Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: carranza2 who wrote (46032)	1/30/2009 11:09:07 PM
From: Snowshoe	Respond to of 217796

>>The nation must shake off the legacy of the Greenspan era and the economic cargo cult of the Chicago School.<< Nice turn of phrase. ;)

To: carranza2 who wrote (46032)	1/31/2009 3:52:53 AM
From: TobagoJack	Read Replies (1) \| Respond to of 217796

just in in-tray, per GREED & fear · The key short-term issue now facing world financial markets remains whether the Obama administration is willing to bite the bullet and come up with a coherent policy towards the banking system. That is to recognize reality by nationalising the insolvent banks and putting their distressed assets into one big state-owned bank with a view to returning the rest of the banks' operations to the private sector as quickly as possible. · Full-scale nationalisation is the best way of cleaning up the financial system in the most pro-active manner possible. There is a better chance that Washington implements this policy before London since Britain is still run by the Labour Government. A policy of formal nationalisation would only crystallize the losses already taken by the British taxpayer. · There is the need to get away from the politically charged focus on requiring Western banks to "start lending again". The British and American banks have not stopped lending altogether. Still the risk is clearly that banks slow lending much more in coming months as they try to deleverage their balance sheets. The most natural way for them to do this is to increase their purchase of government bonds. · The reality is that the banks cannot be expected to fill of their own accord the gaping hole left by the implosion of the shadow banking system, and in particular the implosion of securitisation. The implosion of securitisation is an intensely deflationary process. · There will be a lot more noise in coming weeks on US fiscal and housing policy. On fiscal policy, the short-term influence on the economy is going to be less than many have hoped. GREED & fear has more hope for nearer term traction from the Beijing fiscal response than from the Washington one. Obama's political instincts in the housing area will be to push for forbearance schemes to help distressed homeowners with mortgages. · The fundamental cause of the debt deflationary bust now scaring the world is clearly the massive scale of the private sector debt burden accumulated in the consumption-driven Western economies led by the US. This reverts back to the core issue ignored by central bankers and politicians for so long. That is so many years of above trend credit growth. · A sudden collapse in government bond markets would have very negative implications for the ability of governments to engage in counter cyclical policies. Still in GREED & fear's view the present deflationary environment will continue for now to mean a fundamentally attractive environment for investors in government bonds. The real risk to the US government bond market is when US monetary policy becomes ever more manic in coming months assuming velocity does not pick up in a meaningful fashion. · To take the view that a dollar debasement trade has already begun, investors need to see the US dollar index break the 80 level convincingly on the downside. But for now GREED & fear continues to believe there is more downside risk to the euro than to the dollar. · It is an interesting sign of growing confidence in gold as a financial asset that recent corrections in the gold bullion price have resulted in progressively smaller declines in the amount of gold held in gold exchange-traded funds. This behaviour of course raises the issue of who is selling gold. · The world is still overdue more of a relief rally in stocks than what occurred between November and the beginning of January. But for the S&P500 to get to GREED & fear's relief rally target of 1,050, investors actually need to believe the policy response has a chance of working. That is certainly not yet the case. · It would be insane for Washington to provoke China at this juncture. The time to get worried on the trade war front will be if and when China panics and starts pushing down its currency. That in GREED & fear's view will only occur if China gives up all hope of its reflationary policy efforts gaining traction. · Some changes will be made in the absolute-return portfolio this week. India's Educomp will be replaced by Titan, an Indian consumer play. Two percentage points will also be removed from State Bank of India with the money added to the existing investment in Reliance Industries.

To: carranza2 who wrote (46032)	1/31/2009 4:04:11 AM
From: TobagoJack	Read Replies (1) \| Respond to of 217796

hello c2, lunched with chief of greater china banking ops of enormous singapore bank, a family friend, and the chief sees hyper inflation future, had managed own portfolio harmless through the tsunami so far, and intends to start buying hk real estate once the banks start to sell off real estate collateral, and at some juncture, leverage, and then leverage more. i like the plan, and i like the signal person. cheers, tj