The two main income streams for our leaders are SS/self employment tax and Income Tax, both of which are likely highly leveraged to pay for the ongoing entitlements, particularly medical related and social security related but we also have a considerable liability in paying unemployment compensation to the millions of people on the dole. Eventhough folk are maybe a little concerned, they are mostly just plodding into tomorrow with the same play book they brought with them yesterday, trying to squeeze a little more out of that now defunct Boomer model. Reminds me of the Mad Magazine we used to read when we were kids with the by line..."What me worry?" There is really nothing to worry about now because if you're just now getting to worrying about it, your 401/IRA has already been ransacked by the paper boys, your house is treading water at best, your job is on the line every day, you can't get a loan, your credit cards are all glowing in the dark and it's way too late to worry about any of that. There are two choices, raise taxes or hope for a rainbow...pick one. Of course there is always the possibility that a Hail Mary event may occur but that was last seen in 1975 Staubach to Pearson for a win over the Vikings which was coincidentally also the last year the U.S. had a positive balance of trade. Go deep and pray.
<< <i>Im not talking about a rate increase of 1000 basis points (10%). A Fed funds rate of 2% would help much more than it would hurt. If people arent buying houses with 4% mortgage rates, then they surely wont buy at 6%. So whats the harm? Bernanke is afraid of Depression 2. Scared policy is doomed policy.
Raise rates now!!! >>
It's not just about mortgage rates. You start offering a percent or two more on savings accounts and it will encourage saving rather than spending or investing, which will also hurt the economy. I don't disagree - rates need to be raised - but fit hey don't cut spending nothing matters.
One of my good friends had lunch with someone who's on Obama's bipartisan debt reduction team. There were 2 main conclusions: 1. He was confident that none of the recommendations made by the team would be adopted 2. Entitlements are THE #1 biggest economic problem facing this country.
I think #2 is the most telling. NO ONE is talking about addressing entitlements. Every time you turn on the TV, it's, "Save the police, fireman, teacher, children, etc..." The politicians are always threatining these emotional targets so they can justify coming to the rescue with another bailout plan, and no one wants to even suggest cutting back on entitlements...
It's not just about mortgage rates. You start offering a percent or two more on savings accounts and it will encourage saving rather than spending or investing,
And that is exactly what this country needs. People are still taking money out of the banking system and putting in under their mattress or buying gold--so they are already saving money which hurts the economy. The banks wont lend as they dont have a cushion. Get people to keep their money in the banks, the banks will have less fear of a run on them, and they will lend.
Deflation will also help the entitlement problem somewhat as it will lower COLAs. If you cant pay the future bill, make it smaller.
Deflation will also help the entitlement problem somewhat as it will lower COLAs. If you cant pay the future bill, make it smaller.
They won't let that happen without increasing tax rates through the roof. And that's too obvious. It's much more politically-acceptable to keep housing prices and salaries pumped up, keep tax revenues flowing, and to inject "liquidity" into the system. Inflation has the same impact on entitlements, it dilutes their value without lowering the payout, thus making the future bill "smaller". It is also the ONLY way to get relief on the National Debt, by inflating it away faster, not slower.
Deflation also implies that the government and individuals become more responsible and to stop spending and grabbing for every possible freebie.
Q: Are You Printing Money? Bernanke: Not Literally
<< <i>Deflation will also help the entitlement problem somewhat as it will lower COLAs. If you cant pay the future bill, make it smaller.
They won't let that happen without increasing tax rates through the roof. And that's too obvious. It's much more politically-acceptable to keep housing prices and salaries pumped up, keep tax revenues flowing, and to inject "liquidity" into the system. Inflation has the same impact on entitlements, it dilutes their value without lowering the payout, thus making the future bill "smaller". It is also the ONLY way to get relief on the National Debt, by inflating it away faster, not slower.
Deflation also implies that the government and individuals become more responsible and to stop spending and grabbing for every possible freebie. >>
You're gonna see higher taxes so dont be surprised. This should already be factored into expectations. Only the unexpected should hurt you. Higher taxes should not be unexpected. Whats to worry about?
PC....I wish I could get back that 3 minutes of my life again.
An interesting read from Armstrong c/o JS. He notes that in recorded history sovereign nations always default w/o exception whether it's by dumping a hard money standard, printing fiat, or just telling your debtors to take a hike. Sovereign defaults via sharply changing capital flows go back thousands of years indicating that high finance, Wall Street and derivatives are not necessarily needed. One last point he makes on the last page is that dollar was the object of increasing capital flows during the Great Depression because the dollar was gold. Hence, if there were to be a repeat of that, it would imply a flight to gold, not fiat currency.
The author has been in a Federal lockup for years so he does indeed use a typewriter to publish his material.
From the website whose domain is always censored CBS Market*watch..8-19-10
Recent filings from hedge funds managed by George Soros, John Paulson and other high-profile investors show they are using a $50 billion exchange-traded fund to buy gold - even as the ETF's growing clout may be chipping at gold's role as an asset that moves to its own beat.
Eton Park Capital Management LP earlier this week showed it had joined a list of hedge funds that own SPDR Gold Shares /quotes/comstock/13*!gld/quotes/nls/gld (GLD 120.42, +0.03, +0.03%) , an ETF backed by about 1,300 metric tons of the precious metal. Eton revealed a roughly $800 million stake in the ETF. See full story on Eton Park's gold-ETF purchase.
Paulson's firm kept its stake in the gold ETF steady at 31.5 million shares, meaning its position was close to $4 billion at the end of the second quarter. Soros Fund Management had about $600 million in the gold fund, filings show.
