September 14, 2015

Market Unrest: Time to invest?

Posted in Irish Independent · 66 comments ·
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For a documentary going out on RTE One the week after next on wealth in Ireland, we explored the recent returns to the stock market. In order to get a sense of the value of companies based here in Ireland, the team constructed a bespoke index, which measured the stock performance of the top ten US multi-national corporations that have part of their global business here in Ireland.

The results were quite dramatic, not least because we contrast this index with an index of Irish wages. The aim is to show how you’d be fixed now had you depended on stocks for your household income, rather than depending on wages. We look at the evidence from 2008 to 2015.

Households that depended on wages have seen hardly any increase in income, but the households that depended on stocks – no matter how small the investment – are looking at a tidy 470 per cent profit.

Let that sink in for a minute.

Before we launch into a story about how easy it is to make money of stocks, calm down. Picking the year 2008 as the beginning of the financial crisis is a bit unfair because it represents a recent nadir for stocks. Markets crashed in 2008. In addition, the policy reaction to the financial crisis was quantitative easing which was explicitly designed to drive up stock prices in order to repair the balance sheets of the US investing public.

Therefore, we are looking at possibly an exceptional period in financial market history when the main economic policy was focused on balance sheets and driving up asset prices, including property.

This policy reaction led to the presumption that every time there was a wobble in stock prices, central banks would come in and inject more cash into the market sending prices back upwards. It’s not that central banks decided to love financial markets all of a sudden, but they decided that the financial market is the battleground through which they will win the economic war of dragging the world out of recession.

This background noise substantiates the observation that sometimes, when investing, the best of decisions are taken in what appear to be the worst of times and the worse decisions are taken in what appear to be the best of times. 2008 was the worst of times.

So for six years financial markets have been on a rollercoaster of cheap money, leading to upwards stock prices, leading to more confidence, leading to ever higher stock prices. This is precisely the opposite of what was happening in the normal economy, where competition from China kept downward, not upward pressure on manufacturing wages.

But over the summer, the upward march of markets came to a sudden halt – driven largely by fears over China and, more fundamentally, by the acknowledgement that, in the US, the period of easy money is over and the next move in interest rates will be upwards.

Stocks have all fallen dramatically, the dollar has risen, and this has pushed down commodity markets further and led to billions of dollars leaving all sorts of risky assets.

Contagion from China’s 40 per cent stock market meltdown has triggered bear markets from Hong Kong to Frankfurt, and plunged Asian/emerging markets equities into a ghastly replay of 1998’s epic meltdown.

Just to remind you what happened then, we had General Suharto’s overthrow in Indonesia, the Russian rouble default, Malaysia’s capital controls, the run on the Thai baht, the IMF’s $57 billion South Korea bailout and oil prices down as low as $10 a barrel.

But back then, the Fed responded to the crisis by cutting rates and injecting money into the system.

Now the likely move in Fed rates will be upwards because the US is growing so strongly.

After six years of zero interest rates, the US authorities are about to declare victory. The day rates are raised in the US will be a valedictory moment. It will mean that the Fed’s policy has worked.

Let’s look briefly at the US numbers to understand this point. The economy is growing at close to 4 per cent, the unemployment rate is down to levels lower than when Reagan was in power, the banks are lending again, commercial property is rocketing and the banks’ balance sheets are in good shape.

So it would not be surprising for the US to raise rates this week, despite calls from both Larry Summers and the chief economist of the World Bank for the Fed to chill out and wait until the rest of the world looks better.

Most people in the US have discounted a US rate rise anyway. So why should the US stock market slump further?

Elsewhere, ongoing deflation is going to make the ECB miss its inflation target, again. The situation in Europe is the polar opposite to the US.

The ECB has just downgraded again its growth and inflation forecasts in Europe, and is actively preparing the ground for another massive round of European quantitative easing.

In the past two weeks, the German DAX index dropped 20 per cent from its peak since its blue-chips have 10 per cent of their sales in China. It rebounded this week, but we are still yo-yoing around. The Swiss market did the same; as too did the Italian market.

But unlike China, there is no sign of recession anywhere in Europe. There may be worries about inflation, but the economy is no worse than it was a few months ago, and industrial Europe is doing well.

So it looks like there is value in Europe.

The key to this game is to buy when you think stocks are cheap and really just go away and allow the companies do their thing.

The idea that you can beat the index or be cleverer than the next guy seems to me to be a recipe for many sleepless nights. Also, if you do want to sleep, avoid leverage because this is a way to bankruptcy.

If you are content to buy good companies that have good cashflow and a history of giving investors back their money via good dividend payouts, now is a good time, because the market has been indiscriminate in punishing everyone.

