Financial mayhem

[Michael Stuart Kelly]

Chris,

I went ahead and fixed your post. When embedding a video, you have to choose "HTML ON - Auto Linebreak mode" down at the bottom. Otherwise all you get is code.

Michael

[BaalChatzaf]

There is no obvious safe haven for money except to hoard cash as a hedge against deflation and gold in the short term.

Over to you, Brant.

I saw a cartoon the other day: It had financial experts discussing strategies to cope with the current crisis. One says to the other: I tell my clients now to bury their money in the back yard to to get a mattress to put their cash under-.

There is no guarantee that fiat money will be a safe store of value, by the way.

Ba'al Chafatz

[algernonsidney]

I'm not sure how to express the worthlessness of Doug Casey and his advice. I now realize that probably most of these guys don't make any money investing themselves. They just make their income from selling worthless advice. Thanks again for helping me lose money, Doug.

[Brant Gaede]

I'm not sure how to express the worthlessness of Doug Casey and his advice. I now realize that probably most of these guys don't make any money investing themselves. They just make their income from selling worthless advice. Thanks again for helping me lose money, Doug.

I lost a little money years ago on account of Doug visiting a company and being bamboozled by its management. I could have lost it all if I hadn't liked the way the stock was behaving and sold out.

No matter what, it seems, gold is going "to the moon" according to Doug. This started working when gold hit 250-270 an ounce. You knew it was a bottom because it was near the cost of production for the major gold companies, even below.

We don't know how Doug personally does as an investor. He achieved success initially as a financial writer who wrote a book championed by Robert Ringer. I think he also inherited a tremendous amount of money from his father.

He's worth reading because he spins good stories. Invest at your peril.

--Brant

[Brant Gaede]

The gross government interference in markets reflected in a huge snapback rally in equity prices yesterday and today is a set up for disaster. It is not taxpayer money making markets worldwide go up, just naive money on the side. The smart money is selling into this--it had better.

Equity markets have not cleared out the deadwood yet and real estate has not bottomed. Nothing fundamentally has changed except after the Treasury gets its legislation the Federal government will have absolutely nothing left to fight the business cycle except taxes and inflation.

Many shorts have been damaged for they were positioned for options expiration Friday today. These heroes now have less capital and an important part of capital markets has been badly damaged. When the inevitable crash comes they won't be there to cushion the blow. They won't be there to warn us that the crash is coming. Not in the strength needed to make a significant difference. The crash may happen over a short or long period of time, but I tremble for the people of the United States of America as the economy burns down.

--Brant

[Jerry Biggers]

In answer to the chaos and monumental losses on Wall Street and other financial institutions, we are now offered (e.g., forced) a solution from the same gang that helped create the problem in the first place.....the "Government" is going to "save" the financial system by creating even MORE bureaucratic regulation, (including outright nationalizations), and pumping-in perhaps a trillion dollars or more, to "back-up" the financial viability of financial institutions...... :no: :no:

Of course, our proposed new "leaders," Obamageddon and McPain, are rushing to out-do each other in proposing even more bolder governmental programs to solve our financial problems..... :sheep: :poke:

The response (as coached by the media) of the American people? "Ohh,...we feel better already! The government is going to SAVE us!"

Uh-huh,...

WAIT TILL THEY GET THE BILL! :sick: :sick: :sick:

[algernonsidney]

I lost a little money years ago on account of Doug visiting a company and being bamboozled by its management. I could have lost it all if I hadn't liked the way the stock was behaving and sold out.

Which one was that?

He's worth reading because he spins good stories. Invest at your peril.

I'll give him that. That's what ultimately keeps most people (including me) interested in reading his stuff. While so many people on boards like these claim to know what is going on around the world, Doug actually gets out there and travels. I've read a couple of his books. To his credit, he seems to be able to see the big picture and not just the world of investing.

What is happening right now can be summarized like this:

What is happening? We're not sure.

Why is it happening? We're not sure.

What caused it? We're not sure.

When did it start? We're not sure.

Who is responsible? We're not sure.

Government must do something. On this, we're sure.

Edited September 19, 2008 by Chris Baker

[Matus1976]

The Fed will cut Monday morning or shortly thereafter. You get to look good for a few months. That's not the question. It doesn't matter if interest rates go to zero. I will personally bet $100 to a donut that US private sector employment falls 10% this year and rate cuts won't do a damn bit of good, because the issue is solvency not liquidity.

Two sound investment ideas for the coming crisis: food, uniforms and ordnance.

This post was made in January 2008, can we take that as an official prediction Wolf?

