Congratulations Australia - You are not in a recession

[Conza88]

You seem interested in history, so I thought this article poignant

http://online.wsj.com/article/SB123981155929121475.html

These guys are still alive and were in "the market" during the great depression... so perhaps their experience is worthy of at least a read ?

Hi, I am. Thanks. Graham Style value investing.. yes. Analyzes businesses, not the market. That's principle no. 1 - Principle 1: Ignore “The Market” and “Market Experts” etc. and there are many others. I studied them myself when I discovered Chris Leithner (Graham style value investor / Austrian economist) at his site, many months ago.

All they do is crunch numbers etc. models, which is satisfactory for businesses but not for the market. Scientific method / empiricism fails for economics - because it is the wrong epistemology (type of knowledge). Value is subjective.

Anyway, if you know the proper economic laws, you can position yourself for the inevitable and profit / avoid loses because of it. i.e If the country's money supply was doubled over night, you know that those who first spend it are better off. And if you want to avoid the affects of inflation, you would spend it asap - or purchase something, like commodity (gold) to store the wealth.

"But as an investor who has seen dozens of economic downturns, Kahn plainly says this is just part of the natural cycle of the market."

Hilarious. There is no "natural cycle" of the market. The Business / trade cycle is a result of the 5th plank of the Communist Manifesto, the Central Bank - and more precisely, fractional reserve banking.

Greenspan artificially lowered interest rates in 2001 and kept them below the market level. Easy credit, easy money.. creates malinvestment. This is the artificial BOOM, which is ALWAYS followed by a BUST. It is economic reality being restored. You can try get away from it by printing more money, but it will arrive - you only prolong the inevitable and make it worse.

There is a reason the ONLY people who saw this coming where free market - Austrian Economists. Granted though, there are natural business fluctuations - this differs from cycles though.

"Glickenhaus is a much bigger fan of President Obama and thinks he may be able to work the same magic FDR did during the Depression."

"Ultimately, though, the man who has an opinion on just about everything acknowledges this economy is confounding. "I'm not sure I'm right," Glickenhaus says, which is why he's keeping at least 30 percent of his clients' money in cash."

Hahah... he has the right intuition.. he's not right. He's just probably never been shown an alternative theory. FDR prolonged the depression... Obama will do the same. Hoover was horrible as was Bush. The FED is to blame.

Little bit of history:

"Ludwig von Mises established the foundations of modern Austrian economics while Irving Fisher established the foundations of modern mainstream macroeconomics and central bank policy.

Fisher helped create and was a proponent of mathematical economics, statistics and index numbers, and a monetary policy that “stabilized” the value of the dollar. Fisher claimed that his scientific approach established a new era of prosperity during the 1920s.

Mises published a book in 1928 that critiqued Fisher’s approach and predicted that it would lead to an economic crisis and collapse. Before the stock market crash in 1929 Fisher proclaimed a perpetual prosperity for the economy and continued to recommend investing in stocks long after the market had collapsed. In this important case study, Mises passed the “market test” while Fisher lost his personal fortune during an economic crisis that his economics help create." Article.

 

[Conza88]

If the advice in that other material had been followed we would almost certainly be in depression now instead of looking like avoiding prolonged recession! Really - the stuff you posted suggests the exact opposite of what should be done, and what has proven to work to stimulate economies during cyclical downturns (Ie suggesting that in a downturn government should CUT expenditure so as to reduce it's "burden" on the private sector! What a joke!). There are many good reasons Austrian economics is confined to the fringe.....and that's putting it politely....

If the advice had been followed, ala those who started warning everyone in 2002 - "Hey, umm, guys.. you're creating a bubble here..." If the advice of those in '70 had been followed about staying on the Gold standard.. If the advice of those in ww2... if the advice of those in 1921 leading up the Great Depression had been followed... if the advice of those who were again the creation of the FED in 1913 had been followed...

Then we wouldn't be in this mess. ​

I mean really... mainstream Keynesian economics and every other school had no idea this was coming... completely unaware, ignorant and flabbergasted... and YET, you want to take their advice about what to do now? Wow... just wow.

The only people prolonging the depression are the tools in power, who are following advice from fundamentally flawed economic doctrines... and we're all going to have to suffer because of it.

