rogerk2

Will a 'Silver Bullet' Finally Kill the Metal Manipulators?

Remember, the "good" repositories like CEF have at least 95% of their inventory in physical form and maybe up to 5% in certificates, essentially IOU's. The "bad" repositories don't tell you how much they have in physical or in certificates, and they certainly don't let auditors in to count bars. Fort Knox hasn't had an audit since 1955. They won't even let the Congressional Bedget Office know how much physical they actually have left.

My guess is the bullion banks and central banks have maybe 5-10% in physical and 90-95% in certificate IOUs. They can make lots of money "loaning" these IOUs to to an ETF that needs to show inventory or a speculator for a short sale. Consequently, almost all of the daily volume you see in precious metals is the going price for the IOUs, not the real price of the physical metal. The banks won't give you physical delivery; you have to buy from a dealer.

What's happening is the same thing as when they switched off the gold standard. The govt confiscated privately owned gold and issued "promisory notes," basically IOUs. If the manipulation starts to unravel, the govts of the world will do the same thing again. You won't see them break the banks, just the little guys.

The New Regulatory Structure Begins to Emerge

Geithner has already stated the first rule he wants to implement - don't cap executive pay and bonuses just because they're living off taxpayer money. The fat cats want their billion dollar salaries and bonuses and perqs back, and their "man" in Treasury wants to give it to them.

So far, these guys are all just re-shuffling the chairs on the deck of the Titanic. The same "good old boy" insiders as before are at the tiller, and they're just powering further into the ice field.

We won't get a "New Deal" as long as Geithner, Summers, Barney Frank, and all the other "Old Deal" cronies are still running things. They're part of the bunch that put the country in the toilet to begin with. By the time we get past the mess they made, we'll have so much national debt, it will take 10 generations or more to pay it off.

I can't believe they want to strip powers from actual government agencies and give more regulatory authority to the Federal Reserve. The Federal Reserve Banks are private companies, chartered by the govt. to oversee interbank relations and provide liquidity when needed. Most Reserve Bank directors are bank CEOs. There is just so much incentive for them to push "the Fed" into doing whatever it takes to keep the banks afloat and protect their own jobs, is it any wonder the govt. pumped all the money in there first? (Paulson was a former banker. Geithner was a former Fed head. Summers was Treasury Sec when the easy-money easy-credit bubble got started. Pals gotta stick together in tough times.)

Cramer's Mad Money - We Lost a Good Man (5/8/09)

The problem is, Geithner and the rest of them CREATED the financial meltdown, by lax oversight and ineffective (or no) regulation. Hiring these same crooks to clean up their mess is adding insult to injury.

Cramer's job is to get eyeballs for CNBC. More people watch the show if he's pitching stocks to go up, not down. His job is to make people think "there's always a bull market out there some where" so they'll keep watching his show (and the advertisements that support CNBC).

A Stress Test Shocker: BofA Needs $35 Billion

Seems to me the whole premise of rating a bank's future health on shareholder assets is flawed. A very large percentage of the bank's current "float" shareholders are fast-money traders. If the bank's share price starts falling, there will be a quick landslide of hedge funds and other speculators heading for the exits ... and loading on shorts.

How many pension funds, college endowment funds, mutual funds, stayed long the banks all the way down? If they did, their shares are worth pennies on the dollar. How much of the new money going into banks this year so far has come from these big funds? Not a lot yet, I suspect. Most of the new money is speculation ... and it'll be gone in a flash at the first whiff of bad news.

If a bank is forced to raise $10B more shareholder assets, and $10B worth of speculators sell the news, doesn't that mean the bank has to find $20B instead? That's why the spec players will dump all at once and immediately go short.

3x ETFs: Using Leverage For Higher Returns

Regarding a series of 35% crashes (3 x 35% = 105%) -- the 3X ETF wouldn't ever reach zero. Say it's $10. A 35% loss would rebalance the price to $6.50 the next day. Another 35% loss would get rebalanced to $4.23. Another 35% loss would take it to $2.75, and so forth. Since today's price is a percentage increase or decrease based on yesterday's price, it could get close to zero but would never actually reach it.

FAS and FAZ have had lots of 30% and 40% daily moves, which is why they are so popular with daytraders and often have the highest daily volume on the exchanges. Play them with extreme caution. The professional traders have access to market-moving information before you do, they have enough money to manipulate any stock they want to, and they can trade before and after your markets open/close. If you play against them, you lose.

Cramer's Stop Trading! So Long, Stress Test (4/9/09)

How much of the banks' profits this quarter were due to the windfall from AIG using government money to pay off the banks' for their co-party swap obligations? The big "profits" the banks are claiming may just be a one-off gift from AIG and the Treasury.

