I live in the USA and I am concerned about the future. I created this blog to share my thoughts on the economy and anything else that might catch my attention.
Dr. Strange Move or How I Learned to Love the Bill
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After a couple of years of disinflation, the Fed changed directions and
started lowering rates. By most measures, the economy had been humming
along near a...
NVIDIA Revisited
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On August 26, 2023, 5 days before it a new closing hi at 493.55, I wrote a
critical post about NVDA - the stock, not the company. After that, the
stoc...
Stay away from popular tech stocks, part II
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Last August, I wrote a blog post arguing that largest technology and
internet companies -- Amazon, Apple, Facebook, Google, Microsoft -- would
never grow i...
So, Where Have I Been?
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Well, of course, I have been where I am!
It's been a good few years away from this blog. I do miss some folks
terrible, and I sort of miss things financial...
Those Whom The Gods Wish To Destroy ...
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they first make mad. Still true!!!
*(Note: this post, and probably several others to follow, are actually
about the US dollar and relative currency trends....
That's a 10% increase from last year, the National Retail Federation says.
So why is this deflationary you might ask?
Amazon.com Full time employees:24,300 2009 revenue:$24,509,000,000 Revenue per employee: $1,008,600 Employees per $100k sales: 0.10
Sears Full time employees:322,000 2009 revenue:$44,043,000,000 Revenue per employee: $136,780 Employees per $100k sales: 0.73
Macy's Full time employees:161,000 2009 revenue:$23,489,000,000 Revenue per employee: $145,894 Employees per $100k sales: 0.69
Amazon.com requires just 1/7th the number of employees per shopping dollar spent.
The following chart shows the failure of the exponential growth in retail trade employment. I have added an exponential trend line based on the 51 years of data from January 1939 to January 1990.
Click to enlarge.
Now let's look at the difference between the two.
Click to enlarge.
We are now over 8 million jobs below the long-term trend. I think it goes a long way towards explaining the rise in unemployment in general. In fact, if those 8 million jobs actually existed then employment would look fairly normal.
If the Ben Bernanke's, the Paul Krugman's, and the Jim Cramer's of the "new world" think they can create jobs by inflating the price of crude oil, then I would argue that they've got another thing coming. All it is going to do is encourage people to shop from home even more and accelerate the demise of our country's many shopping malls.
And because the Fed kept interest rates low and companies are delivering strong earnings, he thinks this is a "greenlight" for the kind of job creation that would help spur an economic recovery.
I turned bearish in 2004 due to low interest rates and rising debt loads. He might not realize it, but he's indirectly telling me to remain bearish.
What's a few extra bucks? Higher gas prices won't hurt holiday spending much, shoppers say
I bet you are wondering how many shoppers offered an opinion. The answer appears to be two. Here's a summary of the results.
Here's anecdotal evidence that supports the claim.
Cassie Peterson, 25, a health coordinator from St. Paul, said higher prices won't change what she buys for her nieces...
Here's anecdotal evidence that weakens the claim.
In Hartford, Conn., Michael Hardaway, 54, paid $3.10 a gallon for gas for his Chevy Silverado. He said he will reduce his spending on Christmas gifts...
Here's additional anecdotal evidence that doesn't even mention holiday shopping. I therefore had to throw it out of my analysis. It is a useless data point.
"It stinks," said stockbroker Jack Landers, 64, as he paid $3.11 at a service station...
Let's follow the logic here.
1. Higher gas prices will definitely not slow one person's shopping. 2. Higher gas prices will definitely slow another person's shopping. 3. Therefore, "Higher gas prices won't slow most holiday shoppers."
It's hard to fault the analysis (other than the fact that a sample size of two is rather small and error prone). Half is certainly not most. This is fantastic news of course. Higher gas prices won't slow "most" holiday shoppers.
Since this is an Illusion of Prosperity blog I figure I can use that very same anecdotal evidence to offer up some doom and gloom. Brace for it. You might consider sitting down first if you are prone to fainting and/or you work in the retail trade industries.
Anecdotal evidence suggests that higher gas prices slow 50% of holiday shoppers!
Sharply reduced prices on flat-screen TVs helped fuel many stores' sales, according to Marshal Cohen, market research analyst at NPD Group Inc. Stores were grappling with a glut of TVs heading into the season because they had overestimated consumer demand.
