Mrs. B and I go to London tomorrow for about a week. There will be no new blog post until Tuesday, May 5. I need some culture and have planned visits to the British Museum, National Gallery, Tate Gallery and Wallace Collection, among others. The British Museum is easily worth two days or more to see the antiquities, which will complement my recent CD courses on the ancient cultures of Egypt, Sumeria, Babylon, Assyria, Greece and Rome.
I see we get to travel while the world panics on this swine flu fears. What is it about modern society that seeks to panic ? We lived through SARS, bird flu and now a reprise of swine flu. Of course precautions should be taken. But a panic ?
Beefers are slinging around preplanned shorts to try to create some more fear and bag a few dollars for their pockets.
Maybe I'll get the pullback I've been awaiting to deploy my new capital.
Word of the Day
"Enclitic" - adjective & noun [$10] Grammatical, from by language studies
Enclititc means (adjective, of a word) pronounced with so little emphasis that it forms part of the preceeding word; (noun) such a word, as the 'not' in 'cannot'.
Sentence: Grammatical endings in many languages arise from separate words indicating grammar becoming enclitics over long periods of time.
Le Mot du Jour
"Pagaille" - noun, feminine (variant spelling pagaïe)
Pagaille means mess, shambles; chaos. This is a polite alternative to the word in Friday's translation of FUBAR - see comments. Pagaille complète means screw-up.
La Phrase: Cette panique de grippe porscine sera une pagaille complète.
Sentence: This swine flu panic will be a screw-up.
Monday, April 27, 2009
Friday, April 24, 2009
Gold
Well, well, well ...
FT: "SHANGHAI/BEIJING, April 24 – China revealed on Friday that it had quietly raised its gold reserves by three-quarters since 2003, increasing its holdings to 1,054 tonnes and confirming years of speculation it had been buying. Hu Xiaolian, head of the State Administration of Foreign Exchange (SAFE), told Xinhua news agency in an interview that the country’s reserves had risen by 454 tonnes from 600 tonnes since 2003, when China last adjusted its state gold reserves figure. ...
"China’s reserves were now the fifth biggest in the world, with only six countries holding more than 1,000 tonnes, she said. ...
" 'The comments indicate that China will buy more gold as reserve to improve its foreign reserve portfolio. This is a trend,' said Yao Haiqiao, president of Longgold Asset Management.
Hou Huimin, vice general secretary of the China Gold Association, said China should build its reserves to 5,000 tonnes. 'It’s not a matter of a few hundred, or 1,000 tonnes. China should hold more because of its new international status, and because of the financial crisis,' he said.
'The financial crisis means the U.S. dollar value is changing fast, and it may retreat from being the international reserve currency. If that happens, whoever holds gold will be at an advantage.'
"The European Central Bank recommends its member banks hold 15 percent of their reserves in gold, but among Asian nations the percentage is far smaller, said Albert Cheng, World Gold Council managing director for the far east. "
China should be buying some gold for its monetary base. This is bullish for gold, by the way, over the long term. It shows a huge potential buyer for the gold in European central banks and the IMF gold, if those institutions are stupid enough to sell their gold. The amount of Chinese buying is a lot, but not quite as much as the incremental amounts going into gold ETFs over the same period.
Gold
For a few years, I've been watching and buy & selling gold. I follow the monthly gold chart for guidance on value. Long term, readers know I'm bullish. I sold a lot around $1,000 last year and re-bought some around 750 early this year. From the monthly chart there is a very long term uptrend line dating back to the bottom in 2000-1 that is about 600 now. Another multi-year trend line now exists dating to 2006 that is around 750 now. So I'm still not a buyer, and will wait for a better price. Chartwise, the recent failure to punch through the peak prices in early 2008 shows a bearish pattern, or at best a long consolidation pattern.
I invest in gold three ways: the ETFs in a retirement account, physical gold American Eagle coins, and a gold stock fund in a retirement accounts. Long term gains in gold are taxed at 28%, so this bifurcation helps me keeps taxes low.
It's Wasn't All a US Bubble.
FT: "The number of Spanish unemployed rose sharply in the first quarter of this year to more than 4m, confirming Spain’s position as the European Union state worst affected by job losses during the global economic crisis. Unemployment rose to 4.01m, or 17.4 per cent of the workforce, up from 13.9 per cent in the fourth quarter of last year, the National Statistics Institute said on Friday.
"Spain’s economy had grown rapidly in recent years on the back of a surge in home construction, and the collapse of the housing market wiped out nearly 700,000 building jobs over the past year. In the latest quarter, however, it was in the services sector where most jobs were lost. "
A housing bubble in Spain, too. And the UK. And others. One should keep these facts in mind when hearing all the handwringing and anguish about this crisis.
Markets
Amazon revenues up: "revenues rose 18.2% year/year to $4.89 bln vs the $4.76 bln consensus" from Briefing.com. What happened to the Depression ?
I am doing nothing, waiting for better prices.
Word of the Day
"Obtrude" - verb [$10]
Obtrude means (intransitive) to be or become obtrusive; (transitive) to thrust forward importunely.
Sentence: Today's "stress test" reports to bank CFOs and the inclusion of counterparty risk in them will likely obtrude uncomfortably, like a poke in the eye with a sharp stick, into staid mindset of these cluster fubars*.
["fubar" is WW II slang for F***ed Up Beyond All Recognition. I wonder if I can translate that into French ? Hmmm I think so ... ]
Le Mot du Jour
Reading parts of Le Monde this morning was fun. I'm going to break form a bit here and copy an entire paragraph, then paraphrase it. Remember Jerome Kerviel, the trader who lost about $6 billion for Societe General ? It's about him.
Le Monde: "Jérôme Kerviel, le trader accusé d'avoir fait perdre 4,9 milliards d'euros à la Société générale, aurait investi 800 milliards d'euros entre 2005 et 2007 (achats et ventes), selon son nouvel avocat Olivier Metzner, pour qui ces dérives ne pouvaient pas passer inaperçues de l'"employeur" : "C'est deux fois le budget de la France et 120 fois le budget du ministère de la justice ! A moins d'être non-voyant, on ne peut pas ne pas le voir", relève Me Metzner."
Mr. Kerviel's lawyer say the aggregate buys and sells of Mr. Kerviel totaled E800 billion ! And such sums, being twice the national budget of France and 120 times the budget of the ministry of Justice, could not have gone unnoticed. His point, I presume, is that Mr. Kerviel was simply trading under his bosses supervision and should not be fired under French law. Maybe he has a point.
"Inaperçu, e" - adjective
Inaperçu means unnoticed. The usual usage is with the verb passer, "passer inaperçu" meaning to go unnoticed.
La Phrase: Est-ce que Ken Lewis a crû que l'affaire de Merrill Lynch passerait inaperçue ?
Sentence: Did Ken Lewis believe that the Merrill Lynch affair would go unnoticed?
FT: "SHANGHAI/BEIJING, April 24 – China revealed on Friday that it had quietly raised its gold reserves by three-quarters since 2003, increasing its holdings to 1,054 tonnes and confirming years of speculation it had been buying. Hu Xiaolian, head of the State Administration of Foreign Exchange (SAFE), told Xinhua news agency in an interview that the country’s reserves had risen by 454 tonnes from 600 tonnes since 2003, when China last adjusted its state gold reserves figure. ...
"China’s reserves were now the fifth biggest in the world, with only six countries holding more than 1,000 tonnes, she said. ...
" 'The comments indicate that China will buy more gold as reserve to improve its foreign reserve portfolio. This is a trend,' said Yao Haiqiao, president of Longgold Asset Management.
Hou Huimin, vice general secretary of the China Gold Association, said China should build its reserves to 5,000 tonnes. 'It’s not a matter of a few hundred, or 1,000 tonnes. China should hold more because of its new international status, and because of the financial crisis,' he said.
'The financial crisis means the U.S. dollar value is changing fast, and it may retreat from being the international reserve currency. If that happens, whoever holds gold will be at an advantage.'
"The European Central Bank recommends its member banks hold 15 percent of their reserves in gold, but among Asian nations the percentage is far smaller, said Albert Cheng, World Gold Council managing director for the far east. "
China should be buying some gold for its monetary base. This is bullish for gold, by the way, over the long term. It shows a huge potential buyer for the gold in European central banks and the IMF gold, if those institutions are stupid enough to sell their gold. The amount of Chinese buying is a lot, but not quite as much as the incremental amounts going into gold ETFs over the same period.
Gold
For a few years, I've been watching and buy & selling gold. I follow the monthly gold chart for guidance on value. Long term, readers know I'm bullish. I sold a lot around $1,000 last year and re-bought some around 750 early this year. From the monthly chart there is a very long term uptrend line dating back to the bottom in 2000-1 that is about 600 now. Another multi-year trend line now exists dating to 2006 that is around 750 now. So I'm still not a buyer, and will wait for a better price. Chartwise, the recent failure to punch through the peak prices in early 2008 shows a bearish pattern, or at best a long consolidation pattern.
I invest in gold three ways: the ETFs in a retirement account, physical gold American Eagle coins, and a gold stock fund in a retirement accounts. Long term gains in gold are taxed at 28%, so this bifurcation helps me keeps taxes low.
It's Wasn't All a US Bubble.
FT: "The number of Spanish unemployed rose sharply in the first quarter of this year to more than 4m, confirming Spain’s position as the European Union state worst affected by job losses during the global economic crisis. Unemployment rose to 4.01m, or 17.4 per cent of the workforce, up from 13.9 per cent in the fourth quarter of last year, the National Statistics Institute said on Friday.
"Spain’s economy had grown rapidly in recent years on the back of a surge in home construction, and the collapse of the housing market wiped out nearly 700,000 building jobs over the past year. In the latest quarter, however, it was in the services sector where most jobs were lost. "
A housing bubble in Spain, too. And the UK. And others. One should keep these facts in mind when hearing all the handwringing and anguish about this crisis.
Markets
Amazon revenues up: "revenues rose 18.2% year/year to $4.89 bln vs the $4.76 bln consensus" from Briefing.com. What happened to the Depression ?
I am doing nothing, waiting for better prices.
Word of the Day
"Obtrude" - verb [$10]
Obtrude means (intransitive) to be or become obtrusive; (transitive) to thrust forward importunely.
Sentence: Today's "stress test" reports to bank CFOs and the inclusion of counterparty risk in them will likely obtrude uncomfortably, like a poke in the eye with a sharp stick, into staid mindset of these cluster fubars*.
["fubar" is WW II slang for F***ed Up Beyond All Recognition. I wonder if I can translate that into French ? Hmmm I think so ... ]
Le Mot du Jour
Reading parts of Le Monde this morning was fun. I'm going to break form a bit here and copy an entire paragraph, then paraphrase it. Remember Jerome Kerviel, the trader who lost about $6 billion for Societe General ? It's about him.
Le Monde: "Jérôme Kerviel, le trader accusé d'avoir fait perdre 4,9 milliards d'euros à la Société générale, aurait investi 800 milliards d'euros entre 2005 et 2007 (achats et ventes), selon son nouvel avocat Olivier Metzner, pour qui ces dérives ne pouvaient pas passer inaperçues de l'"employeur" : "C'est deux fois le budget de la France et 120 fois le budget du ministère de la justice ! A moins d'être non-voyant, on ne peut pas ne pas le voir", relève Me Metzner."
Mr. Kerviel's lawyer say the aggregate buys and sells of Mr. Kerviel totaled E800 billion ! And such sums, being twice the national budget of France and 120 times the budget of the ministry of Justice, could not have gone unnoticed. His point, I presume, is that Mr. Kerviel was simply trading under his bosses supervision and should not be fired under French law. Maybe he has a point.
