Is the US Government About to Forgive Mortgage Debt? Let’s Crowdsource Our Way Through a Scenario or Two!Submitted by Reggie Middleton on 10/01/2010 14:53 -0500
Yeah, I know what you're saying as you read this, but many of the signs are there. Here are the legal, economic and financial widgets to contribute to an interesting crowdsourced debate, discussion and analysis for the weekend.
There have been a lot of articles about the coming hyperinflation in America. Many of the commentators with whom I agree most of the time say hyperinflation is inevitable here. The problem is that it is an easy thing to say but more difficult to prove. If one does a careful analysis of the hows and whys of hyperinflation, it is highly unlikely to happen here.
China has created a monster for itself that has already begun to turn on its master, and will one day devour it.
I am not an economist or anything of the sort, but the bank loss situation looks an awful lot like it did during the great depression.
The Caisse de dépôt et placement du Québec, Canada’s biggest pension fund manager, is going overweight commodities and energy...
American consumers do not want the Age of Mammon to end. They will need to be dragged kicking and screaming into the Age of Austerity. Consumer expenditures peaked at $10.2 trillion in the 3rd Quarter of 2008. They reduced spending for two quarters, but when Big Daddy Government handed them billions and told them to spend it on cars, appliances, and homes, they dutifully obeyed. Today, consumer expenditures stand at an all-time high of $10.3 trillion, still accounting for 70.5% of GDP. There really has been no hint of austerity by Americans. It is a false storyline. The major reductions in consumption still loom in the future.
Moody's downgrades Spain from AAA to Aa1, a rating which pretty much everyone knew would not last, with the kneejerk reaction nonetheless being to spike bunds. However, as Goldman immediately reminded everyone who cares, this was (supposed to be) "completely priced in." As Erik Nielsen reminds us: "Moody's has just announced that they have downgraded the Spanish government to Aa1 with "stable outlook". This is not really a surprise since they had given themselves until the end of September to consider this rating, and – as I discussed in my Sunday email – there is a good degree of “catch-up” in these ratings. The good news, if that’s the way of putting it, is the “stable” outlook. It appears that Moody’s is getting somewhat impressed with the reform agenda in Spain (as they should be)."
Everything is proceeding exactly as I have foreseen - Emperor Palpatine
Has Obama ordered Fed governor Ben Bernanke to flood the system with $2 trillion of liquidity? A cynical ploy to give the economy a much needed shot in the arm that will enable the Democrats to retain control of both houses of Congress. Two more years of Obamanomics to follow. Never let the truth get in the way of a good story.
Why the Case Shiller Index, Although Showing Another Downturn Coming, is Overly Optimistic and Quite Misleading!Submitted by Reggie Middleton on 09/29/2010 05:51 -0500
Now that the Case Shiller index has been the housing sound bite du jour, many would benefit in knowing that the index was designed to filter out the vast majority of the factors that are dragging down home prices today. That means that despite the fact that this most recent CS reading shows prices on the decline again, it in no way captures the whole picture. Even more pertinent, the parts that it doesn't capture are the worse parts. The Case Shiller index makes the housing downturn look downright rosy in comparison to the data on the streets - but you won't hear this from the mainstream financial media!
For decades, public pension funds have bankrolled the private equity industry, investing billions of dollars with large firms like Apollo Global Management and the Blackstone Group. Is this about to change in a major way?
Yes, I really exist! I’m not an urban legend! Come to San Francisco for an up to date view on stocks, bonds, currencies commodities, precious metals, and real estate. And to keep you in suspense, I’ll be throwing a few surprises out there too. Enough charts, tables, graphs, and statistics will be thrown at you to keep your ears ringing for a week. Tickets are available for $199.
David Rosenberg Responds To All Who Blame The Bears For Missing The Stock Rally With One Simple Word: GoldSubmitted by Tyler Durden on 09/28/2010 09:44 -0500
Recently, there has been much euphoria to define all those who believe that gold will outperform as goldbugs. We in turn are fairly confident that pretty soon all those who have faith that the central banks will somehow get it right this time, instead of causing all out war again, will be labeled as "paper bugs." What however, surprises us is that all the so called "gold bugs" continue to be invested in the best performing asset class over the past day, 5 days, 1 month, 6 months, 5 years, and 10 years: on a relative basis gold has outperformed stocks in all these time categories, yet it continues to be more hated than even Ben Bernanke, whose stealthy destruction of middle class purchasing power is in fact cheered by the "paper bugs" - we will not bore you with the chart that shows how the dollar has lost almost 100% of its purchasing power since the creation of the Fed. Anyway, here is David Rosenberg, who several months ago joined the gold bandwagon, and presents one of the better defenses to all those who blame gold bugs for not catching the "bungee jump" in the most manipulated stock market in history. "We continue to field criticism that we “missed the call” on the equity market. Well, no doubt we did not see the 1930-style bungee jump last year, but: (i) it’s over, and (ii) there were many other asset classes we liked that did very well: what has done better than gold, which is up more than 30% in the last 12 months." We obviously agree both now, and about 50% back, at the time of the creation of this blog, when we said that the only natural response to Fed insanity is the otherwise useless shiny metal.
Bill Gross: More QE Will Lead To A "Declining Dollar And A Lower Standard Of Living; Druckenmiller Departure Is End Of Old Normal"Submitted by Tyler Durden on 09/28/2010 07:42 -0500
Some very troubling observations from Bill Gross. In summary: "What the U.S. economy needs to do in order to return to the “old” normal is to recreate nominal GDP growth of 5%, the majority of which likely comes from inflation. Inflation is the classic “coin shaving” technique of government since the Roman Empire. In modern parlance, you print money faster than required, pray that the private sector will spend it to generate investment and consumption, and then worry about the consequences in a later decade. Ditto for deficits and fiscal policy. It’s that prayer, however, which the financial markets are now doubting, resembling circumstances which in part are reminiscent of the lost decades in Japan since the early 1990s. If the private sector – through undue caution and braking demographic influences –refuses to take the bait, the reflationary trap will never snap shut. Investors will likely not know whether the mouse has grabbed for the cheese for several years forward...The most likely consequence of stimulative government policies that strain to get us there will be a declining dollar and a lower standard of living. Stan Druckenmiller is leaving, and with good reason. A future of low investment returns, and a heap of trouble for those expecting more, is what lies ahead."
This morning our favorite Banksters goosed the EU markets by upping targets on international mining operators Kazakhmys, Lonmin and BHP and that got the European markets off to a flying start out of the gate, despite the fact that UBS had just DOWNgraded the same sector on Friday.