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  • The Nascent Occupy Wall Street Movement And Rise Of The American Independents  [View article]
    Mr. Iacono, I like your articles but this one gets a lot wrong.

    "OWS protesters seem to understand [things] quite well" - Not as far as I can tell. Many call for (even) more 'free' goodies from government, some are just out there getting high, and a few are literally crapping on police cars.

    "Should the OWS effort turn into a real movement that maintains political power outside of the current two-party system..." - It won't. The protestors are *already* Astroturfed, e.g., at least some organizers are paid employees of established (if left-wing or Democrat-associated) political and financial interests. Who, in turn, pay at least some of the rank-and-file to show up.

    "Chris Christie announced he won’t seek the GOP nomination and that’s a good thing." - Why? Though no one is perfect, Christie is a proven 'teller of fiscal truth.' He's only bad if you think he's still too green and there's somebody better out there... so, whom would you have in mind as better? Spill the beans.

    "the door wide open for an independent candidate" - Absolutely no way that can succeed. Ross Perot couldn't pull it off, no else can now.

    "one can remain hopeful that, not only will a viable OWS-backed independent candidate for president emerge" - The OWS-backed candidate will, in the end, be President Obama. Just watch. Only a Democrat will promise the OWS protestors the expanded Welfare State that many of them seek, and have a snowball's chance of election. (A Green might also promise it, but won't be elected.)

    "money in politics – whether it’s from big Wall Street banks or unions – is at the root of America’s problems" - No, you've inverted it. The problem isn't "money in politics". It's "politics in money" - the fact that government interference in the economy has mushroomed to the point where the government, not the marketplace, picks marketplace winners and losers. In that kind of environment, being able to influence the government is a life/death issue for companies; lobbying is a basic and essential self-defense measure. We need separation of Business and State, or to say it another way, the restoration of a true market economy complete with business failures (no bailouts). That, plus transparency in political donations, will reduce the importance of money. Money will still be in politics, as it has always been, but won't matter so very much.

    Again: We don't need to end "money in politics"... we need to end "politics in money". We need Separation of Business and State. Plus, sound(er) money. Then Main Street can and will thrive again.

    The OWS protestors, for the most part, do not get those things. Some call for greater separation of Wall Street and Washington - while also calling for multi-trillion-dollar Welfare State expansions, not realizing that the bigger government is, the more inevitably it allies with Wall Street - and denies everybody's freedom. A genuine return to personal responsibility (and freedom) under Small Government and Sound Money is the only answer which will work in the end; we might never choose to go there, but in that case, we will continue to have a world that "doesn't work". Tea Party gets that; OWS isn't even close.
    Oct 10, 2011. 08:32 PM | Likes Like |Link to Comment
  • What Will Pop The Gold Bubble - Update  [View article]
    "the 3 most likely near-term scenarios for popping the gold bubble are: 1) Deflation where real interest rates rise... 2) Supply growth... a revaluation upward of the Chinese renminbi... 3) Increasing GDP growth would result in increasing [real] interest rates..."

    And you really think any of those can happen? say, in the next year? Or without major political changes?

    1) Deflationary rise in real interest rates: not going to happen, the Fed is so "on top of" that one that they would launch more QE in plenty of time. (Which is part of why real rates are so low, driving gold up.)

    2a) Supply growth - But the mine output increases that you're talking about, 4% and 8%, are nothing. I can see an eventual secular increase from a new mining technology - say, undersea mining. Might see it in 5-10 years, doubt we will see it in one.

    2b) China RMB revaluation - That would hit gold DEMAND not supply, so you have misclassified it. Regardless, it will not happen all at once, and will not significantly hit Chinese gold demand: it would simply let Chinese have better gold prices. The only hits to private Chinese gold demand would come if the RMB were put on an effective gold standard, or if China were to loosen its foreign investment controls... and Indians and Arabs would be there, to buy whatever gold the Chinese don't.

    3) Increasing GDP growth... LOL :-) "Green tech", anybody? Solyndra?

