Tuesday, December 28, 2010

Economic Collapse Between 2010 and 2030

Too Many Bulls?  See:
-------- Original Message --------
Subject: "French citizens have the impression that bankers are like vampires."
Date: Tue, 28 Dec 2010 05:18:36 -0800
From: Jas Jain

I was watching a report on the "rogue trader" Jerome Kerviel who cost his bank, Societe Generale, billions in trading losses. Most French people blame the bank and only few believe that Kerviel should shoulder the blame. The lawyer for the bank had this to say:
"French citizens… hate their bankers; they have the impression that bankers are like vampires; they live on the blood of the population."
 
It is obvious that the French citizens have more accurate view of the human institutions than do their American counterparts. In America, it is not just the bankers and financiers who have been engaged in financial bloodsucking; they are joined by Corporate Crooks of America. Most of the economic problems in America, particularly over the past 15 years, can be blamed on the financial bloodsucking of the honest working class population via the Scam Market and other parasitic activities, e.g., mortgage fraud, of bankers and financiers.
The Constitution of the United States of America was not designed to keep these crooks and other politically powerful people in line, or even in check; it was designed to keep the working class folk in line with threats of fines and imprisonment for minor infractions compared to the infractions of the rich and the powerful. Anglo-American "democracy" is the system of the capitalist masters who have now turned into pure Crooks as the time has progressed and the public has been suitably duped. The primary "ethics" of America's capitalists and the whores trained at Harvard, Yale, Princeton, etc., who protect their interests, are deception, fraud and manipulation. Bernanke and Obama owe their positions to their training in these skills. Crooks can count of a Harvard man, or a Yale man, or a Princeton man! No one goes to these institutions to become a better human being; they go there to be better connected with the Crooks and their agents. These are the preferred training grounds for intellectual whores and Crooks. They don't educate.
I can assure you that this System of the Crooks would collapse. It could collapse during 2010s, but no later than 2030. Until then the vampires are on the loose in the USA.
Jas

Monday, December 27, 2010

2011: A Brave New Dystopia by Chris Hedges

-------- Original Message --------
Subject: FWC--2011: A Brave New Dystopia by Chris Hedges
Date: Mon, 27 Dec 2010 17:29:17 -0800
From: Jas Jain
2011: A Brave New Dystopia by Chris Hedges

http://www.informationclearinghouse.info/article27136.htm

"Would we be, as Orwell wrote, dominated by a repressive surveillance and security state that used crude and violent forms of control? Or would we be, as Huxley envisioned, entranced by entertainment and spectacle, captivated by technology and seduced by profligate consumption to embrace our own oppression? It turns out Orwell and Huxley were both right. Huxley saw the first stage of our enslavement. Orwell saw the second."

 

The secret sauce to breed dopes in America, wholesale, has been "by entertainment and spectacle!" Tamasha!! Political commentators Limbaugh and Stewart are entertainers. So are Bill Maher and Dennis Miller. The list is long.

The "virtue" most prized in a man, or a woman, in America is entertainment! Truth is very boring. One thing about a born-and-bred American dope is that he, or she, is a thoroughly entertained dope. He, or she, needs entertainment as a part of the fix. The dope then can vote for whoever is more entertaining, or less boring! For example, Reagan was entertaining and Obama was less boring than McCain.

Jas

 

The Scariest Thing about Bernanke + Inside Job

-------- Original Message --------
Subject: FWC: The Scariest Thing about Bernanke + Inside Job
Date: Mon, 27 Dec 2010 17:03:24 -0800
From: Jas Jain
The Scariest Thing about Bernanke + Inside Job

One has to be blind to the reality to believe that Economists like Bernanke, Greenspan, Krooksman, Mishkin, Stiglitz, etc., are there to serve the American People in their capacities as Nobel Prize winners in economics, or as Chairman and Governor of the Federal Reserve.

Let me remind that the problems facing the American economy are: Born-and-bred dopes, Crooks, and Rogue economists. They sustain each other, or they are codependents! There are no policy solutions to such problems. Remaking of Americans, at all levels, will take decades of misery. Lifelong doping is a very serious problem with very serious consequences. "Democracy is the best political system." LMAO!

Jas

-x-x-x-x-x-x-x-x-x-x-x-x-x-x-

http://www.wealthdaily.com/articles/scariest-thing-about-bernanke/2892

The Scariest Thing about Bernanke

A monetarist and a mathematician walk into a bar...

By Adam Sharp
Tuesday, December 21st, 2010

"The trouble with the world is that the stupid are cocksure and the intelligent are full of doubt."
— Bertrand Russell

"One hundred percent."
— Ben Bernanke, on his confidence that the Fed will control inflation

Lately, I can't help but reflect on Ron Paul's End The Fed (ETF). It's been over a year since I finished the book, yet I keep pulling it off the shelf. Throughout, Paul writes insightfully about politics and money in America.
Like this part about the Bernank:
Some people have been surprised by Bernanke's irresponsible conduct of monetary policy. There was no reason to be surprised. He was on record promising unlimited amounts of inflation should the need arise.
If Greenspan was cocky about the genius of central bankers, Bernanke is even more so.
Congressman Paul — unlike some — is careful with his words. You don't get many sexy sound-bytes out of the Rep. from Texas.
So when he says Bernanke is worse than Greenspan (my interpretation, based on this and other passages in ETF), it's noteworthy.

