The results of the President's economic policies are becoming plain to see. The economy is mired in stagnation; inflation is picking up; and new unemployment claims are surging. The national debt is reaching catastrophic levels. The Fed is printing money to finance purchases of new debt (they bought 80 percent of the newly financed deficits for the past eight months). The most absurd economic policies in American history are bearing fruit. The economy is a total mess.
Obama often speaks of "the race to the bottom." Now we know what he means. The American economic engine, once the envy of the world, is now a joke, and a bad one at that. Obama's policies have strangled the private sector and broken the finances of the federal government.
So what is Obama doing now? He's beginning his re-election campaign. Wonder what part of this record he plans to defend?
Thursday, April 28, 2011
Keep talking, Ben: US Dollar update
Listening to the Flamin' Groovies as the dollar burns. $USDX
David Shvartsman
FinanceTrends
David ShvartsmanFinanceTrends
This is what's going down. Here's the weekly chart on the dollar index:
Sunday, April 24, 2011
New music on Trader Rock
I've posted some new music and documentaries for your listening and viewing pleasure. New jukebox selections from David Bowie, Kate Bush, OMD, Joy Division, The Move, The Smiths, Suede and more are featured in our latest posts.
You can also take advantage of continuous play rock with the Trader Rock YouTube playlists; all our hits are compiled in sequential order for non-stop rock n' roll fun. Perfect for those who want to rock out at night, or while you work (researching, trading, etc.) at your desk!
Enjoy, and check out our links section for more great music blogs & online radio resources.
Wednesday, April 20, 2011
Wealthtrack interview with James Grant
Grant's Interest Rate Observer founder, Jim Grant sits down with Consuelo Mack for an interview on WealthTrack.
Topics include: the rising cost of living and commodities, the US dollar's decline, and the Federal Reserve's targets for "desired inflation". See what Grant has to say about all this, and more, in this discussion.
By the way, I don't think anyone who caught Grant's interview or Michael Burry's recent talk on America's financial condition was surprised by S&P's recent warning on America's AAA debt rating. Only the timing of the outlook revision might have come as a surprise, and even that may have been telegraphed to market participants earlier.
Related articles and posts:
1. Jim Grant and John Hathaway chat with Charlie Rose.
2. Jim Grant's latest interview with King World News.
3. Lew Rockwell and Jim Grant discuss Austrian economics, gold standard.
Greek Restructuring -- Sooner or Later?
It is interesting to see folks saying that if the Greeks restructure their debt (meaning a partial default on their debt) that a financial Armageddon will soon follow. Since restructuring or some type of default is inevitable for Greece, I guess there must be a financial Armageddon in our future. Last week the IMF suggested that the Greeks must restructure within 12 months and now more voices have been added saying essentially the same.
What those who worry about the coming Armageddon don't seem to get is that "restructuring" or a "partial default" is inevitable for Greece, Ireland, Portugal, Italy, and Spain. Indeed, one should add Germany and France to that list since their governments and banks have backstopped the former countries with bailouts in the past 24 months.
What is wrong with a default or partial default by Greece? Nothing. Those who have made bad loans to Greece should lose money. Is there any reason that they should be insulated from their bad decisions and the losses should be spread to those who did not make bad decisions? That's the problem with bailouts. They transfer wealth from those who made good decisions to those who made bad decisions. Why is that a good (or fair) idea? The answer is: it isn't.
Lending money to people who can't possibly pay it back is stupid and will eventually result in loss. Call it financial Armageddon or whatever you will. It is inevitable. The Western European plains are soon to be littered with defaults, partial defaults and restructurings. There is no way to avoid it. You may as well plan for it.
What those who worry about the coming Armageddon don't seem to get is that "restructuring" or a "partial default" is inevitable for Greece, Ireland, Portugal, Italy, and Spain. Indeed, one should add Germany and France to that list since their governments and banks have backstopped the former countries with bailouts in the past 24 months.
