i'm moving this blog to wordpress, so you'll need to update your RSS feed or weblinks
http://obront.wordpress.com
hope to see you there!
Monday, May 4, 2009
Sunday, May 3, 2009
Property seizure by provinces OK
Robin Chatterjee, a former student at Carleton University in Ottawa, was en route to his home in Thornhill, Ont., in March 2003 when police pulled him over because his car was missing a front licence plate.
They discovered he was breaching a court order to live in Ottawa and upon searching his car, found a light ballast, one light socket and an exhaust fan -- items commonly used for marijuana grow operations. He also had $29,000 cash.
Police did not charge the young man because they said they did not have enough evidence.
Ontario's Civil Remedies Act, however, does not require a criminal conviction, so the province moved in and seized the goods after receiving judicial approval. A judge can give permission based on a balance of probabilities that the goods were proceeds of crime, a standard that is not as high as the criminal test of proof beyond a reasonable doubt.
'Each level of government bears a portion of the costs of criminality and each level of government, therefore, has an interest in its suppression,' Justice Ian Binnie wrote in the 7-0 decision.
Property seizure by provinces OK: court
They discovered he was breaching a court order to live in Ottawa and upon searching his car, found a light ballast, one light socket and an exhaust fan -- items commonly used for marijuana grow operations. He also had $29,000 cash.
Police did not charge the young man because they said they did not have enough evidence.
Ontario's Civil Remedies Act, however, does not require a criminal conviction, so the province moved in and seized the goods after receiving judicial approval. A judge can give permission based on a balance of probabilities that the goods were proceeds of crime, a standard that is not as high as the criminal test of proof beyond a reasonable doubt.
'Each level of government bears a portion of the costs of criminality and each level of government, therefore, has an interest in its suppression,' Justice Ian Binnie wrote in the 7-0 decision.
Property seizure by provinces OK: court
Sporting Life 10K Results
woohoo, my first timed race run ... 2,454th place!
Sporting Life 10K
Place 2454/10762
Chip Time 49:35.8
Pace 4:58
Gender Place/Total 1892/4857
Category M45-49 206/543
Sporting Life 10K
Sunday May 3rd, 2009
Toronto, ON, 8:00am
OBRONT, DAVID Toronto, ON, 8:00am
Place 2454/10762
Chip Time 49:35.8
Pace 4:58
Gender Place/Total 1892/4857
Category M45-49 206/543
Da Russophile
Their Thesis
The Western media tells us Russia is in a death spiral, its economy is one giant oil bubble, suffers from endemic corruption, inequality and lawlessness and is presided over by a KGB kleptocrat dead-set on resurrecting the USSR and launching Cold War II.
Our Antithesis
Russia is a normal country with a booming non-hydrocarbons economy underpinned by a well-educated and secular workforce. The Putin administration has affirmed democratic values, worked to improve human rights and pursued Russia’s national interests abroad.
Your Synthesis ?
Core Article: Welcome to Da Russophile | Sublime Oblivion
The Western media tells us Russia is in a death spiral, its economy is one giant oil bubble, suffers from endemic corruption, inequality and lawlessness and is presided over by a KGB kleptocrat dead-set on resurrecting the USSR and launching Cold War II.
Our Antithesis
Russia is a normal country with a booming non-hydrocarbons economy underpinned by a well-educated and secular workforce. The Putin administration has affirmed democratic values, worked to improve human rights and pursued Russia’s national interests abroad.
Your Synthesis ?
Core Article: Welcome to Da Russophile | Sublime Oblivion
Saturday, May 2, 2009
Insulin, Blood Sugar & Type 2 Diabetes
We all know by now that type 2 diabetes is an epidemic. Here’s my ultra-simple explanation of the entire insulin/blood sugar/type 2 diabetes mess. Big Agra could really care less about you. That’s just business.
The Definitive Guide to Insulin, Blood Sugar & Type 2 Diabetes (and you’ll understand it)
Mark's Daily Apple4 excerpts from Sum: Forty Tales from the Afterlives by David Eagleman.
a vision of the hereafter from a new book by David Eagleman
Seven hours of vomiting. Fourteen minutes of pure joy
Today's story is entitled 'Sum.'
Tuesday, April 28, 2009The great TV in the sky
Today's story is entitled 'Will-o'-the-Wisp.'
Wednesday, April 29, 2009The Technician's warning
Today's story is entitled 'The Unnatural.'
Thursday, April 30, 2009-
The many versions of you
Today's story is entitled 'Prism.'
Friday, May 1, 2009
Friday, May 1, 2009
Bank PPEs ample cushion against rising loan losses
Bank PPEs ample cushion against rising loan losses - FP Trading Desk: "The pre-provision, pre-tax earnings (PPE) of Canada's banks are more than ample to cushion the impact of rising loan losses, says UBS analyst Peter A. Rozenberg.
'We think that PPE are the most important line of defence against projected credit losses, he said in a note to clients. 'We project significant PPE of $34-billion in F2009 compared to $9.3-billion in projected provisions.
Mr. Rozenberg said Canadian banks have historically enjoyed strong provision coverage with PPE:PCLs no less than 1.5x. Currently, the analyst noted the average coverage is 3.6x with National Bank at 7.3x and Bank of Nova Scotia at 4.8x, leading the pack. Bank of Montreal at 2.5x would be the lowest.
He added that PPE is also a good way to judge bank valuations and following the recent rally in the sector, Canadian banks are now trading at 5.4x PPE, compared with their historical average of 5.6x. CIBC and Bank of Montreal trade at the most attractive valuations, he said, while Royal Bank and Bank of Nova Scotia trade modestly above average, TD is below average and National Bank trades higher than average.
'Lower valuations at TD and BMO likely reflect lower implied US returns while discounts at CM likely reflect higher [collateralized loan obligations] risk,' he wrote. 'The relative premium valuation at NA is likely due to lower than average provisions and higher implied returns.'"
'We think that PPE are the most important line of defence against projected credit losses, he said in a note to clients. 'We project significant PPE of $34-billion in F2009 compared to $9.3-billion in projected provisions.
Mr. Rozenberg said Canadian banks have historically enjoyed strong provision coverage with PPE:PCLs no less than 1.5x. Currently, the analyst noted the average coverage is 3.6x with National Bank at 7.3x and Bank of Nova Scotia at 4.8x, leading the pack. Bank of Montreal at 2.5x would be the lowest.
He added that PPE is also a good way to judge bank valuations and following the recent rally in the sector, Canadian banks are now trading at 5.4x PPE, compared with their historical average of 5.6x. CIBC and Bank of Montreal trade at the most attractive valuations, he said, while Royal Bank and Bank of Nova Scotia trade modestly above average, TD is below average and National Bank trades higher than average.
'Lower valuations at TD and BMO likely reflect lower implied US returns while discounts at CM likely reflect higher [collateralized loan obligations] risk,' he wrote. 'The relative premium valuation at NA is likely due to lower than average provisions and higher implied returns.'"
Ovechkin vs Crosby
National Post editorial board: Ovechkin vs Crosby, a defining decision:
"We are not the first to say how fortunate hockey fans are to be enjoying another Sidney Crosby-Alexander Ovechkin playoff duel. In fact, we’re probably more like the thousandth. But there are so many reasons to be grateful that, even collectively, the hockey world’s editorialists are helpless to exhaust them all. Just consider, for example, the manner in which hockey’s Magic and Bird have re-energized and reinvented the old Canada-vs.-Russia tension that was part of our lives for 20 years. Back in the day, it was the Soviets who lacked individuality and presented the contemptuous demeanour of the soldier to the world; it was the Canadians who best expressed the love of the game as such, and reminded us of the reasons we still talk of “playing” hockey.
Today, time and events have changed the picture. For better or worse, it is our Mr. Crosby who is the straitlaced one, the self-conscious leader; Mr. Crosby who, for better or worse, may represent to the world’s hockey fans a homogenizing obsession with correctness and knowing one’s place in the order. And it is Mr. Ovechkin who represents creativity and glee and fire and insolence, who knows the game is a game and who is willing to take it off the ice (as he did when, with his team down 2-0 in the series, he showed up at a Rangers’ practice to talk smack and rattle his opponents). There can be no question which one of these players would fit in on, say, the ’74 Flyers of Bob Clarke and Fred Shero, and which one could be slotted into the old Russian KLM line for 10 minutes before anyone noticed.
That makes the question of rooting interests incredibly complex, and raises this sports rivalry to the highest level imaginable, a level at which the tides of history and the self-images of two great nations have their part to play.
There must be many households which have a young son who venerates Mr. Crosby patriotically — he’s handsome, good-natured, assiduous, stylish and hardly ever puts a foot wrong on the ice — and a father who, perhaps secretly, sees Mr. Ovechkin as being more like the heroes of his own youth. And yet, there must be as many more where the father sees Mr. Crosby as standing up for Canadian values, representing everything he wants his own child to become, while the son, responding with instinctive fellow-feeling to the boy barely hidden inside Mr. Ovechkin, goes to bed clutching his No. 8 jersey. At times like this, sport aspires, and quite successfully, to the qualities of an outstanding novel.
The difference is, nobody on earth knows what the next chapter will look like: Nobody can know until it is carved into the ice. Miraculously, the protagonists are just 23 and 21 years of age. And it is worth remembering that Mr. Crosby is still a great deal further from his physical and mental peak than Mr. Ovechkin; biologically, he has yet to reach his final form. But the opportunities for him to face his nemesis in the playoffs may not be many. The 30-team pro sports leagues of today are remorseless in their mathematical logic. For reasons of pure abstract combinatorics, they offer fewer opportunities for sustained rivalry, for the kind of multi-seasonal epics than Montreal and Boston, or Calgary and Edmonton, used to create.
So now would be a good moment for Mr. Crosby to step forward. He came into the NHL accompanied by unrealistic expectations of instant massive success (though it is not as though he has been a disappointment, exactly), and now an interloper, Mr. Ovechkin, has established himself as perhaps the bigger star. We are all waiting anxiously to see what level of the pyramid Mr. Crosby ultimately ascends to. He is clearly on a Hall of Fame track, but in the Hall of Fame, you’ve got your Mike Gartners and Bernie Federkos, and then again you have your Gretzkys and Orrs. The difference is made, young Sidney, at times like this."
"We are not the first to say how fortunate hockey fans are to be enjoying another Sidney Crosby-Alexander Ovechkin playoff duel. In fact, we’re probably more like the thousandth. But there are so many reasons to be grateful that, even collectively, the hockey world’s editorialists are helpless to exhaust them all. Just consider, for example, the manner in which hockey’s Magic and Bird have re-energized and reinvented the old Canada-vs.-Russia tension that was part of our lives for 20 years. Back in the day, it was the Soviets who lacked individuality and presented the contemptuous demeanour of the soldier to the world; it was the Canadians who best expressed the love of the game as such, and reminded us of the reasons we still talk of “playing” hockey.
Today, time and events have changed the picture. For better or worse, it is our Mr. Crosby who is the straitlaced one, the self-conscious leader; Mr. Crosby who, for better or worse, may represent to the world’s hockey fans a homogenizing obsession with correctness and knowing one’s place in the order. And it is Mr. Ovechkin who represents creativity and glee and fire and insolence, who knows the game is a game and who is willing to take it off the ice (as he did when, with his team down 2-0 in the series, he showed up at a Rangers’ practice to talk smack and rattle his opponents). There can be no question which one of these players would fit in on, say, the ’74 Flyers of Bob Clarke and Fred Shero, and which one could be slotted into the old Russian KLM line for 10 minutes before anyone noticed.
That makes the question of rooting interests incredibly complex, and raises this sports rivalry to the highest level imaginable, a level at which the tides of history and the self-images of two great nations have their part to play.
There must be many households which have a young son who venerates Mr. Crosby patriotically — he’s handsome, good-natured, assiduous, stylish and hardly ever puts a foot wrong on the ice — and a father who, perhaps secretly, sees Mr. Ovechkin as being more like the heroes of his own youth. And yet, there must be as many more where the father sees Mr. Crosby as standing up for Canadian values, representing everything he wants his own child to become, while the son, responding with instinctive fellow-feeling to the boy barely hidden inside Mr. Ovechkin, goes to bed clutching his No. 8 jersey. At times like this, sport aspires, and quite successfully, to the qualities of an outstanding novel.
The difference is, nobody on earth knows what the next chapter will look like: Nobody can know until it is carved into the ice. Miraculously, the protagonists are just 23 and 21 years of age. And it is worth remembering that Mr. Crosby is still a great deal further from his physical and mental peak than Mr. Ovechkin; biologically, he has yet to reach his final form. But the opportunities for him to face his nemesis in the playoffs may not be many. The 30-team pro sports leagues of today are remorseless in their mathematical logic. For reasons of pure abstract combinatorics, they offer fewer opportunities for sustained rivalry, for the kind of multi-seasonal epics than Montreal and Boston, or Calgary and Edmonton, used to create.
