If you aren't having a festive holiday, don't watch this video because it won't help.
Source: http://www.youtube.com/watch?v=Ina16XSJQvM
Source: http://guymcpherson.com/2012/12/the-twin-sides-of-the-fossil-fuel-coin-presenting-in-massachusetts/
Monday, December 24, 2012
Wednesday, December 19, 2012
Kyle Bass on the World
Oct. 1, 2012 | Day 1 | AmerCatalyst 2012 | The Engtanglement : Session
1.2 | The World is Not Enough: Keynote presentation by J. Kyle Bass
Click here to watch the video: http://www.youtube.com/watch?v=JUc8-GUC1hY&feature=youtu.be
Source: http://www.zerohedge.com/news/2012-12-19/hour-company-kyle-bass
Thursday, December 13, 2012
Hypocrite of the Year: Warren Buffett
Here's what Warren Buffett's Berkshire Hathaway just did: (1) He spouts B.S. all day long about raising taxes on the wealthy when he was one of the biggest beneficiaries of US Govt bailouts (how about we give taxpayers their money back instead of allowing him to hugely profit from bailouts that I'm willing to bet he knew would occur beforehand?); (2) for decades he spouts B.S. about the evils of stock buybacks then begins to buyback Berkshire shares in late 2011; (3) instead of buying the shares on the open market, he goes to a longtime shareholder who I presume is trying to avoid tax increases that may happen in less than a month and makes a deal but not before, (4) changing Berkshire's policy on stock buybacks (the original policy prevented this buyback given Berkshire's share price) in order to make the deal happen.
Dec 12 (Reuters) - Warren Buffett's $1.2 billion share buyback from a single unnamed investor likely helped that person's estate save substantially on taxes, just one day after the Berkshire Hathaway CEO said the rich should actually be paying more, not less, when they die.
Berkshire also said Wednesday it raised the threshold for future share buybacks to 120 percent of book value from 110 percent, the level it chose when it first approved a repurchase program in September 2011. The higher level allowed Berkshire to complete this latest buyback, which was above the old threshold.
Dec 12 (Forbes) - With several firms scrambling to return money to shareholders ahead of the fiscal cliff, it was Warren Buffett who surprised many on Wednesday, as Berkshire bought back $1.2 billion in Berkshire stock from a single shareholder.
The company noted it bought 9,200 Class A shares at $131,000 each “from the estate of a long-time shareholder.”
Interestingly, Buffett had been historically opposed to repurchases, shunning them for four decades, according to Bloomberg, but the Oracle changed his mind in 2011.
Source: http://www.reuters.com/article/2012/12/12/berkshire-buyback-idUSL1E8NCITK20121212
Source: http://www.forbes.com/sites/afontevecchia/2012/12/12/warren-buffetts-berkshire-buys-back-1-2b-in-stock-from-single-sharheolder/
Dec 12 (Reuters) - Warren Buffett's $1.2 billion share buyback from a single unnamed investor likely helped that person's estate save substantially on taxes, just one day after the Berkshire Hathaway CEO said the rich should actually be paying more, not less, when they die.
Berkshire also said Wednesday it raised the threshold for future share buybacks to 120 percent of book value from 110 percent, the level it chose when it first approved a repurchase program in September 2011. The higher level allowed Berkshire to complete this latest buyback, which was above the old threshold.
Dec 12 (Forbes) - With several firms scrambling to return money to shareholders ahead of the fiscal cliff, it was Warren Buffett who surprised many on Wednesday, as Berkshire bought back $1.2 billion in Berkshire stock from a single shareholder.
The company noted it bought 9,200 Class A shares at $131,000 each “from the estate of a long-time shareholder.”
Interestingly, Buffett had been historically opposed to repurchases, shunning them for four decades, according to Bloomberg, but the Oracle changed his mind in 2011.
Source: http://www.reuters.com/article/2012/12/12/berkshire-buyback-idUSL1E8NCITK20121212
Source: http://www.forbes.com/sites/afontevecchia/2012/12/12/warren-buffetts-berkshire-buys-back-1-2b-in-stock-from-single-sharheolder/
Tuesday, December 11, 2012
Private vs. Government Workers
Gary Alexander, Secretary of Public Welfare, Commonwealth of
Pennsylvania:
- For every 1.65 employed persons in the private sector, 1 person receives welfare assistance
- For every 1.25 employed persons in the private sector, 1 person receives welfare assistance or works for the government.
From Gary Alexander, Secretary of Public Welfare, Commonwealth of Pennsylvania (a state best known for its broke capital Harrisburg). As quantified, and explained by Alexander, "the single mom is better off earnings gross income of $29,000 with $57,327 in net income & benefits than to earn gross income of $69,000 with net income and benefits of $57,045."
Source: http://www.zerohedge.com/news/2012-11-27/americas-lost-decade-one-simple-chart
Source: http://www.zerohedge.com/news/2012-11-27/when-work-punished-tragedy-americas-welfare-state
- For every 1.65 employed persons in the private sector, 1 person receives welfare assistance
- For every 1.25 employed persons in the private sector, 1 person receives welfare assistance or works for the government.
From Gary Alexander, Secretary of Public Welfare, Commonwealth of Pennsylvania (a state best known for its broke capital Harrisburg). As quantified, and explained by Alexander, "the single mom is better off earnings gross income of $29,000 with $57,327 in net income & benefits than to earn gross income of $69,000 with net income and benefits of $57,045."
Source: http://www.zerohedge.com/news/2012-11-27/americas-lost-decade-one-simple-chart
Source: http://www.zerohedge.com/news/2012-11-27/when-work-punished-tragedy-americas-welfare-state
Our Dear Friend China
What everyone thinks: China will always buy US Treasuries. It helps to fund the US so it can continue to spend recklessly and have Americans buy more crap from China.
What everyone should know: China reduced its holdings in Dec. 2011 and since then, has only been recycling its holdings. This means that the US needs more external buyers (Japan, UK, other country) or the Fed will have to buy our debt (say, 60%-75% -- FYI, this is money printing in the 20th century).
