Open Thread
By Barry Ritholtz - December 13th, 2010, 7:51PM
Tweet
Facebook
Reddit
Digg this!
Comments
Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data, ability to repeat discredited memes, and lack of respect for scientific knowledge. Also, be sure to create straw men and argue against things I have neither said nor even implied. Any irrelevancies you can mention will also be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.
December 13th, 2010 at 8:06 pm
No big list. I’ll just say the thing I keep thinking about is when/if gold breaks and holds above $1400, and silver does the same for the $30 level.
That could mark the next big wave up for both, or we may look back and see it as the ceiling was hit. I think 75% chance it’s pushed through and each goes much higher (more than 50% higher), and a 25% chance this is the top.
On the equity side, we put in a weekly close above 1220 S&P (as I mentioned in a previous reply – we had hit that level twice this year and each time it did not hold the next week). If it holds through year end, I may rebalance to overweight equities.
December 13th, 2010 at 8:11 pm
Still wondering about this JPM silver short…real or not real?
» JP Morgan and the Massive Silver Short – The Greatest Story Ever Told
» http://fridayinvegas.blogspot.com/2010/12/jp-morgan-and-massive-silver-short.html
December 13th, 2010 at 8:11 pm
From here to early Mar, I am forecasting a rise of 30% in gold and 40% in Silver. I expect the US Dollar Index to break the 2008 lows sometime in March
December 13th, 2010 at 8:12 pm
JPM according to FT has covered a significant amt of their short in Silver futures.
December 13th, 2010 at 8:13 pm
1750/oz + gold
38-41/oz Silver
Early March
December 13th, 2010 at 8:14 pm
http://red-pill-blue-pill.blogspot.com/2010/12/jpm-silver-shorts-squeezed.html
December 13th, 2010 at 8:22 pm
Would this idea work to raise government revenue? Tax all income equally (Not a flat tax), but rather increase the long-term capital gains tax and eliminate other tax subsidies/loopholes (yes sort of like Bowles-Simpson). People seem to say that would decrease investment/liquidity and stifle American entrepreneurship. It seems to me that Institutional investors and the top 10% of earners make up such a large share this country’s investment capital and they would never resort to hiding their money under the mattress. This would allow the government to lower marginal rates across the board and would stop the pointless (in my view) subsidies given to equity investors. Any thoughts?
December 13th, 2010 at 8:28 pm
Will the publicity about the 9 big firms fixing prices on derivatives and increasing the price of our food and other commodities get enough anger raised to push more reforms through?
December 13th, 2010 at 8:32 pm
What’s on my mind? Everyone reading this should check out the Book Club link and see Tavakoli’s top 10 book list.
December 13th, 2010 at 8:32 pm
My prediction of reaching 1250 this cycle almost came true
http://stockswatch.blogspot.com/
December 13th, 2010 at 8:32 pm
VIX closed the gap from 04/23 and closed higher today from a lower open, for 2nd day ; The high flyers (CRM, NFLX, CMG and the likes correcting?); a lot of other technical factors to the bullish extreme; volume anaemic; all the strategists are hoping for a continued run into q1 at least. Tax cuts priced in; Europe is cool now(?); Yardeni calling for copper to double from here (sure if dollar crashes from here or he is supporting someone’s agenda); Call buying still at the extreme; greedy fund managers do not want to lock in their profits still!
a correction — a small one albeit – is overdue, heading into opex. Perhaps a higher high in January/February (if there is improvement in jobs front and no troubles in Europe). 1300 next year’s high. Don’t forget Ireland still has to pass the bailout in the parliament this week (wednesday?)
December 13th, 2010 at 8:34 pm
Maybe it’s the sentimentality of holiday time, but for the past week or so I find myself relatively unconcerned about the price of gold or anticipating the bureaucrats’ next maneuver.
Instead I find myself increasingly concerned for my childrens’ future. I tell myself that there have been more than a few parents that have felt exactly the same way and that through hard work and perseverance they have carved out opportunities for their kids. But for the first time I really wonder whether or not many of my countrymen possess that type of intestinal fortitude.
I grew up poor. Not working class, but poor. I have always felt very lucky to live in a country where you can succeed to whatever extent that you’re willing work hard. I’ve benefited from that very premise. I am concerned that might change in the coming years.
I’ve probably just been reading too much doom lately. That and the holidays are never particularly
joyous for me. But I can’t seem to shake this anxiety.
Perhaps it’s this fear that will preserve me.
December 13th, 2010 at 8:40 pm
Hi Barry,
I think that there were clear signs on the tape that there was a strong possibility of a sell-off into the close for 3 reasons:
1. When the buy programs were dominant today within the SP 500 electronic futures prices, they did not move price at all.
2. During the last leg up to the high of the day there was tremendous selling ‘under the hood’ of the SP 500 electronic futures contract.
3. The high of the day of 1,242 was just 2 ticks higher than the in place high of the day of 1,241.50, which was put in during the pre-market trade around 8:42 EST.
You can see a graphic illustration of these events in a chart here:
http://algofutures.com/blog/a-dangerous-new-high-modern-tape-reading-101/
Hope this is interesting…
December 13th, 2010 at 8:43 pm
I remain very concerned that the U.S. Dollar is vulnerable to a substantial decline. For those interested, I have written a variety of posts on the subject; the latest can be found at my blog here:
http://www.economicgreenfield.com/2010/10/25/market-overview-part-ii/
Yes, I have heard all the arguments that state a lower Dollar as positive and beneficial to the U.S. economy. However, I think these arguments are largely based on the assumption that such a Dollar decline would be “reasonable” (i.e. not a sudden decline of unexpected magnitude). However, my analysis indicates that a U.S. Dollar that falls below 71 could well usher in a new Dollar trading environment that would not be supportive of the Dollar. Various technical (some seen in the above link) and fundamental analysis support such a conclusion.
Further supporting the idea that the U.S. Dollar is vulnerable is the very strong price action of Gold and other commodities. While it may be easy to believe Gold and other commodities are in a bubble, such strong price action (which has far outpaced the U.S. Dollar’s decline to date) may well be indicating a large impending Dollar decline.
Should a substantial U.S. Dollar decline occur, as my analysis indicates, I think it will prove very detrimental to the U.S. economy and financial markets. As well, I think that once it does occur, it will prove very difficult to reverse.
