I know it's been forever since my last post, but the work of an executor is never done. But...after spending the past three days going back and forth to my realtor, and signing my name (and my parents' names) about a thousand times, an offer has been made and accepted on the condo that has been sitting empty for the past seven months. Well, it wasn't empty seven months ago. There was crap all over the place, and I mean that literally, not just in terms of the usual clutter. But after throwing out lots of stuff, holding an estate sale, and then throwing out whatever was left from that, and then cleaning and painting the place, replacing all of the carpeting and linoleum, and most of the appliances, I was finally able to list the property. Of course it didn't sell, so I had to lower the price by $50,000, which by the way enraged the homeowners association, but now if there are no further complications, I will finally be rid of the place.
The last surviving holdouts of totalitarian communism are Cuba, North Korea, and homeowners associations. But I don't want to get started on that.
I mentioned some time ago that one of my few guilty pleasures is watching Britain's Got Talent. Now the American version is airing, and there is no doubt that America has more talent. Perhaps the British tend to appreciate novelty acts more than we do, but the American version seems to have overall much better singers and dancers than the one across the pond.
The only problem I have with AGT (and BGT) is that a lot of it is fake, i.e staged as a production. For instance, one of the singers who recently auditioned on AGT was...well...plain-looking. Not horrifically ugly, but she had a cleft palate, and even after surgery, she isn't much to look at. But she has an amazing voice, and she should be a star. But given our society's infatuation with style over substance, she didn't even make it to the quarter-finals. This is a person who needs and really deserves a break, and they brought her to Las Vegas, only to tell her she was going home. She didn't even make it out of the airport. No explanation was given, and they didn't interview her, as they did so many other performers.
However...in the promo for next week, the three judges are shown on their private jet, receiving a call from Simon Cowell, telling them that there is a big problem. If I were a betting man (which I am, if the stock market counts) I would bet anything he is going to tell them to put that singer through to the next round. Earlier, the judges had the choice of putting either one or two dance acts through, and they only picked one, so now there are only 39 contestants left, when they have room for 40. All of this seems orchestrated to have left a spot open for her.
Or maybe this is just me being paranoid, but it all seems to fit together. I don't blame the performers for getting involved in this elaborate charade, because they really don't have a choice. It's not like the old days when there were variety shows which performers could use to showcase their talents. In this day and age, if they want any exposure, they have to do what the producers of AGT or American Idol tell them.
As far as the stock market is concerned, all is well for precious metals and resource stocks, although there is one special situation that should be mentioned. A small exploration company called Noront (NOT-V) found a huge nickel deposit two years ago in the Ring of Fire. It was a penny stock that soared to $7, and then crashed back to 0.60 when the market melted down. In the past two months, the stock has tripled on no news, which means (to me, anyway) that they have hit something. The stock has run from 60 cents to $2 on trading volume as high as 15-20 million shares, so someone must know something. Do your own due diligence, as some of the board members (Patrick Anderson et al) are shady characters.
Friday, July 31, 2009
Thursday, May 28, 2009
Upside breakout
After a dreary winter, the long overdue spring has arrived for the gold and silver markets. Battles were fought for the past two days over options and futures expiration, and the Gold Cartel could not defend $950 or even $960. Silver poked its nose above $15, and then went through it today. The silver open interest is barely 100,000, so there is plenty of room for that to expand, and it looks like the speculative longs are willing to take on JP Morgan and HSBC at these levels.
For Silver Standard, this couldn't have come at a better time, as they are about to sell the first silver concentrate from their Pirquitas mine. Things did not look nearly as good six months ago when silver was lanquishing around $9, but Pirquitas will be an amazingly robust project with silver at $15+.
I doubt that this signals the death knell of the Gold Cartel, but it is more proof that they are on the wrong side of history. The distortions in the silver and gold markets are growing, and it is becoming progressively harder for the bad guys to keep a lid on things. Ultimately, this will end with a failure on the COMEX. One of these months, someone won't be able to deliver silver bullion, and will be forced to settle in cash.
It looked like this scenario would occur last year, but the hedge fund deleveraging that began in July raised the specter of a deflationary crash, if not the collapse of the entire global financial system. This time around, we have massive amounts of money being printed all over the world, and the game is up. Silver is no longer an industrial metal, and industry supply and demand figures are meaningless. Silver is now a monetary metal, and investment demand will drive the price of silver. It does not matter how many new silver mines come on stream, as depreciating paper currencies will spur investor demand for physical silver bullion.
The story in gold is much the same. China will buy all the gold the Western central bankers are willing to sell, and then some. Best of all, the mining equities are leading the precious metals, and providing leverage to metals prices, as they should. As the saying goes, get in, sit down, shut up, and hang on!
Confession of guilty pleasure: I enjoy watching Britain's Got Talent. In fact, I have gone so far as to watch BGT every day this week. Well, one day it wasn't on, having been preempted by some soccer game or something, but every other day this week. That's not easy to do since it isn't televised in America. But the performances are being posted on YouTube. First, I find out from my news reader which acts made it into the next round. Since I used to be an air traffic controller, I understand Zulu time, and can easily translate to my local time. See, I knew those twenty years in ATC would come in handy one of these days.
Later on, the performances are posted on YouTube, and still later in the day, the judges' comments. The talent level ranges from amazing to awful, and everything in between. For instance, there's this fat Greek guy and his 12-year old son who run around on the stage and pretend like they're dancing. Don't laugh, they just made it into the finals. But the star of the show is a dumpy, plain-looking 48-year old woman from a small village in Scotland. She's never accomplished anything in her life, but she just happens to have an amazing singing voice. Among her competition is a 10-year old girl who also can sing, and will one day be a star. Then there's a guy who plays, of all things, a saxophone, but he's really good. It's like watching a soap opera, but these are real people chasing a dream, and it really is compelling theater.
Here's a parody of two of the main contenders, Susan Boyle and Hollie Steel:
http://www.youtube.com/watch?v=a7qXYpc3bDs
For Silver Standard, this couldn't have come at a better time, as they are about to sell the first silver concentrate from their Pirquitas mine. Things did not look nearly as good six months ago when silver was lanquishing around $9, but Pirquitas will be an amazingly robust project with silver at $15+.
I doubt that this signals the death knell of the Gold Cartel, but it is more proof that they are on the wrong side of history. The distortions in the silver and gold markets are growing, and it is becoming progressively harder for the bad guys to keep a lid on things. Ultimately, this will end with a failure on the COMEX. One of these months, someone won't be able to deliver silver bullion, and will be forced to settle in cash.
It looked like this scenario would occur last year, but the hedge fund deleveraging that began in July raised the specter of a deflationary crash, if not the collapse of the entire global financial system. This time around, we have massive amounts of money being printed all over the world, and the game is up. Silver is no longer an industrial metal, and industry supply and demand figures are meaningless. Silver is now a monetary metal, and investment demand will drive the price of silver. It does not matter how many new silver mines come on stream, as depreciating paper currencies will spur investor demand for physical silver bullion.
The story in gold is much the same. China will buy all the gold the Western central bankers are willing to sell, and then some. Best of all, the mining equities are leading the precious metals, and providing leverage to metals prices, as they should. As the saying goes, get in, sit down, shut up, and hang on!
Confession of guilty pleasure: I enjoy watching Britain's Got Talent. In fact, I have gone so far as to watch BGT every day this week. Well, one day it wasn't on, having been preempted by some soccer game or something, but every other day this week. That's not easy to do since it isn't televised in America. But the performances are being posted on YouTube. First, I find out from my news reader which acts made it into the next round. Since I used to be an air traffic controller, I understand Zulu time, and can easily translate to my local time. See, I knew those twenty years in ATC would come in handy one of these days.
Later on, the performances are posted on YouTube, and still later in the day, the judges' comments. The talent level ranges from amazing to awful, and everything in between. For instance, there's this fat Greek guy and his 12-year old son who run around on the stage and pretend like they're dancing. Don't laugh, they just made it into the finals. But the star of the show is a dumpy, plain-looking 48-year old woman from a small village in Scotland. She's never accomplished anything in her life, but she just happens to have an amazing singing voice. Among her competition is a 10-year old girl who also can sing, and will one day be a star. Then there's a guy who plays, of all things, a saxophone, but he's really good. It's like watching a soap opera, but these are real people chasing a dream, and it really is compelling theater.
Here's a parody of two of the main contenders, Susan Boyle and Hollie Steel:
http://www.youtube.com/watch?v=a7qXYpc3bDs
Saturday, May 23, 2009
First Japan, the the UK, then the US?
Japan, the second largest economy in the world, just lost the AAA rating on its government bonds. Standard and Poor just said the United Kingdom may lose its AAA rating in the near future. They didn't mention the United States (yet) but the yield on the 10-year note has recently risen from 2% to almost 3.5%. That is not a ringing vote of confidence. Bear in mind that this outfit (S&P) gave its AAA rating to mortgage-backed securities that now sell for 10 cents on the dollar.
This information finally seems to be getting through to the financial markets. Since March (the day the Fed announced quantitative easing) the precious metals and mining stocks have roared ahead against all currencies, but especially against the US Dollar. As I write this, gold is at $956 and silver at $14.69, as both have rallied sharply. However, the commitment of traders has deteriorated, and the technical wizards say the metals are overbought, which means at some point JP Morgan will pull its bids and try to engineer another sell off in silver and gold. That is inevitable, but another piece of news just surfaced.
The Bank for International Settlements just issued its semi-annual report, indicating that gold derivatives declined sharply, from $649 billion to $395 billion, or roughly 40%. I take this to mean the shorts are finally starting to cover. That is a decline of 7600 tons, or close to three years of production. If I had to guess, I would say we will see $1200 gold this year, and I expect the gold/silver ratio to decline, so silver should outperform gold for the rest of the year.
This information finally seems to be getting through to the financial markets. Since March (the day the Fed announced quantitative easing) the precious metals and mining stocks have roared ahead against all currencies, but especially against the US Dollar. As I write this, gold is at $956 and silver at $14.69, as both have rallied sharply. However, the commitment of traders has deteriorated, and the technical wizards say the metals are overbought, which means at some point JP Morgan will pull its bids and try to engineer another sell off in silver and gold. That is inevitable, but another piece of news just surfaced.
The Bank for International Settlements just issued its semi-annual report, indicating that gold derivatives declined sharply, from $649 billion to $395 billion, or roughly 40%. I take this to mean the shorts are finally starting to cover. That is a decline of 7600 tons, or close to three years of production. If I had to guess, I would say we will see $1200 gold this year, and I expect the gold/silver ratio to decline, so silver should outperform gold for the rest of the year.
Sunday, May 10, 2009
Don't ever be an executor!
