ERICOPOLY

Much faster, thanks. But I'm willing to help pay for the site with cash donation if people choose to block your ads. Microsoft's new enhancement to their browser: http://seattletimes.nwsource.com/html/microsoftpri0/2013616394_microsoftaddsdonottrackliststointernetexplorer9.html The new tracking protection will allow anyone to create lists of websites users can permanently ignore. Those sites will not be able to send cookies or other tracking software to the user's computer.The sites have implications for online advertisers and website designers. Many websites that people visit include content from other websites that serve Web ads, for instance. By blocking those other websites, users could eliminate those ads on site they're visiting. So, buh-bye doubleclick!! I take it all I have to do is feed it this URL: http://googleads.g.doubleclick.net

Perhaps hurt by the composition of my assets. I have it all in equities. But put a 50% haircut on it and I'm still at 50 years of payments. The real estate market here is actually relatively stable on Bainbridge Island. This particular house was a short sale and at 50% of what it's new-build price was. Nice house. They classified it as "asset based lending" because I have no earned income, and would only assign me some arbitrary yield of about 1.5% (it was 1.x%, I don't remember exactly what the fractional amount was) on my loan as "income". I told them I could put a zero percent yield on the assets and they would still get their money back -- because even if I spent 1.5x my prior salary on living expenses for the 30 year loan term, and additionally paid the mortgage all along the way, I'd still have a lot of money left over at the end of the 30 years. Plus, this was for an amortizing mortgage... every year they've have it partially paid off, so that initial 30% margin of safety would get larger and larger. So for arguments' sake if I defaulted after year 10 or 15 or 20... what have you... I'd have sunk so much principle into the loan by then that the margin of safety would be well beyond 30%. They still said no. Then Stumpf gets on the news saying they have a problem with demand for loans! I was going to pay them about 6% interest, and it was only about 3 yr fixed rate, then adjusting... so they carried little interest rate risk -- still not profitable? At that point, I said "okay, let's say I put down 35%". Nope. How about 40%. Nope. All those pencil-heads cared about is the paltry 1.5% or so yield they'd give me for my assets in order to count it as income. I said how about I just put the entire thing into Treasuries (for arguments' sake) and get 4% yield? That would have given them automatically a risk free yield that was more than double what they would grant me in their projections. Or how about I invest in blue chip stocks like JNJ so that you can in effect be lending against a AAA rising income? And that income would likely rise faster than your typical earned income paycheck in this environment? Nope. Bottom line is no matter how silly, they wouldn't lend. Now, if the secondary market had been more accomodating there would not have been a problem. The person with no assets and an income (a pink slip away from foreclosure) is a better risk than a person with 100 years of payments ALREADY in the bank. That person with the income... are they going to work for the next 100 years? It's bizarre.

I've seen realtors compared to Klansmen, but that's the first time I've seen the animal huggers painted! I think that at least one scientist who used animals in his research has been murdered by these harmless people. All arson is terrorism then, because there is a risk of killing someone. An arsonist of any stripe is a domestic terrorist, and a group of them is a "terror cell". I can tell you that when I hear on the news today that there are "terror cells" in the United States, I feel like (after the Joe Dibee incident) they are talking about a broad stripe of criminals including people who have absolutely no motivation to kill people. Accidents happen... a kid driving a car drunk at 100 MPH can kill two little girls just like some drunk driving Klansmen once did. So does that make him a drunk driver that should go to prison for involuntary manslaughter, or does it make him a "domestic terrorist". I'm drawing a distinction between "accidental" and "deliberate". It's semantics, I think arson is a crime and he should go to prison for it. My gripe is that I think this is political.

People were saying that twelve months ago too. I went out looking for a home loan. I couldn't get one. I wanted a 30% down loan. The amount I wanted to borrow amounted to an annual mortgage payment of about 1% of my net worth. So I told them... okay... I'm already giving you a 30% price cushion, I ALREADY have 100 years frigging years worth of payments saved up, and you're telling me it's too risky? Actually, the real story is that because I have no job I'm not qualifying for a Fannie/Freddie program, so they have to carry my loan on the books. This at a time when they are trying to de-risk to meet stricter capital levels. They said it was because the secondary markets were not welcoming this kind of loan. One of those banks that turned me down is Wells Fargo. I gave up looking for a while -- for a brief time we thought of getting a house in Montana (and found a bank that would do it), but then we decided to wait on that too. Actually, I haven't been out looking in 9 months so I'm not sure if the banks here in Washington state have healed yet. Anecdotally I heard from a lender that Washington Federal was making such loans (I guess that's a solid hint that their balance sheet is healthy).