"Inaperçu, e" - adjective
Inaperçu means unnoticed. The usual usage is with the verb passer, "passer inaperçu" meaning to go unnoticed.
La Phrase: Est-ce que Ken Lewis a crû que l'affaire de Merrill Lynch passerait inaperçue ?
Sentence: Did Ken Lewis believe that the Merrill Lynch affair would go unnoticed?
Thursday, April 23, 2009
Tidbits for Thursday
My meaning here is expressed in French as le détail la plus croustillant (the crunchiest details), not les potins (gossip) or la friandise (candy). When translating to another languge, one must think and not just grab the first word from the dictionary.
Hillary seems to be the iron fist for this administration, while Obama is the velvet glove. She hits the bad guys (read Iran, Taliban, etc.) in the mouth, while Obama bends over (read Castro, Chavez, etc.). I wonder if this is a coordinated effort or disarray ?
Apple reports good numbers - iPhone sales strong. I'd re-buy a pullback to 100 area for a trade, but otherwise will just stick with Mrs. B's position in Sky Fund and let it ride. I figure Apple eventually gets 25% of the PC market for its Macs, viz. every PC not tied to a work/job. In other Words, AAPL goes to 500 eventually (maybe five years).
China consumers are spending and buying. Makes sense. If you were slaving in a dusty village five years ago, how bad can this slowdown look ? American whiners live better than their parents did after World War II, yet gripe & moan how tough it is. Take a look at the old photos of houses built after World War II compared to today's. Or the kitchens, then, when most women actually could and DID cook. Today many grip while eating prepared foods or takeout.
Basic foods are so good and so cheap, IFF one is willing to prepare them.
Ken the Cad says Hank and Ben "made" him hide the looting and losses at Merrill Lynch from his shareholders. What a greasy swine ! This guy should be instantly fired.
Prices plunge in the Hamptons, says Blabberg. Aw, shucks.
Markets
I am doing nothing. Underinvested beefers are buying quickly on dips. My analogy is that the market is behaving like a balloon being pushed under water (by bears). When the pressure is released, it pops back up and out to higher levels.
I have new skim to deploy, but will wait. I have plenty invested already if the market rips to S&P 900 or 1000 ... which could happen.
Word of the Day (two for today)
"Homeopathic" - adjective [$10]
Homeopathic means of a diluted or insipid nature.
"Insipid" - adjective [$10]
Insipid means 1. lacking taste or savor: tasteless; 2. lacking in qualities that interest, stimulate or challenge: dull, flat. ALTERNATIVE: 1. lacking vigor or interest; 2. lacking flavor, tasteless.
Sentence: Timmy's "stress tests" will likely be seen to be homeopathic, worthless frauds. Why he is doing this static analysis in the dynamic situation is beyond comprehension. Reserves are made to be USED in stress, not saved. That's what J. P. Morgan ordered banks to do in 1907.
Le Mot du Jour
"Onde" - noun, feminine.
Onde means wave (generally and in physics). Ondes radioelectriques = radio waves; Ondes courts = short waves.
La Phrase: Les marchés des valeurs subissent les ondes de la vente et de l'achat.
Sentence: The securites markets are subject to waves of selling and buying.
Hillary seems to be the iron fist for this administration, while Obama is the velvet glove. She hits the bad guys (read Iran, Taliban, etc.) in the mouth, while Obama bends over (read Castro, Chavez, etc.). I wonder if this is a coordinated effort or disarray ?
Apple reports good numbers - iPhone sales strong. I'd re-buy a pullback to 100 area for a trade, but otherwise will just stick with Mrs. B's position in Sky Fund and let it ride. I figure Apple eventually gets 25% of the PC market for its Macs, viz. every PC not tied to a work/job. In other Words, AAPL goes to 500 eventually (maybe five years).
China consumers are spending and buying. Makes sense. If you were slaving in a dusty village five years ago, how bad can this slowdown look ? American whiners live better than their parents did after World War II, yet gripe & moan how tough it is. Take a look at the old photos of houses built after World War II compared to today's. Or the kitchens, then, when most women actually could and DID cook. Today many grip while eating prepared foods or takeout.
Basic foods are so good and so cheap, IFF one is willing to prepare them.
Ken the Cad says Hank and Ben "made" him hide the looting and losses at Merrill Lynch from his shareholders. What a greasy swine ! This guy should be instantly fired.
Prices plunge in the Hamptons, says Blabberg. Aw, shucks.
Markets
I am doing nothing. Underinvested beefers are buying quickly on dips. My analogy is that the market is behaving like a balloon being pushed under water (by bears). When the pressure is released, it pops back up and out to higher levels.
I have new skim to deploy, but will wait. I have plenty invested already if the market rips to S&P 900 or 1000 ... which could happen.
Word of the Day (two for today)
"Homeopathic" - adjective [$10]
Homeopathic means of a diluted or insipid nature.
"Insipid" - adjective [$10]
Insipid means 1. lacking taste or savor: tasteless; 2. lacking in qualities that interest, stimulate or challenge: dull, flat. ALTERNATIVE: 1. lacking vigor or interest; 2. lacking flavor, tasteless.
Sentence: Timmy's "stress tests" will likely be seen to be homeopathic, worthless frauds. Why he is doing this static analysis in the dynamic situation is beyond comprehension. Reserves are made to be USED in stress, not saved. That's what J. P. Morgan ordered banks to do in 1907.
Le Mot du Jour
"Onde" - noun, feminine.
Onde means wave (generally and in physics). Ondes radioelectriques = radio waves; Ondes courts = short waves.
La Phrase: Les marchés des valeurs subissent les ondes de la vente et de l'achat.
Sentence: The securites markets are subject to waves of selling and buying.
Wednesday, April 22, 2009
Tuesday, April 21, 2009
How Old is Too Old ?
Two recent example of foolishness by elderly high public officials brings this question to mind. I postulate that age 80 is a cut-off age to avoid probable nonsense from babbling forth into public discourse.
Permit me to adduce two bright examples.
Example I. John Paul Stevens (age 86) writes an opinion that Shakespeare didn't write the plays. WSJ: Justice Stevens, who dropped out of graduate study in English to join the Navy in 1941, is an Oxfordian -- that is, he believes the works ascribed to William Shakespeare actually were written by the 17th earl of Oxford, Edward de Vere. ... This puts much of the court squarely outside mainstream academic opinion, which equates denial of Shakespeare's authorship with the Flat Earth Society.
" 'Oh my,' said Coppelia Kahn, president of the Shakespeare Association of America and professor of English at Brown University, when informed of Justice Stevens's cause. 'Nobody gives any credence to these arguments,' she says. Nonetheless, since the 19th century, some have argued that only a nobleman could have produced writings so replete with intimate depictions of courtly life and exotic settings far beyond England."
Gosh, a common man couldn't read and talk to courtiers. Nor write such magnificent works. That required the nobility.
What nonsense !!! But what would I expect from one involved in saying that carbon dioxide - essential to plant life - is a pollutant. Or one who can't read the Second Amendment and understand its plain language.
Example II. Yesterday Paul Volcker (age 81) opened his mouth again. WSJ: "Mr. Volcker, who led the Fed in conquering double-digit inflation in the 1980s, questioned how the Fed can talk about both 2% inflation and price stability. 'I don't get it,' Mr. Volcker said, leading to a lively back-and-forth between the two central-bank heavyweights at a conference Saturday at Vanderbilt University." I suppose he doesn't think sub 2% core inflation rate is close enough, but wants to grind down millions of the common man to get it closer to zero.
Then on Blabbberg I heard his suggesting that Fed accountability be reviewed. Now ? Here's a guy who used his unaccountable authority to destroy millions of manufacturing jobs in the MidWest in the 1980s as he caused the dollar to soar to ridiculous levels with high interest rates. I call Paul Volcker the Neutron Bomb of central bankers. He saves the money while killing all the people. If one thinks ECB chairman Trichet is an Ostrich with his head in the sand, then Volcker is Pluto, god of the underworld far down below ground level.
The Fed under Bernanke is the only institution in DC that is working well. Maybe Volcker is opening his mouth to be in the spotlight after years in the shadows. Maybe he likes the attention Obama gave him. But he's dangerous to listen to. People I know personally heard him speak at a conference recently in NYC and told me everyone was thinking Volcker sounded completely foolish, bloviating on matters he knew nothing about.
Conclusion: The drop-off in wisdom begins at age 80. Let's make it a mandatory retirement age for public figures.
Markets
Big drop yesterday. After six weeks of green, some big, bright red days are expected. Barring bad news, I'll give the selling three days, then look for some adds.
Word of the Day
"Emend" - verb [$10]; from the card file
Emend means to remove errors or corruption.
Sentence: Excessive Congressional and "watchdog" efforts to emend the TARP appear to seriously harm its effectiveness. A similar failure due to undue focus on emending a program killed last summer's multi-billion $ mortgage relief program.
Le Mot du Jour
"Le pouvoir" - noun [sic], masculine. I am not referring the the common verb, "pouvoir".
Le pouvoir means power, ability, capacity; (Physics) power.
La Phrase: Les pouvoirs de l'État sont grandes et dangereux.
Sentence: The powers of the State are great and dangerous.
Permit me to adduce two bright examples.
Example I. John Paul Stevens (age 86) writes an opinion that Shakespeare didn't write the plays. WSJ: Justice Stevens, who dropped out of graduate study in English to join the Navy in 1941, is an Oxfordian -- that is, he believes the works ascribed to William Shakespeare actually were written by the 17th earl of Oxford, Edward de Vere. ... This puts much of the court squarely outside mainstream academic opinion, which equates denial of Shakespeare's authorship with the Flat Earth Society.
" 'Oh my,' said Coppelia Kahn, president of the Shakespeare Association of America and professor of English at Brown University, when informed of Justice Stevens's cause. 'Nobody gives any credence to these arguments,' she says. Nonetheless, since the 19th century, some have argued that only a nobleman could have produced writings so replete with intimate depictions of courtly life and exotic settings far beyond England."
Gosh, a common man couldn't read and talk to courtiers. Nor write such magnificent works. That required the nobility.
What nonsense !!! But what would I expect from one involved in saying that carbon dioxide - essential to plant life - is a pollutant. Or one who can't read the Second Amendment and understand its plain language.
Example II. Yesterday Paul Volcker (age 81) opened his mouth again. WSJ: "Mr. Volcker, who led the Fed in conquering double-digit inflation in the 1980s, questioned how the Fed can talk about both 2% inflation and price stability. 'I don't get it,' Mr. Volcker said, leading to a lively back-and-forth between the two central-bank heavyweights at a conference Saturday at Vanderbilt University." I suppose he doesn't think sub 2% core inflation rate is close enough, but wants to grind down millions of the common man to get it closer to zero.
Then on Blabbberg I heard his suggesting that Fed accountability be reviewed. Now ? Here's a guy who used his unaccountable authority to destroy millions of manufacturing jobs in the MidWest in the 1980s as he caused the dollar to soar to ridiculous levels with high interest rates. I call Paul Volcker the Neutron Bomb of central bankers. He saves the money while killing all the people. If one thinks ECB chairman Trichet is an Ostrich with his head in the sand, then Volcker is Pluto, god of the underworld far down below ground level.
The Fed under Bernanke is the only institution in DC that is working well. Maybe Volcker is opening his mouth to be in the spotlight after years in the shadows. Maybe he likes the attention Obama gave him. But he's dangerous to listen to. People I know personally heard him speak at a conference recently in NYC and told me everyone was thinking Volcker sounded completely foolish, bloviating on matters he knew nothing about.
Conclusion: The drop-off in wisdom begins at age 80. Let's make it a mandatory retirement age for public figures.
