Jan 17, 2007

Richard Russell ruminations on the US economy...

The venerable "investment guru" Mr. Richard Russell gave us a piece of his mind yesterday on the way economic things are going in the U.S. of A. (and it ain't a pretty picture I can tell'ya!)

..Faye and I spent an afternoon at our largest local mall. It was an eye-opening experience. People were buying excitedly in almost every specialty store and department store we visited. I got the feeling that the buying was reaching frenzied proportions.

The whole spectacle reminded me of various past periods of crowd behavior. I'm talking about almost abnormal crowd behavior. There's the mad Dutch era of wildly-priced tulip plants. I've read books about the crazy Salem period when people accused their terrified female neighbors of being "witches." I seen films of the wild-eyed crazed look of Germans masses as Hitler drove by in his giant bullet-proof Mercedes. I was there during the insane McCarthy era when the entire nation seemed paranoid about the "Commies" that McCarthy warned about but never found. More recently, all of us can remember the insanity of tech stock-buying during the late '90s when people begged their brokers for more and more worthless IPOs.

Now there seems to be an almost pathological desire to buy -- buy $10,000 hand bags, buy $25,000 wrist watches encrusted with diamonds. Buy women's shoes starting at $500 and going into the thousands of dollars. Every celebrity is now out with his or her own expensive perfume. Classic art is selling in the multi-millions of dollars. Gambling casinos are packed to overflow around the clock. Top of the line Bentley cars are selling at over $300,000.

But it's not just the rich who are spending the big money. We saw the mall filled with average people, intent on buying something, almost anything. The role models today are the "celebrities." Super markets feature six different celebrity magazines at the check-out stands. Today every young lady want to be "drop-dead gorgeous" like Britney or Lindsay or Paris. Expensive boots are "in" -- even here in Southern California where the last thing a lady need are high leather boots. Designer coffee sells everywhere at $1.50 to $4.00 a paper cup, no refills. Designer sun glasses sell for over $300 a pop and are a must as are special blue jeans that can cost into the thousands of dollars.

At any rate, I really get the sense of Americans on a buying binge. Strange, and this buying phenomenon is accompanied by a below-zero savings rate. Are people losing faith in their money -- would they simply prefer to have the goods? Or have Americans lost their fear of debt? Buy now and pay later -- but above all, buy.

Ironically, we see economists worrying about the lack of savings in the US and the steady rise in debt. But at the same time, economists are cheering any increase in consumer spending. Which one do they want? Well, they'd like both. But why worry -- there's always massive defense spending, and an expensive war.

Speaking of the military and the US empire, we now have 460,000 military stationed in 144 foreign countries. The miracle is how the dollar has held up for this long!

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8 ΣΧΟΛΙΑ (COMMENTS):

Anonymous ksefoskotos ΕΙΠΕ (SAID)...

Kai o Ellhnas katanaloths den pah piso.

Opios exei esto kai liga metrita se 2-3 xronia tha einai vasilias.

Cash is king !....and gold is queen.

Simfoneite ?

Tha hthela na ksero pou vlepete na vriskete h agora akinhtwn sthn Ellada se 2 xronia .....egw pistevo oth oi times tha pesoun toulaxiston 30-35%.

January 18, 2007 4:16 PM  
Blogger Chrysotheras ΕΙΠΕ (SAID)...

...Real cash is King!...and the King of Real cash is Gold! (silver is Queen and, as we know from playing chess, the Queen is one of the most powerful and mobile pieces!).

Nai kai egw ektimw pws ta akinhta sth xwra mas einai ypertimhmena. Dyskolo omws na problepsei kaneis poso tha pesoun. Ayto tha eksarththei KAI apo to rythmo toy plythwrismou sto euro. To US$ bebaia exei poly dromo akoma...pros ta katw!
To thema einai poso tha anteksei akoma to US$ san diethnes meso synallaghs kai reserve currency.....idwmen.

January 18, 2007 9:46 PM  
Anonymous ksefouskotos ΕΙΠΕ (SAID)...

Nai simfono, alla mhn eiste kai tosso sigourh oth h Amerikh den tha polemish na swsh to dolario opws ekane to '79.

Also mhn ksexnate oth to xryso (h timh tous diladh) to polemane sinexos h kentrikes trapezes tou kozmou.

Pistevo oth DEN tha to afisoun na pesei toso eukola mesa sto abyss.

Osso nane, h agora akinhtwn tha pah prws ta kato.....mhn ksexnate ta ARM's (pou hparxoun kai sthn Ellada).....einai thema 1% auksish akoma....kai poof......san ta dot com stocks.

Ean exeis metrita ta epomena xronia, tha vgeis POLLH kerdizmenos.

