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joi, 6 februarie 2014

FPSRoca: "Rust - PvP no server dos Pé de lama" and more videos

Mihai, check out the latest videos from your channel subscriptions for Feb 6, 2014.

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Seth's Blog : Your relationship with the future

Your relationship with the future

Some people believe that tomorrow is likely to be better. Better opportunities, better technology, a brave new day to make a new kind of difference.

Others think that yesterday was a lot better than today. Tomorrow represents diminished resources, fewer opportunities, one step closer to the end.

We call tech geeks, "early adopters," and it's worth highlighting that they are not, "early adapters." Adaptation implies that people aren't eagerly going forward, they're merely tolerating what gets thrown at them.

As a marketer, then, there's a real choice here--to market your wares (new to this market) to people who are eager for change, or to get very good at marketing to people who would prefer not to change.

As a human, the question is even more profound: What relationship with the future will you choose?

The thing is, the future happens. Every single day, like it or not. Sure, tomorrow is risky, frightening and in some way represents one step closer to the end. But it also brings with it the possibility of better and the chance to do something that matters.

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miercuri, 5 februarie 2014

Mish's Global Economic Trend Analysis

Voters in Bankrupt San Bernardino Sweep Pro-Union Guard from Office; Hard Line on CalPERS Coming
Latest EU Proposal: Let's Pretend for Another 50 Years! Why Now?
Questions of "Fairness"
Brazil, Russia Cancel Debt Auctions; Head-in-Sand Move Won't Work
"Situation Impossible"

Voters in Bankrupt San Bernardino Sweep Pro-Union Guard from Office; Hard Line on CalPERS Coming

Posted: 05 Feb 2014 06:27 PM PST

The inevitable shape-of-things-to-come has finally arrived in a major California city. I am pleased to report Voters in bankrupt San Bernardino sweep old guard from power.

Residents of bankrupt San Bernardino, California on Tuesday voted to complete a rout of the city's pro-union old guard, electing business-friendly pragmatists who have pledged to try to reduce pension costs and take on vested interests.

As San Bernardino enters into a fourth month of mediation with its creditors, the biggest of which is Calpers, California's giant retirement system, voters on Tuesday elected Carey Davis as the crisis-hit city's new mayor.

Davis, a businessman and political novice, ran in part on a campaign to reduce the city's pension obligations. In an interview in November, when he became one of two mayoral candidates, he said the city had to cut spending on police and fire departments, currently more than 70 percent of the budget.

"You have to roll the pensions back," Davis said in November. Davis did not return calls on Wednesday.

Davis will play a big role in how the city approaches negotiations with its creditors. He will be part of a small team of elected officials who represent the city as the debtor in the bankruptcy.

Along with Detroit, the biggest U.S. city to seek Chapter 9 protection, San Bernardino is likely to set precedent on whether retirees or Wall Street bondholders suffer the most when a city goes broke.

Davis defeated a San Bernardino political veteran, Wendy McCammack. She ran for mayor despite having been ousted by voters from her own council seat in a recall election in November.

Also on Tuesday, another political novice, Henry Nickel, became a new council member, saying he wanted to take on special interests. Nickel's biggest challenger was Randy Wilson, a police sergeant endorsed by the police union, the only candidate for that seat who did not support pension reform efforts.

Tuesday's results follow elections in November, when the balance of power in San Bernardino's seven-member council shifted dramatically away from an old guard reluctant to take on unions and reduce pension obligations.

After Tuesday night, six of seven council members are now on record as saying they want to explore reducing San Bernardino's pensions, along with Davis, the new mayor, and a new city attorney, Gary Saenz.

Expect a Hard Line On CalPERS

This kind of broad sweep eventually it had to happen. I am not sure why it took so long, but even Taxifornia is finally fed up with public unions and the damage they cause. One bankrupt city after another will go this route.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Latest EU Proposal: Let's Pretend for Another 50 Years! Why Now?

