<< <i>$40 billion in liquidity injections added today, and the market still finished down. Can anybody say, "Yikes!" >>
From a technical standpoint there wasa rally today as prices opened considerable lower and almsot all stocks closed higher than their open. This was a positive day. The weekly bar will also be green as all averages ended the week higher than last week.
I am not saying the market will go higher or lower next week. Actually I hope it continues to what it has for the past 2 weeks. This has been my best trading since 2003.
Monsterman.....a fact regarding the price of corn. Historically it trades between $2 and $3 per bushel. Currently at about $3.70 and down from nearly $5. But, as with most any commodity, prices are very volatile. For instance, 10 years ago corn traded over $5.50 per bushel. The price did not last and I seriously doubt these prices will either. As you know, the best remedy for high prices is high prices. We saw that with the Tech bubble in 2000 and currently with the housing bubble. The commodity bubble will correct also.
<< <i>The guys in Washington are hoping that the Fed can prop up the "free market" long enough for the wealthy to get their money moved into safe investments...after that, who cares if the little investors and those relying on 401K accounts for their retirements lose their shirts. >>
As long as that DOW number keeps going up there'll be an endless supply of suckers. So what if tomorrow's dollar only buys half of what today's dollar can buy? Most morons will still think they're making money in the market. >>
Plus the rich have easy access to capital anyway. Even if they lose half their wealth due to inflation, bankers will still be lining up to lend them more. It's the little guy who takes all the blame and gets left out in the cold.
I'd have to be an idiot to pay capital gains taxes for that privilege.
CB's dumping around $200 Billion of liquidity into markets in 2 days is an unusual occurrence. Our own FED was "buying" illiquid and unpriceable Mortgage Backed Securities. That stuff can't go anywhere. Sort of a shame to see the FED bailing out the same banks, hedge funds, and corporate crooks who started this mess. But who expected anything different? The credit mark is in disarray and the mortgage derivatives problem is certainly starting to spill over into the interest rate derivatives as well. The holders of this "AAA" rated Mortgage Junk cannot sell it to raise cash to pay margin calls, etc. So they'll sell stocks and equities with honest value to get out from under the first wave. But more waves are coming...and larger ones at that.
The obvious question is how will this affect the upper echelon of coin buyers where liquidity makes all the difference?
<<RoadRunner said: The obvious question is how will this affect the upper echelon of coin buyers where liquidity makes all the difference? >>
I expect one of two things will happen.
If the fed keeps pumping money into the system in order to prop it up, then coin prices (and milk and bread prices for that matter) will continue to rise and be attractive investments.
On the other hand, if the fed decides to tame inflation and damn the torpedoes, I expect coin prices to fall through the floor...
"The obvious question is how will this affect the upper echelon of coin buyers where liquidity makes all the difference?"
The obvious response is: Scared money is scared money and scared money is always wrong. If folks have scared money then they will put it in the CD's and 5%+ accounts that are insured up to $100,000 each. I doubt there will be a major shift of assets other than the bottom feeder type activity we are seeing now. The economy is challenged but who in the world isn't right now. A good stock is a good stock, no need to turn the boat around if you are on a solid deck. The market segments of the world are alive and dynamic, they always have been since one guy had a piece of flint that another guy needed. The market segments and networks will each evolve with the time line or that segment will be history. Cash doesn't wait, nor does it have to.
This economic evolution will probably have most of an effect on the middle areas of the market. The upper echelon will probably have little problem getting what they want, as it should be and it is doubtful they will waste any cash, they rarely do. Some folk may start pullling back a little with their 4 digit purchases. Not because they are scared but because they might be able to wait and snag a nice piece at a cheaper and more attractive price. Even the $500 guys can certainly wait and watch, it's predator v.s. prey. The market has a lag, it seems, from financial reality...maybe as much as three months so it would be good to start looking at September/October for some significant movement in coins, if there is to be any. Coins have seemingly remained amazingly stable, at least in the areas where I sniff around.
I fully expect the FED to pump, pump, and pump away some more. And I agree that should be bullish for fine collectibles. That said, we still also need to be on the lookout for the derivatives tsunami that is building up steam out in the distance.
My own thoughts are to hedge one's bets and play the middle. For those that don't mind selling coins that have appreciated more than enough, take some off the table. For those that are stable, solid values over many years, and have not appreciated all that much, hang on longer.
"I fully expect the FED to pump, pump, and pump away some more."
Maybe, although Bernanke is far less "chummy" with Wall Street than Greenspan was, and is much more of an academic, so I expect he will try to prevent a sudden deflation and not much more. I think he is much less inclined to bail out the rich. But, we will see. This is certainly an interesting test of his skills.
Keep in mind, also, that when a central bank injects liquidity into a deflating environment, it is hard to predict the results. The Fed has been quite adept at this since 1987, but I would not feel too certain in predicting directions.
(and therefore I agree with your strategy of playing the middle!)
<< <i>"The obvious question is how will this affect the upper echelon of coin buyers where liquidity makes all the difference?"
The obvious response is: Scared money is scared money and scared money is always wrong. If folks have scared money then they will put it in the CD's and 5%+ accounts that are insured up to $100,000 each. I doubt there will be a major shift of assets other than the bottom feeder type activity we are seeing now. The economy is challenged but who in the world isn't right now. A good stock is a good stock, no need to turn the boat around if you are on a solid deck. The market segments of the world are alive and dynamic, they always have been since one guy had a piece of flint that another guy needed. The market segments and networks will each evolve with the time line or that segment will be history. Cash doesn't wait, nor does it have to.
This economic evolution will probably have most of an effect on the middle areas of the market. The upper echelon will probably have little problem getting what they want, as it should be and it is doubtful they will waste any cash, they rarely do. Some folk may start pullling back a little with their 4 digit purchases. Not because they are scared but because they might be able to wait and snag a nice piece at a cheaper and more attractive price. Even the $500 guys can certainly wait and watch, it's predator v.s. prey. The market has a lag, it seems, from financial reality...maybe as much as three months so it would be good to start looking at September/October for some significant movement in coins, if there is to be any. Coins have seemingly remained amazingly stable, at least in the areas where I sniff around.
JMHO >>
Gotta agree with you here. Markets do not go down 10% just because they want to. There is always some sort of shock. And then when the shock happens everyone runs to the hills. The stock market was up 30+% in the last year and needed a break. Home prices doubled or tripled in 4 years. They needed a break, and when it finally happens the doom and gloomers sprout like fungus.
None of this is unexpected. Take advantage or take the bus.
Didn't the FED just dump something like $70 Billion into the market over the past 2 days? I'd call that sort of accomodating. And we aren't even at a real crisis point yet. The EU dumped even more into their economies. What's $200 billion among friends?
“The holders of this "AAA" rated Mortgage Junk cannot sell it to raise cash to pay margin calls, etc. So they'll sell stocks and equities with honest value to get out from under the first wave.”
As well as Gold and Silver RR, these guys are selling anything they can get cash from!
“On the other hand, if the fed decides to tame inflation and damn the torpedoes, I expect coin prices to fall through the floor...”
Joe V.
I do not think it is possible to “tame” inflation. The government has become so use to just printing whatever money they need, they are not going to stop this. As one Dem. Presidential candidate put it today, “we have a 50 Trillion dollar freight train headed right toward us, what are we going to do about that?”
I am sure he was talking about the S.C. and Medicare deficits.
They are going to print the money of course!
I am sure there are many rare coins that could be considered very expensive at this point, but most of our hobby has just adjusted for the REAL inflation that has occurred since the 1990 market. In addition I do not believe there are huge amounts of money being speculated on coins, even after our 6-year bull market. So my personal opinion is that things might slow down with a false hope the Government might be able to do something about REAL inflation, but I see no way the coin market as a whole goes to the Devil.
“Didn't the FED just dump something like $70 Billion into the market over the past 2 days? I'd call that sort of accommodating.”
Mr. Bernanke had already warned everyone in advance what he would do if any of the U.S. markets started to freeze up, that’s how he got the name helicopter Ben. You must say he is not a liar. The markets started to freeze up in this derivative market, and he turned the presses on, and did the Bernanke Helicopter Drop.
Look guys this is very smart! If you continue to lie and create fake CPI numbers, and if you continue to tell the same lies about how you really want a strong dollar, you can sell lots of worthless debt, backed by nothing, to loads of folks around the planet and pay them back at 10 cents on the dollar.
