|
PureBytes Links
Trading Reference Links
|
Sounds like you are also describing the US economy. If so time to get short.
Ira
Peter [ KKD ] wrote:
> Brent
> The following is only a breif explanation
> Austrian economics is my prefferred "frame work" in assessing global
> macro situation. Specifically, in japan , whats refferred to as the "pool of
> funding" has been depleted in japan over the last 30 or so years. The "pool
> of funding" basically encmpasses the net wealth of a nation. This net
> wealth is eroded by the artificial manipulation of economics areas of
> interest, primarily interest rates. In japan specifically, what people
> referr to as the "bubble economy of the 80's" was the climax of this
> manipulation of the pool of funding..Once manipulation occurrs, the short
> term (prehaps many years) benefits of reduced unemployment, high eco growth
> rates etc are not sustainable & the economy must collapse & return to
> the mean. All gov't policies are manipulation. It is basically the
> misallocation of resources.
> The lowering(or increase) of interest rates by reserve banks is a
> wealth consuming activity to a nation which, because it dosnt correspond to
> consumers decision to save more, implies that there isn't an increase in the
> allocation of the means of sustence ( ie productve resources) in the
> economy. So capital (hence eventually other economic resources like labour
> etc.. hence lower unemployment rates in short term) is diverted to less
> deserving ventures in the economy which otherwise would not have taken place
> (were it not for the artificial lowering of interest rates by the reserve
> bank)...... this in essence is "fat" in the economy. Eventualy to support
> this "fat" (ie economic booms in stockmarkets) the reserve needs to keep
> lowering interest rates etc, otherwise it will all collapse. This is what
> happened in japan, & recently asia.
> The greater the manipulation the harder the fall & economic problems, &
> hence the longer it takes to restorethe economies natural resource
> allocations levels
> In japan Money supply grew to such an extent by the artificial lowering
> of interest rates that in order to keep supporting the economy (stockmarket)
> the govt had to keep printing money, but this is only possible for so long,
> so then what happens is you have asset deflation (leading to recession),
> (eventually you get consummer deflation as incomes dwindle) & due to the
> excessive money supply, coupled with the massive exsodus of capital from
> the country due to the asset deflation you get exchange rate depreciation.,
> this ofcourse raises riskpremiums in the country & interest rates to attract
> the badly need capital for economic activity........ ie credit crunch.
> TELL ME .....DOES THIS SOUND FAMILIAR......JAPAN, ASIA (yen, ringitt,
> comsumer inflation world wide) ....& eventually the USA will succumb to this
> outcome..
> From this we can see that unless the govts of these countries allow
> asset depreciation to take place & allow there ER to move freely, they are
> only going to draw out the pain for there countries & exacerbate the
> situation.
> Manipulation of economies ocurred mostly in malaysia & indonesia &
> therefore thats where most ecomonic damage has occurred. australia,
> singapore etc havnt been hurt at all (comparatively)
> Brent, fundamentals allow you to understand whats going on & why (&
> importantly what comes next), its not for trading specifically on day to day
> basis but you can pick whats going to happen to te yen for example
> over..all. It allows you understand what MUST occurr & that it will
> EVENTUALLY occurr. Fundamental analysis is all a "framework" of assesing
> situations
> . Hope this helped
> Peter
>
> -----Original Message-----
> From: BrentinUtahsDixie <brente@xxxxxxxxxxxx>
> To: Peter [ KKD ] <derivatives@xxxxxxxxxxxxxx>; RealTraders Discussion Group
> <realtraders@xxxxxxxxxxxxxx>
> Date: Saturday, 5 December 1998 4:48
> Subject: Re: Economics
>
> >Pete,
> >
> >Somebodys always wanting to quit just when your about to learn something:-)
> >I did a quick brush up on these "schools" as I wasn't familiar with the
> >terms. It would be interesting to hear how you think that this
> understanding
> >allows you to be able to understand whats happening in Japan & whats
> >happening in Asia at the moment & why it occurred.
> >
> >Brent
> >
> >
> >
> >
> >
> >-----Original Message-----
> >From: Peter [ KKD ] <derivatives@xxxxxxxxxxxxxx>
> >To: brente@xxxxxxxxxxxx <brente@xxxxxxxxxxxx>; RealTraders Discussion Group
> ><realtraders@xxxxxxxxxxxxxx>
> >Date: Thursday, December 03, 1998 11:39 PM
> >Subject: Re: contango/backwardation
> >
> >
> >>Brent
> >> Austrian Economics is a school of thought, like Keynsian, its not the
> >>economic well being of the Austrian economy. Your missing the point.
> >>Knowing the difference betweeen Austrian & mainstream economics allows you
> >>to be able to understand whats happening in Japan for example & whats
> >>happening in Asia at the moment & why it occurred.. Austrian economics is
> >>just one facet of fundamentals
> >> You state " Economic forces are what move most everything but they are
> >>difficult to fully understand and conceptualize"..... thats exactly
> my
> >>point, . Without having a proper understanding of Fundamentals your not
> >able
> >>to understand whats going on.
