As we approach the ten-year anniversary of BWE, we have seen a level of pricing in Bordeaux that I think few of us imagined back in February 2000 when we started BWE.
I'm just a country lawyer from Maine, I'm no financial expert for sure, but I see things that are happening in my criminal, family law, and bankruptcy practices that are leading me to conclude that the world economy is going to be knocked back into the middle ages in the next ten years. I'm at the northern end of Appalachia up here in central Maine but, based on what I'm seeing in my practice, I think the country is descending into economic anarchy, I think the system is collapsing and there is an inertia that we are simply incapable of stopping, and that it is happening right now, not some nebulous point in the future. We are the toads sitting contently in the bottom of the slowly heating pot of water getting perilously close to boil.
I think the U.S. system of government is severely broken: Obama is same as the old boss, no better than Bush, the Democrats and Republicans are both hopelessly beholden to special interests, the Pelosi/Reid leadership in Congress is extremely weak and McConnell/McCain et al on the Republican side are no better, I have nightmares of a Palin/Brown ticket prevailing in 2012, matters are going to get a thousand-fold worse as a result of this week's U.S. Supreme Court decision on corporate campaign contributions.
I just don't see how this country can sustain all this debt. What is it, like $14 trillion? It just seems to me that our hands are going to be tied for at least a century.
And now China is experiencing 8% growth but it seems to be based on a real estate bubble like we had here, and when they go down we're going to become a borderline third world country. Much of Appalachia USA, south Florida, California, the mid-West, and other parts of the U.S. are already basically in third world status.
My prediction is that there will be a huge collapse in Bordeaux pricing by 2020, that prices will be below 2000 levels, at least in relative if not actual dollars.
I don't know if any of you saw Prince Alwaleed on Charlie Rose the other night, regardless of what anyone might think about him he is a compelling interview. He provided one of the best summaries of the financial problems in the world in general and the financial/political problems in the Middle East in particular that I've heard in quite a while. I think you can see the whole interview on http://www.charlierose.com, there is a short clip from the interview on YouTube:
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3:19 video lang: enTranslateView original(Translation disabled)Charlie Rose - Prince Alwaleed 01/20/10 Charlie Rose - Prince Alwaleed 01/20/10
Prince Alwaleed, Chairman, Kingdom Holding Company Full interview here: bit.ly http://www.charlierose.com
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Predictions on Bordeaux pricing in the next ten years
Re: Predictions on Bordeaux pricing in the next ten years
Hi Jim,
I recently read a new book on the subject of your thread:
http://www.amazon.com/What-Price-Bordea ... 530&sr=8-1
In fact, I was going to post a review on BWE, but decided against it because "What Price Bordeaux?" is full of serious flaws and I'm not convinced think it deserves a place on the Bordeaux lover's book shelf.
My own opinion, for what it's worth, is that there are limits to everything, and that includes pricing for the great growths of Bordeaux.
I think that something approaching a plateau will be reached pretty quickly, even for good years. However, I predict that the first growths will continue to be a law unto themselves, and that prices will go up and up.
We are talking about the good old capitalistic system at work here: you see (and help to create
high demand, and you put your prices up accordingly. Many people are now saying that this is a dangerous game to play, and that you could be cutting out the grass from under your own feet...
I am reminded, of all things, of the market for Cuban cigars. There is a traditional market for these cigars in Mexico, Spain, France, etc. If the US lifts the embargo one day, Americans will rush in to buy them, and either there won't be enough, or the producers will put the price up – which will by OK for Americans, but prompt many traditional customers to buy cigars from somewhere else.
The fine wine market is volatile, and has been as long as I've known it.
If the Bordelais *were* to go too far, let's say, with pricing the 2009 vintage, I think they would draw the logical conclusions and adapt.
I've read posts on several Internet forums in which people predict a collapse of the market and the end of the en primeur system.
I don't believe that for a moment.
While the economic scene is NOT good, people with money will go on buying great wine IMHO. And I say this despite the problems they're having in Champagne (because that's a very different story).
I agree that there may very well be a shift in the types of cutomers who buy these wines, that some loyal customers may be priced of the market, and that this presents a risk.
There is also a strong irrational component to all this. It can make much more sense to buy older vintages (even great years) for less money than a new vintage, but that overlooks some important psychological factors. Certain consumers want to grow old with their wine, i.e., prefer younger wine. Others want wine from a vintage in which they were married, or had a child.
