Obama announced his plan to reduce his commitment to Afghanistan if Karzai doesn't "confront" corruption.
What, in fact, is happening is Obama is letting Afghanistan sink, present it to the world as an intractable mess inherited from Bush(which it is), and he'll write it off and focus on the currently imploding US economy.
I support this effort, but the Admin has to SELL this to the people and make failure the "responsibility" of the degenerate Karzai, not the US.
The real goal behind this: to satisfy our creditors: too much money wasted in A'stan.
The US is going to blow trillions on domestic spending: we have to cut somewhere, and defense is the obvious place to start. Healthcare, too, is on the chopping block.
This is all part of a great plan, as articulated in the Foreign Affairs article, to help rebulid the US economy. It'll be a tough slog, but assuming the cuts are made, we will be better for it.
It's not defeat: it's reallocation of resources.
Thursday, November 5, 2009
Friday, October 23, 2009
New Economic Order
In this quarter's, "Foreign Affairs", Bergsten writes:
A responsible fiscal policy would permit the Federal Reserve to run a relatively easy monetary policy, which would hold down interest rates and prevent overvaluation of the dollar. If the Obama administration is looking for a historical model, it should aim to replicate the Clinton-Greenspan policy of the late 1990's (a mix of budget surpluses and low interest rates) rather than Reagan-Volker policy of the early 1980's (high deficits and high interest rates).
This is it, guys. The only problem with this strategy? TRADE CONFLICTS, specifically, CHINA! THAT'S whom Bernanke alludes to when speaking of "issues" with Asian currencies!!! Japan is doing its part: China needs to de-peg its RMB, but it isn't.
IF things get substantially worse in the future, it will be because of China's refusal to depeg and resulting trade disputes. Watch the trade diplomacy carefully, folks.
A responsible fiscal policy would permit the Federal Reserve to run a relatively easy monetary policy, which would hold down interest rates and prevent overvaluation of the dollar. If the Obama administration is looking for a historical model, it should aim to replicate the Clinton-Greenspan policy of the late 1990's (a mix of budget surpluses and low interest rates) rather than Reagan-Volker policy of the early 1980's (high deficits and high interest rates).
This is it, guys. The only problem with this strategy? TRADE CONFLICTS, specifically, CHINA! THAT'S whom Bernanke alludes to when speaking of "issues" with Asian currencies!!! Japan is doing its part: China needs to de-peg its RMB, but it isn't.
IF things get substantially worse in the future, it will be because of China's refusal to depeg and resulting trade disputes. Watch the trade diplomacy carefully, folks.
Saturday, September 19, 2009
Where Are We?
Chronology:
1998: Tigers Blow Up: G-8 freak the fuck out.
I suggest ALL of you watch Bill Clinton's CNBC interview: Bill Clinton is the smartest guy in the room: he GETS IT, 100%. A model of probity... perhaps not, but that's irrelevant in this sordid world: he gets it.
http://www.cnbc.com/id/15840232?video=1267861215&play=1
Bill mentions in the interview that leaders (*cough* bankers ) agreed to begin developing meaningful and sustainable domestic demand ex-US/Europe.
Why, you ask? Because bankers can't make INSANE sums of money without assets to inflate( we could go back to 3-6-3, but that is sooo boring!). The problem we have now, too, is that governments have such high expectations of growth and a duly voracious appetite for consumption themselves that THEY ALSO want asset inflation.
The result is that the bankers and government are, in essence, the same, since they both need each other. The government keeps the infrastructure in place for the banks to operate, and the banks direct capital where it can most efficiently (in theory, folks!) be spent.
This is the underlying thesis behind the global commodity boom. Annoying that no one bothers to articulate it...
1998: Tigers Blow Up: G-8 freak the fuck out.
I suggest ALL of you watch Bill Clinton's CNBC interview: Bill Clinton is the smartest guy in the room: he GETS IT, 100%. A model of probity... perhaps not, but that's irrelevant in this sordid world: he gets it.
http://www.cnbc.com/id/15840232?video=1267861215&play=1
Bill mentions in the interview that leaders (*cough* bankers ) agreed to begin developing meaningful and sustainable domestic demand ex-US/Europe.
