The Duck-Like Noise of a One-Legged Economy

October 11th, 2010

In my email I got a forwarded essay titled “Profit from the Collapse of Debt-Fueled Growth” by a guy named Jim Quinn.

It was immediately interesting to me, as I am a guy whose natural lazy and greedy nature makes me instantly attracted by things that start out with the word “Profit,” especially if the word “Easy” is also included.

Thus, I am intrigued enough to read on, in case it was!

I read on, finding economic horror after economic horror until, at the end of the piece, he presents a chart titled “Total Debt Balance and its Composition” from the FRBNY’s Consumer Credit Panel. The chart shows that total private debt (mortgage debt, home equity debt, credit card debt, car debt, etc.) peaked in 2008 at $12.5 trillion, where most of it (75%) was (and still is) mortgage debt.

Since then, total debt has fallen to $11.7 trillion in the first quarter of 2010, which is a fall in (theoretically) spending of $800 billion spread over two years, which is Bad, Bad News (BBN) for an economy based on financed-consumption, as one leg of the economy is gone. A one-legged economy!

And if Mr. Schiller is right about housing needing to fall another 20%, then, at 75% of outstanding debt, more Bad, Bad News (BBN) is on the way! Yikes!

Perhaps the lesson is that a one-legged economy fares as does the Black Knight in the Monty Python and the Holy Grail movie, who had his remaining leg whacked off (whack!), who was (admittedly), already missing both his arms and one leg (whack whack whack!) by this scene in the film, with the analogy being Uncle Sam reeling from the sudden amputations of the housing implosion (whack!), the commercial property implosion (whack!), the retail sales implosion (whack!), terrifyingly relentless Federal Reserve monetary expansion (whack whack!), now trying to achieve a new, completely insane “targeted” price inflation of 5% (whack whack whack!), which will be achieved automatically because of the insane levels of money-creation necessary to finance astonishing, suicidal levels of federal deficit-spending (whack whack whack whack!).

I am aware that the persistent use of the word “whack” sounds quite comical and duck-like to many of you, particularly the use of the rare “quadruple whack” appearing here, as far as I know, for the first time in history, as is apropos for (as far as I know) the first time in history where an idiot nation with a $14 trillion GDP has nonetheless amassed $13.5 trillion in national debt, $11.7 in personal debt, trillions more in business debt, trillions more in bank liabilities, and a gigantic overhang of shadowy derivatives, once estimated to total more than a quadrillion dollars, and all financed on astounding, insane, impossible margins of 20-to-1, 30-to-1, 40-to-1, 50-to-1, and more! Sometimes much more! Sometimes much, much more!

I left the overuse of “whacking” stay as written, mostly since I am too lazy to go back and change it to something less comedic, and don’t bother writing me any emails complaining, as I will cleverly claim that I purposely left it all in, so as to provide some comic relief to the nightmarish, claustrophobic sense unremitting gloom and imminent destruction found everywhere.

There is no need to thank me, as this little levity is just another free service cheerfully provided by The Mogambo Institute (TMI), formerly a serious research and policy think-tank, but which quickly devolved into just a sad little “club” for a lecherous old man who likes to fritter away his life drinking and watching pretty girls pole-dancing.

Nonetheless, the chance to humorously sound like a duck – whack whack whack whack! – will be one of the few bright spots in the economy for (checking my watch for the exact time so as to be as accurate as possible) the rest of your freaking life.

Even more Bad, Bad News (BBN) is that Mr. Quinn reports that Lowe’s, Wal-Mart, Target and Kohl’s have doubled – or more! – the number of stores in their chains since 2000, according to the “Annual Store Count Growth” provided by RetailSails.com, yet, unfortunately, “Annual Sales Growth (YoY % Chg)” for both “Total Sales” and “Same-Store Sales” for each of them has trended down for a decade! Yikes! Bad news a-plenty!

And not only have sales trended down, but down and down! Down to where the demons dwell, down into retail hell, down into “zero growth” makes you yell before now sliding into what I extrapolate linearly as “negative growth,” down to where Sheer Freaking Panic (SFP) ensues and the boards of directors begin screaming about why didn’t they just put all that money into gold, silver and oil like The Magnificent Mogambo (TMM) is always yelling to do, and then they would have So Freaking Much Money (SFMM) that it wouldn’t matter if anybody buys anything in their stupid stores or not! And they can give themselves humongous bonuses! And full health insurance, and company cars, for everybody!

“Thank you, Wonderful And Handsome Mogambo (WAHM)!” Lowe’s, Wal-Mart, Target and Kohl’s employees would say! “Thank you for coming to this planet and saving our miserable Earthling butts with the profoundly wise advice to buy gold, silver and oil when our central bank is insanely creating too much money and the federal government is too corrupt and cowardly to stop deficit-spending so that total government spending is half of GDP! Thank you! Thank you, WAHM! Thank you for making us wealthy!”

Of course, Lowe’s, Wal-Mart, Target and Kohl’s did not follow my advice, and this is just another example of life’s many examples of “Too soon old, too late wise” in action, unless, of course, you were a true Junior Mogambo Ranger (JMR) with a distinct Austrian School of Economics inclination, and you have invested everything you own in gold, silver and oil as classical, guaranteed protection against the massive price inflation that will be consuming us very soon as a result of such massive, unbelievable government deficit-spending and outrageous, massive money-creation by the unfettered, foul Federal Reserve.

Another example of “Too soon old, too late wise” is that this boom-bust cycle in retail chains was entirely predictable, as Casey’s Daily Dispatch newsletter reminds us that it was “interference with interest rates, pushing them well below where the free market would have set them, that set in motion the classic boom-bust cycle we’ve just witnessed. F.A. Hayek won the Nobel Prize for showing how central banks like the Federal Reserve, by interfering with interest rates and not allowing them to tell entrepreneurs the truth about economic conditions, divert the economy into unsustainable configurations that inevitably come undone in a crash. (Hayek belongs to a tradition of free-market thought called the Austrian School of economics).”

So why the title “Profit from the Collapse of Debt-Fueled Growth”? Mr. Quinn never does say, but it must have something to do with going short these retail stocks, as he ends with, “Lowe’s, Wal-Mart, Target, and Kohl’s have yet to recognize their predicament. They are still blinded by their hubris. The point of recognition will occur within the next year. Each of these retailers will be closing hundreds of underperforming stores in the next two years.” Yikes!

But as long as there are retail outlets for gold, silver and oil stocks, then for those who buy them it will not be, “Yikes! They’re closing all the retail stores where Junior and Maybelle work, and now we’re all freaking doomed!” but instead it will be the happily-ever-after story of, “Whee! This investing stuff is easy!”

The Mogambo Guru
for The Daily Reckoning

The Duck-Like Noise of a One-Legged Economy originally appeared in the Daily Reckoning. The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today’s markets. Its been called “the most entertaining read of the day.”

Read more here:
The Duck-Like Noise of a One-Legged Economy




The Daily Reckoning is a contrarian e-letter, brought to you by New York Times best-selling authors Bill Bonner and Addison Wiggin since 1999. The DR looks at the economic world-at-large and offers its major players – investors, politicians, economists and the average consumer – some much-needed constructive criticism.

Uncategorized

Debating the True Value of the Chinese Yuan

October 11th, 2010

Well, that was a whole lot of nothing. Bigwigs from the International Monetary Fund met over the weekend in Washington to “tackle global imbalances,” as the BBC put it.

Alas, the imbalances broke every tackle and sprinted to the end zone unencumbered.

“In my view, it’s too early to make a decision regarding currency exchange rates,” Russian finance minister Alexei Kudrin said last Thursday, telegraphing the outcome. He implied the BRIC countries – Brazil, Russia, India, and China – were united on that score.

“Will anything really be accomplished?” roving analyst Richard Lee wrote to us the same day. “Not likely.”

Further, “the lack of anything substantial surfacing from these meetings is likely to propel the major and emerging market currencies against the US dollar higher in the near future.”

The likely trend if the status quo remains: Dollar down… gold, precious metals, commodities, energy up!

The remaining outlier in this equation: the people’s currency.

China’s reticence this weekend to cave to his will prompted still more ham-fisting by Treasury Secretary Tim Geithner:

Treasury Secretary Tim Geithner

Geithner called for emerging economies to adopt “a more flexible, market-oriented currency policy.” He didn’t name China, but he didn’t have to.

Low interest rates in the “developed” world, Zhou Xiaochuan, governor of China’s central bank, responded tersely, have created “stark challenges for emerging market countries.”

In short, hot money is fleeing low interest rates in the US and Western Europe for China, India, South Korea, etc., where the returns are much higher. The knock-on effect is forcing their currencies up against the dollar and the euro, hurting exports and creating property bubbles.

What’s a Dartmouth- and Johns Hopkins-trained banker to do?

“In my opinion, the renminbi became undervalued late 2003,” says Pieter Bottelier, writes an adjunct professor of China studies at Johns Hopkins, “when China’s trade surplus – especially its bilateral trade surplus with the United States – began a steep incline.

