Comments on: The Deadly Dozen

By: sg

sg — Wed, 10 Feb 2010 00:22:28 +0000

David, I am pro immigration, too. Especially immigrants with something to contribute. We should make sure that newcomers possess some real human capital, because their children will grow up in the culture of the USA which is not conducive to character building. You are very thorough in your analysis of financial matters. Similar scrutiny of the data of the performance of immigrants will render a more reasoned and cautious view of immigration. Charles Murray at AEI has analyzed immigrant performance and found that human capital matters.

By: dlr

dlr — Mon, 08 Feb 2010 09:00:25 +0000

You left out lucky 13 – the residential real estate bubbles that haven’t popped yet. Canada, Australia, and the UK have property bubbles more than twice as large as the US’s property bubble, and they haven’t even started to deflate. Not to mention the insanity that is going on in places like Singapore.

By: David Merkel

David Merkel — Sun, 07 Feb 2010 05:46:06 +0000

anon, it seems that way, but credit almost never has a V-top. That is why I am diffident at present.

By: anon

anon — Sun, 07 Feb 2010 05:05:52 +0000

So much of the equity rally has been due to tightening corp bond spreads (both inv and high yield). But since Jan spreads are widening, and therefore high debt equity names are getting derated. It just seems that the high yield bond rally is over.

By: David Merkel

David Merkel — Sun, 07 Feb 2010 04:29:18 +0000

Depending on what happens with sovereign risk, we could see dollar bonds rally a lot further. Watch the European fringe.

Mortgage Bonds are overpriced, and the Fed is done (for now).

Can corporate spreads tighten further? Yes, but I think the market will have a tough time if the default cycle recurs either due to insufficient growth or sovereign defaults affecting the creditworthiness of foreign and domestic financials.

Thanks for asking, anon.

By: David Merkel

David Merkel — Sun, 07 Feb 2010 01:59:25 +0000

We allow more people in of of more different sorts, and are more tolerant of differences than most places in the world. Please ignore the noisy anti-immigrant sorts — there are fewer of them in America than immigrants.

Note: I am pro-immigration, in general. Immigrants are beneficial to the US, because most of them are hard working.

By: Mauldin

Mauldin — Sat, 06 Feb 2010 23:25:25 +0000

you are wrong about USA demographics . the attractiveness of working in USA for foreigners is not exactly going up compare rooting their life in their countries. reason for rooting in USA for foreigner in term of social, economic reward are not going up. not mentioning about they need to deal with discrimination.

By: anon

anon — Sat, 06 Feb 2010 20:31:49 +0000

Is the bond market rally over? You called the rally in high yield, then got off a bit early, and now its correcting.

By: David Crais

David Crais — Sat, 06 Feb 2010 15:22:08 +0000

Great post. I would also add the flaws being exposed in the US retirement system. 401K’s and IRA became popularized at a time (1982) when Baby Boomer’s were still in their 20′s and 30′s. It was also a time when we were heading into lower tax rates, a rising stock market (shaking off the doldrums of the 70′s), declining energy prices, lower union membership.
We also had the fall of the Berlin Wall in 1989. This led to the opening up of Easter European markets and resources which expanded capitalism. It also led to the fall of many leftist leaning governments and military juntas in Latin America which also opened up more areas to capitalist forces.
These forces of change are either over and assimilated in already, or the demographic trends have changed.
Much is discussed today about the need for tech innovation to bring back the 90′s Internet and TelComm driven period of Innovation. But it wasn’t just tech that drove the growth (even though it was 1982, the first year of the stock market boom, that the PC was Time Magazine’s “Person of the Year”) it was also these demographic, geopolitical, and policy changes.
What forces are driving the next 20 years.
David Crais
New Orleans

By: Mariano

Mariano — Sat, 06 Feb 2010 00:41:16 +0000

I wonder if this is just they way humanity works. I can’t think of a time without a significant risk (wars, diseases, etc). We’ll allways have risks or threats….