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EJ
10-08-10, 12:50 PM
The American Output Gap Trap – Part I: We have three years to escape or we’re dead meat
“Politics is the gentle art of getting votes from the poor and campaign funds from the rich by promising to protect each from the other.”
– Oscar Ameringer
The contraction phase of the Great Recession left America with a $1 trillion gap between actual and potential economic growth. The economy must grow at a rate of at least 4% per year starting now in order to reach growth potential before the next recession opens the gap further a few years from now. If we fail to meet this deadline, the American political economy will enter a second circle of hell as chronic economic pain from high prices and low wages morphs into a self-destructive cycle of class conflict and political deadlock. The stakes are high, yet the only escape from the output gap trap isn’t even in the menu of mainstream debate.

Our dire situation is summed up in the two presentations below.


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The American Output Gap Trap: No Way Out?
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“Politics is not the art of the possible. It consists in choosing between the disastrous and the unpalatable.”
– John Kenneth Galbraith

US policy makers must among three options to escape the output gap trap or enter the second circle of economic hell. Which is the least disastrous and most palatable, to whom, and why? What will happen if none of them are pursued? This question defines the new era, the Output Gap Trap era that has replaced the Bubble Cycle era that we identified early in the last decade. As we make our case for how the next decade will look, we build our model of the complex dynamics that will determine the direction of assets globally.

(This analysis forms one of the three essential building blocks of our Next Ten Years forecast.)

The American Output Gap Trap – Part II: Inflation, deflation, and the un-debate (http://www.itulip.com/forums/showthread.php/17143-The-American-Output-Gap-Trap-%C2%96-Part-II-Inflation-deflation-and-the-un-debate-Eric-Janszen?p=176719#post176719)

When the people lose faith and don’t know what to believe in, they don’t believe in nothing, they believe in anything.

CI: In the Ask EJ section of iTulip a subscriber asks you “What do you think about all this hyperinflation-is-coming stuff that’s been circulating on the Internet lately?” You answer the question there [tk], but before this interview you told me you have a comment on the subject of extreme forecasts overall.

EJ: I attribute the recent flurry of extreme ‘flation forecasts, of an impending deflation spiral or conversely of imminent hyperinflation, to the perverse effects of the recession on the advertising revenue driven mainstream and blogger business model.

CI: Explain.

EJ: Think back to before the crisis. October 2006 we warned of a massive financial crisis and recession starting by the end of Q4 2007 as the inevitable fallout of the housing bubble. Even though anyone who was paying attention could see that the economy had rolled over by the middle of 2007, a year after the housing bubble started to deflate, the dominant storyline on the economy in the mainstream was that the housing bust is no big deal, and even if it turned into a crisis it certainly won’t be bad enough to cause a massive recession.

Fast-forward two and a half years. After the crash, what’s the dominant storyline now? There are several but two dominate.

One is the double dip recession and deflation we’ll get if we cut public spending to stimulate the economy. The other is the debt and currency crisis and inflation we’ll get if we keep trying to expand the public debt to pay for stimulus programs. These policy bookends frame the economic policy debate. Problem is, the framework is out of context with the economic reality. It’s an “as if” ideology-charged framework of belief systems.

CI: As-if economics...

EJ: Yes. The double-dippers argue that ongoing fiscal stimulus is the road we must take to avoid a second recession in a repeat of 1938, as if public spending will make the credit bubble era debt go away in a few quarters rather than commit the US to a decade of rising public debt and government spending dependence, as if the US in 2010 is Japan in 1995, with a huge trade surplus and capital account deficit, and as if we as a net foreign debtor can afford to expand the public debt for 15 years to muddle our way through a balance sheet recession to avoid a political confrontation with the banking lobby. The debt crisis prognosticators, on the other hand, understand the limits of a debtor nation’s balance sheet but they offer an equally fantastical solution, to cut spending and the deficits, as if the US was in a business cycle recession not a balance sheet recession and millions of households didn’t have trillions of debt payments to make.

CI: Who’s right? more... $ubscription... (http://www.itulip.com/forums/showthread.php/17143-The-American-Output-Gap-Trap-%C2%96-Part-II-Inflation-deflation-and-the-un-debate-Eric-Janszen?p=176719#post176719)

iTulip Select (http://www.itulip.com/forums/showthread.php/1032-iTulip-Select-Subscription-Description?p=7837#poststop$session[sessionurl_q]): The Investment Thesis for the Next Cycle™
__________________________________________________

For a concise, readable summary of iTulip concepts read Eric Janszen's September 2010 book The Postcatastrophe Economy: Rebuilding America and Avoiding the Next Bubble (http://www.amazon.com/gp/product/1591842638?ie=UTF8&tag=wwwitulipcom-20&link_code=as3&camp=211189&creative=373489&creativeASIN=1591842638)http://www.assoc-amazon.com/e/ir?t=wwwitulipcom-20&l=as2&o=1&a=1591842638.

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krakknisse
10-08-10, 02:01 PM
Welcome to hell. Can't decide whether it will be the seventh or eighth circle.
http://upload.wikimedia.org/wikipedia/commons/1/1a/Gustave_Dore_Inferno_Canto_21.jpg

Fiat Currency
10-08-10, 02:05 PM
When I click on the 2nd presentation it just takes me to janszen.com ... is that right?

zoog
10-08-10, 02:29 PM
When I click on the 2nd presentation it just takes me to janszen.com ... is that right?

Same here. If you move your mouse over the blue line in the middle of the chart (or thereabouts), there is text that pops up in the lower area detailing different periods.

<rant>
One of the problems I have with Flash websites etc. is that the open-ended nature allows designers to create interactive navigation methods which, while no doubt obvious to the creator, are not always intuitive to the public at large. To be safe, you really have to be captain obvious with this stuff. One possible solution: some fairly large, colorful dots in the areas where the mouseover happens. Even though you don't actually have to be exactly on the dot for it to work, it may provide enough of a clue to encourage viewers to move their mouse there to see if anything happens.

</rant>

Fiat Currency
10-08-10, 02:36 PM
Ah ... thanks zoog. Since the first one was a "click on" I had just assumed the 2nd was too. My bad.

LargoWinch
10-09-10, 11:59 AM
I would like some clarity on the following if possible: What are the assumptions behind the Real Potential GDP curve?

Shouldn't at some point the exponential nature of such curve hit the wall of limited resources?

EJ
10-09-10, 12:48 PM
I would like some clarity on the following if possible: What are the assumptions behind the Real Potential GDP curve?

Shouldn't at some point the exponential nature of such curve hit the wall of limited resources?

Real Potential Output is a garbage economics idea that gets hauled out from time to time to justify inflationary monetary and fiscal policies. Michael Hudson reminded me in an interview Thursday, that we'll publish next week, that he had meetings at the White House in the 1970s the last time the potential output concept was promoted as a policy tool, by the Arthur Burns Fed. Back then the concept was harder to justify because the FIRE Economy had not yet produced the necessary trillions in credit to grow the economy on the curve as it has. Then the debate was over the angle of the curve and where you start and so on. Forty years later the Real GDP curve fits well to a constant Potential Real GDP curve.


http://research.stlouisfed.org/fred2/graph/fredgraph.png?&chart_type=line&graph_id=0&category_id=&recession_bars=On&width=800&height=480&bgcolor=%23eeeeee&graph_bgcolor=%23FFFFFF&txtcolor=%23000000&ts=12&preserve_ratio=true&fo=ve&id=GDPPOT,GDPC1,GEXPND,CCLBSHNO&transformation=lin,lin,lin,lin&scale=Left,Left,Right,Right&range=Max,Max,Max,Max&cosd=1949-01-01,1947-01-01,1947-01-01,1949-10-01&coed=2020-10-01,2010-04-01,2010-04-01,2010-04-01&line_color=%230000FF,%23FF0000,%23006600,%23FF6600&link_values=,,,&mark_type=NONE,NONE,NONE,NONE&mw=4,4,4,4&line_style=Solid,Solid,Solid,Solid&lw=2,2,2,2&vintage_date=2010-10-09,2010-10-09,2010-10-09,2010-10-09&revision_date=2010-10-09,2010-10-09,2010-10-09,2010-10-09&mma=0,0,0,0&nd=,,,&ost=,,,&oet=,,,&fml=a,a,a,a


As you say, credit expansion played a critical role in this expansion. Since private credit stopped expanding and began to shrink during the recession, government credit has been expanded to take up the slack, as we forecast. But as the recent employment data suggest, the "pump priming" of government spending is acting more like the economy's iron lung. The iron lung of government spending runs on foreign and domestic credit. If the dollar weakens too quickly, we'll see a "run on the bank" as foreign private creditors race to capture the remaining value of their investments in the US and foreign official holders fail to fill the gap because doing so will import US inflation. That's the idea behind Ka-Poom Theory.

We'll see how things go at the IMF meeting this weekend. The foreplay over the past few weeks was rough, but I suspect that our trade partners will ratchet up the threats if the US doesn't drop its unilateralist posture. We'll see more than currency swap deals among trade partners to avoid dollars in international trade. They'll escalate to the next level. If gold bolts to $1400 next week we'll have our answer.

Why do an the output gap analysis if I think the concept is garbage? Because what matters is not what I think the policy markers should be thinking but how they actually are thinking. I exchanged emails with a financial reporter at the Washington Post on a recent analysis he did. After that I decided it was time to update our January 2009 output gap analysis. I'm starting to notice the concept coming out of the Bullhorn. Are we being sold an inflationary policy? We shall see.

Thanks for the question.

Fiat Currency
10-09-10, 01:41 PM
We'll see how things go at the IMF meeting this weekend. The foreplay over the past few weeks was rough, but I suspect that our trade partners will ratchet up the threats if the US doesn't drop its unilateralist posture. We'll see more than currency swap deals among trade partners to avoid dollars in international trade. They'll escalate to the next level. If gold bolts to $1400 next week we'll have our answer.

Indeed, and "foreplay" is a good word for it. I could have posted 80% of the articles in the last 4 weeks into my "Global Fiat Currency Differentiation Watch" thread. The "Road to the Final Four" for global fiat currencies is "slowly" heating up.

EJ - do you think the probability of the $USD losing it's World's Reserve Currency Status is increasing, and if so ... same question for the time horizon?

LargoWinch
10-09-10, 05:18 PM
Thank you EJ for the insightful response.



As a bonus, I can now look forward to yet another unique article by iTulip!


Michael Hudson reminded me in an interview Thursday, that we'll publish next week, that he had meetings at the White House in the 1970s the last time the potential output concept was promoted as a policy tool, by the Arthur Burns Fed.

metalman
10-09-10, 06:44 PM
Same here. If you move your mouse over the blue line in the middle of the chart (or thereabouts), there is text that pops up in the lower area detailing different periods.

<rant>
One of the problems I have with Flash websites etc. is that the open-ended nature allows designers to create interactive navigation methods which, while no doubt obvious to the creator, are not always intuitive to the public at large. To be safe, you really have to be captain obvious with this stuff. One possible solution: some fairly large, colorful dots in the areas where the mouseover happens. Even though you don't actually have to be exactly on the dot for it to work, it may provide enough of a clue to encourage viewers to move their mouse there to see if anything happens.

</rant>

when i click on the 1st chart i get a new chart & comments. no matter how fast i click i get a new chart... no janszen.com. i get text if i mouseover anywhere on the 2nd chart. slick as shit, if you ask me.

ThePythonicCow
10-10-10, 01:43 AM
when i click on the 1st chart i get a new chart & comments. no matter how fast i click i get a new chart... no janszen.com. i get text if i mouseover anywhere on the 2nd chart. slick as shit, if you ask me.
By the "1st chart", I presume you mean the first chart in EJ's Post #1, with the title "Output Gap Trap: What is it?" and the slowly changing "Rolodex" of graphcs.

If you click on it (on the text or title, not on the Roladex graph, which is special - see below!), then the normal web page fades and a overlaying chart comes up, with the title "Great Depression 1930-1941". Once that pop-up overlay chart comes up and full paints on your computer (could take a few seconds I suppose on a slow link or slow PC) then there are a few "Hot Spots" on that overlay chart. These Hot Spots are:

upper left corner, labeled "PREV", to go to the previous chart
upper right corner, labeled "NEXT", to go to the next chart
bottom right corner, labled "CLOSE X", to close the pop-up overlay and return to the normal web page
bottom left to center, a hot link labled something beginning with "Output Gap Trap: ...", which takes you to http://www.janszen.com.

