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sky_walker616 115 posts  |  Last Activity: Mar 27, 2015 11:56 AM Member since: Jan 20, 2005
  • sky_walker616 sky_walker616 Feb 6, 2015 11:54 AM Flag

    Part II
    "Although the foreign demand helps to firm up the marginal transaction prices on these assets, it is, in my view, the highly leveraged positions taking on by the domestic hedge funds generated most of the demand. As I mentioned earlier, these leveraged positions were mostly financed by the banks and other investment vehicles, which are largely hidden from plain sight. Such ENRON like private financial system have been sanctioned by the government and by the organizations like FASB probably unwittingly, and have been promoted by all level of “grass-root” networks including educational institutions.
    I think that it is almost impossible for US government to replicate the private shadowy banking system (i.e. hedge funds, SIVs, etc.) existed before 2007 since it is prohibitively expensive to take the tens of trillion of hidden debt/loss onto government balance sheet. With subdued future investment demand from traditionally current-account-surplus nations such as OPECs, China, Japan, etc., and from badly hurt hedge funds and SIVs, the USD assets could enter into a secular downtrend which would likely last a few more years.
    We have now witnessed the first and second stage of this “One-hundred-year flood” — the financial crisis and the economic crisis. I think that the third stage would be the social crisis. The high unemployment and high number of family in financial distress over a long period of time would present a fresh test to the democratic political system.
    "

  • sky_walker616 sky_walker616 Feb 6, 2015 11:52 AM Flag

    This is from 2009:
    Part I
    "This American financial/economic crisis is the product of many years of excess built up in the global financial system. Partly because USD is the world reserve currency and partly because the Wall Street enjoys dominant position in world financial stage, the entire private financial system, including commercial banks, investment banks, hedge funds, private equity corps, investment structures such as CDO/CLO, and other SIVs and SPVs, has, during the past twenty-five years, helped to created a false sense of prosperity in America and other developed world by, like a ENRON corp, hiding the loss/debt but showing the profit/wealth.

    The persistent demand for USD denominated assets by foreign central banks and domestic non-bank financial institutions such as Insurance companies, pension funds, mutual funds has contributed to the appreciation of USD assets. That trend prompted the creations of many loosely regulated domestic speculative institutions such as hedge funds, which, with the tremendous funding from the banks and investment banks, try to take advantage of pricing trend with highly leveraged bet. Such demand from speculative financial institutions and the greater willingness for the banks to lend have further boosted the assets prices and hence the sense of wealth and prosperity among most American consumers and American corporations (higher stock prices, higher housing price, higher commodity prices, higher wage and labor compensations etc.)
    "

  • sky_walker616 sky_walker616 Feb 6, 2015 10:00 AM Flag

    I think that the key to understand this is to know that the real "money printing" is not done by central banks, but by the banking system, the shadowy banking system, by consumers, by the entrepreneurs, by hedge fund managers, by investment managers such as Bill Gross, etc. In a credit driven economy, the leverage effect of credit extended determines the economic growth. As all these participants in the economy are taking on more and more debt, the marginal utility of new debt/credit declines and will someday reach the "point of saturation", where the risk of unsustainable liabilities outweighs the utility generated by the marginal debt/credit.
    Bill Gross, along with Martin Barnes of the Bank Credit Analyst and Ray Dalio of Bridgewater Associates, thinks that the "point of debt/credit saturation" is about now.

  • sky_walker616 sky_walker616 Feb 5, 2015 12:22 PM Flag

    This is what the WW3 would look like:
    Step One:
    The major powers will try to destroy the communication capability in the space on both sides. It will be a very expensive operation but it is necessary to destroy as many as satellites on the lower Earth orbit and Stationary Orbits. Many known and unknown weapon systems will be employed. The good news are that the human casualty will be at minimum.
    Step Two:
    If Step One does not stop the war, the major powers will start to destroy the communication and strategic military targets on the Earth surface with known and unknown weapon systems. That operation could be expand to dual-use civilian communication systems.
    Step Three:
    If Step Two does not stop the war, the major powers will start to attack the strategic targets, such as Three-Gorges Dam in China, and YellowStone National Park in US. If the Yellowstone Super Volcano is induced to erupt, then that would be classified as a global extinction event.
    ....

