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

To: carranza2 who wrote (60174)	1/20/2010 7:04:59 PM
From: TobagoJack	Read Replies (2) \| Respond to of 219610

just out from send-tray my personal view of governments, and that be all governments bar except the obviously comical and not exactly efficacious philippines government, is that they be all better if ever smaller. my own perspective is that in the great grand scheme of econo-political history (and that be all history unless we consider religion to be somehow neatly separated from econo-politics), and i generally prefer that i am not somehow directly wrapped up in the events, the way people change governments has consequences of own, and not all expected. the final verdict on the which approach is more effective, for the grand scheme, is still out. i am absolutely against someone, anyone, telling me that they are in charge, per mao of china, lee of singapore, by force or subterfuge, or hitler and marcos, by ballot box. i am also biased against universal suffrage, because all are not equal, and most are by definition unfit to decide. as i am not big all on governments, and do not in fact know how best to be placed under rule, the disneyland scheme of hong kong suits me o.k. for china to go democratic ala sun yat-sen's vision may work, or may just end up with a messier still version of ... pick our choice, marcos philippines, nazi germany, ... or more likely, putin russia or anytime india. i just do not know, and so what is is. china raises the finger to politicians ocasionally, and whenever so, quite thoroughly in a deeply cleansing way, and in every sense, more satisfying to the participants that come on top, and less fortunate for the folks trampled over on the bottom. as to each iteration of politicians booting out the previous iteration by will of universal suffrage in the usa, i am deeply suspicious, because that experiment was instigated by necessity in newly stolen land long ago where, unless all are more or less equal, chaos would have reigned supreme, and more because the experiment is still very young, and done so far under ideal conditions in happy isolation by means of two large oceans in face of no particularly true competition per 20/20 hindsight. events are evolving and conditions are changing, and now the experiment must truly experiment. i am not certain what the outcome would be, but so far the trend is not at all promising, a state of is, of course to do with the nature of the electorates. i remain hopeful for the best, but have discounted quite a bit even if not all. so, thankfully sitting in freedom hong kong and small government kowloon, we watch china experiment, and guard the experiment by cracking google, and we see america experiment, and guarding the experiment by cracking everything. one may have a commercial motivation, the other may have a dire terror imperative, but from where i sit, the line is very thin and can be drawn everywhich way, depending on day of week and month of year. i am also early-fretting that the freedom citadel hong kong may not hold, and should such be the case, where then to? i just do not know; not yet. will the day soon dawn where hong kong refugees need to converge on switzerland, or will the swiss first find that they need to migrate to hong kong. perhaps you can tell, or always knew, i like to worry. as to whether goog permits or not, let us just say goog should not permit, but no one is asking for permission. a killing drone in pakistan, a killer-app code segment in silicon valley, permission does not come into the equation, only national imperatives. so, again, i figure goog is now tee-ed up as cyber warrior on international scene, flavored with econo / national security / evangelical / trade flow herbs and spices. we are now into drama on the big stage. as usual, i get excited by drama and am thrilled about thrillers. i tend to hold off on the right and wrongs, because i have seen much everywhere on personal basis of right and wrong, and am inclined to believe that all government-sponsored, induced, or otherwise backed undertakings are wrong, a priori, should one wish to put a label on it, even should one wish to weigh the relative wrongness and degree of transgression, which i tend not to do. however, given the serendipitous confluence of interests in china, america, and in truth, everywhere else, should the drama be 10% responsible for even if miniscule amount of trade / fund flow, we have perhaps the consequential flapping of the butterfly wing in the amazon. whereas i may have been an early alarmist over the past 10 years, i am suspicious that my so far still relaxed attitude "that globalization will survive" may well be wrong. i have discounted more than the median but i have not taken account of total breakdown. i do not know what full disengagement or even close to full disengagement between china and usa would usher in, but figure it would be more so than divorce usa-japan, and separation russia-usa. in any case, drama on the big expensive stage. let us watch n brief.

To: carranza2 who wrote (60174)	1/20/2010 11:29:42 PM
From: TobagoJack	4 Recommendations Read Replies (2) \| Respond to of 219610

