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Tuesday, November 27, 2012

Paul Krugman: Franc Thoughts on Bond Vigilantes


Paul Krugman: Franc Thoughts on Bond Vigilantes



Bond Vigilanti's Response:

Krugman's Poor Analysis;
"Francly, Frustrating And Frightening"



Paul's NY Times analysis is simply frightening and frustrating. First of all , we question the intellectual honesty of picking only one country's circumstances out of thousands, and then using this anecdotal observation to draw a scientific conclusion about the whole population of similar situations. This is too convenient - pick the circumstances that fit your argument and ignore everything else - we were born late at night - it just wasn't last night.

Secondly, how much credibility should we give to the numbers from the IMF data bank of the 1920s. They were hand calculated, used different models by country/regime, by year (perhaps by month) and were free from any sort of bias (ha, ha). You can see the problem. The evidence presented is not subject to verification of any sort - you might as well read either tea leaves or Goldman Sach's Annual Statements. Both would be closer to the truth.

The third glaring error in this analysis, is the measure that is used for national debt. Again, Krugman's analysis is intellectually misleading as he tricks us into thinking that this is an apples to apples comparison. It is not. For instance in the 1920's there was very little consumer debt and the banking systems leverage is impossible to compare given the exponentials created today by derivatives and such. A fairer apples to apples comparison would be national debt inclusive of government, banking, business and consumer debts, other analysis would fail to provide credible comparisons - and thereby, impossible to draw any sort of credible conclusion.

Despite these horrific intellectual errors the commentary is built to conclude that a spike in rates with a corresponding debasement in both the US currency and T Bills would provide an expansionary influence for the economy. Exports would expand, however the trade off would be a sharp compression in asset values across the board. Long bonds, real estate and markets could collapse by 30% or more. Net worth, and notably highly levered net worth, could be wiped out overnight - bringing on a banking crisis that would pale in comparison to 2008. The overall psychological effect on the consumer and institutions would be so negative that it should destroy any expansionary benefit imagined. (Actually the actual calculus of the pluses and minuses is not determinable.)

Enough already, Paul states that there are no examples where the debasement of bonds and currency negatively affected a nation - how far did you look when you already have a case that supports the conclusion you want the reader to believe is the reality? How many national debt-time- periods were considered? Off the top we can think of three possible examples: Iceland, Nauru and Germany (30"s); however, this assumes that we can agree on the nature and characteristics of the apples.

Our concern is not really about whether we are right or wrong on this issue; it is more about the method and quality of analysis and that better analysis makes some attempt to fairly compare and contrast the object(s) involved. We ask: How is it possible that only one case can represent the whole of cases in the population? Should the analytical evidence and observations not be at comparable, objective and verifiable? Should the comparative analysis not be based on apples to apples?

It is thus remarkable that the policy discourse on such an important issue is subject to such weak analysis that neither proves or supports the fear-mongering of the vigilanties or others. Perhaps it has something to do with the so-called science of economics, as recently stated by George Sorros:

"Scientific method needs an independent criterion, by which the truth or validity of its theories can be judged. Natural phenomena constitute such a criterion; social phenomena do not. That is because natural phenomena consist of facts that unfold independently of any statements that relate to them. The facts then serve as objective evidence by which the validity of scientific theories can be judged. That has enabled natural science to produce amazing results."


Sadly and francly (sic), the New York Time's methods, analysis and its science (so-called) of economics could learn much from George's statement. We rest our case.

First Financial Insights
November 27, 2012


WANTED: Bond Vigilantes


Monday, November 26, 2012

Jim Rogers, Peter Kinesa, Marc Faber,Nouriel Roubini...

Investors' Insights:
Week Ending November 24, 2012 


FIRST FINANCIAL INSIGHTS
"Investors' Insights"





Jimmy that was some lunch you ordered...




Wow! Is Jim reading our blog and list of top recommended business books?

The most important concern that Jim fails to mention is the type of war. Another conventional world war is out of the question for at least two related reasons: One, the naval supply of war materials will be curtailed dramatically in a few days by guided drones and missiles; two, there will not ironically be enough raw materials for an extended war.

So, what type of war will prevail? For the likely answer, we suggest you read "How The End Begins". A link is provided on our recommended book list

First Financial Insights
November 22, 2012

Cripes General, he said lunch...NOT launch!



 Jim Rogers:Communism and Socialism have failed many, many times The issue here is not the labels. Free enterprise, democracy, socialism; ...

We are not going to comment on Peter's words. They provide a succinct logical understanding and statement of the conceptual issues and complexities involved. Thanks Winnie.

First Financial Insights
November 22, 2012


Comrades, forward for the people...






While we do not rejoice when folks start to agree with our views - there is an odd sort of comfort and affirmation that comes when their voices ring out with our past conclusions. Thanks Marc for confirming what we set out a year ago in our blog regarding the collapse of the markets by 2020. Your comments here predict a similar event in the next 5 to 15 years.

Maybe there is a reason why we call ourselves "FIRST FINANCIAL INSIGHTS" beyond this anecdotal affirming forecast provided by Marc Faber. There is more to a name - sometimes.