So yes, there is opportunity in this market no doubt, but in stocks, it is the underlying companies you want to understand.

A great example of this could be the well-managed multinationals that operate here. They are in a variety of sectors, are plugged into the world market and are based in an economy which is growing at six per cent per year, yet where their costs are kept down via the low corporate tax rate.


  1. Colm MacDonncha

    Which is great news for those with money to invest in the Market… oh,subscribe!

  2. Mike Lucey

    I hope you are right David but from what I read the USA picture is not quite a rosy. It looks like 43 million US individuals, nearly 15% of the population (doubled since 1975), are receiving Food Stamps. Surely this could not be looked on as a healthy economy? http://www.trivisonno.com/food-stamps-charts

    Depending on where one sources their figures in relation to US growth it also looks that the 6% figure is highly manipulated and may be a lot lower. Some argue that it could be in negative territory.

    As regards Ireland with its 9.5% unemployment figure, I wonder what the picture would look like if the country had not been able the ‘export’ our unemployed? Some argue we would be looking at upwards of 30%.

    I wonder how good an investment the likes of Apple, Google etc would be if they were stumping up full taxes instead of availing of the ‘cute hoor’ arrangement laid on for them, probably okay but not in the territory they have been in and continue to be in.

    • Deco

      The US has serious societal inner imbalances. In fact most Western economies have increasing imbalances.

      One of the principal reasons for this is that economic activity is increasingly being driving by low interest rates, rather than efficiency improvement. There are improvements occurring in efficiency, but these are being smothered by an increasingly powerful state system.

      The prevailing economic model currently is to stick the gear in fifth, and keep the handbrake on.

  3. michaelcoughlan

    “Elsewhere, ongoing deflation is going to make the ECB miss its inflation target, again. The situation in Europe is the polar opposite to the US.

    The ECB has just downgraded again its growth and inflation forecasts in Europe, and is actively preparing the ground for another massive round of European quantitative easing.

    In the past two weeks, the German DAX index dropped 20 per cent from its peak since its blue-chips have 10 per cent of their sales in China. It rebounded this week, but we are still yo-yoing around. The Swiss market did the same; as too did the Italian market.

    But unlike China, there is no sign of recession anywhere in Europe. There may be worries about inflation, but the economy is no worse than it was a few months ago, and industrial Europe is doing well”

    You must be still in the same stupor you were when you wrote the last article if you can’t see the contradiction in the above passage.

    Michael.

  4. McCawber

    I thought we all agreed that inflation is a bad thing for the citizens.
    We should be worried if inflation increases. It’s amazing how we’ve all been indoctrinated into believing that a target of 2% inflation is a good thing when in fact it is actually a bad thing.
    It’s only good if inflation is higher than 2%.
    The ECB should acknowledge this fact and lower the target (I seem to recollect that it’s not the ECB that actually sets the target).
    Germany certainly wants a lower target – Proof – Action speaks louder than words and it’s one of the things that makes them so competitive.
    My ears may have been deceiving me but I’m sure I heard that the new UK labour party leader is in favour of more QE.
    As for investment it’s nearly always a good time to invest in the stock markets, long term. But some times are better than others.

  5. JK

    Would anybody like to add their 2 cents on who the “well managed multinationals” are?

  6. DB4545

    Historically you’re right David but it’s easy to “predict” the past unfortunately we don’t have that option with the future. Viewed from today the correct investment/selection in yesterday’s Paddy Power’s racing opportunities seems like it could make us a few quid. But I doubt Paddy Power will grant you that opportunity retrospectively.We only get to view snapshots of past events and try to make sense of them just as you’re doing.

    They say the best time to invest is when there’s blood on the streets. I don’t think we’re there just yet but then again I can’t predict the future either.If we’re heading into uncertain waters guns, gold, booze, cigarettes and food seem to offer richer pickings,more opportunities and diversity than a few tech stocks. That to me translates to corporations such as General Dynamics, Gold, Diageo, British American Tobacco and Cargill/Monsanto and related stocks. Then there’s the other question of the entry/exit costs for the little guy to access that arena. The stockholders in those industries have had a nice little earner over the time frame you’ve outlined and look like they prosper over the very long term from uncertainty.

    How can anyone ensure that their sure thing doesn’t become a beaten docket? Make sure you’re the bookie or the racehorse owner or a combination of both.

  7. michaelcoughlan

    The more I think about this article the more idiotic it seems to me. 100 euros now only buys 70 gbp. It must have been a shadow writer who produced it.