----------------------------------------

 

Thursday, December 23, 2010

Inside Job's Charles Ferguson on the Corruption of Academic Economics

Readers may have seen the movie Inside Job (if you haven't, you really need to) or a clip from the movie that got quite a bit of attention on finance blogs, that of director Charles Ferguson grilling former Federal Reserve vice chairman Frederic Mishkin on some dubious work he did touting Iceland as a well run banking center not long before its implosion.
 

Monday, December 20, 2010

Captains of Industry Re: --Mkts… It Is the Volatility (Uncertainty), Stupid!



-------- Original Message --------
Subject: Re: --Mkts… It Is the Volatility (Uncertainty), Stupid!
Date: Sun, 19 Dec 2010 13:21:07 -0800
From: Jas Jain

Re: --Mkts… It Is the Volatility (Uncertainty), Stupid!
Jas: "The global financial markets would collapse if the US really tried to inflate its way out of the debt problem. The markets would force Americans to live with less compared with the artificial boost in the living standard in the recent years via consumption debt, first by the households and now via huge public debt."
 
Sabri: "Good point! Further, QE2 cannot be a "currency war" for the same reason. Given that the household incomes are not going up anytime soon in the US, it would be a suicide for the US to devalue the US dollar. How the heck the US households can buy the imported things with their steady, if not decreasing, incomes, if their dollars can buy less? Captains of the US economy cannot be as dumb as we believe, I should say."
 
"Captains of the US economy," or "Captains of Industry" as Veblen referred to them, are not only not stupid, and I don't know anyone so stupid as to believe that they are, are organized gangsters who are served by other organized gangs in politics and in economics profession. The most obvious organized political gangs in America are the two political parties supported by well-trained (born-and-bred) political slaves, i.e., partisan voters, and two economics schools of thought, Neo-Keynesians and Supply Side, each providing justification for the policies of a political party. I realize that you support policies of socialist gangsters like Krooksman, but the fact that he is serving banking and finance Crooks cannot be in doubt after the "crisis" of 2008 because he, together with his fellow gangsters like Stiglitz, supports more and more and more public debt as the solution to the problem caused by more and more debt, both household and public. Political and economics gangsters know whom they must serve to have fame and fortune. In America they must serve "Captains of Industry," who have turned into Crooks since the voodoo economics of Reagan. Reagan is dead but the voodoo of tax cuts as panacea lives on.
Jas

Sunday, December 19, 2010

Jas Jain's Triggers For Buying and Selling Puts

-------- Original Message --------
Subject: WeeklyTriggersForBuyingSellingPuts
Date: Sun, 19 Dec 2010 12:16:40 -0800
From: Jas Jain

Triggers For Buying and Selling Puts On Scams and Scam Indexes
One of the most important factors in how well one does in long puts strategy is when to accumulate long puts because a good selling opportunity could take a year or more (hence, I only advise buying LEAPS). When to sell the puts presents less of a difficulty


One obvious answer to when to buy is when the volatility, VIX/VXN, is low. That is when the prices are low and it happens mostly when the Scams have been going up for a while. Another useful tool could be sentiment, i.e., when the sentiment is very bullish. IMO, Put/Call Ratio is not very useful but Bulls Minus Bears seems to be a good trigger for accumulating puts when it reaches extremes of bullishness, I mean foolishness. Here is a chart of buy and sell triggers based on AND and OR operations on VIXN (I use average of VIX and VXN because I am overweight techs) and the weekly Bulls Minus Bears data from Investors Intelligence. As it turns out now is a good time to accumulate puts. No promises!
Jas

Market Timing Signals
S&P500, Bonds and Gold
=> ST SELL SIGNAL<=
as of 12/15/10

Friday, December 17, 2010

Marc Faber & Peter Schiff: It Is the Volatility Stupid!

Market Timing Signals
S&P500, Bonds and Gold
=> ST SELL SIGNAL<=
as of 12/15/10

-------- Original Message --------
Subject: Mkts… It Is the Volatility (Uncertainty), Stupid!
Date: Fri, 17 Dec 2010 08:17:17 -0800
From: Jas Jain


Mkts… It Is the Volatility (Uncertainty), Stupid!
Pl. see the attached chart. Gold is not forecasting inflation, as charlatans like Marc Faber and Peter Schiff have been claiming for years, but uncertainty in the global financial markets as a result of the idiotic, and fully predictable, behavior of democratic governments in pushing public debt as the solution to economic problems and protecting the bankers and financiers. America is the worst abuser and the rise in the price of gold in USD reflects nothing more than that. The global financial markets would collapse if the US really tried to inflate its way out of the debt problem. The markets would force Americans to live with less compared with the artificial boost in the living standard in the recent years via consumption debt, first by the households and now via huge deficit spending.
 