December 13th, 2010 at 8:50 pm
I’m thinking about the article in the NYT about how Chinese college grads in China can’t find work, even when their families spent much of their accumulated assets sending millions to second and third tier schools.
Large numbers of unemployed educated people under an authoritarian regime is a bad thing. I don’t think it’s going to explode imminently, but it’s worth keeping an eye on.
December 13th, 2010 at 9:03 pm
“Stimulus” was the wrong word for the White House to use in 2009. We need a new fiscal vocabulary. The word “stimulus” reeks of something temporary and short-term. Which is the exact opposite of the long-term confidence in the future that American business community needs to start hiring again.
The Germans have enacted structural anti-recession policies that every business can count on, all the time, no matter what. Policies that don’t require some kind of panic/emergency session of the legislature, like happened in the US in 2009.
This week’s tax-cut package will suffer the same fate: enormous outlays by the US government, but US businesses aren’t going to start hiring.
December 13th, 2010 at 9:04 pm
Ron Paul is bad
Putbacks are good
Litigation is … litigious
I have no idea what Gold Foreclosure means
If you meant Gold, Foreclosure
Gold is good
Foreclosure is Ritholtz
imVho
December 13th, 2010 at 9:10 pm
Barry
After the bailouts there was occasional talk about increased monitoring of, & regulations for, hedge funds. Whenever the talk picked up, a hedge fund manager or lobbyist would appear on CNBC or Bloomberg to refute the arguments for regulation. Their typical response in defense of HFs was that HF investors were high net worth, sophisticated investors who knew what they were getting into–fine–and of course, hedge funds didn’t receive bailout money like the banks did, so the government has no right to intrude on their operations. Then Bernake regurgitated the data on the bailouts (before a weekend & while the Wikileaks cables were poring out, which I doubt was a coincidence):
http://www.ft.com/cms/s/0/62a1ffd2-fe49-11df-abac-00144feab49a.html?ftcamp=rss#axzz182y2oc1l
WTF? Really? It just confirms the old truth that the US isn’t a socialist country, unless you’re rich.
December 13th, 2010 at 9:14 pm
Some interesting goodies on rail here:
http://www.aar.org/NewsAndEvents/~/media/aar/railtimeindicators/2010-12-rti.ashx
OT: My wife and I got a new car, last week. 2011 VW Tiguan.
December 13th, 2010 at 9:15 pm
“Large numbers of unemployed educated people under an authoritarian regime is a bad thing. I don’t think it’s going to explode imminently, but it’s worth keeping an eye on.”
Maybe China will adopt the method the U.S. adopted when it found itself in the same situation – keep cutting funding for higher education to limit the number of educated people that could be unemployed.
December 13th, 2010 at 9:16 pm
Bloomberg reported yesterday that “Wall Street’s biggest banks, rebounding after a government bailout, are set to complete their best two years in investment banking and trading, buoyed by 2010 results likely to be the second-highest ever.” Last week the Red Sox spent $296 million for two players over seven years. Today the Bush tax cuts are closer to being extended to the wealthiest 2% of all Americans. Has anything changed since 2008? Was anything learned?
December 13th, 2010 at 9:22 pm
I’m thinking that with the Goldman Apple call today, it’s time for me to unload some APPL shares. Sitting at 27X return now, yee haw! (previously cashed out some at 5X and 10X).
But I have absolutely nothing else on my “buy” list right now. Just not seeing many bargains in the market, and I’ve got too much cash sitting around already.
I’m considering paying off my mortgage (about 6%, 20 years remaining on a 30 and I’m at about 30% LTV), and/or possibly looking into buying some rental property. Buy low, and all that.
Anybody got any suggestions?
December 13th, 2010 at 9:24 pm
Hi Barry,
Thank you for a great blog. I find myself saying, “I’m so disappointed.” I know it’s sappy and naive, but I always assumed that the US had a large degree of integrity at its core. However, for the benefit of few, we hastily eliminated many manufacturing jobs (and simultaneously reduced union jobs which conservatives applauded), and we then created artificial bubbles (near zero interest rates and fraudulent mortgage loan practices) to provide the illusion of maintaining our standard of living from which Wall Street profited greatly. To know that we have sunk to the point where our sanctioned banking system is deceiving people and financially assaulting the good people of this country is so disheartening. Why is it too much to expect America’s banking system to be fair to the American people. I am a “Reagan republican” who is struggling to process what has happened.
December 13th, 2010 at 9:25 pm
I’m most curious as to where the foreclosure mess heads, including litigation and putbacks- whether rule of law or oligarchy prevails-right now I think it’s a toss-up.
I do hope Ron Paul can focus a shining light on the Fed but I’m not holding my breath on that one.
Gold=boring, silver less so.
Smells like correction time in equities but how long can they continue to prop the market up ?
Shopping at Costco today- I remembered 1995 (big party year for me) Moet Chandon was $16.99, Dom Perignon was $59.99 – Moet now $29.99, Dom Perignon was $129.99 – looks like inflation to me.
Went to Willie K concert last night and it was simply outstanding- his hot blues version of Silent Night blew me away. If you haven’t seen him in concert you are missing something special- a voice like Pavarotti and plays guitar like you’ve never seen. Here’s a little clip I found showing his voice and personality
http://www.youtube.com/watch?v=Bp1unZLs__M&feature=related
December 13th, 2010 at 9:28 pm
Who’s lying?
http://www.theburningplatform.com/?p=8360
December 13th, 2010 at 9:29 pm
These people still don’t get it, “don’t believe there were any ethical lapses.” In-effing-real. It’s pretty much a guarantee they will do it again too, in some other form.
