Bloomberg’s Reporting of my Remarks…
Oct. 27 (Bloomberg) — Investors worldwide are borrowing dollars to buy assets including equities and commodities, fueling “huge” bubbles that may spark another financial crisis, said New York University professor Nouriel Roubini.
“We have the mother of all carry trades,” Roubini, who predicted the banking crisis that spurred more than $1.6 trillion of asset writedowns and credit losses at financial companies worldwide since 2007, said via satellite to a conference in Cape Town, South Africa. “Everybody’s playing the same game and this game is becoming dangerous.”
The dollar has dropped 12 percent in the past year against a basket of six major currencies as the Federal Reserve, led by Chairman Ben S. Bernanke, cut interest rates to near zero in an effort to lift the U.S. economy out of its worst recession since the 1930s. Roubini said the dollar will eventually “bottom out” as the Fed raises borrowing costs and withdraws stimulus measures including purchases of government debt. That may force investors to reverse carry trades and “rush to the exit,” he said.
“The risk is that we are planting the seeds of the next financial crisis,” said Roubini, chairman of New York-based research and advisory service Roubini Global Economics. “This asset bubble is totally inconsistent with a weaker recovery of economic and financial fundamentals.”
‘Wall of Liquidity’
The MSCI World Index of advanced-nation equities has surged 65 percent from this year’s low on March 9, while the MSCI Emerging Markets Index has jumped 96 percent. The Reuters/Jefferies CRB Index of 19 commodities has added 33 percent.
Roubini said he sees a bubble in emerging-market equities and that gains in some developing-nation currencies are becoming “excessive.” The rally in oil “is not justified by the fundamentals,” he said.
An asset “bust” may not occur for another year or two as a “wall of liquidity” pushes prices higher, Roubini said. In a carry trade, investors borrow in countries with low interest rates to invest in higher-yielding assets.
Roubini said the U.S. recession seems to be over, though the economic recovery in advanced nations will be “anemic.” He’s “more optimistic” on the outlook for emerging-nation growth.
The U.S. economy probably expanded at a 3.2 percent pace from July through September after shrinking the previous four quarters, according to the median estimate of 65 economists surveyed by Bloomberg News before the Commerce Department’s report on gross domestic product due Oct. 29.
Roubini on Stocks
The economy shrank 3.8 percent in the 12 months to June, the worst performance in seven decades.
Roubini’s July 2006 warning about the financial crisis protected investors from losses in the Standard & Poor’s 500 Index’s worst annual tumble in seven decades. The U.S. equity benchmark has surged 58 percent from a 12-year low in March even as Roubini said that month the advance was a “dead-cat bounce,” that it may “fizzle” in May and warned in July that the economy is “not out of the woods.”
The S&P 500 gained was little changed at 1,067.30 as of 12:44 p.m. in New York, while the MSCI emerging markets index lost 1.8 percent. South Africa’s rand dropped 0.9 percent against the dollar as developing-nation currencies weakened. Crude oil for December delivery added 1.2 percent to $79.60 a barrel.
34 Responses to “Bloomberg’s Reporting of my Remarks…”
Reports that Prof. Roubini had ‘jumped the shark’ (Denninger) and joined the ruling class appear to have been exaggerated….
