[8:50am ET] [From the Week In Review} ...it came to me by the end of this week that President Obama's honeymoon is over. It would be easy to make that statement following the results of the vote on the economic stimulus bill that were 100% divided in Congress along Party lines. But, it's more serious than that.
I saw great discord in the responses of the nation's top eight bank CEO's. I saw it in the blank and tired expression of the new Treasury Secretary. But mostly I saw it when, during what many regard as a superlative performance in his first press conference, Obama would not talk about the financial system rescue preparations, but said instead, “Wait to hear that from Tim; he'll be terrific”. That's not what I wanted to hear, and I don't think it's what others needed to hear from their General.
The fact is, Tim wasn't terrific, and the equity market sold off almost 5 percent immediately. The fact is that Obama made precisely the same mistake that George Bush did when he appointed Henry Paulson to that role and referred to him as a star. The fact is that Paulson and Geithner and all those on the current A-Team like Summers, Shapiro, Romer, Volker, Stein, etc, are either central bankers, bankers or academic economists, who are not likely to change. None of them will be “terrific”. They belong to a network. Moreover, Obama will bend over backwards to show he is a “team player,” which is exactly what I don't want to see.
America is in deep trouble and the last thing it needs is traditional thinking from within the same networks that got it there in the first place. Yes, we will cling to the memories – it's all comforting, isn't it? But we need to break the mold, and to explore new ideas and courses of action. I had been hoping Obama would be that person.
In that critical one hour first press conference, I wanted Obama to say that the country needs a new securities act and financial services industry regulations as well as a regulatory system that will be removed from politics to the extent possible. That would have shown me the man is a true leader. All I see is the same old, same old. Same kowtowing to bankers, same advisors (this A-Team could have been Bill Clinton's), same legislators (Pelosi, Reid and Frank) in control, same bipartisan voting in Congress, same pork... So, as I see it: no change; no honeymoon.
It's back to our jobs as traders, fighting the Humungous Bank & Broker proprietary traders who use the public's capital to trade against us – all of us. We are not “Americans first, bankers second” as the Wells Fargo idiot CEO exclaimed in his testimony. No, I won't take that crapola. That's an insult. We are not on the same team; it's them – HB&B CEOs, and their army of slaves, against the rest of us, the 99% of society who are being dictated to.
I see in Obama much of what I saw in the 1960's in Canada's Pierre Elliot Trudeau. Trudeau had the brilliance of mind and charisma we see today in Obama. But overwhelming adoration for Trudeau in Canada at the beginning turned sour later when he was discovered to be so lacking in fiscal responsibility. It's easy to give the people what they want; bankers will always go along with it because they are the ones who hold the debts. In debt, the public becomes a banker's chattel.
http://en.wikipedia.org/wiki/Pierre_Trudeau
I do agree that massive government spending is required, and that money can only come from debts to be repaid in the future, largely by our children and their children. But, why is Obama letting HB&B off the hook? These bankers caused the financial and economic crisis in the first place, so why should they benefit now? I'll tell you why: it's because they can. They own Obama, just like the banks owned Trudeau.
Fool me once, with Trudeau, shame on him; but fool me now with Obama, shame on me. So, for me the honeymoon's over. I haven't seen a shred of evidence yet that he's up to the task of saving America.
I now have to put my faith in Pelosi, Reid and Frank – God help us – and say, have your pork, but at least bring us a new securities act and regulations to replace those of 1933 and 1934. Do the right thing and destroy the Federal Reserve Bank's credit monopoly; make the country understand where money comes from and that debts have to be repaid, necessitating balanced budgets and fiscal responsibility. Yes, I am forced to put my hopes in Congress because I think America has just elected a General who will soon be without an army; a leader in his own mind, able to do little if anything that's really important to the country other than maybe look good.
Focusing in on the trading, I do admit it's been tough to manage risk. More to the point, it's been costly. The market drops -1% and we're flat. A couple days before that when the market goes down -5%, we're down -1%. Yes, we're winning the race, but we're losing, and I hate to lose. We're not actually losing over the course of a month, but I think you understand where I'm coming from.
It's not easy being a trader today because there is also a risk of not being positioned in the stocks that will benefit from rallies, if and when those occur, and that is another risk that must be managed. So, when we go down -1% on those positions, we have to make it up during the day on other positions. At the end of the day, we are more active than we want to be.
I am guessing, probably correctly, that the equity market loss of -5% this week was directly suffered by the pension and mutual funds of Mom & Pop because I know it wasn't me or my clients hurting. Frustrated yes, but not hurting. Frustrated because Obama is not giving us a level playing field, nor giving us the confidence that capital markets will return to doing what they are supposed to do, which is to be a value pricing mechanism. But, I can already see that it is still, under Obama, a casino, owned and operated by HB&B.
[Being a President, I am going to celebrate the President's Day holiday by taking the day off. You'll find me in a hammock on Cable Beach. If not there, I'll be in the water... or enjoying a G&T... you get the picture. If not, I'll have to post some in the photo library linked to the top menu bar Site Index.]
Comments
dr doom & the black swan
http://www.cnbc.com/id/15840232?video=1027496846
Hope he had fun though...
Japanese Finance Minister "appears" drunk at G8 press conference.
http://tinyurl.com/dmyne3
Re: dr doom & the black swan
I'm not sure what was more nauseating about that interview -- the dim outlook from Messrs. Taleb and Roubini, or the CNBC journalists who behaved like the proverbial child presented with a pile of horse dung on Christmas morning.
POO
David - "Chickenpookie: why does the chart you attached suggest that the crude has reversed?"
Looking at the candlestick chart of UUP, it appears the USD showed some weakness Friday, therefore the pop in crude. It's not that I think it will last, because higher crude prices are dependent on supply/demand, and economic perception. Additionally, there wasn't even a mechanism available (I can identify) for directly participating in Friday's extensive crude rally. We need to find a pure oil play in order navigate the contract games.
Fekete
I just found a truly remarkable mathematician turned economist, Dr Antal Fekete, who provides the most cogent explanation of anyone I have read as to the origins and reasons for the crisis we're in. The basis for his thinking is the idea of the liquidation value of debt, which he explains as follows:
"Economists, chartered
accountants, and bank examiners do not recognize the concept of liquidation
value of debt, let alone its inverse relationship to the rate of interest, although it
is exactly the same inverse relationship that is well-recognized to exist between
the market value of a bond and the rate of interest. As the interest rate falls,
creditors refuse to accept the face value of the bond in settlement of debt. At the
lower rate the income stream of coupons falls short of amortizing the face value
of the bond. To compensate for the shortfall the market value of the bond must
be increased. Accordingly, creditors bid up the market price of the bond. If
debtors want to get out of debt before it matures, then they will have to pay the
market price exceeding the face value of the bond. This conclusively proves that
the fall in the rate of interest increases the liquidation value of debt."
He then goes on to discuss the current monetary easing, arguing that for each reduction of the interest rate by half, the liquidation value of the debt doubles. He applies this to the idea of perpetual debt in an irredeemable currency (fiat money) regime. The net effect is that by monetizing the debt, capital is destroyed, and this is why, for instance, the auto manufacturers, and even banks are failing. This is opposed to the Keynesian idea that it is the destruction of *demand* that leads to financial collapse. In effect, Fekete is opposed to Keynes, Friedman, Roubini, and anyone else who thinks that lowering interest rates and monetizing debt will get us out of this crisis.
The result of current policies: "Perpetual debt is more than toxic. It behaves like nuclear fuel: once the threshold is reached
and exceeded, chain reaction sets in and the monetary system explodes. To understand the
dynamics, we need to refer to the liquidation value of perpetual debt. This is a concept that,
for obvious reasons, is not recognized by mainstream economists. If it were, they would be far
more careful with their recommendation of unlimited government spending as panacea for all
economic ills. Recognized or not, the liquidation value of debt acts as a trigger to a
cataclysmic destruction of the economy looming large on the horizon, of which we have had a
foretaste in the recent past."
According to Fekete, the White House is being held hostage by the Fed and treasury who are leading us down the wrong road. Fekete also argues that the most significant event in the last month is that gold went into backwardation. I recommend reading his papers for anyone like me who is looking for insight into the economic crisis. I believe Dr. Fekete has hit the nail on the head. His writing is extremely clear, but always solidly based--it is not ideology, right-wing or left-wing, in spite of the fact that he thinks currencies should be backed by gold. I think you will find it easy to get hooked on what he has to say--a good way to spend President's day. Here are some of his preditions, by the way:
"Item 1: Barrick and other gold producers that still have an open
hedge book will go bankrupt.
Item 2: Other gold miners will, one after another, stop selling
gold altogether, and go into hibernation.
Item 3: Junior gold mines will put off starting production
indefinitely. They will consider their gold ore reserves in the ground a
safer store of value than paper money in an insolvent bank.