Posted: 05 Feb 2014 03:26 PM PST

What cannot be paid back won't, but that never stops officials from pretending it will. Please consider EU Said to Weigh Extending Greek Loans to 50 Years.

The next handout to Greece may include extending the maturity on rescue loans to 50 years and cutting the interest rate on some previous aid by 50 basis points, according to two officials with knowledge of discussions being held by European authorities.

The plan, which will be considered by policy makers by May or June, may also include a loan for a package worth between 13 billion euros ($17.6 billion) and 15 billion euros, another official said. Greece, which got 240 billion euros in two bailouts, has previously had its terms eased by the euro zone and International Monetary Fund amid a six-year recession.

New money would help Greece fill a financing gap that has vexed European Union and IMF authorities working to make sure the rescue programs stay on schedule. European Union President Herman Van Rompuy said last month that Greece must continue to tighten its belt even as "the people of Greece are still suffering from the consequences of the painful but nevertheless needed reforms that are taking place."

Under the eased terms, all the bailout-loan repayments would be extended from about 30 years and rates would be cut by 50 basis points on funds from the 80 billion-euro Greek Loan Facility, which was created for Greece's first bailout in 2010, said the officials, who requested anonymity because talks are still in preliminary stages.

Why Now?

Inquiring minds might be wondering why these concessions come now. Here is the answer: Greek leftist seeks negotiated debt write-off.

Greece would seek to negotiate an international write-off of about one-third of its debt if the leftist Syriza opposition party won a general election, its leader said on Tuesday.

Alexis Tsipras, who is leading a Communist-backed pan-European leftist list in European Parliament elections in May, said his country's problems could not be solved by more loans, which just went to service past debts and shore up the banks.

"The solution isn't more loans. The solution is fewer loans and less debt," Tsipras, whose party leads Prime Minister Antonis Samaras' conservative New Democracy in opinion polls, told the Europresse association on a visit to Paris.

Greece, which has already been bailed out twice with 240 billion euros ($324.44 billion) in euro zone and IMF funds, is due to hold its next general election in 2016, but voting may be brought forward if Samaras' fragile right-left coalition were to lose its narrow parliamentary majority.

The Debt-Slave Masters in Brussels are very fearful of a collapse in Antonis Samaras' conservative New Democracy which would lead to new Greek elections which undoubtedly Syriza would win. The New Democracy coalition hangs by a thread with a 2-seat majority in Greek parliament.

Hoping to stave off a parliamentary collapse, the EU is prepared to let Greece pay back 30-year commitments in 50 years. That in and of itself is nothing more than a form of default. It is also willing to commit another 15 billion euros to the debacle.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Questions of "Fairness"

Posted: 05 Feb 2014 11:17 AM PST

In response to Controversy in Detroit: What's a Fair Settlement of Bondholder and Pension Obligation Claims? reader Ken suggests my proposal to have Detroit bondholders and pensioners be treated with the same percentage haircuts is not fair.

Ken asked "Which of the two would suffer more: pensioners or bondholders?"

The answer is irrelevant. By definition, "fair" implies equal treatment and equal opportunity, whether black or white, rich or poor.

Is it "fair" the poor have to pay the same for a loaf of bread as the rich? Heck on a percentage-of-wage basis, the poor pay thousands of percent more. Should Bill Gates have to pay $1,000 for a loaf of bread as an act of "fairness"?

I suggest, it's clearly "fair" for everyone who walks into a grocery store to pay the same price for a loaf of bread. Imagine having to prove how much you make and be charged accordingly every time you bought something.

In cases where bargaining happens (auto sales for instance), everyone gets the same chance to bargain, not just the poor or the rich. Some people bargain better than others, but the chance to bargain does not discriminate.

Equal Protection

Equal treatment is fair. There is no other way.

By the way, the "equal protection clause" of the 14th amendment reads:

"No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws."

Does "equal protection" sound "fair" to you? It does to me.

Are the rights of Detroit pensioners higher than the rights of bondholders? Clearly not, given both are unsecured creditors. Whether or not pensioners would suffer more than bondholders is irrelevant.

