Well...........excuse me.....I just go for the strohmans. How much was your sourdough 10 years ago?
I dont know what your "invoices" are for but the only inflation I see is my brokerage statement. The market has been, as Sammy Sosa, said "Been very very good to me" Now I'll just lumber out my my "office"--picture enclosed--and do a little fishing.
<< <i>mining stocks getting destroyed in the free marketplace? Is the entire stock market wrong? >>
Most mines are not in the US. The cost to mine gold in South Africa based in South African currency is actually going up while the value of the gold they produce in thier own currency hasn't changed much.
<< <i>mining stocks getting destroyed in the free marketplace? Is the entire stock market wrong? >>
Most mines are not in the US. The cost to mine gold in South Africa based in South African currency is actually going up while the value of the gold they produce in thier own currency hasn't changed much.
Kitco has some good commentaries regarding this. >>
That is true. The larger gold pruducers are Canadian. One reason the miners are down is because the dollar is getting stronger. Hence less profits when the currency is converted. The strength is the dollar is also hurting the prices of other raw materials. Another reason why the inflation scare is over.
<< <i>Then he spent Billions on military toys and the National Debt Trippled during his presidency. >>
Which spending ended the cold war, freeing Americans (until the rise of terrorism) from the threat of world war and nuclear annhilation. To me it was worth it.
cohodk, don't you know it's all a vast conspiracy? Hundreds of bureaucrats of both parties are conspiring to "cover up" our real economic situation. Tri-lateral Commission and all that
Alan Greenspan holds a Ph.D. in Economics, served in an economic consulting firm for ten years, served as Chairman of the President's Council of Economic Advisers for three years then as Chairman of the National Commission on Social Security Reform for two years. He was also a member of President Reagan's Economic Policy Advisory Board, a member of Time magazine's Board of Economists, a senior adviser to the Brookings Panel on Economic Activity, and a consultant to the Congressional Budget Office. Greenspan also was a member of the President's Foreign Intelligence Advisory Board, the Commission on Financial Structure and Regulation, the Commission on an All-Volunteer Armed Force, and the Task Force on Economic Growth. He was Corporate Director for Aluminum Company of America (Alcoa); Automatic Data Processing, Inc.; Capital Cities/ABC, Inc.; General Foods, Inc.; J.P. Morgan & Co., Inc.; Morgan Guaranty Trust Company of New York; Mobil Corporation; and The Pittston Company. Greenspan has also served as Member of the Board of Trustees, The Rand Corporation; Director, Institute for International Economics; Member of the Board of Overseers, Hoover Institution (at Stanford University); and Vice Chairman and Trustee, Economic Club of New York, Chairman of the Conference of Business Economists, President and Fellow of the National Association of Business Economists, and Director of the National Economists Club. He has served as Chairman of the Federal Reserve under both Republican and Democrat presidents.
Yes, he makes mistakes, since he is human. I'll bet he does a far better job than any of his detractors on this message board could do. Does anyone in this thread hold a Ph.D. in Economics and have 30+ years experience in the field? Just curious!
<< <i>Then he spent Billions on military toys and the National Debt Trippled during his presidency. >>
Which spending ended the cold war, freeing Americans (until the rise of terrorism) from the threat of world war and nuclear annhilation. To me it was worth it.
cohodk, don't you know it's all a vast conspiracy? Hundreds of bureaucrats of both parties are conspiring to "cover up" our real economic situation. Tri-lateral Commission and all that
Alan Greenspan holds a Ph.D. in Economics, served in an economic consulting firm for ten years, served as Chairman of the President's Council of Economic Advisers for three years then as Chairman of the National Commission on Social Security Reform for two years. He was also a member of President Reagan's Economic Policy Advisory Board, a member of Time magazine's Board of Economists, a senior adviser to the Brookings Panel on Economic Activity, and a consultant to the Congressional Budget Office. Greenspan also was a member of the President's Foreign Intelligence Advisory Board, the Commission on Financial Structure and Regulation, the Commission on an All-Volunteer Armed Force, and the Task Force on Economic Growth. He was Corporate Director for Aluminum Company of America (Alcoa); Automatic Data Processing, Inc.; Capital Cities/ABC, Inc.; General Foods, Inc.; J.P. Morgan & Co., Inc.; Morgan Guaranty Trust Company of New York; Mobil Corporation; and The Pittston Company. Greenspan has also served as Member of the Board of Trustees, The Rand Corporation; Director, Institute for International Economics; Member of the Board of Overseers, Hoover Institution (at Stanford University); and Vice Chairman and Trustee, Economic Club of New York, Chairman of the Conference of Business Economists, President and Fellow of the National Association of Business Economists, and Director of the National Economists Club. He has served as Chairman of the Federal Reserve under both Republican and Democrat presidents.
Yes, he makes mistakes, since he is human. I'll bet he does a far better job than any of his detractors on this message board could do. Does anyone in this thread hold a Ph.D. in Economics and have 30+ years experience in the field? Just curious!
I'm so glad that Greenspan is the man. Here I thought we had huge budget and trade deficits but I guess that's all just Democratic lies.
The last 100 years of inflation was a lie too. The dollar is just as strong as it was in 1913 when JPMorgan and the boys hijacked the Federal Monetary supply.
Yes, he makes mistakes, since he is human. I'll bet he does a far better job than any of his detractors on this message board could do. Does anyone in this thread hold a Ph.D. in Economics and have 30+ years experience in the field? Just curious!
Economists are some of the biggest blowhards and blurers of the truth out there. Their job at the university is to support govt studies (toe the party line) to receive grant money to help "prove" what most politicians would like us to believe. The Keynesian crap that has been rampant and taught for half this century is just now starting to show how wrong it all is. PhD in economics? Please! Most of those jokers have no clue about how real markets (manipulated or otherwise really work). Though I do have to say that Dr. Antale Fekete is one of the exceptions. For economists that support administrations they got nice jobs in the govt to support their research, etc. Those that buck the trend, etc...get farmed out....whether right or wrong.
And as far as who could have done a better job? How about Paul Volcker for one who as a the FED Chief during the stagflaton of the late 70's and 80's helped to "kill" the commodities markets (and gold) for 2 decades by his monetary policies. Volcker has been quite outspoken as of late on the pickle that Greenspan has driven us into...with little chance of escape. There are numerous links on the web.
Let's wait another few years before we give old Greenspam any honors. We just might have a different opinion of him at that time.
<< <i>Economists are some of the biggest blowhards and blurers of the truth out there. >>
I'd rather trust a blow-hard with a doctorate and experience in the field than one on a coin message board, but apparently I'm in the minority
RR, what credentials, exactly, do you have that make you such an "expert" on economics. I don't mean this as a personal attack; as you know we agree on other things (such as silver), but seriously, is it not farcical that people less educated than Greenspan with less experience come to a message board and tell everyone what a bad job he does?
I heard they were making a French version of Medal of Honor. I wonder how many hotkeys it'll have for "surrender."
Although Greenspan certainly qualifies as "mainstream", I would consider him on the edge of mainstream, especially considering his early influences. (ie, Ayn Rand). We have had a long period of relatively low inflation, stability, and prosperity. To the extent that we suffer from serious potential problems, (eg, living beyond our means), I don't think Greenspan is to blame. He needs to operate within the constraints of American culture!
Oreville -- are you growing organic vegetables, or part of a purchasing cooperative? Now that I'm back in the US, I'm looking forward to doing some fairly large scale gardening.
Hey, I'm no expert but I am allowed to voice an opinion concerning the biggest credit binge we've ever had in the history of our country over the past 10 years. Greenspan has played a major role in allowing it to go on. From his "irrational exuberance" comment around 1997 to becoming the king of assets bubbles just doesn't make sense. And now he's trying to back out by stating that we have some serious deficit issues to consider that could seriously impact our economy down the road. If he didn't agree with the direction that "society" (i.e. the central banks, govts, and major financial houses) was looking to go he could have stated contrary opinions or stepped down. But he sold the rest of his integrity to ride the wave further up.......and eventually even further down for the rest of us.
There has been some prosperity the past 20 years....but at the great expense of all future generations. What a fine legacy we will be leaving our kids and grand kids. And this "progress" is something to be proud of?
Sometimes I have to buy a cup of nightcrawlers, but they cost the same as 10 yrs ago.
Actually my freezer is full of venison and veggies from last year. I might eat 1 fish per month.
I am still planting my garden. We had a good frost last week so I have to be careful. My garden is about 2000 sq.ft. Last year we froze about 100 pounds of strawberries, and 50 packages of sweet corn. I had a bushel of carrots and 2 of beets. One beet weighed almost 4 pounds. Here is a pic
To get us back on track....gold is down $1 and jobless claims were less than expected. The dollar is stronger and bonds are steady.
South Africa does not have higher prices. What happens is when they sell the gold they produce in dollars they then must convert those dollars into their currency-the rand. Because the dollar was losing value, they can only buy fewer and fewer rand. Thus hurting their profitablilty.
<< <i>South Africa does not have higher prices. What happens is when they sell the gold they produce in dollars they then must convert those dollars into their currency-the rand. Because the dollar was losing value, they can only buy fewer and fewer rand. Thus hurting their profitablilty. >>
Sorry dude but you need to rethink that one. First off there is no requirement that they sell thier gold in dollars, gold sells in any currency you want to sell it in. Secondly, the value of the gold changes hourly to offset any decline in the dollar. Even if they sold for dollars and then converted to rand they would have no depreciation.
