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50 of 63 results found for - "Bill Bonner"  
[Quote No.32338] Need Area: Mind > Plan
"According to one theory, for example, mankind migrated from Africa to Europe. In Europe, during the Ice Age, he encountered a great challenge: cold weather. Most humans and pre-humans probably couldn't survive it. But some did. And they did by evolving into maybe smarter... people with bigger heads... they were an evolutionary necessity... People needed bigger brains to anticipate the change of seasons and save for winter, for example. They had to see what was coming. They had to look at what was coming...and prepare for it. They had to work together too...to hunt large game...and to fight off competitors. Those who couldn't do so died out. [Things haven't changed much since those times. Forethought and planning are still vital to living well.]" - Bill Bonner

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[Quote No.29080] Need Area: Money > Tax
"Still, a system in which people get what they've got coming is infinitely better than a system in which people take only what government gives them [after taking it from them and others through taxes, etc]. That's the essential difference between capitalism and socialism." - Bill Bonner
Author and Founder and editor of the financial newsletter, 'The Daily Reckoning'.
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[Quote No.31419] Need Area: Money > Tax
"[One of the great problems with governments intervening in markets is that before you know it everyone demands their 'help' from the government.] The taxpayers don't mind robbing Peter. But they don't like it when the ill-gotten gains go into someone else. 'Hey, my name is Paul...Where's MY bonus?' " - Bill Bonner
From 'The Daily Reckoning - Australia', published 24th March, 2009.
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[Quote No.29031] Need Area: Money > Save
"You can't get rich on consumption, as Dr. Richebacher [editor of 'The Richebacher Letter' and a world-renowned author, economist, and international banker] used to say. You need capital formation. Save your money and invest it in productive enterprises." - Bill Bonner
Author, founder of Agora Publishing and founder and editor of the financial newsletter, 'The Daily Reckoning'.
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[Quote No.27493] Need Area: Money > Invest
"[As very successful business owners know, be wary of any employee, especially money managers who are]...encouraged to take risks, knowing that 'heads I win, tails I lose someone else's money'. [Because] Taking a big chunk of the gains, while not participating in the losses..[does not instill prudent risk taking behaviour and has been accurately called a business as well as a 'moral hazard']." - Bill Bonner
Successful author of financial and business books
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[Quote No.27497] Need Area: Money > Invest
"Of course, investors always think they see the end...long before the end actually comes [This is why there so many false rallies in a bear market]. In '29, the greatest economist of his day, Irving Fisher, proclaimed the sell-off over in November. The market 'was only shaking out the lunatic fringe', he observed. Of course, it soon shook out everyone else. And in 1990, the Japanese stock market also began to collapse. Then too, the greatest minds of the time - in America as well as in Japan - looked with favor on the Nikkei. The index hit its high of 39,000...and then began an historic decline. At 35,000...30,000...and 25,000 analysts pronounced the crisis over. Each time the Nikkei fell, it was another 'buying opportunity'. But the collapse didn't stop. It kept going until 80% of the Nikkei's capitalization had been wiped out. Now, 18 years later, you can still buy Japanese shares at 60% off." - Bill Bonner
author of books and articles on economic and financial subjects and the founder and president of Agora Publishing.
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[Quote No.27639] Need Area: Money > Invest
"Agricultural commodities are notoriously cyclical. Prices rise; farmers plant more. The resulting bumper crop causes a bust in prices. Then, farmers reduce production, causing prices to rise again. Farm prices hit highs in '74, '77, '80, '86, '94 and '98. In the period following '98, prices sank to what might have been all-time lows - adjusted for inflation. Now, [2008] they're reaching up again. In terms of nominal prices, the CRB index of soft commodities is 150% above its 1993 low. Adjusted for inflation, farm products are up considerably less. And adjusted to the euro or gold...even less still." - Bill Bonner
author of books and articles on economic and financial subjects. He is also the founder and president of Agora Publishing.
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[Quote No.27779] Need Area: Money > Invest
"As we pointed out last week, the newspaper headlines may be negative, but sentiment is not. Most people think this is a good time to buy a house - meaning, they still think 'you can't go wrong in property.' And stocks at 20 times earnings [p/e] are no bargains. At real bottoms, you can buy stocks at 5 to 8 times earnings. At real bottoms, people have stopped looking for bottoms...the press may talk about depressions, bear markets and credit crises, but we ain't seen nothing yet. When we get a real bottom, they won't be talking at all - they will have lost interest. That's what happens. When we get a real bottom, people won't be interested in buying stocks; they'll come to regard stocks as a rich man's game. And they will once again view houses as a consumer item, not an asset class. As for depression...they won't need the newspapers to tell them how bad things are." - Bill Bonner
The founder and editor of the financial journal, 'The Daily Reckoning'. He is also the author of a number of books on investing and the economy. Quoted on 22 April 2008.
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[Quote No.28407] Need Area: Money > Invest
"[Rising energy prices usually signal the end of most share market booms and business cycles. Why?] Modern economies run on petroleum products. As oil has gone up...so has everything connected to it. But as the oil price rises, it sets in motion a whole contraption of actions and reactions. As the price of a gallon of gas rolls up a penny, it tips over a little cup in which there is a steel ball. The little ball rolls down a track, trips a number of levers and switches, and runs into another ball attached to a string, which then swings over to the left and knocks over a glass of water, which falls down onto a tray of fast-growing ivy seeds, which send out shoots and vines and strangle the entire apparatus. Well...you get the point: one thing leads to another... And one thing that high oil prices lead to is higher prices for everything else. And higher prices lead to less purchasing power on the part of the average consumer, which leads to fewer sales, which leads to less output, which leads to lower earnings and slower growth...etc, etc." - Bill Bonner

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[Quote No.28449] Need Area: Money > Invest
"By the charts ye shall know them – bubbles, that is. The lines roll along nicely, calmly, along the bottom of the page, then all of a sudden, the line shoots up. When you see a chart like that, whether it is the price of tulip bulbs, shares in the South Sea Company, or Alan Greenspan’s career, you know what will happen next. The line will go down! What goes up must come down. A bubble is an extraordinary thing – a rare phenomenon... And all extraordinary things tend to become less extraordinary over time. 'Regression to the mean,' is what statisticians call it. The 'mean' marks the territory that is normal. Whenever anything ventures into abnormal territory, chances are very high that it will soon come back on familiar ground... take the weather. A rainy spell may last for a long time. But the more days it rains, the more dry days will be needed to bring the rainfall down to 'normal' levels. Regression to the mean is one of the surest bets an investor can make. Let prices go to extraordinary levels and he’s almost guaranteed that they will come back to normal. In markets, regression to the mean is even more certain than it is in nature. Because extraordinary prices set in motion a series of actions and reactions that almost always bring them back in line. Today’s [10th June 2008 USD$140 a barrel] record-beating oil price, for example, has already touched off a series of derriere-kicking trends and events that are sure to take it down a notch. On the supply side, the industry is spending four times as much on exploration and development than it did when the century began. The price of drilling equipment rentals has more than tripled. And now, believe it or not, a young man graduating from an Ivy-League college with a degree in petroleum engineering earns more money than a man who goes to Wall Street. On the demand side too, changes are underway that will cut the amount of oil used. The cure for high prices is high prices, as we opined yesterday. Bubbles are self-correcting. The higher prices cause people to look for alternatives – or simply not use so much. U.S. imports of oil went down over the last 12 years. And, for the first time ever, Americans are driving fewer miles. Another track of the feedback loop is the economy itself. High oil prices work like higher interest rates or higher taxes – removing money from domestic commerce. The effect is to 'cool' the economy... chilling demand for energy. Elsewhere, substitutes for oil are being developed at breakneck speed – including wind, solar, and bio-fuels. Regression to the mean works. Markets work. Lower energy prices seem a cinch." - Bill Bonner
Bill Bonner is an author of books and articles on economic and financial subjects. He is also the founder and president of Agora Publishing, one of the world's most successful consumer newsletter publishing companies, and the founder and editor of The Daily Reckoning, a daily financial newsletter.
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[Quote No.28479] Need Area: Money > Invest
"...we sit back and let the world [the economy and the share market] go whither it wouldst. We just try to figure out where it is going...and get a parking place before everyone else shows up!" - Bill Bonner
Founder and president of Agora Publishing as well as the founder and editor of the financial newsletter, 'The Daily Reckoning'.
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[Quote No.28519] Need Area: Money > Invest
"Real wealth and 'money' are connected... Houses, for example, are real wealth. But in money terms, their value varies. In the ten years – 1996-2006 – for example, the price of America’s houses almost doubled. Of course, they were essentially the same houses...a little bigger perhaps...with a few more marble countertops, but otherwise not much different. What had happened that made them more valuable? Well, they weren’t really more valuable...just more expensive. America’s elastic money had stretched out to make them more expensive. But now the elastic is snapping back. Houses are down 13% – according to Case/Shiller – from a year ago. And now an analyst at JP Morgan says they’ll probably go down about 30% before the snapback is finished in 2010. This, he says, will cost Wall Street about $1 trillion in losses on mortgage-backed securities. It will cost the nation $4 trillion in 'lost access to capital'. Whoa! That’s the trouble with stretchable money – when the elastic snaps, it can hurt." - Bill Bonner
Bill Bonner is the founder of Agora Publishing and editor of the financial newsletter, 'The Daily Reckoning'. The quote is from 'The Daily Reckoning Australia', 16th June, 2008.
