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Re: Volker, Greenspan and Donner, Too
Old 08-30-2005, 10:35 PM   #61
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Re: Volker, Greenspan and Donner, Too

Dan

There was an old couple who were 85 years old and had been married for 60 years. Though they were far from rich, they managed to get by because they watched their pennies.

They were both in extremely good health due to the wife's insistence on healthy foods and exercise.

One day they decided to go on a vacation to Hawaii, and on the way to the Islands, their plane crashed, sending them to heaven.

They reached the Pearly Gates and St. Peter escorted them inside. He took them to a beautiful mansion filled with the finest furnishings. They gasped in amazment. St Peter said; "Welcome to Heaven. This will be your new home."

The husband asked "Why?"

St. Peter said, "This is your reward in Heaven."

The old man then saw a beautiful golf course complete with club house and spa. The club house had the most wonderful buffet lunch spread out. St Peter told the man all this was his at no cost, after all this was Heaven.

The old man wanted to know where the health food was, St Peter told him that because this was Heaven you could eat what ever you wanted and never get fat. You never had to exercise or be carful of blood pressure.

The old man then looked at his wife, "You and your damn bran muffins, we could have been here 10 years ago!"

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Re: Volker, Greenspan and Donner, Too
Old 08-30-2005, 10:49 PM   #62
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Re: Volker, Greenspan and Donner, Too

I know what my dreams will be made of tonight...
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Re: Volker, Greenspan and Donner, Too
Old 08-31-2005, 06:50 AM   #63
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Re: Volker, Greenspan and Donner, Too

Quote:
Originally Posted by DanTien
flipstress -* I'll help out and buy a couple boxes* I wonder who owns BOCA...Right now I really lay on the condiments...I'm able to eat their All-American* Flame-Grilled* meatless burgers..."We make BOCA Meatless Burgers with nutritious soy...today's smart choice for protein that has all the taste(of soy) you love, without the fat and cholesterol of a ground beef hamburger."
Kraft owns Boca. Kellogg owns Morningstar Farms (used to be an independent that originally started to sell to the 7th Day Adventist market).
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Re: Volker, Greenspan and Donner, Too
Old 08-31-2005, 09:50 AM   #64
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Re: Volker, Greenspan and Donner, Too

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Kraft owns Boca. Kellogg owns Morningstar Farms (used to be an independent that originally started to sell to the 7th Day Adventist market).
Wow....I didn't realize the big guys were involved already...Kellogg...don't they have Adventist roots? Either way, I go through a lot of mustard with these things...still better than Mooseturdpie though...
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Re: Volker, Greenspan and Donner, Too
Old 08-31-2005, 01:25 PM   #65
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Re: Volker, Greenspan and Donner, Too

Morningstar corndogs are the best.... the dog is very dog-like!
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Re: Volker, Greenspan and Donner, Too
Old 08-31-2005, 01:30 PM   #66
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Re: Volker, Greenspan and Donner, Too

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Morningstar corndogs are the best.... the dog is very dog-like!
Does it bite back? Thanks for the reminder..time to get out to the Mn State Fair...wonder if they have deep fried Tofu this year....
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Re: Volker, Greenspan and Donner, Too
Old 09-01-2005, 01:02 PM   #67
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Re: Volker, Greenspan and Donner, Too

Quote:
Originally Posted by DanTien
Either way, I go through a lot of mustard with these things...still better than Mooseturdpie though...*
Yeah, the mustard, mayo, and ketchup help with the taste, as do lettuce, tomatoes, red onions, and sauteed mushrooms and onions piled on.* They all mask the non-beef taste until you get used to it.

Quote:
Originally Posted by Marshac
morningstar farms for me
I do like the Morningstar Farms breakfast links--no condiment-drowning needed!* I'll try out their corndogs.

Sorry to continue hijacking the thread, Donner.* I do read your warnings about the economy and appreciate them, but I might be just too naive to stick to my slice-n-dice mostly-index funds with some I-bonds.
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Re: Volker, Greenspan and Donner, Too
Old 09-01-2005, 01:10 PM   #68
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Re: Volker, Greenspan and Donner, Too

Quote:
Originally Posted by flipstress
Yeah, the mustard, mayo, and ketchup help with the taste, as do lettuce, tomatoes, red onions, and sauteed mushrooms and onions piled on. They all mask the non-beef taste until you get used to it.

