Uncertain Future

[IndependentlyPoor]

Time to find my rusty razor blades, run a warm bath, and light some candles.

 

[brewer12345]

The container lines also mothballed a lot of ships and let a lot of crews go in order to reduce capacity and give them room to raise rates.

Inland trucking rates are also going up dramatically for the same reason. Over a hundred thousand trucks were parked during this recession and all it took was a little uptick in demand for shippers to see a huge change overnight. Sixty days ago I could take an order first thing in the morning and often get the truck loaded late that day. Now it is taking 2 to 3 days and the rates have gone up 20%.

Oh, agreed, most certainly. I think one of the gripes people have had about the container lines is that they have been somewhat slow to bring ships out of layup so as to let rates keep climbing. Not sure that is a fair criticism, since I very much doubt there is anything like a cartel there.

It has been interesting watching the North Sea PSV market. Rates held up there long after every other shipping sector got pulled down and then finally the North Sea market dropped to very low rates and low utilization. Over the course of 6 or 9 months, a bunch of shipowners took their boats out of the North Sea and put them on long term charters in other markets (mainly off the coast of West Africa and Brazil), which had the effect of quickly reducing supply in the North Sea. Then the Icelandic volcano spewed and what had been a slow rate climb rturned into a huge spike/frenzy as all the helicopters that were being used to ferry stuff to/from the drilling platforms were grounded and PSVs were the only way to make the runs back and forth. That market appears to remain pretty tight, no doubt exacerbated that a lot of supply was taken out of that market.

 

[FIREd]

Actually, I don't necessarily disagree that we may be in a depression of sorts. Some will say that we don't have soup kitchens and 25% unemployment like they did in the 30's. But they didn't have SS, Medicare, Medicaid, food stamps, public housing, unemployment insurance and unemployment insurance extensions to keep people off the streets in the 30's. They didn't have wild public spending to prop up the economy either (at least until later in the great depression). As I wrote before, a lot of people in my family would be queuing at the nearest soup kitchen if it wasn't for SS. As for unemployment, the "real" unemployment rate is close to 17%, really not that far from 25% (I am not sure how they counted unemployment in the 30's and whether it bore any resemblance to the way we count unemployment nowadays). Also, the great depression was not uniformly dreadful. It was peppered with periods of recovery that just fizzled out. I guess, it must have felt like you could finally see the light at the end of the tunnel, just to get sucker punched before you could reach the exit. But there were also some great market rallies in the 30's for those who could bear playing the game...

On the other hand, MIL just called. She wants to liquidate her portfolio... Bullish sign?

 

[bbbamI]

If folks are gonna freak out....might as well dance....

YouTube - chic and slash : le freak

 

[MichaelB]

Well, if the world is coming to an end, then

YouTube - R.E.M. - It's The End Of The World As We Know It (And I...

 

[Leonidas]

As of right now the BDI (and NM) is 25% of where it was in May of 2008 and still below last November's high and has made no meaningful new high. The BDI has never confirmed the recovery in the economy as the stock market indicated may happen, it may in the future but it needs to get over 5,000 and hold it for an extended period to get to a prior much lower level.

I can't find a chart (that I can cut and paste here) that shows the entire history of the index, but here is one from its inception to sometime in late 2008.

Maybe I'm looking at this the wrong way, but it seems to me that the BDI at 4,000-ish reflects something closer to long-term normal than the historic high of almost 12,000 or the low at 700-ish. In fact, 4,000 may be just a bit high.

My guess is that the demand for iron ore by China still has a lot of impact here in the shorter-term. Still, I'm not sure comparing the index at its current level against a high that was way outside its normal trading range is the right way to look at it.

 

[brewer12345]

Maybe I'm looking at this the wrong way, but it seems to me that the BDI at 4,000-ish reflects something closer to long-term normal than the historic high of almost 12,000 or the low at 700-ish. In fact, 4,000 may be just a bit high.

My guess is that the demand for iron ore by China still has a lot of impact here in the shorter-term. Still, I'm not sure comparing the index at its current level against a high that was way outside its normal trading range is the right way to look at it.

That is more or less my view. My long term assumption for a number of years is that Capes will earn $50k/day, Panamaxes earn $30k/day, and Supras earn $25k/day. More than that is likely to be short-lived gravy. Less than that is not likely to be a long term phenomenon. Naturally in the short term things can move far from the long term averages.

 

[Sam]

I've had a large percentage of my savings in gold and gold funds since 2001, and the rest in foreign currencies. At that time it was easy to foresee what was going to happen economically.

