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jk
10-22-06, 12:56 AM
i'm having trouble understanding the following passage from an interview with jim paulsen in this week's barrons:

In the next 25 years we are going to have slow but steady improvement in our trade deficit, and that is going to be the dividend payback for the long period of investment we made in these other countries. In the past several years, let's say, our domestic demand has been growing 5% each year while we lost about 1% abroad. So our real GDP is growing at 4%. Let's say next year the trade deficit improves by a percent and our domestic demand is still growing at 5%; well, then GDP grows at 6%. We can go from 4% to 6% without any change in domestic spending trends. You can imagine what that does to wage demands and interest rates.
<big><big><big>
i don't follow these numbers. can someone enlighten me? where does he get "we lost about 1% abroad"? the 2005 trade deficit was 5.8% of u.s. gdp. but this is a nominal figure. he specifies real gdp. also wouldn't it require going to a 1% surplus for to get to 6% gdp by his reasoning? and isn't that a huge and impossibly fast turnaround? and even if we somehow turn this into a -1 becoming a +1, isn't that a +2 change? what am i missing? i would appreciate it if someone could clarify this passage for me.</big></big></big>

bart
10-22-06, 05:09 PM
i'm having trouble understanding the following passage from an interview with jim paulsen in this week's barrons:
...


I agree with your sentiments, the quote makes little sense. The only thing I got is that he has some vague idea that the trade deficit will drop, and that it will cause something to happen to wages and interest rates.

blazespinnaker
10-22-06, 07:18 PM
Well, some people think that the trade deficit is a caused by a global savings gut (too much investing in the US) and not really a trade deficit at all.

WDCRob
10-23-06, 10:57 AM
Is he saying...

US-based GDP is growing at 5%, but declining enough outside the US to create a net 1% drop. So the net rate of GDP growth is 4%.

And if US-based GDP continues to grow at 5%, but other countries stop saving so much by investing in the US, and instead begin consuming more the foreign-based GDP portion of overall GDP will grow and ADD to the domestic GDP of 5% -- creating net GDP growth above 5%.

That's how I read it anyhow.

Finster
10-23-06, 08:14 PM
i'm having trouble understanding the following passage from an interview with jim paulsen in this week's barrons:

In the next 25 years we are going to have slow but steady improvement in our trade deficit, and that is going to be the dividend payback for the long period of investment we made in these other countries. In the past several years, let's say, our domestic demand has been growing 5% each year while we lost about 1% abroad. So our real GDP is growing at 4%. Let's say next year the trade deficit improves by a percent and our domestic demand is still growing at 5%; well, then GDP grows at 6%. We can go from 4% to 6% without any change in domestic spending trends. You can imagine what that does to wage demands and interest rates.
<big><big><big>
i don't follow these numbers. can someone enlighten me? where does he get "we lost about 1% abroad"? the 2005 trade deficit was 5.8% of u.s. gdp. but this is a nominal figure. he specifies real gdp. also wouldn't it require going to a 1% surplus for to get to 6% gdp by his reasoning? and isn't that a huge and impossibly fast turnaround? and even if we somehow turn this into a -1 becoming a +1, isn't that a +2 change? what am i missing? i would appreciate it if someone could clarify this passage for me.</big></big></big>

I couldn't understand it, so I read the whole article in Barron's in the hope of finding some glimmer of coherence. My search was rewarded. I found a glimmer of coherence.

Good thing I wasn't expecting more.

Actually Paulsen expresses a number of perceptive insights in that article. His comments on the trade deficit not included. For some reason, an otherwise intelligent mind seems to turn scrambled when he tries to justify the debt plight of America.

It just doesn't wash. The trade deficit does NOT represent an inflow of capital into America. Exactly the opposite. Capital - the means of production - is being traded away for stuff that we promptly burn up and wear out.

This may well be wonderful for the countries on the receiving end. How it is good for the party whose seed corn is being squandered on trinkets and crude is beyond me.