  8. cooldude

    Lots of inaccuracies in the article. The only reason unemployment seems to be low in the US is because the long term unemployed do not qualify as unemployed in their misuse of the statistics. If you include these out of work Americans the real figure is over 20% which represents a failure by the Fed to achieve one of their principle mandates.

    A much more accurate reflection of the real state of the labour market is the labour participation rate which has fallen to a forty year low, not a sign of a healthy economy. Also the rate of business start ups is at a forty year low which is where actual jobs come from.

    The advice recommending stock purchases seems to me dangerously mistimed. The Dow and the S&P seem to be entering a bear market and seem likely to plunge sharply again soon. I wouldn’t touch either with a barge pole at the moment. The likes of Google and Twitter seem to be vastly overpriced and seem to be ready for a major drop.

    Be careful with all stock markets at the moment. If you go by the seven year cycle theory, which has a fairly good track record, we are soon going to have a serious market correction.

  9. DC

    Now this really has me laughing I think David must be watching too much Mad Money (Cramer) on CNBC. This article is almost as funny as the link below.

    https://www.youtube.com/watch?v=1QEKdsEfLY0.

    If you need salient investment advice look no further than John Hussman – one very sharp operator.

    Yes their will be money to made in stocks but only after a very significant and protracted downturn and if the HFT scam can be tackled so honest price discovery can occur for the average investor.

    David Writes “Most people in the US have discounted a US rate rise anyway. So why should the US stock market slump further?”

    Here is why!

    http://www.hussmanfunds.com/wmc/wmc150914.htm

    Enjoy.

  10. Adelaide

    David trots out Officialdom’s Statistic AS IF they are Actual Facts. I suppose next he will be saying Ireland’s unemployment rate is 9.7% (it’s 23% if you’re interested). A bad run of articles from David, ah well it was the summer, still he’s still miles ahead of the presstitutes that pass for ‘commentators’ these days, and a fine writer regardless, a return to original analytical form is imminent.

    • Deco

      Adelaide, you are correct.

      Brand Ireland is having a “sellathon” called buy our “recovery story” and therefore buy the debt that is sustaining an unstoppable state borrowing addiction.

      Ireland is Greece with Jersey Island style statistics.

      Just look at the size of the Irish institutional state, and the largesse it funds.

      I see where this is going.

      Contrary to what the Irish media say, it was not Syriza that wrecked Greece. It was pro-EU, Brussels loving wasters who are in many ways similar to the parties that dominated this and the previous government.

      The media are lying to us again.

  11. Deco

    All of the worst performers in the Irish Stock Exchange, are headquartered in the expensive areas of Dublin – or are close to the cool areas to live.

    AIB
    BoI
    Anglo
    Permo

    What does that tell us about “Cool Hibernia”, and the prevailing wisdom that exists in such areas ?

    Well it tells us that there a lot of bullsh1t in circulation there, and the performance is abysmal.

    If you want to make money is stocks, do not invest in any companies headquartered in central Dublin, or along the DART line.

    [ I know DMcW will not be keen on that, but the evidence is there].

  12. ‘we explored the recent returns to the stock market.’

    IN AS MUCH AS IT IS WELL ESTABLISHED THAT CENTRAL BANKS MANIPULATE INTEREST RATES TO TRY TO ACHIEVE DESIRED OUTCOMES IT IS ACKNOWLEDGED THAT THE INTEREST RATES DO NOT REFLECT A FREE MARKET.

    It is naive to think that this mindset will not try to achieve desired outcomes in other areas of the economy such as the stock market values, currency values, inflation rates, climate debate, politics etc.

    Everything is now manipulated and as Chris Powell of GATA famously proclaimed,”there is no such thing as a free market” anymore.

    The US “Plunge Protection Team” goes unremarked. Formally known as the Presidents Working Group on Financial markets.

    http://www.archives.gov/federal-register/codification/executive-order/12631.html

    Government sponsored organizations or government organisms or the government itself directly intervene in the stock markets.

    http://www.thedailybell.com/definitions/params/id/2632/

    Discussion of markets without mention of these not so surreptitious efforts to control everything is irresponsible. Ignorance is no excuse as even on this forum the subject is raised many times. Also to consider is the fact that many of these operations are illegal if not criminal in scope. Therefore all financial advisers are accessories before and after the fact. If the financial advisers are unaware then they are plainly ignorant.

    The same may be said for economists, which makes , in my book, most economists irresponsible.

    Also oft repeated is the fact that the central bankers control the monopoly of money production and that all money is issued by them at debt charged interest. They operate a criminal enterprize Ponzi scheme that is designed to encumber the world and reduce the peoples of the world to poverty. The currency system will collaspe without continual expansion of the money supply and eventually regardless.

