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TwinkleToes
14-11-2008, 05:56 PM
Can a forex guy out there help me? What is the best currency pair to be in if the USD collapses over the next 12 months? One that leverage can be used for unlike Yuan. JPY, SFr, .........?

peat
15-11-2008, 05:40 AM
The obvious ways to short the USD are against the Chf or to long the Eur. I tend to prefer the former now that the contagion of loose banks and recession has spread to the continent. The yen seems to have started its move already so you may be a bit late there... Gold or even silver are also $ plays. I've started shorting in a very minor way the USD/CHF already.

Financially dependant
15-11-2008, 09:24 AM
Oil seems a popular hedge against the US$?

arco
15-11-2008, 12:31 PM
You can get a lot of Zimbabwean dollars for your $US



http://www.boncherry.com/blog/2008/10/26/global-crisis-this-is-the-real-crisis/

peat
17-11-2008, 08:59 PM
somthing could be starting.... USD/CAD in the lead +45
added another little USD/CHF short earlier this evening

peat
17-11-2008, 09:33 PM
got a quick 97 tonite off this USD/CAD spastic gartley

stevesnz
18-11-2008, 08:11 PM
Something that you can barter for one of these

peat
25-11-2008, 07:09 AM
I've started shorting in a very minor way the USD/CHF already.
10 days of pain with this trade idea.... starting to come right now...hoping for more yet.

peat
26-11-2008, 07:48 AM
Still holding 2 core positions now which average out to +130 , and sold more into the rally last night at 1.2020. By this morning the +100 target on that had been taken.

arco
26-11-2008, 12:20 PM
.
How about you manage my account Peat :)

peat
26-11-2008, 01:17 PM
lol
one of those core positions was -385 at one stage. just as well I trade small.

Aussie
09-12-2008, 07:14 PM
Can a forex guy out there help me? What is the best currency pair to be in if the USD collapses over the next 12 months? One that leverage can be used for unlike Yuan. JPY, SFr, .........?

How about gold currency . . . It's risen in value by about 50% in NZD terms over the past 12 months. Is there any other asset that can top that?

AMR
09-12-2008, 07:42 PM
Aussie dollars looking like its building for a leg up. The RBA also defends the 60c mark (rumoured), so it could be a safe currency when the USD falls?

Dr_Who
17-12-2008, 02:56 PM
USD very weak!

neopole
17-12-2008, 05:00 PM
talking about Zimbabwean dollars...........
if / when mugabe gets kicked out voted out or dies of old age,
somewhere between 3 months and 10 years...........
the zimbabwean currency will skyrocket upwards.
the people and the economy may be ravished,
the the land is still the most fertile in africa.

a real change of leadership will see the growth story of the century in this saga.

trouble is........ with inflation in the millions, when do you take up the punt on its currency or its desimated business?

sort of like russia 10 years ago.........
the right timing will be very rewarding.

Aussie
17-12-2008, 11:40 PM
I'm sure we are all waiting with bated breath for the Fed decision later today. The Fed is projected to lower rates to .5% from the current 1% on the fed funds rate. WHO CARES! The Fed started lowering rates about 16 months ago, I wrote at the time that lowering rates would not "make bad loans, good ones". In hindsight, lowering rates has done very little other than the short term "psychological boosts" they provided for the equity markets only to fade away quickly. But here we are at the doorstep of ZERO percent and the Fed has no ammo left. It took about a year and a half but now for all the world to see, THE FED HAS NO TEETH! They have gotten no traction whatsoever and in the meantime their balance sheet has turned into a monster sized cesspool of bad debts.

Let's go back to mid July, remember the "rally call" was for a stronger Dollar because the Fed was going to begin raising rates by the third or fourth quarter? Well, the 3rd and 4th quarters have come and gone and the Fed has not, and cannot raise rates. Back in the summer we were supposed to "skirt" recession, begin a recovery, and have a stronger Dollar because of the rate differentials with the rest of the world. All we got was a stronger Dollar because of the demand to pay off $ Dollar debt. Now, even the short covering rally is in the rear view mirror and the Dollar is returning to its death spiral.

Now we enter into "the moment of truth and consequences" phase. The Fed will have no wiggle room as far as rates are concerned, they have lost credibility on a global scale, and only have one gun left with bullets. They can print! This is all they can do as they have backed themselves into the corner, the Fed has spun yarn from here to eternity regarding the banks, the economy, etc.. It has all turned out to be wrong, they clearly were "buying time" for a miracle to occur. Well, when it comes to "math" which is really what economics, finance, and banking all boil down to, THERE ARE NO MIRACLES! Math is math, reality is reality, and facts are facts. The smoke, the mirrors, the misdirection, all the lies, all the frauds, are all in the process of being discovered because the "consequences" are surely beginning to make themselves felt.

This is it, the Fed and the Treasury are in the process of losing the Dollar. The Dollar has now lost 7-8% in a very short time, it is clear that the top is in. Now we will get to see many naked truths. When history is written, the American miracle that was, took a U turn in the 70's. The Dollar as it turns out has been a Ponzi scheme, the stock and real estate markets turned out to be bubbles that grew through debts based upon debts, nothing was as it appeared to be. Mark my words, the amount of fraud still present in the system will dwarf what has turned up so far. The prosperity was false and the U.S. will be treated as any and all "debtor nations" have in the past, they will be shut off from the credit markets, goods markets, geopolitical decisions and on and on. When someone commits a fraud, do you do further business with them? No you do not, you isolate and shun them for your own good.

We will be left with one lasting legacy, HYPERINFLATION. The consequences of building a banking system and economy on a currency that is intrinsically worthless is hyperinflation. We have traded "IOU nothings" for years now but I sense that here and now in this current reversal of the Dollar, the jig is up. Common sense will prevail, when something has no value you do not to accept it in payment for something real, be it goods or services. Gold and Silver have gone into hiding and are in strong hands because investors smell the same thing I do, the U.S. currency is in the process of breaking down. The Dollar scam is over, it's sad, but it is the truth.

Aussie
18-12-2008, 07:37 PM
We have begun the end game when it comes to the Dollar and the world monetary system. Yesterday's rate cut to zero % is beyond farce for any central bank, this is third world stuff that they are adopting as official policy. The flight from the Dollar is continuing again today with close to a 10% drop in value from little over a week ago. This is BIG monetary stuff, in fact the biggest in history. At different points in history England, France, and Spain all held sway over the worlds' monetary system by virtue of having the largest hoard of Gold and thus the strongest currency. This was also true for the U.S. from 1944-1971. Since 1971 the Dollar has been the reserve currency but it truly was only a pretender.

Now that "quantitative easing" has become the new buzz word, the Dollar can in no way compete against anything real or even remotely scarce. The Fed and Treasury have told us all that they will continue to provide more money and credit until "deflation" is no longer a potential problem, this is clearly flawed. First off, with the amount of derivatives and credit outstanding [and blowing up on a daily basis] they cannot possibly create credit faster than it is collapsing. This IS deflation! BUT, they are intent on battling the "deflation monster" so print print print they will. Now for the next part that is only now just beginning to dawn on people, all this new money and credit absolutely DWARFS "real stuff".

If you add together all the commodities worldwide currently available for delivery, you don't even get a pimple on an elephant's ass as compared to the amount of "paper" that's been created over just the last 3 months to fill all of the "black holes". This fake stuff has been piling in as fast as possible into Treasury securities now yielding less than 3%. Once it begins to dawn on investors that getting a sub 3% yield for 30 years in a currency that can drop 10% in a week, then it becomes "Houston we have a problem". The Treasury market has, like all other "bubble" markets before it, become STUPID. It is now set up for the biggest bloodbath in history.

The solvency of the U.S. Treasury and Fed will surely be questioned soon, and the recklessness of these two entities will be case studies for the next 100 years or more. Oh yeah, the best part is Paulson and Bernanke telling us they will "drain the excess liquidity" once the economy begins to turn around. Just a couple of questions for them; and when did you say the turnaround will be?, will the Treasury or Fed still be solvent by then?. I really don't think they have a clue.

Regards, Bill H.

http://www.lemetropolecafe.com

ananda77
19-12-2008, 04:37 PM
...would not count out the US-currency just yet and think, it is undergoing a substantial correction rather then the final Good Bye, short term that is

...there is still a lot of deleveraging to come with more hedge funds going to bite the dust

...and as far as I understand the monetary stance of the FED, if they succeed in re-inflating the economy (it did not happen that way in Japan), how can they keep inflation in control (mopping up the trash) when things are starting to bubble again, when they are paying a paltry 2.25% on borrowing now???...or is it that the economy will stay in a prolonged slump??

Kind Regards

Aussie
20-12-2008, 10:14 PM
. . . if they succeed in re-inflating the economy (it did not happen that way in Japan), how can they keep inflation in control (mopping up the trash) when things are starting to bubble again, when they are paying a paltry 2.25% on borrowing now?

It's mostly a lot less than that . . . The 3 month T-Bill is a fraction above 0%. The 6 month is not far off it . . . hell the 30 year is less than 2.5%. Who in their right mind would tie up their money for 30 years at that rate, pay taxes and then factor 30 years worth of inflation. What a joke. The Treasury market is the biggest bubble yet and when it pops it will truly be the shot that is heard around the world. Americans will suddenly awake to a bank holiday and their very own Argentina.

But it's not just the US economy that needs re-inflating, it's the entire world economy. This has NEVER been tried before like this. What makes anyone believe that Bernake & Co have any clue as what they are doing. All I can say . . . Got Gold?

ananda77
21-12-2008, 08:53 AM
Hi Aussie,

The design is called: 'The Great Depression II' and GOLD IS GOOD

...short US treasuries in New Zealand?? -how-

Kind Regards

arco
21-12-2008, 09:42 AM
Maybe we could be seeing the next round of mortgage related problems when these similar style US loans start defaulting.

Interesting view, lets hope its not as bad as they make it out to be - but it looks pretty bad.

Huge Crash Coming
http://au.youtube.com/watch?v=shYJ_KkbzWg

arco
21-12-2008, 09:51 AM
Sir Richard Branson has delivered a characteristically blunt verdict on the state of the economy, describing it as "f****d".
But Britain's cheeriest billionaire said that he hoped that the downturn might only last a couple of years instead of becoming a repeat of the Great Depression of the 1930s as so many economists now fear.
The Virgin boss was asked his views on the economy by Five News. “I was going to say, it’s f*****, but I think I had better not have said that,” he replied.
He added: “I think it is a terrible, terrible mess, which has been brought upon us by some very irresponsible people in the banking community, some very lax regulation and we are going to have to work hard to dig ourselves out of it.
Related Links




UK jobless claimants break one million barrier (http://www.timesonline.co.uk/tol/business/economics/article5357259.ece)



Fed stuns the world with rate cut to 'virtually zero' (http://www.timesonline.co.uk/tol/business/economics/article5354905.ece)



Fed throws out the rulebook (http://www.timesonline.co.uk/tol/business/markets/article5355258.ece)




“I think governments have moved quickly and hopefully it will be a two-year, two or three-year nightmare not a 1929 nightmare. But we are all going to have to work very, very hard to get things back on the even level.”
A spokesman for Sir Richard said: “He’s only saying what everyone’s thinking, in a more forthright way. He was making the point that the economy is in dire straits. It’s nothing that hasn’t been said every day for the last three months.”



http://www.timesonline.co.uk/tol/news/uk/article5358019.ece

ananda77
21-12-2008, 02:38 PM
... Who in their right mind would tie up their money for 30 years at that rate, pay taxes and then factor 30 years worth of inflation. What a joke. The Treasury market is the biggest bubble yet and when it pops it will truly be the shot that is heard around the world. Americans will suddenly awake to a bank holiday and their very own Argentina.

...well it is those people, who expect Depression II, as the bond market has factored in a slump of around 5 years and in case of a bank holiday, the best way to park cash is US treasuries



What makes anyone believe that Bernake & Co have any clue as what they are doing. All I can say . . . Got Gold?

...what the FED is trying to achieve of course is to discourage investors to buy treasuries or money market funds, but put their money somewhere else, like bank deposits and equities for example, just the opposite of what is happening right now;

...and with interest rates at 0% short- and approaching a lot lower levels long term, credit will be a lot cheaper in the mortgage sector; this should revive the dead securitization market; together with quantitative easing, a wave of liquidity will swamp the market and away goes a new and bigger asset bubble...

...there are a lot of unknowns within this FED strategy, but as the old saying goes:
DO NOT FIGHT THE FED (and personally I would not);

The BEST HEDGE under the current circumstances is definitely holding physical gold as long one can dide it out of reach from the greedy tentacles of utterly corrupt governments;

Kind Regards

Aussie
22-12-2008, 11:24 AM
...short US treasuries in New Zealand?? -how

ananda77, I wasn't suggesting that as a strategy just offering some info but if you are interested I'm sure there is a fund or an ETF somewhere . . . this is a related article.

Why Now Is The Time To Short US Treasury Bonds?

http://www.contrarianprofits.com/articles/why-now-is-the-time-to-short-us-treasury-bonds/10276

Cheers

Aussie
22-12-2008, 11:47 AM
...what the FED is trying to achieve of course is to discourage investors to buy treasuries or money market funds, but put their money somewhere else, like bank deposits and equities for example, just the opposite of what is happening right now

The US Treasury market is so unbelievably huge and it is the last great bubble. It is the only place that governments and corporations feel that there is any safety. They can't/won't park their idle $Billions of dollars into money markets accounts with a banking institution that could go broke. They are turning to the US government as a final source of safety.

Imagine what will happen when they discover that the US government really is insolvent and their measly "interest" is really just more worthless printed paper. The rush into tangible assets, especially gold and silver will be absolutely breath taking.

Here a brief commentary from this week's The Privateer which is very interesting. If you are familiar with the inverted debt pyramid it's interesting to note that we are now about one step away from the apex - which is of course - gold.

THE US DOLLAR IS NOT WORTH SAVING

The US Federal Reserve has made it - to ZERO. It has no further place to
go after cutting official interest rates to record lows of 0.00 - 0.25 percent.
Endless US Credit - At NO Cost??

From here on, monetary absurdities abound. The US Federal Reserve
Note as issued into external circulation is on the balance sheet of the Fed
as a liability - a debt. Anybody who accepts it has de facto given credit to
the issuer of the note, they have made a loan to the Fed. Americans, of
course, have no choice here because they must accept the Fed Note. It has
been made legal tender inside the US. Foreigners, though, are under no
such legal obligation. It shows. The US Dollar (aka the Fed Note) has
dived precipitously on the currency markets.

The post July 2008 US Dollar rally is over - the USDX (US Dollar Index)
has given back half its gains. The Fed is now strongly hinting that it will
soon issue its own debts! This is absurd. The Fed is proposing to issue its
own bonds, notes, etc which will pay a rate of interest. The interest will
be paid in Fed Notes, non-interest paying debt paper which the Fed can
create in unlimited quantities.

That amounts to the Fed paying interest payments on its future debts by
printing the non-interest paying Fed Notes required. Economically, this
makes the US Dollar (aka the Fed Note) not worth saving, buying or even
holding. If the issuer of a debt can service the debt, and later redeem it -
repay the principal amount of the loan - with its own non-interest paying
notes, then no repayment has been made at all. One debt - the non-interest
rate bearing Fed Note - will be used to repay the other. To repay a debt
with another debt is fraud. That is what the Fed is proposing to do.

Ultimately what they are trying to do is keep people INSIDE the banking system - period. Just one of the great reasons to own gold is that it is always money that exists OUTSIDE of the banking system so no matter what happens to the international finance system whether it's banking collapse or currency devaluation - if people own gold they are protected. The money masters are desperate to keep people out of alternative stores of value like gold, silver and commodities. In that regard it is a giant ponzi scheme.


Permission hereby given to
quote short excerpts - provided
full attribution is given:
© 2008 - The Privateer
http://www.the-privateer.com
capt@the-privateer.com
(reproduced with permission)

ananda77
22-12-2008, 12:53 PM
ananda77, I wasn't suggesting that as a strategy just offering some info but if you are interested I'm sure there is a fund or an ETF somewhere . . . this is a related article.

Why Now Is The Time To Short US Treasury Bonds?

http://www.contrarianprofits.com/articles/why-now-is-the-time-to-short-us-treasury-bonds/10276

Cheers

...no problem Aussie; at this stage, -NOT SHORTING JUST YET- only reading the market:

-early in December, bond traders tried to drive down bond prices, but after Bernanke announced the FED's intention (5-12-08) to buy bonds to drive down yields to stimulate the economy, bond prices took off again;
-the Fed's intervention in the bond market is the ONLY factor currently driving bond prices up, to extent the bond bubble to even more extreme limits;
-basically, getting ready to jump to short the bond market at the earliest indication of a divergence indicating a turn around...

-Rydex Inverse Government Long Bond Strategy - C Class (RYJCX)...this is one of them;

Kind Regards

arco
22-12-2008, 01:13 PM
Quite an interesting table...................
World Interest Rates Table

[/URL]Interest rates in Brazil and Egypt have actually gone up (to 13.75 and 11% respectively)

But Iceland looks to be the current winner - was 12% NOW 18%


[URL]http://www.fxstreet.com/fundamental/interest-rates-table/ (http://www.fxstreet.com/fundamental/interest-rates-table/)

ananda77
22-12-2008, 07:16 PM
-But the Fed's argument doesn't stack up. US inflation – as measured by the pre-Clinton methodology, before the politicians started messing with the numbers – stands at 4.5pc.

Deflation is being used as an excuse for the US authorities to print money like crazy, attempting to bury their mistakes and bail out their Wall Street friends.

This reality is crystal-clear. The fact other economists aren't shouting it from the roof tops is both an outrage and a farce.

US Fed's foolhardiness is of more concern than deflation
By Liam Halligan
Last Updated: 10:08AM GMT 21 Dec 2008
http://www.telegraph.co.uk/finance/comment/liamhalligan/3870090/US-Feds-foolhardiness-is-of-more-concern-than-deflation.html

The Madoff Economy
By PAUL KRUGMAN
Published: December 19, 2008
http://www.nytimes.com/2008/12/19/opinion/19krugman.html?em

Kind Regards

Aussie
23-12-2008, 06:54 PM
This reality is crystal-clear. The fact other economists aren't shouting it from the roof tops is both an outrage and a farce . . .

What happens there affects us here. Has anyone else been wondering where is the outrage from Americans . . ? Eighty four year old legendary CEO Lee Iacocca who brought Chrysler back from bankruptcy in 1979 is pissed off . . .

20/12/08
Lee Iacocca writes:

Am I the only guy in this country who’s fed up with what’s happening? Where the hell is our outrage? We should be screaming bloody murder. We’ve got a gang of clueless bozos steering our ship of state right over a cliff, we’ve got corporate gangsters stealing us blind, and we can’t even clean up after a hurricane much less build a hybrid car. But instead of getting mad, everyone sits around and nods their heads when the politicians say, “Stay the course.”

Stay the course? You’ve got to be kidding. This is America, not the damned Titanic. I’ll give you a sound bite: Throw the bums out!

You might think I’m getting senile, that I’ve gone off my rocker, and maybe I have. But someone has to speak up. I hardly recognize this country anymore.

The most famous business leaders are not the innovators but the guys in handcuffs. While we’re fiddling in Iraq , the Middle East is burning and nobody seems to know what to do. And the press is waving ‘pom-poms’ instead of asking hard questions. That’s not the promise of the ‘ America ‘ my parents and yours traveled across the ocean for. I’ve had enough. How about you?

I’ll go a step further. You can’t call yourself a patriot if you’re not outraged. This is a fight I’m ready and willing to have.

The Biggest ‘C’ is Crisis!

Leaders are made, not born. Leadership is forged in times of crisis. It’s easy to sit there with your feet up on the desk and talk theory. Or send someone else’s kids off to war when you’ve never seen a battlefield yourself.

On September 11, 2001, we needed a strong leader more than any other time in our history. We needed a steady hand to guide us out of the ashes. A Hell of a Mess. So here’s where we stand. We’re immersed in a bloody war with no plan for winning and no plan for leaving. We’re running the biggest deficit in the history of the country. We’re losing the manufacturing edge to Asia , while our once-great Companies are all moving offshore. We’re getting slaughtered by health care costs. Gas prices are skyrocketing, and nobody in power has a coherent energy policy. Our schools are the worst in the world. Our borders are like sieves. The middle class is being squeezed every which way.

But when you look around, you’ve got to ask: ‘Where have all the leaders gone?’ Where are the curious, creative communicators? Where are the people of character, courage, conviction, omnipotence, and common sense? I may be a sucker for alliteration, but I hope you get the point.

Name me a leader who has a better idea for homeland security than making us take off our shoes in airports and throw away our shampoo? We’ve spent billions of dollars building a huge new bureaucracy, and all we know how to do is react to things that have already happened.

Name me one leader who emerged from the crisis of Hurricane Katrina. Congress has yet to spend a single day evaluating the response to the hurricane, or demanding accountability for the decisions that were made in the crucial hours after the storm. Everyone’s hunkering down, fingers crossed, hoping it doesn’t happen again. Well guess what people? We are having more floods right now. What are we doing to help these people out? Now, that’s just crazy. Storms happen. Deal with it. Make a plan. Figure out what you’re going to do the next time. Why are we allowing people to build in flood plains anyway? If you build in a flood area, expect to be flooded and deal with it. Don’t expect the Government to bail you out.

Name me an industry leader who is thinking creatively about how we can restore our competitive edge in manufacturing. All they seem to be thinking now-days is getting themselves bigger salaries and bonuses. Who would have believed that there could ever be a time when ‘The Big Three’ referred to Japanese car companies? How did this happen, and more important, what are we going to do about it? Likely nothing!
Name me a government leader who can articulate a plan for paying down the debt, or solving the energy crisis, or managing the health care problem. The silence is deafening. But these are the crises that are eating away at our country and milking the middle class dry. I have news for the gang in Congress and the Senate. We didn’t elect you to sit on your asses and do nothing and remain silent while our democracy is being hijacked and our greatness is being replaced with mediocrity. What is everybody so afraid of? That some bonehead on Fox News will call them a name? Give me a break. Why don’t you guys show some spine for a change? I honestly don’t think any of you have one!

Had Enough?