“The initial burst of China’s trade surplus,” Bottelier continues, paraphrasing more or less the hypothesis we put forward in The Demise of the Dollar, “came on the heels of the sharp monetary expansion in the United States… triggered by the switch to budget deficits in the early George W. Bush years. The Greenspan Fed’s interest rate cuts after the NASDAQ collapse and Sept. 11 also played a role.

“China was the only major exporter that could and did respond quickly to the sharp increase in global demand driven by the massive credit expansion in the United States. In other words, China’s surplus exploded not because of anything China did with its exchange rate – it did nothing – but because of an explosion in external demand led by credit expansion in the United States.”

Surprise, surprise. Washington and Beijing are at a stalemate.

“The willingness of the countries to work together,” IMF chief Dominique Strauss-Kahn fretted this morning, “which was very strong at the climax of the [financial] crisis is not as strong today.”

Meanwhile, the specter of a trade war looms.

When the Senate convenes for its lame duck session after the election, it will begin debating a bill that has already passed the frozen stare of Nancy Pelosi in the House: stiffer tariffs on Chinese goods.

“Even if the remnimbi does appreciate,” writes Dee Woo, an econ teacher at Beijing Huijia Private School, in a remarkable piece published last week in The Wall Street Journal, “it’s unlikely to reduce the US trade deficit or create American jobs…

“Regardless of the yuan’s value, the US trade deficit won’t be significantly reduced unless the US boosts its chronically low savings rate and defuses the disincentive – caused by the dollar’s status as the global currency – for manufacturing. When other nations want imports, they must produce goods to send abroad. All the US needs to do is print more greenbacks: Buy dollar-denominated commodities and goods with dollars and debt, and service the dollar-denominated debt with dollars and more debt.”

Ah, in the immortal words of Mel Brooks: “It’s good to be the king.”

In July of this year (the most recent figures available), Beijing held $846.7 billion worth of Treasury paper. In July 2009, the figure was $939.9 billion. That’s a 10% reduction in China’s Treasury holdings in just 12 months.

What is Beijing doing with the proceeds? What it’s been doing all along…acquiring real wealth in the form of energy, raw materials and precious metals.

Just yesterday, the state-owned Chinese energy company Cnooc agreed to buy a one-third stake in a Texas shale gas project from Chesapeake Energy for $1.1 billion. Cnooc will put up another $1.1 billion to finance the drilling costs. “Unconventional” oil and gas were the one remaining energy sector the Chinese had yet to pursue seriously. No more.

On Oct. 1, another state-owned energy firm, Sinopec, spent $7.1 billion for a 40% stake in the Brazilian unit of the Spanish oil company Repsol. The Chinese are getting a foothold in the offshore Brazil story Byron King’s been writing, excitedly, about.

On the commodities front, China’s corn crop is looking good this year – but not so good as to avoid a second straight year of net imports. Don’t expect this trend to reverse: The US Grains Council, back from its annual visit to China, forecasts that China will quintuple its corn imports over the next five years.

As of 2003, Beijing kept 600 tons of gold in reserve. In April 2009, Beijing announced it had built that reserve to 1,054 tons – a 76% increase.

And there’s no reason to believe that buying has stopped. China is one of the reasons gold is holding strong above $1,300…why corn prices hit a two-year high today…and why oil is steady above $80, despite lower demand in the West.

We don’t expect this trend to let up.

Addison Wiggin
for The Daily Reckoning

Debating the True Value of the Chinese Yuan originally appeared in the Daily Reckoning. The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today’s markets. Its been called “the most entertaining read of the day.”

Read more here:
Debating the True Value of the Chinese Yuan




The Daily Reckoning is a contrarian e-letter, brought to you by New York Times best-selling authors Bill Bonner and Addison Wiggin since 1999. The DR looks at the economic world-at-large and offers its major players – investors, politicians, economists and the average consumer – some much-needed constructive criticism.

Commodities, Uncategorized

Debating the True Value of the Chinese Yuan

October 11th, 2010

Well, that was a whole lot of nothing. Bigwigs from the International Monetary Fund met over the weekend in Washington to “tackle global imbalances,” as the BBC put it.

Alas, the imbalances broke every tackle and sprinted to the end zone unencumbered.

“In my view, it’s too early to make a decision regarding currency exchange rates,” Russian finance minister Alexei Kudrin said last Thursday, telegraphing the outcome. He implied the BRIC countries – Brazil, Russia, India, and China – were united on that score.

“Will anything really be accomplished?” roving analyst Richard Lee wrote to us the same day. “Not likely.”

Further, “the lack of anything substantial surfacing from these meetings is likely to propel the major and emerging market currencies against the US dollar higher in the near future.”

The likely trend if the status quo remains: Dollar down… gold, precious metals, commodities, energy up!

The remaining outlier in this equation: the people’s currency.

China’s reticence this weekend to cave to his will prompted still more ham-fisting by Treasury Secretary Tim Geithner:

Treasury Secretary Tim Geithner

Geithner called for emerging economies to adopt “a more flexible, market-oriented currency policy.” He didn’t name China, but he didn’t have to.

Low interest rates in the “developed” world, Zhou Xiaochuan, governor of China’s central bank, responded tersely, have created “stark challenges for emerging market countries.”

In short, hot money is fleeing low interest rates in the US and Western Europe for China, India, South Korea, etc., where the returns are much higher. The knock-on effect is forcing their currencies up against the dollar and the euro, hurting exports and creating property bubbles.

What’s a Dartmouth- and Johns Hopkins-trained banker to do?

“In my opinion, the renminbi became undervalued late 2003,” says Pieter Bottelier, writes an adjunct professor of China studies at Johns Hopkins, “when China’s trade surplus – especially its bilateral trade surplus with the United States – began a steep incline.

“The initial burst of China’s trade surplus,” Bottelier continues, paraphrasing more or less the hypothesis we put forward in The Demise of the Dollar, “came on the heels of the sharp monetary expansion in the United States… triggered by the switch to budget deficits in the early George W. Bush years. The Greenspan Fed’s interest rate cuts after the NASDAQ collapse and Sept. 11 also played a role.

“China was the only major exporter that could and did respond quickly to the sharp increase in global demand driven by the massive credit expansion in the United States. In other words, China’s surplus exploded not because of anything China did with its exchange rate – it did nothing – but because of an explosion in external demand led by credit expansion in the United States.”

Surprise, surprise. Washington and Beijing are at a stalemate.

“The willingness of the countries to work together,” IMF chief Dominique Strauss-Kahn fretted this morning, “which was very strong at the climax of the [financial] crisis is not as strong today.”

Meanwhile, the specter of a trade war looms.

When the Senate convenes for its lame duck session after the election, it will begin debating a bill that has already passed the frozen stare of Nancy Pelosi in the House: stiffer tariffs on Chinese goods.

“Even if the remnimbi does appreciate,” writes Dee Woo, an econ teacher at Beijing Huijia Private School, in a remarkable piece published last week in The Wall Street Journal, “it’s unlikely to reduce the US trade deficit or create American jobs…

“Regardless of the yuan’s value, the US trade deficit won’t be significantly reduced unless the US boosts its chronically low savings rate and defuses the disincentive – caused by the dollar’s status as the global currency – for manufacturing. When other nations want imports, they must produce goods to send abroad. All the US needs to do is print more greenbacks: Buy dollar-denominated commodities and goods with dollars and debt, and service the dollar-denominated debt with dollars and more debt.”

Ah, in the immortal words of Mel Brooks: “It’s good to be the king.”

In July of this year (the most recent figures available), Beijing held $846.7 billion worth of Treasury paper. In July 2009, the figure was $939.9 billion. That’s a 10% reduction in China’s Treasury holdings in just 12 months.

What is Beijing doing with the proceeds? What it’s been doing all along…acquiring real wealth in the form of energy, raw materials and precious metals.

Just yesterday, the state-owned Chinese energy company Cnooc agreed to buy a one-third stake in a Texas shale gas project from Chesapeake Energy for $1.1 billion. Cnooc will put up another $1.1 billion to finance the drilling costs. “Unconventional” oil and gas were the one remaining energy sector the Chinese had yet to pursue seriously. No more.

On Oct. 1, another state-owned energy firm, Sinopec, spent $7.1 billion for a 40% stake in the Brazilian unit of the Spanish oil company Repsol. The Chinese are getting a foothold in the offshore Brazil story Byron King’s been writing, excitedly, about.

On the commodities front, China’s corn crop is looking good this year – but not so good as to avoid a second straight year of net imports. Don’t expect this trend to reverse: The US Grains Council, back from its annual visit to China, forecasts that China will quintuple its corn imports over the next five years.

As of 2003, Beijing kept 600 tons of gold in reserve. In April 2009, Beijing announced it had built that reserve to 1,054 tons – a 76% increase.

