<< <i>“As virtual currencies take over more and more purchasing power, control over the effective money supply shifts from the central bank to the game developers."
What a riot! If I had to put money on who is smarter and most likely to win this faceoff, I'd have to go with the gamers. >>
I find it fairly amusing that governments are afraid of this. Second Life has had the Linden Dollar for quite a while. I just don't see gamer currency becoming big enough that it would "Shift from the central bank to game developers" control over the money supply. Paranoid Chinese government in action.
Basically 5 major institutions (ie banks) are now responsible for 40% of the trades on the stock market. And their volume has been increasing while others have been backing out. Are all these banks now PPT deputies?
Found it humurous that insolvent Citibank raised their rating on BoA today. I have no problems with insolvent banks with opaque balance sheets rating other insolvent banks with opaque balance sheets.
An excerpt concerning money velocity from JW's latest article. An interesting point in that along with a shadow banking system of the past decade, there has been a very large and unreported shadow monetary/credit velocity. Does the only money velocity that matters have to do with the one from banks/businesses with other consumers?
The primary question that the errant Deflationists avoid is “Why is the Crude Oil price rising?” since it highlights their erroneous position and twisted viewpoint. The strong uptrend in crude oil price stands as contradiction to their argument, but they ignore it. The hidden question that they cannot even manage to formulate is “Is the Shadow Banking System flow data included in the Money Velocity figure?” as some within their camp appear to trust USFed data itself. The other bank system has kept the entire credit market afloat for over a decade, without benefit of statistical inclusion. Never permit a syndicate to supply critical data. To dismiss official price inflation data but trust their money velocity data is folly. In my travels, when my confrontational questions are posed, they are almost never answered. The posed questions are as little understood as the emotion is great behind their incorrect views. The Deflationists will be correct only if the Central Banks and their franchise system of destruction shut down and halt the accelerated production of phony money.
"Found it humurous that insolvent Citibank raised their rating on BoA today. I have no problems with insolvent banks with opaque balance sheets rating other insolvent banks with opaque balance sheets."
It's a sign of the times. Today poll results were released stating that 51% of those interviewed support the health care plan as proposed. The margin of error is +/-3%.
Edited to add: Why do you think they call 'em mushrooms?
It's a sign of the times. Today poll results were released stating that 51% of those interviewed support the health care plan as proposed. The margin of error is +/-3%.
Important legislation often gets majority support without anyone in the final approval process having actually read the bill. In the foot steps of the Homeland Security Act and the TARP, the 1200 page Cap and Trade Bill (aka Climate Bill) wasn't available in its entirety in print before it was approved by Congress. One hopes that it would be available to the Senate for reading before they vote on it. I'd like to know what is included in those last 300 pages that were tacked on at the very end. I'm sure that a poll of the bill would also show strong support even if those responding don't know what it will really do to them.
Sheesh. I was hoping the Aden Sisters would disappear for a while after calling the top on gold in May about 1 week early and then saying buy.....as gold fell 8% and mining shares fell 15%-25%.
This time they have nearly called a complete turnaround in the world's economic crisis by stating the following:
inflation is here......and zero signs of deflation gold is still going up (yeah, I know.....look out below!) dollar is falling bonds are falling (have they looked at bond yields lately?) stocks are up around the world, and will continue up banking is improving and nearly fixed (based on low Libor rate) consumer confidence is up (they saw one couple eating out) markets are all in sync (where were they the past 2 weeks?)
Nassim Taleb was just on CNBC. The guy makes too much sense. He says that the system is fragile and will break - the only question is when. He says that the gov't could back all the debt down and the risks would subside, but they are loathe to do it. 'Nuf said.
Q: Are You Printing Money? Bernanke: Not Literally
<< <i>It's a sign of the times. Today poll results were released stating that 51% of those interviewed support the health care plan as proposed. The margin of error is +/-3%.
Important legislation often gets majority support without anyone in the final approval process having actually read the bill. In the foot steps of the Homeland Security Act and the TARP, the 1200 page Cap and Trade Bill (aka Climate Bill) wasn't available in its entirety in print before it was approved by Congress. One hopes that it would be available to the Senate for reading before they vote on it. I'd like to know what is included in those last 300 pages that were tacked on at the very end. I'm sure that a poll of the bill would also show strong support even if those responding don't know what it will really do to them. >>
One aspect has been coming out in the news recently that many in the public do not realize. You will not be able to sell you house....... unless it meets certain green standards. Basically, it will have to meet the California standards. If you want to sell your house, and it does not have x number of inches of insulation, the proper efficiency of furnace, air conditioners, light bulbs, etc..... you will have to spend the money to upgrade before you can sell.
Not sure about the rest of the country... but here in the midwest, especially in the more rural areas, that will kill the real estate business. Either that or hugely increase the cost of buying a home in the area.
<< <i>Nassim Taleb was just on CNBC. The guy makes too much sense. He says that the system is fragile and will break - the only question is when. He says that the gov't could back all the debt down and the risks would subside, but they are loathe to do it. 'Nuf said. >>
Because if fell $110!!! This is nothing more than a dead cat bounce. Just as Harley Davidson bounced from 7 to 23 and GE bounced from 6 to 14. Oil is still 50% below the high of a year ago. Many people were of the belief that oil was manipulated upward a year ago, so now these same people say it is going up due to inflation? LOL. If oil is $70 this time next year, is it still "rising"?
There is more oil schlossing around the world than perhaps at any other time in history.
Past and present tense will become apparent in coming weeks.
I realize this is just a small company, but I imagine it is representative of the industry in general, so I ask.....with a 43% in demand and at a rate 1.5x greater than in 2008, why isnt gold higher?
From Briefing.com.....
Daily Telegraph reports BullionVault, which says it looks after more gold than many of the world's central banks, reported 43% growth in its clients' physical holdings of the metal in the first half to more than 18 tonnes or $553 mln worth. The addition of almost 5.5 tonnes, or $166 mln worth, was almost twice the growth in BullionVault's clients' holdings in the same period last year and was equivalent to 70% of the growth seen over the whole of 2008. Adrian Ash of BullionVault said: "While politicians argue over 'green shoots' in the economy, the number of private individuals buying physical gold continues to grow. "Central banks are responding to the worst financial crisis in 70 years with an unprecedented experiment in money creation. But there's no evidence yet that quantitative easing has sparked a self-sustaining recovery." He added: "With global interest rates now at zero or near, cash savers are joining stock market investors in seeking a strong crisis and inflation hedge."
"While politicians argue over 'green shoots' in the economy, the number of private individuals buying physical gold continues to grow"
It does seem as we're looking at some kind of bait and switch or something goofy as the "wobble factor" seems to be increasing. By this I mean that the information we get from the in the tank media is questionable but we all know it is questionable so we discount most of it and select some media channel that we think is what we want, there are a lot of choices and not all of them are legit by virtue of being in the tank for somebody. But, it's not just media, the banks have undergone an interesting transition that no one seems to have made note of: they have trimmed the herd considerably and those that benefitted from the gov. are benefitting the gov. with their policies on one hand while they trim the consumers at every turn...it's almost a love love situation, they should either get a room or just announce their marriage. It wouldn't suprise me if you could file your individual ta x return at a Chase bank within a year or two.
I sense there is pressure under gold, something is going to happen and it's gonna happen in a quick succession of events. Not necessarily doom and gloom but change. Gold is supressed and it's being gathered by a lot of people from all over the spectrum of folk seeking "protection", those that can afford to stash a little are doing just that, from countries, all the way across to just us regular guys. At some point, folk aren't going to be able to get it too easily and then it will be all over the news but it's too late then, once it starts getting a large premium for physical...say maybe 15% or 20% then it's happened. Forget the spot, fix, melt all the other things, look at physical and physical premiums relative to spot, fix, melt, that's what physical gold's worth. There is pressure on PM here, maybe we just got it right this time and we made correct assumptions, maybe we got positioned in time, maybe our minds are right for this one and we have our ducks in a row. The wobble factor seems to be increasing. JMHO
How many of you have read the article in the Rolling Stone magazine about Goldman Sachs? "The Great American Bubble Machine" I've heard it is quite an expose on how Goldman Sachs has been involved in every major bubble that has come down the line. What makes it even more interesting is that it is published in such a liberal magazine. Following is a link to a site where it can be read... if my link will work. (I've had some problem with links lately).
Rolling Stone expose: Goldman Sachs behind every market crash since 1920s
Daniel Tencer Raw Story Thursday, July 2, 2009
Goldman Sachs has played a crucial role in creating every market bubble since the 1920s — and has profited from not only the bubbles, but from the crash that followed as well, says a new expose in Rolling Stone magazine.
An article in the July 9-23 issue of the magazine, written by Matt Taibbi, lists five asset bubbles that the 140-year-old investment bank helped create — and one that Taibbi asserts the firm is currently working to make happen.
The five bubbles the article says Goldman was central to creating are the Wall Street stock bubble in the 1920s, which led to the Great Depression; the tech-stock bubble of the late 1990s, which ended in the 2001 recession; the housing bubble of the past decade, which resulted in the current economic crisis; the oil price run-up last summer, when oil shot up to $140 a barrel, likely helping tilt the entire world into recession; and what Taibbi describes as “rigging the bailout,” when Goldman Sachs’ well-placed alumni inside the U.S. government engineered last fall’s bank bailout in such a way that the company profited massively.
Taibbi writes that Goldman Sachs has traditionally been a late arrival to market bubbles, getting in once others have started the trend, but, once in, the company quickly ramps up the bubble, predicts its bursting, and then hedges its bets so as to make money from the bubble crash.
The article, which is not yet officially available online, adds one more bubble to the list: the “global warming bubble,” or specifically, the proposed cap-and-trade legislation that would allow companies to trade pollution credits on an open market.
Taibbi’s argument suggests the Wall Street bank may well want to turn climate change policy into yet another Wall Street casino game.
Because emissions caps will continually be reduced, Taibbi argues, pollution credits will constantly be growing in value, and Goldman Sachs wants in on the ground floor.
Taibbi writes: “The plan is (1) to get in on the ground floor of paradigm-shifting legislation, (2) make sure that they’re the profit-making slice of that paradigm and (3) make sure the slice is — a big slice. Goldman started pushing hard for cap-and-trade long ago, but things really ramped up last year when the firm spent $3.5 million to lobby climate issues.”
On his blog, Taibbi has begun a discussion of the public reaction to his article. Some commenters have suggested that Taibbi’s understanding of high finance is limited, accusing him of misreading Goldman Sachs’ actions.
I pulled it up early and still have it in one of my windows and am only half way through it, I haven't been able to figure out how to save it yet though.
Definitely an interesting article, if I can figure out how to save it I will update.
Edit to add: No luck, I couldn't even get it to print out correctly. When I tried something else, I lost it. Sounds like Rolling Stone will be releasing it next week.
