Land Securities Share Discussion Threads

[careful] 06/3/2009 16:28

marlon
i am impressed with your knowledge, but are you saying that two academics such as Prof Bernancke and Mervin King have decided on action that is different to the steps you would have taken in their positions.

remember, you do not have the full facts, such as how much is being pumped into banks to stop a run.
we may be close to armageddon right now but they will keep it from you to maintain confidence.

[marlonbrando] 06/3/2009 14:56

I realise that I have been aberrant about what this board is about. My apologies. I do have the full article if anyone wants it, about 40 pages. Maybe I should get out more...LOL!

erm...LAND...yes very good carry on! :)

[marlonbrando] 06/3/2009 14:41

That, scburbs, is entirely the problem. A proposal identifying a schematic with any associated legislation that went that one step further to determine expenditure of the issuance would have not only created significantly more confidence (nationally and within the international community), but would have brought the credit problems to a halt. Of course this is a much greater effort on every level, but at least a meaningful one. (It would have probably saved Brown's posterior in the process as well).

Confidence is the key - what has happened so far amounts to no more than putting a large bet on Black or Red at a roulette table. It might work, but then again it might not. (Not to be facetious, but does anyone know what Darling's job is and has anyone passed a job description over to him?) LOL

The following is an exert from an article in support of QE - but the assumptions within are biased towards its acceptance. It's difficult reading, but I want to show that I have seen an argument for QE, but still disagree entirely. My worry is that a few will benefit significantly, whilst the majority won't.

Begins:

In the representative agent model, it does not matter how money gets into the
system: Because of Ricardian equivalence, unanticipated money-financed tax
cuts (real-time helicopter money drops) have the same effect on real and
nominal equilibrium prices and quantities as unanticipated open market
purchases.

Compare again two economies, indexed by superscripts I and II. Initial conditions are identical. In both economies the government overrides the FFMP (equations (31) and (33)) for one period (period 1, say). In both economies the government unexpectedly increases the stock of base money in period 1 by an amount &λP1 over and above the amount given by the monetary rule (33). In economy I the unexpected increase in the stock of money is financed by a cut in period 1 real taxes (over and above the amount given by (31) ) by an amount λ . In economy II the same unexpected increase in period 1 base money is achieved through the purchase in period 1 of an amount & λP1 of nominal bonds by the
government (a so-called 'open market purchase'). In economy II the government sticks to the tax rule in (31) in each period, including period 1. The sequences of real public spending on goods and services are the same in the two economies, and so are the nominal money stock sequences for t > 1. The government satisfies its intertemporal budget constraint in economy I by applying the tax rule (31) after period 1. It follows that the equilibrium
sequences for all nominal and real endogenous variables are the same in the two equilibria, except the sequences of real values of period 1 and later bond stocks and the real value of current and future lump-sum taxes - although the present value of current and future real taxes is the same in both economies.
Proposition 2 is a direct implication of debt neutrality or Ricardian equivalence, and many versions of it are around (see e.g. Wallace (1981) and Sargent (1987)). Proof is by inspection of the equilibrium conditions (equations (8), (15), (16), (29) and (39) to (42)), the government's intertemporal budget constraint (23) and the financial equilibrium conditions
(24). Debt neutrality or Ricardian equivalence means that a helicopter drop of government bonds makes no difference to any real or nominal equilibrium values, except of course for the present value of current and future lump-sum taxes. Bonds are redeemable, so the present value of the terminal stock of bonds is zero. Because
(1%it)Bt&1 /Pt %lim , and , it T64 jT s'0 Rt%sR &1t [Bt%s&(1%it%s)Bt%s&1]/Pt%s / lim T64 Rt%TR &1 t bt%T lim T64 Rt%TR &1 t bt%T ' 0
follows that (1 % it)Bt&1/Pt = 0 : the ability to issue

%lim T64 jT s'0 Rt%sR &1t [Bt%s&(1%it%s)Bt%s&1]/Pt%s

bonds does not relax the government's intertemporal budget constraint in any way. Because of debt neutrality, the timing of lump-sum taxes does not matter, only their present value. Therefore, issuing money by lowering taxes today by an amount λ has the same effect on the real and nominal equilibrium as issuing the same amount of money today by purchasing (retiring) non-monetary debt today and cutting future taxes by λ in present value. Quantitative easing has the same effect regardless of whether the additional base money is
πt%1 ' πt % η0 & η1 y ( & y % η1η&1 0 &1 , η0 , η1 > 0 (43)
put in the system through a current cut in lump-sum taxes or through an open market purchase of public debt and a cut in future lump-sum taxes of equal present discounted value.

