Thursday 8 September 2011
We don't see things as they are, we see them as we are. ~Anaïs Nin
Worth pondering, generally and in the context of what we think we know about markets.
Gold Stocks...fuel waiting for a spark
http://www.safehaven.com/article/21388/will-gold-equity-investors-strike-gold
Gold stocks are cheap by many measures. The article above sets out the story well. If not as cheap as 2001, then very close. Gold at $1,800 per ounce will send rivers of "fiat dollars" through the cashflow statement.
Are you listening to Mr Market? Or are you happy to buy bank stocks yielding a healthy 9% dividend, with tepid growth prospects?
The stocks have started a move already...those in the know have been buying into the sell-off. The many will come soon enough. Keep an eye on the 600 plus level on the HUI (US index).
Gold stocks are cheap by many measures. The article above sets out the story well. If not as cheap as 2001, then very close. Gold at $1,800 per ounce will send rivers of "fiat dollars" through the cashflow statement.
Are you listening to Mr Market? Or are you happy to buy bank stocks yielding a healthy 9% dividend, with tepid growth prospects?
The stocks have started a move already...those in the know have been buying into the sell-off. The many will come soon enough. Keep an eye on the 600 plus level on the HUI (US index).
Tuesday 23 August 2011
"You can avoid reality, but you cannot avoid the consequences of reality" Ayn Rand
Banks are insolvent...at current asset values and cashflows! Understanding the consequences of reality, you can prepare. Capital is working it out. Are you listening?
Meditate on the questions:
- Why is greece not allowed to fail?
- Why are banks not allowed to fail?
- Why is gold rising?
- Why are banks stocks falling?
- What is capital doing?
- How is all the debt to be re-paid?
- How does a reserve currency solve it's problems?
Wednesday 17 August 2011
The USD - walks a fine line
The USD has been very weak during this stock market correction and the flight into government bonds. This is quite surprising given the problems in Europe. I'm not sure who coined or used the phrase recently, but he said "we walk on the edge of chaos" - he is right, and the USD right now is close to crossing that line. Once it does, GOLD will go higher, reflecting the loss of purchasing power of those dollars. Never has a global reserve currency been at such a point. This may be why Mr Sinclair, an extraordinary "harmonious" market reader, sees the beginnings of a hyperbolic move. Gold looks extended - but that's the definition of hyperbolic - the next month will give us the signal.
Wednesday 10 August 2011
$1,800USD gold - Momentous!
Today gold hit $1,800 in USD terms. It has moved substantially in all currencies. It is a momentous day, because of what it announces to the world about fiat money – money backed by nothing other than the promises of government. Confidence is “officially” broken. The words of the Central bankers and governments are rendered meaningless. Worthless. Worth nothing. Gold now waits for actions. No, it screams for actions.
The sound money men are vindicated today. They warned of the 20 plus year policies that have led us to this point. Ridiculed, by academics and professionals everywhere, they stood alone, in the minority. They still are. But not for much longer! Gold has announced their arrival and before the final and dramatic act is over, monetary history will be learned by many, many more. Including the doubters and the “professionals” stuck, mindlessly in their recent history paradigm. The professionals - smart men? Yes. Wise? No.
The seeds of the great re-awakening are in this momentous day. By the end of this there will be a demand for sound money. It is coming.
I thankfully and gratefully acknowledge the independent and courageous thoughts and teachings of those men and women who understood history and the nature of the current system. They stood for something. They stood alone. I humbly say, thankyou!!
Specifically, I would like to list the following: James Turk, James Sinclair, Marc Faber, James Rogers, Eric King , Eric DeGroot, Dan Norcini, Eric Sprott, John Embry, John Hathaway, Ron Paul, the Austrians, DG, DM, CL....and many more
Monday 18 July 2011
GOLD in USD at $1,604...a siren to those listening
European debt fears have been the major theme for the last couple of months. Now, the US debt ceiling debate begins to take centre stage. Gold screams higher in all currencies, (even the stronger ones eg AUS).
There is no value in sovereign debt. Not at this juncture and at these prices. This won't end well.
Now that the slowdown appears to have arrived, Dalio thinks it will be prolonged. “We are still in a deleveraging period,” he said. “We will be in a deleveraging period for ten years or more.”
Dalio believes that some heavily indebted countries, including the United States, will eventually opt for printing money as a way to deal with their debts, which will lead to a collapse in their currency and in their bond markets. “There hasn’t been a case in history where they haven’t eventually printed money and devalued their currency,” he said. Other developed countries, particularly those tied to the euro and thus to the European Central Bank, don’t have the option of printing money and are destined to undergo “classic depressions,” Dalio said. The recent deal to avoid an immediate debt default by Greece didn’t alter his pessimistic view. “People concentrate on the particular thing of the moment, and they forget the larger underlying forces,” he said. “That’s what got us into the debt crisis. It’s just today, today.”
Dalio’s assessment sounded alarmingly plausible. But when one plays the global financial markets a thorough economic analysis is only the first stage of the game. At least as important is getting the timing right. I asked Dalio when all this would start to come together. “I think late 2012 or early 2013 is going to be another very difficult period,” he said.
There is no value in sovereign debt. Not at this juncture and at these prices. This won't end well.
Now that the slowdown appears to have arrived, Dalio thinks it will be prolonged. “We are still in a deleveraging period,” he said. “We will be in a deleveraging period for ten years or more.”
Dalio believes that some heavily indebted countries, including the United States, will eventually opt for printing money as a way to deal with their debts, which will lead to a collapse in their currency and in their bond markets. “There hasn’t been a case in history where they haven’t eventually printed money and devalued their currency,” he said. Other developed countries, particularly those tied to the euro and thus to the European Central Bank, don’t have the option of printing money and are destined to undergo “classic depressions,” Dalio said. The recent deal to avoid an immediate debt default by Greece didn’t alter his pessimistic view. “People concentrate on the particular thing of the moment, and they forget the larger underlying forces,” he said. “That’s what got us into the debt crisis. It’s just today, today.”
Dalio’s assessment sounded alarmingly plausible. But when one plays the global financial markets a thorough economic analysis is only the first stage of the game. At least as important is getting the timing right. I asked Dalio when all this would start to come together. “I think late 2012 or early 2013 is going to be another very difficult period,” he said.
Tuesday 28 June 2011
Ex FOMC members get it...QE is BS. So why so much of it?
http://www.safehaven.com/article/21495/the-education-gap
On June 22, 2011, the Federal Open Market Committee (FOMC) concluded a two-day meeting. This was followed by the obligatory press release. That statement was followed by a press conference featuring Federal Reserve Chairman Ben S. Bernanke.
CNBC, in the person of Maria Baritomo, interviewed three former FOMC members later in the day:
LEE HOSKINS, President of the Cleveland Federal Reserve branch, 1987-1991.
WILLIAM FORD, President of the Atlanta Federal Reserve branch, 1980-1983.
ROBERT HELLER, Federal Reserve Board of Governors, 1986-1989.
There was no disagreement among the three. There was one subject that all three emphasized: Simple Ben's QEII-Money-Flooding-Zero-Interest-Rate Policy (MFZIRP) has left the economy in a worse state than if he had done nothing at all.
Following are some of their comments:
LEE HOSKINS: I think the Fed is doing great damage by running negative real interest rates so long. That's a misallocation of capital.... The Fed made it real clear today they don't control employment and they don't control real GDP. They should stick with trying to control the one thing they can and that's inflation.
...
WILLIAM FORD: Nothing the Fed has done has helped positive GDP growth. It has not fixed the housing crisis by lowering rates to historic low levels. It has not promoted business investment, borrowing and spending. It's killed the dollar without helping exports a lot and that's causing inflation of import prices to go up. Most importantly, they are hurting America's elderly people by having 14 trillion of personal savings accounts of all kinds subject to interest rates that are 5 percent below where they normally are two years after the recession is over. That's costing elderly people about $300 billion. It's reduced GDP because they don't have the money to spend.