Bubble Number 6 - according to the article, is the Cap and Trade. Some interesting notes about Al Gore and GS's investments towards that becoming a law in there also.
he five bubbles the article says Goldman was central to creating are the Wall Street stock bubble in the 1920s, which led to the Great Depression; the tech-stock bubble of the late 1990s, which ended in the 2001 recession; the housing bubble of the past decade, which resulted in the current economic crisis; the oil price run-up last summer, when oil shot up to $140 a barrel, likely helping tilt the entire world into recession; and what Taibbi describes as “rigging the bailout,” when Goldman Sachs’ well-placed alumni inside the U.S. government engineered last fall’s bank bailout in such a way that the company profited massively
Goldman is also giving out an average of $700,000 as a pay package to its employees. This was announced on Squawk Box this morning amounting to several billion dollars. $700,000 pay packages
"This content was removed at the request of Rolling Stone " >>
Wow.... they wasted no time getting that off of the web site! I get the same thing now.... earlier you could read the whole article at the web site. (hmmm.... tin foil hat time.... goldman sacs pulling strings!!!)
Because if fell $110!!! This is nothing more than a dead cat bounce. Just as Harley Davidson bounced from 7 to 23 and GE bounced from 6 to 14. Oil is still 50% below the high of a year ago. Many people were of the belief that oil was manipulated upward a year ago, so now these same people say it is going up due to inflation? LOL. If oil is $70 this time next year, is it still "rising"? There is more oil schlossing around the world than perhaps at any other time in history.
I should have known better than to leave in the oil part of that paragraph I posted. The point of the post was on the shadow banking system money velocity vs. the often referenced consumer money velocity. In any case I'll address oil. No one can truly say how much of last year's move in oil was due to honest supply and demand vice investor speculation. In any case, JW felt last year's move was primarly due to inflation and the notion of peak oil (less supply). Fwiw JW also believes that the rise in oil over the past few months was due to inflationary effects. He's consistent, don't toss him into the camps of wafflers. JW did not state that oil was manipulated up last year. Look at the timing of when commodities took off vs. the stock market.
Gold and silver: November (these often go first) Ags such as Pot/Mos: early December Copper and Uranium: later December Uranium and Oil: mid to later February Stock Market: March 9th Natural Gas: May (with the huge current back log, no surprise here)
Frankly, I see no SM timing connection to commodities. The SM followed some commodities months later. With all the TARP money slushing around (future inflation), it had to go somewhere. That would seem to indicate an inflationary/monetary bias imo rather than just dead-cat bounces. No doubt oil and PM's were over-crushed, and intentionally so. They are seeking truer valuations as gold was never worth $680 nor was oil worth $35. With oil not being produced as it once was supplies are now dwindling. A point overlooked in JW's article, and supported by a RK article, was the fact that there were large oil swaps conducted last July to dump WTIC on the market while keeping the numbers in the US Strategic Oil Reserves fairly constant. That's the helpful "push" that the oil price received last year. Oil will be higher than $70 next year, and yes, it will be rising. Pushing gold off the cliff in 2008 was just a temporary singularity it's not going to keep oil prices in 2 digits for all that long. The rest of the world still needs oil and is still growing. It will more than make up for the drop in usage in the heavily industrialized western nations. Producers have backed down and supplies are being drawn down in the process. That eventually leads to shortages.....and right in the middle of a recession no less...just like the 1970's. Oil will be a lot higher by the spring of 2010 as it will be either leading or shadowing gold. Considering how far it has fallen vs. gold (50% further), I cannot see it reducing the spread with gold. And I'm quite confident that gold will be sizzling by spring of 2010.
I realize this is just a small company, but I imagine it is representative of the industry in general, so I ask.....with a 43% in demand and at a rate 1.5x greater than in 2008, why isnt gold higher?
I don't see a ready comparison between holding physical gold or mining shares vs. Bullion Vault, GoldMoney, or any of the other smaller vaults. Remember the gold that Merrill Lynch was supposedly holding in vaults for its clients a few years back? Yeah, it was all fictitious. Therein lies the potential problem with these private vault companies. Means....Motive....Opportunity. What do you think will happen down the road?
In the case of miners you own actual shares of something concrete in the ground or the actual metal if you buy it yourself. To me, BV is just another 3rd party holder (ie secretary) of something you should be keeping tabs on yourself. While I wouldn't trust GLD with my money, I also wouldn't trust BV or any other 3rd party "vault operation." I'd bet that the majority of physical gold holders feel the same way. Adrian Ash writes some interesting articles, but I don't know him from Adam Ant. BV holds a puny 18 tonnes of gold vs. over 1,100 for GLD (at least on paper)...that's a micro stock in the big picture. If you own 100 oz of gold does it matter whether BV holds a total of 10 tonnes of gold vs 18 tonnes of gold? It only matters to me what I hold....100 oz. And does the vault have it in my name, serialized to the bar, with routine audits at least a few times per year? One can look at the steady rise in the tons held by GLD (even in the face of declining gold prices) over the past couple of years and come to the conclusion that gold prices should be rising if these guys almost never sell off anything. But, how much of all the bullion vaulting business out there is covered by paper derivatives? A lot of it is. Most of the paper ETF's in commodities are using derivatives. It's just a matter of which bullion firms do it and to what extent. No doubt in my mind that GLD is using a significant amount of derivatives to cover it's inventory swings. There is nothing in their prospectus that says they cannot. Look at the big banks that are behind GLD...the same ones involved in the current derivative's mess. I'm not surprised that the vaulting business is not doing as well as you would think......and it all boils down to paper gold (derivatives, futures, options, etc.) parading in the market as the real thing. Paper gold has a limited lifespan. And look no further than to paper gold to explain gold's sluggish performance since early 2008....yet here it is still meandering around the $900's just marking time. Time to print up some more paper gold.
The only way oil will be north of 70 is if the economy gets rolling. Then maybe you can get some inflation pressures. Personally I see the economy at or near todays levels at this time next year. Unemployment will be pushing 11% so that means nearly 3 million jobs need to be created between peak unemployment and this time next year. Aint gonna happen. Wages are declining, saving, whatever people can scrape together is rising, and higher energy prices would crush the economy worse than higher interest rates. Thats why I see rates rising, which supresses inflation and firms the dollar.
Lets say the FED stops printing. If the economy does not come ripping back, then the extra money floating around--of which I believe is much less than some want you to believe--will be slowly absorbed into the economy. Inflation pressures will be minimal.
I can buy into a massive inflationary spike if the economy gets overheated, but I just cannot see that happeneing. Declining wages, shorter workweeks, industrial utilization at 67% all point toward tremendous slack in the economy before inflation can take root.
I line up with the old timers that believe that inflation is a currency driven event, that is, watch the money supply. It doesn't really have to do with business or economic conditions. You can have inflationary tendencies (ie rising prices in specific or generalized areas) in boom, bust, or stagnating type of economic environments. Hence, I'm not fixated on wages or asset prices for example. Real wages fell and unemployment rose from the early 70's throughout the decade all the while inflation was present. The FED at the time was dumbfounded. Then again, when had anyone ever seen a decade of massive spending followed by abadonment of the gold standard before? The great depression saw inflation (1933-1937) as soon as the govt decided to start pumping money instead of contracting it. Japan from 1990-2002 didn't even pursue a QE policy. Helicopter Ben started QE almost immediately during the US crisis (ie a 12 year head start on Japan). Whereas Japan never really took QE to heart, Gentle Ben has gone full out.
Until we become the very first G20 nation to FAIL at purposefly inflating the money supply and not being able to avoid deflation, then I'm firmly on the side of inflation.....and that's inflation driven by currency, not by demand-pull. If the currency and/or credit is there, prices of key ingredients (usually commodities first) will go up. If the FED is really successful at it (and they've never not been able to cause inflation at will), then stocks, real estate, and even wages (though not "real" wages) will eventually join in as well. The FED fancies themselves inflation fighters, yet all they've really been 100% successful at is doing just the opposite. I'm confident they haven't lost their touch.
Even Bernanke supports Milton Friedman's theory (proved in the the 1970's) that inflation is always a monetary event. But that doesn't mean he has to spout that out in public, no more than Greenspan tabled all his former beliefs in gold from the 1960's once he become a govt economist.
If today we are awash in oil, then in the same vein we must be awash in gold and silver as well since their prices also went up with oil's from 2006-2008...only I don't see tankers full of gold and silver any where. What I do see are miners as well as oil producers who have lowered production levels. Check out the link above on how well oil and gold tracked each other from 1972-1990. Considering we left the gold standard in August 1971, which one do you think was doing the following, oil or gold? Supposedly, many in the 1970's felt oil was heading up due to supply shocks from the Middle East. What about the effect from untethering gold and the money supply changes starting in the 1960's? In the 1970's we had rising prices and rising unemployment during declining business conditions. How was that possible? Answer: from the money supply. Only this time the FED doesn't have the option of pulling back the punchbowl any time in the near future.
The deflation vs inflation camps are both quite headstrong. And that's a remarkable thing considering we've had hundreds of years of paper money history, and we still can't get agreement on how to tackle a problem that has occured before. Austrians? Keynesians? Monetarists? Ponzi's?
Real wages fell and unemployment rose from the early 70's throughout the decade all the while inflation was present.
Because of an influx of baby boomers just finishing college or high school combined with supply side shocks due to the oil embargo.
The great depression saw inflation (1933-1937) as soon as the govt decided to start pumping money instead of contracting it.
As the dollar was deliberately devalued and a massive drought created supply shocks to the food distribution system as crops failed and beef and milk herds were destroyed.
Show me an example of inflation not accompanied with supply and/or demand shocks and I'll join the inflation camp. Until then, I see deflation or stable prices just as likely as rising prices.
Gold and silver: November (these often go first) Ags such as Pot/Mos: early December Copper and Uranium: later December Uranium and Oil: mid to later February Stock Market: March 9th
What happens when these reverse from their "dead cat" bounce? Fertilizer companies are rolling over hard as prices drop around the world. Iron ore prices and contracts are being renegotiated down 40-50%. Oil services companies have cut back rigs and services by 50% yet oil is still down 50% from its highs. You have even said the market will roll over later this summer.
What happens when China finishes stockpiling raw materials? Prices do not need selling pressures to fall. Simply a lack of demand. And if you dont believe the economic numbers coming from our Govt, you had better not believe those coming from China. The propaganda in the Chinese newspapers is astounding.
I went to the car dealer for an inspection on my Jeep Tuesday. As I waited I walked around the lot with a salesman. I commented on the number of $40,000+ cars, saying "no one is going to pay 40 grand for a car". He said, "Your right, the business is changing." You can apply the same scenerio to everything from health care to Ipods. Business is changing.
Show me an example of inflation not accompanied with supply and/or demand shocks and I'll join the inflation camp. Until then, I see deflation or stable prices just as likely as rising prices.
1920-1924 Germany has many similarities to the current US situation. Germany got into financial straights following WW1 and having to pay off past debts and future reparations. The US has come up with new ways to go bankrupt (otc derivatives) but the end result is the same financially. Germany was already experiencing bouts of inflation leading up to Weimar in the summer of 1923. Demand shocks? Wages were essentially stagnant, GDP was slumping, unemployment was rising, consumer demand was slack, and a high level of official debt issuance relative to economic growth occured. Sounds like us today! Supply shocks? I'm not aware of anything of note other than the coal strike in the Ruhr region in early 1923 where the French barged in and wanted to keep an eye on "their" coal. See linked article below and the graphs showing each of the above economic stats. Note: I don't approve of everything written in the article.
