Friday, November 06, 2009

Random Shots

You've heard of The Longest Yard. You've heard of The Longest Day. Well, this has been the longest week, given the barrage of significant releases, announcements, et al. We conclude today with US non-farm payrolls, after which Macro Man plans to relax over the weekend.

Anyhow, he doesn't have the energy to conjure a neat tie-in this morning...all he can manage is a collection of random thoughts:

* Very little (short of a positive print) would surprise Macro Man from today's payroll number. Last month's household data and the recent jobs hard to get measure from the consumer confidence survey would suggest risks are to the downside. Claims and the ISM employment figure would suggest risks to the upside. Throw in a dash of statistical hocus-pocus, and just about anything is possible. Jan Hatzius at Goldman has been, ahem, unusually accurate recently; for what it's worth, he's forecasting -200k and 9.9% on the u-rate...
* Is the equity pain trade for a melt-up? The most recent II survey showed a collapse in net bullishness back towards historical lows (excluding March.) Combined with the 30 level on VIX holding, Macro Man's left to wonder if the liquidity orgy is back on the cards. USD/KRW seems to think so....
* If you needed any convincing that this market is screwy, the dollar index ETFs should convince you. Wednesday saw an enormous amount of November call buying on the UUP (dollar bullish) ETF. As in, 320,000 lots enormous. Then yesterday, someone tried to engineer an enormous squeeze in the ETF, to the point where it ran out to shares to create! UUP soared 2% on a day when the dollar....didn't. You can see the effects of the squeeze on the chart below (depiciting UUP, the bearish UDN, and the underlying DXY.) So yesterday, you could bet on the $ going up, make an equal bet on the $ going down, and make money. Yeah, this market is rational....
* So yesterday, the BOE did more QE (£25 bio), JCT was more hawkish than expected (suggesting improved growth prospects and hinting at a not-too-distant embarking on an exit strategy)....and EUR/GBP goes nowhere on the day, net/net. Yeah, this market is rational....

* It has become a cliche (repeated in Macro Man's own FAQs) to recommend books like Reminiscences of a Stock Operator or Market Wizards to people looking to indoctrinate themselves into trading. But Macro Man is rapidly coming to the conclusion that re-reading those books is a mistake for someone with a mature investment strategy. It seems like every time that Macro Man does so, a cold streak immediately follows. Perhaps, subconsciously, it encourages the reader to deviate from their preferred methodology based on some "pearl of wisdom" contained in the books? Macro Man is curious if other experienced punters have found the same. (And yes, a couple of weekends ago, your author picked up Market Wizards to read while eating a sandwich for lunch...)

* Reader of the comments section have recently been treated to a, ahem, "vigorous" debate between "Gary" and "leftback" on a range of issues, including the differences between pension and hedge fund management. Macro Man is always bemused by the mutual contempt with which large real money guys and hedge fund guys often regard each other.

To the PF guy, the hedge fund guy manages a bit of loose change with the attention span of a gnat...and gets richly rewarded for it. Oh, and he doesn't have to worry about stuff like liability matching, long run return assumptions, or Jimmy Hoffa. To the HF guy, the pension fund guy has the ease of not marking to market or getting tinned/losing assets after a small cold streak. Responsibility for losses can be dispersed amongst the many heads around the committee table. Benchmarks are for sissies: it's all about absolute return, baby! (Well, except for 2008, natch...)

Unsurprisingly, there is some truth in these caricatures...but caricatures they nevertheless remain. Ironically, among the greatest PF/endowment managers are those that trade more like HFs. Jack Meyer, et al at Harvard managed a clip of capital that I assume most PF guys would concede was reasonable, but traded many of those assets much more tactically than most PF...with spectacular results.

Of course, they also got paid like HF managers...and some alumni decided that paying 8 figure salaries to a small group of people (who generated a decent chunk of the univeristy's operating budget, btw) was unacceptable.

And so Meyer, Samuels et. Al left, to be replaced by a group of successively cheaper, more real money-ish managers. And surprise....performance has gotten a lot worse! There is a lot more overlap in the Venn diagram of good PF and HF managers than most would believe....

57 comments:

Anonymous said...

Have had a similar experience a couple of times after re-reading selective chapters of Mkt Wizards, MM.

Reading a couple of good books at the moment. "This Time is Different", and "The Holy Grail of Macroeconomics"...

good weekend,
E

Macro Man said...

