With the recent news that the US Unemployment Rate dropped below 9% comes some collateral damage. The Employment Security Commission of the State of North Carolina (US) recently posted the following information telling its residents that the 99 weeks of unemployment benefits were no longer available to those still looking for jobs:
"Please be advised that due to the recent decline in the North Carolina Unemployment Rate, the state no longer meets the Federal and State requirements of the Extended Benefits Program. In accordance with Federal and State law, the Employment Security Commission cannot pay any Extended Benefit claims for weeks later than April 16, 2011. "
North Carolina, the home of NASCAR, Country and God, will take this all in stride. Pick themselves up and get jobs. I don't expect the same whimper of acceptance will occur when similar facts begin affecting the big cities. Stay tuned.
The interesting thing about playing golf is that sometimes you get paired up with someone you don't know. Last year, I played golf with a 99 weeker (a guy that was well on his way to collecting 2 years of unemployment checks from the government). He had no problem paying the $65 for the round of golf because his wife worked and her employer was providing all the medical benefits for both of them. It didn't seem to bother him that I was paying for his vacation through my tax dollars. I didn't make a big deal of it because I didn't want to be swinging 5 irons at each other on the back nine. After all-- this is a civilized country! However, I did remind him that if his wife worked at a job well enough to have generous benefits that he needed to get prepared to write a check to the Federal Government because unemployment is taxable income and his wife's job probably puts them in a tax paying bracket.
So as he and many Americans are now filling out their Federal Tax forms, I am smiling at the prospect of him having to pay taxes on his unemployment benefits because such payments do not have any Federal Tax withholding requirements. Therefore, he probably spent every dollar he got not realizing that some percentage of it was going to have to be returned to the Federal Government in the form of taxes.
Tuesday, April 05, 2011
Sunday, March 27, 2011
Drawing a Green Line through Earth Hour
How did you spend Earth Hour this year? If you missed it, I am not surprised since most of the planet did too.
Earth Hour is a great example of "a flurry of awareness building misconstrued as actual progress".
Normally I stick to finance and economics but today I am going to play the role of electrical engineer to educate you about the finance and economics of saving electricity.
First, if you want to save electricity to save household expenses then you should do it. However, don't think that your saving electricity is doing anything to save the planet.
Fact #1) When electricity is generated and not consumed it is lost. So when you turn out the light you are saving household expense but not saving electricity. It is important to speak correctly.
Fact #2) It is possible to store unconsumed electricity for short periods of time but in many cases the economics don't justify it. Generally speaking, energy storage is economical when the marginal cost of electricity varies more than the costs of storing and retrieving the energy plus the price of energy lost in the process. Also, electricity cannot be stored for long periods of time- there is gradual loss.
Fact #3) Fuel-based power plants (i.e. coal, oil, gas, nuclear) can be more efficiently and easily operated at constant production levels. So nobody is ratcheting down the generator when you turn off a light in your house. It doesn't make sense to do so.
So when, everyone turns off the electrical consumption in their house for Earth Hour, the power plants keep producing anyway. The electricity generated during Earth Hour is either lost or temporarily stored for some future peak demand point.
Well done, people of earth.
Now let's draw that green line right through earth hour once and for all.
Power plants operate at their particular "green line" because that is the most efficient use of their design in terms of fuel consumption and reliability considerations.
Consumption changes must be massive and over a prolonged period of time to make the investment economics attractive to change the green line.
One way to do this is to massively reduce the human population. And this is why the environmentalists draw their green line this way...
Earth Hour is a great example of "a flurry of awareness building misconstrued as actual progress".
Normally I stick to finance and economics but today I am going to play the role of electrical engineer to educate you about the finance and economics of saving electricity.
First, if you want to save electricity to save household expenses then you should do it. However, don't think that your saving electricity is doing anything to save the planet.
Fact #1) When electricity is generated and not consumed it is lost. So when you turn out the light you are saving household expense but not saving electricity. It is important to speak correctly.
Fact #2) It is possible to store unconsumed electricity for short periods of time but in many cases the economics don't justify it. Generally speaking, energy storage is economical when the marginal cost of electricity varies more than the costs of storing and retrieving the energy plus the price of energy lost in the process. Also, electricity cannot be stored for long periods of time- there is gradual loss.
Fact #3) Fuel-based power plants (i.e. coal, oil, gas, nuclear) can be more efficiently and easily operated at constant production levels. So nobody is ratcheting down the generator when you turn off a light in your house. It doesn't make sense to do so.
So when, everyone turns off the electrical consumption in their house for Earth Hour, the power plants keep producing anyway. The electricity generated during Earth Hour is either lost or temporarily stored for some future peak demand point.
Well done, people of earth.
Now let's draw that green line right through earth hour once and for all.
Power plants operate at their particular "green line" because that is the most efficient use of their design in terms of fuel consumption and reliability considerations.
Consumption changes must be massive and over a prolonged period of time to make the investment economics attractive to change the green line.
One way to do this is to massively reduce the human population. And this is why the environmentalists draw their green line this way...
Friday, March 18, 2011
Four Phases of the News
The consequence of 24 hour news requires that the audience carefully evaluate which "phase" of the news they are hearing. For your entertainment and information, I submit the following:
PHASE 1: FACT FREE (pervasive)
A journalist once told me, "I could do a lot of painstaking investigative research OR I could just report something someone tells me. My job pays the same either way!". Fact Free reporting looks like this: CNN is reporting that other news outlets are saying, "______". You fill in the blank. Fact free content is when the news is the news. The only fact here is that someone is saying something. Whether what they are saying is factual is not relevant.
PHASE 2: FACTUAL (rare)
This is when what is reported is a true fact- duly confirmed by independent, knowledgeable sources. This rare event is difficult to detect because usually the fact is embedded inside someone's opinion about what you should think about the fact. The fact is like the chewy chocolate surpise inside a Tootsie Pop- you have to do a lot of sucking and licking to get to the good part.
PHASE 3: FACTUAL SPECULATION (common)
This is when the time available for broadcast exceeds the time needed to report the facts. News networks know that they cannot continously repeat the same facts over and over while retaining an audience. So, they bring in "experts" who speculate on "what might happen next" given the facts at hand. They speculate on the facts and consequently their speculation become the news.
PHASE 4: SPECULATIVE FACTUALIZATION (undetectable)
You move to phase 4 when the speculation in phase 3 is repeated so many times that now it becomes accepted as fact even though it didn't actually happen. By this time, all reality is lost, no one can separate fact from fiction. Since no one can confirm a speculatized fact, the best a news agency can do is report on who is saying what. This returns us back to PHASE 1.
If you've ever heard a news anchor refer to the "News Cycle". This is what they really mean.
PHASE 1: FACT FREE (pervasive)
A journalist once told me, "I could do a lot of painstaking investigative research OR I could just report something someone tells me. My job pays the same either way!". Fact Free reporting looks like this: CNN is reporting that other news outlets are saying, "______". You fill in the blank. Fact free content is when the news is the news. The only fact here is that someone is saying something. Whether what they are saying is factual is not relevant.