I found this in one of Hoisington's letters -- and couple that with Bernanke's frustration over the exploding deficits. What exactly happens when the government borrows that is so painful to the private sector? Why does that impair the private sector as Hoisington claims? I realize that Bernanke has said this is only about controlling interest rates, but I don't believe they always tell the whole story when they speak publicly. It might be a half truth. Perhaps Hoisington is referring to the cost of servicing the debt, but I wondered what good it does for the economy when there is an increased supply of "safe havens" (Treasuries) for the private sector to purchase. So I speculated that if you were to hoard the safe havens to yourself (keep them locked up by the Fed) then people would need to use their dollars for risk taking in order to generate return. http://www.hoisingtonmgt.com/pdf/HIM2009Q1NP.pdf Are Massive Budget Deficits Inflationary? Based on the calculations of the Congressional Budget Office, U.S. Government Debt will jump to almost 72% of GDP in just four fiscal years. As such, this debt ratio would advance to the highest level since 1950 (Chart 5). The conventional wisdom is that this will restore prosperity and higher inflation will return. Contrarily, the historical record indicates that massive increases in government debt will weaken the private economy, thereby hindering rather than speeding an economic recovery. This does not mean that a recovery will not occur, but time rather than government action will be the curative factor. By weakening the private economy, government borrowing is not an inflationary threat.

Interesting idea except for the cost of security or insurance. (Thus making it still a liability for Broxburnboy.) I remember a contractor telling me about a job he was working on the last time copper prices were going through the roof in 2008. Apparently, thieves had broken into the house (which the homeowner had left vacant, in between tenancies) and stripped it of all the copper pipes and wiring. Cost the homeowner a lot more than the value of the copper to repair the damage! But, I guess it might work if you bought guns and tinned food to go with the gold and build the house out in the boondocks. :) That's true. Perhaps best to pour the foundation with the molten metal.

I thought when they boosted their hedge program that they went primarily with Russel2000 total return swaps. That index is up 30% from the summer lows.

I wonder if it's possible to have a tiny super cheap house built, and then make the floors out of gold brick or something else of lasting quality (like copper). You know, so that you barely have any cost in the house itself, but then you have tremendous cost associated with the expensive commodity. You then put something minimal down, like get an FHA loan and 5% down. Or 20% down if you can't get FHA. You get a long term 30 yr conforming fixed interest rate. That would pretty much hedge you out right? I mean, you wouldn't have too much tied up in the house, and your interest costs wouldn't go up with a takeoff of inflation. Maybe even Broxburnboy would concede that such a house is an asset. It's a shame I didn't do this back when you could finance 100+% of a house. It would be a call option on gold or copper, where you just turn in the keys if the commodity goes the wrong way. Perhaps I'm surprised we haven't yet heard of homebuilders pushing homes like this on late night TV -- they could revive the "home is an investment" pitch.

I've seen realtors compared to Klansmen, but that's the first time I've seen the animal huggers painted!

I agree, that's an inefficient and wasteful subsidy. My house is run on 100% renewable energy. I've never bought a solar panel or any other kind of equipment. I merely mailed in a postcard telling my utility that I'd like them to purchase "green power" to exactly offset my usage. It costs me a 10% premium. http://www.pse.com/energyEnvironment/renewableenergy4/Pages/GreenPowerProgram.aspx The company that is creating that green power likely is getting a subsidy themselves, but I argue that they have likely created a more cost efficient and scalable solution -- imagine all the wasted dollars in having all these disparate systems scattered across rooftops.

That's a possibility. When memory goes bad you get these single bit corruptions where registers have values that cannot possibly be so according to the preceding instructions (leading to totally random crashes). It's rare though -- but possible.

Thanks Myth for that tax explanation. One of these days I'm going to hit upon an elegant solution to getting around these double taxes on dividends, and I think the answer is comprised of these letters: Nyorwa. Can you figure out what country that spells? I'm married with a family, but to a young man out there I'd also suggest that the natives are friendly :-)

Did he include corporations in that proposal? In other words, was he really offering to give up HIS dividends? I could always start my own investment holding company, put my money in there, and collect my dividends under corporate tax rules too. Dividend tax? Just buy back some of my own shares and "launder" the dividend as a capital gain (there won't be capital gains if I buy the shares back at the cost basis). Is that even legal by the way? Is it allowed to start your own investment holding company and have a share structure where you are the only shareholder? If not, what percentage do you need to make public? I suppose sometimes you don't mind if your shares never rise in price and fall after IPO ;D

