Date: Mon Feb 14 2005 13:22
trotsky (kapex) ID#248269:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
" Today, a banker just pushes a button and a loan is created out of thin air. "
the process may have been a little less instantaneous in the 1930's, but the principle was the same. the Fed created money 'out of thin air' in the 30's just as it does today. using the same mechanism even ( by buying government debt paper from the banks ) and did so in spades, as i have shown.
you don't need to convince me that the Fed as such is an institution we'd better be off without. neither do i disagree that it is the source of our boom/bust cycles.
i only dispute that they DIDN'T try to pump in the 30's and have proven my contention. and i also dispute that the depression was brought on on purpose. you should really take the time to study the period. one thing that really stands out when one reads newspaper articles ( like e.g. those that appeared in the WSJ ) from the time is how clueless everybody was as to what had happened.
Date: Mon Feb 14 2005 13:15
trotsky (Carmack) ID#248269:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
are you trying to tell me that all my past predictions DON'T COUNT?
why don't you consult the archives and check my 'hit rate'? ( of course i don't claim that i'm right all the time...but i have made quite a few good predictions in the past based in large part on technicals ) .
here's a recent example of a good prediction based on technical evidence - addressed to you, as it were. don't tell me you already forgot? note the date and time:
Date: Wed Feb 09 2005 11:45
trotsky ( Carmack@the duck ) ID#248269:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
as i said yesterday, i believe we're going to get at least a fairly decent bounce here ( we'll see if it becomes more than that ) .
money flows have looked quite positive for some time now, and many stocks in the sector are simply sold out imo. also, the CoT reports on gold and currency futures now look quite constructive.
plus, there's a lot of room for inflows into pm related funds considering how much money has flown out over the past year, so the potential for a sizeable rally has certainly increased, very short term fluctuations notwithstanding ( it's going to be choppy imo, more so than usual, since there's so much overhead resistance now in many stocks ) .
now what if that hadn't worked out? if you use t/a as your guide, there are such things as stops, you know.
Date: Mon Feb 14 2005 12:58
trotsky (JD@GFI/HMY) ID#248269:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
'where does he get the dough'?
fair question...but then, he can't buy more than 5% of GFI's issued share capital per year anyway. this doesn't sound entirely impossible to me. lots of imponderables involved, but he could raise capital via share issues, the Rand might decline and make HMY profitable again, and so on. we'll see i guess.
Date: Mon Feb 14 2005 12:55
trotsky (JD, 12:12) ID#248269:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
well, there will always be attempts by some players to fix prices. the question is, does it work? the OPEC cartel stands tall as proof to the contrary. when they tried to jack prices up they failed throughout the disinflation boom of the 80's and 90's, and now that they actually try to get prices DOWN, they appear to be failing as well.
Date: Mon Feb 14 2005 12:49
trotsky (Bleuler@home prices) ID#248269:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
" What home-price bubble? So far, predictions of the U.S. housing market's demise have been greatly exaggerated."
this is really comical. just because the bubble hasn't popped YET, it is asked "what home-price bubble?" of course the author then goes on to decribe the eye-popping price gains that are so typical of, well, a bubble.
anyway, the argumentation presented is specious. it's similar to the tech bulls who argued around the Nasdaq's peak that BECAUSE the bubble hadn't popped YET, it was either A ) fated to never pop ( that's what most speculators thought ) or B ) not identifiable as a bubble ( the Greenspan fallacy ) .
however, it is easy to disprove both trains of argument. the first one is really easy: ALL bubbles pop, eventually. it's never a question of if, but only one of when, and from what level.
the second one is a bit more tricky, but not nearly as tricky as Greenboink would have us believe at the time. in every asset price bubble one can observe certain characteristics in real time that help one identify the presence of a bubble BEFORE it ends.
to name a few, deviation from trend ( i.e., how far away are prices in percentage terms from the historical long term trend ) , price-to-earnings ratio ( this ratio can be calculated for houses as well as for stocks, with houses one uses the rental yield ) , trajectory of the advance ( when eyeballing the price chart, it is usually parabolic, i.e. the price gains tend to accelerate in the later stages of the bubble ) , and so on.
really, it's not rocket science.
oh, by the way, one absolutely indespensable sign that proves that a bubble is in full swing is that numerous articles appear in the financial and non-financial press alike RATIONALIZING the bubble and explaining that somehow, this one's different.