    We also know that these same bankers are part of the PPT (Plunge Protection Team). also part of the Team are the regulators.
    Here the regulators are charged with the protection of the public interest yet are directly involved in the manipulation of those same markets.

    Knowing all these things and yet promoting the investment into such odious enterprises is deception of the highest order. I go so far as to say a criminal act in itself.

    Pretending the US is in a bone fide recovery is another myth of the PPT and the government in general. Again pointed out on this forum by many is the unassailable evidence that this is not so. How can anyone with access to this information ignore it without rebuttal.

    So refute this with the data if you can.

    http://www.shadowstats.com/alternate_data

    I am pretty well disgusted that this sort of essay was even contemplated yet alone presented to the public as seriously proper information. Where is the integrity?

  13. To be honest with you, there’s so much fraud and corruption going on in the reporting of all of this information that it’s really pointless spending the time collecting the data, analyzing it and trying to understand it.— Dave Kransler

    http://investmentresearchdynamics.com/questions-about-analyzing-gold-futures-cot-data/

  14. mcsean2163

    To be honest, I am stunned to see a buy stock recommendation at this stage in the game. The only problem is the euro devaluation but surely 2016 = recession. Citi have given a 55% chance of a Chinese recession. I’m on the sidelines, no point investing at the top…

  15. “But this week makes little difference in the long term, since the cake is already baked. Stocks will suffer a bloody wound this month, the peak has passed, & the next five years or so will. shave ten thousand points off the Dow. Franklin Saunders

    http://the-moneychanger.com/eCampaign/commentary.php?Key=20150914

  16. Seeing as today we are in the forecasting , recommendation mode, here is a suggestion that is based on nothing but a hunch so take no notice of it but compare it 5 years from now with the general stock market.

    Bludgeoned and bloody but unbowed is PBH Billiton the largest miner on the planet at a severely discounted price showing a 7.2% pa. dividend. For 5 years the commodities have suffered while the general stocks soared. The trend is reversing and there is a decent return on your money paid each quarter while you wait to triple your money within the next 5 years.

    If this does not happen the world is in a total crisis economy. Enjoy. Eat well, sleep well, laugh a lot!! :)

  17. http://www.informationclearinghouse.info/article42853.htm

    I am not the only one who is mad. O’keefe here says it all again. The bankster thieves are supported in the mainstream media by the “Pressitutes ” as Gerald Celente calls them.

    ““All of these players, these politicians are nothing more than puppets, they don’t serve the people there is no real democracy, they serve the rich and powerful who run the world and that would be the bankers who control the money supply. The bankers make huge amounts of money….wars are great for them and ultimately they control the politicians.”

  18. “Whenever the stock markets started to sell off, Fed officials were quick to step up and declare that they could increase the size of QE3 if necessary. So all dips were quickly bought, short circuiting normal market behavior. This created gross distortions in all kinds of markets, including stocks and the leading alternative investment that moves contrary to them of gold. With stocks magically levitating, gold was abandoned. ———–Adam Mamilton

    http://silverseek.com/commentary/silver%E2%80%99s-vexing-slumber-14857

  19. http://www.jsmineset.com/2015/09/13/there-is-no-salvation-for-the-securities-markets/

    “When machines take over markets there are no value metrics for anything. As such anything can trade at any price. It is all math, devoid logic or the means of valuation.

    Those the gods wish to destroy they make mad first. The business of markets is dead. It is going to remain dead, killed by the demons who claimed pubicly to have been doing the work of god. Now these same perverted players are running for cover themselves to save the trillions they have made. Clearly any rally in equities will be used to liquidate. The executioners of markets are finding out that paper currency will not protect their wealth. That should lead to gold and silver selling above any metric for valuation that has been traditional throwing all ratios or other .measures into the round file. These New Normal destroyers have broken the playing board of market, the heart of free enterprise.” Jim s
    Sinclair

    “Markets are now completely broken. Six plus years of zero percent interest rates have taken away any possibility of putting a real or true valuation on anything. The “tool” of derivatives has been used by our central planners to bend and twist markets in ways to “prove” their policies work.”— Bill Holter

  20. http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/

    “The BIS report said the rich countries have failed to right the ship over the last seven years or bring leverage back down to manageable levels, as the Nordic states succeeded in doing after the banking crises a quarter of a century ago. Instead they seem to be caught in a Japanese trap.

    “Aggregate private debt has barely stabilised, let alone started to correct downwards, even in the corporate sector. And government debt continues to rise steadily, in a manner reminiscent of Japan’s trend deterioration in the 1990s,” it said in its quarterly report released over the weekend.”