http://www.mcclatchydc.com/2010/12/13/105197/some-think-its-a-time-to-revisit.html
December 13th, 2010 at 9:36 pm
Ah….and now it is becoming a bit more clear…
► JPMorgan Caves And Unwinds Massive, Controversial Silver Position
► http://www.businessinsider.com/jpmorgan-unwinds-silver-position-2010-12
► Victory! Silver Heading to $475 Trillion an Ounce
► http://fridayinvegas.blogspot.com/2010/12/victory-silver-heading-to-475-trillion.html
► Water, Meet Blood – JP Morgan Admits To, Reduces Massive Silver Short Position, Proves Millions Of Conspiracy Theorists Correct
► http://www.zerohedge.com/article/jp-morgan-admits-defeat-cuts-silver-short-position-proves-millions-conspiracy-theorists-abso
December 13th, 2010 at 9:37 pm
Alright had to throw this in to show Willie K’s range http://www.youtube.com/watch?v=pbZy4CJ9jbE&feature=related
December 13th, 2010 at 9:45 pm
I’ve got a trio of books to read over the holidays, Egypt’s Belle Epoque, Crash of the Titans, and In the Jaws of the Dragon. The first one makes repeated mention of Egypt’s heavy debts leading to “foreclosure” and takeover by the British in the late 19th century, preceded by heavy investments in infrastructure and the unfortunate and ill-advised commingling of public with private finances. It evokes thoughts of how public finance is now appearing to be commingled with what we’ve been calling the shadow banking system out of the belief that necessity is the mother of this rube goldberg invention.
Going forward, we’ll continue to see inflation in cash-procured and consumables and deflation in anything debt-procured. I’m short US Treasuries since 2 painful years ago and will continue to hold this short if rationality in the sovereign debt market ever rears its lovely medusa head. Palladium is what I’m long in the metals area. Equities and what passes for cash otherwise.
December 13th, 2010 at 9:53 pm
..playing on an earlier theme…
JPMorgan Cuts Back on U.S. Silver Futures
By Jack Farchy and Gregory Meyer
Financial Times, London
Monday, December 13, 2010
http://www.ft.com/cms/s/0/7d699ca4-06ea-11e0-8c29-00144feabdc0.html
JPMorgan has quietly reduced a large position in the US silver futures market that had been at the centre of a controversy about its impact on global prices for the precious metal.
The decision by JPMorgan was an attempt to deflect public criticism of the bank’s dealings in silver, a person familiar with the matter said. The person added that the bank’s position in silver would from now on be “materially smaller” than in the past.
A group of small precious metals investors has alleged that large short positions — or bets on lower prices — in silver futures held by several banks, including JPMorgan, are keeping prices artificially low.
The US regulator, the Commodity Futures Trading Commission, announced in September 2008 that it was investigating complaints of misconduct in the silver market, although it did not name specific entities.
December 13th, 2010 at 10:36 pm
NASDQ=No idea
AAPL=Cult -=Follow it-= Make big bucks.
Econ Data=Whatever.
Year End Markets= Bull S
Ron Paul= Good ideas.
Fed=Keep the system running .
Gold=Bubble. Like oil last year.
Foreclosure=Lenders hanging on as long as they can hoping to get what they’re owed. Maybe you and I can pay them back.
Litigations=$ for lawyers.
Putback=Oh Sh-t.
Fair Game=Where are we now? Continuation of Bull run? Seems like Yes. Fear, Uncertainty.
December 13th, 2010 at 10:44 pm
Giants 21 – Vikings 3 at Ford Field in Detroit
The game was snowed out in Minnesota, and almost snowed out in Detroit
December 13th, 2010 at 10:50 pm
Mr. Maule on a Roll (Too bad the Executive/Legislative/Judicial Branches are not as competent):
http://mauledagain.blogspot.com/
“Negotiating Tax Legislation: Lessons from Life”
“Why the Tax Compromise is a Mistake”
“Absurd Tax Quote of the Century”
“Another Tax v. Private Cost Increase Choice”
“Tax Cuts v. Increased Spending”
“Do The Wealthy WANT Tax Cuts?”
“Being Thankful for User Fees and Taxes”
“First Philadelphia, then Harrisburg, now Washington? ”
“A Grander Delusion: Cut Taxes, Don’t Cut Spending, Cut the Deficit ”
“Does Cutting Tax Expenditures = Reducing Spending?”
“Job Creation and Tax Reductions ”
“The Grand Delusion: Balancing the Federal Budget Without Tax Increases”
Not hard to guess the outcome of societies that eat their seed corn:
http://bilbo.economicoutlook.net/blog/?p=12754
At least we have our civil rights to protect us from groping pervs, I mean scare the bejesus out of terrorist screeners:
http://engineeringethicsblog.blogspot.com/2010/12/tsa-has-gone-too-far.html
http://www.vancouversun.com/travel/Full+body+scanners+waste+money+Israeli+expert+says/2941610/story.html
December 13th, 2010 at 10:52 pm
Buy high. Sell higher?
Everyone is now a faster greater fool.
December 13th, 2010 at 10:58 pm
Here’s my two cents worth from across the “sea of tranquility” I’m referring to the Atlantic Ocean which appears to be calmer waters in comparison to the thrashing waves of anti-establishment and anti- semitism which has boiled over here in the UK.
Last week we had university students rampaging through London. Vandalising street furniture, spraying graffiti in Whitehall, daubing the statue of Winston Churchill with paint, and smashing the windows of Treasury in protest at the Govts. imposition of increased tuition fees.
And to cap it all, the Prince of Wales and his wife drove through the maelstrom in a thirty year old Rolls Royce clunker with the window open!!! Some reports say Camilla (Duchess of Cornwall) had to take defensive action by diving to the floor of the car to avoid being poked in the face with a stick!!
Domestic violence seems to be getting worse also. Every time another murder is reported, the Police say: We don’t want the public to be alarmed. It was an isolated incident. The neighbours come on TV and say “This is a quiet place”; “nothing like that ever happens around here”
Only today Police were called to an address in Banbury Oxfordshire where they discovered a horrific scene. A mother and her son and daughter were found with what the police described as blunt instrument trauma. When asked by the media what exactly did that mean, the officer replied. “I cannot tell you that an axe was used, but I can tell you that a firearm was not used.
I try not to get depressed and always remember the words of Bertrand Russell. “The world is a horrible place, once you can fully understand that you can begin to be happy” I also reflect on the advice an eminent lawyer gave to his son. The boy was questioning the fact that some people get treated unfairly. His Father replied: Son, nothing in life is fair so don’t expect it to be.