Date: Mon Feb 14 2005 12:31
trotsky (kapex) ID#248269:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
" And, more importantly, once the bank went, and, the businesses failed, those jobs were lost and people out of work. "
are you saying banks should not be allowed to fail? why should they be treated differently from other businesses? ( note in this context that nowadays, there's the FDIC, which at least in theory makes depositors whole after a bank fails - this adds to the moral hazard in the system ) .
" It isn;t about the numbers trotsky and you know it. "
this sentence makes no sense. of course it's about the numbers.
" There was no conduit to get money into the hands of those who neeeded it the most at the time they needed it. "
huh? conduit? what do you mean, some sort of socialist redistribution scheme that gives everybody money just as long as he 'needs it', or even worse, 'needs it most'?
" It was done by the FED knowing what the end result would be. "
i'm not sure what you mean by 'it', but the very idea that the Fed knows what it's doing is laughable. it's a bureaucracy for chrissakes!
that the Fed shared a great deal of responsibility for the depression of the 30's is unquestionably true, but it's not as is often alleged because they failed to pump money into system in the early 30's, which was my point. their responsibility can instead be traced to how they acted during the preceding boom, during which their monetary policy was way too loose - and it was not 'planned' to be that way, it was simply a miscalculation. they were acting in concert with the BoE, which wanted to avert an outflow of gold from Britain, and asked the Fed to enact a loose policy so as not to attract the gold to the US. it was an early incarnation of co-ordinated policy, such as we have come to know nowadays on a much larger scale.
" The fact that they outlawed Gold when FDR came in shows just exactly what the intent was."
'they'?? it was FDR himself who outlawed private gold ownership and subsequently devalued the dollar against gold. according to the man himself, this idea of stealing from the public cam to him one morning during breakfast. it is by the way not the Fed that controls the US government's gold hoard, it is the treasury.
" It's just like 911 "
no, it isn't.
" At the time, a few warned that it was done as a guise to start taking the rights away.
No one saw it, ( or wanted to see that at the time because it hadn't happened yet ) , but many warned and said, "watch what they do now"
Sure enough, thats EXACTLY what has happened since then with the patriot act, homeland security and national ID cards, cameras etc etc."
well, true enough. the Patriot act was already waiting in a drawer for just such an occasion as 9-11 provided, no doubt about it. and everything that has followed since sure reeks of fascism and a very sinister agenda. i absolutely agree with you on that point.
"Back in the 30's, the bankers ( who own the earth because wimped out politicians have no guts ) , wanted to get folks away from real money.
They created the depression to get folks away from Gold so they could control ALL THE MONEY!
and get the interest from it. "
well, i would agree that the bankers are quite happy with the fiat system, and its implementation was surely in their interest. but the idea that the 'created the depression' by choice is ludicrous. banking was one of the industries the hardest hit by the depression. between '29 and '33, 9,812 banks failed altogether , or more than one third of the entire country's banking industry.
the idea that an industry brings on an event on purpose that destroys one third of said industry subsequently is absurd.
" The problem is the monetary system and the control is being done to ensure that THEY keep control of it. "
i'm still not sure who 'they' are.
