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Wednesday, October 7, 2009
"The concept of Communism is rightly reviled in this country for the simple reason that it is blind to human nature, allowing a small group of individuals near-total control, while sticking everyone else with the same crappy systems -- and the bill. America spent countless lives and half a century fighting against this system of government...so why are we standing for it now?" - Dylan Ratigan
Short Memories... Stephen Roach (M-AA*) sees a failure of most investors to grasp the tough lessons of the crisis... that the crisis was about the "unsustainability of imbalances – imbalances within & between nations – as well as about the egregious flaws in policies, regulatory structures, & risk-management practices that allowed these imbalances to take the world to the brink"... now after massive liquidity injections well in excess of demand, financial markets are again ignoring the fundamentals... "Yet this is the same dubious script the world followed in the aftermath of the bursting of the equity bubble in the early part of this decade. And look how that ended. With far more excess liquidity currently sloshing over into asset markets, there is great temptation to erase the memories of the Great Crisis. Therein lies a pitfall for the markets – as well as for a still unbalanced post-crisis world"...
http://www.ft.com/cms/s/0/bee43992-b27b-11de-b7d2-00144feab49a.html?nclick_check=1
http://www.ft.com/cms/s/0/bee43992-b27b-11de-b7d2-00144feab49a.html?nclick_check=1
Dylan Ratigan: the new "gold rush"... discusses the factors driving gold prices with Bill Fleckenstein & the Cato Institute...
Visit msnbc.com for Breaking News, World News, and News about the Economy
from the archives....(JFF just for fun) ...video of pre-crash times when Peter Schiff was trying to warn everyone..while "talking heads"(particularly Arthur Laffer) mis-lead everyone they can. The video demonstrates that Schiff took the heat & scorn of "looking wrong to be right" and deserves to be a Cliff Küle Most-Admired Adviser (M-AA*)...
http://www.youtube.com/watch?v=Z0YTY5TWtmU
http://www.youtube.com/watch?v=Z0YTY5TWtmU
Gold & The Watched Pot Theory... Mish Shedlock (Cliff Küle M-AA*) explores several factors & opinions.... concludes: "a major financial crisis is in store following a long period of competitive currency devaluation and massive debt and derivatives expansion by nearly every major country on the planet"... makes an analogy of the US$ to a watched pot that may boil but because everyone is watching it, it is not likely to explode - in the same way, says a financial crisis is brewing & "something is going to blow sky high, but from where I sit, it's as likely to be in the Yen, the Swiss Franc, the British Pound, or something no one is watching at all as opposed to the US $ specifically"...
http://globaleconomicanalysis.blogspot.com/2009/10/gold-and-watched-pot-theory.html
http://globaleconomicanalysis.blogspot.com/2009/10/gold-and-watched-pot-theory.html
No such thing as too big to fail in a free market ! Niall Ferguson says the collapse of a financial institution is not necessarily a disaster... warns that if free markets are to thrive, the giant, state-supported banks must not be allowed to believe that they are indestructible... "During the crisis it was often said that officials at the Federal Reserve and Treasury would do 'whatever it takes' to avoid a Great Depression. Now they must do whatever it takes to address one of the key causes of the financial crisis: the existence of financial institutions that consider themselves too big to fail – but which are run in such a way that they are bound to do so"... http://www.telegraph.co.uk/finance/financetopics/financialcrisis/6263315/Theres-no-such-thing-as-too-big-to-fail-in-a-free-market.html
Bank Failure Map... Philip Van Doorn provides an interactive map of US bank failures... http://www.thestreet.com/stock-market-news/10607062/bank-failure-map.html
Tuesday, October 6, 2009
How Can the Fed Avoid the Next Bubble ? Ian Bremmer & Nouriel Roubini suggest several actions, such as watching asset prices, raising rates quickly when it decides the time is right,... also pre-emptively state it won't buy more Treasuries at some point,... also putting in place a new insolvency regime for financial institutions deemed "too big to fail," a serious approach to limiting "systemic risk," & appropriate rules governing compensation for bankers & traders... conclude: "Establishing financial stability—in addition to price stability & growth—is the essential role of the central bank. Achieving this goal in a way that avoids moral-hazard distortions, as with the too-big-to-fail finance institutions, and prevents another bubble in the next years will surely be one of the greatest challenges ever faced by the Fed"... http://online.wsj.com/article/SB10001424052748704471504574446941541499588.html (cartoon courtesy of Chad Crowe)
