Friday 29 May 2009

Precious metals battle week rollup

Well, $960 gold was bested and indeed held. Right now its Friday night and the pits are closed here and in the US, and the price closed out the week at $979.60/oz. Not bad, although I had hoped to see a push right up to $1000. Perhaps our friends at the TOCOM can do it for us Sunday night, so when we wake up and switch on our screens Monday morning the way forward is clear.

OR maybe the powers that be will see to it another time that there is a hefty push back at the open, so they can at least cover some of their deeply out-of-the-money shorts, who knows?

Silver has once again, reassurringly, lead today. I am slightly disappointed that it didn't make it quite up to $16/oz resistance, but $15.79 will have to do for another week I guess.

TBH next week I won't be that surprised to see a healthy pullback. But I really don't see it being long before silver is over $20 and gold is well past $1000. And then off to the races.

Since I am UK-based, clearly I am interested in the "pound factor" too. Really, do you honestly think the UK economy can justify $1.60=£1? No, me neither. So we should make out OK in the UK gold market on this score too I'd say.

OR MAYBE WE GET KILLED. That's the fun of the fair!

Deeeeebt, deeebt will eat us a-live, again. Oh-ooh, deeeebt, deeebt will eat us a-live, again.

You'll need to be old enough to remember Joy Division for that title to mean anything to you, but I just couldn't resist it. (Fittingly, Modus were Manchester-based too. Tidy.)

Anyway, far from the last of many in the commercial real-estate sector, I'm quite positive, Modus Ventures have filed for bankruptcy.

Leverage was great on the way up — all these real estate companies looked like super-slick masters of the universe, and they certainly made out like bandits. Everyone wanted to get a bit of commercial property in their pension portfolio. But look what a difference a measley 26.4% haircut makes (and to me a 26.4% haircut really does seem measley, since that sort of action is commonplace in the resources sector that I am more fascinated by). If any of these companies actually OWNED the underlying properties, they could just sit tight and tough it out until values recovered eventually. But when you have virtually no skin in the game on a property, just a massive mortgage debt, and the environment turns chill like now, things turn against you very quickly and very very nastily.

So, look forward to a lot more commercial mortgage failure news in the future. This will have serious adverse repercussions, not least for banks (again) who can ill afford it.

My opinion is that you can look forward to more of a haircut in this sector too. The falls are not done with on the underlying asset values, which will feedback into even more bankruptcies.

I wouldn't touch real estate, commercial or residential, with a bargepole. Not for some time (I've been saying it for some time, and I also mean that I will continue to be saying it for some time). I still maintain its not just a risky sector, its a positively radioactive one.

Green shoots, schmeen shoots. Economic recovery this year is a pipe dream. Maybe 2012.

Its like a pre-written letter you can send your kids

This is a pertinent snip from the linked article, today's from The Daily Reckoning.

"While your parents had control of the US government they allowed themselves a little larceny. Add the unfunded retirement and healthcare benefits they voted themselves to the official national debt and together they are scheduled to cost your generation 4 times the total annual output of the US. This is over and above the private debt they accumulated.

Some of this debt can be carried. Some will have to paid down. But as it stands, as much as $77 trillion of post-’09 earnings must be stolen from the future in order to pay for the liquor your parents drank... the bombs they dropped on god-forsaken foreigners... and the interest on their debts. So, forget about saving for a European vacation or a house of your own. Even if every penny of your savings – and every other American’s savings – are put to the task you will still be paying for your parents’ expenses all your life."

Its not quite as bad in the UK, but not much better. (Checkout that "my share of the national debt" clock to the top right of this page...) People have been voting for anyone that will give them, or someone they think is deserving of a break — maybe a few even that don't but what the hell I don't mind — something for nothing for years. The trouble is, the time has arrived for paying the price.

The only viable way out of this without going bankrupt, is to inflate away these humongous debts by debasing the currencies they're denominated in. The UK and US governments would love to simply do this, and they will as far as far as they can get away with it. But the people who have bought most of the government debt (that's China, Japan, Arabian nations, Russia and a few others particularly across the regions of the Middle East and Asia but not exclusively) are not stupid and they are not going to let the US and the UK get away with this simple and expedient option.