Look at kitco, gold is valued in rand, the world does not transact all business in dollars.
<< <i>South Africa does not have higher prices. What happens is when they sell the gold they produce in dollars they then must convert those dollars into their currency-the rand. Because the dollar was losing value, they can only buy fewer and fewer rand. Thus hurting their profitablilty. >>
Sorry dude but you need to rethink that one. First off there is no requirement that they sell thier gold in dollars, gold sells in any currency you want to sell it in. Secondly, the value of the gold changes hourly to offset any decline in the dollar. Even if they sold for dollars and then converted to rand they would have no depreciation.
Look at kitco, gold is valued in rand, the world does not transact all business in dollars. >>
South Africans do not buy very much gold. Therefore very little trades in Rands. It is all shipped out and sold in dollar terms. Just spend some time in the business and you will see what I mean.
Note that while the buying of our bonds by Japan and China has wilted, England and the Caribbean Islands has increased substantially. The Caribbean Islands are the great slush fund for monetary laundering. No one knows who is doing exactly what.
Possibly one of the factors why the Rand has been so strong over the past 2 years is that the South Africans have not been printing fiat money like crazy like most of Europe, Asia, and the US. The fact that much of the value in that country is in natural resources may also factor in. But hey, I'm no economist.
Here's an exerpt from an article by Doug Gnazzo:
Alan Greenspan is not stupid, as a matter of fact he is quite brilliant, and an expert on all things monetary. However, somewhere along the line he chose to become a political animal as opposed to an honest money proponent, as he was in his early days, as is witnessed by the paper he wrote in 1964 Gold and Economic Freedom originally to be included in a publication of Ayn Rand’s, who referred to the Chairman as “the undertaker”.
Coupled with the above quote by Sir Alan you know he knows the truth, but for whatever his reason – he has chosen not to follow it. Perhaps he prefers to lead a pale horse, as opposed to accepting to follow silver and gold – as they are sovereign, not he. Absolute power corrupts absolutely as Lord Acton said.
“In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold. If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.
This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the "hidden" confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard.” [Alan Greenspan – Gold and Economic Freedom]
I don't buy the fact that Greenspan saw the fallacy in a gold backed economy. Rather, he jumped ship rather than buck the current and he has been rewarded quite handsomely for his about face.
If a country ties its currency to a precious metal, doesn't that lead to severe deflation when the population or economy of the country grows but their precious metal reserves stay the same? Not trying to start any arguments, just an honest question.
I heard they were making a French version of Medal of Honor. I wonder how many hotkeys it'll have for "surrender."
Yes. The United States suffered through several severe recessions/depressions during the 1800's and early 1900's which can in part can be tied to the fact the dollar and other world currencies were tied to gold.
To get back to my comments about South African mining. Here is are comments from the CEO of Anglogold Ashanti, a large gold mining concern,
"Referring to margins, he observed that it was undoubtedly a great frustration for investors that as the gold price had risen over the past year, margins in gold companies had shrunk. One of the drivers of the higher gold price was the weaker US dollar, which in turn meant stronger operating currencies in almost all of AngloGold Ashanti's producing regions including Australia, Argentina, Brazil, Namibia and South Africa."
I guess we'll just keep on waiting for the next great gold mine or oil field discovery that will help to restore balance to the world's economic system. Until then....hang on tight. Prior to so many gold miners getting squeezed recently world gold production was increasing at about a 2-3% per year clip. That would be an adequate amount to cover a nominal population growth. Certainly our current Fed Reserve system was not the best possible answer, unless the goal was to transfer wealth from society at-large to the owners of the FED. That particular goal has been met.
Another view on the markets & Greenspan from Mike Hoy (see full article on www.kitco.com.
With interest rates rising, the interest charges that these “whiz kids” are paying is rising and at the same time the value of their long term investments are falling; in essence they are being squeezed two ways and then when the junk bonds they own get downgraded they get hit again. The most ironic part of this is when those people who have been on the right side of a trade, and have made good profits, try to collect from a bankrupt entity; forget it!
Again people, this is not rocket science and the handwriting is on the wall. There are rumors all over the place about major banks and hedge funds being in a “pickle” as a result of their “carry trade” speculations! Open up your eyes and ears, take notice of these things because when the bomb goes off it will be too late to put your gold positions back on or get out of the interest rate sensitive investments.
With interest rates rising the biggest joke is the real estate and housing markets. The introduction of “adjustable rate mortgages” and “interest only mortgages” will, in the end, single-handedly destroy these markets. When the end comes to the real estate market it could happen overnight. All offers to buy could simply disappear like fog when the sun comes out. If ever there was a market epitomized by the “greater fool theory” this is the market; at least until the third wave of the gold bull market sets in, when these same people will get creamed all over again.
To understand that the vast majority of real estate purchases made today are made with no money down and an interest only loan. Why? Because this is all that is left to continue the “spin.” These new purchases incorporate the interest only concept to make a home affordable for the buyer. The sad part to this is that the financial institutions who are loaning the money do not care about anything after the first year of payments. They could care less if the buyer has no margin for error in the event of any kind of financial hardship.
We must also understand that the “arm and interest only loans” were devised to prolong the refi game. Once rates stopped going down the “powers that be” were forced to come up with a new gimmick to prolong the worst financial joke and crisis to be dumped on a debt junkie society of all time. The “powers that be” totally destroyed the concept of savings and financial responsibility for the preservation of the illusion of recovery and growth.
“The Greatest Financial Hoax of All Time,” perpetrated by none other than “Mr. Magoo” himself. This hoax was created by simply giving the masses what they wanted; everything their hearts desired at an unbelievable low interest rate!
I find it mind boggling to go back one year and read how Greenspan was a total fan of derivatives and how he stated that they served a very useful purpose in today’s world. Now, one year later we are hearing the man come out with warnings about the derivative markets and how entities like Fannie and Freddie need to be more closely scrutinized.”
Do you hear it? It is loud and clear if you listen! Tick Tock Tick Tock! You bet the timer has been tripped. The only question I have is how long before the explosion? I think that Greenspan is trying to tell us something. Actually, he is now trying to save his legacy; a legacy that never existed in the first place, he is paddling up the Mississippi in a canoe with nothing but holes and a broken oar. In short he is sunk!
About the only thing that gives me a bigger laugh is our brilliant elected gentlemen who believe that the fault lies with the individual who has piled on the debt. They believe that the bankruptcy laws need to be stiffened to shaft the borrower. I believe the borrower is no different than a drug addict and once the binge begins he is not responsible for what he has done and has no choice in the final outcome. I believe the financial institutions have broken every golden rule that ever existed when it comes to loaning “other people’s money” and the financial affordability of those they are loaning that money too. In short they have made no effort to insure their depositors that the people borrowing the money have a chance of being able to pay it off. I belief the fault lies with the financial institutions because they should know that most of these people carry big time borrowing risk. It is the responsibility of the financial institution to only loan their depositors money to those who can truly afford to pay it back!
One of the problems I have with many of the authors of many of these articles on Kitco, is that like the slick sales men on Wall Street these guys are day traders. Sure they make money, but they are not investors that have other jobs that they must concentrate on. They are in and out in an instant playing spreads, they are long, then short, then in this company, out into another company.
I sold my metals shares last week not because I personally had lost interest in the metals but because even though all the metals are up for the year most all the mining companies are DOWN. In many cases it is not outside manipulations that cause these down trends, but the miners themselves playing the derivatives markets. As far as I am concerned they are no longer to be trusted.
Mr. Casey said in a recent article that he did not worry about making money in the metals market that if you stripped him of all of his assets he would be rich again in a couple of years. I am sure he is right, but he is not an investor looking for a several year trend, he is in fact a speculator.
The simple fact is that even though most of these authors write real stories about real potential disasters, their general investment advice is just horrible. Not because they don’t have their facts straight, but because they are consistently advising folks to invest in volatile bullion, and mining stock markets.
We are all very lucky here that we have our knowledge of numismatics. The very best investment one could have made in the last few years as a metals related investment has been slabbed $20 common date Gold coins.
How many times do these guys pushing metals stocks ever say, “Hey man every time the gold market dips, go on ebay and buy $20 U.S. gold pieces”?
Goldsaint, you have valid points about market manipulations. It happens in stocks & bonds as well as PM's. Hey, our own govt via the US Treasury's ESF (created by Reagan following the Oct '87 stock crash) is in the stock and gold markets daily manipulating them as needed. It's a tough game to beat to be sure. One article I read that did some history on years of gold trading said that in 94% of the cases, gold trended bearishly each day. This is a remarkable statement considering that 50/50 would be the norm. Obviously negative manipulation skews the norm. The gold price never moves more than 6$ or so upwards in a day. It is not allowed and the ESF and others will move to stifle gains any larger. On the downside however there is no limit. Funny isn't?
I concur with Gold $20 Saints over gold bullion, at least for the present. I own very little gold bullion or gold shares. Any gold I do own is basically in $20 Saints/Libs. The numismatic weight does carry value to all of us. A number of gold miners are still overly hedged such that as the price of gold goes up they lose money. One solution is to invest in only unhedged miners. But as you said, when things are manipulated downwards, everyone gets hit. If this long term gold market is for real, there will be very challenging downward spikes ahead that will test the most hardened of gold bugs. And at each of those will be a line of pundits claiming that they told you so and that gold is dead. Until the world gets its financial house in order and unwinds the carry trades and asset bubbles, gold is still in play.
