Option A: =(B4-B3)/B3*100

Option B: =(B3-B4)/B4*100

Does it make sense to get a negative number for GDP growth when the GDP goes up?

Definitely. Change "comic books" to "Baby boomers on the cusp of retirement looking to all simultaneously begin liquidating IRAs/401Ks for retirement income" and expect virtually the same outcome.

Also this is why equity wise I typically look first at dividend yield, the company's long term prospects for maintaining that dividend, and then the prospect for appreciation (which imo, outside of the current liquidity fed rally, I feel is universally weak right now).

after a couple of hours of poker my brain starts to short out.

haha thanks for showing me the light boro.

US must cut spending to save AAA rating, warns Fitch

Like Fitch would ever risk its government supported Oligopoly by cutting the credit rating of the U.S.

Re: equities, I think you have to be truly insane to put a significant chunk of money in them right now. P/E ratios are still absurdly high, the "recovery" has not been a recovery at all, unemployment is high and going higher, there is massive currency instability, and when people start retiring en mass they are going to liquidate. I just don't get it.

I find it amazing that there are plausible arguments for the so-called "black swan" appearing first in Japan, China, the UK, the US, Ireland, Greece, Spain, Portugal . . .

Like I said before, all the swans are black. It's just that the Fed is furiously trying to paint them all white.

Something I was thinking about. Black swan could equal the government's ticket to selling the boatload of "safe" T-bills it needs to finance its enormous deficits.

Yes, I think we talked about that scenario before in one of these threads.

More AEP on Japan. The discussion of pre-hyperinflation budget deficits is verah innarressin.


http://blogs.telegraph.co.uk/finance...wing-in-japan/

http://www.nationalpriorities.org/ne...priations-bill


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Obama wants record $708 billion for wars next year

I can't remember if I already made this prediction, but I'm calling for debt swaps in 2010.

I envision a scenario where currency swaps become debt swaps. The Fed and Central Bank X each print a pile of funny money. The Fed buys X-notes with dollars, and vice versa. The Fed then uses X-notes to buy X-bonds, while CBX buys T-bills with dollars. The effect, each central bank is monetizing debt with plausible deniability, supporting their bond markets and holding down yields.

Quote from here, btw: http://www.zerohedge.com/article/why...treasury-short

I'm conflicted. I think TBT is awesome, but am nervous that the Fed will step in w/QE2 and continue to bludgeon the yield on the long bond down. Yields are coming up eventually, but you know, bernankepullingarabbitoutofhishat.jpg and all that may cause some delays.

Right, which is why I only quoted the above and tried to pick a rabbit, rather than endorsing his conclusions.

Sometimes people contend Keynes was about fiscal policy and not monetary policy/interest rate intervention, drawing a distinction between monetarist type policy and true Keynesianism fiscal intervention. There is some truth to that, but Keynes was really more about not monkeying around with short term interest rate targets.

One core tenent of Keynes' economic theory is advocating permanent and stable low long term interest rates. A reason being long term low rates (i.e. cheap and easy money) are key to long term economic growth in Keynes' view (sort of "eternal demand stimulation.")

Keynes was worried about short-term, counter cyclical monetary policy causing an expectation that interest rates would be raised in the future, leading to a liquidity trap where investors hoard cash during periods of lowered short term rates because they expect rates to rise in the future. In other words, investors would know the Central bank would have to eventually raise rates in the future and act accordingly.

Not surprisingly, managing and influencing "inflationary expectations" is an important monetary policy consideration for modern economists like Krugman and Bernanke who favor short term interventional monetary policy goals.

For Keynes, discretionary countercyclical monetary policy (i.e. moving interest rates in the short term in reaction to economic conditions) can be ineffective, not because it is monetary policy and monetary policy is inherently flawed, but because discretionary countercyclical monetary policy generates uncertainty as to long term rates, causing a liquidity trap.

“A low enough long-term rate of interest cannot be achieved if we allow it to be believed that better terms will be obtainable from time to time by those who keep their resources liquid. The long-term rate of interest must be kept continuously as near as possible to what we believe to be the long-term optimum. It is not suitable to be used as a short-period weapon.” (“How to Avoid a Slump,” The Times, Jan. 13, 1937, p.13).

The Keynesian dream = permanently slammed interest rates.

