Tuesday, December 29, 2009

Stock Market from 1929 to 1932



As you can see the market crashed in 1929 and due to the contraction of credit the stock market continued to move down through the middle of 1932.

Tuesday, December 15, 2009

22% Unemployment



U3 10%
U6 17.2% Includes discouraged workers and marginally attached workers
SGS 22%

Tuesday, November 17, 2009

Reason's China Want a Weak Yuan

I was just talking with my bother about why China wants to NOT apprceciate their Chinese Yuan currency in relation to the US dollar. One the main reason US companies do business in China is the cheap labor that can be had. If the Chinese Yuan was to appreciate against the dollar then the whole reasons go to China in the first place would disappear. If the Yuan appreciates too much then corporations would move back and possibly do business in the US. The reality is businesses do not want to be located in the US is because of the high working standards and regulatory costs. The Yuan currently trades at about 7 to 1 to the US dollar. As this currency relationship narrows businesses may move back to the US, Canada, or other parts of the world. It's inevitable that the average US citizen's standard of living will fall as China's rises.

Steve Keen Australia

Monday, November 16, 2009

Money, Banking and the Federal Reserve

US Dollar Carry Trade & Stock Market Rally

I'm posting today to explain the dollar carry trade. Many of the analysts who work on wall street explain the big market move higher on the US dollar carry trade. What investors and speculators are doing is going to banks in the United States and borrowing US dollars to invest in assets. The reason investors are borrowing in the United States are the ZIRP or zero interset rate policy of the Federal Reserve. The assets that have been purchased range from stocks, bonds, currencies, and commodities. The worry is that once the carry trade unwinds the market participants will sell their assets purchased during the bubble which will drive the markets lower.
When looking at the partipants in other countries, we will use Japanese investors for example, the Japanese investors first take their Yen and in exchange get borrowed US dollars. The Japanese investors convert these dollars in Brazilian Reals and buy stocks in Brazil, or convert these dollars to Chinese Yaun and buy Chinese Stocks, or convert these dollars to Euros and buy European stocks. When the bubble is over and the Federal Reserve tightens liquidity by ending their lending facilities then Japanese investors will be selling all these assets and use the profits to pay back their loans in the US. Many analysts on wall street say this will cause a huge rally in the US dollar because foriegn currencies will be sold to buy US dollars. This was the big trade in Japan in Japan from 1990 to present.

Monday, November 9, 2009

Friday, November 6, 2009

Real Unemployment

Chart of U.S. Unemployment

Real unemployment is at 22% Wow.

Monday, October 12, 2009

Thursday, October 8, 2009

END THE FED by Ron Paul Book Review

I recently read two of Ron Paul's books. The Revolution Manifesto and End the Fed which recently came out last month. Both books are great reads and I highly recommend both of them. I will be reviewing End the Fed which Ron Paul lays out the case to end the Federal Reserve monetary system which inflates the currency and steals the wealth of the common man. Ron Paul is a United States House of Representative's member from the state of Texas. Ron Paul is also a physician who practiced obstetrics and delivered over 4,000 babies in his career. In End the Fed Ron Paul lays out why you should care, the history of money in the US, and his influences along with the case for a currency backed by gold.

First off, you should care about the money printing at the FED for many reasons. One, the more money created makes the dollars you save worth less through the silent killer of inflation. To some this is counter intuitive because it's not the goods actually increasing in value, it's your money's purchasing power being devalued relative to those goods. Two, the FED prints money to bailout the rich banksters, automakers, and other failures and expects you to pay for in through inflation and future taxation. Three, the FED also fights wars that you'll pay for the same way. To sum it it the FED is stealing from you.

In the United States we have had three central banks. The two previous central banks have failed. The first and second banks of the United States failed for the same reason the Federal Reserve will fail. The banks just print money and create money that isn't worth the paper it's printed on. The so called money is backed by the full faith and credit of the United Sates government. That is the governments ability to tax it's citizens or just print money.

Ron Paul was greatly influenced in his economic thinking by the Austrian School of Economics. The Austrian School of Economics believes that you shouldn't intervene in the market through monetary or fiscal stimulus. The Austrian School differs from the Keynesian approach that believes the government should prime the pump and stimulate the economy during recessions and depressions to ease the pain. Many of the economic leaders in government espouse the Keynesian approach. The Austrian school believes stimulating just makes the problems worse and makes the future pain ever greater because the stimulative government spending doesn't reflect real demand. The Austrian School believes there are unintended consequences with government intervention like inflation. A good example of this today is the Cash for Clunkers program which helped stimulate the economy but essentially just pulled forward demand that would have occurred sometime in the future. The unintended consequence would be the harsher downturn in the future because of the demand that would not have otherwise occurred because of the government program. Also, the citizens of the United Sates are paying for this program in taxes. You and I essentially helped get somebody else into a new car.
Ron Paul makes the constitutional, philosophical, libertarian, and economic case for abolishing the FED. The power that the FED currently has is unconstitutional because this power should be under the congress and not a private baking cartel of the federal reserve. The philosophical case is made because the FED creates the bubble and does more harm than good. We don't have to have the boom and bust cycles that the federal reserve creates. The economic cycles created by increasing and decreasing the money supply could be eliminated by abolishing the FED. The libertarian case for abolishing the FED is that more and more power is going to government and not to the people. Like Benjamin Franklin stated "if you sacrifice some of your freedoms for security, you deserve nor will get freedom or security. By fighting foriegn wars and having occupation in over 130 countries to increase our global empire we aren't making diplomatic allies in all cases and there's a "blowback" effect from these actions. Countries in the middle east don't want to be told by the United States what policies they should employ. Nobody likes a bully. September 11th is an example of such "blowback". Over a million Iraqi civilians were killed in the war on terror. I wouldn't be happy with a country that caused this damage.
Ron Paul put a great deal of work into End The Fed and it shows. This book is a must read for all americans.

Martin Armstrong Cycle Theory

Cycle Theory 9/09

Saturday, September 26, 2009

Elephants in the Room!!



Greenspan like Bernacke gives the same song and dance that everything is okay or soon to be okay. Just listen to the supposed smart people and everything will be okay. Bankers of course wern't the ones who didn't require down payments and sold interest only loans and adjustable rate mortgages. The system has too much debt and we need to go through a debt deflationary depression. If government continues to just print money we could have hyper-inflation. Revolution is here. The same people who got us into the proplem will not get us out of it. Too much government is the problem.

Alan Grayson Questions Fed on Front Running via Primary Dealers



This obviously needs investigated. Why should the Federal Reserve be so secret. If the Federal Reserve is audited the world will realize that it subsidizes the rich at the expense of everyone else. The Fed's balance sheet is worse than Lehman Brothers and Bear Sterns combined. Who's going to bailout the US government?

Wednesday, September 9, 2009

Depression Similiarities Revisited


Click on Chart to See Clearly

With the insider selling at 10 to 1 versus insider buying. Also the fundamentals of this market are horid and a jobless recovery. Me thinks the market is heading lower very soon.

Thursday, September 3, 2009

Wow, Pete Stark graduated from MIT.



Obviously Stark doesn't believe debt measures wealth. This just shows the lack of righteousness.