The Roladex of graphs will roll over to the next slide, updating the text as well, when you click on the graph, such as on the first graph labeled "Output Gap -- The difference between actual and potential economic growth". There may be a delay on this "click on graph to see roll over to next one" action. When I first load the page, this click on graph action seemed to do nothing. Perhaps I had to wait until it fully downloaded to my computer. I cannot reproduce that delay now. Everytime I click on that Roladex of graphs, I get the next one reliably.

The "PREV" and "NEXT" in the pop-up overlay are not visible until you wave your mouse cursor over their hot spot.

So this seems to mean that there are two ways to view the slide show:

Keep clicking on the Roladex graph visible in the main page, or
Click on the text associated with that graph to pop-up the overlay, then keep clicking NEXT.


The link to http://www.janszen.com seems to be only visible in the second of these methods, on the pop-up overlay, lower left to center.

The text associated with each graph seems to be only visible in the first of these methods, except that some of the text for the two slides with the text titles of

"The Output Gap Trap: The Great Recession at 1% per year", and
"The Output Gap Trap: The Great Recession at 3% per year".

there seems to be no way that I can find to see all their text. For these two slides, there is more text than fits and the text area does not scroll.

One more twist -- you don't have to click on the Roladex graph on the main web page to see the next slide. It automatically rolls over to the next one every 60 seconds. So now we are up to three ways to see the show -- the third one being just to sit and wait for the 60 second rollover. Only one of these three ways gets you that http://www.janszen.com link, and only the other two ways get you (most of) the text associated with each slide.

Final thoughts:

Someone at Macromedia (creators of Flash, the whiz bang technology on display here) has too much time on their hands.
I could not guess from your brief description metalman where you got lost in this maze. Unfortunately the complete description of the maze, as I have just attempted above, may be tedious enough that you get lost there as well. Don't sweat it if that's the case; I won't mind.


Aha - final final thought. I'll bet you were clicking on the Rolladex graph that shows up on the normal web page (not on the pop-up overlay) -- right metalman? If so, click on the text (white characters on black background) to the right of the graph to get that pop-up overlay, where you will find the infamous http://www.janszen.com along the bottom of the pop-up, left side toward center.

P.S. -- I did not even realize that I could view the slides without clicking on the white on black text area to get the pop-up overlay, or that I could see the different text associated with each slide, until I went through the above tedious documentation effort, because (1) when I move my mouse over the Roladex graph, it does not switch the cursor to a visible indication of a place I can click, and (2) I never waited 60 seconds to see if the Roladex graph would automatically do something.

c1ue
10-10-10, 03:46 PM
What I understand from this is that we will inflate - since both Debt Jubilee and a Short Victorious War are both off the table.

What I still don't agree on is why the inflation will necessarily be controlled at just the 100% above natural rates.

Nor do I see how the US political system and way of life will necessarily hold together as this inflationary process unfolds.

The US today is a largely urban nation; a 30% (or more) drop in standard of living means true suffering for a large part of the population; and furthermore in the US this population has votes and will use them.

If you think the Tea Party now is nutty - similarly that Palin's ongoing (and burgeoning?) presence is an indicator of doom, how then will the political situation look like when the standard-of-living-reversion-to-mean occurs?

The inchoate anger being tapped into by the Tea Party and Palin will increase exponentially.

Jay
10-11-10, 07:54 AM
What I understand from this is that we will inflate - since both Debt Jubilee and a Short Victorious War are both off the table.


I see the possibility of inflation through a Medium Length Unwinnable War though. It's the fail safe, not that it will work as planned and go well, whatever well might mean in those circumstances.

dbarberic
10-11-10, 08:27 AM
I'm assuming that the 3 year window is being driven by the next anticipated round of oil price spikes due to Peak Oil. Correct?

FRED
10-11-10, 08:44 AM
I'm assuming that the 3 year window is being driven by the next anticipated round of oil price spikes due to Peak Oil. Correct?

As explained in the first presentation on the Output Gap Trap, there are at least three potential triggers:

1) Reflation politics: fiscal stimulus is withdrawn and the money supply and economy shrink.
2) US runs out of foreign credit needed to roll over existing debt.
3) Next Peak Cheap Oil Cycle

A 4th is a global currency crisis, a 5th an expanded ME war, and a 6th is a property crash in China. The next Peak Cheap Oil Cycle may trigger some or all of the above.

we_are_toast
10-11-10, 10:23 AM
A 4th is a global currency crisis, a 5th an expanded ME war, and a 6th is a property crash in China. The next Peak Cheap Oil Cycle may trigger some or all of the above.

Unfortunately, I think this list can grow quite long. How about high speed computer trading in the markets? How long will it be before a foreign gov. or terrorist organization, or a bug in some software, or a virus, is able to place a few $trillion in trades in a few milliseconds and cause the worlds financial markets to come tumbling down? It's nothing but a big casino now and it's only a matter of time before someone busts the house.

hayekvindicated
10-11-10, 11:41 AM
I wish I could cancel my subscripton. Too late for that I guess.

Chomsky
10-11-10, 11:44 AM
I wish I could cancel my subscripton. Too late for that I guess.


What's the matter, HV? You've seemed especially dyspeptic of late.

thriftyandboringinohio
10-11-10, 12:15 PM
when i click on the 1st chart i get a new chart & comments. no matter how fast i click i get a new chart... no janszen.com. i get text if i mouseover anywhere on the 2nd chart. slick as shit, if you ask me.

Slick, yes; intuitive, no. Nice first try, but it comes up short.
It was only by accident that I discovered the notations on the second chart when I moused over, and still wonder if I got them all.

A better graphic design / interface design is at the Washington Post article. http://www.washingtonpost.com/wp-srv/business/the-output-gap/index.html
The little line of numbers at top with PREVIOUS and NEXT buttons is a powerful design element for the reader to move through the material.

There should always be a clear button that looks like a button for every function.
Invisible mouse-over regions to generate actions are terrible in that regard.
The simple forward/back concept is great for a Flash animation. So is go/stop.

There should always be a clear button that looks like a button for every function.
There should always be a clear button that looks like a button for every function.
There should always be a clear button that looks like a button for every function.....

Chris Coles
10-11-10, 01:27 PM
What's the matter, HV? You've seemed especially dyspeptic of late.

Might be because the sun has been shining here lately :)

LargoWinch
10-11-10, 03:28 PM
I wish I could cancel my subscripton. Too late for that I guess.

I agree with Chomsky, please explain what in this article is causing you to react this way hv. :o

metalman
10-11-10, 07:53 PM
I agree with Chomsky, please explain what in this article is causing you to react this way hv. :o

lacking ideological purity?

hayekvindicated
10-12-10, 06:11 AM
I agree with Chomsky, please explain what in this article is causing you to react this way hv. :o

The fine art of saying nothing.

There's no tradeable advice. This is not new. I've noticed this from the day I joined.

I didn't become a subscriber to participate in interesting and stimulating (but also pointless) intellectual discussions. If that's what I wanted I would have gone to a university course (or become the benighted Michael Hudson's student).

It is a total waste of time.

xPat
10-12-10, 07:39 AM
EJ,

Thanks as always for another post with insightful commentary. Your grasp of the macro picture never ceases to impress me. (Sorry hv, this is not a trader's site, and the fact that it's about the big, long-term picture should have been obvious to you before you subscribed).

But I can't resist the desire to respectfully object to the misplaced attempt at being fancy with the whiz-bang flash format. I really don't want to have to read all the comments in order to glean sufficient insight to know what to click on in order to see the content. The old fashioned format that reads top to bottom with interesting graphs between the text was far superior to this approach. In my opinion, this format puts gimmick ahead of substance, and that's a huge departure from what I've come to know and love about this site. I recognize and respect that you probably just intended to make the presentation more "interactive" but IMHO it's not working.

xPat

hayekvindicated
10-12-10, 07:48 AM
EJ,

Thanks as always for another post with insightful commentary. Your grasp of the macro picture never ceases to impress me. (Sorry hv, this is not a trader's site, and the fact that it's about the big, long-term picture should have been obvious to you before you subscribed).

But I can't resist the desire to respectfully object to the misplaced attempt at being fancy with the whiz-bang flash format. I really don't want to have to read all the comments in order to glean sufficient insight to know what to click on in order to see the content. The old fashioned format that reads top to bottom with interesting graphs between the text was far superior to this approach. In my opinion, this format puts gimmick ahead of substance, and that's a huge departure from what I've come to know and love about this site. I recognize and respect that you probably just intended to make the presentation more "interactive" but IMHO it's not working.

xPat

I can respect the perspective that this is a website for a long term investor - and I happen to consider myself one. I rarely trade for short term profits myself.

However, regardless of whether one takes a long or short term view, the view must translate into something of substance on the basis of which you can invest (even if it is for the long term). Telling people that you advised your investors to buy gold in 2001 which shows how smart you are doesn't cut it.

If you run an investment fund, you are only as good as your last year. No one cares what you did in 2001. I don't get the sense that anyone here has any serious or sensible ideas about making any investment decisions that are really rooted in the commentary here. There are some thing most smart people can notice - you don't need paid commentary for that.

And pardon me if I don't participate in hero-worship. Not my cup of tea, thank you.

xPat
10-12-10, 08:22 AM
Hi HV,

I don't mean to be combative here, and hope my earlier comment didn't come across that way.

FWIW, I'm a very active trader, and I read a LOT of people, focusing on the trade-inspiring advice many of them give. I put EJ's commentaries in a special category of their own. I almost never even read them during the trading day/week when I am going 200 miles an hour trying to sort through the BS looking for worthwhile gems I can trade. Instead, I generally save them for the weekend because (1) I know they almost never have anything to do with short-term trading strategies, and (2) I find they are the most insightful, thought-provoking long-term macro commentaries I have access to. I prefer to read them when the markets are closed and I won't be distracted by trade alarms going off in the background.

The hero worship comment strikes me as a bit silly. I don't worship EJ or consider him a "hero". Rather, I embrace his perspective for the value it has in helping me shape my own macro view of the world, and I find it to be the best in the business. Since you obviously don't agree, I would suggest that a polite and respectful behind-the-scenes e-mail to the management saying you have decided this wasn't for you would probably stand a better chance of negotiating a refund than a public smear campaign. But your mileage may vary...

Best,
xPat

we_are_toast
10-12-10, 08:43 AM
Hi HV,

I would suggest that a polite and respectful behind-the-scenes e-mail to the management saying you have decided this wasn't for you would probably stand a better chance of negotiating a refund than a public smear campaign. But your mileage may vary...

Best,
xPat

I disagree with you here xPat. I find the analysis here on iTulip to be valuable for it's macroeconomic approach and it's data supported conclusions. But I also find the opinions in the community who will challenge the analysis also very valuable. If HV found this thread not to be useful, it's going to make me take a second look. Maybe a different approach at expressing an opinion about the value of a posting would be more helpful, but I find contrary opinions to usually be very useful. One of the most important aspects of iTulip is it's willingness to allow dissenting debate (to a limit).

xPat
10-12-10, 09:00 AM
toast,

I don't think you're objectively looking at what was said.

I couldn't agree more that critical feedback from the community is half the value here. But HV's gripe wasn't "I think your analysis is wrong because XXX". It amounted to "I wasted my money subscribing because this site is useless". He's certainly entitled to that view too. But his comment did not express a criticism of the base post. It only expressed that he thought there was no useful "tradeable" content on this site, and that he had wasted his money by subscribing and regretted that decision.

My point was simply that making comments that imply the site is without value probably isn't the most effective way to negotiate a refund, which is what he appears to want. If he had offered a substantive counter-argument, I'd have agreed with you, but he didn't.

xPat

jpatter666
10-12-10, 09:28 AM
toast,

I don't think you're objectively looking at what was said.

I couldn't agree more that critical feedback from the community is half the value here. But HV's gripe wasn't "I think your analysis is wrong because XXX". It amounted to "I wasted my money subscribing because this site is useless". He's certainly entitled to that view too. But his comment did not express a criticism of the base post. It only expressed that he thought there was no useful "tradeable" content on this site, and that he had wasted his money by subscribing and regretted that decision.

My point was simply that making comments that imply the site is without value probably isn't the most effective way to negotiate a refund, which is what he appears to want. If he had offered a substantive counter-argument, I'd have agreed with you, but he didn't.

xPat

It's been very hard for me to get in sync with what for the last ten years has been iTulip's primary investment strategy.