Once again, I have been remiss in updating this blog, but there have been circumstances beyond my control. The fates have decreed that I am the executor of my parents' estate, and lately I have been busier than a one-legged asskicker. At first I spent most of my time dealing with doctors, nurses, hospitals and insurance companies. Now I spend most of my time dealing with bankers, lawyers, brokers, and investment companies, in addition to some of the above.
Oddly enough, the easiest people to work with have been my probate attorney and the Department of Motor Vehicles. I never would have guessed. Until I engaged the attorney, I usually had to do everything three times to get it done, if I was lucky. Sometimes, my efforts were completely ignored. It seems in the legal world there is only one way to do things, and everything takes four to six weeks, and everything isn't perfect, it gets kicked back to me.
The lawyer knows what to do, and provides me with the Declaration of This, and the Affidavits of This, That, and The Other Thing needed to get things done. As far as the DMV is concerned, there are streamlined procedures, and only one way to do anything. But if you do things their way, and fill out their form, everything gets accomplished in a fast and efficient manner (once you've waited in line for 25 minutes.)
So if anyone ever asks you to be an executor, just decline politely. Tell them you're too busy (and believe me, you will be.) It doesn't matter what the fee is, or if you have experience in the business, or you're good with money. It isn't worth it. I feel like I'm an executive. At any given time, I am juggling ten or twelve things, having delegated tasks to people, and hoping they get them done. After a certain amount of time, I have to follow up with each of them just to make sure they're actually doing something. (What? What form? Oh, no! You were supposed to send us Form XYZ-23. We can't do anything without that.) Then why didn't you tell me that, you stupid &*%$#@!?
Speaking of business, I just saw the finale of the Celebrity Apprentice. Donald (the idiot) Trump just picked Joan Rivers over Annie Duke, which is the dumbest business decision I have seen since New Coke. All I can say is that I have seen the first eight seasons of The Apprentice, but I won't be watching the ninth one. You can't reward nasty, abusive people at the expense of a competent professional, and expect to maintain my interest.
Last of all, my comment on the financial markets. More and more, it is looking like the 1970's again, not the 1930's. Massive global financial stimulus is finally having an effect, and we are seeing that in uptrends in commodities and the Baltic Dry Freight Index. However, the recent run in the broad stock market that has taken the Dow up 2000 points is a mirage. To put it bluntly, it is a sucker rally, nothing more than a bear market rally.
The large banks are still insolvent, and no matter what the stress tests say, they should all be bankrupt. Further, the American consumer is tapped out, and predictions of GDP growth are hopelessly optimistic. When the economic improvement comes, it will be led by China, India and Brazil, not the United States.
We're already starting to see a breakdown in the US Dollar, with the $C up to 87 cents, and 10-year T-Bond yields up to 3.3%. Resource stocks will do very well in this environment. Gold, silver, oil, and gas in particular, but once inflation starts to show up later this year, the soft commodities and even base metals will do well. The only remaining caveat for mining shares is that when the rally in the broad stock market fizzles out, will the gold stocks act like gold or like stocks? It is possible that mining stocks could sell off with everything else, but if they do, that will present one last buying opportunity before gold and silver move up sharply. More likely, the lows for mining shares are already in.
Oddly enough, the easiest people to work with have been my probate attorney and the Department of Motor Vehicles. I never would have guessed. Until I engaged the attorney, I usually had to do everything three times to get it done, if I was lucky. Sometimes, my efforts were completely ignored. It seems in the legal world there is only one way to do things, and everything takes four to six weeks, and everything isn't perfect, it gets kicked back to me.
The lawyer knows what to do, and provides me with the Declaration of This, and the Affidavits of This, That, and The Other Thing needed to get things done. As far as the DMV is concerned, there are streamlined procedures, and only one way to do anything. But if you do things their way, and fill out their form, everything gets accomplished in a fast and efficient manner (once you've waited in line for 25 minutes.)
So if anyone ever asks you to be an executor, just decline politely. Tell them you're too busy (and believe me, you will be.) It doesn't matter what the fee is, or if you have experience in the business, or you're good with money. It isn't worth it. I feel like I'm an executive. At any given time, I am juggling ten or twelve things, having delegated tasks to people, and hoping they get them done. After a certain amount of time, I have to follow up with each of them just to make sure they're actually doing something. (What? What form? Oh, no! You were supposed to send us Form XYZ-23. We can't do anything without that.) Then why didn't you tell me that, you stupid &*%$#@!?
Speaking of business, I just saw the finale of the Celebrity Apprentice. Donald (the idiot) Trump just picked Joan Rivers over Annie Duke, which is the dumbest business decision I have seen since New Coke. All I can say is that I have seen the first eight seasons of The Apprentice, but I won't be watching the ninth one. You can't reward nasty, abusive people at the expense of a competent professional, and expect to maintain my interest.
Last of all, my comment on the financial markets. More and more, it is looking like the 1970's again, not the 1930's. Massive global financial stimulus is finally having an effect, and we are seeing that in uptrends in commodities and the Baltic Dry Freight Index. However, the recent run in the broad stock market that has taken the Dow up 2000 points is a mirage. To put it bluntly, it is a sucker rally, nothing more than a bear market rally.
The large banks are still insolvent, and no matter what the stress tests say, they should all be bankrupt. Further, the American consumer is tapped out, and predictions of GDP growth are hopelessly optimistic. When the economic improvement comes, it will be led by China, India and Brazil, not the United States.
We're already starting to see a breakdown in the US Dollar, with the $C up to 87 cents, and 10-year T-Bond yields up to 3.3%. Resource stocks will do very well in this environment. Gold, silver, oil, and gas in particular, but once inflation starts to show up later this year, the soft commodities and even base metals will do well. The only remaining caveat for mining shares is that when the rally in the broad stock market fizzles out, will the gold stocks act like gold or like stocks? It is possible that mining stocks could sell off with everything else, but if they do, that will present one last buying opportunity before gold and silver move up sharply. More likely, the lows for mining shares are already in.
Friday, April 24, 2009
When did 60 Minutes become Pravda?
Ages ago, when I was a young man, I used to watch 60 Minutes on Sunday nights. Then came 20 years of working weekends as an air traffic controller. But now I am once again watching 60 Minutes, and I am sad to say that you can't go home again.
In the olden days, 60 Minutes was famous for providing the best in hard-hitting investigative journalism. If you were a businessman back then, the last thing you wanted to see was a 60 Minutes camera crew waiting outside your office. Corporate executives used to whine that 60 Minutes was anti-business, but they had it wrong. 60 Minutes was anti-corrpution. Note that I used the past tense in that last sentence.
Things aren't the same any more. Last year, 60 Minutes did a puff-piece on Treasury Secretary Henry Paulson, paying homage to him for preventing the financial system from melting down. In a way, 60 Minutes was correct in that we were indeed on the edge of a global financial cataclysm. But Paulson was one of the perpetrators who caused the disaster in the first place. Yet 60 Minutes never mentioned that, and went on to lionize him for his efforts to avert disaster.
OK, maybe 60 Minutes could slip up once. After all, I have bad days once in a while, too. But then 60 Minutes went on to do a puff-piece on Ken Lewis, the CEO of Bank of America, which had just finalized a deal to purchase Merrill Lynch. So there is 60 Minutes again, showing Bank of America as the clever bank that had avoided the pitfalls that snagged Citigroup and the other money center banks. And now BoA was going to acquire one of the venerable names of Wall Street.
Now the truth comes out. 1) Bank of America is only one or two steps behind Citigroup on the way to insolvency and bankruptcy, and 2) Merrill Lynch is a toxic mess, owning more worthless mortgage-backed securities than anyone had suspected. Certainly more than Ken Lewis suspected, and when he found out, he attempted to back out of the deal, invoking the "material adverse event" clause in the contract.
Here's where things REALLY get sticky. Henry the Hit-Man Paulson then told Lewis you will buy Merrill Lynch or I will fire you, your entire management team, and your board of directors. So Lewis said, "Where do I sign?" He bought Merrill Lynch, simultaneously saving his own job and throwing the BoA shareholders under the bus. Now Paulson pipes up that yes, he threatened to fire everyone, but only because Ben Bernanke ordered him to do so.
Well! That is certainly interesting, because Fed Chairman Bernanke has already denied through a spokesman that he did any such thing. You can bet that we have not heard the last of this. But that brings me back to 60 Minutes, which recently did yet another puff-piece on...Ben Bernanke! It was a wonderful story of how the smartest kid in town grew up to be the genius who is safeguarding our country's central bank.
More and more, 60 Minutes looks like Pravda, the old Soviet newspaper that told the people whatever the government wanted the people to know. It is one thing to try to imbue people with confidence that we will get through this economic mess and everything will be all right. It is quite another to praise the scoundrels who got us into this mess in the first place.
No one says 60 Minutes is anti-business any longer, and for that, the producers of 60 Minutes should be ashamed of themselves.
In the olden days, 60 Minutes was famous for providing the best in hard-hitting investigative journalism. If you were a businessman back then, the last thing you wanted to see was a 60 Minutes camera crew waiting outside your office. Corporate executives used to whine that 60 Minutes was anti-business, but they had it wrong. 60 Minutes was anti-corrpution. Note that I used the past tense in that last sentence.
Things aren't the same any more. Last year, 60 Minutes did a puff-piece on Treasury Secretary Henry Paulson, paying homage to him for preventing the financial system from melting down. In a way, 60 Minutes was correct in that we were indeed on the edge of a global financial cataclysm. But Paulson was one of the perpetrators who caused the disaster in the first place. Yet 60 Minutes never mentioned that, and went on to lionize him for his efforts to avert disaster.
OK, maybe 60 Minutes could slip up once. After all, I have bad days once in a while, too. But then 60 Minutes went on to do a puff-piece on Ken Lewis, the CEO of Bank of America, which had just finalized a deal to purchase Merrill Lynch. So there is 60 Minutes again, showing Bank of America as the clever bank that had avoided the pitfalls that snagged Citigroup and the other money center banks. And now BoA was going to acquire one of the venerable names of Wall Street.
Now the truth comes out. 1) Bank of America is only one or two steps behind Citigroup on the way to insolvency and bankruptcy, and 2) Merrill Lynch is a toxic mess, owning more worthless mortgage-backed securities than anyone had suspected. Certainly more than Ken Lewis suspected, and when he found out, he attempted to back out of the deal, invoking the "material adverse event" clause in the contract.
Here's where things REALLY get sticky. Henry the Hit-Man Paulson then told Lewis you will buy Merrill Lynch or I will fire you, your entire management team, and your board of directors. So Lewis said, "Where do I sign?" He bought Merrill Lynch, simultaneously saving his own job and throwing the BoA shareholders under the bus. Now Paulson pipes up that yes, he threatened to fire everyone, but only because Ben Bernanke ordered him to do so.