Looking at ADP's national employment reports

http://www.adpemploymentreport.com/

Dec 07 - Jan 08 130,000

Jan - Feb -23,000

Feb - Mar 8,000

Mar - Apr 10,000

Apr - May 40,000

May - Jun -79,000

Jun - July 9,000

July - Aug -33,000

Total Change +62,000

With total private sector employment staying close to 116 million throughout, that makes an average change since Jan 2008 of +.05%

So according to Wolf's predictions we should see about 11 million private sector job losses in the next six months.

For the first half of 2008 the real change has been .5% of Wolf's predicted change, and in the wrong direction. I hope that Wolf takes this as an opportunity to refine his assessments of reality and be a little more skeptical of his own ability to predict the future.

[Matus1976]

Every chance I get I invest in becoming more self-sufficient, like a greenhouse, chicken coop, outdoor boiler, backup power, etc. because I have been concerned about the long term sustainability of the economies of Canada and USA and most industrialized countries.

You might be interested in an organization I am extensively involved in, the Lifeboat Foundation, which is working to identify and establish strategies to mitigate the existential threats that civilization faces. Existential threats include man made ones, such as those which advancing technology pose, but also natural ones, like caldera eruptions or asteroid impacts. One of those threats is the economic collapse of a globally intertwined economy, which could very well usher in a new dark age, sealing our final fate when the next cosmic threat hits. A large viral or bacterial pandemic could cause the same global economic crash. I favor redundancy as a strong mitigation strategy, both here on earth for terrestrial threats and in space.

If you are working your way toward planning for such an event, and trying to achieve self sustainability when that happens, you might want to consider also a reliable information archive as well.

http://lifeboat.com/ex/main

[algernonsidney]

Am I pessimistic about the USA? Hell, yes.

Am I pessimistic about the world? That's another story.

Most of the world has gained economic freedom in the last 30 years. Marxism is dead and buried. This crisis will bury Keynes. It depends on many factors.

I've said for several years that I believe Brazil is the next world super power. One big reason is that the country is energy self-sufficient. They give little or nothing to OPEC. Population growth is stabilizing. They have not even discovered all the resources that they have. They aren't really that connected to the world economy. Brazil does not suffer from much of the socialist muck that Europe and Asia do. Their military exists for the protection of their nation and isn't looking for monsters to destroy.

China could collapse simply because they are so dependent on the USA. The same goes for Japan. Europe does not need the USA all that much, but they are still mired in a great deal of socialism. I also figure the EU will mess up things worse than the DC is messing up things here.

Where would I go? Let's see.

New Zealand. It's one of the freer countries on Earth. They speak English. They aren't joining any associations that can destroy them. It's safe from foreign invasion because it's so far from everything.

Switzerland. It's expensive. I would have to learn another language. They have the right kind of traditions. It will be a bastion of civilization in the heart of barbarism once Islam takes over Europe.

Chile. It's probably the best in South America. If I do learn a second language, I would certainly prefer Spanish.

Costa Rica. It's already home to lots of Americans. It seems too popular.

Estonia. It's possibly the freest in Europe now. It's also high-tech. The biggest drawback is that I would have to learn a dying language. Estonian is useless outside of Estonia.

[algernonsidney]

How is Jim Cramer still on television, by the way?

Edited September 19, 2008 by Chris Baker

[syrakusos]

Marxism is dead and buried. This crisis will bury Keynes. It depends on many factors.

I just had a couple of classes in Economics (Macro and Micro, one year, two semester) in 2007 and I assure you that the current textbooks are very aligned with Chicago Monetism. Marx gets a sidebar, as does Ludwig von Mises. Von Hayek, Gary Becker and others get a page, as does John Maynard. Just to say, the trend has long since changed. It's just that governments are what they are. The policies of the current administration are no different from those of pharoah or the Ptolemies.

I've said for several years that I believe Brazil is the next world super power. ... Their military exists for the protection of their nation and isn't looking for monsters to destroy.

Well, the death squads already killed off a lot of those "monsters" the homeless children and others, so you need to take that into account. Also, abortion is still illegal. Mining companies send hunters into the bush to hunt and kill off natives who insist on their property rights. Not being "tied" to Europe is arguable, as this is the country that invited the deposed king of Portugal to rule them. And Brazil is very tied to Japan. So, consider that.

They have a cultural racism that includes measures of eyes and noses, way in excess of anything we have in the USA, though many enlightened (liberal) Brazilians try to play that down. Consider that here in the USA, a light AA might be accused of "passing for White." No one says that dark Cs are attempting to pass for Black. We have racism here. They have it worse, there. They also took an extra 20 years to abolish slavery.