So now would be a good moment for Mr. Crosby to step forward. He came into the NHL accompanied by unrealistic expectations of instant massive success (though it is not as though he has been a disappointment, exactly), and now an interloper, Mr. Ovechkin, has established himself as perhaps the bigger star. We are all waiting anxiously to see what level of the pyramid Mr. Crosby ultimately ascends to. He is clearly on a Hall of Fame track, but in the Hall of Fame, you’ve got your Mike Gartners and Bernie Federkos, and then again you have your Gretzkys and Orrs. The difference is made, young Sidney, at times like this."
The shifting sands of Saudi Arabia
EDITORIAL: The shifting sands - Washington Times: "We suspect that the Saudis have taken the measure of President Obama and his administration - and realize nothing will be done to thwart Tehran's nuclear ambitions. That means Iran's bomb is inevitable and so is the Saudis' appeasement. As for America, we may want to rethink a foreign policy that makes our friends bow to our enemies."
Can Ahmadinejad copy Obama's election slogan? Yes, he can
guardian.co.uk:
Obama's signature campaign slogan, Yes We Can, has been replicated by the Iranian president in a promotional video issued for Iran's presidential poll on 12 June, when Ahmadinejad is seeking re-election.
The video features a cover picture of Ahmadinejad wearing his trademark white jacket and pointing to the Farsi phrase Ma Mitavanim (We Can) on a blackboard. The film is aimed at students and capitalises on his former status as a university lecturer.
Obama's signature campaign slogan, Yes We Can, has been replicated by the Iranian president in a promotional video issued for Iran's presidential poll on 12 June, when Ahmadinejad is seeking re-election.
The video features a cover picture of Ahmadinejad wearing his trademark white jacket and pointing to the Farsi phrase Ma Mitavanim (We Can) on a blackboard. The film is aimed at students and capitalises on his former status as a university lecturer.
Ahmadinejad Doesn't Recognize Two-State Vision
The Iranian website Asr-e Iran stated that the Western media had distorted statements by Iranian President Mahmoud Ahmadinejad in an April 26 interview on ABC TV, that 'Iran would agree to any decision made by the Palestinians,' as meaning agreement to the 'two-state vision' and recognition of Israel.
The website stated that the distortion of Ahmadinejad's words was aimed at weakening Iran's status among the Arabs who see it as supporting Palestinian rights.
It should be noted that during the interview, Ahmadinejad said that 'the Palestinian people has the right to decide its own fate' by means of a referendum held amongst all Palestinians worldwide, not only residents of the Palestinian territories.
Under this Iranian solution, the Jews in Israel could participate in the referendum only if they had lived in pre-1948 Palestine.
The website stated that the distortion of Ahmadinejad's words was aimed at weakening Iran's status among the Arabs who see it as supporting Palestinian rights.
It should be noted that during the interview, Ahmadinejad said that 'the Palestinian people has the right to decide its own fate' by means of a referendum held amongst all Palestinians worldwide, not only residents of the Palestinian territories.
Under this Iranian solution, the Jews in Israel could participate in the referendum only if they had lived in pre-1948 Palestine.
Why Jane Fonda Is Banned in Beirut
Why Jane Fonda Is Banned in Beirut - WSJ.com:
A professor at the American University here recently ordered copies of 'The Diary of Anne Frank' for his classes, only to learn that the book is banned. Inquiring further, he discovered a long list of prohibited books, films and music.
Even a partial list of books banned in Lebanon gives pause: William Styron's 'Sophie's Choice'; Thomas Keneally's 'Schindler's List'; Thomas Friedman's 'From Beirut to Jerusalem'; books by Philip Roth, Saul Bellow and Isaac Bashevis Singer. In fact, all books that portray Jews, Israel or Zionism favorably are banned.
Writers in Arabic are not exempt. Abdo Wazen's 'The Garden of the Senses' and Layla Baalbaki's 'Hana's Voyage to the Moon' were taken to court. Syria's Sadiq Jalal al-Azm was prosecuted for his 'Critique of Religious Thinking.'
All of Jane Fonda's films are banned, since she visited Israel in 1982 to court votes for Tom Hayden's Senate run. 'Torn Curtain' is banned: Paul Newman starred in 'Exodus.' And the television series 'The Nanny' is banned because of Fran Drescher.
Works that could stimulate dialogue in Lebanon are perfunctorily banned. 'Waltz with Bashir,' an Israeli film of 2008, is banned -- even though it alleges that Ariel Sharon was complicit in the Sabra and Shatilla massacres. According to the Web site Monstersandcritics, however, 'Waltz with Bashir' became an instant classic in the very Palestinian camps it depicts, because it is the only history the younger generation has.
A professor at the American University here recently ordered copies of 'The Diary of Anne Frank' for his classes, only to learn that the book is banned. Inquiring further, he discovered a long list of prohibited books, films and music.
Even a partial list of books banned in Lebanon gives pause: William Styron's 'Sophie's Choice'; Thomas Keneally's 'Schindler's List'; Thomas Friedman's 'From Beirut to Jerusalem'; books by Philip Roth, Saul Bellow and Isaac Bashevis Singer. In fact, all books that portray Jews, Israel or Zionism favorably are banned.
Writers in Arabic are not exempt. Abdo Wazen's 'The Garden of the Senses' and Layla Baalbaki's 'Hana's Voyage to the Moon' were taken to court. Syria's Sadiq Jalal al-Azm was prosecuted for his 'Critique of Religious Thinking.'
All of Jane Fonda's films are banned, since she visited Israel in 1982 to court votes for Tom Hayden's Senate run. 'Torn Curtain' is banned: Paul Newman starred in 'Exodus.' And the television series 'The Nanny' is banned because of Fran Drescher.
Works that could stimulate dialogue in Lebanon are perfunctorily banned. 'Waltz with Bashir,' an Israeli film of 2008, is banned -- even though it alleges that Ariel Sharon was complicit in the Sabra and Shatilla massacres. According to the Web site Monstersandcritics, however, 'Waltz with Bashir' became an instant classic in the very Palestinian camps it depicts, because it is the only history the younger generation has.
Thursday, April 30, 2009
Dennis Gartman's Rules of Investing
Dennis Gartman's Rules of Investing
1. Never, Ever, Under Any Circumstances, Add To A Losing Position. Not ever. Adding to a losing position is trading's equivalent of driving while intoxicated. It will lead to ruin. Count on it.
2. This Is Not A Business Of Buying Low And Selling High. It's a business of buying high and selling higher. Strength tends to beget strength, and weakness, weakness.
3. 'Markets Can Remain Illogical Far Longer Than You Or I Can Remain Solvent' is a brilliant statement from good friend Gary Shilling. Illogic often reigns and markets are inefficient — despite what the academics try to tell us.
4. Sell That Which Shows The Greatest Weakness; Buy That Which Shows The Greatest Strength. Metaphorically speaking, when bearish throw rocks into the weakest paper sack, for it will break the most easily. In bull markets, ride the strongest winds.
5. Think Like A Fundamentalist, Trade Like A Technician. It is imperative that we understand the fundamentals driving a trade, and that we understand the market's technicals as well. If the chart is not bullish, why buy?
6. Understanding Psychology Is Usually More Important Than Understanding Economics. Simply put, 'When they are cryin', you should be buyin'. And when they are yellin', you should be sellin'.'
7. Bear Market Corrections Are More Violent And Far Swifter Than Bull Market Corrections. Why they are is still a mystery to us, but they are. Accept it and move on.
8. Be Patient With Winning Trades; Be Enormously Impatient With Losing Trades. Remember, it is quite possible to make large sums of money if we are only 'right' 30% of the time, as long as our losses are small and our profits are large.
9. The Hard Trade Is The Right Trade. If it is easy to sell, don't. And if it is easy to buy, don't.Do the trade that is hard to do and that the crowd finds objectionable.
10. Do More Of That Which Is Working And Less Of That Which Is Not. This works in life as well as in trading. Do the things that have been proven of merit. Add to winning trades, cut back or eliminate losing ones. If there is a 'secret' to trading (and to life), this is it.
11. There Is Never Just One Cockroach. Bad news about a stock is usually followed by more bad news. This continues until such a time as panic prevails and the weakest hands finally exit their positions.
12. All Rules Are Meant To Be Broken. But very, very infrequently. Genius comes in knowing how truly infrequently one can do so and still prosper.
www.thegartmanletter.com
1. Never, Ever, Under Any Circumstances, Add To A Losing Position. Not ever. Adding to a losing position is trading's equivalent of driving while intoxicated. It will lead to ruin. Count on it.
2. This Is Not A Business Of Buying Low And Selling High. It's a business of buying high and selling higher. Strength tends to beget strength, and weakness, weakness.
3. 'Markets Can Remain Illogical Far Longer Than You Or I Can Remain Solvent' is a brilliant statement from good friend Gary Shilling. Illogic often reigns and markets are inefficient — despite what the academics try to tell us.
4. Sell That Which Shows The Greatest Weakness; Buy That Which Shows The Greatest Strength. Metaphorically speaking, when bearish throw rocks into the weakest paper sack, for it will break the most easily. In bull markets, ride the strongest winds.
5. Think Like A Fundamentalist, Trade Like A Technician. It is imperative that we understand the fundamentals driving a trade, and that we understand the market's technicals as well. If the chart is not bullish, why buy?
6. Understanding Psychology Is Usually More Important Than Understanding Economics. Simply put, 'When they are cryin', you should be buyin'. And when they are yellin', you should be sellin'.'
7. Bear Market Corrections Are More Violent And Far Swifter Than Bull Market Corrections. Why they are is still a mystery to us, but they are. Accept it and move on.
8. Be Patient With Winning Trades; Be Enormously Impatient With Losing Trades. Remember, it is quite possible to make large sums of money if we are only 'right' 30% of the time, as long as our losses are small and our profits are large.
9. The Hard Trade Is The Right Trade. If it is easy to sell, don't. And if it is easy to buy, don't.Do the trade that is hard to do and that the crowd finds objectionable.
10. Do More Of That Which Is Working And Less Of That Which Is Not. This works in life as well as in trading. Do the things that have been proven of merit. Add to winning trades, cut back or eliminate losing ones. If there is a 'secret' to trading (and to life), this is it.
11. There Is Never Just One Cockroach. Bad news about a stock is usually followed by more bad news. This continues until such a time as panic prevails and the weakest hands finally exit their positions.
12. All Rules Are Meant To Be Broken. But very, very infrequently. Genius comes in knowing how truly infrequently one can do so and still prosper.
www.thegartmanletter.com
Biden's Verbal Diarrhea
At 7:05 a.m. Thursday, Biden was asked on NBC's "Today" show what advice he would give to a family member who was considering flying to Mexico.
"I would tell members of my family — and I have — I wouldn't go anywhere in confined places now," Biden said. "It's not that it's going to Mexico. It's you're in a confined aircraft. When one person sneezes, it goes all the way through the aircraft." Biden went on to say he wouldn't suggest that they ride the subway either.
Avoid all airline travel? Don't ride the subway?
Cue the backpedaling.
At 8:47 a.m., Biden's office put out a statement gamely trying to rewrite the vice president's words:
"The advice he is giving family members is the same advice the administration is giving to all Americans: That they should avoid unnecessary air travel to and from Mexico," said Biden spokeswoman Elizabeth Alexander. "If they are sick, they should avoid airplanes and other confined public spaces, such as subways."
By 10 a.m., Homeland Security chief Janet Napolitano had supplied her own do-over for the VP:
"If he could say that over again, he would say if they're feeling sick they should stay off of public transit or confined spaces because that is indeed the advice that we're giving," Napolitano said on MSNBC.
http://news.yahoo.com/s/ap/20090430/ap_on_go_pr_wh/us_swine_flu_biden
Government Spending DOWN, personal consumption UP
Q1-2009 government expenditure was down and personal consumption was up!!!
this is not at all how the mainstream view sees the economy
this is not at all how the mainstream view sees the economy
- Real GDP growth contracted 6.1% in Q1 2009 after contracting 6.3% in Q4 2008. Exports, inventories, government expenditure and investment had a negative contribution to GDP growth whereas consumption had a positive contribution
- Real final sales (GDP - change in private inventories) decreased 3.4%. Private inventories subtracted 2.79% from GDP growth (the most since records began in 1947). Real Personal consumption rose 2.2% (the most in 2 years); private investment fell 51.8% led by a 38% decline in both residential and business investments; government expenditure fell 3.9% due to decline in defense and state and local government spending. Exports fell 30% but imports fell at a much faster pace at 34.1%. This led to a positive GDP contribution of net exports of 1.99%
Gettelfinger Motors
Gettelfinger Motors - WSJ.com:
Secretary Timothy Geithner and his auto task force, led by Steven Rattner, have somehow decided that Treasury and UAW chief Ron Gettelfinger will get to own a combined 90% of GM. If there's a reason other than the political symbiosis among the Obama Administration, Michigan Democrats and the auto union, it's hard to discern.
The biggest losers here are GM's bondholders. According the Treasury-GM debt-for-equity swap announced Monday, GM has $27.2 billion in unsecured bonds owned by the public. Under Monday's offer, they would exchange their $27.2 billion in bonds for 10% of the stock of the restructured GM. This could amount to less than five cents on the dollar.