This stamp of approval from some of the world's most respected money managers may attract other investors. Yet there are signs gold is acting less as a portfolio diversifier, one of gold's key attractions. For one, gold at times has been moving in tandem with stocks.
"Many analysts seem to be bullish on gold because of concerns over possible weakness in equities, but we would point out that there are two flaws there," said Waverly Advisors in a strategy note Tuesday.
"Future equity market direction is anything but certain" while the correlation between gold and stocks is "unstable at best," it said. "Recent market data shows periods of very strong positive correlation between the two."
Indeed, investment demand for gold has been rising in recent years as investors seek disaster protection. Gold is also seen as an inflation hedge as central banks take on more debt in the economic downturn and spark fears of currency debasement. Read First Take on gold, inflation and hot money.
"Gold and silver, traditionally delinked relative to equities, saw their correlations to stocks rise" in July from the previous month, says Nicholas Colas, ConvergEx Group chief market strategist.
Signs that more investors are flocking to gold and gold-backed ETFs raise the question of what could happen if stocks or gold -- or both -- crash. In a meltdown, investors could be forced to unwind winning bets like gold to meet margin calls on other falling assets, the theory goes.
'Dramatic shift' Certainly, ETFs have changed the dynamics of buying and selling gold, Colas said in an interview.
"Gold has not been very correlated with financial asset prices, historically," he said.
In the past, gold would be bought from a dealer, perhaps in coins, and stored in a safety deposit box or home safe. Now, Colas pointed out, investors can easily buy or sell gold in their brokerage accounts with ETFs. This "dramatic shift" may lower gold's appeal as a hedge to financial assets, although the strategist noted the gold/stock correlation tends to vary a lot over time.
Although some claim other large ETFs tracking stocks and commodities futures may be impacting their underlying markets, SPDR Gold Shares /quotes/comstock/13*!gld/quotes/nls/gld (GLD 120.42, +0.03, +0.03%) is often singled out. This is because the ETF controls such are large portion of the gold market; its stash ranks it among the world's largest central banks. China's sovereign wealth fund has disclosed a stake in the ETF.
SPDR Gold Shares, which is sponsored by a unit of the World Gold Council, traded higher Wednesday afternoon and is up 12% year to date, while the S&P 500 Index /quotes/comstock/21z!i1:inx (SPX 1,076, -18.53, -1.69%) is slightly negative this year. See earlier story on the gold ETF.
"We've definitely seen an increase in long term strategic users," such as institutional investors, said Tom Anderson, head of ETF strategy and research at State Street Global Advisors, the marketing agent for SPDR Gold.
There are several other exchange-traded funds and notes that track gold prices and other precious metals. Some allow investors to make leveraged bets, profit from lower gold prices or take positions in miner stocks.
Sprott Physical Gold Trust /quotes/comstock/13*!phys/quotes/nls/phys (PHYS 11.54, +0.07, +0.61%) holds bullion and has a unique feature that allows large investors to take physical possession of gold. See previous column on Sprott Physical Gold Trust
Future equity market direction is anything but certain" while the correlation between gold and stocks is "unstable at best," it said. "Recent market data shows periods of very strong positive correlation between the two."
I think the relationship shown by the Dow/Gold ratio since the 1930's has been quite efficient and fairly stable in its LT trend.
"Gold and silver, traditionally delinked relative to equities, saw their correlations to stocks rise" in July from the previous month, says Nicholas Colas, ConvergEx Group chief market strategist.
Traditionally, I would say they are somewhat linked, even if inversely.
Signs that more investors are flocking to gold and gold-backed ETFs raise the question of what could happen if stocks or gold -- or both -- crash. In a meltdown, investors could be forced to unwind winning bets like gold to meet margin calls on other falling assets, the theory goes.
I just don't see investors throwing away their physical gold during a fiat meltdown. Did those in the middle of the Weimar experience toss their gold out at the first sign of fiat destruction?
With Soros, Paulson, and others stomping around with heavy footprints, this has added another level of volatility to gold, and esp. the miners as they guys buy or sell in big chunks. These big investors have no choice but to go to GLD because there's no real easy way they could get their paws on an equivalent amount of physical gold. David Einhorn of Greenlight did it though as he backed out his hundreds of millions from GLD (or was it billions?) and locked into some physical gold.
This article taken from JSMineset today. Ok, so what's the advantage of having McDonalds issue these bonds rather than bond brokers, banks, financial institutions, govt, etc? Is this because it's easy to buy a "McMeal + a yuan bond" with your purchase? How does McD's get these bonds? Do they buy them directly from the Chinese govt at a slight discount? Does McD's get stuck with losses if they are holding the yuan bonds and prices drop? I'm not even sure why they are involved unless it's essentially a no-lose propostion. China may look at the USBanks vs. McD's and logically deduce that a burger joint is a far safer financial entity than a bank...and they don't deal in otc derivatives or marked to model accounting.
McDonald’s Sells Yuan Bonds in Hong Kong, First by Foreign Firm By Shelley Smith and Henry Sanderson – Aug 19, 2010 6:20 AM ET
McDonald’s Corp., the world’s largest restaurant chain, became the first foreign non-financial company to sell yuan-denominated bonds in Hong Kong.
McDonald’s, based in Oak Brook, Illinois, sold 200 million yuan ($29 million) of 3 percent notes due in September 2013, offer manager Standard Chartered Plc said in an e-mailed statement today.