Did I ever own MSFT stock? I got stock options starting when I was hired in 1997... at age 26 I think I was suddenly worth about $500k on paper (largely unvested) and then all of it but about $80k blew up. I know I won't get any sympathy complaining about an $80k options paycheck in 2001... but I had psychologically locked in that $500k so the anchoring made it very tough. Better to have loved and lost? Hmm... Serves me right though, because I argued with my recruiter (Lyzette was her name) that the stock was overvalued (she told me that the stock would likely appreciate 20% a year). She retired in 1998 -- didn't buy her own story perhaps? I think there are two ways in that my work experience translated to my investment success, and neither of them had anything to do with stress testing. One of them was the stock bubble (and the experience of that devastating paper loss), and the other was the DOJ trial. IE was an interesting place to work because it was ground zero. I learned that the story in the media can be completely false, yet people believe it because it's in the media. These people who say that the market is efficient because all the facts are known... well they are naive rubes apparently. They assume the media is reporting unbiased facts! That's a freaking obvious weakness of that argument -- for the market to be efficient you have to take a tremendous leap of faith that the market participants are getting unbiased facts from the news outlets. I can't really get into the details, but there were numerous instances where the facts were clearly distorted and despite a tremendous effort by the PR folks the media just wouldn't budge. It was just a fiasco and my view of what I read in the newspapers has been forever changed by that experience. The media is not accurate, so therefore there is opportunity for profit as prices therefore won't be accurate. Why do I still use IE and Vista? People who have ugly kids still love them all the same I suppose. I really don't mind Vista because I use it to browse and to run my jscript files. It works just fine as far as I'm concerned -- all the bugs that really pissed me off I complained about and had fixed while I worked there. It sits by my bed and I pick it up first thing in the morning, check a few stocks and read some news. It never gets rebooted so the shutdown/reboot time is inconsequential. I also know why many features exist in their present form -- somebody else might find a particular feature really stupid and annoying but in some cases I remember the product manager telling me the justification for not changing it... sometimes it makes sense after hearing his reasoning. There was actually a guy on the IE team who was still running Win95 on one of his computers because he liked it's speed on new hardware (and as you might guess, he was on the Win95 product team). I also worked 3 doors down the hall from this guy: http://www.mostwantedhoes.com/sex/dibee-j.php He worked on the team with me for years (he was there I think from day one, or maybe hired just after me), I even shot him in a paint ball game that we had as a team morale event (that's more than the FBI has been able to do by the way). So it's funny, you go to lunch with the same group of guys every day for years on end, and then one day the guy doesn't come in to work. After a couple of weeks his office is locked off and it's a big secret what happened to him -- then I hear about him on the news. Turns out he got mixed up with some people in Oregon who were burning down animal research laboratories -- just, you know, radical animal rights activists. They always made sure that nobody was in the building -- nobody was ever hurt. Now, granted, that's vandalism and arson. But terrorism? Come on. Somebody in the FBI is desperate for some political headlines. Ten years ago I doubt it would have been "terrorism". That word evokes images of people flying planes into buildings full of thousands of people -- not people who deliberately make sure that those buildings are vacant. Whatever.

How did I miss this Gem. and Ericopoly I think you are a bit biased with regard to MSFT. Macs dont get sick or break ;D. I love the improvements -- the scrolling on the touch-pad and the zooming by moving my fingers on the screen. I have an IPhone4 and a MacBook Pro (both acquired in past 3 months). Generally, I like them -- but the bugs are starting to really irritate me. The MacBook system crashes -- I'm accustomed to better reliability. If I pay more, I expect more. Usually on a Vista system if you're getting crashes you can track it down to a faulty driver -- it's just too difficult to police all the hardware drivers out there. Apple has no excuse as their not an open hardware platform -- they are the OEM. They don't have to test Dell/HP/Acer/Toshiba configurations... only their own. With a test matrix that simple, they just have no excuse for this kind of quality control. I've had Safari crash on me several times -- this is a lower level of reliability that Internet Explorer. I know Internet Explorer's reliability rather well -- for several years it was my job to stress test it. Normally (the vast majority of crashes) it would come down to some third party software running in-process. Think of a search toolbar control that somebody installs -- if it's got a bug it takes down the process. So on my machines I don't allow any of that stuff to run in-process and I get no crashes. Apple has no such excuse -- they have no such open model. This is just Apple code that is going down. Then Safari has this supremely annoying bug where I get no response sometimes clicking on links -- typically I hit this a lot on the midwayusa.com web page when you try to navigate their search results or at the InteractiveBrokers website when I'm trying to do a funds withdrawal transaction. The work around I've found is to open the site in a new tab -- that seems to snap it out of this state. Then my wife has an IPod that she syncs to ITunes running on her Vista laptop -- it hangs the ITunes process and this appears to only happen to the Apple ITunes software written for Windows. Searching online it turns out that a LOT of people have that problem -- seems to be some sort of file system corruption that Apple doesn't admit to but people on the forums have the advice to fix it. You have to reformat the IPod, then reinstall the software, then sync all your old stuff back to it. Then it works for a month or two and you have to do it all over again -- I've been through it twice already. Frustrating. "It just works". Nice. They have a lot of work to do before I'll feel like they are living up to their hype. We're they to be as reliable as Windows I'd give them the nod for sure -- it's frustrating trying to use my Windows laptop these days because I find myself trying to scroll the page by moving my fingers across the touchpad and trying to zoom by dragging them on the screen. I was a reliability (stress) tester because that's the only kind of testing I was interesting in doing -- it's what annoys me the most. I started with the team on IE4 Beta2 and left during the IE8 product cycle -- largely I was getting extremely bored because it was getting damn hard to make it crash.