Funny, I am going to see Mr. Koo speak in a couple o weeks...

Anonymous said...

That should be interesting. Considering the subject matter, his book is a relatively easy read.

E

Charles Butler said...

The problem with books of that sort, MM, is that they assume that the subject is reasonably conscious of the way he or she makes decisions and is able, thus, to communicate that to others. This may be true - or it may be an ex post apologia of sorts. I go with the latter.

TA screeds are plagued with this deficiency.

Anonymous said...

There is much more than meet the eyes with Mr. Meyer's strategy. A large chunk of Harvard's assets was invested with private equity firms which allowed the team to post "smooth" sailing returns strictly due to a lack of readily mark to market valuation of assets. Mr. El-Erian was astute enough to recognize that valuation of those assets would eventually come down to reality due to the time lag difference. He jumped ship...coincidence? You be the judge. Now, give me a few billions and I can stuff into private equity funds when all is gung-ho and on the sides I can claim that I'm doing "strategic" asset allocation along with other "market timing" strategies. Like that Geico commercial...even a caveman can do it.

Anonymous said...

I read both of those books when I got in the business in 1990, and they defined my career. I too have experienced cold spells after revisiting. Then again, I usually only revisit them when I have a cold hand, looking for a tidbit to cling to.

And after 18 years of absolute return macro trading, I am flirting with my first down year (currently -3%). So, I feel your pain (acutally I laughed) when I read these very true words:

"And given that schizophrenia, is it any wonder that a "signal" trader like Macro Man is struggling amongst all the noise? Taking an introspective step backwards last night, Macro Man concluded that one of his primary problems is that he is reacting to short term price swings, rather than anticipating. The problem with reacting is two-fold: conviction is necessarily lower than it would be with a well-thought out macro view, and the lack of serial correlation leads to a lot of top-and-tailing. Macro Man has had enough."

Steve said...

I always get in trouble when I try others' approaches. What works better for me is to find people who trade in a similar way and see how I can improve.

I hate to use stops. Everyone recoils in horror at the very idea, but when I do, I almost invariably stop myself out at the worst possible moment. So I prefer to scale back the whole portfolio when I'm cold, sort of a scaled stop. (Also a variation on CPPI) If I read someone who swears by stops it does me no favor.

Anonymous said...

Anon 1:12 I have been doing this a bit longer than you and I'm also looking at my first year in the red. I am really looking forward to 2010.

Anonymous said...

Guys,

Year's not over yet. Do yourselves a favour and get some Gold/ Silver exposure. It could get you back to flat. Right now, it seems to be the only risky asset that is rallying. Talk about an extremely bullish divergence!

Let your natural goldbug negativity go and get involved.

Just one trader's opinion.

Nic said...

And then you read how GS only had one losing trading day last quarter ... (sigh)
Mind you the FX performance was not so pretty.

I have enjoyed the Gary/LB discussions :)

leftback said...

LB feels genuinely bad for everyone in the U3 and U6 statistic today, but he doesn't run the economy - anyway the payroll number and the 10.2% shocker are going to be awfully good for the P/L of LB's much-maligned portfolio. A good morning to savor the fruits of independent thought and mental agility and to appreciate the relative flexibility of the HF approach relative to its more enormous PF counterparts.

Another positive for the HGCI today?

Pietro Paolo Mazzini said...

The discussion here always seems to have a basis in the discipline of economics. Implicit in yesterday's debate was the rise of politics as an increasingly important determinant of capital markets outcomes. As we all know, political science is anything but scientific. There is no equivalent to the scientific rigor of economics that can be applied to forecast political outcomes. From where are we to draw data and methodologies for predicting political actions, and the capital markets implications thereof? So far, all I've seen around the blogosphere is purely conjecture. If the answer is that there is not such "science", then how am I supposed to deploy capital? Flip a coin?

Judy said...

El Erian? But isn't Pimco reducing risk, at least apparently? A case of lesson learnt or...?

E , so how's Reinhart and Rogoff's extended version of their essay?
Sceptical about holy grails , they always seem so "mystical" that they rarely appear as anything other than symbols!

Sigh, another end of a horrendous week, at least it's ending!

PJ said...

Truly a devastating report for the "recovery" crowd -- large corporations have stabilized but the destruction of small businesses continues, as shown by the rise of 558,000 in the unemployed in the household survey.