Do *nothing*.

The gold and treasuries investments were started in 2001 and continued every year since then. No changes, nada, since [OK, I recognize that EJ *has* made some side-investments in some non-public companies in the past year]. At any point, you could have established the gold/treasuries play and racked profits (and I'll give EJ credit for that -- he's been right on treasuries although I *still* have trouble wrapping my head around that one).

You can always be convinced you can do better, there is an overwhelming urge to find new things, invest in other areas -- the market is worse and more seductive than a craps table in Vegas!

Part of this is that iTulip IMO does a *horrible* job in managing expectations. There have been lots of promises for things that never happen or are delayed -- posted interviews, articles on various topics (I believe you've touched on that yourself xPat!), having more EJ postings, and what HV touches on, the semi-mythical (grin) future positions paper, which has been alluded to for (I think) nearly a year. It was going to be peak-Oil based, then TECI-based, and last month we were told (and I think most of us interpreted it that way) the next month's posting would finally have the positions. And what we get is a solicitation for an MLP which most of us can't participate in.

It's frustrating, I understand, I'm there myself.

But unfortunately, this is the world we are in now. As EJ has said (probably getting this wrong, but...) it's being driven as much by political considerations (if not more) as by market fundamentals. And that's a hell of lot harder read. I'm sure there are many days when EJ is pulling his hair out as well.

For the money (and honestly, I've seen subscriptions offering way less for far more) I think iTulip does a great job and has created an first-rate community. We've transforming into the next phase and the birthing process is always painful, but I hope you (HV) stay around for it -- I find your postings well-written and informative.

hayekvindicated
10-12-10, 09:42 AM
toast,

I don't think you're objectively looking at what was said.

I couldn't agree more that critical feedback from the community is half the value here. But HV's gripe wasn't "I think your analysis is wrong because XXX". It amounted to "I wasted my money subscribing because this site is useless". He's certainly entitled to that view too. But his comment did not express a criticism of the base post. It only expressed that he thought there was no useful "tradeable" content on this site, and that he had wasted his money by subscribing and regretted that decision.

My point was simply that making comments that imply the site is without value probably isn't the most effective way to negotiate a refund, which is what he appears to want. If he had offered a substantive counter-argument, I'd have agreed with you, but he didn't.

xPat

Thanks.

I'm not sure what the most efficient way for getting a refund is. Technically, under contractual law, you have paid for the subscription period and are only entitled to a refund if the site does not deliver at all (although I never bothered to read the fine print).

I don't see why my comment should be called "smearing". I've made my comment publicly and left it to the site administrators to decide whether my subscription can be/should be cancelled because that is what I would like to do. Do they have to do this legally? No. I also am not sure that a private e-mail would do this more effectively.

I'm being very honest about my opinions here. One doesn't have to get offeneded by these things. This is not a personal quarrel. We disagree on the utility of the content on this site. There are those who may consider it invaluable, which is fine. My own view is that the content is not useful if you need to invest money regularly. If you have a high cash flow and high savings, you need to regularly think about investments. What you did with the money a decade ago when everything was depressed (other than the Nasdaq and the DOW) is not relevant now. What is relevant is what you do with fresh savings.

By way of example, I was a student when the Nasdaq collapsed. So what happened then is only interesting from the point of view of learning from past experience and not any more. The bulk of my cash savings have come in the last five years and for someone like me who is still going higher up the earning curve, becoming complacent about some good past investment decisions doesn't cut it. You need new ideas about where to invest money. They are sadly lacking here.

jk
10-12-10, 09:57 AM
i find this site quite informative and a definite influence on my investment decisions. i was in gold before i found itulip, and it was in part ej's case for gold that got me reading here. it was lukester, many years ago now, who initially brought up the issue of peak oil. he was initially resisted by both ej and the rest of the community, but eventually ej adopted the idea with a modifying/clarifying "cheap" inserted in the phrase. the discussion reinforced my notion of investing in canadian energy trusts. i haven't waited for any "official" calls of time to buy- i made my own call, but my education was aided by itulip. i am currently 19% in energy, mostly canadian producers that i started accumulating years ago. at least so far i'm glad i "jumped the gun." otoh, i sold my treasuries when tlt was 88-89; it's now 104-105. my bad. i don't expect to be told what to do here. i do expect to find things worth thinking about. and so far i have.

LargoWinch
10-12-10, 09:58 AM
First, I agree with jpatter666: it is great to have you around hv and I hope you stick around.





I'm not sure what the most efficient way for getting a refund is. Technically, under contractual law, you have paid for the subscription period and are only entitled to a refund if the site does not deliver at all (although I never bothered to read the fine print).

I don't see why my comment should be called "smearing". I've made my comment publicly and left it to the site administrators to decide whether my subscription can/be should be cancelled because that is what I would like to do. Do they have to do this legally? No. I also am not sure that a private e-mail would do this more effectively.


Here I agree with xPat; a simple pm to FRED and I am sure you can get this resolved. Posting such request on an open public thread is unwaranted and probably not the best way to obtain what you seek.




I'm being very honest about my opinions here. One doesn't have to get offeneded by these things. This is not a personal quarrel. We disagree on the utility of the content on this site. There are those who may consider it invaluable, which is fine. My own view is that the content is not useful if you need to invest money regularly. If you have a high cash flow and high savings, you need to regularly think about investments. What you did with the money a decade ago when everything was depressed (other than the Nasdaq and the DOW) is not relevant now. What is relevant is what you do with fresh savings.

By way of example, I was a student when the Nasdaq collapsed. So what happened then is only interesting from the point of view of learning from past experience and not any more. The bulk of my cash savings have come in the last five years and for someone like me who is still going higher up the earning curve, becoming complacent about some good past investment decisions doesn't cut it. You need new ideas about where to invest money. They are sadly lacking here.

Now here is the meat of the matter: you are not happy with the services provided by iTulip inc. Fine. Everyone I am sure will respect that opinion, although some - such as myself - will disagree.


What I am unsure about is:

a) Why such reaction now? iTulip has always been a macro-forum, I am sure you are very much aware of that since at least June of 2008.

b) Isn't the proposed allocation producing a given return each year? If this strategy produces higher returns after fees and taxes on a risk-adjusted basis when compared to constantly trading the stock market, what is the issue?

c) What to do with fresh savings? Simple; I simply follow my selected allocation by rebalancing my portfolio once every quarter or so. Again, new savings does not mean you have to trade them if you decided otherwise as per "b"...

d) EJ indicated that the next major shift in allocation is just around the corner. Furthermore, this strategy will address exactly what you feel iTulip is currently lacking: tradable advice.


In the end, we all respect your decision and value your opinion, but I still do not understand why...

xPat
10-12-10, 10:05 AM
Hi again HV,

It sounds like I offended you and that was not my intent. I was merely putting myself in EJ's shoes. I don't know him personally, but my perception is that he's a guy who doesn't really need the money but enjoys doing this. If I were him and you sent me a PRIVATE e-mail asking for a refund, I would give it to you. But if you came into my virtual online "house" and declared my life's work to be "a complete waste of time", I would probably take offense and be less inclined to honor your request for a refund.

For whatever it's worth, I agree completely that this site is useless for day to day trading advice. What happened this weekend with the G20 was critical for short term traders, and I doubt you'll even see it mentioned here. That's not EJ's cup of tea. For me, as a full-time private investor, this site is invaluable specifically because it is so different from the rest. It is always about the long term big picture, and EJ's commentaries help pull me out of the day to day trading signal crap and see the forest through the trees, so to speak. As jpatter said, I too have on occasion become frustrated with follow-through on this site, but I accept it for what it is.

So let's get this on a useful track and talk about what might work better for you.

ZeroHedge.com is both the best and the worst of the investment sites on the net. Separating the ZH brilliance from the ZH bullshit is a skill that takes time to learn, but it's worth it. My rule of thumb is that there is no better place on the net to get a list of relevant topics. Expect most of them to be communicated with undue hyperbole and for there to be some articles that are just pure nonsense. You have to have the brains to separate the wheat from the chaff, but there are a lot of really worthwhile things there. The AUDJPY-SPX reconvergence trade has pocketed me middle six figures, and I found it there. Nic Lenoir's technical market commentaries are some of the best on the net, and they're free. You have to weed through the GATA posts and other bullshit to find the gems, but they are there.

Tony Boeckh has been publishing a fantastic FREE newsletter for about 6 months, and his book The Great Reflation was a must-read. I think he is about to go paid on the newsletter but I suggest reading through a few back-issues of the free version to see if it works for you.

FinancialSense.com gets dismissed by many as "just for newbie retails" because the podcast is designed to be understandable by everyone, but they get some fantastic articles (all free) on their "Financial Sense Online" area of the website. I always peruse them to look for useful new stuff.

TheOilDrum.com is more of a peak oil awareness site than an investment site, but it's free and is a wealth of information. Very worthwhile if you care to specualte on the coming peak cheap oil price shock and economic impacts.

ChrisMartenson.com is not really an investment site - more about Dr. Martenson's predictions of the macro economy and how it will affect average people. The best stuff requires a subscription but the free content is pretty darned good. Worth putting on your RSS reader or favorites list.

I hope these suggestions will help you find content more along the lines you are looking for. As to your rhetorical comment that you're not sure what the most efficient way to get a refund is, the answer is simple: Don't piss anyone off! You are correct that in terms of contract law, EJ owes you exactly nothing and has the legal right to keep your money laughing all the way to the bank. If you take a more respectful approach you might persuade him to feel sympathy for the fact that you obviously chose the wrong site to subscribe to, but public comments about his site being a waste of time probably aren't the way to schmooze him.

Best,
xPat

LargoWinch
10-12-10, 10:21 AM
The AUDJPY-SPX reconvergence trade has pocketed me middle six figures...

Six as in 6 as in $X00,000? Woacaramba! Good for you xPat.

What kind of capital at risk are we talking about to achieve such a thing? Seven figures? Also, how many six figures losses are required to do this?;_CC



Here is what I am proposing: xPat please post your trades on "Trader's Corner" (http://www.itulip.com/forums/forumdisplay.php/76-Traders-Corner) this way hv sticks around and I get to become as wealthy as Croesus (http://en.wikipedia.org/wiki/Croesus)or possibly even metalman for that matter. (:D)


PS: the whole post is "tongue in cheek" here, except for you posting your trades...

xPat
10-12-10, 10:39 AM
Hi Largo,

One thing that I think sets iTulip apart is the respectful conversation and sense of community that exists here. ZeroHedge obviously has more up-to-the-minute trading perspectives, but the "member" commentary is subadolescent on a good day. While I don't really think this site was meant to be ABOUT trading in the short term, this community is certainly a good place to discuss such subjects.

The AUDJPY-ES convergence trade will keep working until the underlying correlation pattern breaks down. Until then, it's as close to a sure deal as you can find. As to capital risk, it's all about the stops. When the divergence blows out to (say) 10 ES-points, you put the convergence trade on with a target of crossing the line (zero divergence) and a stop at whatever your judgment tells you. My approach was to stop the trade at a 50% excess over the initial divergence. I only got stopped out once that way, and of course the trade turned right around and converged right after I got stopped out. I ran the trade successfully without getting stopped out at least 10 times. When ZH announces the opportunity for the trade, it's usually over before you get there. But if you plot an AUDJPY overlay on your realtime ESZ0 screen, you can see the entry opportunities yourself in real time. Unless you are way better at fancy trading rules than I am, you have to watch the trade manually, since the stops are relative and not at hard price points. As to capital risk, it's contained in the stops and there's enough liquidity in both markets to almost eliminate slippage risk. The only real cost is available margin. I was trading 200 to 300 ES contracts against 10 - 15mm Euros on the FX leg. The risk is well contained but the margin requirement is non-trivial. But a 10 ES-point convergence on 250 contracts yields a $125k profit, usually in about an hour, with very low risk.

As for posting more in trader's corner, I have to confess that I find this site hard to navigate. I don't read all the posts all the time the way I do on some other sites. I read the Ask EJ stuff and the comments under the EJ commentaries, and other topics if they catch my eye. But following the whole thing is too much work for the benefit involved IMHO. That would be one criticism I would (respectfully) levy against this site: The forums are hard to follow.

xPat

FRED
10-12-10, 10:41 AM
Thanks.