Markets
Big drop yesterday. After six weeks of green, some big, bright red days are expected. Barring bad news, I'll give the selling three days, then look for some adds.
Word of the Day
"Emend" - verb [$10]; from the card file
Emend means to remove errors or corruption.
Sentence: Excessive Congressional and "watchdog" efforts to emend the TARP appear to seriously harm its effectiveness. A similar failure due to undue focus on emending a program killed last summer's multi-billion $ mortgage relief program.
Le Mot du Jour
"Le pouvoir" - noun [sic], masculine. I am not referring the the common verb, "pouvoir".
Le pouvoir means power, ability, capacity; (Physics) power.
La Phrase: Les pouvoirs de l'État sont grandes et dangereux.
Sentence: The powers of the State are great and dangerous.
Monday, April 20, 2009
Patriot's Day
Today is Patriot's Day in Massachusetts - the holiday celebration of the Battle of Lexington and Concord in 1775 that showed how determined people could protect their freedom from oppression with some organization, bravery and personal firearms kept in their homes. One can read about this battle - really a series of skirmishes - in many books. From a purely military perspective, a British raid to the interior was stopped and then seriously mauled by a swarm of individuals and small companies of militia.
The celebrations here include re-enactments and the running of the Boston Marathon.
Some Déjà Vu Again
Hmmm ... it's April 20. Where is the financial industry re-regulation plan ? It's probably bogged down in a mud wrestling match with a swarm of lobbyists.
Perhaps some bashing of the short sellers is in order. A relative sent me the links to some interesting and partially illuminating video clips on the bear raids on Bear Stearns and Lehman and has data on the absolutely huge amounts of fraudulent short selling - aka "naked" short selling that occurred in those events. And what has the SEC done ? Nothing. Take a look at the clips and I'll suggest why the SEC has done nothing.
Illegal Naked Short Selling ...
Parts 1, 2 & 3 ...
http://www.youtube.com/watch?v=xUKSU1qahgE&annotation_id=annotation_177033&feature=iv
http://www.youtube.com/watch?v=NcjssQSthNU&feature=related
http://www.youtube.com/watch?v=Q48eSoTNByQ&annotation_id=annotation_911154&feature=iv
Pretty interesting, no?
Here's what the videos miss.
First, I suspect that a huge amount of the naked short selling was by the market making writers of the put options on Bear Stearns and Lehman Brothers. Yes, by the Street itself. Their trading desks have programs to hedge their positions in those options dynamically and they must do that or cover their open put writes. So yes, the hedge funds did initiate the positions, but the huge wave of naked shorts was principally from the Street itself. The analogy is a group of sharks feeding on one of their own who is wounded.
How does the Street do this ? Actually it was and still is legal due to the "Madoff Rule" - remember him ? The SEC in its "wisdom" - or maybe as a payoff - years ago at the prompting of Bernie Madoff made it legal for a "market maker" (read: The Street) to do naked short selling to hedge their book or to temporarily fill an order. And even last year when the SEC put on temporary restrictions on short selling, they exempted the Street "market makers". So all bear hedge funds had to do if they could not get a borrow was to buy lots of put options and the Street did the naked short selling for them.
What a world ! Is the SEC not completely corrupt ? If not corrupt, then completely incompetent ? In either case, why does it still exist ?
Second, the videos miss the huge role of credit default swaps. The bear hedge funds bought the puts and then put in large orders to buy credit default swaps against Bear Stearns and Lehman Brothers. Who could write such insurance against default ? No one. Those firms were in the position of borrowing overnight every night huge amounts of capital. Any fear would cause that necessary funding to dry up. [OK, they were inordinately stupid to fund themselves that way ... but that's another issue.] So the bear raiders tossed a smoke bomb via the credit default swaps to create panic. and then profited hugely on the put options. The Street did the rest.
A recent article by George Soros in the WSJ lays out his agreement with this blog on this matter. I wrote about George's agreement and congratulated him on reading this blog at the time. [ ;) joke ]
Overall, those videos are quite worth watching as they provide good facts, even if important aspects were missed.
Markets
Maybe we'll see a pullback this week. Lots of money is on the sidelines, looking for either a sign to get in, or a good entry point. But without bad news (GM perhaps ?) I suspect pullbacks will be limited. I have some money to invest but also want a good entry. I'll be patient.
Word of the Day
"Chiaroscuro" - noun [$10] from the art world
Chiaroscuro means 1. the treatment of light and shade in drawing and painting; 2. the use of contrast in literature; 3. (attrib.) half-revealed. From italian chiaro 'CLEAR' + oscuro 'DARK', 'OBSCURE'.
Sentence: Does not most public commentary on the stock market use an allegory of chiaroscuro with forces of darkness - the 'evil' bears - battling with the forces of light - the 'good' bulls ?
Le Mot du Jour
"Outil" - noun, masculine
Outil means implement, tool. Outillage [NM] means a set of tools.
La Phrase: Rambo a dit que le meilleur outil est l'esprit. Je suis d'accord.
Sentence: Rambo said that the best tool is the mind. I agree.
The celebrations here include re-enactments and the running of the Boston Marathon.
Some Déjà Vu Again
Hmmm ... it's April 20. Where is the financial industry re-regulation plan ? It's probably bogged down in a mud wrestling match with a swarm of lobbyists.
Perhaps some bashing of the short sellers is in order. A relative sent me the links to some interesting and partially illuminating video clips on the bear raids on Bear Stearns and Lehman and has data on the absolutely huge amounts of fraudulent short selling - aka "naked" short selling that occurred in those events. And what has the SEC done ? Nothing. Take a look at the clips and I'll suggest why the SEC has done nothing.
Illegal Naked Short Selling ...
Parts 1, 2 & 3 ...
http://www.youtube.com/watch?v=xUKSU1qahgE&annotation_id=annotation_177033&feature=iv
http://www.youtube.com/watch?v=NcjssQSthNU&feature=related
http://www.youtube.com/watch?v=Q48eSoTNByQ&annotation_id=annotation_911154&feature=iv
Pretty interesting, no?
Here's what the videos miss.
First, I suspect that a huge amount of the naked short selling was by the market making writers of the put options on Bear Stearns and Lehman Brothers. Yes, by the Street itself. Their trading desks have programs to hedge their positions in those options dynamically and they must do that or cover their open put writes. So yes, the hedge funds did initiate the positions, but the huge wave of naked shorts was principally from the Street itself. The analogy is a group of sharks feeding on one of their own who is wounded.
How does the Street do this ? Actually it was and still is legal due to the "Madoff Rule" - remember him ? The SEC in its "wisdom" - or maybe as a payoff - years ago at the prompting of Bernie Madoff made it legal for a "market maker" (read: The Street) to do naked short selling to hedge their book or to temporarily fill an order. And even last year when the SEC put on temporary restrictions on short selling, they exempted the Street "market makers". So all bear hedge funds had to do if they could not get a borrow was to buy lots of put options and the Street did the naked short selling for them.
What a world ! Is the SEC not completely corrupt ? If not corrupt, then completely incompetent ? In either case, why does it still exist ?
Second, the videos miss the huge role of credit default swaps. The bear hedge funds bought the puts and then put in large orders to buy credit default swaps against Bear Stearns and Lehman Brothers. Who could write such insurance against default ? No one. Those firms were in the position of borrowing overnight every night huge amounts of capital. Any fear would cause that necessary funding to dry up. [OK, they were inordinately stupid to fund themselves that way ... but that's another issue.] So the bear raiders tossed a smoke bomb via the credit default swaps to create panic. and then profited hugely on the put options. The Street did the rest.
A recent article by George Soros in the WSJ lays out his agreement with this blog on this matter. I wrote about George's agreement and congratulated him on reading this blog at the time. [ ;) joke ]
Overall, those videos are quite worth watching as they provide good facts, even if important aspects were missed.
Markets
Maybe we'll see a pullback this week. Lots of money is on the sidelines, looking for either a sign to get in, or a good entry point. But without bad news (GM perhaps ?) I suspect pullbacks will be limited. I have some money to invest but also want a good entry. I'll be patient.
Word of the Day
"Chiaroscuro" - noun [$10] from the art world
Chiaroscuro means 1. the treatment of light and shade in drawing and painting; 2. the use of contrast in literature; 3. (attrib.) half-revealed. From italian chiaro 'CLEAR' + oscuro 'DARK', 'OBSCURE'.
Sentence: Does not most public commentary on the stock market use an allegory of chiaroscuro with forces of darkness - the 'evil' bears - battling with the forces of light - the 'good' bulls ?
Le Mot du Jour
"Outil" - noun, masculine
Outil means implement, tool. Outillage [NM] means a set of tools.
La Phrase: Rambo a dit que le meilleur outil est l'esprit. Je suis d'accord.
Sentence: Rambo said that the best tool is the mind. I agree.
Friday, April 17, 2009
World Reserve Currency. V.
Today I elaborate on the prospects for the future of the World Reserve Currencies [sic].
Since World War II the United States of America has been the engine of growth for world trade and economic development. What evidence is there for this ? The US decadal trade deficit proves that conclusion. The people of the US have been willing, and the government has permitted them to, buy everything they wished to buy from the other nations of the world. Those nations received dollars that they used to buy the goods of other nations or to invest in US government debt to provide a base of value for their own local currencies. Or they could buy US real estate, stocks, or even whole companies. The high relative freedom in, to and from America gave confidence to all those dollars were worth something. The stable US republic and its military might gave confidence to all that the US was going to be there - period, full stop.
Now due to demographics and barring a new boom in immigration, the US population will level off and slowly age in future decades. From Marketing 101, the prime spending years of households is in the 25 to 49 age bracket. Some might say 54 is the upper limit to relatively high spending. In either case, growth in numbers in that age cohort will stop. The US over time will certainly stop importing more goods and services from other nations. The recent US trade deficit numbers show this fact and the trend rather clearly to anyone who wishes to look with an open mind.
That means fewer dollars flowing overseas to other nations' central banks. That means lower growth in their monetary bases. That means overall, lower growth in the world's money supply. And from simple monetary economics, that means lower world economic growth. Money supply growth is a necessary condition to economic growth - read Milton Friedman's work. Yes, lower ... unless other nations step up and start buying with their currencies.
What will that do ? That will provide a start to multiple world reserve currencies. This is a good thing, but will take decades to occur as the confidence in those currencies like the Euro or yen will take a long time to build. [Forget about the Chinese yuan until China becomes a stable democracy - maybe in 100 years. Ditto the Russia and the ruble.]
What about the IMF's "special drawing rights? Laughable. Does anyone have "confidence" in the UN ? Hahahahahaha.
For all the talk about other world reserve currencies, the simple truth is that the ball is in the court of other nations. If a nation (or nations) wants its (their) currency to be a reserve currency, prove it. Hello Europe, China ? Make yourself into a stable republic. Build up your own military ... for defensive purposes. Encourage your citizens to expand there horizons and BUY ! That goes to Japan, too. Prove you have staying power and are trustworthy. And economically expansive and free. Stop bloviating. You can do it in ... in 50 years, perhaps.
Markets
Why does receipt of a Nobel Prize for some sophisticated work in economics make these guys experts on banking ? I guess that alternate name for that prize might be the "Great Badge of Ego".
Word of the Day
"Tenebrous" - adjective [$10] literary; many adjective, verb and noun $1000 variations with the root, tenebr- exist, such as "tenebrity".
Tenebrous means dark, gloomy.
Sentence: Bunkerman is sick and tired of hearing endless tenebrous bloviations about the world economy, that all just seem to say, it's bad out there so it will stay bad. If that was true, the world would still be in the Great Depression of 1893 [sic !!!].
Le Mot Du Jour
"Homard" - noun, masculine.