What happens when these reverse from their "dead cat" bounce? Fertilizer companies are rolling over hard as prices drop around the world. Iron ore prices and contracts are being renegotiated down 40-50%. Oil services companies have cut back rigs and services by 50% yet oil is still down 50% from its highs. You have even said the market will roll over later this summer.
I could be 100% wrong about the SM rolling over this summer or in the fall. It could keep going up. In the heavily manipulated SM where ransom money is given to bankers like GS is the driving force, who can believe the price of any stock? It's a casino pure and simple. Oil, gold, silver, copper, ags are at the forefront of the manipulation because they are the closest competitors to fiat money. The 6 BILL people in the world still have to eat. If those Fert companies continue to keep production way down, then eventually the prices of grains/ags will soar due to lack of supply. Oil price may be down 50% but world demand has dropped only a small fraction of that amount. The price has to rise back to meet the real demand. But short term tricks and paper games can distort the immediate picture. For now, the tankers filled with crude owned by JPM/GS and others are being depleted. Which gas guzzling nation benefited the most from driving oil down to $35 and which nations did it hurt the most? I don't see key commodities performing a "dead cat" bounce under continuing huge QE around the world. If they bounced, it's because they were pushed way too far down. They will bounce back higher to their true values. But Insolvent corporations to big to fail and large banks? They will continue to bounce lower and lower until rescued permanently by govt.
What happens when China finishes stockpiling raw materials? Prices do not need selling pressures to fall.
I doubt the Chinese will ever get enough materials to stockpile considering they have nearly $2 TRILL to spend in US notes/bills yet at every chance to deversify out of that paper the US is there to block any resource asset acquisition they can. They don't want those notes spent, they want them to sit in the vault collecting dust. Spending a couple billion here and there for companies or deals won't make a big dent in $2 TRILL. The price of general commodities will rise as long as money supplies are increasing irrespective of demand. That's why the Chinese want to buy all they can now. The 403 tons of IMF gold is a pittance to them. They would much rather buy up 4030 tons if they could.
So you are saying that the complete disruption of industrial production to provide for the war machine and the food shortages at the end of WW1 were not contributing factors in Germany's inflation. Or that the political chaos created by Germany's defeat and the loss of alliances and territories also were not contributing factors?
The 6 BILL people in the world still have to eat
No one even knew what potash was 3 years ago. Now all of a sudden it is the cure all for the worlds ills? The fervor over fertilizers is the same as the dot.com stocks in 1999. We have already seent he price of corn fall 15% this week as farmers planted too much. Now at harvest time when they barely make enough to pay back the bank, do you think they are gonna order a bunch more fertilizer?
The main difference I see between you and I is that you see some conspiracy involving everything. Thats ok, as long as you realize that these "conspiracies" only have finite lifespans. I will tell you will all that I have ever believed that the prices of fertilizer treached in 2008 will probably not be seen again in at least a generation. The money to be made in ferts has already been made. I see things for what they are whether manipulated or not. And I really couldnt care less one way or the other. Stay liquid at all times and you will always have the ability to react when the house collapses.
Roadrunner, please do more research on the Chinese economy. You will never have seen such smoke and mirrors as is being presented today. China is right now, the USA in May 1930. Everyone is so worried about the Chinese juggernaut, but what if they are wrong? What if it is really the Chinese currency that is in trouble?
What if the Chinese owned every ounce of gold? Would anybody really care? If no one else wanted it--which would be evident in the fact that the Chinese own it all--gold then would cease to have any value.
The inflation rate and the increase in money supply didn't go exponential until the 2nd half of 1923. So nearly 5 years after the war is over, when the currency decides to go inexplicably through the floor, was primarily due to the war machine fall out? Hey, I could see a minor contributing factor, but certainly not the impulsive factor, and certainly not the major factor. The Germans reved up their >100 printing presses in 1923 and everyone figured it out pretty quick.
The main difference I see between you and I is that you see some conspiracy involving everything. Thats ok, as long as you realize that these "conspiracies" only have finite lifespans.
Not everything. But pretty much everything involved with the dollar-US bonds-gold-silver and the financial/banking system in general. Take it all back to Dec. 1913 if you must. If this all happens to affect us on a daily basis, what can I say?
The conspiracy's lifespan is essentially as long as the FED's lifespan. Do you honestly feel that the Bilderbergs, Trilateral Commission, and the other illuminati organizations are in it to solve world hunger problem and foster world peace? It's about getting all the grub and money you can....not necessarily for the nation, but moreso for those at the helm. Always has been. You can call it a conspiracy, the Bilderbergs call it a "game plan." The plan is to take money from the masses and redistribute it to the masters. Why does there have to be a conspiracy or master plan? Because they can: means. motive, and opportunity.
The only reports I even listen to about the Chinese economy are from those analysts (typically gold bugs or contrarians) who routinely venture over there. I look at their natural resource reserves. I don't know about a juggernaut, but I feel they are headed basically up while the US has stagnated or is heading down. I'm letting the price of gold in all currencies be my guide as to what's right side up. Instead of looking at the gold chart vs. dollar, look at it vs the currencies that make up the dollar index (ie UDN). Rather than a top in March 2008 that has not been exceeded, you will see a lower top in March 2008 that was easily exceeded in spring of 2009.
What if the Chinese owned every ounce of gold? Would anybody really care?
The central banks and most of the G8 would care plenty. But since they aren't about to give up anything substantial from what gold they have left speaks volumes. This is in the category of when I see it, I'll believe it. Otherwise why not saddle the Chinese with that 4,000 tons of gold right now and laugh all the way to the fiat bank? Heck, give all 31,000 tons the CB's claim to own, they could afford to buy it all. At some point in time when the fiat balloon goes "pop," gold and other hard assets will be needed to re-establish some sort of order before proceeding forward. That's when everyone will care. The Bilderbabies have been stashing their gold for years. When the day comes when no one wants gold then we can worry about that. But for now, the 3000+ yr run is still intact even in the face of Twilight Zone episodes stating the contrary.
As a rule the fact that games are played in the PM's doesn't alter my buys and sells all that much. You do the best you can with fundamentals and the charts. But, I do find myself at times starting to think like the banksters (ie what would TPTB do today for a head fake?), And sometimes I find myself playing counter to the head fake.
Saw an interesting chart today of gold miners ore grade vs time. Over the past 7 years the ore grade has steadily decreased from 2.2 grams/ton in 2001 to 1.15 gms/ton in 2009....almost a 50% drop in ore grade. A good reason for pog to increase over time assuming miners cannot double their usable ore, which they haven't.
Fact of day: The Bank for International Settlements reports a total of $600 BILL in world gold derivatives. This is roughly equivalent to 22,000 tons of gold. That is roughly 10 yrs of world gold production, 15% of all gold in existence, and 2/3 the total gold claimed to be held by the Central Banks. It's a lot of paper gold! Isn't this just a little clue to the fact that the CB's hold nothing near the 31,000 tons of gold that they have claimed for the last decade or more? No wonder the CB's double count all the lesased/sold gold between contracting parties. They need all they can get on paper! The Comex warehouse only claims about 85 tons of gold and the ETF GLD has about 1130 tons of gold. With up to 100-1 leverage on paper gold it's no surprise that gold prices are "only" in the $900's. What other markets leverage up like gold and silver and why would they need to? Nope, no manipulation to see here But what happens when the PM's paper leverage game finally blows up like it did for MBS and CDO's.....and soon to happen with Interest Rate Swaps??
1920-1924 Germany has many similarities to the current US situation. Germany got into financial straights following WW1 and having to pay off past debts and future reparations. The US has come up with new ways to go bankrupt (otc derivatives) but the end result is the same financially. Germany was already experiencing bouts of inflation leading up to Weimar in the summer of 1923. Demand shocks? Wages were essentially stagnant, GDP was slumping, unemployment was rising, consumer demand was slack, and a high level of official debt issuance relative to economic growth occured. Sounds like us today! Supply shocks? I'm not aware of anything of note other than the coal strike in the Ruhr region in early 1923 where the French barged in and wanted to keep an eye on "their" coal.
Didn't the Versailles Treaty force Germany into a repayment schedule that couldn't be met, and isn't that another reason that the French, acting on behalf of the Allies took over the Ruhr? And coal wasn't the only thing - the Ruhr was a major heavy industrial region, and the output from the factories was being expropriated too?
Germany got screwed in WWI by having dumb alliances, and by making the British into adversaries by picking the early 1900's to build up their navy into a threat against the Brits, for no particular reason. That's one of the factors that nudged the Brits towards the Allies. And the French & Russians were conspiring against the Germans anyhow, as always.
After getting dragged into a war not of their making, after losing millons of men in the war and being put into a position of servitude, the German economy really couldn't pay off the debt imposed by the Treaty of Versailles. Their only option was to inflate. The French didn't like the hyperinflation approach too much, and that's why they repo'd the Ruhr, just to make sure that the war repayments remained "real". After a war and 10 more years of hardships being imposed on them, it's no wonder that the Germans were pissed off and ready to grab onto a hardline position in 1933.
One thing I agree with you wholeheartedly on:
The US has come up with new ways to go bankrupt (otc derivatives) but the end result is the same financially.
It's not much different in scope than the war reparations were for Germany. The main differences are that we (still) have a Constitution and (still) have a middle class. The bad news is that our "reparations" are being paid to the bankers who lost their bets and should be out of business and to the looters in the government who work on their behalf.
Q: Are You Printing Money? Bernanke: Not Literally
It's not much different in scope than the war reparations were for Germany. The main differences are that we (still) have a Constitution and (still) have a middle class. The bad news is that our "reparations" are being paid to the bankers who lost their bets and should be out of business and to the looters in the government who work on their behalf.
Thanks for that history lesson Jmski52. Germany lost a world war and then had to pay everyone off. We didn't lose a war yet but the sum of our world wide military extension is certainly draining us. And the bankers have since locked down the entire financial system. When they demand more money and don't get it, they push the stock market down (since the TARP and other lending facilities gave them tens of billion to do so).
To celebrate the 6th consecutive and purely "coincidental" Monday gold slamdown the following quote is provided from Dr. Fekete's latest article:
"Banking was conceived in iniquity and born in sin. The Bankers own the earth. Take it away from them, but leave them the power to create deposits, and with the flick of the pen they will create enough deposits to buy it back again. However, take away that power, and all the great fortunes like mine will disappear — as they ought to in order to make this a happier and better world to live in. But, if you wish to remain the slaves of Bankers and pay the cost of your own slavery, then let them continue to create deposits.”
Sir Josiah Stamp (1880-1941), one time governor of the Bank of England, in his Commencement Address at the University of Texas in 1927. Reportedly he was the second wealthiest individual in Britain.
