LaxPower Back-Up Stick

a fan wrote: ↑Sat Jun 08, 2019 11:42 pm

Farfromgeneva wrote: ↑Sat Jun 08, 2019 11:19 pm They can’t. Forgive the term but it’s a Mexican standoff as long as the dollar is the worlds currency reserve and the US Treasury Bond curve continues to represent the risk free rate of borrowing (all credit curves are built off the US Bond curve, and it’s T-Bills, notes and long bonds, savings bonds, like EE are anachronistic, retail instruments, not held by sovereign entities).

Price and yield have an inverse relationship, somewhat linear when holding for other considerations. So if China stops buying and the US has to borrow at 6%, instead of 3% for 30yrs now because a large buyer sat the auction out, the price of the 30yr bonds China bought last month (setting aside the on/off the run liquidity premium for new issuance) and worth, rough, back of the napkin math, 91 cents on the dollar. So, $10Bn of bonds bought last month are now worth $9.1Bn, $900mm loss. That sounds like a situation where some mid management finance person in the party is disappearing to a place where your whole body gets pierced

You're assuming China is looking to dump the bonds they're holding.

If they sit on the bonds to their maturity, they get their full yield. It's the whole point to the instrument.

Or at least is used to be, before the 1%ers decided they needed to pull in 20%+ a year on their investments or life was no longer worth living.

Not at all, that’s incorrect. Owning fiat currency reserves as a base is a mark to model exercise. It’s been demonstrated over and over in Latin America, Africa, SE Asia and even russia when they devalued the ruble in 1998 (around the same time as the SE Asia crisis and Long Term Capital Mgt implosion that ultimately led to the lack of interest by peer firms in bailing out Bear Stearns 10yrs later).

In fact your argument of “the whole point of the instrument” is off. If the market yield is higher and you own something with a lower yield your losing money. You could dump the old ones and buy the new ones w the higher coupons and make more money if that were true, except others won’t want your sh**y bonds that pay less unless they buy them at a discount. This is kiddie math here.

The whole point of the instrument is far beyond receiving a coupon and principal back when discussing sovereign debt. Or how about this, who the heck would ever own the 100yr corporate IBM bonds they successfully issued not all that long ago? China would be directly hurting their net worth, and there’d be a one time massive reset to the trade deficit to adjust for this accounting change. Money, like governments, is all mark to model. It’s based on the stability and freedom of a country.

I don’t get why you want to just argue every point with everyone here. I don’t like our president and worked in NYC in the CMBS and for a CRE CDO fund in NYC for a number of years, am familiar with the business side of the guy more than most (want to blame somebody for Trump, check out Andy beal from TX who was Trumps last domestic lifeline before he had to go overseas and get money under whatever rock it could be found). I’ve also been on the macro side of things and traded or structured every type of bond imaginable at some point. This is all
Correct.

What your 1% and 20% comment seems to suggest is a vitriol that supersedes a willingness to actually believe or listen to someone else who has direct domain knowledge. I don’t care, but it just makes your positions increasingly charicature-like.

You know what I borrowed $80k for in my m 20s and worked literally 80-100hr weeks for a number of years for? To be a 1% person? No, to be able to have the resources to provide a better life for my kids than my parents. And while I’ve gone off the deep end personally and live in pharmaceutical corridor now I’ve managed to accomplish that while my generation (40, somewhere between X & millennials,I wasn’t really the audience for reality bites) is staring at being the first in a while to not have loved better than a prior one from a wealth perspective. Seems like you’d accuse me of being a 1% because of the position I would take. Unlike folks, many who went to my college, who were born on 3rd and thought they hit a triple.

old salt wrote: ↑Sun Jun 09, 2019 12:56 amYou just insist on pounding a square peg in a round hole. You can't see nuance. It's all or nothing.

So, true. A fan doesn't get it...he states the Jesuits taught him to see an argument from all sides but then argues from a very narrow place, and constantly misrepresents the person's position he is debating (lots of straw men). That is why I rarely confront his dubious positions/statements ...for me, what's the point? I don't have the time or energy to get sucked in (the vortex).

