gavekal's four scenarios-

[Guest]

Re: gavekal's four scenarios-

We've got to put C1ue-BOT on the happy pills, he's turning into one of the most persistent doomers and gloomers around here. JK, can you write him a prescription please?

[BiscayneSunrise]

Re: gavekal's four scenarios-

To piggy back on the GaveKal piece, this weeks Barron's (p.27) mentioned the same GaveKal analysis and prediction of a stronger dollar.

Other reasons for their prediction of a dollar/Euro turnaround are:
-Euro "grotesquely overvalued"
-European demographic time bomb increasing government financial burdens
-Imperfect integration of Muslim Minorities
-Euro members still have different social and economic traditions
-Euro has never been tested in a serious global crisis

-Currency values are determined by relative rates of return on capital and here the US has a decided advantage.
-US still holds lead on wealth generation, productivity growth, innovation and higher education.

Again, the theme is that the US and its' economic decision makers are everyone's favorite whipping boy. But at some point, things will swing back. To be bearish for too long and for the wrong reasons makes one a bad prognosticator and bad investor.

I don't know if scenario 1 is all that far fetched, with its subsequent rotation out of commodities and massive dollar bullishness. After all, if such noted economic luminaries such as Gisele and Hugo Chavez are now joining the dollar bear wagon, perhaps it is time to jump off. Along the same lines, on the employee forum at my employers website, many of my colleagues are discussing gold investments and other dollar hedges. Perhaps, that is the modern equivalent of cocktail party banter.

Just one man's opinion, but speaking strictly as a trader, I have been selling my commodity, mining and metal stocks over the past few weeks. I hated to do it, they were like old friends having been long commodities since late '02. But if the Fed holds steady on 12/11, I thought the downside risk was too great to be holding. If I'm wrong I can always get back in.

[jk]

Re: gavekal's four scenarios-

one thing i've learned over the years re: currencies: financial/capital movements overwhelm purchasing power parity to establish relative values. gavekal's are long-term value arguments which they have been making for - literally- years. they have also been wrong for -literally - years. yes, the theme seems overly popular, but real movement won't happen because of gisele's policies. it will happen when e.g. gulf nations one-by-one depeg their currencies from the dollar. crrency "diversifiers" don't have many places to go, and they still feel overburdened by dollars.

i'm curious, biscayne, about how many of the people posting on your employee bb have actually bought pm's, and how much of their portfolio they have actually committed. do you have a sense of the numbers?

[BiscayneSunrise]

Re: gavekal's four scenarios-

JK,

Granted it is very easy to make the correct macro call but have the timing way off. And agreed that although dollar holders have no place to really go they are getting a little antsy to diversify.

As for my co-workers allotment towards PM's, I would say many are still unaware and those that see themselves as savvy are just now getting in. Those that are in PM's, wild hunch, have about 10-25% of their portfolios allotted.

Nowhere near .com bubble levels.

[c1ue]

Re: gavekal's four scenarios-

We've got to put C1ue-BOT on the happy pills, he's turning into one of the most persistent doomers and gloomers around here.

You're only a doom- and gloom-er if you're wrong.

If you're right, then you are prescient.

Time will tell...

[touchring]

Re: gavekal's four scenarios-

JK -

A pre-holiday bulletin from Stephen Leeb's "Complete Investor" newsletter. He's known as leaning towards conservative in his portfolios, but he's also been rated one of the top 3-5 market timers in the country in the past 6 - 7 years. FWIW.

I read his the coming ecomnimc collapse book, 2005 version, he proposed buying real estate to hedge against inflation numerous times in his book. Real estate is a big investment, a wrong move and poof!

I think i rather listen to Kiyosaki. :p

[Guest]

Re: gavekal's four scenarios-

I read his the coming ecomnimc collapse book, 2005 version, he proposed buying real estate to hedge against inflation numerous times in his book. Real estate is a big investment, a wrong move and poof! I think i rather listen to Kiyosaki. :p

_____________


Touchring -

Leeb's endorsement of real estate was a very small, and duly hesitant part of his overall recommendations, as you well know if you read that book. It's perhaps 3% of his message in that book? What was his principal message, as far as you recall?

