Tag: "economic"
Local Seminar Series – Weeks 1-4
I gave a 4 week seminar for our local community and surrounding area. Here is the audio for all four weeks as well as the PowerPoint presentations. Click on the title in red above to be taken to the page where you can download the audio and .pps files.
PowerPoint link Week 1
PowerPoint link Week 2
PowerPoint link Week 3
View PostWhat (nearly) killed the markets today?
A nearly 1000 point drop in the DOW. Gold up nearly $30. What does is all mean? Well, that depends on who you ask at this hour. MSM news outlets are claiming a computer glitch or a mistake made when entering a trade. Others claim the markets are simply catching wind of just how serious of a problem exists in the currency markets with the sovereign debt problems in Greece and the Euro zone. Still others blame HFT - High Frequency Trading – that simply got caught without a negative feedback loop, ala the 1987 crash.
Whatever the reason, one thing is certain. Market sentiment is sure to have changed. All the spin that has been engineered by the MSM and PTB over the last year was undone in one, 60 minute roller coaster ride on Wall St. If nothing else was evident today, it is clear that someone – be it millions of individual someones – or a few computer programmers in the glass houses of the big investment banks – has a hair trigger when it comes to exiting the markets. That was on display for all investors to see today, and now people know that they can lose thousands of dollars in the blink of an eye. Investors now will have their finger hovering over the mouse clicker or on the speed dial number of their broker. “Sell NOW!” is on their minds.
18 months is not long enough for investors to have forgotten the pain that the market dive in late 08 and early 09 brought them. They saw their financial life pass before their eyes. Many were late to “get back in” and have recovered only a fraction of their losses. They will not stand by this time and watch the rest of it slip away. The question is, where will they go? If today’s market action did nothing else, it served to reveal in a 3 hour period where money will flow when the next down leg gains momentum (tomorrow and Monday will tell us if that is now). Places to be: US Treasuries, the US dollar, gold and silver and their equities. Nearly everything else got thrashed today.
Let’s look at these one by one. US Treasuries will be a safe haven only for a short period of time. That period could be days or months, depending on how quickly things unravel. Eventually, they too will join the list of asset classes doomed to fall. Ditto for the US dollar. In the game of cascading currency defaults, even the last man standing (which will NOT be the US dollar) will fall.
Now to gold and silver. Today they showed their metal (no pun intended). Gold was firm all day long, steadily catching a bid in the face of major market turmoil. Silver was noteworthy due to its lack of volatility. This is the opposite of what happened in late 08/09′ when they both got crushed with the markets. Why? I have given this some thought, and in 08/09, the markets were under pressure because the financial system was failing. Now, however the actual “money” itself is failing. Big, big, big (did I say big?) difference. This is a trend that will continue throughout the remainder of this crisis, until our current fiat empire is replaced by something else.
And what about energy and other “hard” assets? Well, you saw that they will likely receive the same treatment – at least in the short term – as most other asset classes. The fear of “demand destruction” will outweigh the flight to tangible assets in the early stages. That simply means that energy and other hard assets will be great investment opportunities after the first wave of selling subsides. It will take some wisdom to know when to enter those markets.
If the markets somehow gather themselves tomorrow and are able to put this horror show behind them. It will only be temporary. Gold may pull back slightly, however people now know what to expect. More and more people will begin to accumulate precious metals and their shares. Even Larry Kudlow remarked today “Gold is now the world’s reserve currency. Amazing.” Not for those who have been watching this unfold for the past 3 to 5 years. Not for the Austrian economists. Not for those who read and study history. And last but not least, not for those who read and study their Bible.
Buckle up everyone. The next few days will be very telling. Let’s see how the overseas markets view today’s action.
View PostThe “C” word is back – contagion
Not since the early days of the sub-prime mortgage crisis have we heard the word “contagion” bantered about so much. We were assured then that it would be “contained.” It wasn’t This won’t be either.
ECB May Have to Turn To Nuclear Option
Last time it was 18 months between the initiation of the sub-prime and the financial crisis. I don’t think we’ll have that long this time.
Illegal immigration – the next hot button issue
United States Flag Upside Down Under Mexican Flag
Just has has been predicted, illegal immigration will be the next agenda item for the Obama administration. The law that was courageously passed by Arizona will help speed the process. As with any law, it isn’t perfect. There are troubling issues about presenting papers to prove citizenship that must be addressed, and the application of the law will surely be tested.