Wait until the Dow and S&P take some serious whacks in the years ahead if you want to see some pessimistic views. There is no doubt that it is coming. Whether gold can rise above that remains to be seen.
I don't know whether Hoy's statements about Real Estate are really true or not. Seems far fetched from a residential RE perspective. Maybe more feasible from Commercial. But I'm sure that more loans today are of more leveraged than they were last year or years prior.
The full article is linked below for your convenience. Content is high on the Chicken Little scale but still worth a read.
“Today's Real Estate bubble has propelled Fannie Mae and Freddie Mac to become two of the largest financial institutions in the world. Their presence in today's financial markets is dominating as they play a monstrous role in the debt and derivatives markets.
Currently, Fannie and Freddie are liable for over $3 trillion dollars of outstanding debt securities to the markets. Folks, our national debt is at $8 trillion. How is it possible that Fannie and Freddie can accumulate debt of their own that is nearly 40% of our nation's debt?
It's the misconstrued implication that this debt has 100% U.S. government backing that makes it so easy for these two companies to issue to the public?
Let's paint a picture of what the Real Estate bubble has done to the bond markets and the presence Fannie and Freddie have in it. Total estimated bond market debt today, both public and private, amounts to $25 trillion. That includes Municipal, U.S. Treasury, Corporate, Fed Agencies, Money Market, Asset-Backed and of course Mortgage-Related bonds. Mortgage-related debt includes common MBS vehicles such as Pass-Throughs and CMOs (Collateralized Mortgage Obligations) as well as others. Out of these seven or so major bond market categories, mortgage-related debt is the largest by far accounting for over 20% of all bond market debt, and towering over corporate debt by 15% and U.S. Treasury debt by 30%. Fannie Mae and Freddie Mac house nearly 60% of this mortgage-related debt!
The Real Estate bubble has drastically changed the dynamics of the bond market. Up until 1999, only six short years ago, Treasury debt actually exceeded mortgage-related debt with several other categories nearly at par. Today, mortgage-related bonds have left them all in the dust. To take it even further, in 1990 mortgage-related bonds totaled only half as much as U.S. Treasury bonds. This bond market data in fact reveals that the Real Estate bubble is not a myth and has changed the dynamics of the world financial markets.
May 17 - The Wall Street Journal (Ruth Simon): "In the latest sign of how frothy the housing market has become, new data show the degree to which people are stretching to buy homes in a hot hosing market. The data, from the Mortgage Bankers Association, show that adjustable-rate and interest-only mortgages accounted for nearly two-thirds of mortgage originations in the second half of last year... 'The situation with interest-only loans ARMs is just one of several very scary things going on in the mortgage industry,' says Stu Feldstein, president of SMR Research Group... In California, where home-price growth has been sizzling, interest-only loans accounted for 61% of the mortgages taken out to buy homes in the first two months of this year... Many economists see the current popularity of ARMs and interest-0only loans as the latest sign of how borrowers are stretching to buy homes they couldn't other wise afford - and how lenders are more tan willing to accommodate them."
May 17 - The Wall Street Journal (James R. Hagerty): "Rapid home-price inflation spread to more cities in the first quarter, the National Association of Realtors said in a report released last week. The NAR found that median prices for previously occupied homes rose at double-digit rates from the year-earlier quarter in 66 of the 136 metropolitan statistical areas included in its quarterly survey. That was the highest number of double-digit gains recorded by the NAR since it began compiling such metropolitan tables more than 25 years ago... The biggest increase recorded in the latest quarter was 46% in Bradenton, Fla. Florida also had two of the other biggest increases -- 36% in both Sarasota and the West Palm Beach-Boca Raton area. Other large gainers included Riverside-San Bernardino, Calif. (33%), Las Vegas (29%), Sacramento, Calif. (27%), and Atlantic City, N.J. (23%)."
May 18 - Bloomberg (Andrew Ward): "Surging U.S. home prices aren't just for big cities and sunny coastal communities. From Jackson, Mississippi, and Wichita, Kansas, to Rockford, Illinois, and Green Bay, Wisconsin, housing prices are rising at more than three times the rate of inflation.
The Wall Street Journal (Ruth Simon): "In the latest sign of how frothy the housing market has become, new data show the degree to which people are stretching to buy homes in a hot "hosing" market. The data, from the Mortgage Bankers Association, show that adjustable-rate and interest-only mortgages accounted for nearly two-thirds of mortgage originations in the second half of last year
Interesting facts. And I definitely agree with the "hot hosing market" comment. People will be in for one heck of a HOSING when the bubble bursts.
Here's a fine article by Puplava. What's interesting is the lead in paragraphs on how rapidly increasing credit is indeed an inflationary fuel but doesn't get tracked as such on any of the indexes.
TIPPING POINTS: leading to a fall by Jim Puplava Storm Watch Update May 20, 2005
Economists are calling it a “soft patch,” a temporary slowdown in economic growth. This reflects a regression from earlier euphemisms of a “Goldilocks” economy. I’m sure before long the “soft patch” will turn into a “soft landing.” However, I’ve yet to see a “soft landing” in my 30 years in the investment business. Soft landings are as rare as the dodo bird. It is surprising to see this term resurface every time we are about to head into a recession. Perhaps economists think it has a more palatable sound than recession and depression, which are more frightening terms to investors.
What we can say with a certain degree of confidence is that the Fed will keep raising interest rates until they arrive at a "neutral rate," i.e. an interest rate that is neither stimulative nor contractive for the economy. Reality is something different. The Fed can never truly arrive at a neutral rate. They habitually raise rates until something breaks—usually either in the economy or the markets, but in most cases it's both. The days in which the Fed could fine-tune the economy ended several decades ago with the emergence of the financial economy. Today, even more money is injected into the economy and the investment markets outside the traditional banking sector. Last year the US economy added $2,718 billion in debt. However, the broadest measure of the money supply (M3) expanded by only $587.5 billion. For those who are relieved that money supply growth has slowed down, as shown in the table below, take no comfort. Credit expansion in the US is rampant as reflected in last year's total credit expansion of $2,718 billion.
Commercial Loans 18.6% 17.7% 10.8% Comm Bank Credit 14.5% 10.6% 7.9% Finance Comp Credit 6.6% 7.8% 6.3% Forgn Centr Bank Gov't 13.5% 15.5% 17.6% Source: Grant's Interest Rate Observer, May 20, 2005 issue * Footnotes
As the above table illustrates, credit is expanding at double-digit rates as reflected in commercial loans and commercial credit growth over the last 3, 6, and 12 months. Foreign central bank purchases of Treasuries have also helped to expand credit here in the US. While the monetary base grew by only $33 billion, Federal Reserve Credit and Foreign central bank purchases of Treasuries grew by $42 billion and $207 billion respectively. Credit expansion in the US is hyperinflating. Outstanding debt in the US has grown by 38% over the last four years to $36.2 trillion, an increase of over $10 trillion in the last four years. Last year alone consumer borrowing expanded by $1,017.9 billion, up from $839.4 billion the prior year.[1] New mortgage borrowing surged 87% to $884.9 billion as more Americans bought McMansions in the suburbs. The whole US economy is turning into a hedge fund with national savings of only $133 billion against national borrowing of $2,718, a 20-1 leverage factor
full article: Tipping Points by Jim Puplava This is an excellent article summing up various "risk" factors in our current economy. Simply stated and easy to understand unlike most of these "financial" type articles. A good primer for those who haven't spent much time on the subject. Worth 15-20 minutes.
One of the best posts the past two weeks I think was submitted by Tom. Part of that text follows.
For those of you that are still in the overall stock market perhaps you can find a website that gives information on the additions and subtractions on the S&P, and even the Dow, each week. In the past week there was a market rally in these two indexes. Was it caused by reworking the indexes, or was there a real rally of sorts? Perhaps Kaytsok can ask Mr. Hays?
JIGGERING WITH THE STOCK INDEXES
Everyone plays the manipulation game. Everyone wants things to look better.
Consider Standard & Poor’s, the rating company that just downgraded General Motors and Ford. Some market watchers prefer the S&P 500 to the Dow Jones Industrial Average. Far more companies are in the S&P index.
Both the Dow and the S&P 500 are subject to statistical jiggering. Companies that do poorly are removed from both indexes. Both add companies that seem to be doing well.
Again, let us return to 2002, when bad news was visible in the stock indexes, and readers were a little more alert to reality. An article appeared on the Slate site, "The Poor Standard of Standard & Poor’s" (Aug. 1, 2002). The author discussed in detail the way that the S&P 500 is subject to revisions.
The index is one of the more unlikely villains of the bubble. Despite perceptions, the index is not a passive investment vehicle. Instead, S&P is constantly choosing new stocks and booting old ones. And in the past few years, S&P’s modus operandi – which receives surprisingly little scrutiny – led it, essentially, to recommend that investors buy highly speculative companies at or near their tops.
How did this happen? Because any stock index is structured to reflect current realities. The past is sacked when it become too embarrassing.
When a company merges with another index company, or is acquired by a foreign concern, or files for Chapter 11, the S&P committee automatically deletes it. And some companies simply wither away to the point where the committee – which remains anonymous to forestall lobbying – determines them to be too insignificant to merit inclusion.
