Willink's Econ Thread

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Re: Willink's Econ Thread

Postby Papa John » Sun Oct 26, 2014 8:23 pm

Willink wrote:Daily dose of comedy, thanks to Hillary Clinton:

https://www.youtube.com/watch?v=PyUoCiWsTfI

The notion that "business create jobs" is "trickle-down economics". I guess they just fall from the sky, or Washington. Entrepnures are just some urban legend, like slenderman, or ghosts.


LOL.


Corporations have enabled millions of workers to provide for their families and statistically, their criteria for advancement is based more on meritocracy than that of small business or government.

Many liberals maintain a belief that goes something like, "government created corporations, so it is within the government's right to get rid of them." This idea is not founded in freedom.

I cannot stand the Clintons. If only the public knew how many people they have had killed off to get to where they are today....
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Re: Willink's Econ Thread

Postby Willink » Thu Nov 06, 2014 7:45 pm

On the markets response to midterm results, and Japan's new round of QE.

First, we have the S&P and Dow surging due to election results, which isn't really unsurprising:

http://www.usatoday.com/story/money/mar ... /18526425/

Also saw another dollar rally yesterday, also not surprising given the continued sorry state of EU + China. Easy to be bullish given the results as well, but the capital structure of the economy is still helplessly malformed and dependent on central bank injections. Hilarious contrast yesterday with exit polls showing a huge % of people rightly and intuitively feeling something "wrong" with the economy, vs Obama trodding out listing all the (few select) areas of supposed economic improvement, like stock numbers (which are $#!!), and months of subsequent job creation (as opposed to actual # of jobs, type of jobs, or labor force rates, etc). See comments here:

Based on the ridiculous, seasonally-adjusted data released day after day by the various US "Departments of Truth", also known as the BLS, the Census, the Dept of Commerce, UMichigan, ADP, the Conference Board and so on, the US economy is so strong and consumer confidence is so resurgent, America is on the verge of a second golden age. Sadly, for Obama, and last night's epic rout for Democrats, it was all a lie - a lie perpetuated by a manipulated S&P500 which now hits daily record highs on unprecedented central bank liquidity injections which have now terminally disconnected the "markets" from the economy, and the welfare of the vast majority of the common "folk" - and said "folk" saw right through it.

Bloomberg's take is just one of many observations on the historic cognitive dissonance that is plaguing the mainstream media this morning, which has been furiously pumping up US confidence by pitching the endless array of "fake data" (to use Paul Singer's words), only to see it all blow up in its face today.

The economy was voters’ most pressing concern as they cast their ballots in the midterm election, with seven of 10 rating conditions poor, preliminary exit polls showed.

The discontent simmered even as the economy showed signs of strengthening in the run-up to the election, posting its strongest six months of growth in more than a decade. Gross domestic product expanded at a 3.5 percent annualized rate in the three months that ended in September after a 4.6 percent gain in the second quarter, the best back-to-back showing since 2003.



Maybe, just maybe, the economy never really strengthened, and it was all even more of the same propaganda that has ordinary Americans finally seeing through the lies. Bloomberg at least admits that much: "Most Americans haven’t shared in the gains. Adjusted for inflation, the July median household income of $54,045 was $2,600 lower than in December 2007.... Voters by 65-31 percent said the country is on the wrong track. That’s 12 points more negative than two years ago and was the second-gloomiest exit-poll reading since 1990, trailing only the 2008 election, the preliminary numbers showed. Half of voters expect life to be worse for the next generation."


More interesting I think is the BOJ's new rounds of QE and how it impacts Asian markets. As I've posted before, Japan has been headbutting a concrete wall since ~1990 attempting every time of stimulus and catch-all "recession-breaker" imaginable to central bankers, while subsequently failing to actually lift their economy to the levels seen pre-1990.

Few days ago, posting ~7.1% GDP growth for Q2 2014 BOJ announced more massive devaluing of the Yen and bond insurance. For practical purposes the BOJ bonds are essentially junk $#!!. This was seen as a direct shot across the bow at China, itself unable to respond in kind for the purposes of protecting its export #'s given it's (as I'll discuss further below) stagnating economy. Seeing as this hasn't worked, ever, in any of the times it has thus been attempted in Japan, quite a few people have been percipient to its likely consequences:

http://blogs.reuters.com/breakingviews/ ... lack-hole/

http://www.forbes.com/sites/stephenharn ... xperiment/

Am I the only one who thinks that the unprecedented increase in “quantitative and qualitative monetary stimulus” announced Friday, October 31, by Bank of Japan governor Kuroda Haruhiko is one of the most risky, if not reckless, and possibly disastrous actions in the history of world central banking? Since I know the answer, this is a rhetorical question. The answer is that I have plenty of company.