> >> Dont confuse this with trading. I said that a trader worth his salt
> >>needs to understand fundamental but to ignore it in trading.
> >> You keep on reffering to news, fundamentals is not about news, its
> >>about "laws" that govern economics & markets.
> >> how about we just leave the discussion at then
> >>cheers
> >>Peter
> >>
> >>-----Original Message-----
> >>From: BrentinUtahsDixie <brente@xxxxxxxxxxxx>
> >>To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
> >>Date: Friday, 4 December 1998 9:32
> >>Subject: Re: contango/backwardation
> >>
> >>
> >>>Pete,
> >>>
> >>>This is getting close to splitting a hair but how do you get your
> >>>information on Austrian Economics? Do you go there and personally collect
> >>>data and measure it? I don't think so. You probably rely on the news like
> >>>most all of us. I think that you are talking about how you utilize
> >>>information that is most likely obtained from the news. Economics is
> >simply
> >>>the amalgamation of all input and output of an economic system and news
> is
> >>>simply the reflection of that. Economic forces are what move most
> >>everything
> >>>but they are difficult to fully understand and conceptualize. In 1980
> >>>everyone's idea of the economy didn't tell them that for the next 20
> years
> >>a
> >>>bull market was going to ensue or everybody and especially the economists
> >>>would be richer than Bill Gates. My point is that no one can possibly
> know
> >>>all fundament input whether it comes from the news, the boardroom, or the
> >>>local tavern. And one key missing piece of information can negate all the
> >>>other input. For example a dock strike can cause a price rally even
> though
> >>a
> >>>large supply of something is produced and expected.
> >>>
> >>>Brent
> >>>
> >>>
> >>>
> >>>-----Original Message-----
> >>>From: Peter [ KKD ] <derivatives@xxxxxxxxxxxxxx>
> >>>To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
> >>>Date: Thursday, December 03, 1998 12:49 PM
> >>>Subject: Re: contango/backwardation
> >>>
> >>>
> >>>>Brent
> >>>> when I referr to fundamentals, Im not talking about news events (ie
> >>>your
> >>>>saddam comment), but rather things like "mainstrean econmics" vs
> Austrian
> >>>>economics, capital flows, intermarket integration & correlations, being
> >>>>aware of how portfolio mangers utilise CAPM & hence their capital
> >>>allocation
> >>>>to different asset sectors in general, what EMU integration means for
> >>>>fiscal/monetary policy, & why it cant really work, hence what it implies
> >>>for
> >>>>US/EU risk premiums, hence ER, & int rates differentials. etc etc, etc
> >etc
> >>>> FUNNYmentals encompase a much wider scope than you mentioned
> >>>>Peter
> >>>>
> >>>>-----Original Message-----
> >>>>From: BrentinUtahsDixie <brente@xxxxxxxxxxxx>
> >>>>To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
> >>>>Date: Friday, 4 December 1998 6:23
> >>>>Subject: Re: contango/backwardation
> >>>>
> >>>>
> >>>>>Pete, although I agree with the sprit of your statement that it is
> >>>>important
> >>>>>to understand fundamentals, I don't believe that anyone understands
> >>>>>fundamentals completly. For example you virtually have to be all
> knowing
> >>>to
> >>>>>know that Sadam ate something that gave him indigestion and kicks out
> >>some
> >>>>>UN guys or something. I followed a Copper backwardation for a while and
> >>it
> >>>>>was just market manipulation as near as I could tell. Surprise, there
> >was
> >>>>>more Copper in some wharehouse that they didn't count. You can't hardly
> >>>>>believe a word of the news. So what else is new.
> >>>>>
> >>>>>Brent
> >>>>>
> >>>>>-----Original Message-----
> >>>>>From: Peter [ KKD ] <derivatives@xxxxxxxxxxxxxx>
> >>>>>To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
> >>>>>Date: Thursday, December 03, 1998 9:35 AM
> >>>>>Subject: Re: contango/backwardation
> >>>>>
> >>>>>
> >>>>>>To be a trader worth your salt, you need to understand fundamentals
> >>>>>>completely, but then when it comes to trading you need to forget about
> >>it
> >>>>>>totally. This however dosnt detract from its importance......... case
> >in
> >>>>>>point LTCM Euro positions
> >>>>>>Peter
> >>>>>>
> >>>>>>-----Original Message-----
> >>>>>>From: BrentinUtahsDixie <brente@xxxxxxxxxxxx>
> >>>>>>To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
> >>>>>>Date: Friday, 4 December 1998 3:20
> >>>>>>Subject: Re: contango/backwardation
> >>>>>>
> >>>>>>
> >>>>>>>I'll tell you what contango/backwardation means to me, it means that
> a
> >>>>>hole
> >>>>>>>bunch of fundamentalist traders are going to be taken to the
> cleaners.