Hey, I’m not trying to be the voice of gloom and doom here. I’m trying to light a fire. I’m speaking out because I have hope; I believe in America … In my lifetime I’ve had the privilege of living through some of America’s greatest moments I’ve also experienced some of our worst crises: the ‘Great Depression’, ‘World War II’, the ‘Korean War’, the ‘Kennedy Assassination’, the ‘Vietnam War’, the 1970s oil crisis, and the struggles of recent years culminating with 9/11. If I’ve learned one thing, it’s this:

‘You don’t get anywhere by standing on the sidelines waiting for somebody else to take action. Whether it’s building a better car or building a better future for our children, we all have a role to play. That’s the challenge I’m raising in this book. It’s a call to ‘Action’ for people who, like me, believe in America . It’s not too late, but it’s getting pretty close. So let’s shake off the crap and go to work. Let’s tell ‘em all we’ve had ‘enough.’

ananda77
26-12-2008, 04:50 PM
-US$ short/Gold long: The Best Currency Pair To Counter The US$ Crash in 2009-

...the only way to counter the difficult US-position to keep financing a massive current account deficit without being able to offer anywhere near competitive yield returns or additional capital gains in the treasury bond market is to use a currency response, Rudiger Dornbush (1976) described as “exchange rate overshooting”

...according to this model and based on the Fed commitment to keep short term interest rates low (even move further out along the curve (2 year/5 year/10 year/30 year), is to drive the US currency down to extremely depressed levels and as a result, creating expectations that the US$ will appreciate over time...

...the gold response in this instance should be clear but such a response also creates a timing point for shorting US treasuries...

!!Be Aware though:

-the above outline assumes that the Fed will be successful in re-inflating its way out of the down price spiral;
-however, there are big risks and, the bond market is the foremost warning sign, that the Fed efforts will NOT be able to stop the down price spiral; consequently, if depression digs deeper and prices will continue to free fall, including the price of gold, the US$ will enter into a major bull market;

Kind Regards

Dr_Who
26-12-2008, 07:54 PM
Whatss the best way to short $US? Short $US against $AU or EUR?

ananda77
26-12-2008, 08:04 PM
Whatss the best way to short $US? Short $US against $AU or EUR?

Dr.Who:

!!Be Aware though:

-the previous outline assumes that the Fed will be successful in re-inflating its way out of the down price spiral;
-however, there are big risks and, the bond market is the foremost warning sign, that the Fed efforts will NOT be able to stop the down price spiral; consequently, if depression digs deeper and prices will continue to free fall, including the price of gold, the US$ will enter into a major bull market;

Kind Regards

arco
26-12-2008, 09:04 PM
Whatss the best way to short $US? Short $US against $AU or EUR?

Jack Crooks is calling the US dollar bullish now.

I cant find the article at the moment but you may be able to search Google for it.

ananda77
26-12-2008, 11:32 PM
Friday, 12 December 2008
Deflation has become inevitable
http://londonbanker.blogspot.com/2008/12/deflation-has-become-inevitable.html

Kind Regards

arco
27-12-2008, 09:37 AM
The beginning of the end of paper money?

Welcome to Free Lakota Bank

The Free Lakota Bank is the world's first non-reserve, non-fractional bank that issues, accepts for deposit, and circulates REAL money...silver and gold. All of our deposits are liquid, meaning they can be withdrawn at any time in minted rounds.

http://www.freelakotabank.com/

Aussie
27-12-2008, 11:46 AM
Dr.Who:

!!Be Aware though:

-the previous outline assumes that the Fed will be successful in re-inflating its way out of the down price spiral;
-however, there are big risks and, the bond market is the foremost warning sign, that the Fed efforts will NOT be able to stop the down price spiral; consequently, if depression digs deeper and prices will continue to free fall, including the price of gold, the US$ will enter into a major bull market;

Kind Regards

Jens O Parssons in the Dying of Money: Lessons of the Great German & American Inflations (Wellspring Press, 1974, p.71) best describes the initial ignorance, early warning signs and final consequences of inflation.

"Everyone loves an early inflation. The effects at the beginning of inflation are all good. There is steepened money expansion, rising government spending, increased government budget deficits, booming stock markets, and spectacular general prosperity, all in the midst of temporarily stable prices. Everyone benefits, and no one pays. That is the early part of the cycle. In the later inflation, on the other hand, the effects are all bad. The government may steadily increase the money inflation in order to stave off the latter effects, but the latter effects patiently wait. In the terminal inflation, there is faltering prosperity, tightness of money, falling stock markets, rising taxes, still larger government deficits, and still roaring money expansion, now accompanied by soaring prices and ineffectiveness of all traditional remedies. Everyone pays and no one benefits. That is the full cycle of every inflation"

For the many deflationists out there take particular note of the Parssons comments re faltering prosperity and tightness of money. This is a normal phase of inflation. Using the tsunami parallel first the ocean disappears (draw back) and its all sand for miles in front of you then out of nowhere appears a giant wall of water 10 stories high.

Right now most people are standing on the beach saying "where has all the water (cash) gone?" Those well studied on the patterns of tsunamis understand what this signals and have moved their families to higher ground by protecting themselves with physical gold and silver.

ananda77
27-12-2008, 01:25 PM
Friday, 12 December 2008
Deflation has become inevitable
http://londonbanker.blogspot.com/2008/12/deflation-has-become-inevitable.html

Kind Regards

Hi Aussie,

...my mind is made up about the strategies necessary to prosper further in 2009/beyond and:

-although the Fed will continue to use its magic box of tricks to continue the pumping of massive amounts of $$$$ into the system (these tricks will provide the windfall opportunities during 2009), this money-wave will hit an even more massive money-wall of debt; until this debt is largely purged from the system, deflation, inevitably, will run its course; and remember, $$$$ are the currency needed to pay down the debt and can not purchase gold...

...still very bullish on gold, but more for reasons like:

-its an asset class outside the ****ed banking system
-I have NO TRUST in the present political and economical system
-it is almost assured that gold will fare a lot better than any other asset class available under present circumstances

Kind Regards

Dr_Who
27-12-2008, 06:30 PM
Thanks for the great articles guys, keep them coming. I have grave concerns for the global economy. The US is dragging us down a black hole. How long will the world keep bailing out the US?

My take is that the next crash will take us into depression, assuming we come out of this recession. If we cant dig ourselves out of this recession than it will go into a depression.

Aussie
28-12-2008, 10:47 AM
Hi Aussie,

...my mind is made up about the strategies necessary to prosper further in 2009/beyond and:

-although the Fed will continue to use its magic box of tricks to continue the pumping of massive amounts of $$$$ into the system (these tricks will provide the windfall opportunities during 2009), this money-wave will hit an even more massive money-wall of debt; until this debt is largely purged from the system, deflation, inevitably, will run its course; and remember, $$$$ are the currency needed to pay down the debt and can not purchase gold...

...still very bullish on gold, but more for reasons like:

-its an asset class outside the ****ed banking system
-I have NO TRUST in the present political and economical system
-it is almost assured that gold will fare a lot better than any other asset class available under present circumstances

Kind Regards

All good reasons and you are right, opportunities will abound in some places as although the banks are not lending/spending at the moment, that may change next year and once the magic multiplier of fractional reserve banking does it's trick, the wave of inflation will be huge. I think there will be some giant bear market rallies in the US and other markets. Probably here and in Australia - follow on rallies I suppose, but they will ultimately prove to be short with huge declines as the world economy gets structurally weaker and weaker.

However, against this there is an enormous amount of derivative and mortgage hell to get through with the US "ALT-A" and "Option-ARM" resets starting next year, not mention commercial real-estate, auto loan and credit card failures. There are $100's of Trillions of "off balance sheet" interest rate derivatives held by the likes of JP Morgan, Chase and BofA. If things turn in the bond market and interest rates start to rise, these things are going to explode big-time.

Everywhere you look there are financial land-mines. A currency crisis is coming . . . my advice to anyone who does not yet have physical gold in their possession, is get some NOW while you can because even right now it is very difficult come by and in the near future for all practical and economic purposes it will be simply unavailable. Period.

Dr_Who
28-12-2008, 08:06 PM
The bond market is the next big bubble to burst. Bernanke and Co will make sure of that.

arco
28-12-2008, 09:06 PM
http://research.stlouisfed.org/

A mine of useful information.

The Research Division's goal is to promote quality economic research and contribute to economic policy discussions while expanding the frontier of economic knowledge around the globe in the areas of money and banking, macroeconomics, and international and regional economics.

peat
29-12-2008, 07:13 AM
http://research.stlouisfed.org/

A mine of useful information.


some of the graphs of monetary figures are very interesting! m2 climbing steeply and the monetary base itself actually doubling since Sept.

ananda77
29-12-2008, 08:58 PM
Inflation Targeting instead of Income Targeting

Inflation targeting does not work if economic turmoil is caused by the bursting of a debt bubble created by monetary inflation, which could only be cured by allowing the bubble burst to liquidate the misallocated investment made during the bubble boom. The debt bubble burst has left the US with a national insolvency problem of insufficient income to support bloated asset price levels. US ideology of market fixation normally limits the solution to come only from market corrections. However, when market correction causes systemic market failure, market ideology is cast aside to make room for practical emergency measures to revive a market system hit by cardiac arrest.

Still, under this market ideology, government assistance is not allowed to be applied directly to distressed individuals who are innocent victims of a dysfunctional debt regime to help them increase their income to transition to a new viable financial regime in a new economic system. It can only be applied to distress institutions deemed too big to fail. Yet nationalization of insolvent private institutions facing weak demand so that they can continue to survive massive losses in a market economy will only bankrupt the entire nation, bringing down all citizens with it.

What the US economy needs in this crisis is not inflation targeting but income targeting. Let’s hope the new Obama administration has the sense to implement immediately a massive income policy when it hits the ground running on January 20, 2009.
http://henryckliu.com/page175.html

Obama aides stress long-term goals
Senior economic adviser warns of 10% unemployment by end of 2009
By Michael Kitchen, MarketWatch

Summers repeated Obama's plans for government works spending, including funds for infrastructure upgrades and environmental technology, but he played down the importance of direct stimulus to consumers.
"Some argue that instead of attempting to both create jobs and invest in our long-run growth, we should focus exclusively on short-term policies that generate consumer spending," he said. "But that approach led to some of the challenges we face today -- and it is that approach that we must reject if we are going to strengthen our middle class and our economy over the long run."
http://www.marketwatch.com/news/story/Obama-aides-stress-long-term/story.aspx?guid={0CA3917B-23A2-449C-9DD9-6A11C723C13A}

-Moody's view of end market performance for US diversified manufacturers in 2009:

Aussie
30-12-2008, 03:30 PM
Interesting opinion piece by Bill Holter and he is not the only commentator expressing the same concerns - Bill Buckler at "The Privateer" has been warning of a USD collapse for some time now. These guys were right about the mortgage and derivatives mess, I have no doubt they will be right about a US currency crisis as well.

Anyone who believes that the US can continue to borrow unlimited amounts of capital and savings from the rest of the world is in denial of the current situation and is ignoring past currency history at their peril.

We in NZ should be especially concerned because I think the RBNZ has far more of those paper "USD Reserves" than physical gold.

What will that mean for the international value of the NZD if the reserve asset that underpins it either crashes or is significantly devalued? We now live in a time where NO paper currency is backed by or is convertible into gold, so when the panic comes - there will be no escape for those who were unprepared.

Cheers :D

Transfer of wealth

Things are about to change very quickly now. In Sept. I wrote "Fannie and Freddie in the lap of the U.S. Treasury"

http://www.forsoundmoney.com/2008/09/07/fannie-and-freddie-in-the-lap-of-the-us-treasury/#more-180

we are now approximately 4 months past this watershed event, and I believe we are now at the point where the questions will begin. These questions will examine the solvency of the U.S. Treasury and Federal Reserve, I do not believe either will receive a passing grade whether the Plunge Protection Team can hold things together up until President Bush leaves office is a moot point, the "plunge" is coming no matter what is done.

I believe that very shortly the rest of the world will begin to abstain from Treasury auctions and continue selling Dollars, only now the pace will begin to quicken and become frantic as in a PANIC. The questions will arise as to how safe of a credit U.S. paper is, math questions such as the impossibility of the U.S. ever paying back without printing and borrowing more, and the obvious question, that of default and bankruptcy. The biggest questions of all will be "how do I get paid?", "what do I get for settlement"? The current answer is YOU DON'T and NOTHING! This must change. These are very simple questions that even a child would ask but have been repressed for years now to hide and obscure the Ponzi scheme. Surely the world knows that they have been run through a Ponzi scheme but they want to get out without exposing it, an impossible task indeed.

For the last 60 years or so, Americans lived the "good life" with less and less work and production with each passing generation. A good deal if you lived through it, but then the bill must be paid. This "bill" will be a shocker to all who think that life will go forward and "things are bound to get better". They will not, almost every facet of life will change drastically and the standards of living will decline no matter where in the world you are located. It has become clear that the U.S. must begin to reign in military spending and thus shrink it's global presence on foreign soils.

History has shown that past booms that turned to bust invariably ended up in war, I hope this time will be different because now their are too many competing nations with nuclear capabilities. Because the U.S. financial position has become public and common knowledge, the risks of tensions flaring up will intensify even without Washington stirring up the pot, U.S. weakness or collapse will spark all sorts of aggressive movements and posturing.

The IMF and Council on Foreign Relations have both recently forecast the rising risk of civil unrest worldwide, they have run the numbers and know that the "Dollar hegemony" is collapsing and a monetary change is in the wind. Washington knows this too and have recalled some 40,000 troops trained in "crowd control". It is always bad enough on a country when they are forced to devalue or discontinue a currency, however, the current problems reach the four corners of the Earth and no sovereign will pass unscathed. The collapse of a currency or even a "reserve currency" is nothing new, it has happened many times before. The key to survival has always been whether or not you sought shelter and exited the busted currency in time to preserve your wealth, however, in the past 37 years the game has been one of "musical currencies". Today that game is over as all currencies are "busted" because their reserves being Dollars, are "busted".

Once every 50 to 100 years is it wise to have ALL your assets in either Gold or Silver, this is that time! Physical metal has risen between 10-15% in Dollar terms for 2008, a fantastic return while all else was crumbling. Metal itself has become very, very scarce, and for good reason, smart money has already intellectually arrived at the end game, they are exiting the Dollar system and seeking shelter in the only historically tried and true safehavens. The coming devaluation will dissolve

Treasury values and the last competing safe haven with metal will dry up and blow away, Gold and Silver will be the "last man standing" and absorb absolutely massive amounts of global capital. This is it, this coming year has the potential and probability to have THE largest revaluation and "transfer of wealth" in history. It is very simple actually, the biggest Ponzi scheme in history has been played on the world for at least half of everyone's lifetime, do you not think that when this sham collapses, fortunes will be destroyed and fortunes will be made? This wealth transfer will be FOR ALL THE MARBLES, either wealth is transferred away from you or away toward you, either you stay in the system or you exit it. Very simple but very important choices, these choices will remain a legacy to your future generations, either good or bad.

Regards,

Bill Holter C/O Le Metropole Cafe

ananda77
30-12-2008, 06:16 PM
...Surely the world knows that they have been run through a Ponzi scheme but they want to get out without exposing it, an impossible task indeed.
source: http://www.forsoundmoney.com/2008/09...sury/#more-180

...it needs to be found out indeed, if it will be an impossible task because:

-the Brigands are about to raid the Peons again and still it seems, the Peons still haven't got a clue!!!???!!! and this is how its done this time around: see attached graphic

...the problem for the US is that CHINA PEONS, RUSSIA PEONS, GERMANY PEONS, FRANCE PEONS (just to name the most influential) will not tolerate to get ****ed again...

...consequently, 'BE AWARE' how you invest your resources in 2009...

Aussie
30-12-2008, 07:22 PM
...it needs to be found out indeed, if it will be an impossible task because:

-the Brigands are about to raid the Peons again and still it seems, the Peons still haven't got a clue!!!???!!! and this is how its done this time around: see attached graphic

...the problem for the US is that CHINA PEONS, RUSSIA PEONS, GERMANY PEONS, FRANCE PEONS (just to name the most influential) will not tolerate to get ****ed again...

...consequently, 'BE AWARE' how you invest your resources in 2009...

All good points ananda77.

Where do people get their news from . . .

Reuters, AP, ABC, NBC, CBS, FOX, NYT, WP etc . . . why do we get the same lame, toothless financial news and disinformation reprinted across the globe? People constantly being told the bottom is in . . . the masters herding the masses back into the stock market only to be slaughtered again. Their savings and retirement accounts picked over one more time . . .

Could it be that the same interests that control international banking, also control much of the international media through large shareholding blocks under different entities that were acquired long ago?

Aussie
31-12-2008, 12:39 PM
The ultimate Pyramid Scheme . . .

1123

arco
31-12-2008, 03:14 PM
.

Everybody is saying buy gold, which probably means we should be selling gold. :D

Currently a Doji on the weekly chart- could that lead to an Evening Star?

Ichimoku Kumo on the weekly is still bearish with current action stuck in the Kumo (and on a DT line). In fact, two downtrend lines need breaking.

arco
31-12-2008, 04:07 PM
Spotted this posted on another forum.

Market Update for December
Market Condition: Volatile Bear

by
Van K. Tharp, Ph.D.


............................My advice, once again, is that secular bear markets usually end when the PE ratios of the S&P 500 hit around 6-8, for example, 1932, 1942, and 1982. We’re in the worst crisis since the Great Depression and perhaps in one that is worse. Are you willing to risk the PE ratio of the S&P 500 dropping to single digits? My advice, get in the market when prices are above the 200-day moving average and get out when they are below (or at least stay out until our market type turns bullish for at least two weeks). That would have kept you out of this market throughout 2008.

ananda77
31-12-2008, 05:04 PM
.

Everybody is saying buy gold, which probably means we should be selling gold. :D

Currently a Doji on the weekly chart- could that lead to an Evening Star?

Ichimoku Kumo on the weekly is still bearish with current action stuck in the Kumo (and on a DT line). In fact, two downtrend lines need breaking.

...Gold DOWN >>>wonderful<<< US$600- 500- 400- bring it on, arco, happy to trade TRASH for CASH to Money Nirvana...

ananda77
31-12-2008, 05:07 PM
Spotted this posted on another forum.

Market Update for December
Market Condition: Volatile Bear

by
Van K. Tharp, Ph.D.


............................My advice, once again, is that secular bear markets usually end when the PE ratios of the S&P 500 hit around 6-8, for example, 1932, 1942, and 1982. We’re in the worst crisis since the Great Depression and perhaps in one that is worse. Are you willing to risk the PE ratio of the S&P 500 dropping to single digits? My advice, get in the market when prices are above the 200-day moving average and get out when they are below (or at least stay out until our market type turns bullish for at least two weeks). That would have kept you out of this market throughout 2008.

...exactly, why buy expensive when you can get it a lot cheaper...

...a bit like the banks, why start lending until money was free ride

Successful NEW YEAR and always

Kind Regards

ananda77
31-12-2008, 05:15 PM
...and the GOOD NEWS till last:

Fred and the Economy
http://blip.tv/file/1528079

Kind Regards

arco
31-12-2008, 09:12 PM
As of 22 September 2005, the largest gold holdings in tonnes (http://www.nationmaster.com/encyclopedia/Tonne) as reported by the World Gold Council (http://www.nationmaster.com/encyclopedia/World-Gold-Council) can be seen in the table below.[7] (http://www.nationmaster.com/encyclopedia/Official-gold-reserves#_note-5) The United States' holding of gold is worth approximately US$ (http://www.nationmaster.com/encyclopedia/US%24)164 billion (December 2006). A tonne or metric ton (symbol t), sometimes referred to as a metric tonne, is a measurement of mass equal to 1,000 kilograms. ... The World Gold Council, formed in 1987, is an industry association of the worlds leading gold mining companies. ... The United States dollar is the official currency of the United States. ...


1 United States of America (http://www.nationmaster.com/country/us) 8,133.5 2 Germany (http://www.nationmaster.com/country/gm) 3,427.8 3 International Monetary Fund (http://www.nationmaster.com/encyclopedia/International-Monetary-Fund) 3,217.3 4 France (http://www.nationmaster.com/country/fr) 2,892.6 5 Italy (http://www.nationmaster.com/country/it) 2,451.8 6 Switzerland (http://www.nationmaster.com/country/sz) 1,290.1 7 Japan (http://www.nationmaster.com/country/ja) 765.2 8 Netherlands (http://www.nationmaster.com/country/nl) 722.4 9 European Central Bank (http://www.nationmaster.com/encyclopedia/European-Central-Bank) 719.9 10 People's Republic of China (http://www.nationmaster.com/country/ch) 600.0 11 Republic of China (Taiwan) (http://www.nationmaster.com/encyclopedia/Republic-of-China) 423.3 12 Portugal (http://www.nationmaster.com/country/po) 407.5 13 Russia (http://www.nationmaster.com/country/rs) 386.6 14 India (http://www.nationmaster.com/country/in) 357.7 15 Venezuela (http://www.nationmaster.com/country/ve) 357.4 16 United Kingdom (http://www.nationmaster.com/country/uk) 311.3 17 Austria (http://www.nationmaster.com/country/au) 307.5 18 Lebanon (http://www.nationmaster.com/country/le) 286.8 19 Spain (http://www.nationmaster.com/country/sp) 283.0 20 Belgium (http://www.nationmaster.com/country/be) 227.7 21 Philippines (http://www.nationmaster.com/country/rp) 187.9 22 Bank for International Settlements (http://www.nationmaster.com/encyclopedia/Bank-for-International-Settlements) 185.3 23 Algeria (http://www.nationmaster.com/country/ag) 173.6 24 Sweden (http://www.nationmaster.com/country/sw) 155.4 25 Libya (http://www.nationmaster.com/country/ly) 143.8 26 Saudi Arabia (http://www.nationmaster.com/country/sa) 143.0 27 Singapore (http://www.nationmaster.com/country/sn) 127.4 28 South Africa (http://www.nationmaster.com/country/sf) 123.9 29 Turkey (http://www.nationmaster.com/country/tu) 116.1 30 Pakistan (http://www.nationmaster.com/country/pk) 107.9 31 Romania (http://www.nationmaster.com/country/ro) 104.9 32 Poland (http://www.nationmaster.com/country/pl) 102.9 33 Indonesia (http://www.nationmaster.com/country/id) 96.5 34 Thailand (http://www.nationmaster.com/country/th) 84.0 35 Australia (http://www.nationmaster.com/country/as) 79.7 36 Kuwait (http://www.nationmaster.com/country/ku) 79.0 37 Egypt (http://www.nationmaster.com/country/eg) 75.6 38 Denmark (http://www.nationmaster.com/country/da) 66.5 39 Pakistan (http://www.nationmaster.com/country/pk) 65.3 40 Kazakhstan (http://www.nationmaster.com/country/kz) 58.6

arco
31-12-2008, 09:44 PM
_________________________

It will be interesting to see how accurate this mob is - we can look back in 2012 .


