<< <i>Yaaa, the market got its 25 basis points rate cut and is rallying. Now watch it sell off tomorrow.
Tyler >>
It's already selling off. Rate cut cycle is probably near over, and headline inflation (not gov't CPI b.s.) is running wild while the economy is getting hosed. Now what will they do?
The herd seems to have forgotten that gold did indeed rally while the FED was bumping interest rates from 1% to 6% a few years back. Gold also prospered in the later 1970's as rates were hiked from single digits to nearly 20%. It's odd how the manipulators have scared everyone into thinking that any rate hikes from here will squash gold. The bottom line is that until interest rates can pay for the difference between inflation and the rate (with a profit included), the metals will trend upwards.
A kick back to $875 today and no 5% drop into the $830's. There is enough bearish sentiment to build a foundation off of right now.
Edit: really meant to say that as long as the real rate of return on fixed CD's, etc is negative (ie net negative real return)...that commodities will prosper.
<< <i>The herd seems to have forgotten that gold did indeed rally while the FED was bumping interest rates from 1% to 6% a few years back. Gold also prospered in the later 1970's as rates were hiked from single digits to nearly 20%. It's odd how the manipulators have scared everyone into thinking that any rate hikes from here will squash gold. The bottom line is that until interest rates can pay for the difference between inflation and the rate (with a profit included), the metals will trend upwards.
A kick back to $875 today and no 5% drop into the $830's. There is enough bearish sentiment to build a foundation off of right now.
roadrunner >>
An interesting graph is to compare worldwide interest rates to gold. Many would not expect to see what it depicts. And this is the reason why I do not hold to the absolute 100% corrolation of gold vs the dollar that many do.
<< <i>The herd seems to have forgotten that gold did indeed rally while the FED was bumping interest rates from 1% to 6% a few years back. Gold also prospered in the later 1970's as rates were hiked from single digits to nearly 20%. It's odd how the manipulators have scared everyone into thinking that any rate hikes from here will squash gold. The bottom line is that until interest rates can pay for the difference between inflation and the rate (with a profit included), the metals will trend upwards.
A kick back to $875 today and no 5% drop into the $830's. There is enough bearish sentiment to build a foundation off of right now.
roadrunner >>
An interesting graph is to compare worldwide interest rates to gold. Many would not expect to see what it depicts. And this is the reason why I do not hold to the absolute 100% corrolation of gold vs the dollar that many do. >>
if you look at the dollar index compared to gold...is what you are saying? ..i haven't seen the graphs...i think there is going to be a disconnect between dollar index down / gold up, because of world wide inflation will affect the other currencies as well..and will therefore "keep" the dollar index from dropping as much.....yet the price of gold will increase.....am i right in following both of your thoughts?
You're getting close. It is my belief that the direction of worldwide interest rates have more to do with the direction of gold. The dollar is still the dominant worldwide currency, so it will have some impact on the direction of gold, but it is much too simplistic to say "Dollar down, gold up." With the acceptance of the Euro as a global currency, one could surmise that the Euro may someday have an impact on the direction of gold. And perhaps way down the road we may be talking about the value of the Chinese YUAN.
About 28 yrs ago global interest peaked. About 7 years ago they bottomed.
Well Thank goodness this financial crisis is over and we can all get back to a stable psychological existence.
Surely all the coins we need to fill our holes will now be cheap!
No real need to own all these commodities obviously, as oil is headed back below $75, gold back to $550, silver back below $10, the Euro back to $1.
I think we all can see that the Fed lowering the rate to 2% was indeed the key to all of our problems, and now everything is right on track for a safe financial year.
Let me sum up. The worst is over, on the other hand the worst could be yet to come. Inflation is abating according to the Government while actually accelerating for the great unwashed masses.
Stock are rising but it could be a rally in a great bear market. Gold, silver, plat & oil are dropping,with further to go but may go into a reversal mode and go back up.
The talking heads are saying, BUY< BUY< BUY SELL, SELL, SELL. Everything is normalizing except there are food riots all around the globe. Everyone is talking about helping homeowners in distress while the number of repo homes is hitting ever higher historical levels.
@&% is going on, as well as what is going to happen. I feel so much better knowing that we are all in good hands with ALLSTATE and the Geico Gekko is looking out for us.
We it just keeps going deeper. I guess if everyone keeps their jobs or choose to stay in their houses it's no big deal. But if that doesn't happen watch out.
There is a new report from the US Comptroller of the Currency titled "OCC's Quarterly Report on Bank Trading and Derivative Activities, Fourth Quarter 2007", which shows that total bank holdings of derivatives is estimated to be "only" US$164.2 trillion
As long as the net real rate of return is negative (interest paid minus true price inflation rate), then gold prospers. As soon as interest rates are high enough to offer a better return that the TRUE price inflation rate, then the dollar and stocks will prosper longer term. Right now net real rates of return are negative, even using the BLS's BS numbers.
The above link tends to indicate that the derivatives and credit mess is only worsening. The FED has just picked up education and credit card loan derivatives on their list of what to swap treasuries for. The list grows. Credit default swaps are now looming. The FED's bank account for buying under-water derivatives is just shy of a TRILLION. At the rate they are sopping up this sludge they will run out of money very soon. Then who gets to buy it?
Concerning that $164 TRILL in derivatives owned by US banks: $91 TRILL of that belongs to JPM. It's more than coincidence that they needed to sop up Bear's $14 TRILL in derivatives to keep their own $77 TRILL from imploding. The FED needs to keep JPM alive to keep themselves ticking.
Lies, Damned Lies and Statistics by Anthony Cherniawski, The Practical Investor, LLC | May 2, 2008
The quote has been attributed to Benjamin Disraeli and popularized by Mark Twain. It could be applied to today’s Employment Report. The press headline reads, “ Nonfarm payrolls down 20,000; unemployment rate unexpectedly falls.” Folks, these numbers have been massaged to get the “right” outcome.
For example, in April, the number of persons working part time for economic reasons increased by 306,000 to 5.2 million. This level was 849,000 higher than in April 2007. These individuals indicated that they were working part time because their hours had been cut back or because they were unable to find a full-time job. 5.2 million workers comprise 3.8% of the alleged workforce.