The issue “opens up more potential issuers to tap this market, especially those who have sizable operations in China,” said Arthur Lau, a Hong-based fixed-income fund manager at JF Asset Management Ltd.
China is expanding its financial system, and will use Hong Kong as a testing ground for yuan-denominated products, according to the city’s former central bank chief Joseph Yam. Foreign companies in February became eligible to issue yuan bonds as part of efforts to bolster the ex-British colony’s financial status and expand its role in promoting China’s currency for global commerce.
Bank of East Asia Ltd. and HSBC Holding Plc’s China unit sold yuan bonds in Hong Kong in 2009, becoming the first non- China banks to do so, according to data compiled by Bloomberg. Hopewell Highway Infrastructure Ltd., controlled by Hong Kong billionaire Gordon Wu, was the first non-financial company to enter the market when it issued 1.38 billion yuan of 2.98 percent notes in July, the data show.
That agrees with what my friends' contact who is on the panel said. The panel will have LOTS of recomendations, but he is certain that none of them will be implemented:
Even before the commission settles on a plan, many liberals are vowing to block any cut in retirement benefits.
<< <i>Instead of cutting Social Security, why not cut the bailouts? Oh, that might get a dig in at the "wrong" people. >>
The real area for gain is in cutting recurring expenses like SS because that's a long term solution. Of course, now that the bailouts are recurring, it will help greatly to cut those too.
Just noticed on Yahoo's "trending now" search list which I assume is some of the top search terms, "Gold Bullion" was number 4. It seems that the public is catching on...
Are you sure they just aren't looking for places/information to get rid of their gold bullion considering the media keeps telling them gold is in a bubble?
The following article has a stack of references that is valuable by itself. I found #35, a video of Austrian school economist Murray Rothbard from 1983 discussing economic myths, central banking roots and gold standard before 1860, quite interesting. First time I had ever seen him give a presentation.
Some people say that the yield on the 10yr US Treasury bond (2.60%) is way too low. Well here is a sample of rates from around the world. Rates are slightly lower today as these numbers were compiled last week.
Japan---0.99% Switzerland---1.24% Singapore---1.91% Hong Kong---2.23% Germany---2.39% Sweden---2.45% Finland---2.60% Netherlands---2.61% France---2.72% Denmark---2.76% Canada---2.98% Austria----3.08% Belgium---3.05% United Kingdom---3.12% China---3.29% Norway---3.29%
Clearly, rates in the US are right in the middle of this group.
Now for rates in countries that are, IMO, too low...
"Ask, and it shall be given you; seek, and ye shall find; knock, and it shall be opened unto you." -Luke 11:9
"Hear, O Israel: The LORD our God is one LORD: And thou shalt love the LORD thy God with all thine heart, and with all thy soul, and with all thy might." -Deut. 6:4-5
"For the LORD is our judge, the LORD is our lawgiver, the LORD is our king; He will save us." -Isaiah 33:22
I read it. I'm afraid that I didn't get it. Is there something really significant in that article that I missed? (This is not a dis to you for posting it, I simply failed to see the point of his writing it).
There are two ways to conquer and enslave a nation. One is by the sword. The other is by debt. –John Adams, 1826
I enjoyed the article. There will come a time (if we're not already there) that the government cannot "fix" everything or "provide" everything. This will be a shock to most of the country.
<< <i>I read it. I'm afraid that I didn't get it. Is there something really significant in that article that I missed? (This is not a dis to you for posting it, I simply failed to see the point of his writing it). >>
Well, it's more an ode to a dying culture, if you ask me. Plus a vague warning that when the SHTF, our country might be in a whole lot of trouble (much more so than in the Great Depression). I think he was just thinking out loud.
.....GOD
"Ask, and it shall be given you; seek, and ye shall find; knock, and it shall be opened unto you." -Luke 11:9
"Hear, O Israel: The LORD our God is one LORD: And thou shalt love the LORD thy God with all thine heart, and with all thy soul, and with all thy might." -Deut. 6:4-5
"For the LORD is our judge, the LORD is our lawgiver, the LORD is our king; He will save us." -Isaiah 33:22
People seem totally oblivious to the fact that in the event of population decline caused by massive structural failure of the economy that every- one's ox is going to get gored. There may be some enclaves of the su- per wealthy who believe they can hold out against anything but there are time constraints caused by the inability to secure supplies with a non- functioning economy. There can be no escape in places that aren't run- ing. The government can make some things run by fiat and martial law but it probably can't prop up much.
We'd all be better off trying to find ways to save the system than to pro- fit from or even survive its demise. It's the status quo killing us. but it's the system that feeds us. We need to change the way we do things while keeping the system functioning. Many of the changes needed are quite obvious but no one has the will to make them.
The Indiana Superintendent of Public Instruction Tony Bennett has the right idea and says enough is enough. It's timne to demand more of the schools and teachers. Once we fix this mess it will only be about two gen- erations until things get back to some semblance of normality. We might as well start now.
cladking, two generations? While I agree with you, American's don't have the foresight nor the will at this time. Unfortunately, much pain needs to come before anything of merit will happen. We will all sit here and watch and get absorbed into this malestrom and may fair better than most but this will affect all.
I think the rest of the world doesn't realize either is that if America goes down, then maybe 1-2 Billion people will starve to death in the next few years in the developing world. Love us, hate us, but we we really hold things together
Just as the downfall of the Soviet Union had unintended consequences (such as 9/11), so will the downfall of the financial system
You have to decline and click through the ad and follow down the page to the article. FT is kind of tricky, they are trying to sell their content...what kind of deal is that?