Its going to be interesting to follow how this is going to work out. So far, I can't see there is a way that both the creditors and the debtors can come away happy. You and I are stuck in the middle; we'll be ravaged whatever happens I strongly suspect...

Bummer. Glad to have at least a little physical insurance, but wish I could afford to store more.

Previously, I asked if Fiat would be idiot or genius, buying GM

Seems to me that now they'll just be "lucky", for pulling out of the "race".

Who in their right mind wants to buy a car maker right now? If I was Fiat, I'd be trying to sell myself not buy my competition!! (While I'm still "worth something", ahead of likely bankruptcy, or more likely nationalisation.)

Thursday 28 May 2009

Anyone want to buy a Dell computer?

Seems like they have a lot to shift, if their profit is down 63%.


If I was a braver, richer man

and I had more spare cash laying around and I didn't feel I might NEED to liquidate it in a hurry anytime soon, I might well buy a few hundred shares of Tanzanian Royalty Exploration Company (TNX in Toronto), tuck them away for a while, and pretty much forget about them until everyone and their dog is talking about their gold investmments and the TV programs about how to buy gold on the tele.

It might very well be a 20 bagger, or more, maybe much much more, sometime in the next few years. Check it out, if you're that sort of person.

If I was a rich man,
Teedle teedle teedle,
Teedle teedle teedle,
Teedle dum.

But I aint. Bummer.

Mortgage rates

For my part, my mortgage rate was fixed for 5 years and that contract ends in May next year. I just hope that these ridiculously low rates that are prevalent just now will stick around long enough that I can fix into another long term low rate in May, and not have to worry for some time that rates could very easily, and in fact are likely to, go into double digits at any time and with little notice. I would refinance right now to a longer term fixed rate, if it wasn't going to be penally expensive to terminate the current contract ahead of its time.

It seems that Stephanie Flanders thinks along similar lines.

Gold retrying $960 again right now. Silver comfortably over $15 and leading

Let's see how this shakes down again today then. (Probably a beating with the short stick again I would imagine...)

Yet ANOTHER interesting day in the pits...

Great. Another 850 IT talents on the local market then.

As if the Central Belt of Scotland region needs another 850 IT people on the streets, driving ever more taxis. When I get in a taxi to the airport up here, one of the first things a driver will ask is "on business or pleasure?" and then they will ask "so what is it you do?". Clearly, I am usually flying for business (flying is no pleasure!) and "I am an IT consultant". The next thing they say is some variant of "Oh. Every second person I pick up is an IT Consultant." And sadly, its probably true!

I.T. -- could it be the Noughties version of 70's/80's ship building and general heavy industry? Everyone and his dog "got into computers" over the last decade or so, because this was where the money was. You could pay a couple of grand to a training company, go to a "boot camp" for a couple of weeks, and come out with a shiny certificate, stating that you are now a "Microsoft Certified Systems Engineer" (MCSE). You are now free to go out and inflict your complete lack of experience on any willing employer, who has to assume that all IT people are as useless as you are.

At first the techiques and tools and just plain cost of capital to get setup in the IT industry were high, so only in "rich" countries like the UK can such an industry take off.

Then, over time, the capital costs come down and the skills become generally available and commoditised. New companies spring up in cheaper locations, with workers prepared to perform the same functions for half the price, or less.

This process necessarily leaves a trail of destruction in its wake.

I wonder what the next decade's must-join industry will be; so this time I can make sure I am far enough away from it to miss the fallout.

Wednesday 27 May 2009

Gold busting up against $960, silver touching $15

Silver is leading this afternoon and is very clearly UP.

If silver bests $15 and closes above, I'll be pretty pleased and looking forward to $16 before too long.

Similarly, if gold can jump through $960 and hold to the close, this could be a trend continuation and a run at $970 should be on the card lickety-split.