December 13th, 2010 at 11:12 pm
Looks like a return to normalcy… time heals all wounds:
- year end seasonality is strong for equities
- combine that with early Jan 10 highs of 1150 and upside/downside looks skewed to risk
- 3rd year of recovery and presidency are strong
- tax deal is a big catalyst and looks like it will get done before week’s end
- another good Q of earnings is almost booked, SPX looks on track to do $100/shr next year, AAPL will continue to kill it >50% eps growth and the best worldwide product line-up in modern history
- lots of smallcaps continue to have awsome prospects, huge EPS growth, M&A bid, easy bal sht improvement
- jobs seem to be finally coming along
- china, india and brasil are just churning some awsome growth. they are becoming wealthy at a speed and magnitude never seen before — see BMW, LVMH, AAPL (up 65-100% on 1yr)
We sit up around 12-13% on SPX total return. Could we do 15%? What if we did closer to 20% before year end? After doing 21% in 2009? What is the pain trade, up or down?
I remember last year, every “strategist” thought we would have a strong H1, top at 1250 and the have a weak second half. Turns out the overall trajectory was correct… but the timing was exactly mixed up.
How much $ sits in Tbills or cash at 10-20 bps? Answer = $10-20 trillion. It has missed out on btw 7-20% returns in all risk asset classes, 30-50% in select better investments. When will it start to move out of cash in a big way?
December 13th, 2010 at 11:19 pm
Very ready to turn the calendar to a new year and new opportunities, the past few have been lackluster professionally and financially.
December 13th, 2010 at 11:27 pm
What was it? I think 12 – 24 months after a market crater and the post run up at which point you see a 20% beatdown, what percentage of the time? That’d be in the next 6 months or so…
The way I see it, there is an absurd level of frothy “major bull market!!!!!!” talk going on right now. But anyone ever able to see through bull shit can watch the Bernanke interview and see that, beneath the calm exterior, all is not well at the Fed and on top of that there is the thin discussion and hint of QE3. These two factors are sending red flags.
I’m still in full agreement with your longstanding secular bear market opinion. We haven’t had a major shakeout since rocketing up like this. Sure, 2010 was a volatile year of ups and downs and we may even end up flat, but we haven’t seen a solid 20% extended down. One reason could likely be the huge sums of money dumped on the market to help prop it up. Even people with crutches are bound to take a few more spills before being fully recovered. At some point, we will see a major correction at which point a lot of the money on the side, and there is quite a bit, will come in. You’ve had some good overlays posted, may be time to dust them off.
That said, the intern at my office is convinced the world is ready to completely crash and it should have happened last week. So, probably not going to happen yet. I’ll let you know when he buys in to the rally, that’s when I’ll sell (yeah, very data driven. haha).
December 13th, 2010 at 11:37 pm
What happened to all of our problems? Jobs, Underwater homes, Wars, Banks. It all has vanished while Apple keeps everyone happily tapping away.
Off to listen to The Door’s Strange Days.
December 14th, 2010 at 12:09 am
Cool story here:
============
Wall Street Firm Uses Algorithms to Make Sports Betting Like Stock Trading
Wired magazine
November 2010
http://www.wired.com/magazine/2010/11/ff_midas/all/1
December 14th, 2010 at 12:26 am
Anyone else thinking its a good time to get short financials after the run lately? I’m thinking FAZ looks good here under 10 dollars per share for a few days, maybe even hold it for a week or so.
December 14th, 2010 at 1:44 am
It seems gold and silver have finally caught the imagination of Joe and Jane six pack. We normally would have gone through a seasonal correction by this time of the yearly gold cycle. Nothing significant has happened there. This has positive implications for a gold bull. The back of my mind has me feeling we have entered ‘wall of worry’ territory for the first time since we have been on this gold run (dating back to the early ’00′s)
I don’t think we are in mania territory but the gold bull finally has some respect. Trade cautiously.
Also, it has been some time since gold stocks have gone through consolidation. There has been some activity on that front of late. It might be time to expect another flurry of significant names coupling up
December 14th, 2010 at 2:13 am
If economy is fine, why Gold and Silver continue to kiss new highs. Its clear – Fed supports markets and at any point of time, we could witness correction. Till, party is on.
December 14th, 2010 at 7:07 am
I put in another 10% or so and am about 75% in at this time. It’s nice to make money again. I expect end of year window dressing to add a few percent, thus my hurry to put in more yesterday. I’m not expecting a large market drop unless they go parabolic; then they will drop to trend. Gold and energy will be range trades, the rest essentially buy and hold for a respectable time unless a nice parabolic rise presents itself. Then I will try to time things a little.
I don’t feel passionate about any current events so I haven’t been posting much recently. I still think the wall of worry is going to bring in a good 2011. Like it or not, the world economy is safe to invest in.
December 14th, 2010 at 7:25 am
-Employment
The issue no one talks about: Automation. We just don’t need as many workers as we did. So where do all of these displaced workers find employment????? Between outsourcing to cheap labor and automation and a very stressed economy, the work force faces a vertical cliff that must be climbed. (Note to self: unemployment will remain high for years/decades)
Investments/Wealth
Physical assets (gold, silver, uranium, copper, crops, farm real estates, oil etc) are in a ten year bull market more or less with no immediate sign of any permanent pull back.
With high risk in bonds (who really thinks the FED isn’t doing everything possible to reflate with the accompanying rise in interest rates), the window is much narrower now to find good investments.
The US stock market appears to be the play ground of the well connected and powerful (still got skin in the game but don’t really feel right about it).
Money will continue to migrate to the 1 per-centers especially when 50% or so of the population feels that is what should happen or at least they care less (as in fear less) about getting poor than they do about “them other folk”. Deal with it.
December 14th, 2010 at 7:41 am
Sad day when it takes a socialist, Bernie Sanders to get a crystal clear picture through his 8 hour lecture on the myopic mess that we’ve become over the last 30 years (cross eyed, goo-goo, gag-gaa more tax cuts) in the public record of the senate
December 14th, 2010 at 7:48 am
teraflop
“Going forward, we’ll continue to see inflation in cash-procured and consumables and deflation in anything debt-procured. I’m short US Treasuries since 2 painful years ago and will continue to hold this short if rationality in the sovereign debt market ever rears its lovely medusa head. Palladium is what I’m long in the metals area. Equities and what passes for cash otherwise.”
