We The Sheeplez- The Coming Economic Collapse.."A Nation Of Sheep Ruled By Wolves" Thomas Jefferson

Friday, September 2, 2011

Goldman Justifies The Need For More QE3, And Even More Record Wall Street Bonuses

We end this busy day of economic buffoonery with Goldman's scorecard for August ("the US economy has not fallen off a cliff", which we translate as a B+, and "far better than expected"), which in turn explains why Goldman, and everyone else, now assumes QE3 (yes, Op Twist is QE3; get over it) is not only a given, but why in Goldman's esteemed opinion, the Fed has at least 3 rationales for pushing for more QEasing. Incidentally, these are as follows: "First, unemployment is far above the Fed’s long-term forecast in the low 5% range; the longer high unemployment persists, the greater the risk that an erosion of skills and labor force attachment will result in permanent supply-side damage. Second, economic growth has been woeful this year and there is no convincing sign of the second-half pickup in growth that the majority of Fed officials seem to expect. The payroll report in particular will weigh heavily in the minds of many Federal Open Market Committee members. Third, there is limited prospect for near-term fiscal stimulus from a gridlocked Washington." The only thing Goldman is avoiding, of course, is the wipe out in stocks that will make QE3 a virtual certainty, as we have been predicting ever since March. Goldman is also avoiding to mention that the only outcome of more QE will be another record year of Wall Street bonuses, all at the expense of more joblessness, higher gas prices, a 120% debt/GDP ratio, and overall sovereign insolvency. Oh well - in the meantime we continue, as we have for the past 2.5 years, to buy gold... or spam for the Econ PhDs out there.

Charting Two Centuries Of Business Booms And Depressions: From 1775 To 1944

Because this time is never different...

The Barro-Ricardian Equivalence Theorem

September 2, 2011, at 3:58 pm
by Monty Guild in the category Guild Investment |

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Dear CIGAs,

“The Barro-Ricardian Equivalence Theorem handcuffs and deters short term fiscal policy stimulus the way the “liquidity trap” makes further monetary policy ineffectual and unlikely. This unfortunate situation means that the U.S. will be facing a prolonged period of slow growth. Any stimulus attempts would be self defeating. The theory suggests that when a government tries to stimulate demand by increasing debt-financed government spending, demand remains unchanged because the public will save the excess money. The public chooses to save it in order to pay for what they know will eventually be future tax increases which will be necessary to pay off the debt. (Keep this in mind during Obama’s speech).”

–From Scotia Mcleod

Monty Guild

In The News Today

September 2, 2011, at 11:55 am
by Jim Sinclair

Jim Sinclair’s Commentary

Here is why you should subscribe to John Williams’ ShadowStats.com if you have not already.

WEAK PAYROLL NUMBERS PUSH GLOBAL STOCKS LOWER AND BONDS HIGHER — IT NOW LOOKS LIKE SUMMER BOUNCE HAS ENDED — GOLD MINERS INDEX COULD ACHIEVE BULLISH BREAKOUT ON RISING GOLD AND SILVER PRICES By John Murphy
From stockcharts.com:

EUROPEAN STOCKS FALL … This morning’s weak employment report is having a negative impact on global stock markets. European stocks are down 3%. Chart 1 shows the German DAX to be the weakest of the three after having achieved a feeble rally over the last month. Chart 2 shows the French CAC Index failing at 3300 resistance. Chart 3 shows the London Times Index (FTSE) falling back below its mid-August peak at 5377. All three charts strongly suggest that the short-term rally in Europe has probably ended. U.S. futures are called to open sharply lower this morning as well. It looks like the U.S. rally has ended as well. Not surprisingly, bond prices are rising as bond yields drop. While economically-sensitive commodities are dropping, safe haven buying is pushing gold and silver prices higher. That should be good for mining stocks.

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Chart 1

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Chart 2

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Chart 3
BOND YIELDS PULL STOCKS LOWER … Chart 4 shows the 10-Year Treasury Note yield (TNX) dropping close to its summer low. The solid line is the S&P 500. The chart shows that the recent rebound in stocks wasn’t confirmed by a rising bond yield. That’s another sign that the stock rally has probably run its course and that prices are headed back down.

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Chart 4
GOLD STOCKS NEAR UPSIDE BREAKOUT… With gold and silver prices spiking higher this morning, it should be a good day for mining stocks which could be on the verge of a bullish breakout.. Chart 5 shows the Market Vectors Gold Miners Index (GDX) testing its highs near 64 for the third time. Technical odds for an upside breakout look very good.

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Chart 5

Smart Money Accumulating Mining Shares

September 2, 2011, at 5:59 pm
by David Duval in the category General Editorial |

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Chart by CIGA Luis Ahlborn Sequeira (LAS)

Comment by LAS:

The accumulation is only starting in my opinion. The performance could follow the same pattern as Internet stocks in the 90s. Indeed, I do believe the upcoming Gold Mania could beat that period in a grand fashion. There is a quiet but definitive technical turn taking place in the entire gold group. It would not surprise me to see a surge in M&A activity which would be a telltale sign of things to come.