Friday, November 25, 2011

Happy Black Friday

A large portion of the global economy since the late 1960's has been built on foreign countries producing goods for Americans to purchase.  Over time those purchases have been financed more and more heavily with debt provided by.....foreign countries reinvesting their trade surplus back into America.  Historians will look back at the time as an economic model based on lunacy.  With 30% of mortgage holders no longer making payments on their mortgage and living payment free it has created a temporary surge (or last gasp) of buying and borrowing power. The following video sums up the insatiable buying hunger of the American consumer in 38 seconds.....

Dr. Burzynski vs. The FDA

The following incredible documentary discusses the long running attacks of the FDA against Dr. Burzynski and his successful medical research breakthroughs in the development of cancer treatment.  Because my personal opinion of big government is well known for readers of this site, I will let the documentary speak for itself. 

Thursday, November 24, 2011

Happy Thanksgiving

Happy Thanksgiving to you and your family.

A couple of charts to get your day started before the football kicks off.  The first is the current federal revenue vs. spending on a historical scale.

The second shows our current deficit in comparison to those throughout American history.

With gold up 19.3% and stocks down 7.5% through Thanksgiving this year, the next chart shows a recent Gallup poll asking Americans what they thought was the best long term investment.  Gold moved into its optimism phase of the secular bull market when it crossed over $1,000.  It is now the leader on the board, although most Americans still put less than 1% of their portfolio into gold related investments.  That will change. 

The final phase, the mania, will follow when investors rush in full speed knowing that they "can't lose" with gold.  This is when you want to be selling and purchasing other assets in the valley of their bear markets: real estate and stocks. 

I anticipate one more massive sell off in precious metals before the mania stage begins.  Make sure to have some cash available to take advantage of this opportunity.

Wednesday, November 23, 2011

Oliver Sarkozy On Europe Bailout Size

Great discussion this morning on CNBC regarding the size of the bail out needed to stabilize the markets with Oliver Sarkozy of the Carlyle Group.  The staggering quote from the interview which comes at 4:30 into the video.

"The math I'm working with is very simple. In the US banking sector, we had 3 trillion of wholesale funding that needed to be stabilized, got stabilized by the implementation of TARP which saw the US treasury buy $212 billion worth of preferred in the banking sector to stabilize that $3 trillion, give our banks the time to work through hair problem their problem assets. In Europe, that $3 trillion is $30 trillion. So if you multiply the $212 by 10, you get the $2.12 trillion. In my view, the issues on the European banks are bigger than the issues on the books of the US Banks. So if you want to stabilize that $30 trillion and in my view it's not that you want to, it's that you have to, you do not have a choice, you're going to have to be at least at 2.1 trillion and i suspect it may need to be more."

h/t Zero Hedge

Jim Chanos On Chinese Banking System

Jim Chanos speaks with Bloomberg regarding China and their banking system.  He sees their financial markets as "fragile" and "built on quicksand." He has short positions placed against Chinese real estate.

Monday, November 21, 2011

Completing The Global Web

Last Friday I posted some pretty pictures of what each insolvent country owes to the other in Global Sovereign Web Of Toxic Debt.

Today we have another pretty picture which puts them all together.  It summarizes perfectly what will be taking place over the next 4 years as the current financial system implodes.

The size of the arrows show the size of the debt burdens, and the colors show which countries have already reached their debt crisis moment (the bond markets have turned against them and their bond yields are rising).  The countries in grey will get their turn as they wait in line.

This weekends announcement of no progress from the debt "supercommittee" shows that there is no political will to cut spending and our crisis moment continues to approach by the hour.  After crossing $15 trillion in federal debt last week, it is any one's guess what trillion dollar milestone will trigger the bond market to offload our toxic treasuries.

Kyle Bass sat down for another excellent interview this week discussing why he believes Japan is up next:

A Look Back In Time: 2001 - 2002

For those that enjoy financial history, we start the week with two videos from the beginning of the last decade.  One is the now famous home ownership program speech from George Bush.  He lays out the plan to push mortgages on people who could not afford them at a time when home prices were already entering bubble pricing.  Bush, along with most democrats and republicans at the time, was taking in millions of dollars in campaign contributions from the GSE's and the Wall Street banks who were packaging these toxic mortgages (and making billions$ in profits).

The next video, which receives far less attention today, is from 2001.  This other politician explains how money was leaving the bursting stock market bubble and entering the real estate market due to the Federal Reserve slashing interest rates down to dangerous levels and Fannie Mae and Freddie Mac (the GSE's) reducing their standards on who they lend to.  Endless books have now been written discussing how these events created the financial crisis of 2008, but only a handful of economists (and one politician) understood exactly what was happening as it was taking place. 

Ten years later, as the politicians continue to take millions of dollars in campaign contributions from the Wall Street banks, and the Federal Reserve has interest rates at 0% along with quantitative easing programs, he continues to speak about the coming crisis that once again falls on deaf ears.  It is impossible to know the date when a bubble will burst.  A famous saying in the financial world is that markets have the ability to stay irrational longer than an investor can stay solvent (betting on the correct outcome).  Many astute investors can see today that we have a government bond market bubble in our country, but the ability to stay the course and not get caught up with the herd is almost impossible due to the way we are wired psychologically.