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[Quote No.28530] Need Area: Money > Invest
"[In inflationary boom times for industries remember this economic truth:] ...markets still work. The cure for high prices is high prices. High prices encourage producers to increase output...and consumers to reduce consumption. Sooner or later, the medicine does the trick - [the lack of comsumer demand wins] and prices fall." - Bill Bonner
Founder of Agora Publishing and editor of the financial newsletter, 'The Daily Reckoning'.
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[Quote No.28654] Need Area: Money > Invest
"[When a country keeps interest rates too low for too long they open the door to irresponsible lending and borrowing. All the easy money pushes up the share market and assey prices beyond any realistic long-term valuation, creating the conditions for an eventual reversion to the mean crash when the inevitable inflation arrives and interest rates are necessarily raised to combat it. Between 2005-2008] People borrowed too much...and spent too freely. Now [2008], they have to cut back and pay up. The sooner they get it over with the better; clearing away excessive debt and cleaning up balance sheets will give them something solid to build on. Of course, it won't be easy or painless. But the Fed is doing all it can to avoid a slowdown. That is why we have the key Fed rate at a NEGATIVE real yield of 2.2%. And it's why when you put money in a money market fund you get a return of less than half the rate of consumer price inflation. The low rates discourage you from doing what you ought to be doing – saving money rather than spending it. The 90-day T-bill rate is only 1.8%. That's part of the reason gold is so expensive; you don't give up much income to own it. [Unfortunately history is repeating itself. But at least it reminds investors that those who don't bother to learn from the failures of past investors are doomed to get their same poor results. The key is to understand the business cycle and how it effects the share market and then monitor where an economy is in the cycle as closely as you monitor the companies in your share portfolio.]" - Bill Bonner
Author, founder of Agora Publishing and founder and editor of the financial newsletter, 'The Daily Reckoning'.
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[Quote No.28668] Need Area: Money > Invest
"The financial industry used to represent about 10% of the entire stock market's earnings. Then, as credit grew, the financial sector invented new ways to separate people from their money. During the period known as the Great Moderation, the percentage of earnings coming from Wall Street rose to 40% of the total. Now it's coming back down. It's over. We don't have to tell you, but the 'Great Moderation' was a big fraud. There was nothing moderate about it. Instead, it was a period of extravagance...excess...over-the-top consumption and borrowing...and outlandish claptrap. It was claimed, for example, that the Wall Street firms were 'adding value' by packaging subprime mortgages into securities and peddling them to towns in Norway. And it was believed that the Fed really had learned how to smooth out the business cycle and could henceforth avoid serious downturns. And inflation? That was a problem of the '70s...not of the 21st century. But every bubble pops. And the force of a correction is equal and opposite to the deception that preceded it. Naturally, the correction in the financial industry would have to be substantial. Nor is the Fed able to stop it. When a bubble bursts, the Feds can pump as hard as they want; the new cash and credit will go into a new bubble, not the old one. You haven't seen another bubble in the dotcom industry, have you? That one blew up eight years ago. It hasn't come back – despite the best efforts of central banks all over the world. And don't expect another bubble in housing either. We've seen the highest prices for housing – in real terms – that we will probably see in our lifetimes. Bubbles...busts...bubbles...busts...the beat goes on. One sector gets pumped up...and then it gets whacked. What's up next? See below... *** The next bubbles are probably coming in oil...commodities, and – many experts believe – in emerging markets. We see the hot air flowing into the oil market, for example. Barron's reports that $260 billion has gone into indexed commodity strategies – up from only $13 billion at the end of 2003. And looking at a chart of the NASDAQ, 1990-2000, we find it looks familiar. Yes, dear reader, the oil market 1998-2008 looks a lot like the dotcom market (traded on the NASDAQ) eight years before. Of course, many are the reasons why you might think oil will get more and more expensive. But so were the reasons that you might have expected the dotcoms to keep going up. And prices of Miami condos to keep going up. And tulip bulbs. 'Oil is different,' we can hear you saying. The economy can't function without it. More and more people are buying it. The Nigerians are blowing up pipelines. Production has peaked out. T. Boone Pickens says it's going up. The Chinese are hoarding for the Olympics, and so forth. Maybe so. But human beings err, said Rosmini. The more reasons they have to believe something...the more they tend to believe it to excess. And the sadder they are when their beliefs are proven incorrect. As to emerging markets, Alan Abelson, in Barron's, believes they are in bubble-mode too. 'Decoupling' is hooey, he believes. When the world economy heads down, they'll go down with it." - Bill Bonner
Founder of Agora Publishing and founder and editor of 'The Daily Reckoning'. Quoted in 'The Daily Reckoning - Australia', 15th June, 2008.
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[Quote No.28695] Need Area: Money > Invest
"[Remember when considering your share investments when inflation comes with a vengence as it always does at the end of the business-economic cycle, resource and energy related stocks do well, while the rest of the market suffers, because as people] ...are forced to pay more for fuel, they pay less for other things. The whole retail sector suffers. And much of the hospitality industry [including airlines which suffer from both falling spending and rising costs]; ...[people become so concerned they even plan] on taking 'stay-cations'." - Bill Bonner
Founder of Agora Publishing and founder and editor of the financial newsletter, 'The Daily Reckoning'.
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[Quote No.28747] Need Area: Money > Invest
"[In periods of high real inflation don't believe government inflation calculations. It is not in their interest, politically or fiscally, to accurately show the general public the true state of the economy. History shows this is true. Why?] What is good from the government's point of view is a low official inflation number. Billions and billions of dollars depend on the CPI calculation - everything from tax rate adjustments, Social Security payments, to monetary and fiscal policies. In a better world, perhaps we would have honest inflation numbers. But in a better world, we wouldn't need them." - Bill Bonner
Founder of Agora publishing, founder and editor of the financial newsletter, 'The Daily Reckoning' and author.
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[Quote No.28769] Need Area: Money > Invest
"Typically, in a recession, the government tries to 'lean into the wind' to counterbalance the effect of an economic slowdown. Business stops investing so much. Consumers stop spending so much. The government - according to classic Keynesian economics - tries to take up the slack by spending more. But where does it [The U.S. Government in 2008] get the money? The feds already have a deficit of about $500 billion. And a 'financing gap' of $57 trillion. In the coming recession, predicts Bill Gross of the PIMCO fund, the federal deficit will go to $1 trillion. Obama will likely be the next president. He'll be tagged with the first TRILLION DOLLAR DEFICIT. But what can he do? Obama says he's going to cut spending. But every economist in the nation is going to tell him not to do it - not during a recession. It will only make the recession worse, they'll say. Instead, they'll urge him to spend more money. They'll remind him that the Japanese used fiscal stimulus on a massive scale - equal to 10% of GDP - and it still wasn't enough to light a fire under their economy. A similar fiscal stimulant in the United States would mean a deficit of $1.7 trillion! [Surely the lesson for next time, for governments as well as individuals, is 'when things are going well put a little away for a rainy day', because, without a doubt, it is coming.]" - Bill Bonner
Founder and editor of the financial newsletter, 'The Daily Reckoning'. Quoted from 'The Daily Reckoning Australia', 3rd July, 2008.
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[Quote No.28778] Need Area: Money > Invest
"[After any stock market boom comes the bust. If you want proof then between 2004-08 most stock markets doubled which is twice as fast as the historical average. Then early 2008 the markets overheated and the the wheels fell off, the asset bubble burst with a nasty credit squeeze and then out of control inflation. Any time a market gets too far ahead or behind its long-term mean return expect it to correct - often savagely!] But think you’ve got it bad? Think again. Inflation in the Ukraine is running at 30% per year. In Latvia, it’s 18%. Egypt is suffering 16% inflation. And, oh yes...there’s Zimbabwe. The average worker’s salary in Zimbabwe is 15 billion Zimbabwe dollars per month. The poor fellows are billionaires, every one of them. But it takes 19 billion Zimbabwe dollars just to buy a pack of 10 cookies – if you find it. A pound of margarine is 25 billion. Consumers are getting shellacked all over the world. So are investors. Europe’s stock markets are down nearly twice as much as Wall Street. And many foreign markets are down twice as much. China and Vietnam, for example, are both down more than 50% from their peaks." - Bill Bonner
Founder and editor of the financial newsletter, 'The Daily Reckoning'. Quoted from 'The daily Reckoning Australia', 4th July, 2008.
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[Quote No.28907] Need Area: Money > Invest
"...major bottoms don’t happen at the beginning of a recession; they happen at the end of one...when an economy is ready for another big growth spurt. Nor do they happen when stocks are still relatively expensive – as they are now [2008]. They happen when they are cheap...when they sell for 5 to 8 times earnings, not 10 to 15 times. They also tend to happen when the Dow and the price of gold are getting close to a one-to-one relationship. Just before the ’82 bottom, for example, you could buy the entire Dow for a single ounce of gold. Now, it takes nearly 12 ounces. Most important, a real, major bottom doesn’t happen when you’re looking for it. It comes after you’ve given up...when investors have lost interest in stocks. You may recall a notorious cover from Business Week in the summer of ’82: 'The Death of Equities.' No one was expecting a bottom; they thought stocks were dead." - Bill Bonner
Founder of Agora Publishing and founder and editor of financial newsletter, 'The Daily Reckoning'.
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[Quote No.29047] Need Area: Money > Invest
"A free market is not a system designed to give people a free lunch. It's designed to make them better people - by rewarding them when they do the right thing and punishing them when they do the wrong thing." - Bill Bonner
Author, Founder of Agora Publishing and founder and editor of the financial newsletter, 'The Daily Reckoning'.
