Rate Cut
Lawyerkill
may not be one.
aero...@flight.net
wrote:
>Looks like investors don't believe there will be a rate cut, and there
>may not be one.
Couldn't tell by today's laughable "recovery"........Of course 1,000
points have gone down this "market's" throat under the guise of "hopes
for a rate cut," and the less likely the cut becomes, the more this
laughable "market" is "struggling to recover"........
The funniest part of it, is that the guise for this "struggle" is
"bargain hunting"......What a riot! "Bargain hunting" in a "market"
artificially overvalued by 30%........Hilarious!
lubow
problems that the PhDs in the President's economic council never anticipate,
assuming they were ever consulted on this hair-brained policy. One such
problem is that it ties the Fed's hands in the case of an unusual economic
development. IMO -- and it's only an opinion -- this is the problem when we
elect gamblers instead of leaders. And sure enough, in my lifetime gamblers
viz., LBJ and Nixon screwed up the economy to where it took about 20 years
to fix. And the first clue to those screw-up was a drop in exchange rates
vs. benchmark currencies. In the days of LBJ and Nixon, the benchmark was
the DM and the SF. Now it's the Euro and the CAD. Doesn't matter. The
exchange rate is more than a number for speculators. It's our first clue
that things are screwed up. No country ever devalued itself into prosperity
unless it had 40 years of oil self sufficiency waiting to be tapped.
*Normally* exchange rates, i.e., monetary policy, are the exclusive province
of the Treasury Department. The problem is that the Fed also understands
that in extraordinary times its domain, interest rates and economic policy,
impacts the exchange rates. The Fed also knows that extreme devaluation is
the first step to extreme inflation a year or two down the road. At least
that has been true since the 1970s.
And therein lies the problem. If the Administration simply had the policy
of taxing the people to conduct war, devaluation would not be necessary and
the Fed would do what the Fed normally does which is to bring about a
goldilocks economic scenario by real actions and real adjustments instead of
playing cosmetic games what-looks-good-on-CNBC games.
And that's all I want to say about this, except the Fed is currently
helpless. Thank you, gamblers in the West Wing.
Isn't it amazing how the biggest hawks on war are also the ones who refuse
to pay for it but want those who haven't even been born to pay for it with
interest.
--
Lubow
FrediFizzx
assets are about 111 Trillion. Total debt about 60 Trillion. Yearly
income (GDP) about 13 Trillion. We are not over-indebted. In fact, we
should take on more debt while interest rates are still reasonable and
sink it into infrastructure and R&D. The decline of the dollar is
mostly due to the rest of the world doing well and that is where the
money is flowing to instead of into dollars. There is very little real
"devaluation" going on here. It is more than ever a global economy
now-a-days and things are probably just balancing out more like they
should be. Get used to it. Quite frankly, I don't see that a rate cut
is even much necessary right now. So the Fed just needs to do what it
has been doing providing liquidity when necessary. Leave the rate at
5.25 and let everyone get used to it. It's a good number to stay at.
Fred
"lubow" <lu...@lubow-industries.com> wrote in message
news:N8mFi.2647$BL3.434@trndny01...
704set
> The Fed also knows that extreme devaluation is
> the first step to extreme inflation a year or two down the road. At least
> that has been true since the 1970s.
>
How does devaluation bring about extreme inflation? A devalued dollar means
imports are cheaper which helps lower inflation. Help me here. Thanks.
704set
d.
I think you mean a devalued dollar makes imports tend to be more
expensive. You must not have had your coffee yet this morning.
Lubow
that I am right. If the Fed was able to lower the Fed funds rate, it
would have done so. Greenspan did so in 1998 between FOMC meetings
when the Asian stock market collapsed. If Bernanke did not have his
hands tied by the immense debt and out of control exchange rates he
would have done as other Fed chairs have done instead of the cosmetic
crap.
I'm sorry to say your "assets" and "income" analogue stem from Reagan
trickle down logic. It's nonsense because the USA is not Czarist
Russia. The Federal government does not own everyone and everything.
Like any other entity, the government owns what it purchases or
confiscates. It's revenue is what it draws from in taxation and sale
of products and assets. Nothing more. And right now it's showing one
huge loss which is currently manifested in the exchange rates. But if
history of the last 37 years is any barometer, falling USD valuation
leads inflation by a couple of years just as increased USD valuation
led to the goldilocks economy of the latter 1990s.