The Fed and other central banks are doing what they are supposed to do—being a banker for banks. The are recharging the system by lending at wholesale rates, allowing banks to borrow cheaply and relend at a spread.
There is a real demand for money to fund quality loans to quality borrowers. This is a good sign. If the banks were getting hit by defaults caused by business failures, they would not need new money to fund new loans, since they would not be lending into a collapsing economy.
Lets try to keep in perspective the source of the liquidity crunch. Commercial lenders lend money for the purchase of real estate or for home equity loans and refinancings. To get more money to keep the lending pipeline full, they package their loans and sell them to institutional investors in the form of pass-through trust certificates. The lenders then are not generating earnings through interest on their loans, but rather are earning points and similar loan fees and sometimes spreads between the rate on their loans and the rate paid on the certificates. The ultimate risk of the loan is therefore born by the trust certificate holders, not the lending institution. When the riskier trust certificates go into default, the lenders find it harder if not impossible to sell of their new loans. A similar effect occurs when the originating bank sells of participations in its loans to other banks. The result is that their source of refunding for new loans dries up. Sometimes the baby gets thrown out with the bath water and the markets for quality commercial loans are adversely impacted even though the defaults are in the subprime housing loans.
An odd result of this is that the flight to safety has seen a rush to buy Treasury notes. The result is that bond prices have gone up and yields have declined. The 10 year Treasury note, which the bench mark for pricing commercial real estate loans, has declined back down below 5%. But at the same time the lenders that would like to lend at a spread over that rate are short of funds to lend. So oddly, money is tight but money is cheap. In other words, interest rates remain attractive but you can’t borrow because the lenders have no money to lend or have the money but can’t be sue that they can sell off their new loans.
The very statement that "money is cheap, but there is none to loan" should give you some idea that the system is being manipulated. Remember the supply/demand idea?...if there is no money to lend, then interest rates are supposed to go up to deal with it, likewise if there is a lot of money, rates are supposed to go down. We have way too much debt to have interest rates as low as they are, and the rate should probably be 10% or more right now, but that certainly wouldn't be good for our consumer economy, would it? - so we contunue to live a game of musical chairs, everyone hoping that they're not the one left standing when the music stops and we have to face the truth about our economy. The government is not supposed to print new money so the banks can continue to lend it out at low rates...that idea is called voo-doo economics, something that has permeated our nation since Ronald Reagan began the idea of "spending our way out of debt". It doesn't work for anyone but the wealthy.
The very statement that "money is cheap, but there is none to loan" should give you some idea that the system is being manipulated. Remember the supply/demand idea?...if there is no money to lend, then interest rates are supposed to go up to deal with it, likewise if there is a lot of money, rates are supposed to go down. We have way too much debt to have interest rates as low as they are, and the rate should probably be 10% or more right now, but that certainly wouldn't be good for our consumer economy, would it? - so we contunue to live a game of musical chairs, everyone hoping that they're not the one left standing when the music stops and we have to face the truth about our economy. The government is not supposed to print new money so the banks can continue to lend it out at low rates...that idea is called voo-doo economics, something that has permeated our nation since Ronald Reagan began the idea of "spending our way out of debt". It doesn't work for anyone but the wealthy.
I totally agree. But I think it started earlier, when Nixon severed all links to the Gold Standard. That was the beginning of this mess we're in. The Oil crisis of the seventies had nothing to do with oil. It was the fact that the Saudis didn't want the US dollars anymore, hence the massive price increase.
Getting back to your thoughts of 'manipulation' in the markets. Well, you couldn't have this if every country was on the "Gold Standard'.
Unfortunately, it's much too late to go back on a gold standard since the ratio of 'amount of money' to 'amount of gold' is totally, grotesquely, out of proportion.
"Gold is money, and nothing else" (JP Morgan, 1912)
"“Those who sacrifice liberty for security/safety deserve neither.“(Benjamin Franklin)
<< <i>The government is not supposed to print new money so the banks can continue to lend it out at low rates...that idea is called voo-doo economics, something that has permeated our nation since Ronald Reagan began the idea of "spending our way out of debt". It doesn't work for anyone but the wealthy. >>
Can't agree with you on this one. Central Banks were created to be the banker for banks. One of their roles is to smooth the interest rate curve to prevent short term anomalies and disquilibriums from creating havoc in the economy. Which would you rather have, an orderly financial system that can have time to figure out what the value of mortgage securities and other loan are really worth, and then adjust prices accordingly, while business continues on even keel, or periodic melt downs that can whip saw investors out of the market and stifle investment?
How long should the following scenario continue—you can’t sell your house because a credit worthy buyer can’t get a mortgage loan at a rate that won’t bleed him dry, and you can’t buy the new house you want because you are in the same boat as the guy who wants to buy your house?
Or your business can’t finance its accounts payable at a rate that will allow your business to make a profit even though your customers are all solid credit risks who pay on time every time?
>>The price did not last and I seriously doubt these prices will either. As you know, the best remedy for high prices is high prices. We saw that with the Tech bubble in 2000 and currently with the housing bubble. The commodity bubble will correct also.
your exactly correct...the private sector will always enter the market and create more capacity and feel the need and drive prices back down
however
this exact fact does not happen with wages as nothing is more inflationary than wage pressures
now that we are inflating at over 10% per annum for a few now...raises are in no way keeping up with headline inflation
thus the rich are getting richer and the middle class is getting smaller....why????well they fail to realize that we are in a global economy and they are competing against not the 10 other job applicants but rather the other 200 aplicants around the globe....with 55 million people in india with a college degree...who dont need calculators to do math and do it in their heads...who work longer...who work cheaper...who work smarter are kicking our middle class`s rears......the problem is they dont know the size of the competition.....when i showed up for my first training camp there were 16 middle linebackers on the roster all wanting the job...imagine if there were 20 times that...or 320 people trying out...i might never of been!!!
in sports i always made it a point to " know thy competition"...as doing so makes me wiser....unfortuantely many of our middle class doesnt see it that way
monsterman
my goal is to find the monsters and i go where they are but i sometimes miss some.... so if you have any and want to sell IM THE BUYER FOR THEM!!!
out of rockets ...out of bullets...switching to harsh language
<< <i>Unfortunately, it's much too late to go back on a gold standard since the ratio of 'amount of money' to 'amount of gold' is totally, grotesquely, out of proportion >>
Why gold? Why not corn? Why not diamonds? Why not aluminium? If we had continued to allow the gold supply to limit the amount of capital available to finance business and technoogy we would have a Great Depression stadnard of living, or worse. In fact we would not be having this on-line discussion because there would be no such thing as the internet or personal computers etc. all financed with amounts of capital that just could not exist if gold standards pundits had their way.
<< <i>with 55 million people in india with a college degree...who dont need calculators to do math and do it in their heads...who work longer...who work cheaper...who work smarter are kicking our middle class`s rears...... >>
This is Tom Friedman's "The Wold is Flat" concept. Our best bet for survival is to continue to be able to pay more for the best of the best of those 55 million tech guys from India so that they will come here and help our companies develop the cutting edge technology, or start new companies here rather then there. Even if in the end those new companies wind up outsourcing back to Bangalore at least some new jobs will be created here.
Why gold? Why not corn? Why not diamonds? Why not aluminium? If we had continued to allow the gold supply to limit the amount of capital available to finance business and technoogy we would have a Great Depression stadnard of living, or worse. In fact we would not be having this on-line discussion because there would be no such thing as the internet or personal computers etc. all financed with amounts of capital that just could not exist if gold standards pundits had their way.
Why Gold...I'll tell you why. Because Gold is about the only thing on this planet that is Money.
Name me anything else that satisfies (like Gold) the following conditions:
1. is valued by all 2. non-perishable 3. can be easily divisible 4. rare 5. beautiful 6. resists attack by weather and chemicals. 7. can be used to account for credit/debit system 8. and is a Store of Wealth.
Can corn do this...NO Can aluminum do this....No Can rhodium do this....NO Can diamonds do this....NO
The list goes on and on.
