Whippet's Comments

Geithner, The NY Fed, And AIG's Missing Disclosure

Thu, 07 Jan 2010 13:42:52 -0500

Well put. I would change your last statement to "it is easier to lie up front and deny responsibility for so-called Unintended Consequences than to be honest with the American people."

More from FOMC minutes: Amid agreement that underlying inflation was subdued (and, of course, would be for some time), views for the next two years began to diverge - with some members thinking inflation could be too low for employment/price stability targets, and a few others worried about upside risk. The committee tabled discussion of what to do with the proceeds of maturing issues - adopting an interim approach of continuing not to reinvest them.

Wed, 06 Jan 2010 15:03:57 -0500

"inflation could be too low for ... price stability targets"
What kind of Orwellian doublespeak is that? Are they actually using Austrian definitions for inflation now?

"This is my moment to step aside": As expected, Senate Finance Committee chairman Chris Dodd confirms he won't seek re-election - which is likely to diminish bargaining power for his ambitious financial reform proposals.

Wed, 06 Jan 2010 13:02:32 -0500

A true Cincinnatus...more like a true coward. He'll go the way of Bob Rubin.

'Greater Depression' More Bullish for Gold than 1930s

Wed, 06 Jan 2010 12:57:26 -0500

Nice start to 2010, Jeff!
All of your arguments make silver an even better investment than gold, especially for the investor with limited means (if you have to shelter $100K or more in cash a proportional amount of gold is requisite; otherwise silver is sufficient.) Any flight to Gold As Money will collapse the Au:Ag ratio back toward the rational 17:1 crust ratio, and possibly even lower to the <10:1 REAL ratio due to aggregate silver destruction.

This New Decade: Era of Coal 2.0?

Wed, 06 Jan 2010 10:57:32 -0500

Right on, Windsun33. As we are blowing by the peak oil sign on the highway at breakneck speed, we are ignoring nuclear and under-utilizing our own NG in terms of dedicating infrastructure to it. The only high EROI option to fill the cheap energy needs of a growing world economy is coal. GDP growth absolutely REQUIRES cheap energy- it must be coal for the developing world. As for the developed world- well, our GDP won't be increasing much in real terms, and that's if we're lucky enough to avoid precipitous decline.

Dropping the Bomb on Healthcare

Wed, 23 Dec 2009 11:51:35 -0500

Face the facts- the bill won't be scuttled. It will destroy the supply and demand dynamics of healthcare; we will have rationing both by the queue and the grave. It will cost ten times more than the CBO rubber-stampers think. It will morph, and morph, and morph into another hideous and grotesque Marxist program.
And we should all rejoice. Because it speeds the rate of the Statists' insolvency. A reboot is the only solution.

The euro's credibility could be jeopardized if Greek bond woes spread to larger economies such as Spain, Goldman's Jim O'Neill says. Moody's dropped Greece's rating a benevolent single notch this morning, but further downgrades could trigger a cascade. For now, euro's flat at $1.4283.

Tue, 22 Dec 2009 10:10:37 -0500

Never let the truth get in the way of a sovereign credit rating.

The government needs to implement tax hikes and spending cuts by 2012 in order to keep debt at a manageable 60% of GDP by 2018, or face possible panic in financial markets, the Peterson-Pew Commission on Budget Reform said in a report. A loss in investor confidence could drive down the dollar and force interest rates higher, resulting in a sharp decrease in the country's standard of living. "We will be less free if we don't tackle this," panel says.

Tue, 15 Dec 2009 09:21:45 -0500

Tax hikes will only make the problem worse- the public sector tumor is growing at the expense of the body that feeds it.
This parasite will kill its host.

Gold isn't responding well to a rosier-than-expected jobs report, and maybe that means it hasn't been making its gains on a safety play. You might think signs of an economic pickup would only strengthen gold bugs' thesis that hyperinflation is on the way. Gold now -3.2% to $1,178.50.

Fri, 04 Dec 2009 11:29:46 -0500

This is purely the inverse of the spike in the dollar index. It could be as simple as a few large short dollar/long gold plays by some major players going badly awry, suddenly. Don't read too much into it.
Gold bugs should be pleased that this reinforces the true underlying correlations: Gold is tied to the Dollar, not the Equities markets. When the dollar continues on its inevitable slide into the abyss, this is excellent for gold- regardless of what happens elsewhere.

