Archive - Sep 5, 2010

We present an exclusive summary of all the Paulson & Co. portfolio facts, figures, strategy, ins and outs, and Paulson's discussions with former Fed Chairman Alan Greenspan on the "the relationship between the monetary base, the money supply, inflation and gold prices." Must read for everyone.

When did it start? When will it end?

A Chat With Steve Forbes. The crash was a failure of government. We have the most hard left president and congress in history. The Fed should pursue a strong dollar policy. The rating agencies are a cartel we should get rid of. George Bush betrayed the Republican party by abandoning its principles.

The back-to-back super-sized traffic jams near Beijing has landed China on the top spot among the cities with the world's worst traffic. While the world seems quite fixated on the length--miles and number of days--of these mega jams near Beijing, there's also a serious message--the under-capacity of China’s infrastructure.

Summer vacation is over and things in Europe may soon start rocking and rolling all over again. Not only is France about to experience its first 24 hour general strike this Tuesday in a long time, which will likely remind everyone else in Europe (hint Greece and Ireland) that austerity is the new normal across the Atlantic and the 14th annual monthly salary is not going to come back just because nobody is talking about it, but as the FT reports Europe needs to issue double the amount of debt in September compared to August. From the FT: "Eurozone governments will try to raise €80bn ($103bn) in September compared with new bond issuance of €43bn in August. Spain is expected to attempt to borrow €7bn in September compared with €3.5bn in August, according to ING Financial Markets." The dramatic ramp up in issuance is forcing the FT to speculate that "some of the weaker economies could fail to raise the amount of money they need as eurozone governments attempt to issue double the amount of debt this month compared with August." For all those who have been waiting for the perfect storm in Europe to finally develop the time of waiting may be over.

A Labor Day rant.

Summer is over, and now the real scramble for performance begins with just 3 weeks left in the quarter. Here is a look at the key economic events in the upcoming week, from around the world.

We should not adopt positions or beliefs that oppose the Ponzi simply because it’s contrary to the Ponzi. Doing so just shifts the illusion of control to us, but still leaves us dancing to the Ponzi beat. Our views should be adopted only after rigorous examination and vetting. This is the only way to a truly peaceful, free and sovereign life.

Greece's exit from the eurozone would be the "worst possible option", Europe's central bank chief said at the weekend amid concerns over the debt-stricken country's ability to pull itself out of crisis. Will Greece default and will this cause yet another global crisis?

The ever insightful Don Coxe of Coxe Advisors has released a transcript of his recent discussion on why the rally is fizzling. Aside from everything else, which as usual is spot on and must read, any paper that has the following statement: "In the New York Times today, Paul Krugman got into one of his splenetic rages but he is a terrific and articulate exemplar of the post-Keynesian (that claims to be Keynesian) school, which basically doesn’t believe that government deficits are bad, (they are good) and paying for things in the next generation or the generations after it is okay where it to get us out of what we are in now, so as far as he’s concerned, stimulus has to be done by increasing government deficits" is worth its weight on tungsten. Coxe also does the best summary of why the market has is barely changed both YTD and on a 1 Year basis: "We have a buildup in cash (in print money that is) and we have a buildup in gold, and beyond that there’s not much going on. That’s why the S&P is up about 1% year over year and it’s hardly of the kind of environment that’s going to get those investors who left the stock market after the Flash Crash, saying “We don’t believe the market is any realistic place for ordinary individuals anymore”— this is not going to get them running back in to buy stocks." But don't believe him- after all, there are thousands of paid for newsletters and momentum models, that promise they can time each and every up and downtick, and will certainly make you a trillionaire if not a billionaire (sic).

The Commitment of Traders Report is created by the CFTC – The Commodity Futures Trading Commission and is published weekly every Friday. This body gathers and publishes the open futures positions on all publicly traded US futures contracts as well as the corresponding options. The data consists of 3 main categories.