Since the week before the market peak on June 1st there has yet to be an up Monday. Only one Friday has been up. For the year, there have been at most 3 up Mondays which is even more incredible since gold was moving upwards for 93 days so far.
Fairly amusing Q&A from the answer desk at MSNBC.com today:
Not too long ago the big banks were begging for help and painting the doomsday scenario. Suddenly, when the executives found out that they will no longer be able to stuff their pockets with obscene salaries, the banks no longer needed the bailout money. Have I missed something? — P.H.Tampa, Fla.
This is how I explain it. Say a person buys 10oz in gold in coins now at @ $950.00 in Fed Reserve Notes…10 x 950 = $9500.00 and this person stores them in a home safe. And another person deposits $9500.00 in FRN’s into a savings account at his local bank. Both are expecting to hold these long term. Let’s say for the sake of argument that both persons are homeowners who bought their homes at the same time at about the same price with the same money down with a fixed mortgage rate at 6% and both hold relatively safe jobs with about the same pay…let’s say $50,000.00 per year. Both have about the same bills to pay each month. Let’s say that after 10 years gold is at $3000.00 per ounce value in FRN’s and the savings account holder receives 1% per year interest in his savings account. The person who bought gold would have an investment worth $30,000.00 while the savings account holder would have an investment worth $10493.76. Now let’s say that at this time both persons lost their jobs an needed their investments to live on until they found employment again. Which persons investment situation would you rather be in? Both are valued in FRN’s but the gold investors situation is far preferable to the savings account holder. You could even recalculate this scenario using gold price statistics from the last ten years and stock market averages for the last ten years and the older of gold comes out ahead. Gold is a storage of VALUE! While FRN’s will reflect a diminishment of value through inflation the value of gold will rise to reflect it’s value against inflation. This is why you receive interest or dividends when holding investments in paper long term…you have to have some reason or reward (or bribe some would say) to park your investment without it losing it’s value. Gold pays no interest or dividends because it owes nothing. It is a safe store of VALUE against fiat currencies!!
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Although this uprising is mostly religious based, it demonstrates the need for China to keep its citizens happy. China is spending $500 billion to keep violence from running rampant. If the world economies do not inprove dramatically in the next 2 years, China will have exhausted its currency reserves and savings through continual "stimulus" spending. They will then be a debtor nation.
So answer this question, if every country is borrowing, who is lending?
edited to add market commentary. Gold, XAU and GDX all riding hard on the uptrend line. Dont stumble horsie.
"Gold pays no interest or dividends because it owes nothing."
That is a very good statement. One of the most honest qualities of physical gold is that it does owe nothing; there is no debt and there is nothing due, it is worth what someone will pay for it in what ever currency or exchange for goods that two people can agree to, right here, right now. No one will lend you a 10 oz bar, no one will let your borrow 10 oz of physical gold. If you got it, it's yours, it's paid for, nothing is due, it is the absolute liquid asset across all forms of trade. There is no paper this for some paper that, if it is physical, it is real, you can't eat it but you can hold it in your hand and you don't need a computer or a statement from a bank to see it, it is the ulitmate store of value; you can stick it in your pocket, you can sew it into your shirt, you can put it in the bottom of your shoe and just walk away. Gold is good. Certainly the metal is nothing to worship or bow to but in terms of protecting your wealth, gold will take care of it for you.
And then there is this, talk about your boomer problem!
China's elderly will overwhelm the nation Cao Jun / For The Times
The retirement center at 2 Ruijin Road in Shanghai is often filled to capacity. When it opened 15 years ago, though, the idea of packing loved ones off to an old-age facility was still taboo.
The one-child rule imposed 30 years ago has created too few young people to support the quickly expanding aging population. Shanghai provides a window into China's demographic future. Already China's largest city, it's also its grayest. More than one-fifth of its population is at least 60 years old. That percentage is projected to nearly double to 40% by 2030.
So many residents have reached retirement age that city officials are urging local companies to persuade their aging staffs to stay on the job longer. The government has injected $618 million into the public pension system over the last two years to keep it solvent.
It's not much different in scope than the war reparations were for Germany. The main differences are that we (still) have a Constitution and (still) have a middle class. The bad news is that our "reparations" are being paid to the bankers who lost their bets and should be out of business and to the looters in the government who work on their behalf. >>
Comrade jmski, how much longer do Constitution stay when fearless leaders want to change?
<< <i>It's not much different in scope than the war reparations were for Germany. The main differences are that we (still) have a Constitution and (still) have a middle class. The bad news is that our Germany lost a world war and then had to pay everyone off. We didn't lose a war yet but the sum of our world wide military extension is certainly draining us. And the bankers have since locked down the entire financial system. When they demand more money and don't get it, they push the stock market down (since the TARP and other lending facilities gave them tens of billion to do so).
rr
It may not be a conventional war that we are losing but we are losing by the steady drain you write of. Bin Laden said he would outlast the Russians in Afghanistan and said he will do the same to the US. The cost of being the world police is finally catching up. The Russians ran out of money in 1989. At least we are at able to print but for how long? The question I have is: How do we pay off $100 trillion (a guess, who knows the real number) in unfunded liabilities? If we can't the US may be reduced to a France-like tier and unable to protect our freedoms and sovereignty. And if we can't pay it off but somehow pay down enough to where the world sees us as getting our financial house in order and a safe place to invest in. It appears to me we are not heading in either of these directions. That's why I think we are losing this unconventional war and will have to pay everyone off someday.
I'm sure the "Bankers" are working on this transition as we speak. Only they know the timetable.
<< <i>And then there is this, talk about your boomer problem!
China's elderly will overwhelm the nation Cao Jun / For The Times
The retirement center at 2 Ruijin Road in Shanghai is often filled to capacity. When it opened 15 years ago, though, the idea of packing loved ones off to an old-age facility was still taboo.
The one-child rule imposed 30 years ago has created too few young people to support the quickly expanding aging population. Shanghai provides a window into China's demographic future. Already China's largest city, it's also its grayest. More than one-fifth of its population is at least 60 years old. That percentage is projected to nearly double to 40% by 2030.
So many residents have reached retirement age that city officials are urging local companies to persuade their aging staffs to stay on the job longer. The government has injected $618 million into the public pension system over the last two years to keep it solvent. >>
I've written about this a few times over the past 2-3 years. A declining population is a death knell for any town, city, state, country. China's population could very well begin declining in 20 years. The massive infrastructure they are building today will be to support a smaller population. Buildings will be vacant, highways crumble. Heck, many areas could look just like Detroit. China knows their biggest fear is not a declining dollar.
I feel like I'm bashing China today, but I guess that just how events unfold. This commentary was from a link posted by Roadrunner in another thread. I couldnt help but think how much this sounded like China of today...........................
However, a small group of these thieves have figured out a better angle. You can understand this technique by studying the medieval aristocracy. They had seized all of the arable land in Europe by the sword, and they enserfed the average guy to work the land, produce food for him and other goods. In those days, if you didn’t like your boss (the land lord), it was against the law to quit your job. If your boss’ son wanted to rape your daughter, there were no police or courts to stop him. And he had an armed gang of thugs to beat you up (with a session of torture thrown in for good measure).
Yes, things were bad. But here is the problem. The common people outnumbered the aristocrats by 100 to 1. I don’t care if the aristocrats had weapons and armed thugs. Why couldn’t the common person simply rise up and overthrow these aristocrats by sheer force of numbers? Ultimately they did, and there were a series of revolutions (of which the American Revolution is an example). But my point is that they didn’t for a long, long time. The people of Europe went over a thousand years working as serfs (in incredible poverty and misery) for their feudal lords. Even the use of the word “lord” to describe these people shows the imbalance because this is the same word we use for God. These people were looked upon as little gods, and all they were were thieves. This leaves us with two questions. Since the people were ultimately able to overthrow the medieval aristocrat, how come they went on for a thousand years working as serfs?
I will agree with the posts about China. The Chinese government is *very* worried about any group that threatens the party's control. Couple this ethnic unrest with the also mentioned aging population problem and throw in corruption you have lots of fuel for unrest.
The Chinese government has a lot to worry about and the end of the linked article makes me proud to be an American. The Chinese are angry because "Any criticism is seen as undermining Chinese sovereignty," he said. "People have no way to express their grievances." In America we have many different ways to express our grievances.
While I may not have voted for our current President, he is my Commander-in-Chief. Our "revolt" was carried out peacefully, unlike Iran's election. Those who wanted change got it.
We have problems, but I have hope for the future. China has problems and may only see violence as the solution. Both those in government and those who feel they have no way of changing their future without using violence to force change.
I will take America's problems over China's everyday, from here on out.
This is an effort to summarize some of the recent discussion of inflation versus deflation. I think there are strong arguments in either direction. To some extent, deflationary forces may offset inflationary ones, resulting in stability, but I think the situation is probably more like a chaotic system where we could see dramatic,sudden changes. It is inherently hard to predict. In any case, here is a list of deflationary and inflationary forces:
Deflationary Forces:
(1) Demographics -- aging populations in most countries; as populations age, savings rates tend to increase, and consumption decreases.
(2a) Savings deficit in US - compounding the underlying demographic effect , the fact that baby boomers in the US have so far failed to save adequately may result in an even greater increase in savings, further dampening consumption.
(2b) Similarly, underfunding of pension plans will require catch-up payments, which increase savings vs. consumption
(3) The wealth effect -- effect of declining equity and housing prices on consumption
(4) Lingering effects of the subprime and broader financial bubbles -- cautious credit markets, conservative individual behavior, etc.
(5) State level fiscal crises and resulting budget cuts
(6) Excess industrial capacity
(7) On a global scale -- excess of workers (though this will be mitigated by aging of the population)
(8) Increase in protectionism leading to global depression
Inflationary Forces
(1) Expansion of money supply due to stimulus (current and possible ongoing)
(2) Expansion of money supply as a means of funding growing Federal deficits.
(3) Specifically, the possibility of large, unfunded entitlements, such as National Health Care
(4) Increase in protectionism leading to effective reduction in global industrial capacity
(5) Growth in China/India, other developing countries putting pressure on basic commodities
(6) Possible supply shock, eg - due to political instability in the Middle East
Saville summarizes some key points that tend to get lost in the inflation vs. deflation debate. The 2nd chart provided in the article shows a sound correlation between CPI and M2/M3 10 yr moving averages during all sorts of business conditions between 1910-1996. The final alterations to CPI in the 1990's don't show that increasing money supply from 1995 onward as having any effect on govt published CPI. However the SGS CPI alternative from John Williams using the same 1980 methodolgies clearly maintains the trends from earlier decades. Hence the creation of distortations (a-d) below. Monetary inflation might not always lead to obvious consumer price increases, esp if that nation owns the reserve currency and can export that inflation to force other nation's prices to rise in the interim.
In a nutshell, monetary inflation isn't a problem because it leads to a broad-based increase in prices; it is a problem because it
a) distorts the price signals upon which the market economy relies,
b) temporarily makes it seem as if the quantity of real savings is higher than is actually the case (thus leading to mal-investment on a grand scale and the destruction of real savings),
c) facilitates the re-distribution of wealth to the detriment of the overall economy and the living standards of most people, and
d) allows the government to become far more powerful than it should be.