However, I would like to address a hot button topic that I am sure will ruffle a few feathers. That is the subject of “racial profiling.” This term has been constructed and defined for the sole purpose of hindering the investigation of crimes by criminals. There are some stubborn things called “facts” that people do not want to deal with when it comes to the issue of illegal immigration.
- Fact – The vast, vast majority of illegal immigrants in this nation are Hispanic. 95% plus is a legitimate estimate.
- Fact – Had we been enforcing laws already on the books, we would not have this problem.
- Fact – The illegal immigrants have been draining resources from state and local budgets for decades now. We are in a time economically when we must make the hard choices.
- Fact – United States citizens are granted rights by our Constitution. Foreigners are protected from undue persecution and improper trial, but they are not granted the rights of U.S. citizens.
That brings me to the issue of racial profiling. Let me make my point by an illustration. It isn’t a pleasant one but makes my point.
If we are to use the logic of those who decry using racial profiling in the enforcement of law, then we would have to apply that logic to other physical characteristics that distinguish one group of people from another. Take gender for example. Gender, like race, is something that is easily recognizable (except in some large cities). Now lets say that law enforcement not only is prohibited from using “racial profiling” but they are also prohibited from using “gender profiling.” Hmm…
It is a fact that over 95% of sexual assaults are committed by men. What happens when tragically, a woman is assaulted? She gives a description to police that will help them catch the criminal. But applying the logic of the left and “racial profiling,” she should not be allowed to identify the gender of her assailant. It matters not that she saw him. It matters not that 95% of sexual assaults are committed by men. She cannot name her assailants gender. And police must consider males and females alike when investigating the crime. Rapists would love that law, and I am sure support it wholeheartedly. If practiced, it would hinder their arrest and imprisonment.
Absurd? You bet.
What is the difference then when police are sent to investigate a report of a group of Hispanic men who are working a job site yet have not produced identification that they are legally entitled to work. It needs to be investigated. All information is taken down. But the race of the men cannot be identified. Police must go out and look for them without considering race, despite 95% of illegal aliens are Hispanic (and they could be identified by witnesses as being Hispanic). Hispanic illegal immigrants would love that law (and they do.) If practiced, it would hinder their arrest and deportation.
Absurd? Should be.
In the real world, if such restrictions were placed on law enforcement, (in both cases) they would still use “profiling” to identify suspects. They know the statistics. They know who to look for. Cries of “racial profiling” or “gender profiling” are simply fodder for the criminals to use to hide behind political correctness.
Don’t think for a minute I am equating illegal aliens with rapists other than to make a simple point (yes you lefties, that is the first place you would go with this). The point is this. In both cases, the people are criminals. (people don’t want to hear that about Hispanic illegals, yet it is one of those stubborn facts that “reform” wishes to remedy). In both cases, they have an easily identifiable physical characteristic that drastically shrinks the pool of likely suspects. Identifying that identifiable characteristic is simply good practice.
Both criminals deserve the punishment the law affords. Prison for one, deportation for the other. The latter has the opportunity to do it the right way – apply for citizenship and go through the process if they wish. But they do not want to follow the law. Instead, they want amnesty – forgiveness without consequence. I’m sorry, but to be consistent we would then have to apply that standard to the rapist as well. Maybe not such a good idea after all…
The left wants to assign degrees to the debate to cloud the issue. It is then that their relativistic worldview comes into plain sight. “You can’t compare a rapist to a Hispanic single mom who is just trying to provide for her family!” Yes I can, and I just did. They both have broken the law. While I would feel empathy for the mother and wish to help her through other means to provide for her family (this is where the church should come in) her breaking of the law cannot be accepted.
Right and wrong. Standards. Absolutes. Difficult things to be sure. But necessary for a functioning society.
Obama’s Loyalties Exposed
The upcoming debate on the issue of illegal immigration should prove to be an interesting one. The Obama/Reid/Pelosi axis ignored the will of the majority of Americans and passed Obamacare despite their protests. Watch what happens if/when they ramrod through an amnesty bill. They will have pressed forward with the wishes of a small minority of foreigners (some of whom by the way hoisted their flag above an upside down American flag at a school in California when immigration reform with some teeth was proposed in 2006). What a contrast! The fallout of such a move should be interesting to watch. It will certainly make clear that their agenda and loyalties are not with the U.S. citizen and the Constitution, but rather with the globalists and the interests of the U.N.