Well! That is certainly interesting, because Fed Chairman Bernanke has already denied through a spokesman that he did any such thing. You can bet that we have not heard the last of this. But that brings me back to 60 Minutes, which recently did yet another puff-piece on...Ben Bernanke! It was a wonderful story of how the smartest kid in town grew up to be the genius who is safeguarding our country's central bank.
More and more, 60 Minutes looks like Pravda, the old Soviet newspaper that told the people whatever the government wanted the people to know. It is one thing to try to imbue people with confidence that we will get through this economic mess and everything will be all right. It is quite another to praise the scoundrels who got us into this mess in the first place.
No one says 60 Minutes is anti-business any longer, and for that, the producers of 60 Minutes should be ashamed of themselves.
Friday, April 17, 2009
New website: Goldmansachs666.com
The government's interference in the financial markets has become so blatant that references to it are finding their way into the mainstream media. I don't mean the various stimulus packages that President Obama is pushing: I mean the outright fraud and manipulation being practiced by Government...oops, Goldman Sachs. For a long time there has been a revolving door between the highest level of GSax and the Treasury and the world's central banks. The machinations of the President's Working Group on Financial Markets (aka Plunge Protection Team) has been well documented. But now, a fellow by the name of Mike Morgan is willing to take on the embodiment of evil itself and I wish him well.
In case it is not clear, the Wall Street banking industry (with its allies in government) is plundering the wealth of this country. Vast amounts of money are being created and immediately funneled to the favored banks. With interest rates driven down to near zero, retirees can't live on their savings, and their wealth is being extracted from them. Again, low interest rates favor the banks, which can borrow at no cost, and invest the money at much higher rates. The people who actually work and manufacture and create things are seeing their currency debased, and their wealth transferred to the executives on Wall Street, who push paper around, and create nothing.
This is the web site: http://www.goldmansachs666.com/
Here is a sample from a disclaimer:
"Disclosure: Yes, I am short Goldman Sachs stock. I believe this company is evil and should not exist. We need to begin to break up companies that have as much control over world finances as Goldman Sachs."
Needless to say, Goldman Sachs is trying to shut him down, but Mr. Morgan (and his lawyers) are ready for a fight, and they want to take on Goliath. I wish him the best of luck.
On a somewhat lighter note, a somewhat heavier golfer won the Masters tournament on Sunday. Angel Cabrera became the first man from Argentina to win the Masters. He isn't your typical pro that grew up playing golf at the country club links. Cabrera dropped out of school at age 10, and spent most of his youth getting into fights. From the looks of him, he spent the rest of his time eating. At least when he wasn't chain smoking.
That's not to say he can't play. He hadn't realized the potential of his talent, mostly because he didn't seem to think putting was very important. A couple of years ago, he finally decided to do some work on his putting, and he beat Tiger Woods to win the US Open. So it was no surprise that he could win another major championship, especially since he gave up smoking. He still likes to eat, though. Not like John Daly, but Cabrera could stand to lose a few pounds. But then the fittest golfers don't always win, and I think Cabrera has at least another major title in him.
In case it is not clear, the Wall Street banking industry (with its allies in government) is plundering the wealth of this country. Vast amounts of money are being created and immediately funneled to the favored banks. With interest rates driven down to near zero, retirees can't live on their savings, and their wealth is being extracted from them. Again, low interest rates favor the banks, which can borrow at no cost, and invest the money at much higher rates. The people who actually work and manufacture and create things are seeing their currency debased, and their wealth transferred to the executives on Wall Street, who push paper around, and create nothing.
This is the web site: http://www.goldmansachs666.com/
Here is a sample from a disclaimer:
"Disclosure: Yes, I am short Goldman Sachs stock. I believe this company is evil and should not exist. We need to begin to break up companies that have as much control over world finances as Goldman Sachs."
Needless to say, Goldman Sachs is trying to shut him down, but Mr. Morgan (and his lawyers) are ready for a fight, and they want to take on Goliath. I wish him the best of luck.
On a somewhat lighter note, a somewhat heavier golfer won the Masters tournament on Sunday. Angel Cabrera became the first man from Argentina to win the Masters. He isn't your typical pro that grew up playing golf at the country club links. Cabrera dropped out of school at age 10, and spent most of his youth getting into fights. From the looks of him, he spent the rest of his time eating. At least when he wasn't chain smoking.
That's not to say he can't play. He hadn't realized the potential of his talent, mostly because he didn't seem to think putting was very important. A couple of years ago, he finally decided to do some work on his putting, and he beat Tiger Woods to win the US Open. So it was no surprise that he could win another major championship, especially since he gave up smoking. He still likes to eat, though. Not like John Daly, but Cabrera could stand to lose a few pounds. But then the fittest golfers don't always win, and I think Cabrera has at least another major title in him.
Tuesday, April 7, 2009
No surprises from G20 meeting
The good news from the G-20 summit meeting is that while some 90 people were arrested, only one person was killed, and even that might not be directly related to the protests. Other than some windows being broken at the Royal Bank of Scotland, the affair was about as peaceful as one could have hoped. French President Sarkozy didn't walk out, and for the first time in a long time, the US had a president with the gravitas to be there, and didn't try to look into anyone's soul. But for all the praise President Obama received, he didn't have a very strong hand to play.
Both China and Russia are trying to replace the dollar as the world's reserve currency, either with a gold-backed currency, or with Special Drawing Rights from the IMF. If the IMF was serious about this, they wouldn't be selling 403 tons of gold, ostensibly to pay some bills or raise funds to help impoverished countries in Africa, or some other such nonsense. I think it is a payoff for holders of T-Bonds who are fed up with our money printing. In other worlds, most of the IMF gold will end up in a Chinese bank vault, and none of it will ever be sold on the open market. It will be a bank-to-bank transaction, with no effect on the gold market.
All I can gather about the G20 meeting is that our world leaders finally figured out that the economic crisis is for real, and it is global, so they all have to learn to play nice with each other or the whole thing collapses. So we will see more and larger stimulus packages to come. They formally announced that the world will collectively spend another $5 trillion by the end of next year, and if things still don't look good, you can bet there's more where that came from. So there will be a global economic rally of sorts, but we won't see much of it here in the US. It will be led by the emerging markets, notably China, India and Brazil, and that will strengthen commodity prices further as those countries industrialize. Ever since I was in college, the old joke about Brazil was that it was the country of the future, and always would be. It appears now the joke is on us. Brazil is energy self-sufficient, it has an enormously popular president, and the country may actually start to live up to its potential.
And now a word about Plax. Some time ago (right after the idiot shot himself) I opined that Paxico Burress would play football again, but not for the New York Giants. At last the Giants have given up hope, and released him. Last year the Giants withheld his $1 million bonus because when they re-did his contract last year they inserted a clause that said Burress would forfeit his signing bonus if he was subject to “incarceration or detention by any law enforcement personnel” or if he was suspended by the NFL or the Giants for “conduct detrimental” to the team.
It sounds like the Giants knew who they were dealing with, doesn't it? That in itself is a sign of the times when you suspect your multi-millionaire employees might get themselves thrown in prison. But now an arbitrator ruled that the Giants have to pay Burress the $1 million because the Collective Bargaining Agreement overrules individual contracts, and the CBA states that a player can only forfeit his signing bonus if he “willfully takes action that has the effect of substantially undermining his ability to fully participate in either preseason training camp or the regular season.” The arbitrator ruled that Burress’ actions were not “willful.” So I guess if Burress had shot himself on purpose, the Giants would have had a better case.
That's one of the things I've always hated about unions. They protect bad people who deserve to be punished. I wish Plax well in his future endeavors, and I certainly hope he stays out of prison because he doesn't belong there. But as if he didn't hurt the Giants enough by wrecking their 2008 season, now he has cost the team another $1 million in the bargain. End of rant.
Both China and Russia are trying to replace the dollar as the world's reserve currency, either with a gold-backed currency, or with Special Drawing Rights from the IMF. If the IMF was serious about this, they wouldn't be selling 403 tons of gold, ostensibly to pay some bills or raise funds to help impoverished countries in Africa, or some other such nonsense. I think it is a payoff for holders of T-Bonds who are fed up with our money printing. In other worlds, most of the IMF gold will end up in a Chinese bank vault, and none of it will ever be sold on the open market. It will be a bank-to-bank transaction, with no effect on the gold market.
All I can gather about the G20 meeting is that our world leaders finally figured out that the economic crisis is for real, and it is global, so they all have to learn to play nice with each other or the whole thing collapses. So we will see more and larger stimulus packages to come. They formally announced that the world will collectively spend another $5 trillion by the end of next year, and if things still don't look good, you can bet there's more where that came from. So there will be a global economic rally of sorts, but we won't see much of it here in the US. It will be led by the emerging markets, notably China, India and Brazil, and that will strengthen commodity prices further as those countries industrialize. Ever since I was in college, the old joke about Brazil was that it was the country of the future, and always would be. It appears now the joke is on us. Brazil is energy self-sufficient, it has an enormously popular president, and the country may actually start to live up to its potential.
And now a word about Plax. Some time ago (right after the idiot shot himself) I opined that Paxico Burress would play football again, but not for the New York Giants. At last the Giants have given up hope, and released him. Last year the Giants withheld his $1 million bonus because when they re-did his contract last year they inserted a clause that said Burress would forfeit his signing bonus if he was subject to “incarceration or detention by any law enforcement personnel” or if he was suspended by the NFL or the Giants for “conduct detrimental” to the team.
It sounds like the Giants knew who they were dealing with, doesn't it? That in itself is a sign of the times when you suspect your multi-millionaire employees might get themselves thrown in prison. But now an arbitrator ruled that the Giants have to pay Burress the $1 million because the Collective Bargaining Agreement overrules individual contracts, and the CBA states that a player can only forfeit his signing bonus if he “willfully takes action that has the effect of substantially undermining his ability to fully participate in either preseason training camp or the regular season.” The arbitrator ruled that Burress’ actions were not “willful.” So I guess if Burress had shot himself on purpose, the Giants would have had a better case.
That's one of the things I've always hated about unions. They protect bad people who deserve to be punished. I wish Plax well in his future endeavors, and I certainly hope he stays out of prison because he doesn't belong there. But as if he didn't hurt the Giants enough by wrecking their 2008 season, now he has cost the team another $1 million in the bargain. End of rant.
Tuesday, March 31, 2009
PIGS to meet in London
Thursday should be exciting. That's the day of the G-20 economic summit in London. But I think they should have picked a different locale for it. Some place no one had ever heard of, or could find on a map. Sort of like when Dick Cheney would be spirited away to an "undisclosed location" even though we knew they had issued a TFR in Wyoming for him. The problem with this G-20 meeting is that it isn't a good time for bankers to be getting together, much less the heads of state to discuss the economic mess.