My MacBook Pro is actually crashing more often than my Windows Vista ever did (I've actually never had a system crash with my Vista laptop). That's twice in 106 hours! Yeah Steve Jobs! Interval Since Last Panic Report: 383259 sec Panics Since Last Report: 1 Anonymous UUID: B7D14614-39D1-41DB-A928-B08E798113F6 Mon Dec 6 17:22:08 2010 panic(cpu 0 caller 0x2aab55): Kernel trap at 0x002347d7, type 14=page fault, registers: CR0: 0x8001003b, CR2: 0x00000028, CR3: 0x00100000, CR4: 0x00000668 EAX: 0x00000000, EBX: 0x00000030, ECX: 0x00000028, EDX: 0x03643d74 CR2: 0x00000028, EBP: 0x00fc32c8, ESI: 0x00000000, EDI: 0x0a20f400 EFL: 0x00010202, EIP: 0x002347d7, CS: 0x00000008, DS: 0x00000010 Error code: 0x00000000 Backtrace (CPU 0), Frame : Return Address (4 potential args on stack) 0xfc3058 : 0x21b50c (0x5d42fc 0xfc308c 0x223974 0x0) 0xfc30a8 : 0x2aab55 (0x59616c 0x2347d7 0xe 0x596336) 0xfc3188 : 0x2a09a8 (0xfc31a0 0x0 0xfc32c8 0x2347d7) 0xfc3198 : 0x2347d7 (0xe 0x48 0x10 0x10) 0xfc32c8 : 0x220633 (0x3643d74 0x1 0x1 0x5551ff) 0xfc3308 : 0x220673 (0x30 0x1 0x0 0x0) 0xfc3328 : 0x52e7e4 (0x30 0xa20f400 0x1000 0x0) 0xfc3348 : 0x96c965 (0x30 0xbd80a000 0x1000 0x0) 0xfc3368 : 0x96dc66 (0x8208dac 0xd9ab200 0xa20f400 0x52b5c000) 0xfc33c8 : 0x9d69f0 (0xbd80a000 0x0 0x1000 0x0) 0xfc3408 : 0x16a975e (0xbd80a000 0x0 0x1000 0x0) 0xfc3478 : 0x16a99ce (0xfc34e8 0xfc34e4 0x1000 0x0) 0xfc3508 : 0x16a9fa7 (0x2 0x94a2004 0x0 0x0) 0xfc3568 : 0x178acf9 (0x94a2004 0x9548804 0xdda4404 0xfc35b8) 0xfc3618 : 0x176050c (0x94a2004 0x9549804 0x4c231014 0xfc3748) 0xfc3768 : 0x1799e87 (0x94a2004 0x950c004 0x0 0x3) 0xfc37e8 : 0x9cf780 (0x94a2004 0x3f 0x0 0x0) 0xfc3888 : 0x9d3826 (0xc1d00021 0x4000000 0x41 0x2) 0xfc3a38 : 0x9d48f7 (0x0 0x600d600d 0x703a 0xfc3a68) 0xfc3b08 : 0xbd6ba1 (0xc1d00021 0x4000000 0x41 0x2) 0xfc3b88 : 0xbcae7c (0x4423d000 0xfc3dbc 0x0 0x13dc221) 0xfc3ca8 : 0x96aae6 (0x4423d000 0x1 0xfc3d3a 0x84) 0xfc3d08 : 0x95d90f (0x8dc8000 0x1 0xfc3d3a 0x84) 0xfc3d78 : 0x95e0ec (0x8dc8000 0x19 0xfc3dbc 0x4ff931) 0xfc3de8 : 0x95eb01 (0x8dc8000 0x2 0xfc3e18 0x4ff5ae) 0xfc3e58 : 0x945159 (0x8dc8000 0x70777273 0x2 0x1) 0xfc3e98 : 0x945348 (0x8dc8000 0xb1 0xfc3ec8 0x949791) 0xfc3ec8 : 0x94e884 (0x8d8ac00 0xb1 0x0 0x2a35a1) 0xfc3f08 : 0x54c4db (0x8a91180 0x8a96100 0x1 0x0) 0xfc3f58 : 0x54b50c (0x8a96100 0x0 0x202 0x0) 0xfc3f88 : 0x54b966 (0x8a91180 0x8a91180 0x0 0xab9a000) 0xfc3fc8 : 0x2a06cc (0x8a91180 0x0 0x0 0x0) Backtrace continues... Kernel Extensions in backtrace (with dependencies): com.apple.nvidia.nv50hal(6.2.4)@0x1694000->0x1aa8fff dependency: com.apple.NVDAResman(6.2.4)@0x967000 com.apple.NVDAResman(6.2.4)@0x967000->0xc54fff dependency: com.apple.iokit.IOPCIFamily(2.6)@0x927000 dependency: com.apple.iokit.IONDRVSupport(2.2)@0x95a000 dependency: com.apple.iokit.IOGraphicsFamily(2.2)@0x938000 com.apple.iokit.IONDRVSupport(2.2)@0x95a000->0x966fff dependency: com.apple.iokit.IOGraphicsFamily(2.2)@0x938000 dependency: com.apple.iokit.IOPCIFamily(2.6)@0x927000 com.apple.iokit.IOGraphicsFamily(2.2)@0x938000->0x959fff dependency: com.apple.iokit.IOPCIFamily(2.6)@0x927000 BSD process name corresponding to current thread: kernel_task Mac OS version: 10H574 Kernel version: Darwin Kernel Version 10.5.0: Fri Nov 5 23:20:39 PDT 2010; root:xnu-1504.9.17~1/RELEASE_I386 System model name: MacBookPro7,1 (Mac-F222BEC8) System uptime in nanoseconds: 74059766557762 unloaded kexts: com.apple.driver.AppleMCP89RootPortPM 1.11 (addr 0x1440000, size 0x20480) - last unloaded 156130369438 loaded kexts: com.apple.driver.AppleHWSensor 1.9.3d0 - last loaded 21108703735 com.apple.filesystems.autofs 2.1.0 com.apple.driver.AGPM 100.12.19 com.apple.driver.AppleMikeyHIDDriver 1.2.0 com.apple.driver.AppleHDA 1.9.9f12 com.apple.driver.AppleMikeyDriver 1.9.9f12 com.apple.driver.AppleUpstreamUserClient 3.4.5 com.apple.driver.AppleMCCSControl 1.0.17 com.apple.driver.AudioAUUC 1.13 com.apple.driver.SMCMotionSensor 3.0.0d4 com.apple.kext.AppleSMCLMU 1.5.0d3 com.apple.Dont_Steal_Mac_OS_X 7.0.0 com.apple.driver.AudioIPCDriver 1.1.6 com.apple.driver.AppleIntelPenrynProfile 17 com.apple.driver.ACPI_SMC_PlatformPlugin 4.5.0d5 com.apple.driver.AppleLPC 1.4.12 com.apple.driver.AppleBacklight 170.0.34 com.apple.GeForce 6.2.4 com.apple.driver.AppleUSBTCButtons 200.3.2 com.apple.driver.AppleIRController 