Australia Leads in Raising Interest Rates - Andrew Busch points out Australia did not experience a contraction like the Western world, & continues to benefit from the commodities boom tied to China... retail sales, building approvals, mortgage lending, & property are increasing significantly... concludes: "Due to the extraordinary financial crisis and monetary response, the Federal Reserve can take action. The Board should do something extraordinary to deal with the US $ fallout. If the Fed wants to stabilize the greenback, it should raise rates like Australia before unemployment peaks. This would stabilize the US $ & make a strong statement about its independence"... http://www.cnbc.com/id/33191494
The demise of the $... Robert Fisk writes a controversial article (Cliff Note: the Saudi Central Bank is denying the below http://www.cnbc.com/id/33185885)... : "In the most profound financial change in recent Middle East history, Gulf Arabs are planning – along with China, Russia, Japan and France – to end dollar dealings for oil, moving instead to a basket of currencies including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and Qatar"... http://www.independent.co.uk/news/business/news/the-demise-of-the-dollar-1798175.html
Bet on Stuff... James Quinn gives 4 factors driving commodity prices higher - peak oil, the green energy movement, infrastructure neglect, & growing demand for oil... "while government bureaucrats are funneling hundreds of billions to weak banks, sick insurance companies, clueless automakers, and the politically well connected, the capital needed for new mines, pipelines, drilling projects, refineries, and crops has dried up. There will be consequences. When the economy crawls out of the current recession, today’s paucity of investment in commodity infrastructure will leave us with meager supplies and roaring prices"...
Gold vs. Currencies... chart courtesy of Guy Lerner... gold's performance relative to a basket of 8 currencies.Those currencies are: 1) Australian Dollar; 2) Canadian Dollar; 3) Swiss Franc; 4) Eurodollar; 5) British Pound; 6) Singaporean Dollar; 7) Japanese Yen; 8) US Dollar. This is a weekly chart... http://www.safehaven.com/article-14655.htm
Gold Stocks Discussion with Doug Casey... : "when the public gets the bit in its teeth and wants to buy gold stocks, it’s going to be like trying to siphon the contents of the Hoover Dam through a garden hose"... http://www.caseyresearch.com/displayCwc.php?e=true
Monday, October 5, 2009
Matt Simmons - Investing in Energy - A Nightmare or an Enlightened Dream...
Matt Simmons Energy Presentation
Matt Simmons Energy Presentation
America’s infrastructure is collapsing... thousands of bridges are structurally deficient or obsolete... 1/3 of the nation’s highways are in poor or mediocre shape... leaking water & sewage systems are creating health hazards, contaminating rivers... the power grid is increasingly maxed out...
History Channel Rebroadcasts: Tuesday, October 6 at 10:00 AM & 4:00 PM (watch for other times)
History Channel Rebroadcasts: Tuesday, October 6 at 10:00 AM & 4:00 PM (watch for other times)
The Myth of the Oil Crisis: the Challenges of Depletion, Geopolitics, & Global Warming........ Robin Mills, Senior Evaluation Manager for Dubai Energy ask if it really is the end of oil? Absolutely not !... counters the peak oil theory by showing where & how oil will be found in the future... 40 minutes long... click on image above or link below to activate...- Windows Version: http://www.netcastdaily.com/broadcast/fsn2009-1003-2.asx
- MP3 Version: http://www.netcastdaily.com/broadcast/fsn2009-1003-2.mp3
"No, I'm not optimistic about the government getting anything right. I think that they are very much responsible for the situation which we are in and which, to me, the most damning part of it is the dependence on the Chinese & Japanese lenders for our very existence. I think it is a tragedy that it happened to the United States. I think that has been done by a group of politicians over a long period of time,.... 30 years........" - Julian Robertson
