Friday, May 25, 2012

German government 10 year bond yield hit 1.4%

Bond market is hinting at deflation. If you lend your money to German government for 1.4% a year, you must be expecting an inflation over 10 years that is less than 1.4%. That is an inflation rate considered by most central banks in the world as too low to foster growth. Is the world economy heading toward another recession?

Wednesday, May 16, 2012

3 ways to improve your performance

1. Live a more active lifestyle to boost your energy level.

2. Improve your Emotional Intelligence. Learn how to handle stress and be optimistic facing set back.

3. Continue to improve your social skill and oral communication.

Monday, May 14, 2012

Simon says:

"Such banks have become too large and complex for management to control what is going on,"
"The regulators also have no idea about what is going on. Attempts to oversee these banks in a sophisticated and nuanced way are not working."

former IMF chief economist and MIT professor Simon Johnson

 Fed regulators in hot seat over JPMorgan loss

My view:
1. break up the megabank so that they can safely fail without causing crisis.
2. short of that, the only remedy is to require a much higher capital cusion on the largest multinational banks. Build in a safety margin so large that it is impossible to fail.

Thursday, May 10, 2012

Volcker says his namesake rule reduces conflicts of interest

 Former Federal Reserve Chairman Paul Volcker told a Senate banking subcommittee that it is unlikely that banks will be able to handle the potential customer conflicts presented by trading activities. "The risk of failure of 'large, interconnected firms' must be reduced, whether by reducing their size, curtailing their interconnections, or limiting their activities," Volcker said. He said the Volcker rule is a good start toward that end.

Can Gold counter deflation?

May 9, 2012 - Market reflection
"The political scramble in Greece, which points squarely at another election next month, is posing an increasing threat to the stability of Europe. The Dow fell another 3/4 of a percent to 12,835. The euro is back under $1.3000, down 1/2 percent on the day to $1.2940. Oil fell another $1 and is at $96.50 while gold fell another $20 to $1,590."

It is interesting that gold fell another $20 along with oil. It doesn't look like gold has any power countering deflation. It is only useful when inflation expectation rises.

If not served as money or centrl bank asset, the yellow metal almost has no pratical use.

On homosexuality

昨天北卡州以公民投票 通過了第一憲法修正案

在我看來,civil union 也一並禁止,是極不人道的。 打擊同性戀者不會使你的婚姻更穩固。任何人有打擊同性戀者這種想法,都是因為害怕自己的婚姻出問題。可是同性戀已經有幾百年有記載的歷史。同性戀並不會傳染。




同性戀者的痛苦,你看見了嗎? 通過了這個法案,離婚率就會下降嗎?

I am not upset about the election result. I predicted it will come out that way. What I worried most, is that church in the US became a force of intolerance, much like Muslims in the middle east.

Homosexual is genetic. There are only 1 percent of the population have that tendency, and they are not contagious, to you or your family. You are NOT under threat. Further more, homosexual people don't "choose to be" that way. Most of the gay comes from traditional family. And children raised from homosexual environment turn out to be 99 plus percent heterosexual.

I feel treating gays and lesbians as a behavior problem is harsh and inhumane. Unfortunately, that is the stance of most church in the US. Billy Graham came out supporting the NC amendment in the last days before election. My neighbors who attend Baptist church go on Facebook to proudly demonstrate that they voted. They don't even know that they are conducting a cruel act toward a very minority who won't do any harm to the society.

People are born with different color, gender, height, or even health conditions. Modern science think Sexual Orientation is just another dimension of that difference. It is unclear why this self-defeating gene was passed down over generations, but it is harmless to others. I feel the only humane way to treat these people is to be tolerant. We can peacefully live together. There is no need to push them back into the closet, asking them to live in the dark corner of the society. That's what Muslims do. Christians should know better.

I will continue to try my best whenever there is an opportunity to explain the importance of tolerance. Homosexual people will never have enough vote to protect themselves. It is only when heterosexual people willing to understand them, they have a chance to live a less isolated life. I believe Christians have the love and courage to be the understanding party.

I hope you will understand where I come from. I am not offended by your post. I seized the opportunity to educate people who has never think of the other side, that I believe is a more humane way forward. In this sense I should thank you for bringing up the topic and giving me the chance to say my views. So thank you.

Tuesday, May 08, 2012

Rebuttal to Ron Paul's FT 5/8 article

Ron Paul's idea about monetary policy is completely wrong. Unfortunately there are still sizeable people who are misled by him and believe what he says.

The main goal of QE is to fight deflation. And only a scholar who knows the Great Depression so well as Bernanke can use this policy so timely and boldly.

The fact is after printing $2 trillion dollars, the cumulative inflation is hovering around 2%, right on target.

Japan's lost decade of 1991 to 2001 is exactly due to central banker's reluctance to use QE. It was an unconventional tool back then and only academics like professor Bernanke was advocating it.

Ron Paul advocated return to gold standard, so as to tie central bank's hands to print money. What he doesn't know, or doesn't care to know is that the policy he advocated caused deflation and is the main cause of the Great Depression.

It would be a tragedy of a generation if his policy is ever adopted by any central bank.

It is also untrue to claim the housing bubble is a result of money printing by central bank. Housing peaked in 2006 before any QE was put into action.

The theoretical justification for printing money, is that the velocity of money flowing through economy slows down significantly due to a severe financial and confidence crisis. When liquidity flows very slowly, more quantity is justified. The goal is to maintain the price level and quantity of production.

Monday, May 07, 2012

Oil price dropped more than $6 in the first week of May

Only two days really mattered in the oil markets this past week. After mild oscillations the first three days of the week, the spot price of West Texas Intermediate dropped Thursday by a little more than 2-1/2 dollars per barrel on an unexpectedly weak ISM non-manufacturing report. And crude fell just over 4 dollars a barrel on Friday on the disappointing jobs report.

Net for the week, the spot price for West Texas Intermediate dropped $6.44 per barrel to settle at $98.49. This is the first time spot WTI settled below $100 per barrel since early February 2012. This will help the Fed with its forecast for softening inflation and may even put back a little money in consumer wallets. Lower gasoline prices will help offset soft employment.

Debt to Income

The debt-to-income ratio shows how indebted consumers are relative to income. A rising ratio indicates that consumers are taking on greater debt burdens with respect to income growth. In a growing economy, this may not be dangerous. However, indebtedness could quickly become a problem if income and employment conditions turn around. The yearly change in debt outstanding shows yearly trends in debt growth and tends to be less volatile than the monthly change.

A balance sheet recession means consumers are overly indebted and future income will be directed to debt repayment rather than consumption. Aggregate demand can be surpressed for a long time and hence the economic growth and job creation.

A balanced economic growth means a good balance between production and consumption. This usually implies a healthy balance sheet and the debt-to-inomce ratio is not too high.