Between 1990 and 1994, the committee made an average of about 13 changes each year. But with the surge of merger and acquisition activity in the late 1990s, the need for deletions rose. Between 1996 and 2000, the committee changed an average of 40 companies each year. In 2000, a record 58 changes occurred.
The indexes drop poorly performing stocks after they have shrunk. This is called "sell low." They add stocks after a long period of rising prices. This is called "buy high." This "buy high, sell low" strategy guides the stock index funds. But it does more than guide index funds. It guides the investment community generally.
Because of its breadth and diversification, the S&P 500 is the crucial benchmark for professional investors. Investments by insurance companies, pension funds, college savings funds run by states, and public employee pension funds are either invested in the S&P 500 companies or mimic its makeup closely. "The S&P 500 is used by 97 percent of U.S. money managers and pension plan sponsors," S&P’s Web site proudly notes. "More than $1 trillion is indexed to the S&P 500." (That sum is almost certainly lower now.) About 8 percent of the shares of every S&P 500 stock are held by index funds. As a result, S&P’s eight-person Index Committee, which selects the companies that enter and leave the S&P 500, is a far more influential stock picker than Warren Buffett or Fidelity manager Peter Lynch.
Most Americans ignore retirement. They assume that "something will turn up." They trust Social Security and Medicare – the red-ink monsters that are rated as if they were tools of budget-balancing. But even those Americans who dutifully add funds systematically to their retirement fund portfolios according to the recommended buy-and-hold strategy are rarely informed regarding the assumptions of those who take their money: corporate managers, index designers, and index fund managers. If they did understand, they might plan differently.
Or would they? Stories like those that I have cited appear from time to time, but investors take little notice. It seems easier to trust the experts . . . until the bills come due.
"In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves. Stripped of its academic jargon, the welfare state is nothing more than a mechanism by which governments confiscate the wealth of the productive members of a society to support a wide variety of welfare schemes. The abandonment of the gold standard made it possible for the welfare statists to use the banking system as a means to an unlimited expansion of credit (debt creation)." by Allan Greenspan (#8) in The Objectivist newsletter published in 1966, reprinted in Ayn Rand's Capitalism: The Unknown Ideal.
(from Michael Hodges "grandfather economic report")
You have to choose (as a voter) between trusting to the natural ability of gold and the natural stability and intelligence of the government. And with due respect to these gentlemen, I advise you, as long as the capitalist system lasts, to vote for gold. -George Bernard Shaw
Are there any blue chip companies that don't have a lot of debt? I'm thinking those would be the ones to invest in, especially if the "debt bubble" does eventually burst.
I heard they were making a French version of Medal of Honor. I wonder how many hotkeys it'll have for "surrender."
What have we learned so far and where are we heading?
It has been very helpful for my personal planning to go back into this thread and read so many of the posts. At the age of 58 my time for financial planning is running short, and there is literally no time to make and then to correct major mistakes. Like multiple millions of other Americans, decisions made today will determine a great deal of what type of retirement future I might have.
I certainly think that there is a great deal to be learned from all the various posts here, and we are very lucky to have a cross section of personalities, and professions, represented that have expressed their opinions and posted their back up documentation.
What I have gleaned from all of this over the last few months is that we will either have a “muddle through”, inflationary, or deflationary economy over the next decade. This may sound like all the choices are still on the table, but in reality I think that by process of elimination our choices on how to best handle potential crisis coming down the road has narrowed our choices for correctly choosing a financial strategy for the future.
I think there is little doubt that we live in very interesting, and dangerous financial times.
I also think that we could all agree that there are many financial ticking time booms in the world today, any one of which might bring a total collapse to our system, i.e. the derivatives markets, the real property debt bubbles, personal out standing debt, foreign trade deficits, unfunded S.C. and Medicare liabilities, etc.
First lets look at a few things that many think will not happen.
We are very unlikely to see any of the huge imbalances in our Gov. debt, and foreign trade be corrected in the next decade.
We are very unlikely to see a huge doubling surge in the U.S. stock market to the up side that would cure many investor’s financial problems.
We are unlikely to see a multi year continuation of the current real property price escalations, without hyperinflation rearing its head.
We are unlikely to see a big move in Gold until we reach the near point of collapse simply because there are to many dollars, and to many derivatives to manipulate the price.
We are also unlikely to see first hyperinflation followed by deflation since hyperinflation will destroy the fiat money system, and the old paper money will have to be exchanged for new paper money at some devaluation.
So what are we likely to see?
I think we can expect to see bubbles moving across the landscape where huge amounts of paper dollars will chase after various markets looking for safety. In fact we are seeing that now, and have been for at last several years. We can also see at least two of these today, one in our own coin market, and another in the real property market. Many of these markets will crash as they become unsustainable. All of these crashes will transfer wealth to the professional traders in each market.
It simple is not possible for most of us to follow these bubbles making money at every turn, but what is possible is to stay balanced trying to hedge our strategy stopping short of following any bubble to its conclusion.
There are two things that stand out as being blatantly clear at this point, whether we have “muddle through” inflationary, or a deflationary economy. One is that all debt is the bane of our existence, and second that whether we start down the road to hyperinflation or deflation it will be to late to make our investment decisions once things start to go.
So what can be done?
Since each of us have such different personal situations, and are most likely strong in some areas, and weak in others, it is necessary for each person to develop their own personal plan.
By developing their own personal plan I think that each person must learn to be their own advisor. Most of the survivors that will escape any type of calamity will be those that will stay informed, but also stay away from the salesmen that populate all of the planning and investment areas. The reason that wealth is always transferred from the sheep to the professionals is that they are doing their homework and making their money off of the sheep. You need look no further than this board to see this taking place every day.
Debt, Every American needs to reduce every bit of debt possible, starting with the smallest debt they have and working upward.
Real-Estate (homes), It is always better to own than rent if the market in your area is not already at bubble status, but owning multiple rental properties that you have no way to pay debt service on, or maintain in a market collapse, would not seem to be a good plan at this time. If I had an ARM, interest only, or some other type of weird mortgage, I would certainly convert any of those to a fixed rate. In addition if possible PAY IT OFF.
Stocks, I am not sure there are any good investments in the entire market, but if you can find a company, learn about it yourself like it belonged to you, truly find out all of the assets, liabilities, and potential for growth, then you can start looking at the fundamentals. Does it have very little debt? Is it a well-established company with good products, does it have a PE in the low teens, etc.? If you can find a few of these rare monsters then why not, but you also need to fit it into the inflation, or deflation scenario. Personally I would also have the stock ordered out so you have the certificates if you buy.
Bonds, Personally I like these (I) bonds for inflation, and EE bonds for deflation.
Gold, U.S gold coins preferably slabbed so they could be claimed as a collection if confiscation started to occur.
Silver, 100-ounce bars delivered.
Cash, Short term C.D.’S spread in several banks.
Liability cash accounts, At this point going forward many would find a special account just for emergencies of real benefit. I am opening mine tomorrow. This account is just a slush fund for medical, tax, and financial emergencies.
Taxes, Fight every tax you can with every avenue open. Spending less automatically means paying less in taxes. Fight every increase in property taxes. Vote no on every new spending bill that comes along. Hiding money and profits is up to each individual, but my personal feeling on this is that being gallant and wanting to pay your fare share is just insanity when the powers that be think your fare share is everything!
Protecting what you have, Many that make it through the coming years of radical financial change will be those that protected and took care of what they had and did not get greedy. I think this is a very bad time to try to figure a slick way to double or triple your net worth through risk.
Whether we go forward with a “muddle through”, inflationary, or deflationary economy over the next decade. There is no reason not to protect and keep in good condition the assets you currently own.
Eliminating losers, The faster all of us eliminate those losers we own the better everyone’s plan will work.
Are there any blue chip companies that don't have a lot of debt? I'm thinking those would be the ones to invest in, especially if the "debt bubble" does eventually burst
Ten years ago I made the pledge to pay off the mortgage ASAP. What a 5 year struggle. No more nice cars for a while and a severe belt tightening. I just did not want to deal with debt. At the time I was saving ...maybe 1-2% of what I was making except for capital gains which continually bumped up the net worth.
At the ripe old age of 50 right now I carry no debt and can save as much as I want but never any less than 25%.
This economy in So. CAl. scares me right now. I am watching a lot of people hocked up to their eyeballs and if things go soft ---there are going to be a lot of unhappy people. At this point it looks like Monopoly money. I have a very bad feeling in my stomach for this economy.
My company is selling at 20 bucks a share, has a book value of 14.50 a share (almost all cash), earns 1.25 a share every 3 months(less than 4 P/E), and has no debt. They just announced a 5% stock buyback which is about 3 months profit.
For some reason its not big enough for the wall street boys to pay attention to it.
Coynclecter--who do you work for? Wall street may not find that interesing, but I do .
Also, to all in general...does anyone have any thoughts on Goldmoney.com. I googled them and haven't found anything to suggest anything iffy, but I am curious about them. Anyone here do any kind of electronic/digital gold? I haven't, but am most curious about the whole process.