I'm not sure what the most efficient way for getting a refund is. Technically, under contractual law, you have paid for the subscription period and are only entitled to a refund if the site does not deliver at all (although I never bothered to read the fine print).

I don't see why my comment should be called "smearing". I've made my comment publicly and left it to the site administrators to decide whether my subscription can be/should be cancelled because that is what I would like to do. Do they have to do this legally? No. I also am not sure that a private e-mail would do this more effectively.

We have in the past received PM's from subscribers who did not "get" our analysis and our approach. We are glad to refund and have done so in the past, but the requests are rare. As I recall, we have only received three refund requests since 2007 when we started our subscription service. The most common feedback we get is that our service is vastly under-priced for the value it delivers compared to other services. Even though our expenses are rising, we are reluctant to raise prices because we pride ourselves at providing world class analysis to a broad range of readers.


I'm being very honest about my opinions here. One doesn't have to get offeneded by these things. This is not a personal quarrel. We disagree on the utility of the content on this site. There are those who may consider it invaluable, which is fine. My own view is that the content is not useful if you need to invest money regularly. If you have a high cash flow and high savings, you need to regularly think about investments. What you did with the money a decade ago when everything was depressed (other than the Nasdaq and the DOW) is not relevant now. What is relevant is what you do with fresh savings. Our philosophy has for ten years had through the Bubble Cycle era been that it was not possible to earn a decent return on savings on a risk-adjusted basis with a traditional buy-and-hold strategy based on a portfolio of stocks and bonds. We also believed that net of transactions costs -- fees and taxes -- an actively traded portfolio was likely, due to high volatility, to under-perform a portfolio constructed for the conditions we foresaw, of asset price inflation, deflation, and reflation. We put substantial effort into devising a portfolio composed simply of gold and Treasury bonds. If you bought Treasury bonds from a Treasury Direct account as we recommended in the Fall of 2000, transaction costs were virtually zero over the entire period. The risk-adjusted returns are reviewed here. (http://www.itulip.com/forums/showthread.php/17051-iTulip-Portfolio-Strategy-%C2%96-Section-1-Part-I-The-Past-Ten-Years-Eric-Janszen?p=175802#post175802)

The Bubble Cycle ended in 2007. The challenge going forward is first to identify the primary drivers of economic change for the next ten years and then construct a portfolio that allows us to capture gains as well as we did over the previous ten years with minimal risk and transaction costs. This is no mean feat and there is no guarantee that we will succeed as well this time as last. The bubble cycle was relatively simple and predictable. The interaction of a multiplicity of drivers over the next ten years is far more complex and less predictable, especially the political components. The dominant political components of the Bubble Cycle was asset price inflation and dollar depreciation. The political components of the next ten years include negotiation of a new international currency regime, a global battle over dwindling cheap oil supplies, domestic wrangling over how to manage the consequences of post-credit bubble era debt deflation, and how to escape the Output Gap Trap.

The first step is to lay out our case this month for the main drivers over the next ten years. We covered the first key driver in this article, the Output Gap Trap. Next we lay out the likely trajectory of the other three drivers. Next we attempt to model how they might interact with each other. Finally we relate these to asset prices.

To help us decide how to respond to this macro environment we have spent a year searching for investment professionals who share our vision of how the world will look. Each takes a different approach to the challenge of managing risk and earning decent returns through this period. We plan to present these professionals to subscribers in a series of webinars. The first of these is provided for free to subscribers later this month. So far 70 members have signed up at the link provided in Part II of this article. Even if a subscriber likes what they hear but is not in a position to meet the minimum account requirement, they will get exposure and a chance to ask questions of what we believe are the very best managers in the industry.

We also plan to make Postcatastrophe Economy Portfolio Strategy available to subscribers, once we work through a few final regulatory and compliance issues that we hoped we'd work out in September. This reveals another benefit of the gold and Treasuries portfolio that we are losing in the new era: simplicity.

The only reason that we have any optimism that we are likely to navigate the troubled environment of the next ten years, as we did previously by out-performing approximately 80% of professional portfolio managers over the past ten years, is that we have over 12 years learned how to analyze the political economy in a way that combines both qualitative and quantitative measures, and have as a result avoided the mistake of expecting a deflation spiral as a result of the collapse of the mortgage credit bubble in 2008 and 2009.


By way of example, I was a student when the Nasdaq collapsed. So what happened then is only interesting from the point of view of learning from past experience and not any more. The bulk of my cash savings have come in the last five years and for someone like me who is still going higher up the earning curve, becoming complacent about some good past investment decisions doesn't cut it. You need new ideas about where to invest money. They are sadly lacking here.If that's how you feel then indeed this is not the place for you. Please PM me and we'll gladly give you a refund.

LargoWinch
10-12-10, 10:57 AM
I have to be honest xPat, I am affraid that I lack to sophistication to put in place such strategy and even to understand some of the terms you are using. :)

Looking forward to learn more as they say! Thanks for the reply.




Hi Largo,

One thing that I think sets iTulip apart is the respectful conversation and sense of community that exists here. ZeroHedge obviously has more up-to-the-minute trading perspectives, but the "member" commentary is subadolescent on a good day. While I don't really think this site was meant to be ABOUT trading in the short term, this community is certainly a good place to discuss such subjects.

The AUDJPY-ES convergence trade will keep working until the underlying correlation pattern breaks down. Until then, it's as close to a sure deal as you can find. As to capital risk, it's all about the stops. When the divergence blows out to (say) 10 ES-points, you put the convergence trade on with a target of crossing the line (zero divergence) and a stop at whatever your judgment tells you. My approach was to stop the trade at a 50% excess over the initial divergence. I only got stopped out once that way, and of course the trade turned right around and converged right after I got stopped out. I ran the trade successfully without getting stopped out at least 10 times. When ZH announces the opportunity for the trade, it's usually over before you get there. But if you plot an AUDJPY overlay on your realtime ESZ0 screen, you can see the entry opportunities yourself in real time. Unless you are way better at fancy trading rules than I am, you have to watch the trade manually, since the stops are relative and not at hard price points. As to capital risk, it's contained in the stops and there's enough liquidity in both markets to almost eliminate slippage risk. The only real cost is available margin. I was trading 200 to 300 ES contracts against 10 - 15mm Euros on the FX leg. The risk is well contained but the margin requirement is non-trivial. But a 10 ES-point convergence on 250 contracts yields a $125k profit, usually in about an hour, with very low risk.

As for posting more in trader's corner, I have to confess that I find this site hard to navigate. I don't read all the posts all the time the way I do on some other sites. I read the Ask EJ stuff and the comments under the EJ commentaries, and other topics if they catch my eye. But following the whole thing is too much work for the benefit involved IMHO. That would be one criticism I would (respectfully) levy against this site: The forums are hard to follow.

xPat

jpetr48
10-12-10, 11:09 AM
Fred,

What makes itulip unique is not only its readers but its subscribers. As a new subscriber, I am constantly challenged to think outside of the quick fix economic sound bytes of today.
EJ has been cautious in making any "new idea" recommendations because he studies and formulates first before firing out fad ideas.
Communities like itulip understand we need a nation of producers and no longer consumers of products, information etc. That means subscribers & members become partners.
My compliments to all long term subscribers and of course EJ
Joe

steveaustin2006
10-12-10, 11:13 AM
Well said, FRED.

This summation is something that new subscribers should copy/paste to keep:

"The Bubble Cycle ended in 2007. The challenge going forward is first to identify the primary drivers of economic change for the next ten years and then construct a portfolio that allows us to capture gains as well as we did over the previous ten years with minimal risk and transaction costs. This is no mean feat and there is no guarantee that we will succeed as well this time as last. The bubble cycle was relatively simple and predictable. The interaction of a multiplicity of drivers over the next ten years is far more complex and less predictable, especially the political components. The dominant political components of the Bubble Cycle was asset price inflation and dollar depreciation. The political components of the next ten years include negotiation of a new international currency regime, a global battle over dwindling cheap oil supplies, domestic wrangling over how to manage the consequences of post-credit bubble era debt deflation, and how to escape the Output Gap Trap."

c1ue
10-12-10, 12:24 PM
it was lukester, many years ago now, who initially brought up the issue of peak oil. he was initially resisted by both ej and the rest of the community, but eventually ej adopted the idea with a modifying/clarifying "cheap" inserted in the phrase.

I'd just note that Lukester was notably wrong on a number of things: including that oil would hit $300 within 2 years, etc etc.

I'd also note that what Peak Cheap Oil means is vastly different than the Lukester/Oil Drum/no more oil we're all doomed ethic: Peak Cheap Oil is that there's PLENTY of oil, just not dirt cheap high quality oil.

The effect on investment is tremendously different: Peak Oil means prices spike and we all wind up fighting each other for a shrinking pool like crocodiles at a watering hole during a drought.

Peak Cheap Oil means the economic cost - therefore the economic benefit that must be derived - from each barrel of oil gradually ratchets upwards. This is a significant pressure on economies, on commodity prices, etc etc but is a gradual boiling of the frog.

Thus to say that EJ adopted what Lukester proposed is true in a certain sense, but quite untrue in the overall sense.

vinoveri
10-12-10, 01:32 PM
The Bubble Cycle ended in 2007. The challenge going forward is first to identify the primary drivers of economic change for the next ten years and then construct a portfolio that allows us to capture gains as well as we did over the previous ten years with minimal risk and transaction costs. This is no mean feat and there is no guarantee that we will succeed as well this time as last. The bubble cycle was relatively simple and predictable. The interaction of a multiplicity of drivers over the next ten years is far more complex and less predictable, especially the political components. The dominant political components of the Bubble Cycle was asset price inflation and dollar depreciation. The political components of the next ten years include negotiation of a new international currency regime, a global battle over dwindling cheap oil supplies, domestic wrangling over how to manage the consequences of post-credit bubble era debt deflation, and how to escape the Output Gap Trap.



Would you please define or elaborate on what you mean by the end of the bubble cycle vis-a-vis what appears to be starting to happen at present with the ramp up in "all" asset classes that can be paper traded (bonds, equities and commodities)?

Does not ZIRP now going on for almost 2 years with no end in sight combined with QE guarantee that liquidity will be leveraged to bid up assets in bubble fashion. Even if securitization of private debt is gone, and the bubble machinery thereof dead, do not the global central bank policies generate bubbles? Why should we not look for those to invest in, even if for a short time of 1-2 years?

Do you deny the existence of bubbles inflating around the world or do you acknowledge them but just find them not worth "investing" in?

jk
10-12-10, 02:00 PM
I'd just note that Lukester was notably wrong on a number of things: including that oil would hit $300 within 2 years, etc etc.

I'd also note that what Peak Cheap Oil means is vastly different than the Lukester/Oil Drum/no more oil we're all doomed ethic: Peak Cheap Oil is that there's PLENTY of oil, just not dirt cheap high quality oil.

The effect on investment is tremendously different: Peak Oil means prices spike and we all wind up fighting each other for a shrinking pool like crocodiles at a watering hole during a drought.

Peak Cheap Oil means the economic cost - therefore the economic benefit that must be derived - from each barrel of oil gradually ratchets upwards. This is a significant pressure on economies, on commodity prices, etc etc but is a gradual boiling of the frog.

Thus to say that EJ adopted what Lukester proposed is true in a certain sense, but quite untrue in the overall sense.
the global recession has kept oil demand in check, while production has remained essentially plateaued for several years, since about '05 iirc. i don't think anyone 5-10 years ago would have thought that we could be in the worst global recession since the 1930's, and have oil at $80/bbl. i think we could see a real price spike if global demand picks up. that's one scenario for triggering the next recession, perhaps.

FRED
10-12-10, 02:13 PM
i find this site quite informative and a definite influence on my investment decisions. i was in gold before i found itulip, and it was in part ej's case for gold that got me reading here. it was lukester, many years ago now, who initially brought up the issue of peak oil. he was initially resisted by both ej and the rest of the community, but eventually ej adopted the idea with a modifying/clarifying "cheap" inserted in the phrase.