PHASE 2: FACTUAL (rare)
This is when what is reported is a true fact- duly confirmed by independent, knowledgeable sources. This rare event is difficult to detect because usually the fact is embedded inside someone's opinion about what you should think about the fact. The fact is like the chewy chocolate surpise inside a Tootsie Pop- you have to do a lot of sucking and licking to get to the good part.
PHASE 3: FACTUAL SPECULATION (common)
This is when the time available for broadcast exceeds the time needed to report the facts. News networks know that they cannot continously repeat the same facts over and over while retaining an audience. So, they bring in "experts" who speculate on "what might happen next" given the facts at hand. They speculate on the facts and consequently their speculation become the news.
PHASE 4: SPECULATIVE FACTUALIZATION (undetectable)
You move to phase 4 when the speculation in phase 3 is repeated so many times that now it becomes accepted as fact even though it didn't actually happen. By this time, all reality is lost, no one can separate fact from fiction. Since no one can confirm a speculatized fact, the best a news agency can do is report on who is saying what. This returns us back to PHASE 1.
If you've ever heard a news anchor refer to the "News Cycle". This is what they really mean.
Friday, February 25, 2011
Libya Trivia
After 42 years of ruling Libya, why is Moammar Gadhafi still only a Colonel? I think if he had gotten a promotion or two along the way things might be going better for everyone.
NATO is considering possible military intervention. The debate is the actual number of civilian deaths required to insight action on NATO's part. Apparently, until it gets to about 100,000, nobody is mobilizing anything. It is not clear who is doing the counting either.
According to reports, Libya's military is ruthlessly attacking its citizens. This apparently has not caused Libya to lose its seat on the UN's Council for Human Rights. Long live the UN.
Some Libya trivia from the 20th Century:
Gadhafi drew a line in the sand (actually it was a line in the water) claiming certain international waters as Libya's property. The US, whose job it is to draw lines, got upset and decided that no one else should be allowed to draw lines on the planet. This resulted in two Libyan fighter jets getting shot down by Iceman and Maverick when the Libyan pilots accidentally pointed their nose cones at the 2 US F-14 Tomcats.
The Colonel then drew a line in the sand (real sand this time) a little farther south but tricked the US by later launching six SA-5 missiles against the U.S. Sixth Fleet and missed (not a good idea).
Gadhafi, realizing he was in trouble, then moved his tent complex farther south and drew another "line in the sand". By this time, the US had enough of his line drawing and launched Operation El Dorado Canyon, involving Air Force F-111s from airbases in the United Kingdom. The refusal of the French government to grant authority for an American overflight of their country greatly complicated matters and necessitated the accidental bombing of the French embassy in Libya. Ooops, sorry.
At that point Colonel Gadhafi moved farther south and drew another line in the sand but by this time he was standing in the country of Chad.
No wonder he never got promoted.
NATO is considering possible military intervention. The debate is the actual number of civilian deaths required to insight action on NATO's part. Apparently, until it gets to about 100,000, nobody is mobilizing anything. It is not clear who is doing the counting either.
According to reports, Libya's military is ruthlessly attacking its citizens. This apparently has not caused Libya to lose its seat on the UN's Council for Human Rights. Long live the UN.
Some Libya trivia from the 20th Century:
Gadhafi drew a line in the sand (actually it was a line in the water) claiming certain international waters as Libya's property. The US, whose job it is to draw lines, got upset and decided that no one else should be allowed to draw lines on the planet. This resulted in two Libyan fighter jets getting shot down by Iceman and Maverick when the Libyan pilots accidentally pointed their nose cones at the 2 US F-14 Tomcats.
The Colonel then drew a line in the sand (real sand this time) a little farther south but tricked the US by later launching six SA-5 missiles against the U.S. Sixth Fleet and missed (not a good idea).
Gadhafi, realizing he was in trouble, then moved his tent complex farther south and drew another "line in the sand". By this time, the US had enough of his line drawing and launched Operation El Dorado Canyon, involving Air Force F-111s from airbases in the United Kingdom. The refusal of the French government to grant authority for an American overflight of their country greatly complicated matters and necessitated the accidental bombing of the French embassy in Libya. Ooops, sorry.
At that point Colonel Gadhafi moved farther south and drew another line in the sand but by this time he was standing in the country of Chad.
No wonder he never got promoted.
Saturday, February 19, 2011
Rocks and Hard Places
"CAIRO, Feb 18 (Reuters) - Egypt has approved the passage of two Iranian navy ships through the Suez Canal, an army source said, a move that could annoy Israel, whose foreign minister has called Iran's actions a provocation. "Egypt has agreed to the passage of two Iranian ships through the Suez Canal," the army source told Reuters."
The Red Sea is pretty tight quarters and military officials of all countries are always concerned about unintended incidents with war ships in such close proximity.
A quick check of the US Carrier battle groups shows something interesting:
The USS Enterprise and USS Kearsarge are straddling the entrance and exits to the Red Sea. The USS Carl Vinson is parked directly off the beaches of Iran. Probably in plain site of any sun bathers. That's a lot of warships packed into a small area of the planet. Remember these ships never travel alone.
What is also curious is that on the east coast of the US we have the USS Bataan, USS Harry Truman and the USS GWH Bush. On the west coast of the US we have the USS Makin Island, USS John Stennis, and USS Ronald Regan. It's almost like a "picket line" has been formed on each coastline.
I wonder if the US is expecting visitors.
PS: For those of you worried about the above disclosures, don't be. This information is a matter of public record. Besides, it is never about where the ships are. It is always about what they are doing and where they are going.
The Red Sea is pretty tight quarters and military officials of all countries are always concerned about unintended incidents with war ships in such close proximity.
A quick check of the US Carrier battle groups shows something interesting:
The USS Enterprise and USS Kearsarge are straddling the entrance and exits to the Red Sea. The USS Carl Vinson is parked directly off the beaches of Iran. Probably in plain site of any sun bathers. That's a lot of warships packed into a small area of the planet. Remember these ships never travel alone.
What is also curious is that on the east coast of the US we have the USS Bataan, USS Harry Truman and the USS GWH Bush. On the west coast of the US we have the USS Makin Island, USS John Stennis, and USS Ronald Regan. It's almost like a "picket line" has been formed on each coastline.
I wonder if the US is expecting visitors.
PS: For those of you worried about the above disclosures, don't be. This information is a matter of public record. Besides, it is never about where the ships are. It is always about what they are doing and where they are going.
Tuesday, February 08, 2011
Eqypt Data and EU Warnings
HEY! I just got my first reader from Eqypt!!!!! Welcome.... In celebration I thought I would post something about Eqypt.
The incidents in Eqypt are indeed unfortunate. And setting aside all the political rhetoric going on about Mubarak the US et. al. Let's look at some data.
Back to politics: A warning for the EU: Keep an eye on the Balkans. The path is clear. First the overthrow of the Pakistani government. Then Eqypt. Then Jordan. And then it is on to the EU. Movements no longer require joining land masses, they jump from country to country by means of Twitter, Blogs, and an old style media that still believes, "If it bleeds; it leads" -- hence signs in English -- a more international language.
