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First, "producing something" is really not that valuable in this day and age -- most of the profit comes from the service, not the substance. Second, I live a county of 250,000 people and nearly 5,000 software companies. Most are tiny companies you've never heard of but some have been bought...

This is the best advice and you should take it. Ask yourself this: if you had a good and loyal friend with 12k of cash, what would you tell your friend to do with it? Would you really tell him to buy SPY or DDM? Are they really the best trade/investment? If so, then keep your position. If...

I think you will find that the "smart money" is NOT in control of their own destiny. The "smart money" is getting margin calls from their broker and capital calls from their private equity investments so they need cash and they need it quick. But the"smart money" hedge funds have halted...

Exactly! But a job is an exchange of the employee's time for a customer's money. So jobs, jobs, jobs requires customers, customer, customers. Until American workers can do something that makes them worth more in this world's customers than what a highly-trained engineer or worker in China...

Actually, more homeowners are effectively underwater than this statistic shows. Because most real estate transaction costs are paid by the seller, the seller needs 5% to 7% positive equity to break-even at the sale. Thus, more than 20% of homeowners can't sell their homes without bringing...

That's Shiller's PE that's at 12 (which is based on averaging the last 10 yrs of earnings). And if you look at Shiller's work then you'd know that his PE needs to drop down to at least 8 (and maybe as low as 5) after a big bubble of above average PEs. So PE=12 is NOT cheap. Perhaps when spooz...

That depends on a lot of factors Assuming the company plans to roll the debt perpetually, then one approximation is years_of_profit = 1/(longterm_corp_debt_interest_rate). But the real answer depends on a lot of factors such as: 1) the effects of other income statement variables such as...

First, that consumption tax needs to be at least 20% to cover the non-stimulus portions of the Federal budget. Second, I don't see how a penalty on consumption aids small businesses because so many small businesses provide products and service that would be affected by this tax.

And it was optimistic models on "fixed income instruments which haven't defaulted yet" which created this problem in the first place. If these "pennies on the dollar" instruments are so undervalued, why isn't anyone buying them? Although I agree that mark-to-market has dangers, it seems the...

First, I commend Cutten on a tour de force (or tour de Treasuries). I like and respect most of his reasoning process, but do have five differences in data and logic that convince me that Treasuries are in a bubble. 1. Non-negligible default risk: CDS of 5-yr UST are now trading at 100 bp, up...

An American-built TV would be significantly more expensive. You suggested that American-built TVs would employ 50 Americans instead of 10. Highly-skilled American workers are about 5X more expensive than highly-skilled Chinese workers. At the upper end of the manufacture base (e.g...

Yes, it does look overvalued. But the bigger issue is the muted future expectations of E. Even if PE doesn't revert further to historical levels, three factors will impede future earnings so that equity prices may drop: 1. Higher taxes on businesses and consumers 2. High debt loads on...

Yes, we are all desperately trying to forget that chart. ;) Of course, given that both the monthly payment and the principal on Eastern European mortgages resets every time the exchange rate changes, these option adjustable resets may be the least of our worries.

And the downside of making TVs 5 times more expensive should be obvious to everyone, too. "Buy American" is equivalent to America erecting trade sanctions against America.

Just had dinner with a friend who is in your situation exactly -- high credit score, always pays off the card and Cap One raised the rate to 29%. Like you, he's not materially affected, but he is pissed. Given the rising default rates and the scarcity of credit, I'm not surprised that the...

Yes, most of the economies of the world are decline right now. And they are declining more rapidly than they did in the Great Depression. But the rate of decline says more about improvements in the world since the 1930s than the troubles in the world. There is now a much greater amount of...

Thank you for the excellent and informative post! If you look at the consumer spending component of GDP, you can see that it was far too high in recent years, being fueled by a massive conversion of home equity into consumption. Consumer spending was entirely unsustainable and has created a...

Exactly! UBS is 3X the size of Lehman. Moreover, I'd suspect that UBS has a much higher fraction of non-risk capital from depositors and bond-holders.

Only to the point at which service on the debt starts to consume too much disposable income. To the extent that all of peoples' money is going to pay for past expenditures, they have no money for present expenditures and the economy dies. Debt moves consumption from the future to the...

Well, the situation looks much worse than I thought because not only have the monthly payments doubled for many Eastern European borrowers, but the amount of principal owed has effectively doubled, too. Thus, a very large fraction of Eastern European mortgages were pushed underwater by fx rate...