Another example is the CES Birth/Death Model, which added 267.000 fictitious jobs to the employment data. The reason I say fictitious is the way they are distributed. For example, the model suggests that 83,000 jobs were added in Leisure and Hospitality, 72,000 jobs were added to Professional and Business Services and 45,000 jobs were added to the Construction Sector.
The last example is the most damning evidence yet of the state of our jobs market, called “Alternative measures of labor underutilization.” Total unemployed, plus all marginally attached workers, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all marginally attached workers rose from 9.1% to 9.2% in April.
Does that give you any confidence in the headline numbers on our employment situation?
The vaunted CES birth death model added 200,000 jobs this month to areas of the economy that are contracting. Considering that the net number was -20,000 for the month, the number without the wishful birth death model would have been closer to -200,000 jobs. No worry though, corrections could show up in a couple of months. No need to put out negative news about job growth at this time. The +45,000 jobs given to the construction sector is in sharp contrast to the -61,000 jobs that the construction trade reports. Since the BDM over-estimates new jobs during economic contractions, this is the perfect tool for the FED. But once a recovery starts and job growth begins, they'll come up with another model tweak because the BDM will be under-estimating new job growth at that time. For now, they are fine and dandy with how BDM works.
Ironically the unemployment figured dropped from 5.1% to 5% yet the BLS's own figures show dropping employment. Guess they must have kicked some "366 day" unemployed people off the unemployment roles.
The +0.6% GDP growth of the last 2 quarters is circumspect considering that the GDP deflators used by the BEA to adjust for inflation were in the 2.4 to 2.6% range (they use even more absurd assumptions than the BLS does). This is in contrast to the inflation rate of >4% that the BLS uses in their monthly CPI estimate. Good thing the BEA wasn't using the more commonly published and "respected" inflation numbers or GDP would be -1% the last 2 quarters! Imagine what GDP would be like if true inflation numbers were used? They'll let us know in a year or so that we did indeed begin a recession in the 4th quarter of 2007 after they revise the numbers and see the "errors of their ways."
This time the money went where it can do the most good, in the pockets of consumers, not bankers and their buddies. That's what they should have done the first time around instead of bailing out stupid rich people who hoard wealth when times get tough.
"The timing of the stimulus package is absolutely perfect."
It does seem to have worked out well. Lots of upbeat news seems to be relfected in the 13,000 DOW and with the stimulus, another 1/4 point of the fed rate, it could be perceived as happy days are here again. They say that perception is reality but it's hard to embrace that notion in light of the other economic battles yet to be fought. So, I guess the stock market is going to surge in anticipation, metals will be flat for the immediate future, oil will active and will command everyone's attention, it's going to be a fun ride...well, maybe not too much fun but a ride none the less.
A good read as to how the transfer from subprime risks into credit defaults will likely go. To those that say the systemic risk in the $62 TRILLION credit derivatives market is only 1% or less, read on. There is every reason to believe they we are talking many multiples of that amount. A long read but with simple examples to show how the risks were created and why they aren't going away.
We're currently at hundreds of billions of dollars lost so far in sub-prime with plenty yet to go (20-50% so far?). Credit derivatives are 30X that market. That gets us started with probably losses in the $10-20 TRILLION range. Chump change when you have a printing press.
Even Berkshire Hathaway recently got whacked in the 1st Qtr 2008 on $1.7 BILLION in financial weapons of mass destruction (ie derivatives). Et tu Buffet? More than enough WMD's to go around for everyone!
<< <i>The timing of the stimulus package is absolutely perfect. I say it's dumb luck, but anyways... >>
LMAO Its a planed sale waiting to unfold. the dollar will tank price action dictates it may not happen within a week or two.' Prediction, you have been briefed...
Humblepie
I have found power in the mysteries of thought.
It is always a question of knowing and seeing, and not that of believing.
Our virtues, and our failings are inseparable, like force, and matter. When they separate, man is no more.
I agree. The timing of the stimulus package is pretty good.
The last one was close to an election, but not close enough to be considered obvious vote buying by most.
As Bush cannot be re-elected, the 2008 package is closer to the election. It is also vote buying.
In fact, most of the articles I see recently appear to be about class warfare and vote swaying. Lots of garbage from all corners designed to replace a reasoned thought process with baseless emotion.
Take these current events with a good healthy dose of history. Study that history. The future may be uncertain...we know much about the past.
Here is another easy read. It's a column in the local free paper by a guy named Don Bauder. He's a retired investigative reporter for the local newspaper and a really good one at that. I am sure he has made a lot of big enemies and probably even has been threatened. Goes after evil developers and their political cronies on a regular basis. Lately he has been focusing a bit on the economy. It is localized to San Diego, but is an exagerrated microcosm of the national scene in some ways.
<< <i>Here is another easy read. It's a column in the local free paper by a guy named Don Bauder. He's a retired investigative reporter for the local newspaper and a really good one at that. I am sure he has made a lot of big enemies and probably even has been threatened. Goes after evil developers and their political cronies on a regular basis. Lately he has been focusing a bit on the economy. It is localized to San Diego, but is an exagerrated microcosm of the national scene in some ways. >>
"You're walking around stoned all day." (first sentence)
are you sure that is San Diego and not Santa Cruz? hehehe
thanks for the post
here is something a wee bit different...i just dunno how one can "make money" doing this....unless 31 cents on the dollar is 'good'...
seems like some kinda Joe Lunchbox bail out plan..
That's a good read Coxe. It's unfortunate that the average guy still believes in the CPI and doesn't even realize the changes that have occured to it over the past 25 years. Apples to oranges as they say. And you can argue with economists until you are blue in the face and they will support those changes as realistic. The author also commented below the article about the bogus 0.6% GDP "growth" the past 2 quarters. But he has only so much room for trashy govt stats in his articles.
A good read as to how the transfer from subprime risks into credit defaults will likely go. To those that say the systemic risk in the $62 TRILLION credit derivatives market is only 1% or less, read on. There is every reason to believe they we are talking many multiples of that amount. A long read but with simple examples to show how the risks were created and why they aren't going away.
We're currently at hundreds of billions of dollars lost so far in sub-prime with plenty yet to go (20-50% so far?). Credit derivatives are 30X that market. That gets us started with probably losses in the $10-20 TRILLION range. Chump change when you have a printing press.