I like the quote, and of course that means I agree with it. Palladium, why and how??? My guess, it can and is (?) being used as a substitute for platinum. Interested in your comments. Thanks
December 14th, 2010 at 8:24 am
Monday was the first day in a while that the New York Times did not publish a Wikileaks cable. There were two indirect articles about Wikileaks (in the business section), but none based on the cables.
December 14th, 2010 at 8:32 am
“Next year, Cleveland, Ohio, will require 25,000 households to use recycling bins equipped with radio-frequency identification tags (RFIDs), computer chips that will help the city find out whether a household is in compliance with waste-disposal regulations. The fine for non-compliance: $100. This year alone Cleveland expects to issue 4,000 citations, according to a spokesman for the city’s Division of Waste Collection. No special skills in mindreading are needed to determine how the municipal authorities feel about the prospects for revenue enhancement when, six years from now, all Cleveland households are scheduled to be using electronically monitored recycling bins.
As Orwellian as the predicament of Cleveland residents sounds, the Brits already have it much worse, Independent Institute Research Fellow Wendy McElroy reports in the December issue of The Freeman. An estimated 2.6 million of Her Majesty’s subjects use recycling bins equipped with spy chips. Fines for violations can reach £1,000 (more than $1,500). Just as Cleveland’s officials can look across the Atlantic for ideas on enhanced revenue via enhanced surveillance, so cash-strapped city managers across the United States will be watching Cleveland to see how its experiment pans out. Will American households put up with this rubbish?
“Perhaps, unlike the British, Americans will object to an RFID chip monitoring their garbage on privacy grounds,” McElroy writes. “This objection may well be valid, but it does not touch on the motives of local governments that consider mandatory recycling schemes. Nevertheless, it may well be the strongest defense that can be mounted.”…”
http://www.independent.org/newsroom/article.asp?id=2930
–Sounds promising, for the “168. Track ‘n Trace ‘Economy’” “Bull”-Market Thesis..
~~
“..Environmental quality has been a major public concern since the first Earth Day in 1970, yet the maze of environmental laws and regulations enacted since then has fostered huge government bureaucracies better known for waste and failure than for innovation and success.
Can we do better than this failed environmental bureaucracy? The noted contributors to this volume answer with a resounding “yes.”
Re-Thinking Green exposes the myths that have contributed to failed environmental policies and proposes bold alternatives that recognize the power of incentives and the limitations of political and regulatory processes. It addresses some of the most hotly debated environmental issues and shows how entrepreneurship and property rights can be utilized to promote environmental quality and economic growth.
Re-Thinking Green will challenge readers with new paradigms for resolving environmental problems, stimulate discussion on how best to “humanize” environmental policy, and inspire policymakers to seek effective alternatives to environmental bureaucracy.
http://www.independent.org/store/book_detail.asp?bookID=58
~~
““If we want to reform the legal system, we must change the rules of the game so that the individual incentives of judges, lawyers, juries, and other legal actors motivate them to act in the larger social interest.” So argues Edward Lopéz in The Pursuit of Justice, a thoroughgoing book on government legal failure—the bureaucratization and politicization of the U.S. legal system and how the law really works in practice rather than in theory. From fingerprinting to criminal sentencing, from lawyer licensing to judicial selection, and from eminent domain to wealth transfers via class-action lawsuits, how do perverse incentives impact the law and what reforms would create a more just and efficient legal system? Join Professor Lopéz (San Jose State University), David Friedman (Santa Clara University), and Judge Alex Kozinski (U.S. Court of Appeals, Ninth Circuit) as they discuss the faulty incentives at the heart of legal failures and whether market-based reforms would create a more just and efficient system of law…”
http://www.independent.org/events/detail.asp?eventID=150
December 14th, 2010 at 8:39 am
I count my blessings, I enjoy my wife and family as much as I can, because I fear our western-civilized bubble of comfort that was build on worldwide inequality is about to pop.
December 14th, 2010 at 8:55 am
Hi Barry – I’m a global macro PM in NY. I get a lot from blogs, including yours, so I started one of my own. I’m looking at the likely high in treasury yields right now. This post, with charts, is my case:
http://globalmacrotrading.wordpress.com/2010/12/13/g3-recap-12-13-10/
December 14th, 2010 at 8:56 am
I wouldn’t ban the FED, but I would make some changes:
1. Eliminate the dual mandate – Let the congress juice the economy with stimulus if needed.
2. Make the FED 100% transparent – The idea that we shouldn’t know what our leadership is up to in a democracy is mind boggling to me.
3. Appoint FED Governors for life with the ability to remove them with a 2/3 majority of congress.
4. Regulate the banking industry with one regulator that is not the FED. In my opinion, the FED is part of the banking industry. It cannot regulate itself. It may be in its best interest to regulate itself, but history proves that it cannot.
Most importantly: When is this blog going to be mobile ready? It’s a perfect fit.
December 14th, 2010 at 9:19 am
I just heard about Best Buy’s dismal performance. I’m not surprised. They’ve always been too expensive for me to buy from regularly. For example, my slingbox retailed for about $179 but BB sold it for $199. I bought it from Amazon for $168 shipping included. They screw around with you with respect to store prices vs on line prices. You have to get aggressive to get Internet prices, otherwise you get overcharged sometimes. Even so, many other competitors offer a better selection for less money and offer on line shopping convenience. You can even get a great gigabit dual frequency simultaneous channel wireless n router at Wal-mart for cheaper than BB. Last Xmas, I bought a couple of laptops for a great price from BB, though. Occasionally, they come through. Just not often enough to make their numbers, apparently.
December 14th, 2010 at 9:44 am
re BBY, again:
I jut looked at BBY on Yahoo charts. They looked due for a pullback anyway. Their long term performance is downward but they have good range trade potential. They were very toppy yesterday. Maybe 35 or a little lower is a good buy in price for a range trade. Wait 4 or 6 weeks and evaluate.
December 14th, 2010 at 9:50 am
Ooh, late start. Every time I turn around, another to-do gets on my list.
Tax – Forecast GDP picks up latter part of year, barring unforeseen difficulty (guessing, might be bond market related).