Item 4: The closing of the gold window at the Comex will
furnish an excuse for other issuers of paper gold including the bullion
banks to declare bankruptcy fraudulently.
Item 5: GLD and other joint depositories of gold will be under
enormous pressure to default and let the owners of the ETF shares
hold the bag. Let them sue for the gold. They won’t get it: their
contracts give them no right to physical gold. They will get small
6
change, in paper. The principals will cut up the gold pie among
themselves. No crumbs will trickle down to shareholders.
Item 6: Even allocated and segregated metal account gold is not
safe. The temptation on the account providers to default will be
irresistible. They are not going to release the gold until expressly
ordered by the courts, and will make sure that no gold will be left by
then.
Item 7: Central banks forfeit their gold under leases due to
backwardation, causing an uproar of citizens whose patrimony was
sequestered and dissipated in such an ignominious manner."
Pardon the long post, but, for me at least, this is the most exciting thing I've seen on the internet since I learned about Bill's blog. Fekete has many detractors, but he merits a close look by anyone worried about the future.
http://www.professorfekete.com/articles.asp
I can vouch for him as a mathematician--check out his book on Linear Algebra on Amazon--you can inspect it close-up.
Re: Fekete
aucourant - Good find, I too have been reading Fekete for quite some time now. I found he goes right for the heart of the problems inherent with debt creation, confirming my interpretation of the concepts.
Re: Fekete
Thanks, CP. I hope to go to one of his workshops or lectures and actually meet the man. I'm planning on one held in Madrid in June. He is giving a workshop in March in Hungary and another in San Francisco in August. He was actually financed by Eric Sprott for a while.
Weekly Commentary
I introduced a brother-in-law to this website yesterday via an email where-in I copied a portion of Bill's latest Weekly Commentary, the same portion that he reposted in today's Commentary. Below is his email reply:
"WOW!
He doesn't mince words, does he?
Thanks for giving me a new resource."
Jim Sinclair
Officially “Out Of Control”
Posted: Feb 14 2009 By: Jim Sinclair Post Edited: February 14, 2009 at 8:26 pm
Filed under: General Editorial
Dear Extended Family,
I sent you a certain few emails that I consider to be the most important communications issued in my career that started in 1958.
I am the son of what I know to have been the greatest Lone Wolf trader in Wall Street history ever, Bertram J. Seligman. He was a past master at his business and believed to be a market sensitive. I apprenticed to him, learned from him and inherited some of his ability, not all however.
From this background of experience understanding and sensitivity the following flows.
The emails of note:
1. Said, "This is it."
2. Said, "It is now."
This communication is to inform you as of 2/13/09, "It is totally out of control." There is no longer any means of reversal of the beginning of the final phase of the downward spiral now solidly set in motion.
For your sake, protect yourselves immediately.
Be prepared for disruptions in distribution common to hyperinflation.
1. You should have already distanced yourself from your financial agents. If you haven’t you are headed for significant displeasure and strain.
2. Make sure you stay three months ahead on necessary items that could experience distribution delays such as prescribed medicine and preferred foods.
3. Even though real estate is far from a buy, if you can afford a second home outside of major cities it would serve a good purpose.
4. Own gold.
5. Consider that good gold shares of non-US companies incorporated in a non-US country operating in third country, traded on multiple exchanges are a means of money expatriation legally and in broad daylight if required.
6. For currencies, all you can do is own a spread held by a true custodial ship wherever that might be.
Simply said, as of Friday February 13th, 2009 the situation is in confirmed "Out of Control" mode as this well engineered downward spiral enters into a terminal phase.
The motive was profit and degree of the disintegration caused in the pursuit of this goal was not anticipated.
The key event was when Lehman was flushed - all hell broke loose. The hell cannot be contained in any practical manner.
I seek nothing of you, but the protection of yourselves.
Respectfully yours,
Jim
Was this fully discounted yesterday?
"Japan, The world's second-biggest economy shrank 3.3 percent from the previous quarter, or at an annual pace of 12.7 percent."
I expect to witness further US selling on this report.
President Obama's honeymoon is over.
Bill, I am in total agreement with your assessment of Obama's performance so far. I think part of the problem is his lack of true legislative experience. He is in the big league now and Pelosi and Reid know all the tricks of the trade — he does not. I'd really like to see him take charge, but he has just squandered his best opportunity and looked about as effective as Geithner. He still exudes an air of authority — maybe he can learn quickly.
If not, I think one of your comments from past commentaries about the American people will come about. Too many people have been added to the economic casualty list and we'll vote him out after one term.
My question is where was Rahm Emmanuel, the supposedly Washington-wise Chief of Staff while this was going on? Where were the recommendations from the A-Team you mentioned? What we kept hearing were from pelosi and Reid.
Since he took office I have added 5 more individuals to my list of 59 who I know in our city who are now among the unemployed. There is another group of 20 who I don't know personally, but were the second shift at the company owned my my son's lifelong friend.
While he is not directly responsible, obviously, he will own the problem in short order if losses keep mounting.
Day trading
Bill and others,
I am interested in starting to day trade in the next 2 to 3 months. Can somebody list the must have ressources in order to trade efficiently. Please note that I am an IB customer.
- What book should I read on Techical analysis? Techical Analysis explained by Martin Pring? Or any other?
- Should I have Level II Quote? If yes, what is the best way to have access to it?
- Should I use a techical analysis software? Any particular one recommended?
- Any other charting software recommended? Which charting software do you guys use?
- Is a 3 monitor display sufficient? Where is the best place to buy them? Do you guys buy a special computer or use your ordinary dell for example.
Thanks.
Cyangugu
Re: Fekete
aucourant - Well that would be a good use of time. Keep in mind though that no one seems to have a feel for when or really if everything goes to hell in a hand basket. Considering the extreme views at both ends, I guesstimate we'll wind up somewhere in between. ie: Deep recession lasting two years vs Mad Max depression. Negative corporate profits, heavy job loss, minimized consumption, I think we could even witness a major currency collapse.
The problem is that DC hasn't been serving the interests of the public since before they sold themselves to the Wall Street devils, and the time has now come for a major correction. You see, if you ask an extremely rich man "How much is enough?", he will answer by saying "It's never enough". They live by this mantra, and will do anything in their power to consume as much wealth as they are possibly capable on the backs of the people for they are not generating actual wealth, they are merely controlling it.
Re: Day trading
Cyangugu,
My first recommendation is to understand and know thyself. The reason I say this is because "day trading" significantly impacts your emotions. Some mottos I focus on are:
(1) If you are worried at night about your positions, you have taken on too much risk.
(2) If you can't leave your screen for more than a couple of minutes, your position is too large.
(3) Never risk more than 10% of your capital on one position.
How Much is Enough?
It seems that enough is that which allows a person to live well, in a creative and productive manner, and to have some left over for investments that provide some income for later life. Evidently, such a concept is lost to those who use money (and or gold, etc.) to keep score. Such is obviously ego trips.
coxe
does anyone have the link to weekly call?
Re: Day trading
Thanks teamonfuego.
On a personal side, I do not worry on my situation if I happen to lose a great part of my investments. I still have other back up plans in case day trading doesn't work out for me. I always wanted to try day trading. If you can specify the tools that you or other use, in your day to day trading, that will be great.
Thanks.
Cyangugu
"High Noon: Geithner v. The American Oligarchs."
http://www.pbs.org/moyers/journal/02132009/watch.html
Bill Moyer video of 2/13/9
Re: Day trading
Cyangugu
It’s best to start off small and keep things simple. I traded for years with one computer/one screen. It’s been my experience that the more information you display, the more difficult the task. Other, more nimble traders, may disagree. I use IB’s TWS charting software to execute my trades and Worden’s TC2007 “gold” to cull my watch lists.
I recommend you read Bill’s book. The reading should never stop. If trading is not a passion, even after losing all your trading equity once or twice, you’re in the wrong game.
Re: "High Noon: Geithner v. The American Oligarchs."
Wow. good video. Well if we continue business as usual, i guarantee the people of this country will revolt. people will stop working for the great fortune of paying taxes and enslaving their unborn future generations. I would guess 12-15% unemployment would be enough pain. We don't need to get to as high as depression levels, as the psyche of America's entitlement culture today is higher than it was before the great depression.
And surely the tax payers will storm the homes and banks of the "gnomes".
SAVING
ALOHA!!