A Stronger U.S. Economy Requires a Weaker $ ! Willem Buiter points out the US $ will have to depreciate versus currencies of emerging markets & developing countries, if a long spell of over-capacity, high unemployment & low growth is to be avoided... "Because I consider it likely that too many EMs will continue to be reluctant to let their real and nominal exchange rates appreciate sufficiently, I consider it unlikely that the external stimulus to the US recovery will be sufficient to close the US output gap swiftly. I hope to be proven wrong"... http://blogs.ft.com/maverecon/2009/10/a-stronger-us-economy-requires-a-weaker-dollar/
The end is nigh (again)... The Economist article explores how pessimistic commentators remain anything but convinced by the stockmarket rally... covers Nouriel Roubini, David Rosenberg, Bill Fleckenstein... http://www.economist.com/opinion/displaystory.cfm?story_id=14541030 (cartoon by Belle Mellor)
"Gold has two interesting properties. It is cherished and it is indestructible. It is never cast away and it never diminishes, except by outright loss. It can be melted down, but it never changes its chemistry or weight in the process. Its price has been remarkably similar for centuries at a time. Its purchasing power in the middle of the twentieth century was very nearly the same as in the midst of the seventeenth century." - Businessman Ray Jastram (1915-1991)
"Regarding the outlook, my analysis is grim. I am not a doomsayer, I follow the cash, and so far, I’ve been correct, and the government has been wrong. Here’s the situation. We are at greater risk of a total meltdown due to a deflationary collapse than we were in 2007... we’ve seen history’s greatest fiscal and monetary expansion, but it hasn’t worked. Debt levels of consumers and business exceed the capacity to repay." - Janet Tavakoli
Defensive, With Equanimity... John Hussman (Cliff Küle M-AA*) still thinks the US economy has not improved & the "green shoots" are a short-term stimulus put out by the government, does not think these shoots will propagate into "organic" growth... points out continued employment weakness, home foreclosures, & a mountain of adjustable mortgage resets coming... economic concerns become quite pointed about 6 months out (when current delinquencies will be transformed into foreclosures and reportable balance sheet losses). That's about the horizon over which the market often begins to pay attention to oncoming trouble, so while we've known about the risk of a second wave of credit problems for a while, we may be at the point where investors begin to act on those prospects"... http://www.hussmanfunds.com/wmc/wmc091005.htm
Sunday, October 4, 2009
Why All the Fuss over Rare Earths?... Doug Hornig explains the rarity, applications, & supply considerations on rare earth metals (REE)... says the sector is frothy now from an investment perspective but concludes: "the ever-growing need for REEs is dead serious. And while the current bubble may pop any day, the long-term prospects for successful miners are outstanding"... http://www.financialsense.com/editorials/casey/2009/1002.html
Put 10% Of Your Assets into Gold & hope it doesn't work!.. says Paul Airasian. He identifies 3 R's: - Reality - Gold is money, it has been accepted as money for over 4,000 years; Reasons to own gold - insurance & investment; Recommendations -offers general set of recommended vehicles on gold investment...http://www.safehaven.com/article-14637.htm
"If there is a shred of truth in what Karl Rove had to say in yesterday’s op-ed piece in the WSJ ("Obama Can’t Outsource Afghanistan"), then gold is likely going to go much, much higher than $1,000 an ounce. That’s the currency we prefer"... David Rosenberg (Cliff Küle M-AA*) thinks there is a secular theme in baby boomers' seeking investment income & that we may have entered a "correction"in the stock market
Lunch With Dave 100209
Karl Rove article: http://online.wsj.com/article/SB10001424052748704471504574444981640430364.html
America's Hidden Cost Of Borrowing... Daniel Aaronson & Lee Markowitz make an important point that most Americans probably never considered as a price to be paid for maintaining the empire.... a country which relies on foreigners for credit loses political power in the world economy ... Daniel/Lee conclude "The supremacy of the United States is under attack. The transition from the G-8 to the G-20 is critically important because it shows that there is a much greater price to pay than the financial expense of our trillion Dollar deficits....the ominous cost of relying on foreign borrowing will become evident"... http://www.safehaven.com/article-14631.htm
No China Bubble.. explains Strategist Andy Rothman... Click here or on the image above ... about 5 minutes...