On June 22, 2011, the Federal Open Market Committee (FOMC) concluded a two-day meeting. This was followed by the obligatory press release. That statement was followed by a press conference featuring Federal Reserve Chairman Ben S. Bernanke.
CNBC, in the person of Maria Baritomo, interviewed three former FOMC members later in the day:
LEE HOSKINS, President of the Cleveland Federal Reserve branch, 1987-1991.
WILLIAM FORD, President of the Atlanta Federal Reserve branch, 1980-1983.
ROBERT HELLER, Federal Reserve Board of Governors, 1986-1989.
There was no disagreement among the three. There was one subject that all three emphasized: Simple Ben's QEII-Money-Flooding-Zero-Interest-Rate Policy (MFZIRP) has left the economy in a worse state than if he had done nothing at all.
Following are some of their comments:
LEE HOSKINS: I think the Fed is doing great damage by running negative real interest rates so long. That's a misallocation of capital.... The Fed made it real clear today they don't control employment and they don't control real GDP. They should stick with trying to control the one thing they can and that's inflation.
...
WILLIAM FORD: Nothing the Fed has done has helped positive GDP growth. It has not fixed the housing crisis by lowering rates to historic low levels. It has not promoted business investment, borrowing and spending. It's killed the dollar without helping exports a lot and that's causing inflation of import prices to go up. Most importantly, they are hurting America's elderly people by having 14 trillion of personal savings accounts of all kinds subject to interest rates that are 5 percent below where they normally are two years after the recession is over. That's costing elderly people about $300 billion. It's reduced GDP because they don't have the money to spend.
Thursday 23 June 2011
There are no accidents...ok...very few
NEW YORK (Reuters) - Oil tumbled 6 percent on Thursday to a four-month low after the world's top consumers released emergency oil reserves for the third time ever, a surprise intervention to aid the struggling global economy.
The International Energy Agency announced it would inject 60 million barrels of government-held stocks in the global market, immediately increasing world supply by some 2.5 percent for the next month and sending prices spiraling, with U.S. crude prices erasing all of the year's gains.
The move shocked traders who had been expecting the IEA to give top exporter Saudi Arabia more time to make up for the supply shortfall following OPEC's failed meeting on June 8, when other members blocked Gulf efforts to hike output.
"It comes after the Saudis said they would increase output so it suggests they think this might not be enough," said Helen Henton, head of commodity research for Standard Chartered Bank. "I think it will knock prices lower. I expect prices to be lower a month from now."
Goldman Sachs, whose oil price forecasts are closely watched by markets, said the release of the IEA oil could knock prices for Brent crude down by $10 to $12 a barrel.
The International Energy Agency announced it would inject 60 million barrels of government-held stocks in the global market, immediately increasing world supply by some 2.5 percent for the next month and sending prices spiraling, with U.S. crude prices erasing all of the year's gains.
The move shocked traders who had been expecting the IEA to give top exporter Saudi Arabia more time to make up for the supply shortfall following OPEC's failed meeting on June 8, when other members blocked Gulf efforts to hike output.
"It comes after the Saudis said they would increase output so it suggests they think this might not be enough," said Helen Henton, head of commodity research for Standard Chartered Bank. "I think it will knock prices lower. I expect prices to be lower a month from now."
Goldman Sachs, whose oil price forecasts are closely watched by markets, said the release of the IEA oil could knock prices for Brent crude down by $10 to $12 a barrel.
QE3?...or QE(n)
The debate is raging. To QE or not to QE?
Bill Gross say's a form is coming. Jim Grant sees the same thing. The US economy is floundering that's after 2 version of QE. Without it this would be a modern day GREAT depression. For many americans it already is.
We need to be aware of the politics of such a move. A stealth version is my tip. "Extended period" you better believe it.
Here is what Mr Gold is saying: Meditate on these - Thankyou Jim.
Dear Extended Family,
Today’s markets are exactly what you would expect as we enter illustration number three of the Skier.
Economic statistics are taking a hard fall.
Without QE who will buy US treasury issues?
Without QE where is the basis of world equity markets?
Without QE what do you think the chart of unemployment will look like?
Without QE how do you think the camouflage of the insolvent balance sheets of the financial industry will fare?
Without QE where is mortgage money coming from?
Without QE what do you think home prices will do?
Without QE how will the present Administration and the legislative be re-elected?
Without QE how will the States of the United States of America finance themselves?
Be prepared for a reversal of the decision to curtail QE at the end of June.
Be prepared for a snap back at a greater percentage of QE with a different name.
Be prepared for covert QE between July 1st and late August when stimulation goes wild.
Be prepared for gold to take out $1650 on the upside as magnets at $12,544 come into play.
Be prepared for the Inflationary Depression of all time.
Stand firm on your gold positions.
Stand firm on your discipline of NO margin.
Stand strong in your Swiss Franc and Canadian dollar positions.
Survive the MOPE and market manipulation that is so obvious today.
Respectfully,
Jim
http://www.jsmineset.com/2011/06/23/stand-strong/
Bill Gross say's a form is coming. Jim Grant sees the same thing. The US economy is floundering that's after 2 version of QE. Without it this would be a modern day GREAT depression. For many americans it already is.
We need to be aware of the politics of such a move. A stealth version is my tip. "Extended period" you better believe it.
Here is what Mr Gold is saying: Meditate on these - Thankyou Jim.
Dear Extended Family,
Today’s markets are exactly what you would expect as we enter illustration number three of the Skier.
Economic statistics are taking a hard fall.
Without QE who will buy US treasury issues?
Without QE where is the basis of world equity markets?
Without QE what do you think the chart of unemployment will look like?
Without QE how do you think the camouflage of the insolvent balance sheets of the financial industry will fare?
Without QE where is mortgage money coming from?
Without QE what do you think home prices will do?
Without QE how will the present Administration and the legislative be re-elected?
Without QE how will the States of the United States of America finance themselves?
Be prepared for a reversal of the decision to curtail QE at the end of June.
Be prepared for a snap back at a greater percentage of QE with a different name.
Be prepared for covert QE between July 1st and late August when stimulation goes wild.
Be prepared for gold to take out $1650 on the upside as magnets at $12,544 come into play.
Be prepared for the Inflationary Depression of all time.
Stand firm on your gold positions.
Stand firm on your discipline of NO margin.
Stand strong in your Swiss Franc and Canadian dollar positions.
Survive the MOPE and market manipulation that is so obvious today.
Respectfully,
Jim
http://www.jsmineset.com/2011/06/23/stand-strong/
Stealing from the people...the silent killer
http://www.nasdaq.com/aspx/stock-market-news-story.aspx?storyid=201106211841dowjonesdjonline000414&title=change-to-inflation-measurement-on-table-as-part-of-budget-talksaides
According to congressional aides familiar with the discussions, the proposal would shift how the Consumer Price Index is calculated to reflect how people tend to change spending patterns when prices increase. For example, consumers tend to drive less when gas prices increase dramatically.
Such a move is widely seen by economists as resulting in a slower rise in inflation. That would impact an array of federal programs that are linked to CPI including the Social Security program and income tax brackets set by the federal government.
The proposal could lower federal spending by around $220 billion over the next decade, based on calculations by last year's White House deficit commission, which recommended the change as part of its final report.
By Corey Boles and Janet Hook
WASHINGTON -(Dow Jones)- Lawmakers are considering changing how the Consumer Price Index is calculated, a move that could save perhaps $220 billion and represent significant progress in the ongoing federal debt ceiling and deficit reduction talks.According to congressional aides familiar with the discussions, the proposal would shift how the Consumer Price Index is calculated to reflect how people tend to change spending patterns when prices increase. For example, consumers tend to drive less when gas prices increase dramatically.
