Monday, November 30, 2009

Insolvency Vs. Illiquidity

Is Dubai going through a temporary liquidity crisis, or is it facing a serious insolvency problem? Does it need a couple of billion to tide it over a rough spot, or is the income produced by the assets it built by the dozen insufficient to cover their debt load?

The answer is, obviously, the latter: Dubai has a serious solvency problem, as can be seen from the see-through buildings dotting its shore and spiking its skies.

Does it matter? Of course it does; the ONLY remedy for insolvency is debt liquidation and a commensurate drop in the price of the associated assets. That's how asset prices may once again come into line with the income said assets can produce. Corollary to this basic truth is that monetary bailouts of the type envisaged by the central bank in Abu Dhabi do nothing in such cases - except possibly avert panicky bank runs. That's a laudable and necessary step, of course, but what must come next is, perforce, the painful liquidation phase.

And why does it matter to the rest of the world what is going on in Dubai? Because it is the world's most glaring, most spectacularly obvious case of what is wrong in the real economy, all over the world. The quantities and prices of all kinds of assets rode high on a sea of easy credit with no regard to their end use. Assets were built and financed with an eye only to their immediate sale, to flipping them for an instant capital gain instead of operating them for real economic gain, like rents or dividends. That's the economic principle known as "the greater fool" or "the trading sardine". It works for a while and then always fails, quite often most spectacularly.

In my opinion, Dubai is the warning bell that the global economy has entered Phase B. The greater part of the liquidity crisis is over; but now starts the real pain of dealing with insolvency. Central banks and financial ministers did a creditable job of subduing illiquidity. They even fostered the view that the global Great Recession was over. That's a mistake.

Dealing with insolvency will require far greater political resolve and much different skills than merely lowering rates and opening credit facilities to all comers.

57 comments:

  1. "Dealing with insolvency will require far greater political resolve..."

    Therein lies the rub. Will political resolve or cravenness lead? If recent past is prologue the latter not former will be our fate.

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  2. Of course, the big buried monster is the size of the CDS pool written. I read this domino is at 600 billion$.

    The derivative boondoggle is so interdependant one debt implosion could take it all out.

    Joe M.

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  3. Kunstler is a good read this morn. I don't consider him an detached observer, but he sure has his flashes:

    "if we don't stop lying to ourselves about the destruction we have induced, every other suit-and-tie wearing authority figure in America, from the county clerk to Barack Obama, will take on the aura of the archetypal Evil Clown from a Stephen King yarn. Imagine living in a country where absolutely nobody in a leadership position is credible. This is the kind of country we're becoming and it will not keep running that way for long."

    http://kunstler.com/blog/2009/11/
    wickedness-abides.html

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  4. I am a resident of Dubai and have been keenly following all the financial blogs about Dubai. yours is the most accurate depiction of the underlying situation here. Here it was a pure speculatie economy for the last 4 years. Now almost 80% of the investors in property are not being able to pay their instalments, while the remaining paying 20% are shocked by the loss in their investment value by atleast 50% and are wondering if continuing with the originally overpriced investment is rational.

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  5. Not well known is that the U.S. Ex-Im Bank (i.e., U.S. taxpayers) is on the hook for huge loans to Emirates Airlines, which went crazy ordering airplanes from Boeing and Airbus. If Dubai crumbles, why would anyone want to fly there? In any case, the idea of Dubai becoming a "global hub" for air traffic (sort of the "Atlanta of the world") always was ludicrous.

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  6. Angry,
    Interesting facts you bring up..
    A cursory look at ExIm's pages and news reveals about $1.3 billion of exposure to Emirates Airlines.

    Thanks,
    H.

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  7. Any bets on the next sovereign (ok, Dubai World is not a sovereign) default?

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  8. Well, I see Marcus beat me it, as he has already cut and pasted Hell's last sentence as a prelude to expressing deep skepticism regarding officialdom's "resolve."

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  9. Actually there cannot be a sovereign default. A currency issuer can never default in their OWN currency. Start messing with other currencies though,
    watch out.

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  10. "Any bets on the next sovereign (ok, Dubai World is not a sovereign) default?"
    In eastern Europe there was a bunch of borrowing going on. The problem is that they (Ukraine, Hungry, Lithuania, Poland, etc.) borrowed mostly in Euro and in Dollar. So, contrary to the US, they don't own a printing press that could bail them out. Default sub-prime borrower style is in the future. A bunch of west European (France, German, British) banks and ultimately taxpayers will be on the hook for that disaster.