> >>>>>Just
> >>>>>>>another good reason to trade 99% technically.
> >>>>>>>
> >>>>>>>Brent
> >>>>>>>
> >>>>>>>-----Original Message-----
> >>>>>>>From: I4Lothian@xxxxxxx <I4Lothian@xxxxxxx>
> >>>>>>>To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
> >>>>>>>Date: Thursday, December 03, 1998 8:19 AM
> >>>>>>>Subject: Re: contango/backwardation
> >>>>>>>
> >>>>>>>
> >>>>>>>>You normally hear contango and backwardation in relation to New York
> >>>>>>>>contracts. In Chicago the terms I hear used are a "Normal" market
> >>(one
> >>>>>>>with
> >>>>>>>>carrying charges ), and an "Inverted" market (one with nearby prices
> >>>>>>higher
> >>>>>>>>than deferred prices). Just different terms to describe the same
> >>>thing.
> >>>>>>>>
> >>>>>>>>An example of a normal market to an extreme is the Lean Hog market.
> >>>>>There
> >>>>>>>is
> >>>>>>>>a glut of available nearby supply, not much capability to store
> >>>product,
> >>>>>>>and
> >>>>>>>>weaker demand than anticipated when the farrowings were planned.
> >>>>>>>>
> >>>>>>>>Given our glut of supply in most all commodities, and weak worldwide
> >>>>>>>demand,
> >>>>>>>>there are not any significant inverted markets I can see right now.
> >>>>>>>However,
> >>>>>>>>the corn market of 1996 would be a good example. Nearby prices
> >gained
> >>>>>>>>dramatically on deferred prices.
> >>>>>>>>
> >>>>>>>>Sometimes markets will go inverted when there is a shortage of the
> >>>>>>>commodity,
> >>>>>>>>like the 1996 corn market. Other times you will see an inverted
> >>market
> >>>>>in
> >>>>>>>the
> >>>>>>>>first couple of months, despite a glut of supply. This will occur
> >>>>>because
> >>>>>>>the
> >>>>>>>>owners of the commodity, like farmers holding and storing soybeans,
> >>are
> >>>>>>>>waiting for higher prices in the future to sell their crop. In the
> >>>>>>>meantime,
> >>>>>>>>processors of soybeans need to buy them to fulfill their nearby meal
> >>>and
> >>>>>>>oil
> >>>>>>>>contracts. This creates a strong basis, which supports the nearby
> >>>price
> >>>>>>>due
> >>>>>>>>to the relationship of the cash prices in the country to delivery
> >>>values
> >>>>>>of
> >>>>>>>>the futures contracts.
> >>>>>>>>
> >>>>>>>>Regards,
> >>>>>>>>
> >>>>>>>>John J. Lothian
> >>>>>>>>
> >>>>>>>>Disclosure: Futures trading involves financial risk, lots of it!
> >>>>>>>>
> >>>>>>>>
> >>>>>>>>In a message dated 12/3/98 7:53:09 AM Central Standard Time,
> >>>>>>>stansan@xxxxxxx
> >>>>>>>>writes:
> >>>>>>>>
> >>>>>>>><< Ketayun:
> >>>>>>>> This is my understanding of these terms.
> >>>>>>>> In commodities, e.g. oil, cocoa, etc., the contracts for
> >>>>>>>> future delivery carry a higher price than contracts for
> >>>>>>>> near term delivery.other factors being equal.
> >>>>>>>> So a contract for oil expiring in 6 months would usually
> >>>>>>>> cost more than the same contract expiring in 30 days.
> >>>>>>>> This is due to several factors one of which is the carrying
> >>>>>>>> cost. This normal situation is called "Contango" but I'm
> >>>>>>>> not sure the origin of the term.
> >>>>>>>>
> >>>>>>>> However, a year ago long-delivery oil was priced below the
> >>>>>>>> short-delivery oil and this unusual situation was referred
> >>>>>>>> to as backwardation. I believe this term is appropriate
> >>>>>>>> because the relationship of long term to short term is
> >>>>>>>> backwards.
> >>>>>>>>
> >>>>>>>> I hope the RT'ers who deal in commodities can give
> >>>>>>>> a better explanation.
> >>>>>>>> BTW at the time of the backwardation in oil occurred
> >>>>>>>> it was explained partly as due to temporary loss of
> >>>>>>>> refinery capacity and was a near term factor only.
> >>>>>>>>
> >>>>>>>> Regards,
> >>>>>>>> Stan R. >>
> >>>>>>>>
> >>>>>>>
> >>>>>>>
> >>>>>>
> >>>>>>
> >>>>>
> >>>>>
> >>>>
> >>>>
> >>>
> >>>
> >>
> >>
> >
> >
> >
|