The bust HAS to come. It is inevitable. It is economic reality coming back to fruition. It is like gravity, you can't avoid it. Granted, you can violate it temporarily by getting in a plane and nose diving to achieve weightlessness (printing money, stimulus etc) - but it's temporary and the trouble is - you eventually have to land (suffer the consequences of your fun, easy credit, easy money), if you don't you're going to run out of fuel (the value of money will be devalued) and crash (hyperinflation).

Personally, I'd like the plane to land on a tarmac and get the ride over with... not crash

 

[MRC & Co]

Soros had no idea it was coming, because he doesn't understand the Austrian Theory of the Business Cycle... which is why what he is calling for to solve the crisis is going to make it all so much worse. He's lost BILLIONS this year, and for good reason.

Where is the proof of that statement?

Oh and Soros did see this coming, he was only predicting it since the 1980s (point is, even though you may know what's coming, profiting off it can be a completely different matter), he is far from a Keynesian or a Neoclassical economist, infact, he has touted your EXACT Boom/Bust model, how about you learn something before you go shooting your mouth off with assumptions?

 

[Conza88]

Where is the proof of that statement?

Oh and Soros did see this coming, he was only predicting it since the 1980s (point is, even though you may know what's coming, profiting off it can be a completely different matter), he is far from a Keynesian or a Neoclassical economist, infact, he has touted your EXACT Boom/Bust model, how about you learn something before you go shooting your mouth off with assumptions?

Inside Soros by Llewellyn H. Rockwell, Jnr.​

"This year, it is George Soros, the billionaire hedge-fund operator who has turned like a snake on the system of economics that made him rich. His new book is The Crisis of Global Capitalism, which argues for a world central bank and an army of new global regulators to straighten out the world monetary mess, according to the Sorosian prescription.

... But today's system was constructed by the very planners that Soros says ought to be given the power to redesign the world economy once again. In fact, what we need is a monetary system that manages itself the way the gold standard used to.

Back in 1992, Soros's hedge fund speculated against an overvalued British pound. That nation's central bank chose the brainless path of "defending" the currency and thereby depleted its reserves. The press began to call Soros "the man who broke the Bank of England." He began to believe it.

"It is sort of a disease when you consider yourself some kind of god, the creator of everything," the New Oxford Review quotes him as observing. "But I feel comfortable about it now since I began to live it out."

Of course, the pound went down not because Soros wanted it to, but because of real economic factors having to do with British monetary mismanagement. But he wants to give himself the credit, and later, when his power proved for naught in other situations, came to believe that no other man should have such influence.

In a market economy, no man has the power to shape the world on his own. Entrepreneurs excel at anticipating consumer behavior and acting on it; they do not control the behavior itself. Speculators excel at predicting future values; they do not control those values. Capitalism means allowing people to get rich by serving the needs of others. But becoming a billionaire apparently temps some to a form of meglomania.

This disease has other effects. Tired of competing for their place in the market economy, they long to impose their wisdom on the masses by means of state power. This is why they are inclined to adopt an anti-capitalist credo. They imagine that their wealth and power will give them a leg up when it comes time to design the world according to socialist strictures.

So long as we are psychologizing about billionaires turning to leftist ideology, we must not forget the all-important motive of self interest. In Soros's case, this was on ugly display during the Russian debt collapse. Desperate for hard currency and facing a fiscal crisis, the Russian government guaranteed wildly high returns on its debt instruments. Believing that Russia would never be allowed to fail, Soros took huge positions in its bonds.

His conversion to the cause of financial socialism began as Congress refused to bailout Russia, and Soros's fund started bearing the weight of margin calls. Eventually, the losses would total $2 billion. His new book admits that he burned up the phonelines calling for governments to loot their taxpayers on his behalf, with additional panicked calls to central bankers and finance officials to pressure them into doing so.

Soros made the wrong bet, lost one of his shirts, and turned against capitalism. He believed himself to be the most powerful man in the world. It turned out that there is something more powerful, which is the market itself.