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  11. Thanks for this post, captures what is at the core of the "crisis" since the very beginning.

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  12. Actually, Hell, when I returned to the U.S. two summers ago to catch a peek at what the alma mater (country) had become, I was a little distressed to see all those cheap, third rate shopping malls à la Walmart going up as the only example of... construction around.
    Grenoble is surrounded with miles of empty office space. I presume you can find it at La Defense, Paris's hyper chic skyscraper district.
    I would be really interested on this blog if anybody could give me/us examples on the way the... Muslim banking system is organized GIVEN THAT ISLAM STILL PROHIBITS TAKING INTEREST.
    That's a... BIG GIVEN.
    "They" may be getting around it in our global world, but if they are, I would like to hear how they're doing it, how it's organized, the way it's done, and the different actors involved.
    Just so we can compare this with where WE came from, way back when.
    Y'll know MY sympathies on this subject...

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  13. Thanks, Marcus for the interesting link.
    The author does NOT take into account that the very nature of democracy is to... DESTROY authority figures (as mentioned in my comment on Hell's last post).
    It always HAS been the nature of democracy in our Western world. Its logical conclusion.
    Louis XVI did not lose his head for nothing...
    The structure of democracy favors... disincarnated (or unembodied if you prefer) abstractions over flesh and blood representatives of authority.
    Good to remember.

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  14. Dear debra, re islamic banking.

    First some history. There was a VERY good reason both Christian and Islamic religions forbade lending at interest. In simple terms, because it instigated war. 1) Because most lending was done to sovereigns to finance wars and 2) because at the age of gold and silver money the ONLY way to pay interest was by either to a) discover a new goldmine or b) pillage it from someone else.

    It was mostly pillaged, of course.

    As to islamic finance. Its practitioners merely call interest something else, mostly "partneship gain" etc. For example, an islamic mortgage works like this: the bank buys the house and resells it to the borrower at a profit, allowing the borrower to re-pay in installments.

    It's all a gross miscarriage of principle, like medieval monks who had to fast blessing the meat so it was divinely transformed into fish, i.e. fine to eat on fasts.

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  15. Aw, shucks, Hell, something tells me that you are in no way whatsoever a candidate to believe in transsubstantiation...
    A rose by any other name, remember ??
    And, from the sounds of your EXTREMELY CONDENSED history lesson I would say that times have not really changed, then, have they ?

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  16. Debra:

    "The author does NOT take into account that the very nature of democracy is to... DESTROY authority figures "

    To bad we don't have a semblance of democracy in this country anymore, then we might follow your line of thinking.

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  17. Thank you for keeping me on my toes, Marcus.
    I SHOULD have said...
    the nature of democracy is to... BANKRUPT the legitimacy of authority figures.
    Do you like that better, Marcus ?
    While we live under an oligarchy, we nevertheless pay tremendous lip service to... democracy, Marcus.
    Greenie : BIG SMILE for that last comment.

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  18. Whoever wrote that article on Goldman employees getting permitted, really doesn't know what they are talking about. Odds are that the bankers in question are applying for what is known as a license to carry-which means the right to carry a loaded handgun on one's person- otherwise they wouldn't need a personal recommendation.

    The fact is that NYC has very tough gun laws and shouldn't, if protocol is being followed, give any of these jokers an LTC for the simple reason that no one at any financial firm, let alone Goldman, has come under physical attack, unless, of course, you count that random lone fist planted to the face of Dick Fuld. However, as the applicants are Goldman employees, and are therefore above the law, some number of these financial would be gunslingers will likely acquire what 99.9% percent of NYC residents would be denied except under the most compelling circumstances.

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  19. Debra,

    Still don't see the argument.

    Louis XVI was an example of revolution, regime change. Any regime change "bankrupts" or "destroys" the previous authority, by definition.

    I don't see good concrete examples, in excess of the opposite argument, of democracy destroying authority figures.

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  20. I completely agree with Debra provided I understand her argument correctly. Democracy is one of the worst political systems. Democracy, by its nature, is corrupt. People, who think that this country's problems are due to our democracy getting corrupted by moneyed classes, are looking at the wrong place. Rule of money is the natural destination of all democracies. Blind faith in democracy is what will take USA down.

    Few weeks back, I wrote a long post on the above point in my blog. Let me see, whether I can find it.