Let's travel back in time to the Black Friday just before the latest recession began (December 2007).
Zapatero belatedly used the word "crisis" to describe the country's situation last month, touching a nerve with Spaniards...
Okay, okay. Maybe that won't work. Let's try a different angle instead.
Perhaps you could letRafael PachecoandDavid Taguasdo all the talking? They both had economic denial down to a dismal science. Perhaps they've still got the touch.
Fine Print Disclaimer:
A sarcastic reference to "they've still got the touch" might mean "touching a nerve" but certainly not a nerve within one's "junk". We're talking about "proud" Spaniards here, not "patriotic" Americans.
A sarcastic reference to "patriotic"is intended for those who see themselves as defenders "against presumed interference by the federal government" especially in regards to "individual rights". It is not intended for TSA workers or those who voted for the Patriot Act.
Black Friday, September 24, 1869 also known as the Fisk/Gould scandal, was a financial panic in the United States caused by two speculators’ efforts to corner the gold market on the New York Gold Exchange.
The Eyemouth disaster was a severe European windstorm that struck the southern coast of Scotland, United Kingdom, specifically Berwickshire, on 14 October 1881. 189 fishermen died, most of whom were from the village of Eyemouth. Many citizens of Eyemouth call the day Black Friday.
The Black Friday fires of January 13, 1939, in Victoria, Australia, were considered one of the worst natural bushfires (wildfires) in the world, and certainly the single worst in Australian history as a measure of land affected.
Black Friday is the name given to September 8, 1978 (17 Shahrivar 1357 AP) and the shooting of protestors by security forces in Zhaleh (or Jaleh) Square in Tehran, Iran. The deaths and the reaction to them has been described as a pivotal event in the Iranian Revolution when any "hope for compromise" between the protest movement and the Shah's regime was extinguished.
“I believe it’s going to be the biggest Black Friday we’ve had,” Toys “R” Us Inc. Chief Executive Officer Jerry Storch said in a Nov. 24 telephone interview. “Everyone has been focused on decreasing prices and these prices may never be repeated.”
Ask your broker what he plans to do if the market suddenly crashes, or if it begins to significantly increase. He should have an answer readily available.
It would be my hope that my online broker does absolutely nothing. I probably won't be that lucky though. They'll no doubt send me an email telling me about upcoming free seminars to theoretically enhance my trading profits.
Is he only using index funds? While index funds are very inexpensive, in the current market environment, they are not your best investment option.
One way to boost returns in a flat market is to increase the fees spent on stock market funds. No doubt about it.
The stock market is currently "range bound," meaning that it will experience volatility within a certain range, up and down, over the next few years (similar to the 1970s).
We can simply take the stock market's current trend and extrapolate it forward? For the first time in recorded history, we now know exactly what the market will be doing over the next few years? Genius!
While indexing will not produce outsized returns, the right active manager will take advantage of that volatility and actually make your account grow.
If hindsight shows that the market was truly range bound for several years, then hindsight will also show that for every dollar that the "right" active manager makes there will be a dollar that the "wrong" active manager loses.
Here's some free advice. Invest a small portion of your nest egg in rabbits' feet and four-leaf clovers before trying to pick the "right" active manager. I doubt it would help but it certainly couldn't hurt!
It snowed in the Seattle area last night. Keep in mind that this is footage from just one street. Similar sliding can be seen at other streets no doubt. For example, be sure to check outWall Street.
Be sure to check out the transit bus at 2:45 too. Somebody call the Transportation Security Administration. There's definitely been a breach in security!
Because of surging gold commodity prices, jewelry manufacturers are paying much more for the precious metal than last year. So one way that jewelers are keeping their own costs, and retail prices down reasonable for consumers, is by selling more gold-plated or gold-filled jewelry.
Many advertised deals on gold jewelry will use phrased such as "gold-filled" or "gold-overlay." This is not the same as solid gold, said Kevin Adkins, a graduate gemologist.
"When you see those terms, know that you're buying silver with a plate of gold coating over it," said Adkins.
Is it any wonder silver has been doing much better than gold over thelast three months? Score one for the silver bugs. In my opinion, silver isn't cheap at these prices. However, at least it doesn't cost $20,000 per pound.
The belief here is that the servicer is intentionally avoiding any modifications on those loans so their parent company doesn’t have to write down the second lien.