So Soros, the new poster child of the left, turns out to be nothing more than a disgruntled rich guy tired of the risks that made him wealthy. In similar fashion, we see Netscape, Oracle, and Sun Microsystems calling on the government to crush Microsoft because it beat them in a free and competitive marketplace.

Speculators like Soros have done great good for the world when they have used their talents within the framework of the market economy. But when they decide to cozy up to politicians, pose as philosopher kings, and urge government planning on the world, they are capable of doing enormous evil. Recall that Friedrich Engels was a wealthy businessman too.

If George Soros wants to repudiate capitalism, let him begin by eschewing the market that is currently selling his book. We're waiting, George."

Howsabout I didn't run my mouth off, so no. And now it's your turn to source - where Soros believes in the Austrian Theory of the Business / Trade Cycle... lmfao

 

[It's Snake Pliskin]

Thanks TH!
This is good news but the doomsayers are ready with "Yeah, but..."

Here they come now LOL

Timmy,

We've had a very low dollar rate with many countries so exports would have benefited and contributed to the economy. Let's see where it is considering the rise of late, by the next quarter.

Cheers...

 

[bluelabel]

Yeah but,
This staving off of the recession is on the back of some very good retail figures as a result of Kevs throw it and see where it lands policy of recession fighting.

What happens after all the stimuli has been spent, saved, hoarded, stuffed in a Milo tin and buried next to my childhood pet under the lemon tree?

My questions are these…

Can the entire market be propped by retail and over inflated house prices?

and...

What of next period when negative GDP occurs again?

We will still see Kevs cohorts spruiking we are not in a recession as there haven’t been 2 periods of shrinkage.


:bier:

blue

 

[Aussiejeff]

Yeah but,
This staving off of the recession is on the back of some very good retail figures as a result of Kevs throw it and see where it lands policy of recession fighting.

What happens after all the stimuli has been spent, saved, hoarded, stuffed in a Milo tin and buried next to my childhood pet under the lemon tree?

My questions are these…

Can the entire market be propped by retail and over inflated house prices?

and...

What of next period when negative GDP occurs again?

We will still see Kevs cohorts spruiking we are not in a recession as there haven’t been 2 periods of shrinkage.


:bier:

blue

LOL. It's hilarious that now after seeing the good spin, a number of NSW bull$hitter$ have also demanded that that state's recent poor economic statistics which had shown it WAS in Recession over two succesive quarters be judiciously "altered" to include import/export data to show it, too, was technically NOT in an unspeakable *ecession.



Ya just gotta larf in the face of diversity.

 

[noirua]

Timmy,

We've had a very low dollar rate with many countries so exports would have benefited and contributed to the economy. Let's see where it is considering the rise of late, by the next quarter.

Cheers...

Yes indeed, the next quarterly report will be very interesting. Rudd & Co are probably hoping that the sudden demand for Aussie coal by China, orchestrated by their Government, will offset reductions elsewhere.

 

[Trembling Hand]

Anyway, if you know the proper economic laws, you can position yourself for the inevitable and profit / avoid loses because of it. i.e If the country's money supply was doubled over night, you know that those who first spend it are better off. And if you want to avoid the affects of inflation, you would spend it asap - or purchase something, like commodity (gold) to store the wealth.

That's funny. Reading all your stuff. Makes me guess that you have been out of the market for some time? Maybe holding some precious?

 

[MRC & Co]

Inside Soros by Llewellyn H. Rockwell, Jnr.​

Howsabout I didn't run my mouth off, so no. And now it's your turn to source - where Soros believes in the Austrian Theory of the Business / Trade Cycle... lmfao

You have got to be the DUMBEST MAN I HAVE EVER COME ACCROSS.

With all your supposed intellect, you listen to the USA bullsheeeet analysts about Soros views and opinions.

Those BILLIONS of dollar losses were YEARS ago FOOL!

His views are not ANTI-CAPITALISM. Look at his OPEN SOCIETY where he PROMOTES capitalism AND democracy.

He has made BILLIONS off his BOOM/BUST model, the one he himself CREATED, which is FAR in excess of your Austrian friends.

His belief in regulatory authorities is in sync with his belief that free markets are the way to go, but that prevailing bias can actually blow this apart, hence the need for some regulation (not complete protectionism). His short of the pound sterling actually saved their citizens, dire consequences. For that, he should be thanked.