Is Silver Really a Better Investment than Gold?

Wed, 02 Dec 2009 13:12:26 -0500

No mention in the article of how silver bullion is in SHORTER supply than gold bullion- by a few billion ounces. Also no mention of the inelasticity of silver demand AND supply- the industrial uses are largely high-value added applications that will not find substitutions in other elements, and the bulk of silver mining is as a secondary, sidestream result of copper, zinc, and gold mining. With near-record inventories of base metals looming, and little aggregate industrial demand increase to speak of, supply could fall.

Also, the HISTORIC ratio is 15:1 to complement the crust ratio of 17:1. The author's history only goes back to 1941. As hard money demand increases, silver will only become a MORE desirable monetary metal in the past. Its biggest knock was, ironically, its abundance- well, not so true anymore...

Is a Deficit-Neutral Stimulus Possible?

Tue, 01 Dec 2009 16:11:31 -0500

Here's some deficit neutral stimulus:
1) Reduce the government payroll, and by an equal amount
2) Cut business and income taxes.

My bad- that's not deficit neutral- that's DEFICIT NEGATIVE.

Progressives don't believe in deficit neutral; it is a euphemism for TAX HIKES.

High Gold Prices: It's the Oil, Stupid

Tue, 24 Nov 2009 16:38:22 -0500

Fitz- good article, but I think you misinterpret the correlation (it is definitely a post hoc ergo procter hoc fallacy, as noted by a previous commenter.) Gold and oil are correlated- strongly at times, weakly at times. The strength of the correlation is TIGHT right now because of an easy-money flight to hard assets. Oil and gold are BOTH inelastic on their supply curve- we reached peak gold even before we reached peak oil. Thus, the gold price cannot be considered relevant to the usage or non-usage of natural gas. Increased dependence upon NG would create elasticity in petroleum demand; this would relax price volatility but would not drop prices considerably (every barrel produced would still be consumed, albeit by higher value-added demand streams).

Think of gold as Money, and the oil:gold ratio as a cousin (in fact, a more applicable one) to the oil:dollar ratio. Price.

Junior Miners: Poised for Impressive Gains

Mon, 23 Nov 2009 09:50:21 -0500

Great point- and the IRS reporting requirements for bullion buys and sells are nonexistent for the smaller investor (<30 ounces of gold or 1000 ounces of silver, no reporting.)

On Nov 22 08:11 AM PYRAMIDHUNT wrote:

> More and more funds and investors will buy silver and gold miners
> because of the heavy 28% tax on GLD and SLV every year whether you
> personally sold your holdings or not since both are trusts. It was
> only recently that the media publicized this fact.
>
> www.thestreet.com/_yah...;cm_cat=FREE&c...
> or just search "Your Gold Could Bring Hefty Tax Bill"
> l

Did China Buy Too Much Copper?

Thu, 19 Nov 2009 16:51:20 -0500

What an asinine pretense- With Trillions of FRNs, China cannot buy too much of any durable commodity. Period. End of story. There is not a market large enough for China to get rid of its dollars fast enough.

Goldman's Human Face

Thu, 19 Nov 2009 16:48:25 -0500

Right on. This is only about 0.5% of the money they STOLE FROM AMERICAN TAXPAYERS THROUGH AIG BAILOUTS AND THEIR CRONY TIM GEITHNER.

Felix, you are better than this.

On Nov 19 01:15 PM Donald Ingram wrote:

> Wow! $500 million! Of which they fully expect repayment with interest.
>
> Yet, they are expecting to dole out about $23 billion to themselves?
>
> Merry Christmas bonuses, for robbery well done!

Depressed Detroit: The Sale of the Pontiac Silverdome

Thu, 19 Nov 2009 16:23:44 -0500

The only thing uglier than the sales price and the architecture were the football games played by its home team.

Honestly, it seems like a crappy deal for the buyer. I don't see how you can make that sort os $hithole cashflow above maintenance costs in the depressed Michigan economy.

And outdoor soccer on astroturf is about the worst game imaginable.