Even Berkshire Hathaway recently got whacked in the 1st Qtr 2008 on $1.7 BILLION in financial weapons of mass destruction (ie derivatives). Et tu Buffet? More than enough WMD's to go around for everyone!
roadrunner >>
He probably has more than a few dollars left. The foreign currency bets have done VERY well.
<< <i> This time the money went where it can do the most good, in the pockets of consumers, not bankers and their buddies. That's what they should have done the first time around instead of bailing out stupid rich people who hoard wealth when times get tough. >>
Well, my wife and I must be one of those "rich" people who got scre*d out of the stimulus rebate because I had some large capital gains in 2007 (mostly in coins, believe it or not) and therefore do not get a stimulus rebate at all. Those who had less than $3000 in social security income and/or earned income as well as those who had more than $175,000 in total joint income get nothing.
Are we (both poor and rich) less worthy than other Americans when it comes to spending stimulus rebates?
It was because I DIDN"T hoard my wealth and sold some of it in 2007 that caused me to lose my stimulus rebate!!!
One can paint a much rosier future than the author without working too hard at it. There are a lot of positives that are just being overlooked. Everything is cyclical and it's always darkest before the dawn.
But we shouldn't get complacent by any means since it's pretty dark before a storm as well.
The competition for reserve currency status in the future is with China and India, not Europe and Japan.
Oil prices have been high many times in the past but no one has found a better solution. The rewards for finding a cancer cure are huge but no has solved that problem either. The free market doesn't magically come up with a solution to everything.
As far as changing direction, which one of the 3 candidates with a chance of winning proposes major changes? None of the above. Short term gimmicks to get elected. More of the same like bombing another Middle Eastern country that means much bigger deficits and oil prices.
No question living standards for most Americans will continue to fall but I'm not sure how that is a positive.
what is rather funny (sad) is there is also an article regarding the housing crisis being over...well if you are a hedge fund firm, i guess you'd better try to spin something (anything) PDQ
shouldn't high oil prices finally cause people to dump their gas hog mobiles?
am i the only one noticing more and more hybrid cars on the road? i had to put a down payment at Toyota just to get on the list to get a Prius hybrid at the end of the month. They are the hottest selling car in the nation it seems.
also, many folks, like me, will probably take nice vacations in our home state or next door neighbor states close by. people are going to change to save money and visit local attractions instead of driving/ flying 1000-3000 miles to a remote destination.
the article mentions we are using less oil lately. won't this trend continue as more people get vehicles capable of 45+ MPG?
Maybe trains will have a rebirth soon as they are capable of hauling mass amounts of goods great distances without using as much oil?
Maybe people will move back to the city or closer to their jobs? I made a vow several years ago that I will never commute more then 30 minutes one way to my job. Never again. Waste of my time and life to do that.
Maybe nuclear power will finally get respect in this country and plans to build reactors that are safe will happen in the next 10 years?
we as a country have many options including drilling for oil in our own territory. it will simply take higher prices to make it happen as many have predicted to make us change.
As cruel as it may sound, nothing will bring innovation for renewable energy, as well as significantly better gas milage, then 6-7 dollars a gallon for gas. This means more efficiency, smaller lighter cars, as well as less useless trips.
<< <i>As cruel as it may sound, nothing will bring innovation for renewable energy, as well as significantly better gas milage, then 6-7 dollars a gallon for gas. This means more efficiency, smaller lighter cars, as well as less useless trips.
HIGH COST WILL TRANSLATE INTO
BETTER CONSERVATION OF RESOURCES. >>
Although I generally agree with this, there will be a great deal of collateral damage along the way.
Folks will tighten up other expenditures before they change their driving habits...before folks discover new ways to utilize energy...before they stop driving solo...before they move closer to work...
Right now, for example, restaurants are taking it on the chin. People are eating in more. There are many, many easy things that can be done to live more frugally. Folks buying less coins for example (yikes) I suspect that Japan and China (and Korea and Thailand and all the rest) will be pretty upset when folks stop buying flatscreens (if that happens). There is a lot of belt-tightening that will occur before folks, who have been used to burning energy at this rate for all of their lives...change those habits!!!
The next cycle may be the "nuclear" cycle. There are ways to burn that stuff fairly completely, leaving little "ash"...producing vast quantities of energy. This may be what fuels the next cycle...as with that sort of energy, seawater can be easily turned into drinking water...oil can be produced from air or anything else that has carbon in it...why even go there, you have lots of hydrogen available from that process...if you scale energy up to the levels attainable there, you can do lots of things. Heck, with enough neutrons, you can turn lead into gold...but that would probably be some pretty unstable 'hot' gold. And there would not be very much of it. And i'm not sure I would want a nuclear gold coin.
Germany $8.63 Denmark $8.14 Brazil $6.01 Canada $4.73 Australia $5.18 New Zealand $5.42 Hong Kong $7.56 Iceland $8.06 Isreal $7.20 Netherlands $8.95 Norway $9.55-----Norway is one of the largest oil producers. Pakistan $4.01-----One of the poorest countries in the world. Romania $6.32-----One of the poorest countries in the world. Sierra Leone $18.42----One of the poorest countries in the world Turkey $10.13 England $8.18 Russia $3.79
i have seen more people driving a few miles an hour slower on the freeways here in CA, many snob~urbans now cruising at the speed limit, cruising neck and neck with those Precious Pius hybrids.
in CA prices are at or very close to $4 with mid grade and superduper about 15 and 20 cents higher. i see prices for premium increasing more than the customary 20 cents more over 87. the tank-mixed mid grade is reflecting that now.
i agree with Bear more will be more efficient with their trips and drive slower and less. the gas hogs are here for another 5 years at least as many are so upside down on resale that they have no other choice.
BTW more on topic....when will gold disconnect from the dollar index and tie itself to inflation? it was oil/gold now USD/gold when inflation/gold???
Germany $8.63 Denmark $8.14 Brazil $6.01 Canada $4.73 Australia $5.18 New Zealand $5.42 Hong Kong $7.56 Iceland $8.06 Isreal $7.20 Netherlands $8.95 Norway $9.55-----Norway is one of the largest oil producers. Pakistan $4.01-----One of the poorest countries in the world. Romania $6.32-----One of the poorest countries in the world. Sierra Leone $18.42----One of the poorest countries in the world Turkey $10.13 England $8.18 Russia $3.79
USA $3.70
Unfortunately, it looks like it will take higher prices like these to force change in the US. Maybe even the creation of an energy policy!
