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.
This is the End and a New Beginning
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I've been thinking about this for some time.
After 21 years of writing this blog almost daily, I've decided to stop
writing the daily updates on the blog.
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Silver Deep Dive
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Silver had a memorable year (+148%). Some of this can be explained by a
decline in the dollar. I decided to do some ML analysis to look for other
insights....
"I called gold the ultimate bubble, which means it may go higher, but it’s certainly not safe, and it’s not going to last forever."
Although I have stagflationary in my name and I have owned physical gold and silver in the past (from 2004 to 2006), I have absolutely no interest in owninggold compared to TIP at these prices. I believe gold's "safe haven" status has been very much in question since it broke $1,000. No asset is good at any price.
Heck, I even sold TIPrecently because I felt it was slightly overpriced. I'll either buy it back if the price comes down and/or bypass it entirely by participating in the 30 year TIPS auction this coming February.
As we are about to head into the Christmas season, I figured it might be informative to update a few of these charts.
Look at all that "shock and awe" our trading partners are feeling. We are now roughly 437,000 TEUs below the unsustainable long-term exponential trend. It's like we hit an illusion of prosperity wall or something. Go figure.
That surge in exports is apparently losing its momentum too. Again.
Let's hope there are actual customers for all of this stuff. We're partying almost like it is 2007. Well, sort of. It's not entirely like 2007 come to think of it.
The natural gas bubble popped from its 2005 inflation adjusted high. It is possible that we're now simply at the bottom of its channel and that support will hold. It is also possible that the support won't be there.
Part of that surplus comes from increased oil and gas production, particularly from ongoing production in the non-OPEC countries (including the U.S., where a "shale gas boom" has created a natural-gas glut). It also comes from flat demand due to the stumbling economic recovery and changing consumer behaviors. Neither of those factors is guaranteed to last. But as the summer driving season passes and students head back to school, awareness has gradually dawned that we may be looking at an oil surplus for years to come.
For what it is worth, my behavior was permanently altered in 2004.
The inspector general reported that 1,326 single people listed as dead by the Social Security Administration claimed more than $10 million in credits. The IRS threw out 528 of those 1,326 claims, saving $4 million.
Rumor has it that these 528 also have accounts at our nation's zombie banks and are still buying zombie products from our nation's zombie companies.
The corporate-bond market looks even more like an accident waiting to happen. Investors decided to lend $400 million for 30 years to Stanley Black & Decker Inc. this month. They will be paid an interest rate of 5.2 percent by the toolmaker, which has total debts of $4.5 billion in the form of bonds and loans, according to Bloomberg data.
The job of a fixed-income investor is to balance risk and reward. That interest rate seems like an awfully skimpy reward for quite a big risk.
Peer three decades into the future. Tell me you don't see some new globetrotting enterprise from China -- where Western retailers now do most of their manufacturing -- employing the workers Stanley Black & Decker trained and undercutting the U.S. company with cheaper screwdrivers, drills and hammers.
Ouch.
There's also the connected problem of lax lending standards during the credit boom. The loan covenants that would normally get triggered when a borrower is in distress were watered down to the point of uselessness. So it is entirely plausible that zombie companies are blundering along in the twilight lacuna between alive and dead, distorting the default data.
Zombie companies blundering along in the lacuna? Is that our truth?
Clock is ticking while I’m killing time Spinning all around Nothing else that you can do to turn it back
The U.S. ranked 87th for macroeconomic stability, and American businesses also increasingly questioned the government’s ability to avoid meddling in the private sector and viewed it as a wasteful spender, the forum said. In its index of financial market development, the U.S. fell to 31st from ninth in 2008.
Cut taxes, especially for millionaires and billionaires. Cut regulations for special interests. Cut trade deals even if they didn't benefit our workers. Cut back on investments in our people and our future -- in education and clean energy; in research and technology. The idea was that if we had blind faith in the market; if we let corporations play by their own rules; if we left everyone else to fend for themselves, America would grow and prosper.
For a time, this idea gave us the illusion of prosperity. We saw financial firms and CEOs take in record profits and record bonuses. We saw a housing boom that led to new homeowners and new jobs in construction. Consumers bought more condos and bigger cars and better televisions.
I have included long-term exponential trend lines for your consideration.
Special thanks to "jus me" for offering this breaking news in the comments.
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