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How President Obama Is Rapidly Becoming A Gold Bug's Best Friend
In the latest note from the masters of the arcane at ConvergEx, Nick Colas' team looks at the historically very strong correlation between home prices (which recently hit an 8 year low: here and here) and unemployment, a foundation stone in every single QE episode as to the Chairman the only controlled variable to set the unemployment rate are average home prices, and flips it. In other words, in their Friday analysis ConvergEx try to extrapolate just by how much home prices need to rise to hit the Fed's projected unemployment rates of 8.7% in 2012 (absent the now generic labor participation rate fudge of course), 8.2% in 2013 and 7.7% in 2014. The answer is disturbing: "In order for unemployment to reach 8.7% in the Composite-10 next year (2012), home prices will have to rise by an average of 3.5%. To reach 8.2% in 2013, they will have to climb 9.4% from their current prices. For a 7.7% unemployment rate in 2014, the necessary rate of increase is 15.4%." It is disturbing because while Case Shiller predicts a 2.7% rise in 2012, we have now seen the 5th consecutive drop in home prices, and the largest sequential decline since March 2011. In other words, not only are home prices not rising, or even stabilizing, they are suddenly deteriorating at an alarming pace yet again. ConvergEx continues: "we have no doubt that the Fed knows these numbers. They know that the housing market only needs a little boost in prices and if historical correlations are trustworthy then the labor picture should begin to brighten. The biggest overhang to this relationship is, of course, the still dauntingly high level of foreclosures and still-empty houses. Only slightly less concerning is the incremental scrutiny all mortgage applications now receive from potential lenders."
And the conclusion for anyone who still does not see why upcoming paper dilution means a non-paper solution (in the form of hard assets) - "If it costs a QE III to get the 3.5% bump in real estate prices, or even a QE IV, then markets should not doubt that the current Federal Reserve will seriously consider it." At the end of the day, the only thing the Fed thinks it can control are asset prices for that most critical of assets: housing. And if rising home prices means diluting a few hundred billion more dollars, so be it. After all, we are now less than 12 months from the presidential election, and all bets are off. As SocGen predicted, expect to see massive monetary easing resume as soon as January when Obama realizes he needs something to go right or else he can kiss that second term good bye. Ironically, the lower the president's interim rating, the higher the price of gold will ultimately rise when all is said and done. Who would have thought that the worst president since Carter would be a gold bug's biggest friend.
Full note from ConvergEx:
When All You Have is a Hammer, Everything Looks Like a Nail
Summary: Even as economists and market watchers celebrate recent improvements in U.S. macroeconomic trends, both the residential housing and labor markets still appear moribund. That’s really no surprise, as the correlation between the two markets has been historically quite high. But is that correlation or causation? The Federal Reserve is clearly banking on the latter. So how much do house prices have to recover from current levels to get us to the Fed’s own forecast for unemployment in 2012 and beyond? Based on our analysis of the historical data, house prices - as measured by Case-Shiller - will have to increase by 3.5% over the next 12 months to reach the Fed’s projected unemployment rate of 8.7% for 2012. To hit the Fed’s unemployment targets in 2013 and 2014, the appreciation in residential housing will have to be on the order of 9.4% and 15.4% over those periods. These aren’t especially daunting numbers, but they do require an inflection point. House prices are still, after all, trending downward. If that requires a full blown QE III, so be it.
“During these 2 years business conditions had grown steadily worse, unemployment had increased, construction had practically reached a standstill, foreclosures had mounted rapidly, and commercial and banking failures had increased sharply…and appeals for direct governmental assistance for distressed home owners were pouring into the Nation's capital.”
Sound familiar? No, it’s not Fed Chairman Bernanke testifying in front on Congress – it’s the Federal Home Loan Bank Board’s Fifth Annual Report, published in 1937 (http://fraser.stlouisfed.org/publications/holc/issue/3011/download/40594...). In the years following the Great Depression, the report shows, mortgage delinquency rates soared as wide scale property price deflation increased the real value of outstanding mortgage debt and rising unemployment meant that more and more people were unable to make payments. Home prices also fell sharply, making it less likely that a homeowner could sell his property to pay the balance on his loan.
Almost seven decades later, we’re facing an eerily similar situation: continuing high unemployment, little new construction, an increasing number of foreclosures, bank failures, and, most notably, high mortgage delinquency rates and a seemingly endless decline in home prices.
In the 1930s, the solution was the creation of a slew of federal government agencies which purchased distressed mortgages, offered a stable source of funds for loans, and issued over one million loans for residential-mortgage and economic development. These agencies brought the mortgage market back from the brink and saved many homeowners from crippling mortgage debts:
- FHLB – Federal Home Loan Bank System
- HOLC – Home Owners’ Loan Corporation
- FHA – Federal Housing Administration
- FSLIC – Federal Savings and Loan Insurance Corporation
- FNMA – Federal National Mortgage Association (a.k.a. Fannie Mae)
Today, the Federal Reserve is trying to emulate that success – albeit using a different set of tools. Consider the following statement from Chairman Ben Bernanke: “The housing sector has been a significant driver of recovery from most recessions in the US since WWII. But this time…” (August 26, 2011) This time, housing hasn’t rebounded. Many homeowners (some estimates place the percentage as high as half) are “underwater” on their mortgages, new home construction is at one-third of its pre-crisis level, and, most importantly, home prices continue to decline.
Several weeks ago, the Fed introduced “Operation Twist” – a plan to sell $400 billion worth of short-term holdings and use the proceeds to buy longer-term debt with the aim of pressuring long-term yields even lower. A primary purpose of the program was to push down 30-year fixed mortgage rates (FMR), which are tied to the 10-year Treasury bond yield, in order to make homes more affordable and refinancing more manageable for both current homeowners and new buyers. Almost immediately after the program was announced in late September, the average 30-year FMR ticked down from 4.09% (September 23) to just 3.94% in the week ending October 7. In the last few weeks, the rate has hovered around 4.00%, among the lowest levels ever recorded for the 30-year FMR.
There has been a good amount of backlash directed towards Bernanke and the Fed for choosing to influence the housing market rather than focusing on the letter of the institution’s famous “Dual mandate”: maximum employment in the context of stable prices. Clearly, Chairman Bernanke sees the housing market as cornerstone economic issue, and one that can (when properly pushed and prodded) help create a lasting economic recovery with attendant gains in domestic labor markets.
