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Hello,
how do you think will the crisis evolve and what research is valuable for getting a clue what is actually going on and is eventually going to happen?
I don't expect academians or policy makers or journalists to get it right. They are all looking in the rear mirror and will probably get only a fraction of the picture.
For example journalists and politicians talk about that Germany will have to bail out the PIIGS. However, if Germany would recap their banks debt/GDP would be at pretty unsustainable levels already. And even in these cirumstances Germany will issue new debt of 26 billion €. So it seems that the politicians, despite all the talk about the Euro crisis, absolutely don't get it.
I'm following:
* John Mauldin
* Kyle Bass
* Roubini
* Soros
* Bill
Soros said it isn’t currently clear whether the crisis will be contained, adding many people “feel” it’s “over the brink” and “insolvable.” |
bearish on bonds |
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ilrico
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so you're short bund. i agree with you but i guess you have to be able to survive 140 before.
anyway, i would add Charles Gave to your list. one of very good ones.
www.gavekal.com |
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Edward Hugh - his Facebook feed is nice.
Credit Writedowns
A Fistful of Euros
Peter Tchir (very nice new name)
My personal view? Pretty much agree with what both of you said. Deflation is really not a solution, as it cannot be done peacefully. With 50% youth unemployment in several countries, the European version of Arab Spring could be near. Seriously - how long are the young going to look at this , and what is the establishment's response? Riot police and pepper spray?
Inflation? More QE (and stealth QE from ECB), combined with fiscal spending could jumpstart the inflation and accelerate the velocity of money. Don't know. Only got 4 uni weeks in macro, but so has everyone else nowadays. |
The crisis takes a much longer time coming than you think, and then it happens much faster than you would have thought, and that’s sort of exactly the Mexican story. It took forever and then it took a night. – Rudi Dornbusch |
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Polter
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pj
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| Total Posts: 2726 |
| Joined: Jun 2004 |
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> Deflation is not a solution
How is deflation possible? 
We have a loads of money printed out, so
how deflation may happen and how it might
theoretically solve the problem? |
вакансия "Программист Психологической службы"
-але! у нас ошибко! не работает бля-бля-бля
-вы хотите об этом поговорить? |
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| pj, that is something that should be asked from the eurocrats, who are trying their hardest to deflate. Isn't all this austerity and very low inflation very deflation-like? |
The crisis takes a much longer time coming than you think, and then it happens much faster than you would have thought, and that’s sort of exactly the Mexican story. It took forever and then it took a night. – Rudi Dornbusch |
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| Is there something like a collection of links or something? I'm not sure where to look. IMF? I'm sure Mrs. Lagarde is in front of the curve, as with the french banks. lol |
bearish on bonds |
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quantz
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| how about reading history? great depression, collapse of various empires (roman, british, etc) seems relevant. for the more bleak, warzone survivalist stories |
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Reinhart/Rogoff is very good. As far as I understand it's the first time that all the available data from the history of financial crises has been compiled. However, past data only gets you that far. Question is if the 19th century or first half of the 20th century can be a benchmark at all. Also , world debt/GDP is unprecented. My theory is that the concept of inflation and central-banking is really a misnormer. The job of a central banker has to be to watch for asset and credit bubbles. Isn't the rate of interest suppose to bring savings and lending into equilibrium? I wonder why no one talks about raising rates to increase savings.
Two indicators to look at (based on Kyle Bass' letters):
1. world debt / gdp. Crises from 1950 to 2008 were much more local and mostly in the Emerging markets. What happens if the whole world has to restructure it's debts (at once)?
2. financial crises and capital mobility. Portual, Ireland, Greece are experiencing capital outflows, which very often a good predictor of default. |
bearish on bonds |
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Attached File: Endgame.pdf
I finally found something more bearish than myself. Maybe that's a sign we are near the bottom, even if it is to be a long slow climb upwards. One glaring omission from the analysis is that it is based on economic theory, which could easily be the wrong model for all this in its current form. |
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pj
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| Total Posts: 2726 |
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Another glaring omission is his agenda :
He is evidently selling himself.
> All that is left is the Dollar and Gold
Yeah, right, especially 
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вакансия "Программист Психологической службы"
-але! у нас ошибко! не работает бля-бля-бля
-вы хотите об этом поговорить? |
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Cheng
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| Total Posts: 2370 |
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| 6 months to make as much money as possible and then ? Sell everything, buy an AK-47 and wait for the end of the world ? Sounds a bit overdone to me. |
"He's walking like a small child / But watch his eyes burn you away / Black holes in his golden stare / God knows he wants to go home / Children of the damned"
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pj
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| Total Posts: 2726 |
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> Sell everything,
To whom? |
вакансия "Программист Психологической службы"
-але! у нас ошибко! не работает бля-бля-бля
-вы хотите об этом поговорить? |
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Cheng
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| Total Posts: 2370 |
| Joined: Feb 2005 |
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| Non-NPers who didn't read this exclusive presentation. |
"He's walking like a small child / But watch his eyes burn you away / Black holes in his golden stare / God knows he wants to go home / Children of the damned"
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sfca
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| I think that "Endgame" presentation is very interesting. Some of the major material it missed is how monetary policy is being run out of Area 51 by intergallactic overlords that need us to go back on the gold standard so they can offload that stupid delivery of physical trade they did with the Zygons. |
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Cheng
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| Total Posts: 2370 |
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If you want to run through Area 51 take a look:
Area 51 Lv 1 |
"He's walking like a small child / But watch his eyes burn you away / Black holes in his golden stare / God knows he wants to go home / Children of the damned"
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nikol
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still coming back to this one and re-reading the economy timeline history.
highlights (with my own additions):
- Energy cost is inherent in every (corp) business, and pushes margins when rises up. => Less opportunities and more bankrupcies.
- Banks have trouble making their profits out of the corps which have lower margins. Riding on the backward curve (cost and carry) is not viable anymore.
- While derivatives between banks and corps make sense (hedging), the derivatives within banking have no hard meaning, but rather sweeping old problems under the carpet of new trades. more volume is in demand (isda shows exponential growth in notional and therefore exponential growth in sensitivies). => Banks get into trouble. (loans) liquidity sqeeze.
- Effects described by H.Minsky only amplify the problem of the banks.
- Troubled financial system hampers further investments to be made to keep corps running and to be made to maintaine good competition level => Secondary (positive feedback) effect due to finance system, not only due to energy.
- Another effect of increasing energy cost is higher cost of global trade due to transportation cost.
Entire system goes through restructuring (not only banks). governments make energy policy decisions (moving to alternative, independent, sustainable sources), while producing populist statements to keep public calm, because transition is painful, and also trying to revive financial system by throwing cash into it (there are many pro/counter-arguments for/against this action).
This is of course, IMHO, and, of course, very simplistic view. The reality is worse.
The system is not dead (yet). It goes through transition, which might have self-destructive effect on the system. |
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