    Debt load are still increasing warns the BIS. Beware it hints.
    The BIS should know as they are the central bankers central bank. They deal in credit err… debt and as do every central banker on the planet. Between them they issue nothing but new debt as currency and as such are the primary source of all the debt carried by mankind. QE is simply a way to flood the world with new debt use to fund existing debt in order to prevent the whole edifice blowing up. It is a delaying tactic to make the final bust all the worse.

    Now they pretend to warn us of their own actions. They are nothing but a den of psychopathic vipers.

  21. McCawber

    Another Question.
    Preamble-
    The Irish economy has recovered dramatically (well ahead of the most optimistic forecasts or predictions) even while the government has imposed significant spending constraints.
    Regular commentary worldwide continuously calls for more government spending (or stimulus) to boost the world economy (Germany is a naysayer to that approach).
    So Ireland’s experience is at odds with the general wisdom.
    ie cutting spending has brought growth.
    My question is WHY.
    Don’t use answers like exchange rate, trading partners etc, other countries have had the same positives. Ditto pent up demand.
    There has to be something more fundamental.
    Is it really the case that McCawber is right.
    Balance your books and everything will flow from that including or in particular the intangibles like confidence (eisk on???), goodwill etc.
    To keep my post short I’m relying on you to fill in some of the obvious gaps – I’d also welcome the views of any citizen socialists out there.
    Anyone care to try to explain the control system that is the answer to my WHY.
    I have a supplementary but I want to see the answers or opinions on my first question.
    In McCawber we trust!!!!!

    • “It is important to call the Irish recovery what it is: a state-led development strategy, coordinated by an autonomous public sector agent, specifically tasked (and adequately resourced) to attract investment from global firms in an internationally liberalized market “-

      See more at: http://europedebate.ie/what-explains-the-irish-economic-recovery/#sthash.pd6ohrJ0.dpuf

      • “All the state has to do is regulate for market competition and then get out of the way. Therefore it is assumed that markets, not politics, shape FDi flows. This is the assumption that underpins the European Commission DG for ECFIN analyses of industrial and enterprise policy. The only role for the state is to implement structural reforms of product and labour markets. Once this liberalization is achieved the positive effects of inward investment and entrepreneurship will emerge, naturally, by itself. In the Troika memorandum of understandings with the Irish government, and the country specific recommendations on how to tackle macroeconomic imbalances, there is zero mention of enterprise, education, skills or industrial developmental policy. Micro-economic supply-side policies imply nothing more than reducing costs, particularly in the labour market. – See more at: http://europedebate.ie/what-explains-the-irish-economic-recovery/#sthash.pd6ohrJ0.dpuf

    • So Ireland’s experience is at odds with the general wisdom.
      ie cutting spending has brought growth.
      My question is WHY.

      Answer, It hasn’t.

      • McCawber

        I think it has in part and in a significant.
        In a very simplistic way, if a government constrains its’ spending this (IMHO) automatically leads to less waste, a more efficient economy which leads on to etc etc.
        There is no doubt an economic recovery is in progress.
        Again I don’t need/use publication of figures to be certain of this although such figures do reinforce my own estimations.
        I live right beside the M50 and had I made a note I could have told the country to within a month’s accuracy the day the recovery started.
        Simple traffic volumes and associated noise increases.
        Were I the government I would have traffic volumes monitored on a few key road links and this would indicate almost immediately when the course of the economy has changed or at least started to and perhaps even (or more importantly) the rate of change.
        The M50 is as loud/busy as before the crash and the noise has been beginning at an earlier time this year, in particular.
        So Dublin is starting to suck up spare capacity in the general Leinster region also.
        (It reminds me in a sort of a way of some of the stuff in David’s “The Pope’s Children”, it’s uncanny, people on the road to work in the very early hours of the morning. Could history be about to repeat itself, time for a reprint maybe, there are lessons to be relearned I fear)
        I get your references to various publications but what are your own eyes and ears and friends etc telling you.
        Irish history supports my view. In the late 80′s with the IMF at the door the Irish government was forced to rein in spending, what happened next is history but there is a correlation and I’d loved to know how to measure it and therefore benefit from it.
        A wise man once told me. Believe nothing of what you read and only half of what you see.

        • DB4545

          McCawber

          At a local level there’s definitely more traffic on the road in the Dublin area but what is it telling us? Is commerce and tourism concentrating and growing in the greater Dublin region? There’s plenty of 151/152′s on the M50. The stats might point to new car registrations being up.How many are rentals? Is the pump being primed before the election? The usual auction politics and promises appear to be under way and the usual media are selling recovery. Politicians are focused on a key issue that concerns them and that’s re-election. Politicians and the usual media sold soft landings.