Also, I suspect that they've been rigging the unemployment stat to keep the rate low by classifying unemployed people as out of the workforce. In this report 259,000 left the work force in addition to the 558,000 additional unemployed; number leaving the workforce is up over a million in the last two months.

PJ said...

Pietro Paulo Mazzini - True, this is a market for forensic psychologists, not economists. When policy outcomes can range from deflation to hyperinflation, and governments can deploy $1.5 trillion into risk assets in a single year, political insight dominates economics and investment savvy.

Or, connections with the people allocating the $1.5 trillion. Goldman Sachs seems to be having no trouble. Only 3 down days in the last six months! That rivals Hillary Clinton's commodity futures trading for "market wizardry."

Meta Finance said...

The problem I have with Market Wizards is that there are almost as many distinct trading styles as there are interviews in the book. Any given interview makes sense; the philosophy espoused is consistent, persuasive and (for the interviewee) effective. It’s all too easy to read a particular interview and say, hey, that sounds reasonable, why don’t I incorporate that idea into my own trading? But that way lies disaster; you’ll merely end up with a hodgepodge of superficial and mutually inconsistent maxims.

Which is not to say I find MW completely useless. The key is to recognize which parts work for you. I’ve been trading long enough to know my own relative strengths and weaknesses, and to have some idea of what it is that defines my style. There are a couple of interviewees in MW who seem to have a similar style to mine, and I definitely get value out of re-reading their stuff. Especially when I’m on a cold streak: 7 times out of 10, I find that the cold streak is because I have (knowingly or unknowingly) deviated from my own principles. Re-reading the relevant interviews brings this home to me, and allows me make the necessary adjustments.

leftback said...

Should be an interesting day today. Nice analysis, PJ, small business employment is part of the fabric of the economy but it's often swept under the rug.

Last night's smackdown with Gary got a bit rough, and LB came in for a spot of invective from the Big G. It evoked memories of Neil Kinnock's tussles in the House with Sir Geoffrey Howe.....

Our Man in NYC said...

Which one of you was Kinnock?
And will we see a version of the Sheffield scream? (for the Americans, think Dean scream!)

leftback said...

I was wrong - not Kinnock, it was Denis Healey, of course. Last night's relentless attack on LB by Gary was “Like being savaged by a dead sheep.”

Judy said...

Bit off topic well, ok, was topical 2 days ago - sorry been busy...

Nemo

asset leverage figures are going to be hard to get for loan profiles in any country and likely to be a matter of hindsight which means "oops" and the scramble to get out of related positions is always going to be tricky

if you're intent on getting those figures for China, that's an e en tougher call and (with no offence intended ) even Mr Pettis has little idea most days - a glance at his posts will tell you that. It's not a matter of connections or ability but the fact that the data isn't there and the scary thing is not sure if the people responsible for overseeing those loans have any real grasp of the situation either.

The last musings on Mr Pettis' blog regarding this topic was disturbing to say the least - leaving it to you to read up

Nemo Incognito said...

Mr Mazzini, meet Daron Acemoglu. I think you two will get on fine.

Game theory (my college thesis, or part thereof) is of a lot more use to me these days than normal macro analysis.

Nemo Incognito said...

Viz loan leverage, you can get it. I worked out how f*cked Kazakhstan was back in early 07 by talking to real estate developers back when your average bank analyst didn't do anything but look at big picture loan aggregates. Similarly, if you want to check whether the actual valuations make sense just read some appraisals: hint, when the cap rates are inside govvies you have a problem. I assume living in Beijing would certainly help, being in HK is pretty close to useless sometimes.

Anonymous said...

I'm surprised that people on here, who come across as very experienced and successful investors, can be swayed into deviating from their methods just by reading a book of interviews with traders.

Surely, if you had enough experience and confidence in your edge there would be nothing new in those books. I always thought they were for novices. If successful, established managers are reading them now and changing their methods, it is actually quite a scary thought that these people are allowed to manage other people's money.

And whoever said economics is "scientific" and "rigorous" is surely having a laugh! And even if it is, the markets will quickly disabuse you of the notion that you can apply that "rigour" and "science" to them and expect them to conform.

Macro Man said...

Anon, as note in the post, I think effect is a subconscious one rather than an overt effort to change one's methodology. When I picked up the book a couple of weeks ago (since it is easy to find something to occupy you for 15 minutes while you et a sandwich), I was at my HWM for the year; there was no need for a change in methodology. Perhaps it's just a coincidence; I really don't know...that's why I brought it up.