Such a move is widely seen by economists as resulting in a slower rise in inflation. That would impact an array of federal programs that are linked to CPI including the Social Security program and income tax brackets set by the federal government.
The proposal could lower federal spending by around $220 billion over the next decade, based on calculations by last year's White House deficit commission, which recommended the change as part of its final report.
Monday 30 May 2011
Mr Sinclair lays it down simply - someone's going to get hurt...it's always that way!
"The risk of not stimulating is stagflation at a spiritual level. The risk of stimulating is stagflation at a spiritual level. The risk of doing nothing is both an economic and currency collapse of biblical proportions.
This is what the three illustrations of the skier teach. Should the Fed lose control of this, which is predictable, then currency induced cost push inflation would take gold to Martin Armstrong’s $12,500.
The odds are 70/30 right now that hyperinflation occurs. That takes gold over $1650. If the odds shift then gold starts a run to balance the International Balance Sheet of the USA and will secure Martin Armstrong’s target of $12,500."
Mr J E B Sinclair
www.jsmineset.com
This is what the three illustrations of the skier teach. Should the Fed lose control of this, which is predictable, then currency induced cost push inflation would take gold to Martin Armstrong’s $12,500.
The odds are 70/30 right now that hyperinflation occurs. That takes gold over $1650. If the odds shift then gold starts a run to balance the International Balance Sheet of the USA and will secure Martin Armstrong’s target of $12,500."
Mr J E B Sinclair
www.jsmineset.com
Derivatives - financial instruments, multiples of the real economy!
Mobius Says Fresh Financial Crisis Around Corner Amid Volatile Derivatives
By - May 30, 2011
Mark Mobius, executive chairman of Templeton Asset Management’s emerging markets group, said another financial crisis is inevitable because the causes of the previous crisis haven’t been resolved.
“There is definitely going to be another financial crisis around the corner because we haven’t solved any of the things that caused the previous crisis,” Mobius said at the Foreign Correspondents’ Club of Japan in Tokyo today in response to a question about price swings. “Are the derivatives regulated? No. Are you still getting growth in derivatives? Yes.”
The total value of derivatives in the world exceeds total global gross domestic product by a factor of 10, Mobius said. With that volume of bets in different directions, volatility and equity market crises will occur, he said.
The global financial crisis three years ago was caused in part by the proliferation of derivative products tied to U.S. home loans that ceased performing, triggering billions of dollars in writedowns and leading to the collapse of Lehman Brothers Holdings Inc. in September 2008. The MSCI World (MXWO) Index tumbled 38 percent in the six months after Lehman’s collapse. The freezing of global credit markets caused central banks around the world to pump cash into the financial system to encourage lending.
The largest U.S. banks have grown larger since the financial crisis, and the number of “too-big-to-fail” banks will increase by 40 percent over the next 15 years, according to data compiled by Bloomberg.
“There is definitely going to be another financial crisis around the corner because we haven’t solved any of the things that caused the previous crisis,” Mobius said at the Foreign Correspondents’ Club of Japan in Tokyo today in response to a question about price swings. “Are the derivatives regulated? No. Are you still getting growth in derivatives? Yes.”
The total value of derivatives in the world exceeds total global gross domestic product by a factor of 10, Mobius said. With that volume of bets in different directions, volatility and equity market crises will occur, he said.
The global financial crisis three years ago was caused in part by the proliferation of derivative products tied to U.S. home loans that ceased performing, triggering billions of dollars in writedowns and leading to the collapse of Lehman Brothers Holdings Inc. in September 2008. The MSCI World (MXWO) Index tumbled 38 percent in the six months after Lehman’s collapse. The freezing of global credit markets caused central banks around the world to pump cash into the financial system to encourage lending.
The largest U.S. banks have grown larger since the financial crisis, and the number of “too-big-to-fail” banks will increase by 40 percent over the next 15 years, according to data compiled by Bloomberg.
http://www.bloomberg.com/news/2011-05-30/mobius-says-fresh-financial-crisis-around-corner-amid-volatile-derivatives.html
Tuesday 10 May 2011
An hour - well worth it!
An excellent video explaining the problems of the monetary system...in a very enthusiastic way!
a Great education!
http://www.goldmoney.com/gold-research-videos.html
Jesús Huerta de Soto, author of the thought-provoking book on economics 'Money, Bank Credit and Economic Cycles'
a Great education!
http://www.goldmoney.com/gold-research-videos.html
Jesús Huerta de Soto, author of the thought-provoking book on economics 'Money, Bank Credit and Economic Cycles'
Gold at $1,510 and Silver at $38.25 today after a very bad week and half...
Mr Gold is taking it in his stride!...
Today’s action totally eliminates any and all remaining concerns for the price of gold. Today’s action lights up the $1764 Angel in gold.
Technical damage always requires technical repair. That type of price action is a perfect set up for a major launch of the gold price in June.
Relax and enjoy your protection and insurance positions.
Regards,
Jim
Today’s action totally eliminates any and all remaining concerns for the price of gold. Today’s action lights up the $1764 Angel in gold.
Technical damage always requires technical repair. That type of price action is a perfect set up for a major launch of the gold price in June.
Relax and enjoy your protection and insurance positions.
Regards,
Jim
it's good to be on top!...
Goldman Sachs Traders Lost Money on One Day in First Quarter
By Christine Harper
After losing money on 13 days in the fourth quarter, Goldman Sachs’s traders lost between $25 million and $50 million on one occasion in the first quarter, according to the New York- based firm’s quarterly filing with the Securities and Exchange Commission. They generated more than $100 million on 32 days out of 62 total days, the filing showed.
Goldman Sachs’s performance beats Morgan Stanley, whose traders lost money on three days and made more than $100 million on 10 days, according to a filing yesterday. It falls short of JPMorgan Chase & Co. and Bank of America Corp., which both reported zero days of losses in the quarter.
Tuesday 26 April 2011
Wall Street Journal - "Recognition phase"
Editorial in the WSJ:
http://online.wsj.com/article/SB10001424052748703983704576277431813826152.html?mod=WSJ_Opinion_LEFTTopOpinion
"The solution to the problem is equally simple. First, in order to limit Fed discretion, the dollar must be made convertible to a weight unit of gold by congressional statute—at a price that preserves the level of nominal wages in order to avoid the threat of deflation. Second, the government must at the same time be prohibited from financing its deficit at the Fed or in the banks—both at home or abroad. Third, only in the free market for true savings—undisguised by inflationary new Federal Reserve money and banking system credit—will interest rates signal to voters the consequences of growing federal government deficits."
http://online.wsj.com/article/SB10001424052748703983704576277431813826152.html?mod=WSJ_Opinion_LEFTTopOpinion
"The solution to the problem is equally simple. First, in order to limit Fed discretion, the dollar must be made convertible to a weight unit of gold by congressional statute—at a price that preserves the level of nominal wages in order to avoid the threat of deflation. Second, the government must at the same time be prohibited from financing its deficit at the Fed or in the banks—both at home or abroad. Third, only in the free market for true savings—undisguised by inflationary new Federal Reserve money and banking system credit—will interest rates signal to voters the consequences of growing federal government deficits."
Saturday 16 April 2011
Meanwhile in the land of OZ...the Wizard shows us...price gravity does exist in Australian housing...
http://www.heraldsun.com.au/ipad/melbourne-home-property-prices-plunge/story-fn6bfkm6-1226039937945
sentiment has turned/is turning...game over....RBA may even have to drop rates later this year...Aussie dollar gold....may be giving us a clue...
trading at $1,405...about $100 off the top...targetting $1,800 plus
http://www.goldpreciousmetals.com/charts_historic_aud.asp
sentiment has turned/is turning...game over....RBA may even have to drop rates later this year...Aussie dollar gold....may be giving us a clue...
trading at $1,405...about $100 off the top...targetting $1,800 plus
http://www.goldpreciousmetals.com/charts_historic_aud.asp
Something historic this way comes...the precious metals are shouting...