The Treasury, which is owed $16.2 billion, would receive 50% of the stock and $8.1 billion in debt -- as much as 87 cents on the dollar. The union's retiree health-care benefit trust would receive half of the $20 billion it is owed in stock, giving it 40% ownership of GM, plus another $10 billion in cash over time. That's worth about 76 cents on the dollar, according to some estimates.
In a genuine Chapter 11 bankruptcy, these three groups of creditors would all be similarly situated -- because all three are, for the most part, unsecured creditors of GM. And yet according to the formula presented Monday, those with the largest claim -- the bondholders -- get the smallest piece of the restructured company by a huge margin.
GM, the government and the bondholders all insist that a bankruptcy filing would be a disaster. GM's SEC filing on the debt-equity swap also warns darkly that if the requisite 90% of bondholders don't agree to these terms, they may recover little or nothing in bankruptcy court. But given the choice between a 10% stake in Gettelfinger Motors and the independent mercies of a bankruptcy judge, bondholders could be forgiven for taking their chances in court.
Next up will be tax changes and regulations intended to coax, or coerce, Americans to buy Gettelfinger Motors cars. This tale of taxpayer woe is only beginning.
Secretary Timothy Geithner and his auto task force, led by Steven Rattner, have somehow decided that Treasury and UAW chief Ron Gettelfinger will get to own a combined 90% of GM. If there's a reason other than the political symbiosis among the Obama Administration, Michigan Democrats and the auto union, it's hard to discern.
The biggest losers here are GM's bondholders. According the Treasury-GM debt-for-equity swap announced Monday, GM has $27.2 billion in unsecured bonds owned by the public. Under Monday's offer, they would exchange their $27.2 billion in bonds for 10% of the stock of the restructured GM. This could amount to less than five cents on the dollar.
The Treasury, which is owed $16.2 billion, would receive 50% of the stock and $8.1 billion in debt -- as much as 87 cents on the dollar. The union's retiree health-care benefit trust would receive half of the $20 billion it is owed in stock, giving it 40% ownership of GM, plus another $10 billion in cash over time. That's worth about 76 cents on the dollar, according to some estimates.
In a genuine Chapter 11 bankruptcy, these three groups of creditors would all be similarly situated -- because all three are, for the most part, unsecured creditors of GM. And yet according to the formula presented Monday, those with the largest claim -- the bondholders -- get the smallest piece of the restructured company by a huge margin.
GM, the government and the bondholders all insist that a bankruptcy filing would be a disaster. GM's SEC filing on the debt-equity swap also warns darkly that if the requisite 90% of bondholders don't agree to these terms, they may recover little or nothing in bankruptcy court. But given the choice between a 10% stake in Gettelfinger Motors and the independent mercies of a bankruptcy judge, bondholders could be forgiven for taking their chances in court.
Next up will be tax changes and regulations intended to coax, or coerce, Americans to buy Gettelfinger Motors cars. This tale of taxpayer woe is only beginning.
Wednesday, April 29, 2009
Canada's advantage
Canada's advantage:
As Canada's experience in the 1990s showed, the path to economic growth lies in shrinking government, not growing it
As Canada's experience in the 1990s showed, the path to economic growth lies in shrinking government, not growing it
Most Canadians are unfortunately not aware of Canada's 15-year track record of reducing the size of government (1992-2007). Since peaking in 1992, the size of government in Canada--best measured by total spending at all levels of government as a share of gross domestic product -- has decreased from 53% to less than 40%, according to data from the Organization for Economic Cooperation and Development. This is a dramatic departure from the 1960s, '70s and '80s, when Canada leaned towards ever bigger government.
Equally important is the gap between Canada and the United States. In 1992, Canadian governments consumed 36% more of the economy than their counterparts in the United States. By 2008, the gap had decreased to just 3%. Indeed, given President Obama's recent budget, Canada will likely have a smaller government than the United States within the next few years.
Kunstler's forecast 2009
Kunstler's forecast 2009:
There are two realities 'out there' now competing for verification among those who think about national affairs and make things happen. The dominant one (let's call it the Status Quo) is that our problems of finance and economy will self-correct and allow the project of a 'consumer' economy to resume in 'growth' mode. This view includes the idea that technology will rescue us from our fossil fuel predicament -- through 'innovation,' through the discovery of new techno rescue remedy fuels, and via 'drill, baby, drill' policy. This view assumes an orderly transition through the current 'rough patch' into a vibrant re-energized era of 'green' Happy Motoring and resumed Blue Light Special shopping.
The minority reality (let's call it The Long Emergency) says that it is necessary to make radically new arrangements for daily life and rather soon. It says that a campaign to sustain the unsustainable will amount to a tragic squandering of our dwindling resources. It says that the 'consumer' era of economics is over, that suburbia will lose its value, that the automobile will be a diminishing presence in daily life, that the major systems we've come to rely on will founder, and that the transition between where we are now and where we are going is apt to be tumultuous.
My own view is obviously the one called The Long Emergency.
Since the change it proposes is so severe, it naturally generates exactly the kind of cognitive dissonance that paradoxically reinforces the Status Quo view, especially the deep wishes associated with saving all the familiar, comfortable trappings of life as we have known it. The dialectic between the two realities can't be sorted out between the stupid and the bright, or even the altruistic and the selfish. The various tech industries are full of MIT-certified, high-achiever Status Quo techno-triumphalists who are convinced that electric cars or diesel-flavored algae excreta will save suburbia, the three thousand mile Caesar salad, and the theme park vacation. The environmental movement, especially at the elite levels found in places like Aspen, is full of Harvard graduates who believe that all the drive-in espresso stations in America can be run on a combination of solar and wind power. I quarrel with these people incessantly. It seems especially tragic to me that some of the brightest people I meet are bent on mounting the tragic campaign to sustain the unsustainable in one way or another. But I have long maintained that life is essentially tragic in the sense that history won't care if we succeed or fail at carrying on the project of civilization.
There are two realities 'out there' now competing for verification among those who think about national affairs and make things happen. The dominant one (let's call it the Status Quo) is that our problems of finance and economy will self-correct and allow the project of a 'consumer' economy to resume in 'growth' mode. This view includes the idea that technology will rescue us from our fossil fuel predicament -- through 'innovation,' through the discovery of new techno rescue remedy fuels, and via 'drill, baby, drill' policy. This view assumes an orderly transition through the current 'rough patch' into a vibrant re-energized era of 'green' Happy Motoring and resumed Blue Light Special shopping.
The minority reality (let's call it The Long Emergency) says that it is necessary to make radically new arrangements for daily life and rather soon. It says that a campaign to sustain the unsustainable will amount to a tragic squandering of our dwindling resources. It says that the 'consumer' era of economics is over, that suburbia will lose its value, that the automobile will be a diminishing presence in daily life, that the major systems we've come to rely on will founder, and that the transition between where we are now and where we are going is apt to be tumultuous.
My own view is obviously the one called The Long Emergency.
Since the change it proposes is so severe, it naturally generates exactly the kind of cognitive dissonance that paradoxically reinforces the Status Quo view, especially the deep wishes associated with saving all the familiar, comfortable trappings of life as we have known it. The dialectic between the two realities can't be sorted out between the stupid and the bright, or even the altruistic and the selfish. The various tech industries are full of MIT-certified, high-achiever Status Quo techno-triumphalists who are convinced that electric cars or diesel-flavored algae excreta will save suburbia, the three thousand mile Caesar salad, and the theme park vacation. The environmental movement, especially at the elite levels found in places like Aspen, is full of Harvard graduates who believe that all the drive-in espresso stations in America can be run on a combination of solar and wind power. I quarrel with these people incessantly. It seems especially tragic to me that some of the brightest people I meet are bent on mounting the tragic campaign to sustain the unsustainable in one way or another. But I have long maintained that life is essentially tragic in the sense that history won't care if we succeed or fail at carrying on the project of civilization.
Covering My Short Against Treasury Bonds
Why I'm Covering My Short Against iShares Barclays 20+ Year Treasury Bond -- Seeking Alpha:
I am covering almost my entire short against iShares Barclays 20+ Year Treasury Bond (TLT) ahead of the Fed meeting Wednesday.
I'd like to talk about bonds but this market is completely out of the hands of supply /demand - the Federal Reserve has made this their plaything. But the market has started to make the Fed unhappy and prices are faltering, causing yields to begin to rise. The all important 3% on the long bond is the line in the sand - each time we get there Bazooka Ben says no more! We can't have mortgage rates go to 'unnatural' levels like say ... 5.4%. So I'd expect trench warfare to be announced Wednesday to get this to 'bend' to the will of the Federal Reserve. Because that is how central planning works.
If I knew the Federal Reserve were not involved, I would be piling into this short hand over fist, but we now have to learn to trade under the USSA regime. On the chart below you can see the huge reaction 6 weeks ago when Uncle Ben announced quantitative easing; I want to avoid that in case he comes with a bigger bazooka tomorrow
I am covering almost my entire short against iShares Barclays 20+ Year Treasury Bond (TLT) ahead of the Fed meeting Wednesday.
I'd like to talk about bonds but this market is completely out of the hands of supply /demand - the Federal Reserve has made this their plaything. But the market has started to make the Fed unhappy and prices are faltering, causing yields to begin to rise. The all important 3% on the long bond is the line in the sand - each time we get there Bazooka Ben says no more! We can't have mortgage rates go to 'unnatural' levels like say ... 5.4%. So I'd expect trench warfare to be announced Wednesday to get this to 'bend' to the will of the Federal Reserve. Because that is how central planning works.
If I knew the Federal Reserve were not involved, I would be piling into this short hand over fist, but we now have to learn to trade under the USSA regime. On the chart below you can see the huge reaction 6 weeks ago when Uncle Ben announced quantitative easing; I want to avoid that in case he comes with a bigger bazooka tomorrow
Jeopardy! Ken Jennings vs Big Blue
How IBM Plans to Destroy Google: "Big Blue has created a software program called 'Watson' that professes to understand and synthesize plain-language queries fast enough to compete with human contestants on the quiz show.
The showdown is not yet scheduled, but plans are already underway to ship a Blue Gene supercomputer to Los Angeles for the contest, The New York Times reports. Among the potential challengers for Watson is former Jeopardy! champion Ken Jennings, who earned worldwide acclaim by winning on the show 74 consecutive times."
The showdown is not yet scheduled, but plans are already underway to ship a Blue Gene supercomputer to Los Angeles for the contest, The New York Times reports. Among the potential challengers for Watson is former Jeopardy! champion Ken Jennings, who earned worldwide acclaim by winning on the show 74 consecutive times."
Obama's First 100 Days
Rasmussen Reports™: The Most Comprehensive Public Opinion Data Anywhere: "As Barack Obama’s administration reaches the 100-day mark, partisans and ideologues on both sides are spinning furiously to define what has happened so far and what it means going forward.
Republicans and conservatives try to paint a portrait of declining support and weakness. Democrats and liberals see a president with unrivaled popularity and power. Both assessments are wrong.
As the president concludes his first 100 days in office, his ratings are about where you’d expect them to be: Democrats are strongly supportive, Republicans are strongly opposed, and those not affiliated with either political party are in between. Those on the fence give Obama the benefit of the doubt, and those with doubts hope they’re wrong.
An analysis of Gallup data going back to the Eisenhower administration shows that Obama’s 100-day ratings fit right in the middle of the ratings for the 10 presidents who came before him. Still, he’s now doing just a bit better than his immediate predecessors, George W. Bush and Bill Clinton, after their first 100 days in office.
Republicans and conservatives try to paint a portrait of declining support and weakness. Democrats and liberals see a president with unrivaled popularity and power. Both assessments are wrong.
As the president concludes his first 100 days in office, his ratings are about where you’d expect them to be: Democrats are strongly supportive, Republicans are strongly opposed, and those not affiliated with either political party are in between. Those on the fence give Obama the benefit of the doubt, and those with doubts hope they’re wrong.
An analysis of Gallup data going back to the Eisenhower administration shows that Obama’s 100-day ratings fit right in the middle of the ratings for the 10 presidents who came before him. Still, he’s now doing just a bit better than his immediate predecessors, George W. Bush and Bill Clinton, after their first 100 days in office.
The Politics of Liberal Amnesia
Nancy Pelosi is 'pushing back' against charges that she was aware of -- and acquiesced in -- the CIA's harsh interrogations of terrorist detainees nearly from the moment the practice began, reports the Politico Web site. Maybe she's suffering from amnesia.
Maybe, for instance, the speaker doesn't remember that in September 2002, as ranking member of the House Intelligence Committee, she was one of four members of Congress who were briefed by the CIA about the interrogation methods the agency was using on leading detainees. "For more than an hour," the Washington Post reported in 2007, "the bipartisan group . . . was given a virtual tour of the CIA's overseas detention sites and the harsh techniques interrogators had devised to try to make their prisoners talk.
"Among the techniques described," the story continued, "was waterboarding, a practice that years later would be condemned as torture by Democrats and some Republicans on Capitol Hill. But on that day, no objections were raised. Instead, at least two lawmakers in the room asked the CIA to push harder."