"Screw the Bondholders" has a nice "Robin Hood" ring to it, but it is blatantly unfair, as well as unconstitutional.

Addendum

Reader John offered an interesting as well as accurate assessment. Paraphrasing John ... Detroit bonds are assets in the retirement plans of other. Ken essentially argues it's fair if Detroit pensioners' retirement prospects are enhanced at the expense of others' retirement plans.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Brazil, Russia Cancel Debt Auctions; Head-in-Sand Move Won't Work

Posted: 05 Feb 2014 09:55 AM PST

Russia and Brazil don't like escalating interest rates. Their "solution"? Cancel government debt auctions.

Russia Cancels Debt Auctions Second Week

Yesterday, Reuters reported Russia cancels domestic bond auction citing market conditions

Russia's finance ministry cancelled its weekly domestic bond auctions for the second week in a row on Tuesday, saying in a statement the decision was "based on an analysis of current market conditions".

Yields on so-called OFZ bonds have risen by 70-80 basis points since the start of the year. A new ministry sale could have potentially pushed the rates higher, analysts said.

Brazil Cancels Debt Auctions

Today, Bloomberg reports Brazil Government Yields Fall After Auctions Canceled.

Brazilian government bond yields extended their drop from a four-year high after the Treasury canceled auctions of fixed-rate and zero-coupon bonds amid a selloff in emerging-market assets.

Yields on local bonds maturing in 2017 declined 18 basis points, or 0.18 percentage point, to 12.80 percent at 3:20 p.m. in Sao Paulo after increasing Feb. 3 to 13.14 percent, the highest since January 2010.

The Treasury cited market conditions for its decision and said the last time it canceled auctions to sell zero-coupon LTNs and fixed-rate NTN-Fs was in July. The government had planned to sell zero-coupon bonds maturing in 2014, 2016 and 2018 and fixed-rate bonds maturing in 2021 and 2025.

Head-in-Sand Move Won't Work

This kind of head-in-the sand move won't work long. In fact, it did not work at all, it only created an illusion of working. Unless underlying conditions change quickly, and favorably (both doubtful), there is a strong likelihood of increased volatility when auctions resume.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

"Situation Impossible"

Posted: 04 Feb 2014 11:52 PM PST

Greek economist Costas Lapavitsas says "The Euro has Already Failed" and it's "Situation Impossible" for France.

Via translation from La Vanguardia here is the complete interview ....

LV: When I interviewed you for the first time in late 2011, you said that the ECB was not the magic solution to the eurozone crisis. Then in July 2012 Mario Draghi stated "The ECB is ready to do whatever it takes to preserve the euro and believe me, it will be enough." Do you still believe that the ECB is not the solution?

CL: The ECB is not the solution. What happened in 2011 and 2012 is that the peripheral countries accepted the austerity demanded by Berlin and Brussels. They accepted wage cuts and unemployment. Their economies are headed for a recession. Have stabilized public finances and external deficit has stabilized. The fundamental answer is recession.

LV: Is that what the ECB wanted?

CL: The announcement of Mario Draghi pacified the financial markets but only because recession was accepted by the population in the peripheral countries. The ECB did not solve the crisis in the real economy.

LV: Are we far from a stable eurozone crisis solution?

CL: The ECB stabilized the fiscal deficit and the trade deficit and hence financial markets. But the crisis has become a crisis in the real economy. There is foul growth and impoverishment.

LV: Has the crisis moved from the periphery crisis to other countries?

CL: Yes. The euro crisis has moved to the heart of the eurozone. France and Italy are now facing the same problems as the periphery in 2010 and 2011. The crisis is now in France and Italy.

LV: Is there more inequality now than at the beginning of the crisis?

CL: Of course. Here's how the situation has stabilized: recession, austerity without growth, more impoverishment and huge social problems for most of the working class.

LV: Can we forget the idea introduced a couple of years ago regarding a two-speed euro?