Gold at $1,486; Silver at $43.05...(in USD) terms on Friday 15th April in US...
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/4/14_Jim_Grant_-_US_Will_Resolve_Debt_by_Returning_to_Gold_Standard.html
In the above interview on Eric King's website, Jim Grant, put's a value on gold in his own style...
“To me the gold price takes the form of a very uncomplicated formula, and all you have to do is divide one by ‘n.’ And ‘n’, I’m glad you ask, ‘n’ is the world’s trust in the institution of paper money and in the capacity of people like Ben Bernanke to manage it. So the smaller ‘n’, the bigger the price. One divided by a receding number is the definition of a bull market.
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/4/14_Jim_Grant_-_US_Will_Resolve_Debt_by_Returning_to_Gold_Standard.html
In the above interview on Eric King's website, Jim Grant, put's a value on gold in his own style...
“To me the gold price takes the form of a very uncomplicated formula, and all you have to do is divide one by ‘n.’ And ‘n’, I’m glad you ask, ‘n’ is the world’s trust in the institution of paper money and in the capacity of people like Ben Bernanke to manage it. So the smaller ‘n’, the bigger the price. One divided by a receding number is the definition of a bull market.
Wednesday 6 April 2011
Saturday 2 April 2011
Kocherlakota...The CB has to bail out the government sometimes...there you have it!
Central Bank Independence and Sovereign DefaultNarayana Kocherlakota - President
Federal Reserve Bank of Minneapolis
Wharton Conference
Philadelphia, Pennsylvania
April 1, 2011
exerpt below...
More subtly, regardless of the FA’s solvency, sovereign debt issues can fail simply through a co-ordination failure among investors. If I, as an investor, don’t anticipate that others will buy into the debt issue, I won’t either. In this sense, sovereign debt issues may be susceptible to suboptimal “runs”. The CB can eliminate this possibility by ensuring the nominal promises of the FA whenever the FA is threatened with default.
Thus, I see trade-offs. On the one hand, the CB is known to be willing to intervene to keep the FA solvent, then inflation is necessarily shaped by fiscal considerations and by the short-run incentives of elected officials. We know from many years of theoretical and empirical research that this effect is not a desirable one. On the other hand, if the CB is fully committed to allow the FA to default if necessary, then even optimal debt management by the FA may end up exposing the country to troubling risks.
Let me wrap up. I’ve argued that even if the fiscal authority borrows exclusively in its country’s own currency, the central bank can have a large amount of control over the price level. But the central bank can only achieve that control if it is willing to commit to letting the fiscal authority default. Such a commitment may expose the country to risks of short-term and medium-term output losses. How this trade-off should best be resolved awaits future research. But I suspect that it may be optimal for central banks to guarantee fiscal authority debts in some situations. If so, we again have to think of price level determination as something that is done jointly by the fiscal authority and the central bank — just as Sargent and Wallace taught us 30 years ago.
Federal Reserve Bank of Minneapolis
Wharton Conference
Philadelphia, Pennsylvania
April 1, 2011
exerpt below...
More subtly, regardless of the FA’s solvency, sovereign debt issues can fail simply through a co-ordination failure among investors. If I, as an investor, don’t anticipate that others will buy into the debt issue, I won’t either. In this sense, sovereign debt issues may be susceptible to suboptimal “runs”. The CB can eliminate this possibility by ensuring the nominal promises of the FA whenever the FA is threatened with default.
Thus, I see trade-offs. On the one hand, the CB is known to be willing to intervene to keep the FA solvent, then inflation is necessarily shaped by fiscal considerations and by the short-run incentives of elected officials. We know from many years of theoretical and empirical research that this effect is not a desirable one. On the other hand, if the CB is fully committed to allow the FA to default if necessary, then even optimal debt management by the FA may end up exposing the country to troubling risks.
Let me wrap up. I’ve argued that even if the fiscal authority borrows exclusively in its country’s own currency, the central bank can have a large amount of control over the price level. But the central bank can only achieve that control if it is willing to commit to letting the fiscal authority default. Such a commitment may expose the country to risks of short-term and medium-term output losses. How this trade-off should best be resolved awaits future research. But I suspect that it may be optimal for central banks to guarantee fiscal authority debts in some situations. If so, we again have to think of price level determination as something that is done jointly by the fiscal authority and the central bank — just as Sargent and Wallace taught us 30 years ago.
we, the sheeple get fleeced...
If you want to understand better why so many states—from New York to Wisconsin to California—are teetering on the brink of bankruptcy, consider this depressing statistic: Today in America there are nearly twice as many people working for the government (22.5 million) than in all of manufacturing (11.5 million). This is an almost exact reversal of the situation in 1960, when there were 15 million workers in manufacturing and 8.7 million collecting a paycheck from the government.
It gets worse. More Americans work for the government than work in construction, farming, fishing, forestry, manufacturing, mining and utilities combined. We have moved decisively from a nation of makers to a nation of takers. Nearly half of the $2.2 trillion cost of state and local governments is the $1 trillion-a-year tab for pay and benefits of state and local employees. Is it any wonder that so many states and cities cannot pay their bills?
Tuesday 29 March 2011
Investing Themes - As investors, from time to time we have to change our thinking about what is good as opposed to what was good.
Below is an exerpt of an article written in 2004. The timing may have been off...but when compared to say gold, commodities, even real estate...the banks have been a poor relative investment...I missed the explosion in credit would give them a "last hurrah" - it did. I suspect their glory days are over!...Utilities anyone?
The past is certain, the future obscure.
Thales (640 AD - 546 AD)
...(edit).
The banks are a case in point. You would be in the majority to think that investing in Banks has been a good investment over the last 10 years - and you would be correct! But if we look more closely at the performance of banks over the last 2 years we see things may have changed. We all know that lending has grown at tremendous rates and over the last few years, banks have continued to lend an ever increasing amount, as the growth in residential property borrowing verifies.
On this basis you would assume that all Bank share prices would be well in excess of that achieved 2 years ago. Not so. The “Big 4” banks are all under their record highs and their recent performance is nothing to get excited about – especially if you consider the high volatility they have shown. ...
Could the bull market in “debt” be coming to an end and could this lead to lower profits (or lower growth in profits) for the banks? It is possible. (comment: years early CT! :-))
2011:
- higher capital adequacy
- higher wholesale funding
- lower debt demand/growth
- governments demanding their pound of flesh
headwinds!!
2011:
- higher capital adequacy
- higher wholesale funding
- lower debt demand/growth
- governments demanding their pound of flesh
headwinds!!
Australia - the lucky country indeed!
The seeds of Australia's own inevitable "calamity" are well and truly being watered.
Having ridden on the sheep's back over a 100 years ago, we now ride on the Asian Tiger (how ironic given our historic policy of "2 Wongs don't make a white"). What a ride!
Resource millionaires have been on the rise for the last decade. And so has the wealthy Australian house owner! But I believe rising home prices over the last 10 years, have masked a number of flaws in our economy:
- Wages growth has been marginal at the middle to lower end
- It has been acceptable while house prices have gone up - Serious income inequality is brewing.
- Debt grows and grows
Australians, having seen the economy stay resilient, believe the government all powerful and able to come to the rescue, having forgotten the wastage of programs like the pink batts fiasco.
The banks today, lend ever increasing amounts, on higher LVR's, using values that are at extreme levels (as identified by Jeremy Grantham of GMO). But have no concern dear Aussie, our banking system is "safe".
The governments (state and federal) assume their tax revenues are somehow "normal" and continue to increase the range of programs and subsidies creating a welfare psychology at higher and higher levels of income. And in the last few weeks, the bloated federal government now proposes a carbon tax - capital knows when it is not liked!