Much is being said about the Asian market. I don't see this as having a miraculous short-term effect, in which the Asians will pay bloated prices that the English or Americans will not.
In any event, the 2009 futures campaign in April/May should be fascinating to watch, because there are some very unusual parameters these days…
As for the US economy, you're a far better judge of that than I am. America has shown an amazing ability to rebound in the past. It's about time that this came to the fore now…
As for the debt, let's not forget that this is largely caused by two wars, neither of would appear to be winnable.
All the best,
Alex
I recently read a new book on the subject of your thread:
http://www.amazon.com/What-Price-Bordea ... 530&sr=8-1
In fact, I was going to post a review on BWE, but decided against it because "What Price Bordeaux?" is full of serious flaws and I'm not convinced think it deserves a place on the Bordeaux lover's book shelf.
My own opinion, for what it's worth, is that there are limits to everything, and that includes pricing for the great growths of Bordeaux.
I think that something approaching a plateau will be reached pretty quickly, even for good years. However, I predict that the first growths will continue to be a law unto themselves, and that prices will go up and up.
We are talking about the good old capitalistic system at work here: you see (and help to create
high demand, and you put your prices up accordingly. Many people are now saying that this is a dangerous game to play, and that you could be cutting out the grass from under your own feet...I am reminded, of all things, of the market for Cuban cigars. There is a traditional market for these cigars in Mexico, Spain, France, etc. If the US lifts the embargo one day, Americans will rush in to buy them, and either there won't be enough, or the producers will put the price up – which will by OK for Americans, but prompt many traditional customers to buy cigars from somewhere else.
The fine wine market is volatile, and has been as long as I've known it.
If the Bordelais *were* to go too far, let's say, with pricing the 2009 vintage, I think they would draw the logical conclusions and adapt.
I've read posts on several Internet forums in which people predict a collapse of the market and the end of the en primeur system.
I don't believe that for a moment.
While the economic scene is NOT good, people with money will go on buying great wine IMHO. And I say this despite the problems they're having in Champagne (because that's a very different story).
I agree that there may very well be a shift in the types of cutomers who buy these wines, that some loyal customers may be priced of the market, and that this presents a risk.
There is also a strong irrational component to all this. It can make much more sense to buy older vintages (even great years) for less money than a new vintage, but that overlooks some important psychological factors. Certain consumers want to grow old with their wine, i.e., prefer younger wine. Others want wine from a vintage in which they were married, or had a child.
Much is being said about the Asian market. I don't see this as having a miraculous short-term effect, in which the Asians will pay bloated prices that the English or Americans will not.
In any event, the 2009 futures campaign in April/May should be fascinating to watch, because there are some very unusual parameters these days…
As for the US economy, you're a far better judge of that than I am. America has shown an amazing ability to rebound in the past. It's about time that this came to the fore now…
As for the debt, let's not forget that this is largely caused by two wars, neither of would appear to be winnable.
All the best,
Alex
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JimHow
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Re: Predictions on Bordeaux pricing in the next ten years
Excellent insights as always Alex.
I'd be interested in hearing what some of the financial guys here think about the impacts of the U.S. debt situation.
I don't know anything about these issues but it seems staggering to me, I just can't imagine how it is not going to come back and bite us as we move forward, with our infrastructure crumbling, and baby boomers aging, and health care costs rising, and pension funds depleting, and wealth becoming more consolidated into the hands of fewer people, and the world becoming more rather than less dangerous, etc., etc.
It just seems so impossible to effect real change, take health care for example, how can we ever hope to reform the system when there is so many special interests and so much money involved?
Can someone tell me why we need health insurance companies? I mean, we have this big pot of money being spent on health care, for doctors and nurses, and research, and drugs, and equipment, and infrastructure, etc., that's already incredibly expensive, costing us trillions of dollars, something like, what 15-20% of our economy, why do we need another player in the system-- insurance companies-- to take more money out of the pie for their mega profits? What purpose do the insurance companies serve other than to reap enormous profits for their investors and multi-million-dollar bonuses for their executives? Why can't government run health insurance, like we do with Medicare and Medicaid? Well, because government is bureaucratic and wasteful, some might respond. What? Government is more wasteful than these robber barons on Wall Street? Man, it irks me when I see us spending billions and billions of dollars so that these thieves can have their bonuses in the tens of millions, while students trying to get through college and improve themselves have to struggle and have to saddle themselves with debt and we have to expect our poorest people in society to live on $604 a month plus food stamps from their social security checks.