And there’s no reason to believe that buying has stopped. China is one of the reasons gold is holding strong above $1,300…why corn prices hit a two-year high today…and why oil is steady above $80, despite lower demand in the West.

We don’t expect this trend to let up.

Addison Wiggin
for The Daily Reckoning

Debating the True Value of the Chinese Yuan originally appeared in the Daily Reckoning. The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today’s markets. Its been called “the most entertaining read of the day.”

Read more here:
Debating the True Value of the Chinese Yuan




The Daily Reckoning is a contrarian e-letter, brought to you by New York Times best-selling authors Bill Bonner and Addison Wiggin since 1999. The DR looks at the economic world-at-large and offers its major players – investors, politicians, economists and the average consumer – some much-needed constructive criticism.

Commodities, Uncategorized

5 ETFs To Play Australia

October 11th, 2010

Over the last century, Australia has outperformed its counterparties in the developed world, while offering one of the lowest volatilities to investors. As for the future, the Land Down Under is expected to continue its growth, providing returns and the path to opportunity for some. 

A major reason that the future remains prosperous for Australia is due to its close ties with Asia.  According to the International Monetary Fund (IMF), exports to China and India have been growing at a rate of 18%-19% per year and are expected to continue to grow.  As China and India continue to emerge as global economic powerhouses, Australia will likely continue to reap the benefits.  In fact, Asia as a region is expected to witness economic growth of nearly 50 percent over the next five years and account for more than a third of total global output. 

Another driver behind Australia’s appeal is its abundance of natural resources.  The nation has ample supply of coal, oil, iron ore, potash, zinc and other commodities that growing economies demand.  As populations continue to expand and purchasing power in emerging Asia continues to increase, so will demand for natural resources.  Furthermore, Australia is rich in gold, which has remained a hot commodity and is likely to continue to do so due to fiscal and monetary policies implemented by some developed nations around the world.

Lastly, Australia has relatively stable financial system when compared to that of other developed nations.  The nation was hardly touched by the global financial meltdown, is expected to boast its twentieth year of economic expansion and has a public debt ratio which stands around 18 percent of its GDP.  Additionally, the nation has an unemployment rate which is a hair over 5 percent and has a positive balance of trade.

At the end of the day, there are numerous forces working in Australia’s favor and some ways to gain access to the country include:

  • iShares MSCI Australia Index Fund (EWA), which has 74 holdings with the following sector breakdowns: 44.35% to financials, 26.4% to materials, 10.19% to consumer staples and 6.67% to energy.
  • IQ Australia Small Cap ETF (KROO), which gives exposure to small cap Australian stocks that are involved in natural resources.  KROO allocates 39.33% of its assets to materials, 19.92% to consumer discretionary and 10.8% to industrials.
  • WisdomTree Pacific ex-Japan High Yielding Equity Fund (DNH), which allocates 90.5% of its assets to Australia.
  • WisdomTree Pacific ex-Japan Total Div Report (DND), which allocates 59.2% of its assets to Australia.
  • PowerShares FTSE RAFI Asia Pacific ex-Jp Portfolio ETF (PAF), which allocates 41.2% of its assets to Australia. Its top holdings include BHP Billiton (BHP) and Rio Tinto (RTP).

Although an opportunity seems to exist in Australia, it is equally important to keep mind the inherent risks that are involved with investing in equities. To help mitigate these risks having an exit strategy is a good idea.  Such a strategy can be found at www.SmartStops.net.

Disclosure: No Positions

Read more here:
5 ETFs To Play Australia




HERE IS YOUR FOOTER

Commodities, ETF, Uncategorized

British Columbia Looking For Positive Decision On Taseko’s Prosperity Project

October 11th, 2010

I wrote an article on July 5th, 2010 as Taseko was collapsing after a Federal Review Panel concluded that Prosperity would have significant adverse affects on the environment. As the stock was plummeting from the news I wrote to readers that Taseko was reaching a major buy point and an area of support.  Since that article Taseko has rallied more than 75%.

An important point that sellers did not understand in July was that Federal Review Panel did not weigh the economic affects at all.  Their duty was only to make environmental recommendations in case the project was approved.  The British Columbia Approval was based on the fact that Prosperity is crucial to the future economic growth of the Province and that those positive outcomes far outweigh the environmental impacts.

In the article I noted that the mining industry brings in over 8 billion dollars to British Columbia a year and Prosperity is a crucial  decision which the entire mining is carefully observing.  Prosperity is an essential project for the Province as it will bring in more than 400 million dollars a year in revenue.  It will create a lot of jobs and boost not only jobs for miners but in all the mining related industries.  A new mine has a domino effect for the economy as it is the foundation for local industry in British Columbia.

Last Friday Premier Gordon Campbell made an important plea to the Prime Minister in highly publicized speach to approve the mine.  This gave a huge signal to the mining investment community that this decision from the Prime Minister will have powerful ramifications.

The ramifications of the Federal Government overturning a Provincial decision would spur a lot of tension in an area which has been hit hard from a weak economy due to the downturn in forestry.

Investors are now seeing the broad based support especially local political support that Taseko is receiving and the importance of this mine to be constructed from very powerful people in the Province.

This has sent Taseko’s shares soaring to new highs as investors price in a go ahead from the Prime Minister.

Now Taseko is approaching a major breakout point which could significantly send shares higher on approval from the Prime Minister.  The decision should be released soon and I expect the Prime Minister will support the Province’s decision.  Since my original recommendation on Taseko from May of 2009 Taseko shares have soared more than 333%. If you are interested in new recommendations and how to trade mining stocks using technicals and fundamentals please sign up for my newsletter at http://goldstocktrades.com.

Read more here:
British Columbia Looking For Positive Decision On Taseko’s Prosperity Project

Commodities

British Columbia Looking For Positive Decision On Taseko’s Prosperity Project

October 11th, 2010

I wrote an article on July 5th, 2010 as Taseko was collapsing after a Federal Review Panel concluded that Prosperity would have significant adverse affects on the environment. As the stock was plummeting from the news I wrote to readers that Taseko was reaching a major buy point and an area of support.  Since that article Taseko has rallied more than 75%.

An important point that sellers did not understand in July was that Federal Review Panel did not weigh the economic affects at all.  Their duty was only to make environmental recommendations in case the project was approved.  The British Columbia Approval was based on the fact that Prosperity is crucial to the future economic growth of the Province and that those positive outcomes far outweigh the environmental impacts.

In the article I noted that the mining industry brings in over 8 billion dollars to British Columbia a year and Prosperity is a crucial  decision which the entire mining is carefully observing.  Prosperity is an essential project for the Province as it will bring in more than 400 million dollars a year in revenue.  It will create a lot of jobs and boost not only jobs for miners but in all the mining related industries.  A new mine has a domino effect for the economy as it is the foundation for local industry in British Columbia.

Last Friday Premier Gordon Campbell made an important plea to the Prime Minister in highly publicized speach to approve the mine.  This gave a huge signal to the mining investment community that this decision from the Prime Minister will have powerful ramifications.

The ramifications of the Federal Government overturning a Provincial decision would spur a lot of tension in an area which has been hit hard from a weak economy due to the downturn in forestry.

Investors are now seeing the broad based support especially local political support that Taseko is receiving and the importance of this mine to be constructed from very powerful people in the Province.

This has sent Taseko’s shares soaring to new highs as investors price in a go ahead from the Prime Minister.

Now Taseko is approaching a major breakout point which could significantly send shares higher on approval from the Prime Minister.  The decision should be released soon and I expect the Prime Minister will support the Province’s decision.  Since my original recommendation on Taseko from May of 2009 Taseko shares have soared more than 333%. If you are interested in new recommendations and how to trade mining stocks using technicals and fundamentals please sign up for my newsletter at http://goldstocktrades.com.

Read more here:
British Columbia Looking For Positive Decision On Taseko’s Prosperity Project

Commodities

Opportunity in Ecuador

October 11th, 2010

My name is Ronan McMahon. I’m a real estate investor. I specialize in hunting down real estate in the world’s emerging economies. But right now, I’m looking at opportunities in three distressed markets: Ecuador, Ireland and Nicaragua.

Bill Bonner is joining me in an acquisition in Ecuador. And he asked me to share what we’re doing with you. It’s a plan to buy a big piece of land along Ecuador’s northern coast. As you’re probably aware, Ecuadorian president, Rafael Correa, recently fought off a rebellion by police officers in the country’s capital, Quito.

It’s too early to tell what effect the recent trouble will have on real estate prices. But one thing is certain: it will give us almost free rein to scout for bargains. Most property investors will be looking the other way right now.

The area we’re canvassing is the stretch of Ecuador’s north Pacific coast between Canoa and Pedernales. It’s by far the country’s most beautiful piece of coastline.

Ecuadorian Coast

As it stands, accessing this stretch of coastline isn’t easy. You have two options: A seven-hour drive from Ecuador’s capital, Quito. Or a short domestic flight from Quito to the city of Manta, followed by a drive up the coast.