These target prices are based on the median of 21 gold analysts surveyed by Bloomberg. As shown, analysts currently aren't expecting a big rally or a big decline in gold over the next few years. By mid-year 2009, analysts are expecting gold to be at $825/ounce, which is less than $10 from its current price of $816. At the end of 2011, analysts expect gold to be down to $790, and then down to $762 by the end of 2012.




http://bespokeinvest.typepad.com/.a/6a00d8349edae969e20105365ed4d4970c-400wi


Perhaps oil could be a better deal, - heres the Crude Oil Price targets



http://bespokeinvest.typepad.com/.a/6a00d8349edae969e20105365ba4d4970c-400wi


http://bespokeinvest.typepad.com

fungus pudding
01-01-2009, 01:47 AM
_________________________

It will be interesting to see how accurate this mob is - we can look back in 2012 .


These target prices are based on the median of 21 gold analysts surveyed by Bloomberg. As shown, analysts currently aren't expecting a big rally or a big decline in gold over the next few years. By mid-year 2009, analysts are expecting gold to be at $825/ounce, which is less than $10 from its current price of $816. At the end of 2011, analysts expect gold to be down to $790, and then down to $762 by the end of 2012.




It's only good for filling teeth.

JBmurc
01-01-2009, 10:52 AM
I see gold stopped trading in 08 at 880-80

In Chinese communities around the world, eight is considered the most fortuitous of numbers, making it much coveted for addresses, phone numbers and bank accounts."



If you're Chinese--every fifth person in the world is--an eight not only portends prosperity but confidence and money worth even millions,

depending where you are.




"In Hong Kong, a personal license plate with the number eight can cost

millions of dollars," says Alhambra, California developer Raymond Cheng, who was born

and reared in the [former] British colony. "A single eight on your license plate gives you status. People know you have to pay top dollars for it."

Today--the eighth day of the eighth month--the cultural significance

of the number eight will be renewed in the Chinese American communities

in the United States too.



For centuries, this ancient culture has held eight as the most

fortuitous of numbers. Early Chinese settlers coming to California a

century and a half ago brought their beliefs with them, passing them on

to the new generations.



Since the '70s, with the influx of moneyed immigrants to the state

from Taiwan and Hong Kong, the traditional tenet about the number eight

has moved beyond the gates of Chinatowns to become an American suburban

fact of life.





People Place Culture History
Chinese home buyers in the San Gabriel Valley routinely look for an

eight in a street address, viewing it as an added value. Some try to have

their home address changed to include an eight. Others seek to rid a

number, such as a four--considered unlucky because it sounds like the

Chinese word for "death." Many pay to get as many eights as they can in

phone, fax and license numbers.



There is even a Chinese restaurant named 888 in Rosemead. Chinese

Yellow Pages for the San Gabriel Valley have more eight combinations than

one thought imaginable.



"If they get a phone number or a checking account with a lot of

eights, they're extremely happy," says Councilwoman Judy Chu of Monterey

Park, who is Chinese American.



Recently, when she opened an account at a Monterey Park bank, the bank

made sure it had many eights. "They thought I would be pleased," Chu says.



Next door in Alhambra, Raymond Cheng and his wife, Tina, have a lot of

eights between them.



His business phone is (818) 282-2828. His fax number: (818) 282-0283.


Their three cars--a Rolls-Royce, his and her Mercedes-Benzes--also have

ample sprinkling of the number eight. And, naturally, their home phone

and street address are sprinkled with eights. (His parents' Hong Kong

flat is on the 18th floor and the street number on their San Francisco

home is 18.)



Cheng, who serves on more than 10 civic and professional boards in

addition to owning a development company and a Chinese restaurant, won't

go so far as to say that the many eights in his life contributed to his

visible prosperity.



But his wife ventures: "All things being equal, an eight gives you

added confidence." After all, it's worked for Hong Kong.

One has to ask the question why has Hong Kong done so well in such a

little space? Cheng says.



"Hong Kong is a small island with no natural resource, and yet it is

one of the world's most important financial centers."

Here in Los Angeles, too, he lives with what he calls a "Hong Kong

syndrome."



Not long after opening his own company in 1983, Cheng won a contract

to remodel Los Angeles National Bank in Monterey Park.

"I had to complete everything in 2 1/2 months because the owner

absolutely said a grand opening would be on Aug. 8," Cheng recalls.



Working nights and weekends and getting a city inspector to come out

on a Saturday, Cheng made sure the bank had the grand opening on Aug. 8.



"There was no other reason except that the date signified good fortune

and prosperity," he says.

Daniel T.C. Liao, a ranking Taiwanese government official who served

as the director of the Chinese Cultural Center in El Monte, says the

belief follows wherever Chinese go.


JBmurc is also a big 8 fan and will only drive V8 cars :)

Aussie
01-01-2009, 12:46 PM
2008 has come and gone. Gold held up very well while the mining shares got hammered. In fact, Gold did everything it was supposed to do no matter what the nay sayers tell you. Actually the physical metal did far better than "they" want you to know. The physical metal, if you can find it, is trading at a $100+ premium over COMEX. This is better than a 10% gain for the year while virtually all other assets crumbled with the exception of US Treasuries. Treasuries are living on borrowed time though as the Treasury is issuing literally $trillions more in supply with no end in sight. In any case, the metal of monarchs turned in a year that many could only have wished for.

So where to now? I believe 2009 will be the year that "spin no longer works". I truly believe that this coming year will be one of comeuppance for the U.S. Treasury and the Federal Reserve. 2009 is shaping up as the year that the credit spigot will shut tight on further U.S. borrowings from the rest of the world. This shutdown may or may not be called a bankruptcy, though it matters not, Uncle Sam will be shut out and shut down. This will be THE year of divergence of those things real vs. those things paper. Some will even discover that what they thought was real, really was not, ie. ETF's, pooled accounts, etc.. UGLY is too pretty for what I am afraid 2009 holds in store.

If I am even half correct in what I expect 2009 to bring, civil unrest worldwide and in particular within the U.S. will be commonplace especially in the urban areas. This unrest will be a result of market and bank closures, those with "cash" will be disappointed that it will not spend for more than a couple weeks after the initial "banking holiday". Those with metal will be disappointed that "goods do not grow on shelves". while those with "goods" will be disappointed that they don't have more, or even enough. Putting it mildly, 2009 will be the year of disappointments. I come to the conclusion that 2009 will be the year of the fiscal and monetary train wreck that must come at the end of all fiat Ponzi schemes.

Why is this? Ponzi schemes all require more and more new capital to sustain prior entries, it is the same with "fiat" capitalism. Either more new debt and credit enters the system or the system will begin to deflate, this deflation is what kills off earlier entries into the system. It is either inflate or die until you can no longer inflate, then you die. We are there now. But what of hyperinflation? Don't worry, that is out there for 2009 also, probably very, very early in the year. Many have, and will, argue that deflation and hyperinflation are complete opposites and cannot exist together, I disagree completely. I envision much further deflation of assets in 2009 while the collapse of the $ will create $10 cups of coffee, [I'm not talking Starbucks either].

The deflation that surely will continue in 2009 will be massive in terms of Gold and to a lesser extent in Dollars, I also believe Gold will end 2009 at a minimum $1,600 per ounce and that is only IF the system holds together which I give odds of less than a coin flip of occurring. All bets are off when the banks close and Uncle Sam can no longer borrow, pick your wildest number for Gold and that will probably be too low, [2009 will probably be the year when you begin "counting ounces" as opposed to Dollars]. However, the hyperinflation side will be far worse to humanity than assets deflating, I say far worse because FOOD is the quintessential necessity and hyperinflation hurts the masses where it counts, in the belly. This, I believe, will be the catalyst for civil unrest, government response and thus conflict.

We stand in the doorway of food shortages for several reasons, first, a hyperinflation [currency run] causes hoarding and panic buying, second, what retailers have just experienced with inventory loans and the demand for COD payments will surely come to a grocery store near you, third, some farmers will not plant this year because crop prices have been pummeled by the commodity bust and can no longer make a profit, and fourth because of distribution bottlenecks. Distribution will be adversely affected by lack of credit, it already has in many retail industries. I wrote all about this potential "credit crunch" result early last year and it now appears to growing. Without credit, the umteen different "hand offs" from start to finish are affected and just like any chain, if one link breaks, the chain is no longer functional.

I don't like being the bearer of bad tidings or doom and gloom, but this is how I see it, I do not at this point see any possible escape from this "two headed 'flation' monster. The debt is already in place, the monetary and fiscal responses have been textbook, as one would expect, and yet still no traction. Unfortunately and unbelievably this appears to be the financial end of the greatest empire in Earth's history. Those who know me personally know that I do not say this with malice, I am speaking from my gut and hoping that those reading this will take all means to protect themselves and family. The bankruptcy of the US Treasury and Dollar is now imminent, is it Jan. 2009 or July 2010?, I have no idea. I would bet it will be sooner than later as only a fool would lend further funds at this point, and the U.S. Treasury "lives" on borrowed capital. The entire system as it turns out was a "con game", now that the "confidence" is gone we enter "game over". This "game" is really not a game, it is about the 6 billion souls living on the planet all of whom will suffer because of a long term banking scam centered in the U.S.

2008 was the year misdirection and illusions, next year, reality will hit you square between the eyes as things are so far over the edge that it will no longer be "spinnable". All along the spin has been deafening, "contained, sound, strong, no recession then mild recession, lower rates then 0% [yeah!], TARP and 22 other loan programs, $10 trillion from the Fed and Treasury, real estate is bottoming, V bottom then L bottom, and on and on. Nothing has worked, all the spin was just that, spin, the WHOLE THING HAS BEEN SPIN, IT IS ALL A PONZI SCHEME!!!

Individuals, banks, brokers, real estate, autos, insurance co's, municipalities, states, and even the federal government are all financially crippled with too much debt and no ability to service that debt, PLUS the money we use is untenable. What entity can possibly step in and fix this? I think the only possible remedy the rest of the world can take is to "change" the money. They must distance themselves from the Dollar or go down with it, I believe this also pertains to individuals. Either exit the Dollar arena or go down with it, pretty simple. Please do not take the upcoming year lightly as there will be a point in time where the public mindset will become one of "the boy who cried wolf" as it pertains to spin, reality will become all too apparent.

I wish everyone who encounters this missive the best of health, fortune, and luck in 2009, we will all need it.

Regards, Bill H.
Via LeMetropole Cafe

Aussie
01-01-2009, 12:59 PM
. . . analysts currently aren't expecting a big rally or a big decline in gold over the next few years. By mid-year 2009, analysts are expecting gold to be at $825/ounce, which is less than $10 from its current price of $816. At the end of 2011, analysts expect gold to be down to $790, and then down to $762 by the end of 2012.

Analysts say one thing and know another. They work for investment banks that are insolvent and create lies and disinformation as a matter of everyday business practice.

I wish I had an once of gold for every time Goldman Sachs or JP Morgan have been bearish on gold, telling their clients to sell, while they do the opposite and load up. - then they reverse the play and make money on the unwind - all the time with their hand in their clients wallet.

These people have no vested interested in dealing in truth, because the truth is - their gig is up, it's only a matter of time.

arco
01-01-2009, 03:51 PM
Aussie

I was recommending Gold as a buy here on Sharetrader circa 2001 when it was around $250. Most people thought I was mad, but I went ahead at that time and bought both gold and silver at bargain basement prices.

At some point around the same time I started a thread 'the looming American dollar disaster". This situation we are in now is something I have been conscious of and preparing for over a number of years.

My current opinion is precious metals should be part of your holding, but in this economic situation I feel more diversification may be required to cover any eventuality.

We do know things are bad globally but we dont know exactly what is going to happen for certain. Governments have the power and can do many things.

Be diversified, be nimble

Aussie
01-01-2009, 06:11 PM
Aussie

I was recommending Gold as a buy here on Sharetrader circa 2001 when it was around $250. Most people thought I was mad, but I went ahead at that time and bought both gold and silver at bargain basement prices.

At some point around the same time I started a thread 'the looming American dollar disaster". This situation we are in now is something I have been conscious of and preparing for over a number of years.

My current opinion is precious metals should be part of your holding, but in this economic situation I feel more diversification may be required to cover any eventuality.

We do know things are bad globally but we dont know exactly what is going to happen for certain. Governments have the power and can do many things.

Be diversified, be nimble

Great advice, you were ahead of the times and have no doubt done extremely well in your gold position. Most people have no knowledge or understanding of the depth of the trouble that the world is in. I just want to be as prepared as I can be.

Dr_Who
01-01-2009, 07:32 PM
Aussie

I was recommending Gold as a buy here on Sharetrader circa 2001 when it was around $250. Most people thought I was mad, but I went ahead at that time and bought both gold and silver at bargain basement prices.



I did recall a very wise and experienced broker telling to buy gold back then. I should have listen to him.

Aussie
01-01-2009, 07:44 PM
I did recall a very wise and experienced broker telling to buy gold back then. I should have listen to him.

Some might say it's still relatively cheap today, certainly a long way off it's inflation adjusted price.

Aussie
02-01-2009, 09:50 AM
Clearly a move away from the USD by the world's largest oil producers is on the cards here . . . the results of this would be devastating for the US. Imagine if the US had to convert it's currency into this new one (like everyone else) in order to buy oil?

GCC leaders approve Monetary Union as members seek to host Central Bank
By Sunil K. Vaidya, Bureau Chief
Published: December 30, 2008, 23:46

Muscat The GCC leaders put their final seal on the Gulf Monetary Union on the concluding day of the two-day 29th summit yesterday but the question of the location of the Central Bank remained unresolved.

"There are four countries staking a claim to host the GCC Central Bank," Mohammad Al Mazroui, assistant secretary-general for economic affairs, told Gulf News at the end of the summit on Tuesday.

He said the UAE, Bahrain, Qatar and Saudi Arabia were keen to host the GCC Central Bank.

He said he hoped a decision would be taken by year end.

Gold reserves

In reply to a question on gold reserves for the GCC Central Bank, Al Mazroui said "that is a matter to be pondered over later.

"We first have to decide on the location of the Central Bank, then the Central Bank and Monetary Council will have to decide on the gold reserves for the Central Bank," he said.

Oman had pulled out of the common currency in 2005 citing unpreparedness but had decided not to object to the other five members going ahead with it.

Ironically, it was during the 2001 GCC Summit in Muscat that the plan for the common GCC currency was mooted and it was given the final nod here in Oman yesterday without the participation of the hosts.

It was decided to speed up the creation of the Monetary Board to oversee technical requirements for Monetary Union. The proposed board will finalise details for setting up the Central Bank and the issuance of the single currency.

Common currency

Saudi Arabia's King Abdullah Bin Abdul Aziz proposed that the committees working on the GCC economic integration process should speed up their work and complete the whole process by September 2009 so as to benefit GCC nationals.

The leaders also reviewed the functioning of the GCC common market and adopted a document containing principles, market requirements and objectives and mechanisms for implementation.

Al Mazroui said that the common market draft proposed by the finance ministers went off smoothly and was adopted but some issues of revenue have to be sorted out as far as the Customs Union issue was concerned.

On the name for the common GCC currency he said there were some names that had come up. When pressed, he agreed that Khaleeji was ahead in the race.

Al Mazroui said that the railways project feasibility study was also given the approval along with the $7 billion (Dh25.69 billion) GCC power grid. "The power grid should be functional in the first half of 2009," he said.

He, however, added that the GCC finance ministers had shown concern about the cash flow.

http://www.gulfnews.com/business/Economy/10271396.html

Aussie
02-01-2009, 09:51 AM
Gulf Cooperation Council leaders yesterday concluded their 29th annual summit meeting in Muscat, Oman with a final approval for the creation of a single currency for the six-nation economic bloc, still targeted for 2010.

Saudi Arabia is the largest economy in the GCC and boasts substantial gold reserves. But whether gold will be included in the currency basket has not yet been decided.

Golden opportunity

GCC assistant secretary-general Mohammad Al Mazroui told Gulf News: ‘We first have to decide on the location of the Central Bank, then the Central Bank and Monetary Council will have to decide on the gold reserves for the Central Bank’.

The creation of the GCC single currency - likely to be known as the Khaleeji which means Gulf in Arabic - is a major gold event for two reasons.

First, the breaking of their dollar pegs by the Gulf Arab nations is clearly dollar negative. Secondly, any inclusion of gold either as a part of the monetary basket, or in the reserves of the new GCC Central Bank will create additional demand for the precious metal.

2009 deadline

The project is gathering pace, and no lesser a figure than Saudi Arabia’s King Abdullah has directed that GCC economic integration committees speed up their work and complete the whole exercise by September 2009.

It is only a couple of months since a group of Saudi businessmen allegedly bought $3.5 billion worth of gold, believed to be the largest ever single transaction for the precious metal. Perhaps in 2009 it will be gold rather than local currencies which become of interest to speculators about monetary reform in the GCC.

Gulf countries are keen to break away from the link with the US dollar because it ties them to inappropriate monetary policies that exaggerate the boom-to-bust cycle in their economies.

http://seekingalpha.com/article/112731-will-the-new-gcc-single-currency-include-gold

JBmurc
05-01-2009, 09:38 AM
Fed has abandoned monetary policy, critic says
Sat Jan 3, 2009 9:58pm EST

SAN FRANCISCO (Reuters) - The Federal Reserve has embarked on a campaign of unsupervised industrial policy to end the country's financial crisis, a move that could undermine its independence, a former top U.S. official said on Saturday.
John Taylor, who was under secretary of treasury for international affairs from 2001 to 2005, said the explosive growth of the Fed's balance sheet since September was "unbelievable."

"This doesn't really seem like quantitative easing in the sense of finding a growth rate in the money supply," he told a panel discussion during the annual meeting of the American Economics Association.

"What you are looking at now is really being determined by other considerations. How much should we buy of mortgage-backed securities? How much should we loan to foreign central banks? This is really more like an industrial policy," he said.
The Fed's balance sheet has more than doubled in size to over $1.2 trillion in recent months as it has tried to shield the U.S. economy from the worst financial crisis since the Great Depression by supporting key credit markets.

This has included direct purchases of mortgage-backed bonds by the Fed and support for top-rated non-financial borrowers in the crucial commercial paper market, as well as hundreds of billions of dollars lent to banks on the basis of collateral.

"If you have a situation where the Fed is borrowing to invest in all these sectors it seems to me you have a huge governance issue...that demands a lot of thought," Taylor said.

Taylor said the U.S. Congress has a legitimate right to demand a say in who the Fed lends money to. The outcome would be "radical reform" that would risk monetary policy independence, he said.

This concern was echoed somewhat by the president of the St Louis Federal Reserve Bank, James Bullard, who also took part in the panel discussion. He said the close collaboration between the Fed and U.S. Treasury in fighting the crisis could have unintended consequences.

"We are blurring the institutional arrangements a little," Bullard said. "I am concerned about independence. Fed independence is very important," he told reporters.

Aussie
12-01-2009, 12:58 PM
Things are way more out of control than anyone in Washington or Wellington would dare let on . . .


A Future U-Turn In A One Way Street

The Federal Reserve has boxed itself into a corner. With official US rates at (effectively) zero, they have only one way to go in future - UP! As a direct consequence of this, US Treasuries are standing on a trap door. The mad stampede over the past two months into Treasuries for “safety” simply means that these holders of US official debt now stand on that trap door. US Treasuries are the main assets held by the rest of the world’s central banks as reserves behind their own national currencies. US yields are certain to climb as the US Treasury tries to borrow more than $US 2 TRILLION this year. When yields climb, bonds - ALL bonds including US Treasury bonds - fall in value.

US Treasuries are the last bubble, following after stocks, real estate and commodities which have already deflated. When the US Treasury bubble bursts, the carnage on the global bond markets will be awesome.

A Now Invalid US Benchmark

In the staircase of ascending risk, government debt paper - bonds, notes etc. - have long been deemed the safest. Only after government debt comes the debt issued by the private civil economy. It is deemed more risky because this debt is exposed to commercial risks which government debts are not. The problem is that government debt is exposed to political risks.

Today, the climbing political risk of US Treasuries is radiating all around the world. Most of the rest of the world’s other central banks hold in their vaults US Treasury and Agency paper “valued” at $US TRILLIONS. When US Treasuries start their fall, this will contract the valuation of the “reserves” of every global central bank. That will in turn contract their reserves, forcing all their own interest rates upwards. Were the US Dollar fall along with Treasuries (an almost certain event), then many foreign central banks would face a double jeopardy situation. As their holdings if US Treasuries fell in market value because of climbing US interest rates, a falling US Dollar would tear their holdings of official reserves apart. These foreign central banks would have to take desperate measures to replenish their reserves. They would have to do so in public in order to “reassure” the public. Any foreign central bank which failed to do this would risk losing their standing as the backstop for their commercial banking sector. At that point, the US political risk would spike up to a global crisis level since, clearly, US Treasures, Agencies or even the US Dollar itself could no longer be valid reserves. In outline, these are the already built-in monetary and financial features of the global situation which is arriving.

The Looming US Debt Default

As things stand economically, the Obama “stimulus” package is woefully too little and too late. It amounts to throwing money into a US deflationary hurricane. But that same “stimulus” package opens the door politically for the later claim that since the rest of the world refused to lend the money to save the US economy, we will no longer service our external debts to the world. From that comes debt default. But even that is only the start because it then becomes critically necessary to stop an immense outflow of foreign funds presently invested in the US. That means US currency controls. Under such controls, an American who wants to make payments offshore will have to justify their action. Foreigners will have to justify why they should be allowed to take some of the US Dollars they own out of the US. Foreigners outside the US who are today holders of US Dollars will have to explain why they want to send some of their US Dollars back inside the US and what they intend to buy there.

Historically, there is not an item in this which has not been done in the many instances of debt default.

The Likely US Triggers

The most likely global trigger event will be when a US Treasury debt issue is under-subscribed (i.e. an issue is left on the counter because it faces a global buyers’ strike) or when US interest rates start their climb, the US Treasury is forced to offer a higher rate because of international fears of a US debt default. An under-subscription or a higher US Treasury offer rate required to sell new US debt paper are really two sides of the same economic coin. Either or both will signal that the US Treasury has reached its global credit limit and can borrow no more. At that point, the Treasury will stand in the same position as any person receiving a letter in the mail that says their credit card has been totally maxed out.