          At a global level Swiss ten year bonds sold at a negative yield. There’s a wall of cash looking for a safe and attractive home with decent returns and no home to go to. It doesn’t seem to be keen to jump into equities just yet.The usual canary in the coalmine indicators (oil & gold) which traditionally skyrocket in times of turmoil have tanked. As Warren Buffet said sometimes the best decision is to decide to do nothing. In times of uncertainty and unseen risk absence of evidence isn’t evidence of absence.

        • Adelaide

          McCawber, a friend who commutes to Dublin via the M50 has an alternative explanation based on his own observations of increased M50 traffic and his own situation, it’s caused by rising rents within the M50 belt, pushing tenants outside the M50 and thus forcing them onto the M50 as part of their new commute.

          It’s not economic recovery, it’s dislocation of working tenants. Sounds plausible to me.

        • So Mr McCawber

          You wish to ignore this account and make no comment on the reasoning why there has been a statistical improvement in the Irish economy? It is embedded in policies formed in the 1960′s.

          I’ll attach it again.

          http://europedebate.ie/what-explains-the-irish-economic-recovery/#sthash.pd6ohrJ0.dpuf

        • McCawber

          The points regarding pre-election pumping,
          rental issues both cars and housing etc are all valid but they certainly don’t add up to anything like a full explanation for the increased traffic (Economic Growth).
          Tony, you are quite right to refer to our industrial policy since the 60′s.
          There is or maybe was nothing wrong with this approach and a lot right with it.
          However we didn’t kick on from it and use it as a springboard to god knows what.
          At least if you have a policy, you’ve made a decision and you can see then is it the right or wrong decision and make changes accordingly.
          It also had the beneficial (or not depending on your ideology) impact of forcing the Irish government to remove (in theory) the preferential tax rates given to multi nations and apply them to all businesses when we joined the EU.
          So I will adjust my wording.
          Government constraints on spending heavily augmented by it’s long term FDI policy has led the recovery. ie the recovery would not be as strong if the government had done nothing about its’ spending.

          DB4545 beat me to my supplementary.
          If we are moving (In my opinion we are) in the right direction, how do we avoid slipping back into the old ways and go bust again.

          Wage competitiveness is a very complicated issue.
          The elephant’s in the room are.
          1. Over paid state sector, specifically arising from bench marking.
          2. Negative equity.

          1. lead to 2.

          I don’t want to bore you this time round but I will some day.

  22. http://www.mineweb.com/news/base-metals-and-minerals/jp-morgan-calling-the-bottom/

    They ought to know as they manipulated with others, the prices lower.

    Mr Morgan of days of yorw is reputed to have said, “gold is money, all else is credit”

    The recommendation these days to avoid the stock crash coming is to have your savings in real things. If in stocks in the beaten up sectors

  23. Posted on lemetropolecafe.com

    Ireland:

    Moody’s changes outlook on Ireland: Moody’s in a statement said it has change the outlook on Ireland’s long-term government bond ratings to positive from stable and affirmed the Baa1/Prime-2 long-term and short-term government bond ratings. Moody’s said its decision reflects the marked improvement in the country’s credit fundamentals over the past year, including a stronger economic recovery, faster fiscal consolidation and a substantial decline in the government’s debt burden. The ratings firm however said despite this positive trend, Ireland’s public debt ratio remains at around 100% of GDP (year-end 2015), which is significantly higher than most single-A rated peers.

  24. http://www.arabianmoney.net/gold-silver/2015/09/13/eric-sprott-4000t-annual-gold-supply-6000t-sales-so-im-buying-gold-miners/

    How about this for an investment. Sprott, like a lot of us, has been wrong for 4 years so he has to be right sooner or later and then it will be “I told you, I was just a bit early!!. Those that wait will be late!!

  25. StephenKenny

    4% growth, lowest unemployment for decades, stock market and all time high after a 6 year bull run, real estate market at all time high, the US are clearly enjoying one of the most prosperous eras in their history.

    The only reason that this might make sense is that there is so much excess money in the world (BIS say something like an extra $27Tn, globally), that there’s simply no where else to put it.

    Everything that won’t hit a value of $0, if there’s ever another downturn, is already in such demand that prices have gone stratospheric.

  26. DB4545

    StephenKenny

    We can talk about noise forever and choose to ignore the signal.Intelligent people charged with investing money on behalf of others are prepared to place that money on deposit for ten years in Switzerland in the full knowledge that they will receive less money back than they initially invested without even factoring in inflation or other variables. I’m certainly that’s not their total investment strategy and their risks are diversified. What signal does that give to you? Some of their customers may decide to walk but clearly on this occasion someone has sagely decided it’s safer to risk losing 50% of their customers rather than 50% or even 100% of their customers money. What signal does it give about the place where they trust that their customers money is safe?

