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Friday, July 30, 2010

Do You See Inflation Followed By Deflation and If So When?


Question: 

Do you see inflation followed by deflation and if so when?


Answer: 

That's a tough call to make. It will probably happen after foreigners stop buying Treasury bonds unless they get double digit interest rates. At that point the Government will not be able to "borrow their way into prosperity" any longer and will either have to raise taxes to draconian levels (politically unpopular) or they will begin to attack the Federal Reserve for causing all the economic problems and begin to investigate them for crimes (politically popular). 

This will be sort of like the pot calling the kettle black. The real motive will be to eliminate the Federal Reserve so that congress can begin printing money without borrowing it from anyone. That is when inflation would be likely to ignite. I would guess 3-5 years but it could be sooner. 

Just keep your eye on long term treasury interest rates and any "Righteous Indignation" towards the Fed that begins to come out of Washington. That will be a strong signal that it is time to exchange your worthless paper dollars in for anything that is real and tangible. (Gold, Silver, Real-estate, etc)

As a quick recap, during deflation you want to move your assets into cash and during inflation you want to move your assets out of cash and into commodities.

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Tuesday, July 27, 2010

The Warburgs and The Federal Reserve - Whats the Big Deal Anyway?

I was watching the Glenn Beck show (by the way I really like his show) on June 26th but I didn't remember the deflation discussion because I tuned out the speaker (actually fast forwarded the recording). In reviewing it I remembered why I had tuned it out.

I agree with him obviously on his deflationary scenario but what made me tune him out was his eulogizing of S.G. Warburg. The Warburgs are and interesting family. Paul Warburg came to the United States and became the mastermind behind tuning our money supply over to the private banking firm we now call the Federal Reserve (That's right its not a government entity) and eventually the income tax. Both of which were passed by stealth. 
(Sound familiar)

Without the Federal Reserve, there would be no national debt or income tax. Thanks Paul. So Paul was in charge of the US financial system during WWI when we were fighting the Germans. What was his brother James doing at the time? Well he was in charge of the German economy as the head of their central bank. Of course this posed no conflict of interest did it? James' policies were responsible for the hyperinflation that occurred in Germany during the Wiemar Republic, while a few years later his brother Paul was responsible for the US policies that gave us the Great Depression.

So eulogizing his Son who fled Germany and relocated to England after his dad's policies destroyed his home country so that he could do to England what his brother and uncle did to Germany and the US, to me is a bit much. After the Warburgs fled Germany, that economy was able to become the strongest in Europe. And what became of the UK, the Warburgs new home?

The UK is now broke but the good news is that the Warburgs have become uber rich.

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Saturday, July 24, 2010

Home Sales Disaster

Yes 300,000 new home sales released today is lower than I thought it would be, but it is no surprise, even as deep a drop as it was. Last month it was 500,000. That’s a 40% drop in one month! Should drive a stake in the heart of the household formations theory of a housing rebound.

With the recent downtick in the jobs market the trend here is abysmal. Relief from the gov’t unlikely with the poisoned atmosphere in Washington. Even if there was a new rebate program recent sales figures call into question how effective it would be.




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Wednesday, July 21, 2010

Legislated Deflation - Government is the Ultimate Crowd

By Bill Fox, Senior Bonds Analyst
Thu, 10 Jun 2010 13:15:00 ET


"Government is the ultimate crowd; every decision being made by committee. It is always acting on the last trend, the one that is already over. (For example, the Federal government passed securities laws to prevent the 1929-1932 crash...in 1934.)"
-- The Elliott Wave Financial Forecast, July 2007.

Politicians worldwide have historically proven themselves poor architects of fiscal policy. The Glass-Steagall Act of 1932 was a reaction to the persistent deflation following the stock market crash of 1929. The soon-followed Banking Act of 1933 was a reaction to the U.S. banking system collapse.

Sixty-six years later, the Banking Act was repealed -- in reaction to an expanding economy and financial engineered products that promised to lower systemic risks. We all know how that worked out.