Here’s my analysis of the U.S. stock market. Not having to study anymore for CFA exam or dissertation does leave me with a lot more free time.First we have very high…http://raphaelkahan.blogspot.com/2009/10/stock-market-update.html
Is Obama Following In Bush’s Footsteps?A related topic to the government trying to control markets by making “gift” loans, subsidizing markets, etc., is governmental manipulation of the stock market. Much was said on this topic during the later Bush years, but I hear nothing these days.I haven’t been following the markets lately, but during the Bush manipulations, I noted the following characteristics of the markets:1: When the heat was on, often the emphasis was on the Dow, and the Dow would do well, while the other two major markets were losing (i.e. the Dow would get out of sync with the Nasdaq and the S&P).2. There would be a big climb in the Dow on opening (and at times in all three major markets), then a big drop, and then gross up and down instability thereafter.I know little about stocks, but I have some background in military intelligence, and the current scene smells very fishy to me.The individual stocks that would be manipulated would be those currently under attack because of bad news, and those that would produce a big bang for the buck.In addition to being outright un-American, government stock market manipulation could easily result in “insider trading” type illegality. For example, a government official might tell a big bank, “We’re going To be buying Acme tomorrow, and you might want to jump on the band wagon”. Even more dangerous would be plunge team members messaging outside interests on plunge team activities.As I said, I know little about the stock market, and general characteristics and behavior of the stock market should be supplemented by activity concerning individual stocks. But given contextual information, a knowledge of plunge team objectives and operational procedures, and a knowledge of normal trading patterns, it should be fairly easy for a stock a stock market expert to detect extensive and repetitive illegal or quasi-illegal activity.
Here’s an interesting essay regarding stock market manipulation, it will make your stomach turn:During the past few weeks we have serialized a 30,000 word story about a network of market miscreants that includes disreputable financial analysts, prominent financial journalists, associates of the Mafia, some of America’s best-known hedge fund managers, and Michael Milken, the famous criminal from the 1980s. The story focuses on the travails of Dendreon, a company with a promising treatment for prostate cancer, but it describes market machinations that have affected hundreds of other companies, and it contains a larger message about the the “deep capture” of our nation’s media and regulatory bodies.Now we publish the full, 15-chapter story as a single document….http://www.deepcapture.com/the-story-of-deep-capture-by-mark-mitchell/
I’ll re-post here a discussion in the previous thread, specifically when it comes to future market evolution and the influence of the wall of liquidity injected by the fed :PeteCA writes :“There seems to be a subtle shift occurring in the atmosphere of the market … a reduction in bullish optimisim and a return of creeping fear. Risk appears to be raising its ugly head – just in time for Halloween. If the Dow has to make a correction to allow for the outcome of reduced earnings ahead – then a significant loss must be factored in from current levels.”Michelle responds :“I think that subtle shift is a return to fundamentals, i.e. future revenues, economic rebound, etc. Excess liquidity has been mopped up and as I see it stocks are unable to propel higher. As you may remember, I sold half my equity position early last week and won’t buy back in until I see solid evidence that retail investors are willing to buy, and I don’t believe that will happen unless we have a 7-10% correction.”Chignos responds :“Why should anyone believe a “return to fundamentals” is in the cards at all when the Federal Reserve’s balance sheet is so opaque that no one knows if there are any fundamentals?”Independent contractor responds :“When you stop and think about it, what is fundamentally different between now and March – other than a ton of liquidity (much more debt), more unemployment, tanking demand from both consumers and business, lower real estate prices, and more foreclosures on the horizon, which equals more problems for bank balance sheets?The jobs picture is worse and there is no demand. Wall Street is playing a giant game of musical chairs with itself and the average inwestor is sitting on the sidelines.”So, I asked this question :”Now, who knows ? How much of that (more than $1 trillion) excess liquidity announced by the Fed n March, has already been used ? Has anybody seen a report