Now where could China be spending its surplus?
Source: http://www.zerohedge.com/news/2012-11-17/china-persists-refusing-buy-us-paper-foreign-ltm-purchases-treasurys-plunge-three-ye
What everyone should know: China reduced its holdings in Dec. 2011 and since then, has only been recycling its holdings. This means that the US needs more external buyers (Japan, UK, other country) or the Fed will have to buy our debt (say, 60%-75% -- FYI, this is money printing in the 20th century).
Now where could China be spending its surplus?
Source: http://www.zerohedge.com/news/2012-11-17/china-persists-refusing-buy-us-paper-foreign-ltm-purchases-treasurys-plunge-three-ye
Fed to English Translation Cheat Sheet
Quick cheat sheet for Fed-speak:
Source: http://www.scribd.com/fullscreen/115261249?access_key=key-oxvngtudgie6dtgtt6b
Source: http://www.zerohedge.com/news/2012-12-03/lighthouse-investment-n-word-monetary-policy
Source: http://www.scribd.com/fullscreen/115261249?access_key=key-oxvngtudgie6dtgtt6b
Source: http://www.zerohedge.com/news/2012-12-03/lighthouse-investment-n-word-monetary-policy
Debt Doesn't Matter ... Until It Does (and It's Too Late)
Hint: It's already too late. Brace for impact...
Source: http://www.zerohedge.com/news/2012-12-06/visualizing-us-debt
Source: http://demonocracy.info/
Source: http://www.usdebtclock.org/
Source: http://research.stlouisfed.org/fred2/series/GFDEBTN/
Source: http://www.zerohedge.com/news/2012-12-06/visualizing-us-debt
Source: http://demonocracy.info/
Source: http://www.usdebtclock.org/
Source: http://research.stlouisfed.org/fred2/series/GFDEBTN/
Not Sure Where We Go From Here, But This is Where It Ends
Gordon Long:
There are five distinct stages in the life cycle of sovereign nations. These life cycle stages map to generational cycles and to Long Cycles such as the Kondratieff Cycle. Since these cycles are fundamentally behavioral shifts, they consequentially take the nations economic and political process with it.
STAGE V
After bubbles burst and when deleveraging occur, private debt growth, private sector spending, asset values and net worth decline in a self-reinforcing negative cycle. To compensate, government debt growth, government deficits and central bank “printing” of money typically increase. In this way, their central banks and central governments cut real interest rates and increase nominal GDP growth so that it is comfortably above nominal interest rates in order to ease debt burdens. As a result of these low real interest rates, weak currencies and poor economic conditions, their debt and equity assets are poor performing and increasingly these countries have to compete with less expensive countries that are in the earlier stages of development. Their currencies depreciate and they like it! As an extension of these economic and financial trends, countries in this stage see their power in the world decline.
ACCEPTING STAGE V
Success breeds complacency and complacency breeds leverage. Fiat currency enables a late stage country to delay the realization that it is no longer rich, but not avoid it. The developed and emerging nations are in obviously different positions and consequentially their behavioral traits and priorities are different. Accepting the realities of Stage V is still to come for the developed world, and when it does it will be sudden and shocking to most people -- and to the financial markets.
Source: www.GordonTLong.com
Source: http://www.zerohedge.com/news/2012-12-11/guest-post-ungovernable-democracy
There are five distinct stages in the life cycle of sovereign nations. These life cycle stages map to generational cycles and to Long Cycles such as the Kondratieff Cycle. Since these cycles are fundamentally behavioral shifts, they consequentially take the nations economic and political process with it.
STAGE V
After bubbles burst and when deleveraging occur, private debt growth, private sector spending, asset values and net worth decline in a self-reinforcing negative cycle. To compensate, government debt growth, government deficits and central bank “printing” of money typically increase. In this way, their central banks and central governments cut real interest rates and increase nominal GDP growth so that it is comfortably above nominal interest rates in order to ease debt burdens. As a result of these low real interest rates, weak currencies and poor economic conditions, their debt and equity assets are poor performing and increasingly these countries have to compete with less expensive countries that are in the earlier stages of development. Their currencies depreciate and they like it! As an extension of these economic and financial trends, countries in this stage see their power in the world decline.
ACCEPTING STAGE V
Success breeds complacency and complacency breeds leverage. Fiat currency enables a late stage country to delay the realization that it is no longer rich, but not avoid it. The developed and emerging nations are in obviously different positions and consequentially their behavioral traits and priorities are different. Accepting the realities of Stage V is still to come for the developed world, and when it does it will be sudden and shocking to most people -- and to the financial markets.
Source: www.GordonTLong.com
Source: http://www.zerohedge.com/news/2012-12-11/guest-post-ungovernable-democracy
Tuesday, November 13, 2012
Marc Faber on Our Future
Talk about no faith in US politicians, borrowing for eternity, and market manipulation...
Source: http://www.cnbc.com/id/49802535
Source: http://www.cnbc.com/id/49802535
Tuesday, October 16, 2012
No Way Out
If the U.S. government cut all government services except Social Security, Medicare, Medicaid, and payments on the debt, federal spending would still outpace revenues. Prof. Antony Davies argues that there are not specific cuts that will enable government to balance the budget. He says, "Nothing less than a redesign will solve this problem." That redesign should begin by determining what the proper role of government is.
Source: http://www.zerohedge.com/news/2012-10-16/why-balanced-budget-impossible-america
Source: http://www.youtube.com/watch?feature=player_embedded&v=asRDOhgN70Q
Source: http://www.zerohedge.com/news/2012-10-16/why-balanced-budget-impossible-america
Source: http://www.youtube.com/watch?feature=player_embedded&v=asRDOhgN70Q
Friday, October 12, 2012
Wednesday, October 10, 2012
Getting to Know Your Fed
Ever wonder how the government can spend so much money on bailouts yet you fail to see the benefits?
This video contains the answer. Along with other unfortunate facts.
