Financial Crisis

[AlexLah]

The economy in the US is recovering.

Champagne sales up 95% in February........

[midas]

The economy in the US is recovering.

Champagne sales up 95% in February........

why not celebrate - paying back your mortgage is a thing of the past ?

[Gambles]

... a humble 'Yes' then.

Only joking Paul.

If thats what you like who am I to interrupt.

Sorry about that; basically you asked me the time and got treated to a lengthy lecture on the history and workings of the wristwatch....

I guess what I was trying to say is that you'd be amazed when it comes down to it how few individuals and organizations actually specialize in portfolio allocation and over my years in the finance business it's become apparent to me that portfolio allocation is THE primary investment function - its the 90% in Brinson, Beebouwer and Hood's breakdown of where return comes from. Generally the closest thing to it is private banking and that often tends to be executed with massive variability.

I saw this and thought of this forum.

I guess that it goes without saying that I thought this was a great if alarming piece - this is the story that's going on everywhere right now (inside and outside the USA) and needs to be told

[Gambles]

Please don't take this personally Paul as I'm sure it its my own ignorance that is at fault here, but am I to understand that you are a financial advisor that doesn't put money to work yourself , but that you make use of "portfolio allocators" who presumably use fund managers to try to get a return on the funds you have nder managenent? Here's my hypothetical situation. Suppose someome gives you $1,000,000 and there is a zero return on capital over the course of the next year. How much in percentage terms will they have lost by putting their money with you?, given all the mouths to feed? I admit I have a certasin bias against money mangers but I certainly don't have a special bias towards you.

Lanna, no offence taken - it's actualy a really good point.

Can I answer it this way?

It's not just about price - it's also about what you get:

An individual has assets, liabilities, income and expenditure.

My job is too look at all of the above and also their tax position and to understand their future intentions and goals and the degree of potential variability in these plans going forwards (some people are 100% sure in their own minds about what their future plans are - we always temper 100% because we've seen sure fire plans change - whereas others have no real plans where they want to end up on the planet, with whom or doing what).

That gives us some guidelines for deployment of assets and income.

A guideline might be as simple as to achieve capital growth referenced to Thai Baht for potential withdrawal of X% of the portfolio in 5 years time and to use Y% of the portfolio to provide income in 10 years time.

The actual deployment of that capital is then undertaken by portfolio allocators.

Over the years I've learned that I certainly can't do the best job in the world at creating portfolio allocations, nor can passive allocations to indices and nor, in my experience can private banks as a generalization. There may be financial advisors or private bankers out there who are stunningly brilliant but my ability to interpret the professional deployment of capital is derived from those banks and wealth managers who subscribe their portfolio allocation to APCIMS or PCI as a benchmark (I wish that I knew how to post graphs and charts on TV but I don't) and from what I see some have good years, some have bad years but what I really need is a clear understanding of the risk and methodologies. For instance of the 5 different risk rated private client indices ranked by PCI all lost money in 2008 even 'Cautious'. To me that's an appalling failure - it was hard to make money in '08 and to some extent it involved coming off the gas early in '07 and getting on it again a little late in '09 but losing money on a cautious remit would be something that private bak clients must have been very disappointed with and we would certainly have been disappointed if our cautious remits had lost money in 08.

So I guess what I'm saying is that the deployment of capital needs to be done by experts and experts who I feel are working for me and for my clients. And you'd be amazed just how much that limits the gene pool. There are thousands of asset managers but only a handful of genuine portfolio managers. Our relationship with Miton goes back well over 10 years and in that time the understanding ahs always been that the client needs come first and however satisfied we've been over the years, if a better alternative comes up, we'll take it. Scott Campbell always used to open his reglar Bangkok visits by saying to the audience something along the lines of "I must have been doing a good job for you guys because MBMG have invited me back to speak for another year".

How they then deploy the capital is then a highly specialised skill and a process in which they get questioned and have to justify BUT they're able to execute without interference.Is this expensive when say they choose to use funds (or indeed whatever assets they choose) as the basis of deploying capital into markets? It probably looks like it - you have MBMG as the client's personal advisor, you have Miton as managers, you have someone like Mees Pierson or Deutsche or Capita as custodians, you have 3rd party administrators and then you have underlying fund managers at the sharp end.Sounds like a lot of people involved.