The Financial Times’ premier commentator on macroeconomics, Gavyn Davies, may have a more sanguine view, but this is hardly clear. Writing on November 2, he commented on the unprecedentedly outsized scale of the BoJ’s prospective “gigantic increase in QE activities” … being “of first order global importance…ensuring that the total central bank injection of liquidity into the global economy in 2015 will be much larger than it has been in the last year.”

“The Japanese injection,” Davies wrote, “relative to the size of the economy, is far larger than anything attempted by the other central banks.” Japan is now conducting “a laboratory experiment” and “Governor Kuroda’s monetary experiment has in effect morphed into a strategy of devaluation plus financial repression.”


If and when a country resorts to having it central bank buy up – the equivalent of – all sovereign bonds it issues, the snake truly eats its tail, and not in a metaphorical sense. Japan eats it children, most of them as yet unborn, to keep its rapidly ageing population contented and in relative wealth, because the alternative would cost Tokyo’s financial-political power cabal their jobs and heads.

Japan’s problem is, and has been for many years, twofold: first, the Japanese people lost the spending power to keep the domestic real economy growing some 20 years ago and never got it back, and second, a whole slew of successive governments refused to restructure the debts in the financial sector, and instead put those debts on the public tally.

The negative growth announced today in US consumer spending should be a warning sign, as should similar numbers that have come from across Europe for a while now, a sign that we need to think about how to run our societies and economies without everlasting growth, and without the ever more failing and ever more costly policies aimed at constructing and maintaining that growth.

However, the worse the policies are for the real economy and the people who depend on it for survival, the more money the financial markets, and the banks, make. It truly is QE as morphine, and Japan has shown us today that morphine can alleviate pain, but it is also in the end the ultimate killer.


What goes out has to come back. The yen was hammered down, and snapped up, to buy Treasuries, and bid the Treasury price up. Everything is hunky-dory. No need for QE when Japan does it for you. Unintended consequences, or more accurately, anticipated consequences-we'll cross that bridge when we get to it. This is extreme short-term thinking.

Because Japan can't prop up bond prices by itself forever. What if you get to the bridge, but it's not there?

The bridge in this case is more Fed QE. "We can turn the printing press back on any time we need to." But what if you can't?

Right now the Fed owns $4 trillion of Treasuries with a high price and a low yield. If the price is driven higher, the Fed's balance sheet improves, fine'n'dandy. The Fed's nightmare is a reversal of that equation- low price/high yield. That means that the Fed bought high, and has to sell low. It also means an imminent gov't default, leaving the Fed holding the bag.

What are some events that can spook the bond market into a selloff?

1. China goes broke because the yen meltdown fouled the Asian waters, bringing down the yuan with it. China no longer gets to play with the idea of selling Treasuries as a geopolitical strategy- it HAS to sell in order to avoid total bankruptancy. Treasuries flood the market and the price plummets.

2. Of course this will drive a short-selling orgy, which will increase the downward spiral.

3. The Fed steps in to buy more bonds in order to contain the carnage. But the Fed discovers it does not have the depth with which to buy trillions at a go. It wheezes after a few hundred billion. Why? i'm guessing a number of factors- political opposition to more debt; a sudden realization at the Rothschild level that even they have a limit to risk appetite. Something like that. The Fed's QE then will be too little, too late.


The Japanese government is the most heavily indebted entity on planet Earth, perhaps in all of recorded history.

The Japanese government cannot possibly pay the debt, but it will attempt to roll it over. Rolling it over in a progressively weakening currency reduces the load. Thus, Abenomic's ongoing debasement of the yen.

However, in its heavily indebted state, the Japanese government is very vulnerable to interest rate shocks. It has been speculated elsewhere that servicing a 10-year yield of 2% would effectively cost every single yen collected in taxes by the central government.

