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hrhjuliet says

High yields translate into lower prices. As yields rise, the Fed’s Treasury holdings

That is true, but eventually the high yields will ensure that you still make money. This post explains what I'm talking about:

http://whitecoatinvestor.com/bonds-are-a-crappy-investment/

Interesting read, thank you. I guess I'm more concerned with assets failing into the hands of foreign investors, whether I make money or not.

hrhjuliet says

High yields are bad for stocks and bad for the economy

By the way, this is what's called "the Fed model," and empirically it's been shown to be inaccurate:

http://www.economist.com/news/finance-and-economics/21582513-low-bond-yields-have-past-been-bad-not-good-equity-returns

History shows that when bond yields are high, stock market returns in the following 10 years are high. When bond yields are low, as they are now, stock market returns in the following 10 years are low.

hrhjuliet says

I guess I'm more concerned with assets failing into the hands of foreign investors, whether I make money or not.

I'm actually not that concerned at all. We had this fear in the 80s when the Japanese were buying everything in site, including Pebble Beach. The Japanese did buy a lot of stuff, but then it all came back.

What tends to happen is that the early buyers buy the good stuff -- the 1st tier assets. They probably do okay. However, the bandwagon people start buying the 2nd tier, 3rd tier, and 4th tier garbage, and those buyers don't end up so great. That's what happened with the Japanese. That's what happened when Iceland had its big boom -- read this article by Michael Lewis in Vanity Fair (paywall, but you can find the article elsewhere):

http://www.vanityfair.com/politics/features/2009/04/iceland200904?printable=true&currentPage=all

I can't really find a reason why it'd be different this time.

That said, if you really want an action that you personally could take -- buy American. Don't buy that cheap Chinese crap.

Hi,
Stand up straight

Tell these truths
http://patrick.net/?p=1230886

Proceed with intellectual honesty -- for example see bottom of this page
http://www.showrealhist.com

Wow,

This post cements my theory about the bubble correlation effect. The bubble of the Stock Market of the late 90s, contaiges into the housing market aided by CRA, when the CRA bubble pops, QE kicks in, and now the cul-de-sac of cant stop QE w/o tanking the reinflated bubbles.

Proves Montesquieu was right.

corntrollio says

That said, if you really want an action that you personally could take -- buy American. Don't buy that cheap Chinese crap.

Couldn't agree more. It shocks people, but I never buy things made in China.

Here is a group you can join.....https://www.facebook.com/groups/304287742985430/#

It's amazing how similar that graph resembles the one showing the insane price rises of home starting about 2006!

1. Invest in R&D and Manufacturing, (example: Take 10% of the US legal fees of $850B into R&D and Manufacturers via tax breaks)
2. US schools tax credit for limiting Art and Humanities, and soft science majors to 80% of college enrollments.
3. Reinstate Glass Stegall and make derivatives as hard to get as it is 4% interest at a bank right now.
4. Elementary Schools must have 2 Science Teachers on staff to get any title 1 or other classes, (art, dancing, all good but but not exclusive). All student must take and pass 3 Science classes in Jr. High, and 6 in High School to graduate.
5. Pass laws that require complex law suits to be heard by an expert lawyer who consults with specialists. The Lawyer can use other lawyers, but should work for the Goverment (This is similar to German model)
6. Lawyers must make a handbook of laws for technology that do not create artificial false lawsuits so easy. Really suggest that Lawyer get paid similar to Physicists and Engineers - but would never happen.

I always said the same thing, save till you have enough cash to not need a loan. Smart once listen, everyone else gets a mortgage.

Entitlemented says

when the CRA bubble pops

Yes, the CRA, which caused massive credit bubbles in Spain, Iceland, and Ireland, as well as a bunch of other countries.

Call it Crazy says

hrhjuliet says

Couldn't agree more. It shocks people, but I never buy things made in China.

Really??? How do you avoid that in this country today??

It takes research and spending a bit more money sometimes, but not always. For example, you can find US-made shoes, jeans, and other clothing quite easily these days. There are likely blogs dedicated to it. Here is a listing:

http://www.stillmadeinusa.com/men.html

My objection is not just to globalization. If the US-based manufacturers, such as Johnston & Murphy just as one example, had made the same quality shoes in China or India as they did when their manufacturing was in the US, I'd have fewer complaints about the products. However, moving manufacturing overseas also coincided with a drop in quality to cut costs further.

Johnston & Murphy didn't just use the same quality leather and the same type of construction any more. They used cheaper leather (which could barely be called leather in some cases) and cheaper methods of construction. We consumers fell for this crap to get cheaper goods throwaway that don't last very long.

Companies like Allen Edmonds or Chippewa use higher grades of leather and better construction methods so that their shoes are made to last. Most of their shoes are re-craftable, so that you only have to replace the sole cheaply. The uppers are made to last and can survive multiple re-craftings and will look nice for much longer than Chinese Kenneth Coles ever will.

That's why there's such a market for vintage Johnston & Murphy US-made shoes. Instead of buying some glued together painted leather garbage that won't look nice after the first two weeks, won't take a proper polish/shine, and will start peeling at the soles after a while, you can get a cobbler to replace the soles of your grandfather's US-made J&Ms, shine them up, and use them for at least another decade or two.

Call it Crazy says

hrhjuliet says

Couldn't agree more. It shocks people, but I never buy things made in China.

