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So, Dr. Tax?

Discussion in 'Other Off Topic Forum' started by gabriel, Feb 7, 2004.

  1. gabriel

    gabriel Formula 3

    Did you read this article? Could it be so that Euro leaders *might* be seeing that we ain't a gonna shoy ourselves in the head and change our weak dollar policy until some certain Asian country(ies) stop fixing exchange rates? Seems like Japan still isn't having any fun yet. :) May they all rot in h3ll for the $$$ Maylasia stole from me...

    http://story.news.yahoo.com/news?tmpl=story&ncid=578&e=8&u=/nm/20040207/bs_nm/group_dc
     
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  3. Texas Forever

    Texas Forever Four Time F1 World Champ
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    Apr 28, 2003
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    Texas!

    Hi Gabriel, Thanks for remembering my previous thread. I am still blindly stumbling through the fog in trying to get my arms around the dollar/euro issue.

    (Disclaimer: I am not a money manager. I'm just a curious fellow. This thread has absolutely nothing to do with Ferraris because my bet is that the price of new Ferraris will go up regardless of which way the dollar moves.)

    However, I have learned this much about foreign intrigue -- You can completely ignore what people say. You should only focus on what they do.

    For example, one of the biggest stories that is not being covered by the "If it bleeds, it leads" American media is the Pakistan/Nukes/Libya story. In pretty short order, Libya cops a plea, there are two near-miss assassination attempts on the Pakistani leader, then suddenly Pakistan gets religion and fesses up that, well, it actually was exporting nukes after denying this for years; but no harm, no foul, so don't sweat it.

    Hopefully, you get my point that press releases from G7 meeting don't even rate toliet paper status.

    That said, and based on an excellent anaylsis last week in the WSJ (naturally), it looks like some folks at Treasury just might pull off a real high-wire act.

    1. On one hand, it is time to re-elect the President with the world's largest campaign fund -- the US Treasury. They do it everytime.

    2. This means low interest rates and a cheap dollar to encourage exports.

    3. Europe, especially Germany, is one sick puppy. Germany's unemployment rate is now around 12%. The US unemployment rate is less than 1/2 the German rate. But for whatever reason, the Germans refuse to cut their interest rate. Thus, the dollar keeps tanking versus the Euro. Bottom line is that we are exporting unemployment to Germany.

    4. Our Asian tiger buddies, on the other hand, are sitting on a huge stash of dollars, and they keep buying more and more and more. No only does this tend to prop up the dollar, it lets us get away with offering very low interest rates. Bottom line is that that Asian Tigers are funding our budget deficit, which allows us to pump our economy without triggering inflation, or at least not yet.

    Confused? Well, tune in next week and you'll become even more confused.

    Onward and Upward Through the Fog!

    DrTax
     
  4. TcpSec

    TcpSec Formula Junior

    Feb 8, 2004
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    LA, USA
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    Zeno S Paradox
    Excellent analysis Dr. Tax. I too was wondering about the nuke issue and the lack of coverage on it. What's up with these politicians that they can see through this charade about confessions and pardons. Who are they trying to fool?

    Back to the economy, I am extremely concerned about:

    1) Overspending by average American.
    2) Real estate bubble+Rate adjustable mortgages and their impact on the economy later this year.
    3) Not enough people in manufacturing/education/science/engineering. (OTOH, too many lawyers and real estate agents).

    The low dollar policy seems to be a very cunning move....great for our exports! Can you imagine how hard the Chinese bankers must be crying?

    If you take gold as a standard, we have effectively cut the deficit by 30-40% in less than a year. Anyone want to check if US bought a lot of gold about a year ago.:)

    I have been reading FChat for over 2 years and greatly admire posts by you, whart, and Napolis. Always informative.

    -Jay
     
  5. Texas Forever

    Texas Forever Four Time F1 World Champ
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    Thanks, I have a bad habit of thinking out loud by writing stuff down. I'm not sure that it always makes sense...

    In the short run, i.e., 1 to 2 years, I see the dollar initiallly flying low against the Euro, but increases in the Fed interest rate will gradually start driving the dollar up again. This, of course, means that our old friend inflation will come by to pay us a visit. However, I do see a drop in the price of oil once Irag starts pumping, Venezuela gets it head out of its hiney, and the Russians get it together. Remember our biggest import in terms of $$$ is oil. The price of oil falling will help stem the inflation tide. (Although it is funny. Do you remember not all that many months ago all the talk about deflation?)

    Personally, I think life will be good for the next 2 or 3 years. The stock market and real estate should be good places to be. Bonds and money markets, not so good.

    Longer term, there are some huge icebregs out there. The biggest one being the fact that there are roughly one-third fewer Gen Xers than Baby Boomers. The numbers that I have heard are 90 million Boomers versus 60 million Gen Xers. You do the math.

    And yes, we finally have become a service economy. My mother lives in Pensacola, Florida. The economic base used to be the Navy and chemical plants. Today, the local economy consists of old people going to the Doctor on Medicare, and lawyers suing the doctors for malpractice. I am not kidding!

    Money is still moving, but not at the rate that it used to move.

    What are your thoughts?

    Dr "Elbow Patch & Pipe" Tax
     
  6. TcpSec

    TcpSec Formula Junior

    Feb 8, 2004
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    Zeno S Paradox
    Completely agree! In addition to the iraq/venezuel/russia problem, the prices have been artificially inflated, IMHO. I mean, Exxon has 2-3 time per employee revenue compared to CISCO.

    As far as deflation is concerned, clearly the feds are not buying the same things as us and not sending their kids to college. That would certainly explain a few things. :)

    On the mark! Sometime after march will be a good time to put money into stocks, i.e. after all the bad news has come through. I am also considering long term real estate (>100 acres), that you can pick up cheap today. Something to enjoy when I retire.

    Yikes!!!!!! My crystal ball tells me there will be a tax hike. :-(
    I am off to Canada, I hear they have lower taxes compared to the republic of Kalifornia. :)

    This is truly sad!

    Well I am in high-tech business and I can tell you that US companies are doing amazing work. Except for the cell phone or consumer electronics market (even there we make most of the DSPs), US has a very clear edge over the rest of the world in technology. I think that money will start to move in a year or so.

    Dr "Cognac and Grappa" Jay
     
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  8. henryr

    henryr F1 World Champ
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    note: money mkts, being ultra short term paper will not get hit like "bonds"
     
  9. Texas Forever

    Texas Forever Four Time F1 World Champ
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    Texas!
    True, but you will not enjoy the upside of any move by the stock market.

    Take Care
     
  10. henryr

    henryr F1 World Champ
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    depends on what stock your in - long financials (as an example) in a rising rate enviroment will hurt you.

    as well as, home builders, mortgage brokers, banks.

    the really interesting thing will be to see who has not "prepared" themselves for a rising arte enviroment. i think you will see alot of "blow ups" in companies that thought the were hedged (freddie, fannie?) and are not.

    rising rates don't always equal rising markets. 1970's.

    the most important principle to learn IS CAPITAL PRESERVATION.
     

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