The argument that debt should be measured as a percentage of GDP is
just another vestige of the failed trickle down logic that Kudlow the
drug addict enunciates. It's the logic that gave us the worst
recession since the 1930s during the Bush 41 Administration. For some
crazy reason "supply siders," i.e., trickle down enthusiasts, equated
debt as a percentage of GDP. Why GDP? Why not the rainfall in Las
Vegas?
They both make just as much sense. Such a ratio had never been used
previous to the Reagan Administration to justify extreme indebtedness
and for good reason. The reason is that debt has to be repaid no
matter what percentage of anything it is. That's the logic that made
Bush 41 a one term president.
When Clinton entered office on 1/20/1993 the CAD was $0.79. The CAD
on 1/20/2001 was $0.66. Now it's around $0.95. Fred, you can
certainly live in a world of overloaded government debt, unfinanced
war and mortgage defaults. I'll take a tech bubble and a stained blue
dress over that anytime.
Lubow.
Lubow
So $3 gasoline has nothing to do with inflation?
Lubow
First examine your premise. Are imports cheaper if the dollar buys
fewer euros or Canadian dollars?
Suppose you are Baron Rothschild and you are selling your champagne to
a liquor store in Brooklyn. You want euros for your champagne. It
now takes about $1.30 to buy one euro. Six years ago, it took $0.87
to buy one euro. If it takes the same number of euros now to buy the
same one liter of champagne as it did in 2001, was Rothschild's
champagne cheaper in 2001 or is it cheaper now?
Now, suppose you are an Arab sheikh with oil to sell and you want
euros for your crude. Do you think a gallon of gasoline is cheaper
now or was it cheaper when 87 cents bought you one euro?
aero...@flight.net
wrote:
Of course not...Neither does soaring prices in every other part of the
economy, from hard goods to groceries.....
There's no inflation...Have you lost your cotton picking mind??? 8)
FrediFizzx
news:OPSdnVoF79T68Hvb...@comcast.com...
You have it backwards. Foreigners can buy our stuff cheaper. Stuff we
buy from foreigners whose currency has appreciated relative to ours is
more expensive. It is not too bad as long as tourism increases, we get
some of it back.
Fred
FrediFizzx
bad is why they haven't lowered the rate. For sure they are kind of
between a rock and a hard place going forward here if they want to cut
rates. So I agree with that. But I think the global economies will
help "save the day" this time around if they just leave things alone.
No rate cut is necessary yet. If they do decide to cut, it should only
be .25 and be left at 5% for an extended period. Too low of interest
rates is really never good long term. Japan has been at low rates for
some time now and is it really helping them?
Borrow when interest rates are low or reasonable and reduce debt when
interest rates are high. Just seems like plain common sense. Quite
frankly I think both Clinton and Bush admins did the right thing for
what was going on at the time. Amazingly you would think it would have
been swapped around. But good for us that it wasn't. The US is really
in pretty good shape no matter what anyone says. We will even kick ass
in a recession. ;-)
Fred
"Lubow" <dynami...@hotmail.com> wrote in message
news:1189519402.1...@w3g2000hsg.googlegroups.com...
Dr Tormento
@w3g2000hsg.googlegroups.com:
> The reason is that debt has to be repaid no
> matter what percentage of anything it is.
Oh really? Fact is, the US has been successfully increasing debt almost
constantly since 1845.
http://www.treasurydirect.gov/govt/reports/pd/histdebt/histdebt_histo2.htm
I guess 162 years isn't long enough for you to catch on.
FrediFizzx
news:Xns99A86DA6CF3...@69.28.173.184...
Yep, most people miss this important fact. ;-) The US is so good and
productive that we could take on another 1 or 2 trillion in low interest
debt with no problem. Face it; we kick ass and will always kick ass.
And now-a-days, the rest of the world is catching on and they are
starting to kick ass also. What could be better? The whole world is
kicking ass and being productive.
Fred
BrunoR
and where to buy/sell stocks. Aren't these arguments academic, that do
not in the least help anyone's investment decisions. Rate cut, and some
stocks will jump in price while others will go down. NO rate cut and a
similar scenario will be presented; Some some stocks will jump in price
while others will go down. What are these arguments going to prove? ;-)
Btw. Everyone of YOU presents an acceptable case from YOUR viewpoint.
Lubow
exchange blowout was during the Nixon Administration just after the
Dow closed above 1000 for the first time. The USD lost around 50% of
its value relative to the SF. In my view that was the signal for a
massive inflation that crippled the administrations of Ford, Carter
and the first two years of Reagan. It also signaled the beginning of
a ten year bear market in 1973. Not surprisingly, the same stocks
that did well back then are similar to those doing well right now. SLB
did very well back then. It's doing very well now. Back then, many
favored the domestic driller Union Oil of California, UOC. UOC is no
longer with us, but XTO is.
