Mid-Summer Night’s Linkfestival

Winston – the latest shadow government statistics data shows at least a temporary slowdown in monetary expansion.

http://www.shadowstats.com/cgi-bin/sgs/data

Do you feel that liquidity will be reigned in any time soon, or at least slow down its rate of expansion?

I am impressed that you would include a link to the National Geographic story of the “Swarm Theory of Group Behavior” that essentially says that the group, as a whole, is acting intelligently resulting from the collective small acts of individuals. Should we conclude that “group think” can somehow be “smarter” than what the individual can potentially be?

Overall, I am thankful for your post because, in my view, it illustrates the impact of group behavior and the fact that it is greater than the sum of its individual “parts.”

I have learned (at TBP and other places) that “the crowd” is right most of the time but not all of the time…

In a financial market context, an individual can gain an advantage over the group but only when the individual can somehow find him or her self “one step ahead” of the group momentum but never completely against it…. But who has the ability or foresight to achieve that on a consistent basis?
~~~

BR: One fascinating apsect of the article are the conditions necessary for the group to outperform the individual: Only if individual members act responsibly, if their is diversity of opinion, if members independently make their own decisions. pply this to the market and you can see how tops form as members imitate one another, follow fads, or wait for someone to tell them what to do…

Winston,

Bet you can’t watch the little white ball only once and remember the pattern:

http://www.comstockfunds.com/

On liquidity if M3 is a benchmark they are still flowing beyond inflation safety zones (but not to worry inflation statistics are still subdued in Europe 2. PCT official)
M3
ECB + 10..7 Pct
USA + 13 Pct
Russia (official figures) + 36 Pct (inflation around 8 Pct official)

Assets and risks are very slowly being repriced

Bloomberg July 13TH
http://www.bloomberg.com/apps/news?pid=20601084&sid=agDQwe.HGEpc&refer=stocks

« Debt Risk
Corporate-bond risk has soared this week after Standard & Poor’s said it’s preparing to downgrade $7.35 billion of mortgage bonds and Moody’s Investors Service cut ratings on $5.2 billion of sub prime-related debt, as delinquencies by homeowners with poor or meager credit jumped to the highest in a decade.
Europe’s iTraxx Crossover Index, which is based on credit- default swaps of 50 companies, jumped the most in at least three years on July 11, according to JPMorgan Chase & Co.
A U.S. benchmark index for credit-default swaps, or instruments investors use to speculate on the ability of companies to repay debts, soared that day to the highest in almost two years. An increase may signal higher borrowing costs. »

But strangely simple arithmetic may reveal that risk repricing is subdued and even deriding the reality as perceived by the rating agencies.
From 3.3 USD TRILLION loans in real estates SP and Moody’s find 7.35 billion USD and 5.2 Billions to deserve a cautious outlook If one apply a genuine 20/80 Pareto’s distribution one may come close to 66 Billion USD of very unsecured loans and related mortgage bonds which figure could be confirmed by the 120 PCT financing against collateral banks tolerance.
Should one be interested to look at SP and Moody’s findings against HSBC (only) 11 Billion USD write off of sub primes loans or recent figures of GE suprime lending business, one may find MOODY‘s and SP late findings a little short of reality.

In Europe « everything is for the best in the best of the possible world « no European lenders is caught in direct lending or in the sub primes bonds no Insurance companies manage supbrime bonds or LBO’s bonds in their proprietary portfolios though one may have seen a sample of them in a public sample as direct lenders to New Century or Bear and Stern hedge funds.

The future stories will be read in the LBO’s debts repayments which will, with no doubt bring litigious understanding of assets inflated prices and inflated stocks markets as real life by products. Equities markets are happy to be confirmed through M&A poison pills and the self sufficient tautology « if they buy we are right » what if they all were wrong? The interest debt servicing payment will suffice to prove it.

Stormrunner

YOU ARE RIGHT but the cover up which are “raisons d’état” are the best excuses for watching and trying to understand how and why appointed bodies from elected bodies could arrange truth and their representations, markets (interest rates, equities) to be manipulated by a set of agreed actors at the expenses and sometimes ruin of others.
