Friday, May 23, 2008

These things are surprisingly good


We are the new proud owners of a slightly used Nissan X-Trail. The X-Trail is a light AWD mini SUV based on a Nissan Sentra chassis. They were sold in Canada for a couple of years, and not the US. Now the model line has been replaced by the Nissan Rogue.

I have to say that this little truck really scoots. And it is full of thoughtful features like a removable washable mat for the luggage area, heated cloth seats, the world's biggest sunroof, and individual coolers for my beverage.

Sunday, May 18, 2008

Money supply growth: Unprecedented


...And inflation is certain to follow.

A strong recommendation: check out the free weekly analysis at Zeal.com and reflect on what the history, the trends and the combinations of current factors imply.

For me, there are a few conclusions:
  • Inflation is coming, at levels higher than the past 25 - 30 years. It will feel like 1979 all over again.
  • In addition to the inflationary pressures, we remain in a bull market for commodities. Between monetary inflation and supply-demand forces, commodity prices will continue to grow
  • Debt is now not a bad thing, but interest costs to service that debt will leap upwards. Variable rate mortgages feel good now; there will be benefits from locking in the low interest rates later this year.
  • Bonds are going to be investment road kill
Markets exist, and work, because people draw opposite conclusions from the same data. The opposite opinions to mine come from the following ideas:
  • Credit markets are collapsing, and this shrinks the supply of money as lenders foreclose and people are forced to live within their means. This is DEflationary not INflationary.
  • Central bankers are growing the money supply in a desperate attempt to offset the impact of collapsing credit markets, but credit is such a leveraged creature that bankers can not print money faster than credit failures destroy it.
  • In a deflationary environment prices fall, and consumers are reluctant to spend money today because things will be cheaper tomorrow. This reinforces the deflationary spiral.
  • Debt is crippling in a deflationary environment because the borrower has to repay with increasingly valuable dollars.
I weigh the two arguments and come down on the side of inflation, not deflation, for somewhat cynical reasons.
  • Governments and businesses represent centralized power and influence. Their interests are aligned towards inflation, and voters are easily persuaded to allow the gradual debasement of their currency to avoid short term pain.
  • Prices can drop in market sectors such as housing, while rising in sectors like commodities, without either change being labeled as deflation or inflation. Supply/Demand changes are not monetary changes.
  • Deflation, in my view, would have to be triggered by a global pattern of shrinking monetary factors. Countries who have had a credit bubble and who have post-modern demographics (low birth rates) are vulnerable, as Japan was in the 1990s. Examples are Britain and Italy. Countries who have not had a credit bubble, and who have natural population growth, are in the majority.
My picks? Gold and silver stocks now, and oil stocks that pay dividends this fall, after the oil price corrects from its current overbought levels.

Thursday, May 15, 2008

Paying my carbon taxes

Troposphere temperatures are dropping, sea ice coverage is actually greater than normal, and yet there remains widespread momentum to levy carbon taxes based on the outcomes of computer models of global climate. Virtual reality is taking over.

I have a computer model of how my investments in the stock market are supposed to be doing. I would like to pay my carbon taxes with virtual money earned from the virtual profits generated from the computer model.

The actual portfolio performance displays a far lower 'temperature' than the modeled one. I am sorry that there is no actual money earned, but since we are dealing with virtual reality here it should not matter. Should it?

Sunday, May 04, 2008

Can I write this in a public place?

A pun based on a word I have not said aloud in the past 20 years...

Q: What word describes people who accept criticism in relation to the Vagina Monologues?

A: Contrite


Update:
My wife saw this and immediately pronounced me "chastised." This is probably bad...