Brazil is probably not much different than a lot of other places, with plusses and minuses, of course, but I would not wager cold hard cash on their being ascendant in any meaningful way.

Switzerland. It's expensive. I would have to learn another language. They have the right kind of traditions. It will be a bastion of civilization in the heart of barbarism once Islam takes over Europe.

Have you ever been there? The National Bank of Switzerland demonetized its SFr 100 notes, took note of the market price of gold versus the book value, and then inflated the currency to bring it in line with the dollar. There is no separation of church and state: clerics are civil servants in some of the communes. You need to examine that and more very closely.

Estonia. It's possibly the freest in Europe now. It's also high-tech. The biggest drawback is that I would have to learn a dying language. Estonian is useless outside of Estonia.

Gets you into Finnish and Hungarian, just as Arabic opens the door to Hebrew and Swahili. Besides, as with Switzerland, English is common. In fact, in Switzerland, I had a hard time getting people to not speak English to me.

You need to get out more.

Edited September 21, 2008 by Michael E. Marotta

[Michael Stuart Kelly]

Well, the death squads already killed off a lot of those "monsters" the homeless children and others, so you need to take that into account. Also, abortion is still illegal. Mining companies send hunters into the bush to hunt and kill off natives who insist on their property rights.

Michael,

1. There is no shortage of homeless children in Brazil. I bought plenty of crack off of them when I was an addict. Those child killers happened, but it was a molecule of a drop in the bucket that the media inflated to sell more gallons of news. It was disgusting enough to sell well, so they made good use of the law of supply and demand. They filled that demand until they squeezed all the juice out of it.

There are actually enough orphanages, religious groups and child care centers to handle everything, but the problem is (1) widespread drug addiction in the homeless (the kids are great runners since they don't go to jail), and (2) begging is a hugely profitably enterprise for many beggars (not all, of course). The good-hearted will give more money to a homeless child than a homeless adult, so street children are great little honeypots.

2. Abortion? Heh. Being illegal doesn't matter. That's a law that did not "take" and never did. In fact, the doctors themselves doctor the Brazilian equivalent of Medicaid to pay for it when a woman cannot. Any Brazilian woman who doesn't get an abortion doesn't want one and that's the only reason.

3. I am not so sure the hostile native Brazilian Indians understand what property rights are. They don't want white men nearby and the Indian tribes that get news mileage are vicious as all get out. The miners are too. It's tribal warfare, not anything concerning any rights. Confiscation by murder is a better term (both for Indians and miners).

There are some other misconceptions you mentioned about Brazil that I see reflected in the news. So I am presuming you got your research basically from MSM (main stream media). That's not a very accurate source. Many people still think of Brazil as the lady with the bananas on her head (Carmen Miranda), a humongous tropical jungle and beaches of beautiful women. All MSM stuff to sell to the USA audience.

I am studying Internet marketing right now and I am fascinated with the difference between actual value and perceived value. A good marketer knows that perceived value generates sales, even when actual value does not exist. This is Capitalism-The Underbelly 101. MSM firms are very capitalistic in this respect. They know what their audience wants and they dish it up generously irrespective of truth or value.

I personally believe Brazil will evolve into a major world power economically. It is well on its way and it is gradually shaking off the paternalistic attitude that holds it down. Added to this, Brazilians are incredibly creative outside-the-box thinkers. There are many more inventions used in the world patented by Brazilians than people realize.

Here is just one field: dentistry. Brazil's dentists are hands-down the best in the world. Here's another. Independently of the Wright brothers, Santos Dumont invented the airplane. (The Wright brothers got the credit due to legalities, but Dumont's name is impossible to erase from those days. Even his death is the stuff for grand opera. When he saw fighter planes in WW! and realized that his invention was being used as a more efficient killing machine, he committed suicide from grief.) Here's an art form: Bossa Nova. How's this for modern architecture?: Brasilia. (Niemeyer and Costa didn't just design a building. They did a whole city and people still come to study it from all over the world.)

I could go on and on, but this is a very long subject. In fact, I am feeling a bit of nostalgia for Brazil right now...

Michael

[Brant Gaede]

The life story of Santos Dumont is well worth reading in Wikipedia. He was obviously a more gifted inventor than the Wright brothers. He was also responsible for the wrist watch invented at his request by Cartier.

