Alt A's and Option Arms. The world will soon know these names, like we recently learnt about sub-prime. There are no green shoots, only an artificial rally sweetened by freshly printed Government money. Gold is already at USD 990/oz today...ITS COMING.
Thursday, September 3, 2009
Wednesday, August 5, 2009
ITS COMING
The Greenback is broken. The key will be whether or not the U.S. dollar can hold above CRITICAL DOWNSIDE support near 78.40 on the U.S. Dollar Index Future - Spot Price /quotes/comstock/11j!i:dxy0 (DXY 77.73, -0.03, -0.04%) . Failure there, and 76 is a shoe-in for the greenback."
On Friday the Dollar Index contract closed at 78.45.
As for gold, JSMineset's Dan Norcini suggests: "If 76 on the USDX fails, gold will be at $1,000 before you can say, 'oligopoly.'"
Tuesday, July 28, 2009
THE DARK YEARS ARE HERE
The only reason why there has been an air of optimism in the world economy in the last couple of months is that the bearers of these false rumours of recovery all have a vested interest. These include the bankers and Government officials..
The Dark Years are here
by Egon von Greyerz – Matterhorn Asset Management
In this newsletter we will outline what is likely to be the devastating effect of the credit bubbles, government money printing and of the disastrous actions that governments are taking. Starting in the next 6 months and culminating in 2011-12 the world will experience a series of tumultuous events which will be life changing for most people in the world. But 2011-12 will not be the beginning of an upturn in the world economy but instead the start of a long period of economic, political and social upheaval that could last for a couple of decades.
We will discuss the three areas that we for some time have argued will determine the fate of the world for the foreseeable future, namely the coming unemployment explosion, the next and much more serious phase in the credit markets and finally the likely hyperinflationary or just inflationary effect this will have on the world economy and investments.
EMPIRES ARE BUILT ON THEFT PILLAGE, SLAVE LABOUR AND FINALLY MONEY PRINTING
Let us first go back in history and analyse what creates an empire and the prosperity that comes with it.
The British Empire started in the 17th century and reached its peak in the 19th century during Queen Victoria’s reign. By the end of the 19th century The British Empire included nearly 20% of the land surface of the world and 25% of the world’s population. So Britain which is less than 0.5% of the world’s land surface area controlled an empire which was more than 50 times greater. So by using slave labour and by stealing the resources of 20% of the world, it is no wonder that Britain was the wealthiest nation for several centuries. But like all empires, Britain carried the seeds of its own destruction. All empires – e.g. Mongolian, Roman, Ottoman or British etc. – eventually overstretch their resources both militarily and financially. This combined with decadence and illusions of grandeur eventually leads to the collapse of an empire. MORE HERE
The Dark Years are here
by Egon von Greyerz – Matterhorn Asset Management
In this newsletter we will outline what is likely to be the devastating effect of the credit bubbles, government money printing and of the disastrous actions that governments are taking. Starting in the next 6 months and culminating in 2011-12 the world will experience a series of tumultuous events which will be life changing for most people in the world. But 2011-12 will not be the beginning of an upturn in the world economy but instead the start of a long period of economic, political and social upheaval that could last for a couple of decades.
We will discuss the three areas that we for some time have argued will determine the fate of the world for the foreseeable future, namely the coming unemployment explosion, the next and much more serious phase in the credit markets and finally the likely hyperinflationary or just inflationary effect this will have on the world economy and investments.
EMPIRES ARE BUILT ON THEFT PILLAGE, SLAVE LABOUR AND FINALLY MONEY PRINTING
Let us first go back in history and analyse what creates an empire and the prosperity that comes with it.
The British Empire started in the 17th century and reached its peak in the 19th century during Queen Victoria’s reign. By the end of the 19th century The British Empire included nearly 20% of the land surface of the world and 25% of the world’s population. So Britain which is less than 0.5% of the world’s land surface area controlled an empire which was more than 50 times greater. So by using slave labour and by stealing the resources of 20% of the world, it is no wonder that Britain was the wealthiest nation for several centuries. But like all empires, Britain carried the seeds of its own destruction. All empires – e.g. Mongolian, Roman, Ottoman or British etc. – eventually overstretch their resources both militarily and financially. This combined with decadence and illusions of grandeur eventually leads to the collapse of an empire. MORE HERE
Thursday, July 9, 2009
What if the US Had to Pay its Debt in Gold?
By Bill Bonner
In the old days, before the monetary reforms of the 20th century... notably, Richard Nixon’s unilateral decision to renege on America’s promise to pay its bills in gold... countries had to settle up with each other in the yellow metal. The system worked well; it was reliable; it prevented bubbles. Edward Chancellor explains:
“A country had to pay for its imports or foreign investments with money gained from a surplus on trade. If more money was sent abroad than had been earned through exports, then gold would be packed onto ships to discharge foreign creditors. A declining stock of bullion would induce the central bank to raise interest rates in order to attract gold from abroad. Rising rates would produce a credit contraction, unemployment and general economic misery. The typical nineteenth century was severe, but short-lived.”