We decided to look more closely at home prices and unemployment to see what (if any) reason the Fed had to be focusing so heavily on the housing market in its pursuit of economic expansion. We compiled data from 1997 (the first year Case-Shiller kept records for their Composite-10 Index) to the present for both home prices and unemployment across 10 major metropolitan statistical areas (MSAs): Los Angeles, San Diego, San Francisco, Denver, Washington DC, Miami, Chicago, Boston, New York, and Las Vegas. Our findings are as follows:
- There is a clear and robust correlation between the historical trends for home prices and unemployment levels for the Composite-10. As the charts below indicate, the relationship between home prices and unemployment is inverse; that is, increases in home prices correlate directly with decreases in the unemployment rate and vice versa.
- This correlation also holds true at the individual metro-area level. Some MSAs, such as Boston and New York, experienced relatively moderate declines in home prices after April 2006, increases in the unemployment rate in those regions were also modest. Not surprisingly, those areas worst affected by the housing crisis suffered significantly higher unemployment rates.
- The increase in home prices during the housing boom from 2000 to the peak in April 2006 also correlates closely with the price decline following the bust. Among the Comp-10, home prices increased 107.59% from August 2000 until April 2006; conversely, prices declined by 32.23% after the bust. Most notably, those areas that saw the largest increase in home prices during the boom (Las Vegas, Miami, Los Angeles) also saw the steepest declines when the bubble burst. Essentially, every MSA in the Case-Shiller index exhibited strong and predictable mean-reversion as they went from boom to bust.
The most obvious dataset that supports the correlation between home prices and labor markets is construction employment. As the chart shows, those areas that experienced the largest decline in home prices also experienced the largest declines in construction employment during the years following the bust – homes in Phoenix, for example, lost 56.6% of their value, while construction employment dropped 53.5%. Correspondingly, those MSAs in which construction employment declined the least had similarly modest declines in home prices during this period; Dallas home prices only declined 7.12%, while construction employment only went down 0.34%.
These correlations serve to show that the Fed’s Operation Twist (and all that Quantitative Easing – past, present and future) is in fact directed towards one of its mandates: promoting maximum employment. Clearly, the Fed sees increasing home prices as a driver of economic recovery because increasing home prices are correlated with higher employment levels and overall better economic health. By decreasing mortgage rates, it hopes to drive up home prices which, in turn, according to this analysis, should also drive down unemployment. Yes, we know that correlation isn’t always causation, but we’ll flesh out that thought in a minute.
With this in mind, we looked at how much home prices would have to rise both nationally and regionally in order for unemployment rates to meet Fed projections for 2012, 2013, and 2014. The most conservative rate estimates given by the Fed at the latest FOMC meeting are:
- 8.7% in 2012
- 8.2% in 2013
- 7.7% in 2014
By comparing changes in the unemployment rate to percentage changes in home values both on average and individually for the Composite-10, we calculated a regression analysis through which we determined the percentage increase required in home prices to achieve a particular unemployment rate. Using this equation, we came to the following numbers:
- For every 5% increase in home prices for the Composite-10, the unemployment rate drops 0.4 points.
- In order for unemployment to reach 8.7% in the Composite-10 next year (2012), home prices will have to rise by an average of 3.5%. To reach 8.2% in 2013, they will have to climb 9.4% from their current prices. For a 7.7% unemployment rate in 2014, the necessary rate of increase is 15.4%.
- Case-Shiller predicts a 2.7% climb in home prices for next year. On the one hand, that seems a pretty positive outlook, since it takes us most of the way to the 3.5% increase that gets us to the Fed’s target unemployment rate. But – and it’s a big “but” – house prices are still declining. If you want to be generous, you might say they are “stabilizing.” But they are certainly not rising.
Now, we have no doubt that the Fed knows these numbers. They know that the housing market only needs a little boost in prices and if historical correlations are trustworthy then the labor picture should begin to brighten. The biggest overhang to this relationship is, of course, the still dauntingly high level of foreclosures and still-empty houses. Only slightly less concerning is the incremental scrutiny all mortgage applications now receive from potential lenders.
The essential point, however, is that the Fed knows it has to stop the deflationary cycle in the residential housing market. Chairman Bernanke is a student of the history we quoted at the top of this note. If it costs a QE III to get the 3.5% bump in real estate prices, or even a QE IV, then markets should not doubt that the current Federal Reserve will seriously consider it. Whether low interest rates will actually do the trick is another matter. Correlation and causation look the same when viewed in a historical context.
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you make a large assumption when you think QE will be unequivocally bullish for gold..
The only assumption is that QE will be unequivocally dilutive for paper currencies. As for how gold reacts when fiat is diluted, there is no assumption there at all: just look at its price chart since March 2009.
Ok -im on board with that...
Barack Obama: 2008 Gun Salesman Of the Year
Barack Obama: 2012 Gold Salesman of the Year
Blaming it all on Obama is falling for the false dichotomy that TPTB WANT you to remain focused on. Bush let things go to hell - Obama merely kept the same peopel in charge doing the same old things..... no real difference between the parties. Both offshore jobs, both bail out wall Street, both have continued with the war check list...... 'Hope and Change' meant 'more of the same' - despite all the 'socialist' bs from the right.....NOTHING changed under Obama.
The rich are getting MUCH MUCH richer while the rest of us are getting much poorer.......The US has been looted. Our industrial base was shipped overseas and any money left was stolen and stashed offshore.... The taxpayer hs been stuck with all the losses incurred by the financial sector - our great grandchildren will still be paying this off (providing we don't just default on our national sebt - or hyperinflate it away).
So true. I blame it on the (radioactive) rain (or snow) that is softly falling.
C'mon, banking oligarchs, MAKE IT RAIN!
/s
NeObama is in office now. Fuck Busch...he's been gone for years.
Let's blame the guy who's IN like they did for the last one. And let's get rid of his sorry ass and get someone decent in there.
Try "wasting" your vote this time around.
Out with the old bums, in with the new!
LOL!
only decent one i see far & wide is Ron Paul.
The only hope we have is the GOP warms up to Dr Paul and runs him against Obama, or Obama will get four more years, 100% guaranteed.