CL: I do not think it's going to be a two-speed euro. I think the policy that comes from Berlin and Brussels is the austerity of all European countries. France is now in a situation impossible. The real problem in the eurozone is now France. It has great competitiveness gap with Germany.

LV: Why?

CL: The competitiveness gap that the periphery had in 2010-11 is now in France. Wages in Germany have gone up a bit or frozen, wages in France have grown in line with inflation. This gap makes it difficult for the French economy to grow significantly. If France is moving towards austerity, as the periphery, Europe faces serious problems. Depression. And France is facing huge social and political problems. The eurozone crisis has moved to the heart of the euro.

LV: How does situation look in five years?

CL: It is difficult to say precisely. The eurozone will continue to be unstable as in recent years. It will be even worse than now because of tension between France and Germany. The currency is not sustainable. If the common currency fails, the EU is facing a huge crisis.

LV: Do you think that the euro will fail?

CL: The euro has already failed. It was a project that was supposed to create convergence, growth and solidarity between the peoples of Europe, it was supposed to create a commonality among Europeans. The euro has created divergences, recession, poverty, it is like a straitjacket for Europe, increases the national and the social tensions in Europe. It succeeds now only because it instills fear. I do not think this is sustainable for long.

LV: How is the situation in Greece?

CL: Greece is a mess. In 2010 Greece should have left the euro and put its economy in another direction. The economic and social catastrophe in Greece is worse than what happened in Argentina in the late 90s and early 2000. This is what happens when you're within this monetary structure that is the euro.

LV: This is your first trip to Barcelona. How do you assess issues such as the independence of Catalunya?

CL: The situation in Barcelona is very interesting. I am very surprised by the strength of the independence movement in Catalonia. I'm amazed by the vitality of social movements. Yet, I think the level of understanding of the economic problems of Spain and Catalunya are not as high as they should be.

LV: Why?

CL: I think there should be more understanding of the implications of would happen if there was eventual independence in the Catalan economy. There is a lot of complexity that is not completely understood. Social movements in Catalonia need to further discuss these issues.

Mish Comments

I have little to add other than I agree with Costas Lapavitsas on major points. The euro has already failed. The question is: when will that be politically recognized?

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

First Lady Michelle Obama: "I'm First"

Featured

First Lady Michelle Obama: "I'm First"

Today, we are releasing a special video message from the First Lady in which she talks about being the first in her family to attend college. This video is part of the “I’m First” storytelling project, which lifts up the stories of first-generation college students in order to inspire future generations.

As the First Lady says in her video, “no matter where you come from or how much money your family has, I want you to know that you can succeed in college, and get your degree, and then go on to build an incredible life for yourself.”

Watch the First Lady share her experience as a first-generation college student:

Getting Link Removals Wrong

Posted: 04 Feb 2014 03:15 PM PST

Posted by dohertyjf

Ever since Penguin launched in 2012, SEOs who for years had built less than savory links, or companies who for years had ridden off the coat tails of these links, started to ask for links to be removed. I've heard many of my friends, like Wil Reynolds, repeatedly poo-poo it from the stage (Wil did it during his now famous "Real Company Shit" talk at Mozcon in 2012).

As someone who has overseen link removal campaigns for clients when I was at Distilled, I am not down on link removals. They have a place, and I've seen positive effects from cutting out large chunks of really bad links (porn, pills, poker, you name it). But, I also believe there are good and bad ways to remove links, and I want to make an example here.

In the aftermath of Matt Cutts coming out and warning people off from manipulative guest posting (something all of us have seen and grown more and more tired of in the past few years), I think a voice of reason is needed to stop companies from doing more harm than good to themselves. Youâ€™ll see an example of an email I received a few weeks ago, the day after Matt came out with his proclamation, but letâ€™s cover some basics first before we get into conjecture.

Why remove links?