Geithner, Taxed

Some questions nobody is asking Geithner:

1. You were at the helm of the financial capital of the world during the decade that led to the biggest banking system failure since the Great Depression. What did you do, or fail to do, that allowed this fiasco to occur on your watch?

2. What in your experience as Chairman of the New York Fed demonstrates your qualifications to be given trillions of taxpayer dollars to distribute fairly and openly, for the benefit of the public? How has the public benefitted from your tenure in the NY Fed?

3. The chiefs of JPM and Citi are directors of the NY Fed. Their banks got bailed out. Bear Stearns and Lehman were not represented on your Board. They were allowed to fail, and JPM and Citi were able to buy up their assets for a song. How do you convince the American taxpayer there was no insider collusion in these decisions?

4. Why did you only pay taxes for the two years that got audited, and not for the other two years that obviously had the same tax liability? Your financial advisor or tax preparer didn't know you were cheating on your taxes? Did you use the same tax preparer as Bernie Madoff?

TARP Oversight Panel's First Report: What a Crock

This whole boondoggle is bailing out people unable (through excessive greed or just plain stupidity) to manage their own money. The list includes all the big banks, GM, AIG, and Harry the Unhappy Homeowner. It seems reasonable to me that Harry should get bailed out along with all the other liars and cheaters. The alternative is that taxpayers will have to bail them out anyway, with unemployment insurance and welfare.

From the perspective of Congress and the Administration, Plan A bailouts are far better than Plan B failures and unemployment - even if Plan A has a very small chance of success. Under Plan A, Congress keeps racking in those campaign contributions. Under Plan B, unemployed people don't contribute much to political machines, and when all hope is lost, they tend to organize, riot, and throw the bastards out.

Besides, giving away other people's money is easy. Being responsible for causing, and then failing to fix, the collapse of the world's economy is a much tougher problem.

U.S. Dollar: The Trade of the Decade

Boy, you sure generated a lot of hate mail with that one!

I've been trying to think through the broad implications of your strong dollar/weak commodities arguments. By the way, UBS came out today with a similar projection of oil at $20 and gold at $300 next year.

My conclusion is that the whole question hinges on whether or not Uncle Ben, backed by The Fed and Treasury and our singing printing presses, can pull off a global refinancing deal. It has to be a global solution because everything is so interconnected.

The US has been the global growth engine for the rest of the world for decades. China, India, etc. may be developing their own internal demand structures, but their economic growth is still tied to exports, principally to the US. They need to keep our consumption engine going or their production engine shuts down. If demand/production falls, they lose jobs, and their unemployed population won't have money to buy cell phones or pay taxes to build roads and new factories.

The producing nations are already getting hit harder than anyone expected, due to falling consumption in the US and Europe. Look at Brazil, Australia, to see some of the impacts of falling oil and metals prices. These were very strong economies, now having to scramble.

The point is, none of these countries can survive for long economically without foreign capital coming in to buy their goods and services. That's how they keep their people employed and roads paved. Govts fear high unemployment more than anything else. They can control food prices and gas prices somewhat, but having too many people standing around with nothing to do foments riots and coups. Look at Obama's plan. Step 1 is to create 2.5 million jobs. Get people working, off the streets, and off welfare.

So, Uncle Ben needs a strong dollar to support all those foreign govts holding gigantic piles of dollars and treasuries, and they need to continue buying our low-yield debt so we don't go under. They buy our junk money so we can keep buying the junk products their huge populations produce. It's a delicate balancing act, on a global scale.

It's pretty clear that the dollar's fundamentals are crap. The only way you could get the dollar to look strong while you are creating billions more of them out of thin air is by concerted actions across the world. Nobody can afford to rock the boat too much because they all realize, if the dollar crashes, the US crashes, and every other economy in the world crashes right behind us.

Finally, you can't have a strong dollar if oil and gold are going up. We already know that oil futures are manipulated by traders (primarily the big banks who are market-makers), and I suspect Uncle Ben and the NY Fed are pulling some strings to keep the spot price low. How else could you get "demand" still falling when the price is cut by two-thirds? "Gee, I'm just gonna leave my big new SUV sitting in the driveway." Sure!

Gold is another case. Demand is surging, but the big depository banks (the same guys "fixing" oil prices) are hoarding the physical metal. Spot price $800 - here, have this certificate (IOU) for an ounce. You want actual gold? Go to a dealer. Of course, he'll charge you $1100 an ounce. The spot gold price is being artificially pressured, perhaps again to support the appearance of a strong dollar.

So, I think it is entirely reasonable for Uncle Ben and his local and global cohorts to be manipulating commodities, and many other aspects of daily life we take for granted, to support a strong and rising dollar. It's a very fine line they're walking, with global disaster hanging on every step. Can they pull it off? It seems to be working so far, but I still only give it about a 30% chance of success. Every new bailout, every new pile of money they throw at it, makes the fine line thinner and thinner.