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  21. "What is democracy? It is the rule of mob, or rule of everyone over everyone.

    Democracy is a new experiment on human society. I am ignoring ancient Greeks due to lack of extensive written record about common men of that society and the time lag. If there is one thing that is worth mentioning about ancient Greece, it is that Aristotle, the wisest person of the society, was vehemently against Democracy. That is a strong verdict IMO.

    Let's look at the leader of modern day democracies. Here are few observations.

    How does a democratic man think?

    i) Democratic man is arrogant, because he believes he has power of rule-making.

    ii) Democratic man tries to solve every problem of the society and does not accept that some problems are unsolvable.

    When an arrogant person comes across an unsolvable problem and does not accept that it is unsolvable, he usually creates a mess. Does this observation hold on a societal level?

    How is a democratic society like?

    A. Democracy is a highly perverted system, because everyone acts as a ruler. However, a functional society needs to have small number of rulers. Who are those chosen people? In a democratic society, those who can bribe the mob most get hand-picked as the rulers of the mob. The bribe is in the form of campaign promise - 'elect me and I will give you this'. That give you always follows the principle of 'robbing Paul to pay Peter'.

    B. Rule A makes a democratic societies highly corrupt. When 'robbing Paul to pay Peter' is the moral code of a society, you can expect all moral reasoning to get perverted by 'what do I gain out of this'?

    Corruption is endemic to democratic system. The rulers can stay in power only by bribing, and so bribing becomes an acceptable norm of the society. The bribe may be named 'academic grant', 'legal right', 'campaign finance', 'special interest right' or whatever, but it is bribe nonetheless.

    C. Because there is no God or king to worship, a democratic society naturally picks a new master to worship. That new master is money.



    Why did USA choose democracy?

    It is often said that USA chose democracy for liberty and freedom, yet if you read the history of this country, you will find that it always remained very violent. The country was established by killing the native population. It joined two world wars without invitation. This suggests that freedom and liberty has less to do with establishment of democracy in this country.

    American colonies were established by the puritans. If you understand the puritan mindset, you will conclude that democracy was the only political system they could choose. Puritans can be best described as fanatical Christians. They did not like the king and they did not like the Pope or any other established church. They were behind British civil war in 1650s. When that civil war did not dislodge the church of England, they left en mass to settle in the new continent.

    Puritans were all self-righteous freaks. They banned celebration of Christmas in the colonies. Only system of rule they could go along with was the rule of each man being a ruler. Democracy was highly compatible with puritan mindset.


    Who is the real ruler of a democratic system?

    Due to vacuum of moral authority from religion or royal classes, democratic system gets ruled by moneyed interest. However, there are two important difference between rule by religion/royalty and rule of money. i) Money can move anywhere and does not have loyalty to any country or culture. ii) Moneyed class does not have any moral value other than acquiring more money/power - which brings us to the same conclusion that democratic system is intrinsically corrupt.

    "

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  22. "
    Why will the current political system in USA collapse?

    Through three centuries of evolution, money masters established themselves as the absolute leaders of American democratic society. If you read US history carefully, you will recognize that no single event was responsible to change the society to its current form. Almost every president did something in the name of helping the people that increased the power of money master. It was not just the establishment of Federal reserves, or Reagan's trickle down or Bush's Iraq war.

    Now that the money masters made the country bankrupt, the only way the society can move on to something else is by getting rid of the entire democratic political system. As I explained, democracy and rule of money are integrally related. You cannot part with one without the other.


    Why is California a basket case?

    Around late 1800 (gilded age), some social reformers noticed problems with the political system. They observed that the moneyed interests were having too big a say in the government. What was the solution proposed? - More democracy, because those reformers did not realize that democracy and power of money are two sides of the same coin. Their proposed reforms of direct democracy (recall, referendum, initiative) were incorporated extensively in California and other new states.

    As you understand, problems of democracy cannot be solved by more democracy. California being the leader of direct democracy is the state most likely to collapse.

    [Some of the above thoughts are adopted from Mencken]"

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  23. So Greenie,

    The alternative? Philosopher Kings?

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  24. Yes, Marcus - that is what Aristotle prescribed.