Date: Mon Feb 14 2005 12:04
trotsky (Carmack, 11:27) ID#248269:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
now what prompted that outburst? your phrasing alone shows you don't understand t/a.
in brief: t/a helps to assess PROBABILITIES. among the rules of t/a is that when an assessment of probabilities turns out to be wrong, you simply reverse course and employ the next best set of probabilities.
also, good technicians usually have a statistically relevant 'prediction' hit rate as well. this can be buttressed via examples. for instance, if you examine the record of a master technician like Bernie Schaeffer, you'll notice he gets it right much more often than not ( my guesstimate is that he has a 75% hit rate minimum ) . it's basically impossible that this happens by chance, especially since it has been true for years.
Date: Mon Feb 14 2005 11:56
trotsky (Bleuler) ID#248269:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
"After a long rally, the prices of many commodities are expected to peak this year. "
not that i necessarily agree or disagree, but who's doing the expecting?
Date: Mon Feb 14 2005 11:54
trotsky (P. Yorkie) ID#248269:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
i also think it's a fallacy that the war is what ended the depression. Longwave theory dates the end of the K-winter that began in 1929 to 1949, a full 4 years AFTER the war ended ( incidentally, after the war ended, the stock market immediately plunged in 1946/47 ) .
it is true that deficit spending went totally out of control during WW2, but FDR's government was the most interventionist tax and spend government in US history throughout the 1930's ( actually the phrase "Tax and Tax, Spend and Spend, Elect and Elect, because the people are too damn dumb to know the difference" was coined by FDR's right hand man Harry Hopkins ) .
the so-called 'new deal' which was the basis for the Keynesian government spending spree was extremely harmful and probably delayed the recovery by a decade. similare results could be observed in Japan, where the government has gone on a spending spree over the past 15 years that is unprecedented. the idea that government spending can halt a deflationary depression is simply flat-out wrong. what it does do is lengthen it, since the necessary liquidation of malinvestments is delayed and new malinvestments are piled on top of the old ones. to wit, Japan's countless bridges to nowhere.
Date: Mon Feb 14 2005 11:40
trotsky (P. Yorkie) ID#248269:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
the point is that the Fed tried to pump , but failed. money supply DID contract, but not because of the Fed not trying to inflate it.
Date: Mon Feb 14 2005 11:33
trotsky (frustrated@assumptions) ID#248269:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
i think we can take it as a given that this assumption on their part is correct. after all, together with Norilsk they already control 31.5% of GFI, so any new contender would have to overcome that hurdle. also, who except HMY wants to buy SA mining assets? right now, no-one ( although right now is of course the best time to buy, since valuations are compressed ) .
Date: Mon Feb 14 2005 11:27
trotsky (rijjj) ID#248269:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
FDR himself was a socialist with strong sympathies for Uncle Joe's repressive communist Soviet system, so his use of the phrase was likely merely meant to throw the Christers a bone, so to speak.
Date: Mon Feb 14 2005 11:25
trotsky (kapex) ID#248269:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
don't get me wrong - i share many of your concerns, and i fully agree with you that e.g. the implementation of repressive legislation under the guise of the turr war is in preparation for controlling the population when TSHTF as you've put it.
my comment on mergers really refers only to this one issue...imo anti-trust worries are largely overblown, as long as the market remains relatively free.
Date: Mon Feb 14 2005 11:20
trotsky (Quark@Japan) ID#248269:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
essentially, the asset bubbles of the late 80's are what led to the Japanese banking system's de facto insolvency. loans for shares and real estate holdings were backed with collateral the value of which went into a relentless decline post 1989, and a similarly relentless contraction in bank credit followed. it's of course true that there's a reciprocity at work, inasmuch as it's not so 'easy' to get a loan in Japan these days - but it used to be easy while the bubbles were still expanding.
still, the point remains that the BoJ flooded the money market with cash for free, and all it got to show for it was a big domestic carry trade in JGB paper. no-one wanted the money, and it appears it's still not wanted ( only very recently, a BoJ spokseman remarked on the dearth of demand for the excess liquidity in the system ) .
Date: Mon Feb 14 2005 11:10
trotsky (P.Yorkie) ID#248269:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
oh yes, i DO have the numbers.
