Having The Same Argument, Again.

[Tyrone Slothrop]

Originally Posted by sebastian_dangerfield

So it's Schumpeter... You're a smart guy and you've verified my suspicions. Gold and guns it is.

I think what the government has done has made things better than they would have been. People who are paid to analyze such things agree. People who are paid to do politics may not.

[sebastian_dangerfield]

Originally Posted by Cletus Miller

Yes, but...

People who make predictions of things--interesting or otherwise, plausible or not--buttress them with extremely obvious observations, thus creating a link with any rational person. "At some stage, somewhere in future, we will have a war" is one of those. It's impossible to tell from the article what the actual context of that line was, but it smacks of stating the obvious to condition the listener or reader to lend more credence to the other predictions--one can't argue that there will be a war, and everyone knows that wars have been waged in the past to distract the citizenry and that some wars are not necessary and even against the national interest of the instigator, so everything he said makes sense.

But without a temporal component to the prediction, (1) it's relatively useless for personal investing, unless you can stay solvent longer than the market can stay irrational (and you're still working, so I doubt you're in a different boat than I am), and (2) he can't *ever* be proven wrong in his lifetime.

In the context of what he pitches - commodities rise like crazy in wars so start investing in them - it makes sense. (I think there are many reasons that approach wouldn't work, and he's a bit nuts, but that's another discussion.)

He says there will be a war all the time (friends just saw him at a fund conference in NY and he predicted a dirty bomb destroying property values in US cities as well), and has been saying it for years, so this is not mere shock value fear-mongering. The timetable he cites (you can see endless interviews w/him on Youtube) is w/in 8 years.

I agree its practically useless for the everyman investing right now and looking for short term gains. But it's interesting, and if you're looking long term, it can become quite useful.

It also has an unseen value. Getting macro viewpoints into the discussion changes the conversation. The biggest problem we have in the country right now stems from herd mentalities. From DC to business hierarchies to investing, it's better to be wrong with the crowd than right alone. We incentivize that thinking. Having a few smart crazy fuckers like this guy, Chanos on China and the people like Whitney - who is bashing housing right now - out there questioning things breeds different thinking and creates greater skepticism.

If we're going for a long slide, why not talk about it openly rather than pretend it isn't happening? Maybe it just depresses people, but maybe, also, it leads to some inventive thinking beyond, "Hey, let's just re-inflate the motherfucker for a while!"

ETA: Or to use a favorite Fear lyric, "Let's have a war!"

[sebastian_dangerfield]

Originally Posted by Tyrone Slothrop

I think what the government has done has made things better than they would have been. People who are paid to analyze such things agree. People who are paid to do politics may not.

God yes. You think i disagree? My joke was looking forward. And my question was whether you thought there was any chance of a second stimulus. I took you to be answering, "None."

[Cletus Miller]

Originally Posted by sebastian_dangerfield

Chanos on China and the people like Whitney - who is bashing housing right now

Calling a China collapse--which Chanos may or may not actually be calling--is contrarian, but Hank and many others have noted the overbuilding in Beijing; it's not too very different from the US construction bubble in terms of misallocation. The question is how one effectively, narrowly shorts high-end property in China, when CDS on MBS is not an option.

Whitney calling the double-dip just makes her the one calling that with the loudest voice. There's a toxic brew of a general oversupply of expensive housing units, high unemployment, as-yet undefaulted exotic financing, backlogged defaulted and foreclosed properties, low/no general inflation and a persistent lower-than-sustainable cap rate on many (perhaps not most, at this point) residential and commercial properties. If you ignore homebuilders, realtors and politicians (as one should when discussing resi RE), there's a pretty even split in sentiment about home values, with a lot of nervousness among those on the more-positive side (which includes me, most days), with those calling the double dip more convinced they are correct. What screws it up are the currently very low interest rates, the 50%+ drops in prices in many places (specifically, FLA, AZ, NV and non-coastal SoCal) and the fact that everyone needs to live somewhere. I think the optimistic view for the general market is flattish, with dips tied to seasonality, employment and mortgage rates (which can't go down, but can go up a lot). The bailout for current leveraged owners will only come with inflation. So, while it may be contrarian to the DC-preferred storyline, predicting a double dip is a more than reasonable conclusion from the actual facts looking out over a 6-36 month horizon, rather than looking back at what happened last month.

[LessinSF]

Originally Posted by sebastian_dangerfield

ETA: Or to use a favorite Fear lyric, "Let's have a war!"

No, More Beer!

[Atticus Grinch]

Originally Posted by Hank Chinaski

but if you can't understand what i write, how could it be obvious.

think about it.

All I know is, I have never once posted something that I didn't think was obvious, and yet my PM box is full of "G.O." this and "POTY" that. Apparently, I am going broke overestimating the intelligence of the American public.

[Tyrone Slothrop]

Originally Posted by sebastian_dangerfield

God yes. You think i disagree? My joke was looking forward. And my question was whether you thought there was any chance of a second stimulus. I took you to be answering, "None."

I think that's a political question, and I guess if the economy suffers I wouldn't be surprised to see the Democrats push one, but closer to the fall elections.

[Hank Chinaski]

Originally Posted by Atticus Grinch

All I know is, I have never once posted something that I didn't think was obvious, and yet my PM box is full of "G.O." this and "POTY" that. Apparently, I am going broke overestimating the intelligence of the American public.