Back to Finance & Economics: When the US Federal Reserve floods the world with cheap dollars through Quantitative Easing it makes everything look expensive and devalues the currency. However, political unrest drives a "flight to safety" for investors which is still considered the US dollar and US Treasury Bonds. This increases the demand in the dollar making it stronger. You now know the Ben Bernanke equilibrium strategy... devalue the currency while stumulating demand for the currency.
Back to the Human tragedy: Everything said above gives a strong feeling that Eqypt and therefore the Eqyptian people are not important. Nothing could be further from the truth but the mechanics of finance and monetary policy surely send that message that, "While we agree human beings are important; we must also agree they are irrelevant". My hope is that the people of Eqypt could establish some form of government that allows for periodic orderly transitions of leadership to help keep moving the country forward for the benefit of the people the government is supposed to represent.
The incidents in Eqypt are indeed unfortunate. And setting aside all the political rhetoric going on about Mubarak the US et. al. Let's look at some data.
- Protests in Egypt are being carried out by a very, very tiny percentage of the population.
- Curiously, most signs being carried are written in English.
- 70% of Egyptians work for some level of the Egyptian Government.
- The Egyptian Government just gave 70% of the population a 15% raise.
- According to The US Government Foreign Aid Website the US Government has $1.2B in annual investment in Egypt meaning most Eqyptians work for the US Government apparently.
- If an orderly transition in Eqyptian Government is not realized the most important employer of the Eqyptian people will be lost and rising food prices will be replaced by unemployment on a Biblical scale.
- And, US aid will be halted or reduced thus lowering US Government deficit spending. After all it makes no sense to for the US government to borrow money from the Chinese only to then give it to Eqypt.
Back to politics: A warning for the EU: Keep an eye on the Balkans. The path is clear. First the overthrow of the Pakistani government. Then Eqypt. Then Jordan. And then it is on to the EU. Movements no longer require joining land masses, they jump from country to country by means of Twitter, Blogs, and an old style media that still believes, "If it bleeds; it leads" -- hence signs in English -- a more international language.
Back to Finance & Economics: When the US Federal Reserve floods the world with cheap dollars through Quantitative Easing it makes everything look expensive and devalues the currency. However, political unrest drives a "flight to safety" for investors which is still considered the US dollar and US Treasury Bonds. This increases the demand in the dollar making it stronger. You now know the Ben Bernanke equilibrium strategy... devalue the currency while stumulating demand for the currency.
Back to the Human tragedy: Everything said above gives a strong feeling that Eqypt and therefore the Eqyptian people are not important. Nothing could be further from the truth but the mechanics of finance and monetary policy surely send that message that, "While we agree human beings are important; we must also agree they are irrelevant". My hope is that the people of Eqypt could establish some form of government that allows for periodic orderly transitions of leadership to help keep moving the country forward for the benefit of the people the government is supposed to represent.
Saturday, January 29, 2011
Forgive us our Debts... As we forgive those with Debts against us...
Perhaps the most controversial position I have taken where backlash seems the strongest in both emails and in public discourse is The Great RE-Boot. Where I simply stated that, "...the FED will simply forgive the USG of its debt obligations...The US dollar will remain the world's reserve currency, US debt to GDP ratio takes a multiple order of magnitude leap to the positive and no body gets hurt."
Much has happened since my posting of October and I present to you additional data from the recent Federal Reserve release to further the conversation:
Much has happened since my posting of October and I present to you additional data from the recent Federal Reserve release to further the conversation:
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| Click to Enlarge |
As you can see, the Federal Reserve of the United States now owns over 1/3 of the total debt obligations of the United States of America. They have rapidly moved from #3 to #1 in the space of 3 short months!
The Argument:
- The Federal Reserve creates US Dollars and gives them to the US Treasury to spend on the operations of the US Government.
- The Federal Reserve accepts Treasury Bonds from the US Treasury.
- The US Treasury is obligated to pay back the Federal Reserve the face value of the Treasury Bond plus interest. This is how Government Debt is created.
- Now if you loaned me money and I never pay you pack you lost your hard earned dollars. However, if the US Government never pays back the Federal Reserve, the Fed loses nothing because they printed the dollars out of thin air.
- When Federal Reserve forgives the US Treasury of its debt obligations there is an immediate and significant improvement in the US Debt to GDP ratio which strengthens the country financially.
- And, more importantly, nothing bad happens to the US debt held by China, Japan, etc. because the US Government still will pay back the interest and principle on the bonds they hold. IN FACT... they are in a better position to do so.
It's a great plan, and they are going to do it. But not yet. So don't worry and don't bet against America.
Wednesday, January 26, 2011
Interested In Expert Networks?
Are you getting information that is 3 to 4 months (maybe even a full year) in advance of the general public? Then you may be a member of a so-called “Expert Network”.
The Expert Network questionnaire (score 1 for yes, 0 for no):
Does your network host require that “you not email me from your place of employment?”
Does your network host say, “If you must email me from your place of employment you must use Secure Socket Layer encrypted browsing?”
Does your network host say that, “the same rules we apply to your employer also apply to your lawyer?”
Does your network host provide you with PGP keys that were generated by FIPS 140-1 compliant tokens?
Did you need a “Guide to Defeating Sovereign Censorware” to enable you to stream information beyond your country borders?
Do you need OTR messaging services?
SUBTOTAL: If you scored 4 or more, you are a member of an expert network.
IDIOT OFFSET: If your score is 4 or more, subtract 6 if you failed to capitalize financially on this information.
SCORING:
<0 see Punk
1 to 3 see Sweet Kid
4 or more see Veterano
The Expert Network questionnaire (score 1 for yes, 0 for no):
Does your network host require that “you not email me from your place of employment?”
Does your network host say, “If you must email me from your place of employment you must use Secure Socket Layer encrypted browsing?”
Does your network host say that, “the same rules we apply to your employer also apply to your lawyer?”
Does your network host provide you with PGP keys that were generated by FIPS 140-1 compliant tokens?
Did you need a “Guide to Defeating Sovereign Censorware” to enable you to stream information beyond your country borders?
Do you need OTR messaging services?
SUBTOTAL: If you scored 4 or more, you are a member of an expert network.
IDIOT OFFSET: If your score is 4 or more, subtract 6 if you failed to capitalize financially on this information.
SCORING:
<0 see Punk
1 to 3 see Sweet Kid
4 or more see Veterano
Wednesday, January 05, 2011
Head Game / Head Fake / Dead Head
I am asking you to be optimistic. These next 12 posts will be on optimism because I don't want you to miss the opportunities that lie in front of us no matter from what country you are reading this post.
Optimism yields creativity and innovation. A pessimist never invented anything because, from their point of view, "Why invest the effort; there is no future!"....
I've travelled to many countries and the one common factor about news reporting is "If it bleeds; it leads". That means, if the news is bad, people will pay attention to your report. Good news attracts less eyes.
That is why pessimists dominate the news. And, people are willing to accept whatever they say without proof. BUT.... put one optimist on the news and everyone is yelling, "Show me your data!". Pessimists don't require data- only opinion. Optimists must re-prove their position constantly and their data is always being challenged.
If you follow the markets, I am sure you have heard the following:
(1) The market is in a downward trend; don't invest now until we hit bottom. Better wait.