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[Quote No.29108] Need Area: Money > Invest
"[Business people as well as consumers take on too much debt and then things go wrong:] How could this be? What would cause seasoned businessmen to go so wrong? For once, the president of the United States of America seemed to have it right. He said Wall Street had gotten 'drunk.' The party got a little out of hand, he might have added. Some lamps got broken, and a fight broke out in the parking lot. And now the financiers needed to 'sober up,' continued the president. The metaphor is as good as any. But if we were filling out a police report, we'd still have some questions. We'd want to know who supplied the free booze...and why. No one asked us, but in the following paragraphs we provide the answer anyway. During the last two decades, the percentage of the U.S. economy devoted to consumer spending went up and up and up - from 67% of GDP to 72%, a huge increase. Consumers got a taste of excess spending - and they liked it. Then, they were urged to drink more by the same people who provided the alcohol - the feds. In a consumer economy, they reasoned, growth came from consumer spending. If consumers didn't spend enough, growth slowed. So, in order to boost GDP growth, it was sometimes necessary to 'stimulate' consumers to spend more - by giving them more of what they least needed, more Jim Beam-style credit. A particularly stimulating environment following the mini-recession of '02 produced a particularly thrilling party. The Fed knocked down its key rate to 1% - and left it there for a year. Extremely low lending rates caused house prices to soar. Consumers found that they were not only able to borrow against the inflated values of their houses, but to 'take out' equity, believing they would never have to put it back. As it developed, householders were able to borrow an additional $6.8 trillion, of which $4.2 trillion was spent on consumption. But everyone thought house prices would continue to go up. In today's news, for example, we discover that IndyMac - which just went broke - used mortgage finance models explicitly based on ever-rising house prices. The whole consumer economy functioned in much the same way as Wall Street. Profits were booked when sales were made - not when the item was paid for. Whether the consumer bought an eggbeater or a split-level in the suburbs, the salesman gave himself a bonus when the deal was signed. Someone else would have to worry about collecting! Case/Shiller report that house prices fell 15.8% in May, from a year before. Now, the collateral for mortgage finance is falling in price and buyers are not settling up as expected. (Of course, we haven't seen any real estate agents offer to give back their commissions or any appraisers returning their fees...) And now that the collateral is falling in price, the poor consumers are getting a little sore. Unless some new scam is found that will keep them spending money they don't have, they're going to have to cut back. In fact, as house prices go back whence they came, it seems likely that consumer spending as a portion of GDP will too. And guess what? If consumer spending were to go back to 67% of GDP, it would mean a drop of about $700 billion in spending per year - enough to wipe out all 'growth' completely." - Bill Bonner
Founder and editor of financial newsletter, 'The Daily Reckoning'. Quote from 31st July, 2008.
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[Quote No.29178] Need Area: Money > Invest
"Total debt to GDP reached 230% in 1931. Total debt probably peaked out a couple of years earlier, but by the '30s, GDP was falling, while the debt had yet to be liquidated - producing a record debt/GDP figure. Then, in the following correction, the ratio collapsed to 50% by the end of WWII. But the last quarter century has been a great time to be in the financial industry. Everybody wanted to borrow...or to lend. The debt to GDP figure shot back up to near 300%...as the financiers collected their millions in bonuses. But now [2008], another major correction is underway." - Bill Bonner
Founder and editor of financial newsletter, 'The Daily Reckoning'.
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[Quote No.29206] Need Area: Money > Invest
"Prices go up. Then, they go down. That's the way it's been going for a long time. Housing prices are 'mean reverting,' as economists say. In fact, as we pointed out here, they're about the meanest reverters in the whole financial world. Houses, unlike dotcom stocks or paintings by Lucien Freud, are useful. They're bought by wage-earners to live in. So, they have to be priced at levels that the buyers can afford them. In fact, the average house-price has to be within the housing budget of the average house buyer; that's all there is to it. [which according to demographia.com is about 4-5 times the average wage in the area]" - Bill Bonner
Founder and editor of financial newsletter, 'The Daily Reckoning'.
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[Quote No.29560] Need Area: Money > Invest
"The force of a [stock market] correction is equal and opposite to the deception [and excesses] that preceded it!" - Bill Bonner
Author and financial journalist.
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[Quote No.29561] Need Area: Money > Invest
"[When share market boom turns to bust...] Asset values disappear. And with them, the money supply itself contracts. People spend less freely. They lend less recklessly. More money stays tucked away for longer periods in pockets and bank accounts. Prices fall [asset deflation while debts remain and equity diminishes]. Many assets turn out to be worthless and many people go broke [not just short-term liquidity problems -asset rich and cash poor- but unable to meet their liabilities, insolvent, bankrupt.] Investors buy gold to protect themselves. Gold never overstates its earnings, understates its liabilities or declares bankruptcy. When everything else goes to Hell, gold is still there...still doing its job. Of course, the feds [U.S. Federal Reserve or other central bank] try to prevent nature from taking her course. They counter a natural correction with further unnatural deception. They lend at lower rates than those set by willing buyers and sellers. They spend even more recklessly than usual - often going to war in order to stir up financial activity. Today, for example, the Federal Reserve honchos will meet. The bank already lends to Wall Street at less than half the rate of consumer price inflation [to counter the current credit crunch crisis]. The betting on Wall Street is that it will lower its key interest rates again - so that it can lend to Wall Street at even better rates. That's one reason why Merrill wants to sell itself to the Bank of America - so that it can take advantage of more of this free money. Of course, when there is a serious correction, the financial authorities also make a great show of repairing the damage, supposedly caused by greed and the lack of regulation. Typically, there are a few show trials...a few rich people are ruined and run out of town...and new programs and regulations are put in place which tend to delay recovery and make the next bust-up even worse. But among one of the feds' tricks, one is particularly dangerous: they can 'print' money [which can devalue the currency in relation to other currencies and commodities and effect inflation] Yes, dear reader, when the going gets rough [especially if financial stability is at stake and fear is rampant], the feds turn on the printing press. That's when owning gold really pays off." - Bill Bonner
'Daily Reckoning Australia'. Published 17 September 2008.
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[Quote No.29636] Need Area: Money > Invest
"When everybody thinks the same thing, no one is thinking." - Bill Bonner
Financial journalist and owner of Agora Publishing and 'The Daily Reckoning' financial newsletter.
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[Quote No.29637] Need Area: Money > Invest
"The financial markets give people neither what they expect nor what they want, but what they deserve." - Bill Bonner
founder and editor of financial newsletter, 'The Daily Reckoning'.
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[Quote No.29638] Need Area: Money > Invest
"Free market principles are fine - until prices start going down! [...then markets are out and state-sponsored meddling is in! Capitalism is harsh in that it drives money into the hands of those most wise about its productive use. It therefore separates fools from their money. But in democracies, the fools vote. After a big market price bubble, where people were paying much more than shares were worth, there are more fools than sages so government rushes in to add still more regulations and bureaucratic oversight on so-called 'free markets' to preserve and win more votes, regardless of whether this is in the long-term interests of the people, country or its economy.]" - Bill Bonner
founder and editor of financial newsletter, 'The Daily Reckoning'.
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[Quote No.29639] Need Area: Money > Invest
"[Take what government officials say with a dose of salt. They are usually trying to talk up the market. Wise investors have learned this. This was clear in the 1929 stock market crash and here's a recent example of more of the same, regarding the 2008 sub-prime credit crunch that destroyed so much shareholder equity in so many US and European banks:] [Economist and former head of the Federal Reserve] 'Greenspan relaxed about house prices...' reported the Financial Times in 2005. 'Most negatives in housing are probably behind us...' said the same sage in October 2006. 'We believe the effect of the troubles in the subprime sector...will be likely limited...' said Bernanke [current head of the Federal Reserve] in March 2007. It's 'not a serious problem...I think it's going to be largely contained,' added [former head of Wall Street investment bank Goldman Sachs and current Secretary of the US Treasury,] Paulson in April 2007." - Bill Bonner
Founder and editor of financial newsletter, 'The Daily Reckoning'.
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[Quote No.29666] Need Area: Money > Invest
"[Besides the spot price for copper, which has a history of predicting the health of the global economy, here is another useful indicator.] Investors see the world slowing down - meaning, there will be less demand for oil. Last week, the Baltic Dry Index fell 25% - 10% on Friday alone. The index measures shipping costs...and roughly correlates with globalization, commodity prices and Chinese output. Typically, ships pick up iron ore or copper or wheat from, say, Brazil and deliver it to Asia. When orders fall, so does the index. Now, it's almost in free-fall...down a full 70% from its May peak." - Bill Bonner
Financial author, founder of Agora Publishing and 'The Daily Reckoning' financial newsletter. Quoted from the latter 1st October 2008.
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[Quote No.29667] Need Area: Money > Invest
"It's easier to follow the real trend in stocks by looking at price-to-earnings [pe] ratios than actual prices. You will see that the stock market follows long, broad trends [of about 15-17 years, with smaller high and low cycles of about 5yr duration within] - roughly coinciding with movements in the credit cycle [from very low interest rates to very high, with smaller highs and lows within]. When people are feeling confident...they lend at lower rates...and they buy stocks at higher prices. More or less. At the top of the cycle, they'll pay 20...30...50 [interest rates at say 4%...3%...2%] times annual earnings for a stock. At the bottom, they want a more immediate and more sure pay off; stocks typically sell for only 5 times earnings [interest rates at say 12%]." - Bill Bonner
Financial author, founder of Agora Publishing and 'The Daily Reckoning' financial newsletter.
