Weighing The Week Ahead: Any Help From The European Summit? [View article]
Jeremy -- I know about the existing program. There are proposals to strengthen it in various ways --- size, who guarantees, etc.
I do quite a bit of research for each article, and this theme came up several times. Here is how one source put it (also citing a speech by Draghi): "Third, and most urgent, retail bank runs must be prevented. The best way would be for the EFSF or its successor fund to explicitly guarantee all national deposit insurance systems in the euro area. Such “deposit reinsurance” would bolster the integrity of the euro area and immediately enhance trust in its banks. Of course, strong European-level supervisory structures should eventually be built to prevent moral hazard. It will take more time to combine these different pieces into a consistent European banking policy framework. The current moment calls not for perfect fine-tuning, but for swift and bold commitments."
Daro -- I did not specifically endorse Bergsten. I presented a wide range of views. Since they are in conflict, it is a certainty that some of them will be dead wrong!
I'm sure you noticed my facetious comment about their crystal balls.
How Investors Can Get An Edge From The European Crisis [View article]
I did not say that they were "improving." I said that each party was getting more from the compromise than they would have from an imposed solution that many pundits wanted a year ago.
This is the nature of compromise. And with democracies it takes time.
The message from the governments right now seems to be that there is too much austerity. That bargain will probably change a little to provide the Greeks and (perhaps the French) a little more room to recover.
This is not all about the current debt/GDP ratio......
Boomer -- The ECB has been trying to induce some structural reforms and behavioral changes. It is a process of negotiation and compromise. Every party involves has multiple objectives.
This is not to say that they have been right at every turn, but it is easy to second guess. You might be right, but it is not quite as simple as you suggest.
Weighing The Week Ahead: Any Help From Housing? [View article]
daro -- Everyone has been building economic negatives, including Europe, into earnings forecasts for many months. I track these weekly. Others just talk about unquantified headwinds.
There will always be something to point at while shaking your head. You cannot just say that we have X percent of our trade with Europe. Even a European recession might mean only a 1-2% reduction in GDP. If that is the impact on sales, try doing the math for, say, Microsoft or JNJ.
The European threat centered on systemic risk, like in 2008.
Weighing The Week Ahead: Any Help From Housing? [View article]
Old Trader --
1) If someone loses benefits while still unable to find work it is a serious blow for them personally. The economic impact is not worth calling a "headwind."
2) If someone goes off unemployment benefits and quits looking for a job, it reduces the labor force which affects unemployment. If the person keeps looking for work, it does not. Most people on employment seek and find jobs.
3) In the bond ladders I have been constructing I use five rungs with 3 bonds per rung - -no duplication in companies. You could do this with $15 - 20,000, or you could do a simpler program with fewer bonds. I'll write more on that later.
Weighing The Week Ahead: Any Help From Housing? [View article]
dancing diva -- Most thoughtful people like you make up their minds early. Successful campaigning is pretty scientific. They know what works. Despite protests from people like us, targeted and negative advertising swings marginal voters in key states. I have not written much about the election so far, since I like to emphasize investment themes. I did write a few weeks ago on the role of issues in the election: http://bit.ly/ISBXYO
Weighing The Week Ahead: Any Help From Housing? [View article]
mykie -- I agree about the eventual impact of these developments, and I featured it as one of the final thoughts a couple of weeks ago: http://bit.ly/J0GRYT
Thanks for the kind words and for helping us keep an eye on this development.
Weighing The Week Ahead: Any Help From Housing? [View article]
Tom -- Yes, I highlighted this because I think we will see even more discussion of the "fiscal cliff" issues that require attention.
I am planning a separate article or two on this theme, but in the weekly piece I like to highlight what has been recently significant and what is on the radar.
There are various scenarios, but yours is one possibility.
When Something Goes Wrong: The Case Of JPMorgan Chase [View article]
Angel -- If your conclusion is that every bank is a black box, then I guess that settles it.
The point of this article is to think before acting. There is a lot of information already available about this trade, and there will soon be more. I like this analysis: http://on.ft.com/IWyq0F
When Something Goes Wrong: The Case Of JPMorgan Chase [View article]
Old Trader -
I analyze and report about market worries every week, with a summary several times a year. I make no "assumptions" that things are OK. I use data (like the St. Louis Financial Stress Index) and react accordingly.
As to being sanguine -- I just recognize the fact that things get better over time. There are many people who do not understand economics and have something to sell -- usually something political -- and they want you to believe that in the absence of stimulus the natural state of the economy is negative.