The cost structure in this country is now at high levels. Try to get reasonable service in the tourist destinations - no wonder people are heading to Asia! Add mechanics on $120 to $180 per hour, truckdrivers making a $100k and yes you have a boom.
All is good until it isn't.
So are we the lucky country, or just a country with some luck? Our beaches are nice though - especially in Tasmania!
Having ridden on the sheep's back over a 100 years ago, we now ride on the Asian Tiger (how ironic given our historic policy of "2 Wongs don't make a white"). What a ride!
Resource millionaires have been on the rise for the last decade. And so has the wealthy Australian house owner! But I believe rising home prices over the last 10 years, have masked a number of flaws in our economy:
- Wages growth has been marginal at the middle to lower end
- It has been acceptable while house prices have gone up - Serious income inequality is brewing.
- Debt grows and grows
Australians, having seen the economy stay resilient, believe the government all powerful and able to come to the rescue, having forgotten the wastage of programs like the pink batts fiasco.
The banks today, lend ever increasing amounts, on higher LVR's, using values that are at extreme levels (as identified by Jeremy Grantham of GMO). But have no concern dear Aussie, our banking system is "safe".
The governments (state and federal) assume their tax revenues are somehow "normal" and continue to increase the range of programs and subsidies creating a welfare psychology at higher and higher levels of income. And in the last few weeks, the bloated federal government now proposes a carbon tax - capital knows when it is not liked!
The cost structure in this country is now at high levels. Try to get reasonable service in the tourist destinations - no wonder people are heading to Asia! Add mechanics on $120 to $180 per hour, truckdrivers making a $100k and yes you have a boom.
All is good until it isn't.
So are we the lucky country, or just a country with some luck? Our beaches are nice though - especially in Tasmania!
This cannot end well...it won't
http://www.fgmr.com/golds-hyperbolic-trajectory.html
It will be a gold blow-off...the question is at what price?
Mr Turk makes a case that gold is in the midst of a hyperbolic move.
It will be a gold blow-off...the question is at what price?
Mr Turk makes a case that gold is in the midst of a hyperbolic move.
Saturday 26 March 2011
Not many understand the gold tune...Those that do hear it clearly...Thankyou Dan!
http://traderdannorcini.blogspot.com/2011_03_23_archive.html
The only reason that gold has a sustained price rise is because of a lack of confidence in the monetary system. It does not rise sharply because of such things as jewelry demand or industrial demand - it rises when fear, distrust, doubt, suspicion and uncertainty over Central Bank policy reigns. It rises when REAL interest rates are negative and investors understand the insidious process of currency debauchment practiced by these monetary authorities is underway. It thus cries aloud and issues a warning to those who can hear it and what it shouts displeases many Central Bankers because they are among those who while they despise its message, are all too keenly able to hear that message.
The only reason that gold has a sustained price rise is because of a lack of confidence in the monetary system. It does not rise sharply because of such things as jewelry demand or industrial demand - it rises when fear, distrust, doubt, suspicion and uncertainty over Central Bank policy reigns. It rises when REAL interest rates are negative and investors understand the insidious process of currency debauchment practiced by these monetary authorities is underway. It thus cries aloud and issues a warning to those who can hear it and what it shouts displeases many Central Bankers because they are among those who while they despise its message, are all too keenly able to hear that message.
Tuesday 22 March 2011
Mr J Hussman...weekly is a must read...
My only disagreement might be that any of this is actually "water under the bridge," because the same basic policies that produced the bubble are still very active. These policies have driven financial assets to rich valuations and low prospective returns, which compete sufficiently well with zero interest rates, but offer little for long-term investors. Meanwhile, the financial sector has a continuing overhang of delinquent and unforeclosed homes, which the FASB still allows banks to carry on their books at amortized cost. When the main source of "prosperity" is the policy-induced elevation of asset prices - rather than the allocation of savings into productive investment - it helps to remember that present gratification often equates to future unpleasantness.
Money is not reliable...
http://www.financialsense.com/contributors/robert-blumen/value-investors-hate-gold
Value investors like Grantham only want to buy something when they have a quantitative estimate of its intrinsic value. While this rule works well enough during periods of stability, it provides no guidance for rational action when the monetary system is no longer able to provide reliable money prices. Value investors have successfully invested in countries experiencing a monetary breakdown by using an external stable currency to calculate prices. The present crisis, which is global, threatens to disrupt all of the external stable currencies, making them less useful for this purpose.
Value investors like Grantham only want to buy something when they have a quantitative estimate of its intrinsic value. While this rule works well enough during periods of stability, it provides no guidance for rational action when the monetary system is no longer able to provide reliable money prices. Value investors have successfully invested in countries experiencing a monetary breakdown by using an external stable currency to calculate prices. The present crisis, which is global, threatens to disrupt all of the external stable currencies, making them less useful for this purpose.
Sunday 20 March 2011
Capital Talks, while BS sells papers...
http://www.smh.com.au/business/buy-iodine-sell-gold-and-forget-the-aussie-20110318-1c005.html
What might be amazing to gold’s true believers is how comparatively little gold has done while the Middle East was becoming more volatile, let alone when catastrophe struck Japan. If all the scary stories about oil and nuclear meltdown can’t move the yellow metal much, what will convince the next fool to pay more for the yellow metal?
Meanhwhile the Billionaires...Soros, Paulson, Tudor Jones, Dalio et al are holders of the barbarous relic...
Even the strong Aus dollar not enough to hold the shiny truth teller down...The truth? Debt is killing the globe!
What might be amazing to gold’s true believers is how comparatively little gold has done while the Middle East was becoming more volatile, let alone when catastrophe struck Japan. If all the scary stories about oil and nuclear meltdown can’t move the yellow metal much, what will convince the next fool to pay more for the yellow metal?
Meanhwhile the Billionaires...Soros, Paulson, Tudor Jones, Dalio et al are holders of the barbarous relic...
Even the strong Aus dollar not enough to hold the shiny truth teller down...The truth? Debt is killing the globe!
Thursday 17 March 2011
USD looks tired...safe haven no more?
The USD has been weak for some months - barely able to rally. The recent "risk off" seen in the markets, linked to the Japanes earthquake, has not flown through to USD strength. Something is wrong. As I type it is nudging 76 on the index. It will fall - it must. The only/last hope to keep rates low. It is now 75.86! A close under 76 over night and another leg down may be upon us.
Gold is at $1,401
Gold is at $1,401
Tuesday 15 March 2011
"Gold in a bubble"...Mr Sprott in the negative corner
http://www.sprott.com/Docs/MarketsataGlance/2011/02%20_11_Debunking%20the%20Gold%20Bubble%20Myth.pdf
Some very good measures in this article to put this argument into perspective. Mr Sprott also likes silver for the rest of the decade - better than gold.
US equity bear market still in tact.
Meanwhile,
Today Gold is at $1,408, Silver at $34.68
Overseas equity markets are taking a battering.
Japan down nearly 20% in 2 days!
Some very good measures in this article to put this argument into perspective. Mr Sprott also likes silver for the rest of the decade - better than gold.
US equity bear market still in tact.
Meanwhile,
Today Gold is at $1,408, Silver at $34.68
Overseas equity markets are taking a battering.
Japan down nearly 20% in 2 days!
Saturday 12 March 2011
Japanese earthquake
Our deepest sympathies to those with family and friend affected by the enormous earthquake that hit Japan on Friday. Natures overwhelming power has humbled us once more.
What will be the long term consequences? Consider them. Not all are the obvious ones.
What will be the long term consequences? Consider them. Not all are the obvious ones.
Your weekend listening
Mr Jim Sinclair - known as Mr Gold! Each time he speaks there is a gem or two to savour.
http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2011/3/11_Jim_Sinclair.html
Mr Rob McEwen - a gold executive putting his money where his ideas/thoughts are:
http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2011/3/12_Rob_McEwen.html
http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2011/3/11_Jim_Sinclair.html
Mr Rob McEwen - a gold executive putting his money where his ideas/thoughts are:
http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2011/3/12_Rob_McEwen.html
Thursday 10 March 2011
QE3??