I commend you for, not only having a wealth of information/experience, but also for having the stamina to compete

tech37 wrote: ↑Sun Jun 09, 2019 12:25 pm

old salt wrote: ↑Sun Jun 09, 2019 12:56 amYou just insist on pounding a square peg in a round hole. You can't see nuance. It's all or nothing.

So, true. A fan doesn't get it...he states the Jesuits taught him to see an argument from all sides but then argues from a very narrow place, and constantly misrepresents the person's position he is debating (lots of straw men).

Uh huh. I'm the one who lacks nuance.

How is it possible that---in the context of this discussion----that both old salt and Victor Hanson have never once criticized a single move Trump has made in the foreign policy arena? Apparently, Trump makes Alexander the Great, or Pericles look like babbling idiots. Trump is the best leader we've had overseas in the history of our nation.

While at the same time, we couldn't go one single week without old salt and Hanson....and you, for that matter....complaining about how Obama is doing it wrong.

THAT is "no nuance". And that is where I take issue. I keep waiting for Old Salt or Hanson to say that Trump has made a big mistake in foreign policy.

I'm still waiting.

And what old salt comes back with is "well, i do disagree with Trump, but I just don't tell you when I do". That's the reverse straw man. Hold a position, and don't tell me about it....and "somehow" I supposed to guess what that position is.

And if I guess wrong? You come on here and accuse me of building straw men. I can't win. And i can't have a reasonable conversation.

Farfromgeneva wrote: ↑Sun Jun 09, 2019 6:52 am In fact your argument of “the whole point of the instrument” is off. If the market yield is higher and you own something with a lower yield your losing money. You could dump the old ones and buy the new ones w the higher coupons and make more money if that were true, except others won’t want your sh**y bonds that pay less unless they buy them at a discount. This is kiddie math here.

I should have explained my point better, sorry.

Picture what would happen if Obama and Bush had done nothing in the 08 crash. No bailouts. No QE. Let the free market sort it out.

Guess what? Now those US bonds have some pretty serious value. That's what I meant by the original intent of the instrument.

Now that citizens are paying for the stupidity and greed of Wall Street and not allowing crashes to happen via funding bailouts and QE and the like? Yep, you're right, those bonds are pointless in the long term sense, and are not held to maturity as a result.

Farfromgeneva wrote: ↑Sun Jun 09, 2019 6:52 am I don’t get why you want to just argue every point with everyone here.

? I'm not. This is a discussion site. And a good one. I enjoy the conversations and the break from 70 hour work weeks.

Farfromgeneva wrote: ↑Sun Jun 09, 2019 6:52 am What your 1% and 20% comment seems to suggest is a vitriol that supersedes a willingness to actually believe or listen to someone else who has direct domain knowledge.

Domain knowledge is my favorite part about the Forum. And I did listen....I just disagree. This is bad.....how? And I don't expect you to know this, but I own a factory. I have zero problem with wealth or wealthy people. Even the folks born on 3rd base that you mention....I don't harbor ill will. Unless you do like Trump does, and brag about your business prowess, when in reality, all he did was inherit money.

Farfromgeneva wrote: ↑Sun Jun 09, 2019 6:52 am You know what I borrowed $80k for in my m 20s and worked literally 80-100hr weeks for a number of years for? To be a 1% person? No, to be able to have the resources to provide a better life for my kids than my parents. And while I’ve gone off the deep end personally and live in pharmaceutical corridor now I’ve managed to accomplish that while my generation (40, somewhere between X & millennials,I wasn’t really the audience for reality bites) is staring at being the first in a while to not have loved better than a prior one from a wealth perspective. Seems like you’d accuse me of being a 1% because of the position I would take. Unlike folks, many who went to my college, who were born on 3rd and thought they hit a triple.

You're misreading my comments. I was simply pointing out (and doing a poor job of explaining my point, admittedly) that the original intent of the stock market has changed. It used to be for collecting capital to build things that the private sector couldn't build. That horse left the barn....

a fan wrote: ↑Sun Jun 09, 2019 1:37 pm I keep waiting for Old Salt or Hanson to say that Trump has made a big mistake in foreign policy.

