Archive - Dec 27, 2015

Q. Could oil prices collapse to $20?
A. The short answer is ‘yes.’ We believe that crude oil prices could fall further unless global oil production is reduced.  We believe that the weakness in crude oil prices reflects a combination of fundamental factors and financial flows. Fundamentally there is simply too much oil... the current supply-demand balance is not sustainable; something has to give.

Banks have finally woken up to the risk their billions in C&I loans issued to fund "financial engineering" are exposed to. The reaction: an unprecedented surge in loan collateralization, with the percent of total loans secured by collateral soaring by nearly 50% in the past quarter to a record 55.9%, the highest ever!

Market-based Credit is unstable. This remains the fundamental issue – the harsh reality – that no one dares confront. Long-term stability in a Capitalistic system requires sound money and Credit (hopelessly archaic, we admit). Over the years, we've tried to differentiate traditional finance from unfettered “New Age” finance. The former, bank lending-dominated Credit, was generally contained by various mechanisms (including the gold standard, effective currency regimes, bank capital and reserve requirements, etc.). This is in stark contrast to the current-day securities market-based global financial “system” uniquely operating without restraints on either the quantity or quality of Credit created. There’s no precedence for such a globalized monetary fiasco, though there are a number of historical episodes that provide valuable insight.

Now that the gold-trading company at the nexus of what may have been the world's biggest gold smuggling ring in history has imploded seemingly overnight, vaporizing countless tons of physical gold and unknown amounts of client cash, even more questions remain.

Firefighters have reportedly “gained the upperhand” in the battle to contain a California blaze that started at around 11 p.m. local time on Friday near Ventura. The following dramatic video depicts one family’s terrifying trip through the inferno.

"It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently." – Warren Buffett

It appears not!!

“The [aerial] imagery was made in the vicinity of Zakho (a city in Iraqi Kurdistan), there were 11,775 tankers and trucks on both sides of the Turkish-Iraqi border. It must be noted that oil from both Iraq and Syria come through this [Zakho] checkpoint."

"We don't gloat or feel terribly excited about the economic conditions right now. We approach every single repo and seizure as an opportunity to help respect the dignity of the debtor."

Rare is the ‘aware’ individual who engages in little more than window dressing in re-ordering our lives in preparation for the inevitable……that which is not self sustaining will not continue.