Yes, we have been living a charmed life for a long time. Everybody else in the world is driving these little 4 cylinder cars because of the cost of gasoline but the other factor that makes this significant is that the U.S. uses unleaded gas with 10% ethanol. That is a pretty sophisticated refinery mix and we also change formulations for seasonal blends so we have pretty high end fuel that is shamefully inexpensive on the world chart.
I had suggested earlier that we can end this silliness in one quick flip of the pen; simply not allow anything over 6 cylinders on U.S. highways without a special annual permit, maybe $1,500 to $2,000/year. That will lower our consumption considerably and get many of these bus sized personal (conspicuous consumption) vehicles off the road although $5+ gas may have the same effect. So, if you want to act big and rich, you should have to pay big too. And as an added benefit, instead of buying these 8 cylinder premium unleaded fuel only vehicles for 25 or 30 thousand dollars or so, we can start having 15 to 20 thousand dollar plain unleaded fuel vehicles that would be more affordable and also be less expensive to operate. This would be very bad for the U.S. economy though because the banks would be writing smaller car loans and the car makers would have to make reasonable vehicles for less profit. The only one that would come out of that scenario in better shape would be the consumers.
<< <i>"Worldwide gasoline prices in US$ per gallon."
Yes, we have been living a charmed life for a long time. Everybody else in the world is driving these little 4 cylinder cars because of the cost of gasoline but the other factor that makes this significant is that the U.S. uses unleaded gas with 10% ethanol. That is a pretty sophisticated refinery mix and we also change formulations for seasonal blends so we have pretty high end fuel that is shamefully inexpensive on the world chart.
I had suggested earlier that we can end this silliness in one quick flip of the pen; simply not allow anything over 6 cylinders on U.S. highways without a special annual permit, maybe $1,500 to $2,000/year. That will lower our consumption considerably and get many of these bus sized personal (conspicuous consumption) vehicles off the road although $5+ gas may have the same effect. So, if you want to act big and rich, you should have to pay big too. And as an added benefit, instead of buying these 8 cylinder premium unleaded fuel only vehicles for 25 or 30 thousand dollars or so, we can start having 15 to 20 thousand dollar plain unleaded fuel vehicles that would be more affordable and also be less expensive to operate. This would be very bad for the U.S. economy though because the banks would be writing smaller car loans and the car makers would have to make reasonable vehicles for less profit. The only one that would come out of that scenario in better shape would be the consumers. >>
Good suggestions. However, it isn't about the efficiency so much as the total fuel consumed. Why should an SUV mom be punished driving around town infrequently, putting on 3,000 miles a year, while the prius driver who commutes two hours outside of some big city putting on 25-30,000 miles a year be seen as some sort of "energy conscious" prudent consumer?
Gas prices have been far too low and it has spurned the sort of mindless, wasteful building models (suburbia and exurbia) as found all over America and spawned NASCAR races, SUV's and gas guzzling "toys" by the millions.
Gas is a commodity, those who felt it was some sort of "entitlement" to be had at $1.00 a gallon that they could live 80 miles from their place of work and plan their lives around such a faulty assumption are the ones who need to change or pay. Cheap gas and oil are not an entitlement and if you built your life or business model on those assumptions, well then tough sh*t. I didn't, and I want to drive my twelve cylinder Jaguar in the summer.
Europe has been "supposedly" energy conscious, yet they pay 2x what we do. How would our "efficiency" lead to lower prices? Dont say it will reduce demand, as all we hear is how much oil China and India are going to use.
And how long can Europe continue economic growth with high energy costs?
The rest of the world should feel very lucky that we have "relatively" low energy costs. Just think how much business they would get if we paid $8 per gallon. Wait till you get your heating oil and gas bill next winter.
I'm looking into solor for my house. It really doesn't cost that much anymore to keep your heat, air, and basic functions of the house going. After the ice storm here with me being out of electric for a week during the winter and many being without it for over a month due to 1500 power poles snapping I'm starting to sound like an "off the grid" type guy.
<< <i>"Worldwide gasoline prices in US$ per gallon."
Yes, we have been living a charmed life for a long time. Everybody else in the world is driving these little 4 cylinder cars because of the cost of gasoline but the other factor that makes this significant is that the U.S. uses unleaded gas with 10% ethanol. That is a pretty sophisticated refinery mix and we also change formulations for seasonal blends so we have pretty high end fuel that is shamefully inexpensive on the world chart.
I had suggested earlier that we can end this silliness in one quick flip of the pen; simply not allow anything over 6 cylinders on U.S. highways without a special annual permit, maybe $1,500 to $2,000/year. That will lower our consumption considerably and get many of these bus sized personal (conspicuous consumption) vehicles off the road although $5+ gas may have the same effect. So, if you want to act big and rich, you should have to pay big too. And as an added benefit, instead of buying these 8 cylinder premium unleaded fuel only vehicles for 25 or 30 thousand dollars or so, we can start having 15 to 20 thousand dollar plain unleaded fuel vehicles that would be more affordable and also be less expensive to operate. This would be very bad for the U.S. economy though because the banks would be writing smaller car loans and the car makers would have to make reasonable vehicles for less profit. The only one that would come out of that scenario in better shape would be the consumers. >>
Most of what you say is valid but what appears obvious to me is that, if gas prices were to fall, people will relax their more prudent driving styles. Yes, an increase in the price of gas forces people to be more prudent with their driving but conversely lower prices will relax that. We need a reduction in foreign oil dependence along with more efficient cars. The people, and I'm thankfully not one of them, with the 6-8-12 cyl. cars do pay more for their gas. Their cars are less efficient which requires more gas which is tied to a hefty gas tax.
Which, speaking of gas tax, how motivated is the government to push more efficient cars when they are so dependent upon gas taxes?
Interesting response, ARCO. Maybe it's just being in Texas but living like stacked rats in some planning commission approved walking community doesn't appeal to me. Also, if some soccer mom can afford a $40K vehicle to go 3000 miles a year to bus her kids around to school and practice, she can surely afford for hubby to cough up a little extra for the special permit to run that bus, heck, she could probably afford limo service for that kind of money. But really, no argument here. It just serves to highlight the class wars that I believe are looming on the horizion. Gasoline and food are going to be very big topics after the election.