Home owners here Flush 3% on taxes and another 1% on insurance every year. Tax appraisals are based on how much they want to collect, not how much your property is worth. Throw in a harsh environment that boost lawncare costs, utilities, and roofing/siding/fence/Air Cond repair frequencies.... and renting makes more economic sense vs owning - actually not even CLOSE. Apartments aren't taxed heavily like homes are, and if you choose wisely, utilities are LOW.
It is very important to pay attention to all the extra charges that go with owning a home, and in fact the majority of buyers do not do that. This is another one of those items that the SALESMEN seem to breeze right by. Even in large cities there is a wide divergence in what tax, insurance, and utilities might cost, and these costs are forever. On the other hand every property has these costs, and whether they know it or not renters pay them. Only in the case where the owner is foolish enough to absorb a negative cash flow thinking that the appreciation of the property will cover his loss will the rents be low enough NOT to cover debt service, taxes, utilities, insurance, maintenance, etc.
Owning your own home and paying for it as Streeter has done should be people’s major investment objective. Yes it is a struggle, but if you look at your property as an investment it has the most advantages of any investment one could buy. The tax advantages, appreciation potential, later rent and cash flow possibilities etc. Are always at the top in investment categories. Like any investment you must do your homework but the potential for real tax-free profit gain is better on home ownership than anything else.
Renters do pay a tax. They are not taxed nearly as high as homeowners. The reason is that when tax laws were developed, people in apartments were single/never marrieds with no kids. Things changed but tax laws didn't.
In shopping for a home, I focused on mortgage interest rates. I spent several days constructing a spreadsheet to analyze the cost of homeownership. Over 30 years, by a wide margin, the mortgage cost is insignificant compared to taxes, insurance, utilities, and maintenance.
Comments
I dont know what your "invoices" are for but the only inflation I see is my brokerage statement. The market has been, as Sammy Sosa, said "Been very very good to me"
Now I'll just lumber out my my "office"--picture enclosed--and do a little fishing.
Knowledge is the enemy of fear
Ok. If he's wrong and inflation is rampant, why are the mining stocks getting destroyed in the free marketplace? Is the entire stock market wrong?
<< <i>mining stocks getting destroyed in the free marketplace? Is the entire stock market wrong? >>
Most mines are not in the US. The cost to mine gold in South Africa based in South African currency is actually going up while the value of the gold they produce in thier own currency hasn't changed much.
Kitco has some good commentaries regarding this.
<< <i>
<< <i>mining stocks getting destroyed in the free marketplace? Is the entire stock market wrong? >>
Most mines are not in the US. The cost to mine gold in South Africa based in South African currency is actually going up while the value of the gold they produce in thier own currency hasn't changed much.
Kitco has some good commentaries regarding this. >>
That is true. The larger gold pruducers are Canadian. One reason the miners are down is because the dollar is getting stronger. Hence less profits when the currency is converted. The strength is the dollar is also hurting the prices of other raw materials. Another reason why the inflation scare is over.
Knowledge is the enemy of fear
<< <i>Then he spent Billions on military toys and the National Debt Trippled during his presidency. >>
Which spending ended the cold war, freeing Americans (until the rise of terrorism) from the threat of world war and nuclear annhilation. To me it was worth it.
cohodk, don't you know it's all a vast conspiracy? Hundreds of bureaucrats of both parties are conspiring to "cover up" our real economic situation. Tri-lateral Commission and all that
Alan Greenspan holds a Ph.D. in Economics, served in an economic consulting firm for ten years, served as Chairman of the President's Council of Economic Advisers for three years then as Chairman of the National Commission on Social Security Reform for two years. He was also a member of President Reagan's Economic Policy Advisory Board, a member of Time magazine's Board of Economists, a senior adviser to the Brookings Panel on Economic Activity, and a consultant to the Congressional Budget Office. Greenspan also was a member of the President's Foreign Intelligence Advisory Board, the Commission on Financial Structure and Regulation, the Commission on an All-Volunteer Armed Force, and the Task Force on Economic Growth. He was Corporate Director for Aluminum Company of America (Alcoa); Automatic Data Processing, Inc.; Capital Cities/ABC, Inc.; General Foods, Inc.; J.P. Morgan & Co., Inc.; Morgan Guaranty Trust Company of New York; Mobil Corporation; and The Pittston Company. Greenspan has also served as Member of the Board of Trustees, The Rand Corporation; Director, Institute for International Economics; Member of the Board of Overseers, Hoover Institution (at Stanford University); and Vice Chairman and Trustee, Economic Club of New York, Chairman of the Conference of Business Economists, President and Fellow of the National Association of Business Economists, and Director of the National Economists Club. He has served as Chairman of the Federal Reserve under both Republican and Democrat presidents.
Yes, he makes mistakes, since he is human. I'll bet he does a far better job than any of his detractors on this message board could do. Does anyone in this thread hold a Ph.D. in Economics and have 30+ years experience in the field? Just curious!
EDIT: Greenspan's info from http://www.cooperativeindividualism.org/greenspanbio.html
<< <i>
<< <i>Then he spent Billions on military toys and the National Debt Trippled during his presidency. >>
Which spending ended the cold war, freeing Americans (until the rise of terrorism) from the threat of world war and nuclear annhilation. To me it was worth it.
cohodk, don't you know it's all a vast conspiracy? Hundreds of bureaucrats of both parties are conspiring to "cover up" our real economic situation. Tri-lateral Commission and all that
Alan Greenspan holds a Ph.D. in Economics, served in an economic consulting firm for ten years, served as Chairman of the President's Council of Economic Advisers for three years then as Chairman of the National Commission on Social Security Reform for two years. He was also a member of President Reagan's Economic Policy Advisory Board, a member of Time magazine's Board of Economists, a senior adviser to the Brookings Panel on Economic Activity, and a consultant to the Congressional Budget Office. Greenspan also was a member of the President's Foreign Intelligence Advisory Board, the Commission on Financial Structure and Regulation, the Commission on an All-Volunteer Armed Force, and the Task Force on Economic Growth. He was Corporate Director for Aluminum Company of America (Alcoa); Automatic Data Processing, Inc.; Capital Cities/ABC, Inc.; General Foods, Inc.; J.P. Morgan & Co., Inc.; Morgan Guaranty Trust Company of New York; Mobil Corporation; and The Pittston Company. Greenspan has also served as Member of the Board of Trustees, The Rand Corporation; Director, Institute for International Economics; Member of the Board of Overseers, Hoover Institution (at Stanford University); and Vice Chairman and Trustee, Economic Club of New York, Chairman of the Conference of Business Economists, President and Fellow of the National Association of Business Economists, and Director of the National Economists Club. He has served as Chairman of the Federal Reserve under both Republican and Democrat presidents.
Yes, he makes mistakes, since he is human. I'll bet he does a far better job than any of his detractors on this message board could do. Does anyone in this thread hold a Ph.D. in Economics and have 30+ years experience in the field? Just curious!
EDIT: Greenspan's info from http://www.cooperativeindividualism.org/greenspanbio.html >>
Knowledge is the enemy of fear
The last 100 years of inflation was a lie too. The dollar is just as strong as it was in 1913 when JPMorgan and the boys hijacked the Federal Monetary supply.
Nothing to worry about then.
Economists are some of the biggest blowhards and blurers of the truth out there. Their job at the university is to support govt studies (toe the party line) to receive grant money to help "prove" what most politicians would like us to believe. The Keynesian crap that has been rampant and taught for half this century is just now starting to show how wrong it all is. PhD in economics? Please! Most of those jokers have no clue about how real markets (manipulated or otherwise really work). Though I do have to say that Dr. Antale Fekete is one of the exceptions. For economists that support administrations they got nice jobs in the govt to support their research, etc. Those that buck the trend, etc...get farmed out....whether right or wrong.
And as far as who could have done a better job? How about Paul Volcker for one who as a the FED Chief during the stagflaton of the late 70's and 80's helped to "kill" the commodities markets (and gold) for 2 decades by his monetary policies. Volcker has been quite
outspoken as of late on the pickle that Greenspan has driven us into...with little chance of escape. There are numerous links on the web.
Let's wait another few years before we give old Greenspam any honors. We just might have a different opinion of him at that time.
roadrunner
<< <i>Economists are some of the biggest blowhards and blurers of the truth out there. >>
I'd rather trust a blow-hard with a doctorate and experience in the field than one on a coin message board, but apparently I'm in the minority
RR, what credentials, exactly, do you have that make you such an "expert" on economics. I don't mean this as a personal attack; as you know we agree on other things (such as silver), but seriously, is it not farcical that people less educated than Greenspan with less experience come to a message board and tell everyone what a bad job he does?
You admitted it. Your fish is free on your hook just as it was 10 years ago.
By the way, lovely view!
P.S. I am joining a food coop for organic vegetables and some fruit.
Oreville -- are you growing organic vegetables, or part of a purchasing cooperative? Now that I'm back in the US, I'm looking forward to doing some fairly large scale gardening.
There has been some prosperity the past 20 years....but at the great expense of all future generations. What a fine legacy we will be leaving our kids and grand kids. And this "progress" is something to be proud of?
roadrunner
Sometimes I have to buy a cup of nightcrawlers, but they cost the same as 10 yrs ago.
Actually my freezer is full of venison and veggies from last year. I might eat 1 fish per month.