I do notice a couple of other related items. 1) XAU/HUI gold stock indexes are not on a tear today at all, they are sympathising with a flat/down day in the general stocks. 2) The big mover in the currencies is the Rand, with to a lesser extent the Pound and lesser still Canadian Loonie. This does suggest money moving to commodity locations (lots of miners listed in London, and of course in Canada and South Africa) but specifically maybe to precious metals mining locations (since Aussie and Kiwi dollars are not up big). Hmmm. Lots of possible excuses in here.

Another interesting day in the precious metals markets.

Tuesday 26 May 2009

Facebook "worth $10Billion"

Who would have thought that our lists of Friends, pictures of our pets and kids, our scores on Bejewelled Blitz, and some random sweet nothings sent to each other in a down moment, would ever be worth $10B?

Not me.

Half the UK have no pension arrangements

Holy crap, Batman!

That is a whole lot of people who are going to find themselves in a very Dickensian misery later in life.

Why the hell are we not taught about the financial facts of life at school? (Or anything else of true value in life.) You would think it was the most obvious and critical of life skills, right up there with reading'n'rithmetic. But hey, nobody stands to benefit from this lack of education, right? Its just an oversight. This is a one-off problem nobody has foreseen before now, soon to be corrected. Nobody intentionally ensured that this subject wasn't part of the curriculum, oh no. It will be corrected lickety-split, before another crop of innocent school leavers come out of education in a few months time, into the workplace, and get into debt good and proper before they can say "how will I ever pay this debt off?".

Hmm. You can tell I love a good state education. I know, I had one.

Boy! Am I glad I live in a shit-hole of a house!

If I'd wasted even more of my money (OK, a mortgage borrowed from someone else's money then...) to lever-up and get a massive pad with granite counter-tops, an enviable zipcode, all rooms en-suite, and generally had a really swell old time at the shops, I too would be worried I will never be able to recover enough money on a sale during my lifetime to repay the debts on the damn thing.

Hell, I'm still worried about that even with my rat hole in a grey and rainy unloved Glasgow suburb, far far away from the epicentres of the property boom. So, how many people must be on the verge of suicide around Kensington and Mayfair, Clapham and Richmond, Camden and Highgate? Or even the West End and Southside of Glasgow for that matter.

You bet the Chinese are worried about Anglo-Saxon money printing! They weren't born yesterday!

Oh yeah, they know full well what "quantitative easing" is all about. You can pull the wool over the eyes of your own voters, but the Chinese first invented paper money centuries ago: they know as well as anyone how destructive it is to over-issue your fiat paper promises! You cannot pull the wool over their eyes! (Or the Germans, or the Argentines, or the Zimbabweans, or...)

Maybe there are some "mild deflationary" effects in the system right now. But there is rocket fuel stored up in the basement, right below the engines of the economy. The very second people no longer think there are still deflationary concerns... THAAAAAR SHE BLOOOOOWS!!!

I wouldn't mind betting that the Dallas Fed is actually being fairly conservative when they say they consider the unfunded public liabilities of the USA to be in excess of $99Trillion. And they are set to get a lot worse in the future unless the course is altered radically. You should know right now, if you didn't already, that we in the UK have highly similar problems deferred for the future that are not being addressed.

One thing I KNOW though, Mr Fisher at the Dallas Fed is certainly not stupid. "This situation is of your own creation. When you berate your representatives or senators or presidents for the mess we are in, you are really berating yourself. You elect them." He's certainly got that right. And it applies equally in the UK.

World Bank warns of social unrest

In news that will surprise not very many, the World Bank warns of the strong potential for social unrest as a result of the global economic crisis.

Their solution, in case you can't already guess for yourselves, is naturally that governments should print money with gay abandon. Like more money in and of itself does anything good.

