[stoney]

I've had my long posts on individual responsibility before, but given current markets, that advise while sound, might not be enough.

Arm yourselves with knowledge, it might be the only thing that can help you going forward.

For the leftist 'the govt is here to help us crowd', hopefully this helps to open your eyes. We are heading towards a VERY, VERY nasty market environment, with Cap and Trade setting what is left of our economy up for failure. What these individuals bring to the table is 'the other side' of CNBC and what our politicians are spouting.

The green shoots are not green shoots. The macro-economic numbers are less bad, but far from good, or even better.

If you put money in the market and enjoyed the 40% run up since march, take profits, as this is a completely unsubstandiated rally. The voume is volume, but not liquidity. The trading is program trading creating a bubble. Don't be left holding the bag.

Beyond my other sources of research (which are not public), these guys are the sources I look at every day, multiple times. See the other side, be prepared.

www.zerohedge.com

http://market-ticker.denninger.net/

I'm WAY short the market, long Gold, and short treasuries. In the short-term, we can expect to see the equity markets deflate by 20-30%, with Treasuries making a short term spike, but it will not last. As the market continues to go down and the govt continues to print money, inflation will hit hard. Rates will go up, treasuries will devalue (see treasury bubble popping), commodities will inflate, and gold will run as people look for a safe store for assets (gold has physical value vs paper money).

Inflation is already happening. Look at the price of oil vs USD and CAD. Since Feb 18 US Oil has gone up 90% in USD, vs 66% in CAD. Why? Sellers are pricing in inflation. CPI doesn't include food or oil, so you can effectively discount inflation numbers.

If you have made money in the recent rally, TAKE PROFITS!, and get the hell out of dodge. There is nothing supporting current pricing. SPX P/E is in the 200+ range, it is unsubstantiated.

I know some of you will rant about being bearish, but this is the world I travel in. Everyone I speak with is waiting for the drop. They just don't know when it's going to happen...

 

[X3pilot]

Joker, I appreciate your postings and am learning a lot from another perspective.

As to oil, does this story make sense

‘Rogue broker’ blamed for oil spike

The startling spike in oil prices to their highest level this year on Tuesday was caused by a rogue broker who placed a massive bet in the Brent oil market, triggering almost $10m (€7m) of losses for his company.

and without sounding like a nut job driver that loves my car too much, does the following proposal make sense?

Eliminate oil and gas futures trading from speculative trading. Put the trades back to the point where you bid for a barrel of oil, you better take it. Nationalize the oil, natural gas and gasoline and other distillates markets. Set a standard national price of gas, heating oil, cubic ft of natural gas, etc. Factor in a national tax with a distribution back to the states based on population and gallons sold.

I know there used to be good reasons for speculative trade in the energy sector, but I think the above story shows why this is not a supply and demand market trade situation these days.

Before the flaming jobs begin on my post, consider that I'm trying to learn, not pressing an agenda.

 

[stoney]

Joker, I appreciate your postings and am learning a lot from another perspective.

As to oil, does this story make sense

‘Rogue broker’ blamed for oil spike


and without sounding like a nut job driver that loves my car too much, does the following proposal make sense?

$10mm? That's dick for size. One contract is for 100 barrels of oil x $70/barrel = $70,000 / contract. If you trade 100 contracts (again, still not a lot), you're at $7,000,000. Also, Brent crude is European mkt. US markets us WTI-Crushing. They are named for the pipeling hub.

Eliminate oil and gas futures trading from speculative trading. Put the trades back to the point where you bid for a barrel of oil, you better take it.

This is a valid point. If you are hedging an ACTUAL physical delivery, rock it all week long. Unfortunately some large banks (GS anyone...) have bought subsidiaries that CAN take physical delivery. That loophole would be easy driven through.

Nationalize the oil, natural gas and gasoline and other distillates markets. Set a standard national price of gas, heating oil, cubic ft of natural gas, etc. Factor in a national tax with a distribution back to the states based on population and gallons sold.

I know there used to be good reasons for speculative trade in the energy sector, but I think the above story shows why this is not a supply and demand market trade situation these days.

Before the flaming jobs begin on my post, consider that I'm trying to learn, not pressing an agenda.

Nationalizing is BAD. Say it again, and again, and again. Nationalizing is BAD.

Social Security = Nationalized Retirement
Medicare - Nationalized Healthcare
Amtrack = Nationalized Transportation
AIG = Nationalized Banking

Are we seeing a trend here?

Also, it costs more money to ship refined products to different areas of the country. Land costs more in SF than Wyoming, hence the markup will be substantially higher in SF. Local govts have different tax rates, so there will be no natl gas price.