I am also a Fekete devotee to a point ... I agree with all he says about liquidation value of debt and destruction of capital which is what we have in our midst right now. So what does the US government do as well as other global governments? MORE DEBT PLEASE! You also have to agree with Peter Schiff and the Austrians who say what is needed now is FAILURE of entities that have made poor risk management decisions. From what I am seeing "risk management" was thrown out the window. Ultimately what Schiff points out is that Americans need to save not spend, but as Fekete says essentially how can one save when all ones productive capital(wealth creation)is being used to repay unproductive debt. Ahhh ... the American Dream! Actually NO ... it was the DREAM and PLAN of the US FED and its private banking cartel since 1913. PLANNED CHAOS! Who benefits most from DEBT denominated in US FEDERAL RESERVE NOTES?
SAVING should be the plan the US government and Americans adopt now not MORE SPENDING and MORE DEBT! Essentially the massive US GOVERNMENT needs to shrink and shrink massively right now or it will be forced to shrink in a more violent and massive way later. But what we have in our midst is elected politicians(I refuse to use the word leaders)who were brought up through the public(statist)schools and universities who have been brainwashed to think that government is the savior of mankind. The US VOTERS have been trained the same way in the same statist schools. In fact it is the complete opposite. Government is our enemy! Our Founding Fathers had it right all along, but powerful corporate and banking interests have sidelined any real solution and that has been a downhill battle ever since 1913, when the US FED was empowered.
As I mentioned last night once you pass a point of no return then US TAXPAYER funds and whats left of World Reserve Currency status, becomes a "free for all" for the elites at the top of the money flow(spigot)! Those at the end of the money flow(US TAXPAYERS)will experience trickle down monetary policy, where we "get" less and less as the consequences of years of abusive monetary policies pile up at a faster rate until the pile gets to be unmanageably HUGE and then collapses onto itself! I believe that time has come and we are seeing the beginning of collapse. A visit to the BIS last night and counting up the derivatives exposure on the back of an envelope and I came up with $737tril of notional value. Well, that's a lot of "notion"! HA!! The total US economy is $10tril! Why would such massive leverage be allowed? Unreal ... Greenspan told Ron Paul on numerous occasions that derivatives needed no regulation. I guess not since there was no public market! Greenspan is yet another in the long line of hired flunkies at the US FED that have no business being let free among law-abiding society! Geitner will prove to be the same tired old Wizard Of Blahs! BLAH-BLAH-BLAH ... oops I forgot to pay my taxes ... BLAH-BLAH-BLAH ... oops I destroyed two generations ... BLAH-BLAH-BLAH ... where's my book deal ... BLAH-BLAH-BLAH!! To infinity if we let them! Can we at least "swear" these Fed people in every time they talk to CONgress and make them criminally liable? Thank you!!
I am very intrigued by the Austrians and Richard Maybury, who published the EWR-Early Warning Report. He and the Austrians hit the nail on the head when they inject "human action" into the monetary and economic equation. It seems the Keynesian theories refuse to accept "human action" and desire sterilized mathematical formulas to support BIG GOVERNMENT and as Fekete terms it "irredeemable currency"! They both go hand-in-hand so I am sure the elites prefer it that way and in fact "planned it" that way! I reject Keynes in all his misguided glory ... ECONOMICS 101 as taught here in American public schools and universities is a joke! It has failed miserably as you can see the plethora of economists on TV or on the internet who are clueless and keep "flip-flopping" based on who will pay them as they trod from one US FED instigated financial catastrophe to the next. Yet they always employ the same failed policies in the end that never worked in the past and will not work now! Uhh ... HOPE IS REBORN ... yet again!
Once again I go back to my same question I would pose to Bernanke. If you and your Keynesian based management are so successful then why is it I am paying a ten fold plus price for basic costs now compared to 1913? What money can buy should remain static. We have over 90 years of inflationary monetary and economic policies based on expanded spending which begets expanded money supply which begets expanded DEBT which begets higher costs and ends in total collapse of capital! As Fekete and Schiff and the Austrians point out the saving grace ... the cure ... is to reintroduce gold as money. Spending and DEBT needs to be killed off not promoted and expanded! DEBT can never be extinguished by using a debt based monetary system. Even when you pay off your home the money is re-loaned so DEBT never dies. The government that intervenes to block bankruptcy and to negate contracts will only perpetuate the destruction of capital to service DEBT. Servicing DEBT is unproductive use of capital. It only enriches those who issue the DEBT ... the greater society(debtors) becomes bank chattel(as Bill calls them)! There is no such thing as CONSUMING(SPENDING) ONESELF TO PROSPERITY! Isn't that what the plan is now in Washington DC? What is the Stimulus then if it is not SPEND TO PROSPERITY? Its a "free-for-all" disguised as good intentions! Its 1000 pages long and nobody in the US Congress has time to read it completely, nor do they want to! More PORK please! Let the chips fall where they may because everyone in Washington and NYC and Chicago are in a mad dash to "get theirs"! The LAST HURRAH syndrome! But as they say "no comment" and "thats off the record"!
UNREAL ...
IT ALL WORKS UNTIL IT DOESN'T!
Re: Fekete
Can anyone point me to the link of the futures chain for gold. I want to see that this is in backwardation
Re: "High Noon: Geithner v. The American Oligarchs."
ALOHA !!
WE'RE THERE!!
We are already at 17%(U3)/15%(U6) unemployment ... that is if you count ALL the unemployed and parttimers!
Link: http://www.nowandfutures.com/misc.html
Money flow and mutual funds
I came across this essay in my search for money flow data on mutual funds,but I have not found any data yet for the money flows to mf's. If any one has a source please let me know,as the essay suggests it may be a great indicator.
http://mba.yale.edu/faculty/pdf/lamontdumb_money.pdf
P.s. Someone asked about historical charts;
http://www.chartsrus.com/
The Obama Stimulus: Truth and Consequences by Martin D. Weiss
Not sure about Dr. Weiss's background .. Found's this through another forum.
Never before have I learned so much so quickly from my readers as I have now — all just by reading the thousands of comments you have posted on my blog in the past week!
One of your key questions: Will the new Obama stimulus and banking bailouts succeed or fail?
What will be the immediate and ultimate consequences?
What should I do?
Today’s gala edition is my response.
http://tinyurl.com/alug3s
Re: Day trading
Cyangugu,
Recommended reading:
Reminiscences of a Stock Operator by Edwin Lefèvre
http://www.amazon.com/Reminiscences-Stock-Operator...
Technical Analysis of Stock Trends by Robert D. Edwards and John Magee
http://www.amazon.com/Technical-Analysis-Trends-Ro...
Suggest you try to find one approach that works for you, and then stick to it and attempt to perfect it, rather than undertaking a scattershot approach.
As an example, you might take a look at TraderX's approach, described in detail at http://traderx.blogspot.com/.
Whatever approach you choose, be sure to manage your risk and limit your losses.
Good luck! ~OG
Re: Day trading
Thanks OldGoat and Fox1
Re: Fekete
CP,
I agree in terms of timing, and in terms of how bad things will get, as well. However, what I like about Fekete is that at last I feel that the pieces of the puzzle seem to be fitting together. It's the clarification that he provides that I've been searching for, given the confusion that reigns in economics. I confess I'm biased by his being a mathematician. I also like the fact that he seems to confirm what most people would think--that TARP and stimulus via more debt will only make things worse and ultimately lead to disaster. Ordinary citizens were right to oppose TARP in Fekete's scheme. He would also oppose the crazy idea that it is better to spend than to save.
My plan to reduce/avoid foreclosures
I believe that the only way to stop/reduce the foreclosure is by undertaking the following measure:
-Every Mortgage in Default should be sliced into two parts : 70% Owned by the
borrower of the mortgage and 30% by the Government.
-The fact that the mortgage has been reduce to 70%, will allow people to be
able to meet their payments.
-All mortgages in delinquencies should be converted to fixed rate.
-Once the borrower finish paying their 70% share, they must start paying the
30% remaining part to the government. The 30% remaining part should have a
higher interest rate ( or longer tenure) or additional fees, in order to
deter current borrower that are current on their mortgage to be delinquent
in order to participate in the program.
-But most importantly, the Bankruptcy Code need to be changed in order to
deter the people from defaulting on their mortgage. While in Canada it takes
approximately 5 year to clean a borrower’s record (Ibelieve), the USA should
adopt the same procedure, instead of relying on a credit score.
-We need to change the bankruptcy code in the following manner: If one
borrower default on its mortgage, he will be unable to enter a new mortgage
before 10 to 15 years. So in other terms, it will take the borrower about 10
to 15 years to clean their records in order to obtain a mortgage.
-So a borrower will be faced with two choices:
1)Opt for the 70% (borrower)/30% (government) program and pay additional
fees, interest on the new mortgage related to the 30% slice owned by the
government.
2)Or default, and not been able to purchase a house before 10 to 15 year.
-Therefore, banks will have now writedown on each mortgage that participate
in the program, given that the government is buying this share, government
will earn some upside once their 30% slice is starting to be repaid and
borrower will be able to meet their payments given that their mortgage has
been reduce to 70%.