Maybe the speaker doesn't remember ...Google's Public Data Visualization
Google's Public Data Visualization:
Interesting timing. On the same day when Stephen Wolfram shows a demonstration of his knowledge engine Wolfram | Alpha, Google launched a new OneBox that visualizes public data. If you search for [Florida Unemployment Rate], Google shows an answer ("9.5% of the labor force - Not seasonally adjusted - Mar 2009"), the source and a graph that illustrates how the unemployment rate changed over time.
For now, you can only search for data related to the US: for example, California population. When you click on the result, the graph lets you compare California's population with the population for other states.
For now, you can only search for data related to the US: for example, California population. When you click on the result, the graph lets you compare California's population with the population for other states.
Wolfram|Alpha
Wolfram|Alpha: Our First Impressions
The hype around Wolfram|Alpha, the next "Google killer" from the makers of Mathematica, has been building over the last few weeks. Today, we were lucky enough to attend a one-hour web demo with Stephen Wolfram, and from what we've seen, it definitely looks like it can live up to the hype - though, because it is so different from traditional search engines, it will definitely not be a "Google killer." According to Stephen Wolfram, the goal of Alpha is to give everyone access to expert knowledge and the data that a specialist would be able to compute from this information.
Alpha, which will go live within the next few weeks, is quite different from Google and really doesn't directly compete with it at all. Instead of searching the web for info, Alpha is built around a vast repository of curated data from public and licensed sources. Alpha then organizes and computes this knowledge with the help of sophisticated Natural Language Processing algorithms. Users can ask Alpha any kind of question, which can be constructed just like a Google search (think: "hurricane bob" or "carbon steel strength").
In today's demo, for example, Stephen Wolfram searched for "internet users in europe," or "weather oakland" - two queries that most users would also use in Google or any other search engine.
Where Alpha exceeds, is in the presentation of its "search" results. When asked for how many internet users there are in Europe, for example, Alpha returned not just the total number, but also various plots and data for every country (apparently Vatican City only has 93 Internet users).
Another query with a very sophisticated result was "uncle's uncle's brother's son." Now if you type that into Google, the result will be a useless list of sites that don't even answer this specific question, but Alpha actually returns an interactive genealogic tree with additional information, including data about the 'blood relationship fraction,' for example (3.125% in this case).
Alpha also has a sophisticated knowledge of physics and chemistry data, and during today's demo, we also saw examples for nutritional information, weather, and census data. Most of the data in the system is curated, but real-time financial data or weather information will go through a system that checks the data for validity, so that outliers can be identified as potentially faulty information.
Wolfram|Alpha will be an amazing product, but it's quite different from Google and other search engines. Indeed, maybe it is actually wrong to call it a search engine at all (and Wolfram prefers to call it a "computational knowledge engine"). If you wanted to know what sights to see on your next trip to New York City, for example, Alpha, from what we've seen so for, will not be able to help you.
Alpha, however, will probably be a worthy challenger for Wikipedia and many textbooks and reference works. Instead of looking up basic encyclopedic information there, users can just go to Alpha instead, where they will get a direct answer to their question, as well as a nicely presented set of graphs and other info.
Tuesday, April 28, 2009
On the Coming Bond Crisis - Nandu Narayanan
On the Coming Bond Crisis -- Seeking Alpha: "Nandu Narayanan is one of the few money managers who saw the financial crisis coming. His hedge fund, Trident Global Opportunities Fund, is up 32% over the year to March 31 and up 61% over the two years to March 31.
His February report to unit holders augments some points I was making in my column last week on the U.S. government deficit. Specifically, he warns that the U.S. budget is addressing too many issues at once.
Washington is attempting to deal with “the aftermath of the crisis while at the same time attempting to build a framework for sustainable growth through investments in alternative energy, healthcare and the like.” This will push the U.S. into a deficit-spending cycle “which could backfire badly,” Narayanan says.
At a projected $1.75 trillion, the U.S. deficit for 2009 far exceeds the U.S. domestic savings rate and is larger than the combined surplus savings of the rest of the world. Along with previous requirements for bond issuance, the U.S. is expected to float well over $2 trillion in Treasury securities in 2009.
“If the world balks at purchasing the huge quantity of Treasuries issued, we could have a bond market crisis with U.S. yields spiking dramatically. If the Federal Reserve were to step in to monetize the debt by printing U.S. dollars, it would be a Zimbabwe-style response to the problem and could trigger a currency-market crisis,” adds Narayanan.
To minimize this risk, U.S. politicians should get agreement from rest of the world on how to finance the huge expenditures that are planned. But such support does not seem likely. Indeed, both Europeans and the Chinese are sounding rather unforgiving in their pronouncements on the situation in the U.S.
“Such dissent does not bode well for financial stability going forward,” concludes Narayanan. “We are very likely setting the stage for a significant bond market crisis this year.”"
His February report to unit holders augments some points I was making in my column last week on the U.S. government deficit. Specifically, he warns that the U.S. budget is addressing too many issues at once.
Washington is attempting to deal with “the aftermath of the crisis while at the same time attempting to build a framework for sustainable growth through investments in alternative energy, healthcare and the like.” This will push the U.S. into a deficit-spending cycle “which could backfire badly,” Narayanan says.
At a projected $1.75 trillion, the U.S. deficit for 2009 far exceeds the U.S. domestic savings rate and is larger than the combined surplus savings of the rest of the world. Along with previous requirements for bond issuance, the U.S. is expected to float well over $2 trillion in Treasury securities in 2009.
“If the world balks at purchasing the huge quantity of Treasuries issued, we could have a bond market crisis with U.S. yields spiking dramatically. If the Federal Reserve were to step in to monetize the debt by printing U.S. dollars, it would be a Zimbabwe-style response to the problem and could trigger a currency-market crisis,” adds Narayanan.
To minimize this risk, U.S. politicians should get agreement from rest of the world on how to finance the huge expenditures that are planned. But such support does not seem likely. Indeed, both Europeans and the Chinese are sounding rather unforgiving in their pronouncements on the situation in the U.S.
“Such dissent does not bode well for financial stability going forward,” concludes Narayanan. “We are very likely setting the stage for a significant bond market crisis this year.”"
Enterainment, Cheering Centres, Post-race Party: Sporting Life 10k
Sporting Life 10k
Runners go by: 8:08 to 8:30am
Runners go by: 8:13 to 8:45am
Runners go by: 8:16 to 8:55am
Runners go by: 8:17 to 9:00am
Runners go by: 8:21 to 9:15am
Runners go by: 8:23 to 9:30am
From 8:45 to 9:45am
2009 Entertainment and Cheering Centres and Post-Run Party at the Sporting Life 10k
Coming out to watch the SL10k? Gather at the following locations on Canada's fastest, and most-fun 10k course—for great live entertainment as you watch the race! Runners, you will be energized as you run past the music and crowds! The finish line will be a party with DJ Roxanne. See Route Map here.
1. Yonge & Merton St.
Runners go by: 8:08 to 8:30am
Who's playing: The Rivits
Old Time Rock N' Roll – The Rivits... aka the boys from "Bombardier" ...have been together for the past 20 years... Rock & Roll... lean & mean!
2. Yonge & Bloor (NW corner)
Runners go by: 8:13 to 8:45am
Who's playing: David Leask
David Leask's traditional Celtic music is infused with a "funky" country-pop "Scottish" flavour which truly captivates his audiences with his intense performance style and of course his Scots charm. Backed by a 5 piece band, he has shared the stage with such artists as the Waterboys, the Irish Descendants, Barra MacNeil's, Natalie MacMaster, and Bruce Guthro at venues across the country where he continues to captivate his audiences. www.davidleask.com
3. Dundas Square (SW corner of Yonge & Dundas)
Runners go by: 8:16 to 8:55am
Who's playing: Tribal Conquest
Tribal Conquest uses the deep vibrations of the Didgeridoos with rhythmic Percussion & soulful Guitar to take you on a journey through the rich tribal groove of the Australian Outback!
4. Richmond & Yonge
Runners go by: 8:17 to 9:00am
Who's playing: Glamorous
Cool R&B with a calypso twist, Glamorous will 'rock your soul'!
5. Richmond and Peter St, aka Blue Jays Way (NE corner)
Runners go by: 8:21 to 9:15am
Who's playing: SHELTER
"Shelter" gets its name from their unique origin of playing weekly at a homeless shelter run through the "Out of the Cold" program. The original lineup was Tim McDonald (lead guitar), Kent McDonald (vocals/rhythm guitar) and JR Grant (vocals/bass), often joined by other guest musicians. With the recent addition of Patrick Hamilton on drums, they are ready to ROCK! Their adaptations of classic rock covers will get you moving.
6. Front Street (North Side west of Spadina)
Runners go by: 8:23 to 9:30am
Who's playing: York Lions Steel Band
Feeling "Hot...Hot...Hot" ...enjoy the hottest steel band north of the Caribbean... the York Lions Steel Band. A chartiable organization, the youth band has traveled all over the world performing at various venues, festivals & events. Check out their website at www.yorklionssteelband.com.
7. Bathurst & Fort York Blvd
Who's playing: TBA
Finish Line at Fort York
Who's playing: DJ Roxanne
Post-Race Party
Fort York
From 8:45 to 9:45am
Who's playing: The Tynes Family Band
There is no shortage of energy when you watch this family band called the Tynes. They are sometimes called the Jackson 5, featuring Snooky Tynes (Dad), who has worked with many famous R & B artists. Playing back-up are the 5 family children. Twin girls on bass/guitar, son on drums and daughter who plays keyboards. Watch for their amazing moves & incredible outfits!
SkyNote's Android-powered netbook costs $100
Electronista
Known for making Skype headsets, Chinese company SkyNote is teasing with its prototype Alpha 680 netbook based on Google's Android platform. The device is conceived more as a larger smartphone-class device and has features that reflect the change: the screen is just 7 inches and has a resolution of 800x480, while the ARM11 processor clocks at just 533MHz. The 128MB of RAM can be doubled, while the 1GB of storage space is upgradeable to 4GB.
Known for making Skype headsets, Chinese company SkyNote is teasing with its prototype Alpha 680 netbook based on Google's Android platform. The device is conceived more as a larger smartphone-class device and has features that reflect the change: the screen is just 7 inches and has a resolution of 800x480, while the ARM11 processor clocks at just 533MHz. The 128MB of RAM can be doubled, while the 1GB of storage space is upgradeable to 4GB. Features improve with integrated Wi-Fi, Ethernet, a pair of USB 2.0 ports and an SDHC card slot. There is mention of a 3G data modem, but no other details on it are known. The display will rotate on a double hinge so the netbook can act like a tablet, though the screen isn't likely to be touch-sensitive.
The best aspect of the SkyNote is its projected $100 price tag, though no dates are known for the netbook's release. If or when it arrives, the SkyNote will be available in pink, yellow, red, black and white. [via The Inquirer]
Putin Hails End of 'Cheap Gas' Era
Pipeline Politics: Putin Hails End of 'Cheap Gas' Era
If Russian Prime Minister Vladimir Putin has his way, your Gazprom bill will soon be going up. Despite fast-falling oil prices, he claims Europe will soon be hit with the bill for 'sharply' rising gas field development costs.
Russian Prime Minister Vladimir Putin says European consumers will have to get used to surging natural gas prices. 'The expenses necessary for developing fields are rising sharply,' the Russian government head told attendees at a meeting of gas-exporting nations in Moscow on Tuesday.
'This means that despite the current problems in finances the era of cheap energy resources, of cheap gas, is of course coming to an end,' he added in his keynote speech."
If Russian Prime Minister Vladimir Putin has his way, your Gazprom bill will soon be going up. Despite fast-falling oil prices, he claims Europe will soon be hit with the bill for 'sharply' rising gas field development costs.
Russian Prime Minister Vladimir Putin says European consumers will have to get used to surging natural gas prices. 'The expenses necessary for developing fields are rising sharply,' the Russian government head told attendees at a meeting of gas-exporting nations in Moscow on Tuesday.
'This means that despite the current problems in finances the era of cheap energy resources, of cheap gas, is of course coming to an end,' he added in his keynote speech."
Natural Gas Is Heading to 1997 Levels, Should Stay There Awhile
Natural Gas Is Heading to 1997 Levels, Should Stay There Awhile -- Seeking Alpha: "In the middle of this decade, E&P companies were spurred on by rising commodity prices and easy credit to find and develop new sources of domestic natural gas–most notably shale gas. The forces that enabled this phenomenal growth in domestic gas production–the great asset and credit bubble–have vanished into air, into thin air.
Now, shale-gas companies may have been impaled on their own bayonets. Yet some would have us believe that natural gas prices are poised for a great comeback–that all the fret and worry is for nothing because prices are going to come right back up and justify the development of all the shale in the country, and then some.
They are wrong: demand will continue to be weak and supply will not be nearly as sparse as some of the gas bulls would have us believe. Instead, the story of 2009, 2010, and beyond will be not only how much farther natural gas prices will fall, but also how long prices will stay in the basement, and who will be counted among the casualties."
Now, shale-gas companies may have been impaled on their own bayonets. Yet some would have us believe that natural gas prices are poised for a great comeback–that all the fret and worry is for nothing because prices are going to come right back up and justify the development of all the shale in the country, and then some.
