does that have to do with "corrupt democracy"? Its a squiggle on a chart and a button on a computer and the fortitude to stick to a pre-defined trading plan. The inabililty to separate "trading" from "investing" is a fatal mistake. Just a few late night ramblings.... mm