Now we are promised a new set of financial reforms that will control systemic risks once and for all. Somehow, I believe that history will prove this legislation has missed the mark, as well.

U.S. banks have decided that hoarding cash is a better bet than loaning money; excess reserves at the Federal Reserve remain stubbornly high. The Fed has kept interest rate near zero, but we do not suffer from "a liquidity flood" or inflation; on the contrary, deflation is a concern. Now Europe's banks are hoarding cash, too: The European Central Bank reports that its overnight deposits are surging well above the historical average.

http://www.elliottwave.com/freeupdates/archives/2010/06/10/Legislated-Deflation.aspx

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Monday, July 19, 2010

Market Update - July 15th, 2010 - Investor X

MARKET UPDATE 
July 15th, 2010 
Investor X 

Yesterday I ended the Market Update with the following statement: 

“If aluminum is a proxy for the overall health of the economy going foreword, what is the real message being broadcast here? In my opinion, it is showing weakness in the overall economy and that will become apparent by other numbers and statistics as they are reported. Stay tuned; we may be watching a whip saw unfolding here.” 

Today some of those conflicting numbers were reported, which are indicating deflation and a slowing economy ahead: 

NEW YORK (Dow Jones)--U.S. stocks skidded Thursday after a barrage of largely negative economic data stunted enthusiasm over the recent spate of strong corporate earnings. 

NEW YORK (MarketWatch) -- U.S. stocks dropped sharply on Thursday after another economic report, this one on manufacturing in the Philadelphia region, dimmed views of the recovery.... 

Producer prices fell for a third straight month in June...U.S. stock markets headed lower Thursday morning after the Labor Department said producer prices fell 0.5 percent June, signaling a slow economy. 

BEIJING (Dow Jones)--Steel product prices in China are falling close to cost price for producers and only some of the biggest domestic steelmakers will be able to squeeze out a profit on their goods, a senior Chinese steel official said Thursday. 

The above news indicates deflation and a double dip (depression). Lowering estimates before companies report bad earnings is an old trick that has been used by Wall Street for years. It works quite well in a growing economy and a bull market. However, we are in a shrinking economy and a bear market and so my expectation is that these old tricks will not work in this environment, because there are too many statistical tracks that must be covered in order for it to work. We will see – stay tuned for more economic data in the coming weeks. 

Regards,


Investor X


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Sunday, July 18, 2010

Market Update - July 14, 2010 - Investor X


MARKET UPDATE 
July 14th, 2010 
Investor X 

The earnings season started off with a big bang yesterday as good news from Alcoa sent the markets rallying. Aluminum and copper use is so widespread and spans so many industries, especially the construction industry, many analysts view Alcoa’s performance as being indicative of the overall health of the economy. So, what was the good news reported from Alcoa? 

Alcoa cut 37,000 jobs, aluminum prices have dropped 20% in just the past three months as demand has dropped off a cliff, China has significantly reduced its purchases of aluminum and analysts estimated that Alcoa’s earnings would be 20 cents a share. Alcoa reported earnings of 13 cents per share or 35% below analyst’s expectations. As a result of this good news, Alcoa’s stock price charged ahead by nearly 4.5% at yesterdays opening. 

You say, “What is so good about that news?” Oh, I forgot to mention that the 20-cent analyst expectation was the expectation reported last month. During the past month however, analysts have been busy reducing their expectations by 40% so by the time Alcoa reported its earnings of 13 cents per share, analysts expectations were 12 cents. This beat analyst’s expectations by a penny and that is the good news that was the catalyst for yesterday’s rally in the markets. This just goes to prove that if you lower the bar far enough, any bad news can become really good news. 

The reduction of analyst expectations before earnings are reported is a game that has been played on Wall Street for years. However, a 40% reduction in one month is a tad much wouldn't you say? If aluminum is a proxy for the overall health of the economy going foreword, what is the real message being broadcast here? In my opinion, it is showing weakness in the overall economy and that will become apparent by other numbers and statistics as they are reported. Stay tuned; we may be watching a whip saw unfolding here. 