Source: http://www.zerohedge.com/news/2012-10-10/guest-post-feds-sole-purpose-keeping-banks-afloat-g-edward-griffin
Source: http://www.amazon.com/The-Creature-Jekyll-Island-Federal/dp/0912986212
Source: http://www.youtube.com/watch?feature=player_embedded&v=_WrMWK-FJzU
This video contains the answer. Along with other unfortunate facts.
Source: http://www.zerohedge.com/news/2012-10-10/guest-post-feds-sole-purpose-keeping-banks-afloat-g-edward-griffin
Source: http://www.amazon.com/The-Creature-Jekyll-Island-Federal/dp/0912986212
Source: http://www.youtube.com/watch?feature=player_embedded&v=_WrMWK-FJzU
Sunday, October 7, 2012
Free Slurpees, Disability Checks, and Improving Unemployment
Update on Food Stamp Recipients: It's a record high at 46.7 million people (US population in 2011 was 311.6 million) -- 15% of the population doesn't have enough money to afford food (and Slurpees).
Jobs versus Foodstamps and Disability. FYI, this is a pretty shocking chart:
This is one of main reasons the unemployment rate is ~8% instead of 10% (ignoring the most recent BS 7.8% that was published this past Friday). Labor force participation rate is back at the rate as we had during the early '80s, which is good only if households bought low and sold high for the dot com boom and housing boom, otherwise, it's pretty horrific given the debt load of the average household -- but at least we have 60" HD TVs! FYI, the participation rate is dropping because people are quitting looking for work, not that they are retiring or taking sabbaticals.
Source: http://www.zerohedge.com/news/2012-10-05/us-foodstamp-usage-rises-new-record-high
Source: http://www.zerohedge.com/news/2012-10-05/nfp-prints-114k-top-expectations-115k-unemployment-rate-tumbles-78-expectations-82
Source: https://www.google.com/search?q=us+population
Source: http://www.bls.gov/data/
Jobs versus Foodstamps and Disability. FYI, this is a pretty shocking chart:
This is one of main reasons the unemployment rate is ~8% instead of 10% (ignoring the most recent BS 7.8% that was published this past Friday). Labor force participation rate is back at the rate as we had during the early '80s, which is good only if households bought low and sold high for the dot com boom and housing boom, otherwise, it's pretty horrific given the debt load of the average household -- but at least we have 60" HD TVs! FYI, the participation rate is dropping because people are quitting looking for work, not that they are retiring or taking sabbaticals.
Source: http://www.zerohedge.com/news/2012-10-05/nfp-prints-114k-top-expectations-115k-unemployment-rate-tumbles-78-expectations-82
Source: https://www.google.com/search?q=us+population
Source: http://www.bls.gov/data/
Why It's So Difficult to Get a Loan
Trim Tabs: The bottom line here is that the big banks are making so much money,
borrowing short from the government and buying longer term government
debt, that they do not need to bother making loans. That is why loans
and mortgages are only available to those who can prove they don’t need
them. The banks have learned they can make lots more money with no risk
taking government money and then giving it back to the government.
Source: http://trimtabs.com/blog/2012/10/05/banks-make-huge-profits-from-central-banks-but-who-will-bail-out-central-banks/
Source: http://trimtabs.com/blog/2012/10/05/banks-make-huge-profits-from-central-banks-but-who-will-bail-out-central-banks/
Tuesday, October 2, 2012
Feel Un-Good Video
CNBC brings this guy on when they want to ridicule people who believe central banks that excessively print money lead to gigantic unintended consequences.
Source: http://www.youtube.com/watch?v=ptMrAgWqRfg
Source: http://www.youtube.com/watch?v=ptMrAgWqRfg
Sunday, September 30, 2012
Can't Happen Here...
AP: Atwater in California's San Joaquin Valley is the latest city in financial troubles whose leaders are considering bankruptcy.
Reuters: Furloughs and a hiring freeze will not plug Atwater, California's budget gap and it must move more aggressively to avoid becoming the fourth city in the state to file for bankruptcy this year, according to its mayor.
Mike Shedlock: Either way, Atwater is burnt toast. Attempts to make bond payments is a fool's mission.
Come to California!
Source: http://www.sacbee.com/2012/09/27/4861647/atwater-officials-consider-filing.html
Source: http://finance.townhall.com/columnists/mikeshedlock/2012/09/29/california_hit_parade_rolls_on_atwater_scrambles_to_avoid_bankruptcy
Source: http://in.reuters.com/article/2012/09/24/atwater-bankruptcy-idINL1E8KKMM720120924
Source: http://www.youtube.com/watch?v=Md69zCJKD1c
Reuters: Furloughs and a hiring freeze will not plug Atwater, California's budget gap and it must move more aggressively to avoid becoming the fourth city in the state to file for bankruptcy this year, according to its mayor.
Mike Shedlock: Either way, Atwater is burnt toast. Attempts to make bond payments is a fool's mission.
Come to California!
Source: http://www.sacbee.com/2012/09/27/4861647/atwater-officials-consider-filing.html
Source: http://finance.townhall.com/columnists/mikeshedlock/2012/09/29/california_hit_parade_rolls_on_atwater_scrambles_to_avoid_bankruptcy
Source: http://in.reuters.com/article/2012/09/24/atwater-bankruptcy-idINL1E8KKMM720120924
Source: http://www.youtube.com/watch?v=Md69zCJKD1c
Q2 US GDP Almost as Good as We Hoped (or Stated More Accurately: In Trouble)
Bad news, the US economy is at stall speed now.
Q4 2011: 4.1%
Q1 2012: 2.0%
Q2 2012: 1.25%
FXstreet.com: Durable goods orders declines by 13.2% in August. August figures are the largest decline since January 2009 and the worst drop since January 2007. US GDP has been revised down to 1.3% in the Q2 from the 1.7% previously estimated.