Ends:

[scburbs] 06/3/2009 14:07

LOL! The problem with most stimulus plans are that you need to know that the transmission mechanisms and multiplier effects are going to work. Without these it is like madly pedalling on a bike after the chain has fallen off.

In other words you need to know that the person you give the money to is going to spend it and by spending it transfer it to someone else who is also going to spend it and so on!

What better place to start than giving it to people at a shopping centre!

[marlonbrando] 06/3/2009 13:22

Just to add in reply to scburbs;

My opinion is highly pessimistic about the creation of new money - because it is always a last resort and historically has never worked in countries it has been applied, (Russia, Japan, Zimbabwe, to name just a few). Now I know that nobody would compare our Government to those mentioned and there are plenty of arguments to substantiate that. Nevertheless I can't bring myself to agree that this has been a well thought out solution. I am of course willing to be convinced (and would be gladly so) otherwise, but logic defies it. As a mathematician I can only think in those simple terms.

I think it was Friedman who said it would be better to throw money out of a helicopter over shopping centres and let people pick it up and spend it. It would be cheaper and more effective.

I think I agree with that being a better plan - :)

[marlonbrando] 06/3/2009 13:07

Good afternoon Gentlemen!

I have to agree with you Tourist07 and I thank you for the compliment racg. (You were up late Tourist07 - or was it early).

Having had a splendid time at the golf course this morning (marvellous weather) I am refreshed and recharged.

I suppose as far as sterling is concerned, I am in the camp of being slightly frustrated both with Mervyn King and the Government for reacting when they should have been preventing. I personally think that dropping the interest rate to it's current rate of 05% is disastrous for sterling. Injecting money and giving it an unpronounceable title is even worse. I did a little ring round of some international friends yesterday evening to ask who had pulled their investments out of the UK. Although they hesitated to admit it, they had all pulled out 100% of their investments and moved them to Switzerland or elswhere.

Now I know that is just a micro survey (or perhaps a nano survey), however I do believe it is indicative of what is happening to all foreign investment. Patriotism aside, Sterling can only suffer and get weaker, so whatever shape it's in now (and it isn't in great shape), it's in the best shape it's going to be in for a while to come. I suspect CHF will strengthen as it always does when people oopt for a safe haven currency and maybe even the NZD, AUD and CAD depending on how gold and other mining does. But we now have the GBP being compared to the Yen, not something I could have anticipated only 18 months ago.

I'm not a doom mongerer (if there is such a word), but I'm definitely not optimistic.

Anyway to LAND - looks good if you're short and bad if you're long. I realise I'm stating the obvious but seeing as this is a LAND board, felt I had to say something...lol I'm still on the sidelines.

[scburbs] 06/3/2009 12:52

OK, I take it back. Money supply growth is still positive. However, I think if you look at the M4 lending figures it is pretty clear that there is a significant slowdown that may be about to go negative.

[scburbs] 06/3/2009 12:47

marlonbrando,

It is true that pure increase in money supply will cause inflation. However, is this what is happening?

Asset price falls have decimated wealth across the globe taking money out of the system. Whilst I don't have the statistics I suspect that money supply growth currently is negative. Therefore, quantitative easing is actually targetted at stopping the contraction of the money supply rather than significant real increases in the money supply. In this situation it is much less inflationary. In my view we are heading for a bout of inflation in the future as the authorities are bound to over do it. However, I don't think some level of quantitative easing is necessarily inflationary in the current climate, although it would be useful to see current money supply growth numbers.

The great depression saw a massive decrease in the money supply that was ignored. See interesting article attached.

"Monetarists View

Monetarists highlight the importance of a fall in the money supply. They point out that between 1929 and 1932, the Federal reserve allowed the money supply (Measured by M2) to fall by a third. In particular, Monetarists such as Friedman criticise the decisions of the Fed not to save banks going bankrupt. They say that because the money supply fell so much an ordinary recession turned into a major deflationary depression."

[racg] 06/3/2009 09:23

I quite like reading Marlon's internal dialogue with himself. Carry on M.

[tourist07] 06/3/2009 03:05

Ummmm Marlon ... you're talking to yourself ... do you think you might need to get out more?

Sure Sterling is sick, but is it as sick as the other candidates?

[marlonbrando] 05/3/2009 13:07

Well the move in EUR/GBP has completely reversed and then some. Much as one would expect with interest rates dropping. Where once the GBP may have been used positively in a 'carry trade', at 0.5% it is now in a position to be used negatively within a 'carry trade.

'Quantitative Easing'?? One can dress it up how one likes and politicise as much as one likes but from a standpoint of just plan maths, increasing the money supply with no assets to back it will lead to higher inflation and will devalue sterling. I'm not buying any arguments that this time it's different as much as you wouldn't expect me to buy the argument that at this time 2+2=5.