somewhere which tries to make an estimate ? And who knows if the Fed will not make a renewed announcement of another trillion within the next twelve months ?”So here’s my conclusion about future market evolution and my 2 cents about where to “invest” now :In the current context, I wouldn’t be surprised if equities continue to appreciate by another 30% in the next 12 months, nor would I be surprised if they drop by 50% in that same period.The same is valid for bonds and commodities.In this period of maximum opacity, the best guess is to be 100% cash (a mix of dollars and foreign currencies and a bit of gold as a necessary hedge against the inherent risk of Fiat collapse).Based on fundamentals, I thought all asset classes were already overvalued in March. None of the fundamentals have changed, as the only thing that happened was a mere transfer of credit from the private to the public, which evidently doesn’t change anything fundamentally. The rest is the same, we’ve passed the Minsky point, total credit isn’t growing anymore, and how fast it will eventually deflate will only depend on how efficient and willing governments will be at slowing down the process.We’ve now entered an era of maximum financial instability : ultra shortened business cycles (one, maybe 2 years), a rapid succession of growth periods and recessions for an average growth of output which will best case be at 1% per annum, resulting in a much higher average unemployment rate (between 5 to 10% higher than with “potential” growth at 3.5% per annum). Total credit will not grow, which means that even if public debt might increase from 70% to 170% of GDP in the next decade, private debt will decrease from 300% to less than 200%. Financial companies will remain constantly instable, central banks policy constantly opaque, and a risk of currency crisis on one or several of the major currencies will remain preeminent.The evolution of the markets in the comming decade is going to look like a lightning rod. The only thing that’s certain, is that it goes tumbling DOWN (from the sky to the earth). But what path it takes to get there is anybody’s guess.A question might be, what will be the bottom, ie at which level will stocks be fairly valued in view of the comming decade of sub-par growth and financial instability ? At what level will it make sense to “invest” again in the equity market ?First question, what average PE should we expect in this context ?For the last 5 decades, with an average growth of GDP of 3.6% we have seen an average PE of 15.6As PE = 1/(expected return – growth), we get expected return = growth + 1/PE = 10%With a best case growth of GDP of 1% for the next decade, we then get a PE level of E = 1/9% = 11.1Second question, what about earnings ?For full year 2009, we have a earnings estimate of (reported earnings)Q1 $7.51 (actual)Q2 $13.51 (actual)Q3 $13.14 (as of yet 190 companies have reported for an equivallent of more than 50% of total market capitalization)Q4 ?? $10 to $15 ??2009 $44 to $49This gives us a fair value for the SP500 of between 488 and 549.Of course, that is a level in constant 2009 $.If that “bottom” is reached within 5 years from now, and that for instance cummulative inflation during those 5 years is 100%, that “bottom” level might be 1098, higher than the current level…As said before, this “financial instability” era will mean complete opacity with regards to future monetary policy and future inflation.
And to continue a set from the last thread …#######################There is a discussion up in the thread which I’ll place back here, specifically when it comes to future market evolution and the influence of the wall of liquidity injected by the fed eteCA writes :”There seems to be a subtle shift occurring in the atmosphere of the market … a reduction in bullish optimisim and a return of creeping fear. Risk appears to be raising its ugly head – just in time for Halloween. If the Dow has to make a correction to allow for the outcome of reduced earnings ahead – then a significant loss must be factored in from current levels.”Michelle responds :”I think that subtle shift is a return to fundamentals, i.e. future revenues, economic rebound, etc. Excess liquidity has been mopped up and as I see it stocks are unable to propel higher. As you may remember, I sold half my equity position early last week and won’t buy back in until I see solid evidence that retail investors are willing to buy, and I don’t believe that will happen unless we have a 7-10% correction.”Chignos responds :”Why should anyone believe a “return to fundamentals” is in the cards at all when the Federal Reserve’s balance sheet is so opaque that no one knows if there are any fundamentals?”Independent contractor responds :”When you stop and think about it, what is fundamentally different between now and March – other than a ton of