Going forward, Gold and the Scam Market are near their highs and the Treasuries are near their lows. If and when gold crosses above $1,500 and stays there we can conclude that the US government is unable to deal with the economic reality and trying to kick the can down the 2-year election cycle as it has been doing since late 1990s. Republicans would force Obama into a corner as he desperately tries to get re-selected by the Crooks. It is possible that Crooks might abandon Obama in favor of some other Democrat if he tries to shift to the left and his base would abandon him if he tries to shift to the right. Obama would not be able to triangulate as Clinton was able to do. Conditions are very different.
There is always some message in the markets if one filters out the noise and the volatility.
Jas 

Thursday, December 16, 2010

Bullish Sentiment In the Red Zone

Market Timing Signals
S&P500, Bonds and Gold
=> ST SELL SIGNAL<=
as of 12/15/10

-------- Original Message --------
Subject: Bullish Sentiment In the Red Zone
Date: Thu, 16 Dec 2010 09:49:13 -0800
From: Jas Jain


Bullish Sentiment In the Red Zone
David Rosenberg; 12/16/10:
"…we see that the just-released Investors Intelligence Poll shows the bull camp expanding to 56.8% from 56.2% last week, while the bear share dwindling to 20.5% from 21.3%. The bull-bear spread has widened out to 36.3 and is within striking distance of the 42.4 all-time high posted in October 2007. We are not there yet, but keep in mind that all-time high in sentiment coincided with the all-time high in the S&P 500, which is why extreme levels are to be sold, not bought. In addition, while the bull-bear spread is not yet at 42.4, bullish sentiment on equities is very high, which means that the upside from here is limited since the masses have seemingly "bought into" the consensus optimistic view of sustainable policy-led economic growth."
Pl. see the attached graph.
Jas
--  

Tuesday, November 23, 2010

China vs USA: RE Bubble in China?


-------- Original Message --------
Subject: Re: FWC: Who Gains From The Eurozone Fiasco? China
Date: Tue, 23 Nov 2010 10:09:22 -0800
From: Jas Jain

JS: "Jas: I am not sure I buy into your China/capitalism scheme.  For somebody who is so fast to point out the RE bubble in the "dopey" world of the US, you are blind to it in China.  Can communism maintain bubbles better than dopes can??  The prospect of 1 billion people selling everything (including precious metals and all this other "capital" that they are bubbliciously accumulating) to survive without many of the safety net features us dopes have, should prove verrry interestingkkk...:)"

 

Property bubble is the best proof that China is capitalistic! I fully expect a depression in China and the whole world. Depressions are very capitalistic!! Finance capitalism guarantees severe depressions, be it America, or China, or India. China has lot of capital cushion while America and India don't!

As to born-and-bred Americans, their dopiness is moronic (when I label them dopes I am trying to be polite!). What sort of person, except a moron, thinks that Greenspan, GW Bush and Bernanke would serve the interests of the American People and not their own and those who put them in the first place? These three evildoers were responsible for allowing blatant mortgage fraud in order to grow the economy so that Greenspan got reappointed, GW Bush won the 2004 election and Bernanke got appointed when Greenspan could no longer remain Chairman by law. These evildoers would go to any length to keep power as long as they could by law! The proof is in the pudding. No? Does anyone see the vulnerability of the American system?

Only a moron can be made to think that America has a good political system to serve the interests of the populace. History is full of kings and emperors who served the public interest far better. America promotes to power shortsighted and selfish SOBs. It is not your grandfather's America. Political Correctness has destroyed that America decades ago. Under Obama PC has reached its zenith. Within the next 20 years the American political system—System of the Crooks, by the Crooks, and FOR the Crooks—would be thoroughly discredited. Until then the uncertainty would keep increasing.

Jas 

Monday, November 22, 2010

David Rosenberg on Gold and Commodity Currencies

Gold Price and Chart - ETF: GLD Price & Chart

-------- Original Message --------
Subject: David Rosenberg on Gold and Commodity Currencies
Date: Mon, 22 Nov 2010 09:00:51 -0800
From: Jas Jain


Gold and Commodity Currencies...
"Gold and silver continue to look good in this environment of an ever-declining level of faith in the integrity of the global financial system…"
Those who have read my comments since 1997 know that that has been my primary argument in support of owning gold. Gold is an insurance against the collapse of the American-led global financial system, a system that over the past 15 years has been turned into a System of the Crooks. And China is the biggest beneficiary of this.

I am not bullish on silver and commodity currencies because the Greater Depression cannot be pushed farther into the future, with most developed economies artificially supported by debt, for long. What sort of person has faith in govt's (including the Fed) powers to grow the economy for the good of the majority? The endgame is near.
Jas
-x-x-x-x-x-x-x-x-x-x-x-
David Rosenberg; 11/22/10:
"Gold and silver continue to look good in this environment of an ever-declining level of faith in the integrity of the global financial system (gold is up 24% for the year and silver has gained 65%). At the same time, some of the commodity currencies are taking it on the chin — New Zealand's kiwi was just hit by a downward revision to its credit rating outlook by S&P 500 to "negative" from "stable" and the Canadian loonie has been trading a tad more softly of late, too."