Regards, 


Investor X

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Market Update - July 7, 2010 - Investor X

MARKET UPDATE
July 7, 2010
Investor X 


The market appears to be much closer to the end of the current upward correction than it is to the beginning of the correction. In my opinion an attempt to sell out short positions at the beginning of the correction would have been problematic because, as I mentioned in my previous update, that would have necessitated being right on the sell decision and then being right again on the buy decision for such a strategy to work out. The best way to take advantage of these minor upward corrections, in my opinion, is to add to existing short positions toward the upper end of the rebounds. This requires that you be correct only one time.

I am currently taking some classes that are consuming most of my daytime hours. This will continue through most of August and therefore I will not have the time to be as active in sending market updates unless it appears that the market action warrants an explanation or when the markets get close to the end of the current decline. At that point a multi month rebound should occur prior to the major decline resuming (By the way, when you begin seeing a lot of Market Updates, that is probably indicative that a transition is underway. I typically do not write as many updates once the transition has occurred and a new trend is underway). I plan to sell my trading positions and perhaps a portion of the core holdings in my conservative portfolio and all of my short positions in my aggressive portfolio during that transition. The current downward trend should last for another month or more and erase another 1,300 to 2,000 points before it is complete. Then I would expect the next major rebound to begin. For the most part I have bought in the majority of my short positions and therefore, there is nothing to do over the course of the next month or so but patiently wait for the market to do its thing.

Regards,


Investor X




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Thursday, July 15, 2010

The Markets Are Alive With the Sound of Manipulation

23 June 2010 / Issue #50
Andrew Packer

My dad may be the one who taught me all I needed to know about finance, but my mom taught me how to gracefully handle being self-conscious. You see, like many parents, she has a knack for telling friends embarrassing stories about me.

For example, growing up she’d often tell my friends about how I watched the movie The Sound of Music every day when I was five years old. This was a bigger embarrassment when I was a teenager, but as an adult, it still throws me off guard.

Now, I really don’t want to contradict my mother... nor do I want to confirm anything embarrassing she has to say about me.

But what I AM going to say is that one particular scene from that movie has been stuck in my mind lately. Why? Well, on Monday, the market opened up huge — but gave back all the gains later in the day and closed pretty flat. A smaller version of this erratic market happened again yesterday... The day opened with a rally but fell apart, sending stocks below their 200 day moving average (the technical trigger traders refer to as bear market territory). And with such little trading volume, it’s apparent to most major players that 'quants’ (the folks who program and run computerized trading programs at major firms) are clearly in charge.


Seeing the attempts to continue manipulating the market upwards reminded me of one particular movie scene... ...only without the merriment.

It doesn’t take much to manipulate a market in this low-volume environment. And I can prove it to you. If I really wanted to, I could drive the price of Citigroup up 50%. And it would only set me back around $600. It’s currently trading at $4.00 per share, so if I put in an order to buy 100 shares at $6.00, I’m sure there would be plenty of shareholders willing to sell at that price. Of course, it’s silly to waste money like that.

But in theory, buying at that price may mislead others into thinking Citigroup is a worthy investment. Who knows, by the act of overpaying for those shares, the perception of increased value may result in that higher price sticking! And when perception is reality, it’s best to be wary of markets. That’s when the manipulation is the worst.

And it happens! Just last week, the new 'circuit breakers’ in the stock market kicked in when a few trades in the Washington Post Company (WPO) came in at more than double the prior price of the shares.


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Monday, July 12, 2010

Market Update - June 24, 2010 - Investor X


MARKET UPDATE
June 24, 2010
Investor X


The decline today should complete the current wave down. In my June 14, 2010 update I made the following statement:

“Once that high is in place, one of two patterns should follow:…

2) A down up down up down pattern (three downs) that brings the markets significantly below the low of last Thursday, which again was 10,061 on the DOW. This would indicate that the short-term advance is likely over and that the next phase of the decline is underway. 


