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  • The American Dream Of Renting [View article]
    If the economy is so much stronger, why does it still need $85 billion a month in Fed support? What would the economy be like if the Fed turned off that faucet? Tapering? Maybe, but it will be much less than the market anticipates.
    Aug 14 07:23 PM | 1 Like Like |Link to Comment
  • Why Tapering And Rising Rates Will Fuel A U.S. Recovery And Dollar Strength [View article]
    The argument has been made that if market interest rates rise above the rate the Fed pays to the banks to hold their reserves, the banks ill withdraw those reserves, increasing the velocity of all that printed money, fueling inflation, which in turn would drive rates even higher which would ultimately strangle any recovery.
    Aug 14 07:08 PM | Likes Like |Link to Comment
  • Imminent Danger Of Higher Taxes Ahead [View article]
    Eliminate corporate taxes altogether, eliminate the differential on the tax rate on dividends and replace it all with a national sales tax. That will stop all the shenanigans. Products and services are taxed at the end user stage which corporations can do nothing to avoid paying.
    Jul 20 06:48 PM | 1 Like Like |Link to Comment
  • Gold: Time To Short [View article]
    With higher interest rates, the short term move will be to the down side. How long that will last is anyone's guess. It will probably be a black swan event that will push it back up. In the meantime, take advantage of the lowering price and buy physical!
    Jun 21 11:12 AM | Likes Like |Link to Comment
  • Europe's Lost Generation [View article]
    The youth unemployment is not a result of austerity. It is a result of the rigid and uncompetitive labor laws. Older workers have no employment contracts and as such are very expensive or next to impossible to fire or lay off. Laws were modified when the Euro was introduced, so that new workers could be hired with fix term contracts, usually 1 or 2 years in length. When the economy slowed, those contracts were not renewed and the new younger workers were let go. In Spain, a business owner has to go before a judge and get a court order to be able to lay off any workers. The end result is youth unemployment above 50% in the southern tier EU countries hardest hit by the financial crisis.
    Since the older workers are so well protected, they have little incentive to work efficiently. This is especially true in France where an 8 hour work day is essentially a 4 hour work day when you subtract all the lunch and coffee break time. This has reduced global competitiveness in the EU. 
    Extending social benefits to unemployed youth will not solve the problem. There should be no labor guarantees for anyone. Labor laws need to be reformed, much to the chagrin of the powerful labor unions in Europe, such that business has much more flexibility in hiring and firing workers. This will make the younger workers much more competitive with older workers which in turn will make European business much more competitive in global markets. It is private business that creates jobs, not the government. Current government policy just ties the hands of business. If the labor laws are changed quickly, there will be no lost generation.
    Jun 11 08:34 PM | 1 Like Like |Link to Comment
  • Gold: Time To Short [View article]
    The same argument can be applied to fiat currency. All that time, energy, ink, and paper to print pretty pictures of dead kings, emporers and presidents. The power of faith in the value of pretty pieces of paper is very telling to the continuation of human folly and its very bad and dead ideas.

    Gold is much more useful than paper. It does not rust, degrade or disintegrate. Bury an ounce of gold and a $100 bill in the ground. Come back in 50 years and see which one is in better shape.
    Jun 11 08:15 PM | 6 Likes Like |Link to Comment
  • Gold: Time To Short [View article]
    Get your gold out of the safe deposit box. In the 1930's Roosevelt signed an executive order making it illegal for US citizens to own gold bullion. IRS agents were posted at bank vaults. Any gold held in safety deposit boxes was confiscated. History can and does repeat itself. The recent events in Cyprus should be warning enough that banks are not a safe place to store your wealth, be it cash or gold.
    Jun 11 08:03 PM | 5 Likes Like |Link to Comment
  • Will Gold's Future Price Be $2,154 Or $984? The Equation That Drives Gold's Returns [View article]
    I noted that your article focuses on GLD, i.e. paper gold. There is a growing disconnect between paper gold and physical gold. The premium on the spot price to buy physical gold is at least $25 per ounce and growing. While I might agree that the bottom might fall out of the GLD, it seems that the floor of physical gold seems to be in the $1,350 - $1,375 range. Valuation is not just a ratio model. It is largely based on cost of production. If market valuation drops below profitable cost of production, production will decline or simply cease until lack of supply and increase in demand drive market valuation equal to or greater than the cost of production. It is simple economics. It is not irrational rejection by gold bugs.