I'm sure security will be tight, and most likely there will only be the usual low-grade violence that you normally see in third-world countries, which England is well on its way to becoming. So with any luck there will only be a few arrests, and no one gets killed. The meeting itself could be even more contentious than the protests going on outside. Already most of the major economies, i.e. the US, UK, Japan and Switzerland have gone down the path of quantitative easing (in plain English, money printing.)
Conspicuous by its absence from that list is the European Union. If it were up to the Mediterrean countries, the aptly named PIGS (Portugal, Italy, Greece, and Spain) the ECB would already by happily inflating along with the rest of the world. But the Germans have long memories of the Weimar Republic, and so Europe will be the last to inflate. But mark my words, they WILL inflate, because everyone else will. As everyone else cuts rates to zero, the ECB had to follow, and so they will have to continue in each round of competitive devaluations. Thus, gold and silver will appreciate against all currencies.
French president Sarkozy has already threatened to walk out of the summit meeting, and the Germans have apparently leaked a copy of the report to be issued on the final day. It's nice to know the results of the meeting have already been planned in advance. Sort of like the old Soviet political apparatus announcing the final vote tally the day before the election. So now UK Prime Minister Gordon Brown looks like a complete idiot (not hard for him - remember, he was the guy who sold half of the Bank of England's gold reserve at $252/oz) and the French are blaming the Anglo-Saxons, or in other words the US and UK, for the world's financial problems.
Play nice, children.
I'm sure security will be tight, and most likely there will only be the usual low-grade violence that you normally see in third-world countries, which England is well on its way to becoming. So with any luck there will only be a few arrests, and no one gets killed. The meeting itself could be even more contentious than the protests going on outside. Already most of the major economies, i.e. the US, UK, Japan and Switzerland have gone down the path of quantitative easing (in plain English, money printing.)
Conspicuous by its absence from that list is the European Union. If it were up to the Mediterrean countries, the aptly named PIGS (Portugal, Italy, Greece, and Spain) the ECB would already by happily inflating along with the rest of the world. But the Germans have long memories of the Weimar Republic, and so Europe will be the last to inflate. But mark my words, they WILL inflate, because everyone else will. As everyone else cuts rates to zero, the ECB had to follow, and so they will have to continue in each round of competitive devaluations. Thus, gold and silver will appreciate against all currencies.
French president Sarkozy has already threatened to walk out of the summit meeting, and the Germans have apparently leaked a copy of the report to be issued on the final day. It's nice to know the results of the meeting have already been planned in advance. Sort of like the old Soviet political apparatus announcing the final vote tally the day before the election. So now UK Prime Minister Gordon Brown looks like a complete idiot (not hard for him - remember, he was the guy who sold half of the Bank of England's gold reserve at $252/oz) and the French are blaming the Anglo-Saxons, or in other words the US and UK, for the world's financial problems.
Play nice, children.
Sunday, March 22, 2009
The day the Fed blinked
Some day we will look back at Wednesday, March 18 as the day the US Dollar started down the path to rampant inflation. Early in the day, the new CPI figure came in higher, and the price of oil was higher. You'd think the price of precious metals would be higher too, but the Gold Cartel was at work, and the gold price had been driven down to almost $880, and silver was below $12.
Then the Fed made an announcement that it would purchase $300 billion of treasury bonds, $100 billion of agency bonds, and $750 billion of agency-guaranteed mortgages over the next six months. That's $1.15 trillion, and that's in addition to all of the other purchases the Fed has made. Where is the Fed going to get all that money? That's easy: it will create the money out of thin air.
Within 15 minutes, the price of gold had rallied $38, and silver was even stronger. The rally continued on Thursday, and now gold trades at $952 and silver at $13.73. I think the market is finally getting it. We aren't going to see deflation. The CPI, as doctored as it is, was up even though we are in the deepest recession since the 1930's. The most basic industrial materials, copper and oil, have climbed off their lows, and the Baltic Dry Index (an important indicator of international trade) has also rallied.
Finally, this $1.15 trillion is only the beginning. A down payment, if you will, on much larger bailouts to come. No one thinks this $300 billion is the end. You can't run the US government for very long on a piddling $300 billion. It is possible that the Chinese demanded it; that the Fed will be buying treasuries that China wants to sell to fund its own stimulus program. But one thing is certain: the Treasury will continue to scramble to raise money. Tomorrow, Geithner will announce another scheme to try to foist some more toxic assets on unsuspecting investors, if they can find any.
The Public Investment Corporation will spend another $1 trillion on toxic assets, which they will try to sell to hedge funds or other private investors (read suckers.) The government will offer low-cost loans and will even share some of the risk if (when) the value of those assets falls even further. It may have a different name, or a new acronym, but it's still the same old scam. It all adds up to more inflation, and much higher prices for commodities and tangible assets.
Then the Fed made an announcement that it would purchase $300 billion of treasury bonds, $100 billion of agency bonds, and $750 billion of agency-guaranteed mortgages over the next six months. That's $1.15 trillion, and that's in addition to all of the other purchases the Fed has made. Where is the Fed going to get all that money? That's easy: it will create the money out of thin air.
Within 15 minutes, the price of gold had rallied $38, and silver was even stronger. The rally continued on Thursday, and now gold trades at $952 and silver at $13.73. I think the market is finally getting it. We aren't going to see deflation. The CPI, as doctored as it is, was up even though we are in the deepest recession since the 1930's. The most basic industrial materials, copper and oil, have climbed off their lows, and the Baltic Dry Index (an important indicator of international trade) has also rallied.
Finally, this $1.15 trillion is only the beginning. A down payment, if you will, on much larger bailouts to come. No one thinks this $300 billion is the end. You can't run the US government for very long on a piddling $300 billion. It is possible that the Chinese demanded it; that the Fed will be buying treasuries that China wants to sell to fund its own stimulus program. But one thing is certain: the Treasury will continue to scramble to raise money. Tomorrow, Geithner will announce another scheme to try to foist some more toxic assets on unsuspecting investors, if they can find any.
The Public Investment Corporation will spend another $1 trillion on toxic assets, which they will try to sell to hedge funds or other private investors (read suckers.) The government will offer low-cost loans and will even share some of the risk if (when) the value of those assets falls even further. It may have a different name, or a new acronym, but it's still the same old scam. It all adds up to more inflation, and much higher prices for commodities and tangible assets.
Tuesday, March 17, 2009
The stuff revolutions are made of
In the fourth quarter of last year, the insurance giant AIG lost $61.7 billion. That's more than $20 billion a month. Consequently, AIG has received bailouts of $170 billion from the Treasury department to keep it afloat. Unfortunately we can't let AIG go belly up, because it would take the entire financial system with it. So the taxpayers have to keep throwing good money after bad. As bad as that is, AIG just paid $165 million in bonuses to its employees.
That is money which was given to them by the taxpayers, at a time when millions of Americans have lost their jobs, and millions more are out of work. The company maintains that those bonuses are in the employee contracts, and are required to be paid by law. If it's hard to understand why anyone at AIG deserves a raise (note Exhibit A: the above mentioned $61.7 billion loss) then remember that AIG was actually a profitable insurance company. The company as a whole was making money, except for one unit. The one that engaged in financial engineering, and traded derivatives to bring down the entire company. So they are giving bonuses to the trading department in order to keep those talented individuals in the fold.
I never would have believed it, but Congress has come up with an ingenious solution. Yes, the United States Congress! They are going to sponsor legislation that taxes bonuses received by employees of companies that receive federal bailouts at the rate of 100%. I never thought I would be in favor of Congress inventing new and higher taxes, but I can live with this one. OK, your contract says you have to be paid this $1 million bonus. Now please remit $1 million in taxes to the US Treasury, or we will throw you in prison. Have a nice day, Mr. Expert Derivatives Trader. End of rant.
The price of oil is back up to $48, which I believe is signalling a return to normalcy. Market technicians, and others who read goat entrails say oil has broken above its 50-day moving average, and that's supposed to be good. I can agree with that, and I think it points to better days ahead for the entire commodity complex, especially gold and silver, which can stand on their own, and do not need an economic recovery to do well.
That is money which was given to them by the taxpayers, at a time when millions of Americans have lost their jobs, and millions more are out of work. The company maintains that those bonuses are in the employee contracts, and are required to be paid by law. If it's hard to understand why anyone at AIG deserves a raise (note Exhibit A: the above mentioned $61.7 billion loss) then remember that AIG was actually a profitable insurance company. The company as a whole was making money, except for one unit. The one that engaged in financial engineering, and traded derivatives to bring down the entire company. So they are giving bonuses to the trading department in order to keep those talented individuals in the fold.
I never would have believed it, but Congress has come up with an ingenious solution. Yes, the United States Congress! They are going to sponsor legislation that taxes bonuses received by employees of companies that receive federal bailouts at the rate of 100%. I never thought I would be in favor of Congress inventing new and higher taxes, but I can live with this one. OK, your contract says you have to be paid this $1 million bonus. Now please remit $1 million in taxes to the US Treasury, or we will throw you in prison. Have a nice day, Mr. Expert Derivatives Trader. End of rant.
The price of oil is back up to $48, which I believe is signalling a return to normalcy. Market technicians, and others who read goat entrails say oil has broken above its 50-day moving average, and that's supposed to be good. I can agree with that, and I think it points to better days ahead for the entire commodity complex, especially gold and silver, which can stand on their own, and do not need an economic recovery to do well.
Tuesday, March 10, 2009
Revisionist history and the free market
After listening to so many free market advocates criticize everything the government does (no matter what it does) they all start to sound like a broken record. To begin with, the free market will not solve all of our economic problems.
One such expert on revisionist history is Jim Puplava, the creator of an outstanding website, and host of an informative weekly podcast. However, his economic views tend to favor whatever is best for Jim Puplava, and not the country as a whole. For example, he sees no difference between Hoover and FDR; that their economic policies were the same, and only lengthened the Great Depression. Most amazing of all, he gives the credit for our economic recovery to World War II.
Note to Jim Puplava: war is not good for the economy. Military spending is completely non-productive, and the money could have been better spent to create jobs without getting millions of people killed. Further, he criticizes FDR for campaigning in 1940 on a pledge to keep America out of World War II, and then breaking his promise. Well, was that really his fault? After the Japanese bombed Pearl Harbor, we were pretty much committed to entering the war, weren’t we?
The simple fact is that FDR was one of our greatest presidents because he brought America out of the depression, and won World War II. Bad presidents don’t get elected four times, and we don’t put bad presidents on our coinage. Further, war hasn’t helped our economy lately, has it? I mean, unless you happen to be Halliburton or one of the other defense contractors. Bush gave us two wars, and all they did was increase the deficit spending with no end in sight.
