Re: Debt Based Financial Collapse. "The Death of Kings: Notes from a Meltdown."
Re: Debt Based Financial Collapse. "The Death of Kings: Notes from a Meltdown."
Emerging Markets are just starting to drop because they went up 70% in 2009. In one month, my emerging market index went up 29%! I rebalance my various indices every quarter to minimize the effects of the Up and Down Effect which may or may not reduce my profits. Volatility is the Game Now. It might be difficult to make money now by staying in the same stocks for a long time as Warren Buffett does. I really don't know.
At least 10 percent each of Gold or its equivalent and inflation protected government bonds are investments that should at least be considered. If you are really worried, the Asians including China, India, and Japan did not participate in the derivatives market so buying Yen, for example, may help you allay some of your fears. Unfortunately Europe is in more serious debt trouble than we are so it may not provide a haven on the once Strong Euro.
We had the Best & Brightest gravitating to Wall Street including Banks so they are so much brighter and knowledgeable than I am so take everything I say with a grain of salt and read, read, and read more to start to understand our financial system and whether we want to participate anymore.
All our economies are tied together, but Asia has the potential to be more independent and not depend as much on Western countries for their well being. We may become a country of emigrants to Asia instead of what has been the case in the past.
I am worried that the market seems to be going up with only half the volume so one wonders if the market is being manipulated by the big players. Short covering was involved in lots of the uptick in the market, but it will take another few years of stagnant growth before real growth will emerge if it emerges at all. Hard to know.
The reason I am worried about the financial system still is that we have a huge amount of debt in the system. The derivatives market that are in trouble are estimated at 60 trillion dollars with a T. Not enough people are worried about this.
Vanguard keeps expenses down and is owned by the shareholders, not a profit center for a corporation. Don't be in a rush to get heavily in the market at this time because you have a dual purpose of increasing your holdings without a high degree of risk.
May 15, 2009 New Yorker Magazine: A long very scary article by Nick Paumgarten, "The Death of Kings: Notes from a Meltdown." "WAll Street is Dead" Link Below. You have to register.
The main investor advisor covered in this article is Colin Negrych who has helped billionaires make billions more. He advised his clients to start shorting the housing market in 2006 and the market in 2007.
Both his parents died when he was about nine and he did not take to being cared for by the state and spent several years on the streets. He is apparently a reader and extremely bright so after getting a high school equivalent, he found himself working at Solomon Brothers! He hopped from one job to another fairly frequently and is now working for a small firm, Barclay Investments, not the British firm, while seemingly dying from spinal cancer so he donated almost all his money, but he did not die as the doctors predicted.
He is on morphine all the time to keep down the pain. He works out of his apartment watching two screens of what is happening in the market. I guess his skill is seeing trends in the market and acting. I saw the trends but did not act because I assumed the problem was only in subprime debt, not debt pervasive in the financial system!
Negrych is a fan of conservative economists who hate debt.
Not many of us really understand what money and our debt system is really about. When the Big Boys decided to take more for themselves by cutting income and shipping jobs overseas starting with Reagan, they had to make debt readily available so people would make up their purchasing power with DEBT. We are really not a Growth Economy, but a DEBT ECONOMY.
From Geraldine Perry who wrote about Debt in "The Two Faces of Money," is a book well worth reading even though it may be rough going in certain parts of the book. Understand what is in it and you will a happier future of not relying on Consumerism and Debt for Happiness.
The greatest shortcoming of the human race is our inability to understand the exponential function. / ~Dr. Albert Bartlett
"The issuing power should be taken from the banks and restored to the people, to whom it properly belongs." - Thomas Jefferson
June 2, 2009
Blog at http://jimboguy.blogspot.com
From a google search:
MAY 13, 2009
NICK PAUMGARTEN: THE VALLEY OF THE SHADOW OF DEBT
I wrote a piece about the financial meltdown. It’s in the magazine this week. (Subscribers can read it online.) In the story, Colin Negrych, a broker who calls himself “a macroeconomic and geopolitical strategist disguised as a bond salesman,” serves as a kind of Ancient Mariner, chronicling some of the financial world’s trespasses and delusions. As the story was going to press, he e-mailed me his reworking of the 23rd Psalm. I think it’s a keeper.
Yea though I walk through the Valley of the Shadow of Debt I shall fear no default rates; for thou art with me Thy printing presses and thy stress tests comfort me Thou preparest a bull market for me in the presence of Roubini, Taleb, and Grant Thou anointest my portfolio with liquidity; my wallet runneth over
Surely bonuses and bailouts shall follow me all the days of my life And I will dwell in the house in Greenwich forever. A-Ben
I sent it along to an investor, the kind of guy whose secretary filters his e-mail. I think he may have forwarded it around. But the secretary e-mailed me back the real Psalm 23—albeit the New King James version, which doesn’t quite have the zing of the old King James, or even of the Negrych. [Our Bible has been altered many times by Men since a major alteration of Christianity was made by a non-Christian, the Roman Emperor Constantine
ABSTRACT: ANNALS OF FINANCE about the financial meltdown as seen from the offices of bankers, hedge-fund managers, analysts, and others in the financial sector. Most people may now recall a moment of clarity, an inkling of doom. A private-equity executive the writer talked to said that he sensed the jig was up when his cleaning woman took out a subprime loan to buy a house in Virginia. A big-wheel hedge-fund manager had his epiphany at a Goldman Sachs hedge-fund conference during which he found himself questioning the rapid accumulation of dynastic wealth by the people in the room. The final sign, the big wheel felt, was the opening ceremony of the Beijing Olympics, which cost an estimated three hundred million dollars. A month later, Lehman Brothers collapsed.
Some who foresaw the implosion underestimated its power and duration. Writer notes that the event does not yet have a name. It is variously called the global financial meltdown, the financial crisis, the credit crisis, the recession, the great recession, the disaster, the panic, or the bust. This thing is all-pervading, evolving and ongoing, history-altering yet in many respects banal. Considers several analogies for the crisis, including a war, a natural disaster, and radiation. T
The potential for catastrophe was clear to see, for all who had eyes to see it. For financial-industry executives to claim ignorance or helplessness is to admit negligence or to tell a lie. What’s most vexing is that those who saw trouble didn’t do more to stop it. The crisis is the culmination of events and trends reaching back, depending on your perspective, four, seven, seventeen, twenty-two, twenty-seven, thirty-eight, sixty-five, or a hundred and two years.
The causes are technological, mathematical, cultural, demographic, financial, behavioral, legal and political. Writer interviews Colin Negrych, an adviser who has some of the most venerated investors in the world among his clients. Tells about Negrych’s career path and his opinions on the current crisis. Negrych believes that there is a commercial-financial complex, analogous to the military-industrial complex, which promotes borrowing and spending, and spins indebtedness into fool’s gold. Discusses the consolidation and transformation of the financial industry over the last four decades: the growth of investment banking, the development of derivatives, the increasing use of leverage, and the securitization of debt.
Writer interviews Simon Mikhailovich, an investment-fund manager. Discusses the role of ratings agencies and collateralized debt obligations (C.D.O.s) in the collapse. A debate has roughly formed between those who blame the meltdown on the system, rigged up over the years and decades, and those who vilify the people who most egregiously exploited the flaws in that system. Both sides may be in agreement that, in the end, human nature is to blame. Mentions Margaret Atwood’s book “Payback: Debt and the Shadow Side of Wealth.” Writer interviews economist Bruce Greenwald. Discusses the 1944 Bretton Woods conference and its influence on the world’s economic system. Describes how those who once worked on Wall Street are coping with loss of income and unemployment.