Sorry to continue hijacking the thread, Donner. I do read your warnings about the economy and appreciate them, but I might be just too naive to stick to my slice-n-dice mostly-index funds with some I-bonds.
Donner, I'm almost done, too..unless you had something to add to the handling of soy product

flipstress - that sounds like a real good pile of fixings...I won't be able to find the "meat" in it...actually just skip the soy
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Re: Volker, Greenspan and Donner, Too
Old 09-06-2005, 09:46 PM   #69
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Re: Volker, Greenspan and Donner, Too

The House of Risk

Below is my little analogy/risk house that I thought up a few days ago.

But first a commercial : I agree that inflation is the real risk out there long-term. We keep printing and digitizing money like there is no tomorrow. Have been for thirty years at least. I believe that if we keep it up at the accelerating pace many commentators see we will end up going down like a ton of bricks—but probably much later in the future than we all imagine and also much worse. Inflation is the fear of older people, people who have saved money their entire working lives so that they can draw it down in the golden years. No one here has experienced how severe inflation really impacts people, although we did have a hint of it 1976-1982. Near the end of that time we really revved up the motor with loose money AND credit cards and many other forms of new debt. Wow, years of fun for everybody. Now we’ve reached the point where the debt bubble is ready to burst, in my opinion.

There are two sides to creating money: one side is simply creating it, printing it up or digitizing it; the other is how it is delivered to the users such as businesses and individuals. The gov’t ultimately controls both halves. Some of this money is delivered to us thru wages, profits, price increases, asset appreciation, etc.—all the typical, easily understood means. An increasingly large portion of this money has been delivered thru debt. We borrow from credit card companies, we release value from our properties, we borrow short to use long, we buy a new business with borrowed money, etc. This has steadily accelerated, especially over the course of our most recent mini-recession.

This excessive quantity of money, as most inflation experts know, sooner or later finds its way into price increases. Or, as A. Greenspan knows full well but lies about, into bonds when a better use cannot be found for excess money. This creates his bond conundrum.

The Fed and gov’t have in there wisdom determined that 2-3% inflation is wonderful. It greases the wheels of everything and everybody. People buy homes thinking 2-3% wage inflation will make making the payments a snap. An enticement for keeping this stuff going. Debt is good because I can pay it off with higher wages, the extra money I’ll be making. It’s a wonderful thing as long as it stays under control and returns on financial instruments return even more than the inflation rate. Wonderful stuff for everybody.

Until the wages stop going up, until people can’t make their debt payments. We are reaching that point soon—maybe. I’m hoping so. I’m hoping for a stock market and housing pop to bring people to a debt crisis. Then we really learn and experience something about the true nature and pain of debt—and, hopefully, use that knowledge going forward from that point. A rebalancing is needed soon before the serious stuff--hyperinflation--takes over the country.

We, of course, have another serious problem, 3-4 billion people that are willing to work for far less money than us. This right now is keeping middle class wages from rising no matter how much digital money/debt gets pumped into the system. As I see it, it’s a race between debt and wages. Debt keeps gaining to my mind. When/if we have another mild recession, I suspect whatever politician in office at that time is going to borrow the money to get us out of that future mess. More of the same, more money from nowhere, more excesses.

If the gov’t succeeds somehow in getting the money to us, then we just keep rolling toward hyperinflation—until that ends at some nasty point—probably in our lifetimes. I don’t want to be eighty years old with fifty million worthless dollars and smugly thinking I’ve got more of those thingys than anyone else—but no food, or meds, or working children to take care of me.

The excesses of money and society need to be sopped up at some point. It has amused me that our current administration takes a bifurcated view on this subject: Someone said “Deficits don’t matter.” out of one side of his mouth and out of the other came our new bankruptcy bill that basically says you can run, but you can’t hide (from your debt—it stays with you).

We can try to keep the game going by somehow getting more (and then more) money to the spenders/consumers thru false tricks. (Or thru real tricks like Katrina) History shows that this manipulation of money and hiding of real debt/costs in the future generation’s cradle always ends badly. We just keep sopping the excess money up with higher prices. Plus, sooner or later we inflate our way out of any type of stored value. Living standards fall dramatically as gas, healthcare, and food take an ever larger percentage of our income. A real stability of life is lost throughout the system—money. The alternative is to sop up the current excesses with a recession that sucks the liquidity, the excess money, out of the system now—in a controlled fashion—a managed or semi-managed recession.

My hope is a general awakening just after the bottom of a near-term recession, so we don’t have to go through the hyperinflation stuff. I’m hoping people see the craziness that they— and I—have been participating in. But I’m hedging a bit just in case I’m wrong—again. I don’t know how it will play out, what steps or stages it will take, or how society will react to it. I do know it is coming. End of the commercial.

So my investments are in a house, a five story house, a five story house with structural problems that I think I can judge fairly well as an amateur financial engineer. My guess is that the top two floors (2/5, 40%, DOW 6000) of the house may collapse in the near future, possibly wiping out some of my best friends. Of course, maybe the whole thing will collapse. But if that happens, there’s nothing for me to worry about—as they say.

