johnbee

Roubini Hates Gold: Is He Wrong Again?

If all the aid money to banks is being lent back to the Federal Reserve where is the money for credit for industrial growth? I guess Bernanke has to find the answer to this and the smart banks have made their fortunes this year by gambling that he has it and that either industry will get enough credit to recover or inflation will do the trick. Sure deflation is a possibility but in the balance of probabilities inflation is the better bet and so real assets are preferable to any currency.

Roubini Hates Gold: Is He Wrong Again?

Despite the deflationary argument of economic theorists, people in general are fearful of either inflation or another and possibly final collapse, and its fear ruling the market right now since apart from pumping state aid into the system nothing has happened to change what brought about the crash before. The smart Banks still rule and will continue to behave as they have for 1,000 years unless they are nationalised on a non profit basis. The world's growth is founded on a teadmill of increasing credit to an ever expanding and more productive population where the only solution to debts is inflation which in turn sorts out the wheat from the chaff in survival terms. In a total collapse does gold buy food? No - but people believe it might, and in inflation does gold keep its value against all other resources? It has no reason to other than people think it would. So better be a psychologist than an economist right now.

Is Capitalism in Its Death Throes?

The whole basis of banking and stock market capitalism which has served apparent growth so well is a well disguised mirage. When the general public make more money than they need to eat they either spend it on things they could well do without or buy a bigger house or believe they are saving it beneficially or putting it into a pension for retirement it or investing it on the Stock Market. They are greatly encouraged to do this both by Governments, and by investment advisors who live off the commissions. Inflation constantly creates higher values for these purchases so that it appears money is being created, and Stock Market indexes are constantly adjusted with stocks with poor prospects being replaced by those with good ones so as to give the impression of a constant uptrend. Pensions when finally obtained years later are frequently less (after inflation adjustment) than the money saved. Some investments do grow faster than others in a time period but are more than balanced by those going down. The trick is to pick the right ones and it seems only the rich can manage this through use of skilled advisors working for hedge funds etc. But are they really so skilled? Isn't their trick really to have managed to get control over small savers low interest money and to create money against it out of thin air like magicians and then take half of the thin air and turn it back into cash for themselves while leaving the small savers holding the magical baby (in the form of thin air)! Who perpetrates this trick? The big name investment bankers who station themselves in every important position to do with money. Why is BofA in a mess? Because the directors and staff aren't so smart as the likes of Goldman Sachs.Why do GS people get huge salaries? Because they manage to dream up new tricks and keep quiet about how they do it as if they public knew the ride they are being taken for they would - do what? That's the nub. The public do nothing and governments do nothing because without the banks the wholes system folds as it nearly did back in January this year. But without the banks and their control over savings and their constant creation of money and the Stock market hype that the average company can be valued on 30 times its last years profit (as if anyone could see 30 years ahead) there would be little or no growth (apparent or not).
Hope and speculation that enables entrepreneurs to dream up ideas and financed would be taken out of the market along with competition and Government t revenues would fall hugely and law and order would be out of control. In short the world either sticks to non growth barter where we grow our own potatoes to swap for eggs and protect ourselves with pitchforks or we competitively get on the treadmill of borrowing and easy credit to obtain what we think we need before we have earned it. As the treadmill speeds with more and more people on it then it will inevitably crash from time to time until a new one will be patched up and the wheels oiled again with more temptation or competitive need until it revolves so fast that crises happen almost without any intermission that benefits anyone excepting those who are in a position to pull the wheels that stop and start it and so take any profit gained while the rest of us take the loss. From Cicero to Jesus to Lincoln and beyond bankers have existed to create the mirage of competitive growth. Yes we have TV's and cars and roofs over our head. Well some of us do, but the rest (the billions who still live in poverty) are those who enable it for those who have as the world's resources are not evenly shared. But when they are then poverty will become far more apparent in the Western world to everyone but smart bankers. They will need take to the seas in large armed yachts or live in hiding to survive but they will survive as if they don't then we are all in the shit.

Markets Suffering from Withdrawal Symptoms

If printing money is the easy way out of debt why haven't Governments always printed loads of money? It is correct that low interest rates have made people think things are not so bad along with nil inflation, but the US and the UK debt salvation will need be found in inflation and cheapening their currencies and they will be the two elephants in the parlour that will send us back into a W recovery the second half of which be a long time to happen.

It's Time to Sell Equities and Look to These 3 Areas

nobody knows who is buying. it's obvious the whole market is manipulated: treasuries, stocks, gold, the $ etc.
Those who are genuinely in the know (the directors of those banks who make up the Fed and their friends) must be making the killing of the Millenium.