Saturday, August 29, 2009

Ayn Rand Passage from Atlas Shrugged

“Then you will see the rise of the double standard—the men who live by force, yet count on those who live by trade to create the value of their looted money—the men who are the hitchhikers of virtue. In a moral society, these are the criminals, and the statutes are written to protect you against them. But when a society establishes criminals-by-right and looters-by-law—men who use force to seize the wealth of DISARMED victims—then money becomes its creators’ avenger. Such looters believe it safe to rob defenseless men, once they’ve passed a law to disarm them. But their loot becomes the magnet for other looters, who get it from them as they got it. Then the race goes, not to the ablest at production, but to those most ruthless at brutality. When force is the standard, the murderer wins over the pickpocket. And then that society vanishes, in a spread of ruins and slaughter.

“Do you wish to know whether that day is coming? Watch money. Money is the barometer of a society’s virtue. When you see that trading is done, not by consent, but by compulsion— when you see that in order to produce, you need to obtain permission from men who produce nothing—when you see that money is flowing to those who deal, not in goods, but in favors—when you see that men get richer by graft and by pull than by work, and your laws don’t protect you against them, but protect them against you—when you see corruption being rewarded and honesty becoming a self-sacrifice—you may know that your society is doomed. Money is so noble a medium that it does not compete with guns and it does not make terms with brutality. It will not permit a country to survive as half-property, half-loot.

“Whenever destroyers appear among men, they start by destroying money, for money is men’s protection and the base of a moral existence. Destroyers seize gold and leave to its owners a counterfeit pile of paper. This kills all objective standards and delivers men into the arbitrary power of an arbitrary setter of values. Gold was an objective value, an equivalent of wealth produced. Paper is a mortgage on wealth that does not exist, backed by a gun aimed at those who are expected to produce it. Paper is a check drawn by legal looters upon an account which is not theirs: upon the virtue of the victims. Watch for the day when it becomes, marked: ‘Account overdrawn.’

“When you have made evil the means of survival, do not expect men to remain good. Do not expect them to stay moral and lose their lives for the purpose of becoming the fodder of the immoral. Do not expect them to produce, when production is punished and looting rewarded.

Ayn Rand - Atlas Shrugged – 1957

Thursday, August 27, 2009

SOS Financial Issues Facing the United States 8/27/2009

Today the financial media is talking about green shoots and being the road to economic recovery. The headlines always has some spin to it. I'm not buying what the media is selling. The FDIC is bankrupt. The big money center banks have trillions of worthless assets that sit off their balance sheets in SPE's. A special purpose entity (SPE) (sometimes, especially in Europe, "special purpose vehicle" or simply SPV) is a legal entity (usually a limited company of some type or, sometimes, a limited partnership) created to fulfill narrow, specific or temporary objectives. SPE's are typically used by companies to isolate the firm from financial risk. A company will transfer assets to the SPE for management or use the SPE to finance a large project thereby achieving a narrow set of goals without putting the entire firm at risk.

We won't have any type of recovery until all of this debt is worked through the financial system and defaulted on or paid back. Since many people do not have jobs and unemployment is rising. I suspect the later won't happen. Don't expect a government bailout. Whose going to bailout our government? You can't print worthless paper backed by nothing and producing next to nothing.

Monday, August 24, 2009

Healthcare is about more than Healthcare, It's about Liberty!



This guy doesn't represent some whack job group, he represents the majority of people that I speak to.

Wednesday, August 12, 2009

Chart of the Day



No expanding volume means watch out below! 87% bullish sentiment readings could mark a sign of a reversal. All of the so called experts are calling for the end of the recession. My guess is the next leg is down.

Sunday, August 2, 2009

US Turning Japanese?



Yes I really think so! Not letting bad banks and companies failure is what Japan did in 1990. Twenty years of stagnation and asset deflation is what Japan got as the result. The US should sign up for that, right?
So deflation is the conclusion unless the US gets the Chinese or the Japanese to buy US debt denominated in Yuan or Yen. If you read the US government is selling debt denominated in foriegn currency and still printing dollars without balancing the budget then the hyperinflation scenario could play itself out. By doing this the US is really putting a gun in its mouuth and the Chinese and Japanese would be daring the US to continue fiscal irresponsibility of money printing. Currently we can just print money and pay the foriegn debts off because the debt is denominated in US dollars and the foriegn debt is a fixed amount. If we try this same scenario with debt denominated in Yuan or Yen then the more money we print makes the US dollar worth less and the debt becomes more and more expensive to pay off which pushes the US into a hyperinflationary spiral. You can't get out of this hyperinflationary spiral and the US and foriegners know this. The only reason the US has been able to get away with this excessive money printing is because we are the world's reserve currency.
Bottom line is the future won't be as prosperous as the last thirty years. And yes I think in a credit based money system the likely outcome is deflation which means we are turning Japanese.

Is the Stock Market Really making you REAL Money?



The stock market rallies day after day, yet the fundamentals of the market are getting worse. In real terms when you adjust the market for inflation the stock market hasn't made a new high since 2000. Look at the market priced in gold and you'll see this is very glaring. The chart above tells us that real wealth in the US market hasn't increased. You can't print money backed by nothing and expect prosperity.

Wednesday, July 15, 2009

S&P versus the Nikkei



I told many of my friends what happeded in Japan in 1990 and told them how the Nikkei was down over 70%. Now it's almost down 80% over 20 years. I expect the S&P 500 to do the same. Japan had a huge real estate and credit bubble that popped just like we are going through here in the US. The Japanese had a higher savings rate and also didn't have huge deficits. The US saves barely 1% and we have huge deficits which aren't ending anytime soon. I can't understand how we would expect different results.

Saturday, July 11, 2009

Goldman Sachs Robbing America!



Goldman Sachs doesn't want this to fall in the hands of another investment company because it will cut into their business. Goldman Sachs has helped create every bubble in the history of the world. Remember Goldman Sachs became a bank holding company to get taxpayer money just so they could survive.

Thursday, June 25, 2009



We've got a ways to go to get back to even. We'll see you at S&P 500 at 500 or lower. Debt deflation is a bear. Deflation is a result of 30 years of inflation.

Sunday, June 21, 2009

Banking Nonsense

Many policy solutions to financial problems don't make sense. I'd like to discuss a few that have circulated the financial media recently. Most of the criticisms come from the government and the banksters.

First, explain to me how we are going to solve our current crisis of too much credit by getting more lending to people who can not pay their current obligations? Many people who have loans and credit cards from Citibank and Bank of America aren't able to make their payments. Maybe government and banking officials should go to credit counseling. Most people would love to be like the government and run up credit cards and have the taxpayer or China pay for the frivolous spending. Solutions to this problem would be to cut government spending across the board by 25%. This would include payments to retirees and Medicare.

Second, why would you give the Federal Reserve more power when they have created the problem we are currently in. Rewarding failure in the United States is something we should embrace? The FED is the problem and not the solution.

Third, Obama's administration came out with a loan foregiveness program. If you have your mortgage reworked and have mortgage principal forgiveness. Then, the loan becomes a recourse loan where the bank can come back at you for future consideration. Currently the mortgages are non recourse where you can walk away and the bank eats a shit sandwich. I'm not saying this is right. It's actually very wrong and immoral. Remember though, this would have never become a problem if banks would have required a down payment, proof of income, and used conventional loans to finance the real estate.

Fourth, how is too big to fail a good idea. If you have too big to fail then you must have too small to save which is where the American taxpayer foots the bill. Our country is getting too big to save. Who's going to bailout the United States. Looks like the United States will be defaulting on debt to the Chinese.