The system seems hopelessly broken to me, I don't see anyone in either major party capable of providing the leadership necessary. And I just see the interest on the debt increasing exponentially year after year until we are brought to our knees.
In my law practice I deal with a lot of people in poverty and in lower-middle-class incomes, I've been practicing 25 years now, and I'm seeing things happening in the lives of these people that I did not see, or even imagine, as recently as five years ago.
I'd be interested in hearing what some of the financial guys here think about the impacts of the U.S. debt situation.
I don't know anything about these issues but it seems staggering to me, I just can't imagine how it is not going to come back and bite us as we move forward, with our infrastructure crumbling, and baby boomers aging, and health care costs rising, and pension funds depleting, and wealth becoming more consolidated into the hands of fewer people, and the world becoming more rather than less dangerous, etc., etc.
It just seems so impossible to effect real change, take health care for example, how can we ever hope to reform the system when there is so many special interests and so much money involved?
Can someone tell me why we need health insurance companies? I mean, we have this big pot of money being spent on health care, for doctors and nurses, and research, and drugs, and equipment, and infrastructure, etc., that's already incredibly expensive, costing us trillions of dollars, something like, what 15-20% of our economy, why do we need another player in the system-- insurance companies-- to take more money out of the pie for their mega profits? What purpose do the insurance companies serve other than to reap enormous profits for their investors and multi-million-dollar bonuses for their executives? Why can't government run health insurance, like we do with Medicare and Medicaid? Well, because government is bureaucratic and wasteful, some might respond. What? Government is more wasteful than these robber barons on Wall Street? Man, it irks me when I see us spending billions and billions of dollars so that these thieves can have their bonuses in the tens of millions, while students trying to get through college and improve themselves have to struggle and have to saddle themselves with debt and we have to expect our poorest people in society to live on $604 a month plus food stamps from their social security checks.
The system seems hopelessly broken to me, I don't see anyone in either major party capable of providing the leadership necessary. And I just see the interest on the debt increasing exponentially year after year until we are brought to our knees.
In my law practice I deal with a lot of people in poverty and in lower-middle-class incomes, I've been practicing 25 years now, and I'm seeing things happening in the lives of these people that I did not see, or even imagine, as recently as five years ago.
Re: Predictions on Bordeaux pricing in the next ten years
Hey Jim, I hear you. Here's my take on the events of the last few days.
About the debt, the situation is quite bad but at the moment the Fed and the Treasury are a lot more concerned about deflation than inflation, so I don't see an overall raise in taxes or a drop in Govt spending anytime soon. That's the good news (Heaven help us).
About the deficit, the only statistic that counts is the debt as percentage of GDP, and in 2010 it is supposed to come down from 12.93% to 8.54%, still the highest since 1946, and where some of the PIIGS countries will be this year (Portugal, Ireland, Italy, Greece and Spain). With a 2.5% GDP growth in the US in the next few years, there is hope that the level might go down to the more manageable 3-4%
Health care, no arguments, the system is broken and needs to be changed. The Obama Administration has completely bungled Health Care Reform though. The new bill looks convoluted and full of compromises to all special interest groups. It now looks like even the compromised bill may be stuck in the Senate forever.
The banking bailout: As of now, the Big Banks have returned a large portion of the Government money. The Treasury Department has invested about $200 billion in hundreds of banks through its Capital Purchase Program in an effort to prop up capital and support new lending. Most Big Banks did not want the money and complained vehemently at the Treasury heavy hand in lending it to them. About $143 billion so far have been returned. The remaining funds are mainly not in the hands of Big Banks but rather are invested with smaller regional banks. The Treasury has received dividends and interest of around $16 billion from its investments plus the Fed has received interest of more than $40 billion.
For a full list: http://bailout.propublica.org/main/list/refunds and http://bailout.propublica.org/main/list/dividends
The government has bailed out two companies: AIG and GM, neither of them a bank. It has orchestrated Bear's and WAMU's sales to JP Morgan, Wachovia's sale to Wells Fargo, Merrill's sale to BofA, and the collapse of Lehman. It has also taken over FNMA and FHLMC, neither a bank but both badly regulated government agencies.
The responsibility for Fannie and Freddie's collapse lies squarely with Congress and the Senate.