Really??? How do you avoid that in this country today??

The realization that absolutely no necessity can not be found made fair-trade or American. We also buy fair-trade and from countries dedicated to democratic principles and work policies that protect its people from exploitation. The key word is necessity. I took the pledge to buy American for one month (https://www.facebook.com/groups/304287742985430/#) and found that I could do it easily if I only bought necessities and if I bought anything else, any desires, I would search out an American made alternative. In almost every case I purchased an item of superior quality. We don't buy I lot of non-necessities anymore. We live in small home and don't need extra clutter. We always ask each other (my husband and I) if the item is worth the real estate it occupies. In other words, if it takes up space it better be something we really want. I also enjoy the convenience of buying quality goods; they may be more expensive as an initial investment, but they usually don't need to be replaced, so they end up costing less in the long run. Not to mention time is valuable in our household, and I don't like spending time replacing items or fixing items. Also, I have children in toys made in China often contain lead and other heavy metals or toxins. The safety of my children is also worth the effort. Here are some sites that helped and made it easy to keep my pledge: http://www.madeinamericastore.com/ and http://www.madeintheusa.com/

Entitlemented says

2. US schools tax credit for limiting Art and Humanities, and soft science majors to 80% of college enrollments.

3. Reinstate Glass Stegall and make derivatives as hard to get as it is 4% interest at a bank right now.

4. Elementary Schools must have 2 Science Teachers on staff to get any title 1 or other classes, (art, dancing, all good but but not exclusive). All student must take and pass 3 Science classes in Jr. High, and 6 in High School to graduate.

The only thing I disagree with is limiting the arts and humanities. School systems that encourage both the art and the humanities statistically score better in math and science. There are very significant studies that prove that studying music improves math scores, and studying dance improves science, especially classical music and ballet. I was a science major, and the majority of the successful students in the sciences double majored as a music or dance major. Many of the students who do well in the areas of math and science often talk about how they showed no interest in science or math as a child, but devoted themselves to music or dance at that stage in their lives. They were helping set their minds to receive the information easier while studying music and dance, studies have proven that. At the same time I do not believe that we should keep the arts and the humanities in the schools for the sole purpose of creating better scientists and engineers for the future tech jobs. The world needs more humanitarians and artists. Success means many different things to each individual, and a successful society is also a matter of opinion. I believe a successful society to be one rich in the arts and humanities. We need more beauty and gentleness in the world, not less. Throughout history the eras of great scientific advancement were also the eras of great movements in the arts. It's not a coincidence, they go hand and hand. We need to honour our great artists and humanitarians, not demean them. All the great societies in history treated their great artists as heroes. I dare say what it says about a society that considers movie stars and sports stars worthy of money and status. If the system must eliminate something from the school system I would start with sports, no the humanities and the arts.

Entitlemented says

2. US schools tax credit for limiting Art and Humanities, and soft science majors to 80% of college enrollments.

Kahil Gibran ( a dreaded artist) writes:
"And a merchant said, "Speak to us of Buying and Selling."
And he answered and said:
To you the earth yields her fruit, and you shall not want if you but know how to fill your hands.
It is in exchanging the gifts of the earth that you shall find abundance and be satisfied.
Yet unless the exchange be in love and kindly justice, it will but lead some to greed and others to hunger.
When in the market place you toilers of the sea and fields and vineyards meet the weavers and the potters and the gatherers of spices,
- Invoke then the master spirit of the earth, to come into your midst and sanctify the scales and the reckoning that weighs value against value.
And suffer not the barren-handed to take part in your transactions, who would sell their words for your labour.
To such men you should say,
"Come with us to the field, or go with our brothers to the sea and cast your net; For the land and the sea shall be bountiful to you even as to us."
And if there come the singers and the dancers and the flute players, - buy of their gifts also.
For they too are gatherers of fruit and frankincense, and that which they bring, though fashioned of dreams, is raiment and food for your soul.
And before you leave the marketplace, see that no one has gone his way with empty hands.
For the master spirit of the earth shall not sleep peacefully upon the wind till the needs of the least of you are satisfied."

The focus of the article is far to narrow, and shows a general lack of understanding when it comes to how economics works. I suggest reading Rothbard's summation of boom bust cycles to start with.

As far as action, dump dollar investments(anything paper), pay off all debt, and invest in physical assets that maintain, or gain value in times of economic depression, and that are under your direct control.

FortWayne says

I always said the same thing, save till you have enough cash to not need a loan. Smart once listen, everyone else gets a mortgage.

Depends on the interest rate you get... sub-3% interest rates on auto loans and such... It makes more sense to throw all that cash in the stock market the past few years. You would be able to buy 3 new cars with the profits by now.

A monkey could have made a bundle on the stock market throwing darts at tech stock symbols over the past 5 years. Hell, just investing in every new tech IPO would have made you a bundle.

hrhjuliet says

Couldn't agree more. It shocks people, but I never buy things made in China

Wow, that would make for what's considered a very small and expensive(per item) wardrobe. American jeans, for example, are very expensive. But a pair lasts a couple years, so buy one pair, wear a couple years, buy another.

Electronics would be very difficult. In fact, not buying electronics made in China would essentially mean not having any modern video players, mobile phones, computers, TVs, appliances. Just about anything with a circuit board is made in China.