George Soros and John Paulsen Loaded with Gold

Gold Price and Chart - ETF: GLD Price & Chart

-------- Original Message --------
Subject: America's Biggest Fraudsters Are Loading On Gold
Date: Mon, 22 Nov 2010 09:36:43 -0800
From: Jas Jain


America's Biggest Fraudsters Are Loading On Gold

George Soros and John Paulsen, two of the biggest financial bloodsuckers in America show gold as their biggest holding in their hedge funds! This was just reported on Bloomberg. The American System of the Crooks facilitates financial bloodsucking and hedge funds are the biggest beneficiaries.

Only dopes derive satisfaction from voting for the agents of the Crooks. Every election since 1996 has led to Change for the Worse. This, of course, is with the benefit of hindsight. Dopes have no hindsight to speak of.

Jas


Who Gains From The Eurozone Fiasco? China


-------- Original Message --------
Subject: FWC: Who Gains From The Eurozone Fiasco? China
Date: Mon, 22 Nov 2010 07:12:15 -0800
From: Jas Jain <jas_jain


FWC: Who Gains From The Eurozone Fiasco? China

"There is a much more general or global phenomenon in which powerful people cooperate to build an economic model that provides growth based on a great deal of debt. When the crisis comes, those who control the state try to save their favorite oligarchs, but there aren't enough resources to go around… Here is the present problem: It's not just the Irish elite that is under pressure and struggling to sort out who should be saved. It's also the European bankers who funded them."
 
Democratic govts exist to serve bankers, or Bankrupters and Fraudsters, in particular, and Corporate Crooks, in general. Hence, Democracy = Domination of Money. The primary objective of the govt., then, is to keep 'the people,' i.e., the demos, in line while their real masters do what the Crooks normally do. And what better, or lower cost, way to keep a working and taxpaying dope in line than to give him, or her, a vote?! I mean a useless vote. The Church has nothing over the high priests of democracy in terms of brainwashing the population about the sanctity and efficacy of the institution. Once doped, financial bloodsucking is effortless and without resistance. What a system! The question is: How much longer could such a system survive? Not until 2030. China would make sure of that. Before that the world would have to suffer thru the Greater Depression.
Chinese understand capitalism: Those who have capital get to dictate the terms. Chinese would continue to accumulate capital as long as they are allowed to. The American economy is on life support and part of that is being funded by loans from China. Not counting the life support of debt the US economy has been in depression for more than 13 years. Most democratic govts are on life support. China would win the Economic WW III by soundly defeating America and India. Democratic dopes would get their due. Lot sooner than most imagine (dopes don't think; they hope, wish, imagine, etc.).

Jas

-------------------------------------------

http://baselinescenario.com/2010/11/19/who-gains-from-the-eurozone-fiasco-china/#more-8292

Who Gains From The Eurozone Fiasco? China

By Simon Johnson

Ireland will get a package of support from the EU and the IMF.  Will the money and the accompanying policy changes be enough to stabilize the situation in Ireland or more broadly around Europe?  Does it prevent Ireland from restructuring its debt – or move the Irish (and other parts of the European periphery) further in that direction?

And who gains from the delay and mismanagement we continue to see at the highest European levels?

This is complicated economic chess within Ireland, across Europe, and at the international level.  In my Bloomberg column this morning, I suggest we look several moves ahead, recognizing the underlying political dynamic:

There is a much more general or global phenomenon in which powerful people cooperate to build an economic model that provides growth based on a great deal of debt. When the crisis comes, those who control the state try to save their favorite oligarchs, but there aren't enough resources to go around

…..

Here is the present problem: It's not just the Irish elite that is under pressure and struggling to sort out who should be saved. It's also the European bankers who funded them.

If the Europeans continue to fight among themselves, regarding who bears what losses – and who has to face what kind of public accountability – which other countries gain on the global stage?

Who has the ready money available to recapitalize the International Monetary Fund, if needed?  And it will be needed if Spain comes under serious pressure.

Who understands the strategic concept that piles of "reserve currency" can give you great political leverage?  It is hard to find such thinking among today's generation of American politicians.

And who is already playing international economic chess at the highest level?

China.

For my full assessment, please follow this link: http://www.bloomberg.com/news/2010-11-19/ireland-crisis-might-give-china-break-it-seeks-simon-johnson.html

 

Sunday, November 21, 2010

FDR, Reagan, and Obama by Paul Krugman


Friday, November 19, 2010
ECRI WLI Moves Higher; Growth Revival Ahead Says ECRI

-------- Original Message --------
Subject: FWC: FDR, Reagan, and Obama by Paul Krugman
Date: Sun, 21 Nov 2010 12:13:02 -0800
From: Jas Jain

The leftwing of the Democratic Party, progressives like Krooksman, yearn for FDR and rightwing Republicans like Limbaugh yearn for Reagan as to the kind of economic policies they would like to see.
For the past 80 years, FDR and Reagan instituted economic polices that make these two the worst presidents. They enshrined policies—welfare socialism and crooked capitalism—that have proven to be very bad long-term. Both sets of economic policies are now firmly entrenched in American econo-political system and what Americans have gotten is the worst of both.