Thursday, June 18, 2009

Woods on Mises and Economic History

Morning Readings 6/18/2009

http://globaleconomicanalysis.blogspot.com/2009/06/states-in-deep-trouble-over-plunging.html
http://www.market-ticker.org/archives/1129-Goebbels-Media-Part-Deux.html
http://www.ritholtz.com/blog/2009/06/obama%e2%80%99s-financial-regulatory-restructuring-is-an-%e2%80%9cindustrial-policy%e2%80%9d/
http://www.bloomberg.com/apps/news?pid=20601087&sid=aatqQt9XStqc
http://www.ft.com/cms/s/0/6bcf0554-5b5d-11de-be3f-00144feabdc0.html

Wednesday, June 17, 2009

Confidence Quotes from The Conmen

Posted by Tyler Durden Zerohedge
Austrian Filter has taken the time to put together all the relevant quotes over the past 2 years that demonstrate how profoundly Bernanke and Paulson have been misrepresenting (or simply misunderstanding) just how extensive the crisis we are in, is. One can only imagine why anyone would ever believe anything Ben Bernanke (or any other vapid disseminator of groundless optimism) has to say anymore, after two years of outright hyperbole and unfounded green shootery.

February 28, 2007 - Dow Jones @ 12,268

March 13th, 2007 – Henry Paulson: “the fallout in subprime mortgages is "going to be painful to some lenders, but it is largely contained."

March 28th, 2007 – Ben Bernanke: "At this juncture . . . the impact on the broader economy and financial markets of the problems in the subprime markets seems likely to be contained,"

March 30, 2007 - Dow Jones @ 12,354

April 20th, 2007 – Paulson: "I don't see (subprime mortgage market troubles) imposing a serious problem. I think it's going to be largely contained." , "All the signs I look at" show "the housing market is at or near the bottom,"

April 30, 2007 - Dow Jones @ 13,063

May 17th, 2007 – Bernanke: “While rising delinquencies and foreclosures will continue to weigh heavily on the housing market this year, it will not cripple the U.S.”

May 31, 2007 - Dow Jones @ 13,627

June 20th, 2007 – Bernanke: (the subprime fallout) ``will not affect the economy overall.''

July 12th, 2007 – Paulson: "This is far and away the strongest global economy I've seen in my business lifetime."

August 1st, 2007 – Paulson: "I see the underlying economy as being very healthy,"

October 15th, 2007 – Bernanke: "It is not the responsibility of the Federal Reserve - nor would it be appropriate - to protect lenders and investors from the consequences of their financial decisions."

December 31, 2007 - Dow Jones @ 13,265

January 31, 2008 - Dow Jones @ 12,650

February 14th, 2008 – Paulson: (the economy) "is fundamentally strong, diverse and resilient."

February 28th, 2008 – Paulson: "I'm seeing a series of ideas suggested involving major government intervention in the housing market, and these things are usually presented or sold as a way of helping homeowners stay in their homes. Then when you look at them more carefully what they really amount to is a bailout for financial institutions or Wall Street."

February 29th, 2008 – Bernanke: "I expect there will be some failures. I don't anticipate any serious problems of that sort among the large internationally active banks that make up a very substantial part of our banking system."

March 16th, 2008 – Paulson: "We've got strong financial institutions . . . Our markets are the envy of the world. They're resilient, they're...innovative, they're flexible. I think we move very quickly to address situations in this country, and, as I said, our financial institutions are strong."

March 18th, 2008 - Bear Stearns Bailout Announced

May 7, 2008 – Paulson: 'The worst is likely to be behind us,”

May 16th, 2008 – Paulson: "In my judgment, we are closer to the end of the market turmoil than the beginning," he said.

May 30, 2008 - Dow Jones @ 12,638

June 9th, 2008 – Bernanke: Despite a recent spike in the nation's unemployment rate, the danger that the economy has fallen into a "substantial downturn" appears to have waned,

July 16th, 2008 – Bernanke: (Freddie and Fannie) “…will make it through the storm”, "… in no danger of failing.","…adequately capitalized"

July 20th, 2008 – Paulson: "it's a safe banking system, a sound banking system. Our regulators are on top of it. This is a very manageable situation."

July 31, 2008 - Dow Jones @ 11,378

August 10th, 2008 – Paulson: ``We have no plans to insert money into either of those two institutions.” (Fannie Mae and Freddie Mac)

September 8th, 2008 - Fannie and Freddie nationalized. The taxpayer is on the hook for an estimated 1 - 1.5 trillion dollars. Over 5 trillion is added to the nation’s balance sheet.

September 16th, 2008 - $85 Billion AIG Bailout “Loan”

September 19th, 2008 - $700 Billion Bailout Plan Announced

September 19th, 2008 – Paulson: "We're talking hundreds of billions of dollars - this needs to be big enough to make a real difference and get at the heart of the problem," he said. "This is the way we stabilize the system."

September 19th, 2008 - Bernanke: "most severe financial crisis" in the post-World War II era. Investment banks are seeing "tremendous runs on their cash," Bernanke said. "Without action, they will fail soon."

September 21st, 2008 – Paulson: "The credit markets are still very fragile right now and frozen", "We need to deal with this and deal with it quickly.", "The financial security of all Americans ... depends on our ability to restore our financial institutions to a sound footing."

September 23rd, 2008 – Paulson: "We must [enact a program quickly] in order to avoid a continuing series of financial institution failures and frozen credit markets that threaten American families' financial well-being, the viability of businesses, both small and large, and the very health of our economy,"

September 23rd, 2008 – Bernanke: "My interest is solely for the strength and recovery of the U.S. economy,"

October 31, 2008 - Dow Jones @ 9,337

March 31, 2009 - Dow Jones @ 7,609

"Where's our Money"

Thursday, June 11, 2009

This Should Put Everyone at Ease



I wonder if the experts really know what they are doing. We should let the markets work and have good but limited regulation. Too much leverage is bad!! Dughh

Wednesday, June 10, 2009

If FED had a Stress Test it Would FAIL!



Jim Grant of Grant's interest rate observer said the FED would fail if audited. WTF. I don't believe everything I hear but the FED is basically Citibank.

Tuesday, June 9, 2009

FED needs to Go Bye Bye

Straight out of the Twilight Zone Fed Intends to Hire Lobbyist in Campaign to Buttress Its Image.


The Federal Reserve intends to hire a veteran lobbyist as it seeks to counter skepticism in Congress about the central bank’s growing power over the U.S. financial system, people familiar with the matter said.

Linda Robertson currently handles government, community and public affairs at Johns Hopkins University in Baltimore, and headed the Washington lobbying office of Enron Corp., the energy trading company that collapsed in 2002 after an accounting scandal. She was also an adviser to all three of the Clinton administration’s Treasury secretaries.

“Some members of Congress think there are votes in attacking the Fed” after it “unnecessarily and unwisely entangled monetary policy with fiscal policy,” said former St. Louis Fed President William Poole. “The Fed is going to have a tricky time of unwinding what has been done” and will need to “keep in touch with members of Congress more thoroughly,” said Poole, now senior fellow with the Cato Institute in Washington.

“People have been asking whether the Fed is capable of getting its job done right,” said Lynn Turner, a former chief accountant at the Securities and Exchange Commission. “Hiring a former lobbyist from Enron will surely make one wonder.”