<< <i>cladking, two generations? While I agree with you, American's don't have the foresight nor the will at this time. Unfortunately, much pain needs to come before anything of merit will happen. We will all sit here and watch and get absorbed into this malestrom and may fair better than most but this will affect all. >>
It's been decades since most kids in school have recieved even a basic education and more decades since they were expected to excell. It's far more important no one gets hurt feelings than anyone learn anything.
There are too many structural and fundamental problems to list but the common denominator is usually that no one is responsible.
The root of this is in our beliefs; most notably that we have a "subcon- scious" that drives our actions.
It won't necessarily require two generations to work through our problems but it took four or five to acquire them. It's hard to change people and usually they just get replaced. This would take two generations.
When brokers mention the poor performance of gold since 1980 then toss the above at them. The SM performance doesn't include dividends but it also doesn't include the losers removed from the indicies along the way either. The author's point is that stats can be worked to show what you want. As most here know, every dog has its day.
Found the below video rather ironic. Jason Toussaint, the CEO of World Gold Trust, sponser of the $55B ETF GLD, when asked how he holds his gold investments, his reply: some physical and miner equity shares (ie not GLD). This occurs at 5m-50sec of the video. If GLD were as good as gold wouldn't the sponsor's CEO be in it as well? Clearly if GLD were fully backed by gold and fully a substitute for physical gold, then this CEO would be invested in GLD, especially for the convenience, storage, and "safety."
It's fascinating that the best way to have played the gold market over the past 9 yrs was to short gold between the AM and PM London fixes, and then be long during the overnight periods. If you did both of these your returns were about 2000%. If you just went long gold overnight (London time) you made about 950%. If you just went short during the London day you still made over 100%. If you were "smart" and were long gold during the day as the gold price escalated during the past 9 yrs, you lost about 60% of your money. You can't buck the boyz at their own game. Of course there's no manipulation. It's just sheer luck things worked out this way.
The above may not include dividends but it also doesn't include the losers removed along the way either.
Found the below video rather ironic. Jason Toussaint, the CEO of World Gold Trust, sponser of the $55B ETF GLD, when asked how he holds his gold investments, his reply: some physical and miner equity shares (ie not GLD). This occurs at 5m-50sec of the video.
57loaded, I tried to read the article and when I saw the word "keystroke" my vision blurred and there was no point in reading the rest.
At some point, if money is just keystrokes and the real issue is who gets to run the keyboard, I'm thinking that maybe gold and silver will become more & more important as we go along.
Q: Are You Printing Money? Bernanke: Not Literally
It's not at "some point," we're already there now with keystrokes creating electronic money and debt. While J6P dutifully monitors the old M1, M2, etc for monetary increases, the banks and govt are working around that old system to pump in liquidity. What J6P doesn't know will hurt him.
And that was a good article on the dollar's 3 yr cycles and inflation vs. deflation. As long as the Ben can create liquidity with keystrokes, there will be no deflation, just threats of it to keep the masses off balance.
I'm still an optimist. Americans have cut credit card debt for 23 straight months.
People seem to get that we are competing for work with the Indians and Chinese. Right now there is a lot of looking around and trying to figure out what's next. We will, maybe not all of us, but enough of us are figuring things out.
All private Americans could cut their personal debt to zero but that would not fix the up to $202 TRILLION debt that the govt has taken on in their names. Then toss in the $400-$500 TRILL in otc derivatives that the banks have taken out in their names....but whose losses would eventually be paid out in OUR names.
If there is so much oil in storage, why aren't prices lower
Because the dollar is lower? Another factor in the prices of commodities, PM's, TBonds, etc is how many otc derivatives that the banks have buried out there to help distort the market pricing mechanism. The top 5 US banks own $170 TRILL in interest rate derivatives and a few hundred BILLION in gold/silver derivatives. Those play a large role in distorting their true supply/demand market price. St. Thomas Acquinas, Adam Smith, and other market analysts from previous historical periods could never have dreamt about otc derivatives and their role in completely undoing the role of supply vs. demand.
When a person declares bankrupcy, the stats show that the person just reduced their debt by 100%.
With so many bankrupcies happening it shows that we as a country have eliminated debt....not paying your cards its not the same as learning how to live within your means and focus on savings.
Stats can be presented in many ways...for example 401K withdrawls are up about 10% from last year while contributions are down.
"Women should be obscene and not heard. " Groucho Marx
<< <i>When a person declares bankrupcy, the stats show that the person just reduced their debt by 100%.
With so many bankrupcies happening it shows that we as a country have eliminated debt....not paying your cards its not the same as learning how to live within your means and focus on savings.
Stats can be presented in many ways...for example 401K withdrawls are up about 10% from last year while contributions are down. >>
The homeless guy you see on the corner probably has a higher net worth than most people in this country who are in debt to their eyeballs!
Hummmmm...was just thinking that with all the programed stock machines trading in nanoseconds on any new information that it would be pretty easy for someone to feed some bad data into the matrix. Kind of like an ant taking insecticide back to the nest. Kind of like estimating unemployment numbers instead of actually counting them. Kind of like keystroking an extra 0 or leaving a couple of them off. The mind boggles. When the numbers are just estimated in the first place, manipulating them offers interesting philosophical considerations.
Please return to your regularly scheduled programming.
This is hilarious... Keynes book burning planned for December 13, the anniversary of the Federal Reserve Act.