Permission hereby given to quote short excerpts - provided full attribution is given:
© 2009 - The Privateer
http://www.the-privateer.com (http://www.the-privateer.com)
capt@the-privateer.com
(reproduced with permission)

Aussie
12-01-2009, 10:46 PM
The bond bubble is an accident waiting to happen

The bond vigilantes slumber. As the greatest sovereign bond bubble of all time rolls into 2009, investors are clinging to an implausible assumption that China and Japan will provide enough capital to keep the happy game going for ever.

More . . .

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/4218210/The-bond-bubble-is-an-accident-waiting-to-happen.html

Dr_Who
13-01-2009, 06:57 AM
I agree the bond bubble will pop one day.

What to we buy or sell to benefit from the bond bubble popping?

Aussie
13-01-2009, 11:20 AM
All Roads Lead to Default

Unfortunately, the above title is mathematically correct. From here all roads do, and will lead to default. But default of who? You, me, the company we work for? Possibly. The coming default I am referring to is that of governments and their currencies. Default can happen in several different manners, each of which has one central theme in common. SETTLEMENT, or in this case, lack of. I will get back to this term later but for now, how or why must all roads lead to default?

Default can occur when the debtor does not, can not, or refuses to pay. Please remember while reading this piece that the U.S. Dollar is the world's reserve currency and that almost all currencies use "Dollars" as their "reserve" or foundation for value. The way I see it, the U.S. has several paths to go down, they can try to borrow until eternity, they can try to raise taxes, they can try to print enough Dollars to make payment [notice I didn't say settlement], they can cut spending, or they can just throw their hands up and say "we're broke" and can't pay. The current and past official plan has always been to "out grow" the debt and thus the payments, anyone looking at a chart of debt growth and economic growth side by side knows that this theory is a complete fallacy.

None of these options has a prayer of working either intellectually nor in reality. No matter how "big" the bozos in Washington think they, or the government is, there is a limit as to how much they can borrow. There is a limit as to the amount of global capital available, a limit to what can mathematically be "afforded", and a limit as to the amount of confidence the world will have in our ability to pay. Borrowing to eternity is a nice concept, however when dealing in finances, eternity is an impossibility because of the restraints of reality.

They can try to raise taxes but this cannot work either. You can only raise taxes to 100% of income or even confiscate assets but this only serves to destroy the system and create incentives not to produce and to trade in black markets. Long ago we passed the threshold where the national debt could be paid off by increasing taxes since the increase in taxes will only serve to shrink an already shrinking economy. The military, the embedded entitlements, and interest due are now more than tax receipts so paying the debt down with current taxes is mathematically impossible.

The Fed can try to print enough "Dollars" to pay the debt down but this option will destroy the value of all existing Dollars and cause a foreign central bank panic out of Dollars. This option is ultimately where I believe we are headed but to no avail, governments have tried this many times before only to ultimately blow up their currency. This amounts to trying to make payment with a fictitious entity created out of thin air and of no value, mathematically possible but true and fair settlement is not attained.

Washington can also try to cut spending. They can try [they will be forced] to cut military spending, domestic spending [resulting in riots], but the debt will remain and thus the interest payments. Spending money is what Washington does best, tightening their belts [ours] will not happen. Even if it were to happen, the amount of debt and interest due is beyond payment. Washington is in a position where the mortgage payment is already $25,000 per month with an income of only $10,000.

They can stop going to the grocery store, not use electricity, park their car and not even leave the house, they cannot make the payment without borrowing more.

Washington can try all of these at the same time or in any combination, it will not work. IT IS MATHEMATICALLY IMPOSSIBLE! No matter what option or combination of options are tried or chosen, the key element of SETTLEMENT can never occur. Settlement is the bottom line to any transaction going back to caveman times. As silly as it sounds, even cavemen expected to get something in return for their labor or produce, they expected settlement! Since 1971 settlement has been denied anyone and everyone who accepted Dollars, Pounds, Yen etc. in return for their product or labor. All you received was a piece of paper that you could pass on [or hoped to] to another party in exchange for something else of value. Settlement has been denied ever since Nixon closed the Gold window and withdrew any real backing to the Dollar. The world will demand settlement thus forcing default!

Whether you know it or not, we have been living in a "never pay" world. Think about this for a moment, if you can create currency out of thin air and continually borrow more, do you ever really pay anything, or is it always "something for nothing"? Not only has the system been set up as a Ponzi scheme, it has used a fictitious currency of no value to boot. Most all of the worlds' production for going on the last 40 years has not been "paid for" nor settled, this lack of settlement will ultimately result in one gigantic bankruptcy where those who believe they were paid will find out differently. Values [true, real values] will shock millions to tears or worse as the reality will set in of having "saved" for a lifetime only to find out that what they were saving was of no value.

This is not just a U.S. problem though the Dollar is at the heart of it. Perceptions of values worldwide will be turned upside down in what will feel like a a living hell to those caught unprepared. The world was conned into believing that pieces of paper and debt instruments that promised even more pieces of paper were stores of value, they are not and the rude awakening is coming. This coming default will come about by the world changing its perception and demanding settlement. Unfortunately some governments will not have the ability to settle as they participated in rigging the Gold market, their Gold is gone and can only be replaced through mining. As strange as it sounds now, miners will replace banks as the true "blue chip" investments and settlement will be demanded for any and all transactions. This "never pay" model will be discredited, as well it should!

Regards, Bill H.
via Le Metropole Cafe

Aussie
14-01-2009, 12:38 AM
What to we buy or sell to benefit from the bond bubble popping?

Dr, here's a Canadian ETF that has US Treasury bull and bear funds. Some poking around a few message boards tells me that the 30 year "bear fund" HTD.TO sounds like a popular vehicle.

http://www.hbpetfs.com/fundSummary.asp

http://reports.theglobeandmail.com/jcap/en/69652/html/jovianf/

A Canadian dollar investment might be a good way to play it as they drop - I'd be curious to see what others here think, if I find some spare capital I might jump in it myself. But DYOD.

Cheers

AMR
14-01-2009, 06:30 AM
I agree the bond bubble will pop one day.

What to we buy or sell to benefit from the bond bubble popping?

I believe CMC has "T-bonds" to buy or short.

Aussie
16-01-2009, 11:20 AM
As this commentary says, it's interesting that Fed Chairman Bernanke and FDIC Chairwoman Sheila Bair this week both blew off a couple The US Congressional hearings at the last minute to attend an "emergency" meeting of central bankers at the Rothschild controlled Bank of International Settlements (BIS) in Basel Switzerland. It's not news to anyone that the largest US banks have been on life support for the past 12 months or so. There is no doubt that they are insolvent and have become "zombie" banks that are only functional due to the huge inflows of capital from the Fed and Treasury. One has to wonder how long this charade can continue . . . ?


__________________________

The largest banks in the country are getting hammered again today and are trading at multi year lows. Bank of America is receiving another $10 Billion band aid and Citi is back to where it was a month ago when it was "saved". JP Morgan announced 7 cents per share earnings [FANTASY] a few days earlier than the expected report, I think the advance timing has to do with getting the release out before a new set of overseers from the Obama administration may or may not allow "fantasy" earnings. If every bank in the country is and has been reporting massive losses, and JP Morgan was the leader in "cutting edge" toxic investments AND was THE most leveraged of all, then they are sitting on hundreds of $ billions if not $ trillions in losses!

This credit crunch has progressively moved to more and more important institutions, 2 of the last 3 are now "fessing up" and imploding. It is only a matter of time before JP Morgan is attacked and thus the Fed. So we have the last three big U.S. institutions under scrutiny and attack and the Dollar rallies. Like I said earlier this week, huh? Can you say manipulation? It is also notable that an emergency Basel meeting has been called because THEY KNOW. They know that these banks are about to blow and something drastic needs to be done, and fast. Basel meetings are always scheduled far in advance, this time IS different.

There is also the Mexico, Russia etc. oil producing nation problem that must be addressed, crude prices MUST go higher or we will witness several sovereign failures that will lead to a domino cascade of bankruptcies. The rubber is hitting the road and hard, right now. All of the past manipulations have caused "unintended consequences" that are just now beginning to kick in full force. The perfect storm of financial collapse has been lining up for years now and appears to have assembled across the board from individuals, companies, states, and countries. All we need now is some 1st grader to appear on CNBC and say "but Mr. Kudlow, 2+2=4, they taught me this in school, why is everyone saying it is 5?". The delusion of crap is about to be obliterated, and with it the illusion of paper wealth.

Watch the banks, the Treasury market, and the Dollar, these are going to gap down or even fail bigtime while physical metal will become unattainable and go to levels where only central banks can reach. It is this reason that I think Silver will outperform Gold, the masses will only be able to afford Silver. I will write about this subject next week. For now, hold on tight as it will be amazing what can happen in a one month period of time. Perceptions will be swept away and reality will bite hard.

Regards, Bill Holter
via Le Metropole Cafe

Aussie
17-01-2009, 10:41 AM
U.S. net inflows fall to $56.8 billion in November
Fri, Jan 16 2009, 14:15 GMT
http://www.afxnews.com

NEW YORK, Jan 16 (Reuters) - Net capital inflows into the United States fell to $56.8 billion in November from a revised inflow of $260.6 billion in October, the Treasury Department said on Friday.

The department originally reported inflows of $286.3 billion in October.

November's capital inflows were sufficient to cover the month's trade deficit of $40.4 billion.

Net long-term capital flows excluding swaps showed an outflow of $21.7 billion in November compared with revised outflows of $400 million the previous month. October's figure was initially reported by the Treasury as an inflow of $1.5 billion.

The report showed foreign investors sold U.S. Treasury bonds for the first time since August 2007, when the credit crunch began. Foreigners sold $22.87 billion worth of Treasury securities, after buying $32.87 billion in October.

http://www.fxstreet.com/news/forex-news/article.aspx?StoryId=0cfbfc1f-25cd-4acc-ac3d-0f7c2349e13c

peat
22-01-2009, 10:17 PM
From 13/01
I agree the bond bubble will pop one day.

What to we buy or sell to benefit from the bond bubble popping?

I sold in demo 100 Bunds (GBP 11,000) and 250 US T-Bonds (GBP 24,000) on the day of this post - so thats nearly a week ago.

The Bund got stopped out at -100 but the T-Bond is going well now at +383 = GBP 680 so seems like it wasnt too bad a thing to have done. Less of course the 100 quid lost on the Bunds.

It wasnt at all a well timed entry point see how I didnt even wait for the 38% retracment and it went to almost 62% before falling again. Could be gathering some momentum now

Anyway I know its in demo but hey just showing how bonds can be fun too!

Dr_Who
23-01-2009, 10:28 AM
Ive never traded bonds before.

It sounds abit complicated. Will have to read more on how to trade bonds.

Cheers mate.

peat
23-01-2009, 11:47 AM
the only thing weird about bonds is that their yield and their price are inversely related - so if interest rates go up the price of bonds goes down.

other than that I would just treat them as a number on a chart like everything else.... thats whats cool about technical analysis.

Dr_Who
23-01-2009, 03:21 PM
Bel, I do keep a close eye on the economy and rates movement via the OCR. I try to predict what the RB will do and usually I do get it right. I have never dabble in bonds before, but I did buy some ANZ notes last year with over 9% yield. Cant remember the exact rate, cos I am too lazy to look it up. It is also listed on the NZSE. This is more of a long term yield play for me giving fantastic rates.

Aussie
24-01-2009, 10:28 AM
It's getting closer day by day. Gold staged a HUGE rally last night even in the face a relatively strong dollar - still 85'ish on the USDX. The following is from Bill Holter at Le Metropole Cafe . . . I'd be interested in what you guys think of this.


________________________

Termites did it.

I wrote on Tuesday about the swirling phrase "Treasuries fall on debt concerns", I'd like to expand on this after a couple days of thought. Bottom line, IT'S OVER! If anyone talked or wrote 18 months ago that the credit quality and solvency of the U.S. Treasury would come into question they would have been ushered off stage left and put into a straight jacket. Fast forward 18 months and the topic is all over the world including in the U.S., my what a few burnt $trillion here and there will do.

Never mind that mathematically the biggest game of Monopoly/Ponzi ever played is past the point of no return [we are witnessing a business as usual mentality far beyond this point], the key is perception or "direction of the herd". The fact that U.S. sovereign solvency even has been spoken about publicly means that we are VERY close to a PANIC. Yes the economy and fundamentals have weakened very rapidly, but it is the "perceptions", the "confidence", that moves the herd. The thing is, perceptions can change at the drop of a hat and be 180 degrees within days. If we were on a Gold standard [we wouldn't be where we are now] a panic could [and did in the past] happen, however, there would not be the possibility [probability] of a worldwide banking and all things financial collapse such as we have now.

The credit crunch has chewed its way like termites up the totem pole all the way to Uncle Sam's bare ass, I say this because everything below him has been chewed up and spit out. Only the Treasury remains, there are no other targets left. Unfortunately the U.S. has put itself in a stupid position. We cannot survive without borrowing more money and the rest of the world sees this. EVERYONE sees this, now it is only a matter of time before confidence breaks. The "silly" questions about U.S. solvency are like the cracking and snapping sounds a tree makes in a wind storm just before it breaks. The ONLY thing left is confidence, the fundamentals and strong foundation were termite food long ago.

It was a "good run" that lasted 38 yrs., in fact, the current fiat experiment has lasted longer than any other in history to my knowledge. If you study the busts that came after previous fiat/credit booms then you know that the experience is very "compacted, vicious, and swift", the current fairy tale will be all of these and more because of size and scope. The entire world drank $ Kool Aid for years based on nothing but confidence. The changes occurring in current thought is like a hot knife through the butter of monetary confidence, the panic will be swift!

I am sorry to harp on the Dollar, confidence, solvency and all the other "unimportant" topics but they are the foundation to a fair and functioning financial and trade system. We were led down the path to drink the Kool Aid, now fewer and fewer are complying and others in line are hearing the "grumblings of common sense". The tipping point cannot now be far off, Uncle Sam's financial termite infestation will soon be visible even to those looking the other way because too many are TALKING ABOUT IT! Talk is cheap except when it comes to a fiat currency based on confidence, then talk can topple currencies and the governments that issue them. Be prepared,

Bill Holter

Dr_Who
27-01-2009, 06:57 AM
Which currency is best to buy to benefit from the USD weakness?

JBmurc
27-01-2009, 08:24 AM
Which currency is best to buy to benefit from the USD weakness?

IMHO Hard currency PGM's the best Silver accepted worldwide as true money

only prob is everone else is starting to see how undervalued it is just try and buy some
been produced for 5,000yrs have only economical reserves of 26yrs left on earth

peat
27-01-2009, 11:35 AM
PGM's
Platinum Group Metals ???

arco
27-01-2009, 11:52 AM
We learned today that the global recession, as defined by rising global unemployment, is only just getting underway.

It might feel like it has been going for more than 12 months and you might be getting very tired of it already, but the collapse in the real economy is just a few months old – following the global economic “cardiac arrest” last October – and is now building a head of steam.

In the past 24 hours companies in the United States and Europe announced job cuts totalling 62,000, headed by Caterpillar’s decision cut its workforce by 20,000.

In addition there was Sprint Nextel (8,000), Home Depot (7,000), Pfizer (8,000), General Motors (another 2,000), ING (7,000), Phillips (6,000) Corus (3,500). Last week Microsoft announced 5,000 lay-offs, while in Australia BHP Billiton said it was cutting 3,000 jobs.

So the rise in unemployment, especially in Australia, is still in its infancy, as is the impact of the slowdown on corporate earnings.

Although this began as a credit crisis and will only end when the world’s banks are repaired and can reopen for business, what is now unfolding is the “reverse wealth effect” – the opposite of the consumer spending and business investment boom that came out of the housing and sharemarket bubbles.

In his latest letter to clients, Jeremy Grantham of the Boston based investment firm GMO, lays out graphically how the reverse wealth effect works for the United States.

Assuming declines in value of 50 per cent for the stockmarket, 35 per cent for housing and 35-40 per cent for commercial real estate, there has been a total loss in perceived wealth (my emphasis) of about $US20 trillion from a peak of $US50 trillion.

US GDP – the annual value of goods and services produced – is $US13 trillion.

“These write-downs not only mean that we perceive ourselves as shockingly poorer, they also dramatically increase our real debt ratios."

The national private asset base of $US50 trillion was supported by debt of $US25 trillion. Now the asset values have fallen back to $US30 trillion, while the debt remains at $US25 trillion, “give or take the miserly $US1 trillion we have written down so far”.

Maintaining the same gearing ratio means the debt has to be written down to $US15 trillion. However, as Grantham points out: “As always, now that it’s raining, bankers want back the umbrellas they lent us.” That is, they are demanding lower gearing ratios – no more than 40 per cent, not 50 per cent.

That means $US12 trillion in debt, not $US15 trillion – half the current level. So somewhere between $US10 trillion and $US15 trillion in US needs to disappear.

That’s just the United States. The story is being repeated around the world – in the UK, Europe, Japan, Australia, Russia, Iceland and now China.

The decline in real wealth, and the amount of debt that has to “disappear” is almost unimaginable.

Short of finding another bubble to reinflate asset values, there are only three ways to do it: write the debt off, inflate the money supply and reduce the real value of the debt, or do what Japan did and take years – decades – to gradually save more and pay down the debt (that hasn’t actually worked for Japan yet, by the way).

Each of these three measures is now underway. Each is extremely painful and takes a long time.

The sharemarket has already anticipated a big decline in earnings with its fall of 50 per cent. Is it enough?

The problem is that price/earnings multiples can change for long periods at the same time as profits fall. A profit decline of a third accompanied by a halving of the P/E ratio produces a price fall of two-thirds.

Over the next few weeks we will get a clearer idea of the likely decline in corporate earnings, although it's clear that companies are already seeing what’s coming and are cutting staff in readiness.

No one can really know what’s coming – it’s too early in the process.

But as Grantham reminds us, only “make-believe assets” are being destroyed – that is, the inflated values of shares and houses.
“It is worth remembering that real wealth lies not in debt but in educated people, laws, and work ethic, as well as in the quality and quantity of fixed assets and the effectiveness of corporate organisation.”

When we have dealt with this crisis all of those assets will be sitting around waiting to be put to full use again.

http://www.businessspectator.com.au/bs.nsf/Article/Brace-for-a-20-trillion-write-down-$pd20090127-NNQY6?OpenDocument&src=ea&ir=4

arco
27-01-2009, 12:08 PM
McDonald's - world's largest restaurant chain, reported a 23% profit drop in Q4 despite a tax gain in the year-earlier period, according to Bloomberg news. The company's net income fell $985.3MM, or $0.86 per share vs $1.27bln, or $1.06 per share a year earlier. Analyst's F/C a profit of $0.83 per share.

Aussie
27-01-2009, 12:27 PM
Which currency is best to buy to benefit from the USD weakness?

Dr. I would say it depends on your timeframe. If you know what you are doing and trade aggressively you can probably make some money but IMHO, ultimately there is no paper currency that will benefit and here's why.

CB's the world over are racing to lower interest rates and devalue their currencies to inflate away debt. Also, every government (including ours) wants to have as competitive an export economy as they can in order to try and help their balance of payments at a time when they are running or planning to run huge deficits for years to come.

Bill English said at the weekend that NZ's debt will likely increase by some NZ$50B over the next 4 or 5 years to around $80B. That's a lot for a small country with a tiny (and shrinking) GDP. It WILL affect our credit rating and our currency - how can it not? Over the medium term, I mostly see further and prolonged NZD weakness unless the commodity and export sector improves dramatically.

As I said, IMO it's quite likely that the AUD, NZD and CAD will get a bump as the USD falls as long as it falls in an orderly fashion. If that fall becomes disorderly, then all bets are off since most countries have foolishly relied on USD and US Treasury paper as the "reserves" to back their own currencies. What happens if those reserves drop in value unexpectedly? If the reserves that underpin a nations currency suddenly drops say 30%, 40% or even 50% in short order due to unforeseen events or a lack of confidence, what do we suppose will happen to the value of the currency itself?

Look at what a nightmare the EU is becoming for it's more affluent members like France, Germany and The Netherlands etc . . . it's fast become a currency and economy trap. It is being dragged down by indebted, near insolvent economies like Ireland, Spain, Greece, Italy and the Baltic states. Violence is erupting daily in some of these countries. Under the charter, the EU cannot bailout these economies as the US Fed would, but you know it is likely happening anyway - in secret. It is in effect an additional tax on the German people and if they ever found out . . . there would be real fireworks.

Brussels will do what ever they can to keep the Eurozone experiment together but ultimately, it will show that one economic policy and currency cannot serve the best interests of 27 different nations.

We cannot trust governments to manage our wealth. This is why I am into the hardest currencies of all - gold and silver. Their time is fast approaching.

Interesting video here for anyone who hasn't seen it . . .

Cheers

http://nz.youtube.com/watch?v=pZsY1rFr_yw

peat
03-02-2009, 08:00 AM
is it time ?
I've got a couple of USD/CHF shorts in place from last night ... and this mornings rally looks corrective = the downwaves look convincing. added another now. av price = 1.1650

trying to use that time strategy from the general chat thread on it - quite interesting , seems to fit the turning points reasonably well.

in the picture similar colour lines are duplicates of each other

arco
03-02-2009, 12:54 PM
Peat

Interesting set-ups on the chart at the mo.

Are you targeting the uptrend line (H1/H4 chart) or a bigger move? (Uptrend line daily - from potential Gart). Target circa 1.0530-1.0600

arco
03-02-2009, 01:26 PM
1:04 PM, 2 Feb 2009

It's about time we called a spade a spade. We are looking at the biggest concealment of capital losses the world has ever seen. Until banks around the world come clean, reveal their hidden losses and cover them with capital will we not be able to see an end to the crisis.

Much more.........

http://www.businessspectator.com.au/bs.nsf/Article/Time-to-spill-the-beans-$pd20090202-NV3QR?OpenDocument&src=kgb

.

Aussie
06-02-2009, 06:43 PM
US Treasury in plans for record debt sale

Published: February 4 2009 18:01

The US Treasury on Wednesday opened the floodgates of government bond issuance, revealing plans for a record debt sale in February and more frequent auctions in the months to come.

The announcement came amid growing fears about US government deficits and sent the yield on the benchmark 10-year Treasury note rising to 2.95 per cent, up from just over 2 per cent at the end of December.

The rise in Treasury yields has been pushing mortgage rates higher, complicating efforts to revive the economy. The US Federal Reserve said last week it was "prepared to" buy Treasuries if that would be a "particularly effective" way of reducing private borrowing costs.

