09:09:53 FRIEND 1 : interesting markets
09:11:16 ME : yeah, the time between large events is very short now
09:11:21 ME : remember dubai
09:11:37 FRIEND 1 : so true
09:11:44 ME : now you get europe cracking the week after
you get the u.s.
09:11:51 FRIEND 1 : its a rolling crisis
09:12:20 ME : i heard china offered to buy irish and greek
debt in exchange for cooperation on their currency issues
09:12:29 FRIEND 1 : really
09:12:33 ME : which shows you they are very long the status quo
09:12:38 ME : yeah
09:12:46 ME : and i think that is right
09:12:51 ME : china is very long the status quo
09:12:59 ME : which makes last week a lot of brinksmanship
09:13:18 ME : ultimately, the effect on the market is
treasuries are a buy
09:13:21 FRIEND 1 : they also have a great of leverage
09:13:24 ME : they do
09:13:35 ME : but they have n o desire to pull the plug on
the dollar
09:13:42 FRIEND 1 : no,
09:13:43 ME : and the international global macro framework
09:13:51 FRIEND 1 : that does not help them
09:13:52 ME : meaning they need to buy dollars
09:13:58 ME : and treasuries
09:14:20 FRIEND 1 : I guess we know who will bail us out
09:14:23 ME : and it has had its desired effect
09:14:45 ME : you get an establishment drone like bob
corker cming out and adopting a 'curtail the fed' message
09:15:01 FRIEND 1 : what was that
09:15:11 ME : senator bob corker from tennessee
09:15:20 FRIEND 1 : I know
09:15:21 ME : supportin glegislation to end the fed's dual mandate
09:15:27 FRIEND 1 : very stupid comment
09:15:31 ME : he's a tool
09:15:44 ME : though i am indeed anti-fed
09:15:46 FRIEND 1 : good description
09:16:02 ME : they've done a terrible job
09:16:07 FRIEND 1 : they are out of control
09:16:11 ME : whatever your attribution of why
09:16:40 FRIEND 1 : QE2 not having desired affect
09:16:45 ME : we can't have deflation from unwinding a
credit bubble but we can have credit bubbles?
09:16:53 ME : crazy
09:16:59 FRIEND 1 : good point
09:17:09 ME : asset prices aren’t under their purview when
they're going up
09:17:18 ME : but they are when they're going down??
09:17:25 ME : huh??
09:17:58 ME : what a joke
09:18:40 FRIEND 1 : yep
09:45:35 ME : crazy move in gold
09:43:33 ME : but i think its right
09:43:41 ME : the possibility of deflation far outweighs inflation
09:43:54 ME : hyperinflation
09:43:57 ME : i guess that is
09:44:18 ME : there is very little political will for a
monetary solution
09:44:31 ME : stemming frmo the populist outrage
09:44:42 ME : seeing it as the tax it is
09:45:20 ME : so i think the japan scenario does play out
despite the key differences between the U.S. now and Japan
early 90's
09:52:47 FRIEND 1 : nope
09:52:58 FRIEND 1 : US is different animal
09:53:30 ME : but the creditor nations will support the currency
09:53:39 ME : and fund the current account deficit
09:54:22 ME : no?
09:54:57 FRIEND 1 : yes
09:55:54 ME : and i think you'd have to grant the fed is a
highly politicized entity
09:56:01 ME : given our above discussion
09:56:11 FRIEND 1 : without a doubt
09:56:28 ME : so money printing ad infinitum is not an option
09:56:48 ME : meaning asset prices have tremendous
deflationary pressure
09:56:51 FRIEND 1 : of course not
09:57:03 ME : since they do not have the bernanke put
09:57:17 ME : and have lots of room still to drop to
correct for the unwind of the credit bubble
09:57:32 ME : how do you not directly go to insolvency of
the financial system?
09:57:48 ME : nationalizations or quasi nationalizations
09:58:00 ME : low to negative growth
09:58:02 ME : in gdp
09:58:28 ME : but not a currency collapse
09:58:28 FRIEND 1 : hmmm
09:58:44 ME : since the creditor nations desire a
perpetuation of the status quo
09:59:13 ME : to me, equals long slow grind
09:59:29 FRIEND 1 : not 10yrs
09:59:31 ME : there will be no miracle jobs recovery
09:59:36 FRIEND 1 : nope
09:59:44 FRIEND 1 : i would say 3-5yrs
09:59:47 ME : 44% of americans aged 25or older have a high
school degree or less
10:00:04 ME : but the marginal unskilled job is created in
china or elsewhere in the third worls
10:00:06 ME : world
10:00:33 ME : current govt obligation have us on a massive
structurla deficit path
10:00:39 ME : constraining fiscal policy options
10:00:47 ME : to 'employ the people'
10:00:52 FRIEND 1 : good point
10:01:38 ME : so i think the current economic environment
continues for 10 years
10:02:16 FRIEND 1 : I think we both agree on major issues its just
the duration where we differ
10:02:26 ME : yeah
10:02:36 ME : and the political impetus is with the tea party
10:02:57 ME : to the point establishment drones like bob
corker are adopting anti-fed positions
10:03:45 ME : so where does your recovery come from?