Please feel free to comment.
Cyangugu
Re: The Obama Stimulus: Truth and Consequences by Martin D. ...
ALOHA !!
I have heard of Weiss before ... He plays all the "bubbles"! He has been around for a long time.
Interesting comments and some with much merit, but he leaves out how "bubbles" keep getting larger and larger in "exponential metrics" ...
ITS THE MONEY STUPID!!!
Who benefits from nine decades of money expansion and "irrational exuberance"?
The current deflation solutions still needs to kill off nine decades worth of inflationary monetary policies. Even with $1 for Starbucks Coffee(a drop from $3 per cup)the price is still 2000% higher than coffee sold in 1960 Denny's(5cents per cup). What was a cup of coffee in 1913?
Perspective is what history offers!
Re: Fekete
Westcoaster,
Gold was in backwardation for a few days in December, as I recall. Fekete argues that this is an extremely significant event. Here is a reference to the paper he wrote on this.
http://www.professorfekete.com/articles%5CAEFBackw...
Re: The Obama Stimulus: Truth and Consequences by Martin D. ...
how have income levels risen since 1960 and 1913?
Re: Fekete
Here you go westcoaster http://tinyurl.com/2ffw7j
Re: Money flow and mutual funds
http://www.amgdata.com/#create:home:Home:/php/news...
Kansas is broke
If your a taxpayer in Kansas you will not be getting any refund in 2009. More then likely you will get the same IOU those west coasters out in California are going to get after supporting the film industry and their lobbyists for the last 20 years. The actors union need to strike for higher wages for them super poor actors. Prescription drug costs are on the rise.
Got to admit an IOU is better then the lump of coal those bankrupt banks are going to give the second class nothings of society when the taxpayers finally wean those corrupt parasites.
More discussion about bank nationalization this weekend
http://tinyurl.com/agsxe8
Dum Da Dum DUM DUUUUUUUUMMMMM!
The Postage Stamp Inflation Indicator
With a 2 cent rise in first class postage due in May, compare the 1934 Postage Stamp @ 3 cents
vs the 2009 rate soon to be 44 cents.
Increase 1,467 % in 74 years = 19.82% per year
Time for the Fed to cease operations and disappear. They are an utter failure in their stated mission to protect the dollar. The ultimate Ponzi schemer.
Re: The Obama Stimulus: Truth and Consequences by Martin D. ...
Great article babybear.
So much chaos, so little time
There has been much talk of change but we see little change coming, and a few more trillion dollars from now, we may just have loose change left.
The game plan (what game plan?) seems to be to revive the HBB's, create some makework jobs, add some pork and attempt to resurrect the housing market. We are going to bring back the spendthrift consumer economy! Without radical change where does the new wealth come from? Remortgage the house again and buy something?
The US and other consumer economies need to ADAPT! To move forward by investing resources into producing real products that foreign customers want and can afford to buy. Otherwise, we will generate another bubble until one day, China and other creditors will say, 'enough, we are out of this game.'
We read some optimism about recoveries just around the corner in a few months. I fear any rise just makes for a bigger drop. The deflationary effect of many Circuit City size companies folding, shopping malls going dark, factories closing, will make it harder for many sound companies to survive as panic grows and surplus products are sold off at low prices. Roubini and Taleb might not be loved for their views but I think they are trying to be realistic.
There must be some major changes in exchange rates between the US, Euroland, and Walmart East. We cannot all prosper if one region dominates mass production. Asia has a responsibility to stop saying, 'I will supersize that and here's a double of fries and a big drink. Just sign here, Fatboy.'
And where is some attempt at creating a world plan? We all need customers backed up with real money. We cooperate or we run out of customers. The plight of Portugal,Ireland, Italy, Greece and Spain in contrast with Germany, suggests that the Euro has issues. There must be a plan that seeks to work for strong economies and basket cases. A joke at Davos, 'What is the capital of Iceland? Reykjavik! 'No, it's about 25 bucks.'
None of these changes look to happen fast. Let's hope that until they come about, we can muddle on through, but we cannot be lulled into thinking things can go on the way they were, with platitudes from old generation and new generation politicians. There is little time to get the US economy in order before the baby boomers discover that their Social Security and Medicaid will be funded on more fiat money.
Re: My plan to reduce/avoid foreclosures
Cyangugu,
The only solution to stop foreclosures is let them happen. Prices have to come way down, housing is way to expensive. Median income has not keep up with inflation but credit expansion made up for the difference.
This is what the back side of peak credit looks like and more pain will come. We must become a nation of savings and deleveraging before we can prosper again.
Your solution will still present more of a moral hazard both for the lenders and the borrowers.
Housing prices will take over a decades to get back to those levels. Old debt is to expensive as new debt becomes cheaper... Or Old debt was hyperinflated and since we will enter a period of deflation; borrowers will ask why should I carry a home upside down?
Re: The Postage Stamp Inflation Indicator
it's actually only 3.8% inflation per year in the price of stamps. The math is:
15.67^(1/74) = 1.03788
President Andrew Jackson
Last night, History Chanel aired a biography on Andrew Jackson.
Sure wish he had been available for the presidency instead of Obama. He recognized corruption and got rid of it, including the Second Bank of America.
He is quoted as saying “beyond question that this great and powerful institution had been actively engaged in attempting to influence the elections of the public officers by means of its money". Sound familiar?
While watching, it was easy to substitute yesteryear for today. The banker in charge at the time, Nicolas Biddle, raised rates to try and make people turn against Jackson.
Colin Twiggs
http://www.incrediblecharts.com/tradingdiary/tradi...
MFN
MACD and point & figure setting this one up for the next cycle. Happy Trading
Re: Day trading
Cyangugu,
IMO, when starting new endeavor your first steps must give you a sense of whether it's something you are comfortable with without unnecessary expenses. So let me suggest a few steps that will start you out this way.
1. For general quick overview, go to http://www.realitytrader.com/freelessons.html, give a read to the brief articles and watch videos. This step will take you an hour or two.
2. For more deep look in various aspects of short-term trading, including general philosophy, basics of chart reading, stops placement, psychology etc, go to http://www.realitytrader.com/blog/. There are about 40 articles, which will probably take you couple days.
3. To see how the trading day goes and get a sense whether it's your cup of tea, go to http://www.realitytrader.com/tradinglog/ and read it day by day. Maybe check out a few days back using dates on the right, then read each new day as log gets posted after market close. This will complete your "getting a sense" of this trading approach.
4. Recommended earlier books, Bill's Lessons and Reminiscences, is a great read no matter what trading approach you eventually adopt. I will add Techniques of Tape Reading to the list. There are more of course but don't overwhelm yourself from the get-go.
Re: coxe
http://www.donaldcoxe.com/Coxe_Advisors_-_Don_Coxe...
Click on " Conference Call Webcast" and then follow instructions on next page, and enjoy.
Trading
The discussions regarding economic conditions, politics, gold storage, HB&B, etc are extremely interesting, BUT, we are traders. I believe that significantly more time should be spent on discussing how and why we trade these observations. As Vad states IF-THEN. Let's not get too involved in the forest and not see the trees.
Dan
Re: coxe
Unfortunately, this link does Not work. Despite the Feb 13 heading, you still get the Feb 6 broadcast.
I wish the esteemed Mr. Coxe would offer some kind of subscription service to us plebs.
Observations
I've studiously avoided commenting on the Prez election and our new President because frankly, most of the time, I can't take my comments nor those of others and use them in any actionable trade.
I will say this today. I can't say definitively that they're absolute truths but they seem to work for me.
1) Nothing is ever as good as it seems nor as bad as it seems. Meaning most thought a new President from the Democratic side would shake things up for the good, hence the Nov - Jan rally.
2) Democrats run to left to win their party's nomination, then run to the center to win the general election, and then (try to) govern from the left.
3) The American people seem to be happiest when the Executive branch and the Legislative branch have different parties running each.
4) Although Greenspan neutralized the Presidential cycle, it would not suprise me to see this President load up every bit of bad news into the next 4-6 quarters, blame his predecessor's party, and try to clear the deck for some growth/better economic news in time for the re-election campaign starting in 2011/2012. [However, the mid term elections will be telling as to how long the American people are willing to wait for a turn.]
5) I STRONGLY disagree about Volcker's allegiances/candor. At his age and stage in life, he is not beholden to anyone. But for whatever reason, he was not chosen. I do agree it is the same group of people, other than Volcker, recycled for the Treasury/Fed etc. We'll know if anything actually changes for the better in the fullness of time.
What is actionable for me personally is to wait until indicators show greed/overbought situations and sell/short them and then wait till fear/capitulation appears and buy while being aware LT indicators are still in downtrends.
Re: coxe
no?
http://tinyurl.com/b4t94j
"High Noon: Geithner v. The American Oligarchs."