303.8 com.apple.driver.AppleUSBTCKeyboard 200.3.2 com.apple.iokit.SCSITaskUserClient 2.6.5 com.apple.driver.AppleUSBCardReader 2.5.8 com.apple.BootCache 31 com.apple.AppleFSCompression.AppleFSCompressionTypeZlib 1.0.0d1 com.apple.driver.AppleHPET 1.5 com.apple.iokit.IOAHCIBlockStorage 1.6.3 com.apple.iokit.AppleBCM5701Ethernet 2.3.9b6 com.apple.driver.AirPortBrcm43224 426.36.1 com.apple.driver.AppleFWOHCI 4.7.1 com.apple.driver.AppleAHCIPort 2.1.5 com.apple.driver.AppleEFINVRAM 1.4.0 com.apple.driver.AppleUSBHub 4.1.7 com.apple.driver.AppleRTC 1.3.1 com.apple.driver.AppleUSBOHCI 4.1.5 com.apple.driver.AppleSmartBatteryManager 160.0.0 com.apple.driver.AppleUSBEHCI 4.1.7 com.apple.driver.AppleACPIButtons 1.3.5 com.apple.driver.AppleSMBIOS 1.6 com.apple.driver.AppleACPIEC 1.3.5 com.apple.driver.AppleAPIC 1.4 com.apple.driver.AppleIntelCPUPowerManagementClient 105.13.0 com.apple.security.sandbox 1 com.apple.security.quarantine 0 com.apple.nke.applicationfirewall 2.1.11 com.apple.driver.AppleIntelCPUPowerManagement 105.13.0 com.apple.iokit.IOBluetoothSerialManager 2.3.8f7 com.apple.iokit.IOSerialFamily 10.0.3 com.apple.driver.DspFuncLib 1.9.9f12 com.apple.driver.AppleProfileReadCounterAction 17 com.apple.driver.AppleSMBusController 1.0.8d0 com.apple.driver.AppleSMBusPCI 1.0.8d0 com.apple.driver.AppleProfileTimestampAction 10 com.apple.driver.AppleProfileThreadInfoAction 14 com.apple.driver.AppleProfileRegisterStateAction 10 com.apple.driver.AppleProfileKEventAction 10 com.apple.driver.AppleProfileCallstackAction 20 com.apple.iokit.IOFireWireIP 2.0.3 com.apple.iokit.IOSurface 74.2 com.apple.iokit.IOAudioFamily 1.7.9fc4 com.apple.kext.OSvKernDSPLib 1.3 com.apple.driver.AppleHDAController 1.9.9f12 com.apple.iokit.IOHDAFamily 1.9.9f12 com.apple.iokit.AppleProfileFamily 41 com.apple.driver.AppleSMC 3.1.0d3 com.apple.driver.IOPlatformPluginFamily 4.5.0d5 com.apple.nvidia.nv50hal 6.2.4 com.apple.NVDAResman 6.2.4 com.apple.iokit.IONDRVSupport 2.2 com.apple.iokit.IOGraphicsFamily 2.2 com.apple.driver.BroadcomUSBBluetoothHCIController 2.3.8f7 com.apple.driver.AppleUSBBluetoothHCIController 2.3.8f7 com.apple.iokit.IOBluetoothFamily 2.3.8f7 com.apple.driver.AppleUSBMultitouch 206.6 com.apple.iokit.IOUSBHIDDriver 4.1.5 com.apple.iokit.IOSCSIMultimediaCommandsDevice 2.6.5 com.apple.iokit.IOBDStorageFamily 1.6 com.apple.iokit.IODVDStorageFamily 1.6 com.apple.iokit.IOCDStorageFamily 1.6 com.apple.iokit.IOSCSIBlockCommandsDevice 2.6.5 com.apple.iokit.IOUSBMassStorageClass 2.6.5 com.apple.driver.AppleUSBMergeNub 4.1.5 com.apple.driver.AppleUSBComposite 3.9.0 com.apple.driver.XsanFilter 402.1 com.apple.iokit.IOAHCISerialATAPI 1.2.5 com.apple.iokit.IOSCSIArchitectureModelFamily 2.6.5 com.apple.iokit.IO80211Family 312 com.apple.iokit.IONetworkingFamily 1.9 com.apple.iokit.IOFireWireFamily 4.2.6 com.apple.iokit.IOAHCIFamily 2.0.4 com.apple.driver.NVSMU 2.2.7 com.apple.driver.AppleEFIRuntime 1.4.0 com.apple.iokit.IOUSBUserClient 4.1.5 com.apple.iokit.IOUSBFamily 4.1.7 com.apple.iokit.IOHIDFamily 1.6.5 com.apple.iokit.IOSMBusFamily 1.1 com.apple.kext.AppleMatch 1.0.0d1 com.apple.security.TMSafetyNet 6 com.apple.driver.DiskImages 289 com.apple.iokit.IOStorageFamily 1.6.2 com.apple.driver.AppleACPIPlatform 1.3.5 com.apple.iokit.IOPCIFamily 2.6 com.apple.iokit.IOACPIFamily 1.3.0 Model: MacBookPro7,1, BootROM MBP71.0039.B0B, 2 processors, Intel Core 2 Duo, 2.4 GHz, 4 GB, SMC 1.62f6 Graphics: NVIDIA GeForce 320M, NVIDIA GeForce 320M, PCI, 256 MB Memory Module: global_name AirPort: spairport_wireless_card_type_airport_extreme (0x14E4, 0x8D), Broadcom BCM43xx 1.0 (5.10.131.36.1) Bluetooth: Version 2.3.8f7, 2 service, 19 devices, 1 incoming serial ports Network Service: AirPort, AirPort, en1 Serial ATA Device: Hitachi HTS545025B9SA02, 232.89 GB Serial ATA Device: MATSHITADVD-R UJ-898 USB Device: Internal Memory Card Reader, 0x05ac (Apple Inc.), 0x8403, 0x26100000 USB Device: Built-in iSight, 0x05ac (Apple Inc.), 0x8507, 0x24600000 USB Device: BRCM2046 Hub, 0x0a5c (Broadcom Corp.), 0x4500, 0x06600000 USB Device: Bluetooth USB Host Controller, 0x05ac (Apple Inc.), 0x8213, 0x06610000 USB Device: IR Receiver, 0x05ac (Apple Inc.), 0x8242, 0x06500000 USB Device: Apple Internal Keyboard / Trackpad, 0x05ac (Apple Inc.), 0x0236, 0x06300000