Homard means lobster.
La Phrase: Selon l'homme du bunker, le homard est simplement un véhicle pour mettre de buerre dans la bouche.
Sentence: According to Bunkerman, lobster is simply a vehicle for putting butter into the mouth.
Since World War II the United States of America has been the engine of growth for world trade and economic development. What evidence is there for this ? The US decadal trade deficit proves that conclusion. The people of the US have been willing, and the government has permitted them to, buy everything they wished to buy from the other nations of the world. Those nations received dollars that they used to buy the goods of other nations or to invest in US government debt to provide a base of value for their own local currencies. Or they could buy US real estate, stocks, or even whole companies. The high relative freedom in, to and from America gave confidence to all those dollars were worth something. The stable US republic and its military might gave confidence to all that the US was going to be there - period, full stop.
Now due to demographics and barring a new boom in immigration, the US population will level off and slowly age in future decades. From Marketing 101, the prime spending years of households is in the 25 to 49 age bracket. Some might say 54 is the upper limit to relatively high spending. In either case, growth in numbers in that age cohort will stop. The US over time will certainly stop importing more goods and services from other nations. The recent US trade deficit numbers show this fact and the trend rather clearly to anyone who wishes to look with an open mind.
That means fewer dollars flowing overseas to other nations' central banks. That means lower growth in their monetary bases. That means overall, lower growth in the world's money supply. And from simple monetary economics, that means lower world economic growth. Money supply growth is a necessary condition to economic growth - read Milton Friedman's work. Yes, lower ... unless other nations step up and start buying with their currencies.
What will that do ? That will provide a start to multiple world reserve currencies. This is a good thing, but will take decades to occur as the confidence in those currencies like the Euro or yen will take a long time to build. [Forget about the Chinese yuan until China becomes a stable democracy - maybe in 100 years. Ditto the Russia and the ruble.]
What about the IMF's "special drawing rights? Laughable. Does anyone have "confidence" in the UN ? Hahahahahaha.
For all the talk about other world reserve currencies, the simple truth is that the ball is in the court of other nations. If a nation (or nations) wants its (their) currency to be a reserve currency, prove it. Hello Europe, China ? Make yourself into a stable republic. Build up your own military ... for defensive purposes. Encourage your citizens to expand there horizons and BUY ! That goes to Japan, too. Prove you have staying power and are trustworthy. And economically expansive and free. Stop bloviating. You can do it in ... in 50 years, perhaps.
Markets
Why does receipt of a Nobel Prize for some sophisticated work in economics make these guys experts on banking ? I guess that alternate name for that prize might be the "Great Badge of Ego".
Word of the Day
"Tenebrous" - adjective [$10] literary; many adjective, verb and noun $1000 variations with the root, tenebr- exist, such as "tenebrity".
Tenebrous means dark, gloomy.
Sentence: Bunkerman is sick and tired of hearing endless tenebrous bloviations about the world economy, that all just seem to say, it's bad out there so it will stay bad. If that was true, the world would still be in the Great Depression of 1893 [sic !!!].
Le Mot Du Jour
"Homard" - noun, masculine.
Homard means lobster.
La Phrase: Selon l'homme du bunker, le homard est simplement un véhicle pour mettre de buerre dans la bouche.
Sentence: According to Bunkerman, lobster is simply a vehicle for putting butter into the mouth.
Thursday, April 16, 2009
World Reserve Currency. IV.
Today I elaborate on criterion III, viz., "the currency must have a widely accepted value (even if such value fluctuates moderately). "
What destroys a nation's currency ? I mean actually destroys it, not the hyperventilation of the pundits about a bit of inflation.
1. Loss of a major war.
2. Revolution.
3. Close calls with either of the above.
Over the past 100 years, China, Germany, Japan, France, Italy, Spain, Russia and Great Britain have all suffered one or two or all of the above. The US has not.
What nation NOW has the military power to forestall ANY concern about loss of a major war?
The United States of America.
What nation has had a stable, democratically elected republic for over 200 years ?
The United States of America.
What nation's currency has over 100 years of continuous value for the purchase of goods or services ?
The United States of America. I recently received a quarter minted in 1910 as change at a drug store. That quarter was still accepted as true money. This is NOT true for even the British pound. Old currency is NOT accepted, but must be turned in at the Bank of England with great inconvenience.
I have a few hundred Deutche Marks in my safe that are now effectively worthless, as the Euro has replaced them. But old US currency even the 19th century is still acceptable as money. It's actually worth a lot more than its face value to collectors. But that money is still money.
What nation has a large enough economy to permit other nation's to be assured of being able to actually spend the money they hold as reserves for their own currency?
The United States of America.
Recent news reports show that nation of big mouth leaders, Red China, refusing to let Coca-Cola purchase even a simple juice company. So much for any value for the Chinese yuan in size. Government permission is needed to spend it. And that means risk of confiscation.
Markets
JPM good earnings. Fido Fund owns a good bit (average price 22) for the long term ... uh ... that is until it hits 45. hehe.
Word of the Day
"Wain" - noun [$10] archaic.
"Wainwright" - noun [$10]
Wain means a wagon. Wainwright means a wagon maker.
Sentence: LBJ's "anti-poverty" programs created poverty by providing incentives to climb onto the wain to ride while others pulled it. The Reagan years of supply side provided incentives to become a wainwright (metaphorically), not a mere rider. And the Clinton welfare reforms pushed many of the lazy riders off the wain.
Le Mot du Jour
"Agacer" - verb, regular -er conjugated like commencer.
Agacer means to irritate, to annoy; to egg on.
La Phrase: Une personne certaine qui commente sur ce blog s'amuse à agacer tout le monde. C'et liberté.
Sentence: A certain person who comments on this blog enjoys himself by irritating everyone. That's freedom !
What destroys a nation's currency ? I mean actually destroys it, not the hyperventilation of the pundits about a bit of inflation.
1. Loss of a major war.
2. Revolution.
3. Close calls with either of the above.
Over the past 100 years, China, Germany, Japan, France, Italy, Spain, Russia and Great Britain have all suffered one or two or all of the above. The US has not.
What nation NOW has the military power to forestall ANY concern about loss of a major war?
The United States of America.
What nation has had a stable, democratically elected republic for over 200 years ?
The United States of America.
What nation's currency has over 100 years of continuous value for the purchase of goods or services ?
The United States of America. I recently received a quarter minted in 1910 as change at a drug store. That quarter was still accepted as true money. This is NOT true for even the British pound. Old currency is NOT accepted, but must be turned in at the Bank of England with great inconvenience.
I have a few hundred Deutche Marks in my safe that are now effectively worthless, as the Euro has replaced them. But old US currency even the 19th century is still acceptable as money. It's actually worth a lot more than its face value to collectors. But that money is still money.
What nation has a large enough economy to permit other nation's to be assured of being able to actually spend the money they hold as reserves for their own currency?
The United States of America.
Recent news reports show that nation of big mouth leaders, Red China, refusing to let Coca-Cola purchase even a simple juice company. So much for any value for the Chinese yuan in size. Government permission is needed to spend it. And that means risk of confiscation.
Markets
JPM good earnings. Fido Fund owns a good bit (average price 22) for the long term ... uh ... that is until it hits 45. hehe.
Word of the Day
"Wain" - noun [$10] archaic.
"Wainwright" - noun [$10]
Wain means a wagon. Wainwright means a wagon maker.
Sentence: LBJ's "anti-poverty" programs created poverty by providing incentives to climb onto the wain to ride while others pulled it. The Reagan years of supply side provided incentives to become a wainwright (metaphorically), not a mere rider. And the Clinton welfare reforms pushed many of the lazy riders off the wain.
Le Mot du Jour
"Agacer" - verb, regular -er conjugated like commencer.
Agacer means to irritate, to annoy; to egg on.
La Phrase: Une personne certaine qui commente sur ce blog s'amuse à agacer tout le monde. C'et liberté.
Sentence: A certain person who comments on this blog enjoys himself by irritating everyone. That's freedom !
Wednesday, April 15, 2009
World Reserve Currency. III.
Today I elaborate on criteria II, viz. "the currency must be widely used in international trade."
Why ?
To state the obvious, a world reserve currency must be USEFUL in the world, viz., useful in world trade as that's what money is used for: trade in goods and services.
Hmmm ... can anyone think of commodities that are priced in something other than dollars ?
Cocoa is priced principally in British pounds, as 40% of the world's supplies come from Ivory Coast, a former British colony. I suppose there are others, but I can't think of them now.
Nothing is priced in Chinese yuan. So much for the bloviation of the Red Chinese leader. Nothing is priced in rubles. Ditto for Putin's blather. How about the Euro ? Uh ... zippo. The Euros only been around for about ten years. Eventually perhaps. The Swiss franc ? I suppose cuckoo clocks are priced in Swiss francs. The Japanese yen ? Nope. The Canadian $ ? Nope. The Aussie dollar ? Nope. Gold ? nope. Silver ? Nope.
The US dollar ? Hmm, that list would fill the page.
What about the SDR, the International Monetary Fund's currency blend ? Nope. Nothing is priced in it, not even economists' salaries.
How can something be a "reserve" if it's not very, very useful for trade ?
Lots of pundits and polemics in the US and Arabia and other nations talk about pricing goods and services in other currencies, but they all seem to run into the problems discussed in criteria number I. Not enough of those other currencies are held around the world to make that practical. The cause of that fact was written about Monday, so I won't repeat it.
The US dollar is the only currency widely accepted in international trade and is the pricing currency for nearly every widely traded commodity in the world. No other currency is even a glimmer in the eye of the dreamer.
Markets
Copper is still rising - now $2.16/lb. Maybe those smart buyers in Red China are stocking up at low prices in advance of the next boom.
Word of the Day
"Eldritch" - adjective (Scottish) [$10]
Eldritch means 1. wierd; 2. hideous.
Sentence: The eldritch SDR of the IMF is a joke, being a mere computer conflation of the currencies of the IMF's major contributors of capital.
Le Mot du Jour
"Or" - noun, masculine.
Or means gold, gilt, guilding.
La Phrase: La régle en or: on qui a l'or fait les régles.
Sentence: The golden rule: he who has the gold makes the rules.
Why ?
To state the obvious, a world reserve currency must be USEFUL in the world, viz., useful in world trade as that's what money is used for: trade in goods and services.
Hmmm ... can anyone think of commodities that are priced in something other than dollars ?
Cocoa is priced principally in British pounds, as 40% of the world's supplies come from Ivory Coast, a former British colony. I suppose there are others, but I can't think of them now.
Nothing is priced in Chinese yuan. So much for the bloviation of the Red Chinese leader. Nothing is priced in rubles. Ditto for Putin's blather. How about the Euro ? Uh ... zippo. The Euros only been around for about ten years. Eventually perhaps. The Swiss franc ? I suppose cuckoo clocks are priced in Swiss francs. The Japanese yen ? Nope. The Canadian $ ? Nope. The Aussie dollar ? Nope. Gold ? nope. Silver ? Nope.
The US dollar ? Hmm, that list would fill the page.
What about the SDR, the International Monetary Fund's currency blend ? Nope. Nothing is priced in it, not even economists' salaries.
How can something be a "reserve" if it's not very, very useful for trade ?
Lots of pundits and polemics in the US and Arabia and other nations talk about pricing goods and services in other currencies, but they all seem to run into the problems discussed in criteria number I. Not enough of those other currencies are held around the world to make that practical. The cause of that fact was written about Monday, so I won't repeat it.
The US dollar is the only currency widely accepted in international trade and is the pricing currency for nearly every widely traded commodity in the world. No other currency is even a glimmer in the eye of the dreamer.