Source: http://www.zerohedge.com/news/2012-09-27/final-q2-gdp-disaster-125-growth-comes-below-lowest-estimate
Source: http://www.reuters.com/article/2012/09/27/usa-economy-idUSL1E8KR1VO20120927?type=marketsNews
Source: http://community.nasdaq.com/News/2012-09/forex-flash-expect-to-see-a-sharp-slowdown-in-the-us-economy-in-2012-q4-rabobank.aspx?storyid=177122
Q4 2011: 4.1%
Q1 2012: 2.0%
Q2 2012: 1.25%
FXstreet.com: Durable goods orders declines by 13.2% in August. August figures are the largest decline since January 2009 and the worst drop since January 2007. US GDP has been revised down to 1.3% in the Q2 from the 1.7% previously estimated.
Source: http://www.zerohedge.com/news/2012-09-27/final-q2-gdp-disaster-125-growth-comes-below-lowest-estimate
Source: http://www.reuters.com/article/2012/09/27/usa-economy-idUSL1E8KR1VO20120927?type=marketsNews
Source: http://community.nasdaq.com/News/2012-09/forex-flash-expect-to-see-a-sharp-slowdown-in-the-us-economy-in-2012-q4-rabobank.aspx?storyid=177122
Got Hunger?
Ever get hungry but couldn't afford to buy food? I don't mean hungry for the week and eventually sate your appetite. I mean hungry for a long enough time that you pick up a pitchfork and head down to the local government office. Me neither.
But apparently a lot of people in the world got to that point and it didn't work out so well for their governments. Hopefully you have a job that provides you with a lot of discretionary income and rises equally fast as "headline" inflation (the one that the media never quotes but instead uses "core", which excludes food and energy).
Sovereign Man blog: ... whenever the UN Food and Agricultural Organization (FAO)'s global food price index climbs above 210, conditions ripen for social unrest.
There are so many factors driving food prices higher. From a demand perspective, world population is growing at an extraordinary rate... plus the rise of billions of people from developing countries (especially in Asia) into the middle class is quickening demand for resource-intensive foods like beef.
From a supply perspective, drought, soil erosion, and reduction of available farmland all put significant pressure on global agricultural output. And finally, from a monetary perspective, the enormous amount of paper currency being printed in the world is finding its way into agricultural commodities.
Here's a longer time horizon:
The yellow line is the "real" price (excludes years of inflation) and the orange line is the "nominal" price (the price that you pay because of inflation. Where are the scapegoat speculators when we need them?
Here are the government's gamed/manipulated inflation rates (the true rates are much higher):
Source: http://www.zerohedge.com/news/2012-09-27/guest-post-two-no-brainer-ways-play-rising-food-prices
Source: http://www.fao.org/worldfoodsituation/wfs-home/foodpricesindex/en/
Source: http://www.advisorperspectives.com/dshort/updates/CPI-Headline-and-Core.php
But apparently a lot of people in the world got to that point and it didn't work out so well for their governments. Hopefully you have a job that provides you with a lot of discretionary income and rises equally fast as "headline" inflation (the one that the media never quotes but instead uses "core", which excludes food and energy).
Sovereign Man blog: ... whenever the UN Food and Agricultural Organization (FAO)'s global food price index climbs above 210, conditions ripen for social unrest.
There are so many factors driving food prices higher. From a demand perspective, world population is growing at an extraordinary rate... plus the rise of billions of people from developing countries (especially in Asia) into the middle class is quickening demand for resource-intensive foods like beef.
From a supply perspective, drought, soil erosion, and reduction of available farmland all put significant pressure on global agricultural output. And finally, from a monetary perspective, the enormous amount of paper currency being printed in the world is finding its way into agricultural commodities.
Here's a longer time horizon:
The yellow line is the "real" price (excludes years of inflation) and the orange line is the "nominal" price (the price that you pay because of inflation. Where are the scapegoat speculators when we need them?
Here are the government's gamed/manipulated inflation rates (the true rates are much higher):
Source: http://www.zerohedge.com/news/2012-09-27/guest-post-two-no-brainer-ways-play-rising-food-prices
Source: http://www.fao.org/worldfoodsituation/wfs-home/foodpricesindex/en/
Source: http://www.advisorperspectives.com/dshort/updates/CPI-Headline-and-Core.php
Eurozone in Recession, Impact to US: None?
WSJ (Sept. 28, 2012):An indicator that has correctly recorded contractions in the euro zone suggests the currency area has entered another recession, a development that would underline the difficulties for governments to resolve the currency area's fiscal crisis.
AP (Sept. 20, 2012): Europe appears headed for a deepening economic recession despite a recent easing in market concerns over the three-year debt crisis, a closely-watched survey found Thursday.
FT: (Aug. 14, 2012): The eurozone edged closer towards its second recession in three years after a resilient economic performance from Germany and France failed to prevent the single currency bloc from contracting in the second quarter.
This time is different, the US economy will thrive even with the world's largest economy (the European Union) experiencing a whole lot of problems...
Source: http://online.wsj.com/article/SB10000872396390443843904578024350336679008.html
Source: http://www.zerohedge.com/news/2012-09-27/guest-post-gdp-and-durable-goods-heading-recession
Source: http://www.cbc.ca/news/business/story/2012/09/20/europe-downturn-pmi.html
Source: http://www.ft.com/cms/s/0/fd4d2b94-e5e0-11e1-a430-00144feab49a.html#axzz280PHIgYZ
Two Great Candidates to Choose From! Happy Voting!
Countdown to the 2012 elections.
Please vote for my candidate.
Source: http://www.youtube.com/watch?v=IWDJEc92d38
Please vote for my candidate.
Source: http://www.youtube.com/watch?v=IWDJEc92d38
Monday, September 17, 2012
Get Sick While There Are Still People to Pay For It
Bloomberg discusses the black hole of unfunded liabilities (Medicare, Medicaid, Social Security, etc.).
Source: http://goldsilver.com/video/the-federal-financial-sink-hole-how-bad-is-it-david-walker/
Source: http://goldsilver.com/video/the-federal-financial-sink-hole-how-bad-is-it-david-walker/
Sunday, September 16, 2012
Why Gold and Silver?
Who's in charge of the blue and green lines?