.....GOD
"Ask, and it shall be given you; seek, and ye shall find; knock, and it shall be opened unto you." -Luke 11:9
"Hear, O Israel: The LORD our God is one LORD: And thou shalt love the LORD thy God with all thine heart, and with all thy soul, and with all thy might." -Deut. 6:4-5
"For the LORD is our judge, the LORD is our lawgiver, the LORD is our king; He will save us." -Isaiah 33:22
Maybe if we borrow smoe to bomb yet another 3rd world country will help the economy?
Or just borrow more for whatever the king decides ( since there doesn't seem to be any representation that have the integrity and balls to counter this out of control spending and certainly 1 Congressman can't do it by himself, especially when it would appear there are millions of %#G7@S#! in support of the welfare/warfare state ) Some of their heroes quotes below
Comments
The two main income streams for our leaders are SS/self employment tax and Income Tax, both of which are likely highly leveraged to pay for the ongoing entitlements, particularly medical related and social security related but we also have a considerable liability in paying unemployment compensation to the millions of people on the dole. Eventhough folk are maybe a little concerned, they are mostly just plodding into tomorrow with the same play book they brought with them yesterday, trying to squeeze a little more out of that now defunct Boomer model. Reminds me of the Mad Magazine we used to read when we were kids with the by line..."What me worry?" There is really nothing to worry about now because if you're just now getting to worrying about it, your 401/IRA has already been ransacked by the paper boys, your house is treading water at best, your job is on the line every day, you can't get a loan, your credit cards are all glowing in the dark and it's way too late to worry about any of that. There are two choices, raise taxes or hope for a rainbow...pick one. Of course there is always the possibility that a Hail Mary event may occur but that was last seen in 1975 Staubach to Pearson for a win over the Vikings which was coincidentally also the last year the U.S. had a positive balance of trade. Go deep and pray.
Got Cash?
<< <i>Im not talking about a rate increase of 1000 basis points (10%). A Fed funds rate of 2% would help much more than it would hurt. If people arent buying houses with 4% mortgage rates, then they surely wont buy at 6%. So whats the harm? Bernanke is afraid of Depression 2. Scared policy is doomed policy.
Raise rates now!!! >>
It's not just about mortgage rates. You start offering a percent or two more on savings accounts and it will encourage saving rather than spending or investing, which will also hurt the economy. I don't disagree - rates need to be raised - but fit hey don't cut spending nothing matters.
One of my good friends had lunch with someone who's on Obama's bipartisan debt reduction team. There were 2 main conclusions:
1. He was confident that none of the recommendations made by the team would be adopted
2. Entitlements are THE #1 biggest economic problem facing this country.
I think #2 is the most telling. NO ONE is talking about addressing entitlements. Every time you turn on the TV, it's, "Save the police, fireman, teacher, children, etc..." The politicians are always threatining these emotional targets so they can justify coming to the rescue with another bailout plan, and no one wants to even suggest cutting back on entitlements...
short article on the 4.44% rates
And that is exactly what this country needs. People are still taking money out of the banking system and putting in under their mattress or buying gold--so they are already saving money which hurts the economy. The banks wont lend as they dont have a cushion. Get people to keep their money in the banks, the banks will have less fear of a run on them, and they will lend.
Deflation will also help the entitlement problem somewhat as it will lower COLAs. If you cant pay the future bill, make it smaller.
Knowledge is the enemy of fear
They won't let that happen without increasing tax rates through the roof. And that's too obvious. It's much more politically-acceptable to keep housing prices and salaries pumped up, keep tax revenues flowing, and to inject "liquidity" into the system. Inflation has the same impact on entitlements, it dilutes their value without lowering the payout, thus making the future bill "smaller". It is also the ONLY way to get relief on the National Debt, by inflating it away faster, not slower.
Deflation also implies that the government and individuals become more responsible and to stop spending and grabbing for every possible freebie.
I knew it would happen.
<< <i>Deflation will also help the entitlement problem somewhat as it will lower COLAs. If you cant pay the future bill, make it smaller.
They won't let that happen without increasing tax rates through the roof. And that's too obvious. It's much more politically-acceptable to keep housing prices and salaries pumped up, keep tax revenues flowing, and to inject "liquidity" into the system. Inflation has the same impact on entitlements, it dilutes their value without lowering the payout, thus making the future bill "smaller". It is also the ONLY way to get relief on the National Debt, by inflating it away faster, not slower.
Deflation also implies that the government and individuals become more responsible and to stop spending and grabbing for every possible freebie. >>
You're gonna see higher taxes so dont be surprised. This should already be factored into expectations. Only the unexpected should hurt you. Higher taxes should not be unexpected. Whats to worry about?
Raise rates NOW!!!
Knowledge is the enemy of fear
Raise rates NOW!!!
Ah, cohodk is shorting bonds? That is the only explanation I see.
Higher taxes should be expected. The only questions are how many
I knew it would happen.
Gerald Calente
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
An interesting read from Armstrong c/o JS. He notes that in recorded history sovereign nations always default w/o exception whether it's by dumping a hard money standard, printing fiat, or just telling your debtors to take a hike. Sovereign defaults via sharply changing capital flows go back thousands of years indicating that high finance, Wall Street and derivatives are not necessarily needed. One last point he makes on the last page is that dollar was the object of increasing capital flows during the Great Depression because the dollar was gold. Hence, if there were to be a repeat of that, it would imply a flight to gold, not fiat currency.
The author has been in a Federal lockup for years so he does indeed use a typewriter to publish his material.
