ScottEX

G8 Meeting: In the End, No Big Surprises

Indeed, and China is a big picture kind of story although that doesn't really start to describe it. I was living in the communist heartland where the party originated and maintains its powerbase today. Tianjin was an extreme view. We'll never understand it so don't read too much into my comments. Economic stability in China is controlled by the party and the barrells of a hundred million red army guns, make no mistake about it.

It's an apartheid system with the potential to explode into some kind of violence like the world has not seen in a hundred years or more. Both sides of the system there being aware of the potential for disaster look for Chinese harmony, a very different tune from what we know here. Mao's cultural revolution and some billion people living in an area the size of the eastern US seaboard kind of makes the paradigm impossible for people here to comprehend. No doubt, China has the capacity to change the world forever. My main concern is not economic and price bubbles, rather it is self-destruction by environmental implosion. The water table is dropping by a meter per year but takes hundreds to replace. The desert is encroaching on the eastern seaboard. And with the black skies they bearly have air to breath. Price bubbles and all that won't mean much as long as the peasants have rice in their bowls and things seem to get a bit richer all the time, which just means more meat and beer. With two trillion in reservers now, they can buy a lot of beef, so I think the party can manage that 1 billion second class, many of whom still believe Mao is alive and well.

But I don't know how they are going to keep the peace when the little sliver of habitable land they are on turns to waste, which I think will coincide with the peak of the current boom, 10-20 years down the road, maybe less if something drastic isn't done, but then the new rich won't be satisfied, and so it goes....


On Jul 09 09:55 PM Old Trader wrote:

> Scott,
>
> I always enjoy reading comments from people who're in a position
> to provide a "worm's eye" view. Its all well and good to read/watch/listen
> to media for the "big picture" stuff, but perspective is equally
> helpful.

G8 Meeting: In the End, No Big Surprises

I spent two years living in an economic zone in mainland China. The area I lived was empty of people, a metropolis of business towers and empty condos, waiting for people to move in. Endless building, a giant scheme run by communists and bankers in this area.

They've been in some kind of asset bubble for a few years, but it is controlled quite tightly as you can imagine. It really was living in the twilight zone. I wonder if anybody has moved in, but I doubt it, the scale of it is truly hard to imagine. Expropriate and build things that serve no purpose, that's how it was going when I was there...

You really can't trust what communists do or say, I don't think that's a new deal.

Long Dollar, Short Oil, Hold Gold?

And I do really think the cattle market is ripe for a boom. In the end people will sell all their gold back to the central banks and they'll eat well...


On Jul 06 12:13 PM Boxed Merlot wrote:

> I understand your sentiment and I prefer a medium rare rib eye to
> a hunk of metal or printing press product when I’m weak with hunger
> too. However, once the stomach’s full, I gotta think about how to
> pay for it, or the next meal for that matter. There comes a time
> when others will stop giving me something to eat just because I’m
> hungry. It’s not unreasonable to think they may expect me to contribute
> to my own existence. Unfortunately, the people who care about the
> yellow dung metal and greenbucks are the same ones that own the cattle.
>

Long Dollar, Short Oil, Hold Gold?

It's easier to make a take care of a cow than it is to mine gold... Way easier...


On Jul 06 12:13 PM Boxed Merlot wrote:

> I understand your sentiment and I prefer a medium rare rib eye to
> a hunk of metal or printing press product when I’m weak with hunger
> too. However, once the stomach’s full, I gotta think about how to
> pay for it, or the next meal for that matter. There comes a time
> when others will stop giving me something to eat just because I’m
> hungry. It’s not unreasonable to think they may expect me to contribute
> to my own existence. Unfortunately, the people who care about the
> yellow dung metal and greenbucks are the same ones that own the cattle.
>

Long Dollar, Short Oil, Hold Gold?

In a way I tend to think the US debit is actually partly owned by the world. Maybe as Regan said it is big enough to take care of itself....


