Marc Faber thinks the final outcome of the Greek elections will be that the Greeks will decide not to leave the eurozone, and the problems will just be postponed because they won't implement the austerity measures expected of them. There will be a breakup over time, but, more than likely, it will be Germany that will become frustrated and eventually exit the eurozone themselves. (video) [View news story]
1. The goodwill doesn't have to been written down all at once. BAC can spread the liability over many years.
2. BAC franchise value has INCREASED as European depositors are cramming capital into the parent company out of fear of collapse in European banks.
3. The loans written by BAC over the last 3 years are performing spectacularly while the horrific loan book from 2004-2007 is shrinking (currenty 39% of all loans outstanding, including Countrywide legacy mortgage loans, and falling).
4. Litigation against BAC is ongoing and will continue over the course of the next decade. Bad news? Nope. While the lawyers are battling it out in the courts BAC continues to earn multiple billions each quarter in gross earnings (EBITDA). It is expected under a worst case scenario that BAC will have to pay out about 15% of NET earnings over the next few years (and that is if they lose EVERY court case which isn't very likely).
5. The stringent BASEL III rules are forcing BAC and the other banks to reserve more capital each quarter. This isn't good for profits but the capital (in excess of $25 billion for BAC) is available to backstop losses in the case of a bank run during a "worse than 2008' style crisis (and that is AFTER the FDIC backstop runs out, if that would even occur).
6. The Fed is forcing new mandatory stress tests on the banks (per Frank-Dodd legislation). It is a test for a economic crisis of 13% unemployment and 8% GDP CONTRACTION!!
Such a decline hasn't happened since 1934 and is proof that unlike our friends in Europe, the Fed is determined to force a shoring up of capital at American institutions. This means that once BAC passes this test (at current capital levels they are close and the China Construction Bank sale should put them over the top) default or even further mandatory equity raises should be out of the question for at least five years.
So, in short, at these prices BAC (and also C and MS) is almost literally being given away to investors.
By 2014, BAC is expected to earn under CURRENT less than stellar economic conditions $2.45 per share!! Even Apple or Google isn't producing that kind of cash relative to the stock price.
If you have a greater than three year time horizon then you'd have to be crazy to at least not give BAC considerable consideration!!!
Will Bernanke Monetize Municipal Debt Next? [View article]
I can easily imagine Dr. Bernanke leaning back in his large, comfy chair in his opulent office at the Federal Reserve, sipping tea and listening to Bach and thinking, "The data tells me that we ought to start purchasing municipal securities. I shall make it so."
Meanwhile, in the real world, intelligent investors will continue to hedge against Bernanke's thought processes by buying REAL ASSETS that can not be printed and hold value during times of currency debasement.
Gold Unexpectedly Moves Higher Against the Dollar [View article]
The value of gold stays steady as it has for centuries.
The value of the dollar and euro falls in relation to gold because it is being printed exponentially compared to the amount of precious metals being pulled from the ground.
Gold and silver will rise. Dollars and Euros and Yen and Sterling will fall.
I'll never understand why people can't get this basic concept.
Precious Metals: Fake Rally or Another Strong Move Up? [View article]
The President is hell bent on ramming multi-trillion dollar health-care down the throats of taxpayers who will have to pay for it with IOU dollars.
The Iraq and Afghan PermaWars are costing America many billions of IOU dollars per month.
Government waste and spending is at a all-time high.
...and the ranks of prescription drug Seniors and Pension collectors is growing like southern kudzu in the summer.
Since precious metals are a permanent store of value and the dollar is worth less and less each and every day I will happily trade my dollars for gold.
Yeah...the precious metals rally is real and ain't going away anytime soon!
Marc Faber thinks the final outcome of the Greek elections will be that the Greeks will decide not to leave the eurozone, and the problems will just be postponed because they won't implement the austerity measures expected of them. There will be a breakup over time, but, more than likely, it will be Germany that will become frustrated and eventually exit the eurozone themselves. (video) [View news story]
======================
1. Germany leaves.
2. The new Deutsche Mark skyrockets in value on day one.
3. German exports plunge.
4. Germany slips into a deep recession (which would disgust them).
No...Germany is stuck.
Austerity + Gold Standard = Greece [View article]
Not coincidentally, the world is drowning in debt and fiscal ignorance.
The more we turn our backs on common sense the more we should expect to embrace monetary desperation.
You Can't Eat Your Gold [View article]
100 ounces.