Answer: Oil, going to $300 per barrel. What's more, he made that call back in year 2000, before any other Tom Dick and Harry out there had yet made a single murmur about it. Please accept my assurance this is so. His first book on oil "The Oil Factor" published in 2004 was by no means his first comment on this issue. He only formalized this into an entire investment theory for the next 20 years within that 2004 book, and it'sinsights are some of the best actionable advice on the market today. This bears noting.

Now look around - we read iTulip, right? Seems iTulip is now on board with this idea too as it's viewing "alt-energy" as the next "bubble".

My take is this A) alternative energy won't be a "bubble" at all, it will be a very, very earnest effort to scare up some alternative to dwindling oil, which from your other posts I gather is a thesis you agree with.

B) There is a strong preference around these pages, wherein everyone "needs" to regard all trends occurring in the world as "investment theses" which if adopted to the exclusion of a broader geo-political / ethical viewpoint, may proudce an excessively narrow view of the world we all live in.

Few are the comments around here with a genuine sense of history, complete with an emotional / ethical (that whole awkward "democracy" thingy) component, where mortal threats to mankind's progress (e.g. dwindling hydrocarbons, and the consequences) are regarded as problems of interest to all of humanity, with a "humanistic" perspective.

Instead, my perception is a lot of people yawn and shuffle off unless the topic discussed is examined from the perspective of "how can it earn some kind of yield for investors" or "what is it's gory economic implosion quotient". It's a bit drab sometimes, when one has the sense everyone is reading of disaster and coldly adding up where in that picture they can derive discern an actionable economic trend to the exclusion of broader historical viewpoints.

So Touchring, just to set the question straight, Leeb's sole real thesis for the past eight years has been about petroleum. Now take a look around and tell me you think he was barking up the wrong tree. He was "barking up that tree" long before many other very smart people had a clue about it. Long before iTulip had a clue about it too.

Finally, I have the intuition your reply which reveals a shade of irritation in general (a bit snarky) is inspired by your reading my critical comments of Ms. Wolf? And I may make an astute guess, having corresponded with others from Singapore on other websites, that the average university educated Singaporean takes a very dim view of the current US administration's involvement in events in the Middle East. Surprise! Surprise! So do I.

However, to examine where my view is possibly different than yours in that regard, I have over the recent past years noticed a certain bristly quality from your countrymen, all of whom are discreetly very warm towards the rise of China, because China comprises such a large part of Singaporean society. You are discreetly very proud of what the Han are achieving in the Middle Kingdom, and indeed well you should be! The Chinese are accomplising some very admirable, even awe inspiring transformations indeed. Please believe my sincere compliments regarding that.

I only observe (or make a savvy guess) that your views, (like those of many of your countrymen with whom I've corresponded) of American excessive involvement in many, many foreign countries are of the rather peremptory "kick the neo-colonial buggers out" school of thought, which may be correct in spirit, but risks being as little simplistic as to immediate consequences as well.

The problem with that transition being handled without some fairly ugly consequences (consequences you Singaporeans would eventually find equally as ugly as we do possibly, in terms of lots of regional conflicts springing up in a resulting "power vacuum") is that the world does not have a clear idea of who will be "stepping in" when the "American buggers" are successfully kicked out?

The article I posted about Lebanon yesterday evening aptly describes some really nasty actors in the Middle East who have no compunction as to gobbling up a small weak neighbor for expansion, therefore certainly could be expected to raise the hackles of a good few people in this community who have fond beliefs that by smply excising the "American cancerous presence" from spheres of interest all over the world, you'll see a fresh and wholesome reversion to democratic or peaceful conditions in those places.

With all the sympathy for China from Singaporeans I suspect, it does not take a Sherlock Holmes to deduce where a large number of educated Singaporean sympathies lie in that regard. You may demur, but are you telling me the average Singaporean is pro-American instead? I think rather not.

I really hope you will remember I still aspire to being a gentleman and a person who's culturally been thoroughly steeped in multi-cultural views from having spent half my life living overseas. However I sincerely believe that one part of the great harm which Bush has done to the US has been in irreparably harming the reputability of the US having formerly stood at least at some previous points in the post WW2 era, as a strong country that could exert a check on other regional larger countries in some fairly rogueish parts of the world simply gobbling up smaller ones for strategic advantage. Please don't tell me this does not occur with regularity throughout modern history as much as it did in prior times.