Strange idea, but I wonder if the Fed has been pursuing growth at all costs (GAAC) policy with ZIRP? Look at the timeline: 01 World Trade center, 00-02 Tech stock bubble, 05 Katrina, 08 Credit crisis including housing bubble (G Bush 01-09, Bernanke since 06). I don’t understand the monetary stimulus with consequences be damned. ..Are they trying to scare people out of the stock market (2 bubbles in 6 years)? Even if only 100 people in the world are conversant with the technicalities of internal Fed or International Monetary regulation, I’m not comfortable with the explanations I’m hearing to this point. Per Dr. Phil, there’s always 2 sides to a story. However, the Fed should be more careful of the unintended consequences of their actions.
December 14th, 2010 at 10:08 am
The town’s Architectural Review Committee maintains strict control over the appearance of properties, dictating paint colors, regulating holiday decorations and overseeing the size of political signs that can only be posted in the 45 days leading up to an election.
Most residents see the rules as “protection,” said Carlson, who lives in a Celebration home with a wide front porch where she drinks coffee with neighbors on Sunday mornings.
“Most of us came here not because of Disney — we came because we wanted that type of control over our neighborhood,” Carlson said, “You don’t have to worry that your neighbor will suddenly start parking an old pickup on his front lawn.”
Ok I’m sorry but who are these people ? And everyone wonders why the sheeple don’t want to face reality. They Want to be controlled. their own words. http://www.bloomberg.com/news/2010-12-14/pixie-dust-loses-magic-as-foreclosures-slam-utopian-disney-town.html
December 14th, 2010 at 10:09 am
Barry,
I wanted you to hear my son’s song (s): “The Reign” especially, is one he wrote about the BANKS.
http://georgejohnson.com/
The website is set up so that when you click on ‘listen to music’, it first plays “Santa’s Wearing Blue…” , but will then play “The Reign” immediately following. Both good songs, but I especially like the latter featuring Memphis Horns and the Jordanaires.
Hope you enjoy it. Thanks
December 14th, 2010 at 10:10 am
BTW, I was bitching one day to my brother about “gated communities” and how I would NEVER live in one. He gently suggested that those communities have gates to perhaps keep rebellious people like me out!!!
December 14th, 2010 at 11:12 am
The first shall be last and the last shall be first.
That, at least seemed to be the guiding principle behind yesterday’s trading. The DJI, last week’s laggard, was yesterday’s star performer, while last week’s leaders, the NASDAQ Comp. and the S&P Mid and Small Cap indexes, all lagged. The end result was a rally of suspect quality which did little to dispel concerns about the potential for a near term market pullback.
A point of emphasis in recent market comments has been the very high level of bullishness displayed by a number of different measures of sentiment. Probably the most notable increase in bullishness has been in the daily Int’l Securities Exchange (ISE) put/call ratio. The current 5-day average ratio is at 172, with a 10-day ratio of 156, well above the readings at 146 and 139, respectively, at the April market high. It’s worth noting the ISE ratio measures opening transaction only, while other sources report total put/call volume which includes both opening and closing transactions. Clearly, a closing call transaction indicates a different sentiment than an opening transaction, so the ISE ratio usually provides a better measure of put/call sentiment than ratios based on overall volume. That said, other put/call ratios, such as the CBOE equity-only ratio, also indicate a very high bias toward call volume over the past week. In addition, surveys, such as Investors’ Intelligence and the American Assoc. of Individual Investors show levels of bullish sentiment usually associated with at least short-term market peaks.
Sentiment, by itself, though is a blunt timing instrument, as high levels of bullishness or bearishness can be correct about the market’s direction. These measures as typically best utilized as contrary indicators when confirmed by other indications of a possible change in trend for the market indexes. But, considering the continued market advance over the past couple of weeks, might this be a time when sentiment is, in fact, in sync with the market trend and is not fulfilling its role as a contrary indication? Maybe so. But, as one of our most frequently quoted maxims states, ‘the market deals in probabilities, not certainties.’ And, given the number of warning signs of a possible market top, the probabilities suggest current levels of bullishness are, in fact, truly serving as contrary indicators. A quick review of the warning signs includes the following. First, buying has been increasingly selective, as indicated by the non-confirmations of recent price highs by measures of breadth momentum, specifically the percent of Lowry and NASDAQ issues above their 10 and 30-day moving averages. Second, NYSE Composite volume has decreased as the price indexes have moved higher over the past several days, suggesting not only is buying becoming more selective, but is also decreasing. Third, short-term indicators remain at overbought levels, suggesting an extended rally. Fourth, moves in Buying Power to the dominant position above Selling Pressure have often been followed by a market consolidation or correction. As of yesterday’s close, Buying Power, at 407, was just four points below Selling Pressure, at 411. Thus, even a modest further rally should be enough to effect the cross. The effort needed to send Buying Power to the dominant position often results in an extended rally. Given current readings on short-term indicators, that extended condition is clearly evident today.
The bottom line is, while the price indexes have continued to grind higher over the past week, the risk of a near term market pullback still appears high. Yesterday’s market did nothing to dispel this apparent risk. This was apparent in the selective nature of the rally, in which last week’s laggard—the DJI—showed the best gain, while last week’s strongest areas were lower. The selective nature of yesterday’s market was also evident in the negative breadth on both the NYSE and NASDAQ. There’s another old Wall Street adage that, when the generals (i.e., the DJI) runs out ahead of the troops, they (the generals) sometimes get slaughtered. The day of reckoning may not be today or tomorrow. Regardless, given the continuing (at least in our opinion) risk of a market pullback, the current rally may present a better opportunity for culling underperforming stocks from portfolios than for aggressive new buying. Our long term outlook remains positive and any near term pullback should be limited given the continued strong performances by the Buying Power and Selling Pressure indexes, indicating a still-healthy longer-term pattern of expanding Demand and contracting Supply. But, although the probabilities suggest a limited pullback, the most prudent course is likely to be to wait for any correction to run its course before moving aggressively back into the market. Because probabilities are not certainties.
December 14th, 2010 at 11:15 am
The longer the economic downturn goes on, the more nervous I become about potentially destructive social tensions. Many of the sectors which historically employed large numbers of men without college or even high school degrees or who can’t even read (construction, food service, manufacturing, agriculture) are down or flat, for all many different reason which we all know. So there’s a large population of mem who have nothing to do and no prospects. Nothing on which to focus their energy and frustration. It’s hard to attract a woman if you have no money and no prospects. Women are in this predicament too, of course, but I’m focuing on men because in my experience while women are more likely to complain, men are more likely to actually go out and assault you, rob you, burn down buildings and otherwise just generally smash things. If there’s no hope in your life, one way to get noticed is to smash things, you betcha’ (“At least he’s doing something. . .”)