Paulsen further falls victim to one of the most common errors of fuzzy thinking extant in the economic community inhabiting the Wall Street - Washington axis of evil. Consumption somehow equals wealth. Ridiculous side-swiping cracks like the "...US consumer has been the sole locomotive of world economic growth..." just roll out without the slightest attempt at critical examination. There ought to a malpractice law for economic malfeasance.

It is production and the capacity to produce that makes a nation wealthy. Not its proclivity to absorb the fruits of production and turn them into landfill fodder and smog.

Imagine a farmer who owns forty acres of land. Each year, he raises enough food to feed his family and sell some into the market to buy other things the family needs. Then one day he thinks it would be nice to enjoy some extra, and in addition to the crops and livestock he raises, he sells off an acre of his land, using the extra proceeds for a new SUV and flat-panel TV.

Since it seemed to work out so well, he does it again the next year. And the next. After ten years, however, he finds that he must sell off an acre of land just to live as well as he did before he started. Thirty acres just don't produce as much as forty. So to maintain his lifestyle, he now must sell two acres.

Now by the lights of Paulsen and his fuzzy-minded contemporaries, our farmer is "investing in the future". Finster says he's getting poorer.

Which do you think?

jk
10-23-06, 10:12 PM
I couldn't understand it, so I read the whole article in Barron's in the hope of finding some glimmer of coherence. My search was rewarded. I found a glimmer of coherence.

Good thing I wasn't expecting more.

Actually Paulsen expresses a number of perceptive insights in that article. His comments on the trade deficit not included. For some reason, an otherwise intelligent mind seems to turn scrambled when he tries to justify the debt plight of America.

It just doesn't wash. The trade deficit does NOT represent an inflow of capital into America. Exactly the opposite. Capital - the means of production - is being traded away for stuff that we promptly burn up and wear out.

This may well be wonderful for the countries on the receiving end. How it is good for the party whose seed corn is being squandered on trinkets and crude is beyond me.

the analogy to the marshall plan is key. paulsen is saying that we're building up a world of developed trading partners. of course when we did the actual marshall plan the u.s. was the factory to the world. we built up, among other things, customers. i guess this time around we'll get to sell the indonesians and thais and chinese option arms for their new housing.


Paulsen further falls victim to one of the most common errors of fuzzy thinking extant in the economic community inhabiting the Wall Street - Washington axis of evil. Consumption somehow equals wealth. Ridiculous side-swiping cracks like the "...US consumer has been the sole locomotive of world economic growth..." just roll out without the slightest attempt at critical examination. There ought to a malpractice law for economic malfeasance.

It is production and the capacity to produce that makes a nation wealthy. Not its proclivity to absorb the fruits of production and turn them into landfill fodder and smog.

i agree that nominal values don't make for wealth. but someone does have to consume what is produced. otherwise there is no market for what is produced, and it is worthless. the american people have unselfishly volunteered for this task.


Imagine a farmer who owns forty acres of land. Each year, he raises enough food to feed his family and sell some into the market to buy other things the family needs. Then one day he thinks it would be nice to enjoy some extra, and in addition to the crops and livestock he raises, he sells off an acre of his land, using the extra proceeds for a new SUV and flat-panel TV.

Since it seemed to work out so well, he does it again the next year. And the next. After ten years, however, he finds that he must sell off an acre of land just to live as well as he did before he started. Thirty acres just don't produce as much as forty. So to maintain his lifestyle, he now must sell two acres.

Now by the lights of Paulsen and his fuzzy-minded contemporaries, our farmer is "investing in the future". Finster says he's getting poorer.

Which do you think?

depends on how long the future is. i figure the farmer has fewer acres to work, so he's getting less exercise. this also gives him more time to enjoy the flat panel tv, watching football and drinking beer. if the guy has a heart attack before he runs out of land to sell, he's had a high old time.

Finster
10-24-06, 12:46 AM
the analogy to the marshall plan is key. paulsen is saying that we're building up a world of developed trading partners. of course when we did the actual marshall plan the u.s. was the factory to the world. we built up, among other things, customers. i guess this time around we'll get to sell the indonesians and thais and chinese option arms for their new housing.