--Brant

[Brant Gaede]

To get back on track here, the big snapback rally in equities Thursday and Friday is unlikely to hold. It simply left them more or less equal for the week. The Dow now has a 1000 point up and 3000 point down potential for the coming year. If it goes up 1000 then it will have a 4000 point potential down for the next two-three years. Right now the worst investment class I can think of are any long-term bonds, corporate or government. Well, municipal bonds might crash and burn while generally those others merely greatly decrease in value in the years to come as interest rates go up. They have to go up as the less financially worthy federal government sells bonds to finance its debt way beyond its ability to tax deepening the recession we are looking squarely in the face. Real estate markets may stabilize or even fluff up a bit because of all the bailout crap being shovelled out of Washington, but it won't last. Too many people have too much debt above and beyond their primary mortgages and the total real value of their property and they will walk away from their obligations in increasing numbers.

Because of the Fed we have essentially a socialized banking/financial system with capitalistic bangels. The Federal government is acting to increase its power--socialistization--and to protect this system which has primarily caused all these current problems. Just the opposite of what needs doing. Consequently subsequent problems will be even worse in their actual realization--probably gross third-world inflation and Americans will continue to get poorer. There will of course be even more war than what we have had recently and because the U.S. has "run out of army" that war will certainly involve bombs and missiles. If you are interested in visiting any major city, especially along the sea-coasts most especially NYC, do so while it's still there to visit. I include London in this.

Alan Greenspan is being criticized because he wasn't Paul Volker at the Fed. True enough but besides the point. The real problem is central banking and lack of a gold standard. Greenspan sanctioned this by accepting the job as head of the Fed just as he sanctioned Social Security by heading a commission over a quarter of a century ago to "reform" it which did nothing of the sort. He chose government service because he didn't want to be an ineffective pampleteer. Well, the country is being effectively ruined.

--Brant

[BaalChatzaf]

The life story of Santos Dumont is well worth reading in Wikipedia. He was obviously a more gifted inventor than the Wright brothers. He was also responsible for the wrist watch invented at his request by Cartier.

--Brant

The Freres Wright came up with One Big Trick. Wing warping, which enabled a plane to turn by banking. The canard stabilized the plane in the turns (preventing side slipping) and the rudders provided the torque for the turn. Once this trick was mastered by the European plane builders and other American builders they soon surpassed the Wright Flyer design. So the Wrights converged on three axis control before other designers, but soon bogged down into a rut.

Unfortunately the Wrights ended up spending more time guarding their patent wrights (sorry about that!) than inventing new and better planes.

Ba'al Chatzaf

[algernonsidney]

begging is a hugely profitably enterprise for many beggars (not all, of course).

You will see the same thing in Montreal. The beggars are only there in the summer, interestingly enough. In winter, they disappear.

So I am presuming you got your research basically from MSM (main stream media). That's not a very accurate source. Many people still think of Brazil as the lady with the bananas on her head (Carmen Miranda), a humongous tropical jungle and beaches of beautiful women. All MSM stuff to sell to the USA audience.

I could say the same thing about Jamaica. One of my best buds went down there in the summer. She is engaged to a Rastafarian. She also knows a few of the Marleys. She went to Kingston, not Montego Bay. She saw the Jamaica that most Americans never see. Jamaica is not beaches and music. It's pretty ugly.

My impression of Brazil comes from a lady I used to work with. She had an all-expense month-long trip to Sao Paulo. The Rotary Club paid for it all. I was so jealous!

[algernonsidney]

I just had a couple of classes in Economics (Macro and Micro, one year, two semester) in 2007 and I assure you that the current textbooks are very aligned with Chicago Monetism.

Of course, that's not much better than Keynes.

How many times has Brazil sent their military outside of South America?

Also, abortion is still illegal.

And how exactly is this going to bring down the entire country?

They have a cultural racism that includes measures of eyes and noses, way in excess of anything we have in the USA, though many enlightened (liberal) Brazilians try to play that down. Consider that here in the USA, a light AA might be accused of "passing for White." No one says that dark Cs are attempting to pass for Black. We have racism here. They have it worse, there. They also took an extra 20 years to abolish slavery.

At least they abolished slavery peacefully. What does racism have to do with a nation's prosperity? There was a lot of racism in the 1920's, but a lot of wealth was created too. The main question is: does Brazil have legal barriers in place that keep one race poor? I also have to ask: is there a connection between an increase in socialism and a decline in racism? In this country socialism has increased as racism has decreased.

Have you ever been there? The National Bank of Switzerland demonetized its SFr 100 notes, took note of the market price of gold versus the book value, and then inflated the currency to bring it in line with the dollar. There is no separation of church and state: clerics are civil servants in some of the communes. You need to examine that and more very closely.

I have not been there. Switzerland has an alternative currency called the wir. When the politicians destory the Swiss Franc, the wir will bail them out. Every able-bodied Switzer is armed to the teeth, which is what keeps them free. Their military exists for the defense of the country, and they have been at peace since 1815.

