From Albert Edwards: "In 2005 when Alan Greenspan was being hailed as a “maestro” I wrote that his policies would ruin the world and history would judge him to be “an economic war criminal”. I now think Ben Bernanke’s policies will prove even more ruinous than Sir Alan’s (yes unbelievably he still retains his honorary knighthood). Hence we are lowering our equity weighting to 30%, the minimum possible. The last time I did this was 8 May 2008.... I'm reading some insanely stupid stuff at the moment. Okay, I know some of my writing is pretty insane, but when I read direct quotes and commentary about Bernanke's policy of driving up asset prices in general and equity prices in particular, I almost want to cry over the ludicrousness of this position. The Fed is pursuing the same road to ruin as it did between 2003-2007. I'm becoming more and more convinced that, Gloom, Boom, & Doom's Marc Faber is right when he says that "the Fed will destroy the world."
Live Webcast From Spain Press Conference On 2013 Austerity Budget
Today's prime-time event is about to begin. In a few moments (pending further delays) Mariano Rajoy will begin listing the terms of his 2013 Austerity Budget which is expected to delineate the cuts, and further austerity measures (which so far have been non-existent - recall that Y/Y Spain has seen its tax revenues slide by nearly 5% while spending has increased by almost 9%) which will be a precursor to the Spanish bailout, that Spain has less and less time to enact before it runs out of cash. This could possibly lead to further violent outbursts among the throw of protesters which has once again surrounded parliament, as happened on Tuesday, depending on the resolve of the protesters.
Bubble Formation And Bubble Bursting: A Flowchart So Simple Even An Economist Can Get It
Since it is now quite clear that despite calling for even endless-er QE, the uberdovish Chicago Fed, and by implication the entire FOMC, is still clueless about the two most critical processes of modern fiat-based economics, namely bubble formation, and its counterpart, bubble bursting, we decided to give them a helping hand, and to explain just how these two fundamental events occur, with flow charts so simple, even an Economics PhD can get it.
Peak Macro Complacency
Citigroup's macro risk aversion index just tested record lows (i.e. record high complacenecy levels with regard investors' view of macro uncertainty going forward). Coinciding as it did with Bernanke's all-in moment we wonder if we just saw the 'peak complacency' moment as the wall of worry was officially scaled only to find that the grass is indeed NOT greener on the other side. For sure, it would appear that all the talk of bearish sentiment as the driver of the nextt 'secular' leg in stocks seems just that - 'talk'.
Successful Investing
Admin at Jim Rogers Blog - 22 minutes ago
Successful investing means getting in early, when things are cheap when
everything is distressed, when everyone is demoralized. - *in Adventure
Capitalist*
*Jim Rogers is an author, financial commentator and successful
international investor. He has been frequently featured in Time, The New
York Times, Barron’s, Forbes, Fortune, The Wall Street Journal, The
Financial Times and is a regular guest on Bloomberg and CNBC.*
I Expect The Renminbi To Double Or Triple In The Next Decade Or Two
Admin at Jim Rogers Blog - 2 hours ago
I own the renminbi. Every time I can, I buy more renminbi. I expect the
renminbi to double or triple in the next decade or two. - *excerpt from an
interview in early 2012*
*Jim Rogers is an author, financial commentator and successful
international investor. He has been frequently featured in Time, The New
York Times, Barron’s, Forbes, Fortune, The Wall Street Journal, The
Financial Times and is a regular guest on Bloomberg and CNBC.*
Lost Decades for Short Term Yield Savers
Eric De Groot at Eric De Groot - 2 hours ago
Observations about the lost decade phenomenon: It's been lost decades
(plural) for the average Japanese saver. Japan has gone nowhere since 1989.
It will become lost decades for the average American saver as well. Those
that purchased gold, silver, and high quality mining shares with their
savings will avoid this experience (chart). Chart: U.S. Treasury Bonds
Total Return Index...
