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EurAnalysis Kindergarten 24 replies

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  • #58,081
  • Oct 8, 2012 5:48am Oct 8, 2012 5:48am
Quoting godrich
looks like bernanke has had his columbus day snooze interrupted...

sir, we have a problem down here. it appears the us dollar is gaining some value !

what, how can this be ? i thought we had killed that damn thing ??

i'll be right in...

Good one
Those who say it cannot be done should not interrupt those who are doing it
  • #58,082
  • Oct 8, 2012 7:16am Oct 8, 2012 7:16am
I got a feeling that bastards are going to test yesterdays lows at minimum.. Less than two hours to go till european equities closing time and IF it happens near its opening level at 2988 we will have a London spinner

Edit: looks like momentum shifts to the "right" side again..
69
  • #58,083
  • Oct 8, 2012 7:21am Oct 8, 2012 7:21am
I gotta say that NFP friday PA was less bastardous then todays one..
69
  • #58,084
  • Oct 8, 2012 7:38am Oct 8, 2012 7:38am
Appears with hindsight to have been a nice tweezer top short term reversal on M15 with those 2 dojis.
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The spoken word is your master, the unspoken word your slave.
  • #58,085
  • Oct 8, 2012 8:58am Oct 8, 2012 8:58am
Quoting PipTrapper
Good one
this is serious.LOL
Life is beautiful the way you dress it.
  • #58,086
  • Edited 9:57am Oct 8, 2012 9:46am | Edited 9:57am
Price been consistently bouncing off the 50 ema on the 5m ..wonder if it'll drop through it shortly .. I hope!

Add: Also because of rising wedge type pattern after a drop which could signal break out & continuation of fall, although after London closing and other markets being closed probably not much gonna happen now anymore today.

Add: Ooops, forgot euro ESM press conference later so of course lotsa cr&p could be in circulation!
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The spoken word is your master, the unspoken word your slave.
  • #58,087
  • Oct 8, 2012 10:13am Oct 8, 2012 10:13am
Is that a snorlax?
Nice.
If ask a silly question.. forgive me!i'm just confused again!
  • #58,088
  • Oct 8, 2012 10:15am Oct 8, 2012 10:15am
Quoting afos
Is that a snorlax?
Nice.
The spoken word is your master, the unspoken word your slave.
  • #58,089
  • Oct 8, 2012 10:44am Oct 8, 2012 10:44am
Quoting Wulfgar
ok... 2937 anyone???


http://clip2net.com/s/2nfRM
Bueller? Bueller?
  • #58,090
  • Oct 8, 2012 11:13am Oct 8, 2012 11:13am
Roger Bootle’s Prize Winning Advice to the Greeks: Sit Still While We Rob You!

Oct 08, 2012 08:00 am by Patrick Barron posted in Banking, Capitalism, Economics, Regulation, Bootle, Euro, European Debt Crisis, Gold, Lord Wolfson

http://www.mises.ca/wp-content/uploa...le-300x212.jpgThis summer Roger Bootle won Lord Wolfson’s £250,000 prize for the best advice for a country leaving the European Monetary Union (one may assume that this advice is aimed at Greece). A more statist, anti-liberal policy than his could hardly be envisioned, which is a sad commentary on the mindset of the judges chosen by Lord Wolfson. His advice contrasted sharply with that of Dr. Philipp Bagus, whose liberal, transparent, and free market-oriented policy advice was rejected in favor of Mr. Bootle’s call for state secrecy and coercion.

Mr. Bootle’s statist advice stems from his misunderstanding of basic economics in which he views symptoms as causes. He offers no explanation for Greece’s unsustainable debt burden, high cost structure and high unemployment other than the standard Keynesian explanation of inadequate aggregate demand. Once this fallacious view is swallowed, the prescription follows axiomatically; i.e., devalue the currency to restore competitiveness vis a vis foreign markets, which will increase aggregate demand and reduce unemployment. Oh, and the Greeks may have to default on their foreign debt, but history shows that this is not a problem. Really?

Despite his lengthy and repetitive prize submission, Mr. Bootle’s recommendations can be summarized in this one sentence: In complete secrecy and with no prior discussion, redenominate all Greek euro-denominated bank accounts into Drachma-denominated accounts and devalue the Drachma.