In addition, the central bank has been become a target to some members of Congress who’ve posted online videos of their interrogations of Fed officials during public hearings.

One YouTube clip, of Florida Democratic Representative Alan Grayson’s grilling of Inspector General Elizabeth Coleman, has garnered almost 500,000 views in about a month.
Twilight Zone Lobbying

The fact that the Fed's image needed restoring is bad enough, but hiring an Enron lobbyist and expecting it to improve one's image is straight out of the Twilight Zone.

And what's with those CBS 60 Minutes escapades with Bernanke? It is sickening to see 60 Minutes presenting Fed propaganda as news. If 60 minutes wants news, here is news:

Is Anyone Minding the Store at the Federal Reserve?



If 60 Minutes wants more news it should report on HR1207.

Ron Paul: Audit the Fed, Then End It! 5/18/09




Support HR1207!

Please contact your legislative representatives today!

Here's how: Speak Out - Audit the Fed, Then End It!

8 Step Program To Improve The Fed's Image

Before a drug addict or alcoholic can be helped, the first step is to admit there is a problem. With that in mind, I propose the following 8 step image improvement program.

1) Bernanke needs to admit the Fed and fractional reserve lending are the root causes of our economic crisis.

The Fed under Greenspan and now Bernanke have blown bubble after bubble with each bubble increasing risk. Bernanke needs to admit he does not have a clue where interest rates should be or why.

Certainly any economist who could not spot this housing bubble a mile away is in academic wonderland and unfit to be setting interest rates.

As recently as 18 months ago the Bernanke said this was contained to subprime and would not spill over into the broader markets. Three months ago Bernanke predicted the unemployment rate would be 8.4% for 2009. Is that hopeless or what? Please see Optimistic Unemployment and Housing Forecasts Looking Downright Silly.

It's important to note that not a single member on the Fed got this bubble correct. The problem is not just Bernanke.

2) Admit FDIC is part or the problem.

The problem with FDIC is easy to describe: it continually puts off small problem until there is a massive systemic collapse. Banks like Bank United or any of the 63 banks that failed since 2008 had some things in common: high leverage, high risk, and bets on real estate that went sour.

To attract deposits, these banks offered above market rates on CDs and other FDIC guaranteed deposits. Were it not for FDIC no one in their right mind would have banked at most of those failed institutions. Yet those banks were able to continually raise cash because of government guarantees.

Had those guarantees not been in place, many of these banks would have blown up sooner or they would not have attracted so much capital in the first place. FDIC penalizes banks that lend responsibly because their CD rates are lower.

FDIC appeared successful for years but those appearances were deceiving. Instead of having small random bank failures spread out over years, FDIC guarantees one big banking mess like we are facing now.

It's time to abolish FDIC, except perhaps on checking accounts which are payable on demand deposits that should not be lent out at all.

3) Conduct a complete audit of the Fed.

No one knows what is on the Fed's balance sheet, what it is worth, who loans were made to or why. Is it any wonder the Fed needs to improve its image? Bernanke preached transparency but he is a big liar. There is no transparency and that is why we need an audit.

4) Devise a plan to phase out FDIC.

It might cause a huge problem to phase out FDIC, but it sure can be done over time. Let's start working on the plan now.

5) Devise a plan to phase out Fractional Reserve Lending

The way to start is to require 100% reserves on checking accounts (demand deposits that are supposed to be available on demand). People think money is in their checking accounts. It simply isn't there. It should be and it's fraud that it's not.

Greenspan allowed sweeps in 1994 and unbeknown to bank customers, their checking deposits are swept out nightly into savings accounts. Savings accounts have no reserve requirements at all. It is time to end this nonsense. However, this proposal would likely have to be phased in.

6) Sell the Fed's assets.

Selling the Fed's assets will have to be done over time, but it can easily be accomplished in 3-5 years.

7) Let the free market set interest rates.

This is actually easier than it seems and we can start now. All the Fed has to do is step away and let the market set rates. The Fed has no idea what price orange juice should be, what the price copper should be, or how much a loaf of bread should cost. Nor does the Fed have any clue how to set interest rates. The housing bubble is proof enough.

Some say the Fed just follows the market. If that is the case, why do we need a Fed?

The reality is the Fed does not really follow the market, rather it creates massive feedback loops distorting the market. If you have not yet done so, please read the Fed Uncertainty Principle where I outline the process.

8) Carry out the plan to eliminate the Fed, Fractional Reserve Lending, and the FDIC.

Once that is accomplished the Fed will no longer have an image problem and the citizens of the US will no longer have a problem with the Fed blowing serial bubbles or robbing the middle class with its inflationary policies.

Mike "Mish" Shedlock

Monday, June 8, 2009

Sunday, June 7, 2009

Healthcare in Other Countries

“According to the Economist the total US spend on healthcare is 15.4% of GDP including both state and private . With that it gets 2.6 doctors per 1,000 people, 3.3 hospital beds and its people live to an average age of 78.2

“UK - spends 8.1% of GDP, gets 2.3 doctors, 4.2 hospital beds and live to an average age of 79.4. So for roughly half the cost their citizens overall get about the same benefit in terms of longevity of life.

“Canada - spends 9.8% of GDP on healthcare, gets 2.1 doctors, 3.6 hospital beds and live until they are 80.6 yrs

“Now if we look at the more social model in Europe the results become even more surprising:

“France - spends 10.5%, 3.4 docs, 7.5 beds and live until they are 80.6

“Spain - spends 8.1% , 3.3 docs , 3.8 beds and live until they are 81

“As a whole Europe spends 9.6% of GDP on healthcare, has 3.9 doctors per 1,000 people, 6.6 hospital beds and live until they are 81.15 years old.

The point is we have some room to cut costs in the US. I have a feeling the costs will be cut mostly on wages. I think you will see some improvements accross the board.

Saturday, June 6, 2009

Current Unemployment



The broadest measure is almost 21%. U-6 17%, U3 9.5%

Grill him Mary

Sweeden punishes A$$ Wrangling Bankers, We give them Bonuses

From Business Wire
"If the banks approach us with large credit losses after making a lot of money on lending, their shareholders will have to pay the consequences," Anders Borg said in an interview, Reuters reports. "We will be very clear with banks which are not solvent and cannot live up to what the law stipulates, that they can count on (government) funding to be in the form of state ownership."


Swedish banks fear mounting loan losses as the economy in the Baltic States, where Swedish banks are the largest lenders, are heading for breakdown. This puts the Swedish economy at considerable risk, Sweden's Finance Minister Anders Borg said to Swedish state television, SVT.

Monday, June 1, 2009

The Great Bear Market 2007-present



Chart from Clusterstock.com

The great bear market of 2007 to present saw the market drop 57% from 1565
to 666. We've rallied almost 40% off the lows but the we're far from a new high. The S&P 500 closed around 930 and would need to rally another 70% to make a new high.

Bear Market 2000-2002



Chart from Clusterstock.com

The bear market that ended the tech bubble in March 2000 dropped from 1527 to 776 in October 2002. The market dropped over 49%. This is the high of the stock market in real terms. We hit a new high in October 2007 but this doesn't factor in inflation.

Wednesday, May 20, 2009

Bear Market 2007-Present



Chart from Clusterstock.com

The great bear market of 2007 to present saw the market drop 57% from 1565
to 666. We've rallied almost 40% off the lows but the we're far from a new high. The S&P 500 closed around 930 and would need to rally another 70% to make a new high.