    Jun 11 07:41 PM | 1 Like Like |Link to Comment
  • U.S. Housing: Out Of The Woods [View article]
    1. Mortgage rates are being kept artificially low by the Fed. Let's see where mortgage rates go when the Fed stops its $85 billion per month in bond purchases.
    2. Real incomes are still declining and U6 unemployment is still very high. Higher taxes, food and energy costs leave less income for mortgage payments.
    3. Affordability should be calculated on cost of housing as a percentage of income net of food, energy, and taxes.
    4. Rebound in house prices is a result of
    a) hedge funds and wall street investors buying up single family homes
    b) banks sitting on foreclosures reducing the amount of available inventory for sale
    c) many home owners cannot sell because they are still under water on their mortgages further reducing the inventory of homes for sale.

    The housing market will recover when the market sets mortgage interest rates instead of the Fed, unemployment declines, and real incomes start to grow.
    Jun 10 05:54 PM | 2 Likes Like |Link to Comment
  • The U.S. Doesn't Have A Debt Crisis: Don't Let It Scare You Out Of Stocks [View article]
    Japan's decision to speed up the printing presses will provide a glimpse of what the USA can expect down the road. The USA is facing the same demographic problems. The only important difference is that the USA has a more liberal immigration policy. If interest rates on the 10 year JGB rise above 2% the government will be spending 80% of tax revenues on servicing the debt. The interest expense on the US national debt was $246 billion last year. If interest rates return to historical norms, that cost will triple. It may not bankrupt the country but would bring serious pressure on the federal budget.
    Jun 10 05:32 PM | 4 Likes Like |Link to Comment
  • Is Our Corporate Tax System Irrational? [View article]
    You fail to appreciate that corporations already paid tax in the country where the revenue was earned. Why should they be taxed again in the USA? It is no surprise that they park their cash off shore. How can the government force corporations to pay taxes on income earned abroad. The IRS dies not have international jurisdiction and no US court can force any entitiy to violate the laws of another sovereign state. Secondly, corporations are taxed on a pre dividend basis. When dividends are paid out, the shareholders receiving those dividends are taxed again. The fairest way to address the inequality in effective corporate tax rates is to eliminate the corporate tax rate altogether as well as the disparity between income tax rates and dividend and capital gains tax rates. Corporations would then be required to pay out dividends to their shareholders on a formula based on gross revenue and net income. Shareholders would have the dividends added to their income and taxed at the marginal rate. Such a tax policy would even the playing field between large multinational corporations and small domestic corporations.
    May 28 10:59 AM | 1 Like Like |Link to Comment
  • Gold Price And GLD Holdings Signal A Big Change Ahead [View article]
    What your graph fails to show is that no physical gold is being sold at spot price. The premium over spot is increasing as physical gold is becoming more scarce. I agree that GLD will continue to decline but the correlation between GLD and real gold prices is weakening.
    May 28 10:30 AM | 5 Likes Like |Link to Comment
  • How Much Will Elderly Austerity Affect Consumer Spending And The Economy [View article]
    In the western European countries, there are a few important differences.
    1) consumers / patients file far fewer malpractice suits and as such malpractice insurance is far cheaper than what doctors pay in the USA. Those costs are passed on to the patients.
    2) the price of prescription drugs is strictly controlled so that American consumers pay far higher prices than their European counterparts and as such subsidize lower prices in Europe.
    3) most hospitals do not charge huge mark ups for services provided. In the USA a hospital will charge $5 for an aspirin tablet.
    Apr 30 03:24 PM | Likes Like |Link to Comment
  • How Much Will Elderly Austerity Affect Consumer Spending And The Economy [View article]
    Not only are many elderly relying totally on social security payments but many of the remaining elderly are relying on fixed income in a ZIRP environment forcing them to dip into principal to fund their living expenses. I suspect that this is doing far more damage to the main stream economy than a chained CPI policy will do.
    Apr 28 09:41 AM | 3 Likes Like |Link to Comment
  • How Bitcoin Works And What That Says About Long-Term Bitcoin Value [View article]
    That may be true but bitcoins must still have relative value. If a car costs $10,000 today how many bitcoins does it cost? If through inflation as a result of money printing the cost rises to $12,000. How many bitcoins does it then cost? If the number of bitcoins remains constant that must mean that the fiat currency required to buy bitcoins must increase. If not, how do you ascertain the true market value of a good or service when priced in bitcoins?
    Apr 19 09:43 PM | 2 Likes Like |Link to Comment