Saturday, October 3, 2009
"Anyone counting on a meaningful economic recovery will be greatly disappointed...How do I know? I follow credit, & credit is contracting. Access to credit is being denied at an accelerating pace. Large.... companies have no problem finding credit. Small businesses.... have never had a harder time getting a loan." writes Meredith Whitney (M-AA*) ... " Main Street represents the foundation of this country. Reviving it should take priority over any regulatory reform or systemic overhaul"... http://online.wsj.com/article/SB10001424052748704471504574445470989162030.html
Are Foreigners Welcome ? Among the toughest questions posed to the Chicago bid for the Olympics: What kind of welcome was waiting from airport officials ? One Olympic Committee member pointed out that entering the United States can be “a rather harrowing experience." (Cliff Note: Another cost of the War on Terror: U.S. airports are undesirable to travellers) http://intransit.blogs.nytimes.com/2009/10/02/chicagos-loss-is-passport-control-to-blame/
Friday, October 2, 2009
Strauss-Khan & Greenspan Discussion at Yalta 3-part video clips about 8 minutes each - click below ...Part 1: The financial crisis - Click here
Japanese Politics & the Yen... Axel Merk discusses how a country on a downward economic spiral can have a strong currency... points out now the yen is no longer the preferred funding currency for speculators, through the so-called "Yen Carry Trade" - "Instead, the U.S. $ seems to be taking its place. Given that U.S. policies seem more predictable – a determination to print & spend money, as well as a commitment to keep interest rates low for a considerable time – speculators have more confidence to borrow cheaply in U.S.$s, then sell those U.S. $s to buy higher yielding assets elsewhere"...
http://www.safehaven.com/article-14622.htm
http://www.safehaven.com/article-14622.htm
Thursday, October 1, 2009
Rational Irrationality... John Cassidy in The New Yorker: The real reason that capitalism is so crash-prone... markets can become highly unstable when a crisis hits because the biggest players rush to reduce their exposure, buyers disappear, & liquidity dries up, "where previously there were diverse views, now there is unanimity: everybody’s moving in lockstep" Cassidy emphasizes from the late 1990s onward, the Fed "stubbornly refused to recognize that speculative bubbles encourage the spread of rationally irrational behavior"... points out the Fed should stick to its traditional mandate to insure maximum employment & stable prices, & add a 3rd mandate suggested by Stephen Roach - preservation of financial stability .. this would mesh with Obama's proposal to make the Fed the primary monitor of systemic risk... http://www.newyorker.com/reporting/2009/10/05/091005fa_fact_cassidy
A New MAGNA CARTA : Cliff found a Mexican website that describes the financial crisis with rare clarity & perspective. Click on the chart above for a picture worth a thousand words. Author Hugo Salinas Price says international reserves have exploded because there is no need to “settle” trade imbalances "ever since the world accepted Nixon’s decision not to settle with gold, but to accept $ in supposed 'payment' of trade deficits"... All these “reserves” are debts owed, principally by the US..." "..up to 2007... was a wonderful period for the U.S., it was able to behave like an adolescent come into a vast fortune: dollars in huge quantities, manufactured at will ..." ... "international trade must be settled, not papered over with debt instruments; the gold standard must be reinstalled. That will be the new Magna Carta for our times"... http://www.plata.com.mx/mplata/articulos/articlesFilt.asp?fiidarticulo=99
10-Year Bull Market Has Begun; Dow Will "Double For Sure"... says Neil Hennessy... thinks stocks are the only reasonable money-making investment in this current environment of low interest rates... Why "put your money into a 30-year U.S. government bond at 4% and wait 30 years to get your money back?"... says trillions in cash on the sidelines waiting to get in the game...
Twilight of Pax Americana... Christopher Layne & Benjamin Schwarz: Since the end of WWII, the world has depended on the U.S. for stability - but with American military & economic dominance waning, capitalism & global security are threatened... points to the National Intelligence Council recent report: a "global shift in relative wealth & economic power without precedent in modern history"... the rest of the world is developing fast... http://www.latimes.com/news/opinion/commentary/la-oe-schwarz29-2009sep29,0,4375015.story
Money figures show there's trouble ahead... Ambrose Evans-Pritchard: private credit is contracting on both sides of the Atlantic - M3 money data is flashing warning signals of a deflation crisis next year in nearly half the world economy... private spending has slumped in the deficit countries of the "Anglosphere, Club Med, & East Europe" but has not risen enough in the surplus countries to compensate.... concludes: "Western central banks will have to "monetize" deficits on a huge scale to stave off debt deflation. The longer they think otherwise, the worse it will be"... http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/6234939/Money-figures-show-theres-trouble-ahead.html
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