Agree. NY Sun deserves some kudos for essentially saying the same thing:
http://www.nysun.com/editorials/bernankes-forgotten-footnote/87588/
I like Ron Paul -- very much. But he is no panacea and needs to adjust his thinking to get elected and be effective
Ron Paul would be great for the economy we all agree. But...
A lot of people not happy with his view on the self regulatory nature of things. He believes for example that air travel would be 100% safe since accidents are bad for business. He fails to realize that airlines would calculate the extent of deaths permissible before business got bad. So for example, if 20,000 annual deaths or less are okay according to some statistical calculation, that would be the number that would happen. Or pollution can be managed by property rights. So businesses would calculate the cost of suits against the percentage chance of being sued and the ensuing penalty. We'd get more poisoned rivers. EPA sites and the like
He's keep us from war and that's great. But he would have also said in 1939 that the USA should stay out of WWII. Not sure if the world would be better off with Europe as a Nazi dictatorship
Ron should embrace "practical" libertarianism, not "pure" libertarianism. An all encompassing "hands-off" mentality leaves evil people a large opportunity to make a lot of mischief
Your argument against the free market makes the grossly naive and historically unjustified (not to mention historically ignorant) assumption that those with unparalleled, concentrated power, i.e. government, are going to use that power solely in the broad public interest and not in their own. History, particularly recent history, tends to show otherwise.
If there is a demand for it, whether that "it" is some mindless electronic gadget or low air carrier deaths per annum, then the market, ultimately, is going to meet that demand; whereas the only demands that governments ultimately recognize are their own: "I DEMAND!".
This is the great political shift of our time. The Progressives are plain to see now. Bush was Progressive Lite and Obama is Progressive full tilt Euro Fascist. Both are destroyers of freedom and facilitators of the wealth to their friends. Pity 30% of Americans haven't figured out that Obama plays golf with the 1%, not them.
In the other corner is the Tea Party and friends. They see it now and want to break free from the Progressives, hence the general dislike of Romney by everyone except the GOP elite. And therein the tale is told. The old GOP wants "Progressivism" to continue despite its utter and obvious failure (ie Detroit about to be taken over by the state after 50 years of Progressive control).
The Illinois theory of Political Progressivism and Cronyism(see Dick Cellini, SecDOT LaHood's political patron. How else does a Republican wind up in the most corrupt administration since Grant) is that "There is enough for everybody at the trough, why fight or investigate each other". Both parties are in full tilt "steal their freedom along with the money" mode of which Illinois, and Braack, are both emblematic and symptomatic.
So, according to your definition, Theodore Roosevelt (a self defined Progressive), caused more problems by breaking up the Trusts, than by letting the monopolies continue. Correct?
Trav is right on. They are not the same dumbass! If you like Marxism at break-neck speeds, vote for Obama again.
They're not the same? Please elaborate on their differences.
Hope, hope and change!!
p.s. obama is the worst president since bush (a very close business; possible tie) and both are the worst since washington. carter didn't make the u.s. a police state. ineptness is not the same as towering evil.
I tend to think of ineptness as a politician's way of disguising evil. Bush is a great example.
and Carter made homebrewing legal. My hero.
It's a cute little trick called "Divide and conquer" which TPTB use. It was developed into an art form in the days of the British Empire and it works until it doesn't work. At which time there is revolution.
Uhhh, to which Bush are you referring?
Very true. I predict another crisis will develop early next year and the candidates from both parties will campaign on change we can believe in. I also predict that the electorate will fall for it yet again, and that we will get 4 more years of extend and pretend, regardless of who wins. Only way to affect change is all out revolution
ps. tho im not a fan of currencies with no natural resource tethers, "Printing" by the FED has become a blogosphere concept and is largely wrong. there are way too many twitterers etc that dont really understand what is happening or what is possible with bank balance sheets.
under qe1 and qe2 the money sitting in banks asset ledgers cannot be lent out - the only thing it could possibly be used for is to call in actual federal reserve notes -but that didnt happen - it DID allow banks to get crap off their balance sheets so was moderately helpful (in the context of a 60+ trillion aggregate money supply (money as debt)
There are only 3 things a central bank can do:
1. they can drive interest rates directly (already at zero)
2. they can buy assets and thus drive interest rates down indirectly
3. they can stabilize markets by providing lending facilities if interbank lending goes sour
the central banks do not control the money supply - 98% of that occurs via comm. bank lending. keeping rates low is necessary but insufficient criteria for improving economy. Fed is relegated to being 'wing-man' to government at this point the only other possibility is them going into retail banking - and providing loans directly to John Q Public. they could do that via buying BofA of some such. so from an observer standpoint i think QE3 should it come, might be a 'buy the rumor sell the news event' and it wont necessarily be bullish for gold, tho what is going on in europe right now unequivocally is...;-)
Ben and co are largely done - theyve done what they can do IMO
You're seeing it simplistically, two-dimensionally and too literally.
Fed loaned $7.7 Trillion in secret to banks during the worst of the crisis. That information was disclosed only by FOIA request after 2 years. Fed rescued foreign banks and now is doing so again.
During QE1,2 the game was to allow the primary dealers to front run the LSAPs. That was a form of under the table money transfer.
Fed has allowed suspension of Sarbanes-Oxley rules. Fed coordinates actions with other global central banks to intervene in markets. Fed instituted the Bernanke put.
If the Fed was just a "wingman", there would be no confidence, no recovery in credit and stock markets. There would have been massive defaults and bankruptcies, bank runs and capital market lockups.
clarification: wingman from here on out. I agree they helped to kick can this far
A 3.5% increase in home prices won't do shit for UE this time.
If your under 50% you need 100% just to BE.
Ben was too slow and we've fallen too far down the hole for any quick Fed fix to work. It'll take 30 years to recover. Most of us will be room temp by then
That's why he is pumping stocks. Pathetically it's his only mirage trick to save his job and others. For a while
I'm not sure how you could disprove how gold wouldn't continue to rise with more QE, and especially with the latest reports that China is about to dump $300 billion in Treasuries to fund its small gold miners (which they are shutting down) to explore/buy gold reserves abroad.
http://caspionet.kz/eng/business/Chinas_gold_miners_offered_authorities_...
i couldnt disprove it other than everyone is expecting it...