The target for the current decline remains at about the same level, which is 10,061 on the DOW. Additionally, the current decline has exhibited three down waves, which confirms the major trend as being down. Given the stronger than expected rise before the current decline began, I do not anticipate that the current decline will bring the DOW significantly below the above cited level.

What to expect from here: The current decline should come within 100 points + or – of the above cited target (This may have already occurred this morning at the markets low of 10,185). Subsequently we should expect an upward correction that could last from a few days to possibly a week or so that will bring the DOW back up towards yesterday’s high, which was 10,367 and could rebound as high as 10,475. This should be the set up for the beginning of the next major plunge. For those of us who are short the market, it should be quite impressive. This should begin sometime towards the end of the month or perhaps the immediate days following the 4th of July weekend. Interestingly July 1st is when the states are required to fund their budgets. Many of the states are unable to do so and therefore, this might become a big item in the press following the holiday weekend.

Have a nice day,

Investor X

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Market Update - June 16, 2010 - Investor X

MARKET UPDATE
June 16, 2010
Investor X 



The DOW is getting close to the target I cited in yesterday's Market Update. The advance so far has been anemic with extremely low volume. This indicates that the bears are sitting on the sidelines for now and there is not much enthusiasm among the bulls to plow more money into this rally. So, the best way to describe the markets action so far this week is that it has been drifting slowly higher. Before I discuss my strategy to deal with this market, I would first like to take this opportunity to bring some perspective to the current situation in the markets.


What makes bear markets so difficult for most investors is the fact that upward corrections are typically slow and the topping and reversal process is time consuming. By contrast declines are powerful and fast. Wave bottoms, rather than being a slow process, tend to be a quick event. What this means is that during a bear market, in terms of time watching the markets, most of the time is spent watching the markets go up. Yet, overall the markets are declining. Another way of putting it is for the bears, the majority of the time is spent watching the markets advance and listening to the commentators explain why the markets have bottomed and why a new bull market has begun. Most investors cannot handle the cognitive dissonance this entails. It all seems too confusing and so it becomes much easier to simply follow the crowd while the crowd gets fleeced. Most investors simply do not have the tenacity necessary to stay the course in the face of the majority consensus hammering them with constant messages that they are wrong. Unfortunately, that’s the rules of the game, I didn’t make them but I do understand them.


That is why I mentioned in earlier updates that I instituted a core position of single short ETF’s that I plan to hold for a year or more and that I do not intend to trade these positions. In order to win the game this is the reality: In terms of time, one will be wrong 80% of the Time in exchange for ending up with a winning score. In my opinion, those who do not have time to follow the markets or those who find it difficult to psychologically deal with the above reality, it would be much better to buy in a core short position and then walk away from the markets for about a year. That will help to eliminate most of the confusion. Those who want to attempt to augment their returns and who enjoy playing the game can do so by adding to their core positions a few trading positions as well. The best advice I can give on this point is “To thine own self be true”. In other words make an honest assessment of your temperament and your comfort with risk and then invest accordingly.


As you know I have some trading positions in my conservative portfolio, that are double short ETF’s. I enjoy the game and so attempt to use them to augment my overall returns but I use them sparingly knowing that I am trading at a disadvantage. This is because, as I mentioned above, when a wave is topping it can be a long, slow, drawn out process but when a wave bottoms out, it is usually an event that may last for as little as a few minutes. For example on May 6th, the day of the so called flash crash, if an investor wanted to sell his short positions within 250 points of the bottom of the 1,000 point plunge, he had about 2-3 minutes to do so. If he sold just an hour or so late, the market would have advanced 650 points above the lows and he would have missed his opportunity. On the other hand, if a bull wanted to sell his stock within 250 points from when the market topped on April 26th, he could have done so anytime between April 5th and May 4th. So the bullish investor had about a month to sell out in order to have made “The right call” whereas the bear had only a few minutes. Additionally, that assumes he could have gotten his order executed at all during a period when most of the trading desks were frozen up.


