An impressive pattern of prolonged, sustained uptrend in the 3 indices I follow : ( Dow, S&P, & Nasdaq) looks rather steady. I came upon an interesting partial explanation in an essay to-day by S& P's Vaughn Scully. He points out that state and many municipal governments have serious budget problems. The new Republican house wants to rewrite legislation that will allow them to go bankrupt. This would mean that municipal bonds could default.
I have a wealthy, elderly friend who has long been a fan of municipal bonds, because their interest is tax free It turns out that investors like my friend have pulled $15 billion out of municipal bonds this year in fear of their default. Everybody knows that while local governments are suffering, & social services are cut, corporate profits are strengthening rapidly. Productivity gains and falling need for manpower are at least a short term recipe for success. The investing money that is taken out of municipal bonds has to go somewhere, so at least some of it is heading into equities.
Interesting side note: tax breaks for business jets mean buyers can depreciate their price in ONE YEAR....it may be time to reconsider Bombardier and Embraer. I went downtown at noon to join a citizens' demonstration in solidarity with the Wisconsin public service workers, chanting "workers rights are human rights" and "save the people, not the banks", and so forth. It was most enlivening. I have hopes that the Lybians may soon throw out Muamar Qaddaffi.
Monday, February 21, 2011
Friday, February 18, 2011
The flow of money
Here's Ben Bernanke today: "capital flows are once again posing some notable challenges for international macroeconomic and financial stability." Of course he means that "hot money" flies across international time zones according to the perceptions of the trading class and actually constitute a kind of global government beyond the control of any government. Too bad wisdom and concern for the good of the whole is not a part of the perspective. The more the volatility, the higher the profits, so these guys are not interested in the kind of stability it takes to plan businesses for the long term. The markets react on an ever shorter time frame (yes, computers talking to each other in New Jersey parking lots again)
I read in the Financial Times that a growing body of economists no longer think supply and demand is "the whole story"...that they are thinking of supply, demand, and quantity of money as all part of the equation. This is good news, although entirely insufficient. It's unlikely that there will be broad understanding among main stream economists any time soon that the core economy, the criminal economy, and the ecological economy are part of the equation as well. Meanwhile, I'm doing my best to profit from the uncontrolled casino of the mad financial world, with its vanishing correlation to any underlying "real" economy (defined in the traditional narrow sense of actual business enterprise). I'd like to say I'm a great success, but more accurately I'd have to say only that it's more profitable than keeping the money in the bank. I've never liked banks, but since the 2008 fiasco I'm very interested in them and their shenanigans. It's only because I do know an honest banker that I don't think every one of them is a gold plated crook!
I take long term positions in areas where I see inexorable future growth (for example LED lighting, uranium, wind & solar energy, environmental remediation) and stick to companies that appear to have good management. There are plenty of other good stock trades, but I'm not interested in them. I have too many companies to follow as it is...(good thing my son and husband are into "due diligence") I'm happy that my accounts are all up this week, my boat lifted by the rising tide. Will I know enough (or be alert and active enough) to get out when the tide turns next?
I read in the Financial Times that a growing body of economists no longer think supply and demand is "the whole story"...that they are thinking of supply, demand, and quantity of money as all part of the equation. This is good news, although entirely insufficient. It's unlikely that there will be broad understanding among main stream economists any time soon that the core economy, the criminal economy, and the ecological economy are part of the equation as well. Meanwhile, I'm doing my best to profit from the uncontrolled casino of the mad financial world, with its vanishing correlation to any underlying "real" economy (defined in the traditional narrow sense of actual business enterprise). I'd like to say I'm a great success, but more accurately I'd have to say only that it's more profitable than keeping the money in the bank. I've never liked banks, but since the 2008 fiasco I'm very interested in them and their shenanigans. It's only because I do know an honest banker that I don't think every one of them is a gold plated crook!
I take long term positions in areas where I see inexorable future growth (for example LED lighting, uranium, wind & solar energy, environmental remediation) and stick to companies that appear to have good management. There are plenty of other good stock trades, but I'm not interested in them. I have too many companies to follow as it is...(good thing my son and husband are into "due diligence") I'm happy that my accounts are all up this week, my boat lifted by the rising tide. Will I know enough (or be alert and active enough) to get out when the tide turns next?
Wednesday, February 9, 2011
Unemployment & real estate
I am reading Jeremy Rifkin's book "The End of Work", published in 1995, a rich expansion on ideas I first encountered in the work of Bernard Lietaer (whose book I have been translating )I am surprised to see Ben Bernanke remark on insufficient "employment growth" yesterday. Surely it is part of his job to educate legislators. We are seeing a profound transformation that is making "work" as we have known it a thing of the past. There is not going to be a rebound in employment. Jobs are over. Productivity has been rising since the 60s, and ever fewer workers are needed. Not just manufacturing workers, but all workers, are being replaced by our wonderful software and machinery.
It is not just happening in the US, but all over the world. The "redundancies" are more related to machines taking over than to off-shoring. We are going to have to deal with that, .either by working toward the old dream of more leisure for everyone(that is, some way to share these wonderful profits around more equitably), or by unconsciously sinking further into social division and chaos. It is worth remembering that local currency experiments led to decreased unemployment in Austria and Germany until they were made illegal (for fear of loss of central bank control), whereupon unemployment skyrocketed along with membership in the National Socialist Party-the Nazis. I think we have seen something parallel in our day in the frenzied rhetoric of extremist parties- not just in the USA. I highly recommend the book.