just in from you know who, re whereto, and i quote Apparently a lot of the 'UK buying' is really buying by other countries disguising it through London intermediaries. I suppose the same is true of the Carribean buying (always a big factor, and a major reason why there's hope that the hue and cry about tax havens will peter out again...). Wondering about the whys and wherefores....why do central banks all over the world still stuff their vaults with dollar denominated IOUs? Now aside from the more conventional arguments one often hears (from the mercantilistic vendor-financing schemes to vassaldom to whatever trust remains in the economic and military might of the reserve currency issuer), i would submit that it is simply a system that has long ago gone out of control, so to speak, and has developed an unstoppable dynamic of its own. Once the dollar's link to gold had been severed in the early 70's, the era of major global debt expansion began - and now that the fiat dollar based system (with all the other CBs using the treasury's IOUs as 'reserves') has been firmly established for several decades, there is no longer a realistic escape hatch in sight. It's sink or swim together for the monetary and fiscal bureaucrats involved. So in time-honored tradition, the 'can is kicked down the road' and the mountain of liabilities grows and grows and grows... Attached, as an example (there are numerous others one can look at of course) of the 'taking off' of fiat money inflation and the associated explosion in financial claims and liabilities, is a chart of UK bank assets from a recent paper by Andrew Haldane on the crisis. The reason why we can use this chart as well as any other (such as total credit market debt/GDP charts or those of 'reserves') is that the banking system and the state have always been in bed with each other w.r.t. this inflationary policy. Now, post crisis, it has merely become more immediately obvious, but it has always been a state-capitalistic arrangement (and bluntly speaking, a 'license to steal' for both banks and governments). The point made by the chart is anyway mainly 'when did the unstoppable debt expansion begin' - and that was when gold was finally abandoned in toto. It is supremely ironic that while financial claims have exploded, economic growth has done the exact opposite - it has slowed down markedly vs. the pre-debt expansion era. So much for 'we need inflation for economic growth' - this is a lie, based on a flawed theory, and it can be shown to be so both empirically and theoretically. Coming back to the expansion in treasury and other government debt - what has now happened is that the part of the inflationary bubble that threatened to collapse has been shifted from one set of balance sheets of the 'bank-state' conglomerate to the other , where it can be better camouflaged for the purpose of 'buying time' and attempting to - perversely - 'inflate out of it.' In short, the inescapable dynamic of the system of irredeemable currency without anchor has now moved into a new phase. Note my mention of 'slower economic growth during the inflationary expansion/boom'. This is a side-effect of the structural economic damage done by money and credit supply inflation - too many uneconomic projects are undertaken, and even in a time of enormous technological advances, the economic damage can not be entirely swept under the carpet. This has now apparently morphed into a new 'no growth' mode, akin to what Japan has experienced for a while already. This is a sign that the damage has increased over time to such an extent that the pool of real funding is no longer sufficient to support even the previous 'slower growth' regime. This is however not how those in charge of fiscal and monetary policy see it. They believe that the status quo ante can be restored by piling on even more debt and inflation (see Bernanke's numerous references over time as to the 'scourge of deflation' , which would no doubt involve a reordering of economic power he was appointed to avert). And since it is a global affair due to the design of the system (i.e. with dollar denominated govt. IOUs as the main 'reserve asset'), the spiral of debt and reserve asset growth continues, until the day the market renders it inoperable. In this context, the rising price of gold is an indication that some market participants are preparing for this inevitability. At various points in the journey, the gold forward curve, the gold price and interest rates will give signals indicating the waxing and waning of confidence in the system. We don't know what the threshold will be (how much more debt can be piled up before the market balks), but we know at least what to watch.

To: carranza2 who wrote (60174)	1/21/2010 12:45:08 AM
From: TobagoJack	4 Recommendations Read Replies (2) \| Respond to of 219610

following on to the earlier post from you know who Message 26260933 , a question of asked and answer sought, i quote the exchange, player 2 nice post. So the debt has been passed from the Commercial/Investment banks to the Central Banks. What happens next? Government defaults? Inflation? High interest rates? A repeat of the 70's when we had 18 - 20% government interest rates? Those that bought the high yielding paper at that time did well. Of course, those that bought the high yielding paper at Wiemar, got wiped out. What, in your opinion, is the play book? player 1 There is no 'fixed playbook' that we can use, we can only consider the possibilities and arrange them according to their probability of occurring at any given point in time, depending on what new information comes in. The main reason for this is the principle that cycles always change. Essentially, while certain things seemingly repeat over and over in history, there are always differences in how exactly they play out, and time-tested yardsticks of financial logic can sometimes go awry for extended periods (for instance, the US stock market never had a yield below 3% - for many decades - until it did. The market was a 'safe short' whenever the yield dropped to 3% until the day it wasn't anymore). At the moment I believe that at first there will be some to and fro due to the fact that while government debt is evidently exploding, private sector debt is shrinking. So it appears likely that there will be more episodes of both deflation and inflation scares. During the former, government bonds should actually do well in spite of the large debt issuance. For instance, this year it seems likely that govt. bonds will do well, on the idea that 1. they're universally hated and 2. recovery expectations are likely to be disappointed. Longer term there is a limit to this. Either governments rein their debt expansion and inflation in (and this has become increasingly difficult), or market confidence in the monetary system will go through ever greater convulsions, until it is eventually lost (i believe this is inevitable, but i have no idea how long it will take). Given the great deal of uncertainty, i would say one should hold on to one's gold and add more when it dips (as it inevitably will during the deflation scares). One should not yet abandon highly rated government bonds, but avoid those of the potential flashpoint countries (like UK and Japan), and cut back on them during the deflation scare spikes. And lastly one should continue to regard the equity and commodity markets as a trading situation (a currently severely overbought one as it were). I would also recommend to closely watch all slightly unusual developments. As an example, in 2009 there has clearly been an element of hoarding in the commodity markets. We know this because prices have been rising in the face of rising inventories and tepid industrial demand. Now, i currently believe this will be subject to another setback, but there is no certainty on this point. It is something that bears watching however (i.e., will prices continue to rise in the face of rising inventories, resp. will this behavior return more forcefully after an intervening setback in prices). It's not quite clear yet if the hoarding is based on expectations of a resumption in genuine demand or if it is based on growing inflation fears - maybe it's both, but if it's primarily the former, then a disappointment is likely in store.