Nemo Incognito said...

Huge Covner guy right here for what its worth.

Whats the news on JPY? Seems like a big move relative to equities and any number of other things on the basis of NFP. Did Mrs Watanabe choose some crowded stop levels?

Nic said...

Huge Kovner fan too

Steve said...

Hey is everybody having fun trading this market today?

Today is like a mini-2009.

Macro Man said...

Steve, I've not traed today and it feels wonderful!

Steve said...

Nemo what about game theory are you finding to be of use?

Gary said...

MM: "And so Meyer, Samuels et. Al left, to be replaced by a group of successively cheaper, more real money-ish managers. And surprise....performance has gotten a lot worse!"

MM, seriously? You are comparing the performance of one group (RM or HF) in the mother of all market booms to the performance of the other group in a major selloff?

So that means the computer that was managing an S&P500 index fund during the market boom has more talent than the new CPU (which no doubt cost less) that was bought the following year to manage the same S&P500 fund during the sell off?

Should the older CPU get paid more than the new CPU?

Lots of other private equity groups ran into the same trouble Harvard did, regardless of whether their faculty did a purging of the investment office.

The other "ivy league" schools in the states are all suffering the same results -- even David Swenson's team at Yale. Neither Harvard nor Yale nor any of the other HF like endowments was able to switch 100% into 2y and 5y Treasuries, which is what LB claims to have done. It is simply not possible to do with a big fund.

I think you should have also mentioned that Harvard's losses were added to by Larry Summers who as past President of Harvard somehow managed to enter into a slew of swap trades designed to make his budget appear balanced... Its not really fair to blame either of Harvard's investment teams for Summer's "help".

Steve said...

I haven't either MM, apart from cutting some bonds, but watching the portfolio has been murder. And you can just make out how the bulls can twist this thing around to get to 1200, high 10.2% rate but improving raw numbers => fiscal stimulus => debased buck => blah blah blah.

Nemo Incognito said...

wow, I can't spell. It must be bedtime.....

But before I go, I'd like to introduce you macrofolk to fundamental research for 2 mins: check out this from CBRE on Chinese real estate here. Look at the divergence between the rental index in any given city and the price index for luxury residential. Either a) mortgage credit has expanded a lot in both LTVs and access or b) Mortgage rates dropped over that whole period. That kind of a divergence is seldom a good sign though as a small consolation it seems less pronounced in commercial and retail.

Nemo Incognito said...

Mostly just rational choice stuff in political theory. Looking at interest groups, lobbies, midterm elections and such things. You can often get something close to reality either as a formal or just a mental model by generalizing stuff into a few interest groups with tastes, preferences and strategies. It makes quite a lot of stuff quite tractable.

Macro Man said...

Gary, the Harvard guys left in early '06, I believe; there was still a bit of juice left in the bull for performance not to have deteriorated over the ensuing two years. I can't comment on the allegations of Anon @ 12.29; anyone know how Convexity ahs done the last few years?

And Gary, it is possible for the Meyer team to have switched to 100% short bonds. They redifned their benchmark every year depending on their worldview; I've seen at least one story suggesting that Convexity cleaned up on the subprime mess, sot it's not totally out of the question that they could have changed to an uber-defensive benchmark during the period when their successors were getting carter out...

ES_Geneva said...

Been doing this since '89 and the certainly the Lefevre and Schwager books featured prominently in my early education but now I find "deeper" books of more value when in a slump. Recent reads have included "The art of thought", by Wallas and anything by DT Suzuki. Zen in Japanese Culture is a good place to start -A good place to start and goes deeper that the title suggests.

Nemo Incognito said...

Godel Escher Bach anyone? Definitely on my time off to do list.

Macro Man said...

Nemo, funnily enough, I am halfway through it. Very dense in spots, but very thought-provoking.

Gary said...

MM: Check your facts again

I worked with Meyer's team 5 years ago when I was still sell side. While Meyer's team was given far more latitude than traditional managers, Harvard's investment policy (designed with Bob Rubin's guidance) did not permit Meyer's team to be 100% anything.

I don't know any HF managers that go 100% into any single product -- betting the ranch on one trade. Even when Soros broke the Bank of England on the pound, he still had other trades on.

In addition, selling billions worth of private equity deals in a hurry (in any market) would result in large mark to market losses. Illiquidity is the nature of the product.