Everyone is expecting it (including 2.5 billion Asians) because over the past few years Asia has totally revised its banking system based on private gold accounts. Not only are they offering gold accounts, Asian governments are promoting and encouraging their people to buy as much as they can!!. Go to any major Chinese or Indian bank website and I assure you the first thing you see is a banner linking to several gold purchasing, storing and trading accounts. Even Napal's Bank this week annouced its offering silver bars to its customers. http://www.nicbank.com.np/product/bullion/silver.php
So now you have a fundamental trend, a big one that no American or European government can stop. The game has shifted to the east, get use to it.
Presenting Chinese vs American Banks http://i42.tinypic.com/ay3hc7.png
Well you better hide it, 'cause that F--ker's gonna try to confiscate it.
Only a paranoid American would believe the government would go door to door confiscating gold. Far from the truth of what happened in the past.
Paranoia is baseless fear.
If the government could do it, they would.
The only reason they won't is because they can't.
Only a paranoid would believe the government would round up their citizens and put them in gas chambers. Only a paranoid would believe their government would starve their citizens to gain power over them. Only a paranoid would believe Pol Pot was not working on his citizens behalf.
Bottom line, there is NOTHING government will NOT do in the name of .. of … hmm, maybe maintaining their own power?
sschu
Lets just face it, the Central Banks and the Chinese are idiots. How else can we explain their purchase of tonnes of gold? Certainly not the flood of USD into the world. They just like shiny things.
Look at its price since 1971. People can live in whatever fantasy world they desire. But eventually, reality will bite them in the ass. Gold and silver are the only traditionally accepted forms of currency. And after this current phase passes, these PMs will once again be the basis of our moentary system.
What evidence do you have that the next monetary system will be based on PMs and not another round of fiat, for example SDRs?
Well, honestly, I don't know or care what SDR's are. But I do know that the Egyptions accepted gold for payment thousands of years ago. I know that it's written in the Bible that one of the three gifts for Jesus was gold. I know that both the Romans and the Greeks used gold for currency. I know that the British Empire and the Spanish Empire used gold for currency. I also know that the US used a gold-backed currency until the early 1900s. Perhaps gold is important in human existence, given the history of the past several millenia. By the way, what the fuck are SDRs??
Special Drawing Rights, it's the IMF reserve currency convertable to any currency. AKA an optical backstop to other fiat currencies.
It depends on how long it takes for this system to crash. If they hold it together for a few more years, the flaws of the fiat system will become more and more apparent. If they make the switch now, it's SDRs.
But that means replacing the dollar as the world's 'reserve'. Can we make the Chinese, Indians, Brazilians, and Russians accept a system that benefits the US to the same degree as the current one? Probably not. That means a popular movement in the us: They ruined the dollar, now they want to force another form of fiat down our throat?
The future of fiat looks bleak to me; they should have made the switch years ago, if they could. The reasons they didn't/couldn't are still with us, but probably amplified. In any event, it's clear that a large part of humanity is catching on, even if relatively few of them are in America.
If we really want to know whats up--then we need to see if the bernank and the geethner own a lot of gold. They well know what is in store for the future--they are currently at the center of the gravity vortex that is sucking the life from everything including their own monopoly money.
Unfortunately for the US, our populace is brainwashed by the manipulative crap carried on broadcast and cable television. We can no longer discern plain and simple reality from our own ignorance. Our reality and our ignorance is programmed in early on and then internalized and codified through adolesence and adulthood. All I can say is damn damn damn damn damn-we are getting what we deserve and there is nothing that can be done to stop it. You can only get ready.
Here is my best advice to anyone who is preparing for the fit hitting the shan (from square 1):
1) get a 9 mm pistol and as many rounds as possible
2) take a course on handgun safety and how to shoot
3) go to the range and spend lots of time perfecting the presentation of and firing your pistol from fixed and moving positions
4) get physically fit
5) accumulate non-perishable food and food production knowledge/experience
6) obtain "junk" silver-it will be viable for barter after all the bs stabilizes-the dollar will make good make-shift insulation
7) be ready for everything you think is normal to drastically change-that crap you see in other countries, fear, war, murder, destruction, can come right up to (and through) your door.
8) try to locate people that you can organize with to promote physical security.
9) most important-keep a good attitude: be right, know right, do right. Anything less is thuggery and animalistic.
10) if you think none of this can happen, go ahead and do nothing-->it's what we have all gotten really good at anyway isn't it?
No, we are NOT getting what we deserve. We are getting what others deemed best for themselves, not the general flow of humanity. If someone deliberately misleads you and withholds the truth or even the means to find it, how is the deceived responsible for that? Sure, it takes thinking and reading to get past it. How many are attuned to complex analysis when they are simply trying to feed a family?
How many people in your life actually think or simply go along in some metaphysical belief of all is good? Maybe what you are accusing us of is in there, but the duped are not 100% responsible for it.
Good point. How many times and ways can we be duped before we bare responsibility for it though?
An SDR reserve doesn't benefit the US as much as it does now. And making BRICs part of the basket would reduce their objections. It wasn't done before now because the US still carries a lot of influence. Other countries hate that the reserve is US dollars, we keep exporting inflation to them.
There are enough people that understand what fiat means to voice significant objections to a new fiat system. So they must generate a 'crisis', to get large numbers of hungry people to demand that the government do something. I fear that something will not be what most ZHers want.
I didn't know QE stopped. http://www.gold-eagle.com/editorials_08/willie113011.html
The data presented here is mind boggling. http://www.gold-eagle.com/editorials_08/lundeen111211.html
I'd rather not be a gold bug. Personally, I would rather not have to constantly worry about living in a society of debt slaves, and would like to invest in new technologies that improve lives (not Facebook or LinkedIn) instead of gold. I'd prefer that Obama is not good for gold bugs. I just don't see any other way.
"So, with all the paper work completed, making everything nice and legal, the US government then leased its newly acquired 24 karat gold to a bullion bank, who sold it in London for less than $350 dollars an ounce."
"The first chart displayed the foreign CB's US T-debt reserves, but the Fed has also monetized $2.62 trillion of the US national debt. So, the Fed has purchased twice that of China's holdings, and its US Treasury bond reserves are an equivalent of 63% of all foreign CB's total holdings listed in the table above."