The problem is you can never tell how long the drive from Manta will take. This involves crossing the bay between Bahia de Caraquez and San Vicente…which means relying on ferries.

Some days, if you time it right, you only have a short delay waiting for the ferry. Other days, with low tides or a lot of vehicle traffic, you can easily spend four hours sitting in line at Bahia to get on the ferry.

Once you reach the best section of coast, on the other side of the bay, you bounce around on roads riddled with potholes. It can be a bone-shaking ride.

All of this is changing. A new government infrastructure plan calls for:

  • The construction of a bridge across the bay from Bahia to San Vicente.
  • Road upgrades along the entire coast, as part of a coastal highway plan.
  • A new coastal road to link Quito with Pedernales. This makes our favorite stretch of coast the closest beach area to Quito.

The bridge across the bay at Bahia is nearing completion and will open soon. It will cut out the need for car ferries…meaning you won’t face any delays driving up the coast from Manta

Meanwhile, work is progressing on the highway upgrades between San Vicente and Pedernales. Only a small number of stretches are uncompleted.

These upgrades are part of a government plan to make the entire Ecuadorian coast drivable. This modern highway has already made a huge difference in driving times and comfort along the coast. The new coastal road from Quito to Pedernales is complete. All that’s needed now is a date in the president’s diary when he can officially open the road.

The new road will cut the drive from Quito to Pedernales in half – to three and a half hours. This means that more of Quito’s residents…and foreign tourists…can come here for weekends and vacations.

The best piece of land along this coast is close to Pedernales, where the new highway from Quito hits the coast. This land is perfect for development. It’s like a cut off bowl. Views from all angles are of the ocean. The land is perfect for the development of a resort.

This video I took will help give you a sense of the terrain.

Every inch of the 350 hectares of oceanfront is developable. There is scope to do high-density development in any part of the land. (The flat land at the bottom of the bowl is a perfect spot to put resort amenities such as golf or tennis facilities.)

Ecuador’s first big resort on the north coast opened late last year. It’s just over an hour north of here. I’ve stayed there. The first part of this project is a Decameron hotel. It was full when I was there. All Ecuadorians.

The land I’m looking at is far more beautiful than where this resort is located. And it will also be easier to get to from Quito when the new road opens.

This property is just one example of what’s available to investors who look beyond their own shores. Buying real estate in emerging markets is risky. So it’s not for everyone. But the rewards can be considerable.

Regards,

Ronan McMahon
for The Daily Reckoning

Opportunity in Ecuador originally appeared in the Daily Reckoning. The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today’s markets. Its been called “the most entertaining read of the day.”

Read more here:
Opportunity in Ecuador




The Daily Reckoning is a contrarian e-letter, brought to you by New York Times best-selling authors Bill Bonner and Addison Wiggin since 1999. The DR looks at the economic world-at-large and offers its major players – investors, politicians, economists and the average consumer – some much-needed constructive criticism.

OPTIONS, Real Estate, Uncategorized

Opportunity in Ecuador

October 11th, 2010

My name is Ronan McMahon. I’m a real estate investor. I specialize in hunting down real estate in the world’s emerging economies. But right now, I’m looking at opportunities in three distressed markets: Ecuador, Ireland and Nicaragua.

Bill Bonner is joining me in an acquisition in Ecuador. And he asked me to share what we’re doing with you. It’s a plan to buy a big piece of land along Ecuador’s northern coast. As you’re probably aware, Ecuadorian president, Rafael Correa, recently fought off a rebellion by police officers in the country’s capital, Quito.

It’s too early to tell what effect the recent trouble will have on real estate prices. But one thing is certain: it will give us almost free rein to scout for bargains. Most property investors will be looking the other way right now.

The area we’re canvassing is the stretch of Ecuador’s north Pacific coast between Canoa and Pedernales. It’s by far the country’s most beautiful piece of coastline.

Ecuadorian Coast

As it stands, accessing this stretch of coastline isn’t easy. You have two options: A seven-hour drive from Ecuador’s capital, Quito. Or a short domestic flight from Quito to the city of Manta, followed by a drive up the coast.

The problem is you can never tell how long the drive from Manta will take. This involves crossing the bay between Bahia de Caraquez and San Vicente…which means relying on ferries.

Some days, if you time it right, you only have a short delay waiting for the ferry. Other days, with low tides or a lot of vehicle traffic, you can easily spend four hours sitting in line at Bahia to get on the ferry.

Once you reach the best section of coast, on the other side of the bay, you bounce around on roads riddled with potholes. It can be a bone-shaking ride.

All of this is changing. A new government infrastructure plan calls for:

  • The construction of a bridge across the bay from Bahia to San Vicente.
  • Road upgrades along the entire coast, as part of a coastal highway plan.
  • A new coastal road to link Quito with Pedernales. This makes our favorite stretch of coast the closest beach area to Quito.

The bridge across the bay at Bahia is nearing completion and will open soon. It will cut out the need for car ferries…meaning you won’t face any delays driving up the coast from Manta

Meanwhile, work is progressing on the highway upgrades between San Vicente and Pedernales. Only a small number of stretches are uncompleted.

These upgrades are part of a government plan to make the entire Ecuadorian coast drivable. This modern highway has already made a huge difference in driving times and comfort along the coast. The new coastal road from Quito to Pedernales is complete. All that’s needed now is a date in the president’s diary when he can officially open the road.

The new road will cut the drive from Quito to Pedernales in half – to three and a half hours. This means that more of Quito’s residents…and foreign tourists…can come here for weekends and vacations.

The best piece of land along this coast is close to Pedernales, where the new highway from Quito hits the coast. This land is perfect for development. It’s like a cut off bowl. Views from all angles are of the ocean. The land is perfect for the development of a resort.

This video I took will help give you a sense of the terrain.

Every inch of the 350 hectares of oceanfront is developable. There is scope to do high-density development in any part of the land. (The flat land at the bottom of the bowl is a perfect spot to put resort amenities such as golf or tennis facilities.)

Ecuador’s first big resort on the north coast opened late last year. It’s just over an hour north of here. I’ve stayed there. The first part of this project is a Decameron hotel. It was full when I was there. All Ecuadorians.

The land I’m looking at is far more beautiful than where this resort is located. And it will also be easier to get to from Quito when the new road opens.

This property is just one example of what’s available to investors who look beyond their own shores. Buying real estate in emerging markets is risky. So it’s not for everyone. But the rewards can be considerable.

Regards,

Ronan McMahon
for The Daily Reckoning

Opportunity in Ecuador originally appeared in the Daily Reckoning. The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today’s markets. Its been called “the most entertaining read of the day.”

Read more here:
Opportunity in Ecuador




The Daily Reckoning is a contrarian e-letter, brought to you by New York Times best-selling authors Bill Bonner and Addison Wiggin since 1999. The DR looks at the economic world-at-large and offers its major players – investors, politicians, economists and the average consumer – some much-needed constructive criticism.

OPTIONS, Real Estate, Uncategorized

A letter to Senator Scott Brown – The Fed’s Political Interference Must Be Stopped

October 11th, 2010

The Honorable Scott Brown
United States Senate
317 Russell Senate Office Building
Washington D.C. 20510

Dear Senator Brown:

I am a constituent who would like to help. My father sent you my book, Panderer to Power: The Untold Story of How Alan Greenspan Enriched Wall Street and Left a Legacy of Recession. You wrote my father a thank you note, for which I am thankful. None of the other 20 or so senators and congressmen to whom we mailed my book sent an acknowledgement.

I am writing because the Federal Reserve has interfered with the November elections to an unprecedented degree. I know this, having read Federal Reserve officials’ speeches, their testimony, and the warnings of senators (in committee) to not loosen or tighten money in the weeks before forthcoming elections. Even my protagonist, Alan Greenspan, a master politician, muzzled his mouth and the Fed’s pocketbook before an election. The current interference has not been mentioned by the popular media or by any politician, to my knowledge.

I am suggesting that you denounce the Fed’s activities. It is an institution that, more and more, believes it operates outside the law and above the political process. This is for good reason, given its unaccountability for the financial meltdown and greater authority awarded in the Dodd-Frank Act. It must be reduced to serve the bureaucratic functions that legislation permits.

Motive:

Ben Bernanke and his cohorts at the Fed are promising to gird the stock and bond markets at elevated levels. This is an insider’s game, understood on Wall Street. Its purpose is to fulfill the axiom that a strong stock market aids the incumbent party in an election. The Fed wants the Democratic Party to hold its majorities in both the Senate and the House because it is frightened of what the Republicans might reveal. The Federal Reserve reached an agreement with the Democrats in the past session of Congress, in which obvious failures and possible criminal acts of the Fed were dismissed. The Fed is the prime culprit in the continuing impoverishment of the American people, and its active interference will cause more destruction.