Then came the improvements. And the Great Depression. And now we are faced with another one.
Governments are fighting this one... just as they did the last one... but with much more money. The cost is in the trillions – most of it in the form of public debt. How will these debts be paid? We all expect that they will ultimately be eased by inflation – in full or in part. But suppose the feds had to pay up in real money?
Colleague Simone Wapler compared government debt to government gold. The US has gold worth about $241 billion, she reports. Its official national debt is $11.5 trillion. That gives it a debt/gold ratio of 48 – meaning, the feds have 48 times as much debt as gold.
Britain is even worse. Prime Minister, then Chancellor, Gordon Brown sold much of England’s gold at the worse possible moment – about 10 years ago. This leaves the island with only $9 billion worth of gold compared to $1,274 billion of government debt – a ratio of 1 to 139. But Japan is the worst of all. It has $23 billion worth of gold and $7.3 trillion of government debt, for a ratio of 1 to 323. (Of course, Japan has vast holdings of dollars too!)
What nation has the best gold/debt ratio? Switzerland. It has only twice as much in government debt as it has in gold.
In the old days, before the monetary reforms of the 20th century... notably, Richard Nixon’s unilateral decision to renege on America’s promise to pay its bills in gold... countries had to settle up with each other in the yellow metal. The system worked well; it was reliable; it prevented bubbles. Edward Chancellor explains:
“A country had to pay for its imports or foreign investments with money gained from a surplus on trade. If more money was sent abroad than had been earned through exports, then gold would be packed onto ships to discharge foreign creditors. A declining stock of bullion would induce the central bank to raise interest rates in order to attract gold from abroad. Rising rates would produce a credit contraction, unemployment and general economic misery. The typical nineteenth century was severe, but short-lived.”
Then came the improvements. And the Great Depression. And now we are faced with another one.
Governments are fighting this one... just as they did the last one... but with much more money. The cost is in the trillions – most of it in the form of public debt. How will these debts be paid? We all expect that they will ultimately be eased by inflation – in full or in part. But suppose the feds had to pay up in real money?
Colleague Simone Wapler compared government debt to government gold. The US has gold worth about $241 billion, she reports. Its official national debt is $11.5 trillion. That gives it a debt/gold ratio of 48 – meaning, the feds have 48 times as much debt as gold.
Britain is even worse. Prime Minister, then Chancellor, Gordon Brown sold much of England’s gold at the worse possible moment – about 10 years ago. This leaves the island with only $9 billion worth of gold compared to $1,274 billion of government debt – a ratio of 1 to 139. But Japan is the worst of all. It has $23 billion worth of gold and $7.3 trillion of government debt, for a ratio of 1 to 323. (Of course, Japan has vast holdings of dollars too!)
What nation has the best gold/debt ratio? Switzerland. It has only twice as much in government debt as it has in gold.
Monday, June 22, 2009
Economist puts dent in optimism: bigger crash is coming
An international economic forecaster says another big crash lies ahead for global share and property markets within the next two years.
Harry Dent predicted the Japanese recession in the 1990s and also forecast the current global financial crisis.
He has told ABC News Breakfast that the Australian share market will continue to make gains during the next few months, before bottoming in about 2011.
"I'd say maybe the Australian All Ordinaries will get back up near 4,500, the Dow maybe close to 10,000," he said.
"And then you'll see another crash late this year and into next year, as banking systems melt down again. I think the next one's going to start in Europe and Eastern Europe, housing prices would lag.
"I think stocks are going to end up down 60 or 70 per cent before it's all over, and I think housing prices in Australia will probably be down 40, maybe 50, per cent, maybe more than that in the United States and Europe."
Ageing population
Mr Dent says the driving force behind the renewed slowdown will be the reduced spending of an ageing population: a similar malaise to the one that has affected Japan since the early 1990s.
"Peak spending is age 46, so we've been saying for decades, we're gonna have this great, great boom and then around the end of this decade baby boomers are going to peak in spending, prepare for retirement, kids are going to leave the nest and the economy's going to slow just like Japan did in the 1990s," he said.
"Japan has already gone through a housing bubble, and a peak in generation spending, and you know what? Their stock market declined for years, housing declined 60 per cent, and all the government stimulus could not put Humpty Dumpty together again - that's what we're looking at."
Mr Dent says home owners and prospective buyers should look at the Japanese property bubble and bust to get an idea about where prices might head.
"Bubbles usually go back to where they start... in Australia, I'd look at my real estate and say 'what was it worth in the year 2000?' that's when the housing bubble started," he said.
"They have to go back down to where young families can afford a house again, so that's a good thing."