The representation of social justice, repartition of wealth, efficient economic value through those concerted actions need to be assessed and conclusions to be brought to the public. The problem is by whom, an academic PhD thesis posted in the journal of economics?

There seems to be a psychological cycle at work over the long haul. After the collapse of 1929, a few generations were influenced by the delayed gratification concept and saving for a rainy day.

This has now morphed into an instant gratification mentality and borrow and spend lifestyle.

It looks as though we have gone the full circle.

Work?

Okay.

I’ve got something on my mind, Barringo, so before you manage to hold the bold, I’ll slip this in. Maybe it’s on the subject or maybe it’s off, but this is the linkfest, right?… So, don’t touch… Don’t you touch!…Ya hear!
——-
“Sino Apologia, the Chinese 512 and Mr. Zheng Xiaoyu”

Let’s examine the difference between two very divergent reactions that the Communist Chinese give to circumstances related to commerce between our two countries. But better still… I’m going to illustrate the reasons for the very different reactions. Just pay attention. I’ll tie it all together… promise.

The first one is related to what I’ll call the Chinese 512, or, that is, the Chinese version of the Digital Millennium Copyright Act’s special provision – you know, the one that digital carriers lovingly refer to as “Mother’s Milk” or possibly variously as “Manna From Heaven,” “The Gift that Keeps on Giving” or some other expression evocative of the enchanted land of “Shangri-La.” Whoops!… maybe I ought to not use a reference to S-La… Shhhh!…that won’t make it behind the Iron Firewall.

For even though the U.S. version of 512 does indeed help provide a stolen but “curiously strange and offbeat potpourri of [digital] music, wit and convivial companionship,”(*note – bracketed addition mine) the Communist Chinese version is even more convivial… convivial to a fault I’d say, because their citizens flood the world with pirated intellectual products, both inside China and outside. Their own version of DMCA likely only provides at best a 512 wink and probably is less effectively employed than our version of the wink… if that’s possible.

“But what difference does it make anyway?” they must calculate, since the U.S. has disguised the legislation as being something possibly profoundly protective of intellectual property rights, when in reality it’s mostly a license to steal. “Yep, those Americans,” they might say, “they’re big on pomposity and small on substance, so — they steal – we steal – we all steal together.”
—
*I’ve always wanted to use that phrase in some written or spoken word that might convey the ironic humor often displayed by Mr. Conrad in his show: “Robert Conrad’s Weekend Radio” (thanks Mr. Conrad for all the years of entertainment) linked here:

http://www.pba.org/programming/categories/arts_performance/all/
—
So the Communist Chinese just ignore intellectual property rights altogether, and, as Lincoln more-or-less said in his time about another totalitarianism, “When it comes to this I should prefer emigrating to some country where they make no pretence of loving liberty — to Russia, for instance, where despotism can be taken pure, and without the base alloy of hypocracy [sic].”

As I’ve said before, stealing a man’s intellectual property rights is just a step closer to stealing his human rights as well. It’s another type of slavery and Lincoln was speaking to that subject. I think Lincoln would’ve found hypocrisy in asking China for intellectual property rights protections after absurdly constructing and writing 512 into the DMCA.
—
I tell you, that Lincoln could turn a phrase. You think?… and if he wasn’t the greatest of speilers, he was in a class that it didn’t take long to call the roll:

http://showcase.netins.net/web/creative/lincoln/speeches/speed.htm
—
Consequently Communist China doesn’t have the slightest worry about enforcing intellectual property rights of U.S. interests, because they know the U.S. is both too afraid to do anything about it and toothless to do anything even if it wanted to, except for a little ratchet jawing about intellectual property rights in between begging visits from Paulson and others regarding floating the yuan… floating it in a sea of Sea-Dee-Ohs, that is, or possibly Sea-Em-Ohs, according to Mr. Mauldin’s latest “Thoughts From The Frontline” writ and his quoting therein of a Bloomberg piece:

http://www.investorsinsight.com/thoughts.aspx

Whether you agree with part one or not, let’s talk about the second item of my discussion, the very different reaction the Communist Chinese have had to another sort of irregularity that people in the U.S. might get offended by… like when you kill their dogs and cats with pet food poisoning, or were you to really screw up and kill one or more humans with their food as well. That would be a big no-no. Why? Well, copyright infringement violations are no big deal for the Americans… because, heck… after all… you’re just helping them steal from each other, right?…But if you start killing them you’re likely to finally get their attention, and then get what you deserve, and that would be sudden and very serious trade restrictions.