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[Quote No.29717] Need Area: Money > Invest
"[When inflation is high the markets often try to find purchasing-power safety in gold. In 2008 with the credit crisis, due to years of poor quality lending and the subsequent sub-prime loan securitisation and collateral revaluations, the market tried to find safety from the global financial banking meltdown and the looming European, U.S. and Asian recessions by buying U.S. Treasury bonds.] Just the other day, the Financial Times reports: 'A virtual funding freeze... has affected even top-rated companies such as General Electric... and AT&T.' It's a dangerous time. The fear out there is extreme. [Banks don't even want to lend to eachother let alone companies or individuals as they can't be confident of repayment or the value of collateral.] That explains why the yield on one-month [U.S.] Treasury bills fell to zero [as demand for them and therefore their prices skyrocketed] at one point during the recent panic. Investors just wanted safety. They didn't care about yield. They wanted a place to put their money where they can be sure they will get it back. [Return OF capital rather than return ON capital!] 'Hence, the rush to [U.S.] Treasury securities. On the last day of the quarter, the 10-year note hit 3.83%. If you bought the 30-year T-bond a year ago - which most people thought was a dumb bet - you would have netted a 16% return one year later, as rates fell and your bond price rose. Not bad, huh? 'This rush for safety is also rallying the U.S. dollar. Despite all its flaws and all that it's been through, when people are scared, they want the old greenback. Cash. Commodities, meanwhile, have sold off something fierce. [on the view that the global economy will see a major slowdown, including China, as demand from the rest of the world for its manufactured exports falls.] 'Until the wave of bank failures and credit scares dies down, I don't think we'll see these trends reverse anytime really soon. What we have is a sharp countertrend in a long-term inflationary and commodity bull market. [that developed from the view that China's export-linked domestic growth would drive the global economy.]" - Bill Bonner
Financial author and founder of Agora Publishing. Quote from 'The Daily Reckoning', 7th October, 2008.
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[Quote No.29801] Need Area: Money > Invest
"[In markets, after the boom comes the bust.] After the liquidity comes the liquidation. After the outsized recklessness comes the appropriate regret." - Bill Bonner
Founder and eloquent editor of the financial newsletter, 'The Daily Reckoning.
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[Quote No.29824] Need Area: Money > Invest
"[Don't assume that after a stock market crash and the following recession that jobs will be easy to find.] 'I'm thinking about going back to work,' says one retiree to the New York Times [in October 2008]. Another says he will not be able to retire when he had planned. But these fellows have only just begun to sweat. Jobs were plentiful in the boom years - so easy to get that people assumed they could always find work. That, too, could be changing fast. Unemployment is rising. And after last week [when the stock market dropped 20%], every company executive in America must be considering a freeze on new hiring plans...and cutting unnecessary workers as fast as he can. The typical business spends more on labor than anything else. And in a downturn, labor is the one cost employers can control. So, the marginal worker could soon find himself with no money...no credit...and no job. Go back to work? Where? [One report stated that economists are expecting the unemployment rate in the U.S. which over the last year has gone from 5% to 6% to reach about 9% next year!]" - Bill Bonner
Founder and editor of the financial newsletter, 'The Daily Reckoning'. Published 14th October, 2008.
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[Quote No.29933] Need Area: Money > Invest
"[Not every person agrees with governments intervening in 'free' markets, as recommended by Keynesian economic theory. Austrian free market economists don't. They believe it makes things worse by distorting real 'price discovery' and just delays the economy's recovery to health. For example, here's a quote about the 2008 credit crunch, stock market crash and looming recession which some fear will become a depression:] Every journal, every television commentator, every newspaper, every economist - all agree: the risk of a meltdown is too great to ignore. The feds [Federal Reserve] had to take action. 'Just as there are no atheists in a foxhole, there are no economic fundamentalists in a crisis like this,' says Jared Bernstein, an economic advisor to [U.S. Democratic presidential candidate] Obama. 'Governments have at last thrown the world a lifeline,' writes Martin Wolf in the Financial Times. 'We didn't want to do it...but we had to take action,' Hank Paulson [Federal Reserve Chairman] told the world. Nobody wants a financial meltdown; everyone agrees that rapid and forceful state intervention is necessary... Meltdown? What's wrong with a meltdown? Why shouldn't bankers fear to lend? Why shouldn't prices go to what willing buyers and sellers will accept? Why should Wall Street be bailed out? Why shouldn't investors take the losses they deserve? Why shouldn't house prices fall rapidly? Why shouldn't the mistakes of the past five years be corrected quickly, in other words? The financial crisis was caused by too much ready credit... Because of it, people made mistakes. Investment mistakes. Business mistakes. Spending mistakes. Even lifestyle mistakes. Those mistakes need to be corrected. ...at the height of the bubble people thought that capitalism [irrationally escalating share and real estate prices] would make them rich. Now that the bubble has popped they believe that government must step in to save them from capitalism. Both ideas are equally and oppositely absurd. [Ideally the cause of the problems in the economy, namely too cheap and easy credit for non-productive uses for too long, should have been gently withdrawn earlier when asset bubbles were appearing, through a counter-cyclical fiscal policy of increased taxes and a monetary policy of higher interest rates, higher bank capital adequacy ratios and tighter lending standards. This part of Keynesian economic theory is usually forgotten until the bubbles it was supposed to stop have occurred and governments then decide to follow the second part of his advice to to stop price falling through consumer and business stimulation methods. Without the correct balance between both economic contracting and expanding methods however, of course there will be a problem as there is in 2008. The problem of the business cycle, of boom and bust, has a two part solution. Applying only part of it will at best bring about only a partial solution or at worst make things worse.] " - Bill Bonner
Financial author, founder of Agora Publishing and 'The Daily Reckoning' financial newsletter. Published in the latter, 17th October, 2008.
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[Quote No.30183] Need Area: Money > Invest
"[Here is an article that goes some way to explaining why market booms happen and the emotions generated when they crash:] The masks are coming off. It's the end of the party, now we get to see what people really look like. And it's not a pretty sight. You'll recall that one of the fairest of the Bubble Era's revelers was the idea that, over the long run, you would make money in stocks. All you had to do was 'buy and hold.' Who didn't like her? She seemed so easy...so willing...so fetching and attractive. Yesterday, the Dow lost another 203 points. Investors are down 44% so far this year. Worldwide, they've lost $10 trillion this month - far worse than the crash of '29. The most successful economy of the 20th century was the United States of America. The second was probably Japan. It rose from the bombed-out ruins of WWII to become a worldwide export powerhouse, dominating the auto and electronic equipment industries. But yesterday, stock prices in Japan fell to more than a quarter-century low. Investors in Japanese stocks ... have made nothing in 26 years. Here's the press report: 'Tokyo's Nikkei 225 index closed down 6.4 percent to 7,162.90 - the lowest since October 1982 - with exporters like Toyota Motor Corp. and Sony Corp hit hard. The losses came despite a report that the government was considering massive capital injection into struggling banks in a bid to calm jittery financial markets.' 'Decades of pain and still no relief,' adds the Financial Times, noting that investors in Japan have been waiting for a recovery for the last 18 years. With the mask off, stocks in Japan are giving investors a Halloween fright. But what other masks are coming off? How about the sweet mask worn by housing? 'Housing always goes up.' And, 'you can't lose money in property.' Remember those beauties? Those masks hit the floor a year ago. Since then, the whole world has looked at the property market and gasped in horror [Houses in U.S. and U.K. have lost between 20% and 40%]. How could houses be so ugly, homeowners have wondered; they look like they just woke up. Oh and there's oil...down to $63 yesterday [it was U.S. $150 four months ago]. Oil was supposed to go up forever. At least, that was one of the favorite masks of the late Bubble Era. But there are still a few Bubble Era masks that have not yet come off. In fact, the belle of the ball is the mask on 'progress.' People still believe that the world grows and improves - if not steadily, at least episodically. It's certainly true that long periods of history show what appears to be economic progress. Things get better. But occasionally, something terrible happens - plagues, wars, revolutions, Great Depressions and Dark Ages. Then, the world turns backward. The bull market in progress turns into a bear market of progress turns into a bear market of backsliding. Today, people are losing faith in stocks and housing...but they still have faith in progress. Just a few months ago, they thought capitalism would make them rich. But wicked capitalism has disappointed them badly; it didn't guarantee rising asset prices after all. So, now they turn their sad eyes to the feds. 'Oh ye all-knowing, all-seeing, all-powerful ones...hear us. Save us - from capitalism! They figure the feds will do the trick... And sure enough, all over the world the federales are playing along. The G7, the IMF, the central banks, the finance ministers and Treasury Secretaries - all have put on their own masks...strutting around, pretending to know what they are talking about. Curiously, France's president Nicholas Sarkozy is a leading strutter. He's trying to organize a New World Financial Order...based on something other than the dollar. These poseurs don't look too bad - as long as they leave the masks on. Take them off, of course, and you will see the same silly clowns who CAUSED the crisis in the first place. That is what is so amusing about this stage in the collapse of Western Civilization. You see, most of the world's financial press has come around; they see things much the way we do. They see, for example, that the U.S. Fed erred - big time - by fixing the price of credit too low for far too long. Of course, there's nothing in the Manual of Capitalism that allows the feds to fix the price of credit or support the housing market. This was the government at work, not the market. With the misleading signal coming from the credit markets, the capitalists just did what they always do - they overdid it. Still, the world's press, pundits and politicians have convinced themselves that the fault lies not in themselves...but in capitalism. And now, they expect the feds to do something about it. But that's just the way it works...one hallucination gives way to another. One delusion on the way up; another on the way down. Even star mutual fund managers are getting walloped by this market. Chris Mayer offers us a few examples: 'Managers with great track records are faring poorly, and it may help you feel better about how you are doing. Jean-Marie Eveillard, for example, has been running money for 50 years. He's beaten the market handily for a long time. He is a cautious type. He likes gold stocks. He likes Japan. He's down 27% this year. Robert Rodriguez, another cautious money manager who holds a lot of cash and runs FPA Capital, is down 29%. These are among the best of the best, as the market is down more than 40% this year. William Fries at Thornburg is down 43%. David Winters at Wintergreen is down 37%. Wally Weitz at Weitz Value is down 39%. The list goes on and on... 'So you see, nothing is really working well in this market right now - at least not for investors in stocks. However, there are a lot of cheap stocks out there, bargains I haven't seen in a long time. Unless the world comes to an end, which it has a habit of not doing, future investors will be a happy lot. Count me a cautious buyer of stocks.' Caution is the name of the game here..." - Bill Bonner
Bill Bonner is an author of books and articles on economic and financial subjects. He is also the founder and president of Agora Publishing, one of the world's most successful consumer newsletter publishing companies, and the founder and editor of 'The Daily Reckoning', a daily financial newsletter. This article was published in 'The Daily Reckoning - Australia', 29th October, 2008.