If however one was not trading this market and was simply holding core positions, he would have found that three weeks later the market had dropped below the lows experienced by the flash crash. This is why for many investors it’s better to simply buy in a core position and forget trying to trade and time this market. This especially holds true for those who beat themselves up if they do not short at the exact high and sell their shorts at the exact lows. This is akin to a golfer getting depressed, upset and angry every time he doesn’t shoot a perfect 18. No one, not even Tiger Woods, expects to go out and shoot 18 consecutive holes in one. A more realistic goal is to do better than your competition and at the end of the game, when the final scores are tallied, to end up with a winning score.


This “game” we call the “Bear Market” began in late 2007 and will probably not hit its final lows for another five to seven years. So, it’s important to keep in mind that the score will not be tallied until the game is over. By then, many investors will have lost most of their assets and those who actually end up with a positive score, over that decade, will be rare. The media likes to cut the game into small pieces and act as if each small piece is a separate game and unrelated to the other pieces. I don’t know if that is because they are really that stupid or if it is because they try to keep their viewers confused and dependent upon their “sage” advice. As an example, we hear a lot these days about the risk of a “double dip recession” as if it were totally unrelated to the 2008 recession. Here’s a news flash, it’s going to happen and its not unrelated to 2008, rather it’s a continuation of the decline that began in 2007. So, don’t be surprised when you hear such things as “The economy has entered a Double Dip Recession” and “No one could have seen this coming”. Wasting time “hoping” that a “double dip recession” doesn’t occur is not a good use of ones time. Rather, knowing that the process that began in 2007 will continue until all the excess debt has been wiped clean, recognizing that their will be up phases as well as down phases during the process and actively preparing strategies to not be devastated by the declines when they do arrive is a much more valuable and productive use of ones time.


With the above perspective in mind, I’d like to discuss the current market in relation to my trading positions, which by the way, are only about 20% of the value of my core positions (which are single short ETF's being held long term and not being traded). As I mentioned above, this week’s rally has been anemic and unimpressive and therefore could stall out at any time. On the other hand, it could muster enough “Animal Spirits” to perhaps advance another couple of hundred points from current levels. Either way, it really doesn’t matter in my opinion because the probabilities are that a month from now the markets are going to be significantly lower than current levels. Therefore I am holding my double short trading positions through whatever short term advances the market may make from here. The reason is that if I sell to avoid any short term pain, if the market does advance a couple of hundred points, I will then have to buy them back in again when the rally is over. So, if I do nothing I don’t have to make any decisions but if I decide to sell, that will force me into making two decisions correctly, that is, 1) decide the best level to sell and then 2) decide the best level to buy back in. If I am wrong on either of those two decisions, I can end up much worse off than if I simply do nothing and let this short term rally do its slow and boring process of making a top.


That’s my thoughts on the current market. Have a nice day,


Regards,


Investor X


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Thursday, July 8, 2010

To All My Valued Employees - Signed "Your Boss"

Below is a rant from a small business owner that most other business owners will be able to relate to in spades. In fact its a pretty common story among business owners. A large number of the business owners that I know have shared with me that they have independently come to the same conclusion this business owner has arrived at and are currently making plans to close down their operations once the new tax hikes take effect. 

Perhaps this reveals the difference between genuine stimulus and the imaginary illusions that are now being sold to the public. I suppose we will find out after the tax hikes of 2011 and 2013 go into effect.


To All My Valued Employees 

There have been some rumblings around the office about the future of this company, and more specifically, your jobs. As you know, the economy has changed for the worse and presents many challenges. However, the good news is this: The economy doesn't pose a threat to your job. What does threaten your job however, is the changing political landscape in this country. However, let me tell you some little tidbits of fact that might help you decide what is in your best interests.

First, while it is easy to spew rhetoric that casts employers against employees, you have to understand that for every business owner there is a back-story. This back-story is often neglected and overshadowed by what you see and hear. Sure, you see me park my Mercedes outside. You've seen my big home at last years Christmas party. I'm sure; all these flashy icons of luxury conjure up some idealized thoughts about my life.

However, what you don't see is the back-story.