You need 3rd party custodians and administrators to ensure the security of the capital. For the reasons outlined above you need, IMHO, someone like Miton making the allocation decisions and you need someone to be the client interface with all of those. So is it expensive to do that? Well bearing in mind that many investment funds actually charge 1.5-2.0% per year (admittedly ETFs are much cheaper but.....) our aim to to provide a srcuture that over time costs no more than that. To do that involves making a huge saving on thise funds themselves but typically where a retain class of an underlying fund charges 1.5% an institutional class, which Miton buy for the portfolios, might only cost 0.5% per year so it's actually possible by negotiating cheaper deals with the managers actually at 'the coal face' to offer an actively managed portfolio for the same price as the typical underlying funds.

Hmmm, I'm in danger of doing to do what I did to Badge but I'd rather be boring than glib or inaccurate or incomplete.

So, for anyone still reading, we measure loss or gain on capital as being after all of the fees to all of the mouths (i.e. all results that we report are net of fees) and the fees would vary from case to case but typically give a mandate on US$ 1 Million right now and the ultimately underlying assets would need to produce around 1.5% gross. That then pays any specialist fund managers - the likes of Man, Carmignac, Ruffer, Goldman Sachs, Thames River, Schroders etc - the custodians, the administrators, Miton and MBMG. I say around because the ultimate make up of the underlying managers typically tends to shift the parameters +/- 0.1% or so. Martin holds some institutional ETFs - remember ETFs work well for some assets but not for others and in some situations but not others - some direct holdings of government bonds etc so the costs here are generally little more than the amortised dealing fees.

So, in simple terms

1) 1.5% p.a. of the gross would typically cover absolutely everything (so around $15,000 for $ 1,000,000)

2) Every case is different

3) Apologies if too much detail!

4) Look at the quality not just the price - value is what you get for what you pay

Edited May 30, 2010 by Gambles

[Gambles]

Please don't take this personally Paul as I'm sure it its my own ignorance that is at fault here, but am I to understand that you are a financial advisor that doesn't put money to work yourself , but that you make use of "portfolio allocators" who presumably use fund managers to try to get a return on the funds you have nder managenent? Here's my hypothetical situation. Suppose someome gives you $1,000,000 and there is a zero return on capital over the course of the next year. How much in percentage terms will they have lost by putting their money with you?, given all the mouths to feed? I admit I have a certasin bias against money mangers but I certainly don't have a special bias towards you.

I have never used a money manager but...

I do not see what your describing as so out of the norm for such things.

I mean some hire a manager & I am sure it is based on previous performance as that is all there is.

So what if that manager finds the information through what ever channels & advice including outside of his own thoughts.

I do not see how that is different than hiring a manager who has a good record gained by looking at charts or cycles or throwing the bones for that matter.

Seems most folks who use a money manger do so because they feel they cannot suss it out themselves. They feel someone who does it as a service does it better...at times they may be right.

These are the same folks who do not do their own tax returns. But instead hire some accountant or a kid at H&R Block.

As for anyone being upset at getting no return on 1 million invested....well I guess they could also be glad they lost nothing. I know of no investment service that is guaranteed to make $$$ except for a saving bond/ CD etc.

I actually think it may be a good thing if more money manager would know when to step away from the table & just say the risk at this time outweighs any gain in their opinion. If not then they better sign up for gamblers anonymous

Very good points Flying, but to be fair to Lanna, it's not an unreasonable question to try to understand the value proposition. It's just not easy to reduce the answer to a single line!

FYI and just as an indication of risk, Martin Gray is currently 30-40% cash!!

[Abrak]

4) Look at the quality not just the price - value is what you get for what you pay

That one reminds of the old investment banker saying. 'We are paid so much because we charge so much. And vice versa.'

You cannot really be asked to be paid on the basis of say 'dollar cost averaging' being a good strategy. It is a bit like being paid to say advise people to match their assets and liabilities or spend no more than they can afford.

And 'value is what you get for what you pay for' is total rubbish and I have a Bt11m Mercedes to prove it.

[Naam]

4) Look at the quality not just the price - value is what you get for what you pay

That one reminds of the old investment banker saying. 'We are paid so much because we charge so much. And vice versa.'