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[Quote No.30351] Need Area: Money > Invest
"Stability produces instability, [economist] Hyman Minsky used to point out. Why? Because when investors have no fear that someone will call the cops, they tend to party harder. With no threat of crash or correction, they take more risks in order to squeeze out more gain. [driving a share market boom even higher, before the inevitable crash.]" - Bill Bonner
Founder and editor of the financial newsletter, 'The Daily Reckoning'.
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[Quote No.30441] Need Area: Money > Invest
"[In a business and share market cycle downturn/recession which is accompanied by a credit crisis with too much debt on government, business and especially on the consumers' balance sheets, the normal monetary policy of lowering interest rates and increasing liquidity doesn't work. Government fiscal policy initiatives, for example, infrastructure spending can also have very little short-term effect. This makes the correction particularly deep and drawn out, as everyone stops spending and loans and asset prices fall dramamtically for as long as it takes for balance sheets to improve. The problem is the longer it goes on the worse the assets fall and so the net worth and the poor balance sheets keep falling in a never-ending viscious cycle.] Central banks lower interest rates to try to gin up some activity. They set up another round of drinks, hoping the party will get going again. The Fed cut rates decisively (if a bit slowly) in the '30s. Japan's central bank went further - taking rates down to near-zero and leaving them at that level for years. The U.S. Fed, meanwhile [2008], has already hacked its key rate down to 1%. It's ready to cut more... if need be. But the central bankers are missing the point. They're like a liquor salesman at an AA meeting. Everyone is desperately trying to sober up - not go on another bender. Of course, the feds will get a few people to take up the bottle again... but these poor saps will be even worse off. In this type of correction, people need to correct the mistakes of the late bubble. That means getting balance sheets back in balance. And that means spending less and saving more. Economists describe this problem as 'pushing on a string'... or a 'liquidity trap.' The central bank can make more credit more readily available, but it can't force people to borrow. Yesterday's news headlines included one that went to the heart of the matter; 'Government to force banks to lend.' But the problem is not so much the banks - it's the economy itself. Banks would be happy to lend - if they could be reasonably assured of getting their money back. But in a crumbling economy... who knows?... While monetary policy won't do much good, fiscal policy might... The principle is simple. If businesses won't spend... and consumers won't spend... the government will do the spending. This is the idea made popular by Keynes and known today as 'Keynesian' economics. 'We are all Keynesians now,' said [U.S. President] Richard Nixon back in the '70s. As we said, the idea was irresistible. Keynesian spending doesn't really make people better off, but it has three things going for it: 1) It gives politicians an excuse to spend more money 2) It looks like things are getting better... and at least government is 'doing something' 3) It tends to keep the lights on In the coming U.S. downturn, (we say 'coming' because the worst of it is still in the future) consumers are likely to pull hard on their belts and send the rate of saving soaring. Maybe not the 20%-30% you see in Japan and China, but at least back to the 10% we saw before the 1990s. That will remove more than $1 trillion from the economy. Directly. Indirectly, it will remove a lot more... So what's [the U.S. President Elect] Obama going to do? Simple, he's going to do what his most persuasive advisors tell him to do... he's going to borrow all those savings and put them to work. Everyone wants the safety of Treasury paper. Fortunately, the Obama Administration is going to give them plenty of it. They'll absorb the trillion or so in U.S. savings... and then everything else they can get their hands on - including much of the rest of the world's savings too. The U.S. deficit will soar - along with the national debt. Rates will rise. And then... maybe 18 months from now... maybe 10 years from now... it will get really interesting... [when inflation will rear its ugly head worse than ever]" - Bill Bonner
Founder and editor of the financial newsletter, 'The Daily Reckoning'. Published in the Australian version, 14th Nov, 2008.
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[Quote No.30477] Need Area: Money > Invest
"[The business and share market cycle always has a down period - a recession where the excesses are removed - and more!] In the beginning, there is The Bubble. Then, the bubble pops. Then, people look around and take fright. They realize they've got to stop spending. So, demand collapses. Then, stocks collapse too. And asset prices fall too - especially for speculative assets. As orders and asset prices tumble... merchants and manufacturers cut back too. Jobs are lost. And then, with less income... demand collapses some more. But then, eventually, the bubble is completely flattened. Weak companies have gone out of business. Good companies are holding on, but producing less. Many retail shops have closed. Many malls have gone out of business. Supplies of goods and services have fallen as far as they're going to fall. Then, with supplies tight, prices begin to rise again. The whole process takes time. There are millions of mistakes in need of correction. Each one has to be marked down, written off, worked out, and forgotten. We still have to see the show trials. And the perp walks. And the kvetching... the complaining... the whining... the wimpering. The bailouts and the payoffs... The bottles of whiskey and the loaded revolvers [allowing the dishonoured to do the honourable thing]. It's all still ahead! ... 'The only cure for a bubble is to prevent it from developing.' said [economist Dr.] Kurt Richebacher. In other words, you can't cure a bubble by cutting interest rates, easing bank lending requirements, running bigger government deficits, sending out 'rebate' checks, buying up Wall Street's stupid mistakes, or bailing out sinking businesses. You can't cure a bubble by reflating it. You can't cure a bubble at all. You have to let it pop... and then go about your business. Get it over with quickly; that's the best you can do. Think that will happen? Where have you been, dear reader? Out of Blackberry range? No, the feds are at work - with their patches, their rescues, their bamboozles and their swindles. In our brief moment of clarity ... we saw what was coming - the biggest financial bailout of history. It will be like WWII, without Betty Grable... like the New Deal without the wheelchair - and like nothing we've ever seen. Saving America from free-market capitalism will become the Great National Project of the [U.S. President] Obama years. Deficits will top $1 trillion... maybe $2 trillion. Brain dead businesses will be kept alive. Whole industries that should be allowed to go broke will be protected. Towns, states, and colleges that should go bust will be propped up. There will also be a huge building boom - in infrastructure. Bridges, trains, highways... ... it may be time to buy cement companies! The bailouts are just money down the drain. As for the bridges, who knows whether they are worth the money? But this massive program will achieve its real purpose - distracting and diverting Americans from their loss of wealth. If Olympic medals were given for consumer spending, Americans would have won the gold, silver and bronze every year for the last 20. But now, Americans may become champion savers. Savings could rise to maybe 10% of GDP. What will happen to all this money? It will be lent to the government... So do you see, dear reader, how the new financial system will work? Instead of squandering their money - as Americans have done for the last 20 years - now, the government will squander it for them. Here comes the Era of Conspicuous Thrift. Yes, you heard it here first. 'No more fancy pants,' is a headline at the New York Times. The gist of the accompanying article is that even expensive restaurants are now trying to look cheap. People who still have money to spend don't want to spend it... and when they do spend it, they don't want to look like they are spending it. So restaurants are putting on de po' bo'... that is, they're acting poor. Gone are the sumptuous drapes... gone are the plush carpets and marble tables... gone are the fancy pant waiters. 'Luxury is a dirty word,' said one of the designers. Don't get us wrong. People always look for ways to feel superior to their fellows. In the bubble years, they did so by spending wildly... trying to outdo each other with the extravagance of their purchases and the sans soucis of their budgeting. Young Wall Street pros... or rap musicians... would go out to a fancy restaurant and order a big bottle of Cristal - just to show off. But styles change. Now, people are showing off by NOT spending money. Sound unbelievable? Well, maybe. But our guess is that people are going to find more subtle... and less expensive... ways to wink at each other. Heavy spending is going the way of heavy drinking. It will be seen as vulgar. " - Bill Bonner
Founder and editor of the financial newsletter, 'The Daily Reckoning'. Quote published in the Australian version, 19th Nov, 2008.