    His order of things -

    Wise king (king advised by knowledgeable ministers)

    Republic

    Democracy

    Tyrant

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  25. Well, Greenie, you have AT LAST come out of the closet on this blog, and I am rubbing my hands in glee.
    But... I hold with Thai that this is a zero sum issue : in other words... every advantage has its disadvantage and every disadvantage has its advantage. Our not so recent ancestors were really fed up in France with the fact that... CHURCH AND ROYALTY had become corrupt (my God, Saint Francis was in revolt against MONEY, that great corrupter of ALL men, in the 1200's or so, so that you can see that... the more things change, the more they... STAY THE SAME, as we say over here).
    Which is why I say that it is the nature of MONEY to corrupt, and this corruption transcends ALL political systems.
    And the MOST INTERESTING POINT, in my book lies in OUR PERCEPTION OF CORRUPTION.
    Since Mr Smith goes to Washington portrays basically the SAME corruption that we are ranting on about today, JUST WHAT EXACTLY makes the social body (us, remember ???) get SO uptight and self righteous about it at certain periods and NOT at other times.
    There's a French sociologist whose book I recently took a peek at writing about the... fear of déclassement.
    That means the.. fear of slipping down that social and financial totem pole.
    In my book, that is the number one motivation behind that ranting about corruption these days.
    Fear of slipping down the totem pole.

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  26. Whoever wrote that article on Goldman employees getting permitted,

    Maybe we will see more banksters "Going Postal"? If it happens at board level, I am all for it; I fact, I think it should be encouraged by drugging the water cooler or something.

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  27. Despite the high cost of living, it remains popular. ;-)

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  28. Democracy is in fact a problem.

    Just look at the fantastic state of affairs in dictatorships or pseudo-democracies: Africa, most of Asia, Russia. That is the way to go baby!

    Another good example is when enlightened economic PhDs were in front of dictatorships or even democracies in Latin America. Those were the good times! In fact, Wise kings indeed.

    See for an example of a failed democracy: Brasil. Imagine the ridicule of a fourth grader being in front of a country! Only in a democracy such nonsense is possible. Also, Lula's first finance minister was not an economist at all, not even a PhD. It was an MD. Complete fail.

    Also, in Europe older democracies perform much worse than younger ones. See, eg, Scandinavia versus Southern Europe (a.k.a. PIGS).

    Yes, all facts support that democracy is a bad idea.

    Either that, or some people here live in Mars.

    And before you say that Hitler was elected (boring and old argument), I would like to remind you of the following: HUNDREDS of examples can be found in which wise dictatorships of worse deeds (Stalin, Pol Pot, Rwanda). And, BTW, Hitler had 43% of the vote, not 50+.

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  29. You lost me.

    The fashionable thing around 1900 was Christianity. Christian missionaries in India used to say - 'compare the countries that are industrialized and economically prospering and the countries that are not and the biggest difference you see among them is Christianity. Christianity is what causes prosperity.' - and then they would give 15 or 20 reasons, why Christians are morally superior than those following other religions. Democracy is today's false God.

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  30. Democracy was and remains an ideal to which we should strive. I maintain that women and slaves aside (a rather embarrassing aside) Periclean Athens came pretty close to the ideal. But it only lasted for a few decades and ended up creating some pretty ugly side-effects, besides.

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  31. Debra: "Which is why I say that it is the nature of MONEY to corrupt, and this corruption transcends ALL political systems."

    The nature of gold is to be very malleable, non-corrosive, and rare element.

    The nature of man is to be corruptible by power. This is why we have three branches of government, an attempt to create a balance of power and a check on absolute power.

    Very cynical in a way, yet an attempt at mitigating a flaw in the nature of man. That is what is forgotten in the age of idiocy we find ourselves. Conservative v liberal--bullshit--the good of society v the innate corruption of man.

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  32. Marcus, you have lost me. I do not follow you.
    Sometimes I think that you must go all emotional over me on this blog.
    I still maintain that every political system has its.. advantages and disadvantages, and that corruption is endemic in every society.
    HOWEVER... to get back to Hell's... IDEALISM, shall we say, democracy's... ADVANTAGES are more APPARENT in a society with an educated citizenry. And democracy certainly works best in SMALL societies, NOT in large ones where I think it becomes impracticable because of those sheer numbers that you guys are all so attached to...
    Good point about Christianity, Greenie.
    I DO think that it is positive that we are at least starting to QUESTION that democracy ideal.
    Questioning means that... THINKING is on the way.
    Geez, it's about time that we stopped bowing down in front of that idol (sorry Hell, what did you say, IDEAL ?).