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content, and more! ]]
I Will Never Sell My Gold As Long As We Have People Like The Bernank At The Fed
Admin at Marc Faber Blog - 4 hours ago
I will never sell my gold as long as we have people like The Bernank at the
Fed and fiscal deficits as far as we can see. - *in CNBC*
Related: SPDR Gold Trust ETF (GLD), Newmont Mining (NEM), Barrick Gold
(ABX), Goldcorp (GG)
*Marc Faber is an international investor known for his uncanny predictions
of the stock market and futures markets around the world.*In Historic Anti-Equity Revulsion, Fidelity Now Manages More In Bonds And Money Markets Than Stocks
It
was inevitable. After demonstrating for years that week after week
after week domestic equity mutual funds saw outflow after outflow which
now amounts to a third of a trillion since 2010, regardless of how the
policy vehicle known as the stock market, long since populated almost
exclusively by vacuum tubes, performed and coupled with inflows into
bonds, it was only a matter of time before this happened. This being the
historic announcement by Fidelity that as of Wednesday bond and money market assets now total $848.9 billion, more than half of the company's $1.6 trillion in managed assets. Ford
O'Neil, a top bond manager at Fidelity, underscored the milestone on
Wednesday during a media presentation in Boston. "The rise of bond and
money market funds, including institutional assets, is a remarkable turn
of events for Fidelity. The company built an empire in the 1980s and
1990s on stock funds and star stockpickers like Peter Lynch. Fidelity's
stock mutual funds held $761 billion at the end of June... The rise of
bond and money market funds, including institutional assets, is a
remarkable turn of events for Fidelity. The company built an empire in
the 1980s and 1990s on stock funds and star stockpickers like Peter
Lynch. Fidelity's stock mutual funds held $761 billion at the end of
June." So much for the empire that Peter Lynch built. Luckily we all
know whom to thank - a certain Princetonian central planner who would
make the 1954 Stalingrad politburo blush with envy.Total Donations over the last 3 1/2 years. approx $165.00 (Thank You).
Donations will help defray the operational costs. Paypal, a leading provider of secure online money transfers, will handle the donations. Thank you for your contribution.
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Cashin Concerned On Europe But Egyptian Streets Worry Him More
European
riots protests are on UBS' Art Cashin's mind. Furthermore, Art notes
that Spain has seen a fifth region (Castilla La Mancha) request a
billion-euro-bailout (along with Catalonia's secession concerns) and
Greece is hotting up. However, it is Egypt that is becoming an
increasing concerning for the avuncular aristocrat of the exchange
floor, as he fears the region's growing instability along with its
potential need to devalue the pound may see the current 'sporadic
outbursts of social unrest' spill over into more broad based
protestations on the streets of Cairo.Barclays Opens Massive Brand New Precious Metals Vault In London
It appears that JPM and HSBC's monopoly in the warehousing of tungsten
gold is coming to an end. Just two weeks after QEternity was announced,
it has become obvious that the only things, literally, that will
matter in the future are the ABCDs: Anything Bernanke Can't Destroy.
And as a result of a surge in physical purchases, buyers need to store
their metal somewhere. Sure enough, one of the the UK's most insolvent
banks - Barclays - is more than happy to provide its brand spanking new
warehousing services, with the opening of what will be on of Europe's
largest PM vaults. From Dow Jones: "Barclays has opened its first
precious metals vault in London in a bid to satisfy growing client
demand for bullion as a store of value, the bank said Thursday. The
vault, which houses gold, silver, platinum, palladium and rhodium and
began operating earlier this month, is one of the largest in Europe. While
the bank already has extensive trading and clearing capabilities, this
is the first time that Barclays has been able to offer its own
precious metals storage facility to its customers, having previously
relied on third-party storage." Of course, if and when the scramble
comes and everyone demands their gold from the vault located in an
unknown location, but somewhere in the inner loop of London's M25,
Barclays will just say "Ooops." But we will cross that bridge when we
get to it."Not Counted" Does Not Mean "Not There"
The
ECB has $15 trillion in loans outstanding to Europe. They claim a $4
trillion balance sheet based upon not counting guaranteed loans by
various nations and by not counting contingent liabilities. This is the
same scheme that is used for calculating the debt to GDP ratios of the
countries in Europe. If a loan, a debt, is guaranteed by a nation or
if the liability is “contingent;” it is not counted. This, of course,
does not mean that possibility of having to fund or write-off something
is not there; it just means it is not counted. Do not
disregard or minimize the recent announcement by Germany, Finland and
the Netherlands that was joined twenty-four hours later by Austria.
