First, why the fuck should I be interested in refuting his conclusions anyway? I don't give a shit about the guy or what he has to say. YOU posted a screed of his that is in no way relevant to the piece I posted and now you're upset because I quoted his own damned website back to you. Amazing.
Second, his website is aimed at promoting his DVD and selling gold. That's obvious by just looking at his homepage. That alone makes him somewhat less than objective in my opinion. He has an agenda and you know it, just like most of the bloggers Hale Stewart was talking about. Even though Stewart's blog has a link to his own law firms website, he isn't selling something he isn't qualified to sell.
Rather than refute the conclusions of Dr. Martenson based upon his objective analysis of the data, you instead lash out at his credentials (or lack thereof, in your eyes) as reason that his viewpoint should be summarily dismissed.
Wow. If merely quoting from his own "about me" page is lashing out at his credentials, I can see you and I are not going to agree on much at all, are we? I in NO WAY insinuated his "viewpoint should be summarily dismissed". That is YOUR assumption. But I've read the guy before. He's a scientist that fancies himself an economics wonk. Good for him. AND he's flogging gold. His viewpoint is no more valid than anyone else who writes about the markets that has no credentials in the discipline.
Refute his conclusions? I'm not sure why I should have to bother, but what the hell, I'll take a stab at it. It'll be fun. However, I have a feeling you aren't going to like this either.
But first;
Bonddad's viewpoint may be (and I happen to believe that the perspective of economics is a horribly narrow one, but that's also just my own perspective coming into play), but that does not make it in any way irrefutable. Quite the contrary. I think it is extremely refutable the further back one stands and surveys the entire forest rather than a few select trees.
Pardon me while I raise my voice a bit here, but
STEWART WROTE AN OPINION PIECE ABOUT FINANCIAL BLOGGERS. The "viewpoint" you are talking about does not have to be "valid based upon the analysis of data from a certain perspective" because he isn't talking about data at all. He is simply commenting on the propensity of economics bloggers to stay their course, whatever that may be. And he is right.
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Anyway, let's have a look at what the good Dr. Martenson has to say, shall we?
From the first paragraph;
Watching how the markets were instantly recovered from the Dubai Debacle on Friday and today (Monday), and seeing gold and stocks and bonds all floating along despite the crisis is just further confirmation for the idea that the world's liquidity pumps are set to "maximum power."
Or maybe, just maybe the markets took it in stride, in light of what has happened over the course of the last 2 years and reacted as they might be expected to react: In an unexpected way, like a lot of the time.
He then quotes a couple of news stories talking about how the US consumer is pulling back and "One in four borrowers is under water" (perfectly valid points, BTW) but then he says this;
However, our financial markets are telling a very different story, with signs of plentiful, if not rampant, liquidity everywhere. First, in the largest market of them all (by sheer size) is the bond market. There we find staggeringly large Treasury auctions being held week after week with stupendously low yields and suspiciously high 'indirect bidders' (foreign central banks) showing up each week.
"Rampant liquidity". Oooooh....sounds scary. What the fuck does that mean to him, anyway? That there is lots of cash and/or there are lots of willing buyers and sellers for assets? Who knows if that's what it means to him, but that's what "liquidity" means. How the hell is that a bad thing? "Stupendously low yields." Wow. Another scary sounding bit. Perhaps he would prefer the Treasury wait until demand fell to nothing so they would have to issue debt paper at a higher rate. Yeah, that's the ticket. Why issue paper when there is demand for it and it is cheap to do so? "Suspiciously high 'indirect bidders' (foreign central banks)" Oooh. More scary language. So the fuck what? So there is demand for Treasury paper from foreign central banks. Why would that be, oh wise one? I'll bet he really doesn't know, but if he does, he ain't saying so in this bit. The reason is that those banks KNOW that if they buy a bond issued by the United States Treasury department, they WILL get full par value back when the bond matures and if it pays a coupon, they are going to get those coupon payments on time and in full. They also know that if they want to trade them away, the market for US Treasury bonds is liquid, meaning they can and will find a buyer for what they want to sell in very short order. All of that makes those securities a very safe place to put cash. How horrifying for them.
