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Exchange Rate Deteriorating
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slothrop

Joined: 03 Feb 2003

Posted: Wed Apr 10, 2013 2:14 am Post subject:

edit Last edited by slothrop on Mon Jun 10, 2013 7:04 pm; edited 1 time in total

Weigookin74

Joined: 26 Oct 2009

Posted: Wed Apr 10, 2013 3:42 am Post subject:

slothrop wrote:

isn't japan's total debt to GDP ratio even worse than US?
http://www.zerohedge.com/news/2013-04-09/kyle-bass-perplexed-golds-low-price

what if in the future, taxes and inflation are so high, that assetts become liabliities, and debt becomes the most desireable assett? then those that have the highest debt, and can service the interest on that debt, would have the best credit rating, those that couldn't service the interest on their debt, would have their debt written down, but that would be seen as a penalty, because in that distopian scenario, the more debt you have, the more successful you are. and the people/entities with the most debt, would be the masters. because, like donald trump says... if you owe the bank 1 million dollars and can't pay, you have a problem. but if you owe them 1 billion dollars and can't pay, then THEY have a problem.

Must be the new economics. A way to rationalize spending whatever you want. True the banks have a prob in this case. But they aren't going to lend the average joe a billion bucks. It's still a bubble and when it bursts, there'll be a real Depression, greater than any ever before. But let's hope the politicians work something out before it comes to that. Time is running out, however....

akcrono

Joined: 11 Mar 2010

Posted: Wed Apr 10, 2013 3:49 am Post subject:

@ tran.huongthu
@ KimchiNinja

http://www.epi.org/blog/debt-stabilization-does-not-require-single-number/

http://www.forbes.com/sites/afontevecchia/2012/12/12/qe4-is-here-bernanke-delivers-85b-a-month-until-unemployment-falls-below-6-5/

But you both admit you're ignorant fools, that's nice.

KimchiNinja wrote:

If it is negative $75+ TRILLION dollars, such as the case of the US government, then it is game over. You can adjust the model any way you like, you can double GDP growth rate, you can raise taxes like crazy, you can cut government expenses in half, there is no way out of that hole.

I can make it seem like the end of the world if I pull numbers out of my ass too.

slothrop wrote:

as for US treasuries, it's a catch22. you know the only way they can not default is to continue creating money out of think air, hence they lose value via inflation. but to short them, and be right about a default, would mean the house of cards collapses. then good luck collecting on your CDS's from the next AIG.

You know the way we can not default is if we actually have a recovery. The majority of our deficit right now is cyclical.

Deja

Joined: 18 Mar 2011

Posted: Wed Apr 10, 2013 4:40 am Post subject:

Japan's net export is in top 3-4 positive ones, depending on which "fact book" you look at. US's net export is bottom one - with no other country having anything even remotely close.

slothrop

Joined: 03 Feb 2003

Posted: Wed Apr 10, 2013 5:17 am Post subject:

edit Last edited by slothrop on Mon Jun 10, 2013 7:04 pm; edited 4 times in total

atwood

Joined: 26 Dec 2009

Posted: Wed Apr 10, 2013 5:18 am Post subject:

slothrop wrote:

atwood wrote:

Anyway, if you're so bright, tell me when to start shorting U.S. Treasuries.

i don't know if anyone is shorting any government debt anymore. not since the EU refused to call greece's failure to pay their debt a 'default', hence, stopping all credit default swaps from kicking in.

as for US treasuries, it's a catch22. you know the only way they can not default is to continue creating money out of think air, hence they lose value via inflation. but to short them, and be right about a default, would mean the house of cards collapses. then good luck collecting on your CDS's from the next AIG.

as for SK exchange rate. who knows, a year from now it could stand at 2000, or it could be at 1000. i wouldn't bet on either. what i would bet on is that food, gas, electricity, public transport etc... will all cost more regardless.[/quote
No that's not the only way they can't default. And U.S. Treasuries don't have to default to make money on shorting them.

Besides, they're not creating money out of thin air; they're buying. Treasuries. If that creates inflation, why is inflation in the U.S. so low?

AIG is an insurance company--why would you buy CDs from them?

slothrop

Joined: 03 Feb 2003

Posted: Wed Apr 10, 2013 5:37 am Post subject:

edit Last edited by slothrop on Mon Jun 10, 2013 7:03 pm; edited 1 time in total

bucheon bum

Joined: 16 Jan 2003

Posted: Wed Apr 10, 2013 6:11 am Post subject:

slothrop wrote:

atwood wrote:

No that's not the only way they can't default. And U.S. Treasuries don't have to default to make money on shorting them.

Besides, they're not creating money out of thin air; they're buying. Treasuries. If that creates inflation, why is inflation in the U.S. so low?