The funding nations in Europe placed a line in the concrete when they
rejected assisting legacy issues and loans. This group of nations vacated, in this one statement, all of the pleas and demands of the periphery countries
that had lined up for aid and ever-more aid relying upon the pledges
of the solidarity of Europe and they got an answer, a very Germanic
answer which is not, I am quite sure, what they wanted to hear.Buba's Weidmann Refuses To Be A Good Socialist, Rejects "Free Lunch"
Jens "I don't say no to everything" Weidmann just said "nein" again. This time confirming Germany's position that the banking union idea - or an aggregation of deposit guarantees - will not cover existing bad debts. In other words, this will not be allowed to become a back-handed way of transferring wealth from Germany to peripheral banks in a free lunch. He had more to say (via Bloomberg):- *WEIDMANN: MUST ENSURE PEOPLE DON'T LOSE TRUST IN CENTRAL BANKS
- *WEIDMANN SAYS CENTRAL BANKS SHOULDN'T TAKE ON FISCAL TASKS
- *ECB'S WEIDMANN SAYS PRINTING TOO MUCH MONEY LEADS TO INFLATION
- *WEIDMANN SAYS BANKING UNION NEEDS TIME FOR PROPER PREPARATION
- *WEIDMANN SAYS BANK UNION SHOULDN'T COVER EXISTING BAD DEBTS
Final Q2 GDP Disaster: 1.25% Growth Comes Below Lowest Estimate
So
much for the US recovery (we will never tire of saying that). After
the first Q2 GDP revision bubbled up from 1.5% to 1.7%, the sellside
brigade was confident that the rate of growth would continue and final
Q2 GDP would be in line. Instead, we got an absolute shock of a print,
with the final Q2 GDP print coming in at a ridiculously low 1.25%
(rounded up to 1.3%), below the lowest Wall Street estimate of 1.4%, and
the lowest number since the revised 0.1% reported in January 2011.
Here is the final GDP trendline: Q4 2011: 4.1%; Q1 2012: 2.0%; Q2 2012: 1.25%.
Luckily, at least "housing has bottomed." The reason for the major
contraction in the final print: a downward revision to all favorable
components except Government which detracted the least from growth in
years at just -0.14%. Of note - Personal Consumption was 1.06%, down
from the 1.20% per the second revision. If nothing, we now know just
what data Bernanke was looking at on an advance basis to come up with
QEternity, and we also know the reason for the media and
administration's all in gamble to reflate housing yet again. If the
housing market does not go up courtesy of infinite cheap leverage, it
could be curtains for the Bernanke reflation experiment.Durable Goods Orders Cliff-Dive Most Since Jan 2009 But Initial Claims Beat
Durable
Goods orders expectations were pushed down to a dramatically low -5.0%
after last month's dismal reading and the PMI data since but the print at -13.2% is mind-blowingly bad. Perhaps this is the sneak peek that Ben had? This drop is the largest since January 2009 when world trade had fallen off a cliff.
It appears the seasonal-adjustments are the driver of the plunge as
NSA is -7.2% (still very weak for August). We are sure there will be
calls for the V-Shaped recovery from this but with a very different
stimulus-environment around the world (i.e. jaded and soaked in much
more debt), we suspect that will be less than forthcoming. The sub-indices were all weaker than expected but we note that defense -40% and non-defense aircraft orders plunged. On the bright side, all this terrible production data inspired less layoffs as Initial claims beat expectations modestly falling to its lowest (best) in two months - sigh.Spanish Bank Deposit Outflow Surge Continues In August
The crux of the "pain for Spain" was exposed in August, when the world learned that despite all attempts to the contrary, Spanish banks are no longer perceived as safe by the locals, and the result was a record 5% deposit outflow in one month from local banks: cash that was promptly redeposited elsewhere in the Eurozone. And as money flow theorists know all too well, if cash is exiting the Spanish banking system - i.e., if the confidence is just not there, not only is growth impossible, not only are any austerity plans or otherwise to push GDP higher futile, but all attempts to save the local banking system - which is now reliant on the ECB for funding to the tune of a record €412 billion, and which means the country has already been bailed out by the ECB - are futile and merely sunk, literally, costs. In short: the deposit outflows continued, and while not at the record July 5% pace, a whopping €17 billion, or 1.1% of total, deposits left the country for good and is unlikely to come back.