"The Fed has to be troubled by the fact that mortgage rates have been rising and the buying of Treasuries by the Fed may come sooner than the market expects," said William O’Donnell, UBS strategist.

The Treasury said it would sell $67bn (£46bn) in new securities next week, the largest ever quarterly refunding, beating the last peak in August 2003. It may also start monthly sales of all its benchmark Treasury securities.

At the end of February, the Treasury will start selling seven-year notes every month for the first time since the issue was discontinued in 1993. Sales of 30-year bonds will double to eight times a year and the Treasury will say in May whether the bond will be sold every month.

For Barack Obama’s administration, the step-up in borrowing costs comes as it is fighting to secure an $800bn-plus fiscal stimulus, and is likely to need many hundreds of billions more to fund a banking sector clean-up.

The Treasury Borrowing Advisory Committee expressed concern on Wednesday over the sharp jump in net borrowing needs – which market analysts estimate could reach $1,500bn to $2,500bn for the 2009 financial year.

Traders are particularly concerned about the appetite for Treasuries among foreign investors, who hold more than half the outstanding $5,500bn in Treasury debt.

In recent years, demand for US government debt has been stoked by developing countries running huge trade surpluses with the US and recycling dollars by buying Treasuries. However, many are facing growing pressure to stimulate their own economies and are seeing their current account surpluses decline as global demand diminishes.

http://www.ft.com/cms/s/0/bdf4ee70-f2e4-11dd-abe6-0000779fd2ac.html

Aussie
06-02-2009, 06:48 PM
This is a very recent interview with Paul Keating on ABC Australia's "Lateline". Keating was a longtime Australian Treasurer under Bob Hawke and Australian Prime Minister from 1991 till 1996.

In this very thoughtful interview, he lays out a startling accurate picture of the current global situation, including a very bullish outlook for gold, which is a position not normally associated with someone who has been an insider and extremely intimate with the inner workings of the global economy at a high governmental level and he actually calls for the abolition of the iMF and the creation of a new financial system.

When in power, Keating was not known for his personal modesty or humility, but I do get a sense in this interview that he is chastened and awed by the extreme gravity of our current global predicament.

Enjoy.

http://www.abc.net.au/lateline/content/2008/s2480345.htm

The page also includes a handy transcript.

Aussie
06-02-2009, 06:59 PM
U.S. Treasury default bets surge, hit new record

NEW YORK, Feb 4 (Reuters) - Rising U.S. government borrowing has a growing number of investors betting on a potential default by the Treasury down the line, according to credit default swaps data on Wednesday.

According to CMA DataVision, five-year U.S. CDS spreads stood at 82 basis points on Wednesday, having closed on Tuesday at a record 85.9 basis points. As a result, it currently costs $82,000 a year to protect $10 million of U.S. debt.

That is up tenfold from levels seen a year ago and even more from the negligible levels that were common before the credit crisis.

The CDS market is used to hedge against the possibility of sovereign and corporate defaults, and has played a controversial role in exacerbating the credit crisis.

Many believe a default by the U.S. Treasury is a physical impossibility, since all of the government's debts are denominated in its own currency and it could conceivably print more dollars to meet their obligations.

http://in.reuters.com/article/marketsNewsUS/idINN0431292120090204

arco
09-02-2009, 02:56 PM
Interesting read................

The depression of 1929 is the wrong model for the current economic crisis



By SCOTT REYNOLDS NELSON


As a historian who works on the 19th century, I have been reading my newspaper with a considerable sense of dread. While many commentators on the recent mortgage and banking crisis have drawn parallels to the Great Depression of 1929, that comparison is not particularly apt. Two years ago, I began research on the Panic of 1873, an event of some interest to my colleagues in American business and labor history but probably unknown to everyone else.

Read on............................................

http://chronicle.com/temp/reprint.php?id=477k3d8mh2wmtpc4b6h07p4hy9z83x18

Aussie
09-02-2009, 08:33 PM
Interesting read Arco. Unless I missed it, he forgot to mention there was no US Federal Reserve in 1873 and the US was on a classical gold standard with gold and silver coins in circulation.

In 1873, the US economy was fundamentally different in so many ways.

It's financial system was based on "sound money" gold and silver - not credit based government paper. At that time it ran a trade surplus, not deficit. There was no income tax. As there was no central bank, inflation was virtually non existent. The US was emerging as the strongest industrial and manufacturing economy in the world, Americans earned good wages and actually saved money, it was completely energy independent, it was not at war and the national debt was a miniscule fraction of GDP . . .

Contrast this to an American Empire . . .

that has fallen into a very deep recession, is militarily exhausted fighting two wars while potentially provoking a third in Iran, maintains over 700 military bases in 130 countries, is 70% dependent on foreign countries for it’s energy supplies, has exported most of it’s manufacturing plants and jobs overseas, has unheard of levels of personal, business and government debt along with some $100 Trillion in unfunded promises to the baby boomer generation for future entitlement programs stretching over the next 25 years and an annual trade deficit that is over 10% of GDP! Not to mention that it's banking system is insolvent . . .

In my humble opinion, I think there are no direct comparisons. The world really is in unchartered waters and the more I learn, the more it seems to me that it is by design more than poor management. The confluences of government and Wall St. and the commonality of the players and legislation involved, the spectacular rise of "globalism" particularly over the past decade, are all too precise to be coincidental. What has occurred could simply not have happened without the knowing collaboration of both the US Government and the banks.

Out of this chaos - will come order, but it may not be the order we desire . . .

arco
10-02-2009, 10:09 AM
Aussie

I think he was perhaps more comparing this to the current situation.

"The problems had emerged around 1870, starting in Europe. In the Austro-Hungarian Empire, formed in 1867, in the states unified by Prussia into the German empire, and in France, the emperors supported a flowering of new lending institutions that issued mortgages for municipal and residential construction, especially in the capitals of Vienna, Berlin, and Paris. Mortgages were easier to obtain than before, and a building boom commenced. Land values seemed to climb and climb; borrowers ravenously assumed more and more credit, using unbuilt or half-built houses as collateral"

"As continental banks tumbled, British banks held back their capital, unsure of which institutions were most involved in the mortgage crisis."

etc.

miner
10-02-2009, 10:42 AM
Was up late watching the box the other night and there was a program on about all the Chinese factory's closing down as demand for there goods had dropped off,and allot of the demand had come from the US.

The US owes china allot of money which up until now they have let ride as the US was still consuming there stuff,sort of like a junky and a pusher,the junky may be a bit behind on what he owes the pusher but as long as he keeps buying and doesn't get to far behind the pusher keeps selling to him.

But when the junky stops buying then the pusher wants all his money and if the junky doesn't have it he gets knee capped,so the US junky isn't buying and the Chinese pusher needs his money as times are hard for him so is the US about to get kneecapped ?.

Cheers
Miner

Dr_Who
10-02-2009, 10:51 AM
I agree with you Miner.

Who will continue to support US debt in the near future. I am wondering how the US will be able to raise the trillions needed to stimulate the economy. All the money has gone into the pockets of greedy bankers who are friends of Bernake/Bush. There is no money left in the kitty.

The US will struggle to raise more debt in the future.

So where to from here?

Aussie
10-02-2009, 12:08 PM
I agree with you Miner.

Who will continue to support US debt in the near future. I am wondering how the US will be able to raise the trillions needed to stimulate the economy. All the money has gone into the pockets of greedy bankers who are friends of Bernake/Bush. There is no money left in the kitty.

The US will struggle to raise more debt in the future.

So where to from here?

From Bill Buckler in the latest Privateer . . .

"The US Treasury Department says it will need to borrow $US 493 Billion in the first three months of this year, a record amount for the January-March period. The Treasury says that figure comes on top of the $US 569 Billion the government borrowed in the last quarter of 2008, the all-time high for any quarter. The US is now expected to borrow a record $US 2.5 TRILLION over the fiscal year ending on September 30, nearly THREE TIMES the $US 892 Billion it borrowed over the prior twelve months.

Using data from the Bank for International Settlements (BIS), the OECD and others, it is known that the $US 2.5 TRILLION in NET free savings does NOT exist in the entire world. The world cannot “fund” these monstrous US deficits. Worse, when the US budget deficit of $US 2.5 TRILLION is compared to the US nominal GDP of $US 14.3 TRILLION, the budget deficit is 17.5 percent! Something has to give."


In short, the answer will be Fed monetization (Printing), they have no other choice. Bernanke has already said in his last official statement that the Fed will (has?) started buying the long end of the Treasury market - the 30 year bond. This is an attempt to keep a lid on US mortgage rates but it is likely to backfire as the statement above says "Something has to give" and it will be the USD. Foreigners will demand higher rates or they will dump US Bond's en masse and head for . . . you guessed it - precious metals and commodities as a store of value.

Aussie
10-02-2009, 12:11 PM
Aussie

I think he was perhaps more comparing this to the current situation . . .

Yeah thanks arco, I got that. I was just trying to indicate that as bad as the panic of 1873 may have been, the US was in a far better position to weather it back then, than it is now.

Cheers

miner
10-02-2009, 12:17 PM
I agree with you Miner.

Who will continue to support US debt in the near future. I am wondering how the US will be able to raise the trillions needed to stimulate the economy. All the money has gone into the pockets of greedy bankers who are friends of Bernake/Bush. There is no money left in the kitty.

The US will struggle to raise more debt in the future.

So where to from here?

Interesting that you say this while at the same time also say now is a good time to buy property.

Cheers
Miner

Dr_Who
10-02-2009, 12:26 PM
Interesting that you say this while at the same time also say now is a good time to buy property.

Cheers
Miner

Property for me is a long term play. I am cashed up and with rates at these levels, it makes more sense for me to put my money in properties than in the bank. I have holding power and can ride out the storm. Property is part of my strategy in the portfolio, esp when I sold out all my investment property 2-3 years back.

Hey, I maybe wrong, but then I have holding power and can ride it out, esp when my investment properties are all cashflow positive.

miner
10-02-2009, 12:46 PM
No problem mate good luck with your cunning plan.

Cheers
Miner

Aussie
10-02-2009, 09:51 PM
Property for me is a long term play. I am cashed up and with rates at these levels, it makes more sense for me to put my money in properties than in the bank. I have holding power and can ride out the storm. Property is part of my strategy in the portfolio, esp when I sold out all my investment property 2-3 years back.

Hey, I maybe wrong, but then I have holding power and can ride it out, esp when my investment properties are all cashflow positive.

Dr_Who, generally I like property too, but not at the moment. There's so much more uncertainty to come and a lot of it is going to affect banks and paper currencies and so by extension - the property market . . . and property is SO illiquid.

Personally, I'm bullish on property long-term. I think that there will be unbelievable property deals in the coming years.

But respectfully, a couple of questions . . .

Have you seen clear signs of a bottom in property yet? I see no blood in the streets. I don't hear of people despising their property investments and I see no signs of capitulation in the property market. I think the property slide has a ways to go yet.

This financial crisis is just beginning - not ending. IMO it has years to go. In the near future, property will have a lot less value if people find it hard to borrow because A) they lose their jobs and the market is flooded with inventory or B) the local banks continue to tighten lending or have problems sourcing overseas funds or people cannot come up with large deposits.

Have you protected at least a healthy portion of your wealth by investing in gold? If you leave your wealth in cash, you leave it in the hands of the government and the international bankers to manage for you. Remember, they can guarantee the number of NZD in your account, but they cannot guarantee its value! This storm may be bigger and more destructive than you can imagine.

For example, 12 months or so ago, my brother-in-law sold 1/2 of his dairy farm for NZ$1.7m. His timing was excellent. However, he thought he was being conservative by putting the money on deposit in the bank. While he was busy earning 8% in interest, he lost at least 35% or about NZ$600,000 in real world purchasing power via currency depreciation. He doesn't realize it now, but he will in a year or so when everything here is rising like the current price of petrol.

Not to put too finer a point on it, but even though my share portfolio is down 25%, my net worth in NZD is higher now than it was a year ago . . . ONLY because I have a substantial portion of it in bullion . . . it has been my saving grace!

Something to think about anyway . . .

Cheers :)

Dr_Who
11-02-2009, 06:31 AM
Thanks for the advice Aussie.

My portfolio strategy is in place for a long term recession. I do have some gold bars and gold stocks and even have some short positions in the market to hedge my portfolio. All is in place for blood on the streets. I am no guru and cant predict everything with accuracy. What I can do is make sure my investments are cashflow positive with downside protection.

Cheers guys. All the best.

Aussie
18-02-2009, 02:38 PM
We are getting close

I believe the world's financial system is crossing a very important threshold as I write this. The world is now asking some very pertinent questions and questioning some very long held beliefs. For example, Germany has recently had more failed auctions, China is demanding "assurances" that the Dollar will be supported, several world leaders and organizations have identified the current world economy as in "depression", and here in the U.S. we look forward to more unfunded bailouts.

All of this revolves around one central flaw that has been obvious to anyone who has ever run, or been on a budget. I am not talking about the obvious fact that you cannot spend more than you make, nor borrow forever. As simple as it may seem, no one nor no entity [government] can borrow more money than there is in existence. This is exactly what the U.S. is proposing to do, it cannot be done mathematically but this is the plan. We used to hear about the possibility of the U.S. "crowding out" other borrowers from the credit markets, we are now far beyond this.

This past week Germany had its second failed auction of the year, with the proposed debt appetite in the U.S., it is now only a matter of time until we experience the same. When the U.S. has its first failed auction which I can already can smell, nothing will function, world finance will stop dead in its tracks. The current situation has been blamed on the "credit crunch", as I see it, by trying to borrow its way out of the credit crunch the U.S. is doubling down its bet and actually exposing its own bankruptcy.

Hilary Clinton is expected to go to China later this week to discuss funding and finance for the Treasury. Good luck! China wants assurances that the U.S. will support the Dollar? Again, lots of luck! Every trick in the book has already been thrown at supporting the Dollar to date, any assurances given will have no more value than the Dollar. The only question now is "when" does China pull the plug, they have to sooner or later because they simply don't have it to lend it. I believe it is now dawning on the rest of the world that the U.S. needs to borrow more than the sum total amount of the world's capital pool, impossible.

So the world is figuring out the math, global debt auctions have been touch and go, assets are continuing to deflate and the "D" word is now making the rounds, interesting to say the least. However, as reported by Chris Powell of Gata, and followed up on by Jim Sinclair, I think the most interesting chapter is about to open. "Where's the Gold" will be more riveting than anything we've seen so far, this chapter will in my opinion dwarf all other past frauds. Doing the simple math of how many ounces the Gold ETF's say they have, has some people scratching their heads. I would say "and rightly so" but it is not. The amount of Gold claimed to be held is certainly a fantasy because it had to come from somewhere and no exchange is saying that their inventories have depleted by even 1 ounce. Where did the supply come from? Yes, it had to come from somewhere or it is just fictitious accounting? In all likelihood all this "supposed bullion" is only paper and will burn with the rest of the system.

Common sense says the ETF's do not have the metal they claim to have, neither do the Central Banks. This little inconvenience will erupt into the scandal of all scandals. Once the ETF's are found out, next in line will be Central Banks and in particular the U.S. Treasury. I think that very soon pressure will rise for the U.S. to come clean about it's Gold reserves. I think we may never know for sure but when the stench of rotten fish begins to spread and the world starts asking for verification of reserves, the greatest scandal and Treasury looting in history will be front and center.


______________________

The above was written over the weekend, this morning looks like a panic brewing. If Dow 7,500+-, and S+P 780+- breaks here, we will probably see a cascade downward. Make sure your pantry is stocked as the banks in Europe are imploding and one day soon we will wake to a closed market and banking system. I think we will see numerous gaps down when they are able to open markets, very similar to Russia over the past 6-8 months

Regards, Bill H.

arco
18-02-2009, 03:16 PM
"Although he has been much defamed, Martin Armstrong of Princeton Economic Institute did no doubt stumble upon a unique cycle in financial market analysis. He began with the simple procedure of adding up all the financial panics between 1683 and 1907, and dividing the 224 intervening years by the number of panics that he found, 26 of them to be precise. The result was an average duration between panics of approximately 8.6 years. Of note, 8.6 years also equals 3141 days, or the mathematical symbol of "pi" times 1000".................................................. ......

Full Article (http://www.page88.co.za/cr/armstrong.shtml)

.http://www.page88.co.za/cr/armstrong.shtml
http://www.page88.co.za/cr/images/PEI_Business_Cycle_1985_2020.jpg

Aussie
18-02-2009, 04:02 PM
Armstrong's stuff is fascinating arco. He predicts that March '09 is when the public will become "aware" that there is no hope for the economy anytime soon and around March 19th onwards things will take a much bigger turn for the worst.

peat
18-02-2009, 04:06 PM
not long to wait :eek: 2009.3 = March 19th

tho he says on page 30
that this one is not a major turning point so wont happen to the very day

but hes not talking about the fall of the USD necessarily

fungus pudding
18-02-2009, 04:48 PM
Property for me is a long term play. I am cashed up and with rates at these levels, it makes more sense for me to put my money in properties than in the bank. I have holding power and can ride out the storm. Property is part of my strategy in the portfolio, esp when I sold out all my investment property 2-3 years back.



You like property, it's part of your strategy. You see it as long term. You have holding power to ride out a storm. So why on earth did you sell out?

arco
18-02-2009, 06:26 PM
Armstrong's stuff is fascinating arco. He predicts that March '09 is when the public will become "aware" that there is no hope for the economy anytime soon and around March 19th onwards things will take a much bigger turn for the worst.

Craig 3215 is a friend of Martin Armstrong, and may be able
give us some updates on his ongoing thoughts.

arco
18-02-2009, 06:31 PM
For anyone who is interested..............

77 page PDF here from Martin Armstrong here.......ITS JUST TIME

http://www.contrahour.com/contrahour/files/ItsJustTimeMartinArmstrong.pdf

dumbass
18-02-2009, 09:04 PM
from the pdf of the sp500 that you sent me peat , this is how Max see things unfolding.

he has 5 wave count for wave A which means he's counting it as a zig zag correction.

B wave rally of about 50% of wave A fall and then C wave takes us back down.

commonly A = C which is around 3000 give or take a point or two.

scary scary stuff indeed.

a wonder if he ever looks at sharetrader , would be interesting to see if im reading it correct.

Craig3215
20-02-2009, 09:51 AM
Craig 3215 is a friend of Martin Armstrong, and may be able
give us some updates on his ongoing thoughts.

Hi Arco,

Yes, he is. I talked to him a couple of weeks ago, he likes gold a lot. He also didn't like the fact that the dow made new lows in november after the october low. He said he wouldn't be suprised to see the dow go to 3500-4000. Next time i go see him or talk to him i'll do a post and have some more detail.

-Craig

arco
20-02-2009, 11:01 AM
Hi Arco,

Yes, he is. I talked to him a couple of weeks ago, he likes gold a lot. He also didn't like the fact that the dow made new lows in november after the october low. He said he wouldn't be suprised to see the dow go to 3500-4000. Next time i go see him or talk to him i'll do a post and have some more detail.

-Craig

Thanks very much Craig - look forward to hearing from you

rgds -arco

Dr_Who
20-02-2009, 11:50 AM
Who is Martin Armstrong?

Xerof
20-02-2009, 12:24 PM
No....Hu is Premier of China......:cool:

arco
20-02-2009, 01:34 PM
Who is Martin Armstrong?

Martin Armstrong (http://www.google.co.nz/search?q=martin+armstrong+&ie=utf-8&oe=utf-8&aq=t&rls=org.mozilla:en-US:official&client=firefox-a)


(http://www.google.co.nz/search?q=martin+armstrong+jail&ie=utf-8&oe=utf-8&aq=t&rls=org.mozilla:en-US:official&client=firefox-a)

Aussie
21-02-2009, 11:02 AM
Will it be this weekend that Citigroup, Bank of America, and Wells Fargo are nationalized? Ken Lewis has officially denied this so it must be true since nothing is ever official until it is officially denied. Seriously, it looks like this is the road we are travelling, the only way to keep the banks open is to nationalize the truly brain dead. But this will also have ramifications and unintended consequences.

First and foremost, the Treasury will now expose it's balance sheet to whatever losses and liabilities any bank has if they nationalize them. The biggest problem is that no rocket scientist alive can figure out what all the liabilities are. I don't believe that any of the banks even know what their true exposure and position is, how can the government know what they are stepping into. This is no ham sandwich affair, the derivative positions we are talking about run into the $ trillions. If Uncle Sam decides to step in front of this deflationary freight train, the word bankruptcy comes to mind.

Lending, or lack of has been a major concern for over a year now, does the government believe they can make better lending decisions? Maybe they can but past history shows that government ownership [ie. Amtrak] usually doesn't work as planned. Russia has already proven that central planning is not the answer. We are moving toward socialism on a grand scale.

Then what is next? The insurance companies, autos, airlines, housing? Where does it stop? Or does it? The bottom line is that the economic monster that was created is far bigger and in a deflationary hole that is so deep that if the government steps in to lend a hand, everything ends up getting sucked into the black hole. I think we are to far down the road now for anything resembling a "save". I have said many times that the current firestorm would result in a complete change of the system with a new banking system and currency, I still see no way around this. Sad.

I believe that if the US takes the step to nationalize the banks, private capital will begin to flee any questionable positions for fear of being nationalized. How will this work? The shareholders obviously get wiped out but are the bondholders left with anything? I don't know. I do think that once this "nationalization door" is opened, out of control will be an understatement. At this point no one knows what anything is truly worth, no one knows whether they are invested in a Ponzi scheme or not. If you have land or property you have no idea whether or not it will be taxed out from under you. The only thing that is a certainty is an ounce of Gold. It cannot go bankrupt, if in hand it is not a scheme, ownership [so far] is not a taxable event, and it spends. More and more are coming to this same conclusion, enjoy the ride. Have a pleasant weekend,

regards, Bill Holter

peat
22-02-2009, 02:57 PM
there certainly was a sell off of USD at the end of Fridays trading. Was well rejected from the 78% retracement (1.1850) of the Nov high against CHFby coming off over 300 pips.
gartley target would suggest 1.11

patsy
23-02-2009, 05:42 AM
not long to wait :eek: 2009.3 = March 19th

tho he says on page 30
that this one is not a major turning point so wont happen to the very day

but hes not talking about the fall of the USD necessarily

As coincidental as it may seem, March 19th is the official commencement of the American reporting season, which, of course, will show dreadful figures.