"However, a close examination of the historical data shows that contrary to Friedman the Fed was extremely loose and pumped reserves into the system in its attempt to revive the economy ( on this see Murray Rothbard's America's Great Depression ) . The extent of monetary injections is depicted by changes in the Fed's holdings of U.S. government securities. Thus on January 1930 these holdings stood at $485 million. By December 1933 they had jumped to $2,432 million—an increase of 401% ( see chart ) . Moreover, the average yearly rate of monetary injections by the Fed during this period stood at 98%."
mises.org
Date: Mon Feb 14 2005 11:01
trotsky (frustrated, 10:49) ID#248269:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
the timing of it is now completely open. it does look now as if the competition tribunal will approve the merger after the competition commission has recommended approval ( there's a 10-day lag between the commission's receommendation and the tribunal's ruling ) . however, Harmony's management is on record with the following: if not enough acceptances are received for the share exchange offer within a reasonable time frame, they won't abandon the merger. instead, they'll simply buy the 5% of GFI annually that they're allowed to buy in the open market. presumably until they have ammassed enough clout together with Norilsk to force the resignation of GFI's management and pave the way for a non-hostile resolution.
a recent Swanepoel quote:
"The only thing we plan to do with our 11,5% stake in Gold Fields is to increase it, whether under the subsequent offer or gradually over time until we acquire control of Gold Fields."
Date: Mon Feb 14 2005 10:42
trotsky (kapex) ID#248269:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
" No matter how manipulated the markets are, they still unfold in a predictable way. "
this is true, and goes to show that worrying about market manipulation is an exercise in futility.
Date: Mon Feb 14 2005 10:36
trotsky (kapex) ID#248269:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
"...the big corporations are consolidating into big entities that will stifle all competition."
an old idea first propagated by Karl Marx, who believed that the tendency of corporations to merge in order to achieve economies of scale would eventually condemn capitalism. however, empirical evidence has long disproven the notion. in spite of merger mania being a regular feature of the capitalist economic landscape since the early 1980's, there are now MORE individual companies out there than ever before. in short, there have been more new firms founded than old ones have been swallowed by rivals - a decidedly un-Marxian outcome. in fact, it is also obvious that competition hasn't suffered one bit.
especially in the case of the telecommunication companies which you have used as an example it couldn't be more clear. the prices consumers pay for telecommunication services are the lowest ever - and the trend remains in full swing, as new technologies pose more and more challenges for the established players. for instance, VOIP is about to kill traditional land line telephony for good.
if one looks at the broader economic landscape, one notices that the more government intervention a sector is subjected to, the more consumers pay through the nose via rising prices, health care being a prime example. in those areas where companies are largely left alone to do as they see fit, prices tend to decline and choices tend to proliferate. mergers are primarily a means for enhancing efficencies and buying growth, and are more prevalent in maturing industries than in new ones. to the extent that a merger succeeds in the efficiency enhancement department it can turn into a boon for consumers as well.
Date: Mon Feb 14 2005 10:20
trotsky (P. Yorkie) ID#248269:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
" Unlike 1029, come the crash, keyne's printing presses go to work"
probably referring to 1929, and repeating a common misconception, namely that the printing presses were idle after the 1929 crash. the opposite is true. between 1929 and 1933, the Fed cut interest rates from 6.5% to 2% and increased free reserves in the banking system by 400%.
Friedman merely ASSUMED in his 1960's tome on monetarism that the Fed was at fault in not halting the deflation of the 30's. in reality, it did everything it could, but proved powerless against the K-cycles deflationary down wave ( i.e., try as it might, it could not avert a deflationary debt default crunch and the concomitant decline in money supply ) .
similarly, the BoJ tries to fight the deflation cycle for nearly 15 years now, and has yet to vanquish it. a central bank can pump up liquidity in the banking system such as the Fed did in the 1930's, or the BoJ is doing since 1990, but when there are no willing borrowers, it won't help.
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