liquidity (much more debt), more unemployment, tanking demand from both consumers and business, lower real estate prices, and more foreclosures on the horizon, which equals more problems for bank balance sheets?The jobs picture is worse and there is no demand. Wall Street is playing a giant game of musical chairs with itself and the average inwestor is sitting on the sidelines.”So, I asked this question :”Now, who knows ? How much of that (more than $1 trillion) excess liquidity announced by the Fed n March, has already been used ? Has anybody seen a report somewhere which tries to make an estimate ? And who knows if the Fed will not make a renewed announcement of another trillion within the next twelve months ?”So here’s my conclusion about future market evolution and my 2 cents about where to “invest” now :In the current context, I wouldn’t be surprised if equities continue to appreciate by another 30% in the next 12 months, nor would I be surprised if they drop by 50% in that same period.The same is valid for bonds and commodities.In this period of maximum opacity, the best guess is to be 100% cash (a mix of dollars and foreign currencies and a bit of gold as a necessary hedge against the inherent risk of Fiat collapse).Based on fundamentals, I thought all asset classes were already overvalued in March. None of the fundamentals have changed, as the only thing that happened was a mere transfer of credit from the private to the public, which evidently doesn’t change anything fundamentally. The rest is the same, we’ve passed the Minsky point, total credit isn’t growing anymore, and how fast will it eventually deflate will only depend on how efficient and willing governments will be at slowing down the process.We’ve now entered an era of maximum financial instability : ultra shortened business cycles (one, maybe 2 years).The evolution of the markets in the comming decade is going to look like a lightning rod. The only thing that’s certain, is that it goes tumbling DOWN from the sky to the earth). But what path it takes to get there is anybody’s guess.Reply to this comment By ChrisL on 2009-10-27 15:54:09###############There are several ways to look at this:1) Accept the reasoning of NR that we are entering a rather boring new period. In fact, the gang at PIMCO have been talking up the concept of the New Normal, and it boils down to there being relatively few investment opportunities that will return what people have been expecting over the past several years.2) Brace for the coming financial melt-down hinted at by ChrisL above. There is a lot of merit to this concept as long as the markets remain relatively free, but one could make an argument that there currently is a lot of manipulation, with even more on the horizon, designed to keep the vast majority of us complacent with what is happening even while our pockets continue to be picked in our new kleptocracy.3) Brace for something worse, as it is only a matter of time before the looted masses figure out they have been had and the whole social order in the Western World collapses, in which case it doesn’t really matter where we put our money.I forget who said they would keep their money in cash right now. I guess that works if you think the ‘cash’ will actually be worth something. You might be better served to buy a house or a piece of land, a few guns and some gold.
For the next 12 motnhs, I think cash (mixed currencies and a bit of gold) will be best, as inflation will remain very low during that period and property prices will most certainly not grow. After that, there is absolutely no visibility and one will have to keep well informed to sense when it is time to move from cash to property, a farm, or maybe canned food and whisky…
All of the above is about FEAR and Uncertainty. My take on all this is that baring a ten sigma or black swan event that life for the average person in the US will continue to be more stressful and less secure for a long time to come. I believe that debt revulsion is growing and will continue to grow as will the practice of frugality. That more and more people will work until they drop, as previous generations did. That in the coming years, people will have less and less faith in corporations and more anger towards the government.I believe that those who *lead* us know not what they do. They have/are leading the country into a period of tremendous instability and volatility. They have/are not only bleeding the life blood from the citizens but destroying the desire to work hard to get ahead. The gap between those who have and those who do not is very large and growing daily.I have said this before. They are killing the geese that have been laying the golden eggs and feasting upon their carcasses. When the feast is done, they will have little to feed upon in their or our future. Insane but innately human.