The market is not science, and as such, those who understand it's operations, are obviously the ones with the most insight to correct it. Central Banks and Governments are no traders, hence, they always act in hindsight, then you have the sideline dwellers (such as your Austrian friends) who discredit guys who have prooven they understand the system and it's flaws (proof through their monetary gains). Academics are no traders, and as such, are poor regulators, which infact, renders your views with little to no value. They are simply theory.

Study the man, IN-DEPTH and don't just rely on some BS article that are all written to discredit the greatest trader of all-time, not full-time, not part-time, not this time, not that time, but of ALL-TIME!

Where is my source: How about you read "The Alchemy of Finance" written by him, himself, about his life's work, not some junk journalist or analyst, that is, if you can actually understand it, which I highly doubt.

 

[Bushman]

Austrian forecast for GDP - 'After growing by 1.6% in 2008, GDP will contract by 4.3% in 2009, before contracting a little further, by 0.8%, in 2010.'

Gimme a break. Didn't their banks go hard into Eastern Europe? Lol Austrians.

 

[Uncle Festivus]

"Congratulations Australia - You are not in a recession" technically not going by the lagging GDP data, but the champion of the 'surprise' result yesterday just took a haircut. Exchange rate some 30% better for importers than exporters since the GDP data was compiled. BHP & RIO playing hard ball over iron ore prices in a buyers market - take a cut of 40% maybe? Where's this GDP growth to pay back the deficit going to come from?

Australia's exports fell 11% during April on a seasonally adjusted basis, resulting in an unexpected trade deficit for the month, according to data released Thursday. Imports fell just 2% from March, resulting in a 91 million Australian dollars ($73 million) deficit, compared to a surplus of 2.3 billion Australian dollars in March, according to the Australian Bureau of Statistics. Analysts had expected an April trade surplus of 1.7 billion Australian dollars

 

[Knobby22]

Seems like a fair comment, Knobby.
What do you think will happen to the economy when the artificial stimulus is removed?

The point some of us have been making is that sure if people are given cash to spend, they will spend some of it and this will be reflected in the quarterly figures. But once it's spent, that's that, isn't it?

Whereas if a longer term approach had been taken and that same funding put into e.g. hospitals, water infrastructure, roads, the benefits would have accrued over a much longer period of time and there would have been a permanent result from the money being spent. We could have employed more doctors, nurses, spent more on teacher training so our kids are not semi literate when they leave school.

This is in contrast to Australians lining the pockets of Asian plasma producers and whatever other temporary pleasures provided by the cash splash.

So, no. I do not feel like congratulating the Rudd government. I believe their actions are motivated much more by their own political objectives than the fundamental good of Australia for the longer term.

Julia

The handout should be treated as a temporary TAX CUT!

Many of the right are saying the best way for government to increase spending is by tax cuts however we cannot afford permanent structural tax cuts otherwise we will end up like the US where tax comes no where near to paying for services. A lot of people used the money to pay off credit card debts etc. I used it to help me put a new kitchen in which supplied work to many people.

I agree that at this later stage the handouts are not required but at the time it was the fastest way to stimulate the economy. The schools upgrade program which I am involved in as a designer is providing a very good stimulus.

I tend to believe people like to think they are doing good and federal pollies generally are decent people so I cannot believe that Rudd does not believe that what he is doing is for the fundamental good of Australia. With regard tp political objectives, I am sure he thinks they are what's good for Australia and his party's view will be coloured by this, that is not to say he is correct in thinking this.

 

[Knobby22]

Well said MRC&co.

 

[Conza88]

That's funny. Reading all your stuff. Makes me guess that you have been out of the market for some time? Maybe holding some precious?

Gold. Silver. Hedge against inflation. (Defined as: the Increase in the money supply) And I only really discovered Austrian Economics and Graham style investing within a year & a half ago. I'm fairly autodidactic.

Austrian Economics can't predict precisely when the crash or event will occur, only that it will.

Austrian forecast for GDP - 'After growing by 1.6% in 2008, GDP will contract by 4.3% in 2009, before contracting a little further, by 0.8%, in 2010.'