I am still planting my garden. We had a good frost last week so I have to be careful. My garden is about 2000 sq.ft. Last year we froze about 100 pounds of strawberries, and 50 packages of sweet corn. I had a bushel of carrots and 2 of beets. One beet weighed almost 4 pounds. Here is a pic
To get us back on track....gold is down $1 and jobless claims were less than expected. The dollar is stronger and bonds are steady.
Knowledge is the enemy of fear
If this is true then I think we are in for a rough 2005. I suppose it was only a matter of time before they decided they have too much of our paper.
Of course this doesn't signal doomsday, maybe just a change in the value of the dollar.
If South Africa has higher prices (inflation), why would price of Gold fail to rise?
Knowledge is the enemy of fear
<< <i>South Africa does not have higher prices. What happens is when they sell the gold they produce in dollars they then must convert those dollars into their currency-the rand. Because the dollar was losing value, they can only buy fewer and fewer rand. Thus hurting their profitablilty. >>
Sorry dude but you need to rethink that one. First off there is no requirement that they sell thier gold in dollars, gold sells in any currency you want to sell it in. Secondly, the value of the gold changes hourly to offset any decline in the dollar. Even if they sold for dollars and then converted to rand they would have no depreciation.
Look at kitco, gold is valued in rand, the world does not transact all business in dollars.
<< <i>
<< <i>South Africa does not have higher prices. What happens is when they sell the gold they produce in dollars they then must convert those dollars into their currency-the rand. Because the dollar was losing value, they can only buy fewer and fewer rand. Thus hurting their profitablilty. >>
Sorry dude but you need to rethink that one. First off there is no requirement that they sell thier gold in dollars, gold sells in any currency you want to sell it in. Secondly, the value of the gold changes hourly to offset any decline in the dollar. Even if they sold for dollars and then converted to rand they would have no depreciation.
Look at kitco, gold is valued in rand, the world does not transact all business in dollars. >>
South Africans do not buy very much gold. Therefore very little trades in Rands. It is all shipped out and sold in dollar terms. Just spend some time in the business and you will see what I mean.
Knowledge is the enemy of fear
Possibly one of the factors why the Rand has been so strong over the past 2 years is that the South Africans have not been printing fiat money like crazy like most of Europe, Asia, and the US. The fact that much of the value in that country is in natural resources may also factor in. But hey, I'm no economist.
Here's an exerpt from an article by Doug Gnazzo:
Alan Greenspan is not stupid, as a matter of fact he is quite brilliant, and an expert on all things monetary. However, somewhere along the line he chose to become a political animal as opposed to an honest money proponent, as he was in his early days, as is witnessed by the paper he wrote in 1964 Gold and Economic Freedom originally to be included in a publication of Ayn Rand’s, who referred to the Chairman as “the undertaker”.
Coupled with the above quote by Sir Alan you know he knows the truth, but for whatever his reason – he has chosen not to follow it. Perhaps he prefers to lead a pale horse, as opposed to accepting to follow silver and gold – as they are sovereign, not he. Absolute power corrupts absolutely as Lord Acton said.
“In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold. If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.
This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the "hidden" confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard.” [Alan Greenspan – Gold and Economic Freedom]
Full article by Doug Gnazzo
I don't buy the fact that Greenspan saw the fallacy in a gold backed economy. Rather, he jumped ship rather than buck the current and he has been rewarded quite handsomely for his about face.
roadrunner
Knowledge is the enemy of fear
"Referring to margins, he observed that it was undoubtedly a great frustration for investors that as the gold price had risen over the past year, margins in gold companies had shrunk. One of the drivers of the higher gold price was the weaker US dollar, which in turn meant stronger operating currencies in almost all of AngloGold Ashanti's producing regions including Australia, Argentina, Brazil, Namibia and South Africa."
I hope this makes it clearer.
Knowledge is the enemy of fear
I better just stick with Buy Low/Sell High.
Another view on the markets & Greenspan from Mike Hoy (see full article on www.kitco.com.
With interest rates rising, the interest charges that these “whiz kids” are paying is rising and at the same time the value of their long term investments are falling; in essence they are being squeezed two ways and then when the junk bonds they own get downgraded they get hit again. The most ironic part of this is when those people who have been on the right side of a trade, and have made good profits, try to collect from a bankrupt entity; forget it!
Again people, this is not rocket science and the handwriting is on the wall. There are rumors all over the place about major banks and hedge funds being in a “pickle” as a result of their “carry trade” speculations! Open up your eyes and ears, take notice of these things because when the bomb goes off it will be too late to put your gold positions back on or get out of the interest rate sensitive investments.
With interest rates rising the biggest joke is the real estate and housing markets. The introduction of “adjustable rate mortgages” and “interest only mortgages” will, in the end, single-handedly destroy these markets. When the end comes to the real estate market it could happen overnight. All offers to buy could simply disappear like fog when the sun comes out. If ever there was a market epitomized by the “greater fool theory” this is the market; at least until the third wave of the gold bull market sets in, when these same people will get creamed all over again.
To understand that the vast majority of real estate purchases made today are made with no money down and an interest only loan. Why? Because this is all that is left to continue the “spin.” These new purchases incorporate the interest only concept to make a home affordable for the buyer. The sad part to this is that the financial institutions who are loaning the money do not care about anything after the first year of payments. They could care less if the buyer has no margin for error in the event of any kind of financial hardship.
We must also understand that the “arm and interest only loans” were devised to prolong the refi game. Once rates stopped going down the “powers that be” were forced to come up with a new gimmick to prolong the worst financial joke and crisis to be dumped on a debt junkie society of all time. The “powers that be” totally destroyed the concept of savings and financial responsibility for the preservation of the illusion of recovery and growth.
“The Greatest Financial Hoax of All Time,” perpetrated by none other than “Mr. Magoo” himself. This hoax was created by simply giving the masses what they wanted; everything their hearts desired at an unbelievable low interest rate!
I find it mind boggling to go back one year and read how Greenspan was a total fan of derivatives and how he stated that they served a very useful purpose in today’s world. Now, one year later we are hearing the man come out with warnings about the derivative markets and how entities like Fannie and Freddie need to be more closely scrutinized.”
Do you hear it? It is loud and clear if you listen! Tick Tock Tick Tock! You bet the timer has been tripped. The only question I have is how long before the explosion? I think that Greenspan is trying to tell us something. Actually, he is now trying to save his legacy; a legacy that never existed in the first place, he is paddling up the Mississippi in a canoe with nothing but holes and a broken oar. In short he is sunk!
About the only thing that gives me a bigger laugh is our brilliant elected gentlemen who believe that the fault lies with the individual who has piled on the debt. They believe that the bankruptcy laws need to be stiffened to shaft the borrower. I believe the borrower is no different than a drug addict and once the binge begins he is not responsible for what he has done and has no choice in the final outcome. I believe the financial institutions have broken every golden rule that ever existed when it comes to loaning “other people’s money” and the financial affordability of those they are loaning that money too. In short they have made no effort to insure their depositors that the people borrowing the money have a chance of being able to pay it off. I belief the fault lies with the financial institutions because they should know that most of these people carry big time borrowing risk. It is the responsibility of the financial institution to only loan their depositors money to those who can truly afford to pay it back!
roadrunner
RR
One of the problems I have with many of the authors of many of these articles on Kitco, is that like the slick sales men on Wall Street these guys are day traders. Sure they make money, but they are not investors that have other jobs that they must concentrate on. They are in and out in an instant playing spreads, they are long, then short, then in this company, out into another company.
I sold my metals shares last week not because I personally had lost interest in the metals but because even though all the metals are up for the year most all the mining companies are DOWN. In many cases it is not outside manipulations that cause these down trends, but the miners themselves playing the derivatives markets. As far as I am concerned they are no longer to be trusted.
Mr. Casey said in a recent article that he did not worry about making money in the metals market that if you stripped him of all of his assets he would be rich again in a couple of years. I am sure he is right, but he is not an investor looking for a several year trend, he is in fact a speculator.
The simple fact is that even though most of these authors write real stories about real potential disasters, their general investment advice is just horrible. Not because they don’t have their facts straight, but because they are consistently advising folks to invest in volatile bullion, and mining stock markets.
We are all very lucky here that we have our knowledge of numismatics. The very best investment one could have made in the last few years as a metals related investment has been slabbed $20 common date Gold coins.
How many times do these guys pushing metals stocks ever say, “Hey man every time the gold market dips, go on ebay and buy $20 U.S. gold pieces”?
Obviously negative manipulation skews the norm. The gold price never moves more than 6$ or so upwards in a day. It is not allowed and the ESF and others will move to stifle gains any larger. On the downside however there is no limit. Funny isn't?
I concur with Gold $20 Saints over gold bullion, at least for the present. I own very little gold bullion or gold shares. Any gold I do own is basically in $20 Saints/Libs. The numismatic weight does carry value to all of us. A number of gold miners are still overly hedged such that as the price of gold goes up they lose money. One solution is to invest in only unhedged miners.
But as you said, when things are manipulated downwards, everyone gets hit. If this long term gold market is for real, there will be very challenging downward spikes ahead that will test the most hardened of gold bugs. And at each of those will be a line of pundits claiming that they told you so and that gold is dead.
Until the world gets its financial house in order and unwinds the carry trades and asset bubbles, gold is still in play.
Wait until the Dow and S&P take some serious whacks in the years ahead if you want to see some pessimistic views. There is no doubt that it is coming. Whether gold can rise above that remains to be seen.
roadrunner
I would be very interested in seeing data to support this assertion. Is he talking about residential real estate?