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  33. Eww, Greenie, I got goosebumps reading the first two paragraphs of your link on democracy.
    WE NEED THEORY ???
    DRING. It's about time that I launched into my monthly incitation to you guys to go BACK and read the Merchant of Venice.
    So much more enjoyable than economics/history professors, too.
    Wouldn't you rather get your cultcha from a playright than a professor ? And be... entertained too ??

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  34. Debra, Instead of a general complaint about not understanding me, and attempting to read my emotional state, you might try to give specifics. Exactly what don't you understand? And cut the crap about emotional response.

    Maybe a better phrasing of my last statement:

    "That is what is forgotten in the age of idiocy we find ourselves. Conservative v liberal--bullshit--the good of society v the innate corruption of man."

    might be better phrased:

    Instead of focusing on conservative v liberal bullshit, the good of society through mitigation of the innate corruption of man, should be our focus.

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  35. Ah... Dictatorship works so well, especially in big countries. Just check China or the USSR. Former USSR.

    Brasil is doing very badly.

    India is the only so-so case.

    I am curious where people here would put the US (and UK) regarding being a democracy. Being based on a "first past the post" system of "democracy".

    Anyway, fetishization of the wise dictator. Nice platonists around here, I see.

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  36. Mencken -

    "Politicians seldom if ever get [into public office] by merit alone, at least in democratic states. Sometimes, to be sure, it happens, but only by a kind of miracle. They are chosen normally for quite different reasons, the chief of which is simply their power to impress and enchant the intellectually underprivileged….Will any of them venture to tell the plain truth, the whole truth and nothing but the truth about the situation of the country, foreign or domestic? Will any of them refrain from promises that he knows he can’t fulfill – that no human being could fulfill? Will any of them utter a word, however obvious, that will alarm or alienate any of the huge pack of morons who cluster at the public trough, wallowing in the pap that grows thinner and thinner, hoping against hope? Answer: may be for a few weeks at the start…. But not after the issue is fairly joined, and the struggle is on in earnest…. They will all promise every man, woman and child in the country whatever he, she or it wants. They’ll all be roving the land looking for chances to make the rich poor, to remedy the irremediable, to succor the unsuccorable, to unscramble the unscrambleable, to dephlogisticate the undephlogisticable. They will all be curing warts by saying words over them, and paying off the national debt with money no one will have to earn. When one of them demonstrates that twice two is five, another will prove that it is six, six and a half, ten, twenty, n. In brief, they will divest themselves from their character as sensible, candid and truthful men, and simply become candidates for office, bent only on collaring votes. They will all know by then, even supposing that some of them don’t know it now, that votes are collared under democracy, not by talking sense but by talking nonsense, and they will apply themselves to the job with a hearty yo-heave-ho. Most of them, before the uproar is over, will actually convince themselves. The winner will be whoever promises the most with the least probability of delivering anything."

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  37. I grew up in India and know how well (or how badly) democracy works. Brazil is doing well now, but for a while USSR also looked like a great country. China is kicking the asses of all three BTW, and it is not a democracy. And let's not forget, Fascism was the preferred model in early 1930s, as Germany came out of the depression first. Oh, BTW, how is your Afghan experiment going ever since George Bush established democracy there?

    Anyway you look at it, there are as many failed democracies as failed dictatorships or failed Christian republics. I understand that in this board, when data contradicts emotion, emotion wins,

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  38. Democracy in Afganistan? Even in the USA is to be discussed.

    I suppose it will be quite difficult to discuss with someone that suggests that China is a better place than Brazil to live. I suppose we see too completely different worlds.

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  39. In all fairness we should acknowledge that the simple "fact" of being able to express ourselves in this way on this blog is a tribute to the democratic experiment.
    We would NOT be expressing ourselves this way in... China, for example.
    You guys need to hone up on those liberal arts reading/writing skills. The lack of them keeps (some of) you from developing the nuances of what we're talking about on this post.
    I NEVER said I was in favor of.. dictatorship.
    But.. I think we need a serious rehaul of the "democratic" system. Successive Anti-Terrorism and Death Penalty legislation, coupled with the Patriot Act have succeeded in expanding those irksome little EXECUTIVE privileges to an alarming point... Executive expansion STARTED, as I recall, in the EARLY twentieth century, so you can SEE how far we've come already.
    Marcus, your complaints about my "generalizations" are tiresome, do they mean that you insist on having links to Wikipedia as a "legitimate" authority to judge what I'm saying by ??
    Can't you use your OWN reason ? Or do you have to have a specialist to tell you what to think/who to believe ?