Markets
Copper is still rising - now $2.16/lb. Maybe those smart buyers in Red China are stocking up at low prices in advance of the next boom.
Word of the Day
"Eldritch" - adjective (Scottish) [$10]
Eldritch means 1. wierd; 2. hideous.
Sentence: The eldritch SDR of the IMF is a joke, being a mere computer conflation of the currencies of the IMF's major contributors of capital.
Le Mot du Jour
"Or" - noun, masculine.
Or means gold, gilt, guilding.
La Phrase: La régle en or: on qui a l'or fait les régles.
Sentence: The golden rule: he who has the gold makes the rules.
Tuesday, April 14, 2009
World Reserve Currency. II.
In response to a question, the reason for these posts about a "World Reserve Currency" is the recent public suggestions by Red China and others that a new reserve currency replace the US dollar. In my thinking about the matter, the realization that those proposing such and the pundits discussing same had no understanding about what they were bloviating quickly become evident.
Yesterday the general criterion for a currency to be a "World Reserve Currency" were listed and the defects of gold and silver for such role were explained.
Today I elaborate on criterion I, viz. "The currency is held by central banks of many nations to provide a base of value for their local currencies."
The currency is, or will be, held by the central banks of many nations to provide a base of value for their local currencies. That's what being a "reserve currency" means, The Reserve Currency is the core monetary base of those nations, in addition to whatever small amounts of gold or silver they own. Let's call the Reserve Currency "RC" for neutrality of the discussion, and the various local currencies "LC". The money supply of those nations becomes inextricably tied to the amount of RC their central banks hold. If the nation expands LC too much compared to its RC, it will likely experience inflation and the perception by its people that the value of their LC is being diminished.
The nation will need RC for this international trade. If too much LC exists and creates more and more demand for imports (that must be paid in RC), that demand for RC to purchase those will slowly drive down the value of LC. Temporarily this demand for RC can be filled by loans. But the amount of loans is limited or default risk grows too large. Thus one can see that the nation must have some net inflows of RC - Reserve Currency - broadly over the long term to have an LC - local currency - that maintains its value.
One can see how and why the local currencies of nations like Argentina and Ukraine can collapse: they simply run out of dollars for international trade and debt service as too much local currency is printed compared to the amounts of reserve currencies they hold. And one can see that without the RC, the population of the nation will be unable to operate in international trade or to purchase anything not produced internally. That people will lose confidence of the local currency's value quite rapidly in any crisis or stress. Such a government can maintain the value of the LC internally only be restricting the freedom of the people at act in international trade, whihc means foregoing the enormous benefits of having a free economy with free people.
Tomorrow I address Criterion II. Over this week I plan to explore all the dimensions of this fascinating subject.
Goldman, Sachs
Hmmm ... GS wants to sell stock to be able to pay its employees more. Is that a reason to buy the stock ? I think not, without serious pay cuts over prior practice. Let them buy it themselves and go private.
Word of the Day
"Temerity" - noun [$10]; from the card file
Temerity means 1. rashness; 2. audacity, impudence.
Sentence: I suppose one could call it temerity for Red China to suggest a new world reserve currency is needed, but I call it simple stupidity on the part of leader of its Communist Party on what the economics of freedom are.
Le Mot du Jour
"Raillerie" - noun, feminine.
"Railleur, railleuse" - adjective and noun (M form)
"Railleusement" - adverb
Raillerie means mockery, scoffing.
Railleur means (adjective) mocking, derisive; (noun) scoffer, mocker.
Railleusement means mockingly, derisively, scoffingly.
La Phrase: L'homme du bunker est le railleur du dirigeant de Chine rouge aujourd'hui.
Sentence: Bunkerman is the mocker of the leader of Red China today.
Yesterday the general criterion for a currency to be a "World Reserve Currency" were listed and the defects of gold and silver for such role were explained.
Today I elaborate on criterion I, viz. "The currency is held by central banks of many nations to provide a base of value for their local currencies."
The currency is, or will be, held by the central banks of many nations to provide a base of value for their local currencies. That's what being a "reserve currency" means, The Reserve Currency is the core monetary base of those nations, in addition to whatever small amounts of gold or silver they own. Let's call the Reserve Currency "RC" for neutrality of the discussion, and the various local currencies "LC". The money supply of those nations becomes inextricably tied to the amount of RC their central banks hold. If the nation expands LC too much compared to its RC, it will likely experience inflation and the perception by its people that the value of their LC is being diminished.
The nation will need RC for this international trade. If too much LC exists and creates more and more demand for imports (that must be paid in RC), that demand for RC to purchase those will slowly drive down the value of LC. Temporarily this demand for RC can be filled by loans. But the amount of loans is limited or default risk grows too large. Thus one can see that the nation must have some net inflows of RC - Reserve Currency - broadly over the long term to have an LC - local currency - that maintains its value.
One can see how and why the local currencies of nations like Argentina and Ukraine can collapse: they simply run out of dollars for international trade and debt service as too much local currency is printed compared to the amounts of reserve currencies they hold. And one can see that without the RC, the population of the nation will be unable to operate in international trade or to purchase anything not produced internally. That people will lose confidence of the local currency's value quite rapidly in any crisis or stress. Such a government can maintain the value of the LC internally only be restricting the freedom of the people at act in international trade, whihc means foregoing the enormous benefits of having a free economy with free people.
Tomorrow I address Criterion II. Over this week I plan to explore all the dimensions of this fascinating subject.
Goldman, Sachs
Hmmm ... GS wants to sell stock to be able to pay its employees more. Is that a reason to buy the stock ? I think not, without serious pay cuts over prior practice. Let them buy it themselves and go private.
Word of the Day
"Temerity" - noun [$10]; from the card file
Temerity means 1. rashness; 2. audacity, impudence.
Sentence: I suppose one could call it temerity for Red China to suggest a new world reserve currency is needed, but I call it simple stupidity on the part of leader of its Communist Party on what the economics of freedom are.
Le Mot du Jour
"Raillerie" - noun, feminine.
"Railleur, railleuse" - adjective and noun (M form)
"Railleusement" - adverb
Raillerie means mockery, scoffing.
Railleur means (adjective) mocking, derisive; (noun) scoffer, mocker.
Railleusement means mockingly, derisively, scoffingly.
La Phrase: L'homme du bunker est le railleur du dirigeant de Chine rouge aujourd'hui.
Sentence: Bunkerman is the mocker of the leader of Red China today.
Monday, April 13, 2009
World Reserve Currency. I
This is the first in a short series about the necessary and sufficient conditions for a currency to be a reserve currency for the world.
First, what is a world reserve currency ?
A world reserve currency is a currency that has three characteristics. The currency is (I) held by central banks of many nations to provide a base of value for their local currencies; (II) the currency must be widely used in international trade; and (III) the currency must have a widely accepted value (even if such value fluctuates moderately). The second condition relates to the practical aspects of money. Money is used to trade goods and services. The third condition is required for nations and people to be willing to hold it for long periods of time - they must be satisfied they can buy something with it eventually.
This second characteristic is where gold and silver fail. There is simply not enough gold & silver in the world and it is bulky and heavy. I know that first hand. The gold bugs say the value of gold & silver should rise to the level needed to supply enough money to be useful. Unfortunately, that level is so far above their intrinsic value as jewelry or for industrial purposes that the third condition is violated. [By the way, I include silver as it was widely used before paper currencies to provide small change - viz., ready money.]
Now, let's deal with condition I. What is obvious about that condition ? tick ... tick ... tick ... the music is running out.
A world reserve currency MUST ... and I mean that MUST ... be exported to those other central banks. How else can it be their reserves ? Any nation that proposes to have its currency become a world reserve currency MUST run a large current account deficit. That eliminates the euro for now. Major European nations like Germany want to have export driven economies. Euros just won't flow overseas until European behavior changes. And the same applies to the yen. And the same applies to the Swiss franc. And even the Chinese yuan. The British pound could once have qualified - it once was a world reserve currency before the two world wars.
Only the dollar is left standing ... for now. Other nations' behavior may change in the future, however. I'll write more on this subject this week.
Markets
Copper continues to rise - now over $2.10/lb. A recent article in FT ascribed some of this strength to the moribund scrape market. That's probably true as the scrap market may have become somewhat uneconomic at low prices. But the demand is there, no doubt.
Word of the Day
"Iatrogenic" - adjective [$10]
Iatrogenic means caused by medical examination or treatment. The word arises from the Greek 'iatros' (physician) + GENIC.
Sentence: Let's hope Timmy's stress tests don't cause iatrogenic problems in the banks.
Le Mot du Jour
"Pis" - adjective, adverb and noun [pronounced 'pee']; several expressions use this word.
Pis means worse. "qui pis est" - "what is worse"; "aller de ~ en ~" - to get worse and worse.
Le pis means the worst (NB: the superlative).
La Phrase: La violence va de pis en pis à Bangkok.
Sentence: The violence gets worse and worse in Bangkok.
First, what is a world reserve currency ?
A world reserve currency is a currency that has three characteristics. The currency is (I) held by central banks of many nations to provide a base of value for their local currencies; (II) the currency must be widely used in international trade; and (III) the currency must have a widely accepted value (even if such value fluctuates moderately). The second condition relates to the practical aspects of money. Money is used to trade goods and services. The third condition is required for nations and people to be willing to hold it for long periods of time - they must be satisfied they can buy something with it eventually.
This second characteristic is where gold and silver fail. There is simply not enough gold & silver in the world and it is bulky and heavy. I know that first hand. The gold bugs say the value of gold & silver should rise to the level needed to supply enough money to be useful. Unfortunately, that level is so far above their intrinsic value as jewelry or for industrial purposes that the third condition is violated. [By the way, I include silver as it was widely used before paper currencies to provide small change - viz., ready money.]
Now, let's deal with condition I. What is obvious about that condition ? tick ... tick ... tick ... the music is running out.
A world reserve currency MUST ... and I mean that MUST ... be exported to those other central banks. How else can it be their reserves ? Any nation that proposes to have its currency become a world reserve currency MUST run a large current account deficit. That eliminates the euro for now. Major European nations like Germany want to have export driven economies. Euros just won't flow overseas until European behavior changes. And the same applies to the yen. And the same applies to the Swiss franc. And even the Chinese yuan. The British pound could once have qualified - it once was a world reserve currency before the two world wars.
Only the dollar is left standing ... for now. Other nations' behavior may change in the future, however. I'll write more on this subject this week.
Markets
Copper continues to rise - now over $2.10/lb. A recent article in FT ascribed some of this strength to the moribund scrape market. That's probably true as the scrap market may have become somewhat uneconomic at low prices. But the demand is there, no doubt.
Word of the Day
"Iatrogenic" - adjective [$10]
Iatrogenic means caused by medical examination or treatment. The word arises from the Greek 'iatros' (physician) + GENIC.
Sentence: Let's hope Timmy's stress tests don't cause iatrogenic problems in the banks.
Le Mot du Jour
"Pis" - adjective, adverb and noun [pronounced 'pee']; several expressions use this word.
Pis means worse. "qui pis est" - "what is worse"; "aller de ~ en ~" - to get worse and worse.
Le pis means the worst (NB: the superlative).
La Phrase: La violence va de pis en pis à Bangkok.
Sentence: The violence gets worse and worse in Bangkok.
Friday, April 10, 2009
Happy Easter
After yesterday's huge rally on the Wells Fargo earnings surprise, the markets are closed today for Good Friday.
When working on Wall Street (metaphorically), I used to joke to friends that the markets were closed because Wall Street people were so religious. That usually got a laugh after the initial shock, when they realized I was being sardonic. Now, I suppose one would say that Wall Street is closed because they are worshippers of Satan so need to hide on that holy day. The truth is that Wall Street is closed nowadays simply due to two facts: (1) it always was a holiday for over a hundred years, and (2) European markets are closed as this is a big holiday for all in much of Europe.