My take on this is that the availability of more money just cheapens the value of all existing money, and the price of necessities (ie: food and energy) simply rise in price to reflect this. Since the elite are the only ones with access to the new money (think you can get a loan direct from the Bank of England at 0.5%? You're welcome to try... But guess who can do just that?) they are the ones in a position to be able to buy commodities at these currently depressed prices, and they start the bidding from there. In time the banks will come to be comfortable with issuing new loans (in other words, creating more "money", thanks to the fractional reserve banking system (FRB) we "enjoy" these days). As this additional magic money, created by the banks, floods into the economy, people feel richer (they can get access to money more easily) and they bid the prices back up on "stuff". Well, surprise surprise, the rich got richer and the poor got poorer. Again. Who could have seen that coming?

This is just how it works, until such time as FRB is once again abolished. Which it should be, if you want to see the end of boom and bust. The chances of this coming to pass with any of the current crop of democratically electable politicians? Zero -- they are the ones who stand the very most to benefit from the whole game, and none of them moreso than the Democrats/Labour. You think they are on your side? Wrong -- they are on their side.

If you want to see the end of FRB and you're in the USA, you need to vote for Ron Paul. If you are in the UK, well that's a lot harder but you can look out for the UK Libertarian Party on your voting slip; they are the ones who pledge to do just this, among many other items that make sustainable economics and politics a reality. You might well be in the majority, who have been conditioned to reflexively think "Libertarian? No thanks, I'm not a selfish ignorant right-winger", but I would respectfully request that you should learn to think for yourself rather than think what you're told to think. Check out their policies for yourself.

Friday 22 May 2009

My name. Is Gordon Brown.

Not a lotta people voted for me.

Emirates profits down 72%. Ouch, that's gotta hurt!

If they weren't already, heads are gonna roll at Emirates.

All this, and oil was deeply cut in price over this period. What are these airlines going to be hurting like if/when the oil price comes back to year-ago levels, but passenger numbers are still dwindling..?

Bad Times Boot Camp

In Dubai, things are pretty ugly, economically speaking at least (I couldn't possibly comment on the aesthetics of the local architecture).

Anyone (you know who you are) fancy a daily jog up and down the stairs at the office followed by a cup of tea and a chat about job hunting progress..?

Finally, the "rich" get poorer

Over-leveraged idiot, thinks he wants to downsize but can't add up.

He has a $2.2M mortgage on a house he was offered $5.5M for at the auction. He has another oceanfront house down the road, with another $1M mortgage on it. He wants to sell off his stuff and reduce his debts and commitments, for health reasons (can do without the stress) and a simple life (that he can actually afford).

Why didn't he just accept the $5.5M, pay off both the mortgages, and live debt-free at the smaller house with cash in the bank to support a still very comfortable lifestyle? What a clown.

Still, at least he gets to keep the parrots.

"Less generous"? Surely they mean "more honest"?

Why kid yourself?

If you're a size 16, you're a size 16. Don't kid yourself by going to a shop that sells ill-fitting clothes so they can tell you you're a size 14. Apart from anything else, there is nothing wrong with being a size 16.

Real women come in all shapes and sizes, smaller ones are not always more attractive than larger ones. Be yourself, that is when you will look your best.

Thursday 21 May 2009

Edmund Conway just made it onto my "respect" list

The best was saved for last in the linked article 'Labour must go if the economy is to be saved':

"This leads us to a stark conclusion which, from an economic perspective, it no longer feels controversial to utter: vote Gordon Brown at the next election and you're voting for a real economic and fiscal meltdown."

Amen to that.

Nice little dig from Mr Blanchflower as he leaves the BoE's MPC

Hangbags at dawn.

But he's completely right. They are clueless.

Shame they're going to take us all down with them.

Yes, Mr Stuart Cheek, this IS very big news!

The UK is on the verge of becoming a banana republic. And its all thanks to Gordon and Alistair's abysmal approach to dealing with the credit crisis -- which in turn is LARGELY thanks to Gordon's mismanagement of the economy over the last decade.

Stuart Cheek, head of UK Government bonds at BGC Partners, is wildly understating the seriousness of a downgrade on UK government bonds from their present AAA rating. Many, many, MANY investment funds are only allowed to hold AAA rated securities -- if securities held by these funds are downgraded to anything below AAA, they will be forced to sell at any price. There will be an avalanche of supply on the market.