No Sir...it adds up to only one thing.

[marlonbrando] 05/3/2009 08:02

Good Morning All.

Not sure about being long on the GBP/EUR with an interest rate announcement due out today. A drop in the interest rate is probably already priced in however, I must remain cautious at this point. If the BOE holds interest rates as they are then it would be very nice ot be long of any GBP currency pair, however that is unlikely.

All the excitement for me has been around the EUR/USD although a couple of days ago the NZD/USD and the AUD/USD provided me with a massive profit. I have been outperforming my usual success percentages on Forex and being a mathematician, statistically that can't continue. So I've put a strategy in place for that. After all that work I don't want to give up any of the profits.

Today the FTSE needs to follow up it's rise yesterday.

[skyship] 04/3/2009 18:04

MB - just make sure you stay long £ v. Euro - I think we'll see a continued strong bounce back over the next few months - looking for the 1.25/1.30 range in Qtr3.

[marlonbrando] 04/3/2009 14:38

The market rally seems to be finding a foothold. If it firms tomorrow I'd expect it to go for a few more days as short closing gives it more impetus.

I am by no means bullish about the market overall, but I do think it's a good opportunity to scalp on the bull side.

I'm keeping my fingers out whilst Forex is getting the bulk of my attention, but depending on what happens tomorrow I might move into a limited number of positions, or at least a manageable number.

All the best.

ps my level 2 feed is back now.

[marlonbrando] 04/3/2009 09:49

I've lost my Level 2 feed. Anyone else got the same issue?

Not too much of a problem since I have no stock positions open, but would be interested if anyone else knows what the problem is.

[marlonbrando] 04/3/2009 08:38

Yes of course SKYSHIP - an example of too many pies I think and not keeping a proper track.

Based on that error, I've now closed all equity positions and am focusing on Forex for now. I've lost my handle on what's going on in Stocks so better out than in.

Overall I've suffered a loss on the longs and I've got to attribute that to trying to trade everything all at the same time.

edit: I think the phrase here is juggling too many balls leaves yours exposed and as they say, one should always protect one's honour(ables). lol

[skyship] 04/3/2009 08:22

MB - 20% drop?? - No, they went XR this morning!

[marlonbrando] 04/3/2009 08:13

Good morning All.

Closed my position on LII @ 307 based on 20% drop in BLND. Market is seeing a bounce, wait and see game now to see how long it will last and seek exit points for longs and new entry points for shorts.

[marlonbrando] 03/3/2009 14:48

Buy order on LII filled

[marlonbrando] 03/3/2009 13:49

I have now closed all my short equity positions and taken profits on all of them. Won't go into detail here as to why but there does seem to be a tidal wave of an upswing building up. Basically I'm too fearful to keep them open.

All my open long equity positions remain open for the time being.

Either my system has been infected with an insanity virus or there are the rumblings of a volcanic eruption in stocks.

I'll stay out of short positions until I know what's going on. (Also it's reduced my workload).

[marlonbrando] 03/3/2009 12:54

Signal to buy LII at 306. It's at 309.5 as I write. Order (gfd) placed, will also place a Protective Put if filled.

LAND has come off it's lows. That may be a confirmation on the buy of LII.

Lord it's busy this week.

edit: order changed to 307.5 on re-calc.

[marlonbrando] 03/3/2009 10:34

Well my BP stop has been hit and I've immediately closed my Put option to lock in my hedge and come out without a loss.

On the bright side it gives me one less trade couple to keep track of.

LAND is dropping fairly heavily, I'll be looking for a signal to buy (short term). This time I won't be greedy...LOL!

[marlonbrando] 03/3/2009 09:26

Good morning All.

Very busy day yesterday. Market looks oversold. This time I've got hedges running against my longs. It would be a brave man that went long in current market conditions without a safety net, and I'm just not that brave. However they do say fortune favours the brave.

Still watching LAND from the sidelines - no definite signals as yet.

Mixed signals with BP, although I do have a protective put(atm Mar09) on it, my signal for oil to drop may adversely affect the price of BP. I've closed my short on oil. BP hasn't hit my stop, my put position is itm now, I'll just leave it all to ride out, although I still expect to make my profit on the long position and not on the Put. Only time will tell.

Forex throwing up a number of signals and keeping me very busy. This is hard work, I'll be suffering form trade exhaustion soon, I'm going to need a holiday - LOL!

All the best.

edit; ps I hardly ever trade equities (CFDs), commodities, options and Forex all at the same time. It just seems the opportunities have all arisen at once - however I am conscious that it may be a case of too many pies and not enough fingers. Also my position on oil was closed on reaching target requirements, not because oil hasn't got further to fall.