That's because I agree with what Trump's trying to accomplish re. foreign policy, alliances, national security strategy, & trade.
That doesn't mean I'm happy with all his other faults & shortcomings.
What counts with me is that he's trying to accomplish the things that matter to me.
I don't expect him to accomplish everything, but he might reverse the pendulum.
At least he's forcing the establishment to confront issues like immigration, manufacturing & our trade imbalance,
while challenging the status quo & conventional wisdom.

I told you, when it happened, that it was a mistake for Trump to announce the Syria pullout the way he did. He back tracked somewhat & it's worked out ok, yet it caused Mattis to resign. Turkey hasn't gone after the Kurds & we have not taken any losses there since, so the outcome was ok (so far) but not worth losing Mattis. ...another case of watch what Trump actually ends up doing, rather than overreacting to his rhetoric. This was an example of our allies adapting to Trump. It didn't register with you because totally IN or OUT of the ME, overall, are the only policy options you see.

In foreign policy matters, it takes time for actions & results to catch up with the rhetoric.

a fan wrote: ↑Sun Jun 09, 2019 1:53 pm

Farfromgeneva wrote: ↑Sun Jun 09, 2019 6:52 am In fact your argument of “the whole point of the instrument” is off. If the market yield is higher and you own something with a lower yield your losing money. You could dump the old ones and buy the new ones w the higher coupons and make more money if that were true, except others won’t want your sh**y bonds that pay less unless they buy them at a discount. This is kiddie math here.

I should have explained my point better, sorry.

Picture what would happen if Obama and Bush had done nothing in the 08 crash. No bailouts. No QE. Let the free market sort it out.

Guess what? Now those US bonds have some pretty serious value. That's what I meant by the original intent of the instrument.

Now that citizens are paying for the stupidity and greed of Wall Street and not allowing crashes to happen via funding bailouts and QE and the like? Yep, you're right, those bonds are pointless in the long term sense, and are not held to maturity as a result.

Farfromgeneva wrote: ↑Sun Jun 09, 2019 6:52 am I don’t get why you want to just argue every point with everyone here.

? I'm not. This is a discussion site. And a good one. I enjoy the conversations and the break from 70 hour work weeks.

Farfromgeneva wrote: ↑Sun Jun 09, 2019 6:52 am What your 1% and 20% comment seems to suggest is a vitriol that supersedes a willingness to actually believe or listen to someone else who has direct domain knowledge.

Domain knowledge is my favorite part about the Forum. And I did listen....I just disagree. This is bad.....how? And I don't expect you to know this, but I own a factory. I have zero problem with wealth or wealthy people. Even the folks born on 3rd base that you mention....I don't harbor ill will. Unless you do like Trump does, and brag about your business prowess, when in reality, all he did was inherit money.

Farfromgeneva wrote: ↑Sun Jun 09, 2019 6:52 am You know what I borrowed $80k for in my m 20s and worked literally 80-100hr weeks for a number of years for? To be a 1% person? No, to be able to have the resources to provide a better life for my kids than my parents. And while I’ve gone off the deep end personally and live in pharmaceutical corridor now I’ve managed to accomplish that while my generation (40, somewhere between X & millennials,I wasn’t really the audience for reality bites) is staring at being the first in a while to not have loved better than a prior one from a wealth perspective. Seems like you’d accuse me of being a 1% because of the position I would take. Unlike folks, many who went to my college, who were born on 3rd and thought they hit a triple.

You're misreading my comments. I was simply pointing out (and doing a poor job of explaining my point, admittedly) that the original intent of the stock market has changed. It used to be for collecting capital to build things that the private sector couldn't build. That horse left the barn....

All good this is way too big of an a discussion for here. Yes the implicit guarantees of the GSEs were always gets since we made it the American Dream and have his crazy, 30yr fixed rate, free prepayment option (negative convexity).