The full article is linked below for your convenience. Content is high on the Chicken Little scale but still worth a read.
Hoy article
roadrunner
Higashiyama,
See what you think about this?
“Today's Real Estate bubble has propelled Fannie Mae and Freddie Mac to become two of the largest financial institutions in the world. Their presence in today's financial markets is dominating as they play a monstrous role in the debt and derivatives markets.
Currently, Fannie and Freddie are liable for over $3 trillion dollars of outstanding debt securities to the markets. Folks, our national debt is at $8 trillion. How is it possible that Fannie and Freddie can accumulate debt of their own that is nearly 40% of our nation's debt?
It's the misconstrued implication that this debt has 100% U.S. government backing that makes it so easy for these two companies to issue to the public?
Let's paint a picture of what the Real Estate bubble has done to the bond markets and the presence Fannie and Freddie have in it. Total estimated bond market debt today, both public and private, amounts to $25 trillion. That includes Municipal, U.S. Treasury, Corporate, Fed Agencies, Money Market, Asset-Backed and of course Mortgage-Related bonds. Mortgage-related debt includes common MBS vehicles such as Pass-Throughs and CMOs (Collateralized Mortgage Obligations) as well as others. Out of these seven or so major bond market categories, mortgage-related debt is the largest by far accounting for over 20% of all bond market debt, and towering over corporate debt by 15% and U.S. Treasury debt by 30%. Fannie Mae and Freddie Mac house nearly 60% of this mortgage-related debt!
The Real Estate bubble has drastically changed the dynamics of the bond market. Up until 1999, only six short years ago, Treasury debt actually exceeded mortgage-related debt with several other categories nearly at par. Today, mortgage-related bonds have left them all in the dust. To take it even further, in 1990 mortgage-related bonds totaled only half as much as U.S. Treasury bonds. This bond market data in fact reveals that the Real Estate bubble is not a myth and has changed the dynamics of the world financial markets.
May 17 - The Wall Street Journal (Ruth Simon): "In the latest sign of how frothy the housing market has become, new data show the degree to which people are stretching to buy homes in a hot hosing market. The data, from the Mortgage Bankers Association, show that adjustable-rate and interest-only mortgages accounted for nearly two-thirds of mortgage originations in the second half of last year... 'The situation with interest-only loans ARMs is just one of several very scary things going on in the mortgage industry,' says Stu Feldstein, president of SMR Research Group... In California, where home-price growth has been sizzling, interest-only loans accounted for 61% of the mortgages taken out to buy homes in the first two months of this year... Many economists see the current popularity of ARMs and interest-0only loans as the latest sign of how borrowers are stretching to buy homes they couldn't other wise afford - and how lenders are more tan willing to accommodate them."
May 17 - The Wall Street Journal (James R. Hagerty): "Rapid home-price inflation spread to more cities in the first quarter, the National Association of Realtors said in a report released last week. The NAR found that median prices for previously occupied homes rose at double-digit rates from the year-earlier quarter in 66 of the 136 metropolitan statistical areas included in its quarterly survey. That was the highest number of double-digit gains recorded by the NAR since it began compiling such metropolitan tables more than 25 years ago... The biggest increase recorded in the latest quarter was 46% in Bradenton, Fla. Florida also had two of the other biggest increases -- 36% in both Sarasota and the West Palm Beach-Boca Raton area. Other large gainers included Riverside-San Bernardino, Calif. (33%), Las Vegas (29%), Sacramento, Calif. (27%), and Atlantic City, N.J. (23%)."
May 18 - Bloomberg (Andrew Ward): "Surging U.S. home prices aren't just for big cities and sunny coastal communities. From Jackson, Mississippi, and Wichita, Kansas, to Rockford, Illinois, and Green Bay, Wisconsin, housing prices are rising at more than three times the rate of inflation.
Interesting facts. And I definitely agree with the "hot hosing market" comment. People will be in for one heck of a HOSING when the bubble bursts.
Here's a fine article by Puplava. What's interesting is the lead in paragraphs on how rapidly increasing credit is indeed an inflationary fuel but doesn't get tracked as such on any of the indexes.
TIPPING POINTS:
leading to a fall
by Jim Puplava
Storm Watch Update
May 20, 2005
Economists are calling it a “soft patch,” a temporary slowdown in economic growth. This reflects a regression from earlier euphemisms of a “Goldilocks” economy. I’m sure before long the “soft patch” will turn into a “soft landing.” However, I’ve yet to see a “soft landing” in my 30 years in the investment business. Soft landings are as rare as the dodo bird. It is surprising to see this term resurface every time we are about to head into a recession. Perhaps economists think it has a more palatable sound than recession and depression, which are more frightening terms to investors.
What we can say with a certain degree of confidence is that the Fed will keep raising interest rates until they arrive at a "neutral rate," i.e. an interest rate that is neither stimulative nor contractive for the economy. Reality is something different. The Fed can never truly arrive at a neutral rate. They habitually raise rates until something breaks—usually either in the economy or the markets, but in most cases it's both. The days in which the Fed could fine-tune the economy ended several decades ago with the emergence of the financial economy. Today, even more money is injected into the economy and the investment markets outside the traditional banking sector. Last year the US economy added $2,718 billion in debt. However, the broadest measure of the money supply (M3) expanded by only $587.5 billion. For those who are relieved that money supply growth has slowed down, as shown in the table below, take no comfort. Credit expansion in the US is rampant as reflected in last year's total credit expansion of $2,718 billion.
MONETARY INFLATION MONITOR
3 Months 6 Months 12 Months
M-1 Money Supply* 1.3% 2.4% 3.5%
M-2 Money Supply* 3.2% 4.4% 5.0%
M-3 Money Supply* 4.0% 4.0% 5.2%
MZM Money Supply -0.8% 0.7% 2.2%
Commercial Loans 18.6% 17.7% 10.8%
Comm Bank Credit 14.5% 10.6% 7.9%
Finance Comp Credit 6.6% 7.8% 6.3%
Forgn Centr Bank Gov't 13.5% 15.5% 17.6%
Source: Grant's Interest Rate Observer, May 20, 2005 issue * Footnotes
As the above table illustrates, credit is expanding at double-digit rates as reflected in commercial loans and commercial credit growth over the last 3, 6, and 12 months. Foreign central bank purchases of Treasuries have also helped to expand credit here in the US. While the monetary base grew by only $33 billion, Federal Reserve Credit and Foreign central bank purchases of Treasuries grew by $42 billion and $207 billion respectively. Credit expansion in the US is hyperinflating. Outstanding debt in the US has grown by 38% over the last four years to $36.2 trillion, an increase of over $10 trillion in the last four years. Last year alone consumer borrowing expanded by $1,017.9 billion, up from $839.4 billion the prior year.[1] New mortgage borrowing surged 87% to $884.9 billion as more Americans bought McMansions in the suburbs. The whole US economy is turning into a hedge fund with national savings of only $133 billion against national borrowing of $2,718, a 20-1 leverage factor
full article: Tipping Points by Jim Puplava
This is an excellent article summing up various "risk" factors in our current economy. Simply stated and easy to understand unlike most of these "financial" type articles. A good primer for those who haven't spent much time on the subject. Worth 15-20 minutes.
roadrunner
One of the best posts the past two weeks I think was submitted by Tom. Part of that text follows.
For those of you that are still in the overall stock market perhaps you can find a website that gives information on the additions and subtractions on the S&P, and even the Dow, each week. In the past week there was a market rally in these two indexes. Was it caused by reworking the indexes, or was there a real rally of sorts? Perhaps Kaytsok can ask Mr. Hays?
JIGGERING WITH THE STOCK INDEXES
Everyone plays the manipulation game. Everyone wants things to look better.
Consider Standard & Poor’s, the rating company that just downgraded General Motors and Ford. Some market watchers prefer the S&P 500 to the Dow Jones Industrial Average. Far more companies are in the S&P index.
Both the Dow and the S&P 500 are subject to statistical jiggering. Companies that do poorly are removed from both indexes. Both add companies that seem to be doing well.
Again, let us return to 2002, when bad news was visible in the stock indexes, and readers were a little more alert to reality. An article appeared on the Slate site, "The Poor Standard of Standard & Poor’s" (Aug. 1, 2002). The author discussed in detail the way that the S&P 500 is subject to revisions.
The index is one of the more unlikely villains of the bubble. Despite perceptions, the index is not a passive investment vehicle. Instead, S&P is constantly choosing new stocks and booting old ones. And in the past few years, S&P’s modus operandi – which receives surprisingly little scrutiny – led it, essentially, to recommend that investors buy highly speculative companies at or near their tops.
How did this happen? Because any stock index is structured to reflect current realities. The past is sacked when it become too embarrassing.
When a company merges with another index company, or is acquired by a foreign concern, or files for Chapter 11, the S&P committee automatically deletes it. And some companies simply wither away to the point where the committee – which remains anonymous to forestall lobbying – determines them to be too insignificant to merit inclusion.
Between 1990 and 1994, the committee made an average of about 13 changes each year. But with the surge of merger and acquisition activity in the late 1990s, the need for deletions rose. Between 1996 and 2000, the committee changed an average of 40 companies each year. In 2000, a record 58 changes occurred.