Of course, as my long-time readers know, I happen to believe the mystery can be solved by simply understanding that our bond markets are now subject to large and frequent interventions by so-called non-economic players (i.e. central banks), which do not care about gains or losses.
'scuse me for a sec....:spray: Central Banks don't care about gains or losses, eh? Really?
In the next part he says "The funny stuff I recently saw in the 3-month bill has really left me scratching my head." Yeah. And his interpretation of it has me thinking he doesn't know what the fuck he's talking about;
The funny stuff I recently saw in the 3-month bill has really left me scratching my head. Marked on the chart is one example. I am left wondering why it is that investors show up at auction and pay so much that they receive a 10x worse rate of yield than they could secure in the open market the next day. Who does that? Not regular investors, we can be sure.
First of all dipshit, the chart you are looking at is secondary market data, NOT a chart of auction results.
Here is a table of recent T-bill auction results. 90 day paper is auctioned every week. The data on the graph he has in his article does not correlate to the info from the Treasury's website. In other words, he is wrong in his assumption or he doesn't understand how the auctions work or he doesn't understand the difference between the primary and secondary market with regard to Treasuries and or he doesn't fully understand what he is talking about or all of the above. The spike downward that he is trying to make a big deal out of was a one day thing that had NOTHING to do with the auction that occurred on the 19th of November.
Why does the media never question the odd behavior of Treasuries becoming more expensive right before or on the day of a massive auction? (That's what we have YOU for, Doc!) In a normal world, huge quantities of new supply to sell would drive the price down, not up. (Maybe. But the reason prices have been driven up is because there is demand for these securities. Apparently the good Doctor doesn't understand this) There has been a massive flood of money coming into the 2-year issuances as well. (He inserted a chart here) That's quite a run from August. Ditto for the 5-year. (He inserted a chart here) There has clearly been plenty of money coming into these markets. (Yeah, so? Guess what happens to the money "coming into these markets"? IT BUYS BONDS!)
There's really nothing else to say, except that lots of money has been pouring into the bond markets and the major source is not really in doubt - central banks. (Not in doubt? Not at all? OK, I'll take your word for it. After all, you are a Doctor.) Naturally this makes sense, as they are dead-set on getting the credit markets back moving again, (wait a fucking second here. If those banks are buying Treasuries, that means they are spending the cash they have. Something doesn't make sense with his analysis) even if this means punishing savers with low yields and forcing people to take more risks in the stock market. In fact, that last one is a desirable outcome.
Who is "forced to take more risks in the stock market"? The fact is, there is simply no high reward for being in a "safe" security these days. If you want safety, you have to put up with low yields. If you are willing to take on a little more risk, whether you are an Average Joe or a major central bank, there are plenty of other things to invest in, NONE of which are forced on anyone.
This is getting a bit tiresome, so I'll just jump to his "Conclusion"
Conclusion
All in all, I think what we are seeing in the markets is most consistent with, and best explained by, a simple policy of dumping lots and lots of money into the markets. At the same time the dollar leaks away.
When do markets cease to be markets? When they are so distorted by monetary interventions that they no longer provide useful or rational price signals.
Until some form of useful price information is allowed to once again enter the markets, I will consider them to be largely untradeable for anybody but the very good, the lucky, or the well-connected.
I am not sure when this ends, but I am reasonably certain that it ends in tears, because I doubt that policy can trump reality.
While I sympathize with the challenges facing the monetary and fiscal leadership of the world, I remain stubbornly unconvinced that a problem rooted in too-cheap money and too much debt can be fixed with cheaper money and more debt.
On his last sentence, I agree. But unfortunately that is the situation we're in, and if you have to borrow money to fix something, it is a shitload better to borrow it when it's cheap rather than when it's not.
How's that? In depth enough for you?
One last thing, Mr. Irate Citizen;
Such is not a feature of rational-critical debate. It is, instead, a hallmark of the world of publicity that trades in personality and title rather than in the merit of one's ideas. It is indicative of when ideas have jumped the shark into becoming hollow ideology.
Kudos on the flowery language. You're right. I shouldn't point out things people put on their own websites that tend to shoot holes in their credibility. I'm sorry. Now I shall go and ponder the deep meaning of
"indicative of when ideas have jumped the shark into becoming hollow ideology" because that statement has ALL kinds of beer drinking written all over it.