Source: http://goldsilver.com/why-gold-and-silver-dvd/ref/1052/dc/domainclick/
Source: http://goldsilver.com/article/gold-Monetary-base/
Source: http://goldsilver.com/why-gold-and-silver-dvd/ref/1052/dc/domainclick/
Source: http://goldsilver.com/article/gold-Monetary-base/
Here's a Couple of Charts Showing That "Recovery" Experts Are Talking About on "Credible" News Outlets
Data from Federal Reserve of St. Louis.
All Employees: Construction (USCONS)
2012-08: 5,515 Thousands of Persons
Monthly, Seasonally Adjusted, Updated: 2012-09-07
Housing Starts: Total: New Privately Owned Housing Units Started (HOUST)
2012-07: 746 Thousands of Units
Monthly, Seasonally Adjusted Annual Rate, Updated: 2012-08-16
Some notes on that "rebound" you see in the chart (above):
Source: http://www.streettalklive.com/images/stories/1dailyxchange/home-totalactivityindex-091312.png
Source: http://research.stlouisfed.org/fred2/series/HOUST/
Source: http://research.stlouisfed.org/fred2/series/USCONS
All Employees: Construction (USCONS)
2012-08: 5,515 Thousands of Persons
Monthly, Seasonally Adjusted, Updated: 2012-09-07
Housing Starts: Total: New Privately Owned Housing Units Started (HOUST)
2012-07: 746 Thousands of Units
Monthly, Seasonally Adjusted Annual Rate, Updated: 2012-08-16
Some notes on that "rebound" you see in the chart (above):
Source: http://www.streettalklive.com/images/stories/1dailyxchange/home-totalactivityindex-091312.png
Source: http://research.stlouisfed.org/fred2/series/HOUST/
Source: http://research.stlouisfed.org/fred2/series/USCONS
Why We Always Listen to Smart, Prize-Winning People Who Are Wrong
This video was posted on youtube in November of 2010 but it's still hilariously tragic in 2012.
Source: http://www.youtube.com/watch?v=Yjr7NtntWeQ
Source: http://www.youtube.com/watch?v=Yjr7NtntWeQ
Congratulations 1%, You Win Again
So the Fed announced QE3, which in a nutshell means unlimited money printing until it decides when to stop. It will buy mortgage-backed securities from the too-big-to-fail banks, you know, the ones that were part of the cause of the financial meltdown in 2008. By selling crappy assets to the Fed, the banks get fresh dollars that they can use to speculate in stocks (front-running their clients and inflate the stock bubble) and buy US government securities that will pay them interest courtesy of the US taxpayer.
The Fed argues that the banks will loan money to people, who in turn will start businesses, hire people, who in turn will buy houses and hire construction workers. In reality, the banks will not loan the money because anyone who wants to borrow money, can't.
The Fed also said it will extend its interest rate manipulation through 2015. So those wanting to refinance or borrow to buy houses from the housing market that hasn't bottomed in many geographies don't worry, you have a lot of time.
The S&P 500 rejoiced and went up 1.7% in a couple of hours.
Source: http://www.bloomberg.com/news/2012-09-13/fed-plans-to-buy-40-billion-in-mortgage-securities-each-month.html
Source: http://online.barrons.com/article/current_yield.html
The Fed argues that the banks will loan money to people, who in turn will start businesses, hire people, who in turn will buy houses and hire construction workers. In reality, the banks will not loan the money because anyone who wants to borrow money, can't.
The Fed also said it will extend its interest rate manipulation through 2015. So those wanting to refinance or borrow to buy houses from the housing market that hasn't bottomed in many geographies don't worry, you have a lot of time.
The S&P 500 rejoiced and went up 1.7% in a couple of hours.
Source: http://www.bloomberg.com/news/2012-09-13/fed-plans-to-buy-40-billion-in-mortgage-securities-each-month.html
Source: http://online.barrons.com/article/current_yield.html
Tuesday, September 11, 2012
Big Day Tomorrow: Money From Nothing
Tomorrow is the big day that everyone's been waiting for since about 11 days ago. Ben Bernanke will announce QE3, also known as money printing. If he doesn't, that thing called the stock market will not be happy.
What will it be? Buying mortgage-backed securities? Trading short-term bonds for long-term bonds? Outright bond-buying (pure money printing)? Buying stocks from the S&P 500 (Japan does it)?
Source: http://www.calculatedriskblog.com/2012/09/qe-timeline-update.html
Source: http://articles.marketwatch.com/2012-05-08/markets/31609040_1_etf-stock-market-central-bank
What will it be? Buying mortgage-backed securities? Trading short-term bonds for long-term bonds? Outright bond-buying (pure money printing)? Buying stocks from the S&P 500 (Japan does it)?
Source: http://www.calculatedriskblog.com/2012/09/qe-timeline-update.html
Source: http://articles.marketwatch.com/2012-05-08/markets/31609040_1_etf-stock-market-central-bank
Official Inflation Rate -- Seems Kinda Low
Official U.S. Bureau of Labor Statistics cumulative inflation from Sept. 11, 2001 to Sept. 11, 2012 is 29%.
Seems kind of low, doesn't it?
Here are other changes in prices:
Source: http://www.zerohedge.com/news/september-11-%E2%80%93-eleven-years-later-selected-statistics
Seems kind of low, doesn't it?
Here are other changes in prices:
Source: http://www.zerohedge.com/news/september-11-%E2%80%93-eleven-years-later-selected-statistics
Monday, September 10, 2012
Imagine if America was a Dictatorship.
“Why are you guys so anti-dictators? Imagine if America was a dictatorship. You could let 1 percent of the people have all the nation’s wealth. You could help your rich friends get richer by cutting their taxes and bailing them out when they gamble and lose. You could ignore the needs of the poor for health care and education. Your media would appear free, but would secretly be controlled by one person and his family. You could wiretap phones. You could torture foreign prisoners. You could have rigged elections. You could lie about why you go to war. You could fill your prisons with one particular racial group and no one would complain. You could use the media to scare the people into supporting policies that are against their interests.”
Source: http://www.youtube.com/watch?v=zIOPw0Ewj4Q
Source: http://www.imdb.com/title/tt1645170/
Source: http://www.youtube.com/watch?v=zIOPw0Ewj4Q
Source: http://www.imdb.com/title/tt1645170/
Sunday, September 9, 2012
Sustainable Inflation?