You must be forgetting Energy and Money (http://www.itulip.com/energyandmoney.htm) that appeared in May 2006 shortly after iTulip.com reopened and long before Peak Oil was brought up here by anyone. That article was the beginning of our process of developing the Peak Cheap Oil theory because we were not satisfied with the doomer world typically painted by the members of Peak Oil crowd, such as James Howard Kunstler. Speaking of Kunstler, EJ challenged him to a debate and he accepted. We're still working out the details but it looks like it'll happen in October.


the discussion reinforced my notion of investing in canadian energy trusts. i haven't waited for any "official" calls of time to buy- i made my own call, but my education was aided by itulip. i am currently 19% in energy, mostly canadian producers that i started accumulating years ago. at least so far i'm glad i "jumped the gun." otoh, i sold my treasuries when tlt was 88-89; it's now 104-105. my bad. i don't expect to be told what to do here. i do expect to find things worth thinking about. and so far i have.We'll probably be the last to sell Treasury bonds. Most either sold or even shorted them before now. They underestimated the House. We have questions about oil trusts because the economics appear to run contrary to our expectation for oil resources to shrink. Oil trust returns are based on the value of the resource which is a function of both the amount of oil resource remaining and its unit price. In theory you can have a situation where the resource is depleting faster than the price is rising. It's a good question to pose to the Curbstone guys.

jk
10-12-10, 02:43 PM
We have questions about oil trusts because the economics appear to run contrary to our expectation for oil resources to shrink. Oil trust returns are based on the value of the resource which is a function of both the amount of oil resource remaining and its unit price. In theory you can have a situation where the resource is depleting faster than the price is rising. It's a good question to pose to the Curbstone guys.
the problem is finding a way to buy oil in the ground in politically secure jurisdictions. not easy.

bill
10-12-10, 02:44 PM
do not the global central bank policies generate bubbles? Why should we not look for those to invest in, even if for a short time of 1-2 years?

Do you deny the existence of bubbles inflating around the world or do you acknowledge them but just find them not worth "investing" in?

Two years ago yes,
http://www.itulip.com/forums/showthread.php/1819-Market-Outlook-More-From-The-Fed?p=46131

now a international political minefield.
http://www.ft.com/cms/s/0/bb3699c4-d5d5-11df-94dc-00144feabdc0.html?ftcamp=rss


Thailand to cool inflows with bond tax

By Tim Johnston in Bangkok, Kevin Brown in Singapore and Robert Cookson in Hong Kong
Published: October 12 2010 10:29 | Last updated: October 12 2010 15:06

<SCRIPT language=javascript type=text/javascript>function floatContent(){var paraNum = "3"paraNum = paraNum - 1;var tb = document.getElementById('floating-con');var nl = document.getElementById('floating-target');if(tb.getElementsByTagName("div").length> 0){if (nl.getElementsByTagName("p").length>= paraNum){nl.insertBefore(tb,nl.getElementsByTagNam e("p")[paraNum]);}else {if (nl.getElementsByTagName("p").length == 3){nl.insertBefore(tb,nl.getElementsByTagName("p")[2]);}else {nl.insertBefore(tb,nl.getElementsByTagName("p")[0]);}}}}</SCRIPT>Thailand is introducing a tax on foreign holdings of bonds aimed at curbing capital inflows that have propelled the baht to a 13-year high against the dollar.
The Thai cabinet on Tuesday imposed a 15 per cent withholding tax on capital gains and interest payments for government and state-owned company bonds. The measure – which follows moves by Brazil and other Asian emerging economies to stem capital inflows – takes effect from Wednesday.
The Thai move to tackle “hot money” inflows and a rising currency comes as China and the US are locked in a bitter international debate over currency policy (http://www.ft.com/cms/s/0/55e103f2-d495-11df-b230-00144feabdc0.html). While the US accuses China of undervaluing the renminbi, China blames loose US monetary policy for driving money into emerging markets that threatens to destabilise those economies.
While Brazil, South Korea and Indonesia have taken less drastic measures to control inflows, Thailand on Tuesday sent a clear signal that it was willing to take controversial measures to curb “hot money”.
“Most countries in Asia are moving in the direction of capital controls,” said Dariusz Kowalczyk, a strategist at Crédit Agricole. “But I doubt they will be successful. There is so much liquidity, and there will be even more from quantitative easing in Japan and the US, that the tide will be just too high.”

c1ue
10-12-10, 02:47 PM
the global recession has kept oil demand in check, while production has remained essentially plateaued for several years, since about '05 iirc. i don't think anyone 5-10 years ago would have thought that we could be in the worst global recession since the 1930's, and have oil at $80/bbl. i think we could see a real price spike if global demand picks up. that's one scenario for triggering the next recession, perhaps.

Again, nothing you've said above is unreasonable - or is anything I would categorically object to.

However, I note that there is no path whatsoever for a recovery at this moment or for the next several years.

The global economy has been heavily dependent on the American consumer, and that engine is dead/broke/busted. There is no inheritor(s) in any way capable of taking up the slack.

Certainly some organic growth is still occurring in the BRIC and 3rd world, but even that is significantly being hampered by lowered growth prospects due to demand side shrinkage.

Thus while price spikes can and likely will occur, these are more likely going to be due to sector rotation due to worldwide interest rates at historic lows than due to demand increases. Or for the conspiracy minded, the investment banks/hedge funds/rogue traders playing with public perception and forward looking commodity option prices.

jk
10-12-10, 02:59 PM
Again, nothing you've said above is unreasonable - or is anything I would categorically object to.

However, I note that there is no path whatsoever for a recovery at this moment or for the next several years.

The global economy has been heavily dependent on the American consumer, and that engine is dead/broke/busted. There is no inheritor(s) in any way capable of taking up the slack.

Certainly some organic growth is still occurring in the BRIC and 3rd world, but even that is significantly being hampered by lowered growth prospects due to demand side shrinkage.

Thus while price spikes can and likely will occur, these are more likely going to be due to sector rotation due to worldwide interest rates at historic lows than due to demand increases. Or for the conspiracy minded, the investment banks/hedge funds/rogue traders playing with public perception and forward looking commodity option prices.

i think that over time oil is being turned into a form of money, at least as a store of value. [it's a very inconvenient medium of exchange.] thus we heard some time ago about tankers filled with oil riding at anchor, floating storage for someone's oil play. so we have rising baseline demand as developing countries persist in developing, along with growing investment demand. as qe sends waves of money outward from the fed to the primary dealers and onward, some of those ripples will add to the upward pressures.

we_are_toast
10-12-10, 03:16 PM
i think that over time oil is being turned into a form of money, at least as a store of value. [it's a very inconvenient medium of exchange.] thus we heard some time ago about tankers filled with oil riding at anchor, floating storage for someone's oil play. so we have rising baseline demand as developing countries persist in developing, along with growing investment demand. as qe sends waves of money outward from the fed to the primary dealers and onward, some of those ripples will add to the upward pressures.

As long as new discoveries of easily accessible oil continue to lag world usage, the upward pressure will continue, with the occasional recession and economic panics temporarily dropping the price in dollars. I wish it would drop back a bit so I can add to my positions.

rogermexico
10-12-10, 07:40 PM
I am overall a big fan of EJ and the site.

However, I have some sympathy with some of the complaints I see here.

My big complaint is that the site gets more complex, more difficult to navigate and more confusing as time goes by. This thread follows a post called Part I that is dated Oct 11. Huh?? Part II is dated Oct 8, and the content is partially subsumed into the (later?) Part I, which seems to differ mostly by the addition of interactive slide shows, which like much of what I hate about the internet, I find distracting and annoying.

Last month, there was post called part I section II or something, and it said that Twin Focus was going to offer some TECI specific investment vehicles. I emailed Twin Focus asking their fee structure and was instead solicited about family office style money management for my whole nut. Nothing wrong with that, but it seemed at odds with the description here. The post last month ended saying that next month (now this month) there would finally be a discussion of what we might invest in instead of treasuries. A post, no lie, we have been waiting for for over a year. Instead, there is mention of a new money management team that EJ advises, and an invitation to a webinar (I think). More waiting....

To be clear, the problem I have with this is waiting for Godot. I have no problem if there is actually nothing to recommend and I have no problem with not telling us if you don't want to. (I would still read the site for the macro view). I just hate waiting for promised things that keep not arriving.....

Why can't we just have one post that throws out a few ideas? Not expecting perfection, we are all adults and make our own decisions.

And some discussion of the FUTURE performance of PMs would be perfectly reasonable as well. What do I tell people who say should I buy gold now if I don't have any - without the handwringing about "don't be happy if it goes up"- just a coldly rational prediction of what the price will do from here?

I have some idea what some other members view as alternatives to treasuries right now. I have some of my own ideas. However, I pay to know what EJ's ideas are. I mean, EJ, if you are exactly 30% PMs and 70% 2 year treasuries RIGHT NOW, fine. But if you are not, why not let us know what else you have? Maybe this is what HV means by actionable. CURRENT info, not necessarily fast trading.

My own background is that I did very well with big wave surfing in the nineties and got out at the Peak of the tech bubble and then stayed out of stocks in favor of corporate bonds for the most part. I also heavily shorted the S and P in late 2007 and did very well with this. I even looked for ways to short residential real estate (in 2005 and 2006!) but was not motivated or smart enough to actually do it like the characters in Lewis' The Big Short. I did all of these things before I had ever heard of EJ. I had certainly listened to Marc Faber and many others. What I credit EJ with is convincing me to take a large Gold position (larger than his) and in helping me understand and put together all the macro pieces behind my own observations. Without EJs explanation of the big picture and the forces at work, I might not have had the courage to stick with some of these positions (like buying AU at 900 and hanging on when it went 680 intraday!)

EJ convinced me that that Gold should not be sold until 1) It is much higher AND 2) there is a viable alternative as a store of value (our "money" has never really served that particular function since 1914 has it?)

I feel that EJ's gentle temperament inhibits the transmission of this profound message - this should be repeated in table pounding fashion over and over! Going on TV and acting coy about gold if you really believe gold will at least double from here is doing no one any favors.

I would also like to plead for more simplicity on the site - fewer interactive graphics.

Finally, I am a blogger myself, and like EJ I prefer soundness of message to fecundity. If we have to wait to get quality, so be it. I'll keep subscribing for the macro view, but for energy investment ideas it is time to "shit or get off the pot". Tell us what you think or stop teasing us with it. Either one is OK.

flintlock
10-12-10, 08:53 PM
I don't think HV is literally worried about a refund, rather he said that to make an understated point.

I like the site and tried the pay section but found it didn't offer much for me, so I dropped it. Now I feel I get my money's worth so I can't complain!:(

vinoveri
10-12-10, 08:55 PM
Two years ago yes,
http://www.itulip.com/forums/showthread.php/1819-Market-Outlook-More-From-The-Fed?p=46131

now a international political minefield.
http://www.ft.com/cms/s/0/bb3699c4-d5d5-11df-94dc-00144feabdc0.html?ftcamp=rss

Thanks. I'm not sure I get the point though. Sure, there is more "awareness" that CB liquidity is blowing bubbles and talks now of currency controls, but we could be back here in Oct 2011 with more talk, more angst, QE III or IV on the horizon and the markets 30% higher. Yes, we are 1 year closer to any bubbles popping than we were 1 year ago (by definition of course).

2 years ago was the collapse and iTulip had warned to get out long before and stay out. Over a year ago this site asserted that the SPX would finish '09 at 600 or thereabouts if memory serves, AND after explaining gracefully the error of timing, at the beginning of this year predicted the market would be down 20-20% by years end. Does iTulip still believe that? Deja vous indeed.

rogermexico
10-12-10, 08:57 PM
One must subscribe in order to read EJs analyses, is that not true?

flintlock
10-12-10, 09:02 PM
Fred,

What makes itulip unique is not only its readers but its subscribers. As a new subscriber, I am constantly challenged to think outside of the quick fix economic sound bytes of today.
EJ has been cautious in making any "new idea" recommendations because he studies and formulates first before firing out fad ideas.
Communities like itulip understand we need a nation of producers and no longer consumers of products, information etc. That means subscribers & members become partners.
My compliments to all long term subscribers and of course EJ
Joe

I agree! I'm here for the subscribers . That is what makes Itulip unique. They drive the discussion. No offense meant to EJ by this either. Its just that most of what he says is over my head . But I can read the comments made about his articles and they fill in the blanks for me. At least most of the time.:(

flintlock
10-12-10, 09:12 PM
Thus to say that EJ adopted what Lukester proposed is true in a certain sense, but quite untrue in the overall sense.[/QUOTE]

Don't forget DOW 25,000!

bill
10-12-10, 10:34 PM
Thanks. I'm not sure I get the point though. Sure, there is more "awareness" that CB liquidity is blowing bubbles and talks now of currency controls, but we could be back here in Oct 2011 with more talk, more angst, QE III or IV on the horizon and the markets 30% higher. Yes, we are 1 year closer to any bubbles popping than we were 1 year ago (by definition of course).