Gold-plated.
We have to make sure the systemic risks are not concealed from us.
Gold-plated.
I can’t imagine how they could do a stress test without looking at all the potential liabilities.
Gold-plated.
There is no possibility of another bailout. Not any possibility Congress will come riding to the rescue. Even if the alternative is an economic cataclysm. This may ultimately give us the opportunity to see how resolution authority works.
A microinch is one millionth of an inch. Gold plate is therefore 1/50,000th of an inch. I bet we could gold-plate our entire economy with that, lol. Sigh.
The company expects negative same store sales and cost inflation in the fourth quarter of 2010. We thus remain apprehensive regarding the stock in the near term, given eroding margins and lagging same store sales due to a decline in traffic.
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Moreover, the stiff competition from other resturants...
What's Ben Bernanke's solution to the problem?
1. Decrease same store sales. 2. Increase cost inflation. 3. Increase stiff competition.
Genius!
That's not what he's saying he's trying to do but let's think this through.
1. Ben Bernanke believes that devaluing our currency should lead to more investments. He wants more growth. All things being equal, more investments in the restaurant industry should lower same store sales and increase competition.
2. Ben Bernanke believes that devaluing our currency should lead to more inflation. He wants more inflation. All things being equal, that should lead to higher commodity prices and increased cost inflation.
I continue to remain bearish on our overall "resturant" industry.
Some might argue that "Resturants" is not actually a word. However, if we can't trust the financial experts to give us 100% accurate information 100% of the time, then who can we trust? ;)
Post-2007, the perception of Paulson went from career underachiever to seer. He is now celebrated, and his recent stakes in Citigroup(C), Bank of America (BAC) and gold are seen as green lights to other investors to buy.
If Paulson told us tomorrow that Martians were going to invade us next month, there would be a run on Martian army gear.
Buy Martian army gear now or forever be priced out!
Survivorship bias leads to celebrating the winners and -- usually -- overinterpreting their moves leading up to their success and trying to apply these actions to future situations. At least no one in the mainstream media has yet called John Paulson "the next Warren Buffett."
This would be one reason to question the premise of my blog of course. I have survivorship bias tendencies. No doubt about it. I'm simply trying to survive this ongoing financial crisis.
Remember Eddie Lampert? That's what Business Week and countless other magazines called him back in 2004. Although many still defend Lampert as smart, his past five years of performance have been very disappointing, and his Sears Holdings (SHLD) investment specifically has been ... early.
Oh we remember Eddie Lampert here. Let me assure you of that.
I refer you specifically to the comments. It is a day that will live on in heckling heckling heckling infamy (heckling the heckler who heckled the heckling of Sears).
Stock price then: $93.45 Stock price now: $63.75
But hey, Sears will be open on Thanksgiving Day this year. If that isn't proof that Sears is a "Pillar of Retail Strength" then I don't know what is.
As you may have heard, Sears will now be open from 7 a.m. to noon on Thanksgiving, so you can rise at dawn and start slapping down the plastic. Yes, beat those ever-escalating post-Thanksgiving prices! This changes everything.
"From 2007 to April 2009 you could buy garlic for as little as 4 jiao [6 cents] a kilo, but now the price is about 13 yuan [$1.90]," said Wang Nianyong, director of the information office of the Beijing Xinfadi wholesale market.
That's a 3000% increase.
The government has already fined at least one company for hoarding, and has announced its intention to investigate unnatural price surges. China is the world's top producer of garlic.
Firstly, you have mostly market speculators taking advantage of farmers without access to a wide range of information. Most farmers are still only receiving 1 – 1.5 Yuan per kilo for garlic, as speculators hoard the supply and release only small quantities to the market at a time, keeping the price elevated and demand high.
That being said, the farmers are still averaging three times more income from garlic this year than last year.
But the problem is, even though there’s a shortage of available garlic, many farmers are reluctant to plant bigger crops. The reason? They simply can’t afford the higher price of the seeds, and they don’t want to be left with goods they can’t sell.
Can't afford the seeds? It sure sounds like a tulip bulb craze to me. Someone, somewhere, will find a way to create more garlic seeds someday. I'm 100% confident of that.
In my opinion, if there is a provable bubble in one hoardable hard asset then there is probably a bubble in other hoardable hard assets. Just something to think about if you are a gold bug.
