The single thing that stands out to me, especially after the revisions when Treasury gets a better feel for who is actually doing the buying, is that China appears to be almost single-handedly carrying the US. It seems that much of Chinese buying is being filtered through London perhaps for reasons of privacy. There was a sizeable adjustment made in the Great Britain holdings which saw a sharp drop and a corresponding big rise in the Chinese holdings number. Also noteworthy is the drop off in the rate of US Treasury purchases from OPEC nations. Perhaps some of this is due to Arab and Iranian reluctance to hold too large a portion of their reserves in dollars and their desire to move more of those reserves to euros. Were it not for Chinese buying, I doubt seriously that the US would have sufficient funding for our trade imbalance.
This is even more alarming considering the escalating trade tensions between the two nations.
World currency markets are telling you that they are concerned about inflation. The dollar is very close to major support. It needs to hold. If it does not then I would not be in a hurry to do any foreign travel. You wont be able to afford linguini in Rome.
Not to worry my friends our government has a plan! First we let the Chinese sell what ever they want to us cheap, and we close our factories. Then we sell them U.S. Treasuries for the short falls. Then they take the treasuries, and cash them in for our U.S. companies, banks, factories, farmland etc. Then our grand children all work for Chinese companies, and live happily ever after. Lets see what do you think they can buy if they start at $400,000,000,000?
Thursday April 12, 6:23 am ET By Joe Mcdonald, AP Business Writer
China's Foreign Reserves Rise Past $1.2 Trillion, an Increase of 37.4 Percent Over Last Year BEIJING (AP) -- China's foreign reserves, already the world's largest, have risen past $1.2 trillion, a state news agency said Thursday, amid surging trade and plans to create a multibillion-dollar company to invest some of the stockpile.
The government announced last month it will create a multibillion-dollar company to invest a portion of the reserves in hopes of making more profitable use of the money.
No details of the company's size, when it will be launched or how it will make investments have been released. But economists say Beijing might allocate as much as $200 billion to $400 billion to the venture.
Figures released this week showed China's trade surplus for the first three months of the year doubled from the same period of 2006, reaching $46 billion.
The composition of China's foreign currency reserves is a secret. But as much as 75 percent is believed to be in U.S. dollar-denominated instruments, mostly Treasuries, with the rest in euros and a small amount in yen. Finance Minister Jin Renqing said last month that Beijing would try to learn from the experience of other governments in creating its investment company.
Jin cited the example of Singapore's government-owned Temasek Holdings, which has $89 billion in investments in banks, real estate, shipping, energy and other industries.
Like the guys in Washington that spent all the S.C. and Medicare money, the States have done the same. Too many social programs have eaten up all the retirement savings of State workers, now what?
Texas Leaves Taxpayers in Lurch Over $50 Billion in Benefits By Darrell Preston
April 19 (Bloomberg) -- Texas owes state workers $50 billion in future retirement benefits and refuses to acknowledge the obligation.
Texas Comptroller Susan Combs says she won't follow a new national accounting standard that requires states and cities to disclose the estimated costs of benefits promised to retired workers, such as health care and life insurance. The government would need to set aside $4 billion a year over the next decade to keep from falling short on what it owes, according to a report by the state's Legislative Budget Board.
Disclosing its future costs may force Texas to raise taxes, increase borrowing, sell assets or cut programs to come up with the money. Refusing to recognize them may jeopardize the ratings on $22 billion of outstanding bonds and prompt investors to demand higher yields when they lend to the state.
``If they don't report it, they don't have to do anything about it,'' said Michael H. Granof, Ernst & Young professor of accounting at the University of Texas in Austin. ``It's much easier to just push it off to the next generation.''
Texas, which spent $629 million on health care for retirees in fiscal 2005, hasn't set aside any money to cover the future obligations, equal to two-thirds of annual state spending. Nationwide, states and cities have an estimated $1.5 trillion of unfunded costs for future retiree benefits, Credit Suisse Group estimated in a March report.
``I don't like that,'' said John B. Cummings, executive vice president at Newport Beach, California-based Pimco, which runs the world's largest bond fund and manages $14 billion in municipal debt. ``You're supposed to tell me what's going on.''
I think I offered a $700 gold, 13,000 Dow race a while back but no one would take me up on it. And for good reason. No one, including me thought the Dow had a chance. Just testament to the fact that overbought markets can remain overbought far longer than you think.
The cpi is such crap...surely there is a better, less hyped, government provided indicator of how our economy is moving. No meaningful rise in cpi...
M3 total money stock is an excellent predictor of where inflation is heading since increasing liquidity is the starting point. Even though the govt no longer publishes M3, there are a number of services who track and publish what it would be (see link below to "stats" and select "alt data series" tab). In fact the world is on a money stock binge with most of the key players raising total liquidity to the tune of 10-20% per year. The US is at a "tame" 10-11%.
Hummm, Nothing to see hear everything is rosy please move along.
Real estate confession…
Today in the Las Vegas Review Journal business section, the headline article was "Home Sales Stats Bleak". Within the article there was insight into the gimmicks being used by our government and the National Association of Realtors to manipulate stats in favor of a rosier picture. Jim Sinclair has speculated that housing stats figures such as "closings" and "home sales" are being bolstered by the inclusion of foreclosed home transfers from the owner back to the banks. That presumption was confirmed today in the Review Journal article. Larry Murphy of Las Vegas-based SalesTraq told about 1,000 real estate professionals "there are some alarming figures, like the 402 bank repossessions that accounted for 13 percent of the 3,175 existing home closings in March. That's up from the 9 percent in both February (231) and January (248), Murphy said".
Despite the inclusion of foreclosures, existing home sales are down nearly 20 percent at 8,539. New home closings dropped 43.2 percent in the first quarter to 5,264.
The article points outs that median new home price decline 3.5 percent from a year ago, however the median price of $324,035 is up 4 percent. The existing median home price of $280,000 in March is down 1.8 percent from a year ago and the first-quarter median of $280,667 is down 0.3 percent.
The article contains the typical "we are at or near a bottom" statements which are ridiculous. "SalesTraq showed 22,970 available listings on the MLS in March, a 13-month supply based on current sales figures". That is a long way from when I sold my home in Las Vegas at the end of 2005. I received a contract which was $15,000 above my asking price the day after I listed it. I'm sure things will get much, much worse over the next several years. I keep reminding my friends that home prices in Japan have not yet recovered 20 years after they plunged 50% or more.