So, the nominally independent BOJ, already owning more than half the JGB market, has been drafted by domestic and global stakeholders into purchasing massive JGB issuance going forward, to cap interest rates, and thus mediate risk of a market-directed interest rate shock.

If it sounds like Zimbabwe, that's because it is. The difference between a Japanese currency/debt crisis and a Zimbabwean one being that yen is a part of the IMF-SDR basket, Japanese commercial banks are thoroughly integrated in global counterparty payments, and thus Japanese collapse represents systemic risk to the overarching global financial racket. To think that this QE hand-off from the FED to the BOJ to stave off a Bankster Apocalypse was not negotiated by their respective Chairmen at the Bank of International Settlements would be disingenuous. Again: Japanese Sovereign collapse takes the international credit syndicate down.


I predicted 130 yen to USD by mid '15.

I like my odds. Now the ECB is really going to feel the heat like never before to debase the euro, which will in turn put massive pressure on PBOC to debase CNY.

Export-dependent nations are all going to have to massively debase their currency or face a literal big D Depression.

Gotta love the CB circle jerk now set in motion.


Step back for a moment and realize we are watching Japan knowingly print it's currency to oblivion (to be followed by the rest of us). Not in some moldy old textbook, not in some 3rd world nation run by triabal warlords, but right in front of our eyes in real-time.

It's no coincidence that the same country who fought WW2 with kamikaze tactics is the 1st to do so with its economy
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Re: Willink's Econ Thread

Postby GreenDay » Sat Dec 06, 2014 5:27 am

Well, the US is now the #2 economy, China #1 - 13 years faster than Goldman Sachs predicted. And no one even cares. It's almost as bad as something impossible -like the US needing Russia to get into space - at least that will never happen. But at least government worker's pensions are safe.
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Re: Willink's Econ Thread

Postby Willink » Sat Dec 06, 2014 6:01 am

GreenDay wrote:Well, the US is now the #2 economy, China #1 - 13 years faster than Goldman Sachs predicted. And no one even cares. It's almost as bad as something impossible -like the US needing Russia to get into space - at least that will never happen. But at least government worker's pensions are safe.


I guess its sad insofar as its a poor reflection on us, but I don't think the Chinese economy is particularly sustainable at the moment either.

The one thing that really gets me though is the real lack of perspicacity by elected officials. Their used to be "standard bearers", guys who represented the respective political parties who "really got it", and whose opinion was held to the highest regard on subjects of their expertise.

I think of guys like Carter Glass, Paul Volcker, etc. People who, for whatever specific ideological misgivings they might have/had, at least could be said to pay mind to the big picture, understand political economy. Instead you get moronic M+A bankers like Hank Paulson who don't understand that deficits are deferred taxes.


Volcker, despite being a Jimmy Carter appointment partially responsible for destroying sound money under Nixon, at least understood the Fed was not supposed to undertake massive mission creep and print schitloads of money:

http://www.economicpolicyjournal.com/20 ... price.html

It's quite amazing, really. Beyond the stifling academic environment of economics (at least in my experience), you'd think that when your targets miss, all the time, something might be aloof. Clearly, real "main street" people "get it".
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Re: Willink's Econ Thread

Postby Willink » Mon Dec 08, 2014 6:10 am

Some recent purchases of mine I'd recommend:

http://www.amazon.com/Politically-Incor ... 1596985054
Kevin R. C. Gutzman - Politically Incorrect Guide to the Constitution - Besides Wood's work best of the series, covers Constitutional Convention, early Constitutional History, Supreme Court decisions, etc.

http://www.amazon.com/New-views-Constit ... 1240086237
John Taylor of Caroline - New Views of the Constitution - Taylor dissects Federalist revisionism under the Adams presidency and Marshall court as attempting to subvert principles of the Constitution

http://www.amazon.com/Reclaiming-Americ ... 0230602576
William Watkins - Reclaiming The American Revolution: The Kentucky and Virginia Resolutions and Their Legacy - Discusses political questions framing Constitution, Madison + Jeffersons argument that the states can nullify acts of federal government (in response to alien and sedition acts), and how it fits in the notion of American sovereignty.