They are wrong: demand will continue to be weak and supply will not be nearly as sparse as some of the gas bulls would have us believe. Instead, the story of 2009, 2010, and beyond will be not only how much farther natural gas prices will fall, but also how long prices will stay in the basement, and who will be counted among the casualties."
Kevin Bambrough, Sprott Resource Corp.: "Unbelievable Values in the Public Markets"
Kevin Bambrough, Sprott Resource Corp.
Source: The Gold Report 11/21/2008
"One of the reasons I first started the Resource Corp. is that I didn’t find much value in the public markets last year and I was looking for opportunities to arbitrage between private and public markets. The world’s changed so much since then; there are now just unbelievable values in the public markets. A number companies out there have spent considerable amounts of money over the last number of years—vast, vast sums—building infrastructure, mines and mills, making huge capital investments. Now they’re trading at pennies on the dollar to what they’ve spent and the assets they’ve accumulated. In the current metal pricing market, they’re cash burners and uneconomic because things are so depressed. I’m not concerned that these prices may stay depressed for some time. I’m more concerned about the long term.
There are always cycles in the commodity markets and you get opportunities to buy assets extremely cheaply during the lows. That’s when you want to put your capital to work. So we’re cashed up and ready to put our money to work. If we can buy a company for pennies on the dollar for, say, its mill and I get the ore body and the infrastructure for free and I can let it sit on care-and-maintenance until times improve, I think we may get the chance to make 10 or 20 times our investment over a five- to ten-year period—an absolute killing. This is the market that I’ve been waiting for and hoping for.
I was surprised how far the first big run in the bull market in commodities went. I’d been very cautious and waiting for a correction for quite some time, and now we’re getting it. Going into this year, I was really only excited about metallurgical coal and agriculture, which is why I focused on PBS and getting our phosphate asset in Peru moved along. I still am very optimistic about the long-term value that’s going to be shown in that asset because the fertilizer market looks very bullish long-term."
Source: The Gold Report 11/21/2008
"One of the reasons I first started the Resource Corp. is that I didn’t find much value in the public markets last year and I was looking for opportunities to arbitrage between private and public markets. The world’s changed so much since then; there are now just unbelievable values in the public markets. A number companies out there have spent considerable amounts of money over the last number of years—vast, vast sums—building infrastructure, mines and mills, making huge capital investments. Now they’re trading at pennies on the dollar to what they’ve spent and the assets they’ve accumulated. In the current metal pricing market, they’re cash burners and uneconomic because things are so depressed. I’m not concerned that these prices may stay depressed for some time. I’m more concerned about the long term.
There are always cycles in the commodity markets and you get opportunities to buy assets extremely cheaply during the lows. That’s when you want to put your capital to work. So we’re cashed up and ready to put our money to work. If we can buy a company for pennies on the dollar for, say, its mill and I get the ore body and the infrastructure for free and I can let it sit on care-and-maintenance until times improve, I think we may get the chance to make 10 or 20 times our investment over a five- to ten-year period—an absolute killing. This is the market that I’ve been waiting for and hoping for.
I was surprised how far the first big run in the bull market in commodities went. I’d been very cautious and waiting for a correction for quite some time, and now we’re getting it. Going into this year, I was really only excited about metallurgical coal and agriculture, which is why I focused on PBS and getting our phosphate asset in Peru moved along. I still am very optimistic about the long-term value that’s going to be shown in that asset because the fertilizer market looks very bullish long-term."
Monday, April 27, 2009
The IMF's Gold Gambit
The IMF's Gold Gambit - WSJ.com: "The International Monetary Fund (IMF) deserves credit, figuratively speaking, for cleverly manipulating the financial troubles of emerging and low-income nations to procure a fresh infusion of capital for itself. But its tactics at this month's G-20 summit in London -- where President Barack Obama signed off on tripling the IMF's lending resources -- should not hoodwink anyone, least of all American taxpayers who pay the largest share of IMF expenses."
Saskatchewan Farmland is cheap
i think Sprott Resource (SCP) has found a way around the restrictions by making land deals with the natives for farming ...
I haven’t yet talked about what I think is the single best land idea I’ve encountered so far - Canadian farming land, out in the Western states. Now there’s a damn good reason for that silence on my part – you can’t buy any of this ultra-cheap farm land because only local residents can buy the stuff. Still if you can find a way around these regulations then I suggest you read on.
I’ve been talking on email to the boss (Stephen Johnston) of the premier Canadian investment company that runs funds in this area – AgCapita. According to Stephen : “Agcapita is one of the only investment vehicles on the market - our current retail fund was only open to Canadian citizens/residents and raised almost $20 million of investable capital. We launched in late 2007. The farmland investment market in Canada is still embryonic and Agcapita is the market leader – both in size and expertise.”
The central investment concept is that farm land in states like Saskatchewan is dirt cheap – although prices in the other two prairie provinces of Alberta and Manitoba are also low.
Here’s Stephen on the potential….
“The wheat/canola yields across Saskatchewan, Alberta and Manitoba are basically the same and of course the infrastructure and political risk are the same. However, Saskatchewan has an average price of $400/acre, Alberta $1,100/acre and Manitoba $660/acre. It is worth noting that the large price difference between the three provinces did not exist up until 1988 – they traded in lockstep for almost 100 years. The disparity is primarily the result of Saskatchewan land ownership legislation passed in 1988 prohibiting all non-Saskatchewan residents (including Canadians in other provinces) from investing in the farmland in the province. On top of the regulatory barrier we had low commodity prices and immigration out of rural communities in western Canada. We would argue that all three of these factors are now in our favour. The ownership rules have been liberalized, commodity prices are stronger and people are moving back to Saskatchewan for the first time in 25 years. Our investment premise therefore has three drivers – 1) inflation, 2) the global agriculture commodity bull market and 3) that the artificial price disparity between the Prairie Provinces disappears bringing Saskatchewan up to the same average price as Alberta.”
Now Stephen is of course something of an agriculture bull, as you’d expect – “ we believe the world is still in the early stages of the current commodity bull market. When agriculture commodities prices are compared against their previous inflation adjusted highs they are significantly discounted implying scope for further price increases…During the last commodity bull market & high inflation period in the 1970’s, equities materially underperformed farmland. Western Canadian farmland went from around $100/acre to $550/acre (550% total return and 176% in inflation adjusted terms), cash held in a money market account barely kept ahead of inflation (6% inflation adjusted return) and the S&P 500 index returned less than 2% per year (a loss of almost 50% in inflation in adjusted terms)”.
I’m very agnostic on this super cycle stuff but the core of Stephen’s argument I think stands – that this prairie land is dirt cheap. According to a research paper from last year, AgCapita reckons that the average cost per acre of Saskatchewan land is $390 compared to $660 for Manitoba and $1000 for Alberta. In Brazil the equivalent is around $1000, in the US its $2,700 and in the UK it was $10,000. Now those huge differentials are OK if the farm land was dreadfully unproductive or the infrastructure was terrible – but neither is true. The land is largely cheap because there’s a lot of sellers and there aren’t enough buyers in part because of the land ownership rules. Pity we can’t invest in the stuff !
FT.com / Personal Finance - David Stevenson: Land is cheap
I haven’t yet talked about what I think is the single best land idea I’ve encountered so far - Canadian farming land, out in the Western states. Now there’s a damn good reason for that silence on my part – you can’t buy any of this ultra-cheap farm land because only local residents can buy the stuff. Still if you can find a way around these regulations then I suggest you read on.
I’ve been talking on email to the boss (Stephen Johnston) of the premier Canadian investment company that runs funds in this area – AgCapita. According to Stephen : “Agcapita is one of the only investment vehicles on the market - our current retail fund was only open to Canadian citizens/residents and raised almost $20 million of investable capital. We launched in late 2007. The farmland investment market in Canada is still embryonic and Agcapita is the market leader – both in size and expertise.”
The central investment concept is that farm land in states like Saskatchewan is dirt cheap – although prices in the other two prairie provinces of Alberta and Manitoba are also low.
Here’s Stephen on the potential….
“The wheat/canola yields across Saskatchewan, Alberta and Manitoba are basically the same and of course the infrastructure and political risk are the same. However, Saskatchewan has an average price of $400/acre, Alberta $1,100/acre and Manitoba $660/acre. It is worth noting that the large price difference between the three provinces did not exist up until 1988 – they traded in lockstep for almost 100 years. The disparity is primarily the result of Saskatchewan land ownership legislation passed in 1988 prohibiting all non-Saskatchewan residents (including Canadians in other provinces) from investing in the farmland in the province. On top of the regulatory barrier we had low commodity prices and immigration out of rural communities in western Canada. We would argue that all three of these factors are now in our favour. The ownership rules have been liberalized, commodity prices are stronger and people are moving back to Saskatchewan for the first time in 25 years. Our investment premise therefore has three drivers – 1) inflation, 2) the global agriculture commodity bull market and 3) that the artificial price disparity between the Prairie Provinces disappears bringing Saskatchewan up to the same average price as Alberta.”
Now Stephen is of course something of an agriculture bull, as you’d expect – “ we believe the world is still in the early stages of the current commodity bull market. When agriculture commodities prices are compared against their previous inflation adjusted highs they are significantly discounted implying scope for further price increases…During the last commodity bull market & high inflation period in the 1970’s, equities materially underperformed farmland. Western Canadian farmland went from around $100/acre to $550/acre (550% total return and 176% in inflation adjusted terms), cash held in a money market account barely kept ahead of inflation (6% inflation adjusted return) and the S&P 500 index returned less than 2% per year (a loss of almost 50% in inflation in adjusted terms)”.
I’m very agnostic on this super cycle stuff but the core of Stephen’s argument I think stands – that this prairie land is dirt cheap. According to a research paper from last year, AgCapita reckons that the average cost per acre of Saskatchewan land is $390 compared to $660 for Manitoba and $1000 for Alberta. In Brazil the equivalent is around $1000, in the US its $2,700 and in the UK it was $10,000. Now those huge differentials are OK if the farm land was dreadfully unproductive or the infrastructure was terrible – but neither is true. The land is largely cheap because there’s a lot of sellers and there aren’t enough buyers in part because of the land ownership rules. Pity we can’t invest in the stuff !
FT.com / Personal Finance - David Stevenson: Land is cheap
China world's 5th largest gold holder - International Business - Business - The Times of India
the interesting question is: why announce this now?
Large scale hoarding of gold by China may have been partly responsible for the near tripling in prices of the yellow metal in the past six years. Figures released by the country’s State Administration of Foreign Exchange shows Beijing boosted its gold reserves by 76% since 2003 to become the 5th largest holder of gold in the world.
China now has 1,054 tons of gold after adding 454 tons in the past six years
The Times of India
Large scale hoarding of gold by China may have been partly responsible for the near tripling in prices of the yellow metal in the past six years. Figures released by the country’s State Administration of Foreign Exchange shows Beijing boosted its gold reserves by 76% since 2003 to become the 5th largest holder of gold in the world.
China now has 1,054 tons of gold after adding 454 tons in the past six years
The Times of India
Friday, April 24, 2009
Potash vs Corn/Wheat/Soybean
Prices for corn, wheat and soybeans all plummeted from record highs last year, reducing growers’ incentive to boost yields.
“The potash companies are cutting production to prop up their prices, and we’re cutting our usage to bring them down,” David Kruse, president of CommStock Investment Inc. in Royal, Iowa, and a grower of corn and soybeans on 640 acres, said before the results were released. “It’s a battle.”
While the company’s potash prices were higher in the first quarter, solid phosphates fell 48 percent to $342.75 a ton, and the average price of ammonia and other nitrogen-based products slid 40 percent to $226.69.
North American farmers are on pace to reduce fertilizer use to levels from the 1982-1983 growing season despite planting 37 million more acres of corn and soybeans, the company said.
“This scenario is unprecedented in magnitude and unpredictable in consequences,” the company said.
Doyle said reduced fertilizer use is contributing to lower crop yields in Brazil and Argentina and may lead to a “grain crisis” as the world emerges from recession.
“You could see dramatically higher grain prices going into this fall,” he said on a call with investors and analysts.
“A dangerous game is now unfolding around the world,” Doyle said.
Potash Cuts Forecast After Sales Reach ‘Virtual Halt’ (Update3) - Bloomberg.com:
“The potash companies are cutting production to prop up their prices, and we’re cutting our usage to bring them down,” David Kruse, president of CommStock Investment Inc. in Royal, Iowa, and a grower of corn and soybeans on 640 acres, said before the results were released. “It’s a battle.”
While the company’s potash prices were higher in the first quarter, solid phosphates fell 48 percent to $342.75 a ton, and the average price of ammonia and other nitrogen-based products slid 40 percent to $226.69.
North American farmers are on pace to reduce fertilizer use to levels from the 1982-1983 growing season despite planting 37 million more acres of corn and soybeans, the company said.
“This scenario is unprecedented in magnitude and unpredictable in consequences,” the company said.
Doyle said reduced fertilizer use is contributing to lower crop yields in Brazil and Argentina and may lead to a “grain crisis” as the world emerges from recession.
“You could see dramatically higher grain prices going into this fall,” he said on a call with investors and analysts.
