After Ben Bernanke scared the entire investing universe last week, his captains - Fed governors from the various districts - have been talking it back, generally saying that the economy isn't strong enough to support even a tapering of QE, which comes as welcome news to the money-hoarders on Wall Street, who like nothing better than access to capital at close to zero percent with which to play about in their rigged lottery.
So much for ever having a balanced, unstructured, free market that isn't completely held hostage to central planning by the Federal Reserve Bank. With this kind of thinking predominant, it doesn't take much in the way of analytical skills or market knowledge to profit in equities, since, it is, as they say, "the only game in town," complete with the promise of higher returns than bonds and - with the Fed keeping the monetary spigot wide open - limited downside risk.
That's it. We're back to the Fed and big banks running the show, letting savers get slaughtered because the market will not be allowed to do what it normally would: take a pause, maybe a 10-15% correction, and wipe out the mal-investments.
All this means is that it will take a total collapse of the global economy (or at least a large share of it) to get markets back into what would have been considered "normal" just a few years ago.
Zero percent interest rates are not normal. Central banks purchasing every kind of asset - in quantity - that isn't tied down is not normal. The past five years since the crash in September-October of 2008 have been an aberration and when economies return to sound fiscal and monetary practices, the collapse will be colossal, sparing nobody.
Be prepared. There's a good reason for gold and silver to be selling off dramatically while equity prices soar. The fed and their cohort central bankers cannot stop the deflationary spiral their own policies have created. Continuing a non-discount of money over time is, in itself, the root of deflation, yet the Fed seems content to put their own feet forward into the abyss.
In a nutshell, the problem lies with their downward pressure on gold, which has been in backwardation for months. Gold is collateral, meaning it is at the root of the monetary system. By artificially pressuring it ever lower, demand increases, though, because of hoarding, supply eventually becomes non-existent, all other currencies become devoid of value, thus creating the Pandora's-box-like situation where the price of gold is near nothing, but none can be purchased for fiat because all faith has been lost in currencies built on sand, leading, quite logically, to barter, the most primitive, yet most reliable, form of trade.
This is precisely where the current policy-driven, over-sensitized, can't-take-a-paper-loss, unbalanced global economy is headed. It could take as little as a month or as long as 20 years for the entire system to unwind, which is the conundrum currently facing the peoples of the planet. When it does, those barren, rice-paddy farmers in Southeast Asia will be better off than paper billionaires with nothing but broken promises, McMansions and zero productive skills, because the farmers, at least, will be able to raise their own food and have something to eat.
An eye for an eye, or, more aptly, a plot of land for an ounce of gold.
Nice message for an upbeat stock market day, huh? Keep buying into the system of lies, greed, avarice and contempt for one's fellow man and see how far that gets you. When the Dow is at 20,000 or 30,000 or higher and gold is only $500 an ounce, Adam Smith's invisible hand will come clapping down on all the broken rules of economics and crush the fiat currencies flat.
Dow 15,024.49, +114.35 (0.77%)
NASDAQ 3,401.86, +25.64 (0.76%)
S&P 500 1,613.20, +9.94 (0.62%)
NYSE Composite 9,143.55, +76.28 (0.84%)
NASDAQ Volume 1,643,086,125
NYSE Volume 3,722,540,750
Combined NYSE & NASDAQ Advance - Decline: 5311-1227
Combined NYSE & NASDAQ New highs - New lows: 218-60
WTI crude oil: 97.05, +1.55
Gold: 1,198.20, -31.60
Silver: 18.42, -0.162
Showing posts with label land. Show all posts
Showing posts with label land. Show all posts
Thursday, June 27, 2013
Monday, April 22, 2013
Relative Price Inflation; Getting Off the Investment Grid; Permanent Backwardation in Gold
Since today's trading was nothing but another typical "buy the dip" on low volume type of affair, after Caterpillar (CAT) posted truly ugly first quarter results and existing home sales were likewise horrible, today's post contains some random thought and ideas about the state of the economy and a link to an article by Professor Antal Fekete, one of the few honest economists in the world.
I'll take IBM for 200, Alex... er, make that 175.
I've always been skeptical of yields on dividend stocks, because, in a market-clearing event like 2001 or 2008, these stocks all lose on a per share basis. Yes, your yield rises, but at the expense of share price. At best, you break even; at worst, you lose and the dividend gets cut, a la 2008.