January 18, 2007 10:08 PM  
Blogger Chrysotheras ΕΙΠΕ (SAID)...

antigrafw apo xthesino sxolio tou R. Russell:
..Speaking before the Senate Budget Committee, Fed Chairman Bernanke warned today that the US government may face a "fiscal crisis" in coming decades if it fails to deal with the rising and compounding costs of Social Security, Medicare and Medicaid. Warned Bernanke, "If early and meaningful action is not taken, the US economy could be seriously weakened with future generations bearing much of the cost."

Russell Comment -- Why did Bernanke bring this up all these future problems at this time? Answer -- Bernanke brought up these problems because, unlike the previous Fed Chairman, Bernanke cares more about the nation than he does about boosting his own ego. Bernanke offered no specific proposals to avoid the coming crisis. The Russell forecast -- one method of dealing with the rising level of debts and deficits will be -- inflation.


Pws loipon na palepsei h U.S. gia na krathsei ta skhptra tou US$??....
(isws monon me th dynamh twn oplwn...)

January 19, 2007 8:46 AM  
Blogger Chrysotheras ΕΙΠΕ (SAID)...

...kai synexizei pio katw:
"...To pay for World War II, Americans bought savings bonds and put extra notches in their belt. President Truman raised taxes and cut non-military spending to pay for the Korean conflict. During Vietnam, the US raised taxes but still watched deficits soar.

"But to pay for the ongoing wars in Iraq and Afghanistan, the US has used its credit card, counting on the Chinese and other foreign buyers of its debt to pay the bills."


Einai loipon ligo pio polyploka (globalisation etc) ta pragmata apo th dekaetia twn '70s.

January 19, 2007 8:52 AM  
Anonymous ksefouskotos ΕΙΠΕ (SAID)...

Simfono, alla den thelo na pao to thema ekei. O Bernake den htan sthn Kina prhn liges meres ?? What 'deal' did they come to ?

O Russell leei oth enas allos tropos einai na sfiksoune ta zwnaria ta Amerikanakia. Na auksisoune to savings rate tous, kai na stamatisoun na agorazoun cheap Chinese crap.

Eixa diavash kapou oth kai o k. Russell simfonh me to deflation scenario.

Kai as poume oth inflation tha epikratish.....mexrh pote ta Amerikanakia (kai oxi mono) tha ksodevoun me ths pistotikes ? Are real wages catching up with inflation ?....no way.

Ollo einai thema supply and demand. Kai se thema real estate to supply einai pollh (kai tha auksithi kai parapano) kai to demand mionete ragdea. Posso pio pollh tha danizete o kozmos ?

Simfono pandos oth to xryso kai arghro einai enas tropos na prostateuths......alla den nomizo oth pano apo 5-10% twn apothematwn (cash) tou kathe anthropou prepei na einai ependimena ekei. If the shit hits the fan, me 100 xrhses lyres tha agorazhs perousia, hte einai gh, eite diamerizma.

Mhn ksexname oth h Eurwph DEN einai Amerika, kai oth ean afisoune oi Amerikanoi na pesh to dollario tous den simenh oti h Eurwph tha kanh to idio me to Euro. (note Bernake didn't raise rates last month, but England/Europe did).

Kai osso na'ne zw sthn Ellada.....kai sthn Ellada provlepw elipsh metritwn (tight money supply)...o Garganas exei kanei 'whisper' to endoxomeno gia sfiksimo zwnariwn....pios ton akouh ?

Osso na'ne....pistevo oth ta spitia tha katevoun sta plesia pou htan ghro sto 1999/2000.....milame gia pano apo 30% miosh se timh.....oi times pou pezontan ta teleutea xronia den mporoun na sinezistoun me kanena endexomeno.

January 19, 2007 9:54 AM  
Blogger Chrysotheras ΕΙΠΕ (SAID)...

...I agree.
Endiaferon exei epishs ayto pou leei o Russell ligo parakatw:

"..I just received the latest "Real Estate Timing Letter" by Robert Campbell (858-481-3236). This is a unique and excellent technical-fundamental report by a real estate expert -- Robert was one of the first to call the top of the real estate boom.

Campbell believes we're still at the beginning of a long bear market in real estate. Here are a few of his reasons --

"Real estate downturns typically last 4 to 6 years after housing prices peak out."

"A huge wave of ARMSs are scheduled to be re-priced in 2007, causing a significant rise in mortgage payments and an acceleration in foreclosures."

"A credit crunch is looming on the horizon, which make mortgage financing harder to get. If you contract the availability of credit, the housing bubble deflates.

"After rising by a spectacular 200% during the boom, history almost assures us that the resultant fall in housing will be equally spectacular during the bust."


..oso gia to Euro, "when the proverbial $#it hits the fan" tote tha exoume ayto pou legetai "competitive devaluation"

...Ygeia naxoume kai exoume polla na doume akoma.

January 19, 2007 10:40 AM  
Anonymous ksefouskotos ΕΙΠΕ (SAID)...

Amhn....

Interesting times indeed......

Otan milao gia auta ta themata me merikous, me vlepoune san trelw.......doomsdayer opws lene.

Keep up the good work....

January 19, 2007 10:54 AM  

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