The other commentator who has the same blind spot is Peter Schiff, president of Euro Pacific Capital. You may have seen him, as he endlessly promotes himself, his books, his radio and TV appearances, and so on. His brokerage firm charges very high commissions, but he made a lot of money for his clients from 2001-2007. Then in 2008 his clients lost half of their money just like everyone else. That has never stopped him from trumpeting the fact that he saw the economic mess coming, even if his investments crumbled like the rest of the global stock markets.
Schiff is another government-hater, although his predisposition may be genetic. His father decided that the income tax was illegal, refused to pay it, and wrote books encouraging others to do the same. As you might expect the elder Schiff has spent a great deal of time in the slammer. The government got so tired of his nonsense that he was finally sentenced to 12 years in prison, even though he was 78 years old at the time.
So Peter Schiff hates everything about the government, and thinks anyone who works in the public sector is incompetent. Needless to say, he is opposed to any government bailouts, and thinks everything will work out if companies are allowed to fail. That may work in the ivory tower of Austrian economics, but in the real world it will get you killed.
First of all, the expansion of debt has gone much too far. Allowing large companies to fail would result in a disaster that would make the Great Depression look like a cakewalk. We saw this with the collapse of Lehman Brothers. The government followed the free market dogma last September, and the result was a run on the money markets, and brought the entire economic system to the brink of collapse. That means no credit for anyone. No commercial paper for businesses, so they can’t meet their payrolls, so millions of people are thrown out of work. Those millions of people can’t pay their bills, so millions of businesses fail. This is how a temporary matter of illiquidity results in insolvency, and then bankruptcy for otherwise healthy businesses. Then the effects ripple throughout the economy. So much for the healing effects of free market capitalism.
One final note about government programs. From listening to Puplava and Schiff, you’d think Social Security and Medicare were the worst atrocities ever committed by America. It doesn’t matter to them that Social Security lifted tens of millions of people out of poverty. It doesn’t matter to Puplava and Schiff that without Medicare and other similar programs, virtually everyone in this country would die broke. Because unless you are super rich, or you suddenly die of a heart attack, you can look forward to enormous medical bills at the end of your life. One day in a semi-private hospital room costs $3,500, and that doesn’t count the cost of medical care.
Let the free market have its way and medical insurance won’t become less expensive through market efficiency: it will disappear. Try buying a medical insurance policy on your own today and see what it costs. In hard times, employers will be the first to drop medical insurance because workers will be so desperate for jobs that they’ll be willing to give up fringe benefits. Make no mistake about it: in the absence of these expensive government programs that the free marketers hate so much, no one can afford a serious illness and if you live long enough, medical expenses will bankrupt you.
So we have to keep bailing out AIG, Citigroup, Bank of America, and all the rest, because the alternative is even worse. But these companies need to be temporarily nationalized, the shareholders wiped out, and the companies broken up or liquidated. The much smaller companies that can be profitable can then be privatized. Further, much to the dismay of Puplava and Schiff, we need government regulation. Lots of it! There’s a reason we had Glass-Steagall. Banks should not be allowed to lever themselves 30-1 like hedge funds. If they win, they keep the profits, and if they lose, the taxpayers pay for the bailouts. That game is over. We need a new SEC, or a successor organization with some teeth, and it should be run by prosecutors, not executives from the financial industry that it is supposed to be regulating. We’ve seen what happens when the financial industry is allowed to self-regulate. Schiff and Puplava notwithstanding, the mess we’re in now explains why we need a strong government.
One such expert on revisionist history is Jim Puplava, the creator of an outstanding website, and host of an informative weekly podcast. However, his economic views tend to favor whatever is best for Jim Puplava, and not the country as a whole. For example, he sees no difference between Hoover and FDR; that their economic policies were the same, and only lengthened the Great Depression. Most amazing of all, he gives the credit for our economic recovery to World War II.
Note to Jim Puplava: war is not good for the economy. Military spending is completely non-productive, and the money could have been better spent to create jobs without getting millions of people killed. Further, he criticizes FDR for campaigning in 1940 on a pledge to keep America out of World War II, and then breaking his promise. Well, was that really his fault? After the Japanese bombed Pearl Harbor, we were pretty much committed to entering the war, weren’t we?
The simple fact is that FDR was one of our greatest presidents because he brought America out of the depression, and won World War II. Bad presidents don’t get elected four times, and we don’t put bad presidents on our coinage. Further, war hasn’t helped our economy lately, has it? I mean, unless you happen to be Halliburton or one of the other defense contractors. Bush gave us two wars, and all they did was increase the deficit spending with no end in sight.
The other commentator who has the same blind spot is Peter Schiff, president of Euro Pacific Capital. You may have seen him, as he endlessly promotes himself, his books, his radio and TV appearances, and so on. His brokerage firm charges very high commissions, but he made a lot of money for his clients from 2001-2007. Then in 2008 his clients lost half of their money just like everyone else. That has never stopped him from trumpeting the fact that he saw the economic mess coming, even if his investments crumbled like the rest of the global stock markets.
Schiff is another government-hater, although his predisposition may be genetic. His father decided that the income tax was illegal, refused to pay it, and wrote books encouraging others to do the same. As you might expect the elder Schiff has spent a great deal of time in the slammer. The government got so tired of his nonsense that he was finally sentenced to 12 years in prison, even though he was 78 years old at the time.
So Peter Schiff hates everything about the government, and thinks anyone who works in the public sector is incompetent. Needless to say, he is opposed to any government bailouts, and thinks everything will work out if companies are allowed to fail. That may work in the ivory tower of Austrian economics, but in the real world it will get you killed.
First of all, the expansion of debt has gone much too far. Allowing large companies to fail would result in a disaster that would make the Great Depression look like a cakewalk. We saw this with the collapse of Lehman Brothers. The government followed the free market dogma last September, and the result was a run on the money markets, and brought the entire economic system to the brink of collapse. That means no credit for anyone. No commercial paper for businesses, so they can’t meet their payrolls, so millions of people are thrown out of work. Those millions of people can’t pay their bills, so millions of businesses fail. This is how a temporary matter of illiquidity results in insolvency, and then bankruptcy for otherwise healthy businesses. Then the effects ripple throughout the economy. So much for the healing effects of free market capitalism.
One final note about government programs. From listening to Puplava and Schiff, you’d think Social Security and Medicare were the worst atrocities ever committed by America. It doesn’t matter to them that Social Security lifted tens of millions of people out of poverty. It doesn’t matter to Puplava and Schiff that without Medicare and other similar programs, virtually everyone in this country would die broke. Because unless you are super rich, or you suddenly die of a heart attack, you can look forward to enormous medical bills at the end of your life. One day in a semi-private hospital room costs $3,500, and that doesn’t count the cost of medical care.
Let the free market have its way and medical insurance won’t become less expensive through market efficiency: it will disappear. Try buying a medical insurance policy on your own today and see what it costs. In hard times, employers will be the first to drop medical insurance because workers will be so desperate for jobs that they’ll be willing to give up fringe benefits. Make no mistake about it: in the absence of these expensive government programs that the free marketers hate so much, no one can afford a serious illness and if you live long enough, medical expenses will bankrupt you.
So we have to keep bailing out AIG, Citigroup, Bank of America, and all the rest, because the alternative is even worse. But these companies need to be temporarily nationalized, the shareholders wiped out, and the companies broken up or liquidated. The much smaller companies that can be profitable can then be privatized. Further, much to the dismay of Puplava and Schiff, we need government regulation. Lots of it! There’s a reason we had Glass-Steagall. Banks should not be allowed to lever themselves 30-1 like hedge funds. If they win, they keep the profits, and if they lose, the taxpayers pay for the bailouts. That game is over. We need a new SEC, or a successor organization with some teeth, and it should be run by prosecutors, not executives from the financial industry that it is supposed to be regulating. We’ve seen what happens when the financial industry is allowed to self-regulate. Schiff and Puplava notwithstanding, the mess we’re in now explains why we need a strong government.
Wednesday, March 4, 2009
The return of inflation
Although the precious metals have sold off in the past week, with gold down 10% and silver somewhat more, this is just a normal correction, as no market goes straight up. I think the next few months will show seasonal strength for both metals. We have had all of the ingredients for a bull market for the past decade now, and the case is only getting stronger.
In addition to declining mining supply and increasing monetary demand from investors, it is becoming harder and harder for mining companies to find new deposits to replace their reserves. On top of everything else, the new U.S. government is embarking on fiscal stimulus to break the bank. Some of it may be the infrastructure that we need, and some of it may be the (pork) spending programs that the Democrats have wanted for the past eight years. Any way you look at it, we can't afford it.
Ben Bernanke is of the opinion that we need to flood the system with money right now to avert the fiscal crisis, but that the liquidity can be withdrawn from the system once the crisis has passed. I don't know if he honestly believes that, or he is just being political, but if that is somehow possible, I wish someone would explain to me how it works.
The government has to fund its operating expenses by issuing Treasury bonds. Unfortunately, the gullible foreigners who used to buy them (Japanese, Chinese, Arabs, etc.) now have so many T-Bonds that they can't or won't buy as many as we need to sell. So they government has to sell the unsold bonds to the buyer of last resort: the Federal Reserve.
Uncle Ben's Fed has the luxury of a printing press, and can create all the currency (or in this case, digital money) it needs to buy every last unsold T-Bond. And if you've taken a look at the Fed's balance sheet lately, you'll see that it has done just that. It is swollen with not only T-Bonds, but also the impaired mortgage-backed securities that it swapped with insolvent banks for, to keep them from looking too obviously bankrupt.
So when the day comes that Prof. Bernanke decides the crisis has passed, banks are lending, business is booming, he will attempt to put the genie back in the bottle. To drain liquidity from the financial system, he will have to sell the Fed's T-Bonds, and send the cash proceeds back to whatever dimension the money was conjured from. The part I'm missing is how he is going to sell the T-Bonds. They are in what is commonly known as an "Owl" market.
An Owl market is when you call your broker, and tell him to sell, and he says, "To Whoooooom? To Whooooom?" Never mind the toxic junk that's worth pennies on the dollar, just think about the 10-year or 30-year T-Bonds that pay 3% interest. When inflation is raging, who will want to be locked into earning 3% interest for the duration? The simple fact is that T-Bonds are the last remaining bubble, and everyone knows it. Everyone wants to sell them, but to do so would collapse the market and send interest rates skyward.
Did you ever squeeze too much toothpaste out of the tube...and then try to put it back in? So good luck, Ben, when you try to sell those bonds and drain liquidity out of the system.