Why, you ask? Because bankers can't make INSANE sums of money without assets to inflate( we could go back to 3-6-3, but that is sooo boring!). The problem we have now, too, is that governments have such high expectations of growth and a duly voracious appetite for consumption themselves that THEY ALSO want asset inflation.
The result is that the bankers and government are, in essence, the same, since they both need each other. The government keeps the infrastructure in place for the banks to operate, and the banks direct capital where it can most efficiently (in theory, folks!) be spent.
This is the underlying thesis behind the global commodity boom. Annoying that no one bothers to articulate it...
Friday, August 28, 2009
We're in a bubble, folks
Face it, we're in a bubble: a bull-bubble. Every few weeks, it's another sector that has magically improved fundies, another chart that just shows air from here to da moon, etc.
Trade accordingly and short nimbly. Happy hunting. Keep an eye on FX: silver frankly scared me today with its moonshot: it shouldn't do that while the Euro gets shellacked by the USD.
Trade accordingly and short nimbly. Happy hunting. Keep an eye on FX: silver frankly scared me today with its moonshot: it shouldn't do that while the Euro gets shellacked by the USD.
Sunday, August 16, 2009
Yellow alert!
EM currencies are getting pounded, and capital is fleeing the em's and china.
I should've posted earlier, but I did get some short risk positions ah friday. We could eat a shit-sandwich this week, as we finally reverse some of the asinine trends of recent weeks.
The PBoC will only inflate so much in one go... give it time.
I should've posted earlier, but I did get some short risk positions ah friday. We could eat a shit-sandwich this week, as we finally reverse some of the asinine trends of recent weeks.
The PBoC will only inflate so much in one go... give it time.
Saturday, August 8, 2009
Price Levels and the S&P
My girlfriend's sister is dating a PM who really blew himself up these past two weeks. Of course, being the sadist I am, I appreciate schaedenfreude wherever I can find it, especially from an overpaid asshole PM who has a far shittier pnl than I have from trading between earnings notes and fetching coffee for a vp or whatever it is that bitch associates like I am do. What is it that the "shorts" don't understand?
After reading a LOT of history about economic crises, and assuming an IQ > 120, you basically reach the following conclusion: stock prices are just that: prices. Now, if the Fate of the Union depends on housing prices to reflate and 401k's to expand again to avoid a crippling inter-generation transfer (i.e. Japan), then why wouldn't other prices inflate? Remember, stock prices are just that - prices.
And so back to the bear argument regarding fundamentals: here's the problem: the Bears that are left now HATE, HATE the Fed and .gov. They are ardently anti-monetarist and impose their geocentric views on a heliocentric universe. The problem with bad trading theses isn't it that they're horribly wrong: it's that they're specious, and so people then are fooled into using them!
We are now in what Soros would call a "reflexive" moment, where higher prices beget higher prices. An example: I know, for a fact, that all mining, steel, and oil companies are NOW raising capex and hiring back workers. This is a positive shock, and those who do NOT follow these industries are overlooking the positive shock this will have on GNP/GDP.
Let's take this a step further: higher oil prices beget higher steel prices, which then compels stockpiling by any steel end-users who want to hedge against future cost increases (aka inflation expectations). Higher steel prices will then increase marginal energy demand, propping up utilies, nat gas drillers, etc. We have achieved positive feedback: the question is, what's driving it?
Answers: 1)China 2) Fed : China is building the capacity TO consume as we speak. Ignore the naysayers on China: the smart money is hoarding resources as we speak, and I know because I see the data and deals myself. I spend half my day on the phone with resource company managers who are jizzing themselves now that they have a bid from the Chinese on some crappy asset they have.
The Chinese have bought us another 6 months of bliss: now, we need the US, EU, and IMF to get their shit together. I have little hope for the EU, but I believe the PBoC has created enough inflation expectations to kickstart velocity and help the Fed repair the markets with nuking the Treasury market.