It is actually the opposite -- the author wrote that article bringing up 1970s without mention of wage pressures. I'm not letting him off that easy. If he's going to compare two periods, he needs to address important variables that differ remarkably. He may have guessed correctly, but he is not showing his work. Hoisington has a chart that Fairfax watchers popularized on this board -- the chart shows the spike/collapse in long term interest rates (inflation expectations) coinciding with the Rise/Collapse of Iron/Bamboo curtains. I've argued in the past that Hoisington failed to mention the depegging of the dollar -- I wondered out loud on this board whether the historically low Treasury yields of the past ought to come back again or not... after all, the gold bugs argue quite loudly that a currency backed by gold will hold down inflation. Why should bond yields today reach the levels of the past when back then the dollar was backed by gold? Is there no such thing as a risk premium for fiat money? In other words, let's say the Treasury were to auction off two issues side by side. One of them would be exactly the same as Treasuries today, where principle and interest are paid in dollars. The other issue is one where the principle and interest is paid in gold. Which one do you figure will attract the most demand? Shouldn't that be at least worthy of mention in Hoisington's chart?

"The bottom line, however, is that it is totally incorrect to assume that the massive expansion in reserves created by the Fed is inflationary. Economic activity cannot move forward unless credit expansion follows reserves expansion. That is not happening." I pulled that quote from Hoisington (from page 2): http://www.hoisingtonmgt.com/pdf/HIM2009Q1NP.pdf Record Expansion of the Fed©s Balance Sheet and M2 In the past year, the Fed’s balance sheet, as measured by the monetary base, has nearly doubled from $826 billion last March to $1.64 trillion, and potentially larger increases are indicated for the future. The increases already posted are far above the range of historical experience. Many observers believe that this is the equivalent to printing money, and that it is only a matter of time until significant inflation erupts. They recall Milton Friedman’s famous quote that “inflation is always and everywhere a monetary phenomenon.” These gigantic increases in the monetary base (or the Fed’s balance sheet) and M2, however, have not led to the creation of fresh credit or economic growth. The reason is that M2 is not determined by the monetary base alone, and GDP is not solely determined by M2. M2 is also determined by factors the Fed does not control. These include the public’s preference for checking accounts versus their preference for holding currency or time and saving deposits and the bank’s needs for excess reserves. These factors, beyond the Fed’s control, determine what is known as the money multiplier. M2 is equal to the base times the money multiplier. Over the past year total reserves, now 50% of the monetary base, increased by about $736 billion, but excess reserves went up by nearly as much, or about $722 billion, causing the money multiplier to fall (Chart 3). Thus, only $14 billion, or a paltry 1.9% of the massive increase of total reserves, was available to make loans and investments. Not surprisingly, from December to March, bank loans fell 5.4% annualized. Moreover, in the three months ended March, bank credit plus commercial paper posted a record decline. If this all sounds complicated you are right, it is. The bottom line, however, is that it is totally incorrect to assume that the massive expansion in reserves created by the Fed is inflationary. Economic activity cannot move forward unless credit expansion follows reserves expansion. That is not happening. This quote from page 3 is also a good one: The highly ingenious monetary policy devices developed by the Bernanke Fed may prevent the calamitous events associated with the debt deflation of the Great Depression, but they do not restore the economy to health quickly or easily. The problem for the Fed is that it does not control velocity or the money created outside the banking system.