I'm not going to give a full diatribe on why you might want to remove links pointing into your website, as that is not the point of this article. But, here are some reasons why you may want to remove links -

You aggressively obtained exact match anchor text back on 2008/2009/2010;
Your organic traffic dropped for specific keywords (or rankings plummeted and did not recover) on or around the days we know Penguin rolled out (Algo History here)
You're being proactive because you see that Google is increasingly lowering the barrier to classifying something as spam and you do not want to be caught out in the cold when the hammer drops

That's a quick overview of link removal, and by no means complete. This one is.

The guest posting fiasco

For years now, as old tactics have quit being as effective (though many still work when done as part of a full and balanced campaign), many "SEO" companies turned to guest posting as a way of getting links.

Many have done it well. They've built great relationships with sites that have a relevant audience to them, have driven traffic back to their site, and yes, built a link or two. But notice the order - first comes the business purpose (customers, traffic) and tertiary is links.

Many other companies have tried to "scale" link building via guest posting, yet as we all know when you begin to scale something the first to go out the window is quality. And when you have your boss or client breathing down your neck to lower the cost per link (which is not the metric to base quality on, but money is important to keep an eye on), the temptation to outsource outreach or writing becomes very appealing. Thatâ€™s why weâ€™ve ended up with this:

When Matt dropped the hammer a few weeks ago, many companies freaked out and started getting their guest post links removed, exact anchors and all. To me, this is stupid on many many levels, such as -

If you wrote the content on a quality site, you should want credit in the form of a link, Google be damned;
If you are requesting removal and the person is nice enough to remove the anchor text link, thank them instead of also asking that the branded link be removed too.
Only manipulative posts are being targeted, and in my opinion if you been accepting bad poets just to get content on your site, you deserve to have your site disavowed.

Removal Automation

I'm in favor of automating what you can when it makes sense. Collecting data, smart algorithms to surface content via internal links, and the like are all examples of something that can and should be automated.

When we talk about link removal, I'm all in favor of automating the initial data gathering of sites linking to your page(s) that have been affected. This is where the automation stops though, because a machine will never be as good as a human pair of eyes. We're not just removing links from low authority (from a strictly SEO domain or page authority perspective) sites, but from irrelevant sites where you placed a link just to get a link.

Outreach should be personal. When you automate the gathering of pages to request your link be removed from, any SEO worth their salt will immediately see this. Here is a list of pages on HotPads that a site (redacted) asked that I remove links from (with an admission that they believe themselves to be negatively affected by a manipulative links penalty, which SEMrush seems to indicate as well):

The problem here is that, as you can see, many of these are archive and category pages. They only have links on the actual guest post (and I was nice enough to remove the exact anchor. I left the branded link), but sent me this laundry list because they got it straight from OpenSiteExplorer or MajesticSeo, I'm sure.

The other area you can automate is checking to see if links are still live, then manually qualifying if they should be or not. Many of the removal tools do this, or you can upload a list of pages to Scrapebox and see if the links are still there.

I know link qualification is a tedious process (Iâ€™ve looked at tens of thousands of links to qualify them as good/bad in my career), but putting a human touch onto your work will long-term benefit you, I believe.

What if my site is disavowed?

Here's a question I've heard posed a few times:

"But won't my site get disavowed if I don't remove the link? Will my site suffer if I am disavowed?"

No one has studied this yet, mostly because you cannot know if your site has been disavowed or not. I have to believe that Google can tell semi-algorithmically if a site is being used for manipulative linking or not. With how long it takes for a disavow file to seem to take effect, I believe that disavow lists are manually looked at, and a site may be whitelisted if it is disavowed, but judged to not be manipulative.

So no, I don't worry about my site being disavowed. If shady work was done in the past, then clean it up. If your site is clean, carry on.

Conclusion

I hope this has given you some food for thought before removing links or starting the process. It's a tricky business and can be quite effective when done well, but can cause more harm if done poorly. Proceed with caution.

Sign up for The Moz Top 10, a semimonthly mailer updating you on the top ten hottest pieces of SEO news, tips, and rad links uncovered by the Moz team. Think of it as your exclusive digest of stuff you don't have time to hunt down but want to read!