"Gold is money, and nothing else" (JP Morgan, 1912)
"“Those who sacrifice liberty for security/safety deserve neither.“(Benjamin Franklin)
>>>Why gold? Why not corn? Why not diamonds? Why not aluminium? If we had continued to allow the gold supply to limit the amount of capital available to finance business and technoogy we would have a Great Depression stadnard of living, or worse. In fact we would not be having this on-line discussion because there would be no such thing as the internet or personal computers etc. all financed with amounts of capital that just could not exist if gold standards pundits had their way.
your exactly right......the real thing people have to understand is relativity....meaning how much are we inflating relative to the other countries and relative to our past history and relative to our infrastucure and gdp and futrue potential to produce
what gold does is give a save haven when " we" have lost our financial way in terms of debasing our currency.....its realy a score card......its thats simple.....right now....the score has gone from 250 to 670.......
all you have to do is predict what the goons in washington will do about the future.....and go long or short
i for one know for a fact to go long gold for the next 2 years out.....as i see washington has etched in stone exactly what they will HAVE TO DO IN THE NEXT 24 MONTHS.....and thats further debasing the dollar
end of story!!!!
monsterman
my goal is to find the monsters and i go where they are but i sometimes miss some.... so if you have any and want to sell IM THE BUYER FOR THEM!!!
out of rockets ...out of bullets...switching to harsh language
<< <i>with 55 million people in india with a college degree...who dont need calculators to do math and do it in their heads...who work longer...who work cheaper...who work smarter are kicking our middle class`s rears...... >>
This is Tom Friedman's "The Wold is Flat" concept. Our best bet for survival is to continue to be able to pay more for the best of the best of those 55 million tech guys from India so that they will come here and help our companies develop the cutting edge technology, or start new companies here rather then there. Even if in the end those new companies wind up outsourcing back to Bangalore at least some new jobs will be created here.
CG >>
I wouldn't say you're wrong but why not educate the children in this country. This isn't rocket science. Our children are just as smart as the Indian and Chinese kids it's just that our schools are more concerned with being politically correct than with anyone getting an education. Teachers aren't allowed to teach and kids aren't allowed to do much of anything but toe the line.
It's ironic that we spend far more on education than the Chinese and Indians combined de- spite being outnumbered about seven to one, but when we need someone who knows how to do something we have no choice but to look abroad.
We are too dependent on the rest of the world for our way of life.
<< <i>How long should the following scenario continue—you can’t sell your house because a credit worthy buyer can’t get a mortgage loan at a rate that won’t bleed him dry, and you can’t buy the new house you want because you are in the same boat as the guy who wants to buy your house? >>
What will happen in your scenario is that you'll have to lower the price of your house, or the banks will have to get by on a smaller margin because they aren't moving any money at their current rate of mark-up, or the guy who wants to buy a new house will have to realize that he cannot do it on his income. The problem with your scenario is that the money to keep the interest down is coming from the government (aka you and me). If you want the taxpayer to float loans for mortgages, just eliminate the bankers and let the taxpayer loan the money to the homeowners directly. While big business and the banking industry decries government control/intervention in all situations that benefit the masses, they at the same time rely on what amounts to communism and corporate welfare to keep their businesses afloat and their bank accounts fat. We should use the same economic model that we had before Reagan took over...if interest rates go high, they need to be there to keep the system whole. Eventually someone has to pay (our kids) for what we've managed to put on the tab over the past 30 years. As long as it's not business or the wealthy all is OK...right? Sick.
We are not falling behind China and India in the quality of our top schools. The difference is that more Indian and Chinese kids are studiying engineering, math, physics etc. That is true even in our universities--walk into an engineering class at Berkeley and you will find that most of the students are of Asian and Indian descent. Are they smarter than the Anglo kids? No, they are just willing to work harder.
As to the qualit of our public schools, forget about the poliical correctness nonesense. Math is math, physics is phsyics. Are public schools paying enough to attract top notch teachers? Probably not. Why? Because paying more means raising taxes.
Are teachers who can't teach being weeded out? Probably not. Why? Because no one from the school administration asks the kids to evaluate their teahcers. That's right. Ask the darn kids. They're the ones who know which teachers are good and which ones suck. Just think back on the days when you were in school. Even an 8 year old knows whether a teacher can teach or not. You probably went home and griped to your parents about the teachers who sucked. Did that get them canned and replaced with a good teacher? Bet it didn't. Bet the school principal and the boar of education cared not one wit what the kids thought.
Oh, yeah, and then there are those teachers unions. Not helpful for weeding out the dead wood.
<< <i>We are not falling behind China and India in the quality of our top schools. The difference is that more Indian and Chinese kids are studiying engineering, math, physics etc. That is true even in our universities--walk into an engineering class at Berkeley and you will find that most of the students are of Asian and Indian descent. Are they smarter than the Anglo kids? No, they are just willing to work harder.
As to the qualit of our public schools, forget about the poliical correctness nonesense. Math is math, physics is phsyics. Are public schools paying enough to attract top notch teachers? Probably not. Why? Because paying more means raising taxes.
Are teachers who can't teach being weeded out? Probably not. Why? Because no one from the school administration asks the kids to evaluate their teahcers. That's right. Ask the darn kids. They're the ones who know which teachers are good and which ones suck. Just think back on the days when you were in school. Even an 8 year old knows whether a teacher can teach or not. You probably went home and griped to your parents about the teachers who sucked. Did that get them canned and replaced with a good teacher? Bet it didn't. Bet the school principal and the boar of education cared not one wit what the kids thought.
Oh, yeah, and then there are those teachers unions. Not helpful for weeding out the dead wood.
CG >>
This is getting a little OT but the problem isn't so much the teachers as what teachers are expected to teach and how to teach it. The problem is that things that concern the day to day operation of the classroom are being decided thousands of miles away. Kids often can't really be disci- plined so classes can be difficult to control. "No child left behind" some- times means pandering to the lowest common denominator. Most kids want to learn but teachers get burnt out and kids get tired of trying. Most kids can still get a good education in this country if they are self motivated but not that many are.
We end up importing a lot of the doctors, engineers, and scientists.
“The Fed and other central banks are doing what they are supposed to do—being a banker for banks.”
CalGold, You seem to have an in depth knowledge of all of this, so let me ask you a question?
O.K. so the banks says to qualified borrowers, we are not in a lending mood right now at these rates, so we are keeping our money in the vaults. Then the Fed comes in and opens the window and tells the Banks, “gee take some of our money and lend it out”, but the Bank has to pay this back, right? With interest, Right?
Why would the Banks do that? Or is it the case that the Fed is making new loans directly to the Hedge funds, and derivative boys, so that they can make redemptions and stave off the inevitable for a few more months?
So is the Fed really supplying NEW money to NEW qualified buyers, or are they just printing more money and pumping it to their buddies in the funds?
Aug. 10 (Bloomberg) -- The U.S. federal funds rate opened at 6 percent, a six-year high, after the New York Fed staged three repurchase operations, buying assets including mortgage-backed securities. The total of $38 billion, following $24 billion yesterday, was the highest amount of temporary funds since Sept. 12, 2001.”
“We have way too much debt to have interest rates as low as they are, and the rate should probably be 10%”
I don't know about China or India, but many of the countries that we are falling behind in education identify bright prospects and enroll them into programs which are paid for by the state. In our country, those with money pay to have their children educated at top tier schools in fields that they may or may not be adept at, simply because a degree from there will provide a good income to junior upon his graduation. Just because these prospective professionals have money does not make them anything more than a potato when they get into the job market with their degree intact (for an example, look at our president)...I'd sooner perform surgery on myself as pay an office visit to the two guys who graduated high school with me who are now physicians, yet I'm sure that their patients don't realize that they're relying on a couple of doofus's when they go in to get treated. Maybe our teaching is good - we're just trying to push morons with high social standing into fields that they have no business in.
“If rates go to 10%, or there is a recession out there because of some pervasive credit crunch, I see gold tanking.”
This can happen at anytime anyway since these large world Banks can print all the money they like, and drive Gold into the Ground, but in the end how long can all this printing go on?
We are at 533 Trillion in derivatives, 50 to 75 trillion in debt to our U.S. social programs? Who knows how in debt on mortgages/ and a recent study says the average of American debt on credit cards is 13 thousand per family.
Can we just keep going, creating ever more debt and paper without reaching out for something solid to hold on to?