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[Quote No.30495] Need Area: Money > Invest
"[In less than one year since 2007] The typical stock market investor has lost about half his money. He's looking for someone to blame - surely, it's not his own fault! And so now, poor Wall Street, the public is catching on to your scam... ...that the special knowledge you claimed was nothing but smooth talking claptrap... ...that you really didn't know any more than anyone else about what was actually going on... ...that what you were doing was skimming money from honest businesses with a lot of fancy shenanigans and unnecessary transactions... ...and selling stocks to naive lumpen - claiming that equities 'always go up in the long run' ...and loading up business and consumers with more debt than they could carry... ...and then greasing the debt over to investors, softly assuring them that 'our models show the risk of default is negligible...it won't happen, not in a thousand years.' That was only a few months ago. And now the debt has gone bad - trillions worth of it. And now, so many things that Wall Street promised have turned out to be lies and humbug that the whole world financial system has seized up... And here we switch from the 'innocent fraud' of Wall Street, as [the famous economist] Galbraith calls it, to the armed robbery of government. You see, the Obama Administration will have one overriding priority: to unblock the credit markets, put things back to 'normal,' and get the economy moving again. If he can do that - or even appear to do that (which is the only possibility) - Obama will go down in history as one of the nation's greatest presidents. Of course, everyone is rooting for him. When times are good...we like horror movies and terrorist threats. But when they are bad, we want flicks with happy endings. Obama's election was a landmark for many reasons. But he won largely because voters wanted a 'Hollywood ending' to the campaign. And now they want a Hollywood ending to the new national nightmare. Will they get it? Nah...but they might like the show anyway. Dan Amoss offers his two cents: 'Those fearing deflation assume that every American consumer is stereotypical: an overextended, credit card-addicted, house-flipping gambler. This is simply not the case. Many Americans don't have a mortgage. And most Americans with mortgages are still making their payments. They have, however, temporarily reigned in discretionary spending because of falling house and stock prices. 'Those fearing deflation also assume that demand for debt is low and falling. But demand for debt doesn't always come from businesses or households looking to invest more or spend more. Any business or household looking to refinance existing debt at lower rates - and there are many - is a source of demand for new debt. Banks borrowing at the Fed window at 1% or less will be looking to supply this new debt by make highly profitable loans to creditworthy borrowers. 'Once borrowers refinance, they may not be as aggressive about spending or expanding business as they used to be. But at least they will have access to credit. In the Great Depression, they did not. So the economy fell into a negative feedback loop of asset sales, bank failures, and rising unemployment. 'Treasury and the Fed will keep taking extreme measures to slow down the pace of credit contraction and housing prices - cutting off this deflationary feedback loop. This could include nationalizing Fannie Mae and Freddie Mac and using the Treasury's low borrowing costs to refinance hundreds of billions in existing mortgage debt into new 40- or 50-year mortgages with reduced principal balances. 'Sure, such an action would guarantee a decade or more of stagnation in housing prices, but it will also slow or flatten the rapid decline in prices. This is the essence of the Treasury and Fed actions: to stop the deleveraging from getting out of control - even at the cost of future economic stagnation. Like it or not, I think this is the most likely outcome from this crisis.' And now, let's look at what the Federal Reserve is doing... As you'll recall, the main man at the Fed, Ben Bernanke, has spent almost his entire life studying what went wrong in the United States in the '30s and in Japan in the '90s. He's determined not to let it happen again - not on his watch. And so, he's taking America's central bank where no central bank has ever gone before. From the day of its founding in 1913, the Fed's assets - the foundation capital of the U.S. banking system - grew, reaching $1 trillion on the 24th of September, 2008. But then, something extraordinary happened. Something breathtaking. And for a classical economist - something incredibly reckless. In the next six weeks, the Fed added another trillion. And the head of the Dallas Branch of the Fed said that he expected to add another trillion before the end of the year. How does the Fed get these 'assets?' Simple. It buys them. Where does it get the money to buy them? Simple again: it creates it. It makes it up. It conjures it out of nothing. 'If it comes from nothing,' you might wonder, 'what could it really be worth?' But we're not going to answer that question. We don't have time. Besides, it takes us in such a deep metaphysical swamp, we're afraid we may never slosh our way out...or at least not get out in time for lunch. Instead, we're going to answer this question: 'If it was that easy, how come the Fed didn't do it before?' The answer to that is simple: because when the Fed inflates the money supply it risks inflating consumer prices. People don't like that. They like it when asset prices go up. But not when gasoline and milk increase. But now, no one is worried about consumer prices. In fact, the Fed is worried about deflation...about falling prices. Bernanke knows what happens when consumer prices begin to fall. Consumers stop spending - knowing that they will be able to get a better deal in the future. That further depresses the economy...and pretty soon it's the '90s again and you're back in Tokyo. So the Fed has begun a huge program of monetary inflation, intended to offset Mr. Market's price-cutting. And now another question: Isn't there some risk that the Fed will overdo it? Oh, dear reader...that's a puffball of a pitch. If we can't hit that, you can take our laptop away...you can break our sword...and send us back to the dugout. Remember what happened in the slump of the early 2000s? Alan Greenspan panicked...cut rates to 1%...and left them there for more than a year. He gave the market the wrong medicine at the wrong time...and then delivered such a horse-sized dose, it set off the biggest bubble in mankind's whole bubbly history. Now, it's a different kind of slump...a credit slump. And once again, the Fed is on the scene, like a quack doctor at the side of a heart-attack victim. This time, he's giving stronger medicine...not just a 1% lending rate, but actual monetary inflation. Trillions of dollars worth of it. For the moment, Mr. Market is taking away dollars faster than the Bernanke Fed is replacing them. That could continue...for a few months...or even for several years. But it won't continue forever. And here, we affirm our unshakeable faith in the people who lead us. They are trying to cause inflation. Eventually, they will get the hang of it. They may shoot for 2% per year; but they are sure to overshoot. Money printers always do." - Bill Bonner
Founder and editor of the financial newsletter, 'The Daily Reckoning'. Published in the Australian version, 21st Nov, 2008.
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[Quote No.30569] Need Area: Money > Invest
"'You can understand how fraudulent most economic analysis is,' Nassim [Taleb, financial analyst and author] explained, 'just by looking the life of the turkey. The animal is fed for 1000 days...and then it is killed. So, if you plotted out the turkey's life on a chart, it would look great for 1,000 days...each day, the food arrived reliably, and each day, the turkey gained weight. The turkeys would look around and say they were enjoying growth and a bull market. Momentum investors would see it as an opportunity. The quants would run linear regressions on the data and prove that the risk was minimal.' Ben Bernanke [Federal Reserve Chairman] would describe the turkey's life - with no setbacks - as the product of a 'great moderation.' Turkey stockbrokers would assure their clients that nothing had ever gone wrong in the turkey's life. Turkey econometricians and theorists would come up with explanations for why the turkeys' growth would continue forever and they'd pat each other on the back for having finally mastered the 'turkey cycle.' Turkey politicians would run for re-election on the grounds that they had helped create a better world. And turkey economists would project further weight gains...until the turkey was the size of a hippopotamus. Then, come Thanksgiving, and all of a sudden, something goes wrong. Alas, all the turkeys' theories, models, and conceits were for the birds. 'Rare events can't be modeled,' Nassim continued. 'Because they are too rare. You can't get a statistically reliable sample. Alan Greenspan recently explained that he 'had never seen anything like this before.' Well, of course he had never seen it before. It never happened before.' 'Because these events are so rare, they are also completely unpredictable...and usually much worse than you can expect. Like Thanksgiving Day for the turkey.'" - Bill Bonner
Founder and Editor of the financial newsletter, 'The Daily Reckoning'. Published in the Australian version, Thursday 27th, 2008.
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[Quote No.30690] Need Area: Money > Invest
"History will record that the Bubble Epoque began soon after the Plaza Accords in 1985. The immediate problem confronting the finance ministers and central bankers at the Plaza Hotel in New York was what to do about the dollar. After having gone down in the late '70s, it went up so much in the early '80s that there seemed no stopping it. The strong dollar had its advantages of course. American tourists visiting London in the early '80s could leave their calculators at home. A dollar was a pound. A pound was a dollar. But the strong dollar was a threat to America's commercial interests. Japanese imports, in particular, were undermining America's competitive position. So the assembled economists came up with a solution. It was decided that the yen should be revalued, upwards, so as to tilt the playing field a little more in the Yankees' advantage. With a higher yen and a lower dollar, products from Japan would have to roll uphill if they were to reach U.S. markets. Since Richard Nixon had closed the gold window at the U.S. Treasury, in 1971 dollar, not gold, was the bedrock of the new financial system. But the dollar was hardly granite. It was more like gas. Foreign nations bought dollars from their local merchants and exporters, and paid for them with their own currencies. The more greenbacks America emitted, the more money of all shades and colors expanded all over the planet. If central banks failed to keep up with rising supplies of dollars, their local currencies would rise against the greenback, hurting sales to everyone's favorite customer, the USA. The banks also used dollars as reserves; as their capital increased, so did their lending. The system was absurd; but it wasn't unpopular. The more Americans spent, the more money foreigners had available to lend them. Readers should be grateful; if this column were not so short we would give you more of the details. But there is no need. The facts are not in dispute. The Plaza Accords was followed by the first major bubble of the bubble era - in Japan. The Nikkei Dow, rose from 12,000 in 1985 to over 39,000 in 1990. Property prices in Tokyo soared. The Japanese bubble found its pin in January of 1990. It brought about a bust that has lasted longer than marriages and refrigerators. The Bubble Epoque was only beginning. A few years later came bubbles in Asia, Russia, and an oft-rehearsed one in LongTerm Capital Management. LTCM was the blow-up not heard around the world. Investors should have listened more carefully. The fund had two Nobel prize winners on its payroll. Their theories of risk management and mark-to-model pricing were clearly wrong. Pity no one noticed. Instead, the authorities learned exactly the wrong lessons. When one bubble blew up...the feds pumped in more hot air - inflating a new bubble somewhere else. When the dot.com bubble exploded, they pumped overtime. Pretty soon, they had inflated huge bubbles - in emerging markets, housing, consumer credit, the financial industry, commodities, food, and even art. Private debt - used to fund the asset bubbles - was the biggest bubble of all. And now, with all those bubbles flattening, along comes another one. A bubble in public debt. It's inflation they want. And inflation they shall have. Of course, Mr. Bernanke is as keen to avoid the 'hyper' modifier. 'Just a little bit' would be plenty, he says to himself. He aims for 2%...maybe 5%. And if inflation rises to 10%...20%...or more...he won't be the first central banker to miss the mark." - Bill Bonner
Founder and editor of The Daily Reckoning. He is also the author, with Addison Wiggin, of the national best sellers 'Financial Reckoning Day: Surviving the Soft Depression of the 21st Century' and 'Empire of Debt: The Rise of an Epic Financial Crisis'. He has also written with co-author Lila Rajiva 'Mobs, Messiahs and Markets: Surviving the Public Spectacle in Finance and Politics'. Quote published from 'The Daily Reckoning - Australia', 15th December, 2008.