Seth's Blog : "Oh sure, I studied with him at Harvard"

"Oh sure, I studied with him at Harvard"

"Actually, I read his book when it was in galleys...

I bought it when it came out in paperback...

I have it but never actually read it...

I read a few blog posts he wrote about it...

I scanned the reviews, did you see the one that really excoriated him?

I followed a link on Facebook...

I read a tweet about it.

...Who?"

What level of exposure counts as actually knowing?

For me, doing is at the core of it. If you've done something with what you've learned, then maybe you know it.

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marți, 4 februarie 2014

Mish's Global Economic Trend Analysis

Obamacare Creates Incentive to Work Less; CBO Estimates Obamacare Will Cost 2 Million Full-Time Equivalent Jobs by 2017
Treasury Debate: Gundlach (Bull) vs. Rosenberg (Bear); Price Inflation on Hold; What About Gold?
Controversy in Detroit: What's a Fair Settlement of Bondholder and Pension Obligation Claims?

Obamacare Creates Incentive to Work Less; CBO Estimates Obamacare Will Cost 2 Million Full-Time Equivalent Jobs by 2017

Posted: 04 Feb 2014 02:11 PM PST

MarketWatch reports Obamacare plans to exceed $1 trillion, create reluctant workers.

The CBO projects that insurance subsidies and related spending will account for increasing chunks of deficit spending, starting at $20 billion this year and steadily increasing to $159 billion in 2024, for a collective cost of just under $1.2 trillion. The cumulative total from the ACA for the next decade could reach $1.35 trillion.

In several charts in its report, the CBO calls these "effects on the cumulative federal deficit." But in footnotes and other portions of the 175-page report, the CBO points out there are other sources of revenue generated under the ACA that are expected to make it deficit neutral.

Labor Market Effects of the Affordable Care Act

Inquiring minds are also in interested in labor force projections. For that let's dive into the massive 182 page PDF CBO Budget and Economic Outlook 2014 to 2024 report.

Incentive to Work Less

On PDF page 44 (Report page 38) a curious footnote reads "By providing subsidies that decline with rising income (and increase with falling income) and by making some people financially better off, the ACA will create an incentive for some people to work less."

A detailed explanation is found in Appendix C on PDF page 123.

How Much Will the ACA Reduce Employment in the Longer Term?

The ACA's largest impact on labor markets will probably occur after 2016, once its major provisions have taken full effect and overall economic output nears its maximum sustainable level. CBO estimates that the ACA will reduce the total number of hours worked, on net, by about 1.5 percent to 2.0 percent during the period from 2017 to 2024, almost entirely because workers will choose to supply less labor — given the new taxes and other incentives they will face and the financial benefits some will receive. Because the largest declines in labor supply will probably occur among lower-wage workers, the reduction in aggregate compensation (wages, salaries, and fringe benefits) and the impact on the overall economy will be proportionally smaller than the reduction in hours worked. Specifically, CBO estimates that the ACA will cause a reduction of roughly 1 percent in aggregate labor compensation over the 2017–2024 period, compared with what it would have been otherwise. Although such effects are likely to continue after 2024 (the end of the current 10-year budget window), CBO has not estimated their magnitude or duration over a longer period.

The reduction in CBO's projections of hours worked represents a decline in the number of full-time-equivalent workers of about 2.0 million in 2017, rising to about 2.5 million in 2024. Although CBO projects that total employment (and compensation) will increase over the coming decade, that increase will be smaller than it would have been in the absence of the ACA. The decline in full-time-equivalent employment stemming from the ACA will consist of some people not being employed at all and other people working fewer hours.

Why Does CBO Estimate Larger Reductions Than It Did in 2010?