But I didn't like how you were arguing that we were borrowing from China as if these were negotiated borrowings, it’s a global market and we are, until the world loses faith in us as the free-est, most liberal (rights wise) country in the world, the risk free at which every asset and liability is prices off of. Between the reality of sovereign debt and that China truly can’t afford to f us by sitting out a string of auctions and pushing our borrowing costs up. Where do they put their excess reserves then? Gold, Euro - please, Oil? So it’s just not realistic that they can’t keep financing our growth.

a fan wrote: ↑Sun Jun 09, 2019 1:53 pm

Farfromgeneva wrote: ↑Sun Jun 09, 2019 6:52 am In fact your argument of “the whole point of the instrument” is off. If the market yield is higher and you own something with a lower yield your losing money. You could dump the old ones and buy the new ones w the higher coupons and make more money if that were true, except others won’t want your sh**y bonds that pay less unless they buy them at a discount. This is kiddie math here.

I should have explained my point better, sorry.

Picture what would happen if Obama and Bush had done nothing in the 08 crash. No bailouts. No QE. Let the free market sort it out.

Guess what? Now those US bonds have some pretty serious value. That's what I meant by the original intent of the instrument.

Now that citizens are paying for the stupidity and greed of Wall Street and not allowing crashes to happen via funding bailouts and QE and the like? Yep, you're right, those bonds are pointless in the long term sense, and are not held to maturity as a result.

Farfromgeneva wrote: ↑Sun Jun 09, 2019 6:52 am I don’t get why you want to just argue every point with everyone here.

? I'm not. This is a discussion site. And a good one. I enjoy the conversations and the break from 70 hour work weeks.

Farfromgeneva wrote: ↑Sun Jun 09, 2019 6:52 am What your 1% and 20% comment seems to suggest is a vitriol that supersedes a willingness to actually believe or listen to someone else who has direct domain knowledge.

Domain knowledge is my favorite part about the Forum. And I did listen....I just disagree. This is bad.....how? And I don't expect you to know this, but I own a factory. I have zero problem with wealth or wealthy people. Even the folks born on 3rd base that you mention....I don't harbor ill will. Unless you do like Trump does, and brag about your business prowess, when in reality, all he did was inherit money.

Farfromgeneva wrote: ↑Sun Jun 09, 2019 6:52 am You know what I borrowed $80k for in my m 20s and worked literally 80-100hr weeks for a number of years for? To be a 1% person? No, to be able to have the resources to provide a better life for my kids than my parents. And while I’ve gone off the deep end personally and live in pharmaceutical corridor now I’ve managed to accomplish that while my generation (40, somewhere between X & millennials,I wasn’t really the audience for reality bites) is staring at being the first in a while to not have loved better than a prior one from a wealth perspective. Seems like you’d accuse me of being a 1% because of the position I would take. Unlike folks, many who went to my college, who were born on 3rd and thought they hit a triple.

You're misreading my comments. I was simply pointing out (and doing a poor job of explaining my point, admittedly) that the original intent of the stock market has changed. It used to be for collecting capital to build things that the private sector couldn't build. That horse left the barn....

All good this is way too big of an a discussion for here. Yes the implicit guarantees of the GSEs were always gets since we made it the American Dream and have his crazy, 30yr fixed rate, free prepayment option (negative convexity).

But I didn't like how you were arguing that we were borrowing from China as if these were negotiated borrowings, it’s a global market and we are, until the world loses faith in us as the free-est, most liberal (rights wise) country in the world, the risk free at which every asset and liability is prices off of. Between the reality of sovereign debt and that China truly can’t afford to f us by sitting out a string of auctions and pushing our borrowing costs up. Where do they put their excess reserves then? Gold, Euro - please, Oil? So it’s just not realistic that they can’t keep financing our growth.

China has been increasing its gold holdings and decreasing its USA debt holdings for awhile now. Closer to two years.

China has different sense of time than we do and don’t have to worry about elections as Xi has consolidated his power.

In the multi polar world Xi and Putin see emerging as the USA weakens the dollar will eventually find rivals and may be replaced as the gold standard. Certainly China is working to that end.