<< <i>“If rates go to 10%, or there is a recession out there because of some pervasive credit crunch, I see gold tanking.”
This can happen at anytime anyway since these large world Banks can print all the money they like, and drive Gold into the Ground, but in the end how long can all this printing go on?
We are at 533 Trillion in derivatives, 50 to 75 trillion in debt to our U.S. social programs? Who knows how in debt on mortgages/ and a recent study says the average of American debt on credit cards is 13 thousand per family.
Can we just keep going, creating ever more debt and paper without reaching out for something solid to hold on to? >>
No, but normally I would rather have held a bigger allocation to int'l equities....but clearly even those markets are not immune to this credit crunch/ confidence crisis. As evidenced by Paribas fund stopping redemptions because of US mortgage derivatives held long. In other words this debt your talking about is held internationally too, and affect their markets, and their view on gold as well.
I manage money. I earn money. I save money . I give away money. I collect money. I don’t love money . I do love the Lord God.
Almost 3 years and still going strong! Goldsaint I applaud you on this thread! Looking at where gold is today it's nice to be able to look back and watch the "rising of the tides" in the gold market over these short few years. Researchers and analysts should be getting a kick out of this one..........................................
Exavier
Young Numismatist ............................ and growing!
Central Banks were created to be the banker for banks. One of their roles is to smooth the interest rate curve to prevent short term anomalies and disquilibriums from creating havoc in the economy. Which would you rather have, an orderly financial system that can have time to figure out what the value of mortgage securities and other loan are really worth, and then adjust prices accordingly, while business continues on even keel, or periodic melt downs that can whip saw investors out of the market and stifle investment?
Possibly on paper central banks were created to do the above, but in reality the power brokers wanted control of the monetary printing pressess. And this they achieved (Morgan, Rothschilds, etc.) Within the first few years of the FED creation in 1913 they had already boosted the monetary supply by 60%. And by the mid to late 1920's the party was in full bloom. There was no smoothing the interest rate curve here, nor keeping prices under control, it was all about transferring wealth and getting a guaranteed profit. All the periodic meltdowns since 1913 have been caused by the gyrations of the Central Banks. Are you honestly telling us that the internet would not have been created without CB control or remaining on a gold standard? We've had many fine inventions in the 18th and 19th centuries while being on a gold standard...including the mass production of automobiles, electricity, air planes, steam engines, etc. Progress was there. What stalled the whole mess was the intervention of the CB's in the market from 1913 to 1929. It took 25 years to clean up that mess. CB monetary "control" is the root cause of inflation, market havoc, and periodic meltdowns. They always overinflate and the market falls apart at some point. Going off the gold standard in 1971 only accentuated the problem and took the rev limiter off the printing presses. It's clear that the FED's real goal is to transfer wealth. They have no design to curb inflation (ie they create it), or to control prices (except maybe the price of gold), or to keep things on an even keel. They certainly desire to create market conditions where the Goldman Sachs, JPM's, and Citigroups of the world can make fistfulls of money. A steady long term market with steady rates where these guys cannot make money? Forget it! Gyrations are just fine for the financeers.
If rates go to 10%, or there is a recession out there because of some pervasive credit crunch, I see gold tanking.”
Rates went well above 10% in the 1977-1980 era without gold tanking. It took rates far higher than that to finally end the parade. Rates were in the upper teens as I recall. Plus there is already a recession occuring in various parts of our economy.
Well, there is always the other side of the coin...
The amount of corporate and individual wealth in the world is monsterous, it is The Hulk on steroids with a crack habit. 9.3 million individual millionaires in the US as of the first of the year. Think about a 100 Billion corporation...not a stretch at all, there are plenty of 100 Billion corporations, a bunch of them in the US and even a fair number of billionaires. Fortune 500 companies, 2006 U.S. Millionaires in 2006
There is a tremendous amount of wealth yet we bemoan the debt. Debt has never been higher...but the other side of the coin shows that individual and corporate wealth have never been higher either. It is almost unimaginable.
<< <i>If rates go to 10%, or there is a recession out there because of some pervasive credit crunch, I see gold tanking. >>
Gold may tank initially, but once the run on the dollar starts, gold's gonna fly. I believe only the smart money (Asia) is accumulating gold currently.
>>>>If rates go to 10%, or there is a recession out there because of some pervasive credit crunch
it is absolutely impossible to have rates go to 10%....absolutely impossible...............i can assure you that will make the unemployment rate go over 6%...to at least 6.5%
washington will not let that happen
monsterman
my goal is to find the monsters and i go where they are but i sometimes miss some.... so if you have any and want to sell IM THE BUYER FOR THEM!!!
out of rockets ...out of bullets...switching to harsh language
it is absolutely impossible to have rates go to 10%....absolutely impossible...............i can assure you that will make the unemployment rate go over 6%...to at least 6.5%
Washington's published unemployment rate leaves out a lot of people who the accountants feel no longer count. And this is "good policy" since it is a much better number to ease the worry of the masses. Once you stop looking for a job or fall off unemployment comp, etc you just don't count (ie. former technicians or professionals who decide to settle for a job at MacDonald's are considered fully employed.....though at 1/2 to 1/4 of their former pay). Yup, full employment alright.
A number of statisticians have estimated unemployment in the 10-12% range if you count all the people who are actually trying to work.
<< <i>We are not falling behind China and India in the quality of our top schools. The difference is that more Indian and Chinese kids are studiying engineering, math, physics etc. That is true even in our universities--walk into an engineering class at Berkeley and you will find that most of the students are of Asian and Indian descent. Are they smarter than the Anglo kids? No, they are just willing to work harder.
As to the qualit of our public schools, forget about the poliical correctness nonesense. Math is math, physics is phsyics. Are public schools paying enough to attract top notch teachers? Probably not. Why? Because paying more means raising taxes.
Are teachers who can't teach being weeded out? Probably not. Why? Because no one from the school administration asks the kids to evaluate their teahcers. That's right. Ask the darn kids. They're the ones who know which teachers are good and which ones suck. Just think back on the days when you were in school. Even an 8 year old knows whether a teacher can teach or not. You probably went home and griped to your parents about the teachers who sucked. Did that get them canned and replaced with a good teacher? Bet it didn't. Bet the school principal and the boar of education cared not one wit what the kids thought.
Oh, yeah, and then there are those teachers unions. Not helpful for weeding out the dead wood.
We would NOT want to go to a system where the kids are evaluating the teachers. You are assuming they will use good judgement, which is not a good assumption to make. While it has been a while since I was in high school, I do remember the teachers that I really disliked....... were in fact the ones who were strict and were trying to hold the students to be responsible and at higher standards. Had I been given the chance to vote them out back then.... they would have been gone!! The kids will vote to keep in the 'cool' teachers.... the ones who let them get away with things.....
One of the politically correct policies that I feel has really made our school system suffer in regards to producing the engineers, scientists, etc..... is the one where the classes have been 'dumbed down' to the level of the lower performers in the class. In times past, slower or challenged learners were in separate classes.... as were the high achievers.... and that was a successful method of helping the lower learners and also help pushing the achievers ahead. But somewhere along the way, it was determined that the challanged learners must be in the same classes as the high achievers, etc., to allow them the chance to grow. But this resulted in holding the other students back.... and less interest on their part..... in trying to really push ahead.
World economies and banking systems got pretty well shaken up in the last few weeks. Has anyone noticed that the dollar has gained ground against all major currencies except the YEN. Interesting isnt it. Here we have what looks to be the end of the American consumer, the destruction of the US real estate, and bankers too scared to show up for work, and the dollar actually strengthens. Very interesting.
Well, isn't it obvious who would be strengthening the dollar from falling below .80? PPT ring a bell? Does it matter if it's real market demand or just the FOMC doing their usual jig of refilling the champagne glasses yet another time to keep the good spirits alive? $70 Billion can go along ways in bolstering ye old dollar bill.
<< <i>Well, isn't it obvious who would be strengthening the dollar from falling below .80? PPT ring a bell? Does it matter if it's real market demand or just the FOMC doing their usual jig of refilling the champagne glasses yet another time to keep the good spirits alive? $70 Billion can go along ways in bolstering ye old dollar bill.
roadrunner >>
But the Europeans spent 200 billion. So by that logic shouldnt the Euro have at least maintained ground? When the expected doesnt happen, it is time to take notice.