10:03:52 ME : not asset price based wealth effect
10:03:59 ME : not from fiscal policy
10:04:02 ME : expansion
10:04:25 ME : not from massive change in global economic structure
10:04:28 ME : structure
10:04:41 ME : tat creates the marginal job in more
impoverished places
10:04:45 FRIEND 1 : wow
10:04:46 ME : so... where???
10:04:52 FRIEND 1 : your killing me
10:04:56 ME : yeah guy!
10:05:03 FRIEND 1 : haha
10:05:39 FRIEND 1 : I think we will have 3% growth in 2011
10:06:12 FRIEND 1 : not great but adequate to create some job growth
10:07:56 FRIEND 1 : corporations have healthy balance sheets which helps
10:09:28 ME : no top line growth
10:09:39 ME : and meets/beats on earnings by cutting labor costs
10:09:52 FRIEND 1 : true,
10:09:56 ME : not a healthy macro dynamic!!
10:10:14 FRIEND 1 : I think type line growth will return
10:10:20 ME : how?
10:10:33 ME : top line won’t return without jobs
10:10:38 FRIEND 1 : hopefully the weak dollar helps exports
10:10:39 ME : jobs won;t return without top line
10:10:57 FRIEND 1 : and we realize we need to employ the 44% of americans
10:11:04 ME : so we're going to start selling things to
the mythical chinese/indian middle classes?
10:11:05 FRIEND 1 : without college degrees
10:11:10 FRIEND 1 : yes
10:11:20 FRIEND 1 : lets build America
10:11:21 ME : SELL EVERYTHING!
10:11:44 FRIEND 1 : this will need to happen over the next 5-10yrs
10:11:55 FRIEND 1 : this imbalance has taken 20yrs
10:12:03 ME : that kind of collective action will take a
deeper dislocation
10:12:06 FRIEND 1 : will take long time to unwind
10:12:13 ME : yes
10:12:21 ME : ok, so you're off 3-5 years
10:12:24 ME : ?
10:12:26 FRIEND 1 : haha
10:12:28 FRIEND 1 : I guess
10:12:31 ME : ok
10:12:42 ME : i am comfortable with 5-10
10:12:57 FRIEND 1 : fiscal policy needs to promote this change
10:13:03 FRIEND 1 : not QE@
10:13:04 FRIEND 1 : 2
10:13:36 FRIEND 1 : QE2 is acting as fire wall
10:14:04 FRIEND 1 : structural change will need to happen
10:14:46 FRIEND 1 : maybe someone with some foresight can convince
the politicians that we must change
10:14:52 FRIEND 1 : this is unsustainable
10:14:52 ME : lol
10:15:12 FRIEND 1 : and dangerous to our very sovereignty
10:15:21 FRIEND 1 : and way of life
10:15:35 ME : you are very sanguine!!
10:15:42 FRIEND 1 : yes,
10:15:56 ME : terrifically optimistic about the intentions
of the people in positions of power
10:16:02 ME : in the face of all the evidence!!
10:16:15 FRIEND 1 : change agent is coming
10:16:24 ME : dude
10:16:27 FRIEND 1 : Senator Young of California
10:16:28 ME : where?
10:16:33 ME : From what party???
10:16:43 FRIEND 1 : which ever you prefer
10:17:07 ME : but to be viable in the current system (very
early on) you have to sell out your beliefs
10:17:16 ME : under the D or R label
10:17:19 FRIEND 1 : rand paul
10:17:22 ME : so I need a billionaire backing
10:17:27 ME : maybe
10:17:34 FRIEND 1 : yes
10:17:45 FRIEND 1 : it can be done
10:17:49 ME : it can be done
10:17:57 ME : believe me, i do think about it
10:18:05 ME : part of the larger, where do i belong motif?
10:18:12 FRIEND 1 : I here you
10:18:24 FRIEND 1 : you have great ideas
10:18:38 FRIEND 1 : need to channel
10:18:39 ME : thanks
10:18:41 ME : yes
10:18:46 ME : into what?
10:18:53 ME : getting a hedge fund gig?
10:19:01 ME : becoming a blogger
10:19:03 FRIEND 1 : the greater good of YOU
10:19:04 ME : talk show host
10:19:18 ME : or involved in government
10:19:28 FRIEND 1 : so how
10:19:30 FRIEND 1 : yes
10:19:31 ME : there is such a thing as the greater good
10:19:38 ME : and enlightened self interest
10:19:39 FRIEND 1 : I think so
10:19:47 ME : enlightened self interest seems to have
died in the last 20 years
10:19:51 FRIEND 1 : yes Grass Hopper
10:20:10 ME : sometimes you have to leave a few seeds in
the ground!!!
10:20:17 ME : usually
10:20:19 ME : in fact!
10:20:29 ME : haha
10:20:43 FRIEND 1 : ha
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