In addition to declining mining supply and increasing monetary demand from investors, it is becoming harder and harder for mining companies to find new deposits to replace their reserves. On top of everything else, the new U.S. government is embarking on fiscal stimulus to break the bank. Some of it may be the infrastructure that we need, and some of it may be the (pork) spending programs that the Democrats have wanted for the past eight years. Any way you look at it, we can't afford it.
Ben Bernanke is of the opinion that we need to flood the system with money right now to avert the fiscal crisis, but that the liquidity can be withdrawn from the system once the crisis has passed. I don't know if he honestly believes that, or he is just being political, but if that is somehow possible, I wish someone would explain to me how it works.
The government has to fund its operating expenses by issuing Treasury bonds. Unfortunately, the gullible foreigners who used to buy them (Japanese, Chinese, Arabs, etc.) now have so many T-Bonds that they can't or won't buy as many as we need to sell. So they government has to sell the unsold bonds to the buyer of last resort: the Federal Reserve.
Uncle Ben's Fed has the luxury of a printing press, and can create all the currency (or in this case, digital money) it needs to buy every last unsold T-Bond. And if you've taken a look at the Fed's balance sheet lately, you'll see that it has done just that. It is swollen with not only T-Bonds, but also the impaired mortgage-backed securities that it swapped with insolvent banks for, to keep them from looking too obviously bankrupt.
So when the day comes that Prof. Bernanke decides the crisis has passed, banks are lending, business is booming, he will attempt to put the genie back in the bottle. To drain liquidity from the financial system, he will have to sell the Fed's T-Bonds, and send the cash proceeds back to whatever dimension the money was conjured from. The part I'm missing is how he is going to sell the T-Bonds. They are in what is commonly known as an "Owl" market.
An Owl market is when you call your broker, and tell him to sell, and he says, "To Whoooooom? To Whooooom?" Never mind the toxic junk that's worth pennies on the dollar, just think about the 10-year or 30-year T-Bonds that pay 3% interest. When inflation is raging, who will want to be locked into earning 3% interest for the duration? The simple fact is that T-Bonds are the last remaining bubble, and everyone knows it. Everyone wants to sell them, but to do so would collapse the market and send interest rates skyward.
Did you ever squeeze too much toothpaste out of the tube...and then try to put it back in? So good luck, Ben, when you try to sell those bonds and drain liquidity out of the system.
Tuesday, February 24, 2009
If it's Tuesday...
If it's Tuesday, another mining company must be doing another stock offering. Off the top of my head, I can think of Agnico-Eagle, Kinross, Newmont, Pan American Silver, Silver Wheaton, First Majestic, ECU Silver, and Anatolia Minerals, that have all raised equity lately. I'll give Anatolia a pass since they needed to complete funding the Copler mine. Today add to that list Silver Standard, which just issued 5.45 million shares at $17/share. A week ago the shares were trading at 20, but now thanks to that offering they are below 17.
I attribute this to a lack of confidence by mining executives across the entire industry. It is as though they were so traumatized by what happened to their share prices last year that they're all locking in the chance to raise equity even thought their share prices are still well below last year's highs, often more than 50% off last year's levels. I can understand if they plan to use the cash for acquistions, and they intend to buy up junior mining companies whose share prices have been beaten up even worse (see Kinross) but dilution in order to use the money for "general corporate purposes" makes no sense to me.
Although gold has retreated from $1000, I think this is only a temporary pullback, and we could see another march upward, this time to $1200, and possibly as early as this spring before the inevitable summer sell off. I expect silver will outperform gold, as it still has a lot of catching up to do, at least according to the silver/gold ratio.
I attribute this to a lack of confidence by mining executives across the entire industry. It is as though they were so traumatized by what happened to their share prices last year that they're all locking in the chance to raise equity even thought their share prices are still well below last year's highs, often more than 50% off last year's levels. I can understand if they plan to use the cash for acquistions, and they intend to buy up junior mining companies whose share prices have been beaten up even worse (see Kinross) but dilution in order to use the money for "general corporate purposes" makes no sense to me.
Although gold has retreated from $1000, I think this is only a temporary pullback, and we could see another march upward, this time to $1200, and possibly as early as this spring before the inevitable summer sell off. I expect silver will outperform gold, as it still has a lot of catching up to do, at least according to the silver/gold ratio.
Tuesday, February 17, 2009
The best way to rob a bank
I forget who said it, but the best way to rob a bank is to own one. If you have any doubts, I've found a few videos for your enlightnment.
In this video, Congressman Ackerman questions some officials of the SEC. He actually asks them some of the questions I'd like to ask them. For 12 minutes of righteous indignation, watch:
http://www.cnbc.com/id/15840232?video=1021551579
Here, Congressman Capuano asks some bank executives about their business practices, and even goes so far as to compare them to bank robbers:
http://www.youtube.com/watch?v=d6Im9W4gwNc
This interview with Bill Moyers (all 21 minutes of it) explains how we need to deal with the mega-banks that run our country. He quotes a senator as saying if a bank is too big to fail, it't too big to exist.
http://www.pbs.org/moyers/journal/02132009/watch.html
In this video, Congressman Ackerman questions some officials of the SEC. He actually asks them some of the questions I'd like to ask them. For 12 minutes of righteous indignation, watch:
http://www.cnbc.com/id/15840232?video=1021551579
Here, Congressman Capuano asks some bank executives about their business practices, and even goes so far as to compare them to bank robbers:
http://www.youtube.com/watch?v=d6Im9W4gwNc
This interview with Bill Moyers (all 21 minutes of it) explains how we need to deal with the mega-banks that run our country. He quotes a senator as saying if a bank is too big to fail, it't too big to exist.
http://www.pbs.org/moyers/journal/02132009/watch.html
Thursday, February 5, 2009
Only 22 more letters to go
First, President Obama campaigned on a platform of Hope, and now he warns us of Catastrophe. I suppose this is an improvement over his predecessor, who couldn't even pronounce that word, but he isn't living up to my expectations, at least not yet. I suppose it was too much to expect, that a man who accepted large contributions from Wall Street would actually clean up Wall Street.
And there's a lot of cleaning up to do. My personal favorite is John Thain, formerly known as the savior of Merrill Lynch. That was before the company reported a fourth-quarter loss of $15.2 billion that Bank of America supposedly did not know about before it agreed to acquire them. The popular myth is that BoA had avoided the disasters that befell Citigroup, WaMu, Wachovia and the other insolvent money center banks. The simple truth is that everyone knew Merrill was a disaster waiting to happen. BoA went ahead with the purchase anyway, because this moved them into the "too big to fail" category. BoA is loaded with toxic paper just like everyone else in the financial industry; bad loans and asset- or mortgage-backed paper that isn't worth anything. But on their own, they might have been allowed to fail, just like Lehman. Now, they receive a $20 billion bailout from the government so they can go on make more bad decisions, and losing more money.
But that's not why John Thain is my favorite, not because he supposedly withheld material information from BoA. John Thain spent $1.2 million redecorating his office. That tidy sum included $1,405 for a trashcan. He must be real proud of his trashcan, huh? It also included $88,000 for a rug. If I spend $88,000 on a rug, it had better be a flying carpet. Otherwise, it isn't worth it.
He considered asking for a $10 million bonus before he left the company, but then thought better of it. Good decision. He really didn't deserve another $10 million for running a Wall Street colossus into the ground. But in fairness to Thain, that's the environment he worked in. Last year, the worst year ever in the history of the fiancial industry, Wall Street handed out a cool $18.4 billion in bonuses. Let me say that again, $18.4 billion!
Where do you suppose the money came from? Profit sharing? Did anyone make a profit on Wall Street last year? All I remember hearing about it one $10 billion loss after another. Of course we all know where the money came from: the taxpayers. Now we know where the bailout money went. And that is why I propose the radical suggestion that companies not hand out bonuses unless they are actually making money. But that won't happen because the men running the Treasury, the SEC, and the CFTC came from Goldman Sachs. President Obama has hired foxes to guard chickens.
Back to the economy. Originally we were told the economic recovery would be V-shaped. A downturn, followed quickly by an upturn. Then they told us it would be U-shaped; maybe it would stay down for a while before it turned up again. Then they said it might be L-shaped. I don't like the looks of that one. That's a Japanese-style recession that goes on and on for the next ten years. Now they say it will be W-shaped. The stimulus package will boost the economy in 2010, in time for the mid-year elections, followed by another dip, and then another boost in 2012 in time to get President Obama re-elected.
It could be worse, though. There's still 22 more letters to go, and some of them look really scary. When they start telling us the economy could be M-shaped, then we're really in trouble.
And there's a lot of cleaning up to do. My personal favorite is John Thain, formerly known as the savior of Merrill Lynch. That was before the company reported a fourth-quarter loss of $15.2 billion that Bank of America supposedly did not know about before it agreed to acquire them. The popular myth is that BoA had avoided the disasters that befell Citigroup, WaMu, Wachovia and the other insolvent money center banks. The simple truth is that everyone knew Merrill was a disaster waiting to happen. BoA went ahead with the purchase anyway, because this moved them into the "too big to fail" category. BoA is loaded with toxic paper just like everyone else in the financial industry; bad loans and asset- or mortgage-backed paper that isn't worth anything. But on their own, they might have been allowed to fail, just like Lehman. Now, they receive a $20 billion bailout from the government so they can go on make more bad decisions, and losing more money.
But that's not why John Thain is my favorite, not because he supposedly withheld material information from BoA. John Thain spent $1.2 million redecorating his office. That tidy sum included $1,405 for a trashcan. He must be real proud of his trashcan, huh? It also included $88,000 for a rug. If I spend $88,000 on a rug, it had better be a flying carpet. Otherwise, it isn't worth it.
He considered asking for a $10 million bonus before he left the company, but then thought better of it. Good decision. He really didn't deserve another $10 million for running a Wall Street colossus into the ground. But in fairness to Thain, that's the environment he worked in. Last year, the worst year ever in the history of the fiancial industry, Wall Street handed out a cool $18.4 billion in bonuses. Let me say that again, $18.4 billion!
Where do you suppose the money came from? Profit sharing? Did anyone make a profit on Wall Street last year? All I remember hearing about it one $10 billion loss after another. Of course we all know where the money came from: the taxpayers. Now we know where the bailout money went. And that is why I propose the radical suggestion that companies not hand out bonuses unless they are actually making money. But that won't happen because the men running the Treasury, the SEC, and the CFTC came from Goldman Sachs. President Obama has hired foxes to guard chickens.
Back to the economy. Originally we were told the economic recovery would be V-shaped. A downturn, followed quickly by an upturn. Then they told us it would be U-shaped; maybe it would stay down for a while before it turned up again. Then they said it might be L-shaped. I don't like the looks of that one. That's a Japanese-style recession that goes on and on for the next ten years. Now they say it will be W-shaped. The stimulus package will boost the economy in 2010, in time for the mid-year elections, followed by another dip, and then another boost in 2012 in time to get President Obama re-elected.