You cannot really be asked to be paid on the basis of say 'dollar cost averaging' being a good strategy. It is a bit like being paid to say advise people to match their assets and liabilities or spend no more than they can afford.

And 'value is what you get for what you pay for' is total rubbish and I have a Bt11m Mercedes to prove it.

a good one Abrak! i'm sure my wife and her driver second your statement when her car is in the workshop again.

[Abrak]

a good one Abrak! i'm sure my wife and her driver second your statement when her car is in the workshop again.

Yeah mine is too. My advice is to take a lesson from my GF, who now makes me drive a rented Toyota Yaris while my wheels are being repaired. It is white too.

[Gambles]

4) Look at the quality not just the price - value is what you get for what you pay

That one reminds of the old investment banker saying. 'We are paid so much because we charge so much. And vice versa.'

You cannot really be asked to be paid on the basis of say 'dollar cost averaging' being a good strategy. It is a bit like being paid to say advise people to match their assets and liabilities or spend no more than they can afford.

And 'value is what you get for what you pay for' is total rubbish and I have a Bt11m Mercedes to prove it.

A bit unfair, A

That's not really what I was saying.

My point is that for every situation there are good strategies and bad ones, safe ones and speculative ones, sensible ones and stupid ones. I get paid for trying to understand which of these best suit different individuals or entities at different times. For applying the general understanding that I've built up over the years to specific situations.

Sometimes DCA may well be the best strategy for a particular asset - most times it won't. Anybody failing to understand the relationships between income, assets, expenditure and liabilities can be making a fundamental mistake and it's a very widely repeated one in the big wide world out there where people of all income and wealth levels don't have the attributes, capacity, resources or time to spend taking care of their own assets in a way that perhaps you're able to do - although I would have perhaps counselled against the THB 11 Mn Benz if I were your advisor :-)

Value is what you get for what you pay - if you pay a lot for something that doesn't seem to be worth it then that's bad value. In general and Benz is usually a good example, a higher price tag for better quality can be better value than a lower price tag for poorer quality, although there's obviously a limit on this. BUT I absolutely wasn't saying that expensive is good - I was saying that value is determined by price IN RELATION TO quality

'Expensive' can be good, fair or poor value as can 'cheap' - Expensive or cheap is merely price perception; if you don't look at what you get in return then how can you evaluate any transaction?

Edited May 31, 2010 by Gambles

[Naam]

"My point is that for every situation there are good strategies and bad ones, safe ones and speculative ones, sensible ones and stupid ones."

based on my experience i second that wholeheartedly and add that i have used all above-mentioned strategies. luckily i used the good and sensible strategies "slightly" more often than the bad and stupid ones. but the problem still remains that only ex post one finds out which were the good and which were the stupid ones. now if there was a way to know all that ex ante, then...

[midas]

as one of the G&D's armed resistance guerilla corps, Naam, let me welcome you to our broad church - although there probably are some fundamentalists in the movement who disapprove of my heretical views that an indebted currency collapse and a stock market plunge don't actually matter that much in the long run (unless you happen to hold the currencies or the stocks) because there will still be a global economy even if there is another major global war at the end of the tunnel

Gambles

Funny you mentioned this but I am watching this event ( below ) carefully. Of course it may just be " huffing and puffing " and come to nothing

but I hope they dont do something stupid like using aggression to stop this convoy In this day and age it could be

something as insignificant as this that could spark things off.

I actually applaude this convoy - i think its great - and if i had a boat I would bloody join them

Gaza to receive largest international ship convoy to defy Israel's blockade

However, Israel has earlier this week announced that it will prevent the international ship convoy from reaching the territorial waters of the Gaza Strip, even by force.

Midas,

There are a billion bizarre powderkegs out there

e.g. N&S Korea battling the high seas to sink each other?

German politicians wanting to collateralise Greek sovereign territory?

Texas making semi-hollow threats to seccede the union?

Nobody told us there'd be days like these.....strange days indeed

Well Naam what do you think about today's events ? " Those who cannot be named " have really shown their true

colours today........ not that i needed convincing otherwise anyway

But i can't believe the silly buggers chose to attack the Turkish boat

[badge]

Well Naam what do you think about today's events ? " Those who cannot be named " have really shown their true

colours today........ not that i needed convincing otherwise anyway

But i can't believe the silly buggers chose to attack the Turkish boat

I really dont think Im in receipt of enough of the facts to have any firm opinion on these things.