Hold the Race Card Lefties
Oh, and by the way, for those who want to label me a racist because of this post? Good luck. I have two adopted Guatemalan sons whom I love dearly. I would not want them to be subject to discrimination based on their race. However, if they are in an area where a crime is committed and their “profile” fits the criminal and if there is reasonable cause to suspect they may have been involved – let the questions be asked. Their innocence would soon be evident.
The agenda of the left is being exposed more and more each day. They are rushing toward the finish line of Marxism as fast as they can run. Has “the great awakening” of the tea party come in time to stop them? In part, that answer depends on your participation. We will know within a few short years.
Intersting article by Gary North
Gary North makes some interesting observations regarding our current political climate.
“By the time of the election in November 2008, the two stimulus packages were history and the Federal Reserve had more than doubled the monetary base. For the first time since 1914, the Federal Reserve System was under widespread attack by a significant minority of the public.
Then came Obama’s stimulus package. We can date the rise of the Tea Party movement from that event. It has continued to grow. Recent polls indicate that at least 25% of the voters identify with the Tea Party movement or express sympathy with it.”
I am not sure where he gets his 25% number, but those I have seen quoted are in the 30% to 40% range. Either way, his point which follows is significant from a historical perspective. Furthermore, I have seen estimates that up to 60% to 70% of Independent voters sympathize with the Tea Party. Those are the important ones.
“The speed of this development is unprecedented in modern American history. No swing voting bloc this large has ever appeared in a one-year period. This is a Congressional election year. The bloc did not exist in November 2008.
This is the wildest political wild card in modern American history. There is no organizational chain of command. Ron Paul represents its main ideas, but he does not give it marching orders. No one does.”
His last comment is the Tea Party’s strength and weakness. My feel is that it will be a greater strength. If nobody is able to give the party its marching orders, that makes it much more difficult to be hijacked by the Republican establishment and run down the neo-con road.
“Incumbent politicians who are up for election this fall now see what is coming. Their electoral plans have to factor in the Tea Party voters. Even Congressmen in safe districts have to think about what will be the shape of the new Congress in January 2011.
Nancy Pelosi should be making mental plans to turn over her gavel as Speaker of the House.”
Wishful thinking maybe. It will take an act of God to move the House to Republican hands. Strong gains yes, but there are 7 months between now and the election. Watch what tricks the current administration pull out of their hats. Amnesty for illegal immigrants, and a battle with the evil bankers are just a warm up.
“When Ron Paul got 41% of the vote in the Rasmussen poll a week ago, with Obama at 42%, that sent a message to Congress. No sitting House member has ever matched a sitting President in a public opinion poll. That the member has been the lone wolf in the House on spending bills for three decades indicates a monumental shift of opinion in the public’s sentiments.”
This is quite telling. Staying power is what counts. Right now momentum is on RP’s side. If it peaks too soon, that is a problem and has been a mis-calculation of politicians since politicians have been around. It’s tempting to soak up the praise when it comes your way. The MSM would love to have RP flame out.
“Pelosi’s ramrodding operation of Obamacare was the last straw. She was adamant: the voters be damned. This was the same attitude that Congress displayed in October 2008, when it passed the Paulson-Bush bailout bill. Incumbent Republicans were swept out of office in the House in November 2008. The public got its revenge.”
The sweep by Dems in 08′ was about much more than one bill. The independents (and some moderate republicans) bought the messiah’s message of hope and change.
“This November, the public is likely to get its revenge again. The dark cloud, no larger than a man’s hand – Ron Paul’s hand – a year ago has become a thundercloud. It is heading for Washington, D.C.”
Let’s pray he is right. What continues to disturb me is that there is little mention about restoration of this nation to its Judeo/Christian roots. God’s role in this restoration process is largely absent from the patriot commentary. It is there, but often as an afterthought. Get this saying in mind:
Patriots without God will be slaughtered. Patriots with God will not be stopped.
It’s that simple.
Update on the most important chart…
Here is an update on “the most important chart in 100 years.” The dollar broke out to the upside, but did so in a manner that suggests a short squeeze more than a major turn. If it can consolidate here without turning down sharply, it should set up a sideways trading range. It may even make 80 for a final test of the major multi-decade breakdown level. However it could just be a bull trap where it turns back down violently. It will bear watching closely. 74 has now become a very important technical level. When it is broken to the downside it will bring on accelerated selling similar to the buying we have seen on the upside breakout.