2 years ago was the collapse and iTulip had warned to get out long before and stay out. Over a year ago this site asserted that the SPX would finish '09 at 600 or thereabouts if memory serves, AND after explaining gracefully the error of timing, at the beginning of this year predicted the market would be down 20-20% by years end. Does iTulip still believe that? Deja vous indeed.

I purchased resource companies in Australia, SE Asia, Brazil, South Africa, Mongolia and a few in Canada as markets turned down 08-09 using yen.
My target was resource companies that would supply Emerging Markets. Objective was to get in front of dollar reserve holders rushing for resource companies to purchase.
The period two years ago as markets turned down capital from China was accepted without much resistant’s, acquisitions took place and I benefited from those deals. Don’t get me wrong these deals don’t come easy, hours and hours of research, travel and on and on.
Now that said, to answer your question regarding asset purchases today as I did two years ago face many challenges.
1. Market has gone up and is not what I would call cheap.
2. Hot money flow is now finding resistance via government controls and if you are a politically incorrect as China is asset purchase approval will get denied, thus no exit for investments you acquire prior to China showing up, thus risk of national protectionism, investment tax, currency controls,ect ect.
3. Korea and Japan seem to be positioned well and are looking to acquire resource companies. I think they will have no problem acquiring assets. For example I know Japan is on the hunt to acquire rare earth deals.
Dollar will continue to sink and eventually make assets in USA very cheap. Who gets to purchase USA assets is what you should be researching and I do like Alaska.

BTW, What really rattled my ass to purchase these deals as described above was interviews EJ did with DR Hudson and the “Hot Potato” dollar problem.

chr5648
10-12-10, 10:35 PM
Hi Largo,

One thing that I think sets iTulip apart is the respectful conversation and sense of community that exists here. ZeroHedge obviously has more up-to-the-minute trading perspectives, but the "member" commentary is subadolescent on a good day. While I don't really think this site was meant to be ABOUT trading in the short term, this community is certainly a good place to discuss such subjects.

The AUDJPY-ES convergence trade will keep working until the underlying correlation pattern breaks down. Until then, it's as close to a sure deal as you can find. As to capital risk, it's all about the stops. When the divergence blows out to (say) 10 ES-points, you put the convergence trade on with a target of crossing the line (zero divergence) and a stop at whatever your judgment tells you. My approach was to stop the trade at a 50% excess over the initial divergence. I only got stopped out once that way, and of course the trade turned right around and converged right after I got stopped out. I ran the trade successfully without getting stopped out at least 10 times. When ZH announces the opportunity for the trade, it's usually over before you get there. But if you plot an AUDJPY overlay on your realtime ESZ0 screen, you can see the entry opportunities yourself in real time. Unless you are way better at fancy trading rules than I am, you have to watch the trade manually, since the stops are relative and not at hard price points. As to capital risk, it's contained in the stops and there's enough liquidity in both markets to almost eliminate slippage risk. The only real cost is available margin. I was trading 200 to 300 ES contracts against 10 - 15mm Euros on the FX leg. The risk is well contained but the margin requirement is non-trivial. But a 10 ES-point convergence on 250 contracts yields a $125k profit, usually in about an hour, with very low risk.

As for posting more in trader's corner, I have to confess that I find this site hard to navigate. I don't read all the posts all the time the way I do on some other sites. I read the Ask EJ stuff and the comments under the EJ commentaries, and other topics if they catch my eye. But following the whole thing is too much work for the benefit involved IMHO. That would be one criticism I would (respectfully) levy against this site: The forums are hard to follow.

xPat

People have been doing the JPY-equity trade for years, it was one of the first strategies that I implemented, zero hedge was one of the last to figure it out.

zerohedge = zerocred

magicvent
10-13-10, 08:21 AM
The one thing I find upsetting is that on more than one occasion, what EJ has written would lead a reader to believe he was selling Treasury bonds. When asked for clarification, none was provided. I hope that he is clearer in the future as to the actual steps he is taking.

Chris Coles
10-13-10, 09:50 AM
It is becoming clear that many today do not fully understand just how complex the rules of engagement with any form of finance have become. Take this debate back, say fifty or sixty years and all that was required was a handshake between two individuals, both of which understood the basic rule of the power of a reputation. The old fashioned idea of "His word is his bond" comes to mind. In those days, anyone could open a discussion about money and never have to even think about the consequences of what they said; whereas, today, there are whole shelves lengths of books of rules, all of which lead towards the likelihood of going to jail for simply using the wrong terminology. Just a quick glance at the Financial Services Act here in the UK will give an excellent example:

http://www.legislation.gov.uk/ukpga/2010/28/pdfs/ukpga_20100028_en.pdf?view=extent




Objectives of FSA etc


1 Financial stability objective
2 Enhancing public understanding of financial matters etc
3 Meeting FSA’s regulatory objectives


Remuneration of executives of authorised persons


4 Executives’ remuneration reports
5 Executives’ remuneration reports: supplementary
6 Rules made by FSA about remuneration


Recovery and resolution plans


7 Rules made by FSA about recovery and resolution plans


Short selling


8 Power of FSA to prohibit, or require disclosure of, short selling


FSA’s disciplinary powers


9 Suspending permission to carry on regulated activities etc
10 Removal of restriction on imposing a penalty and cancelling authorisation
11 Performance of controlled function without approval
12 Approved persons guilty of misconduct
13 Publication of decision notices


Measures to protect consumers


14 Consumer redress schemes
15 Restrictions on provision of credit card cheques


ii

Financial Services Act 2010 (c. 28)


Financial Services Compensation Scheme


16 Contribution to costs of special resolution regime
17 Power to require FSCS manager to act in relation to other schemes


Powers to require information


18 Information relating to financial stability
19 Asset protection scheme etc


Banking Act 2009


20 Services forming part of recognised inter-bank payment systems
21 Minor amendments of provision made by Banking Act 2009


Director of Savings


22 Administration of court funds by Director of Savings


General


23 Orders or regulations
24 Minor and consequential amendments
25 Extent
26 Commencement
27 Short title
Schedule 1 — Further provision about the consumer financial education
body
Schedule 2 — Minor and consequential amendments
Part 1 — Amendments of Financial Services and Markets Act 2000
Part 2 — Amendments of other legislation



Now place that into the context of someone, (EJ for example), with a business that tries to steer between the services of an accredited financial adviser and just someone that wants to promote a full discussion.


I suspect that, in looking at the fine detail of all the various regulations that he MIGHT trip over; EJ has, from time to time had to, shall we say; pause for thought?


We are in, what in meteorological terms is described as a classic Col; this time a dead zone between the past mistakes of the FIRE economy and what "might" come next. There are NO certainties and it is to be expected that everyone is going to suffer from confusion; certainly that applies to me right now. (Though in my case it comes from being repeatedly being presented with the idea that the only deal I can get is to sell IP for a couple of M when they might be worth at least several orders of magnitude more than that).


Turning back to previous debate about a decision to take a subscription and a request for a rebate; surely in business, (we all are in business, one way or another), the process ALWAYS involves the concept of risk, where we have to make a decision and then live with the consequences? If at every juncture, we make our play and then expect to be refunded if it does not work out, then surely that flies in the face of the whole idea of taking responsibility for our own decisions?


Over my business lifetime I have made plenty of mistakes; but am happy within myself that I have had the courage to live with the consequences. This, surely, is what being in business is all about?

LargoWinch
10-13-10, 11:43 AM
2 years ago was the collapse and iTulip had warned to get out long before and stay out. Over a year ago this site asserted that the SPX would finish '09 at 600 or thereabouts if memory serves, AND after explaining gracefully the error of timing, at the beginning of this year predicted the market would be down 20-20% by years end. Does iTulip still believe that? Deja vous indeed.

vinoveri, note that EJ call on the S&P were not in current dollars but in $ circa 2000.

I am too lazy to do the math now, but I feel we are at that level if not lower...

LargoWinch
10-13-10, 11:47 AM
I don't think HV is literally worried about a refund, rather he said that to make an understated point.


I am disapointed to note that HV has indeed obtained a refund by FRED in one day.

If you read HV title you will note that it is now: "iTulip Ambassador" instead of the previous "iTulip Select Premium Member".

Hopefully, HV after a killing in PMs will dare to spend $200 fast depreciating bonars to join iTulip in a not so distant future...

jk
10-13-10, 12:25 PM
vinoveri, note that EJ call on the S&P were not in current dollars but in $ circa 2000.

I am too lazy to do the math now, but I feel we are at that level if not lower...

s&p is currently 1180, in 2000 dollars this is 921 using official cpi through the end of 2009. less if using shadowstats inflation, of course.

vinoveri
10-13-10, 12:50 PM
vinoveri, note that EJ call on the S&P were not in current dollars but in $ circa 2000.

I am too lazy to do the math now, but I feel we are at that level if not lower...

Largo, not wanting to quibble too much on this (and thanks for the response by the way),I believe the call was for the market to be 20-25% lower than where it started the year (2010). If you're suggesting that he meant in terms of circa yr2000 $, then I suppose the fair calculation is to take the value of the market in those dollars at start and end of year and figure the difference. If you use the dollar index as a benchmark, the SPX looks flat for the year. http://stockcharts.com/charts/gallery.html?$SPX:$USD

It is the case though that the market is down some ~15% when priced in gold.

http://stockcharts.com/charts/gallery.html?s=%24spx%3A%24gold

metalman
10-13-10, 12:51 PM
I am disapointed to note that HV has indeed obtained a refund by FRED in one day.

If you read HV title you will note that it is now: "iTulip Ambassador" instead of the previous "iTulip Select Premium Member".

Hopefully, HV after a killing in PMs will dare to spend $200 fast depreciating bonars to join iTulip in a not so distant future...

peculiar timing... he'll miss out on the first webinar. if available at all to non-high net worth guys like me who can't get an account with a firm like this or bring any other value to even qualify to get in the door, how much for 1 webinar?

http://www.ipaa.org/meetings/index.php?mid=131

Non-Qualified Analyst Attendee Onsite
IPAA Members $1,095
Non-IPAA Member/Individual Investors** $1,595

vinoveri
10-13-10, 12:56 PM
s&p is currently 1180, in 2000 dollars this is 921 using official cpi through the end of 2009. less if using shadowstats inflation, of course.

I'm not following this. What is the benchmark? Where is the decline during 2010? (still to come maybe?)

And S&P on Jan 1, 2010 was around 1120, so ytd it's up 5% in nominal terms. What's the CPI for this year, 1.5% or so? Maybe the shadowstats numbers will show the real decline better.

LargoWinch
10-13-10, 01:24 PM
peculiar timing... he'll miss out on the first webinar. if available at all to non-high net worth guys like me who can't get an account with a firm like this or bring any other value to even qualify to get in the door, how much for 1 webinar?

http://www.ipaa.org/meetings/index.php?mid=131

Non-Qualified Analyst Attendee Onsite
IPAA Members $1,095
Non-IPAA Member/Individual Investors** $1,595

Woa. Me thinks an excellent business venture is to start selling iTulip subscriptions for $547.99/yr to IPAA Members... just don't tell FRED tho. :D

LargoWinch
10-13-10, 01:29 PM
I'm not following this. What is the benchmark? Where is the decline during 2010? (still to come maybe?)

And S&P on Jan 1, 2010 was around 1120, so ytd it's up 5% in nominal terms. What's the CPI for this year, 1.5% or so? Maybe the shadowstats numbers will show the real decline better.

vinoveri; take the value of the S&P today (as I write $1,183) and using this calculator input (http://data.bls.gov/cgi-bin/cpicalc.pl)the value "in 2010 has the same buying power as $XXX in 2000".

What you get is this: $933.13

jneal3
10-13-10, 03:10 PM
If gold bolts to $1400 next week we'll have our answer.


Price of gold doesn't seem to want to wait for the weekend, probably because the answer's becoming obvious.



Are we being sold an inflationary policy? We shall see.




We shall see indeed:
http://noir.bloomberg.com/apps/news?pid=20601087&sid=acZudC6SsBGU&pos=7

raja
10-14-10, 12:07 AM
What I still don't agree on is why the inflation will necessarily be controlled at just the 100% above natural rates.