 

"More and more, it's becoming clear that progressives who had their hearts set on Obama were engaged in a huge act of self-delusion."

Krooksman, obviously, was one of those progressives who were dancing with delight when Obamacare was passed, but he admits to engaging in self-delusion in supporting Obama because self-delusion is one to the 5 top defining characteristics (there are about a thousand total, most of them minor) of born-and-bred American dopes. So, Herr Professor Krugman, don't feel so bad because you were doomed at birth in succumbing to self-delusion and other dopey behavior. Lifelong brainwashing takes it toll, Nobel Prize or no Nobel Prize. The secret of success for the two political parties in America, and their firm grip on power, is breeding dopes! Different strokes for different dopes!! Krooksman and Limbaugh dance to different drums.

Jas

---------------------------------------------------

http://krugman.blogs.nytimes.com/2010/11/21/fdr-reagan-and-obama/

 

November 21, 2010, 2:07 am

FDR, Reagan, and Obama

Paul Krugman

Some readers may recall that back during the Democratic primary Barack Obama shocked many progressives by praising Ronald Reagan as someone who brought America a "sense of dynamism and entrepreneurship that had been missing." I was among those who found this deeply troubling — because the idea that Reagan brought a transfomation in American dynamism is a right-wing myth, not borne out by the facts. (There was a surge in productivity and innovation — but it happened in the 90s, under Clinton, not under Reagan).

All the usual suspects pooh-poohed these concerns; it was ridiculous, they said, to think of Obama as a captive of right-wing mythology.

But are you so sure about that now?

And here's this, from Thomas Ferguson: Obama saying

We didn't actually, I think, do what Franklin Delano Roosevelt did, which was basically wait for six months until the thing had gotten so bad that it became an easier sell politically because we thought that was irresponsible. We had to act quickly.

As Ferguson explains, this is a right-wing smear. What actually happened was that during the interregnum between the 1932 election and the1933 inauguration — which was much longer then, because the inauguration didn't take place until March — Herbert Hoover tried to rope FDR into maintaining his policies, including rigid adherence to the gold standard and fiscal austerity. FDR declined to be part of this.

But Obama buys the right-wing smear.

More and more, it's becoming clear that progressives who had their hearts set on Obama were engaged in a huge act of self-delusion. Once you got past the soaring rhetoric you noticed, if you actually paid attention to what he said, that he largely accepted the conservative storyline, a view of the world, including a mythological history, that bears little resemblance to the facts.

And confronted with a situation utterly at odds with that storyline … he stayed with the myth.
   

Jeremy Grantham'a Market Outlook - Investments For The Next Asset Bubble




Tuesday, November 2, 2010

species of parasites, called the banking and financial industry


-------- Original Message --------
Subject: Re: Active "investing" is a negative sum gain . . .
Date: Tue, 2 Nov 2010 06:03:27 -0700
From: Jas Jain

Nothing says more about America's System of the Crooks more than the fact that financial bloodsuckers, under the dictatorial rule of Greenspan-Bernanke Fed, have death grip on the US economy. Financial speculation is one of their channels for sucking blood. Pushing Debt is another. No one has done more to fan speculation and push debt than evildoers Greenspan and Bernanke. They were chosen for a reason. They have served their masters well. Agents of these bloodsuckers in academia, e.g., Blinder, Krugman, Shiller, Stiglitz, etc., all have solutions to Americas' economic problems that are based on more deficit spending than being currently done!

Jas

-x-x-x-x-x-x-x-x-x-x-x-x-x-

To: Jas_Jain

Subject: Active "investing" is a negative sum gain . . .

Date: Mon, 1 Nov 2010 20:59:50 -0700
 
And this phenomenon is particularly and demonstrably relevant during a secular bear market; however, most "investors" will not discover this unfortunate fact (for them, not necessarily the money "managers" scalping fees from other people's money) until it is much too late to do anything about it. And it is not an unreasonable assumption that many money "managers" are not aware of the reality of "managing" money; otherwise, they would quit and do something more useful with their time and intellect.
 
 
I would like to elaborate on an important consequence of this equilibrium accounting identity to understand the root cause of the crisis and how this bears on its resolution. There are so many discussions, works, brain-storming and efforts to find better ways to regulate, to manage, perhaps to diagnose and to control the financial system in order to get out of the problems, have the economy recover and prevent future crises.

I think that they are collectively and fundamentally misleading and misled. As a corollary of the analysis [1], it dawns on me that the core of the problem is us, in a collective sense. The core problem is our belief that active investments provided by pension funds, banks, mutual funds, hedge-funds and all the financial industry have the potential to out-perform naive static boring investments. But if GDP grows at, say, 2% per year after inflation, how can financial investments as a whole provide more return?  Believing that financial investment can give more than the growth of the global portfolio is a gross illusion, which I believe is shared by most of us, either consciously or unconsciously.  This is the illusion of over-optimism. This is the illusion of control. But it violates the fundamental equilibrium accounting identity and the fact that our collective wealth does not grow faster than (good measures of) GDP. As long as we, the people and the future retirees, hope for more return, we will provide the manure for the development of the species of parasites, called the banking and financial industry, that feed on our illusion and never ending hopes of easy gains.
 