Droke dusts off the long term cycles and puts them to work to explain major trends of the past 120 years. He's a believer in the 120 yr cycle along with all of its major sub parts: 60,40,30,12,10,6 yr cycles. The last bottom of the 120 yr came in 1894 in the midst of a tumultuous period. Next major bottom is due in 2014, along with all of the sub parts, coaxing the 2011-2014 period towards a primarily deflationary trend much the same as 1891-1894. The 10 yr cycle is peaking (or has peaked) in 2009 which for a while has given some inflationary support. But the rest of the 10 yr. cycle is downward towards 2014. Only the 6 yr cycle remains to give any inflationary boost and it starts its final descent in 2011. After that, the cycles time in unision in a strongly deflationary preferance. This might be why Sinclair picked out January 2011 several years ago as the point where all heck breaks out. How he nailed it down to a specific day in January is beyond me.
For my part I believe that one must be prepared for both situations.
I believe that we will see a double dip recession lasting at least through 2010.
That said paying off all debt possible, and accumulating savings in either basic commodity stocks, and hard assets, such as coins, gold and silver should see one through to the end.
Most of us have had some time to prepare, and more time is welcome. Even real estate can be a very good asset as long as it is bought at the right price with a real ROI.
As always a basket of paid for diversified assets is the way to go.
With the exception of traders, safety first for the next few years.
In my humble opinion the most disastrous situation that exists both at the Federal, State and personal level is debt. All the rules of the game change when debt is at risk of default.
Unfortunately for the average American, if and when, a debt crises occurs it will be to late to make adjustments in their financial situations.
Higashiyama--care to expound on that list placing them in order of most important or relavant. Feel free to mix the deflationary forces with inflationary to complete the list.
GS--Poorly invested debt is evil. IE, buying a plasma on a credit card in is a poor investment. Buying quality real estate on a 5-1 margin at low rates is a good investment.
RR--So Droke is saying that if we dont get inflation by 2011 then we wont get it at all? Seems that doesnt leave much time for the Chinese to rid themselves of the dollar. Or as one of the largest holders of dollars wouldnt they prefer deflation?
And wouldnt it be "convienient" if the meager savings of the boomers was met with falling prices rather than inflation?
Comments
<< <i>“As virtual currencies take over more and more purchasing power, control over the effective money supply shifts from the central bank to the game developers."
What a riot! If I had to put money on who is smarter and most likely to win this faceoff, I'd have to go with the gamers.
I find it fairly amusing that governments are afraid of this. Second Life has had the Linden Dollar for quite a while. I just don't see gamer currency becoming big enough that it would "Shift from the central bank to game developers" control over the money supply. Paranoid Chinese government in action.
Reggie tries to figure out if GS is actually the PPT.
Basically 5 major institutions (ie banks) are now responsible for 40% of the trades on the stock market. And their volume has been increasing while others have been backing out. Are all these banks now PPT deputies?
Found it humurous that insolvent Citibank raised their rating on BoA today. I have no problems with insolvent banks with opaque balance sheets rating other insolvent banks with opaque balance sheets.
An excerpt concerning money velocity from JW's latest article. An interesting point in that along with a shadow banking system of the past decade, there has been a very large and unreported shadow monetary/credit velocity. Does the only money velocity that matters have to do with the one from banks/businesses with other consumers?
The primary question that the errant Deflationists avoid is “Why is the Crude Oil price rising?” since it highlights their erroneous position and twisted viewpoint. The strong uptrend in crude oil price stands as contradiction to their argument, but they ignore it. The hidden question that they cannot even manage to formulate is “Is the Shadow Banking System flow data included in the Money Velocity figure?” as some within their camp appear to trust USFed data itself. The other bank system has kept the entire credit market afloat for over a decade, without benefit of statistical inclusion. Never permit a syndicate to supply critical data. To dismiss official price inflation data but trust their money velocity data is folly. In my travels, when my confrontational questions are posed, they are almost never answered. The posed questions are as little understood as the emotion is great behind their incorrect views. The Deflationists will be correct only if the Central Banks and their franchise system of destruction shut down and halt the accelerated production of phony money.
Full article -vintage Jim Willie
roadrunner
It's a sign of the times. Today poll results were released stating that 51% of those interviewed support the health care plan as proposed. The margin of error is +/-3%.
Edited to add: Why do you think they call 'em mushrooms?
Important legislation often gets majority support without anyone in the final approval process having actually read the bill. In the foot steps of the Homeland Security Act and the TARP, the 1200 page Cap and Trade Bill (aka Climate Bill) wasn't available in its entirety in print before it was approved by Congress. One hopes that it would be available to the Senate for reading before they vote on it. I'd like to know what is included in those last 300 pages that were tacked on at the very end. I'm sure that a poll of the bill would also show strong support even if those responding don't know what it will really do to them.
roadrunner
NYSE Halts Transparency, Feels Goldman Program Trading Disclosure Is Unnecessary.....link provided from Sinclair's site.....
Another look at the aspects of Goldman's role...
I knew it would happen.
Aden Sisters are back - be very afraid
This time they have nearly called a complete turnaround in the world's economic crisis by stating the following:
inflation is here......and zero signs of deflation
gold is still going up (yeah, I know.....look out below!)
dollar is falling
bonds are falling (have they looked at bond yields lately?)
stocks are up around the world, and will continue up
banking is improving and nearly fixed (based on low Libor rate)
consumer confidence is up (they saw one couple eating out)
markets are all in sync (where were they the past 2 weeks?)
The Adens have spoken....protect yourselves.
roadrunner
I knew it would happen.
<< <i>It's a sign of the times. Today poll results were released stating that 51% of those interviewed support the health care plan as proposed. The margin of error is +/-3%.
Important legislation often gets majority support without anyone in the final approval process having actually read the bill. In the foot steps of the Homeland Security Act and the TARP, the 1200 page Cap and Trade Bill (aka Climate Bill) wasn't available in its entirety in print before it was approved by Congress. One hopes that it would be available to the Senate for reading before they vote on it. I'd like to know what is included in those last 300 pages that were tacked on at the very end. I'm sure that a poll of the bill would also show strong support even if those responding don't know what it will really do to them. >>
One aspect has been coming out in the news recently that many in the public do not realize. You will not be able to sell you house....... unless it meets certain green standards. Basically, it will have to meet the California standards. If you want to sell your house, and it does not have x number of inches of insulation, the proper efficiency of furnace, air conditioners, light bulbs, etc..... you will have to spend the money to upgrade before you can sell.
Not sure about the rest of the country... but here in the midwest, especially in the more rural areas, that will kill the real estate business. Either that or hugely increase the cost of buying a home in the area.
Change is good..... right?
<< <i>Nassim Taleb was just on CNBC. The guy makes too much sense. He says that the system is fragile and will break - the only question is when. He says that the gov't could back all the debt down and the risks would subside, but they are loathe to do it. 'Nuf said. >>
Article Link
I'll answer.
Because if fell $110!!! This is nothing more than a dead cat bounce. Just as Harley Davidson bounced from 7 to 23 and GE bounced from 6 to 14. Oil is still 50% below the high of a year ago. Many people were of the belief that oil was manipulated upward a year ago, so now these same people say it is going up due to inflation? LOL. If oil is $70 this time next year, is it still "rising"?
There is more oil schlossing around the world than perhaps at any other time in history.
Past and present tense will become apparent in coming weeks.
Knowledge is the enemy of fear
From Briefing.com.....
Daily Telegraph reports BullionVault, which says it looks after more gold than many of the world's central banks, reported 43% growth in its clients' physical holdings of the metal in the first half to more than 18 tonnes or $553 mln worth. The addition of almost 5.5 tonnes, or $166 mln worth, was almost twice the growth in BullionVault's clients' holdings in the same period last year and was equivalent to 70% of the growth seen over the whole of 2008. Adrian Ash of BullionVault said: "While politicians argue over 'green shoots' in the economy, the number of private individuals buying physical gold continues to grow. "Central banks are responding to the worst financial crisis in 70 years with an unprecedented experiment in money creation. But there's no evidence yet that quantitative easing has sparked a self-sustaining recovery." He added: "With global interest rates now at zero or near, cash savers are joining stock market investors in seeking a strong crisis and inflation hedge."
Knowledge is the enemy of fear
It does seem as we're looking at some kind of bait and switch or something goofy as the "wobble factor" seems to be increasing. By this I mean that the information we get from the in the tank media is questionable but we all know it is questionable so we discount most of it and select some media channel that we think is what we want, there are a lot of choices and not all of them are legit by virtue of being in the tank for somebody. But, it's not just media, the banks have undergone an interesting transition that no one seems to have made note of: they have trimmed the herd considerably and those that benefitted from the gov. are benefitting the gov. with their policies on one hand while they trim the consumers at every turn...it's almost a love love situation, they should either get a room or just announce their marriage. It wouldn't suprise me if you could file your individual ta x return at a Chase bank within a year or two.
I sense there is pressure under gold, something is going to happen and it's gonna happen in a quick succession of events. Not necessarily doom and gloom but change. Gold is supressed and it's being gathered by a lot of people from all over the spectrum of folk seeking "protection", those that can afford to stash a little are doing just that, from countries, all the way across to just us regular guys. At some point, folk aren't going to be able to get it too easily and then it will be all over the news but it's too late then, once it starts getting a large premium for physical...say maybe 15% or 20% then it's happened. Forget the spot, fix, melt all the other things, look at physical and physical premiums relative to spot, fix, melt, that's what physical gold's worth. There is pressure on PM here, maybe we just got it right this time and we made correct assumptions, maybe we got positioned in time, maybe our minds are right for this one and we have our ducks in a row. The wobble factor seems to be increasing. JMHO
GoldmanSachs
"This content was removed at the request of Rolling Stone "
Random Collector
www.marksmedals.com
Daniel Tencer
Raw Story
Thursday, July 2, 2009
Goldman Sachs has played a crucial role in creating every market bubble since the 1920s — and has profited from not only the bubbles, but from the crash that followed as well, says a new expose in Rolling Stone magazine.
An article in the July 9-23 issue of the magazine, written by Matt Taibbi, lists five asset bubbles that the 140-year-old investment bank helped create — and one that Taibbi asserts the firm is currently working to make happen.
The five bubbles the article says Goldman was central to creating are the Wall Street stock bubble in the 1920s, which led to the Great Depression; the tech-stock bubble of the late 1990s, which ended in the 2001 recession; the housing bubble of the past decade, which resulted in the current economic crisis; the oil price run-up last summer, when oil shot up to $140 a barrel, likely helping tilt the entire world into recession; and what Taibbi describes as “rigging the bailout,” when Goldman Sachs’ well-placed alumni inside the U.S. government engineered last fall’s bank bailout in such a way that the company profited massively.