Nor do I see how the US political system and way of life will necessarily hold together as this inflationary process unfolds.

You have to factor in the source of the prediction.
Someone who bases their future on hoped-for successful entrepreneurial outcomes perhaps cannot foresee a future in which "the US political system and ways of life" does not "hold together". Or maybe that's what "we are dead meat" means?

I share your pessimism, c1ue.
I'd leave the US, but where to go?
Europe . . . they've got a great record of getting along ;_N
South or Central America . . . one step from the Wild West.
Asia . . . they, too, are tottering on the financial/political edge.

There's no where to hide . . . might as well stay in the US and tough it out down on the farm with the chickens :(

Down Under
10-14-10, 03:27 AM
vinoveri, note that EJ call on the S&P were not in current dollars but in $ circa 2000.

Sorry Largo, but I think this is BS.

LargoWinch
10-14-10, 07:15 AM
Sorry Largo, but I think this is BS.

No need to be sorry Down Under.

Instead of speculating here, perhaps vinoveri (or someone with great Google-fu skills) can pull out the article in question so that we can review it again? It feels to me that this discussion is without context.

FRED
10-14-10, 10:28 AM
Oct. 9, 2010

We'll see how things go at the IMF meeting this weekend. The foreplay over the past few weeks was rough, but I suspect that our trade partners will ratchet up the threats if the US doesn't drop its unilateralist posture. We'll see more than currency swap deals among trade partners to avoid dollars in international trade. They'll escalate to the next level. If gold bolts to $1400 next week we'll have our answer.

Gold hit $1388 today. If it reaches $1400 tomorrow, then we know for certain that the US contingent will enter the next negotiations with a weak hand.

LargoWinch
10-14-10, 10:40 AM
Gold hit $1388 today. If it reaches $1400 tomorrow, then we know for certain that the US contingent will enter the next negotiations with a weak hand.

I would dare to say that gold hitting $1,388 this morning following the close at $1,347 on Friday Oct. 8 is plenty enough evidence...

http://www.kitco.com/hist_charts/gold/new_york/2010/Nu10082010.gif

Fiat Currency
10-14-10, 10:47 AM
I would dare to say that gold hitting $1,388 this morning following the close at $1,347 on Friday Oct. 8 is plenty enough evidence...

Even if it sits at $1,375 for the rest of the week ... it's already made its point !! :( ... after all it's only the middle of October.

vinoveri
10-14-10, 11:57 AM
No need to be sorry Down Under.

Instead of speculating here, perhaps vinoveri (or someone with great Google-fu skills) can pull out the article in question so that we can review it again? It feels to me that this discussion is without context.

This may not be the one I remember, but is relevant to the topic at hand, including my question as to my liquidity cannot product tradable bubbles, and makes a prediction, albeit not a call. I had access to part II when I was a subscriber, but no longer.

http://www.itulip.com/forums/showthread.php/14124-The-Fog-of-Economic-Crisis-Part-I-Will-the-real-Real-Economy-please-stand-up-Eric-Janszen?p=146070

quote below from part II I believe

"EJ: The DJIA may end the year off as much as 25%, down to between 7,500 and 8,000. This alternative approach to forecasting the DJIA produces an independent result that is consistent with our previous forecast of the S&P 500 off 15% to 20% in 2010 that was arrived at in a reversion to the mean analysis of inflation-adjusted price levels."

LargoWinch
10-14-10, 12:44 PM
This may not be the one I remember, but is relevant to the topic at hand, including my question as to my liquidity cannot product tradable bubbles, and makes a prediction, albeit not a call. I had access to part II when I was a subscriber, but no longer.

http://www.itulip.com/forums/showthread.php/14124-The-Fog-of-Economic-Crisis-Part-I-Will-the-real-Real-Economy-please-stand-up-Eric-Janszen?p=146070

quote below from part II I believe

"EJ: The DJIA may end the year off as much as 25%, down to between 7,500 and 8,000. This alternative approach to forecasting the DJIA produces an independent result that is consistent with our previous forecast of the S&P 500 off 15% to 20% in 2010 that was arrived at in a reversion to the mean analysis of inflation-adjusted price levels."

vinoveri, your quote is accurate (as per Part II).

I believe the confusion as per our previous discussion lies with the fact that two methods were used for forecasting: one in $real (reversion to mean inflation-adjusted) and another using the Dow matching the post-bubble Nikkei 225 in $nominal (used to generate the Dow 7,500-8,000 range).

Down Under
10-14-10, 04:28 PM
No need to be sorry Down Under.

Instead of speculating here, perhaps vinoveri (or someone with great Google-fu skills) can pull out the article in question so that we can review it again? It feels to me that this discussion is without context.

If the guy who made the call, states:


Before we get into the scenarios, a mea culpa on the bad market call: a 20% to 30% S&P correction before the end of the year.

FRED
10-14-10, 05:37 PM
Slick, yes; intuitive, no. Nice first try, but it comes up short.
It was only by accident that I discovered the notations on the second chart when I moused over, and still wonder if I got them all.

A better graphic design / interface design is at the Washington Post article. http://www.washingtonpost.com/wp-srv/business/the-output-gap/index.html
The little line of numbers at top with PREVIOUS and NEXT buttons is a powerful design element for the reader to move through the material.

There should always be a clear button that looks like a button for every function.
Invisible mouse-over regions to generate actions are terrible in that regard.
The simple forward/back concept is great for a Flash animation. So is go/stop.

There should always be a clear button that looks like a button for every function.
There should always be a clear button that looks like a button for every function.
There should always be a clear button that looks like a button for every function.....

We liked your suggestions on the first animation and changed it, but disagree on the second. The text change on mouseover to show different eras in the graph are effective.

thriftyandboringinohio
10-15-10, 02:18 PM
We liked your suggestions on the first animation and changed it, but disagree on the second. The text change on mouseover to show different eras in the graph are effective.

Thank you kindly for taking my suggestions seriously.

I find hidden mouse-over regions turn a presentation into a puzzle. Instead, some version of "next slide, please" would allow me to see next what you want me to see next. Or at least some visual target that tells me touching here will do something.

But suit yourself.
I'm genuinly delighted to get the info from EJ any way he wants to present it!
Cheers.;_TU

steveaustin2006
11-02-10, 11:42 AM
By the "1st chart", I presume you mean the first chart in EJ's Post #1, with the title "Output Gap Trap: What is it?" and the slowly changing "Rolodex" of graphcs.

Is there a way to pause this damn thing? Or download the slides?

thriftyandboringinohio
11-02-10, 11:51 AM
Is there a way to pause this damn thing? Or download the slides?

Fred, if I may say "I told you so", here's a great example.
steveaustin is known to be a fiercly intelligent and capable person, but is struggling with your user interface on the presentation.

ThePythonicCow
11-02-10, 12:28 PM
Is there a way to pause this damn thing? Or download the slides?
I was about to suggest that I posted (long and tedious) instructions to EJ's first chart in the rest of that post of mine to which you were responding.

However looking back now, it seems that the interface to that first chart of EJ's in the opening post of this thread has changed its User Interface since I wrote those instructions.

So ... never mind ... I don't have any instructions for how it works presently.

P.S. -- I doubt there is anyway to download the slides. From what I understand of it, part of EJ's motives in going to the fancier Macromedia Flash interface was to inhibit easy downloading, as that led to easy theft of EJ's charts by other bloggers on the web.

thriftyandboringinohio
11-02-10, 02:06 PM
In my humble opinion, designing flash presenations is a small but real craft within the graphics arts.
Just like a brochure or a flyer, they can be elegant and intuitive or scattered and difficult.

I have every confidence that EJ and his associates will look at a few, take a few notes, maybe read a book, and then start producing first rate flash presentations.

xPat
11-02-10, 11:24 PM
I have every confidence that EJ and his associates will look at a few, take a few notes, maybe read a book, and then start producing first rate flash presentations.
I agree that EJ and colleagues are super-smart people, and I share your confidence in their ability to learn to do this well. But what I don't understand is why they would even pursue getting better at flash presentations, when the simple format of text with static charts between the paragraphs seems to be the much-preferred format by most of the folks who have commented here.

xPat

ThePythonicCow
11-02-10, 11:31 PM
But what I don't understand is why they would even pursue getting better at flash presentations, when the simple format of text with static charts between the paragraphs seems to be the much-preferred format by most of the folks who have commented here.I thought that EJ had been clear on his motive here. He doesn't (if I read correctly) like his charts being stolen by other websites.

xPat
11-02-10, 11:40 PM
I thought that EJ had been clear on his motive here. He doesn't (if I read correctly) like his charts being stolen by other websites.

I completely and totally missed that point. That doesn't mean EJ wasn't clear - just that I'm sometimes prone to "blonde moments". Thanks for straighening me out, 'Cow.

I'm all for EJ protecting his intellectual property, if that's the concern. Just makes me wonder if there is a better way.

xPat

ThePythonicCow
11-03-10, 12:13 AM
I completely and totally missed that point. That doesn't mean EJ wasn't clear - just that I'm sometimes prone to "blonde moments". Thanks for straighening me out, 'Cow.
Whether I straightened you out, or pulled you down into the swamp of confusion with myself, remains to be seen.


I'm all for EJ protecting his intellectual property, if that's the concern. Just makes me wonder if there is a better way.
Having spent over a decade as an open source champion in a proprietary computer company, I too suspect that there are better ways.

However what I really suspect is that there are different ways that people can view the product they produce.
The "proprietary sense" that EJ (from what I can tell) holds for the some of the more unique products of his labor is held by many of the more successful entrepreneurs,

while the "open sense" that hackers such as myself hold is held by many who work for those entrepreneurs or who are now collecting unemployment or social security.
I cast my lot with the second group above, but I have to allow as how the first group above (entrepreneurs and proprietors such as EJ) have a point, and often more business success.

The first group above however does perennially struggle to find technical solutions to their IP control requirements, as in the case of the use of Flash we're discussing here. It's been that way for as long as I can remember. I've designed and coded a few such "solutions" myself. There are seldom any good solutions here, just more or less adequate compromises.

What works best in my experience is a symbiotic relationship between the two groups. Some IP is more productively managed as property, and some as shared understanding.

Chris Coles
11-03-10, 06:03 AM
while the "open sense" that hackers such as myself hold is held by many who work for those entrepreneurs or who are now collecting unemployment or social security.

Good morning Wriggly, you have hit the nail on the head, (so to speak), while at one and the same time you have highlighted the underlying problem, unemployment.

I too have an electronic product, an e-book. If I add DRM it gets hacked, if I, as I have, place the e-book on the market without DRM and ask people to respect my need to earn an income, no one pays for the book.

Until the message sinks in that hacking into and unemployment are two facets of the same problem; neither side of the equation will be able to prosper.

Trying to find copper bottomed answers to a form of DRM is not the way forward, it is education, of the people that "take" without paying that must learn that society overall, pays a very high price for the freebe. Once that lesson sinks in, then prosperity will return.

ThePythonicCow
11-03-10, 07:01 AM
Trying to find copper bottomed answers to a form of DRMThere is another side to this issue, Chris.

The open source work that I have done (in the Linux kernel mostly) has gone on to provide substantially larger benefit, to a wider class of users, for a far longer period of time, in part as an essential basis for work that others have done layered on top of my work ... than anything I did in proprietary software.

On the other side, the open source work that others have done has provided me with far better, richer and more valuable software (by my rather geeky standards) than anything that has come from the proprietary side.

I will always be grateful that I had the opportunity to share such wealth, giving and receiving, with mutual benefit to many people around the world.

This is why I suggested above that this is not an either-or question. Some proprietary ownership and control of ones market and product is required. Some sharing of ideas, infrastructure, understanding and common technology is also required. People naturally understand this in families and close communities. There is shared work, knowledge, tools, and lodging, and there are personal possessions and private labors.

Vibrant communities, including virtual and technology driven spheres, work at both layers at the same time.

I did enough proprietary work to live well and retire modestly. I did enough openly shared work to put a smile on my face when I look back at the contributions I was able to make.

It's a bit of both, Chris.

steveaustin2006
11-04-10, 10:58 AM
In my humble opinion, designing flash presenations is a small but real craft within the graphics arts.
Just like a brochure or a flyer, they can be elegant and intuitive or scattered and difficult.

I have every confidence that EJ and his associates will look at a few, take a few notes, maybe read a book, and then start producing first rate flash presentations.