First Financial Insights
November 21,2012


"Pain...What Pain?"


Not going to repeat ourselves here and refer you to the comments on the Faber Blog posted today. By now, the message is pretty clear.
First Financial Insights
November 20,2012


It's clear to me -






Nouriel Roubini Blog: The Economic Contraction Is Spreading Now To The C... : The economic contraction used to be in the periphery of the...

We think that the good Doctor is setting out the diagnosis. In the end, we still require a cure. That is the hard part.

First Financial Insights
November 20,2012
Dat is mine professional opinion, Schultz








Marc's comments regarding pending scandals and the impeachment of OBAMA are far-fetched. That's being kind. Obviously, Mr. Faber needs to read a little Noam Chomsky to better understand the US socio-political culture. It is not in tea leaves. Moreover, if he thinks America has troubles, then Russia and China are the poster boys of bad stuff. And we mean BAD .

What are they going to do? When they come for you?

First Financial Insights
November 20, 2012





Bad Boys... When they come for you?







And the real problem is they can create these  abstracts forever, causing a monumental future collision between addiction and reality.  Now that's the bartender's rock bottom prognosis . Remember?

First Financial Insights
November 19, 2012

Should have kept my day job...



Numbers and charts in this analysis certainly support view that an economic ice age freezes the Westen economic growth. What this conventional analysis doesn't cover is the physical conditions constrainig the progress. Maybe next time.

First Financial Insights
November 19,2012



Cut off ???




Thursday, November 22, 2012

Jim Rogers: Shortages of Raw Materials will lead to Wars

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(Sample Post; November 22, 2012)


Jim Rogers: Shortages of Raw Materials will lead to Wars

Wow! Is Jim reading our blog and list  of top recommended business books?

The most important concern that Jim fails to mention is the type of war. Another conventional world war is out of the question for at least two related reasons: One, the naval supply of war materials will be curtailed dramatically in a few days by guided drones and missiles; two, there will not, ironically, be enough raw materials for an extended war.

So, what type of war will prevail? For the likely answer, we suggest you read "How The End Begins". A link is provided on our recommended book list

First Financial Insights
November 22, 2012

Cripes General, he said lunch...NOT launch!


Saturday, November 17, 2012

Paul Krugman, Marc Faber, Eric Sprott, Jim Rogers, Peter Kinesa


Investors' Insights:
Week Ending November 17, 2012 


FIRST FINANCIAL INSIGHTS
"Investors' Insights"



Dr Peter G Kinesa, The Quantum Realonomist: Marc Faber : Ben Bernanke can drop as many Dollar ...: Marc Faber : Ben Bernanke can drop as many Dollar bills as he likes The creation of fiat currency has reached a tipping point, particularl


Funny how the Doctor can ties all this together - keeps it simple too.

First Financial Insights
November,17, 2012


We Get It...



Paul Krugman, New York Times: Trans Atlantic Divergence

http://krugman.blogs.nytimes.com/2012/11/17/transatlantic-divergence/

Remember first you have to compare and know how the underlying numbers are calculated. No doubt there are differences that could affect the analysis and conclusion. However, it is a good bet these numbers are fairly relevant - and indicate; as we suspect, the tailspin European economies are in. A trend that has really been in place since 1900. (Rise and Fall of the UK - for example)
Now, does anyone think that resource depletion, overpopulation, and poor economic management have anything to do with the fact these nations are now hanging over the edge? Donald Trump where are you? Or maybe these Cops can help?
First Financial Insights
November 17, 2012 
 Trans Atlantic Divergence?







 "Meanwhile, as the Occupy movement also repeatedly highlighted, the increase in wealth inequality within the US has grown steadily over the ...


In the end, this leads to human despair, social unrest, economic instability - and then, the collapse of the American Hegemony. Sounds,looks and feels like a repeat of history.

First Financial Insights
November 17,2012











No kidding - as the Ponzi scheme is running out of real wealth to support the creation of more fiat money. No matter how hard you try - the finite resources of the planet requires 500 million years of Central Banking. Now try and tell it these guys.


First Financial Insights
November 17,2012




Something Bothering You?




Eric Sprott Blog: Weakness Begets More Weakness:
“The 99% represents the US consumer….It is the purchasing power of this massive, amorphous group that drives the US economy forward. The pro...



Well where have these guys been, why don't they tell us something we don' already know. Hmm...Sell Everything?

First Financial Insights
November 16,2012

That's my advice"



Jim Rogers Blog: 2013-14: A Slowdown Is Coming:

America is going to have a slowdown in 2013-14, there will be fewer jobs, more unemployment and turmoil in oil and currency markets. - in Ec...

We have been saying this for over a year and had set the reasons why. Read " Mother of All Bear Markets" and refresh your thinking.


First Financial Insights
November 16,2012






Marc Faber: Global Markets Will Implode

Well as you know we have been saying this for some time. Not much has changed since 2008, except matters continue to deteriorate.

First Financial Insights
November 15, 2012





Jim Rogers is Still Bullish on Gold


Except for shorts and selected real estate there is not much left, gotta agree.

November15, 2012
First Financial Insights




Tuesday, November 13, 2012

Wednesday, November 7, 2012