I live in the USA and I am concerned about the future. I created this blog to share my thoughts on the economy and anything else that might catch my attention.
This is the End and a New Beginning
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I've been thinking about this for some time.
After 21 years of writing this blog almost daily, I've decided to stop
writing the daily updates on the blog.
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Silver Deep Dive
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Silver had a memorable year (+148%). Some of this can be explained by a
decline in the dollar. I decided to do some ML analysis to look for other
insights....
Our robots will be intuitive to use, intelligent and highly flexible. They'll be easy to buy, train, and deploy and will be unbelievably inexpensive. Heartland Robotics will change the definition of how and where robots can be used, dramatically expanding the robot marketplace. - Rod Brooks
A Renaissance in American Manufacturing
You might not know this but one of my responsibilities as Commander in Chief is to keep an eye on robots, and I am pleased to report that the robots you manufacture here seem peaceful, at least for now.
That leaves gas prices. The U.S. may want to consider creating a price ceiling for average gasoline prices, perhaps at around $3.50. In order to ensure that consumers don't have to pay more than that for gasoline, one step could be to relax taxes when prices begin climbing past that mark. When taxes can't be lowered any farther, perhaps subsidies can help cut prices.
Government price controls further exacerbated the crisis in the United States,[24] which limited the price of "old oil" (that already discovered) while allowing newly discovered oil to be sold at a higher price, resulting in a withdrawal of old oil from the market and the creation of artificial scarcity. The rule also discouraged alternative energies or more efficient fuels or technologies from being developed.[24] The rule had been intended to promote oil exploration.[27] This scarcity was dealt with by rationing of gasoline (which occurred in many countries), with motorists facing long lines at gas stations beginning in summer 1972 and increasing by summer 1973.
There is some good news though.
Secondary effects
Various secondary effects occurred, notably toilet paper panics in Japan and the United States; these were unfounded panics which became self-fulfilling prophesies, and are classic examples of the Thomas theorem. Price rises and unfounded rumors of a toilet paper shortage – based on oil being used in paper manufacturing – caused a panic and hoarding of toilet paper in late October and early November in Osaka and Kobe, among other cities.[35][36] In the US, Johnny Carson inadvertently caused a three-week panic when, on December 19, 1973, he read a news item regarding the US government falling behind on bids for toilet paper and quipping that the nation faced a toilet paper shortage on the Tonight Show.
In all seriousness, I only hoarded toilet paper because I felt it would perform better as an investment than most safe alternatives in this negative real yield environment. Ben Bernanke tried to force me to buy risk assets. I opted to buy something else. I'm not exactly sure how it helps our economy long-term though.
What should you be investing in? One investment to consider for a small part of your portfolio is Treasury Inflation-Protected Securities, known as TIPS, in which the principle is adjusted to the Consumer Price Index. (Pimco uses TIPS in many of its portfolios.) These are issued for terms of five, 10 and 20 years. However, if you purchase them through a mutual fund, you do not have to be concerned about maturities. This investment will protect both your principal and interest from inflation.
Here are the claims of the article.
1. These are nervous times. 2. You should consider investing a small part of your portfolio in TIPS. 3. TIPS will protect both your principal and interest from inflation.
I get it. If TIPS offer protection, then protect modestly.
Be wary of putting too much in TIPS though. You don't want to "protect" more than a "small part" of your portfolio.
I get it. If stocks are overvalued, invest modestly.
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Invest modestly, but be wary of putting too much in the market because there is a good chance it will fall.
Disclosure: This is not investment advice. For what it is worth, a large part of my portfolio is permanently sitting in TIPS and none of my portfolio is invested in stocks. That's been true since 2004. No complaints so far.
That said, TIPS do not offer the risk free protection that the first article claims. TIPS would NOT protect against inflation if we hyperinflate. First, there's a lag between the inflation we see in every day life and when it finally trickles into TIPS appreciation. Second, serious inflation implies serious taxation of the inflationary gains.
The nation's economy is a major mess, and the situation is unlikely to change soon. Investors, take note -- and turn to stocks with strong global ties and better growth potential.
I wonder what the 5 stocks for the decline of thehighly coupledglobal economy are?
Contrary to what the decouplers would have expected, the losses were greater outside the United States, with the worst experienced in emerging markets and developed economies like Germany and Japan. Exports make up especially large portions of economic activity in those places, but that fact was not supposed to matter anymore in a decoupled world because domestic activity was thought to be so robust.
I watched the interview yesterday. He exudes confidence and optimism. No doubt about that. My defenses were up though, much like they'd be on a used car lot.
PEOPLE ARE SCARED FROM A BUNCH OF THINGS BUT I THINK THIS WILL PASS TOO. I DON'T KNOW WHEN. THREE MONTHS, SIX MONTHS, NINE MONTHS OR A YEAR. BUT IT WILL PASS AND WHEN THE ECONOMY IS GOING AGAIN, IT'LL BLOW YOUR SOCKS OFF.
That no doubt explains why I hoarded socks before we entered the recession in December 2007. Seriously. I did! And they have performed much better than the stock market has.
EVERYDAY 130 MILLION PEOPLE GO TO WORK.
130 million people go to work everyday? I thought it was more like139.3 million. What's going to happen to those extra 9.3 million workers? I say this somewhat tongue-in-cheek, but maybe he knows something about the future that we don't.
Click to enlarge.
Claiming that Americans always need to work is a bit like saying that Americans always need to have a place to live. It has a certain National Association of Realtors feel about it.
SO IF YU [sic] ARE A LONGER TERM INVESTOR YOU SHOULD TRY TO ANTICIPATE THE DISAPPEARANCE OF THE HEAD WINDS.
I am a longer term investor. Unfortunately, myMaya calendaronly goes out to 2012. @#$%!
Oil trading volumes were strong for an sixth straight day as traders piled into riskier assets such as commodities and equities, and U.S. stocks rose 4 percent.
1978
I have it on good authority that her boyfriend was an oil speculator.
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