It could be worse, though. There's still 22 more letters to go, and some of them look really scary. When they start telling us the economy could be M-shaped, then we're really in trouble.
Wednesday, January 28, 2009
Pot calls kettle black
The new Treasury Secretary, Timothy Geithner, wasted no time accusing the Chinese of manipulating their currency. To fully appreciate the irony, we must recall Mr. Geithner's background. Most recently he was the Regional Governor of the New York Federal Reserve Bank (and occasional taxpayer) and we all know the Fed would never intervene in the marketplace. Prior to that, he came from Goldman Sachs, the mastermind of the Gold Cartel. BTW, his replacement at the New York Fed is William Dudley, and can you guess where he came from...(drum roll, please) - Goldman Sachs! No points for that correct answer; the question was too easy. Oddly, Mr. Geithner was silent when asked if the United States manipulates its currency.
To their credit, the Chinese fired back at him, and rightfully so. Sooner or later, our elected (and appointed) officials are going to learn that you had better be nice to your bankers, and that's what the Chinese are. We owe them $2 trillion + and that number continues to grow. For now, China and the US are joined at the hip, because they need us as much as we need them. They save money, which we borrow and spend. Then they lend us more money. The reason they keep playing this sucker's game is that their domestic market cannot support their economy. The Chinese, Indians, and other developing countries can't afford to buy all the stuff they're producing. Actually, neither can we, but keep buying it anyway. So if the Chinese stop lending, not only does the dollar crash, sending their huge dollar holdings downward, but their entire economy goes with it.
It wasn't so long ago that the 2009 budget deficit was supposed to be $1.2 trillion. Now I have seen some conjecture that it could top $3 trillion. That's three (3) trillion dollars. US dollars, not Zimbabwe dollars. Although at this rate, there might not be too much difference before too long. That's more than all of last year's total budget. And to think there was a time when spending $100 million on a bridge-to-nowhere was considered a scandal. These days, that's not even a rounding error when the government is pledging $320 billion to rescue Citigroup.
On the whole, I think gold and silver are the place to be, followed by oil and gas. Gold recently blasted through $900, but that could not be allowed to hold with options expiration coming up, so the yellow metal had to be held below that level to make the $900 calls expire valueless. Otherwise someone besides JP Morgan and HSBC might have made some money in commodities this month.
To their credit, the Chinese fired back at him, and rightfully so. Sooner or later, our elected (and appointed) officials are going to learn that you had better be nice to your bankers, and that's what the Chinese are. We owe them $2 trillion + and that number continues to grow. For now, China and the US are joined at the hip, because they need us as much as we need them. They save money, which we borrow and spend. Then they lend us more money. The reason they keep playing this sucker's game is that their domestic market cannot support their economy. The Chinese, Indians, and other developing countries can't afford to buy all the stuff they're producing. Actually, neither can we, but keep buying it anyway. So if the Chinese stop lending, not only does the dollar crash, sending their huge dollar holdings downward, but their entire economy goes with it.
It wasn't so long ago that the 2009 budget deficit was supposed to be $1.2 trillion. Now I have seen some conjecture that it could top $3 trillion. That's three (3) trillion dollars. US dollars, not Zimbabwe dollars. Although at this rate, there might not be too much difference before too long. That's more than all of last year's total budget. And to think there was a time when spending $100 million on a bridge-to-nowhere was considered a scandal. These days, that's not even a rounding error when the government is pledging $320 billion to rescue Citigroup.
On the whole, I think gold and silver are the place to be, followed by oil and gas. Gold recently blasted through $900, but that could not be allowed to hold with options expiration coming up, so the yellow metal had to be held below that level to make the $900 calls expire valueless. Otherwise someone besides JP Morgan and HSBC might have made some money in commodities this month.
Friday, January 23, 2009
So long, Flight Service
This is what happens when you farm out a vital service to a third-rate company. The vital service in question is Flight Service, and the third-rate company is the government contractor Lockheed Martin. Back in the 1970's when it was just Lockheed, the company nearly went bankrupt, and had to be bailed out by the government, in the days when bailouts were still unusual (unlike today.) Lockheed was a third-rate company even then. How did a third-rate company grow so large? By milking the federal govenment for lucrative contracts.
Flight Service had been around for decades, until Lockheed Martin got its grubby paws on the system. After bungling the transition from the government and providing terrible service to the pilots (when it provided any service at all) LM closed down two-thirds of the stations. Then it closed most of the remaining ones out here in the west. Oakland Flight Service survived World War II and the 1989 earthquake, but Lockheed Martin was too much for it.
Then, not content with closing stations, LM went on to lay off employees from the remanining stations. I guess they were providing such good service to the pilots that they thought they could safely reduce their staffing levels still further. Of course they laid off the older, ex-FAA people, because they cost more, as well as anyone with any union affiliation, the better to discourage anyone from being pro-union. So LM got rid of the most experienced specialists in order to keep those who work cheap, typical of any third-rate company. At least the kids had student loans to repay, so they kept wouldn't give the bosses any trouble. Ya wohl, mein kommandant!
That reminds me, I just bought the complete Hogan's Heroes on DVD, and that show had to be one of my all-time favorites. Sergeant Schultz, in particular, was my hero, and I emulated him throughout my FAA/LM career. Plane crash? I know NOTHING!!! Operational error? I see NOTHING!! Don't laugh, it got me through twenty years, during which I killed eight planes. Actually my developmental killed the last one while I was training him on Flight Watch, but I still got credit because I was responsible. I even have a Sergeant Schultz T-shirt, which I used to wear to work in the days you could still wear T-shirts to work, before the LM Nazis made up all kinds of crazy new work rules.
Come to think of it, in my final months at Oakland Flight Service, I kind of felt like I was at a prisoner of war camp, but that was mostly due to the manager. He went on a power trip, and started acting like Colonel Klink. Not that he was that stupid, just that he got seriously drunk with power, and thought he was a lot smarter than he really was. And they wonder why I retired.
C'est la vie. Soon Flight Service will only be a fond memory, at least the FAA years. The LM experience was completely forgettable. When I worked for the FAA the only problems we had were the pilots and (some of) the supervisors. At the end with LM, we had no problems with either the pilots or the supervisors, and it was still a miserable place to work. That took talent, LockMart.
Lockheed Martin: The 21st century corporation with 1930's management.
Flight Service had been around for decades, until Lockheed Martin got its grubby paws on the system. After bungling the transition from the government and providing terrible service to the pilots (when it provided any service at all) LM closed down two-thirds of the stations. Then it closed most of the remaining ones out here in the west. Oakland Flight Service survived World War II and the 1989 earthquake, but Lockheed Martin was too much for it.
Then, not content with closing stations, LM went on to lay off employees from the remanining stations. I guess they were providing such good service to the pilots that they thought they could safely reduce their staffing levels still further. Of course they laid off the older, ex-FAA people, because they cost more, as well as anyone with any union affiliation, the better to discourage anyone from being pro-union. So LM got rid of the most experienced specialists in order to keep those who work cheap, typical of any third-rate company. At least the kids had student loans to repay, so they kept wouldn't give the bosses any trouble. Ya wohl, mein kommandant!
That reminds me, I just bought the complete Hogan's Heroes on DVD, and that show had to be one of my all-time favorites. Sergeant Schultz, in particular, was my hero, and I emulated him throughout my FAA/LM career. Plane crash? I know NOTHING!!! Operational error? I see NOTHING!! Don't laugh, it got me through twenty years, during which I killed eight planes. Actually my developmental killed the last one while I was training him on Flight Watch, but I still got credit because I was responsible. I even have a Sergeant Schultz T-shirt, which I used to wear to work in the days you could still wear T-shirts to work, before the LM Nazis made up all kinds of crazy new work rules.
Come to think of it, in my final months at Oakland Flight Service, I kind of felt like I was at a prisoner of war camp, but that was mostly due to the manager. He went on a power trip, and started acting like Colonel Klink. Not that he was that stupid, just that he got seriously drunk with power, and thought he was a lot smarter than he really was. And they wonder why I retired.
C'est la vie. Soon Flight Service will only be a fond memory, at least the FAA years. The LM experience was completely forgettable. When I worked for the FAA the only problems we had were the pilots and (some of) the supervisors. At the end with LM, we had no problems with either the pilots or the supervisors, and it was still a miserable place to work. That took talent, LockMart.
Lockheed Martin: The 21st century corporation with 1930's management.
Monday, January 19, 2009
Guest editorial
This is from David Galland, managing director of Casey Research, which is anything but a liberal organization. Mr. Galland can be quite eloquent when he wants to:
Bye-Bye, Baby Bush
For what I am about to do, I need to apologize to you, if you fall into two categories of readers. The first group consists of those of you who still count themselves as supporters of President Bush, approximately 35% of the population if you believe the latest polls. The second group is those of you who are subscribers to The Casey Report, because you will recognize this as the “End Quote” from the current edition. Thus, in addition to the fact that you have already read it, I am sharing something from your paid subscription with others who do not subscribe. (If you fall into either of those groups, to save me the need to apologize, you can just skip over the essay by Doug Casey that follows.)
With those apologies out of the way, I felt compelled, given that President Bush will step down before the next edition of these musings is published, to comment on his presidency, but anything I might write would pale compared to Doug’s final – strong - thoughts on the Bush presidency. His remarks follow… This may be the last time I’ll talk about the Baby Bush in this letter. Starting the 21st of January, he’ll be flushed down the toilet of history, remembered only for his inanities, stupidities, criminality, arrogance, and malapropisms. I well remember getting numerous hate letters and requests for cancellation when, especially early in his first administration, I explained what a disaster he was going to be…
My assessment of George W. Bush? I think he's genuinely thoughtless, and actually a little stupid. What will happen is that Dick Cheney will be the President-in-Fact, and Dick is a very dangerous man, the archetypical National Security Fascist and Corporate Statist. Well, at least they'll probably repeal the death tax. The loss of many of your remaining freedoms is a small price to pay, I suppose. (December 2000)
***Absolutely anything the Baby Bush says or does is almost guaranteed to be an exquisite combination of funny, scary, and depressing. I said this before the election (along with a lot of other things), but I'm totally convinced he's dim, with an IQ probably between 95 and 100. His lack of raw computing power doesn't help him in making wise decisions. Like his designation of Iran, Iraq, and North Korea as the so-called Axis of Evil. My vote for that title "Axis of Evil" goes to Cheney, Rumsfeld, and Ashcroft. All these men impress me as being quite bright (and are excellent proof that intelligence is no more than a tool), but totally bent. And they must play the Baby Bush like a fiddle. (September 2002)
But just in December he outdid himself, when Bush said, on CNN television:"I've abandoned free-market principles to save the free-market system,” saying he had made the decision "to make sure the economy doesn't collapse… I feel a sense of obligation to my successor to make sure there is not a, you know, a huge economic crisis. Look, we're in a crisis now. I mean, this is -- we're in a huge recession, but I don't want to make it even worse."The simpleton has somehow been positioned as a staunch defender and advocate of laissez-faire, who is now belatedly recognizing the damage the free market has done and trying to mend its wicked ways. This is exactly what happened with Herbert Hoover, another unprincipled fascist, who was also painted as a capitalist, discrediting economic freedom for generations to come.