(2) The market is in an upward trend; if you didn't get in; wait until a pull back.
(3) We've just experienced a pull back but until we see strong signals to the contrary, we could see another leg down. Better to wait.
(4) The pullback was shortlived; those that waited missed the entry point.
I could go on. But you get the idea. So what are you waiting for? What is the piece of data you need to tell you everything is going to be "all right"? When you finally get that data will you feel you waited too long?
The panic of 2008 is over....
(1) Get in.
(2) Get smart.
(3) Be smart.
(4) Be Optimistic.
(5) Keep Truckin.
Optimism yields creativity and innovation. A pessimist never invented anything because, from their point of view, "Why invest the effort; there is no future!"....
I've travelled to many countries and the one common factor about news reporting is "If it bleeds; it leads". That means, if the news is bad, people will pay attention to your report. Good news attracts less eyes.
That is why pessimists dominate the news. And, people are willing to accept whatever they say without proof. BUT.... put one optimist on the news and everyone is yelling, "Show me your data!". Pessimists don't require data- only opinion. Optimists must re-prove their position constantly and their data is always being challenged.
If you follow the markets, I am sure you have heard the following:
(1) The market is in a downward trend; don't invest now until we hit bottom. Better wait.
(2) The market is in an upward trend; if you didn't get in; wait until a pull back.
(3) We've just experienced a pull back but until we see strong signals to the contrary, we could see another leg down. Better to wait.
(4) The pullback was shortlived; those that waited missed the entry point.
I could go on. But you get the idea. So what are you waiting for? What is the piece of data you need to tell you everything is going to be "all right"? When you finally get that data will you feel you waited too long?
The panic of 2008 is over....
(1) Get in.
(2) Get smart.
(3) Be smart.
(4) Be Optimistic.
(5) Keep Truckin.
Saturday, January 01, 2011
Happy New Year - 2011
To the Western World and much of Asia Pacific (the double dippers who celebrate 2 new years), Happy New Year to you.
I've taken a few months off from Blogging and shortly I will be posting at least 12 new blog entries on finance and economics for the coming year and beyond. But for today, I would like to share with you how my "Main Squeeze" and I welcomed the dawn of the next decade.
Here is a view from our backyard spa where we frequently welcome the dawn of a new day, listening to the local wild life and hoping to catch a glimpse of the family of white tail deer that live in our neighborhood.
The deer can be often seen down by the pond. It is still snow covered and frozen over from the holiday snow storm.
For those of you in the market for a free standing spa, here is the Master SPA LSX it has been a great investment. Out of courtesy to my readers, I have spared you the picture of me sitting in the spa!
I hope you did your own research and made some picks from my August 09 posting. Everything really worked out except for the idea on TIPS.
All the best to my readers for the coming decade!
I've taken a few months off from Blogging and shortly I will be posting at least 12 new blog entries on finance and economics for the coming year and beyond. But for today, I would like to share with you how my "Main Squeeze" and I welcomed the dawn of the next decade.
Here is a view from our backyard spa where we frequently welcome the dawn of a new day, listening to the local wild life and hoping to catch a glimpse of the family of white tail deer that live in our neighborhood.
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| Sunrise January 1, 2011 |
 |
| Waiting for the White Tail Deer |
 |
| Where TEDBITS composes. |
All the best to my readers for the coming decade!
Friday, October 29, 2010
The relationship between debt and slavery
I have no affiliation direct or indirect with the organization that developed this piece of media. I don't know much about them so this not a promotion of their mission or objectives.
HOWEVER.... THEY HAVE MADE A VERY IMPACTFUL VIDEO.
If you country is in debt to another country... surely this must give you pause to think...
Monday, October 11, 2010
Intervention Lasted Two Years. The Unwind Begins Again.
It has been two years to the date when I posted on Bank Holidays.
I would say all the intervention - TARP, TALF etc. bought us some time. But the drum beat is sounding again.
The foreclosure fraud matter is serious. It is going to reopen old wounds.
Some new abbreviations for you to learn: REMIC and MERS. Add them to your ever growing list such as MBS, CDO, CDS and REPO105. They will all be in the news again shortly.
I would say all the intervention - TARP, TALF etc. bought us some time. But the drum beat is sounding again.
The foreclosure fraud matter is serious. It is going to reopen old wounds.
Some new abbreviations for you to learn: REMIC and MERS. Add them to your ever growing list such as MBS, CDO, CDS and REPO105. They will all be in the news again shortly.
Friday, October 08, 2010
The Great "Re Boot"
I often get asked, "What do you think is going to happen financially and economically"? Followed by, "Should I be worried"? The short answer is no. And this post will tell you why.
First of all, remember that there are many, many powerful people around the world that are fully invested in "the status quo" of how things work. They will do anything and everything to maintain it. I am not talking about elected politicians because they are the pawns in this game. We are talking about the people who really really run things.
But what if the TSHTF? I can't speak for all countries but the plan for the United States is very clear albeit undocumented, unreported and unspoken. Dr Martenson (link to the right) often speaks of the 3 big "E"s... Economy, Energy and Environment. I will outline what I think the plan is covering these three sections.
ECONOMY: As of this writing, the US Federal Reserve is now the 3rd largest holder of US Government Debt behind China and Japan. By the end of this year it will be #2. And while it may not be possible for the FED to hold 100% of all USG debt, it will reach a tipping point. When that happens, the FED will simply forgive the USG of its debt obligations -- this is referred to as the "big reboot". If you don't understand how this can reasonably happen please watch these 2 videos. The US dollar will remain the world's reserve currency, US debt to GDP ratio takes a multiple order of magnitude leap to the positive and no body gets hurt.
ENERGY: It is documented that if China reaches its full potential, the natural resources required to accomplish this will basically require a second planet. For decades the US plan is to conserve its own resources and buy energy from other countries now. Sooner or later the extraction curves of natural resources will peak and the US will still have its own resources, on its own soil, to use (Coal, Oil, Natural Gas, Uranium, Precious Metals for electronics, etc.) while everyone else has depleted their reserves. These countries will wake up one day and say, "hey we are out of oil. We sold it to the Americans and all we got in return was little green pieces of paper!"
ENVIRONMENT: When these 2 things are enacted, their will be disruption in the interconnected network of world commerce. So country self sufficiency and self protection will be crucial. Still being the only superpower on the planet, our ability to protect our perimeter is obvious. Inside the US perimeter is the planet's largest reservoir of fresh water (the great lakes) and the mid-west is still the breadbasket of the world. And, while it may be difficult to get kiwi fruit in February, I think there will be plenty to eat and to drink for the 400 million or so Americans.
If it is hard for you to appreciate the plan shown above, it is perhaps you are too caught up in the zeitgeist of current day distractions. But a word of warning- There is always pain in transitions. And, you may need to be a little more independent of the world around you at we go through the worm hole.
First of all, remember that there are many, many powerful people around the world that are fully invested in "the status quo" of how things work. They will do anything and everything to maintain it. I am not talking about elected politicians because they are the pawns in this game. We are talking about the people who really really run things.