At least one has the guts to speak outGo RoubiniIn the commercial real estate business at the highest levels in NYC here is the scoop1. A jobless recovery is no recovery at all2. at some point the fed must raise rates3. then the economy will tank worse than before—the second leg of the W will be worse than the firstwdm223
Roubini has been deep captured; says he does not “believe in” gold!Roubini: I don’t believe in gold. Gold can go up for only two reasons. [One is] inflation, and we are in a world where there are massive amounts of deflation because of a glut of capacity, and demand is weak, and there’s slack in the labor markets with unemployment peeking above 10 percent in all the advanced economies. So there’s no inflation, and there’s not going to be for the time being.The only other case in which gold can go higher with deflation is if you have Armageddon, if you have another depression. But we’ve avoided that tail risk as well. So all the gold bugs who say gold is going to go to $1,500, $2,000, they’re just speaking nonsense. Without inflation, or without a depression, there’s nowhere for gold to go. Yeah, it can go above $1,000, but it can’t move up 20-30 percent unless we end up in a world of inflation or another depression. I don’t see either of those being likely for the time being. Maybe three or four years from now, yes. But not anytime soon.Nouriel Roubini, One on One: More Doom and Gloomhttp://seekingalpha.com/article/168497-nouriel-roubini-one-on-one-more-doom-and-gloomThis is an amazing echo of the government line ignores the2000 year history of constant value of gold and assumes the 90%inflation over the last decade will not continue into the future.Gold has been in a nine year bull market because Western countrieshave been relentlessness debasing their fiat currencies. Gold hasgone from $300/oz to $1,000/oz in the last decade. So even withactive Fed, IMF, & CB price intervention, gold continues to revealvast inflation in the dollar.Roubini’s so called “risky assets,” gold, oil, copper, etc., are beingpushed-up the liquidity wall; too few goods, chased by too much cash.This time however, much of the chasing is being done by the Chinese,with their $1.3 trillion dollar reserves, not just by hedge fundgamblers. Chinese buy gold, silver, oil, and other commodities, on thedips. They are building inventory which, they know they’ll need.But where is the demand in China? Is their internal market is too smallto absorb all these commodities. Is it going to end badly for them?Before you answer, think of China, Inc. positioning itself for thelong term.So, sorry Nouriel, I’m sticking with physical gold.Chinese Citizens Significantly Increasing Gold and Silver Ownershiphttp://seekingalpha.com/article/168496-chinese-citizens-significantly-increasing-gold-and-silver-ownership
There is significant misunderstanding about gold – even amongst experienced analysts and commentators.A few quick points:1) China is experiencing significant inflation and will no doubt suffer higher levels if the yuan-dollar peg is not loosened. Therefore, gold and silver are very good for Chinese and Asian investors.2) Gold has been in a bull market in dollars, pounds and euro’s. Therefore, it is attractive as a rising investment simply for this reason.3) A main driver for gold investments is NOT the expectation of US inflation. It is the expectation of serious currency risk in the global system.4) Gold may become an important component of the basis for some new Middle Eastern currencies in the future. Furthermore, an increasing number of central banks may increase their gold holdings as a stabilization step (incl. China).5) Gold and oil are acting as surrogate “hard currencies” while fiat currencies are depreciating in value.Notice that none of these arguments rely upon inflation or deflation in the USA as a basis for investing in precious metals.You want the sad truth? Here it is. As the West drowns in excessive money printing, Asian investors are acquiring more and more gold. This represents a real (and permanent) transfer of wealth from the West to the East. The attacks by Kenynesian-based economists on the gold price (via the Fed’s secret actions) are nothing short of idiotic.PeteCA
YOUR taxpayer money at work (literally)http://fourwinds10.com/siterun_data/government/fraud/us_government/news.php?q=1256673602muaahahahahahahahahatime to stand up to these kinda S*** have been long overdue
1) China is experiencing significant inflation [because of] the yuan-dollar peg.3) A main driver for gold investments is NOT the expectation of US inflation. It is the expectation of serious currency risk in the global system.Thus, USA investors are NOT buying gold? The main gold-price driver is foreign buyers other than Chinese?
http://finance.yahoo.com/news/Treasury-GMAC-in-talks-for-apf-2275623725.html?x=0&sec=topStories&pos=1&asset=&ccode=OMG, will Treasury and FED continue dumping money on GMAC. why stupid people continue buying Treasury, when Treasury continue dumping money on useless thing.