I don't believe the RE market is actually improving. Where I live (upstate NY), RE prices were not greatly affected by the bubble bursting, but now they're headed south, with lots of Fannie Mae foreclosures showing up after the courts were clogged with them for years (still are).
Cash, silver, land still appear as safe havens, though the recent decline in paper silver has had the opposite effect on physical. Current premiums are now ranging from 25-35%, making the actual price for physical silver closer to $30 per ounce then the post $22 and change.
Land is still a little pricey, especially if it's good farm land, but I'll still take wooded acres because you can cut and use the wood for all kinds of useful things, like buildings, fences, and heat (burns good), and once cleared, viola, farm land. I'm thinking more in terms of small organic garden plots rather than macro-farming, enough to feed a few families. Doesn't take much. The average back yard will feed three-to four families of four.
Cash is your best defense despite the scourge of inflation. If deflation occurs, cash is king, and with a huge crown. That's when you can buy assets on the cheap, which is investing 101 - buy low, sell high - ya know.
I'm still a deflationista, because I look around a lot. You can buy tomatoes at $2.49 a pound at the popular Wegmans' grocery stores, or hit the same thing for $1.59 at Price Rite or even Wally World. Don't get me started on limes, a must for my favorite Bloody Mary, at 3 for $2 at Wegmans, but 4 for a buck at Price Rite.
The Price Rite's and Aldi's are in poor 'hoods, so the sucker middle class gets raped at the "safe" stores. The dimwits in the inner cities, though, are buying mostly Cheetos and crap rather than good food with the SNAP cards, so, they'd just die off, albeit at lower prices.
My point is, get off the investment grid. Buy local (farmers markets are awesome), horde cash, and, when and if the silver mania subsides, more shiney.
A True Small Business Success Story
Professor Fekete on permanent gold backwardation:
Dow 14,567.17, +19.66 (0.14%)
NASDAQ 3,233.55, +27.49 (0.86%)
S&P 500 1,562.50, +7.25 (0.47%)
NYSE Composite 9,019.90, +25.78 (0.29%)
NASDAQ Volume 1,626,128,625
NYSE Volume 3,288,661,500
Combined NYSE & NASDAQ Advance - Decline: 3644-2759
Combined NYSE & NASDAQ New highs - New lows: 225-85
WTI crude oil: 88.76, +0.75
Gold: 1,421.20, +25.60
Silver: 23.32, +0.364
I'll take IBM for 200, Alex... er, make that 175.
I've always been skeptical of yields on dividend stocks, because, in a market-clearing event like 2001 or 2008, these stocks all lose on a per share basis. Yes, your yield rises, but at the expense of share price. At best, you break even; at worst, you lose and the dividend gets cut, a la 2008.
I don't believe the RE market is actually improving. Where I live (upstate NY), RE prices were not greatly affected by the bubble bursting, but now they're headed south, with lots of Fannie Mae foreclosures showing up after the courts were clogged with them for years (still are).
Cash, silver, land still appear as safe havens, though the recent decline in paper silver has had the opposite effect on physical. Current premiums are now ranging from 25-35%, making the actual price for physical silver closer to $30 per ounce then the post $22 and change.
Land is still a little pricey, especially if it's good farm land, but I'll still take wooded acres because you can cut and use the wood for all kinds of useful things, like buildings, fences, and heat (burns good), and once cleared, viola, farm land. I'm thinking more in terms of small organic garden plots rather than macro-farming, enough to feed a few families. Doesn't take much. The average back yard will feed three-to four families of four.
Cash is your best defense despite the scourge of inflation. If deflation occurs, cash is king, and with a huge crown. That's when you can buy assets on the cheap, which is investing 101 - buy low, sell high - ya know.
I'm still a deflationista, because I look around a lot. You can buy tomatoes at $2.49 a pound at the popular Wegmans' grocery stores, or hit the same thing for $1.59 at Price Rite or even Wally World. Don't get me started on limes, a must for my favorite Bloody Mary, at 3 for $2 at Wegmans, but 4 for a buck at Price Rite.
The Price Rite's and Aldi's are in poor 'hoods, so the sucker middle class gets raped at the "safe" stores. The dimwits in the inner cities, though, are buying mostly Cheetos and crap rather than good food with the SNAP cards, so, they'd just die off, albeit at lower prices.