NYUGrad,
There was a time when I thought 12 to 15% would arouse the local populace, but our city recently announced our unemployment is "officially" at 13.4% and the mayor and city council claim nearly $8M budget shortfall and will begin cutting police and fire dept. services (Honestly!). Yet, they are proceeding with plans to rejuvenate the moribund downtown by removing a pedestrian mall and building a river walk.
Never mind that the mall was installed 30 years ago... to rejuvenate the downtown. Funny how no big box stores, hotels or retail of any kind responded back then, they all located near the tollway. But, somehow hope springs eternal — with other people's money.
Oh, so far I see no signs of revolt of any kind.
The Obama Stimulus: Truth and Consequences by Martin D
teamonfuego ,
I can't speak with any authority about 1913, but when I got out of the army in 1960 I was able to save enough in one year to get married, have a child a year later and support the three of us without my wife needing to go to work while earning $1.75 per hour. That's $75 per week before taxes and Social Security deductions. We built our first home in 1963.
By 1966 I was able to start my own business on a $1,000 loan from my Dad (no interest) and then support a family of four — again on only one income. The loan was just needed as a backup until my first clients began to pay their bills.
I know I could not do it like that today.
Obama's people, NYT
http://tinyurl.com/a8gfcb
also
http://tinyurl.com/5qrzbw
Re: "High Noon: Geithner v. The American Oligarchs."
I am not a politician or economist, just another tax paying battery. maybe my number is off, but eventually it will happen. We all work 4-5 months to pay taxes. so somewhere between that and working all yr just to pay taxes, or some level of unemployment, or some level of % of people who no longer have retirement. People will revolt. it is already happening over seas.
EDIT: With that said i am focused on how to use the stormy clouds to position for profits. thats really all that matters to me anymore.
Grym - thx for the insights into your town. it must be very hard to focus while living in that environment. as is for me growing up in NYC and seeing Wall St implode on itself, taking down a city's economy with it.
Re: The Postage Stamp Inflation Indicator
Team Fuego
thanks for pointing out my math error
Actually the stamp has increased 41 cents or 13.67 times in 74 years..... 1934=3 cents 2009= 44 cents
44-3= 41cents 41/3=13.67x
10 cents of the 41 cent increase has occurred since 2001
Re: Fekete
Hogy van az hogy a magyar kozgazdaszok olyan okosak es a gazdasagi elet megis buzlik.
Udvozlet,
Bob
Re: "High Noon: Geithner v. The American Oligarchs."
NYUGrad - "People will revolt. it is already happening over seas."
Just a thought - Perhaps in the case of the US, the revolt started some time ago when incomes weren't able to keep up with monthly mortgage payments and new innovative financing began offering 0% down financing along with extremely relaxed (predatory?) lending standards? I suppose higher personal income taxes would now only serve to aggravate mortgage defaults.
Re: Was this fully discounted yesterday?
yeh, that report from Japan was horrid. I am guessing a weak Asia market overseas tonight and a weak U.S market tomorrow.
Re: coxe - link to weekly call
Click the red text on the right after Noon CST Friday for the new audiocast.
Where does gold go tonight?
overseas, and tomorrow in U.S?
Would like to transition to some specific discussion on prec metals, vs who is wrong and who is right?
Here is the 24 hour chart on Kitco.
http://tinyurl.com/cq41
Re: The Postage Stamp Inflation Indicator
Mo Kat,
You were correct in the first statement that it has increased 14.7 times (44/3 = 14.67).
Even the last 10 cent increase amounts to only a 3.28% annual increase over the past 8 years (44/34^(1/8)=1.03275). So the actual rate of inflation is decreasing according to my math.
ETF Warning from one of us
Dear Bill, please help get this knowledge out to the everyman investor. There is already an insideous loss designed into ETFs that few people are aware of. Even though the owners of the ETF go and buy gold, or whatever, that doesn't mean the value stays in the ETF that the buyer holds.
Start with $1000 and learn how percent up and percent down erodes the value of the ETF over time while the whole asset without the same loss remains in the true owners hands. ETFs are buying the gold for the holders of the gold as an unwitting gift.
$1000 x 140% (x 1.4) is $1400 yet a 40% down day on the $1400 is x 60% ( x .6 )which is $840 left, not $1000. Because the moves are uneven few have noticed the relentless decreasing value as the ETF cycles up and down. Please explore this and write about it. Sitting in one of these long term literally eats away your investment. They are only for fast trading, never for long term investing.
The odds are stacked just like at the casinos. -Elaine Southard
http://tinyurl.com/c6gj2l
Another ETF warning received by mail -- this one anon
The collapse of US banking giant Lehman Brothers few months ago was the beginning of this decade's severest global economic meltdown. Falling stocks markets, rising commodities prices and volatile currencies have made several nations to cut interest rates and people are these days running after gold saying that the yellow metal is the safest investment during recession times.
But do you know that some large American banks are dominating the gold market in the world? Or some of the same banks that helped spawn the current global financial crisis, have the largest positioning in gold and silver futures at Comex, a division of Nymex?
In an interesting report, noted gold market analyst Gene Arensberg, has reviewed the latest gold and silver market data from the U.S. Commodity Futures Trading Commission from a trading standpoint and observes that the largest traders are positioning themselves for a fall in gold but not so much for a fall in silver.
Here is an excerpt from Gene Arensberg's article:
"The very largest traders for gold and silver are, wouldn’t you know it, big U.S. banks. It looks like a few big banks, some of the same ones whose brilliant management helped spawn a global financial crisis, have the largest positioning in gold and silver futures. As of February 3, their positioning in gold and silver futures was big all right – big and short the market for gold, somewhat less short silver comparatively speaking.
A short position means the trader profits if prices fall.
According to the monthly CFTC Bank Participation in Futures and Options Market report released Friday, February 6, two large reporting U.S. banks held zero long and 27,189 short futures positions in COMEX silver futures as of February 3. All commercial traders as a group held a net short silver position of 33,173 contracts that same day; so just two banks held 81.96% of all the COMEX commercial net short positioning for silver.
It should be obvious that these two very large banks could exert a disproportionate share of influence on the small silver futures market if they were so inclined. When just two traders are allowed by the Commodities Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) to accumulate so massive a position that it constitutes an overwhelmingly large percentage of the action; when the authorities allow just two banks to literally dominate a market with the weight of their own trading, traders are left to speculate on what the largest traders are going to do instead of concentrating on the supply/demand fundamentals and legitimate price discovery.
Isn’t that the equivalent of subjects wondering what price the King will decree rather than citizens all haggling in their own self interest to determine a market price? Or, as one trader put it recently, is the COMEX silver market waiting on JP Morgan Chase to show its hand or make a move?
http://www.commodityonline.com/news/Three-US-banks-own-gold-futures-at-Comex!-15092-3-1.html
GM Business Plan
Wonder if we'll hear anything about a similar Banking business plan prior to doling out the next few hundred billion?
Re: ETF Warning from one of us/it's a high risk game
Would point out that both David and SiO2 sounded early warnings regarding value erosion in 2008. Also that David has pointed out the superiority of shorting FAZ, for instance, to buying FAS. And SiO2 has outlined the beauty of using straddles.
But the warning is both appropriate and appreciated, and probably can't be posted often enough. Sort of like a "Wash Hands Before Eating" type warning, really.
In addition, I would point out that in many retirement accounts, shorting is not permitted. Nor are options strategies allowed. Nor is "excessive" trading allowed. Which further extends the casino analogy. The typical 401(k) holder not only plays against stacked odds, but is not permitted to count cards nor move his bets on/off the table at will.
The current environment is probably not the best for initiating a day trading career. Unless you have a fast draw and a natural love for gaming, I would move my money to CTAB and let hired guns do it for you.
Re: Another ETF warning received by mail -- this one anon
Bill, if it is true that US Banks are heavily short gold, it would seem a long position for a small trader such as myself would likely be a loosing position. With news like this, would it be more prudent to exit the trade or send them the remainder of my wealth? It sure is comforting to know that JPM needs our tax dollars to trade against us with a dominating position, how could we possibly survive if setting market prices were left to free-wheeling speculators?
It appears they are bent on breaking us one way or the other.
Re: The Obama Stimulus: Truth and Consequences by Martin D
Grym,
You're a man of much more experience than I am, given that I'm 30 years old. So your point of view takes in far more living than mine does. However, there are several things we need to take into account when calculating the true rate of inflation of this cup of coffee:
Cup of coffee - let's assume the 1960 Denny's $0.05 coffee was the same quality as a $1.60 cup of joe from dunkin donuts. Now while many here would argue that it is not of the same quality, we can probably agree that the price is roughly in the middle of the price range you will find from cheap coffee shops and expensive ones. This means that it is now 32x more expensive to buy that cup of coffee.