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[Quote No.30742] Need Area: Money > Invest
"Now that Bernanke [Chairman of the U.S. Federal Reserve] has run out of conventional weapons [lowering interest rates which are now at 0-0.25%, increasing liquidity by accepting assets for loans not previously thought worth the risk and even paying interest on bank reserves], investors are beginning to guess what happens next. In short: he's gonna drop the big one. He's going to go nuclear. He's not going to stick with [economists] Keynes and Freidman, in other words; he's gonna go Gono. [Gideon Gono is the current Governor of the Reserve Bank of Zimbabwe who's monetary policies caused hyper-inflation in Zimbabwe.] Yes, the Fed says it will now use 'alternative' means of getting some juice in the economy. It will buy Treasury debt itself. This is what is known as 'monetizing the debt' [sometimes called 'quantitative easing' or simply 'printing' money]... turning an increase in U.S. debt into an increase in the amount of currency in circulation. It's a swell trick. If it works, Bernanke will be able to keep the rate of consumer price inflation above zero [as his priority is to avoid deflation]. He will probably try to get it well above zero - so as to encourage people to spend their money now, rather than wait for lower prices [which is the great danger with deflation]. The spending is supposed to be the magic that gets the consumer economy going again. [The difficulty is that consumers have an irresponsibly high percentage of debt to disposable income and assets (which are still falling) and therefore they are trying to pay off more of this debt - called deleveraging or sometimes balance sheet restructuring/repair, they are concerned about becoming unemployed and therefore are trying to save more and banks have raised their lending standards (including lowering their loan to value ratios) making getting further loans harder. These all work against the Reserve's desire to get people spending more. Therefore the government will try to compensate for this lack of aggregate spending by consumers and business through borrowing (by issuing bonds that are bought by the Federal Reserve increasing the quantity of money and thereby lowering the value of each dollar and causing inflation) and then spending, as a fiscal policy stimulus, to increase the velocity of money moving through the economy and therefore also their tax revenues with each exchange, in accordance with Keynesian economic theory.]" - Bill Bonner
The Daily Reckoning Australia - Monday, 19th December 2008.
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[Quote No.30834] Need Area: Money > Invest
"And here, for the benefit of new readers, we offer a simple schema of the machinery of the [Credit] Bubble Epoch [and in the process explain trade surplus and foreign currency reserves]: Americans bought stuff from the Chinese [trade surplus so exports greater than imports]. The Chinese printed up Yuan to buy dollars from Chinese merchants [so these merchants could spend the money in the Chinese economy]. Then, the nice Chinese financial authorities lent the [foreign currency reserves] money back to America [by buying Freddie Mac Fannie May bonds, for example]. What else could they do with it? [They could have bought gold or invested it through their sovereign wealth funds but vendor financing their U.S. customers made more sense economically as they profitted by the profit margin on the goods sold and then the interest rate on the loans of this profit as it was used to buy more goods that had profit margins, ad infinitum.] So, you see, everyone had plenty of money. And the more Americans bought...the more money they had to spend. And the more they spent, the more the Chinese had to lend! Of course, it didn't take a genius to see that a system that depended on people buying things they didn't need [and which wouldn't appreciate for ever, if at all] with money they didn't really have [debt] couldn't last long. In the event, it lasted longer than we expected. But still, not forever. [And so we got the credit crisis in 2007/9 when China and others stopped lending the U.S. money to finance more debt for the already over-indebted U.S. consumer whose collateral, in the form of houses and securitized mortgages turned out not to be worth what was originally thought by the owners, banks and rating agencies.]" - Bill Bonner
Founder of the financial newsletter, 'The Daily Reckoning'. Quoted from the Australian version, 31st December, 2008.
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[Quote No.30835] Need Area: Money > Invest
"Here at The Daily Reckoning, we turn to Shakespeare for a more poetic view of the financial collapse [in 2008]: 'Let Rome in Tiber melt, and the wide arch of the ranged empire fall!' So said Marc Antony as he drew the Queen of the Nile into his embrace. This is another way to look at the crisis of '08. You begin by noticing that it is centred in just two countries - Britain and America. Not coincidentally, those two countries are the twin capitals of the world's only surviving empire, an empire built on a foundation of industry, technology and trade... but lately richly redecorated in an elaborate rococo style of modern debt and finance. Beginning in the 19th century, factories in England and New England transformed the value of a working man. Instead of being equal to his counterpart in China or India - as he had been for a thousand years - he suddenly was superior; he could produce more [through advances in technology and capital]. By the 21st century, the average day labourer in Britain and America earned 10 to 20 times more than his confrere in Asia. Of course, the English speakers had rivals. They were challenged by other Europeans...and the Japanese. All learned that the same machines that produced wealth could destroy it even faster. The Germans were particularly tenacious competitors. By 1910, their factory output was greater than that of the UK. By 1940, they were trying to blow up England's factories. But England and America ganged up against them. In a couple costly wars in the first half of the 20th century, the Teuton threat was finally crushed. By 1945, The Anglo-American empire had only one challenger still standing - the Union of Soviet Socialist Republics. Militarily, the USSR was a real menace. But commercially, it was no more than a comic footnote in economic history. At first, the weakness in the Soviet's [communist/socialist centrally planned, rather than capitalist free market, economic] system was not obvious... especially not to economists. The figures - put out by the USSR - showed rapid growth. But nobody flew to Moscow to buy the latest fashions nor bragged about his Soviet auto. Nor did people hasten to open accounts in Russian banks or seek heart transplants in Soviet hospitals. The Soviets had managed to create a rare thing - a value-subtracting economy. They took valuable raw materials out of the ground and turned them into worthless finished products. If he had a choice, no one would buy soviet-made goods. Every sale made the seller poorer. And the longer this went on, the poorer the Russians got. Finally, the whole system caved in - in 1989, leaving the Anglo-Americans masters of earth, sky and the seven seas. This next era, 1989-2007, was remarkably pleasing to almost everyone. Even former enemies rushed to stock the empire's shelves and lend it money. Overstretched, over-indebted and over-there... it had military bases all over the world. No swallow could fall nowhere in the world without it being captured and interrogated by the Pentagon or its proxies. Back in the homeland, the imperial race went a little mad. People spent too much money...distracted themselves with bread and circuses... and flattered themselves with delusions of mediocrity. It seemed perfectly normal to them that they consumed while the foreigners produced... and that they spent what the foreigners saved. Central banks encouraged the plebes to consume; the more they consumed, the poorer they got, but as long as they had someone else's money to spend, they didn't complain. The imperial youth studied gender sensitivity at school; rivals studied engineering. And as for the foreigners themselves, like gigolos complimenting an aging heiress, they barely suppressed a snicker: 'Your hair is beautiful', they remarked. 'Have another drink of sherry.' And while the poor woman admired herself in the mirror, they rewrote her will. Soon, competitors had more modern factories, more savings, better-trained workers - as well as lower costs. Then, the empire turned to a colossal conceit; that it could make its way in the world by financing things, rather than making them. Gradually, the Anglo Americans developed a value-subtracting society too - financing, derivatizing, borrowing, flipping, consuming - all at the expense of real production. Russians recognized the symptoms: the leadership was largely delusional, industrial capacity was largely archaic and dysfunctional, and the working class was largely broke. The old Bolsheviks recognized the rot too. What the Romans called 'consuetude fraudium' became business as usual...in the Soviet Union...and then in England and America. By 2006, practically every transaction was tainted with swindle. Banks sold each other packages of scammy debt, composed of mortgage contracts on houses sold to people who couldn't afford them, fraudulently rated Triple A by the rating agencies, based on quack formulae invented by Nobel-prizing winning economists. This took place in a party atmosphere created by central bankers, who had put something in the water; they spiked the entire economy by under-pricing credit and then urged consumers to drink up, by buying SUVs (Fed Governor Tier, 2002) and using sub-prime loans (Fed Chairman Greenspan, 2005). The Russians would recognize the next stage too. After the collapse, the ruins are liquidated, picked over, and parcelled out to the politically well-connected. 'Kingdoms are of clay,' said Antony, before killing himself." - Bill Bonner
founder and editor of The Daily Reckoning. He is also the author, with Addison Wiggin, of the national best sellers 'Financial Reckoning Day: Surviving the Soft Depression of the 21st Century', 'Empire of Debt: The Rise of an Epic Financial Crisis' and 'Mobs, Messiahs and Markets: Surviving the Public Spectacle in Finance and Politics', written with co-author Lila Rajiva. Quoted from 'The Daily Reckoning Australia', 31st December, 2008.
