Either the USA produces less (per capita) or China produces more

We say…. You wish Chinese growth would stop…..keep wishing…..but it won’t help the USA to keep wishing when China is already growing internally….rapidly shifting its own consumption and spending dynamics without the benefit of external follow-on demand from the USA or Europe….their business people know the American and European customers aren’t coming back…and now they don’t need them…. Read on!  research@pamria.com

The 12 Myths of Pettis 5-10-2012

We admire the extraordinary human being that William Gates has always been.  From a home-spun family of great community people and thought leaders, Mr Gates has been perhaps one of the least “attention getting” worlds wealthiest people that we are currently aware of.  He even comes from my home town of Seattle Washington.

In earliest years I had the pleasure of working with his Partner’s (Paul Allen’s) stock broker while working at Prudential Bache Securities and always marveled at the excellence of such a company.  Conservative management doing well for customers, and for themselves.  After now almost 20 years as an avid “Microsoft Watcher” we only wonder why Mr. Gates is selling so much and apparently so much more quickly than was previously the case…..

MSFT Bail Bill v1.1

info@pamria.com  Portfolio Solutions Delivered Daily

Grant Reviews the Federal Reserve

We have for now years watched as the federal government BORROW more and more money on behalf of the state, in lieu of proper spending policies.

Simply put, all of the USA government debt is like a “credit card” that the federal government is charging on, spending well in excess of its income.  This is called “deficit spending” and it has been going on (specifically) for the last 30+ years  with increasing rapidity.  Deficits have been getting larger.

The government credit card is in fact the same as a “citizens of the United States” credit card since the citizens are the ones who have to pay for all of these debts.  The federal government is the ultimate consumer, producing absolutely nothing.  It spends money for basic legal and military infrastructure but beyond those expenses, the rest is paid for at the state level and through local taxes, along with federal taxes.

As individual states have become more greatly indebted and thus more heavily reliant on federal funding (acquired by deficit spending and selling more debt (racking up larger credit card bills) to keep their own lights on…. they have slowly ceded their own states independence from the federal government by abusing their own accounting and debt standards in support of evermore glorious yet ineffective local policies.

At some level, the states cede their sovereignty to the federal government and then enact laws which serve to remove INDIVIDUAL citizens’ sovereignty as states are now beholden to the federal government for a fresh download of yet more BORROWED MONEY instead of relying on their own systems of production and consumption, and balanced budgets.

Enter UTAH which decided to end the federal cronyism and instead create their own statewide system of LEGAL TENDER payment in the form of PHYSICAL SILVER which has been a debate in that state for the last two years.  Just this week, state representatives have signed this bill into law and in fact, you can pay for just about everything in Utah with silver is you’d like to.  No longer beholden to some phone paper in form of USD for payment, citizens in Utah can be assured that in the exchange of goods and services, the “currency” received in exchange for goods and services actually possesses TANGIBLE value which is not subject to liens or counterfeiting of any kind.  Congratulations.

Please see the full document below with the chanhes made before being signed into law.  Are we long SILVER in most all client accounts?  Yes we are.  info@pamria.com

UTAH Silver Legal Tender Article PAM

If markets really are based on some fundamental religion, and GDP is relatively stable over time despite continuous mispricing….we begin to think about 7 years lean and 7 years plenty.

Given China’s last 7+ lean equity market returns despite delivering consistent, real underlying GDP growth, we are beginning to see an unparalleled opportunity in the mainland market. info@pamria.com

China GDP and SSE Log Scaled

While we typically refrain from meaningless metadata in print, posting only what matters the most for serious investors….. We are in fact struck by the sheer magnitude of truth spoken here. One simple photo. Does government intervention bother you?

We find Gundlatch irreplaceable in the bold era of high-octane fixed income management.  When I was younger at Prudential Bache Securities we had this guy and his father as a Team in the office….. they RELIGIOUSLY purchased laddered bond portfiolios for all of their clients and held the bonds to maturity.  Tough concept to replicate?  NO.

What’s more interesting is that they managed the other side of their clientbase with deeply researched small-cap equity ideas where they had strong insight as to the real people behind the business.  Not surprisingly….this strategy worked fabulously well.  While I would opine that my stock picks were better….and they were from time to time outstanding….or that my fixed income trading was better….it absolutely was better…. we must come back to the idea of what people WANT vs how much JUICE we can show them by constantly reshuffling the deck.

Today’s market requires perhaps only TWO things at this point.  Well researched equity at a deeply undervalued level….and we have GOBS of those opportunities now (again) in the small-cap space…. and then we would hold CASH since at this point, magically adding value to a bond portfolio yielding 3% and then applying leverage…..  Jeff may not have such a great year in 2013.

info@pamria.com  Stocks and Cash.  Our current preference.

Quantitative Easing vs Federal Reserve PAM

As we have written and published in the past two years, for Stiglitz and others, there’s a long running competition between human capital and financial capital.  Simply put, when productivity is apparently very high, it is usually a function of a system with growth due to leverage, and sometimes excessive leverage combined with declining interest rates that make for “unusually productive results” in the production of almost anything.

We have written about the lengthy challenge of believing in the “American Productivity Myth” with some jovial commentary….

Since Americans are the same “humans” as everyone else on the planet……

Simply put:  Humans share some 99% of the same DNA” so in the grand scheme of things, a reported cultural, regional or racial “productivity bias” is by its very nature, going to be heavily flawed. 

BOSTON CONSULTING GROUP now re-writes what we have opined for so long, demonstrating that between HUMAN CAPITAL and FINANCIAL CAPITAL that in the end…..  debts are restructured and “Human Capital” wins again.

Solid Solutions to Portfolio Management Structure.  High Probability Returns:

Ask us how we do it:  associates@pamria.com

BCG Debt Restructuring 2011-2012 PAM

We are currently exploring a number of mainland companies for immediate acquisition which we feel make materially better sense to us than many opportunities in the USA.  You acquire companies for earnings growth and tangible assets?  Correct.  info@pamria.com

0330_china_lieberthal