I keep going back to the massive debt pyramid. As far as I know, there has NEVER been a country and a people who have put so much of their past consumption on the credit card. On top of that we made future promises to ourselves on top of running up debts beyond our ability to service. There is no way this ends this easy.We have so much past consumption to pay off. So much income has to be devoted to repayment that there just isn’t any left for other things. And much of what we have leveraged is either used up, like fuel, clothing, medical, vacations or needs to be maintained like autos and homes. We have really dug one big hole.And as the public debt rises, there are consequences in the future with either repayment (increased taxes) or inflation. Both remove disposable income from the public. There is no way that borrowing more money by the government, spent on frivolous things like bailing out the TBTF banks, Cash for Clunkers or Down payments for Dummies will pump this dead horse back up and put it back on the race track.The down turn of the economy is affecting the states, counties and cities in a very negative way. Sustaining services has already become difficult to impossible so taxes and fees and tickets have gone up dramatically to no avail. Yet during the *good* times, the states, counties and cities not only didn’t put away a rainy day fund but they borrowed by not adequately funding the public pension systems or the educational system or any other system. So now we have expenses waaaaaaay beyond our ability to repay just to maintain what we have.The layoffs from every conceivable place are contributing to the foreclosures and lowering retail sales which add to the layoffs. There is NO way that this problem has been ameliorated with more government debt. Only shortly postponed.Dr. Roubini is right.ANDAdd to this the insanity of the still unregulated banks raising interest and penalties on credit cards.When a person or a business’ income is inadequate to service the debts incurred, this has historically been dealt with thru defaults and bankruptcies. Massive debt default can not be cured by more debt. Even at Zero Interest! Especially when the banks keep all the benefits of low interest rates and slip the knife into the consumer.We are having deflation in housing and commercial rents but the job losses are out pacing the benefits and so is the rise in commodities. The cost of living isn’t declining even though a lot of assets are and so are the quantity and quality of the jobs and income sources in the country. Nothing the government has done so far has fixed any of the above issues. In fact some of what they have done will only make the eventual outcome worse.SODEBT is going to continue to collapse! IF the government prints enough dollars to more than fill the holes made by the collapsing debt, this will cause commodity prices, like gold and copper and wheat to continue to rise or at a minimum stay high. . This will just accelerate the debt collapse. So in effect creating a race to the bottom.I guess gold could benefit from this but in the end, if it does, the entire economic world as we know it will have been destroyed, so what is it that your gold, valued in US$, will buy you?If the government slows down the printing presses, gold and most other commodities could get hit hard as the dollars in existence will be more valuable as balance sheets get decimated by the collapsing debt.The government is in the worst of all positions where nothing they do at this point will have positive effects and most everything they do will cause harm to WE the People. I just don’t see how this ends positively.If gold holds its value or goes way up we are all screwed. I sure wouldn’t want any one to know I had any if that happens.
You are assuming our government actually wants to fix things and restore the natural order as we have come to expect it over the past century, but it is currently being led by a group who have publicly said they are here to change things to a new America. Change can be good, and change can be bad if you are Jane Q Public. The only winners here are public officials, who have carved the US into a series of fiefdoms the likes of which have not been seen since the western Roman empire was divvied up among the various lords and vassals who offered up their ‘protection’ to the poor serfs who were expected to toil and provide at any case.Gold is an imperfect but useful store of portable wealth that gives the holder a chance to find greener pastures.They might slow the tide of the ‘printing presses,’ but they are in ghastly fear of deflation because it hurts the vast majority of their supporters, who are all debtors. You can be reasonably sure that the Fed and our public officials will do whatever it takes to avoid deflation, and we have already seen that as John Q Public has stopped borrowing and actually paying down his debt, the various governmental entities have stepped in with a vengeance to keep the overall level of borrowing pretty much where it has been in recent years.In short, it is not in the political class’ interest for financial sanity to be restored to the land, therefore it will never happen.We are doomed.
It is only stupid if you look at it through the lens of rational, perhaps capitalistic business. If you look at it through the lens of brute political power, it makes perfect sense.GMAC is needed to finance GM autos. GM autos are needed to keep union autoworkers employed. Union autoworkers were a major financial and electoral bloc supporting the recent Democratic party wins, so a favour is due.Brute politics will always trump rational economics.