Estonia. It's possibly the freest in Europe now. It's also high-tech. The biggest drawback is that I would have to learn a dying language. Estonian is useless outside of Estonia.

Gets you into Finnish and Hungarian

Who cares about those languages?

You need to get out more.

Well, excuse me for not having unlimited funds.

[algernonsidney]

The life story of Santos Dumont is well worth reading in Wikipedia. He was obviously a more gifted inventor than the Wright brothers. He was also responsible for the wrist watch invented at his request by Cartier.

--Brant

Thank you for bringing this up. I had never heard of this guy.

It also seems that the Wrights were also more interested in war profiteering than Santos-Dumont. Perhaps this is why they are more famous here in the US.

[Brant Gaede]

Well, today the Dow is down over 200, oil up $4.50, gold up nearly $40, Nasdaq down 50--so far.

What is happening is the destruction of the dollar, the credit worthiness of the Federal government, and the economy itself. This process has just begun and will be inexorable once the bailout package is passed. These data are not substantial and can easily reverse short term.

Because of the ban on short-selling of 799 financials now expanded by 30 including General Motors and General Electric, equity prices are continuing to be distorted and an actual crash much more likely. Driving the shorts out of equity markets means they won't be there to warn of danger through their actual positions--as opposed to blah, blah, blah (as I am doing)--or to buy shares by covering when things go bad.

I am planning to short technology stocks. I hope the SEC doesn't go there. It probably won't. The Feds have so much in their mouths from financials they can't chew and swallow they'll probably be completely off their radar. They'd have to ban all short selling.

This PM I'm going to go buy a tank of gas before the price goes up 10 cents.

--Brant

[BaalChatzaf]

This PM I'm going to go buy a tank of gas before the price goes up 10 cents.

--Brant

In New Jersey, gasoline went down ten cents since the Ike Spike which was about twelve cents.

Ba'al Chatzaf

[algernonsidney]

What is happening is the destruction of the dollar, the credit worthiness of the Federal government, and the economy itself. This process has just begun and will be inexorable once the bailout package is passed. These data are not substantial and can easily reverse short term.

To borrow a metaphor from my old history teacher, this is like giving aspiring for a brain hemorrhage. It relieves the pain--it doesn't solve the problem.

With the destruction of the USA's credit worthiness, the neo-cons' war will go down the tubes. Gold will go to about $3000 per ounce. More and more people will steal catalytic converters from SUV's.

http://www.reuters.com/article/idUSPEK2402720080917

Finally, Henry Paulson became Secretary of the Treasury in July 2006. Guess what he did before that? He was the CEO of Goldman Sachs and had worked there since 1974. It's a shame that the world would have been so much better off if so many of these worthless Ivy Leaguers had never been born.

Edited September 22, 2008 by Chris Baker

[Brant Gaede]

This PM I'm going to go buy a tank of gas before the price goes up 10 cents.

--Brant

In New Jersey, gasoline went down ten cents since the Ike Spike which was about twelve cents.

As I write crude is up $25/brl. This is up $30 from its recent lows. Right now--I think--I can buy gas for $3.40 a gal. If these crude prices hold its going back to $3.80. Tucson, NJ (unless they've put in higher taxes since 1995)and Ok City (before the storm) have the lowest prices in the country. We are 10% better than Phoenix because we sit on a gas pipeline from El Paso. I also get a 5% cash credit card rebate from Chase.

--Brant

[Brant Gaede]

Oil fell back $10 after the short squeeze. You never want to be short oil without a serious hedge for it can literally double overnight because of a geo-political event in the Middle East.

The Dow just before the close is threatening 370 down and the Nas 90. If only markets had opened up 100 Dow I could have easily shorted it. I hope the bailout package gets passed soon (it will be passed, to my regret) and that fluffs up the market a little, but I don't think it will. Investors are too smart and information too quickly available.

If the general public gets scared and cashing in, Paulson will learn shorts aren't needed to crash markets. You'd a thought the former head of Goldman Sacs would know that.

There is no faith in government intervention. Quite a few shorts were destroyed last week. They won't be back. Quite a few were badly hurt. They can't run on one leg. Longs know shorts actually were protecting them.

--Brant

[algernonsidney]

If the general public gets scared and cashing in, Paulson will learn shorts aren't needed to crash markets. You'd a thought the former head of Goldman Sacs would know that.

All Paulson cares about are his friends and himself. He certainly doesn't care if his interventions wipe out anyone else. He's a corporate-welfare statist.