--Lubow
Lubow
Reagan handed Bush 41 a huge debt. It was so "successful" that the
people gave Bush 41 his walking papers.
Want some more successes? Does a ten year bear market starting from
the day after the Dow closed above 1000 for the first time constitute
your idea of a "success."
I guess 34 years isn't long enough for you to catch on.
On Sep 11, 1:47 pm, Dr Tormento <re...@togroup.com> wrote:
> Lubow<dynamitem...@hotmail.com> wrote in news:1189519402.143704.179520
> @w3g2000hsg.googlegroups.com:
>
> > The reason is that debt has to be repaid no
> > matter what percentage of anything it is.
>
> Oh really? Fact is, the US has been successfully increasing debt almost
> constantly since 1845.
>
> http://www.treasurydirect.gov/govt/reports/pd/histdebt/histdebt_histo...
Dr Tormento
news:1189541384.4...@e9g2000prf.googlegroups.com:
>Does a ten year bear market starting from
> the day after the Dow closed above 1000 for the first time constitute
> your idea of a "success."
You are absolutely insane. There was no ten year bear market. The Dow
peaked at 1000 in 1973, fell to the 500s 1n 1974, and then rose to the
1200s by 1983. That's more than a double in 9 years.
FrediFizzx
simple. If Mr. Lubow is right and thinks the US is headed for a deep
recession due to devaluation of the dollar because of too much debt,
then you should be buying defensive stocks or going to mostly cash, gov.
bonds, etc. If you think I am right then you should be investing
globally in quality companies with growth potential and take on higher
risk. His way; go to lower risk. My way; take on more risk for higher
gains. So the debate really isn't all that academic, is it? If we do
have a rate cut, most stocks will go up and price some of it in. It's
all about earnings yields vs. bond yields and risk tolerance. Most
global quality stocks are still cheap compared to bonds.
Fred
"BrunoR" <Bru...@nyc.rr.com> wrote in message
news:46e6ef97$0$15400$4c36...@roadrunner.com...
704set
"d." <d...@noospam.com> wrote in message
news:46e5fdb4....@216.168.3.70...
Yup. Needed my coffee. Thanks.
704set
lubow
period? And if you are telling me there was no inflation between 1973 and
1983, then I must ask if you are normally insane or does the Usenet bring
out your insanity?
--
Lubow
"Dr Tormento" <re...@togroup.com> wrote in message
news:Xns99A88F3C25B...@69.28.173.184...
Dr Tormento
news:TIGFi.3688$yf3.1964@trndny06:
> We no longer adjust for inflation when we compare the Dow over a ten
> year period?
No, we don't. The return on an investment is dictated by the change in
price only. But even if we did, the cost of living did not double over that
9 year period, so it was clearly a net gain anyway.
704set
There was no 10 year cyclical bear market. But secular bear markets are
longer.
http://www.gold-eagle.com/editorials_01/alexander032101.html
704set
704set
"FrediFizzx" <fredi...@hotmail.com> wrote in message
news:5ko17uF...@mid.individual.net...
I did have it backwards. Mea Culpa.
704set
Lubow
1/11/83 DJI = 1083.79
In between there was double digit inflation, 20% prime.
To you that's a bull market. To me, that's a bear market.
lubow.
=========================
On Sep 12, 2:49 am, Dr Tormento <re...@togroup.com> wrote:
> "lubow" <lu...@lubow-industries.com> wrote innews:TIGFi.3688$yf3.1964@trndny06:
Lubow
energy costs are strongly tied to the exchange rates. No matter how
many Cat payloaders or cases of Coke we sell overseas or tourists that
visit the Grand Canyon, it never compensates the increased cost of
energy.
--Lubow
Dr Tormento
news:iKednR4zLIBjXnrb...@comcast.com:
>
> There was no 10 year cyclical bear market. But secular bear markets are
> longer.
>
> http://www.gold-eagle.com/editorials_01/alexander032101.html
>
> 704set
I don't accept the concept of secular markets, because the time frames
are open ended and undefined. If a big meteor hits in 2025, sending the Dow
down to 400, we could claim a 50 year secular bear market. Not buying that.
CHEFMOHAEDATTEYA
> Looks like investors don't believe there will be a rate cut, and there
> may not be one.
good