Aussie
26-02-2009, 11:11 AM
Cost of insuring U.S. 5 yr. Treasury bond is now 1%

If an institution buys a 5-yr Treasury and then wants to turn around buy credit default protection on its purchase, it now must pay 1%. The yield on a 5 yr. T-bond is 1.92%. It now costs more than 50% of your rate of return on a T-bond to insure that you get your money back. This is an absolute disaster for our Government. The cost of credit default insurance is a real world, market assessment of the risk of default of the U.S. Govt, as opposed to the fantasy/fraudulent ratings issued by Moodys and S&P. As per this article, the default risk of the U.S. Govt is now considered to be higher than that of Japan, Germany and France. I would also argue that, given the risks being priced into our credit markets, including the Govt bond market, that the level of the Dow/S&P 500 is still way too high:

http://zerohedge.blogspot.com/2009/02/santelli-all-over-us-annihilation-risk.html

Aussie
26-02-2009, 11:26 AM
To all; by all rights the equity market is oversold, it was due yesterday's bounce and during normal times we should rally hard to 7,800 then the 8,800-9,000 level on the Dow. We are not in normal times and "waterfall" events generally come from oversold levels. The reverse is true for the metals, they are overbought and should relax and pullback somewhat here. I suspect this is not what is happening, it looks to me like $1,000 will be hurdled shortly in Gold and a "6" handle is what the Dow is looking at shortly. I think if this happens, psychology will be crushed worldwide.

No one has any answers and all the past "answers" turned out to be nothing more than "close your eyes and swing at the ball". I think we are very close to the past "business as usual" [fraud] no longer being tolerated. There has been little if any public uproar or shock to the Madoff and Stanford frauds, nor the bank and mortgage frauds, and the $700 billion TARP generated only short term anger. I sense that this will change shortly and go hand in hand with the current equity downleg deepening. This is obviously just one man's opinion but I sense more "squirming" now than in the past.

Again, this is just my gut feeling but I think there will be some type of event that just won't get by the public. There is no telling what it will be or from what sector it will come from, but I sense that it is out there. A terrorist event, political or financial scandal, bank or insurance run, a sovereign auction failure, war, it could be anything, IT WILL BE SOMETHING and unfortunately the entire world is all in the same boat. Every scandal so far has had the reaction of ho-hum to say the least. No scandal has yet to be really investigated [I wonder why?] nor has the money been followed. Mark to market, real audits, follow the money, none of this can be done because immediate panic would follow.

I don't usually blather "gut feelings" but something has been eating at me for over a week or so and it has to do with the complacency, lack of fear, and lack of outrage that we're witnessing. I sense a big wave coming.

Regards, Bill H.

Craig3215
26-02-2009, 04:41 PM
Cost of insuring U.S. 5 yr. Treasury bond is now 1%

If an institution buys a 5-yr Treasury and then wants to turn around buy credit default protection on its purchase, it now must pay 1%. The yield on a 5 yr. T-bond is 1.92%. It now costs more than 50% of your rate of return on a T-bond to insure that you get your money back. This is an absolute disaster for our Government. The cost of credit default insurance is a real world, market assessment of the risk of default of the U.S. Govt, as opposed to the fantasy/fraudulent ratings issued by Moodys and S&P. As per this article, the default risk of the U.S. Govt is now considered to be higher than that of Japan, Germany and France. I would also argue that, given the risks being priced into our credit markets, including the Govt bond market, that the level of the Dow/S&P 500 is still way too high:

http://zerohedge.blogspot.com/2009/02/santelli-all-over-us-annihilation-risk.html

It's staggering, to me its kind of like buying cds on monopoly money, can't they just print it? I'm racking my brain here trying to come up with a way the us treasury could possibly default... worse case I think the us has trouble borrowing money at such low rates so treasury rates rise, from there if that doesn't work they print money causing possibly hyper inflation and major devaluations of the usd so now 1000 usd = 1 yuan paying back the bond just got a whole lot cheaper... why not short usd to protect yourself, if the US gov defaults in my worst case and you get paid off (from a bank that has been able to outlast the us gov?) your still loosing almost everything you invested because your still exposed to usd... to me this just shows how fear has taken over and that there are big opportunities to make money in select markets... i must be missing something, and i'd be interested to hear what that something is?

Aussie
27-02-2009, 06:39 PM
. . . I must be missing something, and i'd be interested to hear what that something is?

your not missing anything Craig and neither is Bill Holter over at Le Metropole Cafe . . .


__________________________________________________ _

Fiscal irresponsibility ie. Banana Republic

What a complete farce we are living through now. President Obama submitted his budget with a $1.75 Trillion projected deficit, yeah this one's manageable, it is only about 12-13% of GDP. Can you say banana republic? Only a day after his "fiscal responsibility" speech we get the details of this porked out, bloated, nation destroying farce of a budget proposal. Did I mention the $643 billion for health care? Actually, I believe this amount was the "down payment" over 10 years, I can't wait until the final tax bill comes. We will probably witness more heart attacks, more inductions into insane asylums, and more ulcers as a reaction than they will cover the previously uninsured.

This is truly banana land and the market is sniffing it out. Yields on Treasuries are rising and the default insurance on a 5 year note now exceeds that of Germany, France, and Japan. But here is the funniest part of all, if the US were to default, who would be left standing to make good on the default insurance? Aren't the insurers the likes of AIG, GE, and JP Morgan? If the government defaults, would any public finance company be left standing to pay up in Dollars? Wouldn't these Dollars presumably have no value because the "full faith and credit" just went broke? Wouldn't it be a better idea to just take the insurance premiums and buy Gold bullion over the 5 years? Hey, at least at the end you would still have bullion even if there was no default. But the best part, you would have bullion if they did default! I am confused as to what board of directors, money managers, etc. would pay Dollars today [that could be converted into something real] to insure against default of the US, only to receive more currency of the bankrupt entity ? Buying credit insurance on US debt is the equivalent of buying a BIC lighter for fire insurance.

The whole show has gotten stupid, the autos, banks, insurers, home builders and lenders are all crippled because we went off a deflationary cliff and this in turn has dragged the balance sheet of the Fed and Treasury into a black hole. And what do we hear on CNBC? Now is the time to BUY BUY BUY, especially the banks! They will lead us out! I am no rocket scientist but I can do simple math on a scratch pad, the SYSTEM is broke and no amount of freshly created worthless monopoly money is going to change this. It is over the edge and the only thing we hear from Washington is "we will borrow more money to make the already over levered system right again"! I don't think so Tim.

This thing is busted, if it wasn't, then 0% rates, $ Trillions in bailouts and stimulus, plans A-Z surely would have turned us around. They haven't worked and in fact things are much worse now than 6-12-18 months ago. The history books will be read 100 years from now and I can already hear an astute 3rd grader asking, "who WERE these people"?

Regards, Bill H.

arco
01-03-2009, 08:56 AM
.

The dollar is approaching a three- year high against the currencies of major U.S. trading partners as the plunge in the yen and Swiss franc leaves the world’s reserve currency the only refuge from economic turmoil. (Bloomberg)

Five months after the collapse of Lehman Brothers Holdings, risk-averse investors across the world are still flocking to the safe-haven instruments, and in the process shunning riskier debt, a signal of the continued woes plaguing the economy and financial markets.
A slew of US government-bond auctions this week, which totaled $94 billion in sales, underscored the point. At an auction of two-year notes Tuesday, bids for the securities outnumbered the amount being offered by a ratio of more than 2.5 to 1 even though they yielded just 0.96%. The sales were followed up with robust demand at auctions of five-year and seven-year notes Wednesday and Thursday.
(WSJ)

ananda77
01-03-2009, 02:42 PM
.

The dollar is approaching a three- year high against the currencies of major U.S. trading partners as the plunge in the yen and Swiss franc leaves the world’s reserve currency the only refuge from economic turmoil. (Bloomberg)

...yes short term US treasuries remain the safest asset class of choice

...although the US$ may go a bit higher in the short term, the outlook points to a correction;

...longer term however, as the Worldwide Currency Race to the bottom accelerates, the US$ continues to be the best of the bad lot and will continue to show strength as the greatest depression ever will hold the world in its grip for a few more years to come

...to think in terms of inflation based on hopes of another round of CREDIT EXPANSION (like the Crooks' Crew and 'Bla Bla Brainwash Fairytale Press' wants us to believe) is simply delusional so long as the 52 TRILLION = FIFTY TWO TRILLION in credit market debt keeps imploding;
'Keep Safe" = 'Stay in Cash' Strategies are winning the day against the crooks' crew best efforts to explode the money supply irresponsibly with just one objective in mind:

-to save their masters-

and in the process

-entice people to ride even deeper into debt trouble

Kind Regards

peat
02-03-2009, 06:56 PM
USD/CAD seems to be giving a signal of USD strength - see my post
http://www.sharetrader.co.nz/showpost.php?p=244862&postcount=260
has this has now popped its head above the wave 4 triangle and started a wave 5 ?

USD/JPY and USD/CHF look to me as tho they have more resistance areas directly above them

thats what I'm thinkin anyway...

miner
05-03-2009, 10:23 PM
http://www.nytimes.com/2009/02/28/business/28nocera.html?_r=1

Craig3215
06-03-2009, 07:31 AM
I talked to Marty, he is looking for the dow to go to 3600-4000 area by june or sept, with all due respect I hope he is wrong

Dr_Who
06-03-2009, 08:48 AM
I talked to Marty, he is looking for the dow to go to 3600-4000 area by june or sept, with all due respect I hope he is wrong

I hope he is wrong also. This can be catastrophic for the entire world economy. Start farming guys! :eek:

arco
06-03-2009, 08:49 AM
I talked to Marty, he is looking for the dow to go to 3600-4000 area by june or sept, with all due respect I hope he is wrong

Thanks Craig - unfortunately he may not be far off.

peat
06-03-2009, 11:59 PM
Business spectator

" the Bank of International Settlements calculates that European banks faced a $US2 trillion US dollar funding shortfall at the time of Lehman collapse in September and although there is a lag in collecting the data, there is no doubt that a huge shortfall still exists.

The implication of this is clear: European banks funded themselves with dollars during the boom and the capital destruction of the past year has left them starved of dollars and scrambling to get them.

That’s why the US dollar has been so strong and why it seems likely to keep going up, despite the colossal mess in the US financial system."

Dr_Who
07-03-2009, 06:49 AM
Very interesting Peat, thanks for the article. Do you have a link?

The world is totally stuffed with the exception of China.

patsy
07-03-2009, 12:53 PM
Very interesting Peat, thanks for the article. Do you have a link?

The world is totally stuffed with the exception of China.

If you went to China (as I did just two weeks ago), you'd see that the Chinese are in "ultra panic mode". There is an unbelievable idle overcapacity in factories. The peasants, who not long ago thought of "making a killing" as factory workers are moving back from cities to the country after relentless layoffs. The Chinese are propaganda masters - the reality is far from what they try to make us believe in the West.

peat
07-03-2009, 02:03 PM
from this article : http://www.businessspectator.com.au/bs.nsf/Article/Growth-in-our-time-$pd20090306-PURLV?OpenDocument&src=kgb

came this link : http://www.businessspectator.com.au/bs.nsf/Article/Currency-$pd20090306-PUTWT?OpenDocument

which doesnt actually contain exactly what I posted, but is as close as I can find again now.

peat
07-03-2009, 03:35 PM
the Chinese are in "ultra panic mode

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=ahxBcUdeeYxE

China’s 2009 Rebound Is Pure Fantasy: William Pesek (Update1)



this really is the all consuming thread !

winner69
07-03-2009, 03:46 PM
The Chinese are propaganda masters - the reality is far from what they try to make us believe in the West.

Wasn't that many years ago the Chinese GDP figure came out before the end of the period it was measuring ...... prob making it up as they went along was the consensus

patsy
07-03-2009, 06:47 PM
Wasn't that many years ago the Chinese GDP figure came out before the end of the period it was measuring ...... prob making it up as they went along was the consensus

What I've seen over recent years in China/India (through my work) is that there is a certain mystique about those two countries, mixed up with some PC and the sense that it is "cool" in the West to talk up the China/India economies. The reality is a little different. The problem is that most people make comments about them and even financial decisions are made on the basis of some superficial newspaper article or some socialist-driven commentary in The Economist. No-one can deny the significant growth that they experienced but, again, a first-hand look at what's going on there can leave anyone with a completely different opinion.

ananda77
08-03-2009, 12:52 PM
Business spectator

...there is no doubt that a huge shortfall still exists.[/FONT]

The implication of this is clear: European banks funded themselves with dollars during the boom and the capital destruction of the past year has left them starved of dollars and scrambling to get them.

That’s why the US dollar has been so strong and why it seems likely to keep going up, despite the colossal mess in the US financial system."

...as I mentioned before, it is not only the European banks starving as the total outstanding US$ denominated credit market debt = FIFTY TWO TRILLION

...no matter how fast US$ are put into circulation, skyrocketing the money supply, at the same time, the velocity of money simply goes into the opposite direction as the increased money supply is sucked into the huge BLACK HOLE OF DEBT

...in the very short term a USD correction to the 82 level possible

...at the same time, the securitization market is DEAD and despite all efforts remains DEAD as long as the debt still remains unpurged from the system

...stay in cash because it is needed when the financial system takes a holiday

Kind Regards

ananda77
08-03-2009, 02:48 PM
...for all those people pinning their hopes on CHINA:

The U.S. Financial System Is Effectively Insolvent

There is a grave risk of a global L-shaped depression.

By Nouriel Roubini

...So without a recovery in the U.S. and global economy, there cannot be a sustainable recovery of Chinese growth. And with the U.S, recovery requiring lower consumption, higher private savings and lower trade deficits, a U.S. recovery requires China's and other surplus countries' (Japan, Germany, etc.) growth to depend more on domestic demand and less on net exports. But domestic-demand growth is anemic in surplus countries for cyclical and structural reasons. So a recovery of the global economy cannot occur without a rapid and orderly adjustment of global current account imbalances.
http://www.forbes.com/2009/03/04/global-recession-insolvent-opinions-columnists-roubini-economy.html?321

Kind Regards

Dr_Who
08-03-2009, 03:27 PM
If you went to China (as I did just two weeks ago), you'd see that the Chinese are in "ultra panic mode". There is an unbelievable idle overcapacity in factories. The peasants, who not long ago thought of "making a killing" as factory workers are moving back from cities to the country after relentless layoffs. The Chinese are propaganda masters - the reality is far from what they try to make us believe in the West.

I travel to China a couple of years back for a holiday. Amazing place. I too agree with what you are saying. These days, you dont know who to believe. Everyone is telling fibs, from the Chinese to the Americans. All the CEO from the large investment banks are bull**** artists. No wonder investors have lost confidence and buying gold. It will take a long time to restore investor confidence again after this tragic event.

patsy
09-03-2009, 05:46 AM
...for all those people pinning their hopes on CHINA:

The U.S. Financial System Is Effectively Insolvent



The Chinese have now a big dilemma.... similar to a poker player that has to keep on calling and raising bets. On the one hand, they have become the buyers of a big proportion of US Govt bonds - the Americans need the Chinese to fund the bailout. This presents a good opportunity for the Chinese: they can just close the tap and see the US$ collapse and challenge World hegemony. But if they did so, the trillion dollars or so they already hold on Treasure notes would be wiped out. So what should Chinamen do?, they ask themselves. It is a classic example of prisoner dilemma - they can both go down or they can share the pain.

Aussie
09-03-2009, 03:28 PM
The Chinese have now a big dilemma.... similar to a poker player that has to keep on calling and raising bets. On the one hand, they have become the buyers of a big proportion of US Govt bonds - the Americans need the Chinese to fund the bailout. This presents a good opportunity for the Chinese: they can just close the tap and see the US$ collapse and challenge World hegemony. But if they did so, the trillion dollars or so they already hold on Treasure notes would be wiped out. So what should Chinamen do?, they ask themselves. It is a classic example of prisoner dilemma - they can both go down or they can share the pain.

Patsy, what ever the Chinese say publicly . . . you can bet they will be doing the opposite in reality.

Recently they said they see little choice but to continue buying US Treasuries. I say BS . . . they are slowly but deliberately exiting USD assets and acquiring gold, mining and energy assets. They are far better poker players than the dumb western governments.

Craig3215
10-03-2009, 01:37 AM
Here's the numbers, its interesting that foreign demand for long term debt (bonds and notes) has gone no where since june and demand for bills in that period of time has about doubled

http://www.treas.gov/tic/mfh.txt

peat
10-03-2009, 04:39 AM
so its all hot money huh
now thats very relevant to this thread!

however right now USD/CAD hit a new high, NZD/USD pretty much on a low

Aussie
14-03-2009, 10:14 AM
To all; the premier of China has said "We have made a huge amount of loans to the United States. Of course we are concerned about the safety of our assets. To be honest, I'm a little bit worried," Wen said at a news conference following the closing of China's annual legislative session. "I would like to call on the United States to honor its words, stay a credible nation and ensure the safety of Chinese assets."

This is it, this is the beginning of "banana republic" time. If the Chinese truly step back and do not support our Treasury auctions, the buyer of last resort will be the Fed. I am sure the Fed has already begun monetizing but without Chinese support, the Fed will be monetizing out in the open for all the world to see. All of the massive bailouts that have been promised will in essence be paid for by the Fed printing more Dollars to give to the Treasury. The Chinese "communicate" in this fashion, they have made a very strong statement to Washington. It is no longer a question of if, only a question of how rapidly the Dollar unwinds. We all knew this day was coming, the day that the markets see an auction without Chinese participation will be horrid. Strap in and hunker down.

Regards, Bill H.

http://www.breitbart.com/article.php?id=D96T2TT81&show_article=1

lakedaemonian
15-03-2009, 09:51 PM
To all; the premier of China has said "We have made a huge amount of loans to the United States. Of course we are concerned about the safety of our assets. To be honest, I'm a little bit worried," Wen said at a news conference following the closing of China's annual legislative session. "I would like to call on the United States to honor its words, stay a credible nation and ensure the safety of Chinese assets."

This is it, this is the beginning of "banana republic" time. If the Chinese truly step back and do not support our Treasury auctions, the buyer of last resort will be the Fed. I am sure the Fed has already begun monetizing but without Chinese support, the Fed will be monetizing out in the open for all the world to see. All of the massive bailouts that have been promised will in essence be paid for by the Fed printing more Dollars to give to the Treasury. The Chinese "communicate" in this fashion, they have made a very strong statement to Washington. It is no longer a question of if, only a question of how rapidly the Dollar unwinds. We all knew this day was coming, the day that the markets see an auction without Chinese participation will be horrid. Strap in and hunker down.

Regards, Bill H.

http://www.breitbart.com/article.php?id=D96T2TT81&show_article=1

Leverage?

Certainly............but pulling out the rug? hell no

I think of it as:

Financially United Chaos, Karma, Extinction, (and) Destruction

Makes a great acronym

It's the new M.A.D. :)

Aussie
19-03-2009, 02:01 PM
To all; beyond stupid is all I can say about the Fed's announcement today! They are going to spend (read print) $1 trillion, to inject into the economy and buy Treasury bonds, can you say HYPERINFLATION! As a side note, CNBC reported "massive" call buying in long term Treasuries early today, can you say INSIDER TRADING! So I guess we are now all saved, again, for the umteenth time.

Treasury yields have immediately cratered about 1/2% in the 10 and 30 year Treasuries, this knee jerk reaction will soon be seen as nothing but a reaction by a bunch of jerks. So the Fed will expand it's balance sheet by another 50% and investors want to buy fixed income securities? They are buying bonds with lower yields when the Fed says they will create more Dollars to buy Treasury bonds that promise to pay in these same over issued Dollars? I don't get it. Well actually I do, and I think anyone buying bonds now will get it shortly, you know where. Mr. (I'm a student of the depression) Bernanke has thrown in the towel and is hyperinflating in plain sight, this will not work and will not stand when the G-20 meets in 2 weeks.

This is panic by the Fed, plain and simple. It is also the admission of failure, failure of all the past plans to unthaw the credit crunch. If you watched Gold today, you saw it down $30 plus Dollars until the Fed announcement, it is now up $30+. If you had any questions as to whether Gold was manipulated or not, today's action should do it for you. Gold had no reason to be down hard except for the fact that it was necessary to "retard" it so a $60 rally would look like a $30 rally, HOW PATHETIC!!! If you had any lingering questions about owning Gold, they should be completely gone as the Fed "rang the bell" today, WE WILL DESTROY THE CURRENCY TO SAVE THE BANKING SYSTEM! No ifs, ands, or buts, this is textbook hyperinflation.

The Dollar has had a huge one day collapse -3% (read, everything just got 3% more expensive in Dollar terms), stocks are giving up their gains, and Gold and the shares are running upward like scalded dogs, these are all to be expected. Treasuries however are very counterintuitive and anyone who owns them and doesn't sell into this rally (unless hedged by Gold) needs to have their heads examined. Yields should begin a huge rise very shortly as the world figures out what just happened today. I cannot stress enough how big today is, the implications are earth shattering. This is the Central Bank of the world's reserve currency admitting failure and panicking two weeks before they meet with their banking "brethren". Talk about bargaining from a weak position, Geithner, Bernanke and co. will be sent to the corner and ordered to wear a "dunce cap" (made of paper mache) when they arrive in London. They will show up to the gunfight with paper knives.

I knew this had to happen, I like everyone else hoped I was wrong. Now we will watch as the smoke pours from the Fed's money printing factory as the presses burn up and burn out. It is almost hilarious listening to CNBC's endless line up of idiots raving about how great this "quantitative easing" is, they don't even have a clue as to what is happening. Wecome to Zimbabwe, a loaf of bread costs $10 billion. I will leave you with this question to ponder, "what is the difference between U.S. Dollars and those of Zimbabwe"? The answer is in the title.

Regards, Bill H.

patsy
20-03-2009, 06:57 AM
To all; beyond stupid is all I can say about the Fed's announcement today!

Regards, Bill H.

I just couldn't agree more!

For those who really want to learn Bernanke's thought processes and how he'll do anything possible to destroy the USD, this is what he wrote in 2002:

Remarks by Governor Ben S. Bernanke
Before the National Economists Club, Washington, D.C.
November 21, 2002

http://www.federalreserve.gov/boardDocs/speeches/2002/20021121/default.htm

The most unfortunate thing is that Western societies (NZ included) have forgotten the consequences of inflation and spurious paper money, and everyone believes that monetisation and reinflation is the way to go.

Rather than leaving the deleveraging and restructuring process take place, they want to fight against it. A fundamental deleveraging process must take place before the next growth cycle starts. Anyway, they will lose because powerful economic balancing forces are in play.

