UK Economy

[Euler]

Hey guys, it's always darkest before dawn. It's a common trait that good investors / traders get involved when most others don't. I'm a lot busier at the moment in the markets than I was a few years ago for this exact reason. OK I'll make a few mistakes but I'll also pick up some stuff that's been thrown out with the bathwater.

[superfrank]

That's true, but some would argue that it's only just getting dark!

Give this Peter Schiff clip a watch for 10 mins - I've forwarded it to the most interesting part...
http://www.youtube.com/watch?v=6uDbrvir ... e&t=21m02s

[Euler]

I asked Buffett about this and his response was along the lines of 'Look Peter its very easy to find negatives but it's positives that will make you money. Capitalism has this wonderful way over overcoming problems no matter how bad they seem. Focus on finding opportunity and don't worry about macro economic stuff, you can't predict it'

[superfrank]

But as Schiff says, this is not capitalism anymore.

I don't think you can ignore the macro-economics given the extreme nature of the situation. Stock markets would be on the floor now if capitalism had been allowed to run its course (and that probably would have been a great buying opportunity because capitalism would have had a chance of providing a true recovery).

I hope you watched the clip... even if it's not your thing it's always good to get an alternative view.

[Iron]

Hi Superfrank

I agree that we're not in Kansas any more (although to a large extent capitalism is still alive and well), but Peter has a point about searching for opportunity.

Even if there's a socialist or communist revolution, the people who get ahead will be those who seize the opportunities that the new system provides. You'll be glad you watched the BBC when getting ahead depends on using left-wing buzz words like 'empowerment' and 'diversity'!

Jeff

[Euler]

I hear where you are coming from and agree that the economy is in the worst mess we have seen in a generation. But that won't stop me from looking for opportunities. Some of the companies I invest in have good exposure to Asia and have pretty much ridden out the chaos in Europe. They will still be affected for sure but it's given me a big hint as to how to structure things going forward.

On the flip side I took some positions in UK retailers which have completely cratered! That's given me a good steer also!

[superfrank]

I agree entirely with the finding opportunity bit, it's what I do for a living!

I do tend to disagree with the investor mindset of 'the government won't let it happen' which is what it often boils down to. I've heard that a lot from property investors, and it's true that governments are doing their best to prop things up for them, but it's creating distorted markets and ultimately governments can only do so much.

Euler - 'glad you're looking overseas for opportunities because I don't thing are are too many here.

Edit: UK retailing!... what were you thinking?!!

[Iron]

If I were a fundamental investor, I might consider buying shares in a discount food retailer, as whatever else the British cut back on, they're still going to need to eat!

Jeff

Edit: UK retailing!... what were you thinking?!!

[Euler]

My background is as a retail specialist so I understand the businesses well. You have quite a few that historically become asset plays at this stage of the cycle. You can almost forget the underlying business.

I completed on one with an activist shareholder in the US recently. One of the biggest transactions for a while. Basically the company was worth more if they shut it down than if they kept it running.

[superfrank]

CBI says business can get UK economy out of 'bad place'

The UK economy is "in a bad place, with confidence evaporating", the head of the UK's biggest employers' organisation has warned.

But John Cridland, director general of the CBI, said that only businesses could dig the UK out of the "mess".

http://www.bbc.co.uk/news/business-15789791

tis true. no easy fixes, just hard work required.

[Iron]

UK's debts "biggest in the world" - http://www.bbc.co.uk/news/business-15820601

[Iron]

David Cameron: our plan to cut debt is failing - http://www.telegraph.co.uk/news/politic ... iling.html

At least he admits that the current approach isn't working, which is the first step to recovery!

I just hope that what follows next is 'Plan A on steroids', not 'Plan B' or 'More of the same, because the economy is bound to pick up soon'!

Jeff

[Iron]

Actual vs promised cuts:

https://twitter.com/?photo_id=1#!/Danny ... 17/photo/1

Too fast, too deep my foot!

Jeff

[to75ne]

just seen this clip from hard talk. this economist makes sense to me, what he's saying is that the government should pay off private debt and stuff the banks. makes more sense to me then bailing out banks.

http://news.bbc.co.uk/1/hi/programmes/h ... 641873.stm

which is basically what our very own dobbin said back in june.

viewtopic.php?f=18&t=4091&p=28704#p28704

i suspect dobbin is a genius and as i said in june dobbin for pm.

on a more serious note, as anyone got a link to the full hard talk interview with this geezer.

[superfrank]

just seen this clip from hard talk. this economist makes sense to me, what he's saying is that the government should pay off private debt and stuff the banks. makes more sense to me then bailing out banks.

by definition it's another bank bailout as it makes the banks' loan books safer. private debtors are already being bailed out by ultra-loose monetary policy. I agree that if your going to print money then it would be better to give it to people rather than banks, but it's not workable and it's still morally unjustifiable as printing money is generational theft, not to mention the effect on the currency/inflation.

sooner or later countries have to live within their means. bad debtors should default, bad banks should go bust and asset prices should fall. that would be a starting point for recovery. what they're all after is a solution that keeps bad debtors afloat, bad banks afloat and asset prices high.

Lady Thatcher famously said, "you can't buck the market".
- it was right then and it's right now.

the clowns in charge atm are just compounding the problems with their gutless policies and storing up even greater problems for the future.

Steve Keen -
http://www.debtdeflation.com/blogs/
http://debunkingeconomics.com/