Commercial Traders – These are the bigger players in the markets, the smart money and consist of large firms that actually use the commodity being traded, includes companies like…BP in the Oil and Gas Market, Nestle in the Cocoa and Sugar market. The main function of these traders is to hedge the price of the commodity that they trade in.

Roubini's latest media appearance, and now that the spectre of a double dip has fully arisen there are quite a few of them, is with the FT's James Blitz in which the NYU professor does a quick 5 minute summary of what he sees as the main threats to the US economy, among which are a 40%+ chance of a double dip, a sub 1% GDP growth in H2 2010, the disappearance of all stimulus pushes (and the conversion of the fiscal stimulus from a tailwind to a headwind), an awful job market, bigger bank losses, declining home prices, a drop in the stock market, widening spreads, a feedback loop from stock markets into the economy, and much more. We are happy the professor has revised his call from a few months back seeing virtually no chance of a double dip. As to policy, Roubini thinks the US has run out of policy bullets on both the monetary and fiscal side: he is sure the Fed will do more QE, but it will be impotent as there is already over $1 trillion in excess reserves (of course, it simply means excess reserves will be $2 trillion, $3 trillion... etc. And IF the economy picks up, this money will hit broad money. But no, aside from that, there is no threat of inflation. Because the Fed is fully prepared to absorb $3 trillion in excess money....). As to Europe, Roubini thinks austerity will also result in a disaster, first for the periphery and then for Germany, so basically damned if you do and damned if you don't vis-a-vis stimulating, which is precisely what we have been saying for over a year: the central banks have boxed themselves in a corner from which there is no escaping, regardless of what they do. Lastly, on Asia, and specifically China, Roubini notes the obvious that even the world's most overheating economy is faced with so many problems that it can only do what the US has been doing so well to date: kick the can down the road.

Yesterday we presented Dylan Grice's thoughts on why economists and their opinions should be summarily dismissed as nothing but mere noise on the steep downward slope of a series of failed "authoritarian" policy decisions, which seek to validate one false choice after another, by presenting a hypothetical and fallacious counter-outcome as a certain reality (just consider the "apocalypse" we would be living in if Goldman had failed: of course, there is no justification for this except for what Bernanke et al claim is the one true alternative reality based on nothing but their own conflicted interests), which does nothing but discredit the "science" of economics more and more with each passing day. Yet in the grand scheme of things economists are merely pawns in the hands of the landed elite: the financial system set only on perpetuating the status quo of capital and wealth reallocation from the lower classes onto itself (until there is eventually nothing left), and a government whose only prerogative is to usurp ever more control and authority, until the entire system is one of central planning in economics, social affairs, religion, and every aspect of people's daily lives, all the while pretending to operate under the guise of a democracy, which, at least in America, died long ago. Today, we present the observations of Bill Buckler from his Privateer report, which picks up where Grice left off and demonstrates why one must not only never rely on economists but on form of "authority" in general. Putting it all together is Buckler's close analysis at the glue that makes it all possible: the Federal Reserve, also known as the fourth branch of government, and the entity that provides the endless funding for all of the system's failed policies. As Buckler points out, any reversion to a system that follows the constitutional precepts of the founding fathers will need to do away with the Fed first and foremost, as "the issue is not the political will of the US government to go on spending beyond its means, it is the political will of the rest of the world to go on accepting the unworkable global system indefinitely. They will not do it." In other words, in the step leading up to the last and most important defection in the global prisoner's dilemma, it is up to the American people to take the necessary step to restore the systemic balance (which will happen regardless eventually, only in a far more violent fashion). Everything else that happens on a day to day basis is completely irrelevant.

The 3PAR saga finally came to a close on Sep. 2 with Dell beaten by Hewlett-Packard in an 18-day bidding war. The final price tag of 3PAR is at $33 a share, or $2.35 billion, almost twice Dell’s initial offer at $18 a share last month. So, does this acquisition make sense for HP?