"So, what is my point? It's hard for me to find words to describe the monetary monstrosity we call "money", so I made a table to help illustrate my point: (note that dollars values are in billions). No one on TV seems to think the following is important; as they are always fixed on the US dollar, euro exchange rate. BUT the Federal Reserve has now monetized more US T-debt than existed when Doctor Greenspan became its Chairman in 1987; this fact really bugs me."
http://www.dailypaul.com/187659/audit-the-fed-reveals-details-of-16-trillion-in-secret-bailouts
Am seeing some fishy manipulation of the Indian rupee.
It will impact gold purchases and prices globally..
Yeah, and absolutely no media coverage of this. The Rupee does appear to be "circling the bowl" and could be the first of the major currencies to go "poof!". I guess then it will be news.
The only assumption is that QE will be unequivocally dilutive for paper currencies.
Why do you say that's an assumption? Isn't it dilutive by definition? Or are you referring to the possibility of QE not expanding the monetary base if all of it ends up as excess reserves?
Nomura predicts $220 oil. Your explanation could be part of that reasoning.
I am sure we can agree that the Fed has no track record on UE or having it as a mandate. I am sure it would be an accident if they hit it but they won't. Because saving banks does nothing for UE. Fiscal and regulatory factors need to be under the Congress where it always was.
Unfortunately Congress has outsourced all their responsibilities so they can't be blamed and get re elected.
Too bad for them voters know they are worthless
Well it is even simpler than that. You only need to know a few things.
1 What was the price of the Dow in 1910 in Gold?
4.6 oz today the Dow is at 6.8 oz
2. What was price in USD
80 USD, today is around 12,000
Who can doubt the relationship?
Second what is t he current cycle?
Is it a debt increase cycle coming from low leverage (bullish for stock
against gold) or
Is it a debt saturation debt destruction cycle (bullish for Gold against stock
Regarless of the form of debt destruction 1932 and 1980 had BOTH a
very low ratio of Gold).
Third what is the bias of the central bank?
The call from Kyle Bass on mortgage insurer makes more sense
in light of that post....
You are way off Tyler:
http://www.howprofit.com/wp-content/uploads/2011/05/US-M3-VS-Gold-1970-2...
Gold has been shooting to the moon while M3 is relatively steady. In fact, the strong liklihood of more quantitive easing is already priced in to the barbaric yellow metal.
Technology is the new gold people. Understand it and you will profit. Ignore it and well....I guess not much will happen as most of you appear to have little more than a few onzes of gold anyway so you have nothing to lose really.
It sounds like we are going to cross the point where the debt can not be decreased anymore anymore by conventional means, leaving debt destruction as the only option. Your approach is correct from a logical standpoint, but I think you miss the psychological reading. Technology has never stopped being the new Gold, it has always been the only way we moved from hunting to where we are now. So what is changed?? Nothing, the new technology is not new after a while. Technology changes are part of human past present and future. The monetary conditions are cyclical, so one needs to understand where we are on the cycle. As for technology it is great.... depending on teh price. Spectrum is an interesting commodity...
Hope & Change with the Muslim.
Funny how your Moslem has puppet strings tied to a little country that is - oh - let's just say "not Moslem?" Do you find that at all strange?
Whatchoo talkin' 'bout Willis?
I hopes you's talkin' 'bout the RIGHT country...
Or should I say, "City-State"?
http://www.rumormillnews.com/cgi-bin/archive.cgi?read=56350
wait till the obummercare kicks in, gold bug indeed (not!).
http://expose2.wordpress.com
I don't know why you consider Carter to be "worst president." And what happened to the Bush's - either one.
Let's see some supporting evidence.
President Obama may be good for gold, but he is NOT my best friend...
EDIT:
The time is drawing close for this visitor to Peru to join his brothers-in-law for a couple shots of Havana Club!
Actually Obama would be an Asians best friend. Apparently Americans don't buy gold anymore. http://i40.tinypic.com/muea8m.png
Long-Term Unemployed? Disgruntled Youth? Pensioner surviving on cat food thanks to inflation? Why live out your days mad and hopeless? Why continue to play by the rules(that they sure aren't playing by)? Nobody will remember your name in 100 years unless you choose now as the time to carve out a place in the history books. Save a country, hang a banker or politician.
This story shall the good man teach his son;
And Crispin Crispian shall ne'er go by,
From this day to the ending of the world,
But we in it shall be remembered-
We few, we happy few, we band of brothers;
For he to-day that sheds his blood with me
Shall be my brother; be he ne'er so vile,
This day shall gentle his condition;
And gentlemen in England now-a-bed
Shall think themselves accurs'd they were not here,
And hold their manhoods cheap whiles any speaks
That fought with us upon Saint Crispin's day.
Yes reasonable interpretation of what to expect in the election year only issue is that the government does not know if they should be "shit scared about home prices dropping or piss scared about stocks dropping so the pension plans don't fall through the floor", hopefully between shit and piss laden choices they will choose wisely
Even more than Obama, the collapse in confidence in the clearing system in the wake of the MF Global client fund theft will drive many new investors into the safety of gold and silver.
As Ann Barnhardt said in her EPIC RANT this week... GET THE HELL OUT OF ALL PAPER ASSETS NOW!!
http://silverdoctors.blogspot.com/
You're assuming Obama will seek re-election. I predict he'll drop out, probably at the worst possible moment for the Democrat party, say May or June of 2012. He's a man who's never had to experience the first bit of adversity and the world hasn't gone his way these past 3 years. He's going to take his ball and go home. So, I doubt he'll put much pressure on the Fed to do anything, especially as it's his style to "lead from behind"
Wow, just wow. Want to make a bet on that?? Ive got $5000.00 (Fiat not that archaic shiny stuff) that says you are wrong.
$5,000 (in fiat) might buy a coffee and a copy of the New York Times in Starbucks this time next year.
Bookmark this page. By June you'll be glad I didn't take your bet. He's going to withdraw, either like Lyndon Johnson or by becoming "sick" or some such malarky.
He was sick when he got there.
A good man would have isolated himself so as not to infect everyone else.
Expecting a politician to be a "good man" is always and everywhere a mistake
Shit son, I got 5 on it.