Technically, ETNs are senior unsecured debt notes that are designed to track the performance of different indexes ... including commodity indexes. They are bought and sold just like stocks, using a regular old brokerage account. They can also be leveraged, borrowed, and shorted just like ETFs.
Why does the term "Hard Asset Investing Vehicles" send shivers down my spine? Is it that I don't wish to own things that can be leveraged, borrowed, and shorted at a time when "deleveraging" is the word of the decade? Is it that the article was written just before the recession? Or is it the "investing vehicle" part that makes me cringe?
A SIV may be thought of as a very simple high quality, virtual bank.
Sounds good so far.
Though the assumption of ever increasing housing prices was the fundamental problem, there were other mathematical / statistical problems too.
You've got to be quite the speculator if you are choosing to hoard garlic AFTER it has risen 3000%. Right? Hoarding gold and silver after a 400% rise may be similarly speculative. Time will tell.
At these prices, garlic is only a safe store of value if vampires actually exist.
There have been 7 million views of the following video.
This tutorial will show you how to look like a haunting vampire. Inspired by Anne Rice's beautiful vampires. They're evocative, bewitching, desirable and haunting. Read Interview With The Vampire..I love Vampires. From anime like Vampire Hunter D, Blood: The Last Vampire and the games Castlevania Symphony of the Nights.
All we really have is an Illusion of Vampires.
This should not be confused with "life blood" suckers though. Wall Street still has plenty of those.
BEN BERNANKE: So all this esoteric Wall Street stuff doesn't have any meaning to people on Main Street but it connects very directly to their lives. Credit is the life blood of the economy. If the credit system isn't working then firms cannot finance themselves, people cannot borrow to buy a car, to send a student to college, to buy a house.
"Esoteric Wall Street stuff" has been an extremely dangerous investment over the last decade.
understood by or meant for only the select few who have special knowledge or interest
And lastly, how can we know if there is a Wall Street commodity bubble? They don't exactly ring the bell at the top. Surely a warning sign would appear though.
Has anyone heard of the Rubicon Protection Team (RPT)?
The S&P 500 closed last Friday at 1,199.21. The S&P 500 closed today at 1199.73. What an awful week this has been for ongoing Rubicon jokes. Not one closing breach of the 1200 level this week? Not one? Oh the humanity!
Let's cross our fingers for the bulls next week. We're looking for a 0.79 gain on the S&P 500. It may seem like a trivial task for an index walking the line but is anything in this economy really ever that simple?
We needed 0.79. We only got 0.52. It teases us that one does.
Rubicon Protection Team (RPT)
The Group was established explicitly in response to events in the Illusion of Prosperity blog surrounding May 3, 2010 ("Black Rubicon Day") to give recommendations for legislative and private sector solutions for "enhancing the integrity, efficiency, orderliness, and competitiveness of [United States] financial markets and maintaining investor confidence".
Oh well. I'm a glutton for punishment apparently. Here we go again.
Let's cross our fingers for the bulls next week. We're looking for a 0.27 gain on the S&P 500. It may seem like a trivial task for an index walking the line but is anything in this economy really ever that simple?
Mr. Wint: If at first you don't succeed Mr. Kidd? Mr. Kidd: Try, try again, Mr. Wint.
Jacobs, who grew up in London, now plans to use the proceeds of the sale to further his Neverdie Studios enterprise which employs 13 people to create and design new planets for the Entropia Universe.
It is a pretend nightclub on a pretend asteroid. It sold for slightly more money thanMichigan's Silverdomethat sits on 127 acres and seats 80,311 people.
High-school student Mike Everest from Durango in Colorado and his mother made $35,000 (£22,000) by building and selling weapons on Entropia in 2006 - he used most of the money to pay for his siblings’ college fees.
Should you ever find yourself in a similar position here's a bit of advice. Do not to mention that you sold $35,000 worth of pretend weapons when boarding a plane unless you want yourjunk searched.
May the bull market in illusionary prosperity continue!
“Ten-year Treasury yields will begin to pick up slightly now, and be in a continuous higher trend,” said Fabrizio Fiorini, head of fixed income at Aletti Gestielle SGR SpA in Milan, who manages about $8 billion in assets. “You have to discount that the Fed will be successful, so you should be selling Treasuries.”