As for the fixed income portion of Harvard's portfolio -- the unfortunate truth is that Harvard unwound almost all of Meyer's RV trades in a major hurry and moved to a more "traditional" (for an endowment) fixed income book. Short convexity MBS and long convexity Trsy positions would have left the FI portfolio pretty flat gamma.

Unfortunately, Harvard did not unwind Larry Summer's swap "trades"

Gary said...

MM: anon 12:29 is correct in regards to the major sources of Harvard's losses. They had a lot of private equity deals still on from Meyer's day.

Those PE deals are highly illiquid, and marked to market (model) periodically.

They also contractually require Harvard to put in additional money (rather than divest) if the underlying deals require new cash (like during a credit collapse).

This requirement for cash forced Harvard to sell other investments "at the worst time" to raise the cash required -- locking in additional losses in their equity portfolio

But What do I Know? said...

MM, regarding the UUP/UDN both up trade--it would seem that the smart money has been betting that shorting the pair was a great trade since they'll both lose value (mutatis mutandis) over time. Also, SSO/SDS, UWM/TWM, etc. It seems like free money, until it isn't.

This goes back to that crazy theory about doing the "dumb" thing. The smart money has driven the dumb money out of the market on the leveraged/inverse-leveraged scam and the only thing left is to have the smart money start churning itself. Game theory, indeed!

I noticed the call buying on the UUP pick up last week and wondered why. Now I know--short squeeze, anyone?

PJ said...

Interesting chart - total hours worked to population ratio in US at a post-Great Depression low:

click here

leftback said...

So when did university endowments start having to take speculative risk in illiquid instruments? When did CALPERS have to start getting neck deep in CRE and commodity speculation, for that matter? When the managers became IB wanna-bes, that's when..

We seem to have identified a pervasive cultural problem here: the thirst of the Boomers for excess has incubated a virus - the reach for high yield that has infected what were once conservative institutional investors. Average 401K and pension participants have little concept of the degree of (usually one-tailed) risk to which they are exposed.

Steve said...

Wow PJ we've gotten pretty damn efficient, time to buy the market!

Gary said...

leftie -- the bigger your portfolio gets (never mind when you reach CalPERs size) -- the more your portfolio is the market. There are only so many investable assets, you pretty much end up having two of every animal.

The closer your portfolio gets to a total market index fund (total meaning bonds + stocks + real estate + ...) your beta to the total market index goes to 1.0 (pretty much by definition).

And your alpha is negative. Even if you do your job "perfectly" (whatever that means), you still have trading friction (commissions, expenses, etc). If you do your job imperfectly, your alpha is even more negative.

While there are lots of little "yeah buts" that I am leaving out of the story for simplicity, that is the reality of a managing a big fund.

The alpha that small funds capture is the alpha that big funds lose (for whatever reasons). That alpha is divided between the sell side (which gets a lot of the basic friction like b/a spreads & commissions) and the hedge fundies, who capture asset misallocation errors.

That's the real reason why real money guys hate hedge fund guys -- HF only make money when RM loses it.

PJ said...

Steve - Heh. I have a hunch we're going to get more efficient before this is over.

Our Man in NYC said...

LB -- according to my very dull MBA paper; since Meyer/Swenson 'reinvented' the model. It's based on the beliefs that diversification works and that endowments are permanent, hence can be liquidity providers (and take the illiquidity risk).

The major flaw (bar EMH being bleah) is that they have to pay out 5% of their assets each year and that the underlying university uses this money for its day to day running (as opposed to say, solely for capital investments) meaning the endowments are not permanent assets. That and the fact everyone else in pension world was following them into it, meaning you have to wonder if the illiquidity premium is sufficient to be the liquidity provider.

That said, Swenson’s just better at it than most – look at how he traded his TCI investment. Seeded them, walked away after 3-years to be replaced by other pension funds.

leftback said...

Very good summary there, Gary, thanks.

As I see it, in a bull market there is less demand for "real" HFs and there is a profusion of small highly-leveraged specialist high-beta shops and a few um.. information arb guys like those in the news recently. When the bear market rolls around, the high-beta guys blow up very quickly, and the smaller long-short and macro funds tend to excel.

BTW, anyone want to bet that there is at least one more Ponzi hiding out there in the FoF universe?

Our Man in NYC said...