Have you ever had a feeling that prices constantly increase, where you need to have a raise every year just to keep up the same standard of living?
Cumulative inflation (median of 24 countries):
Year-over-year inflation. Notice how consistent years after 1900 of positive inflation can lead to the exponential growth shown in the chart, above.
Source: http://www.zerohedge.com/news/chart-day-803-years-global-inflation
Cumulative inflation (median of 24 countries):
Year-over-year inflation. Notice how consistent years after 1900 of positive inflation can lead to the exponential growth shown in the chart, above.
Source: http://www.zerohedge.com/news/chart-day-803-years-global-inflation
Pension Payments are Doing Just Fine. Just Don't Live Too Long.
Congratulations younger generations! You get to pay into pension schemes that pay out ridiculously high pension payments to your parents and grandparents.
If your state is >80% funded, you are fine, for now. For the rest of you, you too are fine for now...until you aren't. Which will be relatively soon.
Source: http://www.businessinsider.com/the-us-20-2012-9?op=1
If your state is >80% funded, you are fine, for now. For the rest of you, you too are fine for now...until you aren't. Which will be relatively soon.
Global Manufacturing is... Surprise!... Contracting.
Here's how to read the following table. Under the "Status" column, if it shows "Contraction" then it's a bad thing.
Germany, Japan, France, Italy, Australia are all being taken down by the4-year high S&P 500 global economy.
What's this? Even China's official manufacturing index (blue line) is showing contraction (HSBC's measurement is the red line).
Source: http://www.zerohedge.com/news/global-manufacturing-update-indicates-80-world-now-contraction
Source: http://www.zerohedge.com/news/china-manufacturing-pmi-lowest-march-2009-market-response-bad-good-so-far
Germany, Japan, France, Italy, Australia are all being taken down by the
What's this? Even China's official manufacturing index (blue line) is showing contraction (HSBC's measurement is the red line).
Source: http://www.zerohedge.com/news/global-manufacturing-update-indicates-80-world-now-contraction
Source: http://www.zerohedge.com/news/china-manufacturing-pmi-lowest-march-2009-market-response-bad-good-so-far
Better Than the Black American Express Card
Over $5 trillion of US Debt growth in less than 4 years, not bad. Not bad at all.
It took about 13 years to go from $5 trillion to $10 trillion.
I wonder how long it will take to add another $5 trillion...
- August 31, 2012: $16 trillion.
- January 20, 2009: $10.6 trillion.
- 1996: $5.2 trillion.
Congratulations to our children and their children. You now owe the world and your parents/grandparents over $16 trillion.
Source: http://en.wikipedia.org/wiki/Centurion_Card
Source: http://www.zerohedge.com/news/its-official-1601576978821580
It took about 13 years to go from $5 trillion to $10 trillion.
I wonder how long it will take to add another $5 trillion...
- August 31, 2012: $16 trillion.
- January 20, 2009: $10.6 trillion.
- 1996: $5.2 trillion.
Congratulations to our children and their children. You now owe the world and your parents/grandparents over $16 trillion.
Source: http://en.wikipedia.org/wiki/Centurion_Card
Source: http://www.zerohedge.com/news/its-official-1601576978821580
What to do With All That Free Time, and No Money, and No Hope...
Zerohedge: Euro-Zone youth unemployment hs now ticked back up to its euro-era record-high of 22.6% (18-year highs).
The history of Europe over the last 100 years shows that austerity can have severe consequences and outcomes and perhaps most notably, the independent variable that did result in more unrest: higher levels of government debt in the first place.
Source: http://www.zerohedge.com/news/europes-scariest-chart-got-scarier
Source: http://www.zerohedge.com/news/austerity-unrest-and-quantifying-chaos
The history of Europe over the last 100 years shows that austerity can have severe consequences and outcomes and perhaps most notably, the independent variable that did result in more unrest: higher levels of government debt in the first place.
Source: http://www.zerohedge.com/news/europes-scariest-chart-got-scarier
Source: http://www.zerohedge.com/news/austerity-unrest-and-quantifying-chaos
Got Iron?
Don't worry, China will have a soft landing and its domestic demand will replace its export declines, right?
Source: http://brazilianbubble.com/chart-the-four-biggest-bubbles-of-the-last-40-years/
Source: http://brazilianbubble.com/chart-the-four-biggest-bubbles-of-the-last-40-years/
Wednesday, August 15, 2012
Full Faith and Credit of the US Government
The chart below shows the extent of debasement of the value of U.S. money since 1913 when the Fed was established. To summarize in simple terms, a child with 4 cents in his pocket could buy the same amount of candy in 1913 as his descendant could with $1 in 2012. Today, it takes a quarter to buy what a penny did in 1913. The dollar has lost 96% of its purchasing power since 1913 (using CPI statistics). Once the dollar lost all linkage to gold, its value plummeted at an accelerated rate. Since 1971 when Bretton Woods was intentionally dismantled, the dollar has lost 82% of its purchasing power. 82%!
Alan Greenspan (Chairman of the Federal Reserve from 1987 to 2006), 1966: "Under a gold standard, the amount of credit that an economy can support is determined by the economy's tangible assets, since every credit instrument is ultimately a claim on some tangible asset. But government bonds are not backed by tangible wealth, only by the government's promise to pay out of future tax revenues, and cannot easily be absorbed by the financial markets. A large volume of new government bonds can be sold to the public only at progressively higher interest rates. Thus, government deficit spending under a gold standard is severely limited. The abandonment of the gold standard made it possible for the welfare statists to use the banking system as a means to an unlimited expansion of credit.
...
In the absence of the gold standard there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold [in 1933]. If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.
This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard."