Gasoline and food are going to be very big topics after the election
Which means taxes will be going up. Soon we will be just like Europe, paying 50-80% income taxes. And argueably, their livestyle isnt any better than ours.
simply not allow anything over 6 cylinders on U.S. highways without a special annual permit
I couldn't disagree more. Cars don't need V-6 engines. There shouldn't be a Honda or Toyota car on the road with a V-6 engine - all that does is add weight and reduce fuel economy.
Extreme-Liberals (Liberal Fascists if you will) should be very happy. They are getting exactly what they've wanted for years...high fuel prices, stupid alternatives to tie up the US and render it helpless to "tree-huggers" and their ilk. And the end effect is to severely weaken the US. That is the goal of the self-loathing capitalist-hating extremists (to be lead by Obama.)
Comments
Agreed with the disclaimer that evolution will trim the herd somewhat. This is not a one size fits all scenario.
<< <i>Yaaa, the market got its 25 basis points rate cut and is rallying. Now watch it sell off tomorrow. Tyler >>
It's already selling off. Rate cut cycle is probably near over, and headline inflation (not gov't CPI b.s.) is running wild while the economy is getting hosed. Now what will they do?
A kick back to $875 today and no 5% drop into the $830's. There is enough bearish sentiment to build a foundation off of right now.
Edit: really meant to say that as long as the real rate of return on fixed CD's, etc is negative (ie net negative real return)...that commodities will prosper.
roadrunner
<< <i>The herd seems to have forgotten that gold did indeed rally while the FED was bumping interest rates from 1% to 6% a few years back. Gold also prospered in the later 1970's as rates were hiked from single digits to nearly 20%. It's odd how the manipulators have scared everyone into thinking that any rate hikes from here will squash gold. The bottom line is that until interest rates can pay for the difference between inflation and the rate (with a profit included), the metals will trend upwards.
A kick back to $875 today and no 5% drop into the $830's. There is enough bearish sentiment to build a foundation off of right now.
roadrunner >>
An interesting graph is to compare worldwide interest rates to gold. Many would not expect to see what it depicts. And this is the reason why I do not hold to the absolute 100% corrolation of gold vs the dollar that many do.
Knowledge is the enemy of fear
<< <i>
<< <i>The herd seems to have forgotten that gold did indeed rally while the FED was bumping interest rates from 1% to 6% a few years back. Gold also prospered in the later 1970's as rates were hiked from single digits to nearly 20%. It's odd how the manipulators have scared everyone into thinking that any rate hikes from here will squash gold. The bottom line is that until interest rates can pay for the difference between inflation and the rate (with a profit included), the metals will trend upwards.
A kick back to $875 today and no 5% drop into the $830's. There is enough bearish sentiment to build a foundation off of right now.
roadrunner >>
An interesting graph is to compare worldwide interest rates to gold. Many would not expect to see what it depicts. And this is the reason why I do not hold to the absolute 100% corrolation of gold vs the dollar that many do. >>
if you look at the dollar index compared to gold...is what you are saying? ..i haven't seen the graphs...i think there is going to be a disconnect between dollar index down / gold up, because of world wide inflation will affect the other currencies as well..and will therefore "keep" the dollar index from dropping as much.....yet the price of gold will increase.....am i right in following both of your thoughts?
About 28 yrs ago global interest peaked. About 7 years ago they bottomed.
Knowledge is the enemy of fear
Well Thank goodness this financial crisis is over and we can all get back to a stable psychological existence.
Surely all the coins we need to fill our holes will now be cheap!
No real need to own all these commodities obviously, as oil is headed back below $75, gold back to $550, silver back below $10, the Euro back to $1.
I think we all can see that the Fed lowering the rate to 2% was indeed the key to all of our problems, and now everything is right on track for a safe financial year.
Everything has changed right?
Yep, they found the magic bullet.
Saul Goode
on the other hand the worst could
be yet to come. Inflation is abating
according to the Government while
actually accelerating for the great
unwashed masses.
Stock are rising but it could be a rally
in a great bear market. Gold, silver, plat &
oil are dropping,with further to go but may go
into a reversal mode and go back up.
The talking heads are saying, BUY< BUY< BUY
SELL, SELL, SELL. Everything is normalizing
except there are food riots all around the globe.
Everyone is talking about helping homeowners
in distress while the number of repo homes
is hitting ever higher historical levels.
@&%
is going on, as well as what is going to happen.
I feel so much better knowing that we are all in good
hands with ALLSTATE and the Geico Gekko is looking
out for us.
Camelot
Fried in the financial sun
There is a new report from the US Comptroller of the Currency titled "OCC's Quarterly Report on Bank Trading and Derivative Activities, Fourth Quarter 2007", which shows that total bank holdings of derivatives is estimated to be "only" US$164.2 trillion
Current JSMineset page 5/2/08
The above link tends to indicate that the derivatives and credit mess is only worsening. The FED has just picked up education and credit card loan derivatives on their list of what to swap treasuries for. The list grows. Credit default swaps are now looming. The FED's bank account for buying under-water derivatives is just shy of a TRILLION. At the rate they are sopping up this sludge they will run out of money very soon. Then who gets to buy it?
Concerning that $164 TRILL in derivatives owned by US banks: $91 TRILL of that belongs to JPM. It's more than coincidence that they needed to sop up Bear's $14 TRILL in derivatives to keep their own $77 TRILL from imploding. The FED needs to keep JPM alive to keep themselves ticking.
roadrunner
by Anthony Cherniawski, The Practical Investor, LLC | May 2, 2008
The quote has been attributed to Benjamin Disraeli and popularized by Mark Twain. It could be applied to today’s Employment Report. The press headline reads, “ Nonfarm payrolls down 20,000; unemployment rate unexpectedly falls.” Folks, these numbers have been massaged to get the “right” outcome.
For example, in April, the number of persons working part time for economic reasons increased by 306,000 to 5.2 million. This level was 849,000 higher than in April 2007. These individuals indicated that they were working part time because their hours had been cut back or because they were unable to find a full-time job. 5.2 million workers comprise 3.8% of the alleged workforce.