So, where do I put my in-laws in this house? Just kidding DW. They can actually go find their own house. On the bottom floor I put my safest stuff: The precious metal shares, TIPs, I-bonds, some other commodity shares, and a little cash. These things are basically protection for the long term dangers of hyperinflation. They will wiggle and jiggle quite a bit if the upper floors collapse, a couple might even pop and go bye-bye before I need them--or don’t need them. I want them there if the worst happens. I also want them to grow larger and stronger if inflation is evident—to counteract the falling top floors. Normally, REITs and rental property would go here, but things are now so out-of-whack in that realm, to my mind.

On the second floor, I begin to store the safest income producers. For me this is short-term US and some municipal bonds—all AAA. And CDs. This is stuff that I can easily liquidate and then use to repair the top two floors if that is needed at some point or to buy more first floor stuff if things look like they are going in that direction.

Third floor: A little more risk and a little more dividend—but still mostly bonds and dividend paying stocks that will keep paying during dark times. The stocks have low or no debt ratios; I have cleared them for use as best I can, believing that payments will be made until the lights go out. They provide the basic necessities to people, things such as electricity, water, fuel, etc. The prices of these stocks will wiggle and wobble when crushed from above, but I hope they survive. I’ll buy more if the timing and prices are right.

Fourth Floor: The dividend payers that may have some growth opportunities built in, where I see a possible gain in our current market that is greater than the risk. But most of this stuff will be redeployed to the lower floors if I see the fall in sight. I have some investment real estate here—that stuff is not easy to move quickly. The risk-reward is baked into that cake. Not much I can do but watch—and have faith. But I won’t panic at an inopportune time because I know how this floor will behave under a collapse from above. I think I know what will pop and what will bend but hold.

Fifth Floor: My wild and crazy stuff. Who knows: Longer term bonds, growth stocks, whatever strikes my fancy and what may go very well or very badly in a variety of situations. Lots of activity, both up and down. This stuff keeps me interested and focused on timing and what the heck is going on in the world. It’s my play pen in the sky. I climb up there everyday to view the world and all the danger surrounding me.

Lots of working parts here. I look at each level and each component at each level and imagine how they will function if/when serious inflation or recession hits. I look at each part as it relates to the whole and what happens when the serious movement starts. Lately, I’m worried about stagflation too. This is my personal slice and dice.

Some people may have a two story house, a balanced fund comprised of stocks and bonds. It’s tough to watch this house to my mind because of the broad (protective?) nature of the beast. The bond portion contains a diverse mix of corporates, gov’t, foreign, short and long-term stuff. Tough to see the wiggles and wobbles as they happen. All one can do, oftentimes, is watch the price of the fund go up and down—thinking extreme diversity protects you, not a limited, more focused knowledge of a smaller number of components. Ditto with the stock portion. Good luck living blind in that house. Pay special attention to your CD ladder while the house whirls, flattens, billows, pops, and spins. Lots of different slice and dice methods. Many far, far better than mine.

--Greg
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Re: Volker, Greenspan and Donner, Too
Old 09-06-2005, 09:50 PM   #70
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Re: Volker, Greenspan and Donner, Too

I hope the markets drop so Greg can rest easy*

Can you change your name to GloomandDoom?
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Re: Volker, Greenspan and Donner, Too
Old 09-06-2005, 10:12 PM   #71
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Re: Volker, Greenspan and Donner, Too

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I hope the markets drop so Greg can rest easy
I don't know how he can live with himself. Never trust an amateur economist.

Of course, when these things fail to happen, they're always "just around the corner."
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Re: Volker, Greenspan and Donner, Too
Old 09-06-2005, 10:17 PM   #72
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Re: Volker, Greenspan and Donner, Too

--Greg,

Just read War and Peace your "house" post, and my head hurts. What on earth do you do with all your spare tome time when you aren't thinking up all this....uhh..., stuff?

Please don't misterpret this question, but in your house, does your elevator go all the way to the top?

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Re: Volker, Greenspan and Donner, Too
Old 09-06-2005, 10:41 PM   #73
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Re: Volker, Greenspan and Donner, Too

I picture Greg as a mad scientist
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Re: Volker, Greenspan and Donner, Too
Old 09-07-2005, 12:31 AM   #74
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Re: Volker, Greenspan and Donner, Too

Greg, are you bored tonight? There must be something you can do to ease the pain.*

Ha
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Re: Volker, Greenspan and Donner, Too
Old 09-07-2005, 05:03 AM   #75
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Re: Volker, Greenspan and Donner, Too

I agree that REITs are overvalued now.