This is silly, as anyone can see by looking at long-term trends. The mean-reverting state of the economy is back to 3% growth or so. Understanding this makes me, and those like me, the realists.
As I read the news this weekend I see many people using the JPM incident to support whatever they are selling......
Weighing The Week Ahead: Any Help From The European Summit? [View article]
I do quite a bit of research for each article, and this theme came up several times. Here is how one source put it (also citing a speech by Draghi): "Third, and most urgent, retail bank runs must be prevented. The best way would be for the EFSF or its successor fund to explicitly guarantee all national deposit insurance systems in the euro area. Such “deposit reinsurance” would bolster the integrity of the euro area and immediately enhance trust in its banks. Of course, strong European-level supervisory structures should eventually be built to prevent moral hazard. It will take more time to combine these different pieces into a consistent European banking policy framework. The current moment calls not for perfect fine-tuning, but for swift and bold commitments."
http://bit.ly/Jd4idO
Thanks for helping me clarify this distinction.
Jeff
How Will The Greek Drama End? [View article]
I'm sure you noticed my facetious comment about their crystal balls.
I agree about events in Spain as an indicator.
Jeff
How Will The Greek Drama End? [View article]
Jeff
How Investors Can Get An Edge From The European Crisis [View article]
This is the nature of compromise. And with democracies it takes time.
The message from the governments right now seems to be that there is too much austerity. That bargain will probably change a little to provide the Greeks and (perhaps the French) a little more room to recover.
This is not all about the current debt/GDP ratio......
How Investors Can Get An Edge From The European Crisis [View article]
That is a far cry from a Lehman-like disaster scenario that has become a popular recent theme.
I notice that you did not respond to any of the specific points that I made.
Just wondering....
Jeff
Don't Panic Over Europe [View article]
This is not to say that they have been right at every turn, but it is easy to second guess. You might be right, but it is not quite as simple as you suggest.
Jeff
Weighing The Week Ahead: Any Help From Housing? [View article]
There will always be something to point at while shaking your head. You cannot just say that we have X percent of our trade with Europe. Even a European recession might mean only a 1-2% reduction in GDP. If that is the impact on sales, try doing the math for, say, Microsoft or JNJ.
The European threat centered on systemic risk, like in 2008.
I hope the distinction is helpful.
Jeff
Weighing The Week Ahead: Any Help From Housing? [View article]
1) If someone loses benefits while still unable to find work it is a serious blow for them personally. The economic impact is not worth calling a "headwind."
2) If someone goes off unemployment benefits and quits looking for a job, it reduces the labor force which affects unemployment. If the person keeps looking for work, it does not. Most people on employment seek and find jobs.
3) In the bond ladders I have been constructing I use five rungs with 3 bonds per rung - -no duplication in companies. You could do this with $15 - 20,000, or you could do a simpler program with fewer bonds. I'll write more on that later.
I hope this is helpful.
Jeff
Weighing The Week Ahead: Any Help From Housing? [View article]
Jeff
Weighing The Week Ahead: Any Help From Housing? [View article]
Thanks for the kind words and for helping us keep an eye on this development.
Jeff
Weighing The Week Ahead: Any Help From Housing? [View article]
I am planning a separate article or two on this theme, but in the weekly piece I like to highlight what has been recently significant and what is on the radar.
There are various scenarios, but yours is one possibility.
Jeff
Weighing The Week Ahead: Any Help From Housing? [View article]
Thanks,
Jeff
When Something Goes Wrong: The Case Of JPMorgan Chase [View article]
The point of this article is to think before acting. There is a lot of information already available about this trade, and there will soon be more. I like this analysis: http://on.ft.com/IWyq0F
Jeff
When Something Goes Wrong: The Case Of JPMorgan Chase [View article]
I analyze and report about market worries every week, with a summary several times a year. I make no "assumptions" that things are OK. I use data (like the St. Louis Financial Stress Index) and react accordingly.
As to being sanguine -- I just recognize the fact that things get better over time. There are many people who do not understand economics and have something to sell -- usually something political -- and they want you to believe that in the absence of stimulus the natural state of the economy is negative.
This is silly, as anyone can see by looking at long-term trends. The mean-reverting state of the economy is back to 3% growth or so. Understanding this makes me, and those like me, the realists.
As I read the news this weekend I see many people using the JPM incident to support whatever they are selling......
Jeff
When Something Goes Wrong: The Case Of JPMorgan Chase [View article]
It is more fun to write about winners, but even more important to analyze losses.
Jeff