Another example is the CES Birth/Death Model, which added 267.000 fictitious jobs to the employment data. The reason I say fictitious is the way they are distributed. For example, the model suggests that 83,000 jobs were added in Leisure and Hospitality, 72,000 jobs were added to Professional and Business Services and 45,000 jobs were added to the Construction Sector.
The last example is the most damning evidence yet of the state of our jobs market, called “Alternative measures of labor underutilization.” Total unemployed, plus all marginally attached workers, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all marginally attached workers rose from 9.1% to 9.2% in April.
Does that give you any confidence in the headline numbers on our employment situation?
The vaunted CES birth death model added 200,000 jobs this month to areas of the economy that are contracting. Considering that the net number was -20,000 for the month, the number without the wishful birth death model would have been closer to -200,000 jobs. No worry though, corrections could show up in a couple of months. No need to put out negative news about job growth at this time. The +45,000 jobs given to the construction sector is in sharp contrast to the -61,000 jobs that the construction trade reports. Since the BDM over-estimates new jobs during economic contractions, this is the perfect tool for the FED. But once a recovery starts and job growth begins, they'll come up with another model tweak because the BDM will be under-estimating new job growth at that time. For now, they are fine and dandy with how BDM works.
Ironically the unemployment figured dropped from 5.1% to 5% yet the BLS's own figures show dropping employment. Guess they must have kicked some "366 day" unemployed people off the unemployment roles.
Cherniawski full article
The +0.6% GDP growth of the last 2 quarters is circumspect considering that the GDP deflators used by the BEA to adjust for inflation were in the 2.4 to 2.6% range (they use even more absurd assumptions than the BLS does). This is in contrast to the inflation rate of >4% that the BLS uses in their monthly CPI estimate. Good thing the BEA wasn't using the more commonly published and "respected" inflation numbers or GDP would be -1% the last 2 quarters! Imagine what GDP would be like if true inflation numbers were used? They'll let us know in a year or so that we did indeed begin a recession in the 4th quarter of 2007 after they revise the numbers and see the "errors of their ways."
roadrunner
After all, the money is created out of thin air to allow citizens to purchase goods and services.
roadrunner
It does seem to have worked out well. Lots of upbeat news seems to be relfected in the 13,000 DOW and with the stimulus, another 1/4 point of the fed rate, it could be perceived as happy days are here again. They say that perception is reality but it's hard to embrace that notion in light of the other economic battles yet to be fought. So, I guess the stock market is going to surge in anticipation, metals will be flat for the immediate future, oil will active and will command everyone's attention, it's going to be a fun ride...well, maybe not too much fun but a ride none the less.
A good read as to how the transfer from subprime risks into credit defaults will likely go. To those that say the systemic risk in the $62 TRILLION credit derivatives market is only 1% or less, read on. There is every reason to believe they we are talking many multiples of that amount. A long read but with simple examples to show how the risks were created and why they aren't going away.
We're currently at hundreds of billions of dollars lost so far in sub-prime with plenty yet to go (20-50% so far?). Credit derivatives are 30X that market. That gets us started with probably losses in the $10-20 TRILLION range. Chump change when you have a printing press.
Even Berkshire Hathaway recently got whacked in the 1st Qtr 2008 on $1.7 BILLION in financial weapons of mass destruction (ie derivatives). Et tu Buffet? More than enough WMD's to go around for everyone!
roadrunner
<< <i>The timing of the stimulus package is absolutely perfect. I say it's dumb luck, but anyways... >>
LMAO Its a planed sale waiting to unfold. the dollar will tank price action dictates it may not happen within a week or two.'
Prediction, you have been briefed...
I have found power in the mysteries of thought.
It is always a question of knowing and seeing, and not that of believing.
Our virtues, and our failings are inseparable, like force, and matter. When they separate, man is no more.
.
The last one was close to an election, but not close enough to be considered obvious vote buying by most.
As Bush cannot be re-elected, the 2008 package is closer to the election. It is also vote buying.
In fact, most of the articles I see recently appear to be about class warfare and vote swaying. Lots of garbage from all corners designed to replace a reasoned thought process with baseless emotion.
Take these current events with a good healthy dose of history. Study that history. The future may be uncertain...we know much about the past.
"WSJ article"
NSDR - Life Member
SSDC - Life Member
ANA - Pay As I Go Member
<< <i>Here is another easy read. It's a column in the local free paper by a guy named Don Bauder. He's a retired investigative reporter for the local newspaper and a really good one at that. I am sure he has made a lot of big enemies and probably even has been threatened. Goes after evil developers and their political cronies on a regular basis. Lately he has been focusing a bit on the economy. It is localized to San Diego, but is an exagerrated microcosm of the national scene in some ways. >>
"You're walking around stoned all day." (first sentence)
are you sure that is San Diego and not Santa Cruz? hehehe
thanks for the post
here is something a wee bit different...i just dunno how one can "make money" doing this....unless 31 cents on the dollar is 'good'...
seems like some kinda Joe Lunchbox bail out plan..
reprinted in San Jose Mercury News via LA Times
roadrunner
<< <i>Derivatives Primer - where to next?
A good read as to how the transfer from subprime risks into credit defaults will likely go. To those that say the systemic risk in the $62 TRILLION credit derivatives market is only 1% or less, read on. There is every reason to believe they we are talking many multiples of that amount. A long read but with simple examples to show how the risks were created and why they aren't going away.
We're currently at hundreds of billions of dollars lost so far in sub-prime with plenty yet to go (20-50% so far?). Credit derivatives are 30X that market. That gets us started with probably losses in the $10-20 TRILLION range. Chump change when you have a printing press.
Even Berkshire Hathaway recently got whacked in the 1st Qtr 2008 on $1.7 BILLION in financial weapons of mass destruction (ie derivatives). Et tu Buffet? More than enough WMD's to go around for everyone!
roadrunner >>
He probably has more than a few dollars left.
<< <i> This time the money went where it can do the most good, in the pockets of consumers, not bankers and their buddies. That's what they should have done the first time around instead of bailing out stupid rich people who hoard wealth when times get tough. >>
Well, my wife and I must be one of those "rich" people who got scre*d out of the stimulus rebate because I had some large capital gains in 2007 (mostly in coins, believe it or not) and therefore do not get a stimulus rebate at all. Those who had less than $3000 in social security income and/or earned income as well as those who had more than $175,000 in total joint income get nothing.