The housing market is just going through a predictable shakeout. Prices had risen far too fast for too long. Historic low interest rates fuels much of this. However, we have seen this before. The bottom end of the market is tied to where the rental market is (in large metropolitan areas) and the prices of houses are ultimately related to peoples ability to buy them from their salary.
The sky is not falling, but on the other hand I would not want to be stuck with a two bedroom condo in places with falling prices. People who bought for the long term with stable payments they can afford are fine. It is the investor who was trying to flip houses and ride the crest of the wave who got burned the worst.
FYI, the market just crested 13,000.
Retired United States Mint guy, now working on an Everyman Type Set.
The real estate market is just too unpredictable for me. Maybe it is just a temp adjustment. But then, I thought the tech stock 'adjustment' was just a temporary adjustment also. And I ended up riding that pony into the ground......
All I can say is.... home prices still seem astronomical to me..... but you each make your own decisions on this. If I don't have to, I don't plan to buy into this market right now. Gold and silver are my bets right now.
My personal view is that all of these investment markets seem totally out of control, and that includes a large section on the coin market. So much paper wealth has been created from world printing presses over the last few years that oceans of money are looking for some safe or solid investment on a weekly basis.
Small companies now cost a billion dollars, and large companies may cost $100 billion.
I must say that I am surprised that the U.S. stock market hit 13,000 yesterday, but then again it needed to go to 13,100 in December to adjust for inflation, and now needs to go to 13,500 to keep up.
In this new global economy, inflows into the U.S. stock market from folks with Euros will most likely continue, as market here are cheap for them.
On the other hand Americans are being priced out of many of the valuable assets on the planet as the dollar devalues and inflation burns.
Housing costs are truly out of control, and middle and upper middle class Americans could only afford these homes with sub-prime and gimmicky loans the last few years. Now that those loans are gone we many be in for a long down trend in that market, unless foreigners come into that market also.
More than ever I think our original premise of paying down debt, living within a budget, paying as little interest as possible, and putting away some hard assets is the way to protect ones family.
The worldwide press, and governments around the world, want the mob to just remain in the dark about the trainloads of money being printed, and the unsustainable debt being created.
As long as the big money players keep pouring billions, even trillions of dollars into these markets, average investors will not be able to figure out what is truly safe. One CNBC pundit made the comment yesterday that the U.S. stock market had added 5 trillion dollars in value since the first of the year. O.K. where did the 5 trillion come from, are the American people as a whole so flush with savings that they pushed up all these prices? I don’t think so!
I will be making a trip to Rome and Greece at the end of May and will give a report when I return, but having already priced the hotels I can tell this trip will cost nearly double what it did just five years ago. I have already been warned to convert dollars to Euros before I arrive, as no one wants dollars there any longer!
The housing market is just going through a predictable shakeout.
If you said that in mid-2004 you would have been of a very few people who saw housing prices turning around down the road. Today, the majority of the country feels we are at a blip before the next assault on home prices. Good luck to them.
The sky is not falling because the FED/treasury are pumping out liquidity at 8-12% per year. The rest of the world is pumping up M3 at 10-20% per year. One big pumping party. So that money has to follow assets, including an overpriced stock market. If Joe Public doesn't put his money there, where then? The cresting of the Dow to 13,000 is more a function of absurd liquidity and a depreciating dollar than anything to do with company profits or fundamentals. And the funny thing is that 14,000 Dow could occur before 12,000 Dow. The Hedge funds and specs will play this game as long as the American public is continuing to dump their money into it. One massive shock wave from a major fund bust or JPM, GS, Citi, Fannie, etc. and the house tumbles quite a ways. Or it could end instantly next week when all the players decide to pull out at once leaving JQPublic to take his medicine.
In case you haven’t noticed the headlines about the Bank of Montreal [BMO] taking a “charge” against earnings relating to its [DERIVATIVES] trading – particularly in that of Nat Gas futures:
TORONTO, April 27 /CNW/ - BMO Financial Group (NYSE: BMO, TSX: BMO) said today that mark-to-market commodity trading losses estimated at between CDN$350 million and CDN$450 million, pre-tax, will be recorded in the second quarter of its 2007 fiscal year. The impact of this to BMO Financial Group's second quarter earnings, which will be announced on May 23, 2007, is estimated in the range of 45 cents to 55 cents per share.
I’m guessing there’s a much bigger story here than the headline suggests. Bank of Montreal has taken a loss on DERIVATIVES TRADING of some 450 MILLION – and remember – total trading revenue for the whole of last year for BMO was reportedly in the neighborhood of 650 million.
Aren't all bets at this point really bets against the US dollar?
With a $700 billion+ annual trade deficit, it's hard not to bet on the continued decline of the greenback. Of course, if our markets continue to rally, you could see the dollar strengthen significantly. America's trade deficit is simply the flip side of its investment surplus.
"Men who had never shown any ability to make or increase fortunes for themselves abounded in brilliant plans for creating and increasing wealth for the country at large." Fiat Money Inflation in France, Andrew Dickson White (1912)
<< <i> Aren't all bets at this point really bets against the US dollar? >>
Interesting point. While it would seem that the US Dollar will/should continue to fall, since "everyone" expects it, this may be a "contrary indicator." More often than not - markets move the opposite way than the majority of investors believe it will.
Recall that the dollar right now is near the lows it reached in late 2004. After that, the dollar had a fairly strong rally for a year and half. We may see that again the short term.
I have continued to be amazed that the US can sustain these enormous trade deficits year after year. Ultimately, I think the end game logically must be a continued devaluation of the dollar.
On the horizon I think we will see higher inflation. People - probably even most Fed economists - have forgotten how bad inflation can get. Moreover, in a certain sense it may be desireable to have a period of more inflation. Though inflation is often thought of as Evil #1 for economists, inflation could effectively wipe out a lot of our debt problems. Those holding fixed income assets - like the Chinese in US government bonds - would pay the price.
The best investment right now, in my view, is to borrow long-term at low fixed rates (e.g., real estate mortgages - unless you live in a part of the country where property is still grossly overvalued). Ultimately, in a period of inflation, the holders of these notes will be in some serious pain. That's my bet, anyway.