Gimme a break. Didn't their banks go hard into Eastern Europe? Lol Austrians.

Haha The Austrian School of Economics doesn't actually have anything to do with Austria the country, bar that several of it's founders came from there. One of them, Ludwig Von Mises fled Austria from the Nazi's. His economics kind of undermined everything they were doing... He came to the United States, and this is were the Austrian School (i.e like Chicago school was founded in Chicago) is fundamentally orientated.

So the banks in Europe went retardo, because they didn't listen to people like Ludwig von Mises etc...

 

[sammy84]

Is it just me or has there been an influx of posters recently posting their nonsensical and outright silly views lately? Many threads are now littered with posters stating some of the most ridiculous market statements.

 

[Conza88]

You have got to be the DUMBEST MAN I HAVE EVER COME ACCROSS.[sic]

With all your supposed intellect, you listen to the USA bullsheeeet analysts about Soros views and opinions.

Those BILLIONS of dollar losses were YEARS ago FOOL!

Of course. And I'm not sure how that changes anything? If he was familiar with the Austrian Theory of the Business cycle or better yet, that socialism cannot calculate. He would have realised the Soviet Union would inevitable collapse. Pretty bad investment decision, no? You said he didn't lose billions - I showed he did. You then moved the goal posts of the debate, from "didn't" to "recent". I could search out for recent losses if need be?

Oops, I forgot to mention his "60%+ losses in his funds when he was caught in the 1987 crash."

His views are not ANTI-CAPITALISM. Look at his OPEN SOCIETY where he PROMOTES capitalism AND democracy.

He has made BILLIONS off his BOOM/BUST model, the one he himself CREATED, which is FAR in excess of your Austrian friends.

Ok, link me to it? He wrote a book that is directly at odds with the previous one he wrote? Also you haven't sourced this "boom/bust" model... and he created it? Hahaha, hilarious. Did he get a Nobel Peace Prize for it like Hayek? /appeal to authority fallacy

His belief in regulatory authorities is in sync with his belief that free markets are the way to go, but that prevailing bias can actually blow this apart, hence the need for some regulation (not complete protectionism). His short of the pound sterling actually saved their citizens, dire consequences. For that, he should be thanked.

Soros Fund Loss On Lehman May Be $120MBy Bloomberg News | September 11, 2008

First thing that came up on google. Don't worry, I'll stop there - don't want you to get too pissed at me bashing your idol with the truth.

His book he wrote earlier makes it clear, he's anti-capitalist. What are you going off? He didn't save them, that's a myth and was addressed specifically in the other article.

Yet the roots go deeper to a rejection of economics. Back in 1992, Soros's hedge fund speculated against an overvalued British pound. That nation's central bank chose the brainless path of "defending" the currency and thereby depleted its reserves. The press began to call Soros "the man who broke the Bank of England." He began to believe it.

"It is sort of a disease when you consider yourself some kind of god, the creator of everything," the New Oxford Review quotes him as observing. "But I feel comfortable about it now since I began to live it out."

Of course, the pound went down not because Soros wanted it to, but because of real economic factors having to do with British monetary mismanagement. But he wants to give himself the credit, and later, when his power proved for naught in other situations, came to believe that no other man should have such influence.

In a market economy, no man has the power to shape the world on his own. Entrepreneurs excel at anticipating consumer behavior and acting on it; they do not control the behavior itself. Speculators excel at predicting future values; they do not control those values. Capitalism means allowing people to get rich by serving the needs of others. But becoming a billionaire apparently temps some to a form of meglomania.

This disease has other effects. Tired of competing for their place in the market economy, they long to impose their wisdom on the masses by means of state power. This is why they are inclined to adopt an anti-capitalist credo. They imagine that their wealth and power will give them a leg up when it comes time to design the world according to socialist strictures.

The market is not science, and as such, those who understand it's operations, are obviously the ones with the most insight to correct it. Central Banks and Governments are no traders, hence, they always act in hindsight, then you have the sideline dwellers (such as your Austrian friends) who discredit guys who have prooven they understand the system and it's flaws (proof through their monetary gains). Academics are no traders, and as such, are poor regulators, which infact, renders your views with little to no value. They are simply theory.

