Thursday Tidbits

By now you've heard about India buying 200 tonnes of gold from the IMF. Alphaville quoted the Indian Finance Minister as saying "the European and US economies had 'collapsed.'" Alphaville also noted that this was "the strongest signal yet that Asian countries are moving away from the US currency."

I have no idea if that is the "strongest signal" or how important it really is in the big scheme of things but it is relevant and there will be more things like this in the news from healthier countries. But it is one small thing, not disruptive in a meaningful way, just part of a gradual move to the USD being a little less important which should ultimately make interest rates a little higher creating something of a headwind to US growth on most fronts. What it will not do, consistent with yesterday's post, is not cause the complete breakdown of US society.

I found this article about how much people need to save for retirement. It was pretty good but I would urge you not focus on replacing X% of your income but instead focus on your expenses. If you make $20,000 per month but live on $5000 then the $5000 becomes a more relevant starting point. From there you'd need to add some padding for one-off items (we had to get tires for our pick up truck last week, ouch!), things you know will get more expensive like healthcare expenses and chances are your tax situation will change.

The other thing, save as much as you can, many people don't and it is such a simple thing to do.

Lessons that Jim Chanos says we've already forgotten;

1) Borrowing short and lending long is a still bad idea
2) Accounting matters...a lot
3) Conflicted Ratings Agencies: Still not unbiased observers
4) Regulate the activities not the actors
5) Black Swans are real
6) Glass and Steagall were right after all
7) Too big to fail=too big to exist
8) Quantitative easing has a cost
9) Insurance without reserves is not insurance
10) Shooting the messenger does not change reality

Nouriel Roubini is all over the place talking about the mother of all carry trades ending badly. Specifically the world is borrowing at "negative interest rates" and betting on high risk assets like emerging markets and commodities.

It will not be very often I agree with him on magnitude, and I don't now either, but one thing is clear which is this is a time of flux. We have just had (or are still having?) and extreme move in one direction that was in some part the result of an extreme move in another direction. More extreme moves that go faster than fundamentals dictate will very likely be part of the landscape for a while longer which is why although I expect to have more foreign exposure I am moving slowly.