Background:

The Federal Reserve has long believed that boosting the stock market inflates the economy as a whole and influences people to spend beyond their means. The following is Alan Greenspan, then chairman of the Fed, speaking at the Federal Reserve Open Market Committee’s (FOMC) November, 2004, meeting: “The household savings rate has come down dramatically and now is close to zero….The idea of having a negative savings rate is not out of line with the way the world works. Remember…the average household looks at the market value …of its equity holdings…. We can have a negative savings rate with a significant part of the population believing that they are saving at a fairly pronounced rate.”

Greenspan’s policy as Federal Reserve chairman was to draw the masses into the markets (stocks, mortgages, bonds) and then create asset bubbles that leave “a significant part of the population believing that they are saving at a fairly pronounced rate.” After the bubble crashes (even the Fed knows this is inevitable), it creates another bubble by leading the People to the Wall Street insiders’ latest manipulated market.

How:

The means by which the Federal Reserve has boosted the stock market is two-fold. First, it pumps money into the banking system. Second, in recent days, several Federal Reserve officials have spoken about artificially boosting the stock market. The Fed does not control where the money goes once it enters the banking system. By coordinating these speeches, Wall Street knows the stock market is being supported. Thus, the large, recent infusions of money into the banking system by the New York Federal Reserve Bank are going into the stock, bond, and commodity markets.

The method by which the Federal Reserve draws money into riskier assets (stocks, bonds) from safer assets (money markets, for instance) is diabolical. In 2003 (and thereabouts) the Fed drove short-term interest rates to 1%. This was a level below which those who live on interest, such as retirees, could not eat. The Fed’s tactic was explicitly stated.

Ben Bernanke’s Fed is doing the same. Federal Reserve Governor Donald Kohn stated the current policy, in October 2009: “[R]ecently the improvement, in risk appetites and financial conditions, in part responding to actions by the Federal Reserve and other authorities, has been a critical factor in allowing the economy to begin to move higher after a very deep recession…. Low market interest rates should continue to induce savers to diversify into riskier assets, which would contribute to a further reversal in the flight to liquidity and safety that has characterized the past few years.”

This flight from “liquidity and safety” has been forced upon savers, many of whom do not understand that the Fed’s stock market support operation can only work for a limited period of time.

Alan Greenspan described this tactic of fooling the people on March 27, 2010. He told Bloomberg TV: “Ordinarily, we think of the economy affecting stock prices. I think we miss a very crucial connection here in that this whole economic recovery, as best as I can judge, is to a very large extent, the consequence of the market’s bottoming last March, and coming all the way back-up. It is affecting the whole structure of the economy, as well as creating the usual wealth effect impact.”

Greenspan operated under this precept when he was Federal Reserve Chairman. This is Greenspan speaking at an FOMC meeting in 1995:  “I think the downside risks are basically coming from the possibility of significant increases in stock and bond prices…..Ironically, the real danger is that things may get too good. When things get too good, human beings behave awfully.”

The Current Publicity Campaign:

The following are comments in speeches by Federal Reserve officials over the past week:

On October 1, 2010, William C. Dudley, Federal Reserve President of New York, speaking at City University of New York: “We have tools that can provide additional stimulus at costs that do not appear to be prohibitive…. [P]urchases of long-duration assets [by the New York Fed will] pull down the level of long-term interest rates…. [L]ower long-term rates would support the value of assets, including houses and equities and household net worth.”

Dudley was a managing director and partner at Goldman Sachs before taking his position at New York Federal Reserve. On October 1, 2010, Goldman Sachs published a guide to “quantitative easing” for its clients. Quantitative easing is the Fed’s euphemism for creating unlimited amounts of money.

The firm wrote: “As [New York Federal Reserve] President Dudley pointed out, those who are able to borrow will do so at lower rates…. Perhaps more importantly, [quantitative easing] works on other elements of financial conditions, including equity prices and the exchange rate.” In its guide, Goldman Sachs went on to write that higher equity prices increase consumer confidence and decrease the savings rate.

I write “unlimited amounts of money,” since this was made clear by Federal Reserve Chairman Ben Bernanke on October 4, 2010. He spoke in Rhode Island: “I do think the additional purchases – although we don’t have precise numbers for how big the effects are – I do think they have the ability to ease financial conditions.”

On October 4, 2010, Brian Sack, an Executive Vice President at the New York Federal Reserve, spoke in Newport Beach, California. He discussed the Fed increasing the size of its balance sheet. This is a euphemism for money printing: “[B]alance sheet policy can still lower long-term borrowing costs for many households and businesses, and it adds to household wealth by keeping asset prices higher than they otherwise would be.”

On October 1, 2010, Chicago Federal Reserve President Charles Evans spoke in Rome: “In my view, the evidence suggests that the expansion of the securities portfolio to date has helped to foster more accommodative financial conditions, and further expansion would likely provide additional accommodation.”

He is correct that “evidence suggests that the expansion of the securities portfolio to date has helped to foster more accommodative financial conditions.” The S&P 500 rose 8.8% in September, its best September since 1939. This is a dangerous game being played, particularly for the novice.

Conclusion:

The Federal Reserve, its constituents on Wall Street, and those on Capital Hill have their backs against a wall. They know that ultimately there is no way for them, or us, to escape another wave of impoverishment. That will happen when the enormous creation of money and credit crashes. It will crash because there is no increase in the productive economy to validate it.

In his October 1, 2010, speech, New York Federal Reserve President William Dudley talked about the recent mortgage boom. By simply removing “in home prices” from the following, he described exactly how his current contribution to the economy will end: “The surge in home prices was fueled by products and practices in the financial sector that led to a rapid and unsustainable buildup of leverage and an underpricing of risk during this period. These dynamics in turn provided the fuel that caused house prices and consumer spending to rise much faster than income. The boom, of course, was unsustainable.”

It is necessary to publicize the goals, the intentions, and the tactics of the Federal Reserve. I hope that you are able to help.

Regards,

Frederick Sheehan,
for The Daily Reckoning

[For more of Frederick Sheehan's perspective you can visit his blogs here and at www.AuContrarian.com. You can also purchase his book, Panderer to Power: The Untold Story of How Alan Greenspan Enriched Wall Street and Left a Legacy of Recession (McGraw-Hill, 2009), here.]

A letter to Senator Scott Brown – The Fed’s Political Interference Must Be Stopped originally appeared in the Daily Reckoning. The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today’s markets. Its been called “the most entertaining read of the day.”

Read more here:
A letter to Senator Scott Brown – The Fed’s Political Interference Must Be Stopped




The Daily Reckoning is a contrarian e-letter, brought to you by New York Times best-selling authors Bill Bonner and Addison Wiggin since 1999. The DR looks at the economic world-at-large and offers its major players – investors, politicians, economists and the average consumer – some much-needed constructive criticism.

Uncategorized

A letter to Senator Scott Brown – The Fed’s Political Interference Must Be Stopped

October 11th, 2010

The Honorable Scott Brown
United States Senate
317 Russell Senate Office Building
Washington D.C. 20510

Dear Senator Brown:

I am a constituent who would like to help. My father sent you my book, Panderer to Power: The Untold Story of How Alan Greenspan Enriched Wall Street and Left a Legacy of Recession. You wrote my father a thank you note, for which I am thankful. None of the other 20 or so senators and congressmen to whom we mailed my book sent an acknowledgement.

I am writing because the Federal Reserve has interfered with the November elections to an unprecedented degree. I know this, having read Federal Reserve officials’ speeches, their testimony, and the warnings of senators (in committee) to not loosen or tighten money in the weeks before forthcoming elections. Even my protagonist, Alan Greenspan, a master politician, muzzled his mouth and the Fed’s pocketbook before an election. The current interference has not been mentioned by the popular media or by any politician, to my knowledge.

I am suggesting that you denounce the Fed’s activities. It is an institution that, more and more, believes it operates outside the law and above the political process. This is for good reason, given its unaccountability for the financial meltdown and greater authority awarded in the Dodd-Frank Act. It must be reduced to serve the bureaucratic functions that legislation permits.

Motive:

Ben Bernanke and his cohorts at the Fed are promising to gird the stock and bond markets at elevated levels. This is an insider’s game, understood on Wall Street. Its purpose is to fulfill the axiom that a strong stock market aids the incumbent party in an election. The Fed wants the Democratic Party to hold its majorities in both the Senate and the House because it is frightened of what the Republicans might reveal. The Federal Reserve reached an agreement with the Democrats in the past session of Congress, in which obvious failures and possible criminal acts of the Fed were dismissed. The Fed is the prime culprit in the continuing impoverishment of the American people, and its active interference will cause more destruction.

Background:

The Federal Reserve has long believed that boosting the stock market inflates the economy as a whole and influences people to spend beyond their means. The following is Alan Greenspan, then chairman of the Fed, speaking at the Federal Reserve Open Market Committee’s (FOMC) November, 2004, meeting: “The household savings rate has come down dramatically and now is close to zero….The idea of having a negative savings rate is not out of line with the way the world works. Remember…the average household looks at the market value …of its equity holdings…. We can have a negative savings rate with a significant part of the population believing that they are saving at a fairly pronounced rate.”

