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  • #13,241
  • Dec 3, 2011 12:27pm Dec 3, 2011 12:27pm
Quoting Tom_D_Trader
PT please, did I miss some important fundamental news? I saw that China, swap rates + lowering margins, US unemployment. Anything else important happened?

T
Hopium leading into the EU summit with anticipation that the Muppets will bring fiscal unity and the ECB will back them up with large scale bond buying.
This is bullish until it turns into QE and then it is very bearish. I see sub 1.20 in 2012... maybe even parity or close to it.
Those who say it cannot be done should not interrupt those who are doing it
  • #13,242
  • Dec 3, 2011 12:29pm Dec 3, 2011 12:29pm
what if it isnt hopium and actually becomes hope?



u really think they gonna do QE Pt?
Have I got something on my face, SOLDIER?
  • #13,243
  • Dec 3, 2011 12:48pm Dec 3, 2011 12:48pm
Quoting PipTrapper
Hopium leading into the EU summit with anticipation that the Muppets will bring fiscal unity...
Chnochnochno. I dont know who anticipates fiscal union or any other outcome out of this but I dont expect anything of those muppets. Anyway, let there be hopium ride, I dont mind. Only my 3685 short does mind a bit. Poor guy, should have been closed and was left behind. Well I dont trust em a single word.

T
"I know one thing, that I know nothing." Sokrates
  • #13,244
  • Dec 3, 2011 2:01pm Dec 3, 2011 2:01pm
Quoting bumapatria
what if it isnt hopium and actually becomes hope?



u really think they gonna do QE Pt?
It's either some form of QE or bye bye Euro.
More austerity will bring a euro collapse and possibly a major conflict.
Those who say it cannot be done should not interrupt those who are doing it
  • #13,245
  • Dec 3, 2011 2:02pm Dec 3, 2011 2:02pm
Quoting PipTrapper
In times of recession, deflation is just as scary as inflation is during economic booms.

So how does one fight deflation? Lower rates and monetary expansion.

US is doing it. UK is doing it. Japan is doing it. The Swiss are doing it. Europe is next.

ADD: The next ECB press conference should give us some hints as to when that will start... perhaps it will start before the end of the year. Really it has already started. Not by choice but by circumstance. The ECB is buying bonds and has made a commitment to step...
I am going to disagree with you on this PT
THAT IS PRECISELY what Keynesian economics has a phobia about.
deflation

the conventional theory goes that lower cost of goods and services are bad because it means lower profits, lower profits= unemployment as companies will seek to offset their capital losses.

if things are getting cheaper then people would wait to buy things as they expect their money to be worth more tomorrow.

why is stable money and store of value for savings a bad thing again?

Heli printed money like crazy by expanding the balance sheet to ease in the deflation of the bubble that is precisely created by mal investments due to cheap money?

are we not suffering from severe unemployment at the moment?
that is precisely what deflation creates supposedly?

except that if you go unemployed and have some saving you can get buy for a little bit as opposed to loss in purchasing power that is STILL a pay cut and not only that but brings down the standard of living as, companies will not give raised but cost go up = stagflation

as deflation happens and prices of goods and services real state, stock market collapse, and stupid idiotic banks and risk taking firms that tank the economy go out of business, doesn't it create opportunities for entrepreneurs to raise to the occasion and begin to invest at the current discount?

as traders dont you notice reversion to the mean after a painful drop or increased acceleration upwards? how again is the economy different?


so PT please explain why, constant value of money, with decrease in cost of living bad?

pumping money does nothing but debase the currency
AVT INVENIAM VIAM AVT FACIAM
  • #13,246
  • Dec 3, 2011 2:02pm Dec 3, 2011 2:02pm
Quoting Tom_D_Trader
Chnochnochno. I dont know who anticipates fiscal union or any other outcome out of this but I dont expect anything of those muppets. Anyway, let there be hopium ride, I dont mind. Only my 3685 short does mind a bit. Poor guy, should have been closed and was left behind. Well I dont trust em a single word.