http://www.amazon.com/Disaster-Decree-S ... 0801409802
Lino Graglia - Disaster By Decree: The Supreme Court Decisions on Race and the Schools - Graglia (frmr abortive Reagan circuit court appointee and law professor) dissects the various problems arising from court-mandated desegregation (namely, whether it was even in the power of the court, how it resulted in worse racism, caused white flight from city schools, etc).

http://www.amazon.com/Parliament-Whores ... B005EP20MM
P.J. O'Rourke - Parliament of Whores: A Lone Humorist Attempts to Explain the Entire US Government - National lampoon managing editor/satirist laments politics/democracy in the US from a libertarian perspective, great chapters like Would You Kill Your Mother To Pave I-95?.

http://www.amazon.com/Distant-Mirror-Ca ... 0345349571
Barbara Tuchman - A Distant Mirror: The Calamitous 14th Century: Examines many details of 14th century life, family, money, society, etc.

http://www.amazon.com/Medieval-Machine- ... 0140045147
Jean Gimpel - Medieval Machine: The Industrial Revolution of the Middle Ages - Examines the notion that the Middle Ages were a schtity blight, economic growth viz weak state agencies and the church, etc.

http://www.amazon.com/Extraordinary-Pop ... 1463740514
Charles MacKay - Extraordinary Popular Delusions and The Madness of Crowds - Acclaimed work of the Scottish Journalist, wikipedia does a better job explaining:
http://en.wikipedia.org/wiki/Extraordin ... _of_Crowds
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Re: Willink's Econ Thread

Postby Willink » Mon Dec 08, 2014 6:10 am

double post
Last edited by Willink on Wed Dec 10, 2014 6:14 am, edited 1 time in total.
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Re: Willink's Econ Thread

Postby Willink » Wed Dec 10, 2014 6:09 am

On China (with specific reference to #'s mentioned by GreenDay):

The Chinese stock market hit a four year high today at 3,020. This is up 53% since the middle of 2013 low and up 48% in the last six months. I guess this must mean the Chinese economy is operating on all cylinders. If you think so, you’d be wrong. As Anne Stevenson-Yang - who has lived there since 1985, told Barron's, the entire Chinese economic miracle is a fraud. The reforms are false. The leaders are corrupt and as evil as ever. The entire edifice is built upon a Himalayan mountain of bad debt. This lady is about as blunt as you can get about Chinese fraud, lies, mal-investment, and data manipulation.


http://online.barrons.com/articles/anne ... jemb_mag_h
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Re: Willink's Econ Thread

Postby GreenDay » Wed Dec 10, 2014 5:31 pm

The leaders are corrupt and as evil as ever. The entire edifice is built upon a Himalayan mountain of bad debt. This lady is about as blunt as you can get about Chinese fraud, lies, mal-investment, and data manipulation.


And I just assumed they were all ethical! That sentence does remind me of Obamacare/Fed gov., however.
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Re: Willink's Econ Thread

Postby Willink » Sun Mar 22, 2015 5:19 pm

Fantastic interview on FBN with Stockman:
https://youtu.be/vNUWrIehNZE
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Re: Willink's Econ Thread

Postby Willink » Wed Jul 01, 2015 5:30 am

Greece default is on :banana :banana suck it ECB

Sure, they may have long ATM lines and the currency is going in the toilet regardless of payments to the IMF or not, but better to vomit out the bad debt now than to pile more on. In doing so they join this list of illustrious nations:
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Stockman on how central banks destroy honest pricing:

Keynesian central banking and the Brussels and IMF style bailout regime—which has become nearly universal—-eventually fosters a form of soft-core economic totalitarianism. That’s because the former first destroys honest financial markets by falsifying the price of debt. So doing, Keynesian central bankers enable governments to issue far more debt than their taxpayers and national economies can shoulder; and, at the same time, force investors and savers to desperately chase yield in a marketplace where the so-called risk free interest rate has been pegged at ridiculously low levels.

That means, in turn, that banks, bond funds and fast money traders alike take on increasing levels of unacknowledged and uncompensated risk, and that the natural checks and balances of honest financial markets are stymied and disabled. Short sellers are soon destroyed because the purpose of Keynesian central banking is to drive the price of securities to artificially high and unnatural levels. At the same time, hedge fund gamblers are able to engage in highly leveraged carry trades based on state subsidized (free) overnight money, and to purchase downside market risk insurance (“puts”) for a pittance.