In 2010, CBO estimated that the ACA, on net, would reduce the amount of labor used in the economy by roughly half a percent—primarily by reducing the amount of labor that workers choose to supply. 2 That measure of labor use was calculated in dollar terms, representing the approximate change in aggregate labor compensation that would result. Hence, that estimate can be compared with the roughly 1 percent reduction in aggregate compensation that CBO now estimates to result from the act. There are several reasons for that difference: CBO has now incorporated into its analysis additional channels through which the ACA will affect labor supply, reviewed new research about those effects, and revised upward its estimates of the responsiveness of labor supply to changes in tax rates.

Don't worry. This won't cost 2 million jobs, only 2 million equivalent full-time jobs. Perhaps a many as 6 million work fewer hours each week. The CBO did not estimate the breakdown.

Regardless, that cannot possibly happen, can it? Didn't Obama claim ACA would create jobs? Hmm. What else did he promise?

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Treasury Debate: Gundlach (Bull) vs. Rosenberg (Bear); Price Inflation on Hold; What About Gold?

Posted: 04 Feb 2014 12:11 PM PST

I happen to like 10-year US treasuries here, and have since rates got near 3%. I believe job growth is way overstated due to double-counting of part-time jobs, the global economy is slowing more than economists expect, and the US economy is slowing more than economists expect.

Betting Against Treasuries a Fool's Game?

Jeffrey Gundlach CEO of DoubleLine Capital goes even further. Gundlatch claims Betting Against Treasuries a Fool's Game.

The market was "entering 2014 struck by a greater consensus entering any year that I can remember, that the dollar has to do well, gold is for losers and bond yields will rise," said Jeffrey Gundlach, chief executive officer of DoubleLine Capital, which manages $49 billion. "Things were so lopsided in terms of that positioning. That was late in that way of thinking."

The amount of bets against 10-year Treasuries by hedge funds and other large speculators shrunk to as low as 58,000 contracts last month from a 19-month high of about 189,000 in November, data from the Commodities Futures Trading Association show.

Mr. Gundlach predicts yields will fall in 2014, with demand rising from investors such as banks seeking high-quality collateral to meet new regulatory requirements and as a haven for others from political and economic turbulence in nations ranging from Turkey to Argentina.

Gundlach (Bull) vs. Rosenberg (Bear)

One long-time bond bull recently turned bearish, and he sees no reason to change course. Yields will reverse and end the year at 3.5% to 3.75% as the economy improves, according to David Rosenberg, the chief economist at Gluskin Sheff & Associates.

"The economy is on a moderate accelerating trend," Mr. Rosenberg said. "We're coming out of a flight to quality on emerging markets. This is a blip rather than a long-term trend. The yield decline is temporary."

Will the US Economy Accelerate?

David Rosenberg thinks the economy is going to accelerate. If the economy does accelerate, the Fed will increase tapering, not reduce it.

Looking for another opinion?

Marc Faber Bullish on Treasuries and Gold

Taken from a Barron's roundtable discussion, ZeroHedge reports Marc Faber Warns "Insiders Are Selling Like Crazy... Short US Stocks, Buy Treasuries Gold".

Faber: What I recommend to clients and what I do with my own portfolio aren't always the same. That said, my first recommendation is to short the Russell 2000. You can use the iShares Russell 2000 exchange-traded fund [IWM]. Small stocks have outperformed large stocks significantly in the past few years.

Next, I would buy 10-year Treasury notes, because I don't believe in this magnificent U.S. economic recovery. The U.S. is going to turn down, and bond yields are going to fall. Abby just gave me a good idea. She is long the iShares MSCI Mexico Capped ETF, so I will go short.

Q: What are you doing with your own money?

Faber: I have a lot of cash, and I bought Treasury bonds. ... I have no faith in paper money, period. Insider buying is also high in gold shares. Gold has massively underperformed relative to the S&P 500 and the Russell 2000. Maybe the price will go down some from here, but individual investors and my fellow panelists and Barron's editors ought to own some gold. About 20% of my net worth is in gold. I don't even value it in my portfolio. What goes down, I don't value.

Curious Position

US treasuries are a curious position for someone frequently in the hyperinflation camp, which brings up this humorous conversation from Barron's.