Martin Armstrong's view of sovereign defaults and deflation
roadrunner
Recent filings from hedge funds managed by George Soros, John Paulson and other high-profile investors show they are using a $50 billion exchange-traded fund to buy gold - even as the ETF's growing clout may be chipping at gold's role as an asset that moves to its own beat.
Eton Park Capital Management LP earlier this week showed it had joined a list of hedge funds that own SPDR Gold Shares /quotes/comstock/13*!gld/quotes/nls/gld (GLD 120.42, +0.03, +0.03%) , an ETF backed by about 1,300 metric tons of the precious metal. Eton revealed a roughly $800 million stake in the ETF. See full story on Eton Park's gold-ETF purchase.
Paulson's firm kept its stake in the gold ETF steady at 31.5 million shares, meaning its position was close to $4 billion at the end of the second quarter. Soros Fund Management had about $600 million in the gold fund, filings show.
This stamp of approval from some of the world's most respected money managers may attract other investors. Yet there are signs gold is acting less as a portfolio diversifier, one of gold's key attractions. For one, gold at times has been moving in tandem with stocks.
"Many analysts seem to be bullish on gold because of concerns over possible weakness in equities, but we would point out that there are two flaws there," said Waverly Advisors in a strategy note Tuesday.
"Future equity market direction is anything but certain" while the correlation between gold and stocks is "unstable at best," it said. "Recent market data shows periods of very strong positive correlation between the two."
Indeed, investment demand for gold has been rising in recent years as investors seek disaster protection. Gold is also seen as an inflation hedge as central banks take on more debt in the economic downturn and spark fears of currency debasement. Read First Take on gold, inflation and hot money.
"Gold and silver, traditionally delinked relative to equities, saw their correlations to stocks rise" in July from the previous month, says Nicholas Colas, ConvergEx Group chief market strategist.
Signs that more investors are flocking to gold and gold-backed ETFs raise the question of what could happen if stocks or gold -- or both -- crash. In a meltdown, investors could be forced to unwind winning bets like gold to meet margin calls on other falling assets, the theory goes.
'Dramatic shift'
Certainly, ETFs have changed the dynamics of buying and selling gold, Colas said in an interview.
"Gold has not been very correlated with financial asset prices, historically," he said.
In the past, gold would be bought from a dealer, perhaps in coins, and stored in a safety deposit box or home safe. Now, Colas pointed out, investors can easily buy or sell gold in their brokerage accounts with ETFs. This "dramatic shift" may lower gold's appeal as a hedge to financial assets, although the strategist noted the gold/stock correlation tends to vary a lot over time.
Although some claim other large ETFs tracking stocks and commodities futures may be impacting their underlying markets, SPDR Gold Shares /quotes/comstock/13*!gld/quotes/nls/gld (GLD 120.42, +0.03, +0.03%) is often singled out. This is because the ETF controls such are large portion of the gold market; its stash ranks it among the world's largest central banks. China's sovereign wealth fund has disclosed a stake in the ETF.
SPDR Gold Shares, which is sponsored by a unit of the World Gold Council, traded higher Wednesday afternoon and is up 12% year to date, while the S&P 500 Index /quotes/comstock/21z!i1:inx (SPX 1,076, -18.53, -1.69%) is slightly negative this year. See earlier story on the gold ETF.
"We've definitely seen an increase in long term strategic users," such as institutional investors, said Tom Anderson, head of ETF strategy and research at State Street Global Advisors, the marketing agent for SPDR Gold.
There are several other exchange-traded funds and notes that track gold prices and other precious metals. Some allow investors to make leveraged bets, profit from lower gold prices or take positions in miner stocks.
Sprott Physical Gold Trust /quotes/comstock/13*!phys/quotes/nls/phys (PHYS 11.54, +0.07, +0.61%) holds bullion and has a unique feature that allows large investors to take physical possession of gold. See previous column on Sprott Physical Gold Trust
Knowledge is the enemy of fear
I think the relationship shown by the Dow/Gold ratio since the 1930's has been quite efficient and fairly stable in its LT trend.
"Gold and silver, traditionally delinked relative to equities, saw their correlations to stocks rise" in July from the previous month, says Nicholas Colas, ConvergEx Group chief market strategist.
Traditionally, I would say they are somewhat linked, even if inversely.
Signs that more investors are flocking to gold and gold-backed ETFs raise the question of what could happen if stocks or gold -- or both -- crash. In a meltdown, investors could be forced to unwind winning bets like gold to meet margin calls on other falling assets, the theory goes.
I just don't see investors throwing away their physical gold during a fiat meltdown. Did those in the middle of the Weimar experience toss their gold out at the first sign of fiat destruction?
With Soros, Paulson, and others stomping around with heavy footprints, this has added another level of volatility to gold, and esp. the miners as they guys buy or sell in big chunks. These big investors have no choice but to go to GLD because there's no real easy way they could get their paws on an equivalent amount of physical gold. David Einhorn of Greenlight did it though as he backed out his hundreds of millions from GLD (or was it billions?) and locked into some physical gold.
roadrunner
McDonald’s Sells Yuan Bonds in Hong Kong, First by Foreign Firm
By Shelley Smith and Henry Sanderson – Aug 19, 2010 6:20 AM ET
McDonald’s Corp., the world’s largest restaurant chain, became the first foreign non-financial company to sell yuan-denominated bonds in Hong Kong.
McDonald’s, based in Oak Brook, Illinois, sold 200 million yuan ($29 million) of 3 percent notes due in September 2013, offer manager Standard Chartered Plc said in an e-mailed statement today.