Sunday, May 17, 2009

Bear Market 1990 & Gulf War



Chart from Clusterstock.com

This bear market coincided with the presidency of George Bush Sr. and the Gulf War. This bear market was very short and the market dropped 19.9% from July 1990 to October 1990. The S&P 500 traded down from 368.95 to 295.54 and then recovered to make new highs.

Bear Market Crash 1987



Chart from Clusterstock.com

On "BLACK MONDAY" stock market went down over 22.6% on October 19th 1987. The S&P 500hit a high of 336.77 on August 25th 1987 and fell 33.2% to a low of 223.92 in December 1987. This recovery began a 12 year bull market which reached a nominal high in October 2007 of 1578.

Saturday, May 16, 2009

Bear Market 1981-1982


Chart from Clusterstock.com

On November 28, 1980 the S&P 500 hit a high of 140.52 and then proceeded to go down 27.1% to 102.42 in August 1982. During this time the S&P 500 formed a base for 5 months and then went up 64.6% off the lows to 168.62 in August 1983. It's note worthy that Ronald Reagan was president during this time where tax rates were lowered and credit(Debt) was expanded greatly. Many people think Ronald Reagan was a great president but probably at the expense of future generations? I can't argue that Reagan wasn't because I enjoyed prosperity during this time just as every other American did.

Great Bear Market 1973-1974



Chart from Clusterstock.com

The bear market of 1973-1974 is considered one of the great bear markets like 1929-1932, 1937-1938, 1939-1942, 2000-2002, and 2007-present. On January 11th 1973 the S&P 500 hit a high of 120.24 and then proceeded to drop 48.2% to a low of 62.28 in October of 1974. The bear market lasted 20.7 months and rallied 29% to a high of 82.76 over the next 12 months. I think Richard Nixon getting the country off the gold reserve standard in 1971 and the expansion of the money supply over the next 38 years is the main reason the country faces the economic problems today. The S&P 500 increased 25 times from the low of 62.28 to 1578 in October of 2007. If that isn't a huge bubble I don't know what is. I think the S&P 500 will go below 400 before the end of 2010. Only time will tell.

Tuesday, May 12, 2009

Bear Market 1968-1970


Chart from Clusterstock.com

This bear market started in November 1968 and fell 36.8%. Over 17 months the market fell to a low of 69.29 in June of 1970. The president of the United States during this time was Richard Nixon. Over the next 32 months the market rallied to around 100for the S&P 500 index.

Bear Market 1966-1967



Chart from Clusterstock.com

Above is the depiction of the bear market from February 1966 to December 1966. The S&P 500 topped out at 96.04 and dropped to 73.20 which is roughly a 24% decline. The market then rallied 33% for the next 12 months to new highs of 97.35. The main point here is to SELL high and Buy Low using a moving average crossover and your returns would have been much better than just BUY and HOLD/HOPE.

Monday, May 11, 2009

Bear Market 1961-1962



Chart from Clusterstock.com

The S&P 500 hit a high of 72.64 in December of 1961 before dropping for 7 months. The low was hit in July of 1962 at 52.32. This was a 28% decline off the highs in total. The market based out for 5 months before rallying for a 33% gain over the next 12 months. John Fitzgerald Kennedy was the president during this time period.

Thursday, May 7, 2009

Bear Market 1956-1957


Chart from Clusterstock.com

The above chart depicts a bear market during the Dwight Eisenhower presidency. The S&P 500 stock index fell from 49.68 in July 1956 to 38.98 at he end of 1957. In 1956 through 1957 for 7 months the market dropped 15% and then rallied up 26% for 3 months before plummeting 18% for 5 months. If you look at this bear market the basing phase took a couple months before the market rallied up 86% off the lows. A long basing period is good because it allows the market to work off the excesses from the previous expansion.

Monday, May 4, 2009

A Review of Past Bull and Bear Markets Since 1950



The chart above shows the trendline that so many financial planners use to highlight the performance of the stock market. The chart is used to sell the buy and hold investment philosophy. Financial planners don't tell you about the stocks that go bust and the new healthy stocks that come into the index. When AIG tanked the stock was replaced by Kraft Foods. What about Enron, WorldCom, and Wachovia?

Saturday, May 2, 2009

Goldman Sachs Linkage?



Former Treasury Secretary Henry Paulson was CEO of Goldman Sachs. Edward Liddy CEO of AIG was from Goldman Sachs. Former Securities and Exchange Chief Christopher Cox was from Goldman Sachs. Jim Cramer of CNBC who constantly gives misinformation to investors was from Goldman Sachs. The list goes on and on. I think there's a link that needs to be broken especially when taxpayers are bailing these companies out.

PPIP(Private Public Investment Program)will it work?





The 5th video looks feasible.

Friday, May 1, 2009

Swine Flu?



My new belief is this SWINEFLU is 100% BS!




The swine flu killed 20 million people worldwide between 1918-1920. Over 500,000 people were killed in the United States during 1918-1920. The reality is people die every year in the United States due to flu related ailments.

In 1976 the government ran the propaganda video above and many people protected themselves from the swine flu. The government abandoned the program because many people who took the shot suffered bad side effects. I attached a 60 minutes interview transcript from 1979 which will add some insight.

http://www.whale.to/vaccines/swine.html

The number of influenza-associated (i.e., flu-related) deaths varies from year to year because flu seasons often fluctuate in length and severity. CDC estimated that about 36,000 people died of flu-related causes each year, on average, during the 1990s in the United States. This figure includes people dying from complications of flu. This estimate came from a 2003 study published in the Journal of the American Medication Association (JAMA), which looked at the 1990-91 through the 1998-99 flu seasons. Statistical modeling was used to estimate how many flu-related deaths occurred among people whose underlying cause of death on their death certificate was listed as a respiratory or circulatory disease. During these years, the number of estimated deaths ranged from 17,000 to 52,000.

In 2009, CDC published additional estimates of flu-related deaths comparing different methods, including the methods used in the 2003 JAMA study. The seasons studied included the 1993-94 through the 2002-03 flu seasons. Results from this study showed that during this time period, 36,171 flu-related deaths occurred per year, on average.

Monday, April 27, 2009

Is it more like 1930 or 1974?



As you can see from the chart above, there were many rallies after the 1929 stock market crash. If you compare today's stock market to the stock market in 1929 and 1974, I'd say the market after 1929 would be a better comparison. After 1974 the market has never hit a new low. Not yet, but I think we'll go lower in the future. President Nixon got the United States off gold reserve redemptions for foriegn holders of US dollars. After 1971 the United States money supply increased at a very unhealthy upward trend. It's tough to see the stock market going down 90% and the panic and destruction it will cause. Anything is possible.