    Back at the ranch we still haven’t addressed making our economy and State robust or anti-fragile as some would term it. It’s been said that Warren Buffet looks for “wonderful simple businesses that can be run by an idiot because one day an idiot will be in charge”. We haven’t done anything with our Country and economy to make it idiot proof. This is dangerous because our history tells us that we have a habit of producing an excessive amount of them and they tend to congregate in politics. Our political system still requires restructuring so that if an idiot comes along and promises “blanket bank bailouts” the damage is limited to Clara or Drumcondra or Castlebar for example and the rest of Country can get on with their daily business.

    We’ve put nothing in place to stop the same thing from happening again. A de-centralized economy and political system works. We’re highly de-centralized in our sporting and county allegiances and have been for centuries. It just needs a few tweaks to detach strengthen and safely diversify our economy in the same way.

    • StephenKenny

      DB4545, it was sarcasm.

      • DB4545

        Exactly. The noise I referred to is sarcasm.When you print paper or create it’s equivalent in a computer system it has to be stored somewhere.The gullible and the greedy have already exchanged valuable assets for that paper. The rest of the paper is trying to find a home. What could be more sarcastic?

  27. michaelcoughlan

    @mcaawber.

    The answer to your question is very simple. The guberenment has driven down the cost of entry level labour to fuck all and also made it very tax advantageous for large multinationals to locate here. Growth always comes at the expense of labour.

    Example; When Michael O’leary hires 2000 18 year old latvian air hostesses filling them with all sorts of shite at the start and then has to fire them at 20 because they have become so cynical(realistic in their world view) imagine how much extra money he would have to grow the airline if he could dig a big hole in mullingar and nazi like shoot the whole lot of them into it without having to pay their final salariesot airfare home.

    OR

    When the pharaos were in charge in egypt because they had hundreds of thousands of slaves working for their dinner and for to make sure the flesh on their backs wasn’t turned into something that looked like what michael oleary would serve you on a flight that lasts longer than hour it allowed them to grow the pyramids in the desert for the glory of god and stuff the the things full of gold as countless thousands perished doing so.

  28. DB4545

    michaelcoughlan

    Without the multinationals we’d be like Northern Ireland which is a public sector economic basket case dependent on a £10 billion per annum subsidy from the rest of the UK. The multinationals and the services sector we target for FDI don’t pay entry grade wages, the pharma, healthcare and IT sectors are reasonably well paid. We need to wean ourselves off FDI and one of those home grown success stories is a company called Ryanair. We need an economy with lots of smaller companies but we also need Ryanairs.

    Michael O Leary is not running a registered charity and I’m not defending his sometimes ruthless business methods. I’ll stand corrected but he pays his taxes here as far as I’m aware unlike some tax exiles who have their hand deep in the public and private economy of this State yet live overseas to avoid paying their fair share of tax. Michael O’Leary recognised that EU Citizens wanted a cheap flying bus service and not a flying restaurant for the middle classes subsidized by Irish taxpayers, ie a larger version of the Aran Island service. Why do you think we have so many tourists and Dublin Airport is heading towards 30 million visitors? Do you really think they’d pay old style Aer lingus prices or be forced to have a Shannon stopover on their visit to Ireland? Do you think people visiting the UK would want to fly into Bristol if their destination was Heathrow?

    The reason ancient Egypt went tits up is that it became an over-centralised State concentrating power and resources in the hands of an elite. This elite indulged themselves in basket case grandiose schemes such as the pyramids. We have a similar EU elite starting to engage in similar stupidity. When your neighbour knocks on every door in your estate and tells everyone they have to take in two lodgers per household because she needs someone to pay for her pension you know you’re not in charge of your own house any longer.Time to get the f**k out while we can.

    • michaelcoughlan

      Hi,

      Thanks for this. The pyramids were still built with cheap labour and growth is rebounding because labour is cheaper and more flexible.

      What really fucks me off is Irish people have to pay water and property taxes for amongst other reasons to subsidise the multinationals whose accountants are paid a fortune to reduce their tax bills to next to nothing.

      Michael could fly more visitors than ever if he could get the wage bill reduced even more. You might be right consequently that the time has come to leave but there will soon be nowhere left to go.

  29. DB4545

    Michaelcoughlan
    I wrote here a few years ago that I voted against the Lisbon Treaty.I remember arguing with a friend that it would be paid for with the blood of our children.He thought I was over the top. Germany fucked up Europe twice in the last century. That legacy means Germany now short of the people it needs. German self interest coupled with some guilt and sentimentality could lead it to fuck up Europe again in this century. The British have unique skills that can help the EU out of this mess. I hope they have the political skills to use them or we are fucked.If that comes to pass water will be the least of our problems michael.