T
If they end up doing nothing, I will have my sights set on sub par. maybe around 0.7 before it completely collapses, implodes, goes nuclear and starts a war.
Those who say it cannot be done should not interrupt those who are doing it
  • #13,247
  • Dec 3, 2011 2:09pm Dec 3, 2011 2:09pm
Quoting the redlion
I am going to disagree with you on this PT
THAT IS PRECISELY what Keynesian economics has a phobia about.
deflation

the conventional theory goes that lower cost of goods and services are bad because it means lower profits, lower profits= unemployment as companies will seek to offset their capital losses.

if things are getting cheaper then people would wait to buy things as they expect their money to be worth more tomorrow.

why is stable money and store of value for savings a bad thing again?

Heli printed money like crazy by expanding...

You are correct that a decrease in cost of living is a good thing as it increases expendable income... provided you have one. However, without growth, there is no debt service. Governments will default, banks will fail, the rich will lose trillions, pensions will go broke, and civil disobedience will be the norm. They need some kind of QE as a temporary measure to boost the economy, then after everything is running smoothly again, they can shrink the balance sheet once more.

If the Governments weren't so deep in debt hell, then I would agree that QE should not even be considered.
Those who say it cannot be done should not interrupt those who are doing it
  • #13,248
  • Dec 3, 2011 2:10pm Dec 3, 2011 2:10pm
i do not buy the premise of the death trap by a black hole, or deflation spiral.

painful implosion is needed after a period of fraudulent miss allocations of capital , in derivatives and toxic assets.

DEFLATION re sets the system (as painful as it is at first)

Bank of America
JP morgan
Goldman sachs

SHOULD GO BANKRUPT!!!!

they will be replaced by more sounded minded institutions, BAILING THEM OUT, insures THEIR existence and their criminal financial irresponsibility is forgiven, with a slap on the wrist.

i disagree that with you on deflation being so bad
inflation in the other hand destroys savings, destroys the currency and yes we might have to pay less back in debt as purchasing power erodes, but do you really think that once the FED stops manipulating those yields they wont climb and make servicing the debt incredibly expensive?
AVT INVENIAM VIAM AVT FACIAM
  • #13,249
  • Dec 3, 2011 2:12pm Dec 3, 2011 2:12pm
Quoting PipTrapper
If they end up doing nothing, I will have my sights set on sub par. maybe around 0.7 before it completely collapses, implodes, goes nuclear and starts a war.
Ok my friend. So let us count the options:

1) Fiscal union - to form a fully functional fiscal union, they would need to remake Lisabon Treaty. And our president aint going to sign that, and he wont be alone. Other option is some kind of addition to current treaty. Some kind of detour so nations wont need to approve that. I acknowledge this may happen. But is it a positive signal or just a more can kicking? For me it is definitely not positive signal.

2) Bonds - ok Angie, those are not Eurobonds, but Stabilization bonds. Satisfied? Well, this may work. But I aint sure about Angie, I dont think she is going to let this through.

3) Printing press - imho the best solution during current circumstances. But will it be politically acceptable? This option, has the same problem as Eurobonds. Angies falling numbers of voters at her homeland.

Conclusion: I dont think Angie will step aside in both 2) and 3) for sure. Maybe in one aspect, partially. As the more possible one, I see Eurobonds. But I give it like 30% they will pass. The most possible option I see is somewhat detour around Lisabon treaty and some form of fiscal union. That is imo the most possible outcome of the summit. But this aint giving me, as an investor, any confidence at all. If they manage to pass both bonds and wtfiscal union through, I will short from 377 - 379 pretty happily.

T
"I know one thing, that I know nothing." Sokrates
  • #13,250
  • Dec 3, 2011 2:13pm Dec 3, 2011 2:13pm
Quoting PipTrapper
You are correct that a decrease in cost of living is a good thing as it increases expendable income... provided you have one. However, without growth, there is no debt service. Governments will default, banks will fail, the rich will lose trillions, pensions will go broke, and civil disobedience will be the norm. They need some kind of QE as a temporary measure to boost the economy, then after everything is running smoothly again, they can shrink the balance sheet once more.