However, we could probably all agree that the size of the cup of coffee today is larger than it was back in 1960. For argument sake let's say the average cup of coffee consumed today is the medium cup, which is a 16 ounce cup. In 1960 I would have to imagine the average cup of coffee was 8 ounces. So the size of the cup of coffee has gone up 2 fold.
Now, I believe there is a third factor impacting the true inflation rate of this cup of coffee and this is the increase in the rate of consumption of the average person. In 1960, the average male weighed 166 lbs and the average female weighed 140lbs (total = 306lbs). In 2002, the average male weighed approx 191 lbs and the avg female weighted 164 lbs (total = 355lbs). So the average American increased their weight 0.47% annually from 1960 to 2002. I'm pretty sure this has nothing to do with what I'm talking about, but it does suggest increased consumption demand due to burgeoning waists.
So let's take the top 2 rates and ignore the third:
32-fold increase in price divided by 2 fold increase in size = 16 fold increase in price keeping size constant.
16 fold increase over 49 years = 5.8% increase in the price of an average cup of joe annually over the past 49 years.
Now getting back to your discussion of weekly income. Your $75/week salary, if adjusted for the inflation rate of the price of an average cup of joe from 1960 to 2009, equates to $1,200/week today or $62,400/year. This is still above the average household income (which is in the $49k range) and many in this country would consider this a solid wage able to support a family of three, and able to pay for a marriage (or two).
Heck, my mother raised my brother and me on a $18,000/year salary for 12+ years...however, she never drank coffee.
Re: ETF Warning from one of us/it's a high risk game/addendum
It's also clear that brokerages have evolved their game to fit the current environment. When buy-and-hold was the mantra, it was easy to rake it in via front-/back-loaded funds with high annual fees. Then they got greedy and transferred a large slice of wealth in the crash of 2000. Even that wasn't enough. Lowering interest rates to multi-decade lows lured people into taking money of out their homes and/or borrowing beyond their means to buy one- many of them are destined to lose all of it. Now that 401(k)s are decimated and/or in cash, they need to come up with something a little less transparent and a little more convincing. The proliferation of ETFs with accompanying media coverage has now succeeded in transferring large percentages of investors' equity into derivatives. What's next?
Re: The Obama Stimulus: Truth and Consequences by Martin D
Teamonfuego - "Now, I believe there is a third factor impacting the true inflation rate of this cup of coffee and this is the increase in the rate of consumption of the average person."
For your third factor, I think you are referring to the law of supply and demand. I don't know how body weight might affect the demand for coffee, but I would think an increased population would, as it would for many other consumables such as carbon emitting energy sources. On this point, I would venture a guess that environmental impact from additional human energy consumption has greatly increased CO2 emissions in recent years, most likely in proportion to population growth, which I believe has been exponential.
Back to demand for coffee, if demand increases at a rate faster than supply, then I would anticipate price would increase accordingly. Speaking of increased coffee production, we can expect additional environmental impact there as well:
http://tinyurl.com/cqwses
Almost everything man does involves environmental impact. As civilization grows, the impact grows in proportion. At some point, these impacts are likely to become large enough to require remediation, increasing production cost of products such as coffee.
Coffee cups and cars
teamonfuego,
"...we could probably all agree that the size of the cup of coffee today is larger than it was back in 1960."
I didn't offer the coffee example. That was someone else. Cars were much bigger then, but why would you assume the cup size was different?
The original issue was, I believe, that of the diminished value of the dollar. Which your explanation validates as did mine.
BTW, I'm sure that my $75 per week was not the average household income in the 1960s. I had no college degree and no working experience at my 1960 job. I know for a fact that a friend who worked for the same company was earning $5,000 a year as an engineer and my Dad was making around $8,000 with thirty years at his factory job.
I could, however, disassemble and reassemble the U.S. Rifle, Caliber .30 M-1, air cooled, gas operated, semi automatic, shoulder weapon, muzzle velocity 2700 FPS, weight 8.5 lbs (9 lbs with bayonet) — blindfolded, in less than a minute while being paid $85.80 per month. :-)
Re: Coffee cups and cars
Grym - "I could, however, disassemble and reassemble the U.S. Rifle, Caliber .30 M-1, air cooled, gas operated, semi automatic, shoulder weapon, muzzle velocity 2700 FPS, weight 8.5 lbs (9 lbs with bayonet) — blindfolded, in less than a minute while being paid $85.80 per month. :-)"
In addition to your salary of $85.80/month, I suppose they provided coffee at no charge.
Re: Coffee cups and cars
You guys are missing the point, man. What Grym has are "transferable skills." He can now short sell and cover USX on an air cooled, lithium ion battery operated, Dell laptop, upload/download velocity 600Kbps/1.4Mbps, weight 3.97 lbs with mouse - with one arm holding a cup of coffee, in less than a minute while earning $85.80 per second...;)
Re: ETF Warning from one of us/it's a high risk game/addendum
Now are we talking all ETFs or just 2x 3x and commodities ETF. I thought that if I bought the Q it would track the Nas 100 as long as it was close to NAV when I bought it.
Bob
A man in a hot air balloon
A man in a hot air balloon realized he was lost. He reduced his altitude and saw a man below. “Excuse me, but can you help me? I promised a friend I would meet him an hour ago but I don’t know where I am,” he said.
The man below replied: “You are in a hot air balloon hovering approximately 30 ft above the ground. You are between 40 and 41 degrees North latitude and between 56 and 57 degrees West longitude.”
To which the balloonist replied “You must be a broker.”
To which the man on the ground said: “I am, but how did you know?”
The reply came from above: “Everything you told me is technically correct but I have no idea what to make of your information, and the fact is I’m still lost. Frankly, you’ve not been much help so far.”
The man below responded: “You must be a trader.”
To which the balloonist replied: “Yes, I am, but how did you know?”
To which the man on the ground said: “You don’t know where you are or where you are going. You have risen to your current position due to a large quantity of hot air. You made a promise which you have no idea how to keep and you expect me to solve your problem. The fact is, you are in exactly the same position you were in before we met, but now, somehow, it’s my fault.”
From NY TIMES
Re: ETF Warning from one of us/it's a high risk game/addendum
bobbyo- I know for certain value erosion applies to the 2x/3x ETFs. The implication in the original post was gradual erosion MAY also apply to 1x ETFs, but if you read the link the warning appears to be limited to the "ultras." I think the bottom line depends on what the ETF is holding: if it involves derivatives of any kind, there is additional risk. In the case of commodities, of course, kaimu has already pointed out the dangers of paper claims to the real thing.
Spot Gold now bid close to 945
Should gold break-out above the 953 in the next 18 hours, I think it may hit 1000 soon. The $USD is soaring -- presently at 87.48 -- and that is not stopping the gold rally. Silver is under control all day with selling at 13.59. The chart makes this look quite obvious. If there is a break-out above 13.80, and the gold rally is continuing, I think both will move to a new level. The bigger upside would be with Silver, but both have room for solid gains. However, this is a market that HB&B (ie, JP Morgan) and the Bank of England are major players, so frequent trading and use of mental stops are required. Watch the British Pound here closely because I think the Bank of England is working hand in glove with the Fed and the major banks like JP Morgan and Barclays on trying to contain the run-up in the precious metals price. Please keep your observations coming here, as I don't have much time to watch these markets.
"Stimulus is only beginning of Obama's economic plan"
http://tinyurl.com/cmwrwf
"Obama will hear from automakers Tuesday on how they'll restructure to get more taxpayer bailout money. Then he'll sign a $787 billion stimulus bill in Denver and fly to Phoenix , where on Wednesday he'll unveil how his administration will spend at least $50 billion of Wall Street rescue money to begin halting mortgage foreclosures nationwide.
And sometime during the hectic week, the Treasury Department is expected to provide more details on a $100 billion -plus plan for the federal government and private investors to team up to rid bank balance sheets of toxic assets. Those are the distressed mortgage securities and other complex financial instruments that investors are shunning, and that are crippling bank balance sheets and restraining lending.
On their own, each of these developments would be dramatic by historical standards. But for any of them to succeed, they'll need to work in unison with the others."
TCK
Looks like GS bought over 10M shares of TCK in yesterday's market:
http://www.mffais.com/tck.html
Crude
2nd, CP, David....Anyone find a "pure play" on NYMEX crude prices. I spent the better part of the weekend and only came up with a couple of E/P companies that looked good. Of course I'm already maxed out with PXP so no help there. Will move up my stops a little tonight after reading today's discourse. Glad I worked today! I hope to look at 3 houses tomorrow.
Re: Spot Gold now bid close to 945
What is the best site to track spot prices 24/7?
I have been using
http://www.kitco.com/charts/livegold.html
it isnt bad for a delayed quote.
shanghai over 2400
haven't seen this level since last summer...