Are we (both poor and rich) less worthy than other Americans when it comes to spending stimulus rebates?
It was because I DIDN"T hoard my wealth and sold some of it in 2007 that caused me to lose my stimulus rebate!!!
Knowledge is the enemy of fear
<< <i>Is doom and gloom a fairy tale? >>
Common sense doesn't sell books.
One can paint a much rosier future than the author without working too hard
at it. There are a lot of positives that are just being overlooked. Everything is
cyclical and it's always darkest before the dawn.
But we shouldn't get complacent by any means since it's pretty dark before a
storm as well.
Dick Army and Mike Holland were on CNBC this AM having a discussion, and Army was complaining about the Bear Sterns Government bailout.
Holland was talking about how close Bear was to going under and bringing the rest of the Houses down with it. It was a matter of a day or
two away from happening. The whole system had seized up.
I do believe that the severity of the banking crisis has been played down. The CNBC folks sat there like some secret had just been revealed.
A secret that they had previously known about but one that they weren't supposed to discuss.
Because of our recent financial mistakes the nation is about to go through another huge increase in government control.
While I agree that the government couldn't let the economy collapse. How will anyone learn if they are not meant to pay for their mistakes.
The government cannot continue and cannot afford to bail the American people and American Business out everytime something goes wrong.
Oil prices have been high many times in the past but no one has found a better solution. The rewards for finding a cancer cure are huge but no has solved that problem either. The free market doesn't magically come up with a solution to everything.
As far as changing direction, which one of the 3 candidates with a chance of winning proposes major changes? None of the above. Short term gimmicks to get elected. More of the same like bombing another Middle Eastern country that means much bigger deficits and oil prices.
No question living standards for most Americans will continue to fall but I'm not sure how that is a positive.
Some See Oil
At $150-$200 a Barrel
This Year?
Heap Big Oil Increase in WSJ
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
<< <i>Oil to $200 bucks a bbl ?
Some See Oil
At $150-$200 a Barrel
This Year?
Heap Big Oil Increase in WSJ >>
maybe this link works better for a few days at least
what is rather funny (sad) is there is also an article regarding the housing crisis being over...well if you are a hedge fund firm, i guess you'd better try to spin something (anything) PDQ
mobiles?
am i the only one noticing more and more hybrid cars on the road?
i had to put a down payment at Toyota just to get on the list to get
a Prius hybrid at the end of the month. They are the hottest selling
car in the nation it seems.
also, many folks, like me, will probably take nice vacations in our
home state or next door neighbor states close by. people are going
to change to save money and visit local attractions instead of driving/
flying 1000-3000 miles to a remote destination.
the article mentions we are using less oil lately. won't this trend continue
as more people get vehicles capable of 45+ MPG?
Maybe trains will have a rebirth soon as they are capable of hauling
mass amounts of goods great distances without using as much oil?
Maybe people will move back to the city or closer to their jobs? I made
a vow several years ago that I will never commute more then 30 minutes
one way to my job. Never again. Waste of my time and life to do that.
Maybe nuclear power will finally get respect in this country and plans
to build reactors that are safe will happen in the next 10 years?
we as a country have many options including drilling for oil in our own
territory. it will simply take higher prices to make it happen as many
have predicted to make us change.
heck, i might be an optimist. i must be ill ;-)
for renewable energy, as well as significantly better gas milage,
then 6-7 dollars a gallon for gas. This means more efficiency, smaller
lighter cars, as well as less useless trips.
HIGH COST WILL TRANSLATE INTO
BETTER CONSERVATION OF RESOURCES.
Camelot
<< <i>As cruel as it may sound, nothing will bring innovation
for renewable energy, as well as significantly better gas milage,
then 6-7 dollars a gallon for gas. This means more efficiency, smaller
lighter cars, as well as less useless trips.
HIGH COST WILL TRANSLATE INTO
BETTER CONSERVATION OF RESOURCES. >>
Although I generally agree with this, there will be a great deal of collateral damage along the way.
Folks will tighten up other expenditures before they change their driving habits...before folks discover new ways to utilize energy...before they stop driving solo...before they move closer to work...
Right now, for example, restaurants are taking it on the chin. People are eating in more.
There are many, many easy things that can be done to live more frugally.
Folks buying less coins for example (yikes)
I suspect that Japan and China (and Korea and Thailand and all the rest) will be pretty upset when folks stop buying flatscreens (if that happens).
There is a lot of belt-tightening that will occur before folks, who have been used to burning energy at this rate for all of their lives...change those habits!!!
The next cycle may be the "nuclear" cycle. There are ways to burn that stuff fairly completely, leaving little "ash"...producing vast quantities of energy. This may be what fuels the next cycle...as with that sort of energy, seawater can be easily turned into drinking water...oil can be produced from air or anything else that has carbon in it...why even go there, you have lots of hydrogen available from that process...if you scale energy up to the levels attainable there, you can do lots of things. Heck, with enough neutrons, you can turn lead into gold...but that would probably be some pretty unstable 'hot' gold. And there would not be very much of it. And i'm not sure I would want a nuclear gold coin.
Germany $8.63
Denmark $8.14
Brazil $6.01
Canada $4.73
Australia $5.18
New Zealand $5.42
Hong Kong $7.56
Iceland $8.06
Isreal $7.20
Netherlands $8.95
Norway $9.55-----Norway is one of the largest oil producers.
Pakistan $4.01-----One of the poorest countries in the world.
Romania $6.32-----One of the poorest countries in the world.
Sierra Leone $18.42----One of the poorest countries in the world
Turkey $10.13
England $8.18
Russia $3.79
USA $3.70
Knowledge is the enemy of fear
in CA prices are at or very close to $4 with mid grade and superduper about 15 and 20 cents higher. i see prices for premium increasing more than the customary 20 cents more over 87. the tank-mixed mid grade is reflecting that now.
i agree with Bear more will be more efficient with their trips and drive slower and less. the gas hogs are here for another 5 years at least as many are so upside down on resale that they have no other choice.
BTW more on topic....when will gold disconnect from the dollar index and tie itself to inflation? it was oil/gold now USD/gold when inflation/gold???