“I guess gold could benefit from this but in the end, if it does, the entire economic world as we know it will have been destroyed, so what is it that your gold, valued in US$, will buy you?”@ economicminor on 2009-10-28 00:50:44~75% of the World is Asia and Asians are into “Gold” (and rice). Your “entire economic world” may not be as “entire” as you perceive? And no, the World will not be destroyed; life will continue where pain (much) will be felt demographically. This bifurcation is most interesting though where the financial types are just in a feeding frenzy and getting richer by the day on the constant stream of funds being taken from the “unwashed masses”. Most interesting indeed.Those with Gold and Silver bullion will survive the coming “dark age” like shift. Paper is useful for other things but as money has little permanent value particularly when the populace losses faith with its erectiled “leadership” – as is the trend nowadays.Dr. Roubini, with respect, is of a technical mind encapsulated in a nature of superficiality and therefore his perceptions are not attuned to values per se, or IOW, his approach is quantitative and not qualitative which therefore ensures that he dismisses that of which he has no intellectual comprehension.Ho hum
Australia’s Carry Trade and how “we (the unwashed taxpayers) are going to be royally screwed by “OUR” Central Bank (RBA):http://www.debtdeflation.com/blogs/http://www.theage.com.au/opinion/foreign-speculation-on-our-currency-is-a-bubble-set-to-burst-20091025-heo5.htmlhttp://www.smh.com.au/opinion/foreign-speculation-on-our-currency-is-a-bubble-set-to-burst-20091025-heo5.htmlBureaucrats just love to screw the proletariat – it just makes them feel so warm and tingly and,… politicians just love screwing everybody because it is their nature to do so.So y’all American’s out there, et al, don’t feel lonely and isolated, we are all getting screwed..And Organized (highly) Crime in Australia is alive and well – it is called the Officially Sanctioned Telecommunication Industries, and all that hangs off them.Ho hum
Yes, finally I’d approve your request!You are diplomated: The first – one day time cannot be prorogated! Don’t insist please!
Our leaders and are people just don’t get it!Buy a new car=more debtBuy a new home=more debtContinue with the credit cards=more debtIn the present crisis, the theme of the day should be “save, pay off your debt, reduce your expenses” while the insolvent institutions are allowed to fail (in an orderly manner) and replaced by smaller less risky ones which are required to operate with complete transparency, honest accounting procedures and rational risk manangement. If the consumer would just demand this from our leaders we may have a chance to avert the next crisis. Of course, I’m not holding my breath!
The common knowledge is that the US$ is going to be destroyed. That seems to be the theme here and elsewhere. The idiots in charge may in fact do that but the contrary bet would be to go against the crowd. Gold may go to $3k or $30k but if that happens crude oil, priced in US$ will go to $200 or $2000. Same with food and everything else that can rise with devalued dollars. You say rice..But unless wages/incomes of the masses also grow proportionally, then the US middle class is decimated and life as we knew it vanishes.So you own 10,000 ounces of gold, where? How do you protect it? How do you protect yourself and your family? Are you the only one on your block with food? What do you do, use it to buy a large force to protect you from your neighbors? What good is your gold IF the government destroys the dollar and our society?The answer isn’t in the gold but in putting enough pressure on the government to Cease and Desist. We need to some how put the corporate lobbying power back in its box and make the government work for We the People. For if it is ALL about MONEY, which is what corporations are all about, then MONEY is our god. If life is only about serving the MONEY GOD and GOD is all powerful, then everyone becomes a slave to it.. When MONEY is GOD, then everything else loses value and we degenerate into chaos and deprivation.At that point gold may be worth $30,000 US$ but what will that do for you? Will those in power even let you keep it or spend it? What will our society look like if that happens?People should be careful what they wish for.
