Archive - May 2010 - Blog entry

Welcome to the conference of bull markets. Gold hits a new all time high during the conference. Catering to the hard core faithful who suffered a 20 year bear market in hard assets, and even hung on during the dark days when gold plumbed the depths to $260/ounce in 1999. The nuclear power boom in China and the coming renaissance in the US. The new poster child for hard assets: the rare earths.

When viewed through the lens of a common street hustler, the global central banking system reveals itself to be just that: a hustle. Learn the hustle and you have a chance at profit. Ignore it, and you will lose.

You heard my warnings about the "best of breed", "incomparable on the Street" (and all of the other groupie talk, worshiping phrases thrown at this company) Goldman pillaging clients and of their excessive overvaluation for over two years in BoomBustBlog, yet now the mainstream media is starting to catch on as Goldman's stock plummets (down over $5 yesterday and over 20% for the month, with more to go). I wonder when they will get around to the other investment banks and FIRE sector companies that I warned about. Let's reminisce...

CDS update

Futures charts + open thread

OPA! Californians are going to suffer a major Greek hangover and they can thank former Governor Gray Davis and rosy investment projections from Calpers that back in 19999 projected the Dow Jones would reach roughly 25,000 by 2009 and 28,000,000 by 2099. That's not a typo...Dow 28,000,000!

Higher taxes are coming. Which ones? Will it work?

I could try to justify this as on-topic for investment, business or the economy. But I'm honestly just posting this as a public service to those who live in Gulf coastal communities.

There is a new war underway between two forms of capitalism. Western style multinationals are currently on the defensive. Look what happened to Google. An in depth interview on Hedge Fund Radio with Ian Bremmer, president of the Eurasia Group, one of the top independent political research and analytics firms in the world. A tour de force of the global investment landscape. Buy China, avoid the US, and kiss Europe and the euro goodbye. (GOOG), (SPX), (EZU), (FXI), (FXE), (EWA), (EWC), (EWY), (EWT), (THD), (IDX), (EWS), (EWZ), (ECH), (EWW), (RSX)

2 crises, same response ...

The problem with Greece is George Papandreou and his socialist party. For years they have been looting the country by transferring capital from the producers to government employees, national health care, and the unions. They've been borrowing to pay for it ever since capitalists found ways to hide capital from confiscation. Now he blames "speculators" for Greece's problems. He has no shame and he will take Greece and the eurozone down.

As final salary pensions reach the end of the road in the UK, politicians in Illinois ponder on which pension poison to swallow. Kicking the can down the road is no longer an option...

The US economy is in the midst of an epochal transition from a long term GDP growth rate from the 3.9% rate we saw during the last decade, to maybe 2%-2.5% this decade. The “V” is rapidly turning into a “square root.” The screaming great weakness in the global capital markets has long been that it is totally dependent on voluntary private capital. Market makers are now on a hair trigger to whip their capital right out of the market. Not answering the phones at Morgan Stanley. Sharing a single bed in a cheap motel with a gaggle of snoring regulators.

The Asset Securitization Crisis begat the Sovereign Debt Crisis at a time when many believed (and still do) that we are pulling out of a global recession with a roaring bull market. In reality, we are at the tail end of the synthetic high borne from unprecedented global fiscal and monetary stimulus, and it is time to pay the piper - world wide! Enter the final phase of the Great Global Macro Experiment, laid out for you in a analytical spreadsheet!