  • sky_walker616 sky_walker616 Feb 4, 2015 10:48 PM Flag

    So why QE4evers and Zero-Interest-Rate failed to revive this "cancer patient" -- the financial economy?
    Legendary bond investment manager Bill Gross put it this way:
    "If real growth in most developed and highly levered economies cannot be normalized with monetary policy at the zero bound, then investors will ultimately seek alternative havens. Not immediately, but at the margin, credit and assets are exchanged for figurative and sometimes literal money in a mattress. As it does, the system delevers, as cash at the core or real assets at the exterior become the more desirable holding. The secular fertilization of credit creation and the wonders of the debt supercycle may cease to work as intended at the zero bound.
    Comprehending (or proving) this can be as frustrating as understanding the differences between Newtonian and quantum physics and the possibility that the same object can be in two places at the same time. Central banks with their historical models do not yet comprehend the impotence of credit creation on the real economy at the zero bound. Increasingly, however, it is becoming obvious that as yields move closer and closer to zero, credit increasingly behaves like cash and loses its multiplicative power of monetary expansion for which the fractional reserve system was designed."

  • sky_walker616 sky_walker616 Feb 4, 2015 4:34 PM Flag

    So why QE4evers and Zero-Interest-Rate failed to revive this "cancer patient" -- the financial economy?
    Legendary bond investment manager Bill Gross put it this way:
    "If real growth in most developed and highly levered economies cannot be normalized with monetary policy at the zero bound, then investors will ultimately seek alternative havens. Not immediately, but at the margin, credit and assets are exchanged for figurative and sometimes literal money in a mattress. As it does, the system delevers, as cash at the core or real assets at the exterior become the more desirable holding. The secular fertilization of credit creation and the wonders of the debt supercycle may cease to work as intended at the zero bound.
    Comprehending (or proving) this can be as frustrating as understanding the differences between Newtonian and quantum physics and the possibility that the same object can be in two places at the same time. Central banks with their historical models do not yet comprehend the impotence of credit creation on the real economy at the zero bound. Increasingly, however, it is becoming obvious that as yields move closer and closer to zero, credit increasingly behaves like cash and loses its multiplicative power of monetary expansion for which the fractional reserve system was designed."

  • Recently Obama proposed $4 trillion government spending, with dramatic increase in defense spending and infrastructural spending. These are good government spending if we are at the trough of the regular economic cycle. But we are supposed to be at the peak of the economic cycle after stock market jumped more than 40% over the past three years. What is wrong?
    ECB announced QE recently, hoping that it will help to forestall the dramatic slow-down in economic growth in the EU zone. The short-term beneficial effect has already shown up in the EU stock market. But, if you understand what Bill Gross has laid out, such effect will be temporary: it is like giving hormone treatment to a cancer patient -- it does not solve the root-cause of the problem. The same experiment has been conducted in US but failed: the zero-interest-rate and QE4ever have failed to boost the US economy back onto the long-run sustainable growth path.
    So what is next? One of the possibility is wider wars, or possibly WW3. This scenario will be likely, if you start to research on the two decades prior to the WW2 carefully. When the economy is not on good terms, the index of unhappiness of domestic population will likely spike. If such negative sentiment becomes prevalent and left unattended, things can get out hands unexpectedly. So usually the ruling elite will create programs to help to channel the negative sentiment to be subject to controlled release.

  • Recently Obama proposed $4 trillion government spending, with dramatic increase in defense spending and infrastructural spending. These are good government spending if we are at the trough of the regular economic cycle. But we are supposed to be at the peak of the economic cycle after stock market jumped more than 40% over the past three years. Why are we still at the "trough"?? Federal Reserve will never admit that we are still at the trough of an economic cycle and will still push for "rate hike" which they knew will never happen.

    ECB announced QE recently, hoping that it will help to forestall the dramatic slow-down in economic growth in the EU zone. The short-term beneficial effect has already shown up in the EU stock market. But, if you understand what Bill Gross has laid out, such effect will be temporary: it is like giving hormone treatment to a cancer patient -- it does not solve the root-cause of the problem. The same experiment has been conducted in US but failed: the zero-interest-rate and QE4ever have failed to boost the US economy back onto the long-run sustainable growth path.