The Market is a science. The science / study of human action, which is called praxeology. It is build on axioms (self evident truths) and logically deduced from there. Humans exist. (truth) They always act. (truth) and they are extended to generate substantial truths about economic reality, getting further and further complex.

Mises outlined them in his magnum opus, Human Action. And Rothbard extended them in his Man, Economy and State (with Power and Market)

Sideline dwellers? Hilarious. Do you know who Peter Schiff is?

​

Simply theory? You are profoundly ignorant of what Austrian Economics is, if that is your contention.

Study the man, IN-DEPTH and don't just rely on some BS article that are all written to discredit the greatest trader of all-time, not full-time, not part-time, not this time, not that time, but of ALL-TIME!

You clearly worship him. Sad... don't let emotions get in the way of logic and thorough analysis. It is far more profitable to be intellectually honest with yourself and realize someones, including your own flaws - than to carry on in merry ignorance until the cows come home to roost.

He has made a considerable amount of money from State actions.

Where is my source: How about you read "The Alchemy of Finance" written by him, himself, about his life's work, not some junk journalist or analyst, that is, if you can actually understand it, which I highly doubt.

47 of 58 people found the following review helpful:
2.0 out of 5 stars Disappointing,, December 15, 1999
By A Customer
In this book, Soros openly admits that he is completely unable to predict major developments in finance and economics. In addition, he admits that he has never been able to profit consistently in commodities markets. What does that leave us with? Soros is a glorified stock picker, and the Quantum Fund, a glorified mutual fund. Soros does not discuss equity analysis techniques, however; the book is comprised of macroeconomic analysis and prediction which is - by Soros' own admission - of questionable value.

​

 

[Trembling Hand]

Gold. Silver. Hedge against inflation. (Defined as: the Increase in the money supply) And I only really discovered Austrian Economics and Graham style investing within a year & a half ago. I'm fairly autodidactic.

Austrian Economics can't predict precisely when the crash or event will occur, only that it will.

So all your theroy has keep from making money.

Mate you can gladly have it along with your incorrect statements such as,

Anyway, if you know the proper economic laws, you can position yourself for the inevitable and profit / avoid loses because of it. i.e If the country's money supply was doubled over night, you know that those who first spend it are better off. And if you want to avoid the affects of inflation, you would spend it asap - or purchase something, like commodity (gold) to store the wealth.



Hilarious. There is no "natural cycle" of the market. The Business / trade cycle is a result of the 5th plank of the Communist Manifesto, the Central Bank - and more precisely, fractional reserve banking.

 

[Conza88]

Is it just me or has there been an influx of posters recently posting their nonsensical and outright silly views lately? Many threads are now littered with posters stating some of the most ridiculous market statements.

Who are you referring too?

​

 

[Conza88]

So all your theroy has keep from making money.

Nope. Amazing the logical fallacies you folks are coming out with.

Just because my individual actions, means I haven't chosen to invest in stocks doesn't mean that others can't, using the same foundations.

See Peter Schiff, head of Europacific capital. Euro Pacific Capital : "Because there's a bull market somewhere." "We are a global investment strategies company focused on finding thriving markets wherever they exist."

And numerous others, JIM ROGERS being another.

From down under, Frank Shostak is an adjunct scholar of the Mises Institute and a frequent contributor to Mises.org. He is chief economist of M.F. Globalhttp://www.mfglobal.com.au/. - "MF Global Australia Limited (MFGA) is focused on providing customers with everything they need to trade in global futures, equity, CFDs etc..."

And Chris Leithner, head of a private investment company in Brisbane. - "Leithner & Co. adheres strictly to the traditional “value” approach to investment pioneered by Benjamin Graham and adapted by his colleagues Warren Buffett, Thomas Knapp and Walter Schloss. Its motto is its method: to undertake investment operations that are based upon thorough research; to provide reasonable safety of principal and offer an adequate return; and to inform its shareholders regularly, fully and in plain language about these investment operations. It strives to remain a low-cost, low-risk and reasonable-and-steady-return investment vehicle."

Mate you can gladly have it along with your incorrect statements such as,

No, I'll be right. It's correct, why would I refute the truth.