"Men who had never shown any ability to make or increase fortunes for themselves abounded in brilliant plans for creating and increasing wealth for the country at large." Fiat Money Inflation in France, Andrew Dickson White (1912)
Maybe all bets are against the dollar, but we will soon have tax increases plus a climate of "we need to be like Europe." The world will like us again.
Who knows, "they" might invest here again and move the dollar.
There is always the other side of the Derivative's bet. Everyone can't be betting against the dollar because the other side is betting for the dollar. For all those Trillions of hedges, there is someone on both sides. Someone loses in the end.
Though inflation is often thought of as Evil #1 for economists, inflation could effectively wipe out a lot of our debt problems. Those holding fixed income assets - like the Chinese in US government bonds - would pay the price.
It's nice to state that inflation is our worst enemy. This buys votes at election time and bolsters confidence in our FED (the true sources of inflation...and they very well know it). Remember WIN back in the 70's? Whip Inflation Now! Only problem is deflation of all assets is even worse. There is no free lunch in that game. No, our govt and current entitlement system requires a constant inflation. It is anything but Evil for the bankers and politicians who employ. Inflation is a necessity for them in order to continue to transfer the wealth from Joe Public to them. It has been that way since 1913.
Roadrunner, I only very dimly remember the 1970s (yet another reason to count my blessings). My question though is whether it's possible we're entering a situation where higher inflation is seen by policymakers (though they won't come out and say it) as a good thing. Obviously they see it as a means of transferring wealth to the government - but that's always been true.
But is inflation also going to be seen as a quick and dirty means of getting out of some of our debt problems?? Let me give a crude example - if prices of everything doubled overnight, our government debt - which consists of fixed-rate debt instruments held by investors worldwide - would shrink by half. Same with fixed rate debt held by the average American. The complications and problems with this "approach" are obvious - but can you see a situation where letting more inflation happen - or even intentionally creating it - would be a policy tool of government?
"Men who had never shown any ability to make or increase fortunes for themselves abounded in brilliant plans for creating and increasing wealth for the country at large." Fiat Money Inflation in France, Andrew Dickson White (1912)
The major point missed about inflation is the damage done to those on fixed incomes. If you wipe out have the assets of the retired, you have certainly caused at least as much harm as good.
Retired United States Mint guy, now working on an Everyman Type Set.
It's been a policy tool for years. Look at Social security and you'll see COLA's tied to a CPI that's intentionally lower than inflation. It gradually reduces the living standard of retirees. If they did it overnight, everyone would be pissed. Furthermore, they've already been telling the 20 and 30 year olds to expect nothing from Soc Security. 30 years from now, they will have heard it so many times they may believe it.
Meanwhile, the gov't wants to expand the payouts by adding illegal immigrants - retired or "disabled" - to the Soc Security list.
Gold was obliterated today as long liquidation was forced by predatory shorts that began in yesterday’s session. There is really not a lot to say about this other than the fact that ECB gold sales prevented gold from breaking through first, the $700 barrier, and then, the $690 barrier. Seeing that overhead gorilla and bullion bank price capping, longs have thrown in the towel out of disgust while brand new fresh shorts are coming in as well leaving an absence of buying.
Such is the nature of this gold market. It can never set back slowly and gradually but instead goes into free fall mode as the black boxes all get out at the same time and trample each other in the process. The good thing about that is they finish up the liquidation process very quickly and get it over with. The physical market buyers then show up and bid it back up as they see value and the funds then come pouring back into all over again and we repeat the process for the umpteenth time. There are two things you can say with certainty – the sun rises in the East and gold will get bashed periodically, scare the dickens out of gold longs and then climb higher on its next leg back up again.
Another thing is that these gold bashings tend to occur very close to rollover time in the lead month contract. That means a large number of speculative long index fund positions MUST be rolled into the next month, in this case the August. It has been my observation that these predatory gold bear raids are timed to coincide with the rollover period. Again, there is nothing particularly skillful about the trading tactics of the perma gold shorts – they telegraph their intentions so clearly that anyone can see what they are up to. Skillful traders manage to conceal the brunt of their buying and selling. These guys are big gorillas. The problem is not the skill of the gold perma shorts – it is the lack of skill among the hedge funds that play gold. They simply have not learned how to play the gold game and their lack of discretionary trading allows them to be quite easily preyed upon.
By the way, one of the culprits for the gold sales coming out of the ECB has been largely the Bank of Spain. They announced that they sold 40 tons in March.
I got a laugh out this article discussing how the governent is now asking foreigners to please keep investing in the US. God forbid the foreign investment flows dry up and we actually have to start exporting more to close our trade deficit. No, let's keep borrowing from foreigners and selling off our assets, that's the way to go. And this is a Republican administration? Sheesh.
WASHINGTON (AFP) - The US government launched an initiative Thursday to show America welcomes foreign investment despite recent flaps about takeovers of US companies.
The effort announced by President George W. Bush and Treasury Secretary Henry Paulson comes amid a dropoff in global investment in the United States in recent years and a perception of barriers to foreign firms, officials said.
"As both the world's largest investor and the world's largest recipient of investment, the United States has a key stake in promoting an open investment regime," Bush said in a statement.
"My administration is committed to ensuring that the United States continues to be the most attractive place in the world to invest."
Paulson on Thursday was attending a forum on the importance of an open economy and international investment at George Washington University in the US capital, and on Friday was to travel to St. Louis, Missouri to tour the facilities of two foreign-affiliated companies operating there.
The campaign came a year after a move by Dubai's DP World sparked a furor by acquiring US port operator PO, but then sold the US operations in the face of massive criticism in Congress and elsewhere.
Paulson said the administration was concerned because of a drop in foreign investment in the US since a peak in 2000.
"And as I've traveled around the world, there are some that in the wake of the Dubai Ports confusion and publicity are questioning whether we'll really welcome investment, whether we're erecting barriers," Paulson said in an interview with CNBC television
Treasury figures showed the number of Americans employed by foreign firms declined from 5.7 million in 2000 or 5.1 percent of the private sector workforce, to 5.1 million, or 4.7 percent in 2005.
Paulson said he wanted to counter the notion of "perceived regulatory burdens or legal burdens in the US" as well.