 
In other words, do active investors in aggregate earn a higher expected return than passive investors? The arithmetic of equilibrium accounting says we do not need empirical tests to answer this question. Since we are assuming they all hold the market portfolio, passive investors earn the return on the market minus their fees and expenses. In aggregate, active investors also hold the market portfolio, so they also earn the market return minus their fees and expenses. If the fees and expenses of active investors are higher than those of passive investors, active investors must in aggregate lose to passive investors. This is the unavoidable arithmetic of equilibrium accounting. And notice that this is not a statement about expected returns or about long-term average returns. In aggregate active investors lose to passive investors every instant.
It is, of course, possible that individual active investors add value. But if they do, it's at the expense of other active investors. Again assume that passive investors always hold the cap-weight market portfolio. The arithmetic of equilibrium accounting then implies that the deviations from cap weights in one active investor's portfolio must be absorbed by other active investors who take offsetting positions. In aggregate active investors hold the market portfolio, so if some skilled active investors overweight an undervalued stock, other active investors must underweight it. This means that, before fees and expenses, trading is a zero sum game. Ignoring costs, the gains of the skilled investors are, dollar for dollar, at the expense of other investors. But real investors cannot ignore costs. If some active investors win, others must lose, and they all pay to place their bets. (French 2008 provides dollar estimates of the massive costs borne by active investors in U.S. public equity.)
Another common argument is that active investing is more likely to add value for small stocks than for the market portfolio in which big stocks dominate. Again, however, the arithmetic of equilibrium accounting plays a sobering role. Define a passive investor in small stocks as anyone who holds small stocks in cap-weight proportions, and define an active investor in small stocks as anyone who doesn't hold small stocks in cap-weight proportions. (Both groups can hold big stocks in whatever proportions they see fit.) Since passive investors in small stocks in aggregate hold the cap-weight market portfolio of small stocks, in aggregate active small stock investors must also hold the cap-weight market portfolio of small stocks. This again means that skilled active small stock investors must win at the expense of unskilled active small stock investors. If there are more opportunities for skilled investors to add value in choosing among small stocks, it is because unskilled active investors in small stocks are worse than unskilled active investors in big stocks.
. . . [A]ctive investing in any sector is always a zero sum game - before costs. After costs, active investing is a negative sum game.
 

Sunday, October 31, 2010

Top CD Rates


You can often get higher than advertised rates at your local branch if you do your homework. Print out the "Highest CD Rate Survey" and bring it in with you.



If you want to negotiate for better rates at your local bank, then print out some of the advertisements showing rates advertised on your bank's competing web sites so you have proof. (Make sure the date shows on your printout so they know it is current.)


Term Highest
Rate (APY)
Where?
(Click link for Full Rate Sheets)
6 Month CD 1.16% Aurora Bank
1 Year CD 1.51% Melrose CU &
1.49%@ Bank of Internet
1 Yr US Treasury 0.23% US Treasury Rate Quote
18 - Month CD 1.55% Aurora Bank
2 Year CD 1.76% Melrose CU &
1.72% @ Aurora Bank
3 Year CD 2.27% Melrose CU
4 Year CD 2.52% Melrose CU
5 Year CD 3.03% Melrose CU
5 Yr US Treasury 1.22% US Treasury Rate Quote
7 Year CD 3.49% PenFed CU
10 Year CD 3.00% Discover Bank
10 Yr US Treasury 2.47% US Treasury Rate Quote


Rates and terms may change so read the fine print and make sure you get FDIC insurance!!!!

Friday, October 29, 2010

Jas: Bill Gross Is a Shameless Crook


-------- Original Message --------
Subject: Bill Gross Is a Shameless Crook
Date: Fri, 29 Oct 2010 07:29:53 -0700
From: Jas Jain


Bill Gross Is a Shameless Crook

Looks like lot of people have caught on to Bill Gross's bad record in forecasting the bond market. Please see the blog quotes below. How does someone with such a bad record in forecasting the bond market make money? By being in bed with the US govt just like the Crooks at Goldman Sachs. This Crook has made billions of dollars at the expense of the US taxpayers via influencing the govt policies regarding Fannie, Freddie and the mortgage market. Stealing from the US taxpayers is the favorite pastime for America's banking and finance Crooks. Federal Reserve's policies are specifically designed to help Corporate Crooks, in general, and banking and finance Crooks, in particular. All at the expense of who?

Don't forget Gross's famous quote regarding govt artificially lowering rates on existing mortgages that don't qualify: "It is not legal and it is not fair, but I support it." The Crook wants to make tens of billions more if his prescription is adopted by the USG. Why is this Crook not in jail?