New
The US trade deficit fell by a huge amount. Imports dropped big while exports held up. This has much more Global meaning than is generally recognized. Global is capitalized there for more literal and metaphorical reasons. Perhaps now I can write about a theory over which I've been noodling for a couple years.
Word of the Day
Conflate - verb [$10]
Conflate means to combine (two variant texts, for example) into one whole.
Sentence: Bunkerman intends to conflate notions of the US trade deficit and the dollar being the world reserve currency into a theory of the world money supply.
Le Mot du Jour
"Avoir l'intention" - compound verb expression
Avoir l'intention" means to intend; Avoir l'intention de faire quelque chose means to intent to do something.
La Phrase: L'homme du bunker a l'intention de étudier la langue allemande ce week-end.
Sentence: Bunkerman intends to study the German language this weekend.
When working on Wall Street (metaphorically), I used to joke to friends that the markets were closed because Wall Street people were so religious. That usually got a laugh after the initial shock, when they realized I was being sardonic. Now, I suppose one would say that Wall Street is closed because they are worshippers of Satan so need to hide on that holy day. The truth is that Wall Street is closed nowadays simply due to two facts: (1) it always was a holiday for over a hundred years, and (2) European markets are closed as this is a big holiday for all in much of Europe.
New
The US trade deficit fell by a huge amount. Imports dropped big while exports held up. This has much more Global meaning than is generally recognized. Global is capitalized there for more literal and metaphorical reasons. Perhaps now I can write about a theory over which I've been noodling for a couple years.
Word of the Day
Conflate - verb [$10]
Conflate means to combine (two variant texts, for example) into one whole.
Sentence: Bunkerman intends to conflate notions of the US trade deficit and the dollar being the world reserve currency into a theory of the world money supply.
Le Mot du Jour
"Avoir l'intention" - compound verb expression
Avoir l'intention" means to intend; Avoir l'intention de faire quelque chose means to intent to do something.
La Phrase: L'homme du bunker a l'intention de étudier la langue allemande ce week-end.
Sentence: Bunkerman intends to study the German language this weekend.
Thursday, April 9, 2009
Resilience ?
This stock market is showing some surprising resilience for the past two weeks. A big selloff yesterday seemed certain, but "someone" stepped up to buy. Whether it is real buyers or beefers, "someone" wants more stock long positions.
Copper prices recovered a minor dip and are back over $2/lb.
Technology and resource stocks seem to have real buying behind them. Mirabile dictu ! That is 80% of the Fido Fund. REITs have relative strength, too. If the Fed can re-activate commercial real estate lending with the expanded TALF to give good buildings a refinancing takeout, most of the problems in that sector vaporize.
It's earnings season, so be wary - bad news could reinvigorate the bears. However, short interest is already high and there are huge amounts of cash in beefers, so good news could spark a buying panic.
I have a couple names that I'm thinking about adding to the Fido Fund.
Word of the Day
"Dysfunction" - noun [$10]; "Dysfunctional" - adjective [$10]; from the card file
Dysfunction means impaired or abnormal functioning.
Dysfunctional means having, expressing or showing dysfunction.
Sentence: Can anyone dispute that the SEC is completely dysfunctional, as most recently re-proved yesterday by their anemic or corrupt short selling proposals put out for comment ?
Le Mot du Jour
"Perte" - noun, feminine
La perte means 1. loss; 2. ruin; 3. loss or waste.
Le Phrase: Les investisseurs ont très fortes pertes et ils hésiteront beaucoup à acheter des valeurs.
Sentence: Investors have very large losses and they will be wary of buying stocks.
Copper prices recovered a minor dip and are back over $2/lb.
Technology and resource stocks seem to have real buying behind them. Mirabile dictu ! That is 80% of the Fido Fund. REITs have relative strength, too. If the Fed can re-activate commercial real estate lending with the expanded TALF to give good buildings a refinancing takeout, most of the problems in that sector vaporize.
It's earnings season, so be wary - bad news could reinvigorate the bears. However, short interest is already high and there are huge amounts of cash in beefers, so good news could spark a buying panic.
I have a couple names that I'm thinking about adding to the Fido Fund.
Word of the Day
"Dysfunction" - noun [$10]; "Dysfunctional" - adjective [$10]; from the card file
Dysfunction means impaired or abnormal functioning.
Dysfunctional means having, expressing or showing dysfunction.
Sentence: Can anyone dispute that the SEC is completely dysfunctional, as most recently re-proved yesterday by their anemic or corrupt short selling proposals put out for comment ?
Le Mot du Jour
"Perte" - noun, feminine
La perte means 1. loss; 2. ruin; 3. loss or waste.
Le Phrase: Les investisseurs ont très fortes pertes et ils hésiteront beaucoup à acheter des valeurs.
Sentence: Investors have very large losses and they will be wary of buying stocks.
Wednesday, April 8, 2009
Another Whatnot Wednesday
Not much is going on. And I slept in.
The SEC meets to discuss revised short selling rules. But they aren't talking about derivatives or market maker exceptions or anything else vital to the success of the regulations.
A Chinese ring to supply Iran's nuclear program is uncovered. What a shock ! Gosh, and China opposes sanctions on Iran and North Korea. Russia and China just can't seem to get away from the old behavior patterns of the Cold War - the endless monkeyshine* to create problems for the free world, particularly the US. [*a recent Word of the Day]
Alcoa reports problematic revenues and earnings. That's no surprise from a a firm with chronic problems and poor management.
Markets
Good pullback yesterday and futures are down this morning. I am waiting for this correction to run its course to make some re-adds in all my funds.
Word of the Day
"Deracinate" - verb, transitive [$10]; literary
Deracinate means 1. to tear up by the roots; 2. obliterate, expurge.
Sentence: Today's SEC hearing on short selling and its neglect of credit default swaps is a perfect example of why the entire system of financial regulation must be deracinated and created anew as a rational structure.
Le Mot du Jour
"Exiger" - verb, transitive; regular -er conjugation like manger
Exiger means to demand, to require, to insist on (qch de qn - sth of/from sb)
Le Phrase: Le gouvernement exige trop d'impôts de l'homme du bunker.
Sentence: The government demands too many taxes from Bunkerman.
The SEC meets to discuss revised short selling rules. But they aren't talking about derivatives or market maker exceptions or anything else vital to the success of the regulations.
A Chinese ring to supply Iran's nuclear program is uncovered. What a shock ! Gosh, and China opposes sanctions on Iran and North Korea. Russia and China just can't seem to get away from the old behavior patterns of the Cold War - the endless monkeyshine* to create problems for the free world, particularly the US. [*a recent Word of the Day]
Alcoa reports problematic revenues and earnings. That's no surprise from a a firm with chronic problems and poor management.
Markets
Good pullback yesterday and futures are down this morning. I am waiting for this correction to run its course to make some re-adds in all my funds.
Word of the Day
"Deracinate" - verb, transitive [$10]; literary
Deracinate means 1. to tear up by the roots; 2. obliterate, expurge.
Sentence: Today's SEC hearing on short selling and its neglect of credit default swaps is a perfect example of why the entire system of financial regulation must be deracinated and created anew as a rational structure.
Le Mot du Jour
"Exiger" - verb, transitive; regular -er conjugation like manger
Exiger means to demand, to require, to insist on (qch de qn - sth of/from sb)
Le Phrase: Le gouvernement exige trop d'impôts de l'homme du bunker.
Sentence: The government demands too many taxes from Bunkerman.
Tuesday, April 7, 2009
An Example of "The Swamp"
Yesterday I called DC "The Swamp". This simple metaphor is really a long term allegory of corruption and greed in DC that sucks up money and doles out crumbs, while claiming through their propaganda machines to solve all the problems of humanity. Little or nothing really gets done in The Swamp and no problem is ever solved. But the lawmakers, bureaucrats,lawyers and lobbyists get their skim. Here is an example of how such "issues" can easily be solved.
Short Selling
I. Naked Short Selling
There is obvious fraud in selling short stock not actually borrowed, aka "naked short selling". Yet this still occurs, albeit at lower levels. Buyers have to deliver cash on time, so why do some short sellers not have to deliver stock ? Why is this STILL an issue and STILL not solved ? Corruption and greed by the SEC and the Street.
Here is the two-fold answer: (A) a mandatory, no exceptions, instant buy-in for ANY short sale not delivered on time, (B) an automatic fine equal to the great of 2% or the profit on the short sale, and (C) a prohibition on such entity from further short selling for 90 days. No exceptions means simply no exceptions for market makers, ETFs, or anyone. Fraud is simply fraud and must be punished. Naked short selling would disappear overnight with this simply rule.
2. Uptick Rule
In case the SEC has forgotten, the raison d'être of the public securities markets is for investors to be able to buy and sell their investments. It's not designed for traders. So when news comes out that is negative, who should be at the head of the line for selling ? The owners - the investors. What is a reasonable fluctuation range for a stock in the absence of news ? Maybe 2% ? or 3% ? That's a lot - $3 on a $100 stock. Or use a sliding percentage scale based on the price level.
Prohibit ANY short selling, whether by market makers or ETFs or anyone, whether in stocks or any derivatives, when a stock has declined by 3% on a day from its prior day closing price. PERIOD. Big price drops will occur, when the owners sell madly on news. But they won't occur from bear raids.
Smart short sellers will make money be shorting BEFORE the news. Raiders and computer short sellers will be eviscerated.
OK, that solves the issues of short selling permanently. Those in DC who are not part of the solutions are part of the problem.
An Observation
Why is Australia able to fund a superb national broadband program but the US is not ?
BBC: "The Australian government has announced a massive project to extend broadband Internet systems across the country. ... "the government to choose instead the more ambitious fibre-to-the-home network offering 100 megabits per second, accessible by 90% of Australian homes. " The cost is A$43 over eight years.
Hello Barack ? Why isn't YOUR stimulus plan doing this ?
Word of the Day
"Confute" - verb, transitive [$10]; from the card file
Confute means 1. prove (a person)to be in error; 2. prove (an argument) to be false.
Sentence: Can anyone confute my assertion that a naked short sale is a fraud ? Why is this still an issue ? Answer: the SEC is part of the Swamp.
Le Mot du Jour
"Prêter" - verb, regular -er conjugation
Prêter means (transitive) to lend, to attribute; (VT indirect with à) to be open to.
La Phrase: L'homme du bunker prête toujours à nouvelles idées, mais y adopte avec modération.
Sentence: Bunkerman is always open to new ideas, but adopts them sparingly.
Short Selling
I. Naked Short Selling
There is obvious fraud in selling short stock not actually borrowed, aka "naked short selling". Yet this still occurs, albeit at lower levels. Buyers have to deliver cash on time, so why do some short sellers not have to deliver stock ? Why is this STILL an issue and STILL not solved ? Corruption and greed by the SEC and the Street.
Here is the two-fold answer: (A) a mandatory, no exceptions, instant buy-in for ANY short sale not delivered on time, (B) an automatic fine equal to the great of 2% or the profit on the short sale, and (C) a prohibition on such entity from further short selling for 90 days. No exceptions means simply no exceptions for market makers, ETFs, or anyone. Fraud is simply fraud and must be punished. Naked short selling would disappear overnight with this simply rule.
2. Uptick Rule
In case the SEC has forgotten, the raison d'être of the public securities markets is for investors to be able to buy and sell their investments. It's not designed for traders. So when news comes out that is negative, who should be at the head of the line for selling ? The owners - the investors. What is a reasonable fluctuation range for a stock in the absence of news ? Maybe 2% ? or 3% ? That's a lot - $3 on a $100 stock. Or use a sliding percentage scale based on the price level.