Allow me to summarize the thinking here.
QE2 is driving interest rates down. This will encourage spending. This is the Fed's plan.
QE2 is driving interest rates up. This will raise inflation expectations. This is the Fed's plan.
In other words, no matter what happens to interest rates we'll be able to point to the Fed's plan as a success.
Genius! And to think that I once thought the Fed was rather impotent. God how I love the hard science of economics to prove me wrong.
Capital risk is the risk that the initial amount invested may be lost (also known as "the capital").
Currency Risk - Check!
Currency risk is the risk associated with the foreign currency movement affecting the value of an asset if the invested assets are being held in that currency.
Liquidity Risk - Check!
Liquidity risk is the risk that an investment may not be easily traded, otherwise known as liquid, (e.g. commercial property) or the market has a small capacity and may therefore take time to sell.
Business Risk - Check!
The risk that a company or project will not have adequate cash flow to meet financial obligations; thus causing the business to file for bankruptcy.
Credit Risk - Check!
Credit risk, also called default risk, is the risk associated with a borrower going into default (not making payments as promised).
Equity Risk - Check!
Equity risk is the risk that stock prices and/or the implied volatility will change.
Interest Rate Risk - Check!
Interest rate risk is the risk that interest rates and/or the implied volatility will change.
Commodity Risk - Check!
Commodity risk is the risk that commodity prices (e.g. corn, copper, crude oil) and/or implied volatility will change.
In sharp contrast, the following link is a comprehensive list of all safe havens. I can say without reservation that each and every one of them will guarantee you nights filled with blissful sleep as you ride out the economic storm.
How bad has it become? The following video doesn't seem all that shocking any longer. Let's just put it that way.
Airplanes are already far safer than traveling by car. We're told we now need to have our "junk" searched though just to be even safer though. We should be outraged.
All your junk are belong to us.
Any society that would give up a little liberty to gain a little security will deserve neither and lose both. - Benjamin Franklin
The CPI came out today and it was relatively modest (up 0.2% month over month on a seasonally adjusted basis). Meanwhile, the core inflation number used for predictive purposes was running very lean. How lean?
The food index has risen 1.4 percent, with both the food at home index and food away from home index rising the same 1.4 percent.
If you believe that, I've got a bridge to sell you.
It never ends. Okay, I pretty much believe that. Where's my bridge? I am just not seeing the overall inflation in food prices that he sees.
Here's a glimpse of a few of the better sales this week at my local Albertsons.
* $0.27 per pound turkey * $0.47 per 15.25 ounce can Green Giant vegetables * $0.88 for 10 pounds of potatoes * $2.50 for 1.5 quart Dreyer's Ice Cream * $0.79 for 16 ounces of Barilla Pasta (if I buy 10)
Don't take my word for it though. Let's sum up a virtually eggless turkey dinner.
AFBF’s 25th annual informal price survey of classic items found on the Thanksgiving Day dinner table indicates the average cost of this year’s feast for 10 is $43.47, a 56-cent price increase from last year’s average of $42.91. This year’s meal is actually $1.14 cheaper than what shoppers paid two years ago, when the total was $44.61.
That's a 1.3% increase over last year as seen in their informal price survey. From what I can see at the grocery store this year, that sounds about right to me.
The 1.3 percent increase in the national average cost reported this year by Farm Bureau for a classic Thanksgiving dinner tracks closely with the organization’s 2010 quarterly marketbasket food surveys and the federal government’s Consumer Price Index (available online at http://data.bls.gov/).
Indeed it does.
It's not Albertson's turkey at 27 cents per pound (the survey is not based on sale prices) that truly amazes me though. It's the spaghetti. A very, very long standing rule of mine is that if I am buying spaghetti for $1 per pound then I am getting a very good price. Today's price is just 79 cents.
Remember that spike in wheat prices we just had? Spaghetti is made of wheat. Right? So where is the inflation in spaghetti prices?
Chinese Premier Wen Jiabao said today that the cabinet is drafting measures to counter rapid price gains. The nation may impose price limits on food and toughen punishment of those found speculating on agriculture futures, the China Securities Journal reported, citing an unidentified person.
Normally I am not a believer in price controls but perhaps they have a point. Here's achartof long-term wheat prices courtesy ofIndex Mundi.