Of course any life lost is tragic.

Its also interesting to note that the same people who bemoan the MainStrem Medias' bias disposition, seem to choose accept some MSM as fact. Presumably when it suits their bias.

Edited May 31, 2010 by badge

[midas]

Well Naam what do you think about today's events ? " Those who cannot be named " have really shown their true

colours today........ not that i needed convincing otherwise anyway

But i can't believe the silly buggers chose to attack the Turkish boat

I really dont think Im in receipt of enough of the facts to have any firm opinion on these things.

Of course any life lost is tragic.

Its also interesting to note that the same people who bemoan the MainStrem Medias' bias disposition, seem to choose accept some MSM as fact. Presumably when it suits their bias.

Actually badge, its not only todays events............its a variety of things.

And Naam and myself share a common perception about " Those who cannot be named "

But IMO even if you dont " have enough of the facts to have any firm opinion on these things "

and even if you are highly cynical about the MSM, eventually you get to a stage where you can't

ignore any more " bricks in wall " The way they are behaving right now with the

entire international community beggars belief.

http://saudigazette.com.sa/index.cfm?metho...D=2010052373216

Edited May 31, 2010 by midas

[teletiger]

No hard feelings for Paul or the genuine advises he intends to deliver but I know it from the other side of the river. The brightest minds of any field are serving the elite only. What ordinary and/or low funded people will receive from the finance industry is mediocre performance beating inflation at best and that's it(for the lucky ones). It is just a mindgame for the sheeple who actually believe that they don't gamble .

Judging by GS's recommended trades to the "elite" over the past few months, the brightest minds are clouding over.

We need to see more of this 'mainstream'.

Regards.

[Naam]

Well Naam what do you think about today's events ? " Those who cannot be named " have really shown their true colours today........ not that i needed convincing otherwise anyway

relax Midas, justice has been done in a swift manner! those who cannot be named received already a devastating punishment from the Ruler of the most powerful and Greatest Nation on Earth™.

President Barack Obama voiced "deep regret" over Monday's deadly Israeli commando raids, and the White House said he and Prime Minister Benjamin Netanyahu agreed by phone to reschedule White House talks "at the first opportunity."

[sokal]

as one of the G&D's armed resistance guerilla corps, Naam, let me welcome you to our broad church - although there probably are some fundamentalists in the movement who disapprove of my heretical views that an indebted currency collapse and a stock market plunge don't actually matter that much in the long run (unless you happen to hold the currencies or the stocks) because there will still be a global economy even if there is another major global war at the end of the tunnel

Gambles

Funny you mentioned this but I am watching this event ( below ) carefully. Of course it may just be " huffing and puffing " and come to nothing

but I hope they dont do something stupid like using aggression to stop this convoy In this day and age it could be

something as insignificant as this that could spark things off.

I actually applaude this convoy - i think its great - and if i had a boat I would bloody join them

Gaza to receive largest international ship convoy to defy Israel's blockade

However, Israel has earlier this week announced that it will prevent the international ship convoy from reaching the territorial waters of the Gaza Strip, even by force.

Midas,

There are a billion bizarre powderkegs out there

e.g. N&S Korea battling the high seas to sink each other?

German politicians wanting to collateralise Greek sovereign territory?

Texas making semi-hollow threats to seccede the union?

Nobody told us there'd be days like these.....strange days indeed

Well Naam what do you think about today's events ? " Those who cannot be named " have really shown their true

colours today........ not that i needed convincing otherwise anyway

But i can't believe the silly buggers chose to attack the Turkish boat

Don't fall for the propaganda.

From STRATFOR

The Turkish flotilla was not designed to carry out a moral inquest. Instead, the flotilla was designed to achieve two ends. The first is to divide Israel and Western governments by shifting public opinion against Israel. The second is to create a political crisis inside Israel between those who feel that Israel’s increasing isolation over the Gaza issue is dangerous versus those who think any weakening of resolve is dangerous.