The indexes drop poorly performing stocks after they have shrunk. This is called "sell low." They add stocks after a long period of rising prices. This is called "buy high." This "buy high, sell low" strategy guides the stock index funds. But it does more than guide index funds. It guides the investment community generally.
Because of its breadth and diversification, the S&P 500 is the crucial benchmark for professional investors. Investments by insurance companies, pension funds, college savings funds run by states, and public employee pension funds are either invested in the S&P 500 companies or mimic its makeup closely. "The S&P 500 is used by 97 percent of U.S. money managers and pension plan sponsors," S&P’s Web site proudly notes. "More than $1 trillion is indexed to the S&P 500." (That sum is almost certainly lower now.) About 8 percent of the shares of every S&P 500 stock are held by index funds. As a result, S&P’s eight-person Index Committee, which selects the companies that enter and leave the S&P 500, is a far more influential stock picker than Warren Buffett or Fidelity manager Peter Lynch.
Most Americans ignore retirement. They assume that "something will turn up." They trust Social Security and Medicare – the red-ink monsters that are rated as if they were tools of budget-balancing. But even those Americans who dutifully add funds systematically to their retirement fund portfolios according to the recommended buy-and-hold strategy are rarely informed regarding the assumptions of those who take their money: corporate managers, index designers, and index fund managers. If they did understand, they might plan differently.
Or would they? Stories like those that I have cited appear from time to time, but investors take little notice. It seems easier to trust the experts . . . until the bills come due.
(from Michael Hodges "grandfather economic report")
You have to choose (as a voter) between trusting to the natural ability of gold and the natural stability and intelligence of the government. And with due respect to these gentlemen, I advise you, as long as the capitalist system lasts, to vote for gold. -George Bernard Shaw
roadrunner
roadrunner
What have we learned so far and where are we heading?
It has been very helpful for my personal planning to go back into this thread and read so many of the posts. At the age of 58 my time for financial planning is running short, and there is literally no time to make and then to correct major mistakes. Like multiple millions of other Americans, decisions made today will determine a great deal of what type of retirement future I might have.
I certainly think that there is a great deal to be learned from all the various posts here, and we are very lucky to have a cross section of personalities, and professions, represented that have expressed their opinions and posted their back up documentation.
What I have gleaned from all of this over the last few months is that we will either have a “muddle through”, inflationary, or deflationary economy over the next decade. This may sound like all the choices are still on the table, but in reality I think that by process of elimination our choices on how to best handle potential crisis coming down the road has narrowed our choices for correctly choosing a financial strategy for the future.
I think there is little doubt that we live in very interesting, and dangerous financial times.
I also think that we could all agree that there are many financial ticking time booms in the world today, any one of which might bring a total collapse to our system, i.e. the derivatives markets, the real property debt bubbles, personal out standing debt, foreign trade deficits, unfunded S.C. and Medicare liabilities, etc.
First lets look at a few things that many think will not happen.
We are very unlikely to see any of the huge imbalances in our Gov. debt, and foreign trade be corrected in the next decade.
We are very unlikely to see a huge doubling surge in the U.S. stock market to the up side that would cure many investor’s financial problems.
We are unlikely to see a multi year continuation of the current real property price escalations, without hyperinflation rearing its head.
We are unlikely to see a big move in Gold until we reach the near point of collapse simply because there are to many dollars, and to many derivatives to manipulate the price.
We are also unlikely to see first hyperinflation followed by deflation since hyperinflation will destroy the fiat money system, and the old paper money will have to be exchanged for new paper money at some devaluation.
So what are we likely to see?
I think we can expect to see bubbles moving across the landscape where huge amounts of paper dollars will chase after various markets looking for safety. In fact we are seeing that now, and have been for at last several years. We can also see at least two of these today, one in our own coin market, and another in the real property market. Many of these markets will crash as they become unsustainable. All of these crashes will transfer wealth to the professional traders in each market.
It simple is not possible for most of us to follow these bubbles making money at every turn, but what is possible is to stay balanced trying to hedge our strategy stopping short of following any bubble to its conclusion.
There are two things that stand out as being blatantly clear at this point, whether we have “muddle through” inflationary, or a deflationary economy.
One is that all debt is the bane of our existence, and second that whether we start down the road to hyperinflation or deflation it will be to late to make our investment decisions once things start to go.
So what can be done?
Since each of us have such different personal situations, and are most likely strong in some areas, and weak in others, it is necessary for each person to develop their own personal plan.
By developing their own personal plan I think that each person must learn to be their own advisor. Most of the survivors that will escape any type of calamity will be those that will stay informed, but also stay away from the salesmen that populate all of the planning and investment areas. The reason that wealth is always transferred from the sheep to the professionals is that they are doing their homework and making their money off of the sheep. You need look no further than this board to see this taking place every day.
Debt,
Every American needs to reduce every bit of debt possible, starting with the smallest debt they have and working upward.
Real-Estate (homes),
It is always better to own than rent if the market in your area is not already at bubble status, but owning multiple rental properties that you have no way to pay debt service on, or maintain in a market collapse, would not seem to be a good plan at this time. If I had an ARM, interest only, or some other type of weird mortgage, I would certainly convert any of those to a fixed rate. In addition if possible PAY IT OFF.
Stocks,
I am not sure there are any good investments in the entire market, but if you can find a company, learn about it yourself like it belonged to you, truly find out all of the assets, liabilities, and potential for growth, then you can start looking at the fundamentals.
Does it have very little debt? Is it a well-established company with good products, does it have a PE in the low teens, etc.? If you can find a few of these rare monsters then why not, but you also need to fit it into the inflation, or deflation scenario. Personally I would also have the stock ordered out so you have the certificates if you buy.
Bonds,
Personally I like these (I) bonds for inflation, and EE bonds for deflation.
Gold,
U.S gold coins preferably slabbed so they could be claimed as a collection if confiscation started to occur.
Silver,
100-ounce bars delivered.
Cash,
Short term C.D.’S spread in several banks.
Liability cash accounts,
At this point going forward many would find a special account just for emergencies of real benefit. I am opening mine tomorrow.
This account is just a slush fund for medical, tax, and financial emergencies.
Taxes,
Fight every tax you can with every avenue open. Spending less automatically means paying less in taxes. Fight every increase in property taxes. Vote no on every new spending bill that comes along. Hiding money and profits is up to each individual, but my personal feeling on this is that being gallant and wanting to pay your fare share is just insanity when the powers that be think your fare share is everything!
Protecting what you have,
Many that make it through the coming years of radical financial change will be those that protected and took care of what they had and did not get greedy. I think this is a very bad time to try to figure a slick way to double or triple your net worth through risk.
Whether we go forward with a “muddle through”, inflationary, or deflationary economy over the next decade. There is no reason not to protect and keep in good condition the assets you currently own.
Eliminating losers,
The faster all of us eliminate those losers we own the better everyone’s plan will work.
MSFT, INTC, CSCO
Knowledge is the enemy of fear
Ten years ago I made the pledge to pay off the mortgage ASAP. What a 5 year struggle. No more nice cars for a while and a severe belt tightening. I just did not want to deal with debt. At the time I was saving ...maybe 1-2% of what I was making except for capital gains which continually bumped up the net worth.
At the ripe old age of 50 right now I carry no debt and can save as much as I want but never any less than 25%.
This economy in So. CAl. scares me right now. I am watching a lot of people hocked up to their eyeballs and if things go soft ---there are going to be a lot of unhappy people. At this point it looks like Monopoly money. I have a very bad feeling in my stomach for this economy.
They just announced a 5% stock buyback which is about 3 months profit.
For some reason its not big enough for the wall street boys to pay attention to it.
Are they a t/o candidate? Sounds like they could be bought with their own cash.
editted: which is probably why they should NOT be repurchasing their own stock.
Also, to all in general...does anyone have any thoughts on Goldmoney.com. I googled them and haven't found anything to suggest anything iffy, but I am curious about them. Anyone here do any kind of electronic/digital gold? I haven't, but am most curious about the whole process.
Cathy
Fishcooker,
It is very important to pay attention to all the extra charges that go with owning a home, and in fact the majority of buyers do not do that. This is another one of those items that the SALESMEN seem to breeze right by. Even in large cities there is a wide divergence in what tax, insurance, and utilities might cost, and these costs are forever. On the other hand every property has these costs, and whether they know it or not renters pay them. Only in the case where the owner is foolish enough to absorb a negative cash flow thinking that the appreciation of the property will cover his loss will the rents be low enough NOT to cover debt service, taxes, utilities, insurance, maintenance, etc.
Owning your own home and paying for it as Streeter has done should be people’s major investment objective. Yes it is a struggle, but if you look at your property as an investment it has the most advantages of any investment one could buy. The tax advantages, appreciation potential, later rent and cash flow possibilities etc. Are always at the top in investment categories. Like any investment you must do your homework but the potential for real tax-free profit gain is better on home ownership than anything else.
Renters do pay a tax. They are not taxed nearly as high as homeowners. The reason is that when tax laws were developed, people in apartments were single/never marrieds with no kids. Things changed but tax laws didn't.
In shopping for a home, I focused on mortgage interest rates. I spent several days constructing a spreadsheet to analyze the cost of homeownership. Over 30 years, by a wide margin, the mortgage cost is insignificant compared to taxes, insurance, utilities, and maintenance.
Especially mid-size American sedans. R8 in my book.