Click to enlarge.
The Fed is attempting to create the second wheat bubble in just the past four years and the Chinese don't seem to appreciate it all that much. It's almost like they've got a billion or more people to feed. Go figure.
What the Fed proposes to do is neither foolproof nor perfect. Frankly, it's not the policy I would choose.
Great defense, lol.
As I've written on this page, I'd like the Fed to purchase private securities and to reduce the interest rate it pays on reserves, even turning it negative. The latter would blast reserves out of banks into some productive uses.
Some productive uses? Some?
Perhaps we can build even more banks, shopping malls, restaurants, and houses. They'll fit in quite nicely with the massive glut we already have. Won't even notice them no doubt. Will they be productive? Who knows? Who cares?
I ate at the Yankee Diner in Renton, WA on Saturday (it had been years since my last visit). It was about 6pm. We got "rock star" parking near the front door. We had our choice of many, many available tables. You know what they really need? More competition. I suggest Ben Bernanke works on a way to build "some" restaurants right up next to them. Prosperity for all!
This is not to be confused with the Yankee Diner that was once in Ballard, WA. It's gone.
The project, a 170-room, six-story Silver Cloud hotel, was approved with a number of conditions attached, such as the hotel must serve primarily people who work in the industries that it will surround.
Inns? Yes! We clearly needed more inns to serve the local community's workers. Our economy must have really been booming for that to happen. In hindsight, let's see how that worked out though.
Earlier this month, Diamond Parking and Pacific Fisheries Shipyard were asked to remove their vehicles from the parking lot in front of the shuttered diner at 5425 Shilshole Ave N.W. by Nov. 15, according to a number of sources, including Pacific Fisheries General Manager Doug Dixon. The groundbreaking date has been given variously as Dec. 1 and Dec. 15.
In a quarterly securities filing on Monday, Soros Fund Management reported it owned 4.7 million shares of the SPDR Gold Trust (GLD.P) at the end of the third quarter, down from 5.2 million at the end of June.
Money is any object that is generally accepted as payment for goods and services and repayment of debts in a given country or socio-economic context.
Can I pay my bills with gold? No. So how exactly does gold act like money? I must sell gold first in order to get the actual money that is needed to pay my bills. In order to do this I must "speculate" that I will find a buyer who will pay me what I think gold is worth.
As seen within the historical mineral statistics link:
Apparent consumption data represent the total quantity of silver that was consumed for industrial, art, and coinage purposes.
The price for 2008 was $528,700 per metric ton. That works out to $16.44 per troy ounce. Today's price is $26.04. That's a 58% increase in the last 2 years.
If you think the world (China in particular) can continue to afford silver at $26.04 per troy ounce then by all means keep buying silver. You might want to look at what silver consumption looked like during our Great Depression and its decline during the 1970s before deciding entirely though.
My long-term prediction is therefore just about as simplistic as simplistic could be. Hello stagnation. It's just a gut call. I don't have much supporting evidence to back it up. Just add one part deflation to one part stagflation and that's what you get though.
The DJIA closed today at 11,192.58.
This is just not right at all. My earlier cartoon calculations clearly show that the stable stagnationary orbit should have been at the 10,500 level.
In my opinion, we're now at serious risk of re-entering the earth's atmosphere at too high a speed and at the wrong angle of attack.
Due to the Earth's surface being primarily water, most objects that survive reentry land in one of the world's oceans. The estimated chances that a given person will get hit and injured during his/her lifetime is around 1 in a trillion.
Here's a list of dates when the S&P 500 crossed above the 1200 level.
There were 24 of them going all the way back to 1998. I won't bore you with the gory details. I will say that we've just setup the necessary conditions for a 25th crossing though! O frabjous day! Callooh! Callay!
The S&P 500 closed today at 1,199.21.
Let's cross our fingers for the bulls next week. We're looking for a 0.79 gain on the S&P 500. It may seem like a trivial task for an index walking the line but is anything in this economy really ever that simple?
NEW YORK (TheStreet) -- "Gold is not just another commodity," Jim Cramer told the viewers of his "Mad Money" TV show as he once again urged investors to put up to 20% of their portfolios into gold.