I started this company 28 years ago. At that time, I lived in a 300 square foot studio apartment for 3 years. My entire living apartment was converted into an office so I could put forth 100% effort into building a company, which by the way would eventually employ you.

My diet consisted of Ramen Pride noodles because every dollar I saved went back into this company. I drove a rusty Toyota Corolla with a defective transmission. I didn't have time to date. Often times, I stayed home on weekends, while my friends went out drinking and partying. In fact, I was married to my business -- hard work, discipline, and sacrifice.

Meanwhile, my friends got jobs. They worked 40 hours a week and made a modest $50K a year and spent every dime they earned. They drove flashy cars and lived in expensive homes and wore fancy designer clothes. Instead of hitting the Nordstrom's for the latest hot fashion item, I was trolling through the Goodwill store extracting any clothing item that didn't look like it was birthed in the 50's. My friends refinanced their mortgages and lived a life of luxury. I, however, did not. I put my time, my money, and my life into a business with a vision that eventually, some day, I too, would be able to afford these luxuries my friends supposedly had.

So, while you physically arrive at the office at 9am, mentally check in at about noon, and then leave at 5pm, I don't. There is no "off" button for me. When you leave the office, you are done and you have a weekend all to yourself. I unfortunately do not have that freedom. I eat, and breathe this company every minute of the day. There is no rest. There is no weekend. There is no happy hour. Every day this business is attached to my hip like a 1 year old special-needs child. You, of course, only see the fruits of that garden -- the nice house, the Mercedes, the vacations... You never realize the back-story and the sacrifices I've made.

Now, the economy is falling apart and I, the guy that made all the right decisions and saved his money, have to bail-out all the people who didn't. The people who overspent their paychecks suddenly feel entitled to the same luxuries that I earned and sacrificed the flower of my youth for.

Yes, business ownership has is benefits but the price I've paid is steep and not without wounds. Unfortunately, the cost of running this business, and employing you, is starting to eclipse the threshold of marginal benefit and let me tell you why:

I am being taxed to death and the government thinks I don't pay enough. I have state taxes, Federal taxes, Property taxes, Sales and use taxes, Payroll taxes, Workers compensation taxes, Unemployment taxes, Taxes on taxes. I have to hire a taxman to manage all these taxes and then guess what? I have to pay taxes for employing him. Government mandates and regulations and all the accounting that goes with it, now occupy most of my time.

On Oct 15th, I wrote a check to the US Treasury for $288,000 for quarterly taxes. You know what my "stimulus" check was? Zero. Nada. Zilch. The question I have is this: Who is stimulating the economy? Me, the guy who has provided 14 people good paying jobs and serves over 2,200,000 people per year with a flourishing business? Or, the single mother sitting at home pregnant with her fourth child waiting for her next welfare check? Obviously, government feels the latter is the economic stimulus of this country.

The fact is, if I deducted (Read: Stole) 50% of your paycheck you'd quit and you wouldn't work here. I mean, why should you? That's nuts. Who wants to get rewarded only 50% of their hard work? Well, I agree which is why your job is in jeopardy.

Here is what many of you don't understand ... to stimulate the economy you need to stimulate what runs the economy. Had suddenly government mandated to me that I didn't need to pay taxes, guess what? Instead of depositing that $288,000 into the Washington black-hole, I would have spent it, hired more employees, and generated substantial economic growth. My employees would have enjoyed the wealth of that tax cut in the form of promotions and better salaries. But you can forget it now.

When you have a comatose man on the verge of death, you don't defibrillate and shock his thumb thinking that will bring him back to life, do you? Or, do you defibrillate his heart? Business is at the heart of America and always has been. To restart it, you must stimulate it, not kill it.

Suddenly, the power brokers in Washington believe the poor of America are the essential drivers of the American economic engine. Nothing could be further from the truth and this is the type of change you can keep.

So where am I going with all this? It's quite simple.