In all of these countries, politicians are extremely sensitive to public opinion. It is difficult to imagine circumstances under which public opinion will see Israel as the victim. The general response in the Western public is likely to be that the Israelis probably should have allowed the ships to go to Gaza and offload rather than to precipitate bloodshed. Israel’s enemies will fan these flames by arguing that the Israelis prefer bloodshed to reasonable accommodation. And as Western public opinion shifts against Israel, Western political leaders will track with this shift.

[AnnyLing]

Stratfor

[Gambles]

"My point is that for every situation there are good strategies and bad ones, safe ones and speculative ones, sensible ones and stupid ones."

based on my experience i second that wholeheartedly and add that i have used all above-mentioned strategies. luckily i used the good and sensible strategies "slightly" more often than the bad and stupid ones. but the problem still remains that only ex post one finds out which were the good and which were the stupid ones. now if there was a way to know all that ex ante, then...

then it would be arbitraged to almost nothing!

no-one is infalliable, Naam, but getting the odds in your favour more often than not is a good outcome. I keep thinking a lot about this lately and I'm not quite sure why but

Newton's phrase keeps sticking in my mind about "If I have seen farther, it's only because I have been standing on the shoulders of giants".

[Gambles]

Gambles

Funny you mentioned this but I am watching this event ( below ) carefully. Of course it may just be " huffing and puffing " and come to nothing

but I hope they dont do something stupid like using aggression to stop this convoy In this day and age it could be

something as insignificant as this that could spark things off.

I actually applaude this convoy - i think its great - and if i had a boat I would bloody join them

Gaza to receive largest international ship convoy to defy Israel's blockade

However, Israel has earlier this week announced that it will prevent the international ship convoy from reaching the territorial waters of the Gaza Strip, even by force.

Actually I personally don't think that this will be the powderkeg itself but it could lead to all sorts of events that simmer for a while and become the powderkeg maybe. Resentment can be a very slow-burning fuse....

[midas]

Don't fall for the propaganda.

From STRATFOR

The Turkish flotilla was not designed to carry out a moral inquest. Instead, the flotilla was designed to achieve two ends. The first is to divide Israel and Western governments by shifting public opinion against Israel. The second is to create a political crisis inside Israel between those who feel that Israel’s increasing isolation over the Gaza issue is dangerous versus those who think any weakening of resolve is dangerous.

In all of these countries, politicians are extremely sensitive to public opinion. It is difficult to imagine circumstances under which public opinion will see Israel as the victim. The general response in the Western public is likely to be that the Israelis probably should have allowed the ships to go to Gaza and offload rather than to precipitate bloodshed. Israel’s enemies will fan these flames by arguing that the Israelis prefer bloodshed to reasonable accommodation. And as Western public opinion shifts against Israel, Western political leaders will track with this shift.

And dont YOU fall for the propaganda either

George Friedman is chief executive of STRATFOR. He was born in Hungary to Holocaust survivors.

Hardly an unbiased opinion

[midas]

Gambles

Funny you mentioned this but I am watching this event ( below ) carefully. Of course it may just be " huffing and puffing " and come to nothing

but I hope they dont do something stupid like using aggression to stop this convoy In this day and age it could be

something as insignificant as this that could spark things off.

I actually applaude this convoy - i think its great - and if i had a boat I would bloody join them

Gaza to receive largest international ship convoy to defy Israel's blockade

However, Israel has earlier this week announced that it will prevent the international ship convoy from reaching the territorial waters of the Gaza Strip, even by force.

Actually I personally don't think that this will be the powderkeg itself but it could lead to all sorts of events that simmer for a while and become the powderkeg maybe. Resentment can be a very slow-burning fuse....

Maybe there wont be a single powderkeg ? Maybe there will be a series of smaller coordinated and simultaneous

" explosions " around the globe which will pave the way for all sorts of new " arrangements "

Edited June 1, 2010 by midas

[Gambles]

No hard feelings for Paul or the genuine advises he intends to deliver but I know it from the other side of the river. The brightest minds of any field are serving the elite only. What ordinary and/or low funded people will receive from the finance industry is mediocre performance beating inflation at best and that's it(for the lucky ones). It is just a mindgame for the sheeple who actually believe that they don't gamble .