My point is, get off the investment grid. Buy local (farmers markets are awesome), horde cash, and, when and if the silver mania subsides, more shiney.
A True Small Business Success Story
Start a business. Anything. Get paid in cash, if possible. Don't become another debt slave with a shitty job.
Here's my 100% true story: I think it was about 1992. I was broke, living with my brother and he wanted rent. I had $12 in pennies, my car, a little gas and a computer and printer. I took those pennies, rolled them up, took them to the bank, got $12, bought $12 worth of stuff at the dollar store - mostly cleaning supplies - printed up some cards that said "Happy House" and took my goods door-to-door in my neighborhood (in the city, a little distance from the dollar store). I sold what I had in about an hour, went back to the dollar store twice that day to re-supply and again hit the streets.
In one day - ONE DAY! - I had $45, more merchandise and people calling me with orders and questions. My biggest seller were sponges. I was able to get a big bag of them for $1, broke them up and sold them for $50 each. People would buy six or eight at a time. Also, Old Dutch Cleanser (like Comet), which I got 2 for a buck and turned around at $1 each.
In a week, I netted over $400, and then got a huge order from a guy who ran a cleaning business for about $250. I did all this in three residential blocks, barely tapping the market.
I did this for about a month, paid all my bills and took a job with a friend as a painter, which paid extremely well, and still kept getting orders over the phone. I didn't pursue the business further, but, looking back, figure I could have made serious money had I kept at it.
So, my advice, find a service which you can handle, print up some cards or use the internet. There are opportunities everywhere for self-starters. Avoid self-pity and self-defeating attitudes and people who are negative. You have worth and if you allow yourself to overcome your fear of failure, you will succeed.
(Just a side note: When I started my "Happy House" business, I was worried that people would see that I was just buying stuff at the dollar store and turning it over. Never happened. Years later, I realized that I was providing a service: bringing those cheap goods to their doors, and that was the "value added" aspect. Add value to an existing product or service and you can't miss. I know a guy who goes to the farmer's market every morning, brings home vegetables and sells them from his front yard. His day is done by 1:00 in the afternoon, and he plays a lot of golf in good weather. There are success stories everywhere - many on ebay - of people pulling themselves out of bad situations. You are no different.)
Professor Fekete on permanent gold backwardation:
Dow 14,567.17, +19.66 (0.14%)
NASDAQ 3,233.55, +27.49 (0.86%)
S&P 500 1,562.50, +7.25 (0.47%)
NYSE Composite 9,019.90, +25.78 (0.29%)
NASDAQ Volume 1,626,128,625
NYSE Volume 3,288,661,500
Combined NYSE & NASDAQ Advance - Decline: 3644-2759
Combined NYSE & NASDAQ New highs - New lows: 225-85
WTI crude oil: 88.76, +0.75
Gold: 1,421.20, +25.60
Silver: 23.32, +0.364
Tuesday, February 9, 2010
Panic Buying on Rumored Greece Debt Solution
Now that there's a rumor that Germany will bail out Greece from its long-term debt problems, it must be not only safe, but profitable, to invest in equities.
This is what substitutes for logic on Wall Street. A country of roughly 11 million, the government of Greece is having serious difficulties financing its debt burden, a fact that has not been lost on EU officials, the European Central Bank, or, your friendly, neighborhood shysters and hooligans in the investment business.
Normally, credit default of an entire nation is serious business. These days, rumors that somebody will issue more debt to "keep them afloat" is supposed to signal that better days lie ahead, not only for the beleaguered nation, but for the entire planet.
Nothing could be further from the truth and those who bought into today's rally were probably well aware of the risks involved with investing in anything at such a precarious economic juncture. Either that, or most investors are really just sheep being led to slaughter.
There's almost no way to put a positive spin on debt restructuring of a country roughly the size and population of New York; its yet another sad chapter in the all-pervasive world-wide debt bomb. Just as they have for the past year, cheery optimists claim that economies will rebound soon and all will be well. Global demand will improve with better economic conditions prevailing globally. Sadly, these prognostications of some recovery, rebound or reflation are little more then idle pipe dreams of crack-smoking Keynesian economists. More sober heads are pointing to Portugal, Italy, Greece and Spain (the PIGS as they are known) as the beginning of the end of not only the Euro as a viable currency, but for a continuation of the debt-leveraging that has led the global economy down the abyss.