What is wrong with a default or partial default by Greece? Nothing. Those who have made bad loans to Greece should lose money. Is there any reason that they should be insulated from their bad decisions and the losses should be spread to those who did not make bad decisions? That's the problem with bailouts. They transfer wealth from those who made good decisions to those who made bad decisions. Why is that a good (or fair) idea? The answer is: it isn't.
Lending money to people who can't possibly pay it back is stupid and will eventually result in loss. Call it financial Armageddon or whatever you will. It is inevitable. The Western European plains are soon to be littered with defaults, partial defaults and restructurings. There is no way to avoid it. You may as well plan for it.
Saturday, April 16, 2011
Michael Burry talks "Big Short", America's future at Vanderbilt
Michael Burry, the Scion Capital founder and subprime speculator profiled in Michael Lewis', The Big Short, talks to Vanderbilt students about his now-famous subprime CDS short trade and the perils of America's financial future in this video lecture.
Last week on Twitter, I retweeted DDI's notes on Michael Burry's talk, which gave rise to hopes that video of this talk might soon be available. Indeed, that video is now here and it has been making the rounds over the last few days.
Be sure to check DDI's post for comments from the Q&A (Burry's thoughts on farmland and capitalist innovation in Silicon Valley) that might have been edited out (?) of this video.
Burry's talk adheres to a script early on, but as he warms up near the second half of this presentation on the causes of the housing collapse and the financial crisis, the vibe is a bit more loose and the information presented is excellent throughout.
Watching this clip, I get the feeling that we are witnessing a first-rate historical commentary on the pre and post-crisis environment. If economic historians don't look back to Burry's talks, or Tom Woods' analysis of the crisis, they'll be doing everyone a huge disservice.
If you want to know a great deal more about Michael Burry's investments and his views on America's current cultural and financial condition, check out our posts in the section below. Lots of valuable info, including an unedited Bloomberg interview transcript, will be found here.
Related articles and posts:
1. Michael Burry: macro star? (Bloomberg interview transcript) - Finance Trends.
2. Michael Burry bullish on farmland & gold (Bloomberg) - Finance Trends.
3. Michael Lewis on Charlie Rose: The Big Short - Finance Trends.
Why Bail Out Bondholders?
Debts continue to rise in the US and in Western Europe. The so-called bailouts of Greece and Ireland simply enable those countries to get deeper in debt and continue the fiction that some day those debts can be paid off. They can't.
Over the next sixteen months, more European countries will be added to the bailout list: Portugal first, then Spain, and then attention will focus on Italy. The purpose of a bailout is to enable a country to continue to expand its debt. Is that a good idea?
Isn't it time the lenders took a loss. Why are we protecting the lenders? The lenders are sophisticated, highly paid folks, who took a risk that is not working out. They should get burned for their mistake. Why bring the taxpayers into the picture and continue to increase debt levels that everyone knows will never get paid.
It is time for a "workout," as they say in the finance world. Lenders and borrowers need to sit down at a a table and "work out" a new repayment schedule -- a schedule that will inevitably lower debt levels and force the lenders to restructure their way into losses. This is going to happen anyway. Why not start now, instead of pushing policies that simply increase debt to even higher levels and perpetuate the myth of eventual repayment.
Capitalism can't work unless you let it work. Let it work.
Over the next sixteen months, more European countries will be added to the bailout list: Portugal first, then Spain, and then attention will focus on Italy. The purpose of a bailout is to enable a country to continue to expand its debt. Is that a good idea?
Isn't it time the lenders took a loss. Why are we protecting the lenders? The lenders are sophisticated, highly paid folks, who took a risk that is not working out. They should get burned for their mistake. Why bring the taxpayers into the picture and continue to increase debt levels that everyone knows will never get paid.
It is time for a "workout," as they say in the finance world. Lenders and borrowers need to sit down at a a table and "work out" a new repayment schedule -- a schedule that will inevitably lower debt levels and force the lenders to restructure their way into losses. This is going to happen anyway. Why not start now, instead of pushing policies that simply increase debt to even higher levels and perpetuate the myth of eventual repayment.
Capitalism can't work unless you let it work. Let it work.
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