The issue “opens up more potential issuers to tap this market, especially those who have sizable operations in China,” said Arthur Lau, a Hong-based fixed-income fund manager at JF Asset Management Ltd.
China is expanding its financial system, and will use Hong Kong as a testing ground for yuan-denominated products, according to the city’s former central bank chief Joseph Yam. Foreign companies in February became eligible to issue yuan bonds as part of efforts to bolster the ex-British colony’s financial status and expand its role in promoting China’s currency for global commerce.
Bank of East Asia Ltd. and HSBC Holding Plc’s China unit sold yuan bonds in Hong Kong in 2009, becoming the first non- China banks to do so, according to data compiled by Bloomberg. Hopewell Highway Infrastructure Ltd., controlled by Hong Kong billionaire Gordon Wu, was the first non-financial company to enter the market when it issued 1.38 billion yuan of 2.98 percent notes in July, the data show.
Forget a little more cowbell...how about a little more deflation?
This "nutty" guy says the same "crazy" things about inflation and deflation as Katz. And being a nuclear physicist, he's probably smarter than a 5th grader
roadrunner
My local "qwikie mart" gives away free coffee and the Friday newspaper is 1c. Why do people hate deflation so?! I think its AWESOME!!!
Baby steps, but nonetheless, steps......Social Security Cuts Weighed by Panel
Knowledge is the enemy of fear
Even before the commission settles on a plan, many liberals are vowing to block any cut in retirement benefits.
Nuclear physicists do not build power plants. Construction engineers do.
Instead of cutting Social Security, why not cut the bailouts? Oh, that might get a dig in at the "wrong" people.
I knew it would happen.
<< <i>Instead of cutting Social Security, why not cut the bailouts? Oh, that might get a dig in at the "wrong" people. >>
The real area for gain is in cutting recurring expenses like SS because that's a long term solution. Of course, now that the bailouts are recurring, it will help greatly to cut those too.
I wonder where $CASH4GOLD ranks?
roadrunner
Kind of like telling them to buy physical metal..."Here's your macker and a small bond to go"?
The following article has a stack of references that is valuable by itself. I found #35, a video of Austrian school economist Murray Rothbard from 1983 discussing economic myths, central banking roots and gold standard before 1860, quite interesting. First time I had ever seen him give a presentation.
79 reasons to own gold
roadrunner
Japan---0.99%
Switzerland---1.24%
Singapore---1.91%
Hong Kong---2.23%
Germany---2.39%
Sweden---2.45%
Finland---2.60%
Netherlands---2.61%
France---2.72%
Denmark---2.76%
Canada---2.98%
Austria----3.08%
Belgium---3.05%
United Kingdom---3.12%
China---3.29%
Norway---3.29%
Clearly, rates in the US are right in the middle of this group.
Now for rates in countries that are, IMO, too low...
Thailand---3.41%
Czech Repub---3.60%
Italy---3.87%
Malaysia---3.82%
Brazil---3.90%
And the head-scratcher of all...Russia---5.00%
Knowledge is the enemy of fear
Ackerman
"Ask, and it shall be given you; seek, and ye shall find; knock, and it shall be opened unto you." -Luke 11:9
"Hear, O Israel: The LORD our God is one LORD: And thou shalt love the LORD thy God with all thine heart, and with all thy soul, and with all thy might." -Deut. 6:4-5
"For the LORD is our judge, the LORD is our lawgiver, the LORD is our king; He will save us." -Isaiah 33:22
–John Adams, 1826
<< <i>I read it. I'm afraid that I didn't get it. Is there something really significant in that article that I missed? (This is not a dis to you for posting it, I simply failed to see the point of his writing it). >>
Well, it's more an ode to a dying culture, if you ask me. Plus a vague warning that when the SHTF, our country might be in a whole lot of trouble (much more so than in the Great Depression). I think he was just thinking out loud.
"Ask, and it shall be given you; seek, and ye shall find; knock, and it shall be opened unto you." -Luke 11:9
"Hear, O Israel: The LORD our God is one LORD: And thou shalt love the LORD thy God with all thine heart, and with all thy soul, and with all thy might." -Deut. 6:4-5
"For the LORD is our judge, the LORD is our lawgiver, the LORD is our king; He will save us." -Isaiah 33:22
decline caused by massive structural failure of the economy that every-
one's ox is going to get gored. There may be some enclaves of the su-
per wealthy who believe they can hold out against anything but there
are time constraints caused by the inability to secure supplies with a non-
functioning economy. There can be no escape in places that aren't run-
ing. The government can make some things run by fiat and martial law
but it probably can't prop up much.
We'd all be better off trying to find ways to save the system than to pro-
fit from or even survive its demise. It's the status quo killing us. but it's
the system that feeds us. We need to change the way we do things while
keeping the system functioning. Many of the changes needed are quite
obvious but no one has the will to make them.
The Indiana Superintendent of Public Instruction Tony Bennett has the
right idea and says enough is enough. It's timne to demand more of the
schools and teachers. Once we fix this mess it will only be about two gen-
erations until things get back to some semblance of normality. We might
as well start now.
Just as the downfall of the Soviet Union had unintended consequences (such as 9/11), so will the downfall of the financial system
Here's a better link
<< <i>cladking, two generations? While I agree with you, American's don't have the foresight nor the will at this time. Unfortunately, much pain needs to come before anything of merit will happen. We will all sit here and watch and get absorbed into this malestrom and may fair better than most but this will affect all. >>
It's been decades since most kids in school have recieved even a basic
education and more decades since they were expected to excell. It's
far more important no one gets hurt feelings than anyone learn anything.