Does the EU even have a comparable FOMC that intervenes in the market on a daily basis via their minions? (GS, JPM, Citi, et al). I've not heard it talked about at any time in the past 5 years. It's no secret that the US has a FMOC that was created by Reagan in 1987 following the October market crash. The intervention is constant and not all that well-hidden at times.
<< <i>Does the EU even have a comparable FOMC that intervenes in the market on a daily basis via their minions? (GS, JPM, Citi, et al). I've not heard it talked about at any time in the past 5 years. It's no secret that the US has a FMOC that was created by Reagan in 1987 following the October market crash. The intervention is constant and not all that well-hidden at times.
roadrunner >>
They have one and its called the ECB ( european central bank) and they just printed 156 billion euros ( $200 billion) and injected it into the market last week . trying to allay fears of a credit squeeze. As of tonight it appears to be working as the markets in Asia and the pacific are up as I type
<< <i> They have one and its called the ECB ( european central bank) and they just printed 156 billion euros ( $200 billion) and injected it into the market last week . trying to allay fears of a credit squeeze. As of tonight it appears to be working as the markets in Asia and the pacific are up as I type >>
Good, the GDII (grreat depresion two) can certainly wait till I'm too old to care before it comes bustin in...
What’s worse, the contagion is spreading in unexpected ways. The Wall Street Journal reports that US money-market funds are the latest victim of the subprime fallout. Some of the commercial paper owned by money-market funds, according to the Journal: “may be fairly racy, containing mortgage-backed securities that could include chancy subprime loans.” It then went on to mention what it called a couple of “staid funds” that had reported owning this tainted paper.
Foreign governments again pumped money into their markets overnight to shore them up. I don't think that this is going to help in a matter of a week or so...most of the folks I know did or are about to move their money into something less volatile than the market. Granted they do not control big money, but the sentiment that all is not right is spreading quickly, and our economy/stock market is largely based on public perception that everything is peachy.
<< <i>Foreign governments again pumped money into their markets overnight to shore them up. I don't think that this is going to help in a matter of a week or so...most of the folks I know did or are about to move their money into something less volatile than the market. Granted they do not control big money, but the sentiment that all is not right is spreading quickly, and our economy/stock market is largely based on public perception that everything is peachy. >>
In the USA, they actually pulled money out. Every Monday the FED pumps in about $9 billion to meet the weekends withdrawals. This Monday it was about $7 billion.
Bottom line:....."Ok folks, time to go home. There may be an encore, but it wont be worth sticking around for."
Comments
<< <i>This is a PDF file. >>
Yes, it is a PDF. Is that a problem?
<< <i>$40 billion in liquidity injections added today, and the market still finished down. Can anybody say, "Yikes!"
From a technical standpoint there wasa rally today as prices opened considerable lower and almsot all stocks closed higher than their open. This was a positive day. The weekly bar will also be green as all averages ended the week higher than last week.
I am not saying the market will go higher or lower next week. Actually I hope it continues to what it has for the past 2 weeks. This has been my best trading since 2003.
Monsterman.....a fact regarding the price of corn. Historically it trades between $2 and $3 per bushel. Currently at about $3.70 and down from nearly $5. But, as with most any commodity, prices are very volatile. For instance, 10 years ago corn traded over $5.50 per bushel. The price did not last and I seriously doubt these prices will either. As you know, the best remedy for high prices is high prices. We saw that with the Tech bubble in 2000 and currently with the housing bubble. The commodity bubble will correct also.
Knowledge is the enemy of fear
<< <i>
<< <i>This is a PDF file. >>
Yes, it is a PDF. Is that a problem? >>
For some computers. Mine tends to lock up on PDF's. There are a lot of people who like to know when it's PDF since it takes so long to load too.
<< <i>
<< <i>The guys in Washington are hoping that the Fed can prop up the "free market" long enough for the wealthy to get their money moved into safe investments...after that, who cares if the little investors and those relying on 401K accounts for their retirements lose their shirts.
As long as that DOW number keeps going up there'll be an endless supply of suckers. So what if tomorrow's dollar only buys half of what today's dollar can buy? Most morons will still think they're making money in the market. >>
Plus the rich have easy access to capital anyway. Even if they lose half their wealth due to inflation, bankers will still be lining up to lend them more. It's the little guy who takes all the blame and gets left out in the cold.
I'd have to be an idiot to pay capital gains taxes for that privilege.
But who expected anything different? The credit mark is in disarray
and the mortgage derivatives problem is certainly starting to spill over into the interest rate derivatives as well. The holders of this "AAA" rated Mortgage Junk cannot sell it to raise cash to pay margin calls, etc. So they'll sell stocks and equities with honest value to get out from under the first wave. But more waves are coming...and larger ones at that.
The obvious question is how will this affect the upper echelon of coin buyers where liquidity makes all the difference?
roadrunner
I expect one of two things will happen.
If the fed keeps pumping money into the system in order to prop it up, then coin prices (and milk and bread prices for that matter) will continue to rise and be attractive investments.
On the other hand, if the fed decides to tame inflation and damn the torpedoes, I expect coin prices to fall through the floor...
But which road will be taken?? There's the rub
The Fireman...
The obvious response is: Scared money is scared money and scared money is always wrong. If folks have scared money then they will put it in the CD's and 5%+ accounts that are insured up to $100,000 each. I doubt there will be a major shift of assets other than the bottom feeder type activity we are seeing now. The economy is challenged but who in the world isn't right now. A good stock is a good stock, no need to turn the boat around if you are on a solid deck. The market segments of the world are alive and dynamic, they always have been since one guy had a piece of flint that another guy needed. The market segments and networks will each evolve with the time line or that segment will be history. Cash doesn't wait, nor does it have to.
This economic evolution will probably have most of an effect on the middle areas of the market. The upper echelon will probably have little problem getting what they want, as it should be and it is doubtful they will waste any cash, they rarely do. Some folk may start pullling back a little with their 4 digit purchases. Not because they are scared but because they might be able to wait and snag a nice piece at a cheaper and more attractive price. Even the $500 guys can certainly wait and watch, it's predator v.s. prey. The market has a lag, it seems, from financial reality...maybe as much as three months so it would be good to start looking at September/October for some significant movement in coins, if there is to be any. Coins have seemingly remained amazingly stable, at least in the areas where I sniff around.
JMHO
Coin ON!
And I agree that should be bullish for fine collectibles. That said, we still also need to be on the lookout for the derivatives tsunami that is building up steam out in the distance.
My own thoughts are to hedge one's bets and play the middle. For those that don't mind selling coins that have appreciated more than enough, take some off the table. For those that are stable, solid values over many years, and have not appreciated all that much, hang on longer.
roadrunner
Maybe, although Bernanke is far less "chummy" with Wall Street than Greenspan was, and is much more of an academic, so I expect he will try to prevent a sudden deflation and not much more. I think he is much less inclined to bail out the rich. But, we will see. This is certainly an interesting test of his skills.
Keep in mind, also, that when a central bank injects liquidity into a deflating environment, it is hard to predict the results. The Fed has been quite adept at this since 1987, but I would not feel too certain in predicting directions.
(and therefore I agree with your strategy of playing the middle!)
<< <i>"The obvious question is how will this affect the upper echelon of coin buyers where liquidity makes all the difference?"
The obvious response is: Scared money is scared money and scared money is always wrong. If folks have scared money then they will put it in the CD's and 5%+ accounts that are insured up to $100,000 each. I doubt there will be a major shift of assets other than the bottom feeder type activity we are seeing now. The economy is challenged but who in the world isn't right now. A good stock is a good stock, no need to turn the boat around if you are on a solid deck. The market segments of the world are alive and dynamic, they always have been since one guy had a piece of flint that another guy needed. The market segments and networks will each evolve with the time line or that segment will be history. Cash doesn't wait, nor does it have to.
This economic evolution will probably have most of an effect on the middle areas of the market. The upper echelon will probably have little problem getting what they want, as it should be and it is doubtful they will waste any cash, they rarely do. Some folk may start pullling back a little with their 4 digit purchases. Not because they are scared but because they might be able to wait and snag a nice piece at a cheaper and more attractive price. Even the $500 guys can certainly wait and watch, it's predator v.s. prey. The market has a lag, it seems, from financial reality...maybe as much as three months so it would be good to start looking at September/October for some significant movement in coins, if there is to be any. Coins have seemingly remained amazingly stable, at least in the areas where I sniff around.