Sandra Bullock won the oscar because the performance was good for her, not that it was better than M. Streep's.

[Hank Chinaski]

Originally Posted by Tyrone Slothrop

I think what the government has done has made things better than they would have been. People who are paid to analyze such things agree. People who are paid to do politics may not.

note to lurkers and newbers: a lot of times you'll read Ty posts and assume he's being sarcastic, making some kind of joke. but, as hard as it is to believe, he always means what he posts.

[Tyrone Slothrop]

Originally Posted by Hank Chinaski

note to lurkers and newbers: a lot of times you'll read Ty posts and assume he's being sarcastic, making some kind of joke. but, as hard as it is to believe, he always means what he posts.

I could wonder why you mock this opinion when I express it, but not when Sebby agrees, but then the P in PB is for Politics, not Psychology. Carry on.

[Hank Chinaski]

Originally Posted by Tyrone Slothrop

I could wonder why you mock this opinion when I express it, but not when Sebby agrees, but then the P in PB is for Politics, not Psychology. Carry on.

Sebby? Sebby doesn't surf.

[sebastian_dangerfield]

Originally Posted by Cletus Miller

Calling a China collapse--which Chanos may or may not actually be calling--is contrarian, but Hank and many others have noted the overbuilding in Beijing; it's not too very different from the US construction bubble in terms of misallocation. The question is how one effectively, narrowly shorts high-end property in China, when CDS on MBS is not an option.

Whitney calling the double-dip just makes her the one calling that with the loudest voice. There's a toxic brew of a general oversupply of expensive housing units, high unemployment, as-yet undefaulted exotic financing, backlogged defaulted and foreclosed properties, low/no general inflation and a persistent lower-than-sustainable cap rate on many (perhaps not most, at this point) residential and commercial properties. If you ignore homebuilders, realtors and politicians (as one should when discussing resi RE), there's a pretty even split in sentiment about home values, with a lot of nervousness among those on the more-positive side (which includes me, most days), with those calling the double dip more convinced they are correct. What screws it up are the currently very low interest rates, the 50%+ drops in prices in many places (specifically, FLA, AZ, NV and non-coastal SoCal) and the fact that everyone needs to live somewhere. I think the optimistic view for the general market is flattish, with dips tied to seasonality, employment and mortgage rates (which can't go down, but can go up a lot). The bailout for current leveraged owners will only come with inflation. So, while it may be contrarian to the DC-preferred storyline, predicting a double dip is a more than reasonable conclusion from the actual facts looking out over a 6-36 month horizon, rather than looking back at what happened last month.

You can only do it indirectly (vendors, suppliers, etc.). A good start might be examining Australian commodities providers. I understand China gets a lot of raw materials from Australia. Etc...

You think Whitney's merely the loudest because you know the industry better than most. Even here, with mostly dilettantes opining, the level of analysis has much more accurate information than the average person is hearing. The even split you note does not apply across the board. It does not even apply broadly to the "investor class." Until the recent freakout in Europe, the general public perception was that we were in a real, sustainable recovery. The only group that doubts it? People running businesses. They aren't hiring, and they don't plan to any time soon. They think - and I think they're right in this - that once the stimulus effect wanes, and the renewed wealth effect investors have enjoyed from the equities bubble is tempered with a correction, consumption will not flatten, but begin to tank anew.

You will hear very few people say stuff like this out loud on CNBC, or in the Journal. I don't know exactly why, but if you do a Google news search for recent articles using "double dip" and "housing," almost all will argue "That's unposssible!" (cheerleaders) or "We might come close, but it won't happen" (cheerleaders trying to look credible). Whitney's one of perhaps three or four well known analysts saying what the 50% of the people you talk to take as fact. That's frightening.

I don't know why this country feels the need to delude itself, or ignore the facts. Perhaps they all believe behavioral economists like Shiller ("If you think negative, the negative will happen"), or perhaps they just want to do what Americans do in every time of crisis - grab a bullshit narrative and run with it.

You're too positive, I think. I see the factors you describe working in a cyclical fashion, ratcheting atop one another in a long, slow, downward trajectory. I could easily be wrong. And so could people like Faber and Whitney. But we should discuss these views in the open, and to the extent people like Whitney and Faber force the discussion on a public that'd otherwise avoid it like the plague, I'm glad to have them talking.

[Adder]

Originally Posted by sebastian_dangerfield

In context:

"[T]he average family will be hurt by [the prolonged recession], and then in order to distract the attention of the people, the governments will go to war...

People ask me against whom? Well, they will invent an enemy," Faber said.

"At some stage, somewhere in future, we will have a war - that you have to be prepared for. And during war times, commodities go up strongly...”

This context does not render the analysis less retarded.

[sebastian_dangerfield]

Originally Posted by Adder

This context does not render the analysis less retarded.

You're a tedious fucking bore. Go watch him on Youtube and come back with something interesting to say.

Brought to you by shiraz champagne. Tasty!

[Adder]

Originally Posted by sebastian_dangerfield

In the context of what he pitches - commodities rise like crazy in wars so start investing in them - it makes sense.

You don't need a war to think commodities are going to spike again. China and India will take care of that by themselves.

[Having a few smart crazy fuckers like this guy,

You have evidence to support the "smart" part?