I see that the mood in the US, and most certainly in nations like yours, has shifted strongly to the belief that "all US engagement or commitment to such small truly democratic nations as Lebanon is very bad and should be not only ceased, but reversed immediately, because it is solely a "veil" to proceed American exploitative ambitions of it's own.

Whether that's true or not is beyond the scope of this reply. This reply only notes, and indeed predicts, that A) your wish will be granted, and America will indeed turn inwards, and B) we will see the world become increasingly unstable with proliferation of regional conflicts emerging as local players in such parts of the world as the ME see that the US guarantee of security is fatally compromised and in retreat.

Then we'll have a chance to see Cina's Confucian "spirit of compromise and deference to the community good" in action in the next decade or two. I have been reading scuttlebutt elsewhere that the time is coming when China, holding a large club over the US due to it's massive US treasury holdings, will simply gobble up Taiwan, and the US won't have much to do to stop it. That will be the Rubicon crossed, insofar as this single event will alert the entire world that China is now the "big"dog" and the US has succumbed. As far as the US dollar is concerned, if that ever happens it will be the coup de grace on the dollar as no other event could ever be.

I leave you only with this small caution. Despite tremendous accomplishments, Singapore, like China, is an "administered" society, in that it does not have a multi-party system. As a superbly educated Singaporean you must doubtless be aware of this. You have many accomplishments in your nation which put ours to shame - we truly begin to appear as a "banana republic" in per capita comparison to what your country has achieved, with litle perceptible advantage. As such however, maybe when you look at Lebanon, your mindset sees chaos, war and disorder and thinks "first thing to do there is to establish order and prosperity and fairness must follow".

My mindset, and it's not only an American one, but (to some extent) also a European one, thinks "first thing to do is to defend democracy".

So you see, all my critique of someone like Naomi Wolf, which I'm making an astute guess causes you such irritation, in no way detracts from the fact I am every bit as passionate about democracy as those here who may like you "read" my posts about the curtailment of democracy in the US as the "rants of a rightwinger". Unfortunatley if you think that you are employing a two dimensional interpretation (right wing vs. left wing) of the conceptual errors I was trying to point out in my posts about Ms. Wolf.

Lebanon has been a basket case for 40 years, although it's people are really lively and intelligent, and fun to be around. They lost their democracy to a neighboring country that's been a sordid police state for half a century. But presumably in your view because "US meddling" is such a totaly reprehensible thing, the slide of Lebanon into a Syrian satellite is "a small price to pay" for "kicking the US buggers out". Ask the anti-syrian Lebanese, and they may not agree wth you. It's a matter of where you are situated and what pressures your own nation has upon itself from neighbors (ask a Taiwanese for example).

Do Singaporeans maintain a healthy skepticism of the value of having a Politburo running what will soon be the new world superpower? What will be Singapore's official stance, when or if it sees China gobble up Taiwan? Will there be a conflict of sympathies there, or will Singapore merely endorse China because it's good for business?

Ref: http://www.itulip.com/forums/showthread.php?p=21073#post21073


________________


And here is an analysis update on US societal shifts which just hit my mailbox after signing off on this post:

From the desk of James Dines (who BTW lives in the Bay Area and is firmly liberal / progressive in outlook) -

We foresaw that the mere entrance of Barry Goldwater as a candidate represented an earthquake in American politics, toward "conservative" (less government). Additionally, days after 9/11 we predicted what we define as "Southward" (more government), which came true with passage for example of The Patriot Act and other increases in governmental controls. We are interested in Ron Paul because he might be the very first sign of a renewed shift "Northward" (toward less government). If anti-government feeling pervades in America, it would have international repercussions, possibly profound, because as we understand his website www.ronpaul2008.com, his positions would bring all American soldiers home, decriminalize drugs, and abolish the income tax, the CIA and the Department of Education. The odds against Ron Paul winning the American presidency are enormous, but his mere consideration might presage a shift in America's 2012 election, toward isolationism, and abandonment of allies worldwide.