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  40. "someone that suggests that China is a better place than Brazil to live"

    Many of my Chinese friends went back to China/Taiwan/Singapore from USA, and would never think about living in Brazil of all places. My mom prefers to live in India even with all the corruption. Muslims in Switzerland are not doing too ok this week (thanks to Democracy), and may be better off in Dubai or UAE. What is your point?

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  41. My point is precisely that: I don't have your personal datapoints. I have others. And they point in a different direction.

    So, we see a different world.

    I see this world:
    http://www.chinahush.com/2009/10/21/amazing-pictures-pollution-in-china/

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  42. A very intelligent periodic commenter on this blog recently reminded me that blog communication has a major blind side, specifically its lack of additional communication channels helpful in allow readers to understand what linguists call "aspect"- immortalized with Clinton's famous "it depends what the meaning of 'is', is".

    Real world communication usually has supplemental communication channels such as physical/situational context and body language/posture/energy level, etc... All these additional communication channels give a non-linear HD picture to what might otherwise be low res/linear when determining another person's aspect/viewpoint/angle of intent, etc...

    As far as I can tell, most of these additional communication channels helping localize aspect are completely lost in blog world.

    Anyone have any thoughts on how to improve this or know a link that does?


    Having said this, and agreeing with Deb that I see how the lack of cooperation in democracy, or the king's blind side in monarchy- sorry, reading Micheal Lewis right now- allows systemic risk to develop in either, still we have to pick a side in life.

    I therefore chose the democratic jungle over the philosopher king's castle, and will go down with that ship every time... unless a REALLY compelling information structure is presented otherwise. ;-)




    @Hell

    I am not sure I mentioned this but I originally came across your blog whilst doing research for my group's 401k- I am it's trustee. Anyway with a trustee's viewpoint as a fixed reference point, I was wondering if you had any general thoughts on how to frame a staff meeting question on how a prolonged deflation might effect one's decision to either start a ROTH 401k or convert from a regular 401k to a ROTH 401k?

    I swear to god this came up today.

    I know you do not give investment advice and I AM REALLY NOT LOOKING FOR ANY, but I can't find anything on the internet one way or the other so any general thoughts you might be willing to share on how to frame the issue would be greatly appreciated.

    I know this may be globally a zero sum issue, but to the 125 men and women who's blind side I have been entrusted to watch, thoughts on framing the issue would be most helpful.

    Regards

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  43. Greenie, this too shall pass...

    A thought on the issue of emotion on this blog if I might. Please re-read your own writings on the failings of democracy, only this time from the viewpoint that you are looking for emotion in the article. A few quick notable mentions might include (but not be limited to):

    Greenie: "Aristotle, the wisest person of the society, was vehemently against Democracy. That is a strong verdict IMO"

    Thai: Trust?

    Greenie: "Democratic man is arrogant"

    Thai: some kind of emotion, no?

    Greenie: "Democratic man tries to solve every problem of the society and does not accept that some problems are unsolvable."

    Thai: faith? Modeling the future behavior of others using inductive reasoning? Epistomologically incorrect?

    Greenie: "Democracy is a highly perverted system..."

    Thai: "perversion"? Really, some kind of emotion, no?

    Greenie: "Corruption is endemic... "

    Thai: another "some kind of emotion"

    Greenie, we cannot even think of a world without emotion, none of us can. It is a filter on everything we do, every thought we have.

    Take this sad (nay gross) story:

    Think of the bear infinite number of aspects/viewpoint various readers will come into the story with and therefore leave reading it with completely opposite conclusions:

    1. Marcus: American health care is so messed up, people are waiting 80 minutes and dying of heart attacks and if we had nationalized medicine, we would clean this mess up.

    2. Thai: How sad for that poor man. And how unbelievably sad for that poor ED physician working on that shift. 2 out of 3 of his patients are narcotic seekers, an unbelievably tragic national problem which the poor ED physician can not possibly solve, but they kept him from seeing the one guy in the waiting room who he could have helped since he can treat a heart attack. Now he and everyone else involved will be sued. Bad break. It would be great if more resources were coming to help him out but I already know there is a huge shortage of ER docs, nurses, etc... and no one wants to pay more.

    Okie: This requires justice and I will be the first to help that dead man's family. I know the hospital and the ED physician are a deep pocket that can help his children still go to college, we will make them pay.

    fajensen: America is so messed up! I am glad we do not have all their "issues" and I don't want them.