Sadly there's a lot of truth in that but it's not so balck and white. There's a great deal of democratisation in what I believe. And to my mind the value of what I do should be to create the best solutions possible for the widest range of people and businesses possible. I hate the fact that there is an institutional tendency to segment the market. I know that when we deal with large numbers, that's inevitably de-humanising but I think that it's very hard to think about treating everyone on the planet with an acceptable level of human respect once you start breaking the wealthiest few % on the planet down into categories such as

UHNWI

VHNWI

HNWI

MA

and then disregarding the rest.

There are certain hurdles that have minimum entry levels and also certain costs that render some things inefficient below certain parameters but philosophically what social value do we add as an organization if we can't try to put what we do into some sort of a context that can help EVERYONE in some way. I really hate this "You have to have $ 1 million to be our client" and my view has always been that $10,000 is probably at least as important to someone who has a limited income and total assets of $ 15,000 than $ 1,000,000 is to someone who has assets of $ 1 million and while we may not be abel to offer the same services we should offer the same respect for their situation and their wealth.

Sorry, that's probably well off-topic and just a personal rant that kind of came out eventually even though I tried to stifle it! The topic isn't about my personal beliefs and if it were then it probably wouldn't have had any hits! Feel very free to just ignore this.

[sokal]

Don't fall for the propaganda.

From STRATFOR

The Turkish flotilla was not designed to carry out a moral inquest. Instead, the flotilla was designed to achieve two ends. The first is to divide Israel and Western governments by shifting public opinion against Israel. The second is to create a political crisis inside Israel between those who feel that Israel's increasing isolation over the Gaza issue is dangerous versus those who think any weakening of resolve is dangerous.

In all of these countries, politicians are extremely sensitive to public opinion. It is difficult to imagine circumstances under which public opinion will see Israel as the victim. The general response in the Western public is likely to be that the Israelis probably should have allowed the ships to go to Gaza and offload rather than to precipitate bloodshed. Israel's enemies will fan these flames by arguing that the Israelis prefer bloodshed to reasonable accommodation. And as Western public opinion shifts against Israel, Western political leaders will track with this shift.

And dont YOU fall for the propaganda either

what side of that war where you on ?

George Friedman is chief executive of STRATFOR. He was born in Hungary to Holocaust survivors.

Hardly an unbiased opinion

According to my sources, that is bullsh*t.

Edited June 1, 2010 by sokal

[Gambles]

Part 2 of 3 -

Dear all,

Please find below the latest update from MBMG International.

Last week we looked back with GMO’s Jeremy Grantham at the Great Depression and in particular the “Tragic year of 1932”. Global Markets Asia’s John Sheehan sees the period from H210 to H111 as both the tricky and the crucial year – a positive outcome is fraught with danger and yet whatever happens in that period will go a long way to define global economic direction for many years to come.

As Grantham says “if the economic recovery is slow and if unemployment drops slowly, then Bernanke will certainly keep rates very low, as he has promised in as clear a way as language permits. In that case, stocks and general speculation will very probably rise from levels that are already overpriced. And if they do, Bernanke will definitely not be concerned and has told us as much. There were some teasing comments from Bernanke at the lows last spring to the effect that the Fed might take the embedded risk of asset class bubbles more seriously, as many foreign central bankers have begun to and very sensibly so.

But that hope has now been utterly squashed, and Bernanke has returned to the original Greenspan line: let the bubbles look after themselves. Even if we were to re-enter bubble territory in a way that would be obvious to anyone who can tell the difference between 15 P/E and, say, 28 P/E (35 of us at last count), he still will do nothing. For he is now once again genuinely unconcerned with bubbles and even doubts their existence, as proven conclusively by his comments during this last one, the 100-year U.S. housing bubble, the breaking of which landed us in the rich and deep manure of 2009: “The U.S. housing market has never declined,” etc., etc. No believer in the existence of bubbles could ever say such things.

