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Perkins' 'Hoodwinked' Offers Solutions to the Economic Crisis

> So, we consume 30% of the world's resources with 5% of the population.

That's one of the great canards. First, it's only 25%. Second, in past decades it has been well deserved: it's been because we have *produced* 25-30% of the world's goods and services. Third, to the extent it might not be deserved anymore because we aren't producing that much anymore (but are instead only borrowing and spending)... well, all that has started to change with the first wave of the financial crisis, and will change even more after the next wave hits.

Perkins' 'Hoodwinked' Offers Solutions to the Economic Crisis

> what's good for the individual (saving, delayed gratification, etc) is bad for the whole.
> what's good for the whole (spending, debt, leverage) is bad for the individual.

Not sol. Saving and delayed gratification are good for both the individual and the whole. Over-spending and over-leverage are bad for both the individual and the whole.

Perkins' 'Hoodwinked' Offers Solutions to the Economic Crisis

Misstrade and Perkins sound like socialists in their video clip, not capitalists.

There is a certain kind of socialist who claims to be capitalist for credibility (perhaps even credibility with himself - since we all know, at some deep level, that socialism is just wrong). And there is a certain kind of capitalist who, out of guilt for his life, concedes the premises of socialists and begs the world to approve of how he's turned around. I'm pretty sure Perkins is the latter. Misstrade sounds like he could be either.

One lesson made apparent by 9-11 is that the U.S. has to stop supporting corrupt dictators and instead, put itself on the side of people's aspirations to a better life. I think Perkins and I can agree on that. But all the hand-wringing over the past (we were in a slow-motion world war with the Soviet Union, after all), and crypto-socialist greenspeak? Blech!

There are also some holes along with the truths, in the narratives put forth by Perkins and Misstrade. Perkins claims, for one thing, that because he's published books, "the jackals" can't afford to assassinate him. But Perkins is getting older. If "the jackals" are real and have the intentions and the powers that he alleges, they should be able to give him cancer or some other accident that no one could possibly suspect.

Long story short: I give the interview video a two-star review. Perkins was insightful and interesting in some parts, whiny and self-contradicting in some other parts. Misstrade I could have done without entirely (except for the fact that he made the interview happen).

The Dollar Approaches Critical Levels

"My theory for why a weak dollar is good for the stock market is that the dollar's weakness is a reflection of a rebound in money velocity, and that in turn is fueling an expansion of economic activity worldwide."

I have a different theory: 0% interest rates effectively punish people if they hold cash, giving them little choice but to invest in assets, commodities, etc. And that is part of the Fed's intent. (Not to push people into gold or commodities; but to push them into stocks, real estate and higher-yielding bonds, for sure.)

Also, a weak dollar makes U.S. equities look less expensive to foreigners.

On Floaters and the Yield Curve

Hey, what would be a good way for a retail investor to short long-term treasuries?

I don't understand options or floaters. I don't like TBT because it is a 2x ETF with a daily reset. TBF is a little better because at least the daily reset is only on a 1x fund; it gives a nicer inverse to TLT over time. But I still don't love it, because of the daily reset. That's the limit of my knowledge. Is there something better out there? Thanks.

3 Reasons Not to Believe In Gold's Recent Rally

This article made me chuckle.

Gold being driven by dollar devaluation - Well, duh. And long-term, that is likely to continue so it is a great reason to hold gold. I'm not looking to expand my holdings at these prices, but I definitely ain't selling either - and if I had no gold, I'd be looking to get in with partial positions, high prices or not.

Gold not hitting highs in the other currencies - Just look at your own charts. They're pointing *up*. OK, gold isn't hitting all-time highs... yet. It'll get there.

Silver and gold stocks not catching up yet - Very good point. It simply means they're underpriced, or the thing to buy instead of gold itself.

"we could very well see a Gold correction back down to $1,020 or even $1,000" - Well, duh. It's called, normal market behavior. I believe the scientific term is volatility. What makes me chuckle and even feel grand is that as recently as 6 months ago, you told somebody you worried that the gold price could go *as low as* $1,000, they'd think you were nuts. $1,000 being the new floor price for gold is a fantastic validation of the long-term-bull case for gold.