Jas

-x-x-x-x-x-x-x-x-x-x-x-x-

Update: PIMCO's Bill Gross has called end of bond rally before

http://www.calculatedriskblog.com/2010/10/update-pimcos-bill-gross-has-called-end.html

 

Gross forecast that benchmark Treasury yields will range higher than previously thought, prompting him to acknowledge he is now a "bear market manager" after a quarter of a century as the global bond market's most powerful bull.

On June 7, 2007, the ten year Treasury yield was 5.1%.

 

From Bloomberg on March 27, 2010: Pimco's Bill Gross Says Bonds Have Seen Best Days

"Bonds have seen their best days," Gross said in a Bloomberg Radio interview ... Yields on two-year U.S. Treasury notes are likely to rise to 1.25 percent to 1.5 percent from 1.08 percent in the next year as the economy strengthens and the Federal Reserve begins to increase interest rates, Gross said.

On March 26, 2010 the Ten Year Treasury yield was 3.86% (now 2.65%)


Thursday, October 28, 2010

Fouad Ajami - one smart man! -- Karzai and the Scent of U.S. Irresolution


-------- Original Message --------
Subject: Re: Fouad Ajami - one smart man! -- Karzai and the Scent of U.S. Irresolution
Date: Thu, 28 Oct 2010 15:08:15 -0700
From: Jas Jain


Date:  Oct 28, 2010 at 2:00 PM

Subject: Fouad Ajami - one smart man!
In a nation full of born-and-bred dopes anyone who is not is a smart man! US needs to outsource its economic policies and the govt to the Germans and the Swiss. It is idiocy to put power in the hands of Bernanke and Obama. Not that GW Bush and Greenspan were any better. Only the Crooks survive the race to the top! System of the Crooks is firmly entrenched.
Jas
-x-x-x-x-x-x-x-x-x-x-x-

http://online.wsj.com/article/SB10001424052702303341904575576342977166312.html

Karzai and the Scent of U.S. Irresolution

Our longest war is now being waged with doubt and hesitation, and our ally on the scene has gone rogue, taking the coin of our enemies and scoffing at our purposes.

By FOUAD AJAMI

'They do give us bags of money—yes, yes, it is done, we are grateful to the Iranians for this." This is the East, and baksheesh is the way of the world, Hamid Karzai brazenly let it be known this week. The big aid that maintains his regime, and keeps his country together, comes from the democracies. It is much cheaper for the Iranians. They are of the neighborhood, they know the ways of the bazaar.

The remarkable thing about Mr. Karzai has been his perverse honesty. This is not a Third World client who has given us sweet talk about democracy coming to the Hindu Kush. He has been brazen to the point of vulgarity. We are there, but on his and his family's terms. Bags of cash, the reports tell us, are hauled out of Kabul to Dubai; there are eight flights a day. We distrust the man. He reciprocates that distrust, and then some. Our deliberations leak, we threaten and bully him, only to give in to him. And this only increases his lack of regard for American tutelage. We are now there to cut a deal—the terms of our own departure from Afghanistan.

The idealism has drained out of this project. Say what you will about the Iraq war—and there was disappointment and heartbreak aplenty—there always ran through that war the promise of a decent outcome: deliverance for the Kurds, an Iraqi democratic example in the heart of a despotic Arab world, the promise of a decent Shiite alternative in the holy city of Najaf that would compete with the influence of Qom. No such nobility, no such illusions now attend our war in Afghanistan. By latest cruel count, more than 1,300 American service members have fallen in Afghanistan. For these sacrifices, Mr. Karzai shows little, if any, regard.

In his latest outburst, Mr. Karzai said the private security companies that guard the embassies and the development and aid organizations are killer squads, on a par with the Taliban. "The money dealing with the private security companies starts in the hallways of the U.S. government. Then they send the money for killing here," Mr Karzai said. It is fully understood that Mr. Karzai and his clan want the business of the contractors for themselves.
...

Americans were giving away their fatigue. Why not accept the entreaties from Tehran?

A year ago, the U.S. ambassador to Kabul, Karl Eikenberry, laid out the truth about Mr. Karzai and his regime in a secret cable that of course made its way into the public domain. "President Karzai is not an adequate strategic partner," Mr. Eikenberry wrote. The Karzai regime could not bear the weight of a counterinsurgency doctrine that would win the loyalty of the populace. There were monumental problems of governance but "Karzai continues to shun responsibility for any sovereign burden, whether defense, governance, or development. He and much of his circle do not want the U.S. to leave and are only too happy to see us invest further. They assume we covet their territory for a never-ending war on terror and for military bases to use against surrounding powers." In Mr. Eikenberry's cable, Mr. Karzai is a man beyond redemption, who was unlikely to "change fundamentally this late in his life and in our relationship."

In one of his great tales of the imperial age, "Lord Jim," Joseph Conrad depicts the encounter between a criminal and a noble figure. "Gentleman" Brown and a band of robbers had come into Tuan Jim's domain—a small world, Patusan, where Jim's writ ran and the natives honored and deferred to him. Everything was on the side of Jim—possession, security, power. But Brown senses the hidden irresoluteness of Jim, a man who had come to this remote, small world in the Pacific in search of redemption. We are equal, says Brown: "What do you know more of me than I know of you? What did you ask for when you came here?" Jim pays with his life. He had let the ruffian set the terms of the encounter.