"We just want to make it very clear that we welcome foreign investment and it's vital to our economic strength going forward," he said in the CNBC interview.
"Men who had never shown any ability to make or increase fortunes for themselves abounded in brilliant plans for creating and increasing wealth for the country at large." Fiat Money Inflation in France, Andrew Dickson White (1912)
The complications and problems with this "approach" are obvious - but can you see a situation where letting more inflation happen - or even intentionally creating it - would be a policy tool of government?
Inflation IS the primary economic policy of the US. However in public the FED likes to be seen as inflation fighters. Rather, they are the inflation source. Actually the entire world is using inflation as a primary tool. Russia has over 40% inflation currently. Way to go Rootin Tootin Putin. China is "only" around 18-20%.
Wait till the first "official" wave of baby boomers start collecting socialist security come January 2008 ( ? ). The whine heard round the world from this government for more and more funds to write those checks .........if you were the chinese and others who "invest" in that garbage, what interest rate would you want?
The real estate market in Fla cannot even see the bottom much less be close to it.
The only thing that "might" help the situation in the US in general is an overal acceptance of a 40-50 year mortgage. In which case the average home would indeed never be "owned" and therefore the last bastion of the Constitution, ie: life, liberty, pursuit of happiness, er property would be gone forever.
Now all the followers of marx, lincoln, roosevelt and their ilk will get what they've been seeking......
Lenders warn thousands who fail to make mortgage payments
By Paul Owers South Florida Sun-Sentinel
The fear of foreclosure has South Floridians on edge.
Thousands of homeowners in Broward and Palm Beach counties can't make their monthly mortgage payments and are getting sternly worded letters from lenders who threaten to seize their properties and resell them, likely at a loss.
As the housing meltdown continues, analysts predict a surge in foreclosures this year and next that will add to the glut of homes already for sale and further depress property values that have declined since last summer.
"It has the potential to get very ugly," said David Levin, a housing consultant in Palm Beach County.
MANY of them will be selling their "hard assets" in order to get cash to keep the mortgage-wolf away from their doors for a while longer.
The houses that were ATM machines are now alligators that must be fed. Few people have the smarts to walk away from a dead horse; they are going to feed the lenders until ALL of the gold and silver is gone.
Cash is about to be king. Folks with dollars will be able to buy lots of coins/gold/silver REAL cheap, REAL soon.
BUT, I have no clue as to exactly when.
Folks Who Bite Get Bitten. Folks Who Don't Bite Get Eaten.
One would think with the US economy in a massive denial borrowing binge, significant inflation is inevitable (it will only be the careful calibration of self-interest by foreigners to determine whether our inflation will be rapid or paced). In that case,one would think that the last thing you'd want is cash, and that hard assets (property, bullion, etc.) would be king.
Yet here is storm's point, that real estate (and hard assets people will dump in order to avoid eviction a while longer) are about to deflate, and that dollars are the place to be, to pick up all the detritus cheap!
One would think with the US economy in a mssive denial borrowing binge, significant inflation is inevitable (it will only be the careful calibration of self-interest by foreigners to determine whether our inflation will be rapid or paced). In that case,one would think that the last thing you'd want is cash, and that hard assets (property, bullion, etc.) would be king.
Yet here is storm's point, that real estate (and hard assets people will dump in order to avoid eviction a while longer) are about to deflate, and that dollars are the place to be, to pick up all the detritus cheap!
Oh, how to prepare! >>
Diversify and don't be one of those in deep debt. Liquid and diversified will weather most any storm.
“When the people find that they can vote themselves money, that will herald the end of the republic.” — Benjamin Franklin
My icon IS my coin. It is a gem 1949 FBL Franklin.
One ton of computer scrap contains more gold than 17 tons of gold ore. Circuit boards can be 40 times richer in copper than typical copper ore. For this reason, workers in e-waste dumps in the southern Chinese city of Guiyu carefully sort the computers’ hardware and melt down the most valuable parts.
i thought this was worth posting to this thread which i think everyone reads here on occasion.
This is the CCI chart I was looking for. It is, IMHO, a better gauge for seeing inflation that the popular CRB Index.
I wanted to show a 5 yr chart to better illustrate what has happened over the past 5 years, but what is most important is what has been happening for the last 6 months---NOTHING. The chart has flatlined. Bollinger bands are very tight which are indicative of low volatility which I expect to soon change. It may have started today. The trend has been up but that doesnt mean it will continue, but is likely. What is important though is that a sizeable move will soon occur.
Well, with China deciding to swap our ("our"...ha ha ha) bonds for equities (stocks) they seem to now recognize that it will be better to own our "means of production" rather than our debt.
Hmmmm, maybe because without the means of production, there ain't no way to pay the debt.
<< <i>Well, with China deciding to swap our ("our"...ha ha ha) bonds for equities (stocks) they seem to now recognize that it will be better to own our "means of production" rather than our debt.
Hmmmm, maybe because without the means of production, there ain't no way to pay the debt.
Them crazy Chinese! >>
And when Japan decided that US Real Estate was the w0y to go in the late 80's/early 90's it marked the end of the boom in real estate in the US and the in Japanese stock market. Funny how history often repeats itself.
It is very important for silver/gold bulls to remember that a full and complete academic-understanding of the single cause and the multiple effects of monetary inflation has NOT historically led to profit-making in the metals markets.
It is great to have a reasonable-sized stash of the metals, but absent a loan/mortgage denominated in expensive dollars, the cheap dollars that would be created by the sale of those metals in a shock run-up would NOT have a wealth-building effect.
Americans love dollars, and they will continue to do so even as the "value" of the paper dwindles. Having those dollars during the next five-years will lead to the building of the kind of fortunes that last 100-years.
Be ready to go into pawnbroker-mode, and you should do very well during the coming decade. Tie all of your cash up in "inflation hedges" today, and you will miss the real buying opportunities that are headed your way.
Folks Who Bite Get Bitten. Folks Who Don't Bite Get Eaten.
My prediction is that we will see a period of substantially higher inflation. If that's the case, isn't the smart move to take on fixed-rate debt like mortgage debt, and wait for inflation to allow you to pay it off with cheaper dollars in the future? In particular, if you can buy apartments that can be rented out sufficient to cover their monthly costs right now, that seems like a no-brainer.