Greenspan’s policy as Federal Reserve chairman was to draw the masses into the markets (stocks, mortgages, bonds) and then create asset bubbles that leave “a significant part of the population believing that they are saving at a fairly pronounced rate.” After the bubble crashes (even the Fed knows this is inevitable), it creates another bubble by leading the People to the Wall Street insiders’ latest manipulated market.

How:

The means by which the Federal Reserve has boosted the stock market is two-fold. First, it pumps money into the banking system. Second, in recent days, several Federal Reserve officials have spoken about artificially boosting the stock market. The Fed does not control where the money goes once it enters the banking system. By coordinating these speeches, Wall Street knows the stock market is being supported. Thus, the large, recent infusions of money into the banking system by the New York Federal Reserve Bank are going into the stock, bond, and commodity markets.

The method by which the Federal Reserve draws money into riskier assets (stocks, bonds) from safer assets (money markets, for instance) is diabolical. In 2003 (and thereabouts) the Fed drove short-term interest rates to 1%. This was a level below which those who live on interest, such as retirees, could not eat. The Fed’s tactic was explicitly stated.

Ben Bernanke’s Fed is doing the same. Federal Reserve Governor Donald Kohn stated the current policy, in October 2009: “[R]ecently the improvement, in risk appetites and financial conditions, in part responding to actions by the Federal Reserve and other authorities, has been a critical factor in allowing the economy to begin to move higher after a very deep recession…. Low market interest rates should continue to induce savers to diversify into riskier assets, which would contribute to a further reversal in the flight to liquidity and safety that has characterized the past few years.”

This flight from “liquidity and safety” has been forced upon savers, many of whom do not understand that the Fed’s stock market support operation can only work for a limited period of time.

Alan Greenspan described this tactic of fooling the people on March 27, 2010. He told Bloomberg TV: “Ordinarily, we think of the economy affecting stock prices. I think we miss a very crucial connection here in that this whole economic recovery, as best as I can judge, is to a very large extent, the consequence of the market’s bottoming last March, and coming all the way back-up. It is affecting the whole structure of the economy, as well as creating the usual wealth effect impact.”

Greenspan operated under this precept when he was Federal Reserve Chairman. This is Greenspan speaking at an FOMC meeting in 1995:  “I think the downside risks are basically coming from the possibility of significant increases in stock and bond prices…..Ironically, the real danger is that things may get too good. When things get too good, human beings behave awfully.”

The Current Publicity Campaign:

The following are comments in speeches by Federal Reserve officials over the past week:

On October 1, 2010, William C. Dudley, Federal Reserve President of New York, speaking at City University of New York: “We have tools that can provide additional stimulus at costs that do not appear to be prohibitive…. [P]urchases of long-duration assets [by the New York Fed will] pull down the level of long-term interest rates…. [L]ower long-term rates would support the value of assets, including houses and equities and household net worth.”

Dudley was a managing director and partner at Goldman Sachs before taking his position at New York Federal Reserve. On October 1, 2010, Goldman Sachs published a guide to “quantitative easing” for its clients. Quantitative easing is the Fed’s euphemism for creating unlimited amounts of money.

The firm wrote: “As [New York Federal Reserve] President Dudley pointed out, those who are able to borrow will do so at lower rates…. Perhaps more importantly, [quantitative easing] works on other elements of financial conditions, including equity prices and the exchange rate.” In its guide, Goldman Sachs went on to write that higher equity prices increase consumer confidence and decrease the savings rate.

I write “unlimited amounts of money,” since this was made clear by Federal Reserve Chairman Ben Bernanke on October 4, 2010. He spoke in Rhode Island: “I do think the additional purchases – although we don’t have precise numbers for how big the effects are – I do think they have the ability to ease financial conditions.”

On October 4, 2010, Brian Sack, an Executive Vice President at the New York Federal Reserve, spoke in Newport Beach, California. He discussed the Fed increasing the size of its balance sheet. This is a euphemism for money printing: “[B]alance sheet policy can still lower long-term borrowing costs for many households and businesses, and it adds to household wealth by keeping asset prices higher than they otherwise would be.”

On October 1, 2010, Chicago Federal Reserve President Charles Evans spoke in Rome: “In my view, the evidence suggests that the expansion of the securities portfolio to date has helped to foster more accommodative financial conditions, and further expansion would likely provide additional accommodation.”

He is correct that “evidence suggests that the expansion of the securities portfolio to date has helped to foster more accommodative financial conditions.” The S&P 500 rose 8.8% in September, its best September since 1939. This is a dangerous game being played, particularly for the novice.

Conclusion:

The Federal Reserve, its constituents on Wall Street, and those on Capital Hill have their backs against a wall. They know that ultimately there is no way for them, or us, to escape another wave of impoverishment. That will happen when the enormous creation of money and credit crashes. It will crash because there is no increase in the productive economy to validate it.

In his October 1, 2010, speech, New York Federal Reserve President William Dudley talked about the recent mortgage boom. By simply removing “in home prices” from the following, he described exactly how his current contribution to the economy will end: “The surge in home prices was fueled by products and practices in the financial sector that led to a rapid and unsustainable buildup of leverage and an underpricing of risk during this period. These dynamics in turn provided the fuel that caused house prices and consumer spending to rise much faster than income. The boom, of course, was unsustainable.”

It is necessary to publicize the goals, the intentions, and the tactics of the Federal Reserve. I hope that you are able to help.

Regards,

Frederick Sheehan,
for The Daily Reckoning

[For more of Frederick Sheehan's perspective you can visit his blogs here and at www.AuContrarian.com. You can also purchase his book, Panderer to Power: The Untold Story of How Alan Greenspan Enriched Wall Street and Left a Legacy of Recession (McGraw-Hill, 2009), here.]

A letter to Senator Scott Brown – The Fed’s Political Interference Must Be Stopped originally appeared in the Daily Reckoning. The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today’s markets. Its been called “the most entertaining read of the day.”

Read more here:
A letter to Senator Scott Brown – The Fed’s Political Interference Must Be Stopped




The Daily Reckoning is a contrarian e-letter, brought to you by New York Times best-selling authors Bill Bonner and Addison Wiggin since 1999. The DR looks at the economic world-at-large and offers its major players – investors, politicians, economists and the average consumer – some much-needed constructive criticism.

Uncategorized

The Inimitable Human Currency

October 11th, 2010

“One’s destination is never a place, but a new way of seeing things.”

– Henry Miller

What are you worth? It’s a common enough question, but one seldom afforded the consideration it demands…and that you, as the object of the question, deserve. More often that not, the answer will take the form of a dollar sign, followed by a number:

“Well, including my house and car, and subtracting the outstanding amount owed on my mortgage, I’d say…”

Or…

“Right now I’ve got such-and-such in the bank, but my retirement nest egg is worth…”

Or…

“I don’t have much in the way of savings, but I just got a nice raise, so I’d say such-and-such an hour…”

These answers are fine, though extremely narrow. Are you really only worth that number following a dollar sign? Of course not. For one thing, the value of a dollar – or a euro, peso, dirham, etc… – can, and does, change overnight. And, if central bankers around the world have their way, you may soon be worth a lot less…at least valued in the currency they seem hell bent on decapitating.

Here at The Daily Reckoning, your editors write extensively – sometimes painfully so – on all manner of subjects related to money. Our beat is finance and economics, with a sprinkling of philosophy and bad comedy thrown in to keep our Fellow Reckoners from dozing off mid-column. But money, in all its forms, is really just a means to an end, albeit a very important one. That end, of course, is freedom. Money simply happens to be one tool, one method, one key with which you can determine to lead a freer life.

When assessing your own “wealth,” dollars and cents probably only account for a small part of the whole. Consider, for example, your own wealth of experience…the unquantifiable value of your relationships…the immeasurable worth of the time spent playing with your children or canoodling with your partner…the priceless tag on your “net knowledge”…the value of the books you’ve read, plays you’ve seen, of camping trips, Little League games, memorable belly laughs, barbeques in the park, etc., etc., etc…

Consider, for just a moment, the price you would be willing to put on your memory vault, brimming with experiences both good and bad, with lessons and triumphs, failures and heartaches. There is not a central banker in the world that could dream up a currency to measure your real worth. (And what a good thing that is!)

The lessons of our life and the experiences that color them come together in our mind to form a kind of currency that is uniquely human: wisdom. In the words of the great Marcel Proust, “We do not receive wisdom; we discover it for ourselves by a voyage that no one can take for us, a voyage that no one can spare us.”

For many, including the largely reclusive French novelist, that voyage of discovery begins and ends rather close to home. For others, there is nothing quite so valuable as the new perspective won through extensive travel to new and wondrous lands. Every foreign culture sheds new light on our own. Every new taste, smell, custom and terrain, gives new and broader meaning to the life familiar. And every new adventure teaches us a little more about all that we thought we knew, both about others and, perhaps more importantly, about ourselves.