Eventually, there must be losses in order to purge all the mal-investments made over the last 10-20 years - though mostly in the last 6 to 8 - and restore correct economic balance to the entire global system. These losses include everything from credit card defaults to mortgage write-downs to underfunded pension funds to failed governments. Everyone, from individuals to banks to governments and their currencies is going to take a hit, some ore severe than others. It's not very easy to do, certainly isn't pretty, but debt default will eventually restore - and much quicker, by the way - economies to reasonable levels of functionality. Until the debts are expunged, paid off, paid down, or otherwise disposed of, there can be no hope for any kind of lasting recovery and economic stability.
That's the part most "modern" economists just don't seem to get. Either that, or they know it and are just lining their cards up properly. My best guess is that the global economy is about 1/3 of the way through a process that began in August of 2007. Although it took awhile (a little over a year) before most people took notice, the de-levering had begun when real estate values began to slip. Then, by 2008, stocks took their hit (and subsequently recovered, but understand that this cyclical rally within a secular bear market has great downside risk later on), and the banks cried and wailed though gobs of taxpayer money, most of which is still owed.
By August of 2010, the world will be 3 years into the abyss and nowhere near the bottom, such bottom being measured as widespread unemployment which will dwarf what is prevalent today, homelessness, fear and, for some, starvation and death. That doomsday scenario is probably another 2-3 years away, possibly longer, depending on how long governments can hold onto whatever small shards of credibility they have before bombing and attacking each other.
Wars are the usual method by which the great powers sort out their financial differences, though these days, cyber-warfare is already well-underway as is various forms of economic ju-jitsu. You think Greece owing debt to Germany is such a good idea? Read up on some financial history prior to great wars and you'll get a little education. The aftermath of wars isn't such a rosy picture either, but we'll be getting to that - if still alive - upon the events.
For now, the best "investments" would be cash, clothing, transportation devices, canned food, arable land and tools of trades. All can be procured relatively cheaply and will serve one well in crisis conditions, for which, I believe, we are headed.
For today, investors thought stocks were hot and Greece wasn't much of a big deal. A few months and years from now, that thinking is likely to be looked back upon as foolish, unfounded optimism.
Dow 10,058.64, +150.25 (1.52%)
NASDAQ 2,150.87, +24.82 (1.17%)
S&P 500 1,070.52, +13.78 (1.30%)
NYSE Composite 6,835.16, +121.29 (1.81%)
Advancing issues finally had a day in which they exceeded decliners by a large margin, 4864-1651. There were 114 new highs as compared to 79 new lows. The divergence is still not great enough - and only one day's data - to conclude anything other than the negative bias remains in place. Volume was approaching the higher range, though despite the overall price gains, not equal to the volume on recent down days. We're likely to trend sideways to lower until a suitable catalyst provokes a movement in another direction. This market condition could persist for quite a long time as governments and media efforts seek to keep panic from occurring though future events may preclude them from doing so.
NYSE Volume 6,145,856,000
NASDAQ Volume 2,242,082,250
Oil, gold, silver and most other commodities improved. Despite today's moves, the overwhelming evidence of a widespread, nearly global deflationary environment continues to spread.
Governments and financial institutions have been proceeding at a snail's pace, putting profits before repair and political careers ahead of practical concerns. The recession isn't over, though some of the worst of it is. This second phase may last 2-4 years from here before true structural reforms - not yet even begun - start to have any affect on economies.
To get an idea of just how hard government and financial institutions and regulators are sitting on their collective hands, here's Larry Summers, White House Director of the National Economic Council and architect of the financial collapse, prattling on for 10 minutes on CNBC this morning, essentially saying nothing. Notice how his lips move but no meaningful words come out.
This is what substitutes for logic on Wall Street. A country of roughly 11 million, the government of Greece is having serious difficulties financing its debt burden, a fact that has not been lost on EU officials, the European Central Bank, or, your friendly, neighborhood shysters and hooligans in the investment business.
Normally, credit default of an entire nation is serious business. These days, rumors that somebody will issue more debt to "keep them afloat" is supposed to signal that better days lie ahead, not only for the beleaguered nation, but for the entire planet.
Nothing could be further from the truth and those who bought into today's rally were probably well aware of the risks involved with investing in anything at such a precarious economic juncture. Either that, or most investors are really just sheep being led to slaughter.