If we get lucky and have a strong, broad, and sustained economic recovery, interest rates will probably rise before we reach real bubble territory. As rates rise, the market will almost certainly settle down, and we will only have to deal with a substantially overpriced U.S. market and moderately overpriced global equities and risk premiums. In that world, the market would have to decline, but not disastrously, and would probably exercise no really damaging effect on the economy. If, however, the economy only limps along, which seems more likely to me, then we run a very real danger of a third dangerous bubble in stocks and in risk-taking in general. For in that event, Bernanke will definitely keep rates low quarter after quarter and speculation will surely respond. Again? Yes, I’m afraid so. In that environment, Bernanke will do nothing to let the air out gently. His lack of antibubble action is pretty much guaranteed. The end of such events is always hard to predict, but usually bubbles break for almost any reason when they are big enough. Of course, the larger the assets bubble, the bigger the shock to the economic and financial system.

Now, Greenspan was lucky enough to inherit Volcker’s good work, and that gave him a base from which he could launch or blow a huge equity bubble; he also had the advantage that the country’s balance sheet was in excellent shape. Even Bernanke inherited a reasonably solid position from which to fund a second bailout. But a third time? It is hard to work out where the resources would come from to resuscitate the economy if a real shock were to be delivered by another collapse of a major asset class. The key problems here are the Fed’s refusal to see the risks embedded in asset class bubbles and the willingness of both the Administration and Congress to tolerate this dangerous policy. Heck, they recently reappointed him! Yes, the Congressional natives were restless, but in waiting for a third crisis to kick him out, they may be too late to avoid the major-league suffering caused by his blind spot. Should unemployment linger at high levels, which I think is likely, and I get these things right better than half the time (I believe about 52%), then we had better hope that something lucky turns up to break the speculative spirit. This is perverse, but so is Bernanke.

What could go wrong, preferably in the next few months? Some combination of the following: an unexpected second leg down in house prices and a continued rise in the level of defaults, leading to a crisis at Fannie, etc.; a wash-out in commercial real estate and private equity caused by refunding problems (along the lines of Goldman’s and Morgan Stanley’s recent real estate fund wipe-outs) that result in a chain of major defaults in properties like Stuyvesant Town; a crisis in the euro where Portugal or Spain or Greece, or all three, default and strange things start to happen; a rapid rise in commodity prices, despite the anaemic growth of the developed world, which, with the same caveats, I also think is quite likely; competitive devaluations leading to a serious trade war; or my colleague Edward Chancellor’s favourite, two or three wheels falling off of the Chinese economy, which today acts as the main prop to global growth.

Okay, enough. We all know that there is plenty that could go wrong. Some combinations would be enough to break the market but still leave the economy limping along. This would be far better than having the market rise through the fall of next year by, say, another 30% to 40%, along with risk trades similarly flourishing and then all breaking. The possibilities of this happening seem nerve-wrackingly high. The developed world’s financial and economic structure, already none too impressive, would simply buckle at the knees.”

Enjoy your day!

Once again, very best regards,

MBMG International

Please Note: While every effort has been made to ensure that the information contained herein is correct, MBMG International cannot be held responsible for any errors that may occur. The views of the contributors may not necessarily reflect the house view of MBMG International. Views and opinions expressed herein may change with market conditions and should not be used in isolation.

[Abrak]

But that hope has now been utterly squashed, and Bernanke has returned to the original Greenspan line: let the bubbles look after themselves. Even if we were to re-enter bubble territory in a way that would be obvious to anyone who can tell the difference between 15 P/E and, say, 28 P/E (35 of us at last count), he still will do nothing. For he is now once again genuinely unconcerned with bubbles and even doubts their existence, as proven conclusively by his comments during this last one, the 100-year U.S. housing bubble, the breaking of which landed us in the rich and deep manure of 2009: “The U.S. housing market has never declined,” etc., etc. No believer in the existence of bubbles could ever say such things.

I do believe the official 'Bernanke/Greenspan' line is that a) It is very difficult to identify asset bubbles actions taken against perceived asset bubbles may have more costs than benefits and c) the Fed sees their role not as preventing asset bubbles but mitigating the fall out when they occur and finally burst (namely encouraging asset bubbles through moral hazard.)

As for his ('housing prices will not decline') because 'The U.S. housing market has never declined' comment it is clearly not made by any intelligent economist or investor. I do believe he has privately admitted that he was taking a lot of prescription drugs at the time and had just been on an all night bender with Dennis Hopper.

http://www.federalreserve.gov/boarddocs/sp...015/default.htm

[midas]

Don't fall for the propaganda.