    • michaelcoughlan

      Hi,

      I (like you) seem to find myself voting more and more no,no,no for the last number of elections and find myself becoming a lot more conservative. I too really admire the British.

  30. DB4545

    michaelcoughlan

    They say that if you’re radical when young it points to being a reactionary in later life. I don’t think trying to avoid repeating errors that I’ve personally made or that we can learn from history or other cultures is a bad idea. I think experience makes people conservative unless brains or money(inherited experience) got them there first. Every culture has good and bad points and the British are good pragmatists. They bought PC culture from the US and it’s f**king up their Country(and ours) and we both need to ditch it fast. Like a lot of madness in this world it was invented in elite Universities and we both know birds don’t need aeronautical engineers to show them how to fly.

    I feel we’ve made some serious mistakes as a Country in the way we’ve constructed our links with the EU. I think many other Countries are coming to the same conclusion. But mistakes are only information and we have the power to correct them at any time. I’m sure most Irish people thought we were joining a community of equals to promote trade and improve the economies of all member States. When the elected leader of another member State feels she has the power to dictate policy to everyone else in the community the truth is revealed for all to see.

    The only thing I’m sure of is that I don’t have the answers but I’m certain that the gobshites supposedly in charge don’t have the humility or the insight to accept they don’t have the answers either. Perhaps they never did. Maybe the tide has just gone out and they’ve been revealed to be just as fallible as the rest of us. If that’s the case they’re redundant and I don’t see why we need to pay people who don’t provide a service. Let’s do what the Swiss do and provide that service ourselves. We started the process by making FF redundant. Let’s continue that good work by making the rest of the political parties redundant. Then we can get to work on the individuals.

    • McCawber

      I fear the problem is as bad as your last sentance. Individuals elect the politicians.
      When we do get a government that actually tries to do the right thing we kick them out of power, post haste, and (historically, at least) re-elect FF.
      This time we will get something worse than FF which is a frightening vista to even consider.
      Some questions the electorate should ask themselves are.
      Would anybody else have done any better?
      Is there anybody else that will do any better. Don’t knows should vote for this grouping.
      Is there anybody else that will do as good. – Vote for this grouping.
      Is there anybody else that will do any worse. Don’s vote for this grouping.

  31. DB4545

    McCawber

    The electorate vote for and more importantly employ these people. I’ll stand corrected but most employers recruit individuals and then assign them to teams or groups for the benefit of the employer NOT the team. We’re the employers we get to dictate the terms & conditions NOT the employee. As politicians have stated themselves they know how to do the right thing they just don’t know how to get re-elected afterwards. Why not let the employer do this for them by limiting the options and restrict the number of cash tills the employee has access too and in that way limit the damage s/he can do?

    I’ve voted for all the main parties at different points in the past. The main brands are subverted by lobbyists or career politicians and are bought and paid for. I don’t vote for people at either extreme of the spectrum. The “there is no alternative” mantra is nonsense people always have options. Vote them in and vote them out again before they actually try to bullshit people that they had some influence on the economy. Your dinner will be on the table tonight because of the self interest of the butcher,the baker and the brewer not because of their benevolence (or that of any politician). It’s as true today as when Adam Smith wrote it. Individuals move the economy not politicians.

    • McCawber

      The employees unfortunately, in this case, write the terms and conditions of their employment so we don’t get to dictate anything other than who the employees will be.
      For the next four years after they’ve been hired they pretty much do what they like and only for the last year do they pander? to the their employers, most of whom have problems with long term memory (A fact the employees seem to be peculiarly well aware of)
      I agree with your sentiments but not your interpretation but I wish I could.
      Hell we can’t even demand a referendum of our choosing.

  32. DB4545

    McCawber

    In that case McCawber don’t you think it’s time for change? Change can’t come from “there is no alternative”. Can you think of any other employee who gets to write the terms and conditions of employment without a proven track record and not idle promises? Or who use the assets of the employer to protect their employment against competition? We’ve made one group of wasters redundant why not continue the process? It is within our power.

  33. http://www.bloomberg.com/news/articles/2015-09-17/bitcoin-is-officially-a-commodity-according-to-u-s-regulator

    Is bitcoin now as good as gold as it has the attention of the US commodities regulator? Perhaps it too will be subjected to government/banker manipulation?

  34. [...] Market Unrest: Time to invest? | David McWilliams – For a documentary going out on RTE One the week after next on wealth in Ireland, we explored the recent returns to the stock market. In order to get a sense of the … [...]

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