That’s it! There is no need to cut public spending. Quite the contrary, because public spending adds to the Keynesian concept of aggregate demand, and aggregate demand cannot be allowed to fall. The secrecy part is essential for Mr. Bootle’s plan. If the Greek people got wind of what was to happen, they would take measures to protect their property, such as transferring their euro-denominated bank balances to banks in Germany. Mr. Bootle refers to such a development as a crisis, but a crisis for whom? Taking measures to protect one’s property would not be a crisis for the common Greek citizen. It would be exercising rational self interest. Mr. Bootle’s so-called plan is nothing more than robbing Greek citizens in the middle of the night!

Give the Greeks a Better Currency
The aim of currency reform–and, do not mistake my intention, currency reform IS needed–should be to replace a poor currency with a better one. But Mr. Bootle (and his Keynesian colleagues) see the world upside down. In their world of aggregate demand, a weaker currency always is preferable to a stronger one, because a weak currency purportedly makes a nation more competitive in international markets. But this is pure propaganda. A weak currency not only makes necessary imports more expensive, reducing prosperity, but it also is an outright subsidy to foreign buyers of a nation’s goods. As I have argued in my essay Value in Devaluation? and as James Miller has argued in Mark Carney’s Zero-Sum Game, currency devaluation is merely a transfer of wealth from all of a nation’s citizens to politically favored industries, usually export industries. It is no different than giving a subsidy to any domestic producer. The subsidy is paid by all the citizens of the subsidizing country, not by the foreigners who buy the subsidized good. They get a bargain.

Furthermore, devaluation does NOT make a nation more competitive. It does nothing to spur increased domestic saving or external capital investment which lead to the increased application of capital per capita, the only sources of increased worker productivity and the only sources of increased real wages. Devaluation does not reveal the onerous, wealth destroying effect of economic regulation, not does it reveal the true costs of the welfare state, which relies upon high taxes to fund present consumption at the expense of future prosperity. What the state spends cannot be saved and invested, no matter how cheap the currency.

And, contrary to Mr. Bootle’s statement that “improving competitiveness is at odds with the objective of reducing the debt burden”, Greece will not be able to reduce its debt until it does become more competitive. It may well be impossible for Greece to pay all of its debts, but this merely reveals the dire reality of current policy; it does nothing to change that reality. The increase in the debt burden must stop! It must stop now!

Mr. Bootle misses the cause of the euro debt crisis completely when he fails to see that ECB euro-denominated loans to captive national banks, with worthless sovereign debt as collateral, is the manner in which the European Monetary Union subsidizes failed economic policies. As long as the Greek government can get unlimited euro loans from the ECB, there is no real reason to reform the nation’s economy and there will be no end to the debt crisis.

So, Mr. Bootle proposes an even WORSE currency, a devalued drachma, as the replacement for a bad one, the euro. And if the Greek people resist outright theft through devaluation, then the government must trap their wealth internally, where it can be plundered later, by using capital controls to stop euro transfers to safer, foreign banks. The fact that the free movement of capital was one of the pillars of the European project apparently must be sacrificed for the benefit of the state. In fact Mr. Bootle admits that capital controls are illegal under current EU law, but he recommends them anyway. All tyrants love a crisis, because it can be used as an excuse to break the law!

Truly Liberal Alternatives
Dr. Philipp Bagus of King Juan Carlos University, Madrid offered the truly liberal alternative. He proposed a long period of public discussion about alternatives to leaving the euro, which would allow ample time for Greeks to move their property out of the greedy reach of their own government, should they decide to do so. The currency crisis might be solved in this manner as Greek banks closed and the Greek government shut down its welfare and regulatory system for lack of funds. The Greek government could repeal legal tender laws which currently require Greek citizens to transact business in one currency only, always that issued by the state itself.

Concomitantly it could reinstate the drachma as a strong currency backed by gold.

Then good money would drive out bad, as people freely chose which currency to use. They would choose the one that is most marketable. One element of that marketability would be that it would retain its purchasing power.

