ColinTwiggs, Author at the patient investor

March 31, 2013

The Freedom to Diminish Other Peoples’ Freedom | Angry Bear – Financial and Economic Commentary

Mike Kimel at Angry Bear takes a dim view of how some studies define “freedom”:

This Mercatus study, like so much else that comes from that institution, seems to be promoting a specific kind of freedom, namely the freedom of some parties to diminish other people’s freedom and the ability of one group of people to make decisions about what goes onto someone else’s property. And this, to me, is not really a measure freedom, but rather a measure of the right to oppress.

March 31, 2013

Dolphins share wave with surfers | Jeffreys Bay

Dolphins share wave with surfers, Jeffrey’s Bay, South Africa.

March 31, 2013

Mongolia needs better roads, schools and hospitals: so why all this talk about saving for the future? | Making development work for all

Australia could also learn from the Chilean experience of resources boom-bust cycles and adopt similar policies to those being considered by Mongolia. Gregory Smith explains:

Eric Parrado, former head of the Chilean ‘Economic and Social Stabilization Fund’, tells us that “if natural resource booms are well managed they can be a blessing” and that “an important general lesson is that governments should avoid temptation to spend significant temporary surpluses”.

March 30, 2013

Awesome shots of dolphins and surfers from UAV drone

Surfers and dolphins filmed from UAV drone at Lennox Heads, New South Wales, Australia.

http://youtu.be/S2vb3vF56jM

March 30, 2013

When You Weren’t Looking, Democrat Bank Stooges Launch Bills to Permit Bailouts, Deregulate Derivatives « naked capitalism

Yves Smith reports on attempts to undermine the Volcker Rule and why the rule is so important:

In the US, depositors have actually been put in a worse position than Cyprus deposit-holders, at least if they are at the big banks that play in the derivatives casino. The regulators have turned a blind eye as banks use their depositaries to fund derivatives exposures. And as bad as that is, the depositors, unlike their Cypriot confreres, aren’t even senior creditors. Remember Lehman? When the investment bank failed, unsecured creditors (and remember, depositors are unsecured creditors) got eight cents on the dollar. One big reason was that derivatives counterparties require collateral for any exposures, meaning they are secured creditors. The 2005 bankruptcy reforms made derivatives counterparties senior to unsecured lenders.

March 30, 2013

Reminiscences of a German World War II Veteran | SPIEGEL ONLINE

Jürgen Dahlkamp reports on an interview with a 92 year-old WW II veteran who lost his leg on the Russian front.

“I was a good soldier,” says Heinz Otto Fausten, which seems like the beginning of a sentence that can’t possibly turn out well. But then he says: “I see today that because of that, I was merely a good tool for an unbelievably criminal regime.”

The interview raises questions about individual culpability for collective crimes and when should a “good soldier” disobey orders.

March 30, 2013

‘Most of the banks are zombie banks’ | Het Financieele Dagblad

Translation from an interview by Marcel de Boer & Martin Visser with Willem Buiter, chief economist at Citgroup:

Is Europe creating zombie banks?

These already exist. Most of the banks are zombie banks. There is little new lending to businesses and households. Zombie banks will not offer credit even on good projects — that is already evident on a large scale.

Full article (in Dutch) at ‘De meeste banken zijn zombiebanken’ | Het Financieele Dagblad.

March 28, 2013

Forex: Euro correction while Aussie retraces

The euro is headed for a test of primary support at $1.26 on the monthly chart. Respect would confirm the primary up-trend, while failure would signal a down-swing to $1.20.
Aussie Dollar/USD

* Target calculation: 1.35 + ( 1.35 – 1.20 ) = 1.50

Pound sterling is testing the new medium-term resistance level at $1.53 against the dollar. Respect would confirm the primary down-trend, with a target of $1.43*. Declining 63-day Twiggs Momentum, below its 2011 lows, strengthens the signal.
Aussie Dollar/USD

* Target calculation: 1.53 – ( 1.63 – 1.53 ) = 1.43

The Aussie Dollar retraced this week to test short-term support at $1.04, but the up-trend is intact and we should expect a test of resistance at $1.06. Failure of support at $1.03 is unlikely, but would warn that primary support at $1.015 is again under threat. Narrow fluctuation of 63-day Twiggs Momentum around zero suggests a ranging market.

Aussie Dollar/USD

Canada’s Loonie rallied off medium-term support at $0.97 against the greenback. Expect some resistance at $0.99, but the CAD is just as likely to test the descending trendline at parity. The primary trend remains down and a test of primary support at $0.96 remains on the cards in the next quarter.
Aussie Dollar/USD

The US dollar is encountering increased resistance as it approaches ¥100 against the Japanese Yen. The 30-year down-trend is over. The advance is extended and a correction likely, but breakout above ¥100 would test the 2007 high above ¥120*.
Aussie Dollar/USD

* Target calculation: 100 – ( 100 – 80 ) = 120

March 28, 2013

S&P 500: Any gas left in the tank?

The S&P 500 managed to close at a new high, with most fund managers reporting good results for the quarter, but does this signal a new bull market or a last-gasp effort to lock in performance bonuses before the market subsides into a correction?

While markets may be rising, there is strong risk aversion.

“@bespokeinvest: Utilities P/E now up to 16.75, higher than the P/Es of Tech, Financials, Industrials, Health Care, Energy and Materials.”

— Downtown Josh Brown (@ReformedBroker) March 28, 2013

This is definitely not a classic bull market.

One also needs to be wary of September and March quarter-ends. They often represent significant turning points, with new highs (red arrows) and new lows (green arrows) frequently proving unsustainable.

S&P 500 Index

* Target calculation: 1530 + ( 1530 – 1485 ) = 1575

While there is no sign of divergence on 13-week Twiggs Money Flow, which would indicate unusual selling pressure, it is important to remain vigilant over the next quarter rather than blindly follow the herd. Bearish (TMF) divergence or reversal of the S&P 500 below 1500 would warn of a correction.

March 28, 2013

Will the Chinese Be Supreme? | Ian Johnson | The New York Review of Books

Ian Johnson highlights how China’s strategic blunders have painted it into a corner:

Just as [Pre WW I] Wilhelminian Germany should surely have seen that building a blue-water navy would cause Britain to form alliances against it, so too should China understand that demanding control over islands far from its shores but close to its neighbors’ would cause a backlash. (Here one thinks not so much of the Senkaku/Diaoyus but of the shoals, reefs, and islets in the South China Sea.) Even the battle for the Senkaku/Diaoyus seems to have no satisfactory endgame for China except a permanent state of tension with its most important neighbor.

……..today the country’s tactics have left it surrounded by suspicious and increasingly hostile countries; indeed, it’s probably no exaggeration to say that China has no real allies.