“A dangerous game is now unfolding around the world,” Doyle said.
Potash Cuts Forecast After Sales Reach ‘Virtual Halt’ (Update3) - Bloomberg.com:
Wednesday, April 22, 2009
Bill Gates Patents Plasma Injector, for Your Car - Tom's Hardware
Earlier today, a patent filed with the US Patent & Trademark Office was made available for public viewing, detailing an electromagnetic engine that could very well replace the traditional combustible engine, paving the way to energy efficient automobiles of the future. Among the ten inventors listed in the patent--as Searete LLC, part of Intellectual Ventures--is none other than Mr. Windows himself, William H. Gates, III, and Microsoft's former chief technology officer, Nathan Myhrvold. The group originally filed the patent back in October 2007.
Bill Gates Patents Plasma Injector, for Your Car - Tom's Hardware
Bill Gates Patents Plasma Injector, for Your Car - Tom's Hardware
Botanical Drug that Could Silence Peanut Allergies
Mount Sinai Researchers Test New Botanical Drug that Could Silence Peanut Allergies
(New York, NY – February 9, 2009) A new study finds that a botanical drug could provide the key to new treatments for peanut allergies. The findings are published online in The Journal of Allergy and Clinical Immunology.
Lead author Xiu-Min Li, MD, Associate Professor of Pediatrics and Director of Center for Chinese Herbal Therapy for Allergy and Asthma at Mount Sinai School of Medicine and colleagues found Food Allergy Herbal Formula (FAHF-2) produced long-term protection following treatment against peanut-induced anaphylaxis in mice. FAHF-2 treatment protected peanut allergic mice from anaphylaxis for more than 36 weeks after treatment was discontinued. This is one-quarter of the mouse lifespan. These findings update previous research done by Dr. Li and her colleagues, where the same drug was shown to be effective for preventing anaphylactic reactions for up to four weeks following treatment.
'Food allergy is a serious and sometimes fatal condition for which there is no cure,' said Dr. Li. 'Approximately 80% of fatal or near-fatal anaphylaxis cases are due to peanut allergy in this country. There is an urgent need for effective therapies to prevent and treat those who suffer from food allergies and FAHF-2 could prove to be a major advancement in this field.'
Mount Sinai
(New York, NY – February 9, 2009) A new study finds that a botanical drug could provide the key to new treatments for peanut allergies. The findings are published online in The Journal of Allergy and Clinical Immunology.
Lead author Xiu-Min Li, MD, Associate Professor of Pediatrics and Director of Center for Chinese Herbal Therapy for Allergy and Asthma at Mount Sinai School of Medicine and colleagues found Food Allergy Herbal Formula (FAHF-2) produced long-term protection following treatment against peanut-induced anaphylaxis in mice. FAHF-2 treatment protected peanut allergic mice from anaphylaxis for more than 36 weeks after treatment was discontinued. This is one-quarter of the mouse lifespan. These findings update previous research done by Dr. Li and her colleagues, where the same drug was shown to be effective for preventing anaphylactic reactions for up to four weeks following treatment.
'Food allergy is a serious and sometimes fatal condition for which there is no cure,' said Dr. Li. 'Approximately 80% of fatal or near-fatal anaphylaxis cases are due to peanut allergy in this country. There is an urgent need for effective therapies to prevent and treat those who suffer from food allergies and FAHF-2 could prove to be a major advancement in this field.'
Mount Sinai
An emerging opportunity in U.S. housing
Deep breath. Ok, here goes: For the first time in a very long time U.S. housing might actually be a reasonable buy on a five-year view.
As a long-time housing bear and someone who believes there is still considerable pain to come in the U.S. economy and banking system that is quite a hard thing to say.
However historically cheap long-term fixed-rate financing (less than 5 percent on a 30-year mortgage) and the prospect of some nasty inflation a year or two out, both courtesy of current Federal Reserve and government policies, make owning a real asset that is debt financed a lot more attractive than would have been the case just three or six months ago. For full coverage of the U.S. housing market click here.
What I am not doing is calling the bottom of the housing market; there are still reasonable falls to come on top of the 20 percent or so declines we have already seen nationally.
more ...
As a long-time housing bear and someone who believes there is still considerable pain to come in the U.S. economy and banking system that is quite a hard thing to say.
However historically cheap long-term fixed-rate financing (less than 5 percent on a 30-year mortgage) and the prospect of some nasty inflation a year or two out, both courtesy of current Federal Reserve and government policies, make owning a real asset that is debt financed a lot more attractive than would have been the case just three or six months ago. For full coverage of the U.S. housing market click here.
What I am not doing is calling the bottom of the housing market; there are still reasonable falls to come on top of the 20 percent or so declines we have already seen nationally.
more ...
UK Budget Deficit
Inquiring minds are pondering the Record U.K. Deficit, Limiting Room for Stimulus.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Chancellor of the Exchequer Alistair Darling today will deliver a U.K. budget with what may be the biggest deficit on record, limiting his ability to counter the worst recession since World War II.Those who think the US is a basket case need only to look at the UK to find a bigger one.
The shortfall this year may jump to 160 billion pounds ($232 billion), or 11 percent of gross domestic product, according to a survey of 24 economists conducted by the Treasury. Darling, who estimated an 8 percent gap in November, will announce his figures to Parliament at 12:30 p.m. in London.
“The U.K.’s fiscal position is worsening so rapidly that any stimulus measures in the budget are likely to be modest,” said Michael Saunders, chief western European economist at Citigroup Inc. “When it is most needed, fiscal policy will not be able to act. This is a major policy failure.”
Last month, Brown retreated from calls for a new fiscal stimulus after Bank of England Governor Mervyn King said the Treasury should be “cautious” about the deficit, which Citigroup says is the biggest in more than a century, excluding the two world wars.
Darling has said Britain’s economy won’t bounce back before next year, later than he anticipated in November, when the Treasury forecast a contraction of no more than 1.25 percent this year. The median forecast of analysts surveyed by the Treasury now is for a drop of 3.7 percent of GDP, the worst since modern growth records began in 1948.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Card Check Is Dead
After massive lobbying both by labor and by business, it appears that the Employee Free Choice Act (EFCA), which, as it now stands, would allow workers to organize in many cases merely by signing cards instead of holding elections, will not have the 60 votes required to get past a Republican filibuster in the Senate.
Now, to be pro-labor is to resign yourself to years of failures and defeats, with few tea parties along the way for consolation. Even so, the setback on EFCA has to be a bitter one. Union members worked hard to elect Barack Obama and the Democratic Congress, as they did to put Jimmy Carter and Bill Clinton in the White House. And now, just as in those previous two periods of Democratic governance, labor's friends are having trouble enacting basic labor-law reforms.
Now, to be pro-labor is to resign yourself to years of failures and defeats, with few tea parties along the way for consolation. Even so, the setback on EFCA has to be a bitter one. Union members worked hard to elect Barack Obama and the Democratic Congress, as they did to put Jimmy Carter and Bill Clinton in the White House. And now, just as in those previous two periods of Democratic governance, labor's friends are having trouble enacting basic labor-law reforms.
Cops can now ‘take all your stuff’
To the surprise of at least one legal expert, the Supreme Court of Canada last week unanimously gave the provinces incredible powers to seize assets allegedly connected to crime.
As one worried reader e-mailed the other day: “This is a terrifying development. If the police even suspect you of a crime, they can take all your stuff. They don’t have to prove it.” Is he right? “Yes and no,” says University of Manitoba law professor Michelle Gallant. The cops can take your car, for instance, if they think you’re using it to sell drugs. But the police have to persuade a judge that, on a balance of probabilities, the vehicle is connected to crime. And that’s much easier to show than providing evidence beyond a reasonable doubt that someone is guilty of a crime.
In other words, if the police want your car, house, money or any other assets, they can get away with it without even arresting you as long as they convince a judge something doesn’t smell right. No conviction necessary.
“It’s kind of scary,” says Gallant, an expert in proceeds of crime, who never thought Canada would embrace such wide-ranging legislation.
While the goal — going after assets associated with crimes like drug trafficking — is laudatory, it’s an awful lot of leeway to give the government, she says.
At least Britain brought in a more narrowly defined law, limiting proceeds of crime proceedings to assets over 10,000 pounds ($18,000 Canadian).
“It does strike me as quite radical,” says Gallant, of the top court ruling. “Now the state can sue anybody — any asset — and if it proves on a balance of probabilities that it’s connected to crime, it can take it. That’s quite an extraordinary power.”
She would have been more comfortable with more restrictive proceeds of crime laws limited to assets over $100,000 and involving only serious crimes such as drug trafficking.
In the U.S., she adds, there have been shocking abuses of the system. She cites the case of a poor woman who lost her house because her son had been dealing drugs out of the place. And a lot of marginalized people have no control over what goes on around them.
Listen up, folks. Most of the provinces have similar provisions in their proceeds of crime legislation. If your kid is selling drugs out of your car, and you don’t know it, the state could still seize the vehicle as an instrument of crime.
As one worried reader e-mailed the other day: “This is a terrifying development. If the police even suspect you of a crime, they can take all your stuff. They don’t have to prove it.” Is he right? “Yes and no,” says University of Manitoba law professor Michelle Gallant. The cops can take your car, for instance, if they think you’re using it to sell drugs. But the police have to persuade a judge that, on a balance of probabilities, the vehicle is connected to crime. And that’s much easier to show than providing evidence beyond a reasonable doubt that someone is guilty of a crime.
In other words, if the police want your car, house, money or any other assets, they can get away with it without even arresting you as long as they convince a judge something doesn’t smell right. No conviction necessary.
“It’s kind of scary,” says Gallant, an expert in proceeds of crime, who never thought Canada would embrace such wide-ranging legislation.
While the goal — going after assets associated with crimes like drug trafficking — is laudatory, it’s an awful lot of leeway to give the government, she says.
At least Britain brought in a more narrowly defined law, limiting proceeds of crime proceedings to assets over 10,000 pounds ($18,000 Canadian).
“It does strike me as quite radical,” says Gallant, of the top court ruling. “Now the state can sue anybody — any asset — and if it proves on a balance of probabilities that it’s connected to crime, it can take it. That’s quite an extraordinary power.”
She would have been more comfortable with more restrictive proceeds of crime laws limited to assets over $100,000 and involving only serious crimes such as drug trafficking.
In the U.S., she adds, there have been shocking abuses of the system. She cites the case of a poor woman who lost her house because her son had been dealing drugs out of the place. And a lot of marginalized people have no control over what goes on around them.
Listen up, folks. Most of the provinces have similar provisions in their proceeds of crime legislation. If your kid is selling drugs out of your car, and you don’t know it, the state could still seize the vehicle as an instrument of crime.
Mophie Juice Pack Air for iPhone 3G
Mophie ready to ship its thinnest external battery for the iPhone 3G, the Juice Pack Air. Doubling as both an external battery and hard-shell case, the device features a rechargeable 1200mAh lithium-polymer battery that is claimed to provide up to 270 additional standby hours, an extra 4.5 hours of talk and internet time, up to 20 hours of audio playback and roughly 6 hours of video playback. The hard shell is designed to help protect the iPhone from everyday use, with three available colors including black, white and purple.
The Juice Pack Air can be purchased for $80.
Tuesday, April 21, 2009
Shanghai 2009: How do you get a Porsche Panamera onto the 94th floor?
Click above for a high-res image gallery
The day before the public unveiling of the Porsche Panamera at the Shanghai Motor Show, journalists were invited to the 94th floor of the Shanghai World Financial Center in China to catch a glimpse of Stuttgart's first four-door sedan. Providing further proof that both the Germans and Chinese are a persistent bunch, a team of workers proceeded to strap the Panamera onto a special pallet, tipped it on its tail and wedged the dark silver metallic sedan into the freight elevator to make the 1,394-foot trek up the world's third-largest building. The pictures tell the tale better than we can, so check them out in the gallery below, along with more live shots of the Panamera straight from Shanghai.
The painful truth about running shoes
Thrust enhancers, roll bars, microchips...the $20 billion running - shoe industry wants us to believe that the latest technologies will cushion every stride. Yet in this extract from his controversial new book, Christopher McDougall claims that injury rates for runners are actually on the rise, that everything we've been told about running shoes is wrong - and that it might even be better to go barefoot...
Christopher McDougall, author of the forthcoming Born to Run, excerpts a section of his book that suggests costly, tech-term-laden training shoes aren't helping runners all that much—and they may actually be hurting.
McDougall draws from sports science, evolutionary study, and evidence from coaches and running teams that shoes with top-of-the-line "support," "impact resistance," and other features have actually resulted in more injuries for runners than using cheap, low-tech sneakers. There's actually an argument made for running barefoot as, McDougall argues, the human body was designed for.
Dr Daniel Lieberman, professor of biological anthropology at Harvard University, has been studying the growing injury crisis in the developed world for some time and has come to a startling conclusion: 'A lot of foot and knee injuries currently plaguing us are caused by people running with shoes that actually make our feet weak, cause us to over-pronate (ankle rotation) and give us knee problems.The painful truth about trainers: Are expensive running shoes a waste of money?'Until 1972, when the modern athletic shoe was invented, people ran in very thin-soled shoes, had strong feet and had a much lower incidence of knee injuries.'