Good luck with that, going back to a base metal reserve currency.

What they’ve done is tiny on the margin, like sitting out an occasional auction to prove a point. There’s a breaking/inflection point to what they’ve done ultimately. Have you notice the yield, and inversely price, of 10 & 30yr treasuries in the past month?

Just like china makes the mistake of over emphasizing labor in the means of production which will ultimately prove suboptimal, they’d be making a tragic mistake to load up on gold. Keep in mind that we’ve shrunk our balance sheet the last two years while maintaining the trade deficit with China so of course they had to find alternates for excess reserves since they can’t keep building ghost cities and burning money.

Time horizon is a fair point. We’re 250yrs into our hegemony, the longest ever is like 400 (Rome).

But the current paradigms opposing free and (managed) capitalist society as understood and proposed strike me as completely incongruous with economic/military strength. I don’t buy for a second that a society that doesn’t in fact have freedoms and true property rights will lead the world. Unless, that is, the world moves towards increasing xenophobia, retrenchment,populism and closed borders. That’s where we’d lose for real.

Farfromgeneva wrote: ↑Sun Jun 09, 2019 4:18 pm All good this is way too big of an a discussion for here.

Most of our discussions are. It's why so many misunderstandings happen here.... it's no big deal.

Farfromgeneva wrote: ↑Mon Jun 10, 2019 11:38 am Unless, that is, the world moves towards increasing xenophobia, retrenchment,populism and closed borders. That’s where we’d lose for real.

Well, the UK and the US made a large step in that direction in the last few years, wouldn't you say?

Farfromgeneva wrote: ↑Mon Jun 10, 2019 11:38 am Good luck with that, going back to a base metal reserve currency.

What they’ve done is tiny on the margin, like sitting out an occasional auction to prove a point. There’s a breaking/inflection point to what they’ve done ultimately. Have you notice the yield, and inversely price, of 10 & 30yr treasuries in the past month?

Just like china makes the mistake of over emphasizing labor in the means of production which will ultimately prove suboptimal, they’d be making a tragic mistake to load up on gold. Keep in mind that we’ve shrunk our balance sheet the last two years while maintaining the trade deficit with China so of course they had to find alternates for excess reserves since they can’t keep building ghost cities and burning money.

Time horizon is a fair point. We’re 250yrs into our hegemony, the longest ever is like 400 (Rome).

But the current paradigms opposing free and (managed) capitalist society as understood and proposed strike me as completely incongruous with economic/military strength. I don’t buy for a second that a society that doesn’t in fact have freedoms and true property rights will lead the world. Unless, that is, the world moves towards increasing xenophobia, retrenchment,populism and closed borders. That’s where we’d lose for real.

When you say "we shrank our balance sheet"....not sure I follow. The Fed is getting out of it's positions from QE, but our debt is up a trillion per year under Trump.

Yep. And Italy, france, half of Latin America, etc. it’s a consequence of the crisis a decade ago I’m fairly confident. At scary. But the risk I see isn’t one that we can see today like China, Russia, etc. its a broad based rejection of the structure and system that’s been promulgated and believed in for about 350yrs now globally.

That an a blind belief in computer science and engineering alone can solve social problems leading to some AI rules world where we are forced to live in the shadows of the world like we did to all other animals due to our consciousness and ability to critically think. That why I’m shocked at all these threads on political heuristics, current countries, etc by all these smart STEM majors who should know that unfettered growth of AI by people who have no sense of Poiesis whatsoever is a far bigger threat to all of humanity.

Poiesis? Heuristics? Sounds like you got your money's worth at Hobart (assuming Hobart).

foreverlax wrote: ↑Mon Jun 10, 2019 11:54 am

Farfromgeneva wrote: ↑Mon Jun 10, 2019 11:38 am Good luck with that, going back to a base metal reserve currency.

What they’ve done is tiny on the margin, like sitting out an occasional auction to prove a point. There’s a breaking/inflection point to what they’ve done ultimately. Have you notice the yield, and inversely price, of 10 & 30yr treasuries in the past month?