Re: Spot Gold now bid close to 945
Thanks Bill, I witnessed that pop to $945, didn't last long but the trend is up for now...
Re: Spot Gold now bid close to 945
Re: What is the best site to track spot prices 24/7?
I think Adam Hewison does a great job at INO.com
Re: shanghai over 2400
The People's Bank of China have enough money -- foreign reserves as well as domestic -- to make a big impact in equity markets. How better to take the people's mind off the economic woes of the world.
Re: Spot Gold now bid close to 945
I think the Apmex site displays real-time bid/ask prices (currently 944.80/945.80):
http://tinyurl.com/63cbf9
Re: TCK
CP, I use that site as one on my tools also. I'm probably wrong, but I think the report date can be up to 2 weeks old. I follow some companies that have very small volume, and it is easy to match the big trades by date.
Re: Crude
Mark - "Anyone find a "pure play" on NYMEX crude prices."
Nothing worth mentioning, the closest I came to was RJN.... not good enough though.
more casino rules
I'm just waiting (NOT) for Peter Lynch to come out with a mea culpa to his old pitch regarding market timing: "That's not investing, it's GAMBLING!" What he should have told buy-and-hold fund holders in 2007 (about the time I recall hearing those soundbites) was: "We're gambling with your money, dude. But hey, financials are on a streak, and we're going to press our bets with C and BAC."
Now that we know, a reminder that a gaming rule that works well when you're not doing well is: Cash out your chips and leave the table. Come back later.
Re: TCK
mark - "I think the report date can be up to 2 weeks old."
I don't know for sure if old or new data, the top of page indicates 2/13/09... Who knows...
Re: TCK
CP- This from MFFAIS site... How current is the information about holdings?
* The information report can be up to 1 year old. It is the latest reported by companies, but because of filing delays and length between filings the information is not current.
For a high volume stock like TCK, I would guess that transaction dates are about 1-2 weeks before the report date you see @ MFFAIS. Thanks for the oil play...I hope you didn't spend as much time on this as I did. Yikes!
iPhone application helps Blackjack players count cards
http://tinyurl.com/ccahxp
personally, i have nothing against players able to beat the casinos/brokerages at their own games...stacked odds seems to be the name of the game, and for most of us, it's not a game...
Re: iPhone application helps Blackjack players count cards
2nd- That's wild! I played a couple of weeks ago in South Lake, high limit, single deck. I got a call @ the table on my iphone which was on vibrate...pushed ignore, and before I could put it back in my pocket the pitt boss was politely asking me to leave it on the table. Now I know why.
Re: iPhone application helps Blackjack players count cards
Mark- LOL
seriously, though-> counting cards is not something most of us are capable of. not even something we have an interest in, or time for.
is there an alternative to cash, mutual funds, or trading?
CTAB
i'm not a pitchman for CTAB, but honestly, we're kind of stuck here, no? either we play against a stacked deck, or we hire a card counter to level the playing field...i like SiO2's straddle plays, but with most of my funds in retirement accounts, i can't use them...pretty ------- pissed at the system, but hey, as in all of life, we play the hand we're dealt as best we can...
Re: Fekete
Bobbyo,
I'm not sure I understand your question.
Re: Spot Gold now bid close to 945
Over the past few weeks, gold has sold off at the Asian open. Not tonight however. Keep in mind though that the G7 just met over the weekend and President's Day today means any contrived plans will be carried out on Tuesday. Generally in the past, gold gets hit quite hard after a G7 meeting. Therefore, it would not be a surprise if gold moves down tomorrow starting in London with sharp follow-through in NY.
It just might be different this time though as I believe the USD and gold have moved in unison over the past 13 of 15 trading days. This has not occurred in numerous years. In 2009, gold has moved in a very disciplined manner and is looking very strong. Sooner or later the central bankers will have to give up or at least lessen the gold suppression scheme as their gold supply is finite. Gold certificates may have extended the life of their scheme but investors are now wising up and calling for only physical. As Bill has stated, silver has been much more suppressed than gold over the years so it should have the biggest recoil.
market direction
2nd_ave, bsi87: what is your feeling about the market direction for the next week or two? Do you get a feeling that S&P 500 is going to break the 800-850 range to the downside?
Up until last week I thought that not enough bad evidence has accumulated to "swing the pendulum" to the other side, from stopping the rally that started on November 20. But after the disappointing fiscal and monetary stimulus announcements last week, the market may decide to take the indexes down to new lows. Do you have the same feeling?
Faith
"I now have to put my faith in Pelosi, Reid and Frank" - That's the same as giving up. They will destroy us if left unchecked. Putting our faith is the last thing we can do.
http://www.dividendstocksonline.com
gold vs. $USD
I'll make a guess as to why gold has been moving up together with the $USD in the past weeks. I think the reason is the continuing weakness in Euro (which is the largest component determining $USD) due to the impending financial difficulties (to which Bill has alerted in his WIR), and the switch by European traders from Euro into gold. After all, the gold market is so small, that if some big European banks decide to diversify a bit from Euro into gold, they can take the gold price WAY up. What do others think about this theory?
Re: ETF Warning from one of us
Bill,
I believe the contributor of this item has engaged in faulty reasoning. The scenario given was an ETF rising by 40% one day, then dropping 40% the next day, leaving one with 84% of the original amount invested. (1 x 1.4 x .6 = .84)
Is this not precisely what should happen? The exact same result would occur if it dropped 40% the first day, then rose 40% the second day.
(1 x .6 x 1.4 = .84)
If anyone thinks, for example, GLD does not track the price of gold, enter both GLD and $GOLD in the "Performance Charts" feature on StockCharts, and you will see close to 100% correlation with no loss over time.
This does not apply to 2x or 3x ETFs which appear to erode value, especially when in a choppy trading range.
Re: Faith
Your are now "ignored".
Japan finance minister faces possible censure
TOKYO (Reuters) - Japan's finance minister faced a possible parliamentary censure on Tuesday after denying he was drunk at a G7 news conference, as the furor over his behavior dealt a fresh blow to unpopular Prime Minister Taro Aso.
Aso asked his close ally Shoichi Nakagawa to stay in his post on Monday, but emboldened opposition parties were set to grill the minister again in parliament and have said they would submit a censure motion to the upper house if his answers fail to satisfy.
It's true that there was wine in front of me. I sipped but it's not like I drank," Nakagawa told reporters.
Re: market direction
David- I'm going to have to wait and see. I've done pretty well the past two weeks. Leaving/taking my chips off the table would not be the worst move I could make. On the other hand, it's pretty negative out there right now, which is when I like to buy.
My earlier posts were serious. I would recommend that anyone for whom trading is not a natural passion open an IB account and sweep the money into CTAB, the only fund I know of where you retain control over the account, you know who the players are, and the rules and strategies are completely transparent.
Re: Japan finance minister faces possible censure
skylane- You make the call... http://tinyurl.com/dmyne3 . Posted earlier. Good to see the "major" players are on top of this.
Japan's Finance Minister Nakagawa to step down after budget...
...reports Marketwatch. Could be what's roiling markets
Gold
Spot $951.10 and rising rapidly.
I know we have been planning for this but the ramifications are a little surreal.
Re: Japan finance minister faces possible censure
It's true that there was wine in front of me. I sipped but it's not like I drank," Nakagawa told reporters.
Kind of like Al Gore saying, "I didn't inhale"? LOL.
Re: Gold
I gave the alert here at 8:31pm ET and precious metals zoomed at 10:00pm. How's that for timing? Interesting market.
Re: Fekete
Aucourant,
It was more a statement to Fekete concerning the dismal state of our mother land, Hungary. Just a rant really that translates loosely. Why does Hungry have such great economist, yet such a terrible economy.
Bob
Re: Japan finance minister faces possible censure
alberio- Kind of like mixing metaphors, you mixed up Democrats...That was Clinton!
POG still rising since your last post.
Re: ETF Warning from one of us
Yes I also see that this is the hot topic on many boards and websites.
The biggest problem with most of the analysis and spreadsheets is that they consider 10, 20 or 40% up and down to be the same thing and thus a round trip should bring you back to where you started. Yes they are the same raw percentage numbers but the dollar values are different with different starting points.
I often use limit or boundary analysis for these types of things. The upside moves are limitless 1000% plus, but the downside is limited to 100%, so lets use 100%. My stock goes up 100% (ie just a double), then it goes down the same 100%, am I back where I started (dollar wise) ?? or am I at ZERO dollars ??, the percentages were the same.
Re: Gold
Hi Bill
Thanks for the education on the market's, I have learned tons over the past few years, any change your crystal ball does Lotto numbers? aw forget it ,the last big draws were over 25 million, willing that much $$$ would be like losing your life.