Source: http://www.zerohedge.com/news/41-years-after-death-gold-standard-look-how-we-ended-economic-purgatory
Alan Greenspan (Chairman of the Federal Reserve from 1987 to 2006), 1966: "Under a gold standard, the amount of credit that an economy can support is determined by the economy's tangible assets, since every credit instrument is ultimately a claim on some tangible asset. But government bonds are not backed by tangible wealth, only by the government's promise to pay out of future tax revenues, and cannot easily be absorbed by the financial markets. A large volume of new government bonds can be sold to the public only at progressively higher interest rates. Thus, government deficit spending under a gold standard is severely limited. The abandonment of the gold standard made it possible for the welfare statists to use the banking system as a means to an unlimited expansion of credit.
...
In the absence of the gold standard there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold [in 1933]. If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.
This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard."
Source: http://www.zerohedge.com/news/41-years-after-death-gold-standard-look-how-we-ended-economic-purgatory
Saturday, July 21, 2012
10-Year Treasury Yields
What will happen in the next 10 years? Lower bond yields (higher bond prices)? Probably not.
- The US 10 year Treasury yields fell to a 220 year low of 1.45% in June 2012.
- US bonds have had the following distinct secular bull and bear markets:
- 1790-1902: erratic yield fluctuations and then a sustained decline in yields to below 3%.
- 1902-1920: the First Bear Bond Market, yields rise from 3% to 5-6%.
- 1920-1946: the Great Bull Bond Market, yields decline from 5-6% to below 2%.
- 1946-1981: the Second Bear Bond Market, yields soar from 2% to above 15% during 1981.
- 1981-today: the Greatest Bull Bond Market, as yields tumble from 15% to 1.5% today.
Source: Bank of America Merrill Lynch, June 2012.
Wednesday, July 18, 2012
Coming Soon to a City Near You
Recipe for municipal default:
Unrealistic benefits for public workers + housing crisis (lower property taxes) + economic crisis (lower income taxes) + years of wasteful spending + fraudulent accounting = Best of luck (especially you, Californians).
Cities on the brink:
Stockton, CA
Detroit, MI
Mammoth Lakes, CA
San Bernadino, CA
Compton, CA
Get ready for less police/fire, higher crime (unless you believe crime goes down in economic downturns with less police on patrol), more traffic tickets, less public services ...
Source: http://www.zerohedge.com/news/gathering-pace-muni-fails
Source: http://www.latimes.com/news/local/la-me-0719-compton-bankruptcy-20120719,0,7289469.story
Source: http://www.sfexaminer.com/opinion/editorials/2012/07/stockton-cautionary-tale-california
Source: http://latimesblogs.latimes.com/lanow/2012/07/mammoth-lakes-bankruptcy.html
Source: http://www.reuters.com/article/2012/07/03/us-stockton-bankruptcy-cause-idUSBRE8621DL20120703
Unrealistic benefits for public workers + housing crisis (lower property taxes) + economic crisis (lower income taxes) + years of wasteful spending + fraudulent accounting = Best of luck (especially you, Californians).
Cities on the brink:
Stockton, CA
Detroit, MI
Mammoth Lakes, CA
San Bernadino, CA
Compton, CA
Get ready for less police/fire, higher crime (unless you believe crime goes down in economic downturns with less police on patrol), more traffic tickets, less public services ...
Source: http://www.zerohedge.com/news/gathering-pace-muni-fails
Source: http://www.latimes.com/news/local/la-me-0719-compton-bankruptcy-20120719,0,7289469.story
Source: http://www.sfexaminer.com/opinion/editorials/2012/07/stockton-cautionary-tale-california
Source: http://latimesblogs.latimes.com/lanow/2012/07/mammoth-lakes-bankruptcy.html
Source: http://www.reuters.com/article/2012/07/03/us-stockton-bankruptcy-cause-idUSBRE8621DL20120703
Tuesday, June 19, 2012
Skyscraper Index: China Next Up?
Brazilian Bubble Blog (June 2012): Skyscraper Index Never Fails: China plans world’s tallest building
According to CNN, China is planning the construction of the world’s tallest building to be ready by early 2013, a 220-story structure which would cost the Chinese about US$628 million. Once completed, it will surpass Dubai’s Burj Khalifa to become the tallest structure in the world. The building will also outshine China’s current skyscraper poster boy: the 632-meter Shanghai Tower.
CNN (June 2012): It took Dubai more than five years to build the 828-meter Burj Khalifa, the world’s tallest building (for the moment, anyway).
But Chinese architects and engineers reckon they need a mere 90 days to leave the Emiratis in the dust.
At least, that's what they've claimed.
Wikipedia: The Skyscraper Index is a concept put forward in January 1999 by Andrew Lawrence, research director at Dresdner Kleinwort Wasserstein, which showed that the world's tallest buildings have risen on the eve of economic downturns. Business cycles and skyscraper construction correlate in such a way that investment in skyscrapers peaks when cyclical growth is exhausted and the economy is ready for recession. Mark Thornton's Skyscraper Index Model successfully sent a signal of the Late-2000s financial crisis at the beginning of August 2007.
The buildings may actually be completed after the onset of the recession or later, when another business cycle pulls the economy up, or even cancelled. Unlike earlier instances of similar reasoning ("height is a barometer of boom"), Lawrence used skyscraper projects as a predictor of economic crisis, not boom.
Source: http://brazilianbubble.com/skyscraper-index-never-fails-china-plans-worlds-tallest-building/
Source: http://www.ritholtz.com/blog/2012/04/skyscraper-index/
Source: http://en.wikipedia.org/wiki/Skyscraper_Index
Source: http://www.cnngo.com/shanghai/life/sky-city-chinese-company-proposes-worlds-tallest-building-098182
According to CNN, China is planning the construction of the world’s tallest building to be ready by early 2013, a 220-story structure which would cost the Chinese about US$628 million. Once completed, it will surpass Dubai’s Burj Khalifa to become the tallest structure in the world. The building will also outshine China’s current skyscraper poster boy: the 632-meter Shanghai Tower.
CNN (June 2012): It took Dubai more than five years to build the 828-meter Burj Khalifa, the world’s tallest building (for the moment, anyway).
But Chinese architects and engineers reckon they need a mere 90 days to leave the Emiratis in the dust.
At least, that's what they've claimed.