    So what is next? One of the possibility is wider wars, or possibly WW3. This scenario will be likely, if you start to research on the two decades prior to the WW2 carefully. When the economy is not on good terms, the index of unhappiness of domestic population will likely spike. If such negative sentiment becomes prevalent and left unattended, things can get out hands unexpectedly. So usually the ruling elite will create programs to help to channel the negative sentiment to be subject to controlled release.

  • sky_walker616 sky_walker616 Feb 3, 2015 11:57 AM Flag

    Obama admin is proposing $4 trillion budget with lots of spending on defense and infrastructure and some tax hikes.
    This should be good news, if we are in the trough stage of the regular economic cycle.
    The stock market has bee up 40% during the past three years, yet we only get 2.4% GDP growth in 2014, even after short-term growth boosting initiatives such Universal-Healthcare and Immigration Reform.
    Universal-Healthcare boost the total healthcare speaking since it did not make necessary cut, and the burden were borne by higher healthcare premium to average people and higher federal deficit. This will not last long.
    The Immigration Reform gave the undocumented workers the rights to the massive social welfare, such that, given the multiplier effect, $1000 boost to the federal deficit will have $3000 to $5000 effect on the near-term GDP growth. Again, such effect will not last long.
    I wonder how long the GDP growth can be managed piece-meal like this? What will come next?

  • sky_walker616 sky_walker616 Feb 3, 2015 10:25 AM Flag

    Obama admin is proposing $4 trillion budget with lots of spending on defense and infrastructure and some tax hikes.
    This should be good news, if we are in the trough stage of the regular economic cycle.
    The stock market has bee up 40% during the past three years, yet we only get 2.4% GDP growth in 2014, even after short-term growth boosting initiatives such Universal-Healthcare and Immigration Reform.
    Universal-Healthcare boost the total healthcare speaking since it did not make necessary cut, and the burden were borne by higher healthcare premium to average people and higher federal deficit. This will not last long.
    The Immigration Reform gave the undocumented workers the rights to the massive social welfare, such that, given the multiplier effect, $1000 boost to the federal deficit will have $3000 to $5000 effect on the near-term GDP growth. Again, such effect will not last long.

  • sky_walker616 sky_walker616 Feb 2, 2015 1:42 PM Flag

    Now we see new headlines such as "NATO: US must prepare to confront Russia", then we know that the WW3 might be closer than we think.

  • sky_walker616 sky_walker616 Jan 29, 2015 9:01 AM Flag

    Given the upcoming turmoil in the global financial economic system, the possibility of WW3 is getting real:
    "
    ECB announced QE recently, hoping that it will help to forestall the dramatic slow-down in economic growth in the EU zone. The short-term beneficial effect has already shown up in the EU stock market. But, if you understand what Bill Gross has laid out, such effect will be temporary: it is like giving hormone treatment to a cancer patient -- it does not solve the root-cause of the problem. The same experiment has been conducted in US but failed: the zero-interest-rate and QE4ever have failed to boost the US economy back onto the long-run sustainable growth path.
    So what is next? One of the possibility is wider wars, or possibly WW3. This scenario will be likely, if you start to research on the two decades prior to the WW2 carefully. When the economy is not on good terms, the index of unhappiness of domestic population will likely spike. If such negative sentiment becomes prevalent and left unattended, things can get out hands unexpectedly. So usually the ruling elite will create programs to help to channel the negative sentiment to be subject to controlled release. For an individual, the best way to release stress is exercising; and for a nation, the best release venue is War, an extreme version of exercise. One can argue that the recent global events in 2014 and 2015 have laid out the foundation for such future scenario.
    "

  • In his latest Investment Outlook, Bill Gross pointed out "The good times are over", and explained why more cheap credit cannot anchor the real economic growth onto its long-run sustainable path:
    "If real growth in most developed and highly levered economies cannot be normalized with monetary policy at the zero bound, then investors will ultimately seek alternative havens. Not immediately, but at the margin, credit and assets are exchanged for figurative and sometimes literal money in a mattress. As it does, the system delevers, as cash at the core or real assets at the exterior become the more desirable holding. The secular fertilization of credit creation and the wonders of the debt supercycle may cease to work as intended at the zero bound.
    Comprehending (or proving) this can be as frustrating as understanding the differences between Newtonian and quantum physics and the possibility that the same object can be in two places at the same time. Central banks with their historical models do not yet comprehend the impotence of credit creation on the real economy at the zero bound. Increasingly, however, it is becoming obvious that as yields move closer and closer to zero, credit increasingly behaves like cash and loses its multiplicative power of monetary expansion for which the fractional reserve system was designed."