Stephen Roach - a dangerous sense of déjà vu
Averting Depression as Consumer in U.S. Fades: Stephen Roach - Bloomberg.com: Stephen Roach is chairman of Morgan Stanley AsiaUnwittingly, the Depression Foil might well end up recreating this madness. With the risk of a depression viewed as completely unacceptable to the global body politic, the full force of the policy arsenal is being aimed at jump-starting aggregate demand -- irrespective of the consequences such results might imply for a new build-up of global imbalances.
Once again, the U.S. is leading the charge. The Fed wants to get credit flowing again to still overextended American consumers, especially in mortgage markets. The Congress wants to stop the bleeding in the housing market -- irrespective of the persistent imbalance between supply and demand. And the White House wants consumers to start spending again -- to avoid the perceived pitfalls of the “paradox of thrift” brought about by too much saving.
Put it together and it all smacks of a dangerous sense of déjà vu: promoting a false recovery by kick-starting overextended, saving-short American consumers to borrow once again by leveraging their major asset.
Fortunately, the American consumer is smarter than the quick-fix Washington mindset. Shell-shocked families -- especially some 77 million baby boomers for whom retirement planning is an urgent imperative -- know they have no choice other than to save. The personal saving rate has risen from 0.8 percent to 4.2 percent in the past six months alone, and is on its way to a new post-bubble equilibrium that I would place in the 7.5 percent to 10 percent zone.
US Tax Rates Historically
It’s well known that tax rates on top incomes used to be far higher than they are today. The top marginal rate hovered around 90 percent in the 1940s, ’50s and early ’60s. Reagan ultimately reduced it to 28 percent, and it is now 35 percent. Obama would raise it to 39.6 percent, where it was under Bill Clinton.
What’s much less known is that those old confiscatory rates were not as sweeping as they sound. They applied to only the richest of the rich, because yesterday’s tax code, unlike today’s, had separate marginal tax rates for the truly wealthy and the merely affluent. For a married couple in 1960, for example, the 38 percent tax bracket started at $20,000, which is about $145,000 in today’s terms. The top bracket of 91 percent began at $400,000, which is the equivalent of nearly $3 million now. Some of the old brackets are truly stunning: in 1935, Franklin D. Roosevelt raised the top rate to 79 percent, from 63 percent, and raised the income level that qualified for that rate to $5 million (about $75 million today) from $1 million. As the economist Bruce Bartlett has noted, that 79 percent rate apparently applied to only one person in the entire country, John D. Rockefeller.
Today, by contrast, the very well off and the superwealthy are lumped together. The top bracket last year started at $357,700. Any income above that — whether it was the 400,000th dollar earned by a surgeon or the 40 millionth earned by a Wall Street titan — was taxed the same, at 35 percent. This change is especially striking, because there is so much more income at the top of the distribution now than there was in the past. Today a tax rate for the very top earners would apply to a far larger portion of the nation’s income than it would have years ago.
4.12.09 - The Way We Live Now - Richly Undeserved - Why Tax the Well Off as if They Were Wealthy? - NYTimes.com: "
What’s much less known is that those old confiscatory rates were not as sweeping as they sound. They applied to only the richest of the rich, because yesterday’s tax code, unlike today’s, had separate marginal tax rates for the truly wealthy and the merely affluent. For a married couple in 1960, for example, the 38 percent tax bracket started at $20,000, which is about $145,000 in today’s terms. The top bracket of 91 percent began at $400,000, which is the equivalent of nearly $3 million now. Some of the old brackets are truly stunning: in 1935, Franklin D. Roosevelt raised the top rate to 79 percent, from 63 percent, and raised the income level that qualified for that rate to $5 million (about $75 million today) from $1 million. As the economist Bruce Bartlett has noted, that 79 percent rate apparently applied to only one person in the entire country, John D. Rockefeller.
Today, by contrast, the very well off and the superwealthy are lumped together. The top bracket last year started at $357,700. Any income above that — whether it was the 400,000th dollar earned by a surgeon or the 40 millionth earned by a Wall Street titan — was taxed the same, at 35 percent. This change is especially striking, because there is so much more income at the top of the distribution now than there was in the past. Today a tax rate for the very top earners would apply to a far larger portion of the nation’s income than it would have years ago.
4.12.09 - The Way We Live Now - Richly Undeserved - Why Tax the Well Off as if They Were Wealthy? - NYTimes.com: "
Natural gas prices go down; natural gas stocks go up
Natural gas prices are setting new lows almost every week, and everyone expects them to continue lower for some time. But natural gas stocks are going up.
Investors clearly believe that the collapse in the number of rigs searching for oil and gas is going to mean a sharp reduction in gas supply sometime in the coming months, causing gas prices to rebound. Consensus from many analyst reports I have read suggest that won’t happen until Oct-Nov this year, but all are recommending to their investors to begin positioning themselves now.
And the charts on the natural gas stocks say investors are listening.
Stocks do lead fundamentals by 6-9 months. And the many reports that I read are telling investors that when natural gas prices turn up (due to either much lower gas injections into storage in the summer or much larger net withdrawals from storage starting in October) it will be a very fast move up.
It’s only April, but I can almost smell the pent up demand from the market waiting for that first really bullish gas inventory number. And that’s what makes me think this gas market could stay lower for longer than most people think - but the rise in natural gas stocks says otherwise.
How low are gas prices now? Most investors surfing the web only see the price for the NYMEX hub out of New York, and a few see the Henry Hub price out of Louisiana. But there are about 14 natural gas hubs in the US - and many of the Midwest hubs now have prices around US$2/mcf, and I saw one price at US$1.44. By contrast, NYMEX yesterday was US$3.69. And almost everyone agrees (I can’t find one dissenting opinion) that natural gas prices will go lower throughout the summer.
Both institutional and retail investors are looking past the huge natural gas storage levels in both the US and Canada, the looming threat of large LNG (liquid natural gas) shipments being dumped into the US this summer looking for either storage or sale at any price, low customer demand due to recession and the large amounts of shale gas being discovered in North America.
Natural gas bulls can refute any and all of these points, but the main point is…nobody really knows the future. But in bidding up natural gas stocks these early, investors are taking the falling rig counts as their most important factor.
Resource Investor - Natural gas prices go down; natural gas stocks go up
Investors clearly believe that the collapse in the number of rigs searching for oil and gas is going to mean a sharp reduction in gas supply sometime in the coming months, causing gas prices to rebound. Consensus from many analyst reports I have read suggest that won’t happen until Oct-Nov this year, but all are recommending to their investors to begin positioning themselves now.
And the charts on the natural gas stocks say investors are listening.
Stocks do lead fundamentals by 6-9 months. And the many reports that I read are telling investors that when natural gas prices turn up (due to either much lower gas injections into storage in the summer or much larger net withdrawals from storage starting in October) it will be a very fast move up.
It’s only April, but I can almost smell the pent up demand from the market waiting for that first really bullish gas inventory number. And that’s what makes me think this gas market could stay lower for longer than most people think - but the rise in natural gas stocks says otherwise.
How low are gas prices now? Most investors surfing the web only see the price for the NYMEX hub out of New York, and a few see the Henry Hub price out of Louisiana. But there are about 14 natural gas hubs in the US - and many of the Midwest hubs now have prices around US$2/mcf, and I saw one price at US$1.44. By contrast, NYMEX yesterday was US$3.69. And almost everyone agrees (I can’t find one dissenting opinion) that natural gas prices will go lower throughout the summer.
Both institutional and retail investors are looking past the huge natural gas storage levels in both the US and Canada, the looming threat of large LNG (liquid natural gas) shipments being dumped into the US this summer looking for either storage or sale at any price, low customer demand due to recession and the large amounts of shale gas being discovered in North America.
Natural gas bulls can refute any and all of these points, but the main point is…nobody really knows the future. But in bidding up natural gas stocks these early, investors are taking the falling rig counts as their most important factor.
Resource Investor - Natural gas prices go down; natural gas stocks go up
Lithium-ion batteries
Commentary: 'Nothing but sophistry and illusion” with regard to lithium and the electric-car promise
By Jack Lifton
19 Apr 2009 at 12:23 AM GMT-04:00
Lithium-ion batteries promise freedom from fossil fuels, but in many ways the numbers don't back up the hopes and assumptions.
This article is a cautionary tale for those who would rush into lithium investments for the long term. As I have written before, and will do so again, investing in lithium mining, refining and battery development (for personal passenger carrying vehicles) is just a timing game based on announcements made to advertise government and industry moves, so as to get public approval for speculating with some people’s or everyone else’s money. Buy low, either after the announcement of a setback in development or delivery time, and sell high, after the announcement of an investment by someone, famously mostly right, (e.g., Warren Buffet) or after an announcement that the U.S. government will subsidize a technology or a factory. Of course, some announcements target specific battery developers and some are more general. I call these tips and trends, so that they fit into the categories of advice we get daily on television and in the newsletters and main stream press."
Resource Investor - Commentary: "Nothing but sophistry and illusion” with regard to lithium and the electric-car promise
By Jack Lifton
19 Apr 2009 at 12:23 AM GMT-04:00
Lithium-ion batteries promise freedom from fossil fuels, but in many ways the numbers don't back up the hopes and assumptions.
This article is a cautionary tale for those who would rush into lithium investments for the long term. As I have written before, and will do so again, investing in lithium mining, refining and battery development (for personal passenger carrying vehicles) is just a timing game based on announcements made to advertise government and industry moves, so as to get public approval for speculating with some people’s or everyone else’s money. Buy low, either after the announcement of a setback in development or delivery time, and sell high, after the announcement of an investment by someone, famously mostly right, (e.g., Warren Buffet) or after an announcement that the U.S. government will subsidize a technology or a factory. Of course, some announcements target specific battery developers and some are more general. I call these tips and trends, so that they fit into the categories of advice we get daily on television and in the newsletters and main stream press."
Resource Investor - Commentary: "Nothing but sophistry and illusion” with regard to lithium and the electric-car promise
Marc Faber update
Marc Faber insights on Bloomberg TV:
- The S&P may decline to about 750 and probably rebound after July.
- Global stock markets are unlikely to fall below their October and November lows.
- Commodity stocks have risen too sharply and are no longer attractive buys.
- Asian stocks are a much better value than US stocks.
- The US dollar may weaken, so investors should buy the currencies of Canada, Australia and Singapore.
- Bonds are entering a long bear market and should be avoided.
- Gold will be “dead money” for the next three to six months, but he plans to buy more gold if prices drop to between $750 and $800 an ounce."
- The S&P may decline to about 750 and probably rebound after July.
- Global stock markets are unlikely to fall below their October and November lows.
- Commodity stocks have risen too sharply and are no longer attractive buys.
- Asian stocks are a much better value than US stocks.
- The US dollar may weaken, so investors should buy the currencies of Canada, Australia and Singapore.
- Bonds are entering a long bear market and should be avoided.
- Gold will be “dead money” for the next three to six months, but he plans to buy more gold if prices drop to between $750 and $800 an ounce."
JIM ROGERS the two Cs: China and commodities
Q&A: Jim Rogers Isn't Buying a U.S. Stock Recovery
by John Kimelman
Monday, April 20, 2009provided by
Monday, April 20, 2009provided by
The legendary investor is sticking for now with the two Cs: China and commodities.
Well, bank executives and investors can breathe a sigh of relief: Jim Rogers has covered the short positions on financial stocks he put in place ahead of last year's massive meltdown.
But just because this influential investor isn't betting that big banks will fall much further doesn't mean he's confident they will stage a lasting rally either. He feels similarly about U.S. stocks in general.
"I am skeptical about the rally, and the world economy for the next year or two or three," he says. "But if stocks go down, I can make money with commodities."
Rogers, now 66, gained fame as George Soros' hedge-fund partner in the 1970s and 1980s. After retiring from professional money manager in his late 30s, the Alabama native tooled around Europe, Asia, Africa, and Latin America visiting emerging markets, one by one. His resulting book, Investment Biker, helped to popularize emerging market investing at the outset of a bull market for the sector.
He also helped to popularize commodity investing, which for decades was the province of niche investors. In the 1990s, he developed commodity indexes based on futures contracts that in recent years have been turned into exchange-traded funds available to all investors. His 2004 book, Hot Commodities, came ahead of a surge prices for energy, metals, and agriculture.
Since its inception in July 1998, the Rogers International Commodities Index has gained 158%, while the S&P 500 has fallen 23%. And that gain for the commodities index comes despite the fact that it's lost more than half of its value since last July. At these levels, Rogers has been a buyer.
These days, Rogers, now 66, is sticking close to home in Singapore with his wife, Paige Parker, and two small daughters. He's about to release his latest book, A Gift to My Children: A Father's Lessons for Life and Investing (Random House), in which he encourages other people's children to travel widely and learn Mandarin so they can reap the rewards of China's economic boom.
Recently, Rogers talked to Barrons.com by phone from his Singapore home.