Skylane
see currency markets...
something isn't right.
Denninger just posted an update on it.
http://market-ticker.denninger.net/archives/801-RE...
Re: Japan finance minister faces possible censure
Yup, thanks for the history lesson.
Re: Japan finance minister faces possible censure
No history lesson here...I don't think it would matter what politician it was!
Re: Fekete
I know several people that have departed Hungary during that same period,They all tend to have something in common,in your face with very strong opinions on issues that they believe in.
Skylane
Silver and Gold Technicals
It looks like silver can run to 14-14.90 before retracing. Gold looks like it can go as high as 990 on this attempt before retracing. I have positions in both silver and gold stocks as a carryover from last week but will exit positions as it tops out, possibly this week. Options expiration which is this week may be a cause for the reversal. Good luck trading.
Re: Silver and Gold Technicals
A reversal should enable you to have a great buying opportunity for reentry because the next assault could take the precious metals into no man's land where the sky is the limit.
POG @ 958.00
Tomorrow should be interesting.
preparing to cover the FAZ short
I just read John Hussman's latest weekly review, which confirmed my suspicions about an increasing likelihood about an upcoming breakdown in the market. I have just placed a buy-to-cover stop limit order on 225 shares of my FAZ, stop at 50, limit at 52. I think there is a very good likelihood that I'll be able to short it at much higher levels soon. Still keeping 40 shares short in FAZ just for fun and 400 short shares of ERY, since energy shares have a much smaller downside at this point than the financial shares.
Gold price
You can get a minute by minute chart from bullionvault.com - can even choose your preferred currency and time period. Not super precise, and I don't know if the price quoted is from trading on their system or elsewhere, but its a good general indicator. Lot of gold talk on the Don Coxe presentation too. And nothing of any significance from the G7 (or at least, they're not talking about anything useful).
Re: POG @ 958.00
My guess is this relates to the banking problem in Ireland. Remember, just a few Billion $ can change the POG. I wish I knew how much...
Gold's run-up
What about the fact that the commercials are overwhelmingly short? Do we have a moonshot or a bull-trap?
Re: President Andrew Jackson
ALOHA !!
Under Jackson, it was the last time the USA ever saw $0 National Debt, in 1835!
President Andrew Jackson
The banker Jackson ousted was named Biddle. One of his descendants is my good friend and he has apologized to me for his distant relatives behavior and is a very honest guy. At least some things improve over time.
At least part of the problem back then was collusion between the bank and congressmen — what was that about those who do not learn from history?
We need Old Hickory and all we have now is balsa wood.
Gold, ETFs and Bank Manipulation
Here is an article from Kitco which I found interesting and would appreciate any others views about the claims it makes.
Safest Way to Own Gold By Jason Hamlin Dec 17 2008
http://tiny.cc/Qwaj1
COUNTERPARTIES X2
ALOHA !!
It has all come down to "risk and liabilities" of counterparties and this is what leads to a monetary crisis. When the Euro crashes the USDX will benefit and so will gold. Yet there are currencies out in the World with much better balance of payments in terms of trade than the US Dollar. I made a list of them a few days ago.
- Australian Dollar
- Japanese Yen
- Swiss Franc
- Brazilian Real
- Singapore Dollar
However, the US Dollar, is viewed as a safe haven since it is still secure as the Worlds Reserve Currency. What that means is that this view is predicated on the US government's ability to raise capital either through taxation or debt(which is why I closely watch US payroll taxes and the DAILY STATEMENT of the US TREASURY). This is perceived as the advantage the USA has over other countries(currencies) since our economy is the largest on Earth. To me that is the same view once held as undisputed ... TOO BIG TO FAIL! That view will hit the skids eventually, but there will be little warning. At some point due to its lack of liabilities or exposure to any counterparties gold will be the ultimate currency and the ultimate safe haven. Its a process of elimination ... The past 90 years since the US FED was created has been a scam job monetarily speaking ... nothing better than a Madoff Ponzi scheme. The sheer size of the currency markets makes the USDX the best choice to move billions of fiat money, since any move into the minuscule gold or silver market would cause a major short squeeze and prices would rise dramatically as well as the sheer ire from every global central bank. Its a SUPPLY issue ... why? Because what the US FED was originally chartered to do, in essence, is to mimic the gold standard and protect the purchasing power of the US Dollar, by essentially checking US government spending. Well, we now know how all that turned out! Corruption has won out! So we basically have a monetary system based on the "human condition" ... MAN ... what a losing proposition that is!
LIABILITIES will become the dominate issue and the "C WORD" will rise to the top of the list of every person's concerns. When that happens the US Dollar will abruptly fall. It is happening, but HUGE quantities of fiat money sloshing around the globe must go somewhere for a return, but the choices are becoming less.
The end question would be: "AT WHAT PRICE WOULD THOSE WHO HOLD GOLD BE WILLING TO EXCHANGE FOR PAPER FIAT DOLLARS AGAIN?"
I am convinced so long as FIAT paper exists in the World as the dominate money that price will have to be extremely high ...
By the way, as I have said before the futures markets are a sham because fiat money is a sham. Government backed intervention via central banks and central bank agents(think JP MORGAN)into these markets every day has caused the C WORD to rapidly move into prominence. Once the C WORD dominates then currencies and central banks will collapse ...
I have been long convinced that the ETFs, more so those who hold and use derivatives the most are scams ripe for failure. Look who sells them! I have written a published article pointing out the many liabilities of the ULTRA PROSHARE ETFs. Any time any investment vehicle(HB&B product)allows for 15% of the funds to be held in "illiquid trades" you have a RED FLAG! It does not matter whether the fund "sips or drinks" the illiquidity! HA!! The fact that such a clause exists is testimate to fraud and manipulation. Can you decipher how much is 15% and what is classified as "illiquid" each and every trading day? There is not enough transparency to even begin to decipher compliance and therefore TRUST is at stake as RISK rises. Look at the administrator and the custodian of 90% of ETFs and it is JP MORGAN! That should be your first clue! In public court documents JP MORGAN is an admitted agent for the US FED and is immune from prosecution. Why would anyone put their hard earned money into such vehicles, even short term? The best rule of thumb for any risk manager is "where's your money"? If you cannot see or understand where your money is every day then you are exposed to significant risk.
The sheer popularity of ETFs, which is bragged about in every ETF's prospectus, is reason enough to be cautious. The ETF prospectus brags about the sheer size and popularity of ETFs as a reason you should throw caution to the wind and just jump in head first! It all smacks of irrational exuberance. We have an ETF BUBBLE! These attributes are all RED FLAGS to me and not to be trusted. One failure will bring them all under suspicion and tank the entire ETF market in less than a day ... probably over the weekend!
BUYER BEWARE ... its HB&B!!
I have long term funds in oil, gold, silver, farmland and oil royalties. Notice they are all "grounded" investments. The only "real wealth" comes from the ground not paper controlled by banks! Someday that will be crystal clear ... in hindsight of course!
Back to my prediction that "fortunes will be lost trading the markets successfully ..." That is a statement about honest money! PERIOD!!
People need to start thinking in terms of "resilient communities" if quality of life means anything ... I had this sense of urgency back in 1996 that I should be planning on "self-sufficiency". It took me two years to act and then another year to come up with the cash and then another three years to fully execute my plan by moving to Hawaii. You're way ahead of the game if you have the funds now, but you still need to act and execute otherwise its all hindsight. It was by far the best move and the most profitable. My wife and I have totally missed the real estate crash, which had we have stayed in California would have made my execution near impossible now. Had I have doubted myself and my plan or listened to 98% of my friends and relatives I would be sitting in Pleasant Hill,CA in a condo from hell right now paying out my ass California taxes and looking at IOUs!
Heck, had one of my wealthy friends in California or Las Vegas listened to my plan and executed it with me we would be sitting on 330,000 acres of coastline(on the Ningaloo reef)in NW Western Australia with 22,000 head of cattle, a five bedroom house, swimming pool, 13 artesian wells, mineral rights and helicopter for $968,000USD!!! Virtually our own country!!! Last year I spoke with the realtor in Perth about that property and he estimated you can't touch anything like that now for less than $20milAUD, maybe twice that depending on the mineral rights ... SHOULDA-WOULDA-COULDA!!!
Its all timing but before timing you need a PLAN and above all you need the steadfast determination to execute that PLAN! Those are a lot of hurdles ... self esteem-fear hurdles to be exact ...
My how much the World has changed since 1996 ...
How many here would have thought a year ago that a major State like California would have to hand out IOU tax refunds? I hear Kansas is being added to that list! STIMULUS to the rescue ... Please-e-e, don't get me started! HA!!
IT ALL WORKS UNTIL IT DOESN'T !!
ITS A BRAVE NEW WORLD ... Missouri out! NNNNG-G-G-G!!