Speaking of walls of liquidity…Garet Garett in “The People’s Pottage.”The fourth line was a doctrine invented and promulgated by New Deal economists—the doctrine ofperpetual unlimited public debt. What difference didit make how big the debt was? It was not at all like adebt owing to foreign creditors. It was something weowed only to ourselves. To pay it or not to pay it meant only to shift or not to shift money from one pocket to another. And anyhow, if we should really want to pay it, the problem would be solved by a rise in the national income. Many infuriated people wasted their time opposing this doctrine as an economic fallacy. But whether it was a fallacy or not would be entirely a question of the point of view. From the point of view of what the New Deal has called the fetish of solvency it was a fallacy.But from the point of view of scientific revolutionarytechnic it was perfectly sound, even orthodox. Fromthat point of view you do not regard public debt as aproblem of public finance. You think of it only inrelation to ends. A perpetual and unlimited debt represents deficit spending as a social principle. It means a progressive redistribution of wealth by will of government until there is no more fat to divide; after that comes a level rationing of the national income. It means in the end the cheapening of money and then inflation, whereby the middle class is economically murdered in its sleep. In the arsenal of revolution the perfect weapon is inflation.”Beware of New Deal 2.0!
Anybody seen this video? Fall Of The RepublicAny comments?
I’ll say it again …You are assuming our government actually wants to fix things and restore the natural order as we have come to expect it over the past century, but it is currently being led by a group who have publicly said they are here to change things to a new America. If you are John or Jane Q Public, change can be good and change can be bad. Chances are it will be bad, since the agenda is chock full of items that are designed to limit the lifestyle choices you used to make. Just think of what Cap-n-Trade alone will do to the lifestyle of the average American. Better eat that steak while it is still affordable. I prefer mine to be safe, legal, and rare.But change doesn’t happen overnight, and successful change will take at least another election cycle. That is why they want things to look as ‘normal’ as possible through 2010.The only winners here are public officials, who have carved the US into a series of fiefdoms the likes of which have not been seen since the western Roman empire was divvied up among the various lords and vassals who offered up their ‘protection’ to the poor serfs who were expected to toil and provide at any case.In short, it is not in the political class’ interest for financial sanity to be restored to the land, therefore it will never happen.We are doomed.
WOW! Scarier than any Halloween movie. Too many great points to list; a must watch and a call for vigilance to all who are sleeping.
“At that point gold may be worth $30,000 US$ but what will that do for you?”Wrong er, respectfully stated. Gold never changes its value: when the USD collapses it is done and gone; albeit finished.Gold then becomes the King of barter, silver the Queen and then potatoes for tomatoes, corn and or a chicken, for one hours toil, or for fixing a fence but in an environment where that paper, aka USD, worthless and but a fading memory, lines the outhouse walls to keep out the cold winds of winter.People respect Gold and other demand items for it can be trading on its own merit and no politician, bureaucrat, or international “expert” can attach his/her lack of integrity thereto. IOW, Gold stands alone, er, as King. Its value remains simply in terms of demand and the contract established between the Parties.Time then slows and as so, a new milieux blankets the void, out of which the ‘unexpected’ (unseen) trends emerge to cut the fabric and to weave the new future.People have had their wish and it proved untenable. Time to pay the piper. “Too Late”, she screamed.Ho hum
Too many villains in one go … they need to make it a mini-series.
This is an extension of the esteemed professor’s remarks which many here should find interesting: http://boombustblog.com/Reggie-Middleton/1188-The-Next-Step-in-the-Bank-Implosion-Cycle.html
I remember hearing that clap-trap in a civics class in 1960′s America. The indoctrination seems to have worked with my generation. I wonder if our children, who see a bleak future compared to ‘lifestyles of the rich and famous’ version that we have, will be so sanguine.
This blog seems to get a good ammount of visitors. How do you get traffic to it? It gives a nice unique spin on things. I guess having something real or substantial to post about is the most important factor.
Thanks for another great post. Where else could anybody get that type of information in such an ideal way of writing? I have a presentation next week, and I’m on the look for such information.