AIG is an insurance company--why would you buy CDs from them?

i admit my knowledge of how short selling and credit default swaps(CDS) work is limited. but it's my understanding that you make money off stocks going down by 'short selling'. and you make money on the default of government debt, treasuries, mortaged backed securities, etc... by purchasing credit default swaps. AIG sold credit default swaps on AAA rated mortage backed securities that went under and then couldn't make good.
if that is incorrect or incomplete, then i would be grateful if you could explain how those things actually work in the simplest of terms. thank you.

Yep, you got it, although you can short sell bonds too, not just stocks since bond prices also fluctuate.

atwood

Joined: 26 Dec 2009

Posted: Wed Apr 10, 2013 5:04 pm Post subject:

slothrop wrote:

atwood wrote:

Right about the credit default swaps. I misread that as CDs and not CDS. But you can short bonds in pretty much exactly the way you short stocks. It's arbitrage and that's what keeps the market efficient.

CDS are a kind of insurance that can be traded and are used by banks as hedges. Unless you're a hedge fund manager or a high net worth individual, I doubt you'd be investing in them.

KimchiNinja

Joined: 01 May 2012
Location: Gangnam

Posted: Wed Apr 10, 2013 6:35 pm Post subject:

akcrono wrote:

I can make it seem like the end of the world if I pull numbers out of my ass too.

I tried to use small words and short sentences, but obviously you didn't understand a thing I said, and posted some foolish newbie link [facepalm]. I could post support for my numbers, but you wouldn't understand it anyhow.

The thing about math is it's math, not opinion, not politics. It works a certain way.

KimchiNinja

Joined: 01 May 2012
Location: Gangnam

Posted: Wed Apr 10, 2013 7:06 pm Post subject:

Dearest Atwood, please calm yourslef, there's no point to all this carrying on. If you want to show mathematically how a government works its way out of a negative $75T+ hole please do so. It's been my pet project for 5yrs now and nobody has shown me how it can be done (using math).

atwood wrote:

What are the expected cash flows of the U.S. Treasury? You can only guess.

It's not some grand mystery dear fellow.

Expected cash flows are plugged into the model (the US Govt has forecasts and they are available) then you adjust those up/down by inputting various assumptions into said model (GDP growth rate, tax rate, increased/decreased expenses, interest rate on debt, etc). It's called a financial model, you run different scenarios because you don't know the cash flows exactly. But when you build a super optimistic sceanrio, and even in that sceanio the cash flows don't work...you know it's game over.

atwood wrote:

If it were game over for the U.S., why would investors continue to pour money into U.S. Treasuries? Into U.S. stocks? Into the U.S. RE market?

Why did investors keep buying into sub-prime? Why did they keep buying CDOs? Why are you asking me, I didn't.

atwood wrote:

What do you know that all of them don't?

See point above.

atwood wrote:

You're a lifelong finance professional. So was the London whale. So were the guys at Lehman Bros.

I wasn't one of the guys at Lehman Bros though.

atwood wrote:

Anyway, if you're so bright, tell me when to start shorting U.S. Treasuries.

The US Govt is hosed financially speaking, that doesn't mean you are going to be able to time the market. To know the math doesn't work is to understand finance 101, to time the market is to have a crystal ball. Let's be reasonable dammit.

tran.huongthu

Joined: 23 May 2011

Posted: Wed Apr 10, 2013 8:37 pm Post subject:

KimchiNinja wrote:

akcrono wrote:

I can make it seem like the end of the world if I pull numbers out of my ass too.

Love seeing condescending, arrogant people like akcrono get owned. Its just too easy isnt it KimchiNinja?

akcrono

Joined: 11 Mar 2010

Posted: Wed Apr 10, 2013 8:54 pm Post subject:

tran.huongthu wrote:

KimchiNinja wrote:

akcrono wrote:

I can make it seem like the end of the world if I pull numbers out of my ass too.

Love seeing condescending, arrogant people like akcrono get owned. Its just too easy isnt it KimchiNinja?

You used small words, short sentences, and no sources. Just like a 6 year old. Still don't support your position, just "OH NOES! Debt is bad!"

@tran: He's not the condescending and arrogant one? Is he sleeping with you?

Last edited by akcrono on Wed Apr 10, 2013 9:28 pm; edited 1 time in total

akcrono

Joined: 11 Mar 2010

Posted: Wed Apr 10, 2013 9:23 pm Post subject:

slothrop wrote:

akcrono wrote:

You know the way we can not default is if we actually have a recovery.

maybe aliens will come to earth in spaceships filled with gold, exchange the gold for fiat currency, then use that to buy government debt. that's the only hope for a recovery. unless you're talking about a FAKE recovery where no jobs are created, and real earnings go down for those with jobs, and the politicians claim there is no inflation and the unemployment rate keeps going down. we already have that kind of recovery.

Or, we could just have a regular recovery (that we were seeing glimpses of before the latest jobs numbers). We don't need aliens.

slothrop

Joined: 03 Feb 2003

Posted: Wed Apr 10, 2013 9:59 pm Post subject:

edit Last edited by slothrop on Mon Jun 10, 2013 7:02 pm; edited 1 time in total

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