Protectionism isn’t the answer because then the size of the whole global economic pie will get smaller as country after country enacts their own protectionist policies. Make-work programs are at best a temporary band-aid. (“Joe, you dig a hole. John, you fill it. Then tomorrow you’ll switch jobs. . .”) Truth to tell, I’m not so sure that even war is the answer anymore, given the destructive power of today’s weapons.
What’s the answer, then?
December 14th, 2010 at 2:18 pm
And just because the headlines are full of frothy bull market news doesn’t mean that the huge problem regarding housing has somehow disappeared. see Cong Oversight Panel report on the HAMP (perhaps better named HEMP as in What the Hell is the treasury smokin) http://cop.senate.gov/documents/cop-121410-report.pdf
Unemployment at +9% for 2 years seem to have numb everyone into ‘new normal’ BS —
Q4 and the holiday season may have pumped this market, but when the largest inventory level unwinds it will have a negative GDP impact in Q1/Q2 – can kickin and extend and pretend is likely to fade …
The structural weakness in these critical foundational elements underpinning the economy is bound to create some significant headwinds to the market.
Not saying that traders can not make money – just watch out so you are not stuck being the latest fool.
December 14th, 2010 at 3:20 pm
Anybody else catch David Einhorn on Charlie Rose ?
He owns a hedge fund called ‘Greenlight Capital’ which has nearly $7 billion under management.
Check out his bizarre take on “deflation”:
http://www.charlierose.com/view/interview/11333#frame_top
“Let’s talk about deflation for a moment, OK. So Apple, let’s just say they make an iPhone, and let’s say they fix the components in the iPhone so that the battery lasts twice as long as it did before. The way — and then Apple sells you that same phone with the same components with twice as good a battery for the same price. The way the economists look at that, they’ll say that iPhone is 15 percent better than the old iPhone that you could have got at the same price. That is deflation. And what I don’t understand is why do we need to have a policy response to fight that behavior?”
A) That is NOT “deflation”, nor does it elucidate the perils of deflation.
B) People invest money with this guy ???
December 14th, 2010 at 6:02 pm
On a related note, please familiarize yourself with S510
[http://www.govtrack.us/congress/bill.xpd?bill=s111-510], the ‘hidden’ attachment and supposed “safety” bill about to hand over all food ‘leadership’ to the American gov’t and WTO, both in bed with BIG Industry and BIG Banks. Whose in charge? An ex-Monsanto lawyer and lobbiest, Obama’s “Food Czar” Michael Taylor. Surely gov’t has done such a bang-up job on everything else, I want them to regulate and chemically modify every aspect of my food, don’t you?
Anyone see a pattern in the following quote?
“Control oil and you control nations; control food and you control the people; control money and you control the world.” Henry Kissinger – 1970
December 18th, 2010 at 2:35 am
As the name of this wonder-full blog is “Big Picture”, let’s enlarge the perspective momentarily. Everyone, everywhere, is feeling, deep down and bones deep, that BIG CHANGE [BC] is at hand. Bigger, in fact, than the every-day mind might be capable of comprehending. Taken to the largest context, this BC may involve and lead towards the end of an entire way of being, possibly the end of our perceptual ‘duality’, and the ensuing birthing of another more unified, more connected way of being. If this BC is in fact in the works, all kinds of ‘duality’ should be accentuating and accelerating. A brief look-see shows this to be so…red vs. blue, rich vs. poor, left vs. right, anti vs. choice, progressive vs. liberal, west vs. east, capitalism vs. social/communism, carbon fuels vs. alternate, inflation vs. deflation, etc.
Extending this trend (in vastly accelerating times) sees us moving quickly towards a breaking or transcendent point of opposites. Either the tension breaks the system/organism apart or we rise to the point whereby we can hold extreme opposites in increasing tension without clinging to one or resisting the other. Either way, the tension is transforming.
If in fact this BC is upon us, we should be seeing signs that the rational mind is increasingly at a loss of not only being able to fully understand what is happening, but also at a loss of being able to “fix it”…a stunning blow to a Patriarchal, left-brained logical world, as most any man will attest when a nearby woman presents with an unsolvable problem. Another quick look-see and behold, the “ten-thousand heads” are rattling about what should be done, but impotently so.
If this BC is in fact in the works, we should be seeing clear signs of “LOSS”, as we disentangle ourselves from our fixed positions voluntarily or our ripped from them involuntarily. The late Elizabeth Kubler Ross researched and wrote about the loss process, including death and dying, as no one before or since. In a quick search for these clear signs of LOSS, Ross’ “5 stages of loss/grief” are telling.
The 1st stage is Denial. Certainly we know this condition, particularly in America. We have denied our power for ages. Rather than owning, we project and glamorize. The Pope, President or Physician (the PP’s) will fix things. The athlete or movie stars are elevated to nearly touch the Gods. An old proverb states it well, “A poor man [country] is not one who has little, but rather a poor man[country] is one who has much…and wants more.” By this definition, America clearly stands above as one of the poorest in the world. Denial says otherwise, however.
The 2nd stage of LOSS/grief is Anger. More and more Americans and Europeans are feeling this as the tension of opposites grow and the impotence for “change we can believe in” is truly felt. The western world, and associated power brokers, is losing its grip as the singular influence worldwide as the Great Wheel turns. The logical mind is dumbfounded. Many are feeling betrayed and abandoned by those they have always felt would lead them. Anger is growing and moving into the streets. As we listen to elaborate front room speeches only to awaken to the largest power grab and wealth concentration (read truly ‘Bank Robbery’) in history having happened in the back room, step #2 is guaranteed to find more participants. Desperate people do desperate things, particularly when feeling betrayed and used for a fool.