Wednesday, April 22, 2009

Financial company stock prices have been on a tear these days, undoubtedly based on glowing, solid results. After all didn't Wells just have a blow ou

Posted by Tyler Durden
Financial company stock prices have been on a tear these days, undoubtedly based on glowing, solid results. After all didn't Wells just have a blow out quarter? What is that you say, $5 billion in "earnings" were based on FAS 157-4 reversal and accounting gimmicks? Why should that matter to investors who are happy to buy N/M forward PE stocks any time Cramer top ticks the market, or the Power Lunch brigade glowers in the self proclaimed next American Golden Age.Well, the financial ripfest, while benefiting bank prop desks (or at least the one that is left) may end up having some unfortunate side effects for none other than the banks themselves, and especially their accounting voodoo: the basis for the recently announced stellar financial results.The issue at hand is the "Fair Value Option", which under US GAAP essentially allows the booking of a pre-tax profit when a bank's debt trades lower in the open market. This benefits banks that opt-in for FVO instead of other accounting approaches such as amortized cost, or historic cost.And so readers can get a perspective of just how large an accounting "benefit" the FV Option is to financials, observe the table below which compares 2008 bank Net Income with the Pre-Tax Gain from Fair-Valuing of Own Debt.For a somewhat rough proxy of how the five selected banks' debt securities have traded in recent times, please see the chart below.Of the 2015 bonds, recent appreciation has been seen in Goldman Sachs and Credit Suisse bonds, while the remainder have remained relatively flat or have even declined. Of course, these are merely proxies and many more securities are calculated for FVO per GAAP.Regardless, if the equity run up persists, its is inevitable that bond spreads will tighten (see this post for comparisons for credit and equity levels in financials), thereby eroding the FVO pre-tax accounting benefit for companies with appreciating securities, and in fact will result in a negative pre-tax treatment. How much of a negative contributor to EPS it is will ultimately depend on i) how high equity security prices go and ii) how much of a catch up role comparable credit securities play in their price. It is likely that the respective CFOs are too aware of this phenomenon, and could be one explanation for the divergence between equity values and bond prices. If bonds had experienced the same run up as stock prices, the recently announced EPS for the major banks would have been much more adversely impacted

Thursday, April 9, 2009

New Asswrangler Award and Patriot Award which I'll be giving out monthly

Top 5 Qualifiers for the Month of April 2009

Asswrangler Award for Excellence

1) Dick Bove
2) Barney Frank
3) Phil Gramm
4) Dick Fuld
5.) Jim Cramer

Patriot Award for Common Sense

1) Elizabeth Warren
2) Paul Krugman
3) Don Harrold
4) Dr. William Black
5) Dr. Nouriel Roubini



1. asswrangler

one who spends their time wrangling ass (in other words, wasting time doing nothing).
Timmy, aren't you ever going to do any productive with your life? You're nothing but an asswrangler.

Friday, April 3, 2009

The Taxpayer has been Robbed! Where's the Justice

http://www.pbs.org/moyers/journal/04032009/watch.html

The government and media is trying to push the blatent theivery under the rug. The new focus is North Korea. The economy is now on the road to recovery. Yeah right, just take a visit to John Williams website shadowstats.com and look at the real unemployment number of 20%. This is unemployment as measured during the depression. I think we'll see unemployment reach well above 25%. http://www.shadowstats.com/charts_republish#emp
During the savings and loan crisis in the early 1980's 700 people went to jail. Where's today's justice, all we hear is tough talk. We people need to hold our elected government accountable. I'll be a the teaparty on April 15th, we'll you?

Below is a great article by Barry Ritholtz regarding the current misguided policies by Geithner and Summers.

http://www.ritholtz.com/blog/2009/04/summers/

Tuesday, March 31, 2009

Good article from Mish, Taxpayer takes a huge loss!!

I am changing my tune. Geithner's plan can succeed. Before anyone collapses on the floor or starts screaming that I have lost my mind, it's important to define what success means and what the plan is.What Success Is Not Getting banks to lend.
Having a fair bidding process.
Arriving at a fair market value of bank assets.The first is not going to happen and it would be a bad thing if it did, even though Geithner is foolish enough to actually want that. Rather the idea is to make it appear as if there is a fair bidding process so that a fair market value of bank assets can be determined.The key word in the above sentence is appear.Geithner does not want a fair bidding process, nor does he want to arrive at a fair market value of assets. Rather, Geithner does want to avoid a hit to bondholders, at seemingly any taxpayer cost.Putting Off Hard ChoicesOn March 23, John Hussman discussed the bondholder writeoff situation in Fed and Treasury - Putting off Hard Choices with Easy Money (and Probable Chaos).
From early reports regarding the toxic assets plan, it appears that the Treasury envisions allowing private investors to bid for toxic mortgage securities, but only to put up about 7% of the purchase price, with the TARP matching that amount - the remainder being "non-recourse" financing from the Fed and FDIC. This essentially implies that the government would grant bidders a put option against 86% of whatever price is bid. This is not only an invitation for rampant moral hazard, as it would allow the financing of largely speculative and inefficiently priced bids with the public bearing the cost of losses, but of much greater concern, it is a likely recipe for the insolvency of the Federal Deposit Insurance Corporation, and represents a major end-run around Congress by unelected bureaucrats.Make no mistake - we are selling off our future and the future of our children to prevent the bondholders of U.S. financial corporations from taking losses. We are using public funds to protect the bondholders of some of the most mismanaged companies in the history of capitalism, instead of allowing them to take losses that should have been their own. All our policy makers have done to date has been to squander public funds to protect the full interests of corporate bondholders. Even Bear Stearns' bondholders can expect to get 100% of their money back, thanks to the generosity of Bernanke, Geithner and other bureaucrats eager to hand out the money of ordinary Americans.I do not agree with Hussman's views on inflation, but he is always a great read. Please read the above article because protecting bondholders at any expense is indeed part of the plan.Abandoning Toxic Asset PurchasesOn March 30, Hussman did a followup on Abandoning Toxic Asset Purchases.
Gross private debt currently stands at about 350% of GDP, about double the historical norm. Meanwhile, many of the assets underlying this debt are being marked down in value by 20-30% or more. Given that GDP itself is about $14 trillion, a continued policy of bailouts will eventually require a commitment of public funds amounting to a significant fraction of $14 trillion.The Treasury's proposal to address insolvency is to finance the purchase of impaired assets from the banks, primarily using taxpayer funds. But note that if the questionable assets are taken off of the bank's books at their actual value, there is absolutely no change on the liability side of the balance sheet. The bank's capital position does not improve. The “toxic asset sale” simply replaces the bad assets with cash. While this might improve the “quality” of the bank's balance sheet, it does not make the institution solvent.Indeed, the only way for the toxic asset sale to increase shareholder equity is if the buyer overpays for the asset. To accomplish this, the Geithner plan creates a speculative incentive for private investors, by effectively offering them a “put option,” whereby taxpayers would absorb all losses in excess of 3-7% of the purchase amount. This is essentially a recipe for the insolvency of the Federal Deposit Insurance Corporation itself, which would provide the bulk of the “6-to-1 leverage.” To the extent that it is not acceptable for the FDIC to fail, the Geithner plan implies an end-run around Congress, and would ultimately force the provision of funds to cover probable losses.An equal concern is that there is no link between removing “toxic assets” from bank balance sheets and avoiding large-scale home foreclosures and loan defaults. All the transaction accomplishes is to take the assets out of the bank's hands, to offer half of any speculative gains to private “investors,” and to leave the public at risk for 93-97% of the probable losses. What the plan emphatically does not do is to affect the payment obligations of homeowners in a way that would reduce the likelihood of foreclosure. Moreover, the last thing that a bank would do with the proceeds would be to refinance such mortgages, because that would provide full repayment to the original lenders while taking on the risk of the newly refinanced loans.The Real PlanHere is the real plan that now seems odds on to succeed.The Plan: Dump $500 billion of toxic assets on to unsuspecting taxpayers via a public-private partnership in which 93% of the losses are born by the taxpayer. This is not a new revelation, there have been many articles on that theme over the past week. However, most missed the corporate bond connection.InterfluiditySteve Waldman is another one who caught the corporate bond connection in Dark Musings.
I am filled with despair, not because what we are doing cannot "work", but because it is too unjust. This is not my country.I think that critics of the Geithner plan are missing some of its tactical brilliance. My guess is that behind the scenes, Geithner has arranged a kind of J.P. Morgan moment.I don't think the scandal of the Geithner plan is going to turn out to be the subsidy to well-connected investors embedded in the non-recourse loan put option. On the contrary, I think that Treasury has already lined up participants for the "Legacy Loans Public-Private Investment Fund" and persuaded them to offer prices so high that despite the put, investors will expect to take a major loss. My little conspiracy theory is that the Blackrocks and PIMCOs of the world, the asset managers who do well by "shaking hands with the government", will agree to take a hit on relatively small investments in order first to help make banks smell solvent, and then to compel and provide "good optics" for a maximal transfer from government to key financial institutions.Why would PIMROCK go along with this? Because they feel it is their patriotic duty to work with the government for the good of the financial system, even if that involves accepting some sacrifices. And because they hold $100B in J.P. Citi of America bonds, and they've received assurances that if we can get the nation out of the financial pickle it's in, there will be no haircuts on those bonds. "Shaking hands with the government" means that nothing ever has to be put in writing.Welcome to America, 2009. Change we can believe in.How The Plan "Works"Nouriel RoubiniNouriel Roubini asks The Public-Private Partnership Investment Program (PPIP) – Will It Work?
The theoretical foundations of Geithner’s plan are provided by Lucian Bebchuk from Harvard University among others. He explains that “if the underlying market failure is at least partly one of liquidity, an effective plan for a public-private partnership in buying troubled assets can be designed. The key is to have competition at two levels.Geithner’s plan seems to follow these guidelines to a large degree. In particular, on the one hand the government subsidy allows private investors to bid a higher price than otherwise warranted (i.e. the government gives investors the equivalent of a call option.) On the other hand, the fact that the private investor is bound to lose its entire equity stake if the asset value deteriorates from artificially high valuations provides an incentive to bid conservatively. Both effects together may contribute to a reasonable level of price discovery.We can quickly dismiss the idea of a "reasonable level of price discovery".