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[Quote No.31082] Need Area: Money > Invest
"Short sellers can't bring down a large, healthy firm. But when they see a Humpty Dumpty like Lehman [Brothers - a U.S. stock broking house that went broke, due to massive debt and unrealistic asset carrying values, in 2008] on the wall, they give him a push. [Then momentum and chart investors respond to the downward price trend and its coverage in the media, driving the share price down further, until debt covenants related to asset and equity values are broken and the stock price falls dramatically until eventually the company either becomes insolvent and is delisted from the stock exchange, or patient, deep value investors start buying at prices well below its true 'going-concern' value to give them a margin of safety. Then, as the price stabilizes or even rises, short sellers buy to cover their shorts and the price rises still higher to get closer to its 'fair' value.]" - Bill Bonner
Financial journalist
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[Quote No.31085] Need Area: Money > Invest
"The bubble economy of 2002-2007 had all the appearance of a happy, healthy financial system. Trouble was, it was having far too much fun [rising too fast]. People can't party [borrow] that hard without getting sick. We waited for them to start throwing up. ...now, people are retching [losing money and jobs] all over the place. We're no longer waiting for them to get sick. We're not on Bubble Watch any more. Now, we're on Quack Watch...waiting to see how the quacks [governments] put them out of their misery. At every level, the politicians are getting out their black bags [talking about Keynesian government spending] and taking 'command' of the situation... This is where it gets interesting... looking to see how much [long-term] damage the [well meaning but not necessarily competent] fixers do." - Bill Bonner
Financial journalist and founder and publisher of Agora Publishing. Published in 'The Daily Reckoning - Australia' on 28 January 2009.
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[Quote No.31113] Need Area: Money > Invest
"It's coming dear reader. No doubt about it. The only questions are: When? How much? We're talking about inflation. First a word of caution. Everything that MUST happen DOES happen. But it doesn't always happen when and how you think it should. We warned about the coming end of the Bubble Epoque for 10 years before it actually happened. Now, we're warning about inflation coming. Readers may draw their own conclusions. 'In a world of debt and deflation,' writes Crispin Odey in the Financial Times, 'inflation is our friend.' The Financial Times is required reading among policy makers. They read it to find out about the latest fashions in their trade. In a matter of days, they are wearing the season's new styles themselves. The world's financial authorities have a duty to maintain the integrity of the financial system...which means, maintaining the value of the currency. Those that lived through the '70s have a horror of inflation [because with inflation every day each dollar in bank accounts or earned at work is worth less and therefore everything costs more. Gold prices go up too, not only because of inflation but also, because they will become even more in demand as throughout history gold has been a store of wealth and purchasing power in difficult economic times]. They feel they must fight against it...protect against it...and keep an eye out for it. Yet, in front of them is the worst financial crisis since the Great Depression... Bloomberg reports that 236,000 houses were foreclosed in 2008. In California, house prices are already down 42% from their peak...and still falling [deflation]. And just yesterday, Boeing lost its first order for 787 Dreamliner...and announced that it would have to let 10,000 workers go. Starbucks said it would turn 6,700 of its people loose. And the International Labor Organization in Geneva estimated that as many as 50 million people worldwide could lose their jobs 'if the situation continues to deteriorate.' The situation is continuing to deteriorate. 'There's not a moment to spare,' says [U.S.] President Obama. We have to fix things. But how? There are only three choices, says Martin Wolf in the Financial Times. Liquidation. Inflation. Or Boondogglization. Here at The Daily Reckoning , we'll take the first solution. Let the chips fall where they may...clear the market [capitalism's creative destruction or economic survival of the fittest and financially strongest and most needed]...and then get on with things. 'To choose that option must be insane,' says Wolf. Ooooh... Well, we're not going to be provoked by that kind of low-bred name calling. We'll take the high road... He - and most of the 'responsible' commentators - like the third solution, a devil's pudding of sugar-coated carrots and wet-noodle sticks including Keynesian spending, bailouts, massive infrastructure projects, giveaways, new regulations, new programs...a little of this...a little of that...adding trillions in public debt and hoping that the economy grows its way out of it. In the confusion of the crisis, you can also expect the Obama government to sneak in a total overhaul of the nation's health care system...and maybe its education system too. So far, boondogglization is the policy the feds have favored. It's as though a liquor truck had over-turned in a bad neighborhood. Within minutes, people are out in the street grabbing every unbroken bottle. In Mr. Obama's relief plan, for example, there are free drinks for almost everyone. Wall Street financiers. Bankers. Homeowners. Builders. Steelmakers. The House of Representatives - guardians of the nation's purse - took a hard look at it...red-penciled $6 billion out of $825 billion...and let it pass. But little by little...day by day...the policy makers are being drawn towards the second solution: inflation. Boondoggles aren't enough. Borrowing and taxing alone won't do it. A dollar borrowed or taxed merely transfers it from the hands of the person who earned it to the hands of someone who didn't. What the system needs is new money. More money. Money that isn't stolen or defrauded from someone else. And economists are beginning to realize it. The opinion mongers are softening up the world's head. Inflation is not such a bad thing, they keep saying. A little inflation will, in fact, be a good thing. Crispin Odey's analysis is closer to our own than most others. The problem, he says, is not credit; it's debt. The authorities may be able to increase credit by throwing money to the banks; but people who are deeply in debt are still bad credit risks. Martin Wolf, at the Financial Times , outlines the size of the debt problem: 'Let us start with some facts. The ratio of US public and private debt to gross domestic product reached 358% in the 3rd quarter of 2008. This was much the highest in US history. The previous peak of 300% was reached in 1933, during the Great Depression. 'Nearly all of this debt is private. That reached an all-time high of 294% of GCP in 2007, a rise of 105 percentage points over the previous decade. 'Particularly remarkable is the composition of the increased debt. In the early 1930s, most US private debt was owed by non-financial companies, so balance sheet deflation occurred in companies, as was also the case in Japan in the 1990s. This time, however, the big increase in debt was in the financial and household sectors. 'Over the past three decades the debt of the US financial sector grew six times faster than nominal GDP. The consequent increases in its scale and leverage explain why, at the peak, the financial sector allegedly generated 40% of US corporate profits.... 'Household debt - most of based on rising housing values - rose from 66% of US GDP in '97 to 100% in '07.' What to do with all this debt? 'If central banks and governments are aggressive enough, they can generate inflation which will lower the debt burden,' Wolf writes. 'But they will imperil - if not terminate the experiment with un-backed fiat (or man-made) money that started in 1971.' Yes...exactly...that is what we expect. 'The world's total outstanding debts have to be reduced,' continues Mr. Odey, clearheadedly. 'Our populations and companies need the means and the time to pay them off. These means are profits and pay rises.' Not much the feds can do about profits and pay rises - at least not directly. But the last part of Odey's formula sounds like a winner to us: 'The other thing we need is inflation... 'Inflation will allow debt to reduce day by day. Price rises will make companies going concerns, earning their way back to profit. Pay rises will enable households and consumers to pay down what they owe while saving more and spending some. And inflation allows interest rates to rise but still remain negative in real terms. It is healthier that people receive an annual pay rise than take out an extra annual loan - as they have been doing since 2000. This package will allow markets to breathe again.' Inflation is coming back into style. Count on it. We promised an interview with the master. Forget Keynes. Forget Friedman. The economist that everyone should be paying attention to is Gideon Gono. Inflation is coming back in style. And Gideon Gono is its star. While other central bankers flounder, he's proven that you can have inflation...and have it more abundantly than you want. Gono, if you haven't heard of him, is Robert Mugabe's right hand man. And Robert Mugabe is the number one man in Zimbabwe, an African country with a real 'riches to rags' story. It was one of the wealthiest and safest countries in Africa when it was run by Ian Smith in the '70s. But the meddlers and world-improvers couldn't leave well enough alone. They helped put Mugabe in power. Since then, the place has gone to Hell. Gideon Gono, 47 years old, lives in a 47-bedroom mansion in Harare. He says he doesn't drink, only sleeps 4 hours a night, and runs regularly. He is known as 'Mr. Inflation' for his Olympian efforts to increase the country's money supply. He does this the old fashioned way - by printing pieces of paper will lots of zeros on them. Newsweek Magazine seems to have found him in a talkative mood: Asked what he thought of the worldwide credit crash, he replied: 'I sit back and see the world today crying over the recent credit crunch, becoming hysterical about something which has not even lasted for a year, and I have been living with it for 10 years. My country has had to go for the past decade without credit... Out of the necessity to exist, to ensure my people survive, I had to find myself printing money. I found myself doing extraordinary things that aren't in the textbooks. Then the IMF asked the US to please print money. I began to see the whole world now in a mode of practicing what they have been saying I should not.'" - Bill Bonner
Financial journalist and author. Published in 'The Daily Reckoning - Australia' 30th January, 2009.
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[Quote No.31827] Need Area: Money > Invest
"Money can be a solid, a liquid, or a gas depending upon the temperature of the economy. At normal temperatures, money runs freely, watering the economy. And when things really get hot, it vaporizes, creating gaseous bubbles such as those of the late Bubble Period. But when the temperature falls, money shivers in wallets and bank accounts - reluctant to go out into the cold. Economists refer to the 'velocity of money' to describe the magnifying effects of motion. When the same dollar bill appears in three different places in the same day, it is as if the money supply had been multiplied three-fold. In a freeze, on the other hand, it comes to a dead stop." - Bill Bonner
Financial writer.
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