This Marshall Plan crap is key to Door Number 3, behind which lies vague and indefinite irrelevance. This is the player’s booby prize. Where is the hard data? The facts? Was the US a debtor nation? Was the US consuming 7% more than it produced?

No! The US was a creditor nation until sometime in the late 1980s. Then the "temporary" deficits we were running somehow became not so temporary.

The bottom line is you are either trading seed corn for trinkets or you are not. What good does it do to have a world full of trading partners if the trade all boils down to that? Is that what he’s claiming happened during the Marshall Plan?


i agree that nominal values don't make for wealth. but someone does have to consume what is produced. otherwise there is no market for what is produced, and it is worthless. the american people have unselfishly volunteered for this task.

If there were no market for what is produced, then what is produced is worthless and should not have been produced in the first place. Only in a dysfunctional, centrally planned, artificially stimulated and inflated economy do you get such malinvestment and misallocation of resources.

Say’s Law: Production creates its own demand. Of course, that applies in real terms, not nominal ones. In the past few years, US demand came not from its "productivity" but from printing money and distributing it to homeowners. The homeowers produced nothing new for the fresh fiat cash, but the Chinese did, so they wound up with the cash. Then they used that cash to compete with the (now devalued) cash left in the US, causing the prices of oil and other goods to skyrocket, right along with the house prices.

This "demand" borne of the printing press - not production - is phony demand and only serves to drive up prices. But don’t expect Keynesians like Paulsen to get it. They can’t tell the difference between growth and inflation.

Inflation is not wealth!


depends on how long the future is. i figure the farmer has fewer acres to work, so he's getting less exercise. this also gives him more time to enjoy the flat panel tv, watching football and drinking beer. if the guy has a heart attack before he runs out of land to sell, he's had a high old time.

May be, but he sure as heck not investing for a very long one! And his kids, like ours, will be poorer, not richer, for it!

jk
10-24-06, 11:50 AM
This Marshall Plan crap is key to Door Number 3, behind which lies vague and indefinite irrelevance. This is the player’s booby prize. Where is the hard data? The facts? Was the US a debtor nation? Was the US consuming 7% more than it produced?

No! The US was a creditor nation until sometime in the late 1980s. Then the "temporary" deficits we were running somehow became not so temporary.

The bottom line is you are either trading seed corn for trinkets or you are not. What good does it do to have a world full of trading partners if the trade all boils down to that? Is that what he’s claiming happened during the Marshall Plan?

finster, you obviously have not cottoned to the fact that the u.s.' competitive advantage is in its highly developed financial markets and rule of law. we'll be hedge fund manager to the world! [and we all know how much those guys make.]

Finster
10-24-06, 12:00 PM
finster, you obviously have not cottoned to the fact that the u.s.' competitive advantage is in its highly developed financial markets and rule of law. we'll be hedge fund manager to the world! [and we all know how much those guys make.]

:D

But seriously, probably the main reason the problem persists is because those financial markets are making a killing grabbing bits and pieces of the torrent of capital flowing out of the US.

Enough to finance a lot of political campaigns at least...

jk
10-24-06, 12:45 PM
:D

But seriously, probably the main reason the problem persists is because those financial markets are making a killing grabbing bits and pieces of the torrent of capital flowing out of the US.

Enough to finance a lot of political campaigns at least...

it's really not clear to me whether the "torrent of capital" originates here, or is made in japan, given the revival of the yen carry trade after a little scare a few months ago. do you have any info or opinions on that, and its implications?

Finster
10-24-06, 04:45 PM
it's really not clear to me whether the "torrent of capital" originates here, or is made in japan, given the revival of the yen carry trade after a little scare a few months ago. do you have any info or opinions on that, and its implications?

The capital is basically the accumulated wealth of the United States of America. Its productive capacity, its assets.

It's flowing out for two reasons. One is money printing by the Fed. The "free" money means consuming power without the burden of production. It flows to homeowners who did nothing to earn it, and from then to the Chinese, who did. The Chinese in turn lend it back to Americans and buy their property. Through this circuitous route the Chinese get claim to American assets in exchange for trinkets.