The best way to resolve disparate costs and to remove the taxation is a fair tax. I've been shouted at for being against the "little / poor people" for posting it before, but it is flat-out the best way to remove any tax loopholes, and to promote capital growth vs spending. It will never happen though, because equalizing is not what the govt wants, unless they control everything.

Just make it such that ALL cmdty forwards and futures MUST take physical delivery. It will offset much of the speculation. Also require that both parties in the futures trade have skin in the game (ie are buying or selling a physical asset). There is too much money pushing the markets beyond speculation.

 

[ridiculous]

I've had my long posts on individual responsibility before, but given current markets, that advise while sound, might not be enough.

Arm yourselves with knowledge, it might be the only thing that can help you going forward.


I'm WAY short the market, long Gold, and short treasuries. In the short-term, we can expect to see the equity markets deflate by 20-30%, with Treasuries making a short term spike, but it will not last. As the market continues to go down and the govt continues to print money, inflation will hit hard. Rates will go up, treasuries will devalue (see treasury bubble popping), commodities will inflate, and gold will run as people look for a safe store for assets (gold has physical value vs paper money).

Interesting, long gold and short treasuries? I am very curious in learning the trends gold seems to follow, would you mind explaining your reasoning behind this?

It seems like now a days gold has become disconnected from currency and become more of a product. However, I would argue that it hasnt lost its luster as a safe haven for some in these turbulent times or at least it is still marketed that way which is why im so interested in the direction it may goin in the next 3 months. To me though it seems like it should be treated like a commodity just like oil, metals etc and therefore will sink with everything else. Im a total newb at this as you know so feel free to put me in my place.


I played gold spdrs (gld) sideways during the rally with decent success until may when i got out. FWIW i am a fairly active options trader and just enjoy learning these trends especially when explained in lehmans terms. I am no economist or financial expert nor do I believe I need to be

thanks

 

[jimmydean]

On a lighter note, Portland was ranked #4 in the worst real estate markets to buy in, Yeah me! The guy down the street listed his place for $185k (lowest in the area) and has a sale pending sign only a week after posting. I paid $172k, so I feel less bad now (unlike the people behind us who paid $235k).

 

[dante]

Nationalizing is BAD. Say it again, and again, and again. Nationalizing is BAD.

Social Security = Nationalized Retirement
Medicare - Nationalized Healthcare
Amtrack = Nationalized Transportation
AIG = Nationalized Banking

Are we seeing a trend here?

And the US military = nationalized defense, police and firefighters = nationalized home protection, public schools = nationalized education. Combine that with the fact that SS is looking pretty good compared to retiree's IRA accounts right now, and our private health care system means that we pay more per capita than any other nation and yet our life expectancy is 30th in the world (right after Bosnia but above Cyprus ) and suddenly I'm not so quick to demonize all nationized activities.

The best way to resolve disparate costs and to remove the taxation is a fair tax. I've been shouted at for being against the "little / poor people" for posting it before, but it is flat-out the best way to remove any tax loopholes, and to promote capital growth vs spending. It will never happen though, because equalizing is not what the govt wants, unless they control everything.

The only problem for the fair tax is it falls squarely on the middle class. The poor get a rebate so they aren't paying any more taxes than they are now (which is virtually zero). The rich spend less as a percentage of their overall income, so they'll get taxed less. The only problem is the people making $30-200k per year will be paying a lot MORE in taxes (the Bush tax economists numbers, not mine).

 

[stoney]

And the US military = nationalized defense, police and firefighters = nationalized home protection, public schools = nationalized education. Combine that with the fact that SS is looking pretty good compared to retiree's IRA accounts right now, and our private health care system means that we pay more per capita than any other nation and yet our life expectancy is 30th in the world (right after Bosnia but above Cyprus ) and suddenly I'm not so quick to demonize all nationized activities.



The only problem for the fair tax is it falls squarely on the middle class. The poor get a rebate so they aren't paying any more taxes than they are now (which is virtually zero). The rich spend less as a percentage of their overall income, so they'll get taxed less. The only problem is the people making $30-200k per year will be paying a lot MORE in taxes (the Bush tax economists numbers, not mine).

Regarding the fair tax, if you don't want to pay the tax, don't buy more than necessities. It's a VAT based on spending. It's not hard to aviod the tax on your sweet new flat screen, just don't buy it.

 

[Silver]

Regarding the fair tax, if you don't want to pay the tax, don't buy more than necessities. It's a VAT based on spending. It's not hard to aviod the tax on your sweet new flat screen, just don't buy it.

So, to recap: Let's make a tax policy that wildly favors me so that I can buy more luxuries.

Yeah, that'll sell it! No wonder so many people are excited about the the fair tax.