    Here's the bottom line. After 50 years of credit inflation, the world can't support any more net borrowing and is in a deleveraging cycle. Governments are not facing up to it. Rather than letting bad loans default (and bad businesses fail), they keep trying to re-grow credit/lending via ever-lower interest rates. Which has given us zero-to-negative real rates. Which, yes, drives gold up. And that will not change until political culture changes. And astute observers will be able to see that coming.

    Gold may have some intermediate term down cycles, it might even be due right now for a year-long consolidation. But gold's secular (80s/90s) type of plunge will come when, and only when, people are so sick of money-printing (with its attendant commodity inflation) that positive real interest rates are again fashionable. Or when there is something like a 100% increase in mine supply.
    Sep 16, 2011. 10:51 AM | 2 Likes Like |Link to Comment
  • I Said QE 3 Isn't Coming And The Fed Agrees With Me  [View article]
    I think I agree with your basic outlook, but this article is self-contradicting. If it's true that the markets are going to panic this fall when QE3 appears not to be coming, then it's also true that QE3 will be coming just a few weeks after that. It's "what the Fed does" in response to market panics. The fact that Bernanke is reluctant now and faces dissenters, will be irrelevant when the panic hits. Likewise the facts that the Fed is losing control, QE3 won't work, etc. are irrelevant, as the Fed will still try.
    Sep 10, 2011. 11:59 AM | 1 Like Like |Link to Comment
  • Exports Posting Impressive Growth  [View article]
    U.S exports very often have imported components, so there is a limit to how much exports can benefit from a weak dollar. Rising import costs will hit not only U.S. consumption / living standards, but U.S. company cost structures.

    "if foreigners were to stop purchasing our debt, then they would have no alternative but to purchase more of our goods and services and/or more of our stocks and/or more of our real estate" - Indeed. That is exactly what is going to happen, when the bond bubble bursts. China will spend more on consumption, raising its standard of living. (Making commodities even more expensive to the U.S.) And China will become a major financial power within the U.S., owning much real estate and stock.
    Sep 10, 2011. 10:46 AM | Likes Like |Link to Comment
  • Which Is Safer: Junk Debt Or Municipal Bonds?  [View article]
    Ummm... why not track IEF:MUB directly, if that's your point?
    Sep 7, 2011. 08:17 PM | Likes Like |Link to Comment
  • Trading Strategy For A Turbulent September  [View article]
    Buying S&P puts? The time to do that was when the VIX was below 20.
    Sep 5, 2011. 09:03 PM | Likes Like |Link to Comment
  • Get Ready For Negative Interest Rates - Buy Bonds  [View article]
    "sell... gold reserves, oil reserves, and commodity stockpiles" - And then what? The reserves are there for a reason. Several, in fact. What happens when they're gone, yet the debt crisis remains because the U.S. has learned nothing and its over-consuming, over-borrowing, over-spending habits remain?
    Aug 30, 2011. 09:39 PM | Likes Like |Link to Comment
  • Corporate Profits Are Fantastic. What's Wrong With Equity Prices?  [View article]
    The stock market is forward-looking. Since corporate profits as a % of GDP have spiked to such an extreme high, they *will* come down. That's all the market has to look forward to.

    Also, demographics argue that the baby boomers will be net stock sellers for years to come. And yeah, Europe.

    Another way to say all this is that we are in a secular bear market (even if contains cyclical bulls within it where money is to be made), and history shows that the secular bear does not bottom until the average P/E is 8, maybe 7, and the average investor fears and despises stocks.
    Aug 28, 2011. 02:05 PM | 2 Likes Like |Link to Comment
  • Debunking Myths of a U.S. Monetary Collapse  [View article]
    Good for you! :-) (patting you on head)
    Aug 23, 2011. 01:23 PM | Likes Like |Link to Comment
  • Debunking Myths of a U.S. Monetary Collapse  [View article]
    What a delightfully ill-informed article this is! It exhibits so much of the quaint, charming "Money Illusion" of yesteryear: the idea that people work for (and are moved by) currency as such, rather than the purchasing power which they expect quantity X of currency Y to represent - which expectation is, in the real world, undermined progressively as the government in question debauches its currency. Also noteworthy is this article's total disregard for the economic role of real capital formation via real savings, which government spending and/or currency debauch also undermine. Workers and entrepreneurs are assumed to cheerfully keep making the same profit over and over as the government steals it from them each time and/or expropriates the capital from which it had been produced, whether by explicit taxation or by (again) currency debauch. It's charming to see such naive optimism.