Perhaps his narcissism will overpower his aversion to adversity. He also loves the campaign trail, especially when the tax payers are paying for it. I think he'll stay in even if he knew he had no possibility of winning reelection. It gives him a few more months of grinding America into the dirt.
I believe his narcissism will ensure he drops out. He's never lost. Better to withdraw than to deal with rejection. It'll be a strugle for him, for sure, torn between wanting to win to show the world and knowing he's going to get his ass whipped worse than Jimmy Carter, for if he does run, he'll be the first president to lose all fifty states, Carter only lost 48 or 49. So, in the end, his narcissism will force him to choose to drop out rather than go down in the history books for such a titanic loss.
Nah...just blame it on Congress.
Crushed by who? Newt? Thats rich.
"Crushed" by the democrat voters who stay home on election day.
He needs to steal a shitload of that billion he is raising before he goes anywhere!
Nah... the narcissism will not let him believe that he could lose. Like you say, he's never lost.
Unless of course he has something up his sleeve, like one of those falsy flaggy thingys
"...loves the campaign trail" Did you see the photo comparison recently of the crowds he drew, I believe, in Philadephia. The first one, from 2008 looked like a 10,000 people, the second one, just recently, was less than 200. That's got to sting deeply for such a proud and detached-from-reality man. He won't be doing much campaigning if that's the sorts of crowds he draws. The entire country is sick of him and that's beginning to dawn on him and his wife. She was booed at the NASCAR event in November. That is unprecidented in the 20th and 21st centuries. We just don't boo First Ladies, but we booed her. When he speaks, listen to the tone of his voice. He's tired and he's angry, but mostly tired. He works four-hour days, so he can't be tired from work, he's tired of the rejection and lack of adulation. He's going to withdraw, just as he does from any real conflict.
>> She was booed at the NASCAR event in November. That is unprecidented in the 20th and 21st centuries. We just don't boo First Ladies,
Never has the hatred been so focused. This is the Nascar crowd. Drag Barbara Bush to the Mowtown Hoedown and see if she doesn't get booed. I'm guessing there's not a preponderance of deep thinkers at a nascar event.
Disclosure: I absolutely despise Obama and his policies, not so much because he's a democrat, or a marxist (silliest thing the wingnuts have drug out yet), but because he's just another in a long line of corporate fascists who've ruled the insignificant "little people". With a couple of notable exceptions, fuck them all in both parties.
"I'm guessing there's not a preponderance of deep thinkers at a nascar event."
I'm guessing it doesn't take a whole lot of chin scratching & navel gazing in order for them to come to a conclusion on what she is...lol.
This is a woman who went on a personal vacation to Spain, the Costa de Sol to be precise...leaving behind her "beloved"...unemployed NASCAR fans.
Just so she wouldn't be lonely she had 40 of her "friends" tag along. They took over the entire floor of one the five star hotels there...don't know as I've ever seen a proper accounting of the taxpayer hit for this indulgence, but it would have to be in the millions for Air Force One, security details, lodging etc.
She and her husband seem to have a lust for the finest as long as it doesn't come out of their pocket. Do they reimburse the Treasury for all the trips to Marthas Vineyard & Hawaii?
Doubtful.
Speaking of Hawaii, today they are there, with King Barry issuing forth edicts & admonishments to congress critters to stay in the swamps of DC until the payroll tax cut is extended...auto pen signing this or that "pressing legislation" that comes across the transom of the good ship Hopium as they sail around sunning themselves sucking on Mai Tais.
I think the bitter clingers have them figured out just fine...no leaning back in the chair and staring at the ceiling required at all.
>> I'm guessing it doesn't take a whole lot of chin scratching & navel gazing in order for them
Well hell yeah!!!! Wat choo think 'bout kile bush?? some bitch.
lol...I'm a Southerner who doesn't follow NASCAR...go figger ;-)
This assumes he makes the choice. He comes from Chicago.
Ging has zilch chance of beating Obama. Why do you think MSM is promoting NG ?
O will win with or without the economy.
More like "bankster-handled from behind".
I'm thinking there may not be an election. Postponed to fix the fiscal crisis...
His arrogance and ignorance, the hubris of a charmed and massaged life, he cannot admit defeat. The presidency is the only thing he has ever truly won and that through tremendous manipulation. He figures all those pieces are still in place, he is running as an outsider. Too bad his "outsiderness" is all because he did not lead because he cannot lead.
PS- Keep those Chase ads coming on the site Tyler (or Adsense)- click about 10 every time I see one!
-Doc
Not everyone gets those same ads. Advertising here is dynamic. Different advertisements show up depending on whats in your cookie file.
like I said-adsense. So visit Chase.com a few times so their ads appear for you, then click the snot out of them whenever you see one.
Why?... So then when they go 'tits up' because of all the money paid for advertising, they can come after me for another bailout?
and every time the idiot pumps the handle on the Money well construction materials shoot the moon.
how appropriate that this was posted. i had made up my mind to be at the coin guys shop the moment he opens on Monday. i have a dream, a dream that the America i used to know as a child would be a place of goodness again; a place to raise children & feel safe, warm & fed in our little homes ........... if only OBAMA would come on t.v. & tell the people the truth about the fraud & the looting & the truth regarding 9/11 . if only he'd come on t.v. & just tell us that he will reinstate GLASS-STEAGALL ACT & bankrupt WALL ST. & the FEDERAL RESERVE BANK & go back to sound money for our childrens' prosperity, i'd be willing to suffer for it. But, HE WON'T TELL THE TRUTH ........... I'M TAKING EVERY LAST PENNY I CAN LAY MY HANDS ON & BUYING MORE METAL & FOODSTUFFS. fucking criminal.
You own nothing without a way to defend it.
Too bad Jack Kevorkian died recently. We could have elected him president, and he could have put us down quick. Tired of all the sputtering and the shitting of adult diapers going on.
Oh, you've been watching CNBC and reading RobotLemming's posts then?
LOL, except that gold is almost $300 off its high. LMAO
That’s a real cute statement until you look at the chart.
But, but, but the CNBSers said gold was going to zero. How can this be?
That chart must be wrong.
LOLOLOL!!!! When i started trading worthless debt backed FRN's for gold, all they wanted for the barbarous, inedible, metallic chemical element, was 300 pieces of paper. Now, ten years later, they want 1700 pieces of paper. In ten years or less, there won't be anymore paper.
