Australia Sinking; Latin America Trade Tension; Turkey at Risk;

May 2, 2012


“Sometimes people do not want to hear the truth because they do not want their illusions destroyed.” – Friedrich Nietzsche

“I would like to come back as the bond market,” because “you can intimidate everybody” ~ James Carville

“Law cannot organize labor and industry without organizing injustice.” ~ Frédéric Bastiat


Why is it so difficult for us to think statistically? ~ Farnam Street

Stephen Weiss writes book on methods of 10 hedge fund managers ~ yahoo finance

Lessons Learned: Founder’s Dilemmas: Equity Splits – uses unique database of startups, endorsees vesting schedules ~ startup lessons learned

Wired magazine on Forecasting ~ Wired

Central Banking:

The Real Reason Ben Bernanke Resists the Gold Standard ~ US News & World Report

  • ‘Fed rejects gold because they have printed so much paper money that a return to sound money would involve a one-time hyperinflationary spike’ ~ James Rickards

Fed enabling the government to grow debt, says Dallas Fed President Fisher ~ Reuters

“Fed’s Charles Evans wants 4% U.S. growth for some years before stimulus ends.” ~ print enough and you can get 4% nominal GDP growth…along with 8%+ inflation


Gary Schilling $study shows average business cycle length amid deleveraging is 3.7 yrs. It’s been 4.25 yrs ~ John Mauldin

“America spends 4x’s as much on lawsuits than on research” Sir James Dyson, vacuum cleaner entrepreneur

‘Covenant lite restrictions,’ ‘drive by deals,’ ‘reach for yield’ ~ WSJ$JNK Bond bubble percolatesoperationnewbubble

Companies unable to find people with needed skills ~ WSJ  – printing money and subsidizing liberal arts degrees and sponsoring college parties will probably help this


Australia: “Capital city prices have quadrupled and household indebtedness tripled in the last twenty years.” ~ Moody’s

Australia seen Cutting Rates another 75bps by October, show interest rate swaps $AUDUSD ~ BusinessWeek

Iceland is booming ~ Reuters

“Everywhere you have a crisis you have a redomestication of markets” – Laurent Fransolot, Barclays

Foreign holdings of Spanish bonds are down 9.3%  – bloomberg

Turkey Credit Rating Cut on worsening import-export figures, reliance on external debt ~ Bloomberg  $TUR

  • Turkey has a high probability, not to be confused with certainty, of a banking crisis and a currency crisis within 2 years due to unsustainable growth in credit and dependency on foreign debt

Latin American trade tension increasing ~ MSN  from competitive devaluation to tradewar

  • “Shockwaves from even relatively small protectionist measures can cascade through the global supply chain with very serious consequences.”
  • “If you shut yourself off, you’re going to pay higher prices and it’s going to be lower quality,” World Bank’s Bernard Hoekman
  • IMF data show Chile and Mexico are the most trade-dependent countries in Latin America.

BMW will sell a car next year that can drive itself at speeds under 25 miles per hour. ~ TechReview


Hendry: Next market crisis will be in China ~ InvestmentWeek

China‘s Share of Commodity Demand $$ ~ twitter

North Korean Exports To China Surge 40% In The First Quarter ~ Business Insidertrade bolsters alliances

Unease Mounting between China and U.S ~ NYT

  • Geithner and Clinton to meet with Chinese officials
  • Chinese doctrine is “anti-access, area denial,” or to block American access to strategic waterways, particularly the seas off China’s coast.
  • Space weaponry, submarines, anti-ship missiles, surface to air missiles

In Bloomberg:

  • China developers selling commercial estate and malls to finish apartment buildings  ~ Bloomberg 
  • China home sales fell 18% from January to March
  • New loans by Chinese banks are up 49% – hmmm, how much of this will be paid back? 

As appetite to build more empty cities in China wanes, the Party plans a new one in Ireland ~ FT Alphaville

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