The other reason is a badly out-of-whack tax system. It burdens production (income taxes) but not consumption. Therefore, there is a financial incentive to consumer goods of foreign origin, which are not so taxed. This merely adds insult to the injury cited above.

jk
10-24-06, 04:52 PM
The capital is basically the accumulated wealth of the United States of America. Its productive capacity, its assets.

It's flowing out for two reasons. One is money printing by the Fed. The "free" money means consuming power without the burden of production. It flows to homeowners who did nothing to earn it, and from then to the Chinese, who did. The Chinese in turn lend it back to Americans and buy their property. Through this circuitous route the Chinese get claim to American assets in exchange for trinkets.

of course you're right. i focused on the liquidity instead of the true capital. but then the same question arises re the money printing: is it the fed or the boj? it's easy to say both, but i remember seeing some graphs from gavekal a while ago showing that it was the japanese money supply that was powering all the markets via the carry trade.

Finster
10-24-06, 05:42 PM
of course you're right. i focused on the liquidity instead of the true capital. but then the same question arises re the money printing: is it the fed or the boj? it's easy to say both, but i remember seeing some graphs from gavekal a while ago showing that it was the japanese money supply that was powering all the markets via the carry trade.

I don't buy the yen carry trade explanation. The problem there is the failure to distinguish between different types of liquidity, encouraged by the use of a broad and fuzzy term like "liquidity".

Not that there isn't a lot of liquidity or that there isn't a yen carry trade. It's just that it's impossible to explain surging prices in USD in terms of up-to-the-gills yen liquidity. Only a world swimming in dollars can cause the value of dollars to fall and the price of things in dollars to rise.

If that sounds implausible, consider the Wiemar experience. The German government was printing Reichsmarks by the billions and trillions but that did not cause prices in dollars or pounds to rise.

jk
10-24-06, 09:37 PM
I don't buy the yen carry trade explanation. The problem there is the failure to distinguish between different types of liquidity, encouraged by the use of a broad and fuzzy term like "liquidity".

Not that there isn't a lot of liquidity or that there isn't a yen carry trade. It's just that it's impossible to explain surging prices in USD in terms of up-to-the-gills yen liquidity. Only a world swimming in dollars can cause the value of dollars to fall and the price of things in dollars to rise.

the ability to borrow yen at near zero rates, and turn around to buy higher yielding instruments in other currencies, pulls down rates all around the world, and so promotes the creation of new loans, producing- in the case of the u.s.- that very very flood of dollars.




If that sounds implausible, consider the Wiemar experience. The German government was printing Reichsmarks by the billions and trillions but that did not cause prices in dollars or pounds to rise.
what were weimar interest rates like? was there a reichsmark carry trade?

jk
10-24-06, 10:06 PM
http://www.minyanville.com/articles/index.php?a=11492



http://www.minyanville.com/assets/Image/macromaven.JPG (http://www.macromavens.com/)

Break out the paper hats and start gettin’ jiggy with it cuz’ (in case you hadn’t noticed), the fourth quarter party is underway. In what has become a seasonal spectacle, investors are cutting themselves a big fat slice of risk from the global market cake and shoveling it in without the least regard for how piggish they look. Even in these early days, the roundup of market performance for the quarter has the sugar-stained fingerprints of risk-seeking investors smeared all over it.

Hard asset protection has been dutifully dispensed in favor of paper with commodities lagging behind their Emerging Market cousins, precious metals underperforming base metals and spec bets being slashed (see addenda). Indeed, according to the CFTC, gold longs have been cut in half and oil longs have been completely unwound. Meanwhile, on the paper front, the rapacious appetite for risk has found stocks outperforming bonds and high-yield bonds trouncing high-quality. In fact, since the quarter began, Junk yields have actually declined -30bp while Investment grade bond yields have risen +13bp!!

http://www.minyanville.com/assets/Image/sp10241.png

The last time investors went on a risk binge of this magnitude was back in April. That’s right, the month right before May. And we all remember what it felt like coming off that sugar-high!! Watching the current feeding frenzy, it’s hard not to worry about a repeat of that unpleasant circumstance today. The question is whether the indigestion that will inevitably follow will arise as a reaction to the cake itself (the ‘risk’ assets being purchased) or the icing (the leverage).