    I think that the key to understand this is to know that the real "money printing" is not done by central banks, but by the banking system, the shadowy banking system, by consumers, by the entrepreneurs, by hedge fund managers, by investment managers such as Bill Gross, etc. In a credit driven economy, the leverage effect of credit extended determines the economic growth. As all these participants in the economy are taking on more and more debt, the marginal utility of new debt/credit declines and will someday reach the "point of saturation", where the risk of unsustainable liabilities outweighs the utility generated by the marginal debt/credit.

  • sky_walker616 sky_walker616 Jan 27, 2015 9:40 PM Flag

    Given the impending possible slow-motion collapse of the global financial system, the WW3 might be inevitable at this point:
    ECB announced QE on Thursday, hoping that it will help to forestall the dramatic slow-down in economic growth in the EU zone. The short-term beneficial effect has already shown up in the EU stock market. But, if you understand what Bill Gross has laid out, such effect will be temporary: it is like giving hormone treatment to a cancer patient -- it does not solve the root-cause of the problem. The same experiment has been conducted in US but failed: the zero-interest-rate and QE4ever have failed to boost the US economy back onto the long-run sustainable growth path.
    So what is next? One of the possibility is wider wars, or possibly WW3. This scenario will be likely, if you start to research on the two decades prior to the WW2 carefully. When the economy is not on good terms, the index of unhappiness of domestic population will likely spike. If such negative sentiment becomes prevalent and left unattended, things can get out hands unexpectedly. So usually the ruling elite will create programs to help to channel the negative sentiment to be subject to controlled release. For an individual, the best way to release stress is exercising; and for a nation, the best release venue is War, an extreme version of exercise. One can argue that the recent global events in 2014 and 2015 have laid out the foundation for such future scenario.

  • sky_walker616 sky_walker616 Jan 25, 2015 9:41 PM Flag

    Is Greek situation the last straw that break the #$%$'s back?

  • sky_walker616 sky_walker616 Jan 21, 2015 4:26 PM Flag

    If Yellowstone super volcano indeed erupts, then the sky in the Northern hemisphere could be blocked by the ash for at least two years. You can imagine what kind of mess that it could cause.

  • sky_walker616 sky_walker616 Jan 21, 2015 10:14 AM Flag

    Study WW2 carefully. Bad economy in Germany contributed to the rise of Hitler, who was really nobody and came out of nowhere. In hindsight, he, and his regime, was designed to destroy both German and Russia.
    I always wonder how could a person like him, not related to Royal family, not a decorated soldier, not a great painter, nor an heir to large inheritance, rose to the power in Germany. How did he have the foresight to establish his own army, the brown shirt, to help him to govern without the consent of the German upper class?

  • sky_walker616 sky_walker616 Jan 21, 2015 9:51 AM Flag

    Read the book for a few times, then the understanding will sink in automatically.

  • sky_walker616 sky_walker616 Jan 21, 2015 9:50 AM Flag

    Once human is "smart" enough to learn his/her potential to know ALL THAT IS and to be ALL THAT IS, then the world will for sure gets better.

  • sky_walker616 sky_walker616 Jan 21, 2015 9:28 AM Flag

    Study WW2 carefully. Bad economy in Germany contributed to the rise of Hitler, who was really nobody and came out of nowhere. In hindsight, he, and his regime, was designed to destroy both German and Russia.
    I always wonder how could a person like him, who is not related to Royal family, not a decorated soldier, not a great painter, nor an heir to large sum of inheritance, rose to the power in Germany. How did he have the foresight to establish his own army, the brown shirt, to help him to govern without the consent of the German upper class?

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