I must contribute that there’s at least one offender of this unwritten rule (Communist China is I think a country of mostly unwritten rules) that has now paid the price for risking the Super Big Box business that’s still going to the Norte Americanos:

http://tinyurl.com/3dv7me

Boy!… A little case of bribery and they put a bullet in your medulla oblongata. That’s hard! Whew!… as you can see from the guy’s expression, it positively flummoxed the accused. Man-O-Man I hope he was truly guilty!

I wonder. Do you suppose that if they’d taken the head of Mr. Zheng Xiaoyu and put in on a stake it might help alleviate the fears of some Big Box shoppers in the U.S.? Hey, they could put pictures of the staked-out head in the pet food section… giant glossy reproductions. That ought to give them a real sense of security about Rover’s chow.

See, the point I’m trying to make in all of this is to illustrate that the Communist Chinese will do whatever it takes to continue their export business relationship with the U.S., and with the other countries of the industrialized West… and in doing it they’ll also ignore anything of a violating nature that we ourselves allow them to ignore.

You want to ignore intellectual property rights?… they’ll be all too glad to assist you, but don’t think it’ll stop with a few Barringo-criticized type CD label pricing issues, or some knock-off fashions or software applications that they know the American bass boat-buyin’ crowd will simply ignore for their own benefit. As soon as they get enough momentum, it’ll be the same with the big, big stuff, like with big, big planes, trains, electric dynamos, biomedicals… and everything else they can get their piratizing hands on that, at present at least, do still produce the odd higher paying skilled American jobs. Those jobs will get sliced and diced as well, as soon as Communist China can influence the employers of those jobs to absorb the capital costs of re-lo-cation. And that may not take too long, witness the intellectual brain drain to China and India already well under way and the recent apparent lacking of U.S. domestic cap-ex.

You want to ignore their gross pollution of the environment?… their censorship?… their violations of human rights?… their ignoring of commercial investment reciprocity and stockholding rights?… Yes, they’ll help you along with these too, and remind us that we polluted for decades, and remind us that the agents of their U.S. importers are merely the co-agents with them of their pollution and other violations just as well, so “don’t you really mean ‘we’ Kemasaba?” they would say. And it’s true… if I want to reduce the costs of goods exported to the U.S., and if I can dump pollution into the air and water to do it, it’s the same as dumping them in Peoria. Anybody that can’t understand that is just nuts.

You want to ignore killing a few pets and the occasional poor human sucker with a liver and kidney a bit too intolerant of ethylene glycol (antifreeze)?…. they’ll be all too helpful for that too, but they’ll be even more violently reactive to any further U.S. food poisoning issues that threaten to kill consumerism than even U.S. authorities will be. Actually, Communist China probably understands the U.S. consumer better than we in the U.S. understand him. I think they’d be quicker to kill to preserve U.S. consumerism than to kill to preserve or promote their domestic protections of human rights… witness the former Mr. Zheng Xiaoyu. He was D.O.A. as soon as the pet food manufacturing he oversaw started restricting pet food sales, even temporarily, in the U.S. I have no basis for doubting his guilt, but somebody had to be guilty for sure… some head had to roll, and his was at the top of the hill.

In fact, Communist China has made a business and a culture out of ignoring most all types of rights… About the only interests in the U.S. they don’t ignore are the Big Boxers and their agents who provide them with ample Sino Apologia and ample opportunity to misrepresent the production costs of their export goods.

Abandon your totalitarian state, China!… You worry about jobs for your people and you at least academically understand the poor status of your own consumer demand. That’s the world’s real problem with you, China… contrary to what our half-breed agent apologists of your conduct say. Take off the handcuffs from your people, and learn from our own admitted prior mistakes regarding pollution and other matters. You’ll soon have consumer demand and job creation climbing trees. But if you don’t un-handcuff them, sooner or later they’ll be climbing your walls when things don’t go as well as they do now.