Of course, Mr. Bootle desires the opposite; i.e., an ever depreciating currency that robs currency holders of their purchasing power. Naturally Greeks will resist this, therefore, the Greek government must install capital controls. Yet, the essence of self-government and democracy and the great triumph of post war Europe was the freeing of the individual first from fascist tyranny and then communist tyranny, whose primary means of enforcement were control of the economy.

The future of Europe will emerge from the euro debt crisis. Mr. Bootle desires a return to state currency controls as a means to prop up the decaying welfare state. Dr. Bagus desires a step back from this unfortunate detour that took concrete form with the formation of the euro. Rather than compound the errors of the euro with even more state intervention, the alternative is to anchor currencies in gold. This will force individual nations to engage in true democratic processes to determine the scope of state action. It will end the stealth transfer of wealth via euro monetary expansion. In that regard it will force each nation to live within its own means. What’s wrong with that?

Patrick Barron is a consultant to the banking industry. He teaches Austrian school economics at the University of Iowa and Bank Managemant Simulation for the Graduate School of Banking, University of Wisconsin.
  • #58,091
  • Oct 8, 2012 11:30am Oct 8, 2012 11:30am
Quoting Wulfgar
Bueller? Bueller?
good one trade..
  • #58,092
  • Oct 8, 2012 11:35am Oct 8, 2012 11:35am
Quoting chess king
good one trade..
Thanks brother

Amazing how those numbers just keep playing over and over....
  • #58,093
  • Edited 12:03pm Oct 8, 2012 11:43am | Edited 12:03pm
Quoting Wulfgar
Thanks brother

Amazing how those numbers just keep playing over and over....
true brother ... the mid... has an incredible strength
  • #58,094
  • Oct 8, 2012 12:21pm Oct 8, 2012 12:21pm
Quoting chess king
true brother ... the mid... has an incredible strength

it is a beast for sure
  • #58,095
  • Oct 8, 2012 3:29pm Oct 8, 2012 3:29pm
now i understand what happen this morning and why price has stayed in this area

http://www.google.ca/url?sa=t&rct=j&...nX8WJw7VwBQxcg

manipulation at its finest from morgan stanley

Analysts at Morgan Stanley advised buying the euro at $1.2950, with a target of $1.3400 and a stop at $1.2870, citing the potential for positive headlines from this week's Eurogroup and IMF meetings.
Wooooohooooo or Boooooohooooo
  • #58,096
  • Oct 8, 2012 3:32pm Oct 8, 2012 3:32pm
Quoting gnomoneey
now i understand what happen this morning and why price has stayed in this area

http://www.google.ca/url?sa=t&rct=j&...nX8WJw7VwBQxcg

manipulation at its finest from morgan stanley

Analysts at Morgan Stanley advised buying the euro at $1.2950, with a target of $1.3400 and a stop at $1.2870, citing the potential for positive headlines from...
Yes, that was mentioned earlier in this morning here

http://www.forexlive.com/blog/2012/1...g-long-eurusd/
  • #58,097
  • Oct 8, 2012 3:35pm Oct 8, 2012 3:35pm
Quoting mka_78
Yes, that was mentioned earlier in this morning here

http://www.forexlive.com/blog/2012/1...g-long-eurusd/

sorry didnt see it....thanks

G
Wooooohooooo or Boooooohooooo
  • #58,098
  • Oct 8, 2012 3:40pm Oct 8, 2012 3:40pm
EUR / USD S-TERM Long entry1.2966
tg 1.3054/1.3168/1.3260
sl1.2870

argument.. week chart engulf...
  • #58,099
  • Oct 8, 2012 5:49pm Oct 8, 2012 5:49pm
I would be very watchful of shorting anything today. Expectation of positive Euro spin ahead. Look for it to test or break previous high.
  • #58,100
  • Oct 8, 2012 6:12pm Oct 8, 2012 6:12pm
Quoting TRMZXT
I would be very watchful of shorting anything today. Expectation of positive Euro spin ahead. Look for it to test or break previous high.
when? london "tonight" (Est here)? tomorrow? wednesday?

alcoa and chevron amongst others report tomorrow before NY opens. i bet you $1 that alcoa's Q won't sit well
Any prices quoted are futures
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