Faber: I recommend the Market Vectors Junior Gold Miners ETF [GDXJ], although I don't own it. I own physical gold because the old system will implode. Those who own paper assets are doomed.

Zulauf: Can you put the time frame on the implosion? Faber: Let's enjoy dinner tonight. Maybe it will happen tomorrow.

Price Inflation on Hold

If the economy implodes (or even modestly declines) US Treasuries will benefit. Even a frequent hyperinflationist and firm disbeliever in paper assets gets it!

Here's my claim: Deflation Will Return: Europe First, Then US

Strong consumer price inflation, is on hold for a long time. US hyperinflation in this environment is next to impossible.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Controversy in Detroit: What's a Fair Settlement of Bondholder and Pension Obligation Claims?

Posted: 04 Feb 2014 09:49 AM PST

A huge battle between pensioners and bondholders is on. Last week, a Bond rating agency blasted Governor Rick Snyder's $350-million Detroit pension rescue plan as being too favorable to creditors at the expense of bondholders.

Today, the New York Times reports Detroit Turns Bankruptcy Into Challenge of Banks.

Amy Laskey,a managing director at Fitch Ratings, said in a recent report that she sensed an "us versus them" orientation toward debt repayment. And in the view of bondholders, bond insurers and other financial institutions, it only grew worse last week after the city circulated its plan to emerge from bankruptcy and filed a lawsuit on Friday.

The suit, brought by the city's emergency manager, Kevyn D. Orr, seeks to invalidate complex transactions that helped finance Detroit's pension system in 2005. In a not-so-veiled criticism, the city said the deal was done "at the prompting of investment banks that would profit handsomely from the transaction."

Of even greater concern to creditors is the city's 99-page "plan of adjustment," the all-important document that details how Detroit proposes to resolve its bankruptcy and finance its operations in the future. Banks, bond insurers and other corporate creditors think they are being asked to share a disproportionate amount of pain under the plan, still in draft form and not yet filed with the bankruptcy court.

"The essential issue is the near-total wipeout of the bondholders," said Matt Fabian, a managing director of Municipal Market Advisors. He said Detroit's case appeared to be heading toward a "cramdown," or court-ordered infliction of losses on unwilling creditors.

The plan calls for the city to give pensioners up to 50 cents on the dollar for their claims, while other unsecured creditors, like those that bought Detroit's general-obligation bonds, would end up with about 20 cents on the dollar. The pensioners' claims would be paid with cash, while general-obligation bondholders would receive notes that Detroit proposes to issue.

The debt that raised $1.4 billion for the city pension system in 2005 would suffer bigger losses still. The plan of adjustment does not accept the entire $1.4 billion as a valid claim, only about half of it. So the investors who bought that debt, called "certificates of participation," often called COPs, would end up with about 10 cents on the dollar. It would come in the form of a different series of notes, which has lags built into the payment schedules.

What's a Fair Settlement?

Last summer, Gov. Rick Snyder of Michigan said the intent was to "determine the best path forward that respects, and is fair to, pensioners and all parties."

In bankruptcy, the court has an obligation of fairness. However, it's not unprecedented for judges to take one side or another. Until now, the article claims "municipal bondholders have not had losses of principal forced on them by a court."

Here is a key point: Both the pension obligations and bondholder debt are unsecured debt.

Why not treat both pensioners and bondholders equally? The proposal currently on the table is for pensions to get 50 cents on the dollar (a 50% haircut) and bondholders 20 cents on the dollar (an 80% haircut).

I have a simple proposal. Give everyone 35 cents on the dollar (a 65% haircut). Neither side would be happy, but the ruling would be fair.

I also recommend the court trash the city's defined benefit plan entirely, or Detroit will be back in bankruptcy in a number of years.

Finally, if bondholders do not think they got a fair shake, they will demand higher interest rates going forward. Regardless of what the judge decides, the Detroit bankruptcy settlement will affect municipal bond interest rates going forward, not just in Michigan, but nationally.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

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