If you really want to know how literally insane Keynes was, read no further than the rarely discussed chapter 24 of the General Theory:

http://www.marxists.org/reference/su...heory/ch24.htm

madhedgefundtrader's Don’t bet against the 220 year trend for the dollar: I don't endorse all his investment views, but:

Is a hard gold peg with exchange type standard for a currency also a "fiat currency," as it too exists by virtue of a government decree - the set exchange rate (e.g. $20 per troy OZ gold)?

Maybe in a linguistic sense, but the the limitation of the gold exchange peg is a distinguishing characteristic when thinking about fiat in the economic sense of fiat currency.

Under the gold standard, I could take my $20 and exchange it for an ounce of gold, as could everybody else in the world that wanted to, even simultaneously. Thus the limitation: as long as the printed money supply (i.e. the printed money's value) didn't exceed the 20 to 1 ratio to gold, no price inflation and no exchange of dollars for gold.

If the government began printing mad more money, than I might exchange 20 for an ounce of gold but I would probably demand more than $20 if I exchanged it again. The ounce of gold didn't change, its still an ounce. The dollar went down because there are many more of them (monetary inflation).

This gold exchange ratio is the premise that is explored in much more depth Gibson's Paradox and the Gold Standard. Obviously its way complex and highly technical and broader than the simplistic discussion above but also pretty amazing.

Here is an older article by Reginald Howe, the attorney who brought the first federal lawsuit alleging manipulation of the gold price (That lawsuit was dismissed on technical grounds in U.S. District Court in Boston in March 2002 - 38 page Order) discussing this paper: August 13, 2001. Gibson's Paradox Revisited: Professor Summers Analyzes Gold Prices

What is going on in Iceland? This is simplistic, but is it accurate?

http://notsylvia.wordpress.com/

another summary:

More comic book thoughts.

The problem is that people all over the world are all holding assets that they believe are stores of purchasing power and wealth generators that are bubbled compared to their underlying value, their ability to preserve and generate purchasing power. So the total "market value" of all the various equities and debt instruments is impossibly large compared to the producivity of the underlying companies or economies. As people realize this there will be a rush out of these assets (for example the sovereign debt of Greece) in an attempt to preserve the purchasing power that debt supposedly represents. Some purchasing power will be wiped out, but some will find it's way into other assets, heightening their bubbles.

As people flee these assets by selling them, purchasing power flows into currencies, strengthening them. But this can be disastrous, as servicing debt demoniated in the currency becomes that much more expensive and difficult. The most liquid asset in the world is the world reserve currency, the dollar. As people or institutions try to flee a significantly sized dollar denominated asset, the resulting runup in the dollar could cause defaults on dollar denominated debt to spread like a virus. Wiping out dollar denominated debtors, including the US government, state and local governments, American corporations, banks, and ordinary citizens and their bank accounts. This would be cataclysmic, and the current political order would not survive.

This is why Ben Bernanke will print as many dollars as are necessary to avoid this, and the deflationists are wrong. Certainly, as people flee an asset, that asset deflates, often catastrophically. But unless the money supply falls, this will never spread into widespread consumer deflation, and this will never happen, because Ben Bernanke will never allow it.

So as countries around the world sacrifice their real economies to keep their zombie economies alive, more and more sovereigns and corporations will collapse, with people fleeing into was is liquid in the short term and what they believe is safest in the long term. That means runups in the dollar and then "quantitative easing". That means a huge bubble in UST. It may mean that Uncle Sam might have absolutely no problem floating his debt if **** is coming off the hook all over the world, sovereigns are defaulting, equities are crashing, etc. This does NOT mean that Ben will not be monetizing the debt; he will. He will just be doing it indirectly. This of what is being done with agency debt write now: institutions are selling the Fed their MBS, and taking the newly printed dollars and buying UST. This is exactly the sort of process I am talking about. The Fed is ahead of the game here, supporting values by buying the assets up rather than allowing them to collapse and make the crisis explicit, but it's the same thing. People are escaping these asset classes to classes they believe are safer, at least in the short term. The end result of this policy of course is that the Fed monetizes all the world's dollar denominated just and ends up with an enormous ballance sheet filled with toilet paper that there is no market for. Guess what happens then.

Ultimately all of this simply must lead to the remonetization of gold.

/rambling incoherence

I Boro

You know what this sounds like? The paradox of thrift on crack.