High Hendry the Contrarian in 2010

2010-03-09 - Hugh Hendry - At Work

As a contrast to his current viewpoint...

Keynes on Inflation - The Economic Consequences of the Peace

A must-read, 'The Economic Consequences of the Peace' by John Maynard Keynes:

Available free online from Project Gutenberg.

Wikipedia Entry.

Lenin is said to have declared that the best way to destroy the Capitalist System was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security, but at confidence in the equity of the existing distribution of wealth. Those to whom the system brings windfalls, beyond their deserts and even beyond their expectations or desires, become "profiteers,", who are the object of the hatred of the bourgeoisie, whom the inflationism has impoverished, not less than of the proletariat. As the inflation proceeds and the real value of the currency fluctuates wildly from month to month, all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism, become so utterly disordered as to be almost meaningless; and the process of wealth-getting degenerates into a gamble and a lottery.

Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.

Tobin's Q Ratio

Economist James Tobin defined the so-called Q-Ratio, which in the case of a publically listed company, is calculated as:

(Total Market Value i.t.o Market Cap) / (Total Asset Value)

Desmond Lachman

Bio @ the American Enterprise Institute for Public Policy Research"

2009 Piece on Emerging Markets

2010 Piece on the Global Macro Situation

S&P GSCI Index

Formerly the Goldman-Sachs commodity index (GSCI), now the S&P GSCI.

Blurb from the Official Site

"The S&P GSCI® is widely recognized as a leading measure of general price movements and inflation in the world economy. It provides investors with a reliable and publicly available benchmark for investment performance in the commodity markets, and is designed to be a “tradable” index. The index is calculated primarily on a world production-weighted basis and is comprised of the principal physical commodities that are the subject of active, liquid futures markets."

Bloomberg, Nov 4 2010 - The S&P GSCI index of 24 commodities climbed to the highest level since October 2008.