"In ten years or less, there won't be anymore paper."
Sure there will. There'll be a lot less, just decomposing in septic tanks and out-houses.
50% of mortgage holders are underwater. Housing is set to fall 70%-80% considering hyperinflation will remove the easy credit because the printing press will be rendered worthless, the Fed will be ineffective in backing mortgages, American’s will become much poorer because hyperinflation is economically devastating and people will move in with friends and family to save an housing maintenance and utility costs, as well as many will altogether leave the country, which will further expose the overbulding of housing that cheap money and government backing of mortgages has created.
Now is the time to take the equity out of your home if you would like to keep that equity. The best way to save is with silver. Gold is a great option too. If you’re looking to save in USD, nickels now have a melt value of more than $.05.
TheSilverJournal.com
So how much does the Fed lease gold to the bullion banks for...?
The recent numbers are negatives. Go figure.
And then the bullion banks lease it to the COMEX.
Mystery solved.
One word - Bush. Worst President ever. He took a nation with an almost balanced budget, gave tax cuts while launching unecessary (and illegal) wars. He was BinLaden's best friend. ... as Bin laden's idea was to bankrupt America ... and George did a wonderful job for him.
One word - Greenspan.
c'mon, all presidents and paid for congress are handed a daily page from the NWO playbook! it's all scripted, even the news programs are handed scripts! there are no more investigative reporters! enjoy the show!
p.s.- just picture in your minds, all the oldidorks sittin' and laughing their heads off, as thousands of pleebs, fight over two dollar waffle makers!
If the wars were started via UN resolution compliance failures and approved by congress how were they illegal? The surplus, BTW was created by the 1994 congress.
anyone want to buy a FEMA timeshare? the units with a view are selling quickly!
No thanks. The only FEMA property I'm liable to touch are those cute green 3'x2'x7' thermoplastic underground storage containers.
Of course, it'll take a lot of doing to get me and mine into one of those....
it's all boooshez fault. Still stuck on that R&D merry go round are ya?
This Obama dude sounds like a good shit.
If you like shit that is.
I've always wondered how many Courics he is....
...only for composting, and not human; especially one full of toxic microbe political rhetoric shit.
If they REALLY wanted to promote 'maximum employment' they'd stop offshoring jobs. Do you know how many jobs Banks and Wall Street firms tht took TARP funds have offshored? Data Processing went years back...as did call centers and customer support... now they're shipping A/P, A/R and Purchasing overseas.....
Our industrial base was shipped oerseas a decade or more ago...... nothing left there to send overseas.....
of course they're going to try and slam the spot price down (especially silver).
in 3. 2. 1. ...
http://www.infowars.com/lapd-desecrates-american-flag-during-%e2%80%98occupy%e2%80%99-eviction/
In lieu of making ( or maintaining ) wealth by the rapidly increasing value of gold and silver holdings, Id prefer having a less functionally retarded government.
I would be HAPPY to make money the "old fashioned way" , work hard , pay as I go , and garner success based on my work ethic and not achieve the above because of a poorly managed country.
But what are ya gonna do? Weve got a crowd of the smartest kids with Down's Syndrome running things.
So Ill take the only option I have left and thank the TOTUS kindly for the bump with a thumbs up with the right hand, even as I give him the finger for destroying the country with the left.
Just about that "worst president since Carter".
Why not say: "most hypocrite president ever".
Carter has proven himself to be a good man. Too good for TBTB. The Tehran hostage crisis was extended to sabotage his re-election.
No need to repeat the MSM dissing.
Carter was and is a POS. He was an observer who said Hugo's Chavez second election was not rigged. Jiminy is a stupid leftist.
>> Carter was and is a POS.
Carter was the last honest president. If we'd actually taken his good advice to heart we'd be much better off as a nation. We have the government you deserve, but I'm not real happy about it.
I don't see how unemployment would be reduced by higher home prices. I believe Bernanke is trying to draw a relationship between two unrelated things, housing prices and unemployment, because he can affect home prices but he's powerless to affect unemployment.
You can't solve high unemployment by printing money and buying worthless securities at full value ...plus paying commission. All it does is enrich banks. It doesn't help the economy one bit.
Nor do I see how more QE will help Obama's chance of re-election since QE I & II did nothing to hlep the economy recover nor the housing market. QE I & II made things worse by debasing the dollar, reducing people's purchasing power and driving up prices on most things pepole need, turning a recession into a depression and reducing people's ability to buy a home causing home proces to drop further.
Falling home prices is good for an economic recovery allowing more people to afford a home. But it's bad for bankers trying to keep housing-related financial paper on their books at high pre-housing-collapse value.
So Bernanke does what he can to keep home prices from falling further, which helps bankers, but doesn't help the economy.
I believe Bernanke doesn't give shit about the economy. So far his actions have demonstrated that.
Bernanke and others aren't too stupid to know how to help the economy recover. They just don't give a shit about helping the economy recover. It's all about helping banks make money these days.
If you're underwater on your mortgage and can't move, you limit your job options to just what's in commuting distance. The housing crash was a one-two punch, because we have not only a large unemployed population, but also companies who can't get the workers they need.
Either housing prices need to rise drastically, or everyone just needs to walk away. I know which one I'm betting on.
Underwater mortgage is a difficult situation. Your biggest "asset" was purchased at the high point of a bull market, that market has now suffered a major correction, but you need to sell anyway because you need the money.
It's like buying $250,000 of stocks in a bull market thinking they'll go higher then watching the market drop 30% and needing the money for something else. You need to sell but you're going to take a $75,000 loss.
While I can sympathize with your situation, home prices do need to come down if the housing market is going to recover any at all. With unemployment at 23% now there just aren't as many buyers as before, and with 2+ years of home inventory backlog it's a buyers market like never before.
Maybe you didn't buy that home from an investment standpoint. Maybe you bought it merely as a place to live. It doesn't matter. The housing market is collapsing more or less, and I believe the collapse will continue.
If it's significanly underwater and I had to move to get a better job in this recession (depression), I'd probably ask the bank to forgive enough of the mortgage balance to come out even, and if they wouldn't cooperate I might just hand them the keys and walk away from it.