Taibbi writes that Goldman Sachs has traditionally been a late arrival to market bubbles, getting in once others have started the trend, but, once in, the company quickly ramps up the bubble, predicts its bursting, and then hedges its bets so as to make money from the bubble crash.
The article, which is not yet officially available online, adds one more bubble to the list: the “global warming bubble,” or specifically, the proposed cap-and-trade legislation that would allow companies to trade pollution credits on an open market.
Taibbi’s argument suggests the Wall Street bank may well want to turn climate change policy into yet another Wall Street casino game.
Because emissions caps will continually be reduced, Taibbi argues, pollution credits will constantly be growing in value, and Goldman Sachs wants in on the ground floor.
Taibbi writes: “The plan is (1) to get in on the ground floor of paradigm-shifting legislation, (2) make sure that they’re the profit-making slice of that paradigm and (3) make sure the slice is — a big slice. Goldman started pushing hard for cap-and-trade long ago, but things really ramped up last year when the firm spent $3.5 million to lobby climate issues.”
On his blog, Taibbi has begun a discussion of the public reaction to his article. Some commenters have suggested that Taibbi’s understanding of high finance is limited, accusing him of misreading Goldman Sachs’ actions.
The part that got me was the 3-5 minute shower limit. WTF has the gov. got to do with how long I shower?
http://www.allvoices.com/contributed-news/3569092-cap-and-trade-completely-rewrites-the-american-dream
Definitely an interesting article, if I can figure out how to save it I will update.
Edit to add: No luck, I couldn't even get it to print out correctly. When I tried something else, I lost it. Sounds like Rolling Stone will be releasing it next week.
Bubble Number 6 - according to the article, is the Cap and Trade. Some interesting notes about Al Gore and GS's investments towards that becoming a law in there also.
Goldman is also giving out an average of $700,000 as a pay package to its employees. This was announced on Squawk Box this morning amounting to several billion dollars. $700,000 pay packages
California bankrupted
In this case they are sending out IOUs for tax refunds, etc. Many other states I am sure will follow.
Box of 20
<< <i>I get:
"This content was removed at the request of Rolling Stone " >>
Wow.... they wasted no time getting that off of the web site! I get the same thing now.... earlier you could read the whole article at the web site. (hmmm.... tin foil hat time.... goldman sacs pulling strings!!!)
I should have known better than to leave in the oil part of that paragraph I posted. The point of the post was on the shadow banking system money velocity vs. the often referenced consumer money velocity. In any case I'll address oil. No one can truly say how much of last year's move in oil was due to honest supply and demand vice investor speculation. In any case, JW felt last year's move was primarly due to inflation and the notion of peak oil (less supply). Fwiw JW also believes that the rise in oil over the past few months was due to inflationary effects. He's consistent, don't toss him into the camps of wafflers. JW did not state that oil was manipulated up last year. Look at the timing of when commodities took off vs. the stock market.
Gold and silver: November (these often go first)
Ags such as Pot/Mos: early December
Copper and Uranium: later December
Uranium and Oil: mid to later February
Stock Market: March 9th
Natural Gas: May (with the huge current back log, no surprise here)
Frankly, I see no SM timing connection to commodities. The SM followed some commodities months later. With all the TARP money slushing around (future inflation), it had to go somewhere. That would seem to indicate an inflationary/monetary bias imo rather than just dead-cat bounces. No doubt oil and PM's were over-crushed, and intentionally so. They are seeking truer valuations as gold was never worth $680 nor was oil worth $35. With oil not being produced as it once was supplies are now dwindling. A point overlooked in JW's article, and supported by a RK article, was the fact that there were large oil swaps conducted last July to dump WTIC on the market while keeping the numbers in the US Strategic Oil Reserves fairly constant. That's the helpful "push" that the oil price received last year. Oil will be higher than $70 next year, and yes, it will be rising. Pushing gold off the cliff in 2008 was just a temporary singularity it's not going to keep oil prices in 2 digits for all that long. The rest of the world still needs oil and is still growing. It will more than make up for the drop in usage in the heavily industrialized western nations. Producers have backed down and supplies are being drawn down in the process. That eventually leads to shortages.....and right in the middle of a recession no less...just like the 1970's. Oil will be a lot higher by the spring of 2010 as it will be either leading or shadowing gold. Considering how far it has fallen vs. gold (50% further), I cannot see it reducing the spread with gold. And I'm quite confident that gold will be sizzling by spring of 2010.
I realize this is just a small company, but I imagine it is representative of the industry in general, so I ask.....with a 43% in demand and at a rate 1.5x greater than in 2008, why isnt gold higher?
I don't see a ready comparison between holding physical gold or mining shares vs. Bullion Vault, GoldMoney, or any of the other smaller vaults. Remember the gold that Merrill Lynch was supposedly holding in vaults for its clients a few years back? Yeah, it was all fictitious. Therein lies the potential problem with these private vault companies. Means....Motive....Opportunity. What do you think will happen down the road?
In the case of miners you own actual shares of something concrete in the ground or the actual metal if you buy it yourself. To me, BV is just another 3rd party holder (ie secretary) of something you should be keeping tabs on yourself. While I wouldn't trust GLD with my money, I also wouldn't trust BV or any other 3rd party "vault operation." I'd bet that the majority of physical gold holders feel the same way. Adrian Ash writes some interesting articles, but I don't know him from Adam Ant. BV holds a puny 18 tonnes of gold vs. over 1,100 for GLD (at least on paper)...that's a micro stock in the big picture. If you own 100 oz of gold does it matter whether BV holds a total of 10 tonnes of gold vs 18 tonnes of gold? It only matters to me what I hold....100 oz. And does the vault have it in my name, serialized to the bar, with routine audits at least a few times per year? One can look at the steady rise in the tons held by GLD (even in the face of declining gold prices) over the past couple of years and come to the conclusion that gold prices should be rising if these guys almost never sell off anything. But, how much of all the bullion vaulting business out there is covered by paper derivatives? A lot of it is. Most of the paper ETF's in commodities are using derivatives. It's just a matter of which bullion firms do it and to what extent. No doubt in my mind that GLD is using a significant amount of derivatives to cover it's inventory swings. There is nothing in their prospectus that says they cannot. Look at the big banks that are behind GLD...the same ones involved in the current derivative's mess. I'm not surprised that the vaulting business is not doing as well as you would think......and it all boils down to paper gold (derivatives, futures, options, etc.) parading in the market as the real thing. Paper gold has a limited lifespan. And look no further than to paper gold to explain gold's sluggish performance since early 2008....yet here it is still meandering around the $900's just marking time. Time to print up some more paper gold.
roadrunner
The only way oil will be north of 70 is if the economy gets rolling. Then maybe you can get some inflation pressures. Personally I see the economy at or near todays levels at this time next year. Unemployment will be pushing 11% so that means nearly 3 million jobs need to be created between peak unemployment and this time next year. Aint gonna happen. Wages are declining, saving, whatever people can scrape together is rising, and higher energy prices would crush the economy worse than higher interest rates. Thats why I see rates rising, which supresses inflation and firms the dollar.
Lets say the FED stops printing. If the economy does not come ripping back, then the extra money floating around--of which I believe is much less than some want you to believe--will be slowly absorbed into the economy. Inflation pressures will be minimal.
I can buy into a massive inflationary spike if the economy gets overheated, but I just cannot see that happeneing. Declining wages, shorter workweeks, industrial utilization at 67% all point toward tremendous slack in the economy before inflation can take root.
Knowledge is the enemy of fear
Until we become the very first G20 nation to FAIL at purposefly inflating the money supply and not being able to avoid deflation, then I'm firmly on the side of inflation.....and that's inflation driven by currency, not by demand-pull. If the currency and/or credit is there, prices of key ingredients (usually commodities first) will go up. If the FED is really successful at it (and they've never not been able to cause inflation at will), then stocks, real estate, and even wages (though not "real" wages) will eventually join in as well. The FED fancies themselves inflation fighters, yet all they've really been 100% successful at is doing just the opposite. I'm confident they haven't lost their touch.
Stagflation in the 70's and Milton Friedman on money supply's role in producing inflation
Even Bernanke supports Milton Friedman's theory (proved in the the 1970's) that inflation is always a monetary event. But that doesn't mean he has to spout that out in public, no more than Greenspan tabled all his former beliefs in gold from the 1960's once he become a govt economist.
If today we are awash in oil, then in the same vein we must be awash in gold and silver as well since their prices also went up with oil's from 2006-2008...only I don't see tankers full of gold and silver any where. What I do see are miners as well as oil producers who have lowered production levels. Check out the link above on how well oil and gold tracked each other from 1972-1990. Considering we left the gold standard in August 1971, which one do you think was doing the following, oil or gold? Supposedly, many in the 1970's felt oil was heading up due to supply shocks from the Middle East. What about the effect from untethering gold and the money supply changes starting in the 1960's? In the 1970's we had rising prices and rising unemployment during declining business conditions. How was that possible? Answer: from the money supply. Only this time the FED doesn't have the option of pulling back the punchbowl any time in the near future.
The deflation vs inflation camps are both quite headstrong. And that's a remarkable thing considering we've had hundreds of years of paper money history, and we still can't get agreement on how to tackle a problem that has occured before. Austrians? Keynesians? Monetarists? Ponzi's?
roadrunner
Because of an influx of baby boomers just finishing college or high school combined with supply side shocks due to the oil embargo.
The great depression saw inflation (1933-1937) as soon as the govt decided to start pumping money instead of contracting it.
As the dollar was deliberately devalued and a massive drought created supply shocks to the food distribution system as crops failed and beef and milk herds were destroyed.
Show me an example of inflation not accompanied with supply and/or demand shocks and I'll join the inflation camp. Until then, I see deflation or stable prices just as likely as rising prices.
Gold and silver: November (these often go first)
Ags such as Pot/Mos: early December
Copper and Uranium: later December
Uranium and Oil: mid to later February
Stock Market: March 9th
What happens when these reverse from their "dead cat" bounce? Fertilizer companies are rolling over hard as prices drop around the world. Iron ore prices and contracts are being renegotiated down 40-50%. Oil services companies have cut back rigs and services by 50% yet oil is still down 50% from its highs. You have even said the market will roll over later this summer.
What happens when China finishes stockpiling raw materials? Prices do not need selling pressures to fall. Simply a lack of demand. And if you dont believe the economic numbers coming from our Govt, you had better not believe those coming from China. The propaganda in the Chinese newspapers is astounding.
I went to the car dealer for an inspection on my Jeep Tuesday. As I waited I walked around the lot with a salesman. I commented on the number of $40,000+ cars, saying "no one is going to pay 40 grand for a car". He said, "Your right, the business is changing." You can apply the same scenerio to everything from health care to Ipods. Business is changing.
Knowledge is the enemy of fear
1920-1924 Germany has many similarities to the current US situation. Germany got into financial straights following WW1 and having to pay off past debts and future reparations. The US has come up with new ways to go bankrupt (otc derivatives) but the end result is the same financially. Germany was already experiencing bouts of inflation leading up to Weimar in the summer of 1923. Demand shocks? Wages were essentially stagnant, GDP was slumping, unemployment was rising, consumer demand was slack, and a high level of official debt issuance relative to economic growth occured. Sounds like us today! Supply shocks? I'm not aware of anything of note other than the coal strike in the Ruhr region in early 1923 where the French barged in and wanted to keep an eye on "their" coal. See linked article below and the graphs showing each of the above economic stats. Note: I don't approve of everything written in the article.