Still the Worst Deflation in U.S. History

Thu, 19 Nov 2009 09:30:20 -0500

Wow- 55% of American workers work for firms with less than 100 employees. Why don't we just design legislation that will slap ridiculous excise and payroll taxes on these firms under the guise of "universal healthcare"? Brilliant!!

Gold's getting all the attention, but ratio charts show its sisters silver and platinum have been outperforming.

Wed, 11 Nov 2009 15:07:34 -0500

There has only been one direction for silver to move in this ratio for a long time now. Even a protracted "crisis" scenario will only see a temporary spike in the ratio - all of the fundamentals are on the side of silver in the long run. Gold is not consumed; silver is and has been at a tremendous rate since the turn of the 19th century- ironically at the same time the 15.5:1 crust ratio was violated and has never been restored.
Once the world wakes up and realizes that silver is AS SCARCE or even SCARCER than gold and has MORE, ENTRENCHED industrial applications, we'll see a ratio around 5:1.

A Brief History of Goldman Sachs Heads

Wed, 04 Nov 2009 15:51:42 -0500

Christian Scientists are like the Holy Roman Empire- which was neither Holy nor Roman nor an Empire...

On Nov 04 03:30 PM History Buff 24/7 wrote:

> If REAL Christian Scientists were in charge of the Fed, at least
> we wouldn't be spending tens of trillions of dollars trying to keep
> Wall Street intact in its present form.

Marc Faber: ‘Gold a Bargain Compared to S&P500′

Mon, 02 Nov 2009 14:19:10 -0500

No; they will raise the cost of SOME of the inputs (fuel, wages, new ventures) proportionately while others will stay the same (existing long term contracts, owned real estate). When you leverage the margin you see Very Nice returns...

On Nov 02 10:12 AM Doc 224899 wrote:

> If gold goes to $2000, what do you think happens to the dollar, or
> the yuan, or the ruble? Most scenarios that would bring gold to $2000
> are going to raise the costs of gold production proportionately.
>
>
> So here's the homework assignment: figure out what global market
> conditions raise the price of gold but raise the costs of gold production
> proportionately less, that would also permit Americans to profit
> from investing in international gold miner stocks (forget American
> gold miners - too many regulations and lawyers and environmentalist
> plaintiffs).
>
> My guess is that such a scenario would involve OPEC or China/India/Brazil/Russia
> replacing the dollar as the trading currency for commodities.

Marc Faber: ‘Gold a Bargain Compared to S&P500′

Mon, 02 Nov 2009 14:15:51 -0500

Neither does the FRN. And what good is a 5% taxable dividend yield in a stagflationary environment??? And stagflation is the best you can hope for.

On Nov 01 05:52 PM yblarrr wrote:

> You can't eat it. It doesn't get dividends.
>
> Just like stocks alot of you will be left at the top of the market
>
> wondering what happen.

After trading largely higher in the morning on a positive data dump, stocks spent the lunch hour headed straight for negative territory. At midday, the Dow -0.2% to 9,690. S&P 500 -0.3% to 1,033. Nasdaq -0.4% to 2,037. Crude +1.4%. Gold +1.7%.

Mon, 02 Nov 2009 13:17:52 -0500

Are we starting to see a long overdue de-coupling of commodities and equities? Stay tuned.

Paul Krugman says you need to read today's WSJ editorial "The Dollar Adrift" with an eye to the paper's long-term goldbugism: Focusing on currency stability over domestic recovery is a path to disaster.

Fri, 09 Oct 2009 14:56:05 -0400

Great- a second piece of evidence in the same day that the Nobel Prize committee is nothing but a bunch of tundra-dwelling Progressive brumhildes!

Yellowhoard- I thought you were putting this swine on the smoker! Did you run out of mesquite chips?

Can't wait to see the laundry list of NYT editorial-page gaffes. Just slap down another post hoc ergo procter hoc fallacy in the name of "economic science". The fashion designers, Broadway play actors and bums in need of toilet paper that make up 90% of his current readership can't pick up on that...

Despite representatives Ron Paul and Alan Grayson's entreaty to Sen. Chris Dodd to slow down Bernanke's reconfirmation as Fed chairman to determine whether he's "fit to serve," Dodd's expecting no roadblocks.