The key phrase you use is "if you really believe". And none of what you then go on to say I "really believe" -- as you know, I don't "really believe" that bad debt has been monetized... I think the Fed has in effect granted a loan. You go on to call it a printing press, which it is not. Hoisington has pointed out that the quantitative easing is not inflationary -- do you think he is wrong? I presume you do, but I'm not quite so quick to dismiss him. Here is what I believe QE2 is about -- an attempt to stop the increased government borrowing from starving the private sector of dollars. That starvation of dollars would counteract the money that the government is trying to spend as stimulus -- but that stimulus isn't creating much inflation because the current macro environment is heavily deflationary. It's like two very powerful winds blowing head to head but getting nowhere. I believe they intend to lend this money from the Fed (and buying a bond is in fact lending) until the de-leveraging (the massive deflationary headwind) has substantially progressed. They have said they intend to unwind it, and if you think about it all they really need to do is sit on their hands -- let the bonds mature, thus the dollars are brought back to the Fed. This does not come wholly for free (if you support the current price level it's inflationary relative to an alternate path of letting prices fall), but it's far less than 1:1 money printing as many of these dollar bears suggest. That doesn't mean that I believe QE2 will necessarily fix anything -- there is no guarantee that the private sector would invest their dollars in the US economy any differently whether or not they are starved of those particular dollars. The problem is not with QE2 -- the problem is with the government borrowing. QE2 can be reversed far easier than the government borrowing. Do I worry about QE2? No, I worry about the deficits. Do I think QE2 will bring prosperity? No, I think it will merely keep some dollars from being siphoned by the government out of the private sector... for a period of time until they mature (or perhaps sold a year or two before maturity). I've stated before that if you really want a printing press analogy, then this QE2 printing press has disappearing ink.