LB -- I think it's like anything, there's a difference between "absolute skill" and being lifted by a rising tide. A lot of the people who've been successful fall into the latter category, but are perceived as being skillful (look at the numerous guys who made a ton of money pre-2000, partially/completely blew up in 2000-02, came back and then partially/completely blew up again in 2008! Or "value" guys who lost money in 98-00, made a ton in 03-07, and then lost it all again in 08!). It's especially rife in L/S equity world, as people there rarely value portfolio management ability as a skill.

leftback said...

Not a very interesting day, VIX down below 25 again.

It almost feels like equities have nowhere to go here. Strong economic data would make bonds sell off, then we would get a $ rally and start to unwind the carry trade; very weak data would make equities/oil sell off and then a carry trade unwind would cause a $ rally. So I guess the sweet spot is lukewarm data. Am I missing something here? What a long week.

wcw said...

In re: PJ's chart, I did that one a couple releases ago at http://wcw.bignose.org/index.php?/archives/337-Pure-ugliness.html Not that it matters, but since there is an aggregate-hours index, you can calulcate directly against civilian population. As I noted then, it leaves out a ton of moving parts -- so many it's effectively useless in many ways -- but the signal is so very stark, it's worth thinking about.

On the market, all I can say is that my favorite Canadian junior gold is roughly the only thing rescuing me the last six months -- and I just put on a small metal short against it. Gold is making me nervous. That position is still long goldbug euphoria, but nowhere near as long as it was before.

wcw said...

Better link

dblwyo said...

Nemo & MM - GSB. Outstanding book, my childhood favorite. Of course ever since then have been institutionalized. Complex systems hierarchies and emergent behavior oh my. Aunt Ant....

Now can we create nested hierarchies of trading strategies?

dblwyo said...

Nemo - Acemoglu is a place to go as long as you don't go to his modern growth theory but I'd start with North and Olson and add Rodik.

But Pietro has a key point. Normally geo-political decisions do define the structure in a 4-part Structure/ Fundamentals/Tech/Pscych in my view and vibrate at different frequencies. Right now policy is vibrating about as fast as Technicals. Going to be the rest of this decade that some grasp of how things are moving is going to be necessary imho.
Sadly there's no single synthesis and framework to appeal to however.

Nemo Incognito said...

Yeah Olson is hard to beat though Origins of Dictatorship and Democracy is great. Carles Boix's Democracy and Redistribution is good though I find one part of his model, the fungibility of wealth factor, to be a bit weird. Most people act a lot more sticky than they really are.

Anonymous said...

I see Gold keeps getting the "crowded" label.Yet I am not a gold bug ,but I won't sell mine at this price ,or even close to it.
For the "crowded" view all I can say is i think you are missing the point.There are a lot of us now who will hold a few % of gold regardless because we no longer trust central banks and inparticular of course we're pretty disillusioned by the US, it's reserve currency and inability to manage it's fiscal situation.I think when the time comes, and it will come,that markets go looking for a flight to safety they just don't react in the way they have in the past and the way you may think they will in the future.In other words the bid on the US Treasury is no longer the last word for safety for a lot of us.Hence ,this break in the correlation between gold and the US$.

dblwyo said...

Nemo - interesting. I'll try and up it in the que though right now I'm grinding my way thru Drucker's Management. From 1973 and still three decades ahead of where we're at on the social purpose of business and how to think about it. Consider it good background for any hedgie :)
As long as we're running loose here one should mention history: Jay, Cameron and McNeil come to mind. The meat on the North/Olson skeleton.
And since you have this perverse interest in structural socionomics you might find these extensions and applications of N&O, et.al. amusing:
Good Government for a Stable World
http://www.scribd.com/doc/18762337/Good-Government-for-a-Stable-World
Brave New World: Constructive Engagement and US Foreign Policy
http://www.scribd.com/doc/18715606/Brave-New-World-Constructive-Engagement-and-US-Foreign-Policy
Feedback welcomed.

dblwyo said...

Anon@12:29 - fair points and that brings me back OT for this blog but also continues the socio-political thread. IMHO the dangers behind CB policy, particularly in the US, are "greatly exaggerated" and need to look deeper at some structural factors. MM's "nobody's guaranteed a trade surplus" comes to mind. There are a whole bunch, it's pretty chaotic but my best shot is:
http://llinlithgow.com/bizzX/2009/11/turbulence_isnt_chaos_dollar_r.html
FWIW...