In May, leverage was the culprit. Rumblings from the Bank of Japan that it was ready to end its Quantitative Easing campaign and, in time, move to tighten, were sufficient to shake specs from their carry-trade roosts. With their cheap yen financing now threatened, they rushed to unwind their various positions, sucking money from all corners of the globe.

After a brief but ferocious liquidation, these positions were rebuilt…and then some. In the months since, short positions in the Yen have pushed deeper and deeper into record territory. Glancing at the increased wagers in the last two weeks, depicted in the chart below, one can almost envision the drool welling up in the corner of investors’ mouths in Pavlovian response to the 4th quarter alarm bell. After all, what better way to add a little oomph to your year-end performance than lever-up --- borrowing at 25bp in a currency that is all but guaranteed to remain weak??

http://admin.minyanville.com/assets/Image/sp10242.png

If these trader commitments are any indication, the yen-carry trade is now more than twice as large as it was in May! Thus any modest shift in the fundamentals underlying the dollar/yen could cause a Liquidity Event that makes May’s dyspepsia seem like a muffled burp. (Check out yen and the VIX).

http://www.minyanville.com/assets/Image/sp10243.png

Of course, with the Fed busy huffing and puffing about inflation, such a shift in dollar/yen dynamics is the last thing on investors’ minds. But that’s precisely the point. Everyone is lined-up on one side of this bet. And if the housing bubble’s deflation has half the impact we suspect it will (on consumer spending…and financial institutions), the Fed will be shifting gears sooner and more aggressively than the markets presently expect. Tomorrow’s Existing Home Sales report will be interesting in this regard. Should it fail to endorse the popular view that ‘the worst is behind us’… this big trade might begin to unravel.

In the meantime, those looking for anecdotal signs of a ‘peak’ in the yen carry trade it last week. No, I don’t mean Russia’s announcement that it would apportion more of its reserves to Yen (although that is important). I am referring to Iceland’s first-ever Samurai (yen-denominated) bond issue.

Talk about the ultimate expression of the yen carry trade! Iceland, one of the worlds highest-yielding currencies, is borrowing in yen to finance investment at home. It took a while, but apparently the guys at Iceland’s largest bank, Kaupthing, finally figured out that there was substantial Krona to be saved by borrowing at 0.25% in Japan instead of 14% at home!!

Could this be the ‘icing’ on the leverage layer-cake? With Iceland elbowing its way in for a slice of the carry-trade cake, this speculative bash is starting to lose its elite feel. Pretty soon, the other party-goers will be nudging each other: Hey, who invited those guys??? And, as they put their forks down and grab their coats, the long-delayed liquidity exodus will begin.

Finster
10-25-06, 06:48 PM
the ability to borrow yen at near zero rates, and turn around to buy higher yielding instruments in other currencies, pulls down rates all around the world...

No it doesn't.

Jim Nickerson
10-25-06, 07:51 PM
No it doesn't.

I think I can follow jk's reasoning better than I can, "No it doesn't."

Where do you see jk as being wrong?

jk
10-25-06, 10:57 PM
No it doesn't.

the ability to borrow yen at near zero rates encourages carry trades. example: borrow yen, sell yen to buy dollars, invest dollars in tbills. gee, we've created more demand for tbills! yes, i know there have to be dollars created to be bought, but our system creates credit on demand and the yen trade increases that demand.

Jim Nickerson
10-26-06, 03:33 AM
Here is some serious bullishness on the markets
http://www.marketwatch.com/News/Story/Story.aspx?guid=%7B8C8FB303%2D1702%2D4F0B%2DA094%2 D854A0CF5DE10%7D&siteid=myyahoo&dist=myyahoo


Don R Hays of the respected Hays Advisory institutional service was his superbullish self Wednesday, and that's before the Dow Jones Industrial Average made a third successive record high close as the Fed again declined to tighten.