An article in the San Francisco chronicle reports that Bay area real estate prices suffered an accelerated decline in December, a harbinger (as we chart follower's know) of the approaching bottom (we call them "blow-offs") The chief economist of Zillow, Stan Humphries, is quoted as expecting "a long flat bottom" (so far so good= I agree). He goes on, though "before resuming a more normal appreciation of 2-4%" What is this? How can a "normal" market appreciate 2-4% annually. That kind of growth in biology is either juvenile, or tumerous.
Since the mad market makers have been little influence by their most recent toxicity, there seems to be hope among the financial fraternity that markets too will return to "a more normal appreciation" The indices have continued on an uptrend. If you can't beat them, join them. I read that there has been some return to "buy and hold" investing. Here I am, buying and holding. My Chinese stocks (APWR, JST, SOL, SOLF, TSTC, SDTH) are down, my Canadian uranium holdings (CCJ & DNN) are up. See-saw Marjorie Daw. I am also a holder of CREE, since it fell on some slight earnings disappointment recently. I expect LED lights to be with us for some years, and since the Chinese have 20 nuclear plants in construction, uranium miners should do well.
On my street, several people fear for the upcoming loss of their employment. They are engineers. I have weekly quilting parties with their wives, where we take part in a pale sort of "local currency", trading fabrics and doing each other good turns. North Carolina real estate values never rose as high as California's, so it has not fallen as far either. Most of the gigantic houses I have seen built lately could comfortably house several families, and the people in them would be less lonely, too! There would be other folk to share the work- wouldn't that be nice? The only price we would have to pay is the price of learning to put up with each other again!
It is not just happening in the US, but all over the world. The "redundancies" are more related to machines taking over than to off-shoring. We are going to have to deal with that, .either by working toward the old dream of more leisure for everyone(that is, some way to share these wonderful profits around more equitably), or by unconsciously sinking further into social division and chaos. It is worth remembering that local currency experiments led to decreased unemployment in Austria and Germany until they were made illegal (for fear of loss of central bank control), whereupon unemployment skyrocketed along with membership in the National Socialist Party-the Nazis. I think we have seen something parallel in our day in the frenzied rhetoric of extremist parties- not just in the USA. I highly recommend the book.
An article in the San Francisco chronicle reports that Bay area real estate prices suffered an accelerated decline in December, a harbinger (as we chart follower's know) of the approaching bottom (we call them "blow-offs") The chief economist of Zillow, Stan Humphries, is quoted as expecting "a long flat bottom" (so far so good= I agree). He goes on, though "before resuming a more normal appreciation of 2-4%" What is this? How can a "normal" market appreciate 2-4% annually. That kind of growth in biology is either juvenile, or tumerous.
Since the mad market makers have been little influence by their most recent toxicity, there seems to be hope among the financial fraternity that markets too will return to "a more normal appreciation" The indices have continued on an uptrend. If you can't beat them, join them. I read that there has been some return to "buy and hold" investing. Here I am, buying and holding. My Chinese stocks (APWR, JST, SOL, SOLF, TSTC, SDTH) are down, my Canadian uranium holdings (CCJ & DNN) are up. See-saw Marjorie Daw. I am also a holder of CREE, since it fell on some slight earnings disappointment recently. I expect LED lights to be with us for some years, and since the Chinese have 20 nuclear plants in construction, uranium miners should do well.
On my street, several people fear for the upcoming loss of their employment. They are engineers. I have weekly quilting parties with their wives, where we take part in a pale sort of "local currency", trading fabrics and doing each other good turns. North Carolina real estate values never rose as high as California's, so it has not fallen as far either. Most of the gigantic houses I have seen built lately could comfortably house several families, and the people in them would be less lonely, too! There would be other folk to share the work- wouldn't that be nice? The only price we would have to pay is the price of learning to put up with each other again!
Tuesday, February 1, 2011
The Baltic Dry Index
My son has just told me that the way the Baltic Dry Index is created is that people call shippers and get quotes on today's price to send coal or wheat or whatever "dry"commodity (not oil) in a ship. This index is thus NOT party to the general casino. It reflects the prices actually being charged by shipping companies. Wow, a toe-hold in reality!
In the glory days of the last stock run-up/economic expansion, it seems there were not enough ships to carry all the trade generated by the first major wave of globalization. So a lot of ships got built. Then came the crash. Now there are too many ships, so the prices they are charging are historically low.
The people who own the ships have a lot of long term debt (it costs a lot to buy one of these ships) and shipping prices are at this historic low. So everybody is afraid they will be unable to service that debt. Hmmm. Supposed to be there is a rebound in the global economy this year. China's entire population depends on food imports from Brazil. Some huge percentage of the energy we all use is generated by coal, much as visionaries such as myself hate it! It seems that there is likely to be continued need for dry bulk shipping.
In the glory days of the last stock run-up/economic expansion, it seems there were not enough ships to carry all the trade generated by the first major wave of globalization. So a lot of ships got built. Then came the crash. Now there are too many ships, so the prices they are charging are historically low.
The people who own the ships have a lot of long term debt (it costs a lot to buy one of these ships) and shipping prices are at this historic low. So everybody is afraid they will be unable to service that debt. Hmmm. Supposed to be there is a rebound in the global economy this year. China's entire population depends on food imports from Brazil. Some huge percentage of the energy we all use is generated by coal, much as visionaries such as myself hate it! It seems that there is likely to be continued need for dry bulk shipping.
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