Yes my credit would be ruined, but everybody's credit is ruined these days, one reason there are way fewer home buyers now.
From a moral standpoint I know banks created the housing bubble to make fat profits, and banks also created this economic depression causing home prices to collapse, so I would have no moral issue with walking away from it, as many other people are doing.
Keeping that high credit rating. That's how banks keep you locked in their scheme ...and loot you dry in the process.
Banks don't care about me. Why should I care about them?
Fuck that credit rating. I'll start living on a cash basis ...what I should have been doing all along.
Who knows, maybe with that higher paying job and the housing market dropping another 30% - 40%, after 3 - 4 years I might be able to save up enough money to pay cash for a house, so it wouldn't matter what my credit rating is.
It would be nice to go to a closing with just the present owner, their attorney, me, my attorney. No bank, no stack of mortgage papers to sign. I hand the owner a check, he hands me the keys, the deed, and title policy, I hand the deed to my attorney so he can file it at the courthouse, we all shake hands and go our separate ways.
I wasn't speaking of myself. I am underwater on my mortgage, but not by that much comparitively. I also have a good job and I don't plan on moving, so the low prices benefit me on my property taxes.
But yes, I agree. The housing market needs to get worse to fully shake off all those bad investments. I was simply pointing to the correlation between housing prices and unemployment.
>>>I don't see how unemployment would be reduced by higher home prices. I believe Bernanke is trying to draw a relationship between two unrelated things, housing prices and unemployment, because he can affect home prices but he's powerless to affect unemployment.<<<
I am stunned by how ridiculous this article is...even more stunned that it got posted to ZH.
Everthing you need to know is here-
http://www.theburningplatform.com/?p=15875
Complete with inflation adjusted housing "chart porn."
If only that second chart were inflation adjusted to reflect SGS calculated CPI inflation.
Who you calling a bug?
StatusquObama caused the rest of the planet to become slightly enthused that we were "enlightened" enough to elect a well spoken* black man to the white house. The rest of the world was horrified that we elected (twice) a fake cowboy "from" texas that seemed proud of his own ignorance.
*yup, he reads a teleprompter..... 'w' couldn't even do that.
I just bought a 7.3 gram 14 kt gold (pretty!) necklace (calculated melt value $238) for $269 including shipping, how did I do?
I hope it's a chain. Each link will get you plenty pretty soon. Clip-n-Pay....
I recently bought some "junk gold" on FleaBay. If you are patient you can get it for spot.
Don't buy anything with stones or the "ribbon" type of necklaces....you end up paying for weight that is not gold.
Make sure you get a good scale and a test kit to make sure you don't get ripped off. They are available on the Flea as well.
Dog
good advice- I bought the necklace as a birthday present for myself/hedge against bullion confiscation. I just purchased the scale and test kit, think i might make a hobby out of this ;]
Got a website url for this?
bought the necklace on ebay found melt value at http://silverrecyclers.com/Calculators/gold_calculator.aspx
I thinki this is too simplistic
How can QE 3 come with oil prices and more4 importantly PM prices so high?\
there wil.l have to be a major c rash forst to give them room for QE
also the whole world does not revolve around America
even if US house prices rise it doesn'tr stoip the eurozone or China imploding
7.7% unemployment rate in 2014?
All you need to do is let another 8 million people drop off the U-3 litmus test for "unemployed".
That should bring U-3 down to about 7% and change, and the unoffical SGS rate up over 25%.
Fox News Talking Head: "Humm, I just don't understand why the ranks of the OWS have swollen to over 8 million when the unemployment rate is 7.7...now here's Sherry Bubblebutt with the weather."
how do we kinow the Fed WANT OBAMA back in
the FED control the president not the other way round
Stupid Americans. They have a great potential candidate, Ron Paul, who in fact says and practices so many things that most people want to hear and see. Nevertheless, they will not vote for him but Obama will get four more years. A Keynesian, a liberal, a taxmoney waisting warmonger. Mark my words.
http://globaleconomicanalysis.blogspot.com/2011/12/cain-throws-in-towel-gingrichs-serial.html
Even odds Obama loses. I'd take that bet.
yanks vote for the one with the best catchphrase
"change you can believe in" "you got it" "you aint seen nothing yet"
Paul does not havge some corny catch phrasze hence he will lose
bernanke will create credit if only for the treasury market. bringing down home prices to lower unemployment via interest rates is another great success.
.
the fed owns dollars and
nice job but those unemployed are a result of low construction, so to just say more qe to the rescue is going to stimulate housing to the point construction picks up significantly is just a lame idea. unless low income people can be lured into the housing market to buy houses that ohters want to sell so they can move up to a new house the markewt will remain slow. there is little chance the government will create a massive home buying subsidy for low priced homes even if it is the best and cheapest way to go.
Canonical example of cart before the horse. The only way to boost house prices is to cut unemployment. Hedge funds don't buy houses, people do and The Bernank has no mechanism to get money into the hands of the small regional banks who loan to job-creating small businesses. Therefore no amount of QE has any chance of touching housing prices. As has been written over and over in ZH comments--deflation on what you have, inflation on what you need. That's all The Bernank can do.
We could have avoided all of this simply by allowing the TBTF banks to go bankrupt and sharing that liquidity with small local banks who would have lent it to small businesses. An outrageous fraud was perpetrated, it was deliberate. Problem: businesses not hiring. Solution: give liquidity to banks which they will loan. Winky-winky: actually give liquidity to our rich friends who won't loan out a cent of it, but instead will use it to flip bonds for free profit and bid up commodities and farm land.
I am suprised this obvious fact was not discussed. They could get house prices to rise with enough QE, but it would just amount to inflationiary $ destruction, and would do nothing for unemployment.
I have a sibling who lives in Brooklyn. Everyone around her has been encouraging her to buy an apartment there for years. I keep telling her that prices will come down, and they have. So she is glad she listened to me. Yesterday though she was notified that her rent is going from $1,800/Mo to $2,600/mo in February. Can someone please tell me, in a highly inflationary environment, would she be better off owning or renting? I am lost on the deflationary part of this. The prices have been falling but rents have been rising. I am not sure if she should buy or not anymore. Any legit help is appreciated. Condescending comments are welcome as long as they are really funny. Thank you.