    "We are not Greece. Or Weimar. Or Zimbabwe." - True: that is, "not yet."
    Aug 22, 2011. 09:45 PM | Likes Like |Link to Comment
  • Inflation Is Rising and Real Rates Are Falling  [View article]
    "Why is it so hard for Washington to understand that the combination of easy money and fiscal spending stimulus is not at all a prescription for growth?"

    Because a barber always thinks you need a haircut. Washington *is* Big Government. It always wants the answer that sounds like "more government, please"... regardless of the facts on the ground.
    Aug 21, 2011. 09:10 AM | Likes Like |Link to Comment
  • 2-Year Treasury Yields Fall to Record Low  [View article]
    I got it from Calafia Beach Pundit, 26 May 2011: "it does appear that profits relative to GDP are a mean-reverting series (with profits averaging 6% of GDP over time". Link here:

    It also stands to reason: when profits claim too much of the national income or for that matter too little, various signals emerge (market, cultural, etc.) which stimulate market and/or political forces to redress the situation.
    Jun 27, 2011. 01:09 AM | 1 Like Like |Link to Comment
  • 2-Year Treasury Yields Fall to Record Low  [View article]
    "How can the outlook for growth be so dismal when corporate profits are at record levels, both nominally and relative to GDP?" - Profits as a proportion of GDP is a mean-reverting series. Especially under the influence of higher commodity prices, it must head down.

    "..When retail sales are up almost 8% in the past year?" - But for how long? If it's money that was only borrowed (or printed), it's not sustainable.

    "..When private sector jobs are growing at the rate of almost 2% per year?" - That's anemic.

    "..When U.S. exports are growing at almost 20% per year?" - But what's happening to imports, i.e. to the overall current account? Or to the government deficit? The overall US debt position? Are they improving? Weimar Germany also had growth in exports.

    "..When commodity prices are only 5% off of their all-time highs?" - That's a problem. High commodity prices interfere with growth, they don't aid it.

    "..When households' net worth has increased over $9 trillion in the past two years? When financial market conditions are relatively healthy, liquidity is abundant, and the yield curve is extremely steep?" - All testimonies to Bernanke's destruction of the dollar. Because what economic fundamentals justify households being worth $9 trillion more than they were two years ago? Or the rest? We've solved none of our underlying problems from the 2008 crisis; indeed, under Obama we have made some of them much worse.
    Jun 26, 2011. 07:13 PM | 3 Likes Like |Link to Comment
  • Are Gold Miners Set to Explode?  [View article]
    But why do Hussman's 4 conditions work? Here's my stab at it:

    1) gold/XAU ratio > 5 == Miners undervalued, waiting to be noticed.
    2-3) NAPM PMI < 50, inflation rising == Stagflationary conditions, people will be wanting to flee to gold.
    4) Rising Treasury prices == still early in the stagflation cycle; real interest rates are declining-or-negative, which will support the underlying good (bullion) for some time yet.

    Can anyone strengthen the explanation?
    Jun 22, 2011. 05:21 PM | Likes Like |Link to Comment
  • Alternatives to Gold and Silver - Part 1  [View article]
    "The recent May collapse of silver..." - LOL, what a way to start the article. You think that silver still being up nearly 100% from a year ago is a "collapse"? Really? Boy, you must be used to huge returns.

    But I'm not. I bought between $8 and 18 and I am thrilled to be up 150%. Oh wait, maybe you bought at $48 and are upset that silver could drop 30% on you. I hope not, because it would make you a silver NOOB, because 30% drops are typical for silver after a big spike and have happened several times over the last 10 years in silver's continuing bull run.
    Jun 17, 2011. 10:52 PM | 1 Like Like |Link to Comment