Just like china makes the mistake of over emphasizing labor in the means of production which will ultimately prove suboptimal, they’d be making a tragic mistake to load up on gold. Keep in mind that we’ve shrunk our balance sheet the last two years while maintaining the trade deficit with China so of course they had to find alternates for excess reserves since they can’t keep building ghost cities and burning money.

Time horizon is a fair point. We’re 250yrs into our hegemony, the longest ever is like 400 (Rome).

But the current paradigms opposing free and (managed) capitalist society as understood and proposed strike me as completely incongruous with economic/military strength. I don’t buy for a second that a society that doesn’t in fact have freedoms and true property rights will lead the world. Unless, that is, the world moves towards increasing xenophobia, retrenchment,populism and closed borders. That’s where we’d lose for real.

When you say "we shrank our balance sheet"....not sure I follow. The Fed is getting out of it's positions from QE, but our debt is up a trillion per year under Trump.

Your talking fiscal policy. This is monetary policy. Weak fiscal policy over decades can undermine monetary policy (us, Japan for sure), but the reserve and currency discussion is focused on the monetary side.

a fan wrote: ↑Mon Jun 10, 2019 12:03 pm Poiesis? Heuristics? Sounds like you got your money's worth at Hobart (assuming Hobart).

My finance friends all hate it but I loved classes in Existentialism, phenomenology, literature. It’s not a hard science school at all. The mba backfilled some of those tools as even my Econ major only had intermediate econometrics and was very much focused on the philosophical side.

But what I meant is these myopic, STEM obsessed engineers running around the valley think they can engineer ways out of social problems but they mostly have limited understanding of humanity/nature. Been having these rap sessions w a friend who’s a psychology professor and research scientist at Ga State who spent 6-7yrs studying cocaine effects on the brain and now is about to breakthrough and publish relating to levels of empathy in non mammalian animals (most sea life) and its implications on society and he’s also got me paranoid about the god like belief and race to complete AI with no questions, no ethical considerations or attempt to understand the consequences and it’s got me paranoid of the matrix.

The US hasn’t had a hegemony fir 250 years.

The crisis can be argued to have begun with Greenspan in the late 90s.

China has increased gold, diversified some from the dollar, as have some others.

The global economy is slowing and the US weakening. The volume of negative yield bonds has risen to over 11 trillion and will almost certainly break the record set last year.

China’s problem is that while it has lifted more than 800 million people out of poverty it doesn’t have the buyers for all it can produce. It needs exports just as the US needs the recycled dollars.

Trump’s trade wars are accelerating demand. Given global slowing not a good thing.

China has pretty much followed the development process followed by countries like Japan, Korea, and the USA back in the day. There never has been free market trade.

The WSJ and the CBO analyzed the data after the tax bill. Basically it failed to deliver on its promises, as did previous actions, but did provide big fiscal stimulus and relocate wealth.

China looks at the trade question from the way the USA does. For them it is an existential question. The language they use has been used in critical situations in the past century or more

OCanada wrote: ↑Mon Jun 10, 2019 4:31 pm The WSJ and the CBO analyzed the data after the tax bill. Basically it failed to deliver on its promises, as did previous actions, but did provide big fiscal stimulus and relocate wealth.

Analyzed, sure. But as they always do, they ignore the massive new spending bills, pretending that they didn't happen.

"Whoops, we injected $2 Trillion+ of borrowed money into the US economy. That's not a big deal, right?"

That huge jump in deficit was the result of the tax cut. The problem is those who want to have it both ways. Don’t use don’t tax and spend GOP. The tax bill was deeply flawed and should never have passed. Had it been better structured to reward the low and middle and even above middle income it would not have been the disaster it is.

Generally speaking these kinds of tax cuts only recoup about 1/3 of their cost. The thought behind them has always been flawed

Trump: "If President Xi does not attend G-20, more China tariffs will go into effect immediately"

Chinese Foreign Ministry spokesman, Geng Shuang, "If the United States only wants to escalate trade frictions, we will resolutely respond and fight to the end,"told Reuters.

Nothing like a red line.