Wikipedia: The Skyscraper Index is a concept put forward in January 1999 by Andrew Lawrence, research director at Dresdner Kleinwort Wasserstein, which showed that the world's tallest buildings have risen on the eve of economic downturns. Business cycles and skyscraper construction correlate in such a way that investment in skyscrapers peaks when cyclical growth is exhausted and the economy is ready for recession. Mark Thornton's Skyscraper Index Model successfully sent a signal of the Late-2000s financial crisis at the beginning of August 2007.
The buildings may actually be completed after the onset of the recession or later, when another business cycle pulls the economy up, or even cancelled. Unlike earlier instances of similar reasoning ("height is a barometer of boom"), Lawrence used skyscraper projects as a predictor of economic crisis, not boom.
Source: http://brazilianbubble.com/skyscraper-index-never-fails-china-plans-worlds-tallest-building/
Source: http://www.ritholtz.com/blog/2012/04/skyscraper-index/
Source: http://en.wikipedia.org/wiki/Skyscraper_Index
Source: http://www.cnngo.com/shanghai/life/sky-city-chinese-company-proposes-worlds-tallest-building-098182
Monday, June 18, 2012
Got a Great Public Sector Pension or State Retiree Health Benefits? Now Watch Your Children and Grandchildren Suffer...
Summary: Too many lofty promises were made to workers of older generations, and too little (or nothing) was contributed by workers for their mathematically-flawed pension schemes and now we are dealing with the fallout. Changes are happening to reduce the gigantic funding holes, but the most pain will be felt by younger workers. Older workers, you should thank irresponsible policy-makers, your unions, and now, your children, grandchildren, and great-grandchildren for their generosity for paying for your what is "owed" to you.
The Pew Center on the States (June 2012):
States continue to lose ground in their efforts to cover the long-term costs of their employees’ pensions and retiree health care, due to continued investment losses from the financial crisis of 2008 and states’ inability to set aside enough each year to adequately fund their retirement promises. States have responded with an unprecedented number of reforms that, with strong investment gains, may improve the funding situation they face going forward, but continued fiscal discipline and additional reforms will be needed to put states back on a firm footing.
Though states have enough cash to cover retiree benefits in the short term, many of them—even with strong market returns—will not be able to keep up in the long term without some combination of higher contributions from taxpayers and employees, deep benefit cuts, and, in some cases, changes in how retirement plans are structured and benefits are distributed.
Many experts say that a healthy pension system should be at least 80 percent funded.
States have not done nearly enough to set aside money for their retirees’ health care and other non-pension benefits such as life insurance. As of fiscal year 2010, they had put away only 5 percent of their total bill coming due for those benefits.
States’ public sector retirement funding gap for both pensions and retiree health benefits grew by $120 billion, from $1.26 trillion to $1.38 trillion, from fiscal year 2009 to 2010. The largest part of that year-over-year growth was the increase in pension liabilities ($126 billion), which outpaced the growth in pension assets ($29 billion). The total public pension liability in 2010 was about $3.07 trillion; assets were $2.31 trillion, leaving a $757 billion gap.
Source: http://www.pewstates.org/uploadedFiles/PCS_Assets/2012/Pew_Pensions_Update.pdf
Source: http://www.zerohedge.com/news/us-retirement-benefits-underfunding-rises-record-14-trillion
The Pew Center on the States (June 2012):
States continue to lose ground in their efforts to cover the long-term costs of their employees’ pensions and retiree health care, due to continued investment losses from the financial crisis of 2008 and states’ inability to set aside enough each year to adequately fund their retirement promises. States have responded with an unprecedented number of reforms that, with strong investment gains, may improve the funding situation they face going forward, but continued fiscal discipline and additional reforms will be needed to put states back on a firm footing.
Though states have enough cash to cover retiree benefits in the short term, many of them—even with strong market returns—will not be able to keep up in the long term without some combination of higher contributions from taxpayers and employees, deep benefit cuts, and, in some cases, changes in how retirement plans are structured and benefits are distributed.
Many experts say that a healthy pension system should be at least 80 percent funded.
States’ public sector retirement funding gap for both pensions and retiree health benefits grew by $120 billion, from $1.26 trillion to $1.38 trillion, from fiscal year 2009 to 2010. The largest part of that year-over-year growth was the increase in pension liabilities ($126 billion), which outpaced the growth in pension assets ($29 billion). The total public pension liability in 2010 was about $3.07 trillion; assets were $2.31 trillion, leaving a $757 billion gap.
Retiree health care and other benefits liability in 2010 was $660 billion; states had assets to pay $33.1 billion, leaving a $627 billion hole.
To manage long-term pension obligations, nearly every state has moved to reduce its retirement bill in the last three years. Between 2009 and 2011, 43 states enacted benefit cuts or increased employee contributions, or did both.
The most common actions included asking employees to contribute a larger amount toward their pension benefits; increasing the age and years of service required before retiring; limiting the annual cost-of-living (COLA) increase; and changing the formula used to calculate benefits to provide a smaller pension check. States also have cracked down on abuses, such as the practice of “spiking” final pay to get a larger pension check by including overtime pay and sick leave.
The reforms that states have enacted in the last three years mostly affect future state workers, as it is legally difficult to reduce benefits for current employees and retirees.
Source: http://www.pewstates.org/uploadedFiles/PCS_Assets/2012/Pew_Pensions_Update.pdf
Source: http://www.zerohedge.com/news/us-retirement-benefits-underfunding-rises-record-14-trillion
Chris Martenson on the Next 20 Years
In Summary:
Economy (Must Grow) + Energy (Can't Grow) + Environment (Depleting) = 20-Year Outlook Alarming.
Source: http://www.youtube.com/user/GoldMoneyNews/featured?v=8WBiTnBwSWc
Source: http://www.peakprosperity.com/
Economy (Must Grow) + Energy (Can't Grow) + Environment (Depleting) = 20-Year Outlook Alarming.
Source: http://www.youtube.com/user/GoldMoneyNews/featured?v=8WBiTnBwSWc
Source: http://www.peakprosperity.com/