If any new taxes are levied on me, or my company, my reaction will be swift and simple. I fire you. I fire your co-workers. You can then plead with the government to pay for your mortgage, your SUV, and your child's future.
Frankly, it isn't my problem any more. Then, I will close this company down, move to another country, and retire. You see, I'm done. I'm done with a country that penalizes the productive and gives to the unproductive. My motivation to work and to provide jobs will be destroyed, and with it, will be my citizenship.

If you lose your job, it won't be at the hands of the economy; it will be at the hands of a political hurricane that swept through this country, steamrolled the constitution, and will have changed its landscape forever. If that happens, you can find me sitting on a beach, retired, and with no employees to worry about....

Signed,

-Your boss-

The democracy will cease to exist when you take away from those who are willing to work and give to those who are not. - Thomas Jefferson


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Tuesday, July 6, 2010

The Third Depression

By PAUL KRUGMAN 
Published: June 27, 2010

...We are now, I fear, in the early stages of a third depression. It will probably look more like the Long Depression than the much more severe Great Depression. But the cost — to the world economy and, above all, to the millions of lives blighted by the absence of jobs — will nonetheless be immense. 

And this third depression will be primarily a failure of policy. Around the world — most recently at last weekend’s deeply discouraging G-20 meeting — governments are obsessing about inflation when the real threat is deflation, preaching the need for belt-tightening when the real problem is inadequate spending.

Neither the Long Depression of the 19th century nor the Great Depression of the 20th was an era of nonstop decline — on the contrary, both included periods when the economy grew. But these episodes of improvement were never enough to undo the damage from the initial slump, and were followed by relapses.

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Sunday, July 4, 2010

Banks are Honest - Period

According to the "Know your Customer" rules regulating banks, if an employee or firm fails to report a money laundering scheme to the FBI, they will be charged with criminal conspiracy and with being an accessory to the crime. That means jail time. I have come to the firm conclusion, by believing everything I see on TV, that the major financial institutions: 
  • Are not corrupt 
  • They don't have lackey's in Washington who cover for them and prevent them from being prosecuted 
  • Thay don't pay themselves enormous bonuses at the taxpayer's expense 
  • They don't overcharge those same taxpayers for their banking services 
  • They don't have the clout in Washington to make taxpayers pay for their bad bets in the markets. 
  • In fact I think the below story was generated by some conspiracy nut at Bloomberg who refuses to believe what the press and administration officials are telling him. 
Sincerely,


-Naive-




...They found 128 black suitcases, packed with 5.7 tons of cocaine, valued at $100 million. The stash was supposed to have been delivered from Caracas to drug traffickers in Toluca, near Mexico City, Mexican prosecutors later found. Law enforcement officials also discovered something else.


The smugglers had bought the DC-9 with laundered funds they transferred through two of the biggest banks in the U.S.: Wachovia Corp. and Bank of America Corp., Bloomberg Markets magazine reports in its August 2010 issue.


This was no isolated incident. Wachovia, it turns out, had made a habit of helping move money for Mexican drug smugglers. Wells Fargo & Co., which bought Wachovia in 2008, has admitted in court that its unit failed to monitor and report suspected money laundering by narcotics traffickers -- including the cash used to buy four planes that shipped a total of 22 tons of cocaine.


http://www.bloomberg.com/news/2010-06-29/banks-financing-mexico-s-drug-cartels-admitted-in-wells-fargo-s-u-s-deal.html


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Friday, July 2, 2010

Financial Adviser Reveals Next Hot Investment Opportunity

Anthony Fry, senior managing director at Evercore Partners, told CNBC Monday.

“I don’t want to scare anyone but I am considering investing in barbed wire and guns, things are not looking good and rates are heading higher,”

Fry sees three outcomes for the global economy and none of them makes very good reading.

“You can have lower rates and deflation, higher rates and higher inflation or the nightmare scenario of higher rates and deflating asset prices,” he said.

“If the nightmare scenario plays out as I suspect it may then the debt situation gets worse. There is currently no exit strategy and the reaction to the crisis of policy makers remains a big worry.” 

http://www.cnbc.com/id/37549417 


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