Frontrunning: September 27
- Madrid Protesters March Again as Spain Braces for Cuts (Bloomberg)
- Euro Can Bear Fewer Members as Czech Leader Calls Greeks Victims (Bloomberg)
- Chinese Industrial Profits Fall 6.2% in Fifth Straight Drop (Bloomberg)
- China pours $58bn into money markets (FT)
- Beijing vows more measures on Diaoyu Islands (China Daily)
- Noda vows no compromise as Japan, China dig in on islands row (Reuters)
- Politico’s Paul Ryan Satire: The Joke’s on Them (Bloomberg)
- Electoral Drama Shifts to Ohio (WSJ)
- German opposition party targets banks (FT)
- Fed action triggers fear of new currency wars (FT)
- Ex-Credit Suisse CDO Boss Serageldin Is Arrested in U.K. (Bloomberg)
- Romney ‘I Dig It’ Trust Gives Heirs Triple Benefit (Bloomberg)
Overnight Sentiment Better As China Joins Global Easing Fest... Sort Of
After seeing its stock market tumbling to fresh 2009 lows, the PBOC decided it couldn't take it any more, and joined the Fed's QE3 and the BOJ's QE8 (RIP) in easing. Sort of. Because while the PBOC is prevented from outright easing as we have been saying for months now (even as "experts" screamed an RRR or outright rate cut is imminent every day while we warned that Chinese inflation has proven quite sticky especially in home prices and food and China's central bank will not attempt to push its stocks up as long as the situation persists, so for quite a while) it can inject liquidity on a ultra-short term basis using reverse repos (or what are called repos here in the US). And shortly after it was found that Chinese companies industrial profits fell 6.2% in August after tumbling 5.4% in July, we learned that the PBOC added a record 365 billion Yuan to the financial system in order to prevent a creeping lockup in the banking system. While this managed to push the Shanghai Composite by nearly 3% overnight, this injection will prove meaningless in even the medium-term as the liquidity is now internalized and the PBOC has no choice but to add ever more liquidity or face fresh post-2009 lows every single day. Which it won't as very soon it will seep over into the broader market. And as long as the threat of surging pork prices next year is there, and with a global bacon shortage already appearing, and food prices set to surge in a few short months on the delayed effects of the US drought, one thing is certain: China will need a rumor that someone- even Spain- is coming to its rescue.Today’s Items:
South Korean gold reserves rose a sharp 16
tonnes for a 30% increase in total gold reserves. North Korea has
exported more than 2 tons to gold hungry China. Paraguay became the
latest central bank to begin diversifying into gold. Nations bought
254.2 tons in the first half of 2012 and may add close to 500 tons for
the year as a whole.
Germany intends to be one of the first
countries to try to put the brakes on high-frequency trading. This
practice has been, wrongfully, blamed for the rattling of financial
markets across the globe. If an investigation of who programmed these
trades into these computers is done, then the real financial terrorists
will be clearly identified.
John Hathaway would not be surprised if we
see gold and silver track sideways for a while; however, once gold
takes out the $1900 mark, gold may no longer creep, but skyrocket up
further. Of course, the news that 39% of gold mining in South Africa is offline is definitely a bullish indicator for gold. The nice thing is that silver will not be far behind.
As the end game is being played out, JP
Morgan could be letting the paper fly as they grab the physical. In
fact, both silver and gold are being hoarded by the bullion banks.
Although, there is nowhere enough physical to cover the paper, there is
enough, in a massive global meltdown crisis, to make the initial
apparent deliveries of physical before it becomes too dangerous and cost
prohibitive, to the customer, for the actual physical delivery. In
short, JP Morgan may only have to put forth the illusion that they can
service physical delivery in a crisis situation.
Here are a few…
1. The FBI has informed businesses that people, who use cash to pay for a cup of coffee, ar potential terrorists.
2. The TSA has expanded its perverted groping outside of airports to high school proms.
3. The EPA is using spy drones to monitor farms
1. The FBI has informed businesses that people, who use cash to pay for a cup of coffee, ar potential terrorists.
2. The TSA has expanded its perverted groping outside of airports to high school proms.
3. The EPA is using spy drones to monitor farms
Using criteria; such as school choice,
teacher quality, and transparency, the Parent Power Index has named
these states as the best for parents to have a voice in education…
Wisconsin, Minnesota, Utah, Pennsylvania, Louisiana, District of
Columbia, Arizona, Ohio, Florida, and Indiana tops the list.
Personally, I was surprised by some of these states being in this list.
Here are a few…
1. Make a fire and know fire safety.
2. How to clean fish and wild game.
3. How to read a map and use a compass.
I bet there are a lot of adults that do not know these three alone.
1. Make a fire and know fire safety.
2. How to clean fish and wild game.
3. How to read a map and use a compass.
I bet there are a lot of adults that do not know these three alone.
Total Donations over the last 3 1/2 years. approx $165.00 (Thank You). Donations will help defray the operational costs. Paypal, a leading provider of secure online money transfers, will handle the donations. Thank you for your contribution.
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