Unlike other commodities such as oil, grain or copper, gold is a currency, he said, adding it's what people buy when they don't trust their own currency. Cramer said it's what the Chinese and the Indian people buy first when the discover newfound wealth. "No one who's bought gold since 2001 has lost money," Cramer told viewers.
Well, there you have it. No one who's bought gold since 2001 has lost money. Fantastic news. Gold is clearly the winner of the new world. Out of curiosity, why was it absent from his list 10 years ago?
So, whom does that eliminate? First, any company that is a commodity producer simply can't be owned, no matter what. The New Economy makes those be simply a function of low-cost producer with no ability ever to raise price. This, of course, is the crying shame of the way the Fed is trying to break the economy because the only place that could stand for a little inflation is in the deflationary commodity industries.
Heaven forbid someone started stockpiling commodities back in 2000. What a stupid move that would have been in hindsight. As we know, the deflationary commodity industries were definitely no place to be putting money. Those who hoarded oil? Fools!
That's why, despite the 80% increase in the Nasdaq last year, we are looking at another record year now.
Yes sir. The Nasdaq was the only thing worth owning. No one who bought the Nasdaq since 1991 had lost money.
So there you have Cramer's advice. Buy tech in 2000. Buy gold in 2010. You cannot lose.
Don't letAlcoaconcern you. The metal known as gold isn't at all like the metal known asaluminum. Gold is "mad money". Everyone knows it (with the possible exception of the credit card industry and its misguided assumption that you must pay your bills in actual legal tender).
New 'Call of Duty' video game hits $360 million in 24 hours, blowing up entertainment record
In my opinion (as a self-admitted long-term video game junkie and one who made a career as computer game programmer), this is not irrational exuberance or a fad. At $60, a game such as this costs just 1/25th of an ounce of gold and provides many, many hours of enjoyment.
Games just keep getting better and better thanks to rapid increases in productivity miracles brought on by new technology. From where I stand, that's real prosperity.
Might want to rethink thatgift of goldChristmas idea this year though. Just a hunch.
In a keynote address the VMworld conference in San Francisco, Chambers said virtualization is spearheading "a second phase of innovation," in an identical replay to what happened in the mid-90s, when the number of Internet users skyrocketed. November 7, 2007 Cisco Sees "Lumpy" Demand
NEW YORK (Reuters) - Cisco Systems Inc (NasdaqGS:CSCO - News) CEO John Chambers said on Wednesday his company was hit by "dramatic decreases" in orders from U.S. banks, triggering concerns about its growth prospects and sending its shares plunging.
For what it is worth, the recession officially started one month later.
NEW YORK (Reuters) - Cisco Systems Inc (NasdaqGS:CSCO - News) gave a dismal revenue outlook, stunning investors who had hoped for proof of a recovery in technology spending and sending major tech stocks tumbling.
...
Shares of the company crumbled to $21.47 in after-hours trade. They had gained around 20 percent since hitting a year's low at the end of August, as the tech sector rallied on hopes of a recovery in spending.
The following chart shows the exponential growth of the total household and nonprofit organization liabilities adjusted for both population and inflation.
It does not include government debt.
Click to enlarge.
First the good news. We're back to the red exponential trend line that's been in place for 50 years.
Now the bad news. That exponential trend line represents a 3.3% annual growth in inflation adjusted consumer debt per person. How can anyone possibly think that is sustainable long-term?
Here's some bonus bad news. If the trend line is considered average growth then we should keep in mind how averages work. In order for an average to make sense, we must spend as much time below an average as above it. In other words, just because we made it back to the average does not necessarily imply that we're done falling.
As a side note, I started this "Illusion of Prosperity" blog right at the peak. Go figure.
By giving Gold you will teach your children a valuable lesson in life, how to save!!! See their faces light up on Christmas morning when they open a box of Gold. The smile in their faces will be something for you to cherish to be sure.
Here's some bonus advice to enhance the experience.
Fill an empty Playstation 3 box with $1,400 worth of gold. That should add up to around one ounce at today's prices. You may need to add some crumpled up newspaper so all that gold does not rattle around too much.
On the outside of the box write a note hinting that the following games may also be included.