The coming second wave…
For those who believe the economic crisis is over, I have a reality check here.
- Unemployment is above 17% according to government figures (see U6, not the touted U3 number) and nearly 22% if it were calculated using methodology used before 1994. Source Shadow Stats. Yes unemployment is generally a lagging indicator, however we are not in a normal business cycle here. This is a deleveraging cycle, and the two are very different.
- Social Security is due to go into the red in 2010 (meaning it will contribute to budget deficits, not lower them). Source “Gary North/Lew Rockwell.
- Commercial loan losses are just beginning to be felt in the financial sector. Source: Seeking Alpha, Wall St. Journal.
- Christmas sales are running under last year’s dismal numbers. The consumer (70% of GDP) is tapped out and pulling in the horns as they stave off personal bankruptcy and credit card default. Source: Gallup.
- Dubai’s debt default (technically anyhow it was a default) shows continued stress in the system.
- Then, there is this chart.
We are moving headlong into the next wave of mortgage resets. It took a full year into the first wave before the crisis hit the banks. So far, interest rates are low and the resets are hurting but not devastating. This chart is a major reason that the Fed will keep rates low for at least another year. At least they will try. Contrary to popular opinion, the bond market controls mortgage rates, not the Fed. What happens if the dollar continues to slide (it will) and the bond market demands higher rates for holding US treasuries (they will)? You’ve got it. Mortgage crisis II, only this time from an economic baseline much lower and more fragile than it was during the first wave.
If the economy were truly on the mend, the Fed would be talking about raising rates and a real exit strategy for all the liquidity they have pumped into the system. Remember when we were told by the Fed that the taxpayer would make a profit on the Fed buying these assets and selling them back to the banks at a profit? Their exit strategy should be to sell those assets back to the banks and get them off the Fed’s books, in turn receiving back the cash they lent out. That is how money is drained from the system.
However, recently they announced their “exit strategy” is to perform a reverse repo. What this means is that they will sell their toxic assets for cash, thus “draining” that cash from the banking system. But wait. That’s not all. The reverse repo means they also agree to buy that asset back at a future date for more than they paid for it. Say again? Source: Financial Times
Yep. That’s right. This is a shell game combined with a game of hot potato. Follow the ‘taters.
1) Toxic assets (the ‘taters) are bought by the Fed for cash in late 2008 to stave off a banking system collapse.
2) Those assets are held on Fed’s books while banks supposedly repair their balance sheets.
3) Rather than the banks buying the ‘taters back at par or greater, making a profit for the taxpayer (who believed that?), they are being re-sold by the Fed back to the banks with an agreement for the Fed to buy them back later at a higher price, thus making a profit for the banks, and sticking the taxpayer with the ‘tatters once again.
Sick isn’t it. If anyone thinks this financial crisis is over, they are not watching what the Fed is doing. The toxic assets they bought are more toxic now than they were a year ago. They will never return to a state of health and at some point the ‘taters will have to be dealt with. IF this game can buy the Fed more time, then that is all it will buy them. There is no way out of this bankrupt mess. But the time bought will allow them to concoct a plan to further enrich the banking system while putting into place the follow up for whatever is left of our national currency.
Obama declared a few weeks ago that there is risk of a double dip recession. Also, the Federal Reserve has recently began to increase the Fed’s monetary base further, (despite their jawboning about an “exit strategy” – see above) following a pause following last fall and winter’s unprecedented doubling of the monetary base. At the same time, they are saying that substantial downside risks remain and interest rates are going to be held low for a considerable period. Why? The answers are above. We are moving headlong into the next financial crisis and this time it will include not just the financial markets, but the bond and currency markets as well. Gold’s rise to well over $1,000/oz is telling us the transition from a credit crisis to a currency crisis is well under way.
Do not be fooled. Be prepared. God, gold, grub and guns. I never thought I’d post that, but that’s what I see.
Family Economics Conference
I would like to invite you to a family economics conference, scheduled for March 5 and 6th in Castle Rock, Colorado. I will be speaking there, but more important, some of the most respected speakers in the country will be there to discuss family economics from a biblical perspective. These include Scott Brown, Dennis Peacocke, Kevin Swanson, and R.C. Sproul Jr.
Early registration ends December 12th but you can register after that time.
Agenda – Grinding America Down (5 star!)
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