Videos of the math of the Geithner Plan:

http://www.youtube.com/watch?v=ervHbKa7R5g&feature=related

http://www.youtube.com/watch?v=n-arbfLTCtI

Quantitive Easing, Didn't work in Japan?



Spend our way out! This policy won't work and punishes savers. This monetary policy doesn't make sense. I wish the government would allow me to borrow at .25% and then go out and buy 10-year notes at 2.5%, thus earning a 2% risk free return. Like I really believe that Ben Bernacke is going to buy up enough Treasury securities to move 10-year note rates below 2% and force banks to lend money to borrowers who can't possibly pay them back.
No instead, the middle class gets taxed to death, pays too much interest, and gets killed silently by inflation. We will have low interest rates for a couple of years and inflation will eat our purchasing power and savings away. Japan taught us very little and the deflationary depression will run its course. In 1990 Japan's Nikkei index was 80% higher than today at close to 40,000. Today the Nikkei trades at under 10,000. Real estate prices in Japan were also 80% higher than they are today. The 1990's in Japan is called the lost decade and interest rates stayed between zero and 1%. Remember in Japan the inflation that everyone says is coming in the US never became a factor. At some point in a galaxy far far away, inflation will rear its ugly head. Probably in a couple of years we'll see double digit inflation, but Japan never did.

This video below explains quantitive easing:
http://www.youtube.com/watch?v=FziFyDrQ35M

Sunday, March 22, 2009

Snl-skit-dont-buy-stuff-you-cant-afford

http://consumerist.com/consumer/clips/snl-skit-dont-buy-stuff-you-cant-afford-252491.php

So the government wants to continue the credit expansion? Maybe we should spend less and save more? Maybe we should go back to sound money and get the US dollar back on the gold standard? Maybe banks should be allowed to fail because they made NINJA(No Job, No Income, No Assets) loans to people. The US government doesn't make anyone accountable for their actions. Yes, this country has lost its way and it begins with the decay of family values.

Wednesday, March 11, 2009

THE 4 Big Bears


The above chart outlines the 4 biggest bear markets in history. One of which we are currently in and see no end in sight. The current bear market is noteworthy because it comes in the middle of a 25 year credit expansion. I do not expect the S&P 500 index to go down 90% from peak to trough like the 1930's. But I could reasonably see values at 350 or a 75% peak to trough decline.
The Austrian school of Economics has written publications regarding credit expansion and the destruction of the excesses after the bubble bursts. Basically much of what comes during the expansion goes away afterwards. The destruction after the collapse is so great that many people wonder if the credit expansion was worth it. Japan and the lost decade of the 1990's is a perfect example of the end result in a credit expansion gone awry. Credit is an illusion of wealth and using credit is an unwise habit. Past generations used to call people with second mortgages "losers". Our generation called them home equity lines of credit and some how this made second mortgages more acceptable. What we learn from the past is that we don't learn from the past. History always repeats itself.

Wednesday, March 4, 2009

GE THE NEXT TO FAIL? I SAY YES!!

GE will have to be broken up and sold off at some point. Casualties of the collapse.
1) Countrywide
2)IndyMac Bank
3) BearStearns
4)Lehman Brothers
5) AIG
6)Citigroup
7) Bank of America/Countrywide/Merrill Lynch
8) WaMu
9) Wachovia
10) GE ....General Electric are you f&*kin serious?????

So you think stocks are cheap?


If history is a guide we've farther to fall. I've told many of my friends that stocks will fall another 25-50% on average. As you can see from the graph above we are currently at a Price/Earning's ratio of 12. (The graph above doesn't reflect the markets continued fall)
After the great depression stocks fell to an average PE of $2-$4 a share. This occurred again after World War II and in the early inflationary 1980's. I think the S&P 500 will go to 300-400 which would mean we have a 43%-57% drop ahead of us. The world will be very scary if this happens. Civil unrest is already happening around the world and expect it to continue. It's time to buy both Gold and Guns!

Monday, March 2, 2009

Time for a Revolution!!!!!!

http://www.youtube.com/watch?v=REtmym2e3PI&feature=channel_page

Holler at your boy Dilley. 32 states are ready to exercise their 10th Amendment rights. It's time for the people to let the government know who runs the show. The power comes from the people by the people and for the people. The federal government needs to understand the limited powers that they have. The goods coming from China are garbage.

Saturday, February 28, 2009

This Sums up the Bailout BS

http://www.youtube.com/watch?v=3pwAFohWBL4

The banks did the same thing during the great depression. The banks didn't write off the mal investment of the 20's until after World War II.

Wednesday, February 25, 2009


Currently the Dow is down over 50%. My feeling is the market has 20-25% farther to fall. Today February 25th 2009 the Dow closed at 7270. I think the market will bottom between the 5000 to 6000 level. This will be remembered as the Great Depression of my time. I can't believe some people are riding this out and staying in equities. If you have 100k invested in equities and you lose 66%. You have to then gain a return of 200% just to get back to even. I think most people are brain washed by their financial advisor.