But what if the TSHTF? I can't speak for all countries but the plan for the United States is very clear albeit undocumented, unreported and unspoken. Dr Martenson (link to the right) often speaks of the 3 big "E"s... Economy, Energy and Environment. I will outline what I think the plan is covering these three sections.
ECONOMY: As of this writing, the US Federal Reserve is now the 3rd largest holder of US Government Debt behind China and Japan. By the end of this year it will be #2. And while it may not be possible for the FED to hold 100% of all USG debt, it will reach a tipping point. When that happens, the FED will simply forgive the USG of its debt obligations -- this is referred to as the "big reboot". If you don't understand how this can reasonably happen please watch these 2 videos. The US dollar will remain the world's reserve currency, US debt to GDP ratio takes a multiple order of magnitude leap to the positive and no body gets hurt.
ENERGY: It is documented that if China reaches its full potential, the natural resources required to accomplish this will basically require a second planet. For decades the US plan is to conserve its own resources and buy energy from other countries now. Sooner or later the extraction curves of natural resources will peak and the US will still have its own resources, on its own soil, to use (Coal, Oil, Natural Gas, Uranium, Precious Metals for electronics, etc.) while everyone else has depleted their reserves. These countries will wake up one day and say, "hey we are out of oil. We sold it to the Americans and all we got in return was little green pieces of paper!"
ENVIRONMENT: When these 2 things are enacted, their will be disruption in the interconnected network of world commerce. So country self sufficiency and self protection will be crucial. Still being the only superpower on the planet, our ability to protect our perimeter is obvious. Inside the US perimeter is the planet's largest reservoir of fresh water (the great lakes) and the mid-west is still the breadbasket of the world. And, while it may be difficult to get kiwi fruit in February, I think there will be plenty to eat and to drink for the 400 million or so Americans.
If it is hard for you to appreciate the plan shown above, it is perhaps you are too caught up in the zeitgeist of current day distractions. But a word of warning- There is always pain in transitions. And, you may need to be a little more independent of the world around you at we go through the worm hole.
Tuesday, September 28, 2010
Why Investors Are Leaving The US Stock Market
Last May 2010 I wrote about the May 6th "flash crash" (here). My belief continues to be that, "This was a premeditated demonstration of power over the market that was so sophisticated that it was unforeseeable and perhaps inconceivable upon which case the only possible response is capitulation to the victor." The bullies were asked not to do this to the whole market all at once but to please just do it to "little pieces of it at time". You see we need the bullies because they are providing liquidity to an otherwise desert dry (volume wise) stock market so we must let them extract their pound of flesh from retail investors, insitutions and pension funds.
On September 27, 2010, the target was Progress Energy and everyone stood by and watched. No one will say anything. Here is the chart (in milliseconds) of what happened at 9:57 and 42 seconds AM.
I think whatever this was, it slipped out into the hands of some very clever, now powerful people. I hope they are only in it for the money.
On September 27, 2010, the target was Progress Energy and everyone stood by and watched. No one will say anything. Here is the chart (in milliseconds) of what happened at 9:57 and 42 seconds AM.
 |
| Chart Courtesy of Tyler Durden |
First: Please note the time stamp on the chart. All of this happened during a millisecond slice of the 42nd second of the 57th minute after 9am.
Second: Anyone with stop loss orders got taken to the cleaners. Their orders went to immediate execution.
Third: Someone was buying at $4/share (down from $44/share) and had orders sitting there waiting to be executed.
Fourth: In the blink of an eye, the price returned to the $44/share mark. Bagging a 1,000% gain.
This is the work of high frequency trading systems using quote stuffing techniques. It happens everyday to somebody's stock. And this is why nobody wants to play anymore.
Read and remember this: http://tedbits.blogspot.com/2009/07/united-states-district-court-southern.html
I think whatever this was, it slipped out into the hands of some very clever, now powerful people. I hope they are only in it for the money.
Thursday, September 23, 2010
Carry Trade for the Common Man - Do Something Patriotic
I discussed the mechanics of carry trade in this post earlier in 2010: http://tedbits.blogspot.com/2010/02/some-carry-on-while-others-get-carried.html
The stock markets of most countries are going idle and brokers need to stimulate trading so they can earn commissions. I heard a radio commercial today about borrowing on margin.
Plus you will have earned $20 per 1,000 for your politicians so that they can fund wars or give it to their friends. How patriotic of you.
Can't muster up the collateral? Get a bunch of friends to go in together. People do it all the time for lottery tickets. They only difference here is that your odds of winning are near 100%.
If you have a financial adviser and they have not suggested this to you, maybe you should print this out and discuss it with them.
Think if everyone in your country started doing this! Millions of people! The coffers of your governments would get filled with tax money and you would have money to spend on things to stimulate your economy and grow jobs.
The stock markets of most countries are going idle and brokers need to stimulate trading so they can earn commissions. I heard a radio commercial today about borrowing on margin.
- Let's say your broker will lend you 5X your collateral at 1%. This was the interest rate advertised on the radio commercial!
- So suppose you have $200, this allows you to borrow $1,000 @ 1%.
- Use that $1,000 to buy some form a relatively safe and stable stock that yields 5% dividends (there are literally dozens to choose from).
- Assume further that in a year, the price of that stock is the same price at which you bought it (no loss no gain).
- You would make $50 on your $1,000 and still have the original $1,000.
- Sell the stock and pay back the broker $1,010 dollars (principle + interest) leaving $40 gain.
- Set aside $20 of the $40 for taxes.
- Keep $20 for yourself. ( I did some rounding here but you get the idea )
Plus you will have earned $20 per 1,000 for your politicians so that they can fund wars or give it to their friends. How patriotic of you.
Can't muster up the collateral? Get a bunch of friends to go in together. People do it all the time for lottery tickets. They only difference here is that your odds of winning are near 100%.
If you have a financial adviser and they have not suggested this to you, maybe you should print this out and discuss it with them.
Think if everyone in your country started doing this! Millions of people! The coffers of your governments would get filled with tax money and you would have money to spend on things to stimulate your economy and grow jobs.
Friday, September 03, 2010
US Gov Debt Rating Cut to AA by New Global Rating Agency
In July, I wrote about For Whom Da-Gong Tolls. Basically this was a warning of the consequences if the dominance of US rating agencies were diminished. Well, it has only taken 2 months for the impact to be felt.
Here is the latest from Da-Gong Global Rating Agency:
AAA - Norway, Denmark, Luxembourg, Switzerland, Singapore, Australia and New Zealand.
AA+ - Canada, Netherlands, China and Germany
AA - United States, Saudi Arabia
US rating agencies insist that US government debt be rated AAA. Da-Gong disagrees, "Americans may not like to hear the truth, but there is no gainsaying the massive budget deficits, the mounting national debt, the current economic weakness, the expansion of entitlements and the coming wave of retiring baby boomers".
China has been tempering its purchases of US Government debt forcing the US Federal Reserve to buy the treasuries that China won't.
My prediction-- one of two things is going to happen:
(1) Interest rates on US debt will start increasing dramatically as treasury buyers want better insurance for the risk they are taking thus adding more burden to the US debt (this is a deadly embrace).
