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Michael B. Krause's Comments Stream Stats
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- Total Comment Stream rating - = 5
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Money for Nothing: Just Buy S&P 500 Puts
scriabinop23.blogspot....
Corporate defaults are still way too low. This is going to take a while to bottom.
Apple's Move: Institutional Run-Up or Rebound?
Still too much bad news ahead ...
U.S. Dollar Paradigm Shift Underway
typed a little too quick.
U.S. Dollar Paradigm Shift Underway
The err here is that of the masses blindly following the quants in the quest that greed guides. That, by the way, is capitalism. Judge for yourself the errors of capitalism.
As far as John's arguments of money supply: My point is that there has been a gigantic amount of monetary destruction going on. The reigning of credit is monetary destruction. When the reserve base falls (as it has due to these bank losses), the total money outstanding is significantly less. Its just like a multiplier reduction. Now even with a new risk assessment mentality, w/ banks being afraid to even loan to each other, low interest rates is not significantly ramping up money supply. Its just helping reduce a barrier of functionality in the system.
A deflationary environment provides no incentive to run a business. Why invest if your future returns on investment will not pay for your current investment? If you want gold standard, no fractional reserve, etc. then you want a socialist system. Capitalism vs. socialism is another argument for another place.
But certainly, a strong currency with little innovation is fundamentally sound from the point of view of the fact that no progress yields little in the way of health care tech advances. You're right: you won't need to worry about retirement with a gold standard currency because you won't live more than a few years past working age.
Apple and United Technolgies: Bargains Amidst the Recession News
This is a buy at 115-125 and a sell at 140+ until the clouds are gone.
U.S. Dollar Paradigm Shift Underway
If $90+ oil is here to stay, we're only at the beginning of the food commodities rally. Watch corn go to $6.00/bu, soy to $13.00, and forced out wheat acres will repeat this past season's ascent to an even more ridiculous level. Then comes the more expensive to feed pigs, cattle, and resulting milk.
And to the first writer: The average middle class lives more comfortably (minus the servants) than Rockefeller did at the turn of the century. A move away from gold standard facilitated this.
To the last poster, you say:
" For those of you that say innovation has created economic "booms"...I guess there is a sucker born every day. Booms are created by the FED. "
You are getting it backwards. The flexibility of the money supply helps and does not hinder gigantic productivity and technological increases. It is the fuel to our innovative spirit in the US. Sure it leads to excesses and busts like this, but this cycle is necessary. Greed, fear and risk taking are inherent in capitalist mentality systems; a move to a system that removes the cyclical element takes away the capitalist 'oxygen' so to speak.
On the other hand, I'm in no way condoning the giant 'herd' screwup that subprime became (not just in the US scene, but the world scene). It is a story of collusion between i-bankers, ratings agencies, and blind faith into flawed statistical models. Perhaps the lesson here is everyone in finance should be required to take 4 semesters of statistics and econometrics to not function like the herd and think for themselves.
How Bad Is the Dollar's Fall?
scriabinop23.blogspot....
Alan Greenspan Loses His Mind
The reality is that while fed rates too low for about 1.5 years, they did NOT create this credit bubble.
It was the 'flawed model' that created the credit bubble. Everyone went quant, followed models based on a low volatility standard deviation, and they worked long enough to make them 'right' in everyone's eyes.
This was a function of not just money supply and poorly thought out consumption based fiscal policy (blame Mr. Bush for that), but the result of technology and math making their way into the markets as a justifying force as what is right.
Guys: If subprime CDO tranches were more properly rated in the first place, subprime would have never happened. Subprime loans would have cost 9%-12% to the end buyer, not half of that.
From there, its a cascading waterfall.
And like the perennial bears say: Even low rates won't fix an overlevered consumer. So why did low rates allow the consumer to be overlevered before? They didn't because they were low rates; they did because someone (ratings agency in possible collusion with Wall street banks?) was modelling unrealistic loss levels on everything from junk debt to subprime.
Simply put, increased money supply didn't help, but it was not the primary cause of our maladies. The primary cause was risk free euphoria associated with anything to be bought - houses, commodities, junk bonds ... (with the most ironic exception: stocks, we have a financial memory from 2000 what that leads us to).
At least healthy risk models are coming back to the markets. We'll have an era of real returns coming up for investors worth the risk taking.
Market Sentiment: Eye-Poppingly Bearish
But I tell you this: In a real depression/recession, the malls are empty on the weekends. This is not nasty yet. So who knows ...
What's With This Volatility?
krausecomputer.com/per... (its in Excel zipped up)
Visa: Already Priced to Perfection
But this is a conversion to liquid stock of Visa assets for the hundreds of banks that hold an interest in this ... The cash raised in the IPO goes to the company itself. The banks that own it are just shareholders with a now liquid position.
Visa Already Twice MasterCard's Market Cap
scriabinop23.blogspot....
Visa Already Twice MasterCard's Market Cap
Not = float * price.
Visa Already Twice MasterCard's Market Cap
Same goes for BX. They only sold a fraction of the company at IPO; the float is smaller than total outstanding shares.
Visa Already Twice MasterCard's Market Cap