The Administration is about to screw up Banking Reform too, now. Apparently, Geithner, Summer and Barney Frank were working on a plan but were taken aback by Obama's speech on Thursday with Volcker at his shoulder. With Bernanke's confirmation in doubt now, I am as pessimistic about the economy as I've been in 2008.
It seems like we are moving further left and the message is a populist political reality coming out of Washington. The man was elected with a lot of goodwill and is antagonizing even his staunchest allies.
And don't get me started on Afghanistan, the Middle East, Terrorism, TSA and the travel industry.
Jim, you picked a bad month to stop drinking wine.
About the debt, the situation is quite bad but at the moment the Fed and the Treasury are a lot more concerned about deflation than inflation, so I don't see an overall raise in taxes or a drop in Govt spending anytime soon. That's the good news (Heaven help us).
About the deficit, the only statistic that counts is the debt as percentage of GDP, and in 2010 it is supposed to come down from 12.93% to 8.54%, still the highest since 1946, and where some of the PIIGS countries will be this year (Portugal, Ireland, Italy, Greece and Spain). With a 2.5% GDP growth in the US in the next few years, there is hope that the level might go down to the more manageable 3-4%
Health care, no arguments, the system is broken and needs to be changed. The Obama Administration has completely bungled Health Care Reform though. The new bill looks convoluted and full of compromises to all special interest groups. It now looks like even the compromised bill may be stuck in the Senate forever.
The banking bailout: As of now, the Big Banks have returned a large portion of the Government money. The Treasury Department has invested about $200 billion in hundreds of banks through its Capital Purchase Program in an effort to prop up capital and support new lending. Most Big Banks did not want the money and complained vehemently at the Treasury heavy hand in lending it to them. About $143 billion so far have been returned. The remaining funds are mainly not in the hands of Big Banks but rather are invested with smaller regional banks. The Treasury has received dividends and interest of around $16 billion from its investments plus the Fed has received interest of more than $40 billion.
For a full list: http://bailout.propublica.org/main/list/refunds and http://bailout.propublica.org/main/list/dividends
The government has bailed out two companies: AIG and GM, neither of them a bank. It has orchestrated Bear's and WAMU's sales to JP Morgan, Wachovia's sale to Wells Fargo, Merrill's sale to BofA, and the collapse of Lehman. It has also taken over FNMA and FHLMC, neither a bank but both badly regulated government agencies.
The responsibility for Fannie and Freddie's collapse lies squarely with Congress and the Senate.
The Administration is about to screw up Banking Reform too, now. Apparently, Geithner, Summer and Barney Frank were working on a plan but were taken aback by Obama's speech on Thursday with Volcker at his shoulder. With Bernanke's confirmation in doubt now, I am as pessimistic about the economy as I've been in 2008.
It seems like we are moving further left and the message is a populist political reality coming out of Washington. The man was elected with a lot of goodwill and is antagonizing even his staunchest allies.
And don't get me started on Afghanistan, the Middle East, Terrorism, TSA and the travel industry.
Jim, you picked a bad month to stop drinking wine.
Best
Jacques
Jacques
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JimHow
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Re: Predictions on Bordeaux pricing in the next ten years
Wow that's some great info, Jacques, yes I must agree Obama has been a disappointment, although I've never been able to stand Pelosi and Reid. I don't know if you heard the interview with Shenyang on NPR this morning he's going to be performing in La Boheme next month, although not the performance we will be attending in March. I'm going to have a glass of champagne with you guys at the Met in March. Go Jets!
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Comte Flaneur
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Re: Predictions on Bordeaux pricing in the next ten years
My two cents: By far the biggest problem is the world today is white collar crime. Rich elites conspire with politicians to steal billions from honest hard working people. Obama offered hope but stuck with the same failed and corrupt people. He has achieved virtually nothing. Apart from Berni Madoff nobody has been convicted as a result of the gigantic fraud which caused the global financial crisis.
We need people like Bill Black in government
http://seekingalpha.com/article/182231- ... e-cover-up
I am more worried about inflation than deflation, and I think the ingredients are in place for a revolution.
We need people like Bill Black in government
http://seekingalpha.com/article/182231- ... e-cover-up
I am more worried about inflation than deflation, and I think the ingredients are in place for a revolution.