There are too many structural and fundamental problems to list but the
common denominator is usually that no one is responsible.
The root of this is in our beliefs; most notably that we have a "subcon-
scious" that drives our actions.
It won't necessarily require two generations to work through our problems
but it took four or five to acquire them. It's hard to change people and
usually they just get replaced. This would take two generations.
When brokers mention the poor performance of gold since 1980 then toss the above at them. The SM performance doesn't include dividends but it also doesn't include the losers removed from the indicies along the way either. The author's point is that stats can be worked to show what you want. As most here know, every dog has its day.
Found the below video rather ironic. Jason Toussaint, the CEO of World Gold Trust, sponser of the $55B ETF GLD, when asked how he holds his gold investments, his reply: some physical and miner equity shares (ie not GLD). This occurs at 5m-50sec of the video. If GLD were as good as gold wouldn't the sponsor's CEO be in it as well? Clearly if GLD were fully backed by gold and fully a substitute for physical gold, then this CEO would be invested in GLD, especially for the convenience, storage, and "safety."
BNN interview on GLD
It's fascinating that the best way to have played the gold market over the past 9 yrs was to short gold between the AM and PM London fixes, and then be long during the overnight periods. If you did both of these your returns were about 2000%. If you just went long gold overnight (London time) you made about 950%. If you just went short during the London day you still made over 100%. If you were "smart" and were long gold during the day as the gold price escalated during the past 9 yrs, you lost about 60% of your money. You can't buck the boyz at their own game. Of course there's no manipulation. It's just sheer luck things worked out this way.
Go long gold overnight, be short in the day....that's the trend.
roadrunner
<< <i>stock market still at only 44% of it's gold adjusted price since 1929 peak
The above may not include dividends but it also doesn't include the losers removed along the way either.
Found the below video rather ironic. Jason Toussaint, the CEO of World Gold Trust, sponser of the $55B ETF GLD, when asked how he holds his gold investments, his reply: some physical and miner equity shares (ie not GLD). This occurs at 5m-50sec of the video.
BNN interview on GLD
roadrunner >>
I had to see what a 400 ounce bar of gold looks like. It weighs 28 pounds and would be worth almost a half million dollars!
gosh this thread was 5 pages down....needed a bump.
interesting "dollar cycle" for next year
At some point, if money is just keystrokes and the real issue is who gets to run the keyboard, I'm thinking that maybe gold and silver will become more & more important as we go along.
I knew it would happen.
And that was a good article on the dollar's 3 yr cycles and inflation vs. deflation. As long as the Ben can create liquidity with keystrokes, there will be no deflation, just threats of it to keep the masses off balance.
roadrunner
I'm still an optimist. Americans have cut credit card debt for 23 straight months.
People seem to get that we are competing for work with the Indians and Chinese. Right now there is a lot of looking around and trying to figure out what's next. We will, maybe not all of us, but enough of us are figuring things out.
What has me scratching my head is this report Link to CNN money article
If there is so much oil in storage, why aren't prices lower?
Americans have once again changed habits and conserved oil. Again there appears to be a glut. But unlike the 80's the price of oil isn't plummeting.
Why not?
If there is so much oil in storage, why aren't prices lower
Because the dollar is lower? Another factor in the prices of commodities, PM's, TBonds, etc is how many otc derivatives that the banks have buried out there to help distort the market pricing mechanism. The top 5 US banks own $170 TRILL in interest rate derivatives and a few hundred BILLION in gold/silver derivatives. Those play a large role in distorting their true supply/demand market price. St. Thomas Acquinas, Adam Smith, and other market analysts from previous historical periods could never have dreamt about otc derivatives and their role in completely undoing the role of supply vs. demand.
roadrunner
With so many bankrupcies happening it shows that we as a country have eliminated debt....not paying your cards its not the same as learning how to live within your means and focus on savings.
Stats can be presented in many ways...for example 401K withdrawls are up about 10% from last year while contributions are down.
Groucho Marx
<< <i>When a person declares bankrupcy, the stats show that the person just reduced their debt by 100%.
With so many bankrupcies happening it shows that we as a country have eliminated debt....not paying your cards its not the same as learning how to live within your means and focus on savings.
Stats can be presented in many ways...for example 401K withdrawls are up about 10% from last year while contributions are down. >>
The homeless guy you see on the corner probably has a higher net worth than most people in this country who are in debt to their eyeballs!
Please return to your regularly scheduled programming.
"Ask, and it shall be given you; seek, and ye shall find; knock, and it shall be opened unto you." -Luke 11:9
"Hear, O Israel: The LORD our God is one LORD: And thou shalt love the LORD thy God with all thine heart, and with all thy soul, and with all thy might." -Deut. 6:4-5
"For the LORD is our judge, the LORD is our lawgiver, the LORD is our king; He will save us." -Isaiah 33:22
Or just borrow more for whatever the king decides ( since there doesn't seem to be any representation that have the integrity and balls to counter this out of control spending and certainly 1 Congressman can't do it by himself, especially when it would appear there are millions of %#G7@S#! in support of the welfare/warfare state ) Some of their heroes quotes below
US poverty on track to post record gain in 2009
US poverty on track to post record gain in 2009
Democracy is indispensable to socialism.
Vladimir Lenin
The best way to destroy the capitalist system is to debauch the currency.
Vladimir Lenin
The way to crush the bourgeoisie ( middle class ) is to grind them between the millstones of taxation and inflation.
Vladimir Lenin
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
roadrunner
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