Thu, 08 Oct 2009 13:40:13 -0400

Paul wants to restore the Constitutional authority of Congress over the currency.
Grayson and Frank want to restore THEIR Constitutional authority over the currency.
Strange bedfellows, indeed.

Volcker Should Advocate VAT and Drop the Carbon Tax Recommendation

Thu, 08 Oct 2009 10:36:21 -0400

I love a VAT- it will enrage consumers even more than they already are. It's also a great whipping boy for the soon-to-be inflation apologists in Washington- "It's not inflation, it's the effects of the VAT trickling down. This is a GOOD THING for YOU, your CHILDREN, the PLANET, and the COUNTRY.

Hopefully, it will create more opportunities for a true barter trade underground. Consumers will find substitutes for manufactured goods, whether they be recycled, reused, rebuilt, or shop-made. Repairmen will have jobs again. We won't throw out our TVs because the part costs more than a new set.

Mostly, the fomenting of grassroots anger is what I'm rooting for in Washington these days. Utter rage by the serfs directed at their lords. When the government fears us, we will start to taste Liberty again (hat tip- TJ).

Beware Fortune Magazine's Gold Warning

Thu, 08 Oct 2009 10:20:45 -0400

Not to mention that the world's population has grown from 5 to 7 billion (40% increase), United States M3 has gone from $2 to $15 TRILLION (750% increase), and marketable gold supplies have FALLEN precipitously between 1980 and 2009. Central bank holdings have fallen dramatically. "Monetary" jewelry consumption has skyrocketed in the developing world.

Private gold owners are not selling. Western central banks/IMF are running out of gold to sell. The Chinese would buy more but would destroy their dollar holdings if they're too aggressive.

On Oct 08 09:43 AM Jeff Nielson wrote:

> Hi Chap08.
>
> For argument's sake, let's concede that the 1980 price was a "bubble"
> - instead of the new, REAL value for gold after the gold standard
> was abandoned.
>
> Even if we cut that price in half, gold STILL hasn't reached that
> level in REAL dollars - and its fundamentals are MUCH stronger today
> than in 1980. How much have the prices of everything else increased
> since then, 200%? 300%?
>
> Personally, I see that 1980 price as an accurate indicator of gold's
> wealth at that time - and what prompted a three-decade campaign of
> ruthless price-fixing.

New Taibbi Feud with Goldman

Fri, 02 Oct 2009 10:10:43 -0400

Always has been, always will be. McCain-Feingold, for instance. Can you imagine the obscenity that even "term limits" would lead to? The revolving doors would simply spin faster.

Nice article, John. This was my favorite line: "Taibbi maintains (in blog postings) that he believes that Goldman has deliberately attempted to confuse congressmen, conflating traditional short selling with naked short selling by selectively "cherry picking" data for their presentation."

I'm trying to figure out if it's easier for Goldman to trick the mental midgets on Capitol Hill or for the Roadrunner to trick Wile E. Coyote. It's a tough one.

On Oct 02 09:46 AM yellowhoard wrote:

> Be careful what you wish for D.
>
> Communication with congressmen is a double edged sword.
>
> The wealthy will always find ways to influence politicians.
>
> A gatekeeper on access would probably be used to silence the little
> guy.

Manufacturing: Will This Be a V-Shaped Recovery After All?

Fri, 02 Oct 2009 09:28:48 -0400

How dem numbaz lookin' now???

Macroeconomic Policy for a Stronger Recovery, Part 2

Thu, 01 Oct 2009 14:01:15 -0400

I completely agree with your comment, except for the fact that the dynamics of taxation are much different. The government spends over TWICE what it receives in taxes on a rolling monthly basis, and that was when times were good (in 2009, they're spending $4 for each dollar they collect.)

The stimulus we've had so far has been equivalent to giving Viagra to a eunuch and subsequently chastising him for not getting it on.

On Oct 01 07:43 AM markfl wrote:

Chrysler (FIATY.PK) September U.S. sales: -42.1% to 62,197, vs. estimate of -48.7%. Dodge brand -43% to 35,864 vehicles; Jeep brand -19% to 17,287; Chrysler brand -61% to 9,046. (PR)

Thu, 01 Oct 2009 13:53:49 -0400

Some new tagline suggestions:

"Chrysler- We'll treat you like our only customer."

"Chrysler- Our only waiting list is held by our creditors."