Weimar experience
What happens when these reverse from their "dead cat" bounce? Fertilizer companies are rolling over hard as prices drop around the world. Iron ore prices and contracts are being renegotiated down 40-50%. Oil services companies have cut back rigs and services by 50% yet oil is still down 50% from its highs. You have even said the market will roll over later this summer.
I could be 100% wrong about the SM rolling over this summer or in the fall. It could keep going up. In the heavily manipulated SM where ransom money is given to bankers like GS is the driving force, who can believe the price of any stock? It's a casino pure and simple. Oil, gold, silver, copper, ags are at the forefront of the manipulation because they are the closest competitors to fiat money. The 6 BILL people in the world still have to eat. If those Fert companies continue to keep production way down, then eventually the prices of grains/ags will soar due to lack of supply. Oil price may be down 50% but world demand has dropped only a small fraction of that amount. The price has to rise back to meet the real demand. But short term tricks and paper games can distort the immediate picture. For now, the tankers filled with crude owned by JPM/GS and others are being depleted. Which gas guzzling nation benefited the most from driving oil down to $35 and which nations did it hurt the most? I don't see key commodities performing a "dead cat" bounce under continuing huge QE around the world. If they bounced, it's because they were pushed way too far down. They will bounce back higher to their true values. But Insolvent corporations to big to fail and large banks? They will continue to bounce lower and lower until rescued permanently by govt.
What happens when China finishes stockpiling raw materials? Prices do not need selling pressures to fall.
I doubt the Chinese will ever get enough materials to stockpile considering they have nearly $2 TRILL to spend in US notes/bills yet at every chance to deversify out of that paper the US is there to block any resource asset acquisition they can. They don't want those notes spent, they want them to sit in the vault collecting dust. Spending a couple billion here and there for companies or deals won't make a big dent in $2 TRILL. The price of general commodities will rise as long as money supplies are increasing irrespective of demand. That's why the Chinese want to buy all they can now. The 403 tons of IMF gold is a pittance to them. They would much rather buy up 4030 tons if they could.
roadrunner
The 6 BILL people in the world still have to eat
No one even knew what potash was 3 years ago. Now all of a sudden it is the cure all for the worlds ills? The fervor over fertilizers is the same as the dot.com stocks in 1999. We have already seent he price of corn fall 15% this week as farmers planted too much. Now at harvest time when they barely make enough to pay back the bank, do you think they are gonna order a bunch more fertilizer?
The main difference I see between you and I is that you see some conspiracy involving everything. Thats ok, as long as you realize that these "conspiracies" only have finite lifespans. I will tell you will all that I have ever believed that the prices of fertilizer treached in 2008 will probably not be seen again in at least a generation. The money to be made in ferts has already been made. I see things for what they are whether manipulated or not. And I really couldnt care less one way or the other. Stay liquid at all times and you will always have the ability to react when the house collapses.
Roadrunner, please do more research on the Chinese economy. You will never have seen such smoke and mirrors as is being presented today. China is right now, the USA in May 1930. Everyone is so worried about the Chinese juggernaut, but what if they are wrong? What if it is really the Chinese currency that is in trouble?
What if the Chinese owned every ounce of gold? Would anybody really care? If no one else wanted it--which would be evident in the fact that the Chinese own it all--gold then would cease to have any value.
Knowledge is the enemy of fear
The main difference I see between you and I is that you see some conspiracy involving everything. Thats ok, as long as you realize that these "conspiracies" only have finite lifespans.
Not everything. But pretty much everything involved with the dollar-US bonds-gold-silver and the financial/banking system in general. Take it all back to Dec. 1913 if you must. If this all happens to affect us on a daily basis, what can I say?
The conspiracy's lifespan is essentially as long as the FED's lifespan. Do you honestly feel that the Bilderbergs, Trilateral Commission, and the other illuminati organizations are in it to solve world hunger problem and foster world peace? It's about getting all the grub and money you can....not necessarily for the nation, but moreso for those at the helm. Always has been. You can call it a conspiracy, the Bilderbergs call it a "game plan." The plan is to take money from the masses and redistribute it to the masters. Why does there have to be a conspiracy or master plan? Because they can: means. motive, and opportunity.
The only reports I even listen to about the Chinese economy are from those analysts (typically gold bugs or contrarians) who routinely venture over there. I look at their natural resource reserves. I don't know about a juggernaut, but I feel they are headed basically up while the US has stagnated or is heading down. I'm letting the price of gold in all currencies be my guide as to what's right side up. Instead of looking at the gold chart vs. dollar, look at it vs the currencies that make up the dollar index (ie UDN). Rather than a top in March 2008 that has not been exceeded, you will see a lower top in March 2008 that was easily exceeded in spring of 2009.
What if the Chinese owned every ounce of gold? Would anybody really care?
The central banks and most of the G8 would care plenty. But since they aren't about to give up anything substantial from what gold they have left speaks volumes. This is in the category of when I see it, I'll believe it. Otherwise why not saddle the Chinese with that 4,000 tons of gold right now and laugh all the way to the fiat bank? Heck, give all 31,000 tons the CB's claim to own, they could afford to buy it all. At some point in time when the fiat balloon goes "pop," gold and other hard assets will be needed to re-establish some sort of order before proceeding forward. That's when everyone will care. The Bilderbabies have been stashing their gold for years. When the day comes when no one wants gold then we can worry about that. But for now, the 3000+ yr run is still intact even in the face of Twilight Zone episodes stating the contrary.
Gold manipulation primer....if TPTB didn't go to such great lengths to manage/assist the pog, then maybe I'd believe in a goldless future
As a rule the fact that games are played in the PM's doesn't alter my buys and sells all that much. You do the best you can with fundamentals and the charts. But, I do find myself at times starting to think like the banksters (ie what would TPTB do today for a head fake?), And sometimes I find myself playing counter to the head fake.
Saw an interesting chart today of gold miners ore grade vs time. Over the past 7 years the ore grade has steadily decreased from 2.2 grams/ton in 2001 to 1.15 gms/ton in 2009....almost a 50% drop in ore grade. A good reason for pog to increase over time assuming miners cannot double their usable ore, which they haven't.
Fact of day: The Bank for International Settlements reports a total of $600 BILL in world gold derivatives. This is roughly equivalent to 22,000 tons of gold. That is roughly 10 yrs of world gold production, 15% of all gold in existence, and 2/3 the total gold claimed to be held by the Central Banks. It's a lot of paper gold! Isn't this just a little clue to the fact that the CB's hold nothing near the 31,000 tons of gold that they have claimed for the last decade or more? No wonder the CB's double count all the lesased/sold gold between contracting parties. They need all they can get on paper! The Comex warehouse only claims about 85 tons of gold and the ETF GLD has about 1130 tons of gold. With up to 100-1 leverage on paper gold it's no surprise that gold prices are "only" in the $900's. What other markets leverage up like gold and silver and why would they need to? Nope, no manipulation to see here But what happens when the PM's paper leverage game finally blows up like it did for MBS and CDO's.....and soon to happen with Interest Rate Swaps??
roadrunner
i know you respect each other as do those who read
<< <i>both you guys are great reads and great discussions
i know you respect each other as do those who read
<< <i>
<< <i>both you guys are great reads and great discussions
i know you respect each other as do those who read
Me three.
We need to find a "Cap and Trade" ETF.
R95
Didn't the Versailles Treaty force Germany into a repayment schedule that couldn't be met, and isn't that another reason that the French, acting on behalf of the Allies took over the Ruhr? And coal wasn't the only thing - the Ruhr was a major heavy industrial region, and the output from the factories was being expropriated too?
Germany got screwed in WWI by having dumb alliances, and by making the British into adversaries by picking the early 1900's to build up their navy into a threat against the Brits, for no particular reason. That's one of the factors that nudged the Brits towards the Allies. And the French & Russians were conspiring against the Germans anyhow, as always.
After getting dragged into a war not of their making, after losing millons of men in the war and being put into a position of servitude, the German economy really couldn't pay off the debt imposed by the Treaty of Versailles. Their only option was to inflate. The French didn't like the hyperinflation approach too much, and that's why they repo'd the Ruhr, just to make sure that the war repayments remained "real". After a war and 10 more years of hardships being imposed on them, it's no wonder that the Germans were pissed off and ready to grab onto a hardline position in 1933.
One thing I agree with you wholeheartedly on:
The US has come up with new ways to go bankrupt (otc derivatives) but the end result is the same financially.
It's not much different in scope than the war reparations were for Germany. The main differences are that we (still) have a Constitution and (still) have a middle class. The bad news is that our "reparations" are being paid to the bankers who lost their bets and should be out of business and to the looters in the government who work on their behalf.
I knew it would happen.
Thanks for that history lesson Jmski52. Germany lost a world war and then had to pay everyone off. We didn't lose a war yet but the sum of our world wide military extension is certainly draining us. And the bankers have since locked down the entire financial system. When they demand more money and don't get it, they push the stock market down (since the TARP and other lending facilities gave them tens of billion to do so).
To celebrate the 6th consecutive and purely "coincidental" Monday gold slamdown the following quote is provided from Dr. Fekete's latest article:
"Banking was conceived in iniquity and born in sin. The Bankers own the earth. Take it away from them, but leave them the power to create deposits, and with the flick of the pen they will create enough deposits to buy it back again. However, take away that power, and all the great fortunes like mine will disappear — as they ought to in order to make this a happier and better world to live in. But, if you wish to remain the slaves of Bankers and pay the cost of your own slavery, then let them continue to create deposits.”
Sir Josiah Stamp (1880-1941), one time governor of the Bank of England, in his Commencement Address at the University of Texas in 1927. Reportedly he was the second wealthiest individual in Britain.
Since the week before the market peak on June 1st there has yet to be an up Monday. Only one Friday has been up. For the year, there have been at most 3 up Mondays which is even more incredible since gold was moving upwards for 93 days so far.
Katz expects prices 4X higher than today - Why the FED is depreciating the currency
Fekete - Fiat money now in its final death throes
Not too long ago the big banks were begging for help and painting the doomsday scenario. Suddenly, when the executives found out that they will no longer be able to stuff their pockets with obscene salaries, the banks no longer needed the bailout money. Have I missed something?
— P.H.Tampa, Fla.
No. I think you’ve pretty much got it covered.
(x2,Meltdown),cajun,Swampboy,SeaEagleCoins,InYHWHWeTrust, bstat1020,Spooly,timrutnat,oilstates200, vpr, guitarwes,
mariner67, and Mikes coins
Although this uprising is mostly religious based, it demonstrates the need for China to keep its citizens happy. China is spending $500 billion to keep violence from running rampant. If the world economies do not inprove dramatically in the next 2 years, China will have exhausted its currency reserves and savings through continual "stimulus" spending. They will then be a debtor nation.