The other 70% of me says it's all going to fall like Humpty Dumpty one of these days. I'm learning how to grow carrots in my back yard.

Exploring Madoff's Ponzi Scheme Will Unveil the Causes of This Global Monetary Crisis

So far, the commenters still haven't seen the really big picture...the whole world economy is a Ponzi scheme, taking money from future "investors" to pay for stuff current investors demand.

In the US, and world wide, we're underfunded for future needs in health care, education, energy, environment, and retirement, to name a few. We are spending money we don't have today, in all these areas, and expecting future generations to pay it off, in addition to saving for their own needs. Good luck.

In today's reality, everybody is running a Ponzi of some sort. Paying by credit card instead of cash. Buying a house with a 30-year mortgage. Borrowing against your house to buy stock or a new car. It's all a "buy now, pay later" deal, with huge penalties if you can't pay on time.

The world's economy is based on people spending more than they currently have, going into debt to the bankers, and spending the rest of their lives paying high interest and low principle on the maximum amount of debt possible. This is just the current version of the "indentured servitude" model the dark overlords have been using for thousands of years.

12 CNBC Pet Peeves

CNBC died when they "retired" Ron Ensana and Sue Herrerra, the last of the "serious" and knowledgeable anchors. The replacement "first string" players are all actors, not analysts or even financial reporters. They only know what's rolling by on the teleprompter. They don't even listen to what their guests are saying, as evidenced by the number of times they interrupt to ask a question the guest already answered.

The "second string" down in the pits are probably at least reasonably competent reporters, although they only get 10 seconds each to give you all the news you're really interested in. All the new "politically correct" additions are unintelligible idiots. Am I supposed to understand someone with a heavy accent who blasts out 500 words in ten seconds without even taking a breath?

I haven't been able to watch CNBC for more than a few minutes at a time in over two years. Every time I turn it on, I get pissed all over again and switch out. I don't watch Fox news; too much like CNBC. I put both of them in the same league as Oprah for providing objective news.

I pay extra to get Bloomberg on my cable. My major concern there is the ads. They play the same ones over and over. You're lucky to get two minutes of news for every two minutes of ads. It almost seems like they spend more time telling you what's coming up after the break than they did on the last news story. I usually leave the sound off and just watch the news ticker.

One thing to remember about all these channels: they're not in the news business, they're in the advertising business. That's how they make their money. It's all about getting and holding eyeballs. CNBC and Fox seem to be focused on younger, upwardly mobile trader-types whom they expect to have short attention spans and want instant gratification. Bloomberg seems to relate more to serious (older?), long term types interested in the broad picture and understanding the trends.

Quite frankly, I haven't made any hot trade money from any of these channels. The closest I've come is to short whatever Cramer pitches, since lots of sheep buy high on his recommendations and then bail when they realize they got in way too late. Cramer keeps telling them, don't buy today ... but sheep are sheep.

Just my own personal opinions.

Dividend Investing for Monthly Income

I use a similar method but reduce all purchase options to a common $100/mo net return (after any applicable taxes, currency conversion rates, etc.). Then I look at how much it costs to buy the number of shares necessary to net $100/mo and try to space them out and not have much sector or product overlap. I use the same process for quarterly dividends; I just change the formula to $300/quarter net return.

This method let's me compare a variety of dividend yields on a consistent basis, i.e., what does it take to generate $100/mo net returns from dividends?

Destruction of Wealth?

The stock market is not causing destruction of wealth. The market is a zero-sum mechanism: it simply transfers wealth from one party to another. Every loss is offset by a comparable gain to somebody else somewhere in the system.

What we are actually seeing is destruction of unrealized or paper wealth, the writedown of imputed values of stuff that aren't tangible assets. We're getting killed by failed insurance policies, not failed companies...and by the bankers and rating agencies and insurance companies that pitched this stuff like it was real.

Chuck Schumer: The New Chairman of the Board

No real change in management, just replacing one bunch of crooks with another. As usual, shareholders get the shaft.

An Outcry from Emerging and Developed Markets Alike

My view:

1) Hedge funds put a lot of money in emerging markets because of their growth potential. The funds are now withdrawing investments, taking profits where they can get them, to pay for mounting redemptions. Every market tick down now equals 10 ticks up on the margin call meter, and all that leverage has to get paid down quickly.

2) My biggest fear is that, if the coordinated response to the global crisis actually works, it will "justify" consolidation of the global financial system under one central body. That body won't be the World Bank (nobody trusts them), but it could be a global oligarchy of the few "too big to fail" banks left standing - a global shaddow government controlling worldwide commercial activity through its control of credit.

And, it'll be basically the same guys running the new global financial system as screwed up the current "national" ones. A global meltdown of the existing systems sure seems convenient, if the plan is to build a new consolidated global system for fun and profit. At least, it should give all the "new world order" conspiracy theorists something to chew on.