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This is mostly a function of monetary policy,ECB has been loath to cut rates as it sees an inflationary enviorment,Fed has opted to discount inflation fears in the hope of stoking growth,it won't,and will set us back to a period of slower growth,then we'll have to do what Paul Volcker did in the (big)80's,rachet interest rates back up,once investors get a whiff off rate hikes,look out Wall St!Remember,the stock market moves up,down,sideways whatever...but the bond market NEVER lies,all this rate cutting by the Fed?REAL rates have been going up.Not a healthy outlook by any means.
Good post. I agree with the bond market never tells a lie. The Interest rate can be cut down to zero but that does not mean banks will issue new credit or mortgages to people and companies.The major issue the Fed is faced with will be getting caught in a liquidity trap.
Pretty much, but that wasn't the point. The point is rather that some fund managers etc will be correct over many years due to mere statistics and not their abilities. Whether they make their market predictions on coin flips or half baked arguments is irrelevant.
Quote:
However, given the population of bear pundits who have been televised over the past 10 years, of which there are very few
You need to look at the population of all pundits not just the bearish ones. Currently the bear pundits are seen as correct, but that is just the point. They are just the folks with more correct flips than the bulls.
Regardless, the problem is that nobody can really predict the markets. You can forecast matters, but economic forecasts are just like the weather. In the short term fairly reliable in the long term almost useless. Additionally, even if Peter had a successful strategy it would not stay successful for long as the markets are largely efficient. Historically there are many examples of fund managers that come up with a strategy that seemed to work, but the minute other managers tried it it was no longer successful. Whatever inefficiency the initial fund manager was exploiting was destroyed the minute others caught wind of it.
Good post. I agree with the bond market never tells a lie. The Interest rate can be cut down to zero but that does not mean banks will issue new credit or mortgages to people and companies.The major issue the Fed is faced with will be getting caught in a liquidity trap.
The new liquidity at a zero interest rate might hurt the domestic economy. Banks are likely to use the cheap money to purchase oil/commodities rather than loan it to hopeless indebted Americans.
Jacking up interest rates will probably be done when Bernanke is seen as a fraud for trying to prop up a phony economy. This will also probably be done by a new administration who's job it will be to villify unbridled capitalism as an enemy of the state, when it was loose monetary policy by a central bank that spiked the punch bowl all along.
Then again, the temptation to pump even more money into entitlement programs are part of a New New Deal might stoke additional inflation.
Pretty much, but that wasn't the point. The point is rather that some fund managers etc will be correct over many years due to mere statistics and not their abilities. Whether they make their market predictions on coin flips or half baked arguments is irrelevant.
You need to look at the population of all pundits not just the bearish ones. Currently the bear pundits are seen as correct, but that is just the point. They are just the folks with more correct flips than the bulls.
Regardless, the problem is that nobody can really predict the markets. You can forecast matters, but economic forecasts are just like the weather. In the short term fairly reliable in the long term almost useless. Additionally, even if Peter had a successful strategy it would not stay successful for long as the markets are largely efficient. Historically there are many examples of fund managers that come up with a strategy that seemed to work, but the minute other managers tried it it was no longer successful. Whatever inefficiency the initial fund manager was exploiting was destroyed the minute others caught wind of it.
Understood about taking a larger population (bulls and bears) in general. I was taking into account specific predictions made across only the subset of bears. However, some side predictions of Peter were not made (10yr interest rates did not continue to spike above 3.9 right now), yet he makes it very clear that short term gyrations aren't within his ability to predict. If one were to absorb the thesis of Austrian economics and apply it to today's market, that person would be 100% correct on macroeconomic phenomena. Dot com, subprime collapse were some of the predictions people like him made. There is no randomness to this prediction, because the imbalances made by the ponzi schemes were destined to be questioned by investors inevitably. They followed a perfectly deterministic trend. It is the act of going against the rub, being the party pooper, being the bear in a time like this before the fact that makes him look more like an economic prophet and why his appearances plaster YT with 5 star ratings and a near 100% positive review rate and a best selling planning/forecasting book "crash proof" (#1), #4 in investing, #6 in popular economics, and #233 overall on amazon. Now that the stuff has hit the fan, people pay much more attention to the reasoning of why this happened. I just do not consider it random, because there was no particular timeline with his analysis. It would just happen in a reasonable interval. To me, random takes into account little to no salient information on future events and making a prediction based on that lack of knowledge. Toe-may-toe, toe-mah-toe.
Also, Peter predicts that the government will try to influence the Fed to reduce rates further and further and further. He's hoping he's wrong on these predictions, but he believes the evidence is overwhelming that people will be fed up with two asset bubbles the Fed has been responsible for and instead demonize the market and greed, rather than poor monetary policy. This will bring about additional government conrols (i.e. taxes and redistribution), stifling innovation in a time when we will be hungering for capital investment to rebuild a hollowed manufacturing infrastructure.
Someone's listening to Kudlow & Company one too many times
We are a burden that China's citizens bear. They are suppressing their own purchasing power so that we may indulge ourselves. The economist just posted an article on their belief that China will get along just fine without us. Additionally, two superstars, Jim Rogers and Peter Schiff believe that China's decoupling from the US will cause a BOOM in their own standard of living, when they no longer have to peg their currency against ours and can ship their products to Eastern Europe, Australia, or just consume and enjoy them theirselves. They also will have a stronger currency and 35% savings rate to blow on consumer goods. They're going to enjoy the tennis shoes, toys, and iPods we won't be getting anymore.
I question the military superpower argument, but economically, you better believe it we will reluctantly hand the torch to the Chinese. It will not matter on the military front, as we will be reluctant to war with them directly as the US citizens would riot and practically burn the white house to the ground (again). Slight exaggeration, but can you imagine the chaos from disgruntled citizens who no longer have access to any real form of credit and goods are rationed being told that they have to sacrifice further?
Incidentally, post a thread on the internet within the chinese borders on how much you despise Hu's leadership of the country, see how long it takes before you "disappear". This particular facet of communism exists, as well as weaker property rights than we have.
The world is going to be very surprised to see how China moves merrilly along without us, albeit after a very brief withdrawl period.
No way can get along without the US! They just had one of the worst winters on record they'll starve to death with US AG production....
And stop counting those darn lifeboats. The Titanic is UNSINKABLE. UNSINKABLE I Tells ya.
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I hear you Peaker, but think about the usual arrogance and how pride leads to a fall.
You know, we might have had some dreams, but the US is not too far from finding about the alarm clock and what it does to dreaming.
+1...
First, Americans have to remove the flag from their face when speaking on this subject. Second, they have to consider the feasibility of being the world's debtor as opposed to sacrificing so that we may transition back into producing what the world uses. Those who believe the latter is not going to happen, Chicken Little talk, or just unpatriotic will likely get slaughtered on Wall St.
the entire thing can come to a
screaming halt this morning.
vote
stop spending
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