I prefer a single level house in which each room is allocated for each asset class.
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Re: Volker, Greenspan and Donner, Too
Old 09-07-2005, 05:39 AM   #76
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Re: Volker, Greenspan and Donner, Too

Quote:
Originally Posted by moghopper
Never trust an amateur economist.
Didn't know there was a distinction between professional and amateur economists?*

Greg
I couldn't get all the way through your post. I got out of breath climbing up to the third story and couldn't make any higher.

BTW did you see the ny times article on hedge funds?
http://www.nytimes.com/2005/09/04/business/04view.html

Traditionally, economists have thought that big up-and-down fluctuations in returns indicated risky investments, so many hedge fund investors have hoped to see a pattern of smooth and even returns. But Mr. Lo quickly saw that lots of hedge funds were posting returns that were just too smooth to be realistic. Digging deeper, he found that funds with hard-to-appraise, illiquid investments - like real estate or esoteric interest rate swaps - showed returns that were particularly even. In those cases, he concluded, managers had no way to measure their fluctuations, and simply assumed that their value was going up steadily. The problem, unfortunately, is that those are exactly the kinds of investments that can be subject to big losses in a crisis. In 1998, investors retreated en masse from such investments.

In his paper, he shows that the catastrophic losses of 1998 were preceded by a noticeable series of months of mediocre performance. Mr. Lo argues that while a hedge fund crisis appears to be sudden and to be caused by unforeseen events, the breakdown is only the late stage of the problem. As more hedge funds compete for the same slice of the pie, he says, their managers feel that they have no choice but to "leverage up," juicing their returns by borrowing more money to make bigger investments.

That, in turn, makes the investments more prone to a sudden credit crisis. Hedge funds that are highly leveraged are vulnerable to having their lenders - banks and big brokerage firms - cut off credit when they think that their money may be at risk. And Mr. Lo thinks that lenders would do exactly that in an industrywide downturn. That would force hedge funds to close out their positions at the worst possible time - the kind of cycle that brought down Long Term Capital Management.

The nightmare script for Mr. Lo would be a series of collapses of highly leveraged hedge funds that bring down the major banks or brokerage firms that lend to them. That's a possibility that the entire hedge fund industry - secretive and fractious though it is - has a huge interest in avoiding.




Mike
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Re: Volker, Greenspan and Donner, Too
Old 09-07-2005, 07:29 AM   #77
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Re: Volker, Greenspan and Donner, Too

Mike: This more than anything is my definition of a brittle economy--too much leverage in the system. The scary part for me personally is that those who aren't heavily leveraged face the same consequences as those who are, a falling stock market. Thanks for the article.

--Greg
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Re: Volker, Greenspan and Donner, Too
Old 09-07-2005, 07:31 AM   #78
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Re: Volker, Greenspan and Donner, Too

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Originally Posted by Spanky
I agree that REITs are overvalued now.

I prefer a single level house in which each room is allocated for each asset class.
Make sure your bathroom doesn't explode and wipe out your bedroom too.

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Re: Volker, Greenspan and Donner, Too
Old 09-07-2005, 08:01 AM   #79
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Re: Volker, Greenspan and Donner, Too

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Greg, are you bored tonight? There must be something you can do to ease the pain.

Ha
I tried HGTV. Didn't work. Maybe I should have found my pistol, gone down the basement, and rubbed it with oil. Too late now.

Maybe we could start a commune in Missouri, near St. Joe? I read an article in the WSJ that goat meat is becoming more popular. We could raise goats for income. Advertize for a retired doctor to live with us who is willing to write perscriptions for goat milk. Sent a runner to Mexico once every three months for wholesale perscription drugs. Etc. We would only need one computer with internet connection because we would have the kitchen to talk in whenever we got bored. The economies of scale could be huge. JG could be kept walking the fence line for our protection-- the bait--so to speak. We could draw straws to see who brings him food and meds? Of course, Uncle Mick would be there to keep the women in line and for commentary on the septic. Life could be very good for us all, well most of us.

--Greg
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Re: Volker, Greenspan and Donner, Too
Old 09-07-2005, 08:14 AM   #80
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Re: Volker, Greenspan and Donner, Too

Quote:
Originally Posted by REWahoo!
--Greg,

Just read War and Peace your "house" post, and my head hurts. What on earth do you do with all your spare tome time when you aren't thinking up all this....uhh..., stuff?

Please don't misterpret this question, but in your house, does your elevator go all the way to the top?

REW
No! That would be too dangerous, better to just have a hole in the roof that. . . . . . . . . .

--Greg
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