(2) The US will cause or allow something bad to happen in the world which forces everyone to the only place of safety they know-- The US dollar. Thus counteracting Da-Gong's downgrade of US debt.
My bet is on option #2 because it has already had a successful trial run--> The overblown implications of a default of Greek Sovereign debt caused a "flight to safety", people ran to US Treasuries and US interest rates fell.
What do you think?
Here is the latest from Da-Gong Global Rating Agency:
AAA - Norway, Denmark, Luxembourg, Switzerland, Singapore, Australia and New Zealand.
AA+ - Canada, Netherlands, China and Germany
AA - United States, Saudi Arabia
US rating agencies insist that US government debt be rated AAA. Da-Gong disagrees, "Americans may not like to hear the truth, but there is no gainsaying the massive budget deficits, the mounting national debt, the current economic weakness, the expansion of entitlements and the coming wave of retiring baby boomers".
China has been tempering its purchases of US Government debt forcing the US Federal Reserve to buy the treasuries that China won't.
My prediction-- one of two things is going to happen:
(1) Interest rates on US debt will start increasing dramatically as treasury buyers want better insurance for the risk they are taking thus adding more burden to the US debt (this is a deadly embrace).
(2) The US will cause or allow something bad to happen in the world which forces everyone to the only place of safety they know-- The US dollar. Thus counteracting Da-Gong's downgrade of US debt.
My bet is on option #2 because it has already had a successful trial run--> The overblown implications of a default of Greek Sovereign debt caused a "flight to safety", people ran to US Treasuries and US interest rates fell.
What do you think?
Tuesday, August 31, 2010
US Postal Service Confirms Dollar To Be Replaced by New Global Currency
Back in May of 2009, I mentioned that a new global currency was on its way.
Since that time, there has been rumblings by many governments to replace the US Federal Reserve Note ("the dollar") with some other form of global currency to establish a new monetary system for financial settlements.
My prediction remains that "the dollar" will be replaced by an IMF created fiat currency known as Special Drawing Rights or SDRs.
It may strike you as unusual that the United States Postal Service now accepts SDRs as legal tender for transactions. Click here.
This is significant since the last time the United States Postal Service confirmed the existence of something fictitious was in the movie "Miracle on 34th Street". Per Wikipedia: in the 1947 film Miracle on 34th Street, the identity of Kris Kringle (played by Edmund Gwenn) as the one and only "Santa Claus" was validated by a state court, based on the delivery of 21 bags of mail (famously carried into the courtroom) to the character in question. The contention was that it would have been illegal for the United States Post Office to deliver mail that was addressed to "Santa Claus" to the character "Kris Kringle" unless he was, in fact, the one and only Santa Claus. Judge Henry X. Harper (played by Gene Lockhart) ruled that since the US Government had demonstrated through the delivery of the bags of mail that Kris Kringle was Santa Claus, the State of New York did not have the authority to overrule that decision.
Thus the USPS proved the existence of Santa Claus. AND.... has now proved the existence of Special Drawing Rights as legal tender for US Postal transaction making it a valid, legal substitute for the US Dollar.
Since that time, there has been rumblings by many governments to replace the US Federal Reserve Note ("the dollar") with some other form of global currency to establish a new monetary system for financial settlements.
My prediction remains that "the dollar" will be replaced by an IMF created fiat currency known as Special Drawing Rights or SDRs.
It may strike you as unusual that the United States Postal Service now accepts SDRs as legal tender for transactions. Click here.
This is significant since the last time the United States Postal Service confirmed the existence of something fictitious was in the movie "Miracle on 34th Street". Per Wikipedia: in the 1947 film Miracle on 34th Street, the identity of Kris Kringle (played by Edmund Gwenn) as the one and only "Santa Claus" was validated by a state court, based on the delivery of 21 bags of mail (famously carried into the courtroom) to the character in question. The contention was that it would have been illegal for the United States Post Office to deliver mail that was addressed to "Santa Claus" to the character "Kris Kringle" unless he was, in fact, the one and only Santa Claus. Judge Henry X. Harper (played by Gene Lockhart) ruled that since the US Government had demonstrated through the delivery of the bags of mail that Kris Kringle was Santa Claus, the State of New York did not have the authority to overrule that decision.
Thus the USPS proved the existence of Santa Claus. AND.... has now proved the existence of Special Drawing Rights as legal tender for US Postal transaction making it a valid, legal substitute for the US Dollar.
Wednesday, August 25, 2010
Getting It Down Pat
The Social Security System of the United States US
A Real Story: Pat, born in 1948, started working in 1970 earning $5,784 per year. A good median income at the time and, being rewarded with cost of living wage increases each year, Pat retired in 2009 with a final salary of $44,144 per year – still about median income. Pat paid $53,234 into Social Security and is entitled to government retirement benefits of $18,514/year. Accounting for Pat’s employer contributions which matched Pat’s SS Taxes, Pat will consume all $106,468 (her contribution + employer match) sometime during year 6 of retirement (age 71); after which Pat starts taking “other people’s” money.
NOTE: Data to support the above calculations can be found here: http://www.ssa.gov/OACT/ProgData/retirebenefit2.html
Here is what is going to happen:
Today- We know that politicians didn’t save Pat’s contributions but rather spent them replacing Pat’s government “nest egg” with an IOU. As more and more “Pat’s” from the baby boom generation retire, the government needs to borrow more money to pay the benefits. The current plan is for the US Federal Reserve to buy US Government debt to maintain the financial stability of the economic system. Read that again- The Fed is buying US Treasuries with money it prints so that the US Government can give Pat $18,514/year.
Long term- (1) Ration healthcare so Pat doesn’t live too long and (2) make all illegal immigrants citizens so we can apply the 6.2% tax to their meager wages.
In a parallel universe: Using the same basic data, Pat’s SS Taxes and the matching employer contribution are placed in a government trust fund that earned 3% return on average. Pat now has $291,603 and, at the same withdrawal rate, this money would last almost 16 years until Pat was 81.
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If you like Pat's story don't forget to read about Elieen, Peg, Matt and Bob (click).
Monday, August 23, 2010
Red Money
This is the stuff of conspiracy theorists but if you told me in 2008 that the US government was (a) going to take control of the auto industry, (b) financially wipe out all stockholders and bond holders of the then private US auto companies and then (c) give the remaining value to the labor unions-- I would have thought you were a conspiracy theorist because of the US Constitutional protections against "unreasonable search and seizure".
Now for more... One of the provisions of the new United States Healthcare laws is that starting January 1, 2012; all purchases of precious metal coins and bullion over $600 must be reported to the Internal Revenue Service. I am sure you can immediately see the direct relation of precious metals trading with a national healthcare program. This was buried in the 2,000 page plus piece of legislation that no one had the time to read before they voted it into law.
And more... In the financial regulation reform bill just passed, another law was added that allows certain bank holding companies to freeze the money market funds (nothing in; nothing out) if the banks believe that sudden, unexpected money flows put the institution at risk. Risk to be defined by the banks themselves or the newly created financial regulation czar. Click here to recall my musing about US Czars.