The debate has started amongst the Fed Reserve members as to whether they will or won't QE3? It's interesting to see this debate take place in public. Are they just telegraphing their votes to the markets so that there is no surprise? I suspect they are.
Bill Gross of PIMCO, correctly points out that without the aid of the Fed rates should be at least 1.5% higher. Then he tells the world he has sold all his holdings of government treasuries. Long terms rates are going up - it's just a question of time.
http://www.pimco.com/Pages/Two-Bits-Four-Bits-Six-Bits-a-Dollar.aspx
Bill says:
"As a counter, one would argue (and I would partially agree) that the U.S. and indeed developed global economies must keep yields artificially low for some time if post Lehman healing is to take place. But that of course is the point. By eliminating QE II, the Fed would be ripping a Band-Aid off a partially healed scab. Ouch! 25 basis point policy rates for an “extended period of time” may not be enough to entice arbitrage Treasury buyers, nor bond fund asset allocators to reenter a Treasury market at today’s artificially low yields. Yields may have to go higher, maybe even much higher to attract buying interest."
Meanwhile in Europe the talk is getting tough by the ECB that they will begin raising rates later this year.
I'm speculating, but QE3 in some form is highly likely. Markets are not sure and volatility is starting to increase. The next couple of months are going to get interesting.
Bill Gross of PIMCO, correctly points out that without the aid of the Fed rates should be at least 1.5% higher. Then he tells the world he has sold all his holdings of government treasuries. Long terms rates are going up - it's just a question of time.
http://www.pimco.com/Pages/Two-Bits-Four-Bits-Six-Bits-a-Dollar.aspx
Bill says:
"As a counter, one would argue (and I would partially agree) that the U.S. and indeed developed global economies must keep yields artificially low for some time if post Lehman healing is to take place. But that of course is the point. By eliminating QE II, the Fed would be ripping a Band-Aid off a partially healed scab. Ouch! 25 basis point policy rates for an “extended period of time” may not be enough to entice arbitrage Treasury buyers, nor bond fund asset allocators to reenter a Treasury market at today’s artificially low yields. Yields may have to go higher, maybe even much higher to attract buying interest."
Meanwhile in Europe the talk is getting tough by the ECB that they will begin raising rates later this year.
I'm speculating, but QE3 in some form is highly likely. Markets are not sure and volatility is starting to increase. The next couple of months are going to get interesting.
Tuesday 8 March 2011
Ponder this number a few times...
http://www.washingtontimes.com/news/2011/mar/7/government-posts-biggest-monthly-deficit-ever/
The federal government posted its largest monthly deficit in history in February, a $223 billion shortfall that put a sharp point on the current fight on Capitol Hill about how deeply to cut this year’s spending.
Debts exceed any capacity to pay...holes in budgets are massive...if the Fed stops QE...the house of cards crumbles! Ponder quietly.
The federal government posted its largest monthly deficit in history in February, a $223 billion shortfall that put a sharp point on the current fight on Capitol Hill about how deeply to cut this year’s spending.
Debts exceed any capacity to pay...holes in budgets are massive...if the Fed stops QE...the house of cards crumbles! Ponder quietly.
Monday 7 March 2011
China & GOLD
http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=atx3Bl2Zvfas
March 2 (Bloomberg) -- Gold purchases in China, the world’s largest producer, climbed to 200 metric tons in the first two months of 2011
some interesting stas in this article...
Last year about 500 tons...this year on target to buy 1,200 tons - nearly 50% of global production. Extraordinary!!!
March 2 (Bloomberg) -- Gold purchases in China, the world’s largest producer, climbed to 200 metric tons in the first two months of 2011
some interesting stas in this article...
Last year about 500 tons...this year on target to buy 1,200 tons - nearly 50% of global production. Extraordinary!!!
Greeks have Moody Blues...while Egyptians just The blues!
Greece Debt Cut Three Steps by Moody’s on Default Risk
http://noir.bloomberg.com/apps/news?pid=20601087&sid=aZ3F_H3Ccc.w&pos=4
3 whole steps in one go?!...where were they?
The Ministry of Finance sold 3 billion pounds ($509 million) of bonds yesterday, 1.5 billion pounds less than planned, as yields on 266-day notes climbed 31 basis points from the last auction to 12.47 percent, data compiled by Bloomberg show.
http://www.businessweek.com/news/2011-03-06/egypt-bonds-gdrs-sink-as-bourse-shutdown-probe-deters-funds.html
Sovereign debt repulse...a 24 volume set!
http://noir.bloomberg.com/apps/news?pid=20601087&sid=aZ3F_H3Ccc.w&pos=4
3 whole steps in one go?!...where were they?
The Ministry of Finance sold 3 billion pounds ($509 million) of bonds yesterday, 1.5 billion pounds less than planned, as yields on 266-day notes climbed 31 basis points from the last auction to 12.47 percent, data compiled by Bloomberg show.
http://www.businessweek.com/news/2011-03-06/egypt-bonds-gdrs-sink-as-bourse-shutdown-probe-deters-funds.html
Sovereign debt repulse...a 24 volume set!
DEBT DEBT DEBT...GOLD GOLD GOLD
http://goldswitzerland.com/index.php/apres-nous-le-deluge-evg/?utm_source=subscriber&utm_medium=rss&utm_campaign=rss
excellent article by Egon von Greyerz...with a dark conclusion!! A must read
"The almost vertical rise of the CCI is one of the best indicators of hyperinflation being imminent. A catastrophe of astronomical proportions is looming. This will hit the world at a time when there is no capacity whatsoever to take any real measures that could alleviate the problems."
excellent article by Egon von Greyerz...with a dark conclusion!! A must read
"The almost vertical rise of the CCI is one of the best indicators of hyperinflation being imminent. A catastrophe of astronomical proportions is looming. This will hit the world at a time when there is no capacity whatsoever to take any real measures that could alleviate the problems."
Wednesday 2 March 2011
When Private goes public - ding ding ding?
This article decribes Glencore as the Goldman Sachs of Commodities. Why list, why now? The last big Pivate equity IPO was Blackstone in 2007 - good timing! Is this also a good time to de-risk if you are long term owner of a commodity business? You can make an argument for access to capital markets etc etc but taking some money off the table probably makes sense even if they are early.
http://uk.reuters.com/article/2011/02/25/uk-glencore-idUKTRE71O1AX20110225
The firm currently operates as a privately held partnership, with staff sharing the profits according to a performance-based incentives scheme. Sources familiar with Glencore's plans say it may list 20 percent of the company, possibly split between the London Stock Exchange and Hong Kong. Such a listing could yield up to $16 billion and value the firm at as much as $60 billion.
http://uk.reuters.com/article/2011/02/25/uk-glencore-idUKTRE71O1AX20110225
The firm currently operates as a privately held partnership, with staff sharing the profits according to a performance-based incentives scheme. Sources familiar with Glencore's plans say it may list 20 percent of the company, possibly split between the London Stock Exchange and Hong Kong. Such a listing could yield up to $16 billion and value the firm at as much as $60 billion.
Tuesday 1 March 2011
"A man in a suit"
This is how Jim Grant described either Ben Bernanke or Alan Greenspan. Was he putting them down? Not really, just explaining that their powers of controlling an economy through an interest rate, for a desired outcome were not superhuman - more importantly that they were probably subject to flaw. Mr Williams is probably a nice guy - never forget he is just a man in a suit.
http://www.bloomberg.com/news/2011-03-01/san-francisco-fed-names-research-head-williams-president-to-succeed-yellen.html
John C. Williams, research director for the Federal Reserve Bank of San Francisco, was named as the bank’s new president to succeed Janet Yellen, who became the Fed board’s vice chairman in October.