"Men who had never shown any ability to make or increase fortunes for themselves abounded in brilliant plans for creating and increasing wealth for the country at large." Fiat Money Inflation in France, Andrew Dickson White (1912)
Altho precious metals aren't addressed in his book, you might find reading "The Next Great Bubble Boom" by Harry S Dent to be very interesting reading. Subtitled "How to Profit from the Greatest Boom in History 2006-2010" , his premise is based on demographics and predicts the market will crash in 2010 or 11 and we will hit a depression for quite some time. Great reading altho as always take with a grain of salt. Some of his predictions are already beginning to materialize so check it out
"When the people fear their government, there is tyranny; when the government fears the people, there is liberty." Thomas Jefferson
It's going to get really interesting when the first wave of boomers begin officially collecting socialist security, this coming january? Where's that money going to come from and what interest rate would YOU want if they came looking to borrow from you?
The money's gonna come from a printing press. What else? Either that or the coming consumer boom in the USAaaaaaaahhahahahahahahahaaaa.
Gold and silver will be asset PRESERVATION. Capital gain will be so hard as to be near impossible.
My prediction is for a lower and lower standard of living and a willingness to accept ANY controls or regulations that will be miraged into some lie about prosperity.
Mebbe I should start jumping on the ANTI-gun bandwagon because our progeny will certainly be JUSTIFIED in wanting to shoot us for what we have ...allowed.... to happen.
And as a retired pawnbroker, I can tellya that there ain't much left that CAN be pawned. Pawn shops all over the country are running up against a real KILLER problem. That of having NO outlet for "stuff."
Gold and silver are about all that is left that CAN be pawned.
Capital gain will be so hard as to be near impossible
there are still business that are growing and creating value; my largest stock position is in a small, publicly traded company. The stock was up 328% in calendar 2006 and is up another 30% so far this year. The company develops medical products to improve the efficiency and cost effectiveness of drug delivery and the demographics will only improve.
Comments
The single thing that stands out to me, especially after the revisions when Treasury gets a better feel for who is actually doing the buying, is that China appears to be almost single-handedly carrying the US. It seems that much of Chinese buying is being filtered through London perhaps for reasons of privacy. There was a sizeable adjustment made in the Great Britain holdings which saw a sharp drop and a corresponding big rise in the Chinese holdings number. Also noteworthy is the drop off in the rate of US Treasury purchases from OPEC nations. Perhaps some of this is due to Arab and Iranian reluctance to hold too large a portion of their reserves in dollars and their desire to move more of those reserves to euros. Were it not for Chinese buying, I doubt seriously that the US would have sufficient funding for our trade imbalance.
This is even more alarming considering the escalating trade tensions between the two nations.
Knowledge is the enemy of fear
First we let the Chinese sell what ever they want to us cheap, and we close our factories.
Then we sell them U.S. Treasuries for the short falls.
Then they take the treasuries, and cash them in for our U.S. companies, banks, factories, farmland etc.
Then our grand children all work for Chinese companies, and live happily ever after.
Lets see what do you think they can buy if they start at $400,000,000,000?
Thursday April 12, 6:23 am ET
By Joe Mcdonald, AP Business Writer
China's Foreign Reserves Rise Past $1.2 Trillion, an Increase of 37.4 Percent Over Last Year
BEIJING (AP) -- China's foreign reserves, already the world's largest, have risen past $1.2 trillion, a state news agency said Thursday, amid surging trade and plans to create a multibillion-dollar company to invest some of the stockpile.
The government announced last month it will create a multibillion-dollar company to invest a portion of the reserves in hopes of making more profitable use of the money.
No details of the company's size, when it will be launched or how it will make investments have been released. But economists say Beijing might allocate as much as $200 billion to $400 billion to the venture.
Figures released this week showed China's trade surplus for the first three months of the year doubled from the same period of 2006, reaching $46 billion.
The composition of China's foreign currency reserves is a secret. But as much as 75 percent is believed to be in U.S. dollar-denominated instruments, mostly Treasuries, with the rest in euros and a small amount in yen.
Finance Minister Jin Renqing said last month that Beijing would try to learn from the experience of other governments in creating its investment company.
Jin cited the example of Singapore's government-owned Temasek Holdings, which has $89 billion in investments in banks, real estate, shipping, energy and other industries.
Texas Leaves Taxpayers in Lurch Over $50 Billion in Benefits
By Darrell Preston
April 19 (Bloomberg) -- Texas owes state workers $50 billion in future retirement benefits and refuses to acknowledge the obligation.
Texas Comptroller Susan Combs says she won't follow a new national accounting standard that requires states and cities to disclose the estimated costs of benefits promised to retired workers, such as health care and life insurance. The government would need to set aside $4 billion a year over the next decade to keep from falling short on what it owes, according to a report by the state's Legislative Budget Board.
Disclosing its future costs may force Texas to raise taxes, increase borrowing, sell assets or cut programs to come up with the money. Refusing to recognize them may jeopardize the ratings on $22 billion of outstanding bonds and prompt investors to demand higher yields when they lend to the state.
``If they don't report it, they don't have to do anything about it,'' said Michael H. Granof, Ernst & Young professor of accounting at the University of Texas in Austin. ``It's much easier to just push it off to the next generation.''
Texas, which spent $629 million on health care for retirees in fiscal 2005, hasn't set aside any money to cover the future obligations, equal to two-thirds of annual state spending. Nationwide, states and cities have an estimated $1.5 trillion of unfunded costs for future retiree benefits, Credit Suisse Group estimated in a March report.
``I don't like that,'' said John B. Cummings, executive vice president at Newport Beach, California-based Pimco, which runs the world's largest bond fund and manages $14 billion in municipal debt. ``You're supposed to tell me what's going on.''