Germany $8.63
Denmark $8.14
Brazil $6.01
Canada $4.73
Australia $5.18
New Zealand $5.42
Hong Kong $7.56
Iceland $8.06
Isreal $7.20
Netherlands $8.95
Norway $9.55-----Norway is one of the largest oil producers.
Pakistan $4.01-----One of the poorest countries in the world.
Romania $6.32-----One of the poorest countries in the world.
Sierra Leone $18.42----One of the poorest countries in the world
Turkey $10.13
England $8.18
Russia $3.79
USA $3.70
Unfortunately, it looks like it will take higher prices like these to force change in the US. Maybe even the creation of an energy policy!
Yes, we have been living a charmed life for a long time. Everybody else in the world is driving these little 4 cylinder cars because of the cost of gasoline but the other factor that makes this significant is that the U.S. uses unleaded gas with 10% ethanol. That is a pretty sophisticated refinery mix and we also change formulations for seasonal blends so we have pretty high end fuel that is shamefully inexpensive on the world chart.
I had suggested earlier that we can end this silliness in one quick flip of the pen; simply not allow anything over 6 cylinders on U.S. highways without a special annual permit, maybe $1,500 to $2,000/year. That will lower our consumption considerably and get many of these bus sized personal (conspicuous consumption) vehicles off the road although $5+ gas may have the same effect. So, if you want to act big and rich, you should have to pay big too. And as an added benefit, instead of buying these 8 cylinder premium unleaded fuel only vehicles for 25 or 30 thousand dollars or so, we can start having 15 to 20 thousand dollar plain unleaded fuel vehicles that would be more affordable and also be less expensive to operate. This would be very bad for the U.S. economy though because the banks would be writing smaller car loans and the car makers would have to make reasonable vehicles for less profit. The only one that would come out of that scenario in better shape would be the consumers.
<< <i>"Worldwide gasoline prices in US$ per gallon."
Yes, we have been living a charmed life for a long time. Everybody else in the world is driving these little 4 cylinder cars because of the cost of gasoline but the other factor that makes this significant is that the U.S. uses unleaded gas with 10% ethanol. That is a pretty sophisticated refinery mix and we also change formulations for seasonal blends so we have pretty high end fuel that is shamefully inexpensive on the world chart.
I had suggested earlier that we can end this silliness in one quick flip of the pen; simply not allow anything over 6 cylinders on U.S. highways without a special annual permit, maybe $1,500 to $2,000/year. That will lower our consumption considerably and get many of these bus sized personal (conspicuous consumption) vehicles off the road although $5+ gas may have the same effect. So, if you want to act big and rich, you should have to pay big too. And as an added benefit, instead of buying these 8 cylinder premium unleaded fuel only vehicles for 25 or 30 thousand dollars or so, we can start having 15 to 20 thousand dollar plain unleaded fuel vehicles that would be more affordable and also be less expensive to operate. This would be very bad for the U.S. economy though because the banks would be writing smaller car loans and the car makers would have to make reasonable vehicles for less profit. The only one that would come out of that scenario in better shape would be the consumers. >>
Good suggestions. However, it isn't about the efficiency so much as the total fuel consumed. Why should an SUV mom be punished driving around town infrequently, putting on 3,000 miles a year, while the prius driver who commutes two hours outside of some big city putting on 25-30,000 miles a year be seen as some sort of "energy conscious" prudent consumer?
Gas prices have been far too low and it has spurned the sort of mindless, wasteful building models (suburbia and exurbia) as found all over America and spawned NASCAR races, SUV's and gas guzzling "toys" by the millions.
Gas is a commodity, those who felt it was some sort of "entitlement" to be had at $1.00 a gallon that they could live 80 miles from their place of work and plan their lives around such a faulty assumption are the ones who need to change or pay. Cheap gas and oil are not an entitlement and if you built your life or business model on those assumptions, well then tough sh*t. I didn't, and I want to drive my twelve cylinder Jaguar in the summer.
Just some thoughts,
Tyler
And how long can Europe continue economic growth with high energy costs?
The rest of the world should feel very lucky that we have "relatively" low energy costs. Just think how much business they would get if we paid $8 per gallon. Wait till you get your heating oil and gas bill next winter.
Knowledge is the enemy of fear
<< <i>"Worldwide gasoline prices in US$ per gallon."
Yes, we have been living a charmed life for a long time. Everybody else in the world is driving these little 4 cylinder cars because of the cost of gasoline but the other factor that makes this significant is that the U.S. uses unleaded gas with 10% ethanol. That is a pretty sophisticated refinery mix and we also change formulations for seasonal blends so we have pretty high end fuel that is shamefully inexpensive on the world chart.
I had suggested earlier that we can end this silliness in one quick flip of the pen; simply not allow anything over 6 cylinders on U.S. highways without a special annual permit, maybe $1,500 to $2,000/year. That will lower our consumption considerably and get many of these bus sized personal (conspicuous consumption) vehicles off the road although $5+ gas may have the same effect. So, if you want to act big and rich, you should have to pay big too. And as an added benefit, instead of buying these 8 cylinder premium unleaded fuel only vehicles for 25 or 30 thousand dollars or so, we can start having 15 to 20 thousand dollar plain unleaded fuel vehicles that would be more affordable and also be less expensive to operate. This would be very bad for the U.S. economy though because the banks would be writing smaller car loans and the car makers would have to make reasonable vehicles for less profit. The only one that would come out of that scenario in better shape would be the consumers. >>
Most of what you say is valid but what appears obvious to me is that, if gas prices were to fall, people will relax their more prudent driving styles. Yes, an increase in the price of gas forces people to be more prudent with their driving but conversely lower prices will relax that. We need a reduction in foreign oil dependence along with more efficient cars. The people, and I'm thankfully not one of them, with the 6-8-12 cyl. cars do pay more for their gas. Their cars are less efficient which requires more gas which is tied to a hefty gas tax.
Which, speaking of gas tax, how motivated is the government to push more efficient cars when they are so dependent upon gas taxes?
Which means taxes will be going up.
Knowledge is the enemy of fear
I couldn't disagree more. Cars don't need V-6 engines. There shouldn't be a Honda or Toyota car on the road with a V-6 engine - all that does is add weight and reduce fuel economy.
Ren