From STRATFOR

The Turkish flotilla was not designed to carry out a moral inquest. Instead, the flotilla was designed to achieve two ends. The first is to divide Israel and Western governments by shifting public opinion against Israel. The second is to create a political crisis inside Israel between those who feel that Israel's increasing isolation over the Gaza issue is dangerous versus those who think any weakening of resolve is dangerous.

In all of these countries, politicians are extremely sensitive to public opinion. It is difficult to imagine circumstances under which public opinion will see Israel as the victim. The general response in the Western public is likely to be that the Israelis probably should have allowed the ships to go to Gaza and offload rather than to precipitate bloodshed. Israel's enemies will fan these flames by arguing that the Israelis prefer bloodshed to reasonable accommodation. And as Western public opinion shifts against Israel, Western political leaders will track with this shift.

And dont YOU fall for the propaganda either

what side of that war where you on ?

George Friedman is chief executive of STRATFOR. He was born in Hungary to Holocaust survivors.

Hardly an unbiased opinion

According to my sources, that is bullsh*t.

Well quite frankly I could not give a rats a*se about the opinion of STRATFOR

And what about recent the United nations charges these people have been abusing children - is that propaganda as well ?

[Naam]

According to my sources, that is bullsh*t.

let's rather say your sources are bullshit.

George Friedman is chief executive of STRATFOR, a private global intelligence firm he founded in 1996. Prior to joining the private sector, Friedman spent almost twenty years in academia, teaching political science at Dickinson College. During this time, he also regularly briefed senior commanders in the armed services as well as the Office of Net Assessments, SHAPE Technical Center, the U.S. Army War College, National Defense University and the RAND Corporation, on security and national defense matters.

Friedman’s childhood was shaped directly by international conflict. He was born in Hungary to Holocaust survivors. His family fled Hungary when he was a child to escape the communist regime, settling first in a camp for displaced persons in Austria and then immigrating to the United States. Friedman, who attended public schools in New York City, describes his family’s story as “a very classic story of refugees making a new life in America." Friedman was an early designer of computerized war games. The Center was the only non-governmental organization that was at that time granted access to Joint Theater Level Simulation by the Joint Warfighting Center.

[Naam]

Stratfor itself is a big joke. in the late '90s i was a subscriber for several years till i found out what hair raising rubbish was published about two countries in which i lived and worked, still maintain personal connections and visit them. for the last four years i still read some Strafor excerpts (posted in another forum) in which "anytime from now... most probably next week" "the glorious IDF will deal a devastating blow to the Mullahs and turn the country into one big parking lot."

Stratfor case closed, bailiff next one!

[Pakboong]

Don't fall for the propaganda.

From STRATFOR

The Turkish flotilla was not designed to carry out a moral inquest. Instead, the flotilla was designed to achieve two ends. The first is to divide Israel and Western governments by shifting public opinion against Israel. The second is to create a political crisis inside Israel between those who feel that Israel's increasing isolation over the Gaza issue is dangerous versus those who think any weakening of resolve is dangerous.

In all of these countries, politicians are extremely sensitive to public opinion. It is difficult to imagine circumstances under which public opinion will see Israel as the victim. The general response in the Western public is likely to be that the Israelis probably should have allowed the ships to go to Gaza and offload rather than to precipitate bloodshed. Israel's enemies will fan these flames by arguing that the Israelis prefer bloodshed to reasonable accommodation. And as Western public opinion shifts against Israel, Western political leaders will track with this shift.

And dont YOU fall for the propaganda either

what side of that war where you on ?

George Friedman is chief executive of STRATFOR. He was born in Hungary to Holocaust survivors.

Hardly an unbiased opinion

According to my sources, that is bullsh*t.

I'm lost here, were George's parents gay?

[lannarebirth]

Stratfor itself is a big joke. in the late '90s i was a subscriber for several years till i found out what hair raising rubbish was published about two countries in which i lived and worked, still maintain personal connections and visit them. for the last four years i still read some Strafor excerpts (posted in another forum) in which "anytime from now... most probably next week" "the glorious IDF will deal a devastating blow to the Mullahs and turn the country into one big parking lot."

Stratfor case closed, bailiff next one!

I had a subscription for a couple of years and I came to the same conclusion as you. They have a world vision which I do not share.