There's almost no way to put a positive spin on debt restructuring of a country roughly the size and population of New York; its yet another sad chapter in the all-pervasive world-wide debt bomb. Just as they have for the past year, cheery optimists claim that economies will rebound soon and all will be well. Global demand will improve with better economic conditions prevailing globally. Sadly, these prognostications of some recovery, rebound or reflation are little more then idle pipe dreams of crack-smoking Keynesian economists. More sober heads are pointing to Portugal, Italy, Greece and Spain (the PIGS as they are known) as the beginning of the end of not only the Euro as a viable currency, but for a continuation of the debt-leveraging that has led the global economy down the abyss.
Eventually, there must be losses in order to purge all the mal-investments made over the last 10-20 years - though mostly in the last 6 to 8 - and restore correct economic balance to the entire global system. These losses include everything from credit card defaults to mortgage write-downs to underfunded pension funds to failed governments. Everyone, from individuals to banks to governments and their currencies is going to take a hit, some ore severe than others. It's not very easy to do, certainly isn't pretty, but debt default will eventually restore - and much quicker, by the way - economies to reasonable levels of functionality. Until the debts are expunged, paid off, paid down, or otherwise disposed of, there can be no hope for any kind of lasting recovery and economic stability.
That's the part most "modern" economists just don't seem to get. Either that, or they know it and are just lining their cards up properly. My best guess is that the global economy is about 1/3 of the way through a process that began in August of 2007. Although it took awhile (a little over a year) before most people took notice, the de-levering had begun when real estate values began to slip. Then, by 2008, stocks took their hit (and subsequently recovered, but understand that this cyclical rally within a secular bear market has great downside risk later on), and the banks cried and wailed though gobs of taxpayer money, most of which is still owed.
By August of 2010, the world will be 3 years into the abyss and nowhere near the bottom, such bottom being measured as widespread unemployment which will dwarf what is prevalent today, homelessness, fear and, for some, starvation and death. That doomsday scenario is probably another 2-3 years away, possibly longer, depending on how long governments can hold onto whatever small shards of credibility they have before bombing and attacking each other.
Wars are the usual method by which the great powers sort out their financial differences, though these days, cyber-warfare is already well-underway as is various forms of economic ju-jitsu. You think Greece owing debt to Germany is such a good idea? Read up on some financial history prior to great wars and you'll get a little education. The aftermath of wars isn't such a rosy picture either, but we'll be getting to that - if still alive - upon the events.
For now, the best "investments" would be cash, clothing, transportation devices, canned food, arable land and tools of trades. All can be procured relatively cheaply and will serve one well in crisis conditions, for which, I believe, we are headed.
For today, investors thought stocks were hot and Greece wasn't much of a big deal. A few months and years from now, that thinking is likely to be looked back upon as foolish, unfounded optimism.
Dow 10,058.64, +150.25 (1.52%)
NASDAQ 2,150.87, +24.82 (1.17%)
S&P 500 1,070.52, +13.78 (1.30%)
NYSE Composite 6,835.16, +121.29 (1.81%)
Advancing issues finally had a day in which they exceeded decliners by a large margin, 4864-1651. There were 114 new highs as compared to 79 new lows. The divergence is still not great enough - and only one day's data - to conclude anything other than the negative bias remains in place. Volume was approaching the higher range, though despite the overall price gains, not equal to the volume on recent down days. We're likely to trend sideways to lower until a suitable catalyst provokes a movement in another direction. This market condition could persist for quite a long time as governments and media efforts seek to keep panic from occurring though future events may preclude them from doing so.
NYSE Volume 6,145,856,000
NASDAQ Volume 2,242,082,250
Oil, gold, silver and most other commodities improved. Despite today's moves, the overwhelming evidence of a widespread, nearly global deflationary environment continues to spread.
Governments and financial institutions have been proceeding at a snail's pace, putting profits before repair and political careers ahead of practical concerns. The recession isn't over, though some of the worst of it is. This second phase may last 2-4 years from here before true structural reforms - not yet even begun - start to have any affect on economies.
To get an idea of just how hard government and financial institutions and regulators are sitting on their collective hands, here's Larry Summers, White House Director of the National Economic Council and architect of the financial collapse, prattling on for 10 minutes on CNBC this morning, essentially saying nothing. Notice how his lips move but no meaningful words come out.
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