Eventually bond and stock “markets” become central bank enabled casinos—-riven with mispriced securities, dangerous carry trades, massive unearned windfall profits and endemic instability. When an unexpected shock or “black swan” event threatens to shatter confidence and trigger a sell-off of these drastically over-priced securities, the bailout state swings into action indiscriminately propping up the gamblers.

That’s what the Fed and TARP did in behalf of Morgan Stanley and Goldman back in September 2008. And it’s what the troika did in behalf of the French, German, Dutch, Italian and other European banks, which were stuffed with unpayable Greek and PIIGS debt, beginning in 2010.

Needless to say, repeated and predictable bailouts create enormous moral hazard and extirpate all remnants of financial discipline in financial markets and legislative chambers alike. Since 2010, the Greeks have done little more than pretend to restructure their state finances and private economy, and the Italians, Portuguese, Spanish and Irish have done virtually nothing at all. The modest uptick in the reported GDP of the latter two hopeless debt serfs are just unsustainable rounding errors—–flattered by the phony speculative boom in their debt securities that was temporarily fueled by Draghi’s money printing ukase that is presently in drastic retreat.

So this Monday morning push has come to shove; Angela Merkel and her posse of politicians and policy apparatchiks were not able to kick the can one more time after all.


Granted, the Greek government is largely composed of the economically illiterate in the first place, but refusing to pretend they are magically solvent under the guise of debt servicing payments in exchange for emergency liquidity assistance is a nice dose of reality.
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Re: Willink's Econ Thread

Postby APB » Sun Aug 16, 2015 2:15 pm

^^ Is there a follow-up to this now that the EU and Greece have voted to accept another bailout? ^^
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Re: Willink's Econ Thread

Postby Willink » Fri Aug 21, 2015 10:56 pm

APB wrote:^^ Is there a follow-up to this now that the EU and Greece have voted to accept another bailout? ^^

I can write something up later, China devaluation has been capturing markets attention. Interesting smackdown on equity markets and stocks this week, gonna be a $#!! rest of the year for owners of financial instruments


Lol at these women on FBN and cnbc "don't sell were gonna rally muh strong American economy"

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Re: Willink's Econ Thread

Postby Waldo » Sat Aug 22, 2015 3:07 am

Willink wrote:
APB wrote:^^ Is there a follow-up to this now that the EU and Greece have voted to accept another bailout? ^^

I can write something up later, China devaluation has been capturing markets attention. Interesting smackdown on equity markets and stocks this week, gonna be a $#!! rest of the year for owners of financial instruments


Lol at these women on FBN and cnbc "don't sell were gonna rally muh strong American economy"

Image


Well the fundamentals are strong enough that it is likely not a recession, the stock market itself is not a great leading indicator.

I'm not sure a quick rally is forthcoming though, the market was a bit overvalued. That said, the US currently is the world's pillar of stability with China falling apart and the EU's issues, I wouldn't' be surprised to see an influx in international money into US markets.

China OTOH, eek, its looking pretty grim.
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Re: Willink's Econ Thread

Postby Willink » Mon Aug 24, 2015 3:31 am

Waldo wrote:Well the fundamentals are strong enough that it is likely not a recession, the stock market itself is not a great leading indicator.

I'm not sure a quick rally is forthcoming though, the market was a bit overvalued. That said, the US currently is the world's pillar of stability with China falling apart and the EU's issues, I wouldn't' be surprised to see an influx in international money into US markets.

China OTOH, eek, its looking pretty grim.



idk how much longer that will last really though, international money has already been flowing into the US (see comparative strength of US dollar), and the dollar itself is near its % all time highs vs other currencies. South American is already in a freefall, China is launching an FX war which is futher demoralizing the Asian economies and wrecking havoc on emerging markets, petrol economies are getting btfo and the EU is pretty much dead already anyway.

Lots of bad US fundamentals too, wage growth, productivity growth, labor markets writ large, overvalued stock market propped up by Fed balance sheet, bad savings rate, Deutch, BoA, etc pooping their pants:
Image

The only tool bankers seem committed to is more QE, which does nothing other than inflate the same scheme again in hopes of a different result, or that Americans will magically be willing to assume more debt and spend moar.
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Re: Willink's Econ Thread

Postby Willink » Mon Aug 24, 2015 7:29 am

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