One topic the article neglected to mention was the spiraling wage inflation of the 1970s. This I believe is what led to consumer price inflation -- the consumers had more nominal income and thus nominal consumer prices rose. Is the author expecting wages to take off soon? Or is he expecting consumer prices to rise even though nobody can afford price increases without increased wages? I can see the argument for gold rising over time vs the dollar. You have more goods and services in the world today than back in 1980 at the last real gold peak. Were you to exchange the increased goods and services for gold, it would put upward pressure on the real price of gold given that supply of gold is static. When mass psychology gets involved, you can have a sudden move in gold if this becomes a popular way of thinking. The same would happen for the dollar if it's quantity remained static, except that the supply of dollars has increased. This suggests that it is entirely possible to have static consumer prices (in dollars) despite both a higher supply of dollars as well as a higher gold price (expressed either in dollars or in a currency "basket" of goods and services). Consumer inflation (in dollar terms) I think would have been much higher over the past 30 years if there weren't so many advances in productive output. I think partially this is by design -- I suspect they used the advances in productivity to justify much of the dollar supply increases. Regardless, the same amount of gold should logically buy more goods and services if there have been real advances in productivity -- that ought to be a no brainer, if it costs less to produce because of some new gizmo scientific advance, shouldn't you be able to afford more of it? How can you call it a rise in the standard of living if you aren't able to afford more goods and services? I guess what I'm saying is you can have a devalued dollar even if you have stable prices. Technological advancements like machines should in theory make manufactured and farmed goods cheaper -- if you get no downward consumer price movement then you effectively have devaluation because you entirely lost the would-be cost of production savings. Your dollar made no advance in buying power despite improved technology -- therefore devaluation. Gold can therefore advance versus the dollar... but this doesn't necessarily indicate that prices will go up at the grocery store. If gold (at it's current exchange rate with the dollar) doesn't buy you an appropriately larger amount of goods and services (as suggested by increases in productivity) then it could be reasoned to be logically undervalued as a currency. Why should we believe that it should only buy you a finely tailored suit if somebody invents a machine that can duplicate the quality of that suit at 1/4 of the cost? Shouldn't it then buy you four suits? And if the dollar (due to increased supply) can still only buy you one of those suits, then shouldn't gold be a four bagger vs the dollar? In a roundabout way I suppose I'm reasoning that the dollar is already devalued more than people think, and gold could possibly be rising due to undervaluation. It can take a crisis and fear mongering to get people to look at gold again, and that becomes the catalyst to get the needed price correction -- however this may happen independently of any dollar crisis... because the purchasing power of dollar may already have been stealthily devalued during a period of historically high productivity gains that have masked the loss in would-be consumer purchasing power. Based on the supply demand argument based on the rising productivity, I would expect gold over time to buy you more and more... until we hit some productivity limit (if there is one). The question for me though is can I do better investing in other things? Prem said recently "we don't invest in gold" -- I think he feels he can just do better. He also stated that he is worried about a commodity bubble forming right now -- although he didn't say which commodities.

Quantitative easing thus far looks like lending, not printing. Look at QE2... the Fed got Treasury bonds which will repay them for their "loan" when matured. It will be printing when they "forgive" the loan.

Perhaps as a model it's more lucrative for a person of such talents to be a hedge fund manager? It looks like Sardar couldn't hack it... managing other shareholders' investments for free that is. It sure didn't take him long to get his hands into their collective cookie jar.

I suppose they need to lock you in because they won't make any money from the initial batteries. Their plan is to start making money when battery prices get cheaper. No lock in... you'd be taking a free ride for a time while it is cost effective, then when prices get cheaper you'd just buy your own battery.

He said something different (I think) -- I believe he said that the average American drives an 8 year old car. He did not comment on the average life of cars.

I know, but just remember they bought those investments despite doing original research. Original research can avoid a certain class of mistakes (greatly improving your chances), but it's the thinking outside of the numbers that avoids the problems with the stocks mentioned above. I remember Watsa staying clear of oil back when Buffett was buying COP -- it was the kind of mistake that could only be avoided from up at 10,000 feet looking down, not from being down on the ground counting the oil in the balance sheet. The problem with COP was a macro thing ultimately -- could a coat-tailer have avoided the problem by reading and analyzing all of COP's financials?