If the Governments weren't so deep in debt hell, then I would agree...
i think that the conventional thinking of liquidity injection and QE's are nothing but can kicking.

answer me this, are we in better shape now? as far as debt to GDP ratio, standard of living? and economic growth?

don't you think inflation just makes what otherwise would have been a sudden implosion and panic into what looks like a slow death that will ultimately LEAD to a painful implosion and panic?
AVT INVENIAM VIAM AVT FACIAM
  • #13,251
  • Dec 3, 2011 2:20pm Dec 3, 2011 2:20pm
Quoting the redlion
i think that the conventional thinking of liquidity injection and QE's are nothing but can kicking.

answer me this, are we in better shape now? as far as debt to GDP ratio, standard of living? and economic growth?

don't you think inflation just makes what otherwise would have been a sudden implosion and panic into what looks like a slow death that will ultimately LEAD to a painful implosion and panic?
Let me first say that I share your view on how things should be 100%
However, the reality here is that we (our governments) have adopted this theme of "too big to fail". It is motivated strictly by political ideology.
I welcome true capitalism where non-fiscally responsible entities fail and start again. However, the politicians will not have it as it is too painful. They would rather kick the can and they have become experts at it.

One thing I have come to learn about politics in my years and that is that they will always take the path of least resistance and leave the hard work for other politicians who will eventually replace them.
Those who say it cannot be done should not interrupt those who are doing it
  • #13,252
  • Dec 3, 2011 2:29pm Dec 3, 2011 2:29pm
Quoting the redlion
I am going to disagree with you on this PT
THAT IS PRECISELY what Keynesian economics has a phobia about.
deflation

the conventional theory goes that lower cost of goods and services are bad because it means lower profits, lower profits= unemployment as companies will seek to offset their capital losses.

if things are getting cheaper then people would wait to buy things as they expect their money to be worth more tomorrow.

why is stable money and store of value for savings a bad thing again?

Heli printed money like crazy by expanding the balance...
Deflation can be good or bad. With a constant value of money we are currently in the greatest deflationary cycle in the history of the world. It is caused by technological progress. If you look at the hours we work, compare them with those our great grandfather worked, and then look at what we own compared to what he owned there is no other conclusion. This is deflation, pure and simple. Only money is not constant in value. Inflation is somewhat greater than deflation and so net we are in an inflationary cycle.

The problem is depression, not deflation. With our tax system and budget commitments a depression decreases revenues while increasing expenditures. It is a double whammy and the way out is borrowing. Unfortunately our debt levels combined with the long term nature of our current "recession". However, a deflationary cycle magnifies the debt burden by further decreasing GDP and tax revenues, and so magnifying debt.
Kill the ego, or it will kill the mission.
  • #13,253
  • Dec 3, 2011 2:35pm Dec 3, 2011 2:35pm
Lion, you are messing two things together here.

1) Yes, they should go bankrupt. But not because of inflation or deflation or whatever, but simply because they allocated capital in toxic assets. Thats it.

2) We have talked this through a lot with Aaron. I hope you will read it man. And we have agreed on this: "You have good inflation and good deflation." Simple, isnt it? Regarding US. Savings are good for sure, but unemployment in US isnt caused by short term inflation, but by a long long term inflation which is running since 1970 and which eventually resulted in overheating of economy and deflation.

Point is, US is exporting nation. If you were importers, you would be right and unemployment would be caused by inflation. But since you are exporting nation, your objective is to have competitive (cheap) goods on international scale. Thus inflation is giving you jobs in fact. The problem occurs when economy overheats and you stop producing GDP. Thats unfortunately what is happening right now. Deflation has been triggered and suddenly, you aint able to competitively export goods, which is resulting in unemployment.

Anyway, If those bastards went bankrupt it would do a lot of good for sure.

T
"I know one thing, that I know nothing." Sokrates
  • #13,254
  • Dec 3, 2011 2:37pm Dec 3, 2011 2:37pm
Quoting the redlion
i think that the conventional thinking of liquidity injection and QE's are nothing but can kicking.
That is exactly what I think. And it makes me sad every day when I think about it. It is nations inflation race since 1970. Sometimes I wish we went back to gold. Or if those bitcoins have worked. Ahh.