Hays wrote: "NEVER, NEVER, NEVER in my 37-year career have the secular signs been more exciting than they are today. Let me say that again. This is not a flamboyant statement ... We believe the stock market's rally will prove in time to have known the Fed despite their Open Mouth Committee statements was opening the spigot. Over the last two months the growth rate of MZM and M2 (money supply measures) is 7.4% and 6.9% respectively, and that is very, very good news IF it continues. We believe it will..."
Hays even interprets that fact that the stock market is overbought according to some indicators as bullish: "In truth, this is bad news ... or good news. In strong bull markets an overbought condition that reaches very overbought levels is a very good sign of buying power ... if confirmed by psychology readings showing the buying power coming from the smart side of the aisle."
Hays argues this is now the case. This is his asset allocation: "We are 90% bullish and have 10% cash, just in case the market gives us that more acceptable and easier time to buy new stock positions on a pull-back."

Brimelow periodically mentions Hays, and for some while Hays to my perception has been truly a lonely bull, and at the moment he seems more correct than us bears, and if he is ultimately correct, then there is no telling how high the markets may go. But if there is a flood of money from the Fed that is moving the markets up, what is the longer term sequella?

sixpack
10-26-06, 11:10 AM
late arriving comment (sorry!). Is it reasonable to conclude that Japanese interest rate policy / liquidity moves are the most significant factor in the world economy with the size of the carry trade ? Japanese liquidity removal certainly has been before. Put another way, once interest rates do move in Japan, will May '06 repeat itself ?

On the other hand, why would a measly quarter point rise in Japan scare the sweet Jesus out of the markets and create unwinding scenarios ? I still havent got my head around that.

I'm not sure why you suggest that 'others joining the carry trade party', eg Iceland, would result in an exodus ? Could you elaborate if you are so inclined ?
thx.

jk
10-26-06, 02:09 PM
Is it reasonable to conclude that Japanese interest rate policy / liquidity moves are the most significant factor in the world economy with the size of the carry trade ? Japanese liquidity removal certainly has been before. Put another way, once interest rates do move in Japan, will May '06 repeat itself ?

On the other hand, why would a measly quarter point rise in Japan scare the sweet Jesus out of the markets and create unwinding scenarios ? I still havent got my head around that.

i share your questions. the only theory i've come up with as to why the boj's tiny moves matter, is that they trigger a panic like whispering "fire" in a crowded theater. if money managers think there might be an exodus from the carry trade, it is in their interest to get out first/early. thus, the most nervous among them might react to a random blip, reinforcing it, and triggering moves by others, operating rather like a short squeeze. [which is what it is -- short yen.] not all managers will react like this, but enough might to explain the moves.

Finster
10-27-06, 11:17 AM
I think I can follow jk's reasoning better than I can, "No it doesn't."

Where do you see jk as being wrong?

What reasoning? See my point? There isn't any. I think it is first incumbent upon jk to provide at least some scintilla of basis for his claim that "the ability to borrow yen at near zero rates, and turn around to buy higher yielding instruments in other currencies, pulls down rates all around the world..." before there is any need to refute it.

I am to debunk an argument that hasn't even been presented?

Jim Nickerson
10-27-06, 01:44 PM
What reasoning? See my point? There isn't any. I think it is first incumbent upon jk to provide at least some scintilla of basis for his claim that "the ability to borrow yen at near zero rates, and turn around to buy higher yielding instruments in other currencies, pulls down rates all around the world..." before there is any need to refute it.

I am to debunk an argument that hasn't even been presented?

I hope your shoulder is mending, and as it does your seeming disposition improves.

I can tell you what I know for a fact regarding world economic behavior, and it would be nothing or near nothing except what I read somewhere, which may be boils down to "conventional wisdom."