Re: Predictions on Bordeaux pricing in the next ten years
I am looking forward to La Boheme and a glass of Champagne with you, Jim.JimHow wrote: I'm going to have a glass of champagne with you guys at the Met in March. Go Jets!
Go Jets
p.s. I am terrified of a Palin Brown ticket in 2012. Mainly as a backlash to Obama.
Best
Jacques
Jacques
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JimHow
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Re: Predictions on Bordeaux pricing in the next ten years
Sorry about the Jets, Jacques, that damned Peyton is just too much.
Hey it was a fun ride for NY football fans....
Hey it was a fun ride for NY football fans....
Re: Predictions on Bordeaux pricing in the next ten years
He is just one amazing quarterback! I was telling my son that Peyton in that dome is just like a videogame.
Congrats to the Colts. Go Saints!!
Congrats to the Colts. Go Saints!!
Best
Jacques
Jacques
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JCNorthway
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Re: Predictions on Bordeaux pricing in the next ten years
The Jets had a really great run this year, and I think that Rex Ryan will have them in the chase again next year. He seems to be a good game planner and motivator, and I think they have pretty decent talent. But as was pointed out, Peyton on his home field is pretty hard to beat - though I think I saw some looks of concern in the crowd during the first half.
Jon
Jon
Re: Predictions on Bordeaux pricing in the next ten years
Well I think the problem is people don't realize the tremendous power shift that has occurred. Especially with the recent Supreme Court ruling.Comte Flaneur wrote:My two cents: By far the biggest problem is the world today is white collar crime. Rich elites conspire with politicians to steal billions from honest hard working people. Obama offered hope but stuck with the same failed and corrupt people. He has achieved virtually nothing. Apart from Berni Madoff nobody has been convicted as a result of the gigantic fraud which caused the global financial crisis.
We need people like Bill Black in government
http://seekingalpha.com/article/182231- ... e-cover-up
I am more worried about inflation than deflation, and I think the ingredients are in place for a revolution.
It used to be the land holding gentry held the power. Well now corporations are the land holding gentry.
They run everything including the political process.
We are all indentured servants in some extent.
There will be no revolution allowed to happen.
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Jay Winton
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Re: Predictions on Bordeaux pricing in the next ten years
That Supreme Court ruling ranks right up there with the decision to award Dubya the presidency in 2000-disgraceful! Obama has been president for 1 year in tumultuous times-a little early to render final judgment , IMO. Last year was a terrible year professionally for moi but I did celebrate 20 years of marriage so it all balances out I guess. What worries me is the amount of US debt China controls.
Re: Predictions on Bordeaux pricing in the next ten years
I'm launching a hedge fund. The pitch book is full of all this quant stuff, but in reality (where are my smilies?) the investment allocation is 80% AAPL and 20% TIPS. I've heard this is the industry standard. I'm waiving the 2 for BWEers. I'm not greedy.
Re: Predictions on Bordeaux pricing in the next ten years
Ha!Houndsong wrote:I'm launching a hedge fund. The pitch book is full of all this quant stuff, but in reality (where are my smilies?) the investment allocation is 80% AAPL and 20% TIPS. I've heard this is the industry standard. I'm waiving the 2 for BWEers. I'm not greedy.
I thought the industry standard was 10 year Treasury Strips at 65c and 35% of AAPL calls. Of course there is a ten year lockup and a guarantee of your initial investment back (less fees of course, the fund is doing all the work after all).
Best
Jacques
Jacques
Re: Predictions on Bordeaux pricing in the next ten years
I like the way you think. Mr. Jacques, is it? We're looking for some good minds like yours. The firm is called Calibre Investments. Our motto is "the maximum returns allowed by law."jal wrote:Ha!
I thought the industry standard was 10 year Treasury Strips at 65c and 35% of AAPL calls. Of course there is a ten year lockup and a guarantee of your initial investment back (less fees of course, the fund is doing all the work after all).
Re: Predictions on Bordeaux pricing in the next ten years
Just finished reading Too Big To Fail, on Jacques' recommendation. Excellent read.
Maybe it's time to cash out again until the next big shoe drops.
Maybe it's time to cash out again until the next big shoe drops.
Re: Predictions on Bordeaux pricing in the next ten years
10 years.....
Obama down.
Bordeaux up.
APPL up.
Big shoe down.
Palin sideways.
Obama down.
Bordeaux up.
APPL up.
Big shoe down.
Palin sideways.
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