Knowledge is the enemy of fear
Dow: 12,963
Gold: 691.60
How about $800 gold and 14,000 Dow?
roadrunner
Yeah
M3 total money stock is an excellent predictor of where inflation is heading since increasing liquidity is the starting point. Even though the govt no longer publishes M3, there are a number of services who track and publish what it would be (see link below to "stats" and select "alt data series" tab). In fact the world is on a money stock binge with most of the key players raising total liquidity to the tune of 10-20% per year. The US is at a "tame" 10-11%.
roadrunner
Real estate confession…
Today in the Las Vegas Review Journal business section, the headline article was "Home Sales Stats Bleak". Within the article there was insight into the gimmicks being used by our government and the National Association of Realtors to manipulate stats in favor of a rosier picture. Jim Sinclair has speculated that housing stats figures such as "closings" and "home sales" are being bolstered by the inclusion of foreclosed home transfers from the owner back to the banks. That presumption was confirmed today in the Review Journal article. Larry Murphy of Las Vegas-based SalesTraq told about 1,000 real estate professionals "there are some alarming figures, like the 402 bank repossessions that accounted for 13 percent of the 3,175 existing home closings in March. That's up from the 9 percent in both February (231) and January (248), Murphy said".
Despite the inclusion of foreclosures, existing home sales are down nearly 20 percent at 8,539. New home closings dropped 43.2 percent in the first quarter to 5,264.
The article points outs that median new home price decline 3.5 percent from a year ago, however the median price of $324,035 is up 4 percent. The existing median home price of $280,000 in March is down 1.8 percent from a year ago and the first-quarter median of $280,667 is down 0.3 percent.
The article contains the typical "we are at or near a bottom" statements which are ridiculous. "SalesTraq showed 22,970 available listings on the MLS in March, a 13-month supply based on current sales figures". That is a long way from when I sold my home in Las Vegas at the end of 2005. I received a contract which was $15,000 above my asking price the day after I listed it. I'm sure things will get much, much worse over the next several years. I keep reminding my friends that home prices in Japan have not yet recovered 20 years after they plunged 50% or more.
The sky is not falling, but on the other hand I would not want to be stuck with a two bedroom condo in places with falling prices. People who bought for the long term with stable payments they can afford are fine. It is the investor who was trying to flip houses and ride the crest of the wave who got burned the worst.
FYI, the market just crested 13,000.
All I can say is.... home prices still seem astronomical to me..... but you each make your own decisions on this. If I don't have to, I don't plan to buy into this market right now. Gold and silver are my bets right now.
My personal view is that all of these investment markets seem totally out of control, and that includes a large section on the coin market.
So much paper wealth has been created from world printing presses over the last few years that oceans of money are looking for some safe or solid investment on a weekly basis.
Small companies now cost a billion dollars, and large companies may cost $100 billion.
I must say that I am surprised that the U.S. stock market hit 13,000 yesterday, but then again it needed to go to 13,100 in December to adjust for inflation, and now needs to go to 13,500 to keep up.
In this new global economy, inflows into the U.S. stock market from folks with Euros will most likely continue, as market here are cheap for them.
On the other hand Americans are being priced out of many of the valuable assets on the planet as the dollar devalues and inflation burns.
Housing costs are truly out of control, and middle and upper middle class Americans could only afford these homes with sub-prime and gimmicky loans the last few years. Now that those loans are gone we many be in for a long down trend in that market, unless foreigners come into that market also.
More than ever I think our original premise of paying down debt, living within a budget, paying as little interest as possible, and putting away some hard assets is the way to protect ones family.
The worldwide press, and governments around the world, want the mob to just remain in the dark about the trainloads of money being printed, and the unsustainable debt being created.
As long as the big money players keep pouring billions, even trillions of dollars into these markets, average investors will not be able to figure out what is truly safe. One CNBC pundit made the comment yesterday that the U.S. stock market had added 5 trillion dollars in value since the first of the year. O.K. where did the 5 trillion come from, are the American people as a whole so flush with savings that they pushed up all these prices? I don’t think so!
I will be making a trip to Rome and Greece at the end of May and will give a report when I return, but having already priced the hotels I can tell this trip will cost nearly double what it did just five years ago. I have already been warned to convert dollars to Euros before I arrive, as no one wants dollars there any longer!
New silver king
If you said that in mid-2004 you would have been of a very few people who saw housing prices turning around down the road.
Today, the majority of the country feels we are at a blip before the next assault on home prices. Good luck to them.
The sky is not falling because the FED/treasury are pumping out liquidity at 8-12% per year. The rest of the world is pumping up M3 at 10-20% per year. One big pumping party. So that money has to follow assets, including an overpriced stock market. If Joe Public doesn't put his money there, where then? The cresting of the Dow to 13,000 is more a function of absurd liquidity and a depreciating dollar than anything to do with company profits or fundamentals.
And the funny thing is that 14,000 Dow could occur before 12,000 Dow. The Hedge funds and specs will play this game as long as the American public is continuing to dump their money into it. One massive shock wave from a major fund bust or JPM, GS, Citi, Fannie, etc. and the house tumbles quite a ways. Or it could end instantly next week when all the players decide to pull out at once leaving JQPublic to take his medicine.
roadrunner
by Rob Kirby
Derivatives: Glowing Revelations
In case you haven’t noticed the headlines about the Bank of Montreal [BMO] taking a “charge” against earnings relating to its [DERIVATIVES] trading – particularly in that of Nat Gas futures:
TORONTO, April 27 /CNW/ - BMO Financial Group (NYSE: BMO, TSX: BMO) said today that mark-to-market commodity trading losses estimated at between CDN$350 million and CDN$450 million, pre-tax, will be recorded in the second quarter of its 2007 fiscal year. The impact of this to BMO Financial Group's second quarter earnings, which will be announced on May 23, 2007, is estimated in the range of 45 cents to 55 cents per share.
I’m guessing there’s a much bigger story here than the headline suggests. Bank of Montreal has taken a loss on DERIVATIVES TRADING of some 450 MILLION – and remember – total trading revenue for the whole of last year for BMO was reportedly in the neighborhood of 650 million.
--------------------------------------------------------------------------------
From www.financialsense.com.
Just another bad day in the derivatives trading game. There are much larger banks than Montreal with far greater D positions.
And another view of it:
Welcome to Ponzi (not Fonzy) world
roadrunner
With a $700 billion+ annual trade deficit, it's hard not to bet on the continued decline of the greenback. Of course, if our markets continue to rally, you could see the dollar strengthen significantly. America's trade deficit is simply the flip side of its investment surplus.
<< <i> Aren't all bets at this point really bets against the US dollar? >>
Interesting point. While it would seem that the US Dollar will/should continue to fall, since "everyone" expects it, this may be a "contrary indicator."