Being no expert in anything, it seems the essence of what has gone on for years is "people" or "institutions" (and I do not have the foggiest notion to whom that refers--certainly not me) have borrowed at near zero interest rates in Japan and bought higher yielding bonds, I guess, in other countries, perhaps a lot in the US, thus gaining the spread between the rates at which they borrowed and they rates at which they then loaned the borrowed money coming from Japan. How jk knows that or on what basis he believes it is true, he will have to answer, but I bet if one did a poll on this board, most would agree with his perception. I would, but in fact I only "know" what I read.

It seems clearl, Finster, you do not buy the "conventional wisdom." So what is the truth, and how do you know it is the truth?

Finster
10-27-06, 03:52 PM
I hope your shoulder is mending, and as it does your seeming disposition improves.

This is my ‘good mood’ disposition.



What would you expect from somebody called ‘Finster’?


;-)



Being no expert in anything, it seems the essence of what has gone on for years is "people" or "institutions" (and I do not have the foggiest notion to whom that refers--certainly not me) have borrowed at near zero interest rates in Japan and bought higher yielding bonds, I guess, in other countries, perhaps a lot in the US, thus gaining the spread between the rates at which they borrowed and they rates at which they then loaned the borrowed money coming from Japan. How jk knows that or on what basis he believes it is true, he will have to answer, but I bet if one did a poll on this board, most would agree with his perception. I would, but in fact I only "know" what I read.

That seems fairly uncontrovertible. The questionable part pertains to whether that necessarily "pulls down rates all around the world...". Does it really? Or is it being used as an excuse for central banks all around the world to pull down rates and inflate?


I can tell you what I know for a fact regarding world economic behavior, and it would be nothing or near nothing except what I read somewhere, which may be boils down to "conventional wisdom."



It seems clearl, Finster, you do not buy the "conventional wisdom." So what is the truth, and how do you know it is the truth?

A quickie lesson in finsterish. "No it doesn’t." translates as: "Please think this through. Are you sure? Why do you think so? Is this conventional thinking really justified? Or is it something people just accept because it is so often repeated?" A twist on the Socratic method, if you will.

As for the merits of conventional economic thinking, do we not have every reason to be skeptical? After all, conventional economic thinking has given us bubbles, inflation, the greatest indebtedness of any nation in all of history, and appears highly likely to lead to a decline in our overall living standards, at least on a relative basis with the rest of the world. Our ears ought to prick when we hear just about any statement that represents the conventional economic thinking. There is definitely something badly broken in there, and if we fail to ask for a critical examination of each step before proceeding with our analysis we risk becoming just another part of the problem ourselves.

We do call ourselves "contrarian" here, right?

bart
10-27-06, 04:30 PM
This is my ‘good mood’ disposition.



What would you expect from somebody called ‘Finster’?


;-)



Jim, just for possible edification's sake, the following are some of the images that come to mind when I think about Finster and the Manor. ;)


http://www.nowandfutures.com/grins/HauntedManor.jpg


http://www.nowandfutures.com/grins/SPQR.jpg


http://www.nowandfutures.com/grins/finster.jpg


http://www.nowandfutures.com/grins/seance.gif

Jim Nickerson
10-27-06, 04:58 PM
This is my ‘good mood’ disposition.
What would you expect from somebody called ‘Finster’?
Good, got me to laugh out loud. Just what does Finster mean, or from where does it come? Everytime I see Finster, I think "der Fenster."


That seems fairly uncontrovertible. Not uncommonly do I have to look up words, and that one is not in my Merriam-Webster's 2003.


The questionable part pertains to whether that necessarily "pulls down rates all around the world...". Does it really? Or is it being used as an excuse for central banks all around the world to pull down rates and inflate? See, by Jove, if we can get you to cooperate, you can shed worthwhile light on things.