A big American project, our longest war, is now waged with doubt and hesitation, and our ally on the scene has gone rogue, taking the coin of our enemies and scoffing at our purposes. Unlike the Third World clients of old, this one does not even bother to pay us the tribute of double-speak and hypocrisy. He is a different kind of client, but then, too, our authority today is but a shadow of what it once was.

Mr. Ajami is a professor at The Johns Hopkins University School of Advanced International Studies and a senior fellow at Stanford University's Hoover Institution.

 

RE Bill Gross says 30 yr bull market in bonds is over


-------- Original Message --------
Subject: RE: [Bill Gross] 30 yr bull market in bonds is over
Date: Thu, 28 Oct 2010 04:47:29 -0700
From: Jas Jain

Date: Thu, 28 Oct 2010 01:10:40 +0100
Subject: 30 yr bull market in bonds is over
To: jas_jain

http://www.calculatedriskblog.com/2010/10/pimcos-gross-30-year-bull-market-in.html
They call him bond king. He must be right :)
 
A gal on CNBC pointed out that he has been calling for the end of the bull market in US Treasuries for years. After this Crook hired evildoer Greenspan, in 2006?, he raised his range for 10-year Note from 3-4.5% to 4-6.5%! At the time, Greenspan himself said the 10-Year yield would go to 6-8%. Maybe, after Greenspan is dead.
 
It is the Crooks like Bill Gross and evildoers like Bernanke and Greenspan (someone on CNBC blamed these two evildoers for the problems, finally), financial manipulators all, that America is in the troubles it is today. Born-and-bred American dopes suffer from the Cult of Personality; therefore they are lot more likely to listen to Gross than some crank with far superior record in forecasting US Treasuries. Americans have been screwed by the System of the Crooks. And there is no change. Americans vote to get screwed more! The dopes can't get enough!! Dopes have no one to blame but themselves for actively supporting Crooks.
Jas



Wednesday, October 20, 2010

Core Inflation US vs Japan

Saturday, October 16, 2010
Flat COLA: No Social Security Cost of Living Adjustment for 2011


-------- Original Message --------
Subject: Deflation Watch: A Picture Worth a Thousand Words & More
Date: Tue, 19 Oct 2010 13:52:24 -0700
From: Jas Jain


Deflation Watch: A Picture Worth a Thousand Words & More

Just Call Him Bernanke-sama by Paul Krugman:

http://krugman.blogs.nytimes.com/2010/10/18/just-call-him-bernanke-sama/

 

Please see the attached graph courtesy of SF Fed via Krooksman's column. Americans are right when they claim, "we are not Japan." You bettcha. In particular, America's economic leadership is far more immoral than that of Germany and Japan. Bernanke is just a case in point. He is like American and Nazi doctors doing medical experiments on the Negroes and the Jews. He is conducting economic experiments that are horrendous for the savers and the working folk as well as for the economy as a whole. Krooksman and many other neo-Keynesians keep complaining about Bernanke not doing enough without understanding that Bernanke has his job solely to keep the bankers happy. He is in no position to help the economy other than thru helping the bankers. Plus he doesn't know what to do except that he must keep doing something in case it might work and to avoid criticism.

Jas

Monday, October 18, 2010

Steve Kalafe Politicians Are the New Mob

-------- Original Message --------
Subject: "Politicians Are the New Mob"!
Date: Mon, 18 Oct 2010 16:47:31 -0700
From: Jas Jain

"Politicians Are the New Mob"!

That is the conclusion of one Mr. Steve Kalafer, the producer of the film Soprano State, based on the book with the same title about corruption in the State of New Jersey, who appeared on Bloomberg. Mobs thrive in a democracy because there is no other form of govt that is easier to control with money and payoffs. Actually, the mob had principles and was more reliable in terms of keeping its word. It provided security at a lower cost! And it took far greater risks than the political gangsters. Since democracy is the problem elections can't be a solution.

We are dealing with a morally bankrupt economic and political leadership in America that came to power via corruption derived from the vote. For example, evildoers Greenspan and Bernanke, exclusively serving Financial Nazis of America with their polices of Asset Inflation and Pushing Debt, were appointed by Reagan and GW Bush and have been reappointed at every opportunity by Democrats. These two evildoers have had more power over the past 23 years than all the five Presidents over the same period combined. A degenerated system to rule over the people that the Founders could have never imagined. The Constitution stinks from all the "chitting" and peeing over it by the Congress, the Presidents and the Supreme Court. When liars (politicians and political appointees) take an oath to defend the Constitution does it mean anything? We can count on Americans to vote for the abusers of the Constitution. They have been trained to do it.
Jas 




Suggested Reading


=>Article: How to Get the Best CD Rates
=>Article: Beware of Annuities
=>Info: Best Mortgage Loan Rates