On Jul 06 09:16 AM Walter Soonenberg wrote:

> Dollar is cooked...finished. Step back a bit and get a better perspective.
> Yes, short term strength very likely but 18 months out the Grim inflationary
> Reaper will call and the dollar will further collapse. Gold in hand,
> foreign currency (Asian preferred) only hedge. The US Debt load
> is simply too large. Somehow, most "wise" investors blissfully ignore
> this fact. Long Aussie Dollar, Remimbi, Norwegian Krone.

Long Dollar, Short Oil, Hold Gold?

I was living in Japan fairly recently, it all seemed rather good. I said economic recovery is inevitable, not ginormous real estate bubble.


On Jul 06 01:17 PM optionsgirl wrote:

> economic recovery is inevitable? Tell that to the Japanese.

Long Dollar, Short Oil, Hold Gold?

They might buy more and more at Wallmart though...


On Jul 06 09:17 AM Living4Dividends wrote:

> Long Dollar, Short Oil, Hold Gold?
>
> Are you kidding me?
>
> Oil is going up. Dollar is going down - even if other currencies
> go down as well, the dollar will purchase less and less as the years
> go by.

Long Dollar, Short Oil, Hold Gold?

People have to eat. Everybody here has to forget about gold for a minute or two. The IMF is about to dump 400 metric tonnes onto the market and the Indian's aren't buying. The paper gold peddlers are going to jack up the printers and buy greenbucks, so net net. Dollar goes nowhere, gold goes down a bit.

But people still have to eat. And many a hungry mouth a'watering. Let's have a look at the Cattle market and forget this stupid yellow dung metal. Who cares.

Long Dollar, Short Oil, Hold Gold?

I would contend that economic recovery is inevitable; it's only a matter of time before the consumer can bear no more and resist no further the urge to splurge at walmart, believe it.

Likely, yes, inevitable, impossible. There could be some rogue bulls out there anyways... And I am long cattle too, very long.


On Jul 06 01:42 AM Peter Cooper wrote:

> Coming at this from another angle, I would contend that there is
> no economic recovery and that we have quite a long period before
> such a recovery starts. In this time a further stock market sell
> down is not only likely but inevitable. To bring this point home
> I just don't like what I hear about US consumers saving and not spending,
> and US states cutting spending and facing big deficits. If Arnold
> can not get it right in California this does look a major problem,
> see:
> arabianmoney.net/2009/.../

Long Dollar, Short Oil, Hold Gold?

and sniff some glue eh..


On Jul 05 10:28 PM john the babptist wrote:

> short the dollar
> long gold
> hold oil

Long Dollar, Short Oil, Hold Gold?

So let me get this right, you are long gold, and short Aussie/Cad, the two largest gold producers in the world. The Chinese sovereign wealth fund has half a trillion to spend and guess where they will be spending it. It won't be vacation homes in Florida.


On Jul 05 02:49 PM knight wrote:

> Peter you nailed it and i think this the way it will play out in
> the next 6 months. One could also short Cdn/Aussie dollar as well.
> I also think a strong correction should bring Gold down significantly
> which may be the last time to buy it cheap. Also look for Gold stocks
> which will be extremely oversold.

Long Dollar, Short Oil, Hold Gold?

Was it a weak dollar or was it rampant speculation in the derivatives market that sent oil to $147. Surely it was the weak dollar...

I believe that China, whilst continually lying about their state of economic affairs, is still much stronger than people believe. If we look at their actions of late they have been net sellers of treasuries. I feel that on balance, any flight to safety that might occur from a return of the equity markets to more realistic levels will be muted by China's disinterest in collecting USDs observed not by what they say but what they are now doing in the market, reducing their massive dollar holdings. They are shopping for physical assets now, and it seems no shortage of relative bargains for them.

As for gold, do you mean physical gold or the paper stuff traded by JP Morgan and company on the Comex. This ridiculous sham of the so called free markets makes it all rather futile to contemplate. As long as there are no regulations in the gold derivatives market, as long as the gold banks can can write unlimited options and futures contracts backed by the air in the vaults, what use is it to analyze a market that is less a market than a David Copperfield scheme.