Yes, exactly.

Usually I love pushing the tech envelope - however where comprehension is paramount, some features are just mandatory. There's really no excuse for not being able to pause the slides so that you can look, think and absorb the vast amount of information that is being conveyed within the graphs & conclusive commentary.

Ideally you should be able to download the slides, too - because otherwise we are restricted to re-reading the content on a computer. I like to print his editorials and keep them in a binder and periodically look through them/re-read them. For me, over time that is when the pieces all fall into place - when placed within context of other writings from him and other people, as well. This is much, much more interesting than trying to search online and painfully read it on screen.

[I suppose I am an old fashion gen-X'er because, on a similar note, if real hard copy books, for instance, also go away (due to e-books) I will forever mourn the inability to browse a personal collection of books]

jk
11-06-10, 04:50 PM
i used to read alan newman's crosscurrents [cross-currents.net] and he had a way of loading a page "in draft" or as some sort of preliminary loading [i obviously am not familiar with the relevant technology] which prevented copying. perhaps someone versed in this area can illuminate newman's method, which would provide a solution with static charts.

Slimprofits
12-07-10, 11:17 PM
David Stockman: two-thirds of the jobs which have been created in the last year - the jobs which everyone talks about each month - are only part-time jobs, averaging $20,000 per year...

<object id="cnbcplayer" height="380" width="400" classid="clsid:D27CDB6E-AE6D-11cf-96B8-444553540000" codebase="http://download.macromedia.com/pub/shockwave/cabs/flash/swflash.cab#version=9,0,0,0" >
<param name="type" value="application/x-shockwave-flash"/>
<param name="allowfullscreen" value="true"/>
<param name="allowscriptaccess" value="always"/>
<param name="quality" value="best"/>
<param name="scale" value="noscale" />
<param name="wmode" value="transparent"/>
<param name="bgcolor" value="#000000"/>
<param name="salign" value="lt"/>
<param name="movie" value="http://plus.cnbc.com/rssvideosearch/action/player/id/1680963951/code/cnbcplayershare"/>
<embed name="cnbcplayer" PLUGINSPAGE="http://www.macromedia.com/go/getflashplayer" allowfullscreen="true" allowscriptaccess="always" bgcolor="#000000" height="380" width="400" quality="best" wmode="transparent" scale="noscale" salign="lt" src="http://plus.cnbc.com/rssvideosearch/action/player/id/1680963951/code/cnbcplayershare" type="application/x-shockwave-flash" />
</object>

Chris Coles
12-09-10, 04:23 AM
There is another side to this issue, Chris.

The open source work that I have done (in the Linux kernel mostly) has gone on to provide substantially larger benefit, to a wider class of users, for a far longer period of time, in part as an essential basis for work that others have done layered on top of my work ... than anything I did in proprietary software.

On the other side, the open source work that others have done has provided me with far better, richer and more valuable software (by my rather geeky standards) than anything that has come from the proprietary side.

I will always be grateful that I had the opportunity to share such wealth, giving and receiving, with mutual benefit to many people around the world.

This is why I suggested above that this is not an either-or question. Some proprietary ownership and control of ones market and product is required. Some sharing of ideas, infrastructure, understanding and common technology is also required. People naturally understand this in families and close communities. There is shared work, knowledge, tools, and lodging, and there are personal possessions and private labors.

Vibrant communities, including virtual and technology driven spheres, work at both layers at the same time.

I did enough proprietary work to live well and retire modestly. I did enough openly shared work to put a smile on my face when I look back at the contributions I was able to make.

It's a bit of both, Chris.

Wriggly,

found this today on Slashdot and thought of you. Particularly this: http://www.theregister.co.uk/2010/12/07/mcnealy_sun_and_open_source/

Chris.

| Ex-Sun CEO Warns Oracle of Death By Open Source
| from the everyone's-got-a-narrative dept.
| posted by timothy on Wednesday December 08, @08:05 (Oracle)
|
| https://developers.slashdot.org/story/10/12/08/0256257/Ex-Sun-CEO-Warns-Oracle-of-Death-By-Open-Source?from=newsletter (https://developers.slashdot.org/story/10/12/08/0256257/Ex-Sun-CEO-Warns-Oracle-of-Death-By-Open-Source?from=newsletter)
+---------------------------------
gearystwatcher writes "Former Sun CEO Scott McNealy talks to The Reg on where things went wrong, and acquisition by Oracle: 'We probably got a little too aggressive near the end and probably [0]open sourced too much and tried too hard to appease the community and tried too hard to share,' McNealy said. 'You gotta take care of your shareholders or you end up very vulnerable like we got. We were a wonderful acquisition b� we got stolen for a song at the bottom of the Dow.'"
Discuss this story at:
https://developers.slashdot.org/story/10/12/08/0256257/Ex-Sun-CEO-Warns-Oracle-of-Death-By-Open-Source?from=newsletter#commentlisting (https://developers.slashdot.org/story/10/12/08/0256257/Ex-Sun-CEO-Warns-Oracle-of-Death-By-Open-Source?from=newsletter)
Links:
0. http://www.theregister.co.uk/2010/12/07/mcnealy_sun_and_open_source/ (http://www.theregister.co.uk/2010/12/07/mcnealy_sun_and_open_source/)

charliebrown
12-09-10, 06:21 PM
Well said.

I really would like a link or something to say right now how are we invested? I know the general thesis, but sometimes that takes searching through the web site. I too caught the tech wave, got out. I was not completely out, because I switched from tech stocks to very boring value stocks that really did not take a big hair cut. Key there was stratospheric PE's. I caught the mini wave from 1000 - 1500 2003 - 2007 and got out again in time. The key then was the spread between corps and treasuries. I wish I would have bought the itulip strategy hook line and sinker, but I moved in cautiously, buying my first gold around 700, and dollar cost averaging in. without itulip. I would not have 16% in gold, i would probably have nothing in gold as just looking at the price it appears too high. I do not really have the treasury position, i did not think that t's would rally with this storm. I just started rebuilding this postion with the recent weakness but only 2 year duration.

I like the idea of multifamily, but I don't want to put money into some private company. I enjoy and also feel empowered, by managing my own brokerage account. There are aparment reits out there. Maybes someone can do an analysis of what the best ones are. Maybe it wont go up like EJs idea, but if it beats, bonds then i would not be dissapointed.

drifting away from the itulip allocation, i have oil trusts, energy, materials and utility stocks. 15% I'm waiting for another fire storm before moving my allocation to equities higher. gold is always bought on the dips. i have 5% stake in silver.

ThePythonicCow
12-09-10, 09:06 PM
We probably got a little too aggressive near the end and probably [0]open sourced too much
Eh - Sun was doomed either way.

The top to bottom, chips (Sparc) to hardware to languages (Java) to operating systems to applications complete integration business model fails anytime that the dominant low cost leaders at each layer (Intel, PC's, C, Linux, GNU, etc. in Sun's case) are each both cheaper and better (more engineering resources behind them) than you can afford the R&D to compete with, and can be assembled at nearly zero additional cost. DEC (Digital) and SGI and many others have run into the same buzz saw over the years.

shiny!
12-12-10, 11:32 PM
If Sun is doomed will this have any effect on OpenOffice.org?

ThePythonicCow
12-13-10, 12:51 AM
If Sun is doomed will this have any effect on OpenOffice.org?
Not "Sun is doomed", rather "Sun was doomed." Oracle completed the acquisition of Sun on January 27, 2010 (http://www.oracle.com/us/corporate/press/044428).

OpenOffice has gone its separate way. At OpenOffice forks away from Oracle, now called LibreOffice (http://www.techspot.com/news/40438-openoffice-forks-away-from-oracle-now-called-libreoffice.html) (dated September 28, 2010), we learn:

The OpenOffice.org (http://www.openoffice.org/) project is separating itself from database giant Oracle. OpenOffice.org is now called The Document Foundation (http://lwn.net/Articles/407383/), the future of which will be determined by a committee of developers and project managers, taking the responsibility for OpenOffice away from a single company. Furthermore, the actual OpenOffice.org suite of programs is getting a temporary name: LibreOffice. Add all that to the fact that OpenOffice was once called OpenSolaris, and we have a serious problem of brand recognition on our hands.

LibreOffice will keep its name until Oracle decides whether it wants to donate the OpenOffice.org brand to the foundation, which in the meantime has invited Oracle to rejoin their new community by applying for membership. Initial supporters already include the Free Software Foundation, Open Source Initiative, Canonical, Red Hat, Novell, the GNOME foundation, and Google. P.S. -- You can find LibreOffice at http://www.documentfoundation.org/download/ while OpenOffice can still be found at http://www.openoffice.org/ . Presently, OpenOffice is what has been and remains the released product, is what is included in various Linux distributions, and is available for Windows, Mac, and Solaris platforms. LibreOffice is at "Release Candidate One" of their first release. I have not been following this, but I'd guess that the primary energy of development is now focused on LibreOffice, working from and continuing the OpenOffice source code base.

You see here a major advantage of Open Source projects. If they have a sufficiently energetic development and user base, then the demise or takeover of their corporate funder does not risk killing the product.

shiny!
12-15-10, 04:03 PM
Not "Sun is doomed", rather "Sun was doomed." Oracle completed the acquisition of Sun on January 27, 2010 (http://www.oracle.com/us/corporate/press/044428).

OpenOffice has gone its separate way. At OpenOffice forks away from Oracle, now called LibreOffice (http://www.techspot.com/news/40438-openoffice-forks-away-from-oracle-now-called-libreoffice.html) (dated September 28, 2010), we learn:
P.S. -- You can find LibreOffice at http://www.documentfoundation.org/download/ while OpenOffice can still be found at http://www.openoffice.org/ . Presently, OpenOffice is what has been and remains the released product, is what is included in various Linux distributions, and is available for Windows, Mac, and Solaris platforms. LibreOffice is at "Release Candidate One" of their first release. I have not been following this, but I'd guess that the primary energy of development is now focused on LibreOffice, working from and continuing the OpenOffice source code base.

You see here a major advantage of Open Source projects. If they have a sufficiently energetic development and user base, then the demise or takeover of their corporate funder does not risk killing the product.

Thank you again, Mr. Cow. As always, you are a fountain of knowlege.

Chris Coles
12-15-10, 04:23 PM
Thank you again, Mr. Cow. As always, you are a fountain of knowlege.

Sssshh! don't tell everyone, but I do believe he is a "she" .... leastways I think so.....

ThePythonicCow
12-15-10, 07:56 PM
Sssshh! don't tell everyone, but I do believe he is a "she" .... leastways I think so.....
Shiny wins that bet. This cow is full of bull.

Chris Coles
12-16-10, 07:34 AM
Shiny wins that bet. This cow is full of bull.

Thanks for the heads up Wriggly, best laugh I have had in weeks.))O:);_TU

Slimprofits
05-28-11, 11:17 AM
The contraction phase of the Great Recession left America with a $1 trillion gap between actual and potential economic growth. The economy must grow at a rate of at least 4% per year starting now in order to reach growth potential before the next recession opens the gap further a few years from now. If we fail to meet this deadline, the American political economy will enter a second circle of hell as chronic economic pain from high prices and low wages morphs into a self-destructive cycle of class conflict and political deadlock. The stakes are high, yet the only escape from the output gap trap isn’t even in the menu of mainstream debate.


Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 1.8 percent in the first quarter of 2011, (that is, from the fourth quarter to the first quarter), according to the "second" estimate released by the Bureau of Economic Analysis. In the fourth quarter, real GDP increased 3.1 percent.</pre>
http://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm

thriftyandboringinohio
05-28-11, 11:30 AM
Thanks for bringing this one back out again after two quarters of results, babbitted

Slimprofits
05-28-11, 11:38 AM
Thanks for bringing this one back out again after two quarters of results, babbitted

This is one of my favorite and most useful articles by EJ. The 'gap trap' is a concept that almost anyone can wrap their heads around.

Slimprofits
08-05-11, 09:55 AM
The Output Gap Trap goes mainstream, sort of. I've seen several references to this from Bullhorn sources over the last couple of days:

Economists say the U.S. economy must create 200,000 new jobs per month in order to bring down the unemployment rate.

Read more: http://dailycaller.com/2011/08/05/white-house-readies-for-july-job-numbers-with-workforce-photo-op/#ixzz1UA8m5SOv

MSNBC and elsewhere...