Letter to Her Majesty: Suggestion for Low-Tech Apparatus for Economic Horizon-Scanning

If we had all stuck to barter the people of this world would be relatively equal and would have advanced to a far lesser degree but the invention of money, and the money lending that followed down the ages, created the ability to take leveraged risks which benefited some and left others broke in the ever increasing seesaw of money supply. At times though, as in war only, there is massive des-truction in which real assets are really lost and need be replaced. Surviving people need work to eat and offered the chance to borrow money again can rebuild faster. Given the greedy neurosis of humans to improve their lives over a limited life span money feeds risk once more and the competitive urge. This is a constant -over successive generations - but with the greater the creation of money and savings from increasingly educated populations comes the greater need to put it somewhere and the creation of risk capital to feed this need, so creating larger and faster opportunities of which some are bubbles and some not. Many make money travelling in these bubbles rather than arriving and so fuel the flames regardless of the concept. The Banks simply take their interest and commissions either way since they have always had recourse against the borrower in law. But careless lending gives rise to careless investing and bigger bubbles and one need remember that a major silent arm of banking business is that of repossession. I would suggest that no banks should have recourse against a bad loan other than the collateral pledged, or even that borrowers should have recourse against an ill considered loan by a bank so they may behave less irresponsibly. But then who would judge? Right now the only real question is how much money has been destroyed for real? In the dot com crash not much was lost- it simply changed hands- from investors to staff and suppliers. Where is it this time? Residential buildings which are allegedly the prime cause of this crash are not destroyed; they are simply re-designated at lower values and borrowers have been pushed into negative equity so decreasing purchasing power. Investors who buy the houses will benefit in time. While banks, needing to protect the asset cover for their loans, have decreased lending to businesses and revalued their collateral downwards as an accounting measure. Government relaxation of accounting rules and printed money will feed money into their economies now until they recover and inflation will readjust the values upwards and allow for lending again, and so the boom bust cycles will repeat themselves for ever until the world ends or a new Jesus defeats the moneylenders, but as Shakespeare knew they have had their pound of flesh. Nothing changes in human nature- that is the only economic lesson to be learned.

ETF Trends: U.S. Dollar Attracts Flight to Safety Capital

Money has to go somewhere. Banks deposits are only guaranteed to very small amounts. US $ Treasuries are a safe haven only until interest rates rise or inflation creeps in as they surely will. Equities can be a hedge against inflation and currency depreciation but only if you cherry pick.
The rise in equity prices has little to do with reality. If some earnings are up its because of low interest rates, sacking of staff, temporary withdrawal of advertising, low inventory charges etc.
Funny that the lucky ones this last few months have been the gamblers and the uninformed unless you have been a banker in the Fed elite. It should have been obvious with hindsight that they had to be the first to be saved or we were all done for, but thats not a slam dunk just yet, and most equities have long uphill climb to go.

From Bear Trap to Bull Market? The U.S. Dollar Is Key

This is the most informative comment I have seen in these columns. It seems that a potential Treasuries and Bond market fall out could be the main reason for the recent switch to equities although a $ collapse could see a move out of US equities. The VIX just shows low volatility is back and the Baltic Index rise and slight fall back looks like inventory replacement that has now slowed as volume has fallen. Once again its anyone's guess but mine is on a 15% maket drop, and the need to wait to see what of the Fed's money printing actually reached consumers. We should know shortly if the Fed needs create more funds in the market.

Explain This Rally!

Its all very simple. Are consumers still spending money and if so at what rate are they spending it compared to a year ago or six months ago? If they are spending a lot less the more this boom is a farce. Don't rely on Government figures.

Just ask around in your local stores. It's possible that people are spending ahead of what they believe will be rampant inflation and so to make best use of any money to buy consumer products before prices move against them. Does this apply to shares? Maybe - if fund managers feel they may miss the boat they will jump on the bandwagon too, but the figures show peoples' savings are up massively so where is the monet coming from? One day someone will need pay for the excesses of the past and it will be in higher taxes or inflation and most likely both.

S&P Futures Move Lower; Forex Market Fails to Follow

Bernanke did not make good reading. There is no rebound yet; 2011 is the new forecast. The $ is the world's only reserve currency and safest place to be meantime.

Why U.K. Housing Is Still Over-Valued

Lets hope Peter can forecast the UK housing market better than his Gold market pronosis.

Surprise, Surprise, Surprise: Positive Economic News Everywhere

My reading of Seeking Alpha has been that the great majority of opinion has been bearish until recently and is still in the majority.
Yet I now see a lot of bragging by those who say they got the March bottom right. Pity they didn't publish their views then. The only person who outstandingly and continually and daily called the market rise was somone called Cetin, and he was widely abused for months by pretty much everyone. Where is he now?
Its clear the market went against all the rules and was manipulated by the Fed and banker pals under duress. Have they re-established confidence? Bank results are meaningless. Its industry where we need see upside regardless of unemployment and the state of inventories will show the way to commodity prices.
Can the $ hold firm. Will interest rates rise or fall. Back to the Fed and what they can achieve. Only the big hitters know which way its going and those who are not and say they do are a waste of time.

Past Is No Prologue: Stocks vs. Bonds

All the large stock indexes are scams and have been from the beginning of time since the moment an index stock looks like its on the way down its replaced by one that looks as if it may go up. The only method of investing in stocks that succeeds over bonds is to cherry pick and leverage the equity selection and hope you are right. Alpha stock investing by pension funds is just a sure way for the managers to make big salaries and to avoid being sued for incompetence when the performance of your penson fund fails, as most have.

Today in Commodities: Dollar Doom?

Its fear that drives the $US up and less fear down again. That's the call.

Why Coal Is Inevitable

I seem to remember that a company called Sasol or Sasoil in South Africa turned coal into fuel in a very big way. Can't this be done still and at what cost?