Hi Jacob, On <<... Robert Mundell ... worried ... Europe is weighed down by heavy taxes, rigid labor rules and mindless regulation ...diminish the economic lift>> ... from your post ...
Message 16844588
... and in the same approach and some of the same words of your post, I then say, and yet the Euro will be, offering the first viable and widely accepted currency since the rise of the Dollar and the demise of the Pound. Even with all of Europe's problems, <<yet I look around me>> and across the land mass, <<I don't see any Collapse. The Storm is being weathered well. Almost everyone I know pays their taxes, goes to church, makes their kids do their homework, pays their mortgage, is employed, and generally lives a peaceful and productive life>>, plus all around me, and across the land mass, there are savings, soon to be put to good use buying cheapened and productive assets at the right price! …
… <<And is very secure that they'll be doing the same next year, and the year after and the decade after. And I think they're right; it isn't just bravado>> …
Even as the US <<... is weighed down by heavy taxes>>, confusing <<labor rules and mindless>> speculation, debasement of currency, ... <<diminish the economic lift>>, which then result in a voiding of capital influx, devaluation, unemployment, et cetera, adinf … oh, you know, and so on and so forth:0)
<<dollars … there is no alternative>> Not true, have never been true, and less true with each passing minute and following every down tick of the FED rate, until the dollar crashes, long bond yield heads up and the equity market eats the Grande Kahuna, then true. Unless, of course, you are suggesting that the USD will never crash, in which case not true entirely in the altogether. To witness …
Message 16837997
You are correct in that valuation is for comparison, to be used in determining what to buy. Valuation is out of line between many asset classes, and between assets and economic worth. Cash is too cheap, stocks are too dear, profit is naught, productivity is imagination, spin is spun, and yet, at the end economic/financial laws will rule, and at the very end, panic.
In such an environment, one can anticipate, hedge and avoid, or one can wait ‘for it to happen’ while doubting it will ever happen, or, one can even double up on the leverage and really go for it. What are you convinced to do?
On <<Whatever recession the U.S. is going to have, it's going to be worse in Japan. Wherever unemployment crests in the U.S., it's going to be higher in Europe>>
Why? Because it has never happened or we cannot imagine it?
<<And more Argentina-type events forces assets out of pesos and argentinos and other distrusted paper printed by distrusted governments, and moves those assets into..........dollars, the Safe Haven>> … and if the Safe Haven also debases, we go to … gold, of course, naturally, only to be expected, because it has always worked, for 5,000 years.
<<there is really no currency which has any realistic chance of replacing the dollar. Not now, not next year, anyway>> You are fudging and hedging now, about something that may happen in 2003?
<<Which leaves gold, and "hard" assets in general. And gold isn't going to take off until we get either large deflation or large inflation. Maybe that happens, but it hasn't happened yet, in spite of all the shocks since October 1998>> … we must anticipate based on economic logic and game rationality, and not gamble based on blind faith and groundless hope.
<<The dollar has been amazingly resilient. If I had listed for you, in early 1998, all the disasters that were going to happen in the next 4 years, you and the other DoomAndGloomers would have been sure the combination of all those stresses would have caused a Collapse Of Confidence, the Big Cahuna>> … and on the other hand, if I had told you in early 2000 that we will have 11 worldwide rate cuts, massive planet wide fiscal stimulus, a stimulating war, and a gabbilion reasons to merrily enter a globalized world, the bulls would surely have bid the indices to six digits … and yet, nothing, except a representative 27% decline. Why?
I suggest to you we have already left the familiar behind us, and the safe away from us. I suggest we have no leader, map or clue, and I suggest that those who say they know will eventually learn that they didn’t, when it is much too late to repent.
What do you think the correct allocation and approach to the voyage is?
Chugs, Jay |