The move is effective today, said bank spokeswoman Carol Eckert. Williams, 48, has served as executive vice president and research director since 2009.
The economist, who has worked in the Fed system since 1994, joins the central bank’s efforts to bolster growth and reverse a jobless rate stuck at 9 percent or more since May 2009. He represents a nine-state western region that accounts for 20 percent of the economy and has had 73 commercial banks fail since 2004.
http://www.bloomberg.com/news/2011-03-01/san-francisco-fed-names-research-head-williams-president-to-succeed-yellen.html
John C. Williams, research director for the Federal Reserve Bank of San Francisco, was named as the bank’s new president to succeed Janet Yellen, who became the Fed board’s vice chairman in October.
The move is effective today, said bank spokeswoman Carol Eckert. Williams, 48, has served as executive vice president and research director since 2009.
The economist, who has worked in the Fed system since 1994, joins the central bank’s efforts to bolster growth and reverse a jobless rate stuck at 9 percent or more since May 2009. He represents a nine-state western region that accounts for 20 percent of the economy and has had 73 commercial banks fail since 2004.
USD v USB(onds)
USD Index at 76.76...as I type;
Lower yields (the aim of the Fed) will go hand in hand with a lower dollar...for now.
Then one day it will be higher yields for as far as the eye can see...
Lower dollar will go hand in hand with higher gold/silver
Gold at $1,412 as I type...Mr Gold says keep watch!
Lower yields (the aim of the Fed) will go hand in hand with a lower dollar...for now.
Then one day it will be higher yields for as far as the eye can see...
Lower dollar will go hand in hand with higher gold/silver
Gold at $1,412 as I type...Mr Gold says keep watch!
The wise men (with the grey hair) are saying...
Jim Rogers:
"The best sector that I know in the world economy is going to continue to be commodities," Rogers said Monday. "We have huge shortages of everything developing. The facts are we are running out of known reserves of everything and shortages are going to get worse," he added.
http://www.businessinsider.com/jim-rogers-sees-continuance-of-bull-market-for-commodities-2011-2
M Faber:
The private sector debt growth has slowed down but it has turned up again. At the same time we have, of course, a huge expansion in government debt. That should not be forgotten.
These crackup booms don’t last. They are not sustainable but they can last six months to one year to 18 months and then a renewed setback occurs in the global economy.
http://www.moneycontrol.com/news/fii-view/oil-may-gosubstantiallycurrent-levels-marc-faber_524875.html
J Grantham:
“As a simple rule, the market will tend to rise as long as short rates are kept low. This seems likely to be the case for eight more months and, therefore, we have to be prepared for the market to rise and to have a risky bias. . . . All of the famous bubbles broke, but only after short rates had started to rise, sometimes for quite a while. . . . The very famous, very large bubbles also often give another type of warning. Probably knowing they are dancing close to the cliff and yet reluctant to stop, late in bubbles investors often migrate to safer stocks, and risky stocks betray their high betas by underperforming. We can get into the details another time, but suffice it to say that there are usually warnings, sometimes several, before a bubble breaks. Overvaluation must be present to define a bubble, but it is not a useful warning in and of itself.”
http://www.gmo.com/
"The best sector that I know in the world economy is going to continue to be commodities," Rogers said Monday. "We have huge shortages of everything developing. The facts are we are running out of known reserves of everything and shortages are going to get worse," he added.
http://www.businessinsider.com/jim-rogers-sees-continuance-of-bull-market-for-commodities-2011-2
M Faber:
The private sector debt growth has slowed down but it has turned up again. At the same time we have, of course, a huge expansion in government debt. That should not be forgotten.
These crackup booms don’t last. They are not sustainable but they can last six months to one year to 18 months and then a renewed setback occurs in the global economy.
http://www.moneycontrol.com/news/fii-view/oil-may-gosubstantiallycurrent-levels-marc-faber_524875.html
J Grantham:
“As a simple rule, the market will tend to rise as long as short rates are kept low. This seems likely to be the case for eight more months and, therefore, we have to be prepared for the market to rise and to have a risky bias. . . . All of the famous bubbles broke, but only after short rates had started to rise, sometimes for quite a while. . . . The very famous, very large bubbles also often give another type of warning. Probably knowing they are dancing close to the cliff and yet reluctant to stop, late in bubbles investors often migrate to safer stocks, and risky stocks betray their high betas by underperforming. We can get into the details another time, but suffice it to say that there are usually warnings, sometimes several, before a bubble breaks. Overvaluation must be present to define a bubble, but it is not a useful warning in and of itself.”
http://www.gmo.com/
This cannot end well - it won't
Mr Hussman writes one of the most interesting and well thought out pieces - every single week. Whether you are a gold bug, equity analyst, or a student of the markets/economy they are always worth a read.
Thankyou John!
This week:
Cash and Credit - Implications for the Financial Markets ...John P. Hussman, Ph.D.
http://www.hussmanfunds.com/wmc/wmc110228.htm
Thankyou John!
This week:
Cash and Credit - Implications for the Financial Markets ...John P. Hussman, Ph.D.
http://www.hussmanfunds.com/wmc/wmc110228.htm
Monday 28 February 2011
It takes a Ponzi to know a Ponzi...have a read and see how fraud flourished
http://nymag.com/news/features/berniemadoff-2011-3/
The Madoff TapesBy Steve Fishman
...
...The SEC,” he says, “looks terrible in this thing.” And he doesn’t see himself as the only guilty party on Wall Street. “It’s unbelievable, Goldman … no one has any criminal convictions. The whole new regulatory reform is a joke. The whole government is a Ponzi scheme.”
If this was a 3rd world country we would be laughing -
The Madoff TapesBy Steve Fishman
...
...The SEC,” he says, “looks terrible in this thing.” And he doesn’t see himself as the only guilty party on Wall Street. “It’s unbelievable, Goldman … no one has any criminal convictions. The whole new regulatory reform is a joke. The whole government is a Ponzi scheme.”
If this was a 3rd world country we would be laughing -
Saturday 26 February 2011
How do you like your toast?...Golden!
Mr Rickards always puts a well thought argument together...listen to his thoughts about a global currency (liquidity) via SDR’s (special drawing rights). Note, how countries are coming up with arrangements to settle trade outside of the USD and put 2 and 2 together.
The USD is toast...(all currencies are) - the transition to the “new world” will not be orderly!
Thursday 24 February 2011
The Australian Government - a beacon of knowledge
http://www.theaustralian.com.au/national-affairs/climate/julia-gillard-fends-off-accusations-she-has-broken-a-promise-on-a-climate-tax/story-e6frg6xf-1226011792834
JULIA Gillard has braved hostile interviews with two of Australia's toughest radio hosts, confronting head-on accusations she broke an election-eve promise not to introduce a carbon tax.
JULIA Gillard has braved hostile interviews with two of Australia's toughest radio hosts, confronting head-on accusations she broke an election-eve promise not to introduce a carbon tax.
Mining tax, Carbon tax, Fat tax, … these guys are looking after us! All hail our insightful leaders!!
Oil price...UP UP and AWAY!
The devaluation of currency (a result of the inflation) continues. Our purchasing power declines but those in the third world (with a higher share of income going towards food and energy) are feeling it more. Thus the middle east undergoes a potentially transforming event. A region where the US held some power, may see that power/control decline. Implications?
Lock in higher oil prices. Higher gold prices also!
Lock in higher oil prices. Higher gold prices also!
How does this happen?
Taxes (theft) by government leads to this...
In New York City, the No. 2 guy in the fire department retired on a pension worth $242,000 a year. In New York State, a single official holding two jobs and one pension took in $641,000. A lieutenant with the Port Authority police retired with an annual pension of $196,767, and 738 of the city's teachers, principals and such have pensions worth more than $100,000 a year. Their former employer, it goes almost without saying, is steamed. Their former employer is me.