    Greenie: This is yet another example of how American exceptionalism is such a myth and democracy is simply messed up.

    Debra: Forgive us our tresspasses

    etc...


    Just think about it...

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  44. Fajensen, we should be so lucky and live so long to ever see Goldman employees-and I am not counting the poor folks who sling hash at the cafeteria- intentionally harm one another with so much as a desiccated spitball.

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  45. "So, we see a different world.

    I see this world:
    http://www.chinahush.com/2009/10/21/amazing-pictures-pollution-in-china/"

    Being dumb as a doornail, I still do not get your point. You are saying China is polluted, but I can get you similar pictures for India. How is democracy related to it?

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  46. excellent post!

    Clearly, denial seems to be the only policy being adopted for now....

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  47. Dear Thai,

    Re: 401k/ROTH 401k

    It is a very complicated question. The answer depends on the age of the participants, their taxation prospects and a host of other particular details.

    I am not qualified or informed enough to make a suggestion. Sorry..

    (I presume you are aware of the main difference between the two plans, i.e. about pre-tax and post tax contributions, yes?)

    Regards,
    H.

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  48. Thanks Hell and "yes, I am". I'm going to find a specialist to talk with the group on the issue, just curious if you had thoughts.

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  49. Greenie, you are correct hence my comment on aspect and emotion and one further point I will continue with if in parallel as you argue with Tiago if you don't mind.

    ALL decisions require an engineer's classic trade off between competing issues, and I mean ALL.

    Take the simple example of word choice when creating a sentence.

    If you read any linguistics, you will quickly realize that the more linguists have tried to break words into to their most "atomic" level (e.g. that which is no longer divisible), they have discovered that these atomic building blocks have yet further building blocks from which they are comprised.

    The way we comprise words, etc... is simply a reflection of how we grouped particular building blocks together, which in turn is still a function of choices our brain made in evolution over time, etc...

    But once one set of building block choices are comprised, others cannot be. It becomes a classic engineers trade off as opening one door closes another.

    "Emotion" sits as a filter at every one of those decisions junctions no matter how atomic you try to take this issue- of course at some subatomic levels it does get into issues of whether the word emotion continues to be appropriate.

    Just think about. You can Google it yourself if you don't believe me. The neuro quants have made a lot of headroom on this issue in recent years and it is clear: the duality problem is always there.

    It is what it is.

    Be well

    Anyway, I will return to our regularly scheduled program of fighting the war of the world. ;-)

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  50. Thai, I debated about Roth vs regular IRA for my own 401K, and could not come up with a definite answer. It is not a simple question, because one needs to figure out future tax rates (after 30 years), growth of retirement funds and future income/earning potential post-retirement age, when those funds mature. Even a single one of those variables is hard to call. Three together would be nightmare.

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  51. Thai, I agree with you. Even the most objective scientist is emotional, because a selection process goes regarding the problems that he chooses to study. For example, if someone spends all his life studying only the white swans, no matter how objective he is, you learn nothing about another important class of swans from his writing simply because he did not bother to understand them.

    This is why, it is most illuminating to read opinions of people, who used to reject a certain hypothesis for long time, but now has moved to opposite camp. If Hell turns into a gold bug, I would be very curious to read his opinions.

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  52. Thai, another example would be if you conclude that government does not print money.

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  53. Greenie, touche!

    Some superstitions seem to be a lot harder to let go of than others. ;-)

    Be well

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  54. The shame of this is after we all get back on track again it will repeat in the future human nature is habitual.

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  55. Another sunny day here in Dubai.

    Since I posted a few weeks ago we've been in the news a lot. My view is that it was the classic Goldman Sachs "dump and pump" which we often observe around long holiday weekends when US markets are closed. This time it was Thanksgiving in US and Eid/National Day in UAE. They panic foreign markets into crashing while US and UAE are closed, then there is some sort of calming formula spoken just before markets open.

    Voila! The US outperforms again! And UAE is less damaged than most would have thought. Meanwhile the prop desk at Goldman has just earned the 4th quarter portion of their record bonus.

    Let's face it: Abu Dhabi made more money off the appreciation of the US dollar side of its vast portfolio with the brief "flight to quality" dollar bump than it will cost to bail out Nakheel ten times over.

    You all were played. Again.

    For myself, this mini-panic is causing another downward shift in rents. I'm going to move closer to the beach and buy a kite board.

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