What’s more, if you’re not careful, the adventures you take abroad may even end up yielding monetary rewards…you know, for those inclined to worry about such worldly things.

Joel Bowman
for The Daily Reckoning

The Inimitable Human Currency originally appeared in the Daily Reckoning. The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today’s markets. Its been called “the most entertaining read of the day.”

Read more here:
The Inimitable Human Currency




The Daily Reckoning is a contrarian e-letter, brought to you by New York Times best-selling authors Bill Bonner and Addison Wiggin since 1999. The DR looks at the economic world-at-large and offers its major players – investors, politicians, economists and the average consumer – some much-needed constructive criticism.

Uncategorized

The Inimitable Human Currency

October 11th, 2010

“One’s destination is never a place, but a new way of seeing things.”

– Henry Miller

What are you worth? It’s a common enough question, but one seldom afforded the consideration it demands…and that you, as the object of the question, deserve. More often that not, the answer will take the form of a dollar sign, followed by a number:

“Well, including my house and car, and subtracting the outstanding amount owed on my mortgage, I’d say…”

Or…

“Right now I’ve got such-and-such in the bank, but my retirement nest egg is worth…”

Or…

“I don’t have much in the way of savings, but I just got a nice raise, so I’d say such-and-such an hour…”

These answers are fine, though extremely narrow. Are you really only worth that number following a dollar sign? Of course not. For one thing, the value of a dollar – or a euro, peso, dirham, etc… – can, and does, change overnight. And, if central bankers around the world have their way, you may soon be worth a lot less…at least valued in the currency they seem hell bent on decapitating.

Here at The Daily Reckoning, your editors write extensively – sometimes painfully so – on all manner of subjects related to money. Our beat is finance and economics, with a sprinkling of philosophy and bad comedy thrown in to keep our Fellow Reckoners from dozing off mid-column. But money, in all its forms, is really just a means to an end, albeit a very important one. That end, of course, is freedom. Money simply happens to be one tool, one method, one key with which you can determine to lead a freer life.

When assessing your own “wealth,” dollars and cents probably only account for a small part of the whole. Consider, for example, your own wealth of experience…the unquantifiable value of your relationships…the immeasurable worth of the time spent playing with your children or canoodling with your partner…the priceless tag on your “net knowledge”…the value of the books you’ve read, plays you’ve seen, of camping trips, Little League games, memorable belly laughs, barbeques in the park, etc., etc., etc…

Consider, for just a moment, the price you would be willing to put on your memory vault, brimming with experiences both good and bad, with lessons and triumphs, failures and heartaches. There is not a central banker in the world that could dream up a currency to measure your real worth. (And what a good thing that is!)

The lessons of our life and the experiences that color them come together in our mind to form a kind of currency that is uniquely human: wisdom. In the words of the great Marcel Proust, “We do not receive wisdom; we discover it for ourselves by a voyage that no one can take for us, a voyage that no one can spare us.”

For many, including the largely reclusive French novelist, that voyage of discovery begins and ends rather close to home. For others, there is nothing quite so valuable as the new perspective won through extensive travel to new and wondrous lands. Every foreign culture sheds new light on our own. Every new taste, smell, custom and terrain, gives new and broader meaning to the life familiar. And every new adventure teaches us a little more about all that we thought we knew, both about others and, perhaps more importantly, about ourselves.

What’s more, if you’re not careful, the adventures you take abroad may even end up yielding monetary rewards…you know, for those inclined to worry about such worldly things.

Joel Bowman
for The Daily Reckoning

The Inimitable Human Currency originally appeared in the Daily Reckoning. The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today’s markets. Its been called “the most entertaining read of the day.”

Read more here:
The Inimitable Human Currency




The Daily Reckoning is a contrarian e-letter, brought to you by New York Times best-selling authors Bill Bonner and Addison Wiggin since 1999. The DR looks at the economic world-at-large and offers its major players – investors, politicians, economists and the average consumer – some much-needed constructive criticism.

Uncategorized

The Last Americanos

October 11th, 2010

A disturbing bit of news emerged on the 29th of September. Meg Whitman’s campaign for governor of California was body-checked by a damaging news report just weeks before the election. It was alleged that she had someone in her employ who had not fully complied with all the laws of this great Republic…someone who toiled in her very household, in her home, near her hearth, in the very bosom of her vie familiale. Right under her nose, in other words. And it turns out this person was neither a card-carrying Democrat, nor card-carrying Republican. In fact, that was the problem. She had no card at all.

Let’s touch on the financial news briefly and then we’ll return to the story at hand.

The Dow rose 57 points on Friday. The dollar fell, with the euro now trading at $1.39.

Gold did what gold always seems to do: it went up. It’s currently trading hands at $1,345 an ounce.

Is this the final blow-off in the gold market? Probably not. In fact, it looks to us as if gold is ready for a correction. The last stage will come. But maybe not for a while.

Meanwhile…back in the Golden State…

The Associated Press reports:

Whitman denounced the allegations as a “baseless smear attack” by Democratic challenger Jerry Brown in what has become a dead-heat race five weeks before the election.

The central issue is whether Whitman knew about a letter that the Social Security Administration sent her in 2003 that raised discrepancies about the housekeeper’s documents – a possible tip-off that she could be illegal.

The letter is the foundation for claims by former maid Nicky Diaz Santillan that Whitman and her husband knew for years she was in the US illegally, but kept her on the job regardless.

For two days, Whitman forcefully denied receiving any such letter and said she fired the $23-an-hour housekeeper last year immediately after learning she was illegal.

Revelations about the illegal housekeeper have also thrown Whitman’s carefully managed campaign completely off track and opened the door for Democrats to accuse her of hypocrisy.

“The essential fact remains the same,” said the husband, “neither Meg nor I believed there was a problem with Nicky’s legal status,” the husband said. “The facts of this matter are very clear: Ms. Diaz broke the law and lied to us and to the employment agency.”

Shame…shame…shame. What were they thinking? Were they thinking at all?

We don’t know if there’s been any progress in the case. But from what we know so far, it appears that the Whitmans had a woman in their employ who gave good and faithful service for nearly 10 years. Then, when they discovered that her papers were not in order they dropped her like a dirty dishrag.

It is illegal to knowingly employ an illegal immigrant. That is a shame too. On both counts. It’s a shame you need the permission of bureaucrats to travel, live and work where you please. It’s a shame the employer has been turned into an accomplice.

There are far too many greasy laws and far too many people ready to obey them. If the Whitmans had had any sense of integrity or loyalty they would have kept poor Nicky on the payroll. Then, when the scalawags in the press found out about it they could have answered honestly: so what?

But one after the other, the candidates, the governors, the preachers, the radio talk show hosts – the sinners confess their crimes, ask forgiveness, and claim rehabilitation. They sniffle. They cry. They admit their transgressions and misdemeanors. They whip themselves like penitents… Then, life goes on.

But what are the crimes? One falls from grace because he has fondled a stewardess on an airplane. Another has had a fling with an Argentine. One has wiggled his foot in a provocative manner in a public lavatory in Minnesota. Another has used drugs. And more than a few have slept with people other than their spouses.

What would you expect? They are only human. Barely. They are politicians and exhibitionists who enjoy making a public spectacle of themselves. They like their lofty positions in front of the media. They may enjoy their fall from grace even more, provided it keeps their names in the paper.

How we miss the old timers who had the courage of their predilections! To a politician from the great state of Louisiana the following story is attributed:

He called a press conference to reply to allegations that he was spotted consorting with a “known prostitute.”

Holding up the accusing newspaper, he said:

“It says here that I was seen coming out of the Central Hotel at 6 o’clock in the morning after sleeping with a known prostitute. Well, I can tell you that every word of this allegation is a lie.

“It wasn’t the Central Hotel, it was the Downtown Hotel. It wasn’t 6 o’clock in the morning; it was 7 o’clock. She wasn’t a known prostitute; I never laid eyes on her before in my life. And we didn’t sleep a wink.”

But the present generation of political figures is as spineless as the public itself. We live in a nation of sheep led by jackasses. We stand in line to be searched by airport goons, when we know perfectly well we have no intention of blowing up anything. We meekly fill in census forms…separate our garbage…and obey the speed limit even when there are no cops around.

Even so, turning out a trusted servant, merely because she has run afoul of the paper checkers is low and unforgivable. There must be some especially hot corner of Hell set aside for such people.

Besides, illegal immigrants are to be treasured. They are the last real Americans. Like the first ones, they brave hardship and danger to get here. The first immigrants crossed unforgiving seas in small barques. The last cross a hard border, patrolled by drug gangs and border police. Like Puritans, they come without passports…without work permits…with nothing more than the shirts on their backs and a desire to work. They worship their own gods, and otherwise ask only to be left alone. Do some turn to delinquency, felony and voting? Of course, they do…they’re only human too. But most get along passably well without the benefit of US social welfare legislation, democracy or larceny.