JMHO >>
Gotta agree with you here. Markets do not go down 10% just because they want to. There is always some sort of shock. And then when the shock happens everyone runs to the hills. The stock market was up 30+% in the last year and needed a break. Home prices doubled or tripled in 4 years. They needed a break, and when it finally happens the doom and gloomers sprout like fungus.
None of this is unexpected. Take advantage or take the bus.
Knowledge is the enemy of fear
4000th post not far away now!
roadrunner
Yeah
As well as Gold and Silver RR, these guys are selling anything they can get cash from!
“On the other hand, if the fed decides to tame inflation and damn the torpedoes, I expect coin prices to fall through the floor...”
Joe V.
I do not think it is possible to “tame” inflation. The government has become so use to just printing whatever money they need, they are not going to stop this. As one Dem. Presidential candidate put it today, “we have a 50 Trillion dollar freight train headed right toward us, what are we going to do about that?”
I am sure he was talking about the S.C. and Medicare deficits.
They are going to print the money of course!
I am sure there are many rare coins that could be considered very expensive at this point, but most of our hobby has just adjusted for the REAL inflation that has occurred since the 1990 market. In addition I do not believe there are huge amounts of money being speculated on coins, even after our 6-year bull market.
So my personal opinion is that things might slow down with a false hope the Government might be able to do something about REAL inflation, but I see no way the coin market as a whole goes to the Devil.
“Didn't the FED just dump something like $70 Billion into the market over the past 2 days? I'd call that sort of accommodating.”
Mr. Bernanke had already warned everyone in advance what he would do if any of the U.S. markets started to freeze up, that’s how he got the name helicopter Ben. You must say he is not a liar. The markets started to freeze up in this derivative market, and he turned the presses on, and did the Bernanke Helicopter Drop.
Look guys this is very smart! If you continue to lie and create fake CPI numbers, and if you continue to tell the same lies about how you really want a strong dollar, you can sell lots of worthless debt, backed by nothing, to loads of folks around the planet and pay them back at 10 cents on the dollar.
There is a real demand for money to fund quality loans to quality borrowers. This is a good sign. If the banks were getting hit by defaults caused by business failures, they would not need new money to fund new loans, since they would not be lending into a collapsing economy.
Lets try to keep in perspective the source of the liquidity crunch. Commercial lenders lend money for the purchase of real estate or for home equity loans and refinancings. To get more money to keep the lending pipeline full, they package their loans and sell them to institutional investors in the form of pass-through trust certificates. The lenders then are not generating earnings through interest on their loans, but rather are earning points and similar loan fees and sometimes spreads between the rate on their loans and the rate paid on the certificates. The ultimate risk of the loan is therefore born by the trust certificate holders, not the lending institution. When the riskier trust certificates go into default, the lenders find it harder if not impossible to sell of their new loans. A similar effect occurs when the originating bank sells of participations in its loans to other banks. The result is that their source of refunding for new loans dries up. Sometimes the baby gets thrown out with the bath water and the markets for quality commercial loans are adversely impacted even though the defaults are in the subprime housing loans.
An odd result of this is that the flight to safety has seen a rush to buy Treasury notes. The result is that bond prices have gone up and yields have declined. The 10 year Treasury note, which the bench mark for pricing commercial real estate loans, has declined back down below 5%. But at the same time the lenders that would like to lend at a spread over that rate are short of funds to lend. So oddly, money is tight but money is cheap. In other words, interest rates remain attractive but you can’t borrow because the lenders have no money to lend or have the money but can’t be sue that they can sell off their new loans.
CG
I totally agree. But I think it started earlier, when Nixon severed all links to the Gold Standard. That was the beginning of this mess we're in.
The Oil crisis of the seventies had nothing to do with oil. It was the fact that the Saudis didn't want the US dollars anymore, hence the massive price increase.
Getting back to your thoughts of 'manipulation' in the markets. Well, you couldn't have this if every country was on the "Gold Standard'.
Unfortunately, it's much too late to go back on a gold standard since the ratio of 'amount of money' to 'amount of gold' is totally, grotesquely, out of proportion.
"“Those who sacrifice liberty for security/safety deserve neither.“(Benjamin Franklin)
"I only golf on days that end in 'Y'" (DE59)
<< <i>The government is not supposed to print new money so the banks can continue to lend it out at low rates...that idea is called voo-doo economics, something that has permeated our nation since Ronald Reagan began the idea of "spending our way out of debt". It doesn't work for anyone but the wealthy. >>
Can't agree with you on this one. Central Banks were created to be the banker for banks. One of their roles is to smooth the interest rate curve to prevent short term anomalies and disquilibriums from creating havoc in the economy. Which would you rather have, an orderly financial system that can have time to figure out what the value of mortgage securities and other loan are really worth, and then adjust prices accordingly, while business continues on even keel, or periodic melt downs that can whip saw investors out of the market and stifle investment?
How long should the following scenario continue—you can’t sell your house because a credit worthy buyer can’t get a mortgage loan at a rate that won’t bleed him dry, and you can’t buy the new house you want because you are in the same boat as the guy who wants to buy your house?
Or your business can’t finance its accounts payable at a rate that will allow your business to make a profit even though your customers are all solid credit risks who pay on time every time?
CG
>>The price did not last and I seriously doubt these prices will either. As you know, the best remedy for high prices is high prices. We saw that with the Tech bubble in 2000 and currently with the housing bubble. The commodity bubble will correct also.
your exactly correct...the private sector will always enter the market and create more capacity and feel the need and drive prices back down
however
this exact fact does not happen with wages as nothing is more inflationary than wage pressures
now that we are inflating at over 10% per annum for a few now...raises are in no way keeping up with headline inflation
thus the rich are getting richer and the middle class is getting smaller....why????well they fail to realize that we are in a global economy and they are competing against not the 10 other job applicants but rather the other 200 aplicants around the globe....with 55 million people in india with a college degree...who dont need calculators to do math and do it in their heads...who work longer...who work cheaper...who work smarter are kicking our middle class`s rears......the problem is they dont know the size of the competition.....when i showed up for my first training camp there were 16 middle linebackers on the roster all wanting the job...imagine if there were 20 times that...or 320 people trying out...i might never of been!!!
in sports i always made it a point to " know thy competition"...as doing so makes me wiser....unfortuantely many of our middle class doesnt see it that way
monsterman
out of rockets ...out of bullets...switching to harsh language
<< <i>Unfortunately, it's much too late to go back on a gold standard since the ratio of 'amount of money' to 'amount of gold' is totally, grotesquely, out of proportion >>
Why gold? Why not corn? Why not diamonds? Why not aluminium? If we had continued to allow the gold supply to limit the amount of capital available to finance business and technoogy we would have a Great Depression stadnard of living, or worse. In fact we would not be having this on-line discussion because there would be no such thing as the internet or personal computers etc. all financed with amounts of capital that just could not exist if gold standards pundits had their way.
CG
<< <i>with 55 million people in india with a college degree...who dont need calculators to do math and do it in their heads...who work longer...who work cheaper...who work smarter are kicking our middle class`s rears...... >>
This is Tom Friedman's "The Wold is Flat" concept. Our best bet for survival is to continue to be able to pay more for the best of the best of those 55 million tech guys from India so that they will come here and help our companies develop the cutting edge technology, or start new companies here rather then there. Even if in the end those new companies wind up outsourcing back to Bangalore at least some new jobs will be created here.
CG
Why Gold...I'll tell you why. Because Gold is about the only thing on this planet that is Money.
Name me anything else that satisfies (like Gold) the following conditions:
1. is valued by all
2. non-perishable
3. can be easily divisible
4. rare
5. beautiful
6. resists attack by weather and chemicals.
7. can be used to account for credit/debit system
8. and is a Store of Wealth.
Can corn do this...NO
Can aluminum do this....No
Can rhodium do this....NO
Can diamonds do this....NO
The list goes on and on.