So answer this question, if every country is borrowing, who is lending?
edited to add market commentary. Gold, XAU and GDX all riding hard on the uptrend line. Dont stumble horsie.
Knowledge is the enemy of fear
Dave, in the end all will be just printing money.
I do not see how China could borrow from anyone, there will be no more chairs in the musical chairs game.
That is a very good statement. One of the most honest qualities of physical gold is that it does owe nothing; there is no debt and there is nothing due, it is worth what someone will pay for it in what ever currency or exchange for goods that two people can agree to, right here, right now. No one will lend you a 10 oz bar, no one will let your borrow 10 oz of physical gold. If you got it, it's yours, it's paid for, nothing is due, it is the absolute liquid asset across all forms of trade. There is no paper this for some paper that, if it is physical, it is real, you can't eat it but you can hold it in your hand and you don't need a computer or a statement from a bank to see it, it is the ulitmate store of value; you can stick it in your pocket, you can sew it into your shirt, you can put it in the bottom of your shoe and just walk away. Gold is good. Certainly the metal is nothing to worship or bow to but in terms of protecting your wealth, gold will take care of it for you.
China's elderly will overwhelm the nation
Cao Jun / For The Times
The retirement center at 2 Ruijin Road in Shanghai is often filled to capacity. When it opened 15 years ago, though, the idea of packing loved ones off to an old-age facility was still taboo.
The one-child rule imposed 30 years ago has created too few young people to support the quickly expanding aging population.
Shanghai provides a window into China's demographic future. Already China's largest city, it's also its grayest. More than one-fifth of its population is at least 60 years old. That percentage is projected to nearly double to 40% by 2030.
So many residents have reached retirement age that city officials are urging local companies to persuade their aging staffs to stay on the job longer. The government has injected $618 million into the public pension system over the last two years to keep it solvent.
Why the Meltdown Should Have Surprised No One
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
mhammerman,
You've definitely made the thread more interesting! That is a beautiful $10.00
It's not much different in scope than the war reparations were for Germany. The main differences are that we (still) have a Constitution and (still) have a middle class. The bad news is that our "reparations" are being paid to the bankers who lost their bets and should be out of business and to the looters in the government who work on their behalf. >>
Comrade jmski, how much longer do Constitution stay when fearless leaders want to change?
Wot is middle class?
Comrade Renski
<< <i>It's not much different in scope than the war reparations were for Germany. The main differences are that we (still) have a Constitution and (still) have a middle class. The bad news is that our Germany lost a world war and then had to pay everyone off. We didn't lose a war yet but the sum of our world wide military extension is certainly draining us. And the bankers have since locked down the entire financial system. When they demand more money and don't get it, they push the stock market down (since the TARP and other lending facilities gave them tens of billion to do so).
rr
It may not be a conventional war that we are losing but we are losing by the steady drain you write of. Bin Laden said he would outlast the Russians in Afghanistan and said he will do the same to the US. The cost of being the world police is finally catching up. The Russians ran out of money in 1989. At least we are at able to print but for how long? The question I have is: How do we pay off $100 trillion (a guess, who knows the real number) in unfunded liabilities? If we can't the US may be reduced to a France-like tier and unable to protect our freedoms and sovereignty. And if we can't pay it off but somehow pay down enough to where the world sees us as getting our financial house in order and a safe place to invest in. It appears to me we are not heading in either of these directions. That's why I think we are losing this unconventional war and will have to pay everyone off someday.
I'm sure the "Bankers" are working on this transition as we speak. Only they know the timetable.
R95
<< <i>And then there is this, talk about your boomer problem!
China's elderly will overwhelm the nation
Cao Jun / For The Times
The retirement center at 2 Ruijin Road in Shanghai is often filled to capacity. When it opened 15 years ago, though, the idea of packing loved ones off to an old-age facility was still taboo.
The one-child rule imposed 30 years ago has created too few young people to support the quickly expanding aging population.
Shanghai provides a window into China's demographic future. Already China's largest city, it's also its grayest. More than one-fifth of its population is at least 60 years old. That percentage is projected to nearly double to 40% by 2030.
So many residents have reached retirement age that city officials are urging local companies to persuade their aging staffs to stay on the job longer. The government has injected $618 million into the public pension system over the last two years to keep it solvent. >>
I've written about this a few times over the past 2-3 years. A declining population is a death knell for any town, city, state, country. China's population could very well begin declining in 20 years. The massive infrastructure they are building today will be to support a smaller population. Buildings will be vacant, highways crumble. Heck, many areas could look just like Detroit. China knows their biggest fear is not a declining dollar.
I feel like I'm bashing China today, but I guess that just how events unfold. This commentary was from a link posted by Roadrunner in another thread. I couldnt help but think how much this sounded like China of today...........................
However, a small group of these thieves have figured out a better angle. You can understand this technique by studying the medieval aristocracy. They had seized all of the arable land in Europe by the sword, and they enserfed the average guy to work the land, produce food for him and other goods. In those days, if you didn’t like your boss (the land lord), it was against the law to quit your job. If your boss’ son wanted to rape your daughter, there were no police or courts to stop him. And he had an armed gang of thugs to beat you up (with a session of torture thrown in for good measure).
Yes, things were bad. But here is the problem. The common people outnumbered the aristocrats by 100 to 1. I don’t care if the aristocrats had weapons and armed thugs. Why couldn’t the common person simply rise up and overthrow these aristocrats by sheer force of numbers? Ultimately they did, and there were a series of revolutions (of which the American Revolution is an example). But my point is that they didn’t for a long, long time. The people of Europe went over a thousand years working as serfs (in incredible poverty and misery) for their feudal lords. Even the use of the word “lord” to describe these people shows the imbalance because this is the same word we use for God. These people were looked upon as little gods, and all they were were thieves. This leaves us with two questions. Since the people were ultimately able to overthrow the medieval aristocrat, how come they went on for a thousand years working as serfs?
Knowledge is the enemy of fear
So why is everyone so uptight about the US dollar becoming worthless?
Knowledge is the enemy of fear
I will agree with the posts about China. The Chinese government is *very* worried about any group that threatens the party's control. Couple this ethnic unrest with the also mentioned aging population problem and throw in corruption you have lots of fuel for unrest.
The Chinese government has a lot to worry about and the end of the linked article makes me proud to be an American. The Chinese are angry because "Any criticism is seen as undermining Chinese sovereignty," he said. "People have no way to express their grievances." In America we have many different ways to express our grievances.
While I may not have voted for our current President, he is my Commander-in-Chief. Our "revolt" was carried out peacefully, unlike Iran's election. Those who wanted change got it.
We have problems, but I have hope for the future. China has problems and may only see violence as the solution. Both those in government and those who feel they have no way of changing their future without using violence to force change.
I will take America's problems over China's everyday, from here on out.
You may enjoy reading a little of what Bill Tatro has to say at his site: BillTatro.com
He delves into China, Emerging markets, Oil, Gold, Monetary policy, Tarp, deflation/inflation and ...... hyper inflation !
Deflationary Forces:
(1) Demographics -- aging populations in most countries; as populations age, savings rates tend to increase, and consumption decreases.
(2a) Savings deficit in US - compounding the underlying demographic effect , the fact that baby boomers in the US have so far failed to save adequately may result in an even greater increase in savings, further dampening consumption.
(2b) Similarly, underfunding of pension plans will require catch-up payments, which increase savings vs. consumption
(3) The wealth effect -- effect of declining equity and housing prices on consumption
(4) Lingering effects of the subprime and broader financial bubbles -- cautious credit markets, conservative individual behavior, etc.
(5) State level fiscal crises and resulting budget cuts
(6) Excess industrial capacity
(7) On a global scale -- excess of workers (though this will be mitigated by aging of the population)
(8) Increase in protectionism leading to global depression
Inflationary Forces
(1) Expansion of money supply due to stimulus (current and possible ongoing)
(2) Expansion of money supply as a means of funding growing Federal deficits.
(3) Specifically, the possibility of large, unfunded entitlements, such as National Health Care
(4) Increase in protectionism leading to effective reduction in global industrial capacity
(5) Growth in China/India, other developing countries putting pressure on basic commodities
(6) Possible supply shock, eg - due to political instability in the Middle East
Steve Saville on long term money supply trends vs. CPI
In a nutshell, monetary inflation isn't a problem because it leads to a broad-based increase in prices; it is a problem because it
a) distorts the price signals upon which the market economy relies,
b) temporarily makes it seem as if the quantity of real savings is higher than is actually the case (thus leading to mal-investment on a grand scale and the destruction of real savings),
c) facilitates the re-distribution of wealth to the detriment of the overall economy and the living standards of most people, and
d) allows the government to become far more powerful than it should be.
Cliff Droke on inflation vs. deflationary expectations using Kress cycles
Droke dusts off the long term cycles and puts them to work to explain major trends of the past 120 years. He's a believer in the 120 yr cycle along with all of its major sub parts: 60,40,30,12,10,6 yr cycles. The last bottom of the 120 yr came in 1894 in the midst of a tumultuous period. Next major bottom is due in 2014, along with all of the sub parts, coaxing the 2011-2014 period towards a primarily deflationary trend much the same as 1891-1894. The 10 yr cycle is peaking (or has peaked) in 2009 which for a while has given some inflationary support. But the rest of the 10 yr. cycle is downward towards 2014. Only the 6 yr cycle remains to give any inflationary boost and it starts its final descent in 2011. After that, the cycles time in unision in a strongly deflationary preferance. This might be why Sinclair picked out January 2011 several years ago as the point where all heck breaks out. How he nailed it down to a specific day in January is beyond me.
roadrunner
For my part I believe that one must be prepared for both situations.
I believe that we will see a double dip recession lasting at least through 2010.
That said paying off all debt possible, and accumulating savings in either basic commodity stocks, and hard assets, such as coins, gold and silver should see one through to the end.
Most of us have had some time to prepare, and more time is welcome. Even real estate can be a very good asset as long as it is bought at the right price with a real ROI.
As always a basket of paid for diversified assets is the way to go.
With the exception of traders, safety first for the next few years.
In my humble opinion the most disastrous situation that exists both at the Federal, State and personal level is debt. All the rules of the game change when debt is at risk of default.
Unfortunately for the average American, if and when, a debt crises occurs it will be to late to make adjustments in their financial situations.
Higashiyama--care to expound on that list placing them in order of most important or relavant. Feel free to mix the deflationary forces with inflationary to complete the list.
GS--Poorly invested debt is evil. IE, buying a plasma on a credit card in is a poor investment. Buying quality real estate on a 5-1 margin at low rates is a good investment.
RR--So Droke is saying that if we dont get inflation by 2011 then we wont get it at all? Seems that doesnt leave much time for the Chinese to rid themselves of the dollar. Or as one of the largest holders of dollars wouldnt they prefer deflation?
And wouldnt it be "convienient" if the meager savings of the boomers was met with falling prices rather than inflation?
Knowledge is the enemy of fear