Thursday, February 19, 2009

Get this guy on TV.

http://www.youtube.com/watch?v=DxPcJyypUKc

Dilley holler at your boy. I happen to share the same beliefs.

"Everybody knows when your borrowing money just to pay the interest you're fu$ked....................How do you guarantee paper with more paper"

Thursday, February 12, 2009

Government Regulation, Does it Really Matter?

The bigger the government plan the farther the market goes down.
Label Date WSJ Lead Headline
1 6/3 Obama Clinches Nomination.
2 6/7 Markets Slammed by Oil, Crude Leaps Nearly $11.
3 6/10 Big Loss At Lehman Intensifies Crisis Jitters.
4 6/11 Inflation’s Bite Worsens Around World.
5 6/21 Ford Reels as Truck Sales Plunge.
6 6/28 Dow Hits Bear-Market Territory.
7 7/12 Crisis Deepens as Big Bank Fails: IndyMac Seized In Largest Bust In Two Decades.
8 7/14 Treasury and Fed Pledge Aid For Ailing Mortgage Giants.
9 7/16 SEC Moves to Curb Short Selling.
10 8/11 Russia Widens Attacks on Georgia.
11 9/8 US Seizes Mortgage Giants FNM and FRE.
12 9/15 Crisis on Wall Street as Lehman Totters, Merrill Is Sold, AIG Seeks to Raise Cash.
13 9/17 US To Take Over AIG in $85 Billion Bailout; Central Banks Inject Cash as Credit Dries Up.14 9/20 US Bailout Plan Calms Markets, But Struggle Looms Over Details.
15 9/22 Goldman, Morgan Scrap Wall Street Model, Become Banks in Bid to Ride Out Crisis.
16 9/26 WaMu Is Seized, Sold Off to JP Morgan, In Largest Failure in US Banking History.
17 9/30 Bailout Plan Rejected, Markets Plunge, Forcing New Scramble to Solve Crisis.
18 10/4 Historic Bailout Passes As Economy Slips Further.
19 10/14 US to Buy Stakes in Nation’s Largest Banks.
20 10/23 Markets Fall as Fears of Slump Span World.
21 10/28 Crisis Deals New Blow to Japan: Stocks at ‘82 Levels.
22 11/5 Obama Sweeps to Historic Victory.
23 11/19 Big Three Plead For Aid.24 11/
24 US Agrees to Rescue Struggling Citigroup.
25 12/12 Top Broker Accused of $50 Billion Fraud.
26 12/17 Fed Cuts Rates Near Zero to Battle Slump.
27 12/29 Israel Pounds Gaza Again, Signals More on the Way.
28 1/3 Manufacturing Tumbles Globally.
29 1/8 Corporate Scandal Shakes India.
30 1/10 Citigroup Takes First Step Toward Breakup.
31 1/15 Bank of America to Get Billions in US Aid.
32 1/21 President Barack Obama.
33 1/23 Thain Ousted in Clash at Bank of America.

Friday, January 30, 2009

Why you shouldn't follow the so called professional investors?

http://www.youtube.com/watch?v=JwFy8X4U7Io

I love that video. I'm glad I found investment sense on March 16th 2008 when I got out of stocks and corporate bonds. Don't be fooled by investment performance in a bull market. Even asshats make money in bull markets. I'm no genius and I made a good chunk of change in the bull market from 2002-2007. I have many friends who think their investment guy is smart when all he does is tells them to "buy and hold." The investment advisor collects his trail on the mutual fund no matter how bad it performs. Buy and hope works great in a market where there's a 25 year credit expansion. The "buy and hold" investment philosophy is dead. RIP.

Thursday, January 29, 2009

The Bad Bank Idea or Shit Sandwich?

Wouldn't it be nice to make a bad financial decision and then be able to take the loss and put it on someone else. I didn't go out and buy a house that I couldn't afford. I didn't spend like an idiot and not save at least 10 percent of my income. I actually was like a Chinese person and saved over 30% of my income. So it's not unfair for me to ask the question, why should I the responsible taxpayer have to pay for this banker bailout? The banks are going to be able to take all of their non-performing assets and put them on the taxpayer balance sheet. These non performing assets are not wanted by anyone in the private investment community for any price. That alone should raise the red flag. So the banks will sell the taxpayer all of their shitty assets at seventy cents on the dollar. These assets are worth zero. Most people go to jail for doing what these bankers did.
Back in mid 2008, Merrill Lynch sold roughly 31 billion dollars of toxic paper of which 21 billion was already written off as losses. An investment company bought the toxic paper for roughly 6 billion or sixty cents on the dollar. The information that wasn't in the headline was Merrill Lynch had to finance 75% of the purchase and there was a clause that Merrill Lynch pay for any losses incurred. If you do the math the company paid 1.5 billion with no risk because Merrill Lynch had to bear the losses. 1.5 billion divided by 31 billion equals less than 5 cents on the dollar. I'm assuming all of the investment companies were doing this and all of the gains were fraudulently manipulated. Bear Stearns was taken over and Lehman Brothers failed. Goldman Sachs and Morgan Stanley had to become bank holding companies and Merrill Lynch was bought by Bank of America. My point is that bad banks should fail and good banks should take over the bad banks. I the taxpayer want no part of taking another bit of the shit sandwich. Debt is the problem not the solution.
http://online.wsj.com/article/SB121728170968391097.html

Saturday, January 24, 2009

IOU USA and the United States Leadership

China saves 9% of GDP and the US borrows 7% of GDP. If China would appreciate their currency from 7 to 1 to one to one Yuan to US dollar. Then we would only owe China a trillion dollars versus the 7 trillion we owe them currently. Obviously by keeping the current exchange rate it's benificial for US and Chinese business people who sell product in the states. As the Yaun appreciates then the jobs in China would be be shifted. Jobs would go back to the US or to another less developed part of the world like southeast Asia. Some interesting videos below:
http://www.youtube.com/watch?v=lowq9vm412U&feature=PlayList&p=3F7DE8D226D5D57E&playnext=1&index=16
http://www.youtube.com/watch?v=OS2fI2p9iVs

Tom Friedman at MIT "The World is Flat"

http://mitworld.mit.edu/video/266/

A cool video on global trends.

F**** the Fed



The Fed needs to go. Between income tax and the international super bankers the people have no power. We never will until we get these a**clowns out of Washington. The Federal Reserve isn't part of the federal government and the banks don't have any gold reserves backing the United States dollar. What a scam on the american people.

Saturday, January 17, 2009

Bank of America and Citibank are going WAMU???

Is that Citibank or Shittybank, I guess they are one in the same. I've had friends talk about buying bank stocks like Citibank, National City Bank, or Washington Mutual to name a few and I've been telling them for a while that these stocks will go to zero before they go up. George Soros wrote a paper a while back that talks about banking booms and busts. Given his insight, it will take 25 years for many of the surviving bank stocks to reach new highs. There's blood on the street but now is not the time to buy. I've attached a few video clips regarding BOA for your viewing enjoyment.

http://www.ritholtz.com/blog/2009/01/citis-returns-to-roots-bofa-gets-fed-handout/

http://www.ritholtz.com/blog/2009/01/bank-of-america-shocker/

http://www.youtube.com/watch?v=bCfS6Pj_qh4
http://www.youtube.com/watch?v=wUbeD9S0REs