"“Those who sacrifice liberty for security/safety deserve neither.“(Benjamin Franklin)
"I only golf on days that end in 'Y'" (DE59)
>>>Why gold? Why not corn? Why not diamonds? Why not aluminium? If we had continued to allow the gold supply to limit the amount of capital available to finance business and technoogy we would have a Great Depression stadnard of living, or worse. In fact we would not be having this on-line discussion because there would be no such thing as the internet or personal computers etc. all financed with amounts of capital that just could not exist if gold standards pundits had their way.
your exactly right......the real thing people have to understand is relativity....meaning how much are we inflating relative to the other countries and relative to our past history and relative to our infrastucure and gdp and futrue potential to produce
what gold does is give a save haven when " we" have lost our financial way in terms of debasing our currency.....its realy a score card......its thats simple.....right now....the score has gone from 250 to 670.......
all you have to do is predict what the goons in washington will do about the future.....and go long or short
i for one know for a fact to go long gold for the next 2 years out.....as i see washington has etched in stone exactly what they will HAVE TO DO IN THE NEXT 24 MONTHS.....and thats further debasing the dollar
end of story!!!!
monsterman
out of rockets ...out of bullets...switching to harsh language
<< <i>
<< <i>with 55 million people in india with a college degree...who dont need calculators to do math and do it in their heads...who work longer...who work cheaper...who work smarter are kicking our middle class`s rears...... >>
This is Tom Friedman's "The Wold is Flat" concept. Our best bet for survival is to continue to be able to pay more for the best of the best of those 55 million tech guys from India so that they will come here and help our companies develop the cutting edge technology, or start new companies here rather then there. Even if in the end those new companies wind up outsourcing back to Bangalore at least some new jobs will be created here.
CG >>
I wouldn't say you're wrong but why not educate the children in this country. This isn't
rocket science. Our children are just as smart as the Indian and Chinese kids it's just that
our schools are more concerned with being politically correct than with anyone getting an
education. Teachers aren't allowed to teach and kids aren't allowed to do much of anything
but toe the line.
It's ironic that we spend far more on education than the Chinese and Indians combined de-
spite being outnumbered about seven to one, but when we need someone who knows how
to do something we have no choice but to look abroad.
We are too dependent on the rest of the world for our way of life.
<< <i>How long should the following scenario continue—you can’t sell your house because a credit worthy buyer can’t get a mortgage loan at a rate that won’t bleed him dry, and you can’t buy the new house you want because you are in the same boat as the guy who wants to buy your house? >>
What will happen in your scenario is that you'll have to lower the price of your house, or the banks will have to get by on a smaller margin because they aren't moving any money at their current rate of mark-up, or the guy who wants to buy a new house will have to realize that he cannot do it on his income. The problem with your scenario is that the money to keep the interest down is coming from the government (aka you and me). If you want the taxpayer to float loans for mortgages, just eliminate the bankers and let the taxpayer loan the money to the homeowners directly. While big business and the banking industry decries government control/intervention in all situations that benefit the masses, they at the same time rely on what amounts to communism and corporate welfare to keep their businesses afloat and their bank accounts fat. We should use the same economic model that we had before Reagan took over...if interest rates go high, they need to be there to keep the system whole. Eventually someone has to pay (our kids) for what we've managed to put on the tab over the past 30 years. As long as it's not business or the wealthy all is OK...right? Sick.
As to the qualit of our public schools, forget about the poliical correctness nonesense. Math is math, physics is phsyics. Are public schools paying enough to attract top notch teachers? Probably not. Why? Because paying more means raising taxes.
Are teachers who can't teach being weeded out? Probably not. Why? Because no one from the school administration asks the kids to evaluate their teahcers. That's right. Ask the darn kids. They're the ones who know which teachers are good and which ones suck. Just think back on the days when you were in school. Even an 8 year old knows whether a teacher can teach or not. You probably went home and griped to your parents about the teachers who sucked. Did that get them canned and replaced with a good teacher? Bet it didn't. Bet the school principal and the boar of education cared not one wit what the kids thought.
Oh, yeah, and then there are those teachers unions. Not helpful for weeding out the dead wood.
CG
<< <i>We are not falling behind China and India in the quality of our top schools. The difference is that more Indian and Chinese kids are studiying engineering, math, physics etc. That is true even in our universities--walk into an engineering class at Berkeley and you will find that most of the students are of Asian and Indian descent. Are they smarter than the Anglo kids? No, they are just willing to work harder.
As to the qualit of our public schools, forget about the poliical correctness nonesense. Math is math, physics is phsyics. Are public schools paying enough to attract top notch teachers? Probably not. Why? Because paying more means raising taxes.
Are teachers who can't teach being weeded out? Probably not. Why? Because no one from the school administration asks the kids to evaluate their teahcers. That's right. Ask the darn kids. They're the ones who know which teachers are good and which ones suck. Just think back on the days when you were in school. Even an 8 year old knows whether a teacher can teach or not. You probably went home and griped to your parents about the teachers who sucked. Did that get them canned and replaced with a good teacher? Bet it didn't. Bet the school principal and the boar of education cared not one wit what the kids thought.
Oh, yeah, and then there are those teachers unions. Not helpful for weeding out the dead wood.
CG >>
This is getting a little OT but the problem isn't so much the teachers as
what teachers are expected to teach and how to teach it. The problem
is that things that concern the day to day operation of the classroom are
being decided thousands of miles away. Kids often can't really be disci-
plined so classes can be difficult to control. "No child left behind" some-
times means pandering to the lowest common denominator. Most kids
want to learn but teachers get burnt out and kids get tired of trying. Most
kids can still get a good education in this country if they are self motivated
but not that many are.
We end up importing a lot of the doctors, engineers, and scientists.
CalGold,
You seem to have an in depth knowledge of all of this, so let me ask you a question?
O.K. so the banks says to qualified borrowers, we are not in a lending mood right now at these rates, so we are keeping our money in the vaults. Then the Fed comes in and opens the window and tells the Banks, “gee take some of our money and lend it out”, but the Bank has to pay this back, right? With interest, Right?
Why would the Banks do that?
Or is it the case that the Fed is making new loans directly to the Hedge funds, and derivative boys, so that they can make redemptions and stave off the inevitable for a few more months?
So is the Fed really supplying NEW money to NEW qualified buyers, or are they just printing more money and pumping it to their buddies in the funds?
Aug. 10 (Bloomberg) --
The U.S. federal funds rate opened at 6 percent, a six-year high, after the New York Fed staged three repurchase operations, buying assets including mortgage-backed securities. The total of $38 billion, following $24 billion yesterday, was the highest amount of temporary funds since Sept. 12, 2001.”
“We have way too much debt to have interest rates as low as they are, and the rate should probably be 10%”
Blackhawk, I agree with you!
I give away money. I collect money.
I don’t love money . I do love the Lord God.
“If rates go to 10%, or there is a recession out there because of some pervasive credit crunch, I see gold tanking.”
This can happen at anytime anyway since these large world Banks can print all the money they like, and drive Gold into the Ground, but in the end how long can all this printing go on?
We are at 533 Trillion in derivatives, 50 to 75 trillion in debt to our U.S. social programs? Who knows how in debt on mortgages/ and a recent study says the average of American debt on credit cards is 13 thousand per family.
Can we just keep going, creating ever more debt and paper without reaching out for something solid to hold on to?
<< <i>“If rates go to 10%, or there is a recession out there because of some pervasive credit crunch, I see gold tanking.”
This can happen at anytime anyway since these large world Banks can print all the money they like, and drive Gold into the Ground, but in the end how long can all this printing go on?
We are at 533 Trillion in derivatives, 50 to 75 trillion in debt to our U.S. social programs? Who knows how in debt on mortgages/ and a recent study says the average of American debt on credit cards is 13 thousand per family.
Can we just keep going, creating ever more debt and paper without reaching out for something solid to hold on to? >>
No, but normally I would rather have held a bigger allocation to int'l equities....but clearly even those markets are not immune to this credit crunch/ confidence crisis. As evidenced by Paribas fund stopping redemptions because of US mortgage derivatives held long. In other words this debt your talking about is held internationally too, and affect their markets, and their view on gold as well.
I give away money. I collect money.
I don’t love money . I do love the Lord God.
Exavier
Young Numismatist ............................ and growing!