1. Call of Duty: Black Ops ($60) 2. Medal of Honor ($50) 3. Star Wars: The Force Unleashed ($50) 4. NBA 2K11 ($50) 5. Fallout: New Vegas ($50) 6. FIFA Soccer 11 ($50) 7. Final Fantasy XIII ($30) 8. Assassin's Creed: Brotherhood ($60) 9. Super Street Fighter IV ($20) 10. Red Dead Redemption ($50) 11. Need for Speed: Hot Pursuit ($60) 12. Gran Turismo 5 ($60) 13. Castlevania: Lords of Shadow ($50) 14. Resident Evil 5 ($20) 15. Madden NFL 11 ($50) 16. God of War III ($40) 17. Little Big Planet: Game of the Year Edition ($30) 18. Borderlands ($30) 19. Rock Band 1 ($10) 20. Rock Band 2 ($20) 21. Rock Band 3 ($60)
Make sure you also write "or their equivalent" somewhere on the note. Life is all about disclaimers and you'll want to be teaching that too.
That's a $1,200 value (including the $300 Playstation 3) plus sales tax.
I can only imagine the expression on the child's face when the package is opened to reveal that the box was instead filled with all that gold. The child's face lighting up and the accompanying smile will be a wonder to behold. You will no doubt be reminded of it each and every Christmas for the rest of your life.
And don't forget the coal for the stocking over the fireplace Mr. Scrooge! Coal is a great source of energy when times turn tough.
I just wanted to make sure the word got out. Many families are struggling this year thanks to high unemployment and nearly unbearable debt loads. Figuring out how to pay for the holidays can therefore be difficult.
That's not all. Knowing how to pay for the holidays is an important first step in understanding how we are going to pay for our national debt.
Click to enlarge.
It would seem likely that we will pay for it with a combination of cash, debit cards, and credit cards too. That's good to know. I can't speak for you, but I'll be sleeping much better tonight.
Technical analysis clearly shows that you've single-handedly created the foundation of a perfect prosperity miracle. No matter what investors do now, they will apparently be richly rewarded. Why did I ever doubt you?
“The weak, but not recessionary, macro situation in developed countries is a ‘super-Goldilocks’ environment,” Dennis, Citigroup’s New York-based emerging markets strategist, wrote in the report. “The underlying conditions that have driven markets higher over the past few months remain in place and are likely to do so for several more quarters.”
Sure thing! Woohoo!
“I’m pretty optimistic,” Mobius said. “I don’t see any risks any time soon. These things can last for years and years.”
The oil to natural gas price ratio is24.5 to 1 (WTI Cushing Spot to Henry Hub Spot). Amazing.
I have included the median ratio in the chart as a red trend line. How is the current ratio even remotely rational long-term? Energy is energy.
My only explanation is that Ben Bernanke grew up listening to the same music I did.
Well, Earl put down his bottle, mashed his foot down on the throttle, and then a couple a boobs with a thousand cubes in a nineteen-forty-eight Peterbilt screamed to life.
We woke up the chickens.
As hard as this is to believe, I still lean deflationary once the dust settles. Mountains work both ways.
Anyone who still thinks falling prices are a cyclical phenomenon isn’t looking closely. It’s secular, and the sudden ubiquity of discount outfits shows how Japanese consumption has become a race to the bottom of the pricing spectrum.
A collapse in U.S. stock prices certainly would cause a lot of white knuckles on Wall Street. But what effect would it have on the broader U.S. economy? If Wall Street crashes, does Main Street follow? Not necessarily. - Ben Bernanke, October 2000
Ben Bernanke says that a Wall Street bust does not necessarily hurt Main Street.
And higher stock prices will boost consumer wealth and help increase confidence, which can also spur spending. - Ben Bernanke, November 2010
Ben Bernanke says that a Wall Street boom definitely helps Main Street.
Don't you see what this means? We have a way out of the mess we are in!
In order to maximize the help to Main Street all we need to do is continually create booms in the stock market and then allow them to bust. In other words, we will simply repeat what we've been doing for the past decade. Perfect!
Here's a chart to show the theory.
Note that each time Wall Street's health improves, Main Street's health is "boosted". Each time Wall Street's health declines, Main Street's health is "not necessarily" affected all that much.
Using Ben Bernanke's theoretical economic model, I estimate that it will take 4 serious Wall Street crashes in order to get Main Street to 100% health. We're halfway there. We just need more patience.
His mazurkas, like the traditional dances, contain a great deal of repetition: repetition of certain measures or groups of measures; of entire sections; and of an initial theme.
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