When the USD devalues, there is every chance that most countries will continue an unabated destruction of their own currencies for competitive reasons. That's when the REAL wealth destruction will occur. NZ has already started in this path.

Can Bernanke be impeached?

Aussie
20-03-2009, 11:33 AM
Can Bernanke be impeached?

He is appointed by the President and confirmed by Congress. I would imagine that if things got to the point of impeachment talk, the very existence of the Fed itself would be in question.

JBmurc
20-03-2009, 11:50 AM
He is appointed by the President and confirmed by Congress. I would imagine that if things got to the point of impeachment talk, the very existence of the Fed itself would be in question.

Yes the- FED or the truth- the Large private bank run by the super rich of the world -just watch the link below for more imfo on the matter

patsy
20-03-2009, 07:13 PM
the very existence of the Fed itself would be in question.

That would be one of the best things that can happen to both the US and World economies. There is one bill in Congress, sponsored by one of the very few sane American politicians (Ron Paul) to make the Fed more transparent. However, obliteration of the Fed would be better.

Aussie
20-03-2009, 07:25 PM
That would be one of the best things that can happen to both the US and World economies. There is one bill in Congress, sponsored by one of the very few sane American politicians (Ron Paul) to make the Fed more transparent. However, obliteration of the Fed would be better.

100% agree patsy. However, along with the Bank of England, the US Federal Reserve System is the jewel in the crown of the international banking cartel. It is the (waning) financial power behind western global dominance including the World Bank and the IMF.

I suspect we will have officially arrived at the end of the world before they will allow the most lucrative banking franchise in history to be disbanded . . . most likely it will only be replaced by a new "global" central bank. This is in progress and we are likely to see it sooner rather than later. Everything seems to be on an accelerated timetable.

ananda77
20-03-2009, 09:06 PM
...since October 2007, the financial and economic system has disintegrated with lightning speed as exorbitant debt levels started to unravel; many millions of people are facing and are fighting to avoid rock bottom

...I simply cannot imagine how much more misery an unmitigated impact (central bank actions to date) of the global debt destruction would have caused;

...people can be and have been mislead, but people are no idiots they can not be coerced further into debt slavery -DO THE RIGHT THING- and they have started SAVING (the kick-ass strategy against debt slavery); topping that

...SOARING GLOBAL UNEMPLOYMENT, FALLING WAGES, EXORBITANT CONSUMER AND BUSINESS DEBT, as well as HUGE PRODUCTIVE OVERCAPACITY -the flagpoles of global debt destruction-

...HYPERINFLATION - YOU KIDDING?? GET REAL!! LET CASH BE KING

...wonder what John Key, who correctly said: "You Can't Spend Your Way Out of the Crisis." has in mind;
maybe, here in New Zealand, instead of seeing companies laying off workers by the thousands and thus compromising the delivery of goods and services and their international competitiveness, we will see companies holding on to the workforce, albeit on reduced wages -if necessary- ;
in that way, as John Key reckons, we might have a chance... "that when the world starts growing again we can be running faster than other countries we compete with."

Kind Regards

ananda77
22-03-2009, 08:00 PM
...there are possibly only two ways how to finance the US deficit:

1- The federal deficits could be financed by further flight from equities and other investments. The next financial shock could arise from commercial real estate. Stores are closing in shopping centers, and vacancies are rising in office buildings. Without rents, the mortgages can’t be paid.
Another scare and another big drop in the stock market will set off a second "FLIGHT TO QUALITY" and finance the budget deficits (buying up treasuries >to be on the safe side, the safest way would be to buy the shortest term treasuries)

2- The Federal Reserve will buy most of the new bonds and create demand deposits for the Treasury. In effect, the money supply will grow by the amount of Fed purchases of new Treasury debt. Printing money to finance the government’s budget normally leads to high inflation and high interest rates.
The initial impact of the announcement of the Fed’s plan to purchase existing debt was to drive up the bond prices. However, if the reserves poured into the banking system by the bond purchases result in new money growth, and if the Fed purchases the new debt issues to finance the governments’ budget deficits, the outlook for bond prices and the dollar becomes poor.
source: http://vdare.com/roberts/090319_bailout.htm

...looking at the long term trajectory of equity markets as well as the fact that the Fed's intention remains to keep interest rates at their lowest possible level for a prolonged period of time, it looks most likely that 1- should be the preferred strategy to tackle the deficit problem...

Kind Regards

peat
25-03-2009, 09:08 AM
from the ABN Amro Daily mail


China’s central bank proposed replacing the US dollar as
the international reserve currency with a new global system
controlled by the International Monetary Fund. In an essay
posted on the People’s Bank of China’s website, Zhou
Xiaochuan, the central bank’s governor, said the goal would
be to create a reserve currency “that is disconnected from
individual nations and is able to remain stable in the long
run, thus removing the inherent deficiencies caused by
using credit-based national currencies”. Analysts said the
proposal was an indication of Beijing’s fears that actions
being taken to save the domestic US economy would have a
negative impact on China

Nevl
25-03-2009, 09:24 AM
from the ABN Amro Daily mail


China’s central bank proposed replacing the US dollar as
the international reserve currency with a new global system
controlled by the International Monetary Fund. In an essay
posted on the People’s Bank of China’s website, Zhou
Xiaochuan, the central bank’s governor, said the goal would
be to create a reserve currency “that is disconnected from
individual nations and is able to remain stable in the long
run, thus removing the inherent deficiencies caused by
using credit-based national currencies”. Analysts said the
proposal was an indication of Beijing’s fears that actions
being taken to save the domestic US economy would have a
negative impact on China


Proving that old saying" if you owe the bank $1 you have a problem, if you owe the bank $1trillion then the bank has a problem"

China feeling a bit nervous about its unhedged exposure to the US debt market I think. This could be a massive transfer of wealth back to the US from China. How ironic. Proof that the market will even out in the long run. The US $ is on a long term downtrend needed to rebalance its economy and fix up its trade deficit. The Chinese cannot extract all their money and will be watching as each year another 10% of their wealth dissapates.

airedale
25-03-2009, 12:01 PM
So is it possible that in a few years we will see " made in America" instead of "made in China" on everything that we buy.?;)

Aussie
25-03-2009, 12:59 PM
. . . This could be a massive transfer of wealth back to the US from China. How ironic . . .

Not sure that I understand that logic. I thought a massive transfer of wealth from China to the US had already taken place via US$2 Trillion worth of USD's and bonds that China owns.

Am I missing something here? If the USD loses it's status as the world's reserve currency and if China and other central banks start moving out of their substantial USD positions, what will be heading to the US will be a massive wave of inflation as all those un-needed, freshly de-valued USD wash back up on the shores of America.


So is it possible that in a few years we will see " made in America" instead of "made in China" on everything that we buy.?;)

I seriously doubt that. It will take America decades to rebuild what has been destroyed in their manufacturing sector.

ananda77
28-03-2009, 05:56 PM
Stocks Will Drop; Banks Will Go Belly Up - Roubini

...Deflationary Forces:

-lingering for as long as three years
-U.S. government bond yields will remain low and American house prices will fall as much as 20 percent in the next 18 months
-dollar will INITIALLY benefit as investors seek a safe haven in the U.S currency
-China’s call for the creation of a new international reserve currency a “pie in the sky idea” that’s unlikely to gain traction any time soon.
-a political call and in a nut shell - it ain’t going to happen any time soon
http://informationclearinghouse.info/article22302.htm

Kind Regards

winner69
28-03-2009, 07:16 PM
Couldn't help but laugh reading this from that site ananda mentioned above

How the Scam Works

By MICHAEL HUDSON

March 27, 2009 "Counterpunch" -- Newspaper reports seem surprised at how high banks are bidding for the junk mortgages that Treasury Secretary Geithner is now bidding for, having mobilized the FDIC and Fed to transfer yet more public funds to the banks. Bank stocks are soaring – thereby bidding up the Dow Jones Industrial Average, as if the “financial industry” really were part of the industrial economy.

Why are the very worst offenders – Bank of America (now owner of the Countrywide crooks) and Citibank the largest buyers? As the worst abusers and packagers of CDOs, shouldn’t they be in the best position to see how worthless their junk mortgages are?

That turns out to be the key! Obviously, the government has failed to protect itself – deliberately, intentionally failed to do so – in order to let the banks pull off the following scam.

Suppose a bank is sitting on a $10 million package of collateralized debt obligations (CDOs) that was put together by, say, Countrywide out of junk mortgages. Given the high proportion of fraud (and a recent Fitch study found that every package it examined was rife with financial fraud), this package may be worth at most only $2 million as defaults loom on Alt-A “liars’ loan” mortgages and subprime mortgages where the mortgage brokers also have lied in filling out the forms for hapless borrowers or witting operators taking out mortgages at far more than properties were worth and pocketing the excess.

The bank now offers $3 million to buy back this mortgage. What the hell, the more they bid, the more they get from the government. So why not bid $5 million. (In practice, friendly banks may bid for each other’s junk CDOs.) The government – that is, the hapless FDIC – puts up 85 per cent of $5 million to buy this – namely, $4,250,000. The bank only needs to put up 15 per cent – namely, $750,000.

Here’s the rip-off as I see it. For an outlay of $750,000, the bank rids its books of a mortgage worth $2 million, for which it receives $4,250,000. It gets twice as much as the junk is worth.

The more the banks holding junk mortgages pay for this toxic waste, the more the government will pay as part of its 85 per cent. So the strategy is to overpay, overpay, and overpay. Paying 15 per cent is a small price to pay for getting the government to put in 85 per cent to take the most toxic waste off your books.

The free market at work, financial style.

http://informationclearinghouse.info/article22306.htm

Craig3215
02-04-2009, 04:13 PM
Posted a new Martin Armstrong Article here
http://www.traders-talk.com/mb2/index.php?showtopic=103994
too big of a file to attach on sharetrader

JBmurc
06-04-2009, 06:09 PM
discussion on how to replace the dollar as the world's primary reserve currency

http://rs6.net/tn.jsp?et=1102514472800&e=00111dCE0SlCdAZdxC0QfMZ691m42vLtdpWuYAVEEpYppx01 E1lyD3l5CFiIuGJuDmCLGjArV6Kh4k6h3TqwrhO81wi2I6D_JU SUR-KNfhxuH9Wtt_3SEOupBIQiWa4HSgFkWK3r2tpoqfkHT--usdu2-1DdrLoQ9-OhZEIliWLYo4=

airedale
06-04-2009, 08:22 PM
Alexei Kudrin suggested that it could take 20 years to establish a new reserve currency. Strewth.....what is gold going to do in the meantime:(

peat
06-04-2009, 08:43 PM
from the link posted by JB Murc

"The source said the Chinese paper envisaged the International Monetary Fund's Special Drawing Rights (SDRs) being first assigned a role of a clearing currency on some transactions and then gradually becoming the main global reserve currency. "They said that the role of reserve currency should be given to SDR," the source said"


I did a bit of reading on the SDR over the weekend. Its just redeemable to a basket of other (paper) currencies so its like an abstracted fiat. Pretty pointless exercise imo but hey if I can trade it ;+)
While i was there I looked at their books too (quite bad really) tho the IMF does have a bit of gold stashed away which it wants to sell actually.
So I cant see the point
But the point is that everyone esp the Chinese is genuninely and vocally starting to get the wind up with the good ole Yankee dollar.

Really enjoyed the Martin Armstrong read too thanks Craig - tho perhaps a tad too much ancient history. He;s incredibly bullish on gold - not necesarily in the short term but his medium - long term targets are :eek: or more like :D if you own gold. A break above 1200 he says would generate a Phase Transition type move to 2500, and 5000 is 'entirely possible'. Very interested in those specific dates and months he talks about this year too such as April 19th for a support level and then another high in September. Lets see!

Oh and lol at suburbium

Aussie
17-04-2009, 12:11 AM
A good source of Martin Armstrong downloads . . .

http://www.scribd.com/people/documents/10432015-kris

JBmurc
19-04-2009, 11:12 AM
There are several analysts who also see what's about to happen:

"The perfect storm is ahead for massive inflation to begin in the second half of 2009... hyperinflation during the next decade is becoming less the worst case scenario and more the most likely scenario."
The National Inflation Association

"I do not want to own any US dollars. Also, I would not urge you to buy US dollars. (The) dollar is going to lose its status as world reserve currency."
Legendary investor Jim Rogers

"Throwing money at the problem and propping up the greedy banks that created the speculation is like trying to put out a fire by pouring gasoline on it. The result will be an even bigger, more searing fire."
Jim Walker, Asianomics

"If the stock market recovers in the second half of 2009 - ahead of an economic recovery - the rise in share prices in a low interest-rate environment could spark hyperinflation."
Currency expert Wayne McDonell

"...the stimulus programs will only prolong and worsen the credit excesses, and that the massive deficits and reckless expansion of the money supply will unleash hyperinflation, a more painful and socially dangerous threat. Think of Germany's hyperinflation experience in the 1920s or more recently of Brazil's or Zimbabwe's."
Barton Biggs in Newsweek

And I particularly like this warning from respected economist Walter Williams...

"The US economy is in an intensifying inflationary recession that eventually will evolve into a hyperinflationary great depression. Hyperinflation could be experienced as early as 2010, if not before... The US government and Federal Reserve already have committed the system to this course through the easy politics of a bottomless pocketbook, the servicing of big-moneyed special interests, and gross mismanagement."

Aussie
21-04-2009, 11:10 PM
Good stuff JBmurc!

Here's the latest from Bill Holter at Lemetropole Cafe . . .



Zero
To all;

Profit taking? That's what we are being told today is all about in the stock market. Technically, the MACD lines are about to crossover to the downside as a result of two weeks or more of sluggish momentum. Fundamentally, (you know, the real meat and potatoes of investing) could not be worse on a global basis for equity investing. As I mentioned last week, I smell smoke billowing from the back rooms of financial institutions. What has happened, (and been happening for at least 10 years) is that the government has meddled in the markets for so long and to such a degree that the "gears" if you will, are no longer aligned properly nor even running in the same directions.

What they have done, has been to run around putting out fires and managing perceptions without ever considering the longer term consequences. The beauty of capitalism is (was) that it is a "self correcting system", if you make a bad investment, you lose. You go out of business and learn a lesson. Capital will always seek the undervalued and exit the overcrowded, this is the most basic tenet of a free market. When you artificially entice, prod, or even (GOD FORBID!) manipulate markets, you create "mal investment" that shouldn't (wouldn't) normally exist. Investing is always "weighed" or tempered with risk in mind. RISK, is what the world forgot to factor in while "things were good".

In my opinion, risk was masked, hidden, and delayed by the Fed , Treasury, and the administrations in general since 1988 when Pres. Reagan formed the "Working Group on Financial Markets" otherwise known as the Plunge Protection Team. Since the 1987, the U.S. economy has been forbidden from having a real recession that would have cleaned out bad debt and mal investments. Instead, the bad debt was allowed to pile up like a garbage dump that finally reached its boundaries. We could have avoided the current situation had the 1991, 1997, or 2001 recessions been allowed to run a natural course, they were not and now the Piper will get paid no matter what the government wants.

Had markets been left alone to reward the smart and kill the ill informed and ignorant, 2003-2007 could never have happened. After the tech bubble blew up, the Fed HAD to have another debt bubble because they feared the current outcome (debt contraction). The current situation has been postponed for so long and to such an extent that the problem is now far, far, bigger than the Treasury, Fed, and all other world Central banks and Treasuries combined by a factor of at least 10. I know you have heard me say this before but, had the price of Gold been allowed to move freely and not been suppressed all these years, the alarms would have sounded as far back as 1996 about the over issuance of money and credit.

As stated many times before, we will have a new currency, probably very soon. This will amount to a devaluation of all fiat paper versus real goods. All the lies, manipulations, managed perceptions and expectations will be accounted for in one fell swoop. The scales will be balanced, and assets, liabilities, production, consumption, and yes, even money, will all be completely revalued to reflect "the new reality". Once the creators of fiat lose their "power" to obfuscate values, reality will return. I believe that every human being that has used fiat currency will be shocked to some extent as to where some of these new values level out at.

We have heard all sorts of projected numbers for the future "Dollar" price of Gold, Sinclair $1,650, Bill Murphy $3,000-$5,000, Alf Fields $6,000-$10,000. If we are going down the road of fiat destruction as I think we are, ANY Dollar price will make no sense whatsoever. Just look at Zimbabwe, $10 billion for a loaf of bread, what does an ounce of Gold cost, $10 trillion? The point is, the "Fiat masters" are losing the system and we are watching it first hand. If I had any cash left, I would surely invest in a "Zero factory" since 0's will be the most commonly used number in all of history (can you imagine the demand?). Think about it, multiple 0's will follow a number for the price of all sorts of common goods and a single, lonely 0 will be used for what once had been the foundation of society, PAPER. I know this sounds a little off the wall, but what value do you put on a currency when it is no longer accepted? Yes, that's right ZERO!

Regards, Bill H.

Aussie
28-04-2009, 01:03 PM
And now the "REAL" Stress Test!

To all:

The much touted "stress test" of the U.S. banking system is nothing but a PR sham and in reality, completely meaningless. The "worst case scenario used is a 3+% drop in GDP, and a 10% unemployment rate. If real GDP and unemployment numbers were ever offered up, my guess is that we already have had a minimum 5% contraction in GDP and true unemployment is approaching 13-15%. The stress test only addresses "tier one capital", my question is this, what about all the "off balance sheet" crapola that surely renders these reckless banks insolvent? No, really, I WANT TO KNOW! By trying to control and manipulate ALL markets, these banks have taken $ trillions upon $ trillions worth of fraudulent transactions on (and according to their accounting, off) their books. They are walking corpses that cannot be saved.

On books, off books, what is this crap!? If you enter into a transaction, is it not still a transaction whether you "account" for it or not? Are you not responsible to perform on the contract, no matter how you account for it? I did business my entire life on a handshake, I never had "off balance sheet" business because A DEAL IS A DEAL. Period. Even if it was a bad deal, it was still a deal and I would learn a lesson but still perform.

The "originator", the biggest abuser, the teacher if you will, for off balance sheet shenanigans, IS the U.S. government. They have used fraudulent accounting for nearly 50 years. The have used a fraudulent currency for nearly 40 years, invoking the "never pay" model. And now they are providing a stress test for the banks? How quaint, how brazen of them. I believe that the biggest stress test of all time will be imposed on the U.S. Treasury and Federal Reserve very soon by Mother Nature (the markets). The Dollar has completed it's short covering rally, it has made no headway since last November. The Treasury market has retraced all of it's gains since the "quantitative easing" announced by the Fed in mid March. The 10 year has moved up from sub 2.5% to an even 3% in the span of 6 weeks, a move higher from here should accelerate this move. The equity market is at a moment of truth, in that it's momentum has also stalled but it must continue higher in order to "prove" all the talk of "green shoots" and to spur consumer spending and confidence.

Should ANY of these markets fail, the jig will be up for the other 2. Should the Dollar collapse, it will spur Treasury selling and thus higher interest rates. Should Treasuries collapse, the laughable "bottom" in real estate will be proven to be false, and thus will spur further negative sentiment and consumer retrenchment. Should stocks collapse, well, you will have pension shortfalls, even more consumer retrenchment, in short, a "depressionary environment". But here is the "big enchilada", it is the government who will be most harshly affected by this market imposed stress test. Uncle Sam cannot afford higher rates, the debt service alone will kill him. He cannot afford a lower exchange rate currency because this will spook foreigners into a "bank run", nor can he afford a lower equity market as that will expose the invalid "stimulus plans" and spook the entire world.

The current "remedies" virtually guarantee a lower Dollar and higher interest rates, the correct remedies (necessary almost 10 years ago) will result in the same, a collapsed currency and a debt market with few bids. In short, this credit contraction is now becoming a self fulfilling prophecy. Tax revenue is imploding while at the same time they decided to spend like drunken sailors. This is rapidly becoming a sovereign bankruptcy that will spread faster than swine flu. Upon further thought, the real stress test will be how we, as individuals and family units, cope with the conditions thrust upon us. The past rewarded those who were blatantly reckless, now, even those who were prudent and played by the rules will get swept away by this perfect, man made storm. Only those that understand the difference between real money and fake fiat will stand a chance to survive and thrive as the paper promises get swept away. Quite stressful to say the least.

Regards, Bill H.

Aussie
02-05-2009, 12:45 PM
The "never pay" model.

To all;

6 weeks ago the Federal Reserve promised us a huge dose of monetizing Treasury debt. This was done to "pressure" interest rates downward in the hopes of helping the real estate market. It worked, for about 1 month. Now rates are starting to creep higher than they were when the Fed made this announcement. I believe they will soon skyrocket.

This plan to monetize debt was not a "pro active" move, it was reactive to the fact that the Treasury needs to borrow more capital than is, or can be, provided by the free market. I view this action as an exclamation point to the "never pay" model used by both the Fed and Treasury. You see, they never, ever, planned to pay or settle for anything they purchased. The purchases were made with pieces of paper, "promises to pay", but never settled. The Treasury promises to pay you with more pieces of paper when they borrow "with interest". The Fed promises us, they will provide more "promises", (pieces of paper) if they deem there is not enough floating around.

The bottom line is that the entire financial system worldwide has become one of "fraudulent finance" because it is based on a system that truly promises never to REALLY pay. The Dollar WAS accepted because it was redeemable in Gold, then in 1971, that tie was cut. In the early '70's, Henry Kissinger came up with the great idea to get the Arabs to price oil in, and accept for it's purchase, ONLY Dollars. This created a huge demand for Dollars that prolonged the Dollar's supremacy.

Now, the Arabs, Asians, Russians, Brazilians, etc., are all wising up at the same time, they now are wondering why they send real products and goods to the U.S. while accepting unbacked pieces of paper in return. This is the end of an era for sure. This is the end of the biggest con job ever promulgated or accepted in history. This was the plan ever since 1971, send paper for real goods and thus NEVER REALLY PAY. Because the fraud was so widely accepted on a such global basis, everyone worldwide is, and will pay dearly for the foolishness. Make no mistake, the plan was originally started with the idea, no, the goal, of never ever paying.

If you understand this concept, you have only one alternative, OPT OUT! Opt out of the failing paper system and store your wealth in metal. It is clear that Gold and Silver are horribly and completely manipulated as far as price is concerned. Anyone who believes this, or worse yet, speaks or writes of this, is branded a conspiracy nut. No matter, if you know the truth, you can protect yourselves and families once the lie is finally exposed. Gold's price has been suppressed for years and the Dollar has been supported and propped up, why you ask? Because the "ownership" of the free printing press is a very valuable asset as long as the public, the world, can be fooled into assessing value to something that has none. Something for nothing in other words, or the "never pay" model. THIS is why they want you to believe Dollar=good, Gold =bad.