How much gold is needed to buy a typical family home in the U.S. in 2012?
100 ounces.
What a weird coincidence! ;)
U.S. Banking System In Trouble? [View article]
2. BAC franchise value has INCREASED as European depositors are cramming capital into the parent company out of fear of collapse in European banks.
3. The loans written by BAC over the last 3 years are performing spectacularly while the horrific loan book from 2004-2007 is shrinking (currenty 39% of all loans outstanding, including Countrywide legacy mortgage loans, and falling).
4. Litigation against BAC is ongoing and will continue over the course of the next decade. Bad news? Nope.
While the lawyers are battling it out in the courts BAC continues to earn multiple billions each quarter in gross earnings (EBITDA).
It is expected under a worst case scenario that BAC will have to pay out about 15% of NET earnings over the next few years (and that is if they lose EVERY court case which isn't very likely).
5. The stringent BASEL III rules are forcing BAC and the other banks to reserve more capital each quarter. This isn't good for profits but the capital (in excess of $25 billion for BAC) is available to backstop losses in the case of a bank run during a "worse than 2008' style crisis (and that is AFTER the FDIC backstop runs out, if that would even occur).
6. The Fed is forcing new mandatory stress tests on the banks (per Frank-Dodd legislation). It is a test for a economic crisis of 13% unemployment and 8% GDP CONTRACTION!!
Such a decline hasn't happened since 1934 and is proof that unlike our friends in Europe, the Fed is determined to force a shoring up of capital at American institutions. This means that once BAC passes this test (at current capital levels they are close and the China Construction Bank sale should put them over the top) default or even further mandatory equity raises should be out of the question for at least five years.
So, in short, at these prices BAC (and also C and MS) is almost literally being given away to investors.
By 2014, BAC is expected to earn under CURRENT less than stellar economic conditions $2.45 per share!! Even Apple or Google isn't producing that kind of cash relative to the stock price.
If you have a greater than three year time horizon then you'd have to be crazy to at least not give BAC considerable consideration!!!
Should You Buy Gold? [View article]
This precious metals run is both 10 years old AND getting started.
Faith in the U.S. dollar is fading every day.
Our leaders are making fiscal policy mistakes that others around the world are beginning to notice.
Will Bernanke Monetize Municipal Debt Next? [View article]
Meanwhile, in the real world, intelligent investors will continue to hedge against Bernanke's thought processes by buying REAL ASSETS that can not be printed and hold value during times of currency debasement.
Silver Gets No Respect [View article]
By this time next year, silver will be on everybody's mind.
Especially those who got in too late.
INFLATION IS HERE...YOU'VE BEEN WARNED.
Politicians Cannot Stop the Gold Bull Market [View article]
In other words, there will be no gold price collapse.
Buy gold and silver.
What Happens When the Bond Bubble Bursts? [View article]
Well, for one, I'll be able to invest in Certificates of Deposit and Money Market accounts again!
Low interest rates kill the drive to save.
Gold: Is It a Bubble or a Refuge? [View article]
Gold Unexpectedly Moves Higher Against the Dollar [View article]
The value of the dollar and euro falls in relation to gold because it is being printed exponentially compared to the amount of precious metals being pulled from the ground.
Gold and silver will rise. Dollars and Euros and Yen and Sterling will fall.
I'll never understand why people can't get this basic concept.
Federal Debt Crisis in the U.S.? Nothing to Worry About [View article]
They say laughter is good medicine. :)
By the way, if you have any gold or silver lying around I'd be glad to take it off your hands.
After all, precious metals aren't really that valuable, right?
Precious Metals: Fake Rally or Another Strong Move Up? [View article]
The Iraq and Afghan PermaWars are costing America many billions of IOU dollars per month.
Government waste and spending is at a all-time high.
...and the ranks of prescription drug Seniors and Pension collectors is growing like southern kudzu in the summer.
Since precious metals are a permanent store of value and the dollar is worth less and less each and every day I will happily trade my dollars for gold.
Yeah...the precious metals rally is real and ain't going away anytime soon!
Buy gold and silver and farmland.
Gold Investors: Stay Nervous [View article]
To pay our international creditors and the upcoming massive health "care" entitlements the government has little choice but to monetize our debt.
We cannot possibly grow our way out of this mess.
Since our only solution is Fed sponsored inflation you must move NOW to protect your family wealth.
Get out of dollars and get into precious metals ASAP.
You have been warned.
Investing In Gold: Is A Bubble Popping? [View article]