More often than not - markets move the opposite way than the majority of investors believe it will.
I have continued to be amazed that the US can sustain these enormous trade deficits year after year. Ultimately, I think the end game logically must be a continued devaluation of the dollar.
On the horizon I think we will see higher inflation. People - probably even most Fed economists - have forgotten how bad inflation can get. Moreover, in a certain sense it may be desireable to have a period of more inflation. Though inflation is often thought of as Evil #1 for economists, inflation could effectively wipe out a lot of our debt problems. Those holding fixed income assets - like the Chinese in US government bonds - would pay the price.
The best investment right now, in my view, is to borrow long-term at low fixed rates (e.g., real estate mortgages - unless you live in a part of the country where property is still grossly overvalued). Ultimately, in a period of inflation, the holders of these notes will be in some serious pain. That's my bet, anyway.
Maybe all bets are against the dollar, but we will soon have tax increases plus a climate of "we need to be like Europe." The world will like us again.
Who knows, "they" might invest here again and move the dollar.
Though inflation is often thought of as Evil #1 for economists, inflation could effectively wipe out a lot of our debt problems. Those holding fixed income assets - like the Chinese in US government bonds - would pay the price.
It's nice to state that inflation is our worst enemy. This buys votes at election time and bolsters confidence in our FED (the true sources of inflation...and they very well know it). Remember WIN
back in the 70's? Whip Inflation Now! Only problem is deflation of all assets is even worse. There is no free lunch in that game. No, our govt and current entitlement system requires a constant inflation. It is anything but Evil for the bankers and politicians who employ. Inflation is a necessity for them in order to continue to transfer the wealth from Joe Public to them. It has been that way since 1913.
roadrunner
But is inflation also going to be seen as a quick and dirty means of getting out of some of our debt problems?? Let me give a crude example - if prices of everything doubled overnight, our government debt - which consists of fixed-rate debt instruments held by investors worldwide - would shrink by half. Same with fixed rate debt held by the average American. The complications and problems with this "approach" are obvious - but can you see a situation where letting more inflation happen - or even intentionally creating it - would be a policy tool of government?
It's been a policy tool for years. Look at Social security and you'll see COLA's tied to a CPI that's intentionally lower than inflation. It gradually reduces the living standard of retirees. If they did it overnight, everyone would be pissed. Furthermore, they've already been telling the 20 and 30 year olds to expect nothing from Soc Security. 30 years from now, they will have heard it so many times they may believe it.
Meanwhile, the gov't wants to expand the payouts by adding illegal immigrants - retired or "disabled" - to the Soc Security list.
Gold was obliterated today as long liquidation was forced by predatory shorts that began in yesterday’s session. There is really not a lot to say about this other than the fact that ECB gold sales prevented gold from breaking through first, the $700 barrier, and then, the $690 barrier. Seeing that overhead gorilla and bullion bank price capping, longs have thrown in the towel out of disgust while brand new fresh shorts are coming in as well leaving an absence of buying.
Such is the nature of this gold market. It can never set back slowly and gradually but instead goes into free fall mode as the black boxes all get out at the same time and trample each other in the process. The good thing about that is they finish up the liquidation process very quickly and get it over with. The physical market buyers then show up and bid it back up as they see value and the funds then come pouring back into all over again and we repeat the process for the umpteenth time. There are two things you can say with certainty – the sun rises in the East and gold will get bashed periodically, scare the dickens out of gold longs and then climb higher on its next leg back up again.
Another thing is that these gold bashings tend to occur very close to rollover time in the lead month contract. That means a large number of speculative long index fund positions MUST be rolled into the next month, in this case the August. It has been my observation that these predatory gold bear raids are timed to coincide with the rollover period. Again, there is nothing particularly skillful about the trading tactics of the perma gold shorts – they telegraph their intentions so clearly that anyone can see what they are up to. Skillful traders manage to conceal the brunt of their buying and selling. These guys are big gorillas. The problem is not the skill of the gold perma shorts – it is the lack of skill among the hedge funds that play gold. They simply have not learned how to play the gold game and their lack of discretionary trading allows them to be quite easily preyed upon.
By the way, one of the culprits for the gold sales coming out of the ECB has been largely the Bank of Spain. They announced that they sold 40 tons in March.
WASHINGTON (AFP) - The US government launched an initiative Thursday to show America welcomes foreign investment despite recent flaps about takeovers of US companies.
The effort announced by President George W. Bush and Treasury Secretary Henry Paulson comes amid a dropoff in global investment in the United States in recent years and a perception of barriers to foreign firms, officials said.
"As both the world's largest investor and the world's largest recipient of investment, the United States has a key stake in promoting an open investment regime," Bush said in a statement.
"My administration is committed to ensuring that the United States continues to be the most attractive place in the world to invest."
Paulson on Thursday was attending a forum on the importance of an open economy and international investment at George Washington University in the US capital, and on Friday was to travel to St. Louis, Missouri to tour the facilities of two foreign-affiliated companies operating there.
The campaign came a year after a move by Dubai's DP World sparked a furor by acquiring US port operator PO, but then sold the US operations in the face of massive criticism in Congress and elsewhere.
Paulson said the administration was concerned because of a drop in foreign investment in the US since a peak in 2000.
"And as I've traveled around the world, there are some that in the wake of the Dubai Ports confusion and publicity are questioning whether we'll really welcome investment, whether we're erecting barriers," Paulson said in an interview with CNBC television
Treasury figures showed the number of Americans employed by foreign firms declined from 5.7 million in 2000 or 5.1 percent of the private sector workforce, to 5.1 million, or 4.7 percent in 2005.
Paulson said he wanted to counter the notion of "perceived regulatory burdens or legal burdens in the US" as well.
"We just want to make it very clear that we welcome foreign investment and it's vital to our economic strength going forward," he said in the CNBC interview.
Inflation IS the primary economic policy of the US. However in public the FED likes to be seen as inflation fighters. Rather, they are the
inflation source. Actually the entire world is using inflation as a primary tool. Russia has over 40% inflation currently. Way to go Rootin Tootin Putin. China is "only" around 18-20%.
roadrunner
Wait till the first "official" wave of baby boomers start collecting socialist security come January 2008 ( ? ). The whine heard round the world from this government for more and more funds to write those checks .........if you were the chinese and others who "invest" in that garbage, what interest rate would you want?