 

[stoney]

Not even close. The fair tax is a VAT that completely offsets your income taxes. Your income becomes your income. You are taxed on your spending habits. If you are a prodigious saver, you will not be taxed, however if you are a crhronic over spender, you will be taxed based on your spending.

It's a win-win for a economy that has moved grossly away from sustainable growth to one fueled by credit. If you buy on credit, you get taxed on it, making your credit purchases more expensive in the long run. This will promote more fiscal sensibility because it forces you to live within your means.
If you are a saver, yo do not get taxed on saving, which promotes more people to save large % of their income. In doing so, the exonomy becomes less dependent on the whim of the consumer, people have more savings so they are less dependant on the govt for retirements, etc.

 

[jimmydean]

Without doing research of my own, how is the spending tracked? As a sales tax, or like at the end of the year? What if I buy used, or online?

Having lived in Oregon for over 15 years now, I have gotten used to not paying a sales tax. Every time I go to California, I get sticker shock when the cost at the register is more than the sticker.

 

[stoney]

Without doing research of my own, how is the spending tracked? As a sales tax, or like at the end of the year? What if I buy used, or online?

Having lived in Oregon for over 15 years now, I have gotten used to not paying a sales tax. Every time I go to California, I get sticker shock when the cost at the register is more than the sticker.

At the point-of-sale. It's a national tax, so it will be added to EVERY transaction. Used sales are not tracked, but loopholes are bound to exist. Currently used items are not tracked unless they are big ticket (cars, etc).

This will also promote more recycling and re-usage, as you will be taxed on new items more regularly than used.

Don't forget, that this will eradicate you income tax. You will see 30% more every month. How you spend it is your choice. Save it, no tax. Spend it, get taxed.

 

[X3pilot]

But if people spend less, that hurts the economy, no? (Not a smart ass question, a question)

 

[stoney]

The economy will be hurting either way. The economy as we know it, has been overly inflated by credit (ie people spending money they don't have). Eventually this credit MUST be re-paid, taking it out of the economy (credit is inherently fake money, it's been created by the lender, not the govt presses, hence is flattens out once repaid).

What we are looking at is a new normal to the economy, one in which the consumer makes up less of GDP. This will be a lower level for GDP, cash in cirrculation, etc, as the money (again, created from air) is taken out of the economy. That new normal will be once again, an economy where people will save (or pay down debt, since the govt looks at them as the same?!). Reason being, credit is gone. PEople will have to save.

So, while yes, it will hurt the economy in the short term, it will promote a healthier economy long-term by promoting savings and less credit usage. That being said, we're already f*ed long-term if the govt keeps printing money, so wtf not?

 

[ohio]

Been through this before but the black market this would create is extraordinarily dangerous. In principle, I somewhat agree with you. but in execution it won't work the way it is sold.

A dual approach may make sense, while allowing a national VAT that isn't so high it generates a significant black market, but then you have double the tax code to deal with.

 

[dante]

At the point-of-sale. It's a national tax, so it will be added to EVERY transaction. Used sales are not tracked, but loopholes are bound to exist. Currently used items are not tracked unless they are big ticket (cars, etc).

This will also promote more recycling and re-usage, as you will be taxed on new items more regularly than used.

Don't forget, that this will eradicate you income tax. You will see 30% more every month. How you spend it is your choice. Save it, no tax. Spend it, get taxed.

So, if it is going to be revenue neutral, and some companies / people are going to be paying less in taxes, who is going to be paying more?

Also, if the objective is to get people to spend less and save more, what happens if the objective is achieved? Won't the government have to raise taxes if people start spending less? I'm assuming that the current fair tax model is based on current consumption patterns, so if people stop buying what they don't need, the government will have to make up that money somewhere, correct?

 

[stoney]

A HUGE part of the model is reduction in the size of the govt.

It's a dream that flat tax will ever occur, because that would force the gov to downsize, which is never going to happen. Ah... pipedreams. We could only hope that logic might prevail some day.

 

[ohio]

A HUGE part of the model is reduction in the size of the govt.

I don't get the connection. That is (or should be) the goal regardless of consumption or income tax. In my mind they're independent from government size outside of trading an IRS for massive Customs, FDA, and Commerce growth (which would hopefully net out evenly or better).

I also in principle agree with incentives towards savings, but I think a standalone flat tax would be so extreme as to stagnate the economy. Both are tools that should be balanced against each other.

Need to massively simplify and rethink the income tax shouldn't be mistaken for a need to discard it completely. Similarly, problems associated with a standalone consumption tax shouldn't be a reason to discard consumptions taxes (which we do already use semi-appropriately for luxury, vice, and strategic goods).