2) The Fed has done its bit by monetizing debt and creating enough inflation expectations to force the mgmt of Exxon to go out and spend money.
The trick now is to avoid OVER inflating the market, to say 1500 on S&P. Another 15-20% rally is in order to undo the crisis, at which point, the proles will be confident enough to lever themselves dearly again. Of course, we'll live in an $900+ gold world, but that's a small price to pay for saving the Republic.
Regarding gold, here's an interesting exercise: plot the gold price over time from post-Volker to 2004: you'll see it trades in tidy band between $200-400, independent of how high or low rates etc are. In 2004, gold began its departure and never returned to that trading range. I think we might be basing again for a new era of gold trading between 800-1000, an indication of a new era of price levels and trade/monetary policy.
After reading a LOT of history about economic crises, and assuming an IQ > 120, you basically reach the following conclusion: stock prices are just that: prices. Now, if the Fate of the Union depends on housing prices to reflate and 401k's to expand again to avoid a crippling inter-generation transfer (i.e. Japan), then why wouldn't other prices inflate? Remember, stock prices are just that - prices.
And so back to the bear argument regarding fundamentals: here's the problem: the Bears that are left now HATE, HATE the Fed and .gov. They are ardently anti-monetarist and impose their geocentric views on a heliocentric universe. The problem with bad trading theses isn't it that they're horribly wrong: it's that they're specious, and so people then are fooled into using them!
We are now in what Soros would call a "reflexive" moment, where higher prices beget higher prices. An example: I know, for a fact, that all mining, steel, and oil companies are NOW raising capex and hiring back workers. This is a positive shock, and those who do NOT follow these industries are overlooking the positive shock this will have on GNP/GDP.
Let's take this a step further: higher oil prices beget higher steel prices, which then compels stockpiling by any steel end-users who want to hedge against future cost increases (aka inflation expectations). Higher steel prices will then increase marginal energy demand, propping up utilies, nat gas drillers, etc. We have achieved positive feedback: the question is, what's driving it?
Answers: 1)China 2) Fed : China is building the capacity TO consume as we speak. Ignore the naysayers on China: the smart money is hoarding resources as we speak, and I know because I see the data and deals myself. I spend half my day on the phone with resource company managers who are jizzing themselves now that they have a bid from the Chinese on some crappy asset they have.
The Chinese have bought us another 6 months of bliss: now, we need the US, EU, and IMF to get their shit together. I have little hope for the EU, but I believe the PBoC has created enough inflation expectations to kickstart velocity and help the Fed repair the markets with nuking the Treasury market.
2) The Fed has done its bit by monetizing debt and creating enough inflation expectations to force the mgmt of Exxon to go out and spend money.
The trick now is to avoid OVER inflating the market, to say 1500 on S&P. Another 15-20% rally is in order to undo the crisis, at which point, the proles will be confident enough to lever themselves dearly again. Of course, we'll live in an $900+ gold world, but that's a small price to pay for saving the Republic.
Regarding gold, here's an interesting exercise: plot the gold price over time from post-Volker to 2004: you'll see it trades in tidy band between $200-400, independent of how high or low rates etc are. In 2004, gold began its departure and never returned to that trading range. I think we might be basing again for a new era of gold trading between 800-1000, an indication of a new era of price levels and trade/monetary policy.
Monday, August 3, 2009
The absence: I'm a workin' man now!
Got a job, working in the sell-side now.
Let's cut the crap.
China continues to buy US treasuries at shit yields. Why? They're starving. Imports of soybeans are at record highs.
The chief weapon of the US has been and always will be food, and you'll lose money in fixed income investments to keep the people fed.
The US could take out iran in a month by suspending wheat exports there.
Ignore the economists: this is blood and iron.
Let's cut the crap.
China continues to buy US treasuries at shit yields. Why? They're starving. Imports of soybeans are at record highs.
The chief weapon of the US has been and always will be food, and you'll lose money in fixed income investments to keep the people fed.
The US could take out iran in a month by suspending wheat exports there.
Ignore the economists: this is blood and iron.
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