Most show up with no money in their pockets; instead, all they have is their scraps of paper or cheap cell phones…with the telephone number of a cousin in Houston or the address of a friend in Los Angeles – just like the immigrants who crowded into Baltimore, Philadelphia and New York in the 19th century. And like the first immigrants, they cannot sit their fat derrieres down in a cushy government job…nor even ask the assistance of welfare agencies, food stamps or other giveaways. Every contact with the white-skinned “gringos” is as dangerous and repulsive to them as contact with the red men was for the original settlers.

In Arizona, apparently, they can be stopped and asked for their papers at any moment, without cause or provocation. In other states, they need to be careful too…lest they be stopped for speeding and the secret gets out.

Nor can they claim minimum wage, race discrimination, disability, union scale, priority parking, unemployment compensation or any of the other chisels and hustles available to homegrown labor. The illegals have to earn their way.

So raise a glass. Raise a hat. Raise a voice. Say “gracias” to these…the last real Americanos.

Jerry Brown is right; Meg Whitman deserves to lose.

Regards,

Bill Bonner
for The Daily Reckoning

The Last Americanos originally appeared in the Daily Reckoning. The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today’s markets. Its been called “the most entertaining read of the day.”

Read more here:
The Last Americanos




The Daily Reckoning is a contrarian e-letter, brought to you by New York Times best-selling authors Bill Bonner and Addison Wiggin since 1999. The DR looks at the economic world-at-large and offers its major players – investors, politicians, economists and the average consumer – some much-needed constructive criticism.

Uncategorized

The Last Americanos

October 11th, 2010

A disturbing bit of news emerged on the 29th of September. Meg Whitman’s campaign for governor of California was body-checked by a damaging news report just weeks before the election. It was alleged that she had someone in her employ who had not fully complied with all the laws of this great Republic…someone who toiled in her very household, in her home, near her hearth, in the very bosom of her vie familiale. Right under her nose, in other words. And it turns out this person was neither a card-carrying Democrat, nor card-carrying Republican. In fact, that was the problem. She had no card at all.

Let’s touch on the financial news briefly and then we’ll return to the story at hand.

The Dow rose 57 points on Friday. The dollar fell, with the euro now trading at $1.39.

Gold did what gold always seems to do: it went up. It’s currently trading hands at $1,345 an ounce.

Is this the final blow-off in the gold market? Probably not. In fact, it looks to us as if gold is ready for a correction. The last stage will come. But maybe not for a while.

Meanwhile…back in the Golden State…

The Associated Press reports:

Whitman denounced the allegations as a “baseless smear attack” by Democratic challenger Jerry Brown in what has become a dead-heat race five weeks before the election.

The central issue is whether Whitman knew about a letter that the Social Security Administration sent her in 2003 that raised discrepancies about the housekeeper’s documents – a possible tip-off that she could be illegal.

The letter is the foundation for claims by former maid Nicky Diaz Santillan that Whitman and her husband knew for years she was in the US illegally, but kept her on the job regardless.

For two days, Whitman forcefully denied receiving any such letter and said she fired the $23-an-hour housekeeper last year immediately after learning she was illegal.

Revelations about the illegal housekeeper have also thrown Whitman’s carefully managed campaign completely off track and opened the door for Democrats to accuse her of hypocrisy.

“The essential fact remains the same,” said the husband, “neither Meg nor I believed there was a problem with Nicky’s legal status,” the husband said. “The facts of this matter are very clear: Ms. Diaz broke the law and lied to us and to the employment agency.”

Shame…shame…shame. What were they thinking? Were they thinking at all?

We don’t know if there’s been any progress in the case. But from what we know so far, it appears that the Whitmans had a woman in their employ who gave good and faithful service for nearly 10 years. Then, when they discovered that her papers were not in order they dropped her like a dirty dishrag.

It is illegal to knowingly employ an illegal immigrant. That is a shame too. On both counts. It’s a shame you need the permission of bureaucrats to travel, live and work where you please. It’s a shame the employer has been turned into an accomplice.

There are far too many greasy laws and far too many people ready to obey them. If the Whitmans had had any sense of integrity or loyalty they would have kept poor Nicky on the payroll. Then, when the scalawags in the press found out about it they could have answered honestly: so what?

But one after the other, the candidates, the governors, the preachers, the radio talk show hosts – the sinners confess their crimes, ask forgiveness, and claim rehabilitation. They sniffle. They cry. They admit their transgressions and misdemeanors. They whip themselves like penitents… Then, life goes on.

But what are the crimes? One falls from grace because he has fondled a stewardess on an airplane. Another has had a fling with an Argentine. One has wiggled his foot in a provocative manner in a public lavatory in Minnesota. Another has used drugs. And more than a few have slept with people other than their spouses.

What would you expect? They are only human. Barely. They are politicians and exhibitionists who enjoy making a public spectacle of themselves. They like their lofty positions in front of the media. They may enjoy their fall from grace even more, provided it keeps their names in the paper.

How we miss the old timers who had the courage of their predilections! To a politician from the great state of Louisiana the following story is attributed:

He called a press conference to reply to allegations that he was spotted consorting with a “known prostitute.”

Holding up the accusing newspaper, he said:

“It says here that I was seen coming out of the Central Hotel at 6 o’clock in the morning after sleeping with a known prostitute. Well, I can tell you that every word of this allegation is a lie.

“It wasn’t the Central Hotel, it was the Downtown Hotel. It wasn’t 6 o’clock in the morning; it was 7 o’clock. She wasn’t a known prostitute; I never laid eyes on her before in my life. And we didn’t sleep a wink.”

But the present generation of political figures is as spineless as the public itself. We live in a nation of sheep led by jackasses. We stand in line to be searched by airport goons, when we know perfectly well we have no intention of blowing up anything. We meekly fill in census forms…separate our garbage…and obey the speed limit even when there are no cops around.

Even so, turning out a trusted servant, merely because she has run afoul of the paper checkers is low and unforgivable. There must be some especially hot corner of Hell set aside for such people.

Besides, illegal immigrants are to be treasured. They are the last real Americans. Like the first ones, they brave hardship and danger to get here. The first immigrants crossed unforgiving seas in small barques. The last cross a hard border, patrolled by drug gangs and border police. Like Puritans, they come without passports…without work permits…with nothing more than the shirts on their backs and a desire to work. They worship their own gods, and otherwise ask only to be left alone. Do some turn to delinquency, felony and voting? Of course, they do…they’re only human too. But most get along passably well without the benefit of US social welfare legislation, democracy or larceny.

Most show up with no money in their pockets; instead, all they have is their scraps of paper or cheap cell phones…with the telephone number of a cousin in Houston or the address of a friend in Los Angeles – just like the immigrants who crowded into Baltimore, Philadelphia and New York in the 19th century. And like the first immigrants, they cannot sit their fat derrieres down in a cushy government job…nor even ask the assistance of welfare agencies, food stamps or other giveaways. Every contact with the white-skinned “gringos” is as dangerous and repulsive to them as contact with the red men was for the original settlers.

In Arizona, apparently, they can be stopped and asked for their papers at any moment, without cause or provocation. In other states, they need to be careful too…lest they be stopped for speeding and the secret gets out.

Nor can they claim minimum wage, race discrimination, disability, union scale, priority parking, unemployment compensation or any of the other chisels and hustles available to homegrown labor. The illegals have to earn their way.

So raise a glass. Raise a hat. Raise a voice. Say “gracias” to these…the last real Americanos.

Jerry Brown is right; Meg Whitman deserves to lose.

Regards,

Bill Bonner
for The Daily Reckoning

The Last Americanos originally appeared in the Daily Reckoning. The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today’s markets. Its been called “the most entertaining read of the day.”

Read more here:
The Last Americanos




The Daily Reckoning is a contrarian e-letter, brought to you by New York Times best-selling authors Bill Bonner and Addison Wiggin since 1999. The DR looks at the economic world-at-large and offers its major players – investors, politicians, economists and the average consumer – some much-needed constructive criticism.

Uncategorized

Election’s impact on stocks, gold, oil, currencies and more!

October 11th, 2010

Martin D. Weiss, Ph.D.

If you think the winds of change in Washington — both on the political scene and at the Fed — can have a big impact on the financial markets, wait till you see what can happen in the coming political storm!

For a solid sneak preview, I invited world champion pollster John Zogby to an emergency briefing at our Florida office — along with strategists Richard Mogey and Monty Agarwal. Here’s the edited transcript …

Decision 2010: New Dangers,
New Profit Opportunities!

With Martin Weiss, John Zogby,
Monty Agarwal and Richard Mogey

Larry Edelson

Martin Weiss: On November 2, Americans will go to the polls to decide their destiny. They will vote for a continuation in the way our government has been fighting the financial crisis. Or they will vote for a revolution in the government’s role.

The entire world is watching, and make no mistake: Global investors are already voting with their money, already dumping the U.S. dollar, already rushing to nearly any asset that can go up when the dollar goes down.

Commodities, ETF, Mutual Fund, OPTIONS, Real Estate, Uncategorized

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