Sorry if someone has already asked this. Please explain to me why it was easy (for you) to foresee in 2001? If you could foresee then, why can you do it now?

 

[Sam]

I've had a large percentage of my savings in gold and gold funds since 2001, and the rest in foreign currencies. At that time it was easy to foresee what was going to happen economically.

Sorry if someone has already asked this. Please explain to me why it was easy (for you) to foresee in 2001? If you could foresee then, why can you do it now?

 

[dessert]

Speaking of space aliens, this guy is apparently suffering from an alien abduction hangover. I'm always amazed at his constant message of gloom & doom, but this time old Paul has taken it to a new level:

Crash is dead ahead. Sell. Get liquid. Now Paul B. Farrell - MarketWatch

Whaddya bet he's buying on the dips?

REWahoo, I read this guy today and I think if he has any money at all, it is invested in ammunition, canned goods, bottled water, chain link fence, surveillance cameras, land mines, pit bulls and a mountain top. Oh yeah, and he's single too!
I hope everyone realizes that "a blog is a blog etc.etc." Everyone has an opinion and he gets to publish his. I hope he didn't get paid for that.

 

[ultimo]

REWahoo, I read this guy today and I think if he has any money at all, it is invested in ammunition, canned goods, bottled water, chain link fence, surveillance cameras, land mines, pit bulls and a mountain top. Oh yeah, and he's single too!
I hope everyone realizes that "a blog is a blog etc.etc." Everyone has an opinion and he gets to publish his. I hope he didn't get paid for that.

I haven't read the article and have no desire to do so.

What interests me is how any talk about debasement of currencies, etc. etc. is seen as somehow "exteme" and then gets lumped in with the wackos.

Debasement of currencies is not an extreme idea... it's simply what happens when too much money gets printed.

And then you deal with that situation, as an investor.

There's no political ideas behind it all. There's just cause and effect.

 

[Gone4Good]

Debasement of currencies is not an extreme idea... it's simply what happens when too much money gets printed.

Sure, but be careful not to look at only one side of the equation, and just part of it at that. Money isn't being created, it's being destroyed. Every time a borrower defaults, money evaporates . . . poof. Meanwhile, the transmission mechanism by which the Federal Reserve would typically create money to offset that destruction is gummed up. So we have money destruction on one side and a neutered Fed on the other.

The clear and present danger is deflation, not inflation.

Sure, at some undefined point down the road, assuming no policy reversal and assuming we extricate ourselves from the liquidity trap that Japan couldn't, run away inflation is a possibility. But as you well know, 'we're all dead in the long-run'. In the here and now, deflation is still the bigger risk.

 

[FinanceDude]

Sure, but be careful not to look at only one side of the equation, and just part of it at that. Money isn't being created, it's being destroyed. Every time a borrower defaults, money evaporates . . . poof. Meanwhile, the transmission mechanism by which the Federal Reserve would typically create money to offset that destruction is gummed up. So we have money destruction on one side and a neutered Fed on the other.

IMO, the Fed is far from neutered, it is too powerful.........

 

[Gone4Good]

IMO, the Fed is far from neutered, it is too powerful.........

I'll elaborate . . . ."neutered" in its ability to create money through traditional channels.

With respect to its "emergency powers" I agree. I'm just not sure the alternatives are better.

 

[TargaDave]

A post I made in Dec 2005.

My dad is a classic conservative investor with requisite dose of depression era "gold bug" in him. One of the few people I know who made money from precious metals in the early 80's. I can still remember about 5 bags of silver stuffed in the basement. We used to play "fun" poker with the quarters. He sold 3 of the 5 bags right at the "Hunt Brothers" peak. We used a red wagon to wheel em into the broker to sell (heavy suckers). When I think back on it, the Hunt Brothers turned it into a pretty nerve racking speculation, but it helped put me and my 3 brothers through college. I still think it is a challenging investment that doesn't win often, but I own some silver bags, gold coins and mining stocks now because DD wouldn't let me sleep if I didn't. They've done quite well. Thanks again Dad

Well now up to >20% of the total stash mostly in physical metal with a minority in mining stocks with the rest of the portfolio in more typical diversified assets. Plan to stay this way for awhile but will allocate out at some point. Not a gold bug or a tin hat person. No barrels of oil or MRE's.

No desire to convince anyone here and I accept that we could be wrong about further upside potential. Just leaving a data point and another thankyou Dad (no matter what happens)! Cheers!

 

[brewer12345]

A post I made in Dec 2005.



Well now up to >20% of the total stash mostly in physical metal with a minority in mining stocks with the rest of the portfolio in more typical diversified assets. Plan to stay this way for awhile but will allocate out at some point. Not a gold bug or a tin hat person. No barrels of oil or MRE's.