Australia the place to be
Mr Dent says the news is not all bad: he says the greatest boom in human prosperity followed the Great Depression and World War II and the world can expect a similar period of growth once all the bad debts and devaluations work their way through the financial system and economy.
He also says Australia is the best placed Western nation to weather the worst of the recession.
"If I had to sit out the depression in one place in the Western world, it would be Australia," he said.
"Your demographic slide is less, your immigration's been stronger and you're on the edge of China and India - they're not turning down due to baby boomer demographics, they've got much growth ahead."
Harry Dent predicted the Japanese recession in the 1990s and also forecast the current global financial crisis.
He has told ABC News Breakfast that the Australian share market will continue to make gains during the next few months, before bottoming in about 2011.
"I'd say maybe the Australian All Ordinaries will get back up near 4,500, the Dow maybe close to 10,000," he said.
"And then you'll see another crash late this year and into next year, as banking systems melt down again. I think the next one's going to start in Europe and Eastern Europe, housing prices would lag.
"I think stocks are going to end up down 60 or 70 per cent before it's all over, and I think housing prices in Australia will probably be down 40, maybe 50, per cent, maybe more than that in the United States and Europe."
Ageing population
Mr Dent says the driving force behind the renewed slowdown will be the reduced spending of an ageing population: a similar malaise to the one that has affected Japan since the early 1990s.
"Peak spending is age 46, so we've been saying for decades, we're gonna have this great, great boom and then around the end of this decade baby boomers are going to peak in spending, prepare for retirement, kids are going to leave the nest and the economy's going to slow just like Japan did in the 1990s," he said.
"Japan has already gone through a housing bubble, and a peak in generation spending, and you know what? Their stock market declined for years, housing declined 60 per cent, and all the government stimulus could not put Humpty Dumpty together again - that's what we're looking at."
Mr Dent says home owners and prospective buyers should look at the Japanese property bubble and bust to get an idea about where prices might head.
"Bubbles usually go back to where they start... in Australia, I'd look at my real estate and say 'what was it worth in the year 2000?' that's when the housing bubble started," he said.
"They have to go back down to where young families can afford a house again, so that's a good thing."
Australia the place to be
Mr Dent says the news is not all bad: he says the greatest boom in human prosperity followed the Great Depression and World War II and the world can expect a similar period of growth once all the bad debts and devaluations work their way through the financial system and economy.
He also says Australia is the best placed Western nation to weather the worst of the recession.
"If I had to sit out the depression in one place in the Western world, it would be Australia," he said.
"Your demographic slide is less, your immigration's been stronger and you're on the edge of China and India - they're not turning down due to baby boomer demographics, they've got much growth ahead."
Monday, June 1, 2009
Today's musings..
Just putting some thoughts in perspective.
Bond prices get hit, yields shoot up
Commodities ( oil, steel, gas, food etc ) goes up and interest rates on any kind of loans also move in the same direction.
Just how can rising interest rates in an environment in which so many are either unemployed or underemployed be beneficial to any recovery? It just doesn't make sense, hence my continued under participation in the current "rally" on the KLSE.
Yet global stock indices continue to ignore the fundamentals and buy into the "green shoots" idea. The carpet will be soon pulled from under them and the selling will then be horrendous. I can sense the Big Bad Bear sharpening his claws already for the final kill.
On the Gold front, the price cappers seem intent on pushing gold back away from the $990 level. They are just spitting into the eye of a hurricane with the relentless rise in the entire commodity complex and the implosion in the bond market.
Bond prices get hit, yields shoot up
Commodities ( oil, steel, gas, food etc ) goes up and interest rates on any kind of loans also move in the same direction.
Just how can rising interest rates in an environment in which so many are either unemployed or underemployed be beneficial to any recovery? It just doesn't make sense, hence my continued under participation in the current "rally" on the KLSE.
Yet global stock indices continue to ignore the fundamentals and buy into the "green shoots" idea. The carpet will be soon pulled from under them and the selling will then be horrendous. I can sense the Big Bad Bear sharpening his claws already for the final kill.
On the Gold front, the price cappers seem intent on pushing gold back away from the $990 level. They are just spitting into the eye of a hurricane with the relentless rise in the entire commodity complex and the implosion in the bond market.
Why is China buying Gold?
Today we have Tim Geithner rushing over to Beijing to placate his new economic masters.
Last Friday , the US Dollar index fell through critical supports.
In a week to two, pending Congressional approval the IMF will sell roughly 400 tonnes of Gold. What better way to placate the Chinese than to let them have the IMF gold as collateral for their holdings of essentially worthless bonds.
These are not mere coincidences.
MORE
Last Friday , the US Dollar index fell through critical supports.
In a week to two, pending Congressional approval the IMF will sell roughly 400 tonnes of Gold. What better way to placate the Chinese than to let them have the IMF gold as collateral for their holdings of essentially worthless bonds.
These are not mere coincidences.
MORE
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