Why the IMF's Indian Gold Sale Matters

It could set off a polite/undeclared bidding war among central banks. If I were China, I'd be pissed that India beat me to the IMF gold and now I (China) have to pay $30/oz more when it's my turn with the IMF. And if I were the other emerging market / dollar-heavy central banks, I'd look at India and China trying to expand their gold holding and think, gee, I gotta get in on that.

Can You Protect Your Portfolio from Inflation?

What is "inflation"? Several definitions are possible. Moving from narrow to broad:

1) CPI growth.
2) Growth in consumer prices, taking into account that the CPI is manipulated. (hedonics)
3) Growth in consumer prices and asset prices, taking into account that people spend money on both.
4) Currency depreciation.
5) Any money supply growth that is in excess of population growth.

LIke many, you (Brouwer) would appear to be going with (1). It leads to discussions that sound strange and naive to me. Inflation is all around us. It is already happening. The recovery of commodity and equity prices, is inflation (definition 3). The falling US dollar, is inflation (definition 4). The doubling of M0, is inflation (definition 5). You really don't have to wait for the government to measure it in the CPI and pronounce it officially (definition 1). Just look around you.

As for protecting yourself: Convert your cash savings (your rainy day money) at least halfway into precious metals. For the rest, buy real assets - including the stocks of companies that will continue to generate earnings as inflation gathers steam, i.e., the stocks of good companies that produce things people will always need. Producers of food, energy, and medical and consumer products that people are known to always need and buy, even during times of high inflation.

Down on the Farm: Do Farm Stocks Have a Place in a Balanced Portfolio?

Hey, what about BWEL.PK? JG Boswell died earlier this year... is the company still good?

Japan Also Suffering from Low Savings Rate

0% interest rates punish savers. That's all you need to know. The government is doing it deliberately to inflate asset prices (as people are pushed into equities and real estate) and consumer spending.

Does This Chart Say Short Real Estate, Buy Equities?

In 1998, equities were already in bubble territory. You need a much longer view to get a more realistic picture. Try 50 years.

As for short real estate: Only good if you can short it in terms of gold or other real assets. The Fed will depreciate the dollar as necessary to ensure that nominal real estate prices don't drop much from here.

Roubini Hates Gold: Is He Wrong Again?

"I think that gold is a bubble fuelled by excess liquidity..."

Also known as... INFLATION.

I mean, in what world is Fed-driven "excess liquidity" not inflation? Oh, yeah - In the world of Phillips Curve believers, Keynesians, socialists, statists and apparently Roubini.

Record Inflows Favor Emerging Market Bond ETFs

Since PCY and EMB are dollar-denominated, and the easy gains are gone, why would one buy them? Just for the yield? They provide no protection against the Fed's ongoing USD depreciation.

Of course, the latter point may also mean that they carry little default risk (a new era where strong Emerging economies have no trouble scrounging up USD to pay off USD-denominated bonds). If PCY and EMB yield 5-6% and are safer than most people realize, I can see the appeal.

Which Is It: Inflation or Deflation?

"Past depressions have all proved to be deflationary, even though most market participants probably would have preferred otherwise."

But remember that in the Great Depression, the dollar was not a fiat currency. It was a fixed amount of gold. Roosevelt reduced that amount (from approx 1/20 oz. to 1/35), as a way to fight nominal-price deflation. It worked, sort of. Nominal prices stabilized. But, measured as actual amounts of gold, they were much lower. We're looking at something similar today, except that now the dollar is a fiat currency. The government could mail $1 million to every citizen, if they wanted to. So today, even as prices continue to deflate in real terms (measured e.g. as quantities of gold), they can rise (inflate) in nominal terms, and they eventually will. In certain ways or certain markets, they already are, and it just needs more time to show up in the CPI. (Again, the Austrian view of inflation.)

Which Is It: Inflation or Deflation?

"My question is, what outcome of QE reversal is consistent with 3.5 % T bonds and $1000+ gold."

The bond market does seem remarkably calm about the Fed's bond purchases, which I think are well over $1 trillion in the past year. (The $300+ billion of announced Treasury purchases, plus much more in other purchases.)

Market participants must really think that the Fed will withdraw the QE/stimulus, and with no ill effects. I don't. Reversing QE would mean the Fed sells $1 trillion of bonds, popping the bubble and re-igniting the financial crisis. Maybe participants are in denial, or just thinking short-term, enjoying the good-ish times while they last. There's talk of hedge funds are buying both gold and bonds, figuring that one has to crash and the other will then hedge it.