[touchring]

Re: gavekal's four scenarios-

On Stephen Leeb's book, he got it right on gold and oil, but for most ordinary investors, the house is a bigger commitment than most investments/funds, and a very costly one if one buys at the top of the market. From the Singaporean point of view, where city real estate is generally much more expensive, a wrong house buying decision may take a decade to absorb.

On the Singaporean mentality, i must say that i do not represent the average university educated Singaporean mentality, in that i'm engaging when the majority of people from Singapore are conformists. The average Singaporean doesn't care about politics or intellectual arguments and only interested in their career.

As for the Singaporean society, the majority of the older baby boomer generation of Singaporean society are quite "anti-China" if you may call it, to begin with, as seen when the Administration they offended China 3 years ago by visiting Taiwan - http://en.wikipedia.org/wiki/Lee_Hsien_Loong.

The younger generation of Singaporeans (below 35 years old) are generally pro-China as they are used to dealing with people from China in school and at work (i believe there are about half a million people from China in Singapore) and a significant many worked or travel to China on business and leisure trips.

But I must also point out that there is a big section of the society that are pro-China, pro-Korean, pro-American, pro-Taiwan, pro-Japanese all at the same time as a result of pop and fashion cultural imports. Which is not surprising if you consider that the Singaporean society is a cosmopolitan society.

As for the Middle East war, the average Singaporean has no emotional attachment to the conflict, the Middle East being a far away place where the majority of Singaporeans have no business to be in, other than, and sadly, as a pasttime, like watching the war footages on youtube on cable news networks earlier on, and following the casualty reports.

And as conformists, the average Singaporean will tend to believe in whatever the Reuters and other international news agencies report on local media and the internet. If the reports are anti-Bush, or Anti-American, they will follow and repeat what the media says. If the news reports that Greenspan says that the middle east war is about oil, the average Singaporean that hears this news will also assume the same negative view.

As for the issue of whether to be more pro-China or pro-America on the political level (i make a difference between political and personal level since the British are definitely more anti-American on the personal level than the average Singaporean), i think the Singapore administration will play both sides as far as possible having got burnt earlier - refer to wikipedia article.

Personally, i think that the Middle East war was the right move for America from the strategy point of view - to secure the region before Russia does, and to clamp down on Al-Qaeda activities, and to dominate Iran. But war comes with a risk of lives and reputation, and the Bush administration made a mistake of wanting to create a democracy in Iraq instead of just replacing Saddam Hussein with a puppet - that proved difficult in implementation.

On the Taiwan issue, from the look of how things are going, the risk of war is quite low, what will happen is that eventually, China will become so overwhelming dominant from the economic side, Taiwan will just get absorbed bit by bit. It may take maybe a hundred years for this to happen, and by then, China may become a multi-party system like Singapore, where there is one dominant party, and the rest are too small to win any elections.

As for the question on whether Singaporeans fear the Politburo running what will soon be the new world superpower? Let me reply - I think the political system in China is already more democratic than Singapore - it is no longer the Mao days when he held dictatorship. The Chinese leadership is elected by the party itself with many factions vying for power.

As for your question on the danger of changes in the balance of power in Asia, my views would be that the major risk will be if America loses control over Japan, and should Japan starts returning to militarism. Though Japan today is peaceful (well, Japan had been peaceful for 400 years of the Tokugawa Shogunate, before WWII), the samurai culture, male chauvinistic pride remains entrenched in the society as we all know. Poltics can change, technology can change, but cultures do not change for hundreds of years. Before the Tokugawa Shogunate, China acted as a the stabilizing force in the Korean peninsular, in place of America today, but it was an extremely weak one which resulted in this - http://en.wikipedia.org/wiki/Hideyoshi's_invasions_of_Korea. So, in the scenario that America starts to turn inwards, China must evolve to become a stabilizing force in the region, but i think this might not be necessary in our lifetime?

By the way, i saw this report about China going full-time into nuclear power generation - http://bloomberg.com/apps/news?pid=2...e28&refer=home

[Guest]

Re: gavekal's four scenarios-

Very sophisticated reply indeed Touchring. You have won my considerable respect. And you are indeed a Singaporean with very broad horizons.