Possibly on paper central banks were created to do the above, but in reality the power brokers wanted control of the monetary printing pressess. And this they achieved (Morgan, Rothschilds, etc.) Within the first few years of the FED creation in 1913 they had already boosted the monetary supply by 60%. And by the mid to late 1920's the party was in full bloom. There was no smoothing the interest rate curve here, nor keeping prices under control, it was all about transferring wealth and getting a guaranteed profit. All the periodic meltdowns since 1913 have been caused by the gyrations of the Central Banks. Are you honestly telling us that the internet would not have been created without CB control or remaining on a gold standard? We've had many fine inventions in the 18th and 19th centuries while being on a gold standard...including the mass production of automobiles, electricity, air planes, steam engines, etc. Progress was there. What stalled the whole mess was the intervention of the CB's in the market from 1913 to 1929. It took 25 years to clean up that mess. CB monetary "control" is the root cause of inflation, market havoc, and periodic meltdowns. They always overinflate and the market falls apart at some point. Going off the gold standard in 1971 only accentuated the problem and took the rev limiter off the printing presses. It's clear that the FED's real goal is to transfer wealth. They have no design to curb inflation (ie they create it), or to control prices (except maybe the price of gold), or to keep things on an even keel. They certainly desire to create market conditions where the Goldman Sachs, JPM's, and Citigroups of the world can make fistfulls of money. A steady long term market with steady rates where these guys cannot make money? Forget it! Gyrations are just fine for the financeers.
If rates go to 10%, or there is a recession out there because of some pervasive credit crunch, I see gold tanking.”
Rates went well above 10% in the 1977-1980 era without gold tanking. It took rates far higher than that to finally end the parade.
Rates were in the upper teens as I recall. Plus there is already a recession occuring in various parts of our economy.
roadrunner
The amount of corporate and individual wealth in the world is monsterous, it is The Hulk on steroids with a crack habit. 9.3 million individual millionaires in the US as of the first of the year. Think about a 100 Billion corporation...not a stretch at all, there are plenty of 100 Billion corporations, a bunch of them in the US and even a fair number of billionaires.
Fortune 500 companies, 2006
U.S. Millionaires in 2006
There is a tremendous amount of wealth yet we bemoan the debt. Debt has never been higher...but the other side of the coin shows that individual and corporate wealth have never been higher either. It is almost unimaginable.
US Billionaires-individual wealth
There is really a lot of money out there.
<< <i>If rates go to 10%, or there is a recession out there because of some pervasive credit crunch, I see gold tanking. >>
Gold may tank initially, but once the run on the dollar starts, gold's gonna fly.
I believe only the smart money (Asia) is accumulating gold currently.
Buy them dips.
it is absolutely impossible to have rates go to 10%....absolutely impossible...............i can assure you that will make the unemployment rate go over 6%...to at least 6.5%
washington will not let that happen
monsterman
out of rockets ...out of bullets...switching to harsh language
Washington's published unemployment rate leaves out a lot of people who the accountants feel no longer count. And this is "good policy" since it is a much better number to ease the worry of the masses. Once you stop looking for a job or fall off unemployment comp, etc you just don't count (ie. former technicians or professionals who decide to settle for a job at MacDonald's are considered fully employed.....though at 1/2 to 1/4 of their former pay). Yup, full employment alright.
A number of statisticians have estimated unemployment in the 10-12% range if you count all the people who are actually trying to work.
roadrunner
<< <i>We are not falling behind China and India in the quality of our top schools. The difference is that more Indian and Chinese kids are studiying engineering, math, physics etc. That is true even in our universities--walk into an engineering class at Berkeley and you will find that most of the students are of Asian and Indian descent. Are they smarter than the Anglo kids? No, they are just willing to work harder.
As to the qualit of our public schools, forget about the poliical correctness nonesense. Math is math, physics is phsyics. Are public schools paying enough to attract top notch teachers? Probably not. Why? Because paying more means raising taxes.
Are teachers who can't teach being weeded out? Probably not. Why? Because no one from the school administration asks the kids to evaluate their teahcers. That's right. Ask the darn kids. They're the ones who know which teachers are good and which ones suck. Just think back on the days when you were in school. Even an 8 year old knows whether a teacher can teach or not. You probably went home and griped to your parents about the teachers who sucked. Did that get them canned and replaced with a good teacher? Bet it didn't. Bet the school principal and the boar of education cared not one wit what the kids thought.
Oh, yeah, and then there are those teachers unions. Not helpful for weeding out the dead wood.
We would NOT want to go to a system where the kids are evaluating the teachers. You are assuming they will use good judgement, which is not a good assumption to make. While it has been a while since I was in high school, I do remember the teachers that I really disliked....... were in fact the ones who were strict and were trying to hold the students to be responsible and at higher standards. Had I been given the chance to vote them out back then.... they would have been gone!! The kids will vote to keep in the 'cool' teachers.... the ones who let them get away with things.....
One of the politically correct policies that I feel has really made our school system suffer in regards to producing the engineers, scientists, etc..... is the one where the classes have been 'dumbed down' to the level of the lower performers in the class. In times past, slower or challenged learners were in separate classes.... as were the high achievers.... and that was a successful method of helping the lower learners and also help pushing the achievers ahead. But somewhere along the way, it was determined that the challanged learners must be in the same classes as the high achievers, etc., to allow them the chance to grow. But this resulted in holding the other students back.... and less interest on their part..... in trying to really push ahead.
CG >>
At some point the paper pages in the books will be worth more than the paper with $$ printed on them.
Your brain is slowly being cooked as well, some folks' brains are already well done!
And the sad part is they have no clue....
Knowledge is the enemy of fear
$70 Billion can go along ways in bolstering ye old dollar bill.
roadrunner
<< <i>Well, isn't it obvious who would be strengthening the dollar from falling below .80? PPT ring a bell? >>
It must be the Masons.
CG
Hoard the keys.
<< <i>Well, isn't it obvious who would be strengthening the dollar from falling below .80? PPT ring a bell? Does it matter if it's real market demand or just the FOMC doing their usual jig of refilling the champagne glasses yet another time to keep the good spirits alive?
$70 Billion can go along ways in bolstering ye old dollar bill.
roadrunner >>
But the Europeans spent 200 billion. So by that logic shouldnt the Euro have at least maintained ground? When the expected doesnt happen, it is time to take notice.
Knowledge is the enemy of fear
I've not heard it talked about at any time in the past 5 years.
It's no secret that the US has a FMOC that was created by Reagan
in 1987 following the October market crash. The intervention is constant and not all that well-hidden at times.
roadrunner
<< <i>Does the EU even have a comparable FOMC that intervenes in the market on a daily basis via their minions? (GS, JPM, Citi, et al).
I've not heard it talked about at any time in the past 5 years.
It's no secret that the US has a FMOC that was created by Reagan
in 1987 following the October market crash. The intervention is constant and not all that well-hidden at times.
roadrunner >>
They have one and its called the ECB ( european central bank) and they just printed 156 billion euros ( $200 billion) and injected it into the market last week . trying to allay fears of a credit squeeze. As of tonight it appears to be working as the markets in Asia and the pacific are up as I type
<< <i>
They have one and its called the ECB ( european central bank) and they just printed 156 billion euros ( $200 billion) and injected it into the market last week . trying to allay fears of a credit squeeze. As of tonight it appears to be working as the markets in Asia and the pacific are up as I type >>
Good, the GDII (grreat depresion two) can certainly wait till I'm too old to care before it comes bustin in...
The Fireman...
What’s worse, the contagion is spreading in unexpected ways.
The Wall Street Journal reports that US money-market funds are
the latest victim of the subprime fallout. Some of the commercial
paper owned by money-market funds, according to the Journal:
“may be fairly racy, containing mortgage-backed securities that could
include chancy subprime loans.” It then went on to mention what it
called a couple of “staid funds” that had reported owning this
tainted paper.
<< <i>Foreign governments again pumped money into their markets overnight to shore them up. I don't think that this is going to help in a matter of a week or so...most of the folks I know did or are about to move their money into something less volatile than the market. Granted they do not control big money, but the sentiment that all is not right is spreading quickly, and our economy/stock market is largely based on public perception that everything is peachy. >>
In the USA, they actually pulled money out. Every Monday the FED pumps in about $9 billion to meet the weekends withdrawals. This Monday it was about $7 billion.
Bottom line:....."Ok folks, time to go home. There may be an encore, but it wont be worth sticking around for."
Knowledge is the enemy of fear