The 3rd stage of LOSS/grief is Bargaining. If only my 201k can get back to even a 301k, I will get off this merry-go-round of printed money and historical power and wealth grabbing. On the other hand, if only those $%#! consumers (read pawns) will start spending again, we can finally stop force-feeding IOU’s into the system and quit indebting our grandchildren’s grandchildren with our greed today. If Only”…bargaining… sometimes at tremendous costs…to avoid the next step in the process. This next step? A necessary step, yes, if authentic healing and change is to happen, but one that terrifies us deep down, bones deep.
This next 4th stage of LOSS is Depression. It is both necessary and healthy. And terrifying. Moreover any feeling, felt to completion, leads to wholeness. But Depression? Come on, there must be a better way?! If in fact the BC is upon us, there will be no other way than through this process. If the BC is in progress, there should be signs existing. Several $TRILLIONS injected into the economy and several more $TRILLIONS of every-day-American future indebtedness much of which was used now to bail out some of the wealthiest people in the world so that they would not ‘lose confidence’ in the system. To avoid depression, we are willing to do desperate things. We are willing to continue the industrial war machine, most of which is highly inflationary, regardless of the human or financial costs. We are willing to print IOU’s until Hell freezes over. Is is working? A quick look-see again shows it is not. More debt/extended credit can not solve an already over-extended credit system any more than more food or alcohol can cure obesity or alcoholism. A finer look-see and we see a nation where between 1/4 and 1/3 of it’s adult population is taking a legal mood-altering drug. This does not account for the recreational drugs, illegal drugs, prescription drug abuse or alcohol. If the BC is upon is, and we weren’t in denial, we might just see that many, many folks ARE ALREADY DEPRESSED. However, depression without awareness is like quicksand without a tow-rope. Markets up, markets down…who cares?! Once you’ve reached this state without the help of awareness, it just doesn’t matter!!
The last stage, of healthy grieving, is Acceptance. This is the way things are. What is, is. The same invisible intelligence that governs the trillions of stars in hundreds of billions of galaxies and the trillions of cells in our body, ALL WITHOUT OUR GOOD OPINION, may actually be in charge of the BC. It doesn’t keep us from moving on with our life. It doesn’t make us go long on perceived hope or short on felt despair. It simply allows us to keep our heart opening throughout a change possibly so large that our mind can not comprehend it. It allows us to acknowledge the fire in the smelter and gives us the stones to stay in the fire if what we desire is the real gold.
If the Big Change is upon us, we need a larger context or perspective to increase awareness. We need to understand that what we resists, persists. 235 years ago Patriots revolted against a system whereby the government was wedded to industry wedded to church wedded to military. We bloody resisted. 235 years later Americans find themselves working the BC in a system whereby big government is wedded to big business is wedded to religious zealotry is wedded to the war machine (all joined at the hip of FEAR).
Physics 101 tells us that energy is neither created nor destroyed. However, it can be transformed. If we want true liberation from what we have bloody rebelled against, it is us who must transform. We must find a value in the struggle and grit, otherwise the pearl might never be made, let alone found. If the BC is upon us, what do we truly value? Are we finding it in watching the powers manipulate politicians, money and citizen attentiveness like a puppet on a string? Or in complaining about it?
Many are turning eastward with their gaze, to emerging countries like China and India. However, the India being sought today was not always the mistress pearl she currently is. Roughly 80 years ago, a similar situation existed whereby 1 superpower dominated and manipulated the world. Growing poorer and poorer within, this super power grew more desperate and desperate without. Overextended financially and militarily around the world, one determined individual came along and noticed..truly noticed. Assessing his own pearl, he first went about to transform himself through radical simplification. He knew that if he was ‘in debt’ he would never have the magnetic power necessary to help others transform or free themselves from economic servitude.
Rather, this individual knew that in order to be an agent of the BC in his own country, he would have to really understand and flow with it. He would have to go through it himself first and embody the 5 steps of loss. He would have to become the change he sought. Once transformed, he set about not trying to guess market movements or politicians or bankers words or directions. He knew that ‘change he could believe in’ was only the change in which he had himself truly experienced. Experience changes one from ‘belief’ (inherently in others to solve the conundrum) to that of knowing. This man knew that this was not an ‘outside’ job.
Once transformed, this authentic Leader set about awakening the disenfranchised to their condition, i.e., leading through and out of the dark stuckness of denial. In order to harness and use the mass energy of the next step, Anger, he had to have transformed this condition within himself first. In order to move through step #3, Bargaining, he further intensified his own transformation and energetic process. He never once denied depression, but, having felt it, was not afraid to illumine his followers, when ready to quit, to feel and move through it. The results…mind blowing! One person, with sufficient energetic, grit, and inner fortitude, led a voluntary simplicity movement that conquered the largest, yet over-extended economic and military presence in the world…all without force.
Many are feeling betrayed by the election process in the western world, as politburo seems to draw all from the same well. Perhaps our real vote is not at the ballot box but in our choice. Perhaps our real choice is not to follow the advertising dollar and the induced $200 BILLION annual ad campaign and now the multi-$TRILLION Big Bank campaign to keep up with the “Jones”. Perhaps our real vote is to turn away from the numbing and dumbing FEAR that is peddled to keep the masses in check while the Bank Robbery continues. Perhaps we can learn a thing or two from others.
What if the Big Change truly is upon us? Perhaps it truly is time for authentic change. How can we best participate with it vs. being drowned by it? Perhaps conscious simplification is the vote…the vote of no confidence in leadership that all suckles from the same teat. A vote of no confidence in leadership that has not first transformed themselves and therefore is unwilling and unable to stand in the fire as the rest of us progress through it. The world experienced this vote, involuntarily, in late 2008 with ‘mind-blowing’ veracity, quickness, depth and breadth. We called it a “credit crisis”. Sure enough, we stopped spending, and the “Machine” shut down immediately. We were jolted, momentarily, out of the dream and into reality. The card house came unglued.
If the Big Change is upon us, possibly it is time to embrace a Bigger Picture…a picture in which, regardless of outer outcome, within we become transformed. Possibly it is time to question what we truly value and what statement we intend to leave for our legacy and if continued spending ourselves silly, regardless of what gel is used for the Q-easing, will lead to that desired legacy.
Just possibly, it may be time to hunker down, radically simplify, connect with others that have had enough of ‘wishing it were different’, stop the denial within and move through the steps of Loss & Transformation into a more unified and fear-less world…this time voluntarily?
YES WE CAN!