T
"I know one thing, that I know nothing." Sokrates
  • #13,255
  • Dec 3, 2011 2:44pm Dec 3, 2011 2:44pm
Quoting AaronWard
If you look at the hours we work...
Hey, i am watching market 14 hours a day!
"I know one thing, that I know nothing." Sokrates
  • #13,256
  • Dec 3, 2011 2:46pm Dec 3, 2011 2:46pm
Quoting the redlion
i think that the conventional thinking of liquidity injection and QE's are nothing but can kicking.

answer me this, are we in better shape now? as far as debt to GDP ratio, standard of living? and economic growth?

don't you think inflation just makes what otherwise would have been a sudden implosion and panic into what looks like a slow death that will ultimately LEAD to a painful implosion and panic?
Let it crash and burn and we will be better for it. Nice in theory, not so nice in practice. We have many historic examples of systemic collapse and they are all bad. At some point in the future we might suffer the fate we are putting off today. Or we might not.

If the choice is 100% certainty of a problem today with 80% certainty of a problem five years from now I will always choose the kick the can option. And I personally think the possibility of actual collapse is lower... in the 20-30% region.
Kill the ego, or it will kill the mission.
  • #13,257
  • Dec 3, 2011 2:46pm Dec 3, 2011 2:46pm
Quoting AaronWard
Deflation can be good or bad. With a constant value of money we are currently in the greatest deflationary cycle in the history of the world. It is caused by technological progress. If you look at the hours we work, compare them with those our great grandfather worked, and then look at what we own compared to what he owned there is no other conclusion. This is deflation, pure and simple. Only money is not constant in value. Inflation is somewhat greater than deflation and so net we are in an inflationary cycle.

The problem is depression,...
a priori we can conclude that the manipulation of the currency by the federal reserve leads to ipso facto inflation, which is the debasement, destruction of the vehicle of exchange correct?

so you correct the problem by borrowing more? so never mind the increasing amount of unfunded liabilities and the increase in deficit, increase in money supply.

The Fed increased bank reserves, and purchased toxic assets, and derivatives as well as government debt instruments to push the yields down. so it is logical to assume that once the FED let go in 2013 (at least they said they would) interest rates will climb ergo neutralizing the benefits of artificially cutting the debt by loss in purchasing power.

not only is the benefit neutralized but, the economy exacerbates due to lack of confidence, the middle class gets robbed of their hard earn income, and savings, undertaking of risks is not only encouraged but necessary to keep up with inflation.

causing further miss allocation of capital= causing further bubbles

we need not look further than commodities and Gold prices for the next bubble.
in fear of loss of purchasing power people turn to gold that has no yields, and contraire to popular belief, the price CAN collapse causing further losses, not only on the physical gold itself but the derivatives that we use to trade it.

so poof goes the gold money and gold mining companies fail, loans extended to further expansion of the extraction of the precious metal, go into default

so what is the solution?

even worse, do you think that we cannot lose the status as the reserve currency of the world?

then WHAT WOULD HAPPEN TO THE US, if force to swallow its own shitty paper as opposed to exporting inflation other countries
AVT INVENIAM VIAM AVT FACIAM
  • #13,258
  • Dec 3, 2011 2:54pm Dec 3, 2011 2:54pm
a fiat currency system requires

integrity, honesty, intelligence to be able to use it properly; to expand the money supply and contract it as necessary.

sadly,humans cannot be trusted in these areas.

give some one the power to print, or create a perceived asset in unlimited quantities and he will end up destroying that asset.
AVT INVENIAM VIAM AVT FACIAM
  • #13,259
  • Dec 3, 2011 2:56pm Dec 3, 2011 2:56pm
Quoting the redlion
then WHAT WOULD HAPPEN TO THE US, if force to swallow its own shitty paper as opposed to exporting inflation other countries
Default, Armageddon, war, maybe even civil war. Who knows? However, one thing is for sure and I have mentioned it before. That is for future politicians and bureaucrats to worry about, not the current ones. The current ones are hoping they will be long gone before the poop hits the fan. In the mean time they line their pockets and the pockets of their banker friends with the money fleeced from the hard working taxpayers. That's reality. Everything else is an illusion.
Those who say it cannot be done should not interrupt those who are doing it
  • #13,260
  • Dec 3, 2011 2:57pm Dec 3, 2011 2:57pm
Lion, I am just wondering, are you calm while you write it or are you Red?

T
"I know one thing, that I know nothing." Sokrates
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