I believe we will see some strength in the US dollar against the emerging market currencies and non-commodity industrialized currencies. Only because the emerging market will prefer to keep their currencies undervalued. There will be a move into treasuries following weakness in the equity markets coming off these highs. But oil, sorry I don't see any big drops. The oil industry is in fact under capacitated to meet world demand which I believe has no limit. Having traveled the world extensively, this is just a gut feeling. Should speculators be reigned in, perhaps it could ease somewhat. But this is ever going to happen.

Afterall we have been through with shadow banking system bringing the world economy to its knees, and all the public anger and calls for change, have we seen any. Nothing, business as usual. In fact we have many of the worst culprits in the US turning themselves into bank holding companies and pulling up to the fed's back door for unlimited cashola. Let the speculating begin!

Should Mexico Stop Exporting Oil?

But hey, they are incredible innovators, perhaps they will bring us Cold Fusion SUVs


On Jun 24 11:30 AM Ron P. wrote:

> ScottEX says Mexico has the world's 3rd largest proven reserves with
> over 12billion barrels. If this is the case then the world is in
> deep trouble indeed. Obviously this is wrong. Mexico is 17 in proven
> reserves, or was as of 2005. They are probably below that today.
>
>
> At any rate Mexico's exports are declining rapidly. Their exports
> will reach zero in about 5 years regardless.

Should Mexico Stop Exporting Oil?

Sorry, you are right, I don't know where I got that number, still, 12 million barrels is a lot...


On Jun 24 11:30 AM Ron P. wrote:

> ScottEX says Mexico has the world's 3rd largest proven reserves with
> over 12billion barrels. If this is the case then the world is in
> deep trouble indeed. Obviously this is wrong. Mexico is 17 in proven
> reserves, or was as of 2005. They are probably below that today.
>
>
> At any rate Mexico's exports are declining rapidly. Their exports
> will reach zero in about 5 years regardless.

BofA / Merrill Scandal Gets Interesting, Again

" 1.5 times MLs' real value. "

Really, wow, I'd like to know what air they pulled that number out of. A black hat maybe. Look, there is no way an army of derivatives accountants could put a number on that company, even were they given the true books and records. This company has well over 2000 corporate entities, officially. The tactics they pull with their trading books and records to get around trading regulations, what few there are, is shocking, the ease with which they can manipulate the system. It adds up one giant meaningless lie on my books. Those occasional rogue traders you read about, in my view, those guys are nobodys compared to what management gets away with!

What I'd like to know is how obscure the books and records could get if people had the ability to web the maze of official books and records with offshore anonymous holding companies and so forth. Well, web of lies. Who cares. It's good for hysteria, good for greed, good for American capitalism. So who cares. I imagine the need to keep these secrets is why no changes will come to the US financial sector. It's hard to accept after what we lived through this past year. Now it seems to be going in the opposite direction. Morgan and Goldman are now bank holding companies with a back door to the fed, and no change to their ability to take unlimited risks, completely covered by the American taxpayer. But I guess since they own the fed it probably makes sense somehow. Anyways, my rant for the day. The world is controlled by liars and thieves. Not even 911 got an official investigation. Try reading David Ray Griffin on that subject just to see how little citizens in the US care about the truth. Why would we expect any truth to come out of this mess. Reaganomics, gotta love it.


On Jun 25 09:44 AM The Opinion wrote:

> The Mawwiage between BOA and ML was a big surprise to many. Mostly
> because BOA seemingly overpaid for ML by about 1.5 times MLs' real
> value. (So I have heard from a pretty good source that has many friends
> on Wall Street.) Politics over the good of shareholders and the taxpayers
> seems to be status quo no matter who is in the White House. Must
> be nice to have friends in high places. Keeps the brand and reputation
> in tact even when its really falling a part behind the scenes.