A quickie lesson in finsterish. "No it doesn’t." translates as: "Please think this through. Are you sure? Why do you think so? Is this conventional thinking really justified? Or is it something people just accept because it is so often repeated?" A twist on the Socratic method, if you will.
I am not holding out myself as any example, but in fact I pay little regard to the media. I do regard what you and some others put up on this specific board, but given that, none do I take as necessarily correct. You know Finster, most people do not even know as much as I do, and they sure do not know as much as some who write here. I might have been an "expert" one time in a field of endeavor, and my experience was that even "experts" more often than not agree on most big issues, but could argue undendingly on the finer points--to me that is what knowledge and pursuit of it is all about--none of it is fully resolved on most things.


As for the merits of conventional economic thinking, do we not have every reason to be skeptical? After all, conventional economic thinking has given us bubbles, inflation, the greatest indebtedness of any nation in all of history, and appears highly likely to lead to a decline in our overall living standards, at least on a relative basis with the rest of the world. Our ears ought to prick when we hear just about any statement that represents the conventional economic thinking. There is definitely something badly broken in there, and if we fail to ask for a critical examination of each step before proceeding with our analysis we risk becoming just another part of the problem ourselves.

We do call ourselves "contrarian" here, right?

Excellent point.

And all this is so much better than, "No it doesn't" and your time spent in expounding allowed all those little fibers, cells, and tissues to continue recuperating in your shoulder without your thinking about it happening.

Thanks.

Finster
10-27-06, 05:52 PM
Good, got me to laugh out loud. Just what does Finster mean, or from where does it come? Everytime I see Finster, I think "der Fenster."

Not exactly sure, Jim, but it kind of sounded like a good name for a cranky curmudgeon like the character I was going for. It may have come out of the deep recesses of my early childhood memories of a particular Loony Tunes character …

http://www.minorlooneytunes.com/thumbnails/_tfinster003.jpg

http://www.minorlooneytunes.com/thumbnails/_tfinster005.jpg

http://www.minorlooneytunes.com/finsterpics.html


Not uncommonly do I have to look up words, and that one is not in my Merriam-Webster's 2003.

Oops. :o

Perhaps it should have been incontrovertible…?


See, by Jove, if we can get you to cooperate, you can shed worthwhile light on things.

Let’s not be too hasty here ;) … I’m not exactly saying that’s what I think it is, just posing an example of a possible alternative explanation to illustrate the point that jk’s conclusion is not the only reasonable possibility.


I am not holding out myself as any example, but in fact I pay little regard to the media. I do regard what you and some others put up on this specific board, but given that, none do I take as necessarily correct. You know Finster, most people do not even know as much as I do, and they sure do not know as much as some who write here. I might have been an "expert" one time in a field of endeavor, and my experience was that even "experts" more often than not agree on most big issues, but could argue undendingly on the finer points--to me that is what knowledge and pursuit of it is all about--none of it is fully resolved on most things.

A good starting assumption is that none of us knows anything, myself conspicuously included. When people just take the pronouncements of presumed experts is when you run the risk of group-think and of perpetuating fallacy. I have certain biases myself, especially when it comes to certain kinds of things that I hear over and over again in the media as just some kind of "received wisdom" but that virtually never are critically examined. They just kind of set of alarm bells every time I hear them. You always have to try to distinguish between things that are simple and basic enough to merit the status of "fact" from things which are really kind of fuzzy and nothing more than conventional wisdom. As for example, the common claim that Asian demand is the prime factor behind rising oil prices.


And all this is so much better than, "No it doesn't" and your time spent in expounding allowed all those little fibers, cells, and tissues to continue recuperating in your shoulder without your thinking about it happening.

:)

Jim Nickerson
10-27-06, 07:26 PM
Jim, just for possible edification's sake, the following are some of the images that come to mind when I think about Finster and the Manor. ;)





http://www.nowandfutures.com/grins/SPQR.jpg







Now if the right guy had used his digitus medius to straighten his helment, that would be a good picture, whether of Finster or not I do not know, but perhaps of him.

bart
10-27-06, 07:59 PM
Now if the right guy had used his digitus medius to straighten his helment, that would be a good picture, whether of Finster or not I do not know, but perhaps of him.


You mean you or he don't have shining armor? :eek: :eek: :rolleyes: ;)