Q: When you last did a lengthy interview with Barron's magazine a year ago (see "Light Years Ahead of the Crowd," April 14, 2008) you were lightening up on emerging markets investments. Well, you called that one right. But now that many of those markets have fallen from their highs of recent years, are you more optimistic?
A: No. I've sold all emerging markets stock except the ones in China. I bought more Chinese shares in October and November during the panic, but I have not bought China or any other stock markets including the U.S. since then. I'm not buying anything in China right now because the Chinese market ran up maybe 50% since last November. It's been the strongest market in the world in the past six months and I don't like jumping into something that has been that run up. Still, I'm not thinking of selling these stocks either. I think if it goes down I'll buy more. I think you will find that it's the single strongest market in the world since last fall.
Q: In your latest book, you talk of China as the great investment opportunity of the 21st century, just as the U.S. was in the 20th century. What percentage of a typical American investor's portfolio should be in China?
A: If they can't even find China on a map, I don't think they should have anything in China. They should know something about China before they invest there. If they have the same convictions that I do then they should probably have a lot. If you asked me that question in 1909 about the U.S. stock market, I would have said to put 100% of your money in the U.S.
Q: Might it make sense to have a greater weighting in a diversified mix of Chinese stocks than in U.S. stocks?
A: Well yes. Just as in 1909, if you were German or Chinese, you should have had the largest percentage of your money in the United States. The idea of investing is to make money, not to have some sort of political agenda.
Q: That being said, you currently think Chinese stocks are bid-up now, so you're not buying at these levels. So what have you been buying lately?
A: I have been buying commodities through the Rogers commodity indexes I developed because my lawyer won't let me buy individual commodities. I recently bought the all four Rogers indexes -- the ElementsRogers International Commodities Index (ticker: RJI) as well as the three specialty indexes, the International Metals (RJZ), the International Energy (RJN), and the International Agriculture (RJA.) That's how I invest in commodities and that's what I bought last week. I have been buying these shares since last fall and up to last week.
Q: Though you got out of emerging markets last year before they fell hard, you seemed be caught by surprise by the fall-off in commodity prices last year. Is that right?
A: Yes, I was surprised. I did not expect commodities to go down that much and in retrospect it was a period of forced liquidation for many (professional) investors. You know AIG went bankrupt, which was huge in commodities. Lehman Brothers was big in commodities.
But at least I was shorting the investment banks at the time and other financials such as Citigroup and Fannie Mae. So I was hedged by being long commodities and short the other things such as financials and as you know most of them were down from 80% to 100%, so I more than made up on my shorts than I lost on my longs. So thank God for (the stock decline in) Citigroup and thank God (for the decline) in Fannie Mae.
Q: Now despite the recent stock-market rally that started in March, many U.S. stocks are trading well off their 2007 highs. How come you see no value to this market?
A: I am not buying U.S. companies mainly because I think we may have seen a bottom but I don't think we have seen the bottom. I am skeptical about the rally, the world economy for the next year or two or three. But if stocks go down, I can make money with commodities. In the 1970s, commodities went through the roof even though stocks were a disaster. In the 1930s, commodities rallied first and went up the most long before stocks pulled it together.
Q: Can you summarize the reasons for your bullishness about commodities?
A: It depends on the supply and demand. And we have had a dearth of supply. Nobody has invested in productive capacity for 25 or 30 years now. The inventories of food are the lowest they have been in 50 years and you have a shortage of farmers even right now because most farmers are old men because it has been such a horrible business for 30 years. And as for metals, nobody can get a loan to open a mine as you know. Who is going to give you money to open a zinc mine? It takes at least 10 years to open a mine so it's going to be 15 or 20 years before we see new mines come on. Nobody has been opening mines for 30 years and they are not going to. And in the meantime reserves are declining. As for oil, the International Energy Agency came out recently with a study showing that oil reserves worldwide were declining at the rate of 6% or 7% a year.
That does not mean that if suddenly the U.S. goes bankrupt that everything won't collapse in price. But I would rather be in commodities because it's the only thing I know where the fundamentals are improving. They are not improving for Citibank or General Motors but the supply situation in commodities is such that when demand comes back, then commodities are going to be the best place to be in my view.
Q: What do you think of bonds?
A: I am anticipating shorting bonds -- the U.S. long bond. It's about the only real bubble around that I can see right now -- other than the U.S. dollar. I am not shorting bonds at this moment because I've shorted plenty of bubbles in my day, and I have learned that you better wait because they go up higher than any rational person can anticipate. But my plan is to short the long bond in the U.S. sometime in the foreseeable future.
Q: I've read that you think the penchant of the last two presidential administrations for bailing out failing U.S. companies is a big mistake and will contribute to prolonging this recession. You argue that it's best to let these companies all go bankrupt. How bad can the economy get?
A: Yes, politicians are making mistakes. In Japan, the problem has lasted for 19 years. I hope that it doesn't last 19 years in the U.S. The approach that works is to let them (U.S. banks and automakers) collapse and clean out the system. The idea that phony accounting is the solution (through changes in mark-to-market rules) is ludicrous. And the idea that a debt problem and an excessive spending problem can be cured with more debt and more spending is ludicrous.
It's laughable on its face, but politicians think they've got to do something. Unfortunately, they are doing the wrong things and they are going to make it worse.
Q: Thanks for your time.
"Kitchen Sink Stimulus": Jim Grant
On last night’s Kudlow Report I had the privilege of sitting down with a terribly smart old friend of mine, Jim Grant, editor of the popular newsletter Grant’s Interest Rate Observer.
Put simply, Jim is blown away by the ‘caprice’ of total fiscal and monetary spending, which by his math, amounts to an astonishing 29 percent of GDP. (That’s ten times the typical government response in past recessions.) He predicts a tidal wave of future inflation and is puzzled by the complacency of most investors in the face of this threat. Unsurprisingly, he is very bearish on Treasuries and anticipates an eventual return to the not-so-distant past when the long bond yielded north of 12 percent.
LARRY KUDLOW: All right, let’s talk about the market consequences of the titanic scale, and I mean titanic scale, of federal economic stimulus across the board. Think ‘kitchen sink’ says Jim Grant, editor of Grant’s Interest Rate Observer. He is also the author of “Mr. Market Miscalculates: The Bubble Years and Beyond.” A very old and good friend of mine, and a brilliant analyst. Jim Grant, thank you for coming on.
JIM GRANT: It is a pleasure Larry.
KUDLOW: Look, you’ve got some pretty convincing stuff [in Grant’s Observer]. This is the most stimulus we have ever seen. I think what you’re saying is the Fed has poured in 18 percent of GDP. Fiscally, spending and taxing 12 percent of GDP. Those are world records. But this isn’t even the worst downturn.
GRANT: By the numbers, this is a garden-variety recession. So far, statistically, on the GDP numbers, it is ordinary. What is extraordinary of course is Wall Street’s self-inflicted wounds in credit. However, what is truly momentous is the government’s response. Nothing like it. So there have been 11 recessions/depressions since 1929. On average, the sum of the fiscal and the monetary response as we index them is like 2.9 percent of GDP. What is shaping up now, in sight and prospectively, is 29 percent of GDP. Ten times the average response. Now in the Great Depression, before the dawn of Keynesianism, this is three times that response for a recession that is 1/15th the magnitude of the Depression.
KUDLOW: And they may not be done yet! They may not be done yet!
GRANT: They’re probably not done yet.
KUDLOW: First of all, I saw today on one of the news services, my good friend Robert Shiller of Yale, he wants another stimulus package. And I know [Democratic House Speaker] Pelosi’s talked about another stimulus package, other members of the Senate and House...
GRANT: Larry what will they do for an encore?
KUDLOW: Right.
GRANT: Almost nobody on Wall Street has stopped to take the measure of these extraordinary measures and asked why are they necessary? And could they possibly be not helping, but hindering? So they say you got to do more. Imagine, even on Tax Day, that you have some money, and that you may invest it in a going concern. The sheer caprice of federal intervention, the sheer scale of it, must be frightening money under the bed.
KUDLOW: Well just a quick gander, talking about frightening money under the bed, is this in large measure what this [tea party protest] business is? Is that what this is all about? This tea revolt?
GRANT: I mean I have no idea what they are about. I wrote a couple of checks today and I’m glad to be here with you Larry. Listen, it’s better to have a tax problem than not to have a tax [inaudible]. That goes without saying. It’s better to be born in this country then say, in Senegal. We are grateful to be here. But, enough is enough. And 29 percent prospectively, the sum total of fiscal and monetary response to this recession, is the singular fact of this cycle. And what it might portend for the next cycle bears thinking about.
KUDLOW: So one could ask of Washington, what are you thinking? Let me ask you this. Let’s go to the sum of the market and economic implications of this analysis of yours. First of all, the Fed has just poured money in like there’s no tomorrow. And as you say, when you look at the expansion of the Fed’s balance sheet, that’s coming up to 18 percent of GDP…
GRANT: Larry when you and I were teenagers, we watched the Fed’s balance sheet evolve during the uh, the…
KUDLOW: The Carter seventies…
GRANT: The G. William Miller years…
KUDLOW: Ah right, G. William Miller.
GRANT: December of 2007, the Fed’s assets floated to $870 billion dollars, which is a lot of money even when you say it fast. Not quite a year and a half later it is $2 trillion plus on a downtick. Nothing like it ever seen.
KUDLOW: Is there a monetary boom coming for the economy? I mean even short run? What’s the effect of this in your judgment?
GRANT: Well the effect is to irrigate every single crevice of banking that can bear the water. This elixir called liquidity is all over the joint. Now the transmission mechanism for this elixir is of course a little bit out of commission. The banking system has seen better days. But come the time when the healing is more or less complete, all this money will still be here. The Fed insists it will not be, but the money will still be here…
KUDLOW: There could be a boom out there? Surprise everybody.
GRANT: There could be a huge boom and there could be a nasty inflation.
KUDLOW: Talk to me about the inflation. Now we don’t see it today. We had a consumer price report [decline today]. We don’t see it now. Talk to me about the threat.
GRANT: Well we had a consumer price report that showed inflation was going nowhere. But in view of the deflationary undertow, isn’t it surprising that there wasn’t more deflation? There wasn’t any deflation.
KUDLOW: Ohh. So that’s a tip-off. That’s an early tip-off.
GRANT: So as it is, the world is set up for ‘steady as she goes’. I’m saying that with the sum of these federal interventions, it might be much woollier and wilder than that.
KUDLOW: If I own Treasury bonds what should I do? What should I think about your point of view?
GRANT: I am very, very bearish on Treasury bonds. The upside is slight and the downside is immense. When we were breaking into the business, Treasuries yielded 13 and 14 percent. And you know, people couldn’t have imagined then that Treasury bills would yield nothing and that the long bond would yield…
KUDLOW: You think we’re going back there?
GRANT: Eventually, yes.
KUDLOW: Eventually. Not a year. Or is it a year? Two? Three?
GRANT: I wasn’t born yesterday. I’m not going to talk about timing!
KUDLOW: [laughter] Okay.
GRANT: But look, the world over, central banks are printing money as they never have before in modern times. Remarkably, in my judgment, people are complacent in the face of this inflationary threat. And they say, look, there’s a huge gap in capacity versus production, you know, our capacity utilization is way below…
KUDLOW: We can make that up pretty fast...
GRANT: Right. We can make that up.
KUDLOW: I mean, that’s happened before. Let me ask you a couple other things. What about the dollar? How does the dollar come out of this story?
GRANT: The dollar is not the worst brand of paper money on the planet. To me all these currencies are approximately the same. They are printed by central banks that owe no particular obligation to the holders of the currency for the stability of those units, for those pieces of paper. The central banks are in the business of demand management and of economic management. They are central planning agencies.
KUDLOW: So would you sell your dollars? Would you buy gold? Is gold the best investment here?
GRANT: No, it’s not necessarily the best investment. It is one monetary asset that can’t be printed and duplicated by governments. That is its charm and its appeal.
KUDLOW: So there’s some scarcity value in that.
GRANT: There’s some scarcity value. The trouble with gold is it yields nothing. There’s no earnings. There’s no conference calls. You can’t value it. It is a speculation like so many others.
KUDLOW: All right, last one. Producers are yelling at me. Is it possible there is a stock market boom in the short run because of all this money?
GRANT: Is it possible? Sure it’s possible. Sure it’s possible.
KUDLOW: I mean, have we seen the early stages of a real stock market boom? Because they’re just pouring all this money in. I mean that’s the deal.
GRANT: Our approach to the stock market is to look for ideas, idea by idea. We have been bearish for about—how many years have I been in business? For 25 years—we have been bearish for 50.
KUDLOW: Mmm, goodness.
GRANT: But we are seeing more things to do on the long side. We are seeing more opportunities in credit, in equities. Things are cheap. Many things are cheap and the government is printing money like there’s no tomorrow. That doesn’t sound so bearish.
KUDLOW: But it’s not going to have a great ending at the end of the day. Thanks to Mr. Jim Grant. That’s Grant’s Interest Rate Observer. You should get a hold of his April 3rd piece. It’s a wonderful article that lays out the dimensions of this ‘kitchen sink’ fiscal and monetary stimulus.
Subscribe to:
Posts (Atom)
Posts