Prohibit ANY short selling, whether by market makers or ETFs or anyone, whether in stocks or any derivatives, when a stock has declined by 3% on a day from its prior day closing price. PERIOD. Big price drops will occur, when the owners sell madly on news. But they won't occur from bear raids.
Smart short sellers will make money be shorting BEFORE the news. Raiders and computer short sellers will be eviscerated.
OK, that solves the issues of short selling permanently. Those in DC who are not part of the solutions are part of the problem.
An Observation
Why is Australia able to fund a superb national broadband program but the US is not ?
BBC: "The Australian government has announced a massive project to extend broadband Internet systems across the country. ... "the government to choose instead the more ambitious fibre-to-the-home network offering 100 megabits per second, accessible by 90% of Australian homes. " The cost is A$43 over eight years.
Hello Barack ? Why isn't YOUR stimulus plan doing this ?
Word of the Day
"Confute" - verb, transitive [$10]; from the card file
Confute means 1. prove (a person)to be in error; 2. prove (an argument) to be false.
Sentence: Can anyone confute my assertion that a naked short sale is a fraud ? Why is this still an issue ? Answer: the SEC is part of the Swamp.
Le Mot du Jour
"Prêter" - verb, regular -er conjugation
Prêter means (transitive) to lend, to attribute; (VT indirect with à) to be open to.
La Phrase: L'homme du bunker prête toujours à nouvelles idées, mais y adopte avec modération.
Sentence: Bunkerman is always open to new ideas, but adopts them sparingly.
Monday, April 6, 2009
Monday Meandering
Coppers prices crack through $2/lb on the upside.
Obama Fund is in the green again, but Fido Fund is crushing it.
FYI, Obama Fund contains high risk stocks chosen from industries that have done well in the past coming out of severe recessions. The principal selection criterion is a potential to rise by 3x on a "return to normalcy" in 18 months.
Fido Fund includes my old favorites, principally in the resource sector, plus select technology and banking stocks.
Both funds were red a month ago. I added some to their positions then, and trimmed some last week in Obama Fund.
By the way, Obama Fund is so named as it requires Obama's his success in reviving the economy (or at least not screwing it up) for the Fund to succeed. Fido Fund is named after my old dog, Fido, whose name means "loyal", hence it includes my old favorite stocks.
I group my stocks this way to evaluate the strategies I'm using in these speculations.
The Swamp
That's DC. WSJ reports Larry Summers received almost $3 million in speaking fees from hedge funds. These looters in DC seems to have no shame in accepting what are obviously bribes. I suppose the chances of real regulation of hedge funds is rather dim. Summers and Shapiro and the clique will probably kill it quietly, unless France and Europe keep pushing hard. Sigh ... here I am hoping for France to provide some leadership for the US. What is the world coming to ?
North Korea, etc.
That gangster state tests its ICBM program. China and Russia seems unwilling to do anything. Of course, they are not threatened yet and like to see the US and its allies worry. This is why Russia opposes European anti-missile defenses. Russia supplies Iran with nuclear technology and probably missile technology to make money and likes to see the US squirm. But then Russia squeals when the US acts in defense of Europe.
Russian leaders like Putin and Chinese communist leaders seem unable to think outside the box, viz. the old cold war confrontational behavior.
Word of the Day
"Confraternity" - noun [$10]
Confraternity means a brotherhood, especially religious or charitable.
Sentence: The confraternity of DC leaders, regulators and the rich, moneyed crowd seems pervasive in the Obama administration. Is there any one person in it who has not fed at the hog trough ?
Le Mot du Jour
"Assouplir" - verb, transitive; regular -ir conjugation
Assouplir means to soften, to relax, to make supple.
La Phrase: L'administation d'Obama assouplira bientôt les sanctions contre Cuba.
Sentence: The Obama administration will soon relax the sanctions against Cuba.
Obama Fund is in the green again, but Fido Fund is crushing it.
FYI, Obama Fund contains high risk stocks chosen from industries that have done well in the past coming out of severe recessions. The principal selection criterion is a potential to rise by 3x on a "return to normalcy" in 18 months.
Fido Fund includes my old favorites, principally in the resource sector, plus select technology and banking stocks.
Both funds were red a month ago. I added some to their positions then, and trimmed some last week in Obama Fund.
By the way, Obama Fund is so named as it requires Obama's his success in reviving the economy (or at least not screwing it up) for the Fund to succeed. Fido Fund is named after my old dog, Fido, whose name means "loyal", hence it includes my old favorite stocks.
I group my stocks this way to evaluate the strategies I'm using in these speculations.
The Swamp
That's DC. WSJ reports Larry Summers received almost $3 million in speaking fees from hedge funds. These looters in DC seems to have no shame in accepting what are obviously bribes. I suppose the chances of real regulation of hedge funds is rather dim. Summers and Shapiro and the clique will probably kill it quietly, unless France and Europe keep pushing hard. Sigh ... here I am hoping for France to provide some leadership for the US. What is the world coming to ?
North Korea, etc.
That gangster state tests its ICBM program. China and Russia seems unwilling to do anything. Of course, they are not threatened yet and like to see the US and its allies worry. This is why Russia opposes European anti-missile defenses. Russia supplies Iran with nuclear technology and probably missile technology to make money and likes to see the US squirm. But then Russia squeals when the US acts in defense of Europe.
Russian leaders like Putin and Chinese communist leaders seem unable to think outside the box, viz. the old cold war confrontational behavior.
Word of the Day
"Confraternity" - noun [$10]
Confraternity means a brotherhood, especially religious or charitable.
Sentence: The confraternity of DC leaders, regulators and the rich, moneyed crowd seems pervasive in the Obama administration. Is there any one person in it who has not fed at the hog trough ?
Le Mot du Jour
"Assouplir" - verb, transitive; regular -ir conjugation
Assouplir means to soften, to relax, to make supple.
La Phrase: L'administation d'Obama assouplira bientôt les sanctions contre Cuba.
Sentence: The Obama administration will soon relax the sanctions against Cuba.
Friday, April 3, 2009
Voting Proxies
As 'long term' owner of many stocks, I receive many annual reports to read and proxies to vote, particularly this time of year. I don't read them all - that would be a full time job, but I do scan the proxies and cast votes consistent with my general outlook. In short, I do 'walk the walk" and don't just bloviate about shareholder governance.
Here are my general guidelines.
1. Directors - vote against any director not actual owner of 1,000 share at a minimum. This means "OWN", not some phony units or phantom rights or anything else.
2. I vote in favor of cumulative rights, as that can make takeovers easier and can helps get management out of its trenches.
3. I vote in favor of resolutions giving shareholders an advisory vote on executive compensation.
4. I vote against ANY "green" resolutions.
5. I vote for the auditors, if they are a recognized firm.
6. I vote against any compensation plan granting stock options. I favor grants of restricted stock based on operating performance criteria.
7. I vote against any plan involving re-pricing of stock options.
8. IFF I think management is overpaid, I vote against management directors.
9. Other than specifically noted in the items above, I usually vote according to management recommendations.
I'll add more later If I think of them.
The Black List
One can find quite interesting items on the non Anglo-Saxon press, if one can read the language. In French, by the way, The Black List is "La Liste Noire". Oh, and "by the way" in French is "au fait" or "à propos".
So in Le Figaro, I saw the Black List of tax havens of the OECD. And I was quite surprised. Here are the four members - Costa Rica, Uruguay, Philippines and Malaysia. How about that ! These four nations do not respect any international standards for exchanging tax information. Places like the Caymens respect some standards it is on the "Grey List" ["La Liste Grise"].
Hmmm ... a certain loquacious commentor has been singing the praises of the Elysian fields of Costa Rica as paradise on Earth. "Au fait", the words for "tax haven" in French are "paradis fiscal". And it begins to become clear to my why it might seem to be one ;)
All that black cash can certainly make an economy look better than it really is. And the Anglo-Saxon press isn't covering it at all. Fascinating.
G20
I will write on this later, after reading more in depth over the weekend. And after the finance ministers meeting in Prague put some flesh on the skeleton.
Markets
Another big day up. The move began in Asia and was due, in my humble opinion, to signs of economic life out there which are not being reported well in the "Anglo-Saxon" press. The clue is the copper price, which is moving up. Iron ore producers seem to have enough demand to keep prices from collapsing in their negotiations with steel producers.
By the way, the ISM numbers shows that steel inventories were low while demand was bottoming. That is bullish.
Huge amounts of cash are on the sidelines and real sellers probably won't be big until Dow 10,000.
Word of the Day
"Exordium" - noun [$10]
Exordium means the beginning or introductory part, esp. of a discourse or treatise.
Sentence: The G20 communiqué to the press is a mere exordium for publicity before any actual agreements are even written. The meeting of finance minsters will determine what, if anything, actually gets done. Eyes should be on Prague now.
Le Mot du Jour
"Constater" - verb, transitive; regular -er conjugation
Constater means to note, to notice, to declare, to take note of; to certify, to establish.
La Phrase: J'ai constaté La Liste Noire des paradis fiscaux dans Le Figaro ce matin. C'était surpris.
Sentence: I noticed the Black List of tax havens in Le Figaro this monring. It was surprising.
Here are my general guidelines.
1. Directors - vote against any director not actual owner of 1,000 share at a minimum. This means "OWN", not some phony units or phantom rights or anything else.
2. I vote in favor of cumulative rights, as that can make takeovers easier and can helps get management out of its trenches.
3. I vote in favor of resolutions giving shareholders an advisory vote on executive compensation.
4. I vote against ANY "green" resolutions.
5. I vote for the auditors, if they are a recognized firm.
6. I vote against any compensation plan granting stock options. I favor grants of restricted stock based on operating performance criteria.
7. I vote against any plan involving re-pricing of stock options.
8. IFF I think management is overpaid, I vote against management directors.
9. Other than specifically noted in the items above, I usually vote according to management recommendations.
I'll add more later If I think of them.
The Black List
One can find quite interesting items on the non Anglo-Saxon press, if one can read the language. In French, by the way, The Black List is "La Liste Noire". Oh, and "by the way" in French is "au fait" or "à propos".
So in Le Figaro, I saw the Black List of tax havens of the OECD. And I was quite surprised. Here are the four members - Costa Rica, Uruguay, Philippines and Malaysia. How about that ! These four nations do not respect any international standards for exchanging tax information. Places like the Caymens respect some standards it is on the "Grey List" ["La Liste Grise"].
Hmmm ... a certain loquacious commentor has been singing the praises of the Elysian fields of Costa Rica as paradise on Earth. "Au fait", the words for "tax haven" in French are "paradis fiscal". And it begins to become clear to my why it might seem to be one ;)
All that black cash can certainly make an economy look better than it really is. And the Anglo-Saxon press isn't covering it at all. Fascinating.
G20
I will write on this later, after reading more in depth over the weekend. And after the finance ministers meeting in Prague put some flesh on the skeleton.
Markets
Another big day up. The move began in Asia and was due, in my humble opinion, to signs of economic life out there which are not being reported well in the "Anglo-Saxon" press. The clue is the copper price, which is moving up. Iron ore producers seem to have enough demand to keep prices from collapsing in their negotiations with steel producers.
By the way, the ISM numbers shows that steel inventories were low while demand was bottoming. That is bullish.
Huge amounts of cash are on the sidelines and real sellers probably won't be big until Dow 10,000.
Word of the Day
"Exordium" - noun [$10]
Exordium means the beginning or introductory part, esp. of a discourse or treatise.
Sentence: The G20 communiqué to the press is a mere exordium for publicity before any actual agreements are even written. The meeting of finance minsters will determine what, if anything, actually gets done. Eyes should be on Prague now.