Source: http://www.washingtonpost.com/wp-dyn/content/article/2011/02/21/AR2011022103775.html
In New York City, the No. 2 guy in the fire department retired on a pension worth $242,000 a year. In New York State, a single official holding two jobs and one pension took in $641,000. A lieutenant with the Port Authority police retired with an annual pension of $196,767, and 738 of the city's teachers, principals and such have pensions worth more than $100,000 a year. Their former employer, it goes almost without saying, is steamed. Their former employer is me.
Source: http://www.washingtonpost.com/wp-dyn/content/article/2011/02/21/AR2011022103775.html
The Central Bankers are now on board...one by one they all will be
Fed's Hoenig: Big banks too risky, rates too low
"You shouldn't tell the market that you will have very low interest rates for an extended period of time because it invites speculation," he said. The Fed has said it expects to keep overnight borrowing costs, which are close to zero, "exceptionally low ... for an extended period."hmmm...you shouldn't, but we have...but we shouldn't have...
source: http://www.reuters.com/article/2011/02/23/us-usa-fed-hoenig-idUSTRE71M4T020110223?pageNumber=2
Tonights comments from Mr Jim Sinclair (Mr Gold)...Gold at $1,412 (USD)
Gold is strong against a weak cyclical background which assures you that as the cycle changes an explosion in price will definitely occur.
$1650 is in the bag.
Respectfully,
Jim
http://www.jsmineset.com/
$1650 is in the bag.
Respectfully,
Jim
http://www.jsmineset.com/
Wednesday 23 February 2011
America is broke! - Gold knows it!
Greg Hunter knows it! He's telling his citizens. Not everyone is going to like what they hear!
Additional debt over the next 2 years is probably around $3TRILLION dollars. The Piper will be paid in one form or another. Gold knows it!
http://usawatchdog.com/national-debt-america-is-broke/#comment-37628
By Greg Hunter’s USAWatchdog.com (Revised)
Saturday, the House of Representatives passed legislation with more than $60 billion of budget cuts. It is the proverbial “drop in the bucket” when compared to the $14.1 trillion (and counting) outstanding federal debt. Soon, this ever increasing national debt will eclipse the Gross Domestic Product (GDP.) That means America will owe more than all the goods and services it produces in one year. When you owe more than you make, isn’t that a sign you need to change course? The new Speaker of the House, John Boehner, said this just after the budget cut vote, “We will not stop here in our efforts to cut spending, not when we’re broke and Washington’s spending binge is making it harder to create jobs.” I think it is ironic Congress wants to cut $60 billion today and then turn around and consider raising the debt ceiling $1 trillion tomorrow. This is crazy, but that is exactly what’s going to happen because if we don’t, Treasury Secretary Tim Geithner says it could cause, “catastrophic damage to the economy.”
Additional debt over the next 2 years is probably around $3TRILLION dollars. The Piper will be paid in one form or another. Gold knows it!
http://usawatchdog.com/national-debt-america-is-broke/#comment-37628
By Greg Hunter’s USAWatchdog.com (Revised)
Saturday, the House of Representatives passed legislation with more than $60 billion of budget cuts. It is the proverbial “drop in the bucket” when compared to the $14.1 trillion (and counting) outstanding federal debt. Soon, this ever increasing national debt will eclipse the Gross Domestic Product (GDP.) That means America will owe more than all the goods and services it produces in one year. When you owe more than you make, isn’t that a sign you need to change course? The new Speaker of the House, John Boehner, said this just after the budget cut vote, “We will not stop here in our efforts to cut spending, not when we’re broke and Washington’s spending binge is making it harder to create jobs.” I think it is ironic Congress wants to cut $60 billion today and then turn around and consider raising the debt ceiling $1 trillion tomorrow. This is crazy, but that is exactly what’s going to happen because if we don’t, Treasury Secretary Tim Geithner says it could cause, “catastrophic damage to the economy.”
When you measure things in a constant currency...the true nature is revealed
There are various possible targets for the Dow/Gold ratio - a trend which shows the true nature of the GREAT EQUITY bear market - anything under 5 is a guess for me and really a function of government and bureaucrat stupidity
source: http://marketthoughtsandanalysis.blogspot.com/2010/05/update-on-dowgold-ratio-and-few-more.html
source: http://marketthoughtsandanalysis.blogspot.com/2010/05/update-on-dowgold-ratio-and-few-more.html
Sometimes the brutal is a lot clearer - Over to you Karl!
Bernanke, You Stupid Bastard
Karl DenningerMarket Ticker
Feb 22, 2011
Yes, you.
And Trichet, and the rest of the Central Bank fools.
But especially you, Bernanke.
http://www.321gold.com/editorials/denninger/denninger022211.html
Tuesday 22 February 2011
An article worthy of your attention!
"And the great owners, who must lose their land in an upheaval, the great owners with access to history, with eyes to read history and to know the great fact: when property accumulates in too few hands it is taken away. And that companion fact: when a majority of the people are hungry and cold they will take by force what they need. And the little screaming fact that sounds through all history: repression works only to strengthen and knit the repressed." - John Steinbeck - Grapes of Wrath
http://www.marketoracle.co.uk/Article26299.html
The turmoil in the middle east has more to do with this than "democracy"!
http://www.marketoracle.co.uk/Article26299.html
The turmoil in the middle east has more to do with this than "democracy"!
Dear Friends,
The “greek debt crisis” which morphed into the European Debt Crisis gave us an insight as to what is to come in the next 3 to 5 years.
The world is awash with massive and excessive fiscal and monetary imbalances. The piper will be paid and the stresses will eventually play out across all countries. Currency turbulence, I suspect will be more pronounced.
The market wills (in the end) impose discipline on politicians and bureaucrats (i.e. Central Bankers). Do not make the mistake of assuming this is your “run of the mill” crisis. The explosion of derivatives and leverage within the system has created a much more fragile (Yes Alan, nothing was dispersed) system.
Markets and economies are dynamic. They will adjust to the new reality. The question is where will the opportunities arise? To understand the problem is to understand how to position yourself. If you think you can just “buy the market” and all is good from here, you are making a big mistake. Be much more discerning (as you should always be).
It is no co-incidence that GOLD is making all time highs during this period. The average investor still laughs when you raise the topic - oh, you are one of those guys?
Ask the question, who do you think has been buying the gold to raise the price from $260/oz(USD) 10 years ago, to the price is it today? Not joe average! Only those with serious money. Phase 2 of gold has commenced, where the legendary fund managers buy it (not gold-bugs). They can see what is coming.
The children of the bull market (ie 1980s onwards) are missing the full picture.
The system (mainly in the west) needs to be cleaned out. The only solution available to the officials is inflation! The ONLY palatable one. Debt destruction through re-structuring is not considered feasible by the politicoans and bureaucrats.
Thematically, it makes sense to own some or all of the following:
- Gold & Precious metal shares
- Agri-commodities
- Energy
- Companies with clean balance sheets and quality dividends
- For Australian Investors quality global companies
Silver explodes to the upside
Silver traded as high as $34USD on late Monday Aus time. Tonight, (Tuesday) it's coming off a fair bit -down over a $1.50.
I don't know much about the expectations of silver other than the likes of Eric Sprott have much higher expected prices (over $50USD). Who's buying silver? Rumours are circulating about a short squeeze and James Turk has been highlighting the recent backwardation. Something is up!
I don't know much about the expectations of silver other than the likes of Eric Sprott have much higher expected prices (over $50USD). Who's buying silver? Rumours are circulating about a short squeeze and James Turk has been highlighting the recent backwardation. Something is up!
Introduction
Hopefully this will be the start of regular blogging. I have buggered this up in the past. Let's see how I go! Good luck to all.
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