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
The only thing that "might" help the situation in the US in general is an overal acceptance of a 40-50 year mortgage. In which case the average home would indeed never be "owned" and therefore the last bastion of the Constitution, ie: life, liberty, pursuit of happiness, er property would be gone forever.
Now all the followers of marx, lincoln, roosevelt and their ilk will get what they've been seeking......
What a tragedy....
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
This is not the chart I wanted to post. I will try to correct tomorrow. But this chart is interesting nonetheless.
Knowledge is the enemy of fear
Foreclosure crisis looms, housing analysts say
Lenders warn thousands who fail to make mortgage payments
By Paul Owers
South Florida Sun-Sentinel
The fear of foreclosure has South Floridians on edge.
Thousands of homeowners in Broward and Palm Beach counties can't make their monthly mortgage payments and are getting sternly worded letters from lenders who threaten to seize their properties and resell them, likely at a loss.
As the housing meltdown continues, analysts predict a surge in foreclosures this year and next that will add to the glut of homes already for sale and further depress property values that have declined since last summer.
"It has the potential to get very ugly," said David Levin, a housing consultant in Palm Beach County.
FORECLOSURE CRISIS LOOMS
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
////////////////////////////////////////////////////
MANY of them will be selling their "hard assets"
in order to get cash to keep the mortgage-wolf
away from their doors for a while longer.
The houses that were ATM machines are now
alligators that must be fed. Few people have
the smarts to walk away from a dead horse;
they are going to feed the lenders until ALL of
the gold and silver is gone.
Cash is about to be king. Folks with dollars will
be able to buy lots of coins/gold/silver REAL
cheap, REAL soon.
BUT, I have no clue as to exactly when.
One would think with the US economy in a massive denial borrowing binge, significant inflation is inevitable (it will only be the careful calibration of self-interest by foreigners to determine whether our inflation will be rapid or paced). In that case,one would think that the last thing you'd want is cash, and that hard assets (property, bullion, etc.) would be king.
Yet here is storm's point, that real estate (and hard assets people will dump in order to avoid eviction a while longer) are about to deflate, and that dollars are the place to be, to pick up all the detritus cheap!
Oh, how to prepare!
Here's a warning parable for coin collectors...
<< <i>Interesting doomesday cross-currents.
One would think with the US economy in a mssive denial borrowing binge, significant inflation is inevitable (it will only be the careful calibration of self-interest by foreigners to determine whether our inflation will be rapid or paced). In that case,one would think that the last thing you'd want is cash, and that hard assets (property, bullion, etc.) would be king.
Yet here is storm's point, that real estate (and hard assets people will dump in order to avoid eviction a while longer) are about to deflate, and that dollars are the place to be, to pick up all the detritus cheap!
Oh, how to prepare! >>
Diversify and don't be one of those in deep debt. Liquid and diversified will weather most any storm.
My icon IS my coin. It is a gem 1949 FBL Franklin.
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
i thought this was worth posting to this thread which i think
everyone reads here on occasion.
Text
warning, some of the pictures might make you cry or might make you proud
to see such industrious people at work. go china!
here is another type of image set showing a super tanker being
ripped apart for metal.powerful pictures telling a story
But wait til the wind is blowing toward the US.
I wanted to show a 5 yr chart to better illustrate what has happened over the past 5 years, but what is most important is what has been happening for the last 6 months---NOTHING. The chart has flatlined. Bollinger bands are very tight which are indicative of low volatility which I expect to soon change. It may have started today. The trend has been up but that doesnt mean it will continue, but is likely. What is important though is that a sizeable move will soon occur.
Knowledge is the enemy of fear
Hmmmm, maybe because without the means of production, there ain't no way to pay the debt.
Them crazy Chinese!
<< <i>Well, with China deciding to swap our ("our"...ha ha ha) bonds for equities (stocks) they seem to now recognize that it will be better to own our "means of production" rather than our debt.
Hmmmm, maybe because without the means of production, there ain't no way to pay the debt.
Them crazy Chinese! >>
And when Japan decided that US Real Estate was the w0y to go in the late 80's/early 90's it marked the end of the boom in real estate in the US and the in Japanese stock market. Funny how history often repeats itself.
Knowledge is the enemy of fear
that a full and complete academic-understanding of
the single cause and the multiple effects of monetary
inflation has NOT historically led to profit-making in
the metals markets.
It is great to have a reasonable-sized stash of the
metals, but absent a loan/mortgage denominated
in expensive dollars, the cheap dollars that would
be created by the sale of those metals in a shock
run-up would NOT have a wealth-building effect.
Americans love dollars, and they will continue to
do so even as the "value" of the paper dwindles.
Having those dollars during the next five-years
will lead to the building of the kind of fortunes
that last 100-years.
Be ready to go into pawnbroker-mode, and you
should do very well during the coming decade.
Tie all of your cash up in "inflation hedges" today,
and you will miss the real buying opportunities
that are headed your way.
here is another type of image set showing a super tanker being
ripped apart for metal.powerful pictures telling a story >>
Wow, what a scene
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
to be very interesting reading. Subtitled "How to Profit from the Greatest Boom in History 2006-2010" , his premise is based on demographics
and predicts the market will crash in 2010 or 11 and we will hit a depression for quite some time. Great reading altho as always take with a grain of salt. Some of his predictions are already beginning to materialize so check it out
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
Gold and silver will be asset PRESERVATION. Capital gain will be so hard as to be near impossible.
My prediction is for a lower and lower standard of living and a willingness to accept ANY controls or regulations that will be miraged into some lie about prosperity.
Mebbe I should start jumping on the ANTI-gun bandwagon because our progeny will certainly be JUSTIFIED in wanting to shoot us for what we have ...allowed.... to happen.
And as a retired pawnbroker, I can tellya that there ain't much left that CAN be pawned. Pawn shops all over the country are running up against a real KILLER problem. That of having NO outlet for "stuff."
Gold and silver are about all that is left that CAN be pawned.
there are still business that are growing and creating value; my largest stock position is in a small, publicly traded company. The stock was up 328% in calendar 2006 and is up another 30% so far this year. The company develops medical products to improve the efficiency and cost effectiveness of drug delivery and the demographics will only improve.
Liberty: Parent of Science & Industry