Finally... The last leg of this positioning move is still open for public comment. But basically the plan is to confiscate the $4T in privately held pensions, pool it, and pay back to all retirees (those with and those without pensions) a fair monthly pension based on what some politician thinks is fair.
This is all positioning for Red Money.
At some point in the future, US currency will be changed from green to red. You will have some period of time (say 3 months) to convert all your green currency to red currency. This has two purposes:
(1) An estimated 1/2 trillion green dollars are suspected of being trapped outside the US, held by criminal elements both in the US and abroad as well as by ordinary people just keeping cash "off the books". If you don't want to expose yourself by making a cash transaction greater than $7,500 in a bank and alert the Internal Revenue Service you are going to spend the money on something. This is automatic 500B of economic stimulation forcing the world to buy US based goods and services.
(2) When only red money is left, the US Government will devalue it by about 50% thus wiping out half of the country's debt with the stroke of a pen. In US history, devaluation has been done already at least 2 times on a very large scale, once in the 20th century alone by president F. D. Roosevelt.
Thursday, August 19, 2010
Stealth Oil
The old joke goes like this: The CEO of a defense contractor takes the US President to a military air base and says, "Mr. President, parked here on the tarmac is the new Stealth Bomber- price tag a mere $2B each". POTUS replies, "but sir, I don't see any airplane!". "Of course not, Mr. President that's because our stealth technology makes them very difficult to detect". The leader of the free world replies, "That's fantastic! I'll take 4 dozen."
Fast forward to 2010, where the Associated Press reports that-- Major study charts long-lasting oil plume in Gulf.
Excepts and commentary (emphasis mine):
FOLKS THESE ARE QUOTES! YOU JUST CAN'T MAKE THIS STUFF UP!
"A 22-mile-long invisible mist of oil is meandering far below the surface of the Gulf of Mexico, where it will probably loiter for months or more, scientists reported Thursday in the first conclusive evidence of an underwater plume from the BP spill." "The most worrisome part is the slow pace at which the oil is breaking down in the cold, 40-degree water, making it a long-lasting but unseen threat to vulnerable marine life, experts said." "Earlier this month, top federal officials declared the oil in the spill was mostly "gone," and it is gone in the sense you can't see it. "
Comment: Sounds like the Stealth Bomber story to me.
"Monty Graham, a scientist at the Dauphin Island Sea Lab in Alabama who was not involved in the study, said: "We absolutely should be concerned that this material is drifting around for who knows how long. They say months in the (research) paper, but more likely we'll be able to track this stuff for years."
Comment: Poor Monty, he isn't shown in the above picture so didn't get in on the first government grant. However, if he can glum on to the fact this is a persistent problem maybe he can get in on round 2 of the money.
"The scientists used complex instruments...to detect the chemical signature of the oil that spewed from the BP well after it ruptured April 20. The equipment was carried into the deep by submersible devices." Comment: They used rare equipment that nobody can understand and conducted the experiments where no one could confirm they were doing anything.
 |
| 2 WHOI scientists review recent US Gov't grant to search for missing Gulf Of Mexico oil. |
Excepts and commentary (emphasis mine):
FOLKS THESE ARE QUOTES! YOU JUST CAN'T MAKE THIS STUFF UP!
"A 22-mile-long invisible mist of oil is meandering far below the surface of the Gulf of Mexico, where it will probably loiter for months or more, scientists reported Thursday in the first conclusive evidence of an underwater plume from the BP spill." "The most worrisome part is the slow pace at which the oil is breaking down in the cold, 40-degree water, making it a long-lasting but unseen threat to vulnerable marine life, experts said." "Earlier this month, top federal officials declared the oil in the spill was mostly "gone," and it is gone in the sense you can't see it. "
Comment: Sounds like the Stealth Bomber story to me.
"Monty Graham, a scientist at the Dauphin Island Sea Lab in Alabama who was not involved in the study, said: "We absolutely should be concerned that this material is drifting around for who knows how long. They say months in the (research) paper, but more likely we'll be able to track this stuff for years."
Comment: Poor Monty, he isn't shown in the above picture so didn't get in on the first government grant. However, if he can glum on to the fact this is a persistent problem maybe he can get in on round 2 of the money.
"The scientists used complex instruments...to detect the chemical signature of the oil that spewed from the BP well after it ruptured April 20. The equipment was carried into the deep by submersible devices." Comment: They used rare equipment that nobody can understand and conducted the experiments where no one could confirm they were doing anything.
* * * I THINK WE SHOULD GIVE THESE GUYS MORE MONEY * * *
Monday, August 09, 2010
Comment on this model portfolio
First the necessary disclaimer: The following is provided for educational and entertainment purposes only. The information that follows is neither an offer nor a solicitation to buy or sell securities and/or investment vehicles of any kind. In all cases, individuals are encouraged to do their own research and seek investment and tax advice from qualified, certified professionals properly licensed in the country or locality in which they reside.
Assume equal amounts invested--
Group 1: Playing the yield game:
Pimco High Income Fund
Strategic Global Income Fund
iShares S&P U.S. Preferred Stock Index
MFS Special Value Trust
Group 2: Hedge with the general market:
Standard & Poor's Depositary Receipts
Group 3: Buy Cheap Protection Against Inflation:
Health Care REIT Inc.
Fidelity Inflation-Protected Bond (FINPX)
Fidelity Real Estate Income (FRIFX)
Fidelity Strategic Real Return (FSRRX)
Group 4: Insurance for when the SHTF:
SPDR Gold Shares (GLD)
What do you think?
Assume equal amounts invested--
Group 1: Playing the yield game:
Pimco High Income Fund
Strategic Global Income Fund
iShares S&P U.S. Preferred Stock Index
MFS Special Value Trust
Group 2: Hedge with the general market:
Standard & Poor's Depositary Receipts
Group 3: Buy Cheap Protection Against Inflation:
Health Care REIT Inc.
Fidelity Inflation-Protected Bond (FINPX)
Fidelity Real Estate Income (FRIFX)
Fidelity Strategic Real Return (FSRRX)
Group 4: Insurance for when the SHTF:
SPDR Gold Shares (GLD)
What do you think?
Saturday, August 07, 2010
Too Few Too Big To Fail
In the United States, a bank failure is the closing of a bank by a federal or state banking regulatory agency. The Federal Deposit Insurance Corporation (FDIC) seizes a bank's assets when its capital levels are too low, or it cannot meet obligations the next day.
The global financial crisis circa 2008 has caused 176 banks to fail as of this writing.
And now more failures are to come-- due to the new US Financial Regulation legislation recently signed into law with its "Pravda-esque" promise of protecting consumers and regulating wall street.
Interesting point #1: Three large financial institutions- the Federal Reserve Bank (a private bank) and Freddie Mac and Fannie Mae (quasi-government institutions) are all exempted from the legislation.
Interesting point #2: The stated intent of the legislation was to end taxpayer bailouts of financial institutions deemed too large too fail (TBTF). When in fact, what it has done is relieve politicians the nasty task of openly debating the next bailout in front of the public by establishing a taxpayer funded trust fund to bailout TBTF institutions. Get it? They didn't eliminate the bailouts only the public process was eliminated; the bailouts continue in secret with a private slush fund.