No desire to convince anyone here and I accept that we could be wrong about further upside potential. Just leaving a data point and another thankyou Dad (no matter what happens)! Cheers!

Heh, actually I keep some MREs around, but not for the same reasons as the 'pocyclypse nutters or the gold roaches. Just some disaster supplies that would make it easier to keep the kids in one piece if we had a big hurricane or something and it took the authorities a few days to get here.

 

[haha]

One aspect of this board that I do not like is its very rapid rejection of anything off the beaten path.

The board is great for many things, but thinking carefully about investments and interactions of macro and micro evens and politics are not among those things.

My practice is to try to turn off my hearing aid when the quick slams come.

Ha

 

[brewer12345]

One aspect of this board that I do not like is its very rapid rejection of anything off the beaten path.

The board is great for many things, but thinking carefully about investments and interactions of macro and micro evens and politics are not among those things.

My practice is to try to turn off my hearing aid when the quick slams come.

Ha

Which you have said repeatedly in the past. I agree to a certain extent. Having said that, I think far out ideas and detailed investment theses are best spun out via PM with interested parties. In a public forum, if you want to go out on a limb you should expect to put forth a very robust case or get buried by challenges.

 

[REWahoo]

My practice is to try to turn off my hearing aid when the quick slams come.

Ha, Pfizer has very deep pockets.

Who needs the market when you can hit the lawsuit lottery?

 

[calmloki]

"I hear you're taking Viagra".

"Whut"?

 

[DblDoc]

Which you have said repeatedly in the past. I agree to a certain extent. Having said that, I think far out ideas and detailed investment theses are best spun out via PM with interested parties. In a public forum, if you want to go out on a limb you should expect to put forth a very robust case or get buried by challenges.

I agree. There are plenty of other forums out there to discuss politics and economics. There are plenty of roads to Dublin but if you want to post something way outside the investing box it should be challenged - if for no other reason to be sure the lurkers/newbies don't think the ERF members implicitly agree that investing in triple leveraged beaver cheese futures is a reasonable approach for ER.

DD

 

[IndependentlyPoor]

Milton Friedman's revenge?

Sure, but be careful not to look at only one side of the equation, and just part of it at that. Money isn't being created, it's being destroyed. Every time a borrower defaults, money evaporates . . . poof. Meanwhile, the transmission mechanism by which the Federal Reserve would typically create money to offset that destruction is gummed up. So we have money destruction on one side and a neutered Fed on the other.

The clear and present danger is deflation, not inflation.

Sure, at some undefined point down the road, assuming no policy reversal and assuming we extricate ourselves from the liquidity trap that Japan couldn't, run away inflation is a possibility. But as you well know, 'we're all dead in the long-run'. In the here and now, deflation is still the bigger risk.

US money supply plunges at 1930s pace as Obama eyes fresh stimulus - Telegraph

 

[Gone4Good]

One aspect of this board that I do not like is its very rapid rejection of anything off the beaten path.

I haven't seen anything in this tread that is "off the beaten path" that wasn't also factually inaccurate (e.g. that the Constitution requires money to be made of gold).

If "buy gold" is "off the beaten path" then I guess the Fox News channel which has been promoting it heavily is a backwater instead of the most popular news station in America. Same too with the hyper inflation worries and the debasement of the currency concerns. None of this is new, novel, or especially thought provoking.

 

[FIREd]

If "buy gold" is "off the beaten path" ...

I agree. Inflation fears are mainstream. What is off the beaten path is the idea that -perhaps- deflation is the bigger threat. And a lot of people who call for "open minds" were quick to dismiss the deflation scenario as ludicrous.

But no matter. When people (me included) exhort others to keep an open mind, we usually mean that others should keep their minds open only to our vision of things...

 

[DblDoc]

I agree. Inflation fears are mainstream. What is off the beaten path is the idea that -perhaps- deflation is the bigger threat. And a lot of people who call for "open minds" were quick to dismiss the deflation scenario as ludicrous.

How about "highly unlikely" rather than ludicrous. And while gold is an inflation hedge and a holder of value (long term) there are other, traditional assets that do a better job. Gold is best as a "chaos" hedge and has performed as expected during these recent turbulent times. Personally I don't hold any (other than as miners etc in my index funds) as I don't see sufficient benefits that outweigh the hassles and costs in owning the shiny stuff directly, but have no issues with those that do - as a small portion of their portfolio. Being all in gold (or cash) because "deflation is coming with certainty" is not a rational approach to investing, it is gambling.

DD