It’s truly sad -- and a sign of the moral and intellectual bankruptcy of the U.S. -- that gigantic lies like these will be swallowed whole. Be careful with people who lie; they do it largely because they want to control others.But there is also some good news involving the despicable Baby Bush.Like hundreds of millions of others around the world, I was gratified, thrilled, and morally uplifted when Muntadhar al-Zeidi, a 29-year-old Iraqi journalist, stood during a press conference Bush gave in the Green Zone and threw both his shoes at him, while shouting in Arabic, "This is a farewell kiss, you dog. This is from the widows, the orphans, and those who were killed in Iraq."
I don’t know what al-Zeidi’s views on things other than Bush may be. But the man is a hero. And his actions are more appropriate than any form of violence, because they show contempt and disgust. These are emotions that can engender a mass movement, the type of thing the movie V for Vendetta portrayed. It was a fitting farewell kiss from Iraq. Too bad the running dogs that pass for journalists in the U.S. would be too afraid to even think about doing the same when Bush passes the crown of empire to Obama.
Bye-Bye, Baby Bush
For what I am about to do, I need to apologize to you, if you fall into two categories of readers. The first group consists of those of you who still count themselves as supporters of President Bush, approximately 35% of the population if you believe the latest polls. The second group is those of you who are subscribers to The Casey Report, because you will recognize this as the “End Quote” from the current edition. Thus, in addition to the fact that you have already read it, I am sharing something from your paid subscription with others who do not subscribe. (If you fall into either of those groups, to save me the need to apologize, you can just skip over the essay by Doug Casey that follows.)
With those apologies out of the way, I felt compelled, given that President Bush will step down before the next edition of these musings is published, to comment on his presidency, but anything I might write would pale compared to Doug’s final – strong - thoughts on the Bush presidency. His remarks follow… This may be the last time I’ll talk about the Baby Bush in this letter. Starting the 21st of January, he’ll be flushed down the toilet of history, remembered only for his inanities, stupidities, criminality, arrogance, and malapropisms. I well remember getting numerous hate letters and requests for cancellation when, especially early in his first administration, I explained what a disaster he was going to be…
My assessment of George W. Bush? I think he's genuinely thoughtless, and actually a little stupid. What will happen is that Dick Cheney will be the President-in-Fact, and Dick is a very dangerous man, the archetypical National Security Fascist and Corporate Statist. Well, at least they'll probably repeal the death tax. The loss of many of your remaining freedoms is a small price to pay, I suppose. (December 2000)
***Absolutely anything the Baby Bush says or does is almost guaranteed to be an exquisite combination of funny, scary, and depressing. I said this before the election (along with a lot of other things), but I'm totally convinced he's dim, with an IQ probably between 95 and 100. His lack of raw computing power doesn't help him in making wise decisions. Like his designation of Iran, Iraq, and North Korea as the so-called Axis of Evil. My vote for that title "Axis of Evil" goes to Cheney, Rumsfeld, and Ashcroft. All these men impress me as being quite bright (and are excellent proof that intelligence is no more than a tool), but totally bent. And they must play the Baby Bush like a fiddle. (September 2002)
But just in December he outdid himself, when Bush said, on CNN television:"I've abandoned free-market principles to save the free-market system,” saying he had made the decision "to make sure the economy doesn't collapse… I feel a sense of obligation to my successor to make sure there is not a, you know, a huge economic crisis. Look, we're in a crisis now. I mean, this is -- we're in a huge recession, but I don't want to make it even worse."The simpleton has somehow been positioned as a staunch defender and advocate of laissez-faire, who is now belatedly recognizing the damage the free market has done and trying to mend its wicked ways. This is exactly what happened with Herbert Hoover, another unprincipled fascist, who was also painted as a capitalist, discrediting economic freedom for generations to come.
It’s truly sad -- and a sign of the moral and intellectual bankruptcy of the U.S. -- that gigantic lies like these will be swallowed whole. Be careful with people who lie; they do it largely because they want to control others.But there is also some good news involving the despicable Baby Bush.Like hundreds of millions of others around the world, I was gratified, thrilled, and morally uplifted when Muntadhar al-Zeidi, a 29-year-old Iraqi journalist, stood during a press conference Bush gave in the Green Zone and threw both his shoes at him, while shouting in Arabic, "This is a farewell kiss, you dog. This is from the widows, the orphans, and those who were killed in Iraq."
I don’t know what al-Zeidi’s views on things other than Bush may be. But the man is a hero. And his actions are more appropriate than any form of violence, because they show contempt and disgust. These are emotions that can engender a mass movement, the type of thing the movie V for Vendetta portrayed. It was a fitting farewell kiss from Iraq. Too bad the running dogs that pass for journalists in the U.S. would be too afraid to even think about doing the same when Bush passes the crown of empire to Obama.
Friday, January 16, 2009
Worst president ever
Just go, W. Before you do any more damage to our country. Someday (if you aren't already) you will be mentioned in the same breath as Hoover. The damage this man has done, both to our economy and our standing abroad, are incalculable. More and more, I wish I could have traded places with the Iraqi journalist who launched his size-10's at Bush.
The economists finally figured out that our economy is in recession, and has been since the last quarter. Boy, you can't put anything past those guys. Even with all of the doctored economic data, they figured it out. I'm not sure how long this will last, but I do know it will get worse before it gets better. Today's fun topic is...guess the size of this year's budget deficit. We were originally told $1 trillion, but that's just a round number with plenty of room for interpretation. Now they are saying $1.2 trillion this year, and $1.8 trillion next year.
Believe it or not, I would take that. I would be (relatively) happy if that's all it is. I think it will be more, and that's not counting Iraq, Afghanistan, borrowing from Social Security and all the other off-budget stuff. The budget deficit could top $2 trillion this year if/when the recession deepens. President Obama's response is to spend money that we don't have, and probably won't be able to borrow. The only thing holding this house of cards together is that the Chinese need our export markets. They have to keep selling stuff to us, even though we can't afford to pay for it, because their domestic market is still inadequate. So we may be able to muddle through a while longer. But this won't last forever.
I keep hearing the old Will Rogers quote that people are more concerned with return OF captial than return ON capital. For that reason they buy treasury bonds that pay 2% interest. Imagine locking up your money for ten years at 2% interest. This is what is known as return-free risk. Treasury bonds can't appreciate any further because interest rates can't go any lower. T-Bonds are a bubble, just like houses and the Nasdaq. The best investments for the year ahead will be gold, silver, and especially the mining shares because they are trading at such depressed levels, notwithstanding the rally of the past two months. The people who do best in the stock market tend to be people who buy at times like these. Well, actually it's people who did their buying back in October and November, when things really looked bleak. But now is still a good time to buy. Oil and natural gas will also do extremely well, as they have not yet rallied. But that is the nature of markets; everyone wanted oil at $140/bbl and no one wants it at $40/bbl. Except me.
Monday, January 12, 2009
Bye week, then Bye-Bye
This past weekend, four well rested NFL teams took the field, the #1 and #2 seeds in both the NFC and AFC. Three of them lost. First the Tennessee Titans turned the ball over once too often, and lost to the Ravens. Then the Carolina Panthers turned the ball over six times and were slaughtered by, of all people, the Arizona Cardinals. Then the New York Giants blew a bunch of scoring opportunities to lose to the Philadelphia Eagles, which sets up a rematch of the 1948 NFL Championship Game. Better late than never. It does say something about the Cardinals that it's taken them 60 years to make it back to the big game. But the Pittsburgh Steelers took care of business, eliminating the other half of my Super Bowl pick, the San Diego Chargers. The Chargers were lucky just to make it this far. After 12 games, they were 4-8, and in a locker room meeting, LaDainian Tomilinson told his teammates, "We aren't giving up. We aren't the Raiders." No, they aren't, but it took an epic collapse by the Denver Broncos to let the Chargers make the playoffs at 8-8. I'm really not looking forward to Steelers-Ravens; that game should be called the Ugly Bowl. And one last note: the Atlanta Falcons were 11-5, but they had to go on the road to Arizona to play the 9-7 Cardinals, and lost. The Indianapolis Colts were 11-5, and had beaten the Chargers, but still had to go to San Diego to play the 8-8 Chargers, and lost. Once again, it is time to revamp the playoff system.
Strange but true: the New York Giants general manager Jerry Reese now says they are open to taking Plaxico Burress back if everything works out for him. Let me just say:
NOOOOOOOOOOOOOOOOOOOOOOOOOO!
Do they really need his infantile behavior ruining team chemistry? No, but as Sunday's loss to the Eagles shows, they need a deep threat to stretch the field. Note to Jerry Reese: that's what the draft is for. The Giants have everything else, so use your number one pick on the best wideout you can find. If you really want an idiot for a #1 receiver, there's that Chad Ocho Whatever guy in Cincinnati. At least he hasn't shot himself lately.
But he'll be back. Why do I think Plax will be back? Some way, somehow, he will beat the rap. He will be appropriately repentant, and after doing the requisite bowing and scraping, he will back in the NFL. But I always thought it would be for another team. One of the things I always liked about the Giants is that they were the opposite of the Cowboys; they never led the league in felonies. As Inspector Clouseau would say, "Not any more!"
Strange but true: the New York Giants general manager Jerry Reese now says they are open to taking Plaxico Burress back if everything works out for him. Let me just say:
NOOOOOOOOOOOOOOOOOOOOOOOOOO!
Do they really need his infantile behavior ruining team chemistry? No, but as Sunday's loss to the Eagles shows, they need a deep threat to stretch the field. Note to Jerry Reese: that's what the draft is for. The Giants have everything else, so use your number one pick on the best wideout you can find. If you really want an idiot for a #1 receiver, there's that Chad Ocho Whatever guy in Cincinnati. At least he hasn't shot himself lately.
But he'll be back. Why do I think Plax will be back? Some way, somehow, he will beat the rap. He will be appropriately repentant, and after doing the requisite bowing and scraping, he will back in the NFL. But I always thought it would be for another team. One of the things I always liked about the Giants is that they were the opposite of the Cowboys; they never led the league in felonies. As Inspector Clouseau would say, "Not any more!"
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