Don't be fooled no matter what they do to the price of Gold, once the fiat grip is broken, those who have metal will have all the marbles. It makes no difference whether Gold goes "up" or "down" 100's or 1,000's of Dollars, in the end, as the Dollar approaches zero, Gold, coffee, oil, gas, rice, you name it, will approach infinity in Dollar terms. This is the definition of hyper inflation. We will never again in our lifetimes witness a pure unbacked fiat currency. The bad memories will take generations to go away, we will all be long gone before another fraud like this one can be hatched.

Regards, Bill H.

JBmurc
02-05-2009, 02:09 PM
I think the title of the thread should be When the USD collapses ,not If

A new international commondity backed currency will be the major cause of this I believe

Aussie
03-05-2009, 11:38 PM
I think the title of the thread should be When the USD collapses ,not If

A new international commondity backed currency will be the major cause of this I believe

I think you are right JB . . . It will be interesting to see how all this affects the NZD. I guess it depends if it's an orderly or disorderly decline in the USD.

Looks like it's going to be either rising interest rates or a lower dollar. Considering how many untold $ Trillions of dollars in interest rate derivatives are held by JP Morgan, Goldman etc. . . . the dollar will be thrown under the bus.

Got Gold?


The Most Dangerous Trend Today

On US markets, the most “dangerous trend” is certainly the inexorable RISE in longer-term US Treasury yields. In fact, the other three “critical markets” - the Dow, the $US Gold price and the USDX - have essentially being going sideways for the past month. If yields at the long end of the Treasury debt market continue to rise, that sideways action on the other three critical US markets cannot be maintained.

Given the amount of debt which the US government is openly planning to pile on this year and next, the upward pressure on Treasury yields must continue to grow. The more debt, the less credit worthy the debtor. The more the Fed “monetises” this debt, the less viable the currency in which the debt is denominated. Both of these factors are present in all MARKET rates of interest. The Fed cannot control the market for US Treasury debt because so much of it is held OUTSIDE the US.

Rising Treasury yields are always deadly to stock markets simply because they increase the cost of doing any type of viable business. They are also a huge threat to the US Dollar because they reflect a growing concern over the ability of the Treasury to service and repay its debt by any means other than the outright monetising of the debt by the US central bank, the Fed.

And Gold? Obviously, the greater the pressure acting to push DOWN the paper markets, the greater the pressure to push UP the “price” of the only alternative. Higher Treasury yields reflect an increasing doubt as to the solvency of the US Treasury and the viability of the US currency. It’s as simple as that.

Permission hereby given to
quote short excerpts - provided
full attribution is given:
© 2009 - The Privateer
http://www.the-privateer.com
capt@the-privateer.com
(reproduced with permission)

JBmurc
04-05-2009, 12:09 PM
I think you are right JB . . . It will be interesting to see how all this affects the NZD. I guess it depends if it's an orderly or disorderly decline in the USD.

personal believe the NZD will also fall badly on a worldscale but prob not as bad as the USD longer term as we have a fairly solid commondity backed currency now if National would allow more Gold mining ,Oil & Gas development etc we could be a much stronger $$$ I think the biggest negative for the NZD is a longer term low OCR and the massive overseas debt we kiwi's have so we can buying non-productive assets sure I read how NZ was the 2nd worst in the OECD for overseas dept.

Mick100
04-05-2009, 01:49 PM
NZ is running a current account deficit of 8-9% GDP (worse than the US)
Can't see the NZD stengthening in a hurry

Aussie
05-05-2009, 01:07 PM
NZ is running a current account deficit of 8-9% GDP (worse than the US)
Can't see the NZD stengthening in a hurry

I don't think the RBNZ or the NZ Government want it to either. I'm no currency expert, but it seems to me it depends on what traders focus on and if they think they can make a buck one way or the other. The USD looks to have topped to me. Traditionally the NZD has moved up as the USD moves down although that may be muted if traders are given any reason to focus on negative NZ fundamentals.

Aussie
05-05-2009, 01:33 PM
. . . I read how NZ was the 2nd worst in the OECD for overseas dept.

That's because New Zealanders have had to borrow to maintain their lifestyles because the during "the Cullen years" the government was getting rich with surpluses by over taxing while the people were getting taxed into the poor house - or should I say the debt house. The surpluses are now gone . . . wasted on a socialist agenda that was all about creating bigger government and buying votes rather than building a more productive economy and real wealth.

In my humble opinion, this country lacks capital because it lacks savings. Savings (in part) comes from lower (smaller) government costs, lower taxes and savings incentives.

Real investment capital can only come from savings, investment creates new businesses, new businesses create jobs, jobs create confidence and more savings as well as increasing tax revenues . . . its called the cycle of prosperity.

To my mind, the keys to getting things straightened out are tax and savings incentives which reduce borrowing needs, combined with substantially smaller and more efficient central and local government.

Aussie
15-05-2009, 10:06 AM
Richard Russell dons the tinfoil hat, again!

To all; if the banking and financial systems were not so vitally important to our quality and way of life, what is beginning to happen now in Washington and on Wall Street would be comical. I wrote almost a year ago that Wall Street would begin to "eat their own", to some extent this has already happened on a corporate level, it is only just starting on a personal level. A "split", or rift, is becoming noticeable amongst the CNBC so called journalists regarding the lies that are starting to pop up like "green shoots". Public figures such as Paulson, Bernanke, Greenspan, Geithner, etc. are all taking incoming fire to some extent.

Former Secretary Paulson, it is now learned, told the banks that even if they refused TARP money, their regulators would demand they take it, and thus they would "wrapped up" in the TARP whether they liked it or not. Several groups have filed FOIA requests of Treasury and Fed discussions, only to be stonewalled, delayed, and "redacted". Theoretically, no, in reality, every Dollar that Treasury spends is OUR money, OUR tax money, or OUR future obligations. They have apparently "forced" many healthy institutions to take TARP money in their bid to control, (read socialize) the banking system. If I were "King", and knew that I must devalue my currency, I would certainly want to have control of as big a percentage of the banking system as possible before devaluing. When someone "owes" you, you tend to have a greater control or leverage over them, I believe this, along with "looting the Treasury" is the underlying motive behind the bailouts. They are transferring as much capital to favored banks while keeping their thumb on top of as many "rogue" conservative institutions as they can before the declaration of bankruptcy through currency devaluation as they can.

The Fed has also received FOIA requests, they simply say "bug off", we are not a government entity and don't have to reveal anything to anyone, EVER! The Fed has obviously blown their balance sheet up like a balloon, what has not been talked about is the amount of "off balance sheet" garbage they have shoved under their cashmere rugs. We may never find out, but I would not be shocked to see it in the tens of $ trillions.

Which leads me back to the rift that is starting to appear, we have been the recipients of lies to cover lies to cover lies, and just now, even some journalists can't stomach it anymore. They are starting to ask some real questions (imagine that?). Some want to know about the strong arming by Paulson of the banks, others are up in arms about the setting of pay levels at financial institutions that had the balls to "just say no" to TARP money, the "nationalization" of the auto sector is another one. They ask, how can senior debenture holders be considered "speculators" by the President, and why are there legal rights being trampled on? There has apparently been a group of bondholders that in their words were "threatened by the White House" if they got in the way of the Chrysler or GM deals. Some even want Fed transparency, GASP! I guess you could say that some of the Muppets are dissenting.

But, the debate and "discovery" of what happened to the Madoff monies has gone nowhere yet. It may, but I don't think we can be allowed to know since they did business with so many giants and purportedly the NY Fed, this would be pulling the skirt up too high. In any case, I sense the boiling level rising, the lies so pervasive, and the arm twisting to the point of breakage, that they can't hold the tent up much longer. When all is said and done, I believe we will find out that every market, everywhere, has had the fingerprints of government upon them. Whether it be on the butts of the Dollar, Treasuries, and stock markets to hold them up, or around the throats of Gold and Silver to suppress them, it has been everywhere. All those whacked out "tinfoilers" are beginning to gather some followers now that the manipulation, lies, blackmails, frauds, etc. have emerged everywhere and are too obvious to hide. Heck, I even remember when Richard Russell considered manipulation to be preposterous and conspiratorialist, well, for the third time now, he has come out declared market manipulation by the government is rampant.

THIS is a big deal! Mr. Russell is the original, most widely followed and respected, most on target financial writer alive (possibly in history). It took him a while, but I'm glad to see Mr. Russell wearing his new bright and shiny tinfoil hat proudly. Welcome to the club Mr. Russell!

Regards,

Bill Holter

Aussie
17-05-2009, 09:21 PM
A Dangerous Lunacy

Loop back for a moment to the beginning of this issue and the BIS report of a global shrinkage of “bank claims” totalling $US 1.8 TRILLION in the final quarter of 2008. Add in the combination of debt guarantees from the US government and its financial “authorities” since the start of the financial crisis. As reported in the Global Report the whole “package” adds up to $US 29.1 TRILLION. All of these guarantees have been made to artificially maintain the “value” of the paper instruments of indebtedness of all descriptions on which the system is built. Without them, that system would already have crashed.

Now look at the state of the REAL world as reflected in the crash dive in tax receipts which have been suffered by governments all over the world. Consider the fleets of merchant ships at anchor despite the fact that the cost of transport has plummeted to levels at which every container is carried at a LOSS.

In the middle of all this stand the financial markets, clinging to the illusion that the real capital necessary to create and maintain a productive and prosperous society can be run off a printing press or “guaranteed” by an entity which produces no wealth of any kind but merely confiscates and/or redistributes it. Markets have clung to this illusion many times in history but the contrast between “green shoots” and economic reality has never been as stark as it is today.


Permission hereby given to
quote short excerpts - provided
full attribution is given:
© 2009 - The Privateer
http://www.the-privateer.com (http://www.the-privateer.com)
capt@the-privateer.com (capt@the-privateer.com)
(reproduced with permission)

JBmurc
19-05-2009, 08:40 AM
Geithner enriches speculators in "sham" bank bail-outs
13/05/2009 | By Ambrose Evans-Pritchard in Doha | finance

“It’s a sham. The banks are insolvent. The US government is trying to sedate the public because they are down to the last $100bn (£66bn) of the $700bn TARP funds.

"We’re going to see a catastrophic increase in the number of LBO’s (leveraged buyouts) going into default because they’re knee-deep in debt and no solution exists since they can’t refinance.”

“The US government has thrown 29pc of GDP at this crisis compared to 8pc in the early 1930s. The Fed’s balance sheet has risen from $900bn to $2.7 trillion to bail out the system. America has to do it because the only way out is to debase the currency, but that is going to lead to some very high inflation three years down the road

peat
19-05-2009, 09:28 AM
but the end of the article also says

Matlin Patterson, however, has missed the Spring rebound, the most powerful rise in equities in over 70 years. “We shorted the equity rally because we thought it was lunatic. We’ve kept adding positions seven times, and we’re still holding,” he said. Ouch!"

And of course that was a week ago and we know what happened last night... so ouchey ouchey ouch!

Aussie
20-05-2009, 10:51 PM
Have China watchers never heard of a decoy?

By Adrian Douglas
Sunday, May 17, 2009

What amazes me is how financial journalism is at the level of sixth grade in terms of analytical thinking. Even so-called market analysts are not much better.

GATA put out a dispatch today citing this Agence France-Presse article published by the Sydney Morning Herald in Australia, "China Keeps Buying U.S. Bonds Despite Concerns":

http://news.smh.com.au/breaking-news-world/china-keeps-buying-us-bonds-despite-concerns-20090517-b757.html

This article is a prime example. It reports that China was recently expressing grave concerns about its massive U.s. bond holdings is still buying more such bonds.

The simpletons in the press and financial world don't have a clue. What are these sleuths looking for? A $500 billion sell order posted with a New York broker on some rainy Monday morning? Have they never heard of a decoy?

The U.S. Treasury reports each month on foreign holdings of U.S. Treasuries. The Chinese would have no more than 30 days to dispose of almost a trillion dollars in Treasury debt before their selling would be public knowledge. Do these China watchers seriously think that the China's diversification strategy is going to involve unloading U.S. debt on the debt market?

You don't have to dispose of an asset to realize its cash value.

Didn't these people learn anything from the mortgage crisis? For bankers the best collateral in the world is U.S. Treasury debt. That is likely to change soon, but if we deal with the facts of today, the Chinese are holding what bankers perceive is the most liquid and highest-quality collateral. Do you think that this characteristic of U.S. debt has escaped the notice of the Chinese?

I would bet that the Chinese have been busy using their Treasury debt as collateral against FIXED-interest-rate loans. They will have used this money to buy real assets. We know they have bought at least 454 tonnes of gold. They are importing 70 percent more copper than they consume. They are filling up a strategic petroleum reserve. They have been going around the world making deals for raw materials and acquisitions of small-enough companies that they fly under the radar. (The Chinese learned their lesson from trying to buy Unocal.)

The interest rate on these fixed-rate loans will be partially offset by the interest paid on their U.S. bonds. When the bonds go tapioca, the Chinese will have two options. They can sell some of the assets they bought but at prices much higher than what they paid and so pay off the loans with worthless dollars, or they can simply default and lose their collateral of now-worthless U.S. bonds.

Just to obfuscate what they are doing, they make some complaints about U.S. debt one day and then buy some more a few weeks later.

Financial journalists should read the biography of Jesse Livermore to know how you can fool even the best traders.

The Chinese have a $300 billion sovereign wealth fund. If that is properly positioned in commodities, it alone will hedge China's entire bond portfolio.

The notion that the Chinese have accumulated this massive U.S. debt portfolio and only now are wondering what to do about it is so naive it doesn't warrant serious consideration. I have dealt with Chinese in business and they are the sharpest knives in the drawer. My guess is that China has already diversified most of its dollar holdings.

Now, like magicians, the Chinese keep the eyes of the China watchers fixed on the hat, because we all know that is truly where the magician has hidden the rabbit, right?

The Chinese have no interest in collapsing the U.S. Treasury market, but if you think that the Chinese strategy to protect themselves against such an eventuality is to sit tight, buy more, and keep their fingers crossed that everything will work out fine, then you shouldn't go out in public alone.

The Chinese have vault-loads of intrinsically worthless Treasury bonds that they no doubt have used as collateral to buy intrinsically valuable assets. In contrast, Western central bankers had vault-loads of gold they have loaned or sold to buy intrinsically worthless interest-bearing government debt.

I bet Confucius would have had something to say about that.

JBmurc
22-05-2009, 06:31 AM
Good outlook for real assets IMHO

http://email.thefinancialarena.com.au/emailmarketer/link.php?M=596373&N=131&L=457&F=H

Dr_Who
22-05-2009, 09:51 AM
Good outlook for real assets IMHO

http://email.thefinancialarena.com.au/emailmarketer/link.php?M=596373&N=131&L=457&F=H

Fantastic article JBmure. Cheers mate. :)

JBmurc
22-07-2009, 09:09 AM
Financial Circulatory System
by The Mogambo Guru

I was surprised to see that the government made $81.4 billion in cash out of papers, inks, and base metals in the last year, taking the total Cash in Circulation (essentially the M1 money supply) to $907.4 billion, whereas the M2 money supply is about $8.3 trillion (9 times larger) and (saving the best for last) the M3 money supply, which counts everything that can possibly be construed as "money" in the most liberal sense and making all kinds of assumptions, is almost $15 trillion, as close as anyone has been able to figure out, meaning that the money supply, at least as measured by M3, is now larger than the economy of USA!

For all you "velocity" freaks out there - and there are quite a few of them - substitute GDP as the "P" times "Q" part of Fisher's famous equation MV=PQ (or, Money supply times Velocity of money equals Price of everything sold times Quantity of things sold) and you get a Velocity of less than 1! Hahaha! What in the hell is a velocity of less than 1? Hahaha!

Before you fire off another venom-laced email where you insult my intelligence just because I sound so stupid, act so stupid and look so stupid, I already know it doesn't mean anything that I can understand, mostly because I am kind of, well, stupid.

But it is only an example of the kind of weird, strange crap you will see from now on, especially when all those trillions of dollars that have been created are exchanged for toxic assets, and all the future trillions of dollars to be printed by the Federal Reserve to finance the government's massive deficit-spending, start burning a hole in somebody's pocket, probably thanks to Congress coming up with some new "Get 'em buying!" tax scheme that will, inevitably, backfire and make everything worse and worse until it all collapses into what we hotshot professional economists call a Big Worthless Pile Of Financial Crap (BWPOFC).

And the reason that I am so sure of things turning into a BWPOFC is that, as Milton Friedman so famously said, "Inflation is always and everywhere a monetary phenomenon," which seemingly guarantees inflation in consumer prices as a result of all of this new money flooding into the world's economy, which is a monetary phenomenon in itself, in that it has only been tried by desperate countries in a last-ditch, kamikaze blaze of what they hoped would be glory, but was instead, always and everywhere, turned out to be just stupidly suicidal.

And how much inflation can one expect? Good question! The answer is remarkably symmetrical, as Howard Katz of thegoldbug.net says, "Over the past year, the amount of money in the U.S. has increased by almost exactly $1 trillion. This is a 70% increase from a year ago," and "it will cause an approximately 70% increase in prices with a 1-2 year lag time," which, looking at my watch before realizing it does not have a calendar, has already been 1 year of this "1-2 year lag."

Billionaire Warren Buffet, who is not given to hyperbole and outlandish forecasts, says that he expects inflation to be as bad as it was in the '70s. And how bad was that? Mr. Katz says, "The greatest price increase in American history was 13.3%, in 1979."

And if you don't think that gold will shoot up when inflation starts roaring like that, then you are obviously new at this investing business and you haven't had time to look at what happened to the price of gold when it was $35 an ounce in 1970 and over $800 an ounce by 1980 when the inflation (from the vast expansions of the money supply needed to simultaneously finance the War on Poverty and the War in Vietnam) was rising along this same parabolic ride.

Until next time,

The Mogambo Guru

JBmurc
22-07-2009, 08:49 PM
http://query.nytimes.com/gst/abstract.html?res=F60912F73C5A127B93C1A8178AD85F4C 8784F9

JBmurc
22-08-2009, 08:37 PM
Worth a read the USD as much as the CNBC FOX etc want un to believe it's now going be all fine for the USD this link shows quite clearly it's not..........



http://www.lewrockwell.com/sardi/sardi116.html

JBmurc
23-08-2009, 04:00 PM
Hi JB, You seam pretty convinced that the USD is going to devalue big time in a very short space of time. Have you considered what effect the Fed would have on the money supply if it suddenly started selling the huge number of shares it has aquired in the last 12-18 months? Cheer, Belgie.

Tis the reason i hold 35kg's of silver bullion as a safe guard I'm fully aware there maybe yet another major move down on world markets tight stops needed

Aussie
10-11-2009, 09:50 PM
Just a minor difference?

To all; with all the comparisons being made lately to the 1930's I am surprised that virtually no one points out the "small detail" that makes these times not only different but 180 degrees different. Yes I am speaking of money and the lack of "realness" and or backing by metal or anything else. Many advisors say "back in the '30's stocks did this and bonds did that and unemployment was whatever", I don't think a comparison to the thirties is even relevant because the U.S. Treasury was sound and the Dollar really "WAS as good as Gold".

Fast forward to this century and the Dollar is backed by nothing and the Treasury is the largest debtor on the planet that survives only at the whim of foreign lending. On any given day our creditors have the ability to pull the plug on the U.S. financially, as a matter of fact the Pentagon did a study on "financial warfare" last year. The result was the financial destructionof the U.S. by the Chinese. Back in the 30's WE were the Chinese, the U.S. was the biggest creditor to the world and of course we had "excess capacity" in the manufacturing arena as do the Chinese today. Back then the British were the fading power as we are today and they ran trade deficits which drained their Gold until they exited the Gold standard.

The point I am trying to make here is that the financial game is so different today because the money is different. The major players have changed seats at the table and are mostly 180 degrees backward from where they were during the depression. The problem that is unfolding and has become totally obvious to the rest of the world is that the Dollar is no longer as "good as Gold". This was the original deal they cut at Bretton Woods in 1944, then in 1971 we reneged on the Gold backing but got the Arabs to price oil in Dollars and thus the "petrodollar" era. Now even this is about to change as judged by statements from the world's oil producers.

The upcoming currency panic has it's roots in the U.S.. We have abused our right of creating the world's reserve currency and entangled the entire global financial system in our web, if we go down the rest of the world goes down with us. The "games" that the U.S. has played for 50 years or more portraying a stronger currency than in reality has finally caught up to us. The latest comical game being played is "the auction results". This year 80% of Treasury and Agency paper issuance has been bought up by the Federal Reserve and paid for with freshly printed Dollars and each auction is reported as a "success". God forbid the Fed's printer gets a "paper jam" or runs out of toner! Even scarier would be the Chinese or Japanese deciding they want out of what they already have.

Does the game blow up today? Tomorrow? Next week? I don't know and it doesn't matter as long as you know the end game. This end game will include a massive lowering of the standard of living across America. It will take far more Dollars to continue living in the manner we have become accustomed to. I am not talking about 5% or even 10% inflation, the end game for the Dollar will be hyperinflation. The books have been cooked, the Gold is long gone, all currencies are fake but don't worry because the recovery is just around the corner! The scary part is how many Americans know something is wrong but don't have a clue as to what it is because the media continuously points them in the wrong direction.

Regards, Bill H.

JBmurc
17-03-2010, 09:34 AM
Us dept clock anyone think the USD isn't screwed without a major war or huge inflation is dreaming


usdebtclock.org

lissica
04-04-2010, 02:48 PM
Us dept clock anyone think the USD isn't screwed without a major war or huge inflation is dreaming


usdebtclock.org

Anyone have an understanding of what inflation in the US is likely to do to worldwide inflation? And particular in NZ/Australia? Will it be deflationary in a sense if USD denominated goods become cheaper?

Dr_Who
04-04-2010, 02:50 PM
Anyone have an understanding of what inflation in the US is likely to do to worldwide inflation? And particular in NZ/Australia? Will it be deflationary in a sense if USD denominated goods become cheaper?

A strong USD will be good for AU and NZ economy and makes our export more competitive. The weak USD is giving our rural sector a harder time.

JBmurc
04-04-2010, 03:45 PM
well don't know about you guys but this is got to be bad for so called free market