Date: Wed May 05 2004 11:46
trotsky (Q & A) ID#377387:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
a few posts which i didn't find the time to answer to yesterday:
1.Date: Tue May 04 2004 15:21
"mugwump ( trotsky- that was good ( capacity utilization ) Japan ) ID#209288: appears to be recovering or is that an illusion?"
- it's too early to tell for sure. however, if one studies the situation closely, one must conclude that Japan is clearly much farther along the liquidation process, and corporations especially have dealt with much of their debt and become lean and mean ( banking and construction obviously excepted ) . the major lingering problem is the still rickety banking system and the extant bond market bubble in which it is a big participant. so there may be a final washout at some point, in fact that has been my expectation all along. however, i am less certain of this now than i used to be. if Japan hasn't turned the corner already, it will imo soon ( within a few year's time ) .
2. Date: Tue May 04 2004 15:26
"COGOLD ( trotsky ( crude oil ) ) ID#339164:
Copyright © 2002 COGOLD/Kitco Inc. All rights reserved There's something about the SM and oil I'm not
understanding. It wasn't long ago that a rise in
oil prices adversely affected the markets. Now
it doesn't seem to make any difference at all.
If you or anyone else has an explanation for this
I'd sure appreciate hearing it. TIA"
- the adverse effect rising energy costs have on the economy and the markets usually arrives with a lag. not too big a lag, mind you. traditionally between 6 to 18 months. note though that current energy prices are still way below the 1970's crisis levels in inflation adjusted terms ( which is also the reason why they are considered to make up a 'smaller part' of the total economy than previously, a circumstance that no-one ever explains with inflation, but that IS the explanation. it's also a circumstance that is very close to changing, imo ) .
3. Date: Tue May 04 2004 15:27
"Frustrated ( trotsky ) ID#195339:
Copyright © 2002 Frustrated/Kitco Inc. All rights reserved as always thanks for your response...I was thinking
in terms of it's representation in GDP...which
is down dramatically...
...and certainly as you point out not a good
thing ...
as far as those malinvestments go...you can still
clearly see that they haven't been expunged in the worst
offending industry...the telecommunications sector
...I was wondering if LVLT was going to survive,
I know Buffett has invested pretty heavily there,
but it may really be for the pipeline access way's
...do you follow LVLT at all?"
- as i never tire to mention, one can't be sure what GDP is actually supposed to 'measure'. it is the by far most imperfect aggregate economic datum the state provides us with. it makes no sense in so many ways that i'd advise everybody to ignore it completely.
regarding LVTL, i don't follow it specifically, but i would agree that telecommunications is one of the MAJOR areas laboring under still lingering malinvested capital. w.r.t. Buffett's purchase of LVTL junk bonds: he simply bought several billions worth of junk bonds in various beaten down industries ( utilities, telecoms etc. ) when junk bond spreads were extremely wide, an astute bet that they would narrow. i don't think it can really be seen as an endorsement of LVTL's overall investment merit. this was just 'vulture deal' - buying up distressed assets in the hope to make a quick killing. oh yes, it worked out by the way.
Date: Wed May 05 2004 11:28
trotsky (measured measures...) ID#377387:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
the FOMC's statement which announced that monetary policy 'accomodation' could be removed in 'measured steps' is imo a measure of their concern regarding current systemic leverage.
it was an announcement largely aimed at their bankster buddies: 'you have a little time to unwind your carry trades and distribute to the suckers before we slam the brakes'. |
