Good morning Maurice, 1/12th of 2003 is done for, and I do not smell a whiff of recovery or see a hint of bottom. Do you?
From my vantage point, through the scope, all is almost as before, except worse.
Oops, momentary lapse. I forgot that I no longer am in a crawl space, sighting through a scope, but am in the thick of low-gravity 3D close-quarter Death Match combat arena, sporting a multiple-targeting tesla cannon, and packing a mini-black-hole generating Singularity Grenade Launcher.
I see you, flak jacket open, chest bared, Enfield rifle in hand, standing in the open, guarding your Q-ed Tonka, and uncovered USD cash.
I also see:
Japan continues along its continuum of collapse.
Europe is still muddling through its socialist puddle.
US is fighting its WAT-WOT-WhatIsNot, trying with some success to elongate the pleasure of the bubble via housing inflation and delay with less achievement the pain of mania reckoning via fiscal spending.
I guess, and it is only a guess, that hiring a bunch of inspectors to check millions of individuals' luggage one-by-one, however hedonically massaged, is not nearly as productive as investing in a bouquet of programmers to write yet another better-still word processing routine one-by-the-million.
I have a hunch, which is a lesser form of a guess, that a fiscally mandated manufacturing of smart bombs used to keep the peace by waging endless war is possibly unwise, especially when compared to sometimes dumb but privately initiated building of factories, schools, and such.
Ah, but I forgot what I posted much earlier, that Japan is supposed to export wealth, US is choosing to export soldiers, and China should export things. All is, as they should.
Here in Hong Kong, we are cooperating with the WAT effort and the WOT demands. We are instituting container security protocol and shipping safety discipline. I am not aware of any additional employment due to these efforts; because we can ill afford such luxury as bag-checkers, preferring to let the machines do their chore.
In the mean and nasty time, the personal income number has, so far, reverted to 1995 level, representing a still modest (when compared to the inevitable eventuality) 20% give-back from the peak 1997 height.
Deflation comes in two flavors for us Hong Kongers. We enjoy the good kind of deflation, on things we need to acquire, and services we must use, and we fear the nasty type, on goodies we already have, and services we wish to provide.
Some of my often-used services are now cheaper by 30% from year-ago levels, such as massages, phone calls, and office rent.
Other of my always-required services are now more expensive, by about 5%, such as health and other insurances.
I have expended the effort to cut back on redundancies and frivolities, thus deflating someone else's revenue, and imploding other's profit.
I have done the cutting even though my passive income is now as before, but I am in anticipation of tougher active income generation.
What is happening in ultimate-capitalist Hong Kong will likely take place in penultimate-Adam Smith USA, even if ACFlyer Mike chuckled earlier at ideas concerning the concurrent occurrence of inflation & deflation.
I am almost sure he has ingested simultaneously sweet & sour pork before and therefore should have known better had he just thought about what we were discussing, about inflation & deflation, and/or stagnation.
Well, in any case, it is not yet too late for him to save himself by selling down his equity and bond portfolios, because the benighted Maestro is buying time with the J6P balance sheet.
Should ACF Mike do so and accumulate cash, then what should he do?
Is it the case as Hawkmoon proposed, that there is little else to invest outside of the US, or as CB suggested, that Depression at home is not so bad? Perhaps ACF Mike should take Grace's advice and start another business importing things to pump into the domestic consumption bubble?
I believe ACF Mike can benefit from our BBR discussions, macro strategy as led by Maurice and trading tactics as guided by Pezz.
The Euro, while rising against the USD, is ultimately limited by its if-ish quality of backing, by so many socialist countries with plenty of greedy electorates.
The Japanese Yen is pinned against the USD, given the Yen's impending demise as a serious currency of value, and fast becoming a unit of wealth-bleed.
The USD is still a global reserve currency, needs to be held aloft by its sponsors, namely the US, Japan, and China, so as to tap some balance sheets to finance the building of the next abracadabra.
Japan and China has the economic incentive and the financial means to keep buying USD assets for a while longer, keeping USD strong, so that US buys more from them, keeping them at higher glide coefficient in turn.
US has the need to keep the USD strong, so that it can continue to consume beyond its balance sheet prudence, to keep the bread & circus electorates happy, for a little longer.
Japan, by supporting the USD and the resultant consumption, can make more money in preparation for their retirement, by investing the proceeds in China-located factories.
Given all of the above-mentioned truths, and the impetus driving the trends, I believe it is safe to slap the bottom of some equities, taunt the demise of most currencies, be less than always faithful to gold, and generally have a good time.
The game will end when J6P in the aggregate is tapped out, balance sheet wilted, or when the Maestro Greensputin and Professor Bernakaput realize the error of their ways, or otherwise found to be wanting.
Or, failing the above end-games, when Wang-3-Cups and Sake-7-Bottles decide J6P has had enough credit, either because there are other bubbles to fund, or another fiscal black-hole to finance.
So, as CB would cheer for professor Bernankuput and Maurice would chant for Maestro Greensputin, I say thank the tenured and benighted central bankers for making financial speculation so easy and investment wagering so rewarding.
But what about Iraq, you puzzled.
I suggest you forget about irrelevant Iraq, because it is just that, just like N.Korea, which I also did not make reference to, given that it is just as irrelevant, both are sideshows to the central events.
Chugs, Jay |
