Self Explanatory chart given my comments here since February.
Thursday, August 12, 2010
Security Deposit
Most "economists" and "investment strategists" view the dollar as merely the reserve currency of the world.
It is far more than that.
Every dollar deposited in various banks across the worlds, in addition to its economic uses, also serves as a security deposit. That is, the more dollars a given region has acquired, the more "attention due to significance" (either good or bad) the U.S. Federal Government attaches.
I have mentioned before that the number one export of the U.S. is not anything physical, but "Order".
It is far more than that.
Every dollar deposited in various banks across the worlds, in addition to its economic uses, also serves as a security deposit. That is, the more dollars a given region has acquired, the more "attention due to significance" (either good or bad) the U.S. Federal Government attaches.
I have mentioned before that the number one export of the U.S. is not anything physical, but "Order".
Wednesday, August 11, 2010
Gullibility is not a function of intelligence
The very intelligent have a propensity for understanding complex abstract forms of argument and proof.
Unfortunately, this comes with a price.
Throughout history, we have observed the transition of power from states to religions, to singular individuals, to secular governments, and back again.
For example, China is not a republic, its much more similar to a religious monarchy (the God being Marx, the prophet Deng Xiaoping, the apostles and saints the various high ranking members of the "Communist Party")
And yet, the concentration of the highly intelligent within official circles still does not decrease the frequency of failure of States across the Globe. They have convinced themselves that central planning and "good policy" will guarantee a good state.
Its no different than any other system where the fantansy of the outcome severely cripples the ability to reason. Lotteries are no different.
Unfortunately, this comes with a price.
Throughout history, we have observed the transition of power from states to religions, to singular individuals, to secular governments, and back again.
For example, China is not a republic, its much more similar to a religious monarchy (the God being Marx, the prophet Deng Xiaoping, the apostles and saints the various high ranking members of the "Communist Party")
And yet, the concentration of the highly intelligent within official circles still does not decrease the frequency of failure of States across the Globe. They have convinced themselves that central planning and "good policy" will guarantee a good state.
Its no different than any other system where the fantansy of the outcome severely cripples the ability to reason. Lotteries are no different.
Tuesday, August 10, 2010
Fed comments...
...ominous, and in full defense mode. Again, this are simply asset swaps, but it is increasingly clear that even the Fed is experiencing difficulty in containing credit and funding pressures, to say nothing of the impending danger in FHLBs and GSEs.
To help support the economic recovery in a context of price stability, the Committee will keep constant the Federal Reserve's holdings of securities at their current level by reinvesting principal payments from agency debt and agency mortgage-backed securities in longer-term Treasury securities.1 The Committee will continue to roll over the Federal Reserve's holdings of Treasury securities as they mature.
To help support the economic recovery in a context of price stability, the Committee will keep constant the Federal Reserve's holdings of securities at their current level by reinvesting principal payments from agency debt and agency mortgage-backed securities in longer-term Treasury securities.1 The Committee will continue to roll over the Federal Reserve's holdings of Treasury securities as they mature.
The Players
The role of Government in the world of business is best conceived as referee between competitive entities, leveling uneven playing fields (via regulation) and punishing practices that tend towards oligarchy (via anti-trust and other legal measures).
Unfortunately, this pollyanish view of Government ignores the invitable outcome when frictions between Government and Business are high.
And at this moment they are very, very high in the United States, to say nothing of the rest of the world.
Throughout history, we have seen countless examples of the eventual outcomes of this phenomenae.
Eisenhower called this the Military-Industrial complex, even Adam Smith warned "whenever competitors gather, conversation invariably turns to price fixing". This same impetus is magnified where the process of legislation is insular and complex.
Justic Brandeis once stated "sunlight is the best disinfectant" and our Government would be well-advised to introduce strict term limits, greater transparency measures, and much less legislation, both in number and complexity.
Unfortunately, this pollyanish view of Government ignores the invitable outcome when frictions between Government and Business are high.
And at this moment they are very, very high in the United States, to say nothing of the rest of the world.
Throughout history, we have seen countless examples of the eventual outcomes of this phenomenae.
Eisenhower called this the Military-Industrial complex, even Adam Smith warned "whenever competitors gather, conversation invariably turns to price fixing". This same impetus is magnified where the process of legislation is insular and complex.
Justic Brandeis once stated "sunlight is the best disinfectant" and our Government would be well-advised to introduce strict term limits, greater transparency measures, and much less legislation, both in number and complexity.
When the entire world is buying duration...
...the big boys start selling...and just as important, ANNOUNCING that they are selling.
Warren Buffett shortened the duration of bonds held by his Berkshire Hathaway Inc. after warning that deficit spending could force inflation higher.
Twenty-one percent of holdings including Treasuries, municipal debt, foreign-government securities and corporate bonds were due in one year or less as of June 30, Omaha, Nebraska-based Berkshire said in a filing Aug. 6. That compares with 18 percent on March 31, and 16 percent at the end of last year’s second quarter.
“It may be a sign that Buffett expects interest rates to start rising, maybe sooner than the conventional wisdom,” Meyer Shields, an analyst in Baltimore at Stifel Nicolaus & Co. who has a “sell” rating on Berkshire, said in an interview.
Inflation has fallen to a 44-year low even as the Federal Reserve more than doubled its balance sheet in two years to $2.33 trillion to help draw the economy out of recession. A U.S. jobs report last week showing that companies hired fewer workers than forecast in July pushed the two-year Treasury yield to a record low. Bill Gross, founder of Pacific Investment Management Co., advised investors to buy longer-dated maturities.
Warren Buffett shortened the duration of bonds held by his Berkshire Hathaway Inc. after warning that deficit spending could force inflation higher.
Twenty-one percent of holdings including Treasuries, municipal debt, foreign-government securities and corporate bonds were due in one year or less as of June 30, Omaha, Nebraska-based Berkshire said in a filing Aug. 6. That compares with 18 percent on March 31, and 16 percent at the end of last year’s second quarter.
“It may be a sign that Buffett expects interest rates to start rising, maybe sooner than the conventional wisdom,” Meyer Shields, an analyst in Baltimore at Stifel Nicolaus & Co. who has a “sell” rating on Berkshire, said in an interview.
Inflation has fallen to a 44-year low even as the Federal Reserve more than doubled its balance sheet in two years to $2.33 trillion to help draw the economy out of recession. A U.S. jobs report last week showing that companies hired fewer workers than forecast in July pushed the two-year Treasury yield to a record low. Bill Gross, founder of Pacific Investment Management Co., advised investors to buy longer-dated maturities.
Monday, August 09, 2010
Back from hiatus...
It is essential, when intensely studying any subject, to back away from the tangled web of causations, correlations, fallacies, conclusions, arguments, data, analogies and apocryphals, in order to obtain a more complete view of the totality.
I have always favored holistic approaches when analyzing and solving problems, avoiding the pitfalls of pedantism and hubris as best I can.
I will therefore be posting more often in the coming days. There is much to be discussed, as these are indeed historic times rife with Chaos...what order emerges from these next few years will determine the next fifty.
I have always favored holistic approaches when analyzing and solving problems, avoiding the pitfalls of pedantism and hubris as best I can.
I will therefore be posting more often in the coming days. There is much to be discussed, as these are indeed historic times rife with Chaos...what order emerges from these next few years will determine the next fifty.
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