Le Mot du Jour
"Constater" - verb, transitive; regular -er conjugation
Constater means to note, to notice, to declare, to take note of; to certify, to establish.
La Phrase: J'ai constaté La Liste Noire des paradis fiscaux dans Le Figaro ce matin. C'était surpris.
Sentence: I noticed the Black List of tax havens in Le Figaro this monring. It was surprising.
Thursday, April 2, 2009
Springtime Green
Hong Kong stocks are up for the year.
Australia reports a strong trade surplus with exports UP. FT: "Despite weaker global growth, Australia boosted rural exports, particularly wheat and meat, while metals and minerals sales rose 3 per cent. A 55 surge in gold exports to A$784m, was offset by gold imports worth nearly the same amount."
Copper prices are moving up.
I wonder if Q1 will be seen as the end of the recession? This is possible as huge amounts of stimulus are flowing now.
Yesterday was a strong up day, which was a bit surprising since futures were down early. Futures are up strongly this morning as of 5AM ET. Europe is up strongly. Asia markets were up.
Many hedge fund withdrawals filed early this year have been canceled [source - FT], leaving the beefers with surprisingly more money to invest.
What would surprise everyone? A rocket shot to Dow 10,000.
I'm not predicting this, but few are positioned for it. My Obama Fund is, as is my Fido Fund, but ... I've been an incurable and quite wrong optimist for months as the panic unfolded.
I'll be deploying new money over the next few weeks. All will be going to stocks or real estate, which are the two areas my Krypto Fund model says are quite underweighted.
Word of the Day
"Conjure" verb [$10]
I concentrate on an old usage pronounced with stress on 'jure', not the usage related to magic, etc., which is pronounced with stress on the 'con' syllable.
Conjure means (in this usage) to appeal solemnly to [a person, group].
Sentence: Bunkerman conjures G20 to regulate hedge funds strongly.
Le Mot du Jour
"Compter" - verb, transitive; regular -er conjugation.
Compter means to count, to intend, to expect to.
La Phrase: [from today's Le Figaro] Les 20 chefs d'Etat comptent également imposer pour la première fois une supervision aux fonds spéculatifs (hedge funds).
Sentence: The 20 chiefs of state intend as well to impose for the first time a supervision on speculative funds (hedge funds).
I chose this sentence from Le Figaro as it makes clear that the French words for "hedge funds" is "hedge funds". This is clear from the title to the application paragraph: "vers une supervision imposée aux hedge funds." meaning, "towards a supervision imposed on hedge funds."
Australia reports a strong trade surplus with exports UP. FT: "Despite weaker global growth, Australia boosted rural exports, particularly wheat and meat, while metals and minerals sales rose 3 per cent. A 55 surge in gold exports to A$784m, was offset by gold imports worth nearly the same amount."
Copper prices are moving up.
I wonder if Q1 will be seen as the end of the recession? This is possible as huge amounts of stimulus are flowing now.
Yesterday was a strong up day, which was a bit surprising since futures were down early. Futures are up strongly this morning as of 5AM ET. Europe is up strongly. Asia markets were up.
Many hedge fund withdrawals filed early this year have been canceled [source - FT], leaving the beefers with surprisingly more money to invest.
What would surprise everyone? A rocket shot to Dow 10,000.
I'm not predicting this, but few are positioned for it. My Obama Fund is, as is my Fido Fund, but ... I've been an incurable and quite wrong optimist for months as the panic unfolded.
I'll be deploying new money over the next few weeks. All will be going to stocks or real estate, which are the two areas my Krypto Fund model says are quite underweighted.
Word of the Day
"Conjure" verb [$10]
I concentrate on an old usage pronounced with stress on 'jure', not the usage related to magic, etc., which is pronounced with stress on the 'con' syllable.
Conjure means (in this usage) to appeal solemnly to [a person, group].
Sentence: Bunkerman conjures G20 to regulate hedge funds strongly.
Le Mot du Jour
"Compter" - verb, transitive; regular -er conjugation.
Compter means to count, to intend, to expect to.
La Phrase: [from today's Le Figaro] Les 20 chefs d'Etat comptent également imposer pour la première fois une supervision aux fonds spéculatifs (hedge funds).
Sentence: The 20 chiefs of state intend as well to impose for the first time a supervision on speculative funds (hedge funds).
I chose this sentence from Le Figaro as it makes clear that the French words for "hedge funds" is "hedge funds". This is clear from the title to the application paragraph: "vers une supervision imposée aux hedge funds." meaning, "towards a supervision imposed on hedge funds."
Wednesday, April 1, 2009
A Few Sparks
To my surprise, the G20 pre-meeting blather has produced a few interesting items.
The Prime Minister of Japan lectured German leaders on complacency, saying that his nation learned better how to deal with a severe downturn.
From FT: "Taro Aso has dismissed Angela Merkel’s warnings about the risks of excessive public spending in the global downturn, saying Germany has failed to understand why strong fiscal action is vital for recovery. ....
"Ms Merkel, German chancellor, said last week that spending more public money as part of a co-ordinated stimulus risked creating an unsustainable recovery.
"However, Mr Aso said that what his country went through after its asset price bubble burst in the early 1990s made clear that fiscal stimulus played a critical role in restoring growth. 'Because of the experience of the past 15 years, we know what is necessary, whilst countries like the US and European countries may be facing this sort of situation for the first time,' Mr Aso said. 'I think there are countries that understand the importance of fiscal mobilisation and there are some other countries that do not – which is why, I believe, Germany has come up with their views.' "
That's a good development - other nations showing leadership.
Here's another one: "In a further sign of tensions ahead of Thursday’s summit, Nicolas Sarkozy, France’s president, has threatened to walk away from the negotiating table if his demands are not met. Mr Sarkozy reportedly told cabinet colleagues on Monday that there would be 'an empty chair' – a reference to Charles de Gaulle’s seven-month boycott of the European Economic Community in 1965 – if he was not satisfied, although diplomats in Paris later downplayed his comments. "
The French leaders - the energetic Sarkozy and his finance minster Christine Lagarde - have shown considerable verve in wanting action, not words. In Latin, the idiom is "acta non verba" - "action, not words". France seems to lead in wanting hedge funds regulated and wanting limits on CEO looting, oops, I mean pay. Maybe I chose a language to learn wisely.
I read in Le Figaro and Le Monde that workers in France are protesting actively, too. From the WSJ: "PARIS -- French workers besieged bosses, including luxury and retail tycoon François-Henri Pinault, as anger at proposed layoffs generated more forceful protests. Mr. Pinault, the son of François Pinault, is chief executive officer of PPR SA, which controls exclusive brands such as Gucci and Yves Saint Laurent. Employees surrounded his car as he left a meeting in Paris early Tuesday evening and refused to let him leave for nearly an hour. Eventually riot police dispersed the protesters. Separately, workers facing layoffs at a Caterpillar Inc. factory in the French Alps detained four of their bosses Tuesday in a bid to secure better severance packages.
The incidents followed several others in France in recent weeks, and show how social unrest is mounting as the economic downturn deepens."
What would be a US equivalent? A march of the unemployed or foreclosed persons in the Hamptons or in Greenwich? Most US protests are silly affairs led by the loony left. They need to learn from the French, where protests by the common man seem to work.
Markets
A small rally yesterday. I'm wary, as most pullbacks from a primary trend - if this bull move is a primary move and not a bear rally - should be two pulses down with a rally in between them. Futures today show red, so perhaps I'll get some lower prices for my re-buys soon.
Word of the Day
"Affray" - noun and verb, transitive [$10] from the card file
Affray means (noun) a noisy quarrel or brawl; (verb - archaic) to frighten or to disturb as in to affray the peace.
Sentence: With such egos involved, the G20 meeting could degenerate to an affray; that would be very bad for recovery prospects.
Le Mot du Jour
"S'extasier - verb, pronominal, conjugated like 'prier'
S'extasier means to go into ecstasies or raptures over; takes 'devant' or 'sur' for the 'over' something or someone.
La Phrase: Les européenes se extasient sur Obama. Ont-ils raison ou ont-ils tort?
Sentence: The Europeans are going into ecstasies over Obama. Are they right or are they wrong?
The Prime Minister of Japan lectured German leaders on complacency, saying that his nation learned better how to deal with a severe downturn.
From FT: "Taro Aso has dismissed Angela Merkel’s warnings about the risks of excessive public spending in the global downturn, saying Germany has failed to understand why strong fiscal action is vital for recovery. ....
"Ms Merkel, German chancellor, said last week that spending more public money as part of a co-ordinated stimulus risked creating an unsustainable recovery.
"However, Mr Aso said that what his country went through after its asset price bubble burst in the early 1990s made clear that fiscal stimulus played a critical role in restoring growth. 'Because of the experience of the past 15 years, we know what is necessary, whilst countries like the US and European countries may be facing this sort of situation for the first time,' Mr Aso said. 'I think there are countries that understand the importance of fiscal mobilisation and there are some other countries that do not – which is why, I believe, Germany has come up with their views.' "
That's a good development - other nations showing leadership.
Here's another one: "In a further sign of tensions ahead of Thursday’s summit, Nicolas Sarkozy, France’s president, has threatened to walk away from the negotiating table if his demands are not met. Mr Sarkozy reportedly told cabinet colleagues on Monday that there would be 'an empty chair' – a reference to Charles de Gaulle’s seven-month boycott of the European Economic Community in 1965 – if he was not satisfied, although diplomats in Paris later downplayed his comments. "
The French leaders - the energetic Sarkozy and his finance minster Christine Lagarde - have shown considerable verve in wanting action, not words. In Latin, the idiom is "acta non verba" - "action, not words". France seems to lead in wanting hedge funds regulated and wanting limits on CEO looting, oops, I mean pay. Maybe I chose a language to learn wisely.
I read in Le Figaro and Le Monde that workers in France are protesting actively, too. From the WSJ: "PARIS -- French workers besieged bosses, including luxury and retail tycoon François-Henri Pinault, as anger at proposed layoffs generated more forceful protests. Mr. Pinault, the son of François Pinault, is chief executive officer of PPR SA, which controls exclusive brands such as Gucci and Yves Saint Laurent. Employees surrounded his car as he left a meeting in Paris early Tuesday evening and refused to let him leave for nearly an hour. Eventually riot police dispersed the protesters. Separately, workers facing layoffs at a Caterpillar Inc. factory in the French Alps detained four of their bosses Tuesday in a bid to secure better severance packages.
The incidents followed several others in France in recent weeks, and show how social unrest is mounting as the economic downturn deepens."
What would be a US equivalent? A march of the unemployed or foreclosed persons in the Hamptons or in Greenwich? Most US protests are silly affairs led by the loony left. They need to learn from the French, where protests by the common man seem to work.
Markets
A small rally yesterday. I'm wary, as most pullbacks from a primary trend - if this bull move is a primary move and not a bear rally - should be two pulses down with a rally in between them. Futures today show red, so perhaps I'll get some lower prices for my re-buys soon.
Word of the Day
"Affray" - noun and verb, transitive [$10] from the card file
Affray means (noun) a noisy quarrel or brawl; (verb - archaic) to frighten or to disturb as in to affray the peace.
Sentence: With such egos involved, the G20 meeting could degenerate to an affray; that would be very bad for recovery prospects.
Le Mot du Jour
"S'extasier - verb, pronominal, conjugated like 'prier'
S'extasier means to go into ecstasies or raptures over; takes 'devant' or 'sur' for the 'over' something or someone.
La Phrase: Les européenes se extasient sur Obama. Ont-ils raison ou ont-ils tort?
Sentence: The Europeans are going into ecstasies over Obama. Are they right or are they wrong?
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