Here is what to watch for in the news:
Sooner or later, the US FED and FANNIE and FREDDIE who all have been buying up collapsing mortgages and mortgage backed securities, will now start forcing the banks that originally cast these bad loans to start covering the losses (i.e. buying them back). When this starts here is what happens:
The global financial crisis circa 2008 has caused 176 banks to fail as of this writing.
And now more failures are to come-- due to the new US Financial Regulation legislation recently signed into law with its "Pravda-esque" promise of protecting consumers and regulating wall street.
Interesting point #1: Three large financial institutions- the Federal Reserve Bank (a private bank) and Freddie Mac and Fannie Mae (quasi-government institutions) are all exempted from the legislation.
Interesting point #2: The stated intent of the legislation was to end taxpayer bailouts of financial institutions deemed too large too fail (TBTF). When in fact, what it has done is relieve politicians the nasty task of openly debating the next bailout in front of the public by establishing a taxpayer funded trust fund to bailout TBTF institutions. Get it? They didn't eliminate the bailouts only the public process was eliminated; the bailouts continue in secret with a private slush fund.
Here is what to watch for in the news:
Sooner or later, the US FED and FANNIE and FREDDIE who all have been buying up collapsing mortgages and mortgage backed securities, will now start forcing the banks that originally cast these bad loans to start covering the losses (i.e. buying them back). When this starts here is what happens:
- Banks begin consuming their "loan loss reserves" and become unprofitable and eventually insolvent. Thank god the FDIC has hired hundreds of new auditors to handle a new wave of bank closures.
- Banks know this is coming which is why they aren't lending now. They will lend less when the full power of the US government is unleashed upon them.
- The last banks standing are the TBTF banks operating with a tax payer funded safety net and everyone who wants money will have to go to them. Because they are now government backed they are quasi-government agencies.
Wednesday, July 21, 2010
For Whom Da-Gong Tolls
As is customary after my medical exam, my doctor and I chit chat about the world situation. He asked me, "Do you think we will go to war with China". I answered saying that conflict may already be underway but I doubted that we would ever engage in a "shooting war".
To which he asked, "You mean an economic war?". I said, "No, monetary".
So to my dear Doctor C and all my faithful readers, I submit the following excerpt from the Dow Jones News service reporting on an interview my the Financial Times:
"Guan Jianzhong, head of China's biggest credit rating agency, blames his Western counterparts for the global financial crisis and says China, as the world's leading creditor nation, should have a greater say in how sovereign debt is rated.
Rating agencies such as Moody's Investors Service, Standard & Poor's and Fitch "are politicized and highly ideological and they do not adhere to objective standards," Guan, who is chairman of Dagong Global Credit Rating, said in an interview."
So here we have the Dagong show. And why not, if you were the largest creditor in the world, would you leave the task of credit rating to anyone else? Or better yet, do your own credit rating and don't tell anyone else-- leave the current puppets in place and threaten them with their very existence if they reveal true credit ratings to the anyone else.
To which he asked, "You mean an economic war?". I said, "No, monetary".
So to my dear Doctor C and all my faithful readers, I submit the following excerpt from the Dow Jones News service reporting on an interview my the Financial Times:
"Guan Jianzhong, head of China's biggest credit rating agency, blames his Western counterparts for the global financial crisis and says China, as the world's leading creditor nation, should have a greater say in how sovereign debt is rated.
Rating agencies such as Moody's Investors Service, Standard & Poor's and Fitch "are politicized and highly ideological and they do not adhere to objective standards," Guan, who is chairman of Dagong Global Credit Rating, said in an interview."
So here we have the Dagong show. And why not, if you were the largest creditor in the world, would you leave the task of credit rating to anyone else? Or better yet, do your own credit rating and don't tell anyone else-- leave the current puppets in place and threaten them with their very existence if they reveal true credit ratings to the anyone else.
Tuesday, July 20, 2010
First Installment on $20B Shakedown
So, on June 17, I let you folks know how the $20B shakedown of British Petroleum by the US Government was going to unfold. The first installment is for $7B and was announced today at the Apache Corporation website.
Go back and take a quick look at my June 17 posting: here.
Now, after checking out the Apache Corporation website link above notice 3 things:
Go back and take a quick look at my June 17 posting: here.
Now, after checking out the Apache Corporation website link above notice 3 things:
- The underwriters for this transaction are all US financial institutions that have been bailed out by the US Government because they are insolvent,
- The lead is Goldman Sachs former employer of just about everybody who is anybody in the US Treasury or Federal Reserve,
- Apache Coporation does not have $7B to execute the purchase for the assets they announced they are buying.
This is getting really easy to predict. I hope you are making money. If you are just reading my posts for your entertainment; I at least hope that you are amused.
Wednesday, July 07, 2010
Sell into the Summer Strength
When you visit here please remember you are getting the news about a year before it happens.
Remember my treatise of April '09 on the coming double bottom? It was hard to see then with the stock market roaring back after its March '09 lows. Even harder to see when we were all getting real "giddy" in December of '09. But here is comes.
This past April, I encouraged everyone to keep an eye on their country's bank statement. After all, it is your money.
Well, based on the June 30th report from the US Treasury, it looks like we might just tip over the country's legal debt limit before the November 2010 elections. Its a close call.
Also, on July 1, 2010, the Congress of the US decided that they are not going to publish a budget for fiscal year 2011 which starts in September 2010. Never before -- since the creation of the Congressional budget process -- has the House failed to pass a budget, failed to propose a budget, then deemed the non-existent budget as passed as a means to avoid a direct, recorded vote on a budget, but still allow Congress to spend taxpayer money.
Should be an interesting 2nd half of 2010:
Remember my treatise of April '09 on the coming double bottom? It was hard to see then with the stock market roaring back after its March '09 lows. Even harder to see when we were all getting real "giddy" in December of '09. But here is comes.
This past April, I encouraged everyone to keep an eye on their country's bank statement. After all, it is your money.
Well, based on the June 30th report from the US Treasury, it looks like we might just tip over the country's legal debt limit before the November 2010 elections. Its a close call.
Also, on July 1, 2010, the Congress of the US decided that they are not going to publish a budget for fiscal year 2011 which starts in September 2010. Never before -- since the creation of the Congressional budget process -- has the House failed to pass a budget, failed to propose a budget, then deemed the non-existent budget as passed as a means to avoid a direct, recorded vote on a budget, but still allow Congress to spend taxpayer money.
Should be an interesting 2nd half of 2010:
- A new supreme court justice (life time appointment btw) that was never a judge,
- A war that cannot be won (war on terror),
- A problem that cannot be solved (climate change),
- Growing disregard for the "rule of law" by the government,
- Politicians who cannot lead without spending,
- $955B in stimulus spending that didn't stimulate ($168=Bush;$787=Obama),
- An ecological disaster (Gulf of Mexico oil spill) that will not be re mediated,
- A central bank (the Federal Reserve) which has exhausted all its monetary "tools",
- Banks that won't lend,
- Consumers who won't spend unless the government subsidizes the purchase (home buyer rebates, cash for clunkers programs, etc.),
- shall I go on?
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