This coming at a time when there is a major glut of supply of newly issued government bonds to pay for the bailout operations, with plenty more where they have been coming from, for which there are virtually no takers and the Bank of England is the buyer of last resort already, taking them on by purchasing them from the Treasury with freshly-minted money.

No, I'm afraid you cannot overstate quite how serious it is that the UK's debt might be rated anything less than AAA. This is a train wreck, and Gordon has been and continues to head us right at it.

This morning's crop of green shoots

As I start my day, I review the "green shoots" that I can see sitting and waiting for me to peruse them in my short list of relevant RSS feeds (I had a long list, but found it was taking far too much time to keep up with all of them, so I have ruthlessly culled them recently).

JJB Sports sales slump by 25%
All Bar One boss quits over debt millstone
Birthday's card stores in administration
US economy to contract more than forecast this year
Standard & Poors downgrade outlook for the UK from stable to negative
IMF warns more banks may need to be nationalised

Really, does anyone think these are "green shoots of recovery" for our economy? I can't find any GENUINE examples of green shoots of recovery, but plenty of brown, withering, parched seedlings spread over an arid landscape, kept on life support by government intervention of issuing national debt instruments and buying those with newly-printed money, then swapping those "AAA rated securities" for junk assets held by the banks. The hope is the private banks will take the new money and use it to make loans to consumers and businesses, but the reality is that the banks are insolvent still, even after relieving themselves of more of the toxic holdings, and they still cannot make new loans because their losses have been so catastrophically huge, their reserve ratios are still inadequate.

Sadly, this has a long way to run yet, and the government is only making it take longer and cost you more. Bummer.

As previously advertised, don't believe the hype.

Wednesday 20 May 2009

A strong and reliable money is the foundation of a strong and reliable economy

In the UK, the USA, Japan, and now even in Europe (and many many other places)... we have the opposite of strong and reliable money. We have Quantitive Easing. Or Money Printing.

They tried this in Germany after World War I, back when they suffered the Weimar Republic's hyperinflationary demise. I think history shows what happened and what the economy and life was like on that occasion.

They tried this in Japan back in the '90s (and still to this very day, with no end in sight). I think most Japanese people wouldn't mind me saying things haven't been great for them in this period, although they were lucky to get a tailwind from the economy of rest-of-the-world to help mitigate their woes.

How could one forget to mention Zimbabwe in any conversation regarding inflation?

The source of all these problems? Mismanagement of fiat money.

The British Empire grew (by accident) as a result of mercantile success on the high seas of the world. We were a nation of entrepreneurs and wheeler-dealers, who could make trades that worked for both sides and made a shedload of wealth. The wealth was counted in gold and/or silver. The UK Pound Sterling was backed by gold (and silver, hence Sterling -- literally a pound of silver), and the world gradually came to love and want to use the coin of the realm.

The British Empire has declined rapidly since Sterling was untied from the Gold Standard, after World War I to some degree, and after World War II entirely. This is most graphically demonstrated by looking at the history of the metal content of our old coinage -- before 1921, UK silver coins were 92.5% silver("Sterling"), and then until 1947 UK silver coins were 50% silver. From 1947, UK "silver" coins were made of a copper-nickel alloy.

Today, the British Empire has declined so far that it is in question if HM the Queen can continue to boss around the Scots for much longer, or the Welsh for that matter. If you come and visit me in Scotland and we stroll to the bank to draw out some cash, you will be surprised to find that even we do not use Bank of England notes! The same if you go to a shop, you will get your change very, very likely composed of Bank of Scotland, Royal Bank of Scotland or Clydesdale Bank promisory notes. Personally, I prefer to spend these as quickly as I can, and to keep any BoE notes in preference when I get them. Not least because when I am down south, people look at me kinda funny when I hand over the Scottish notes, they don't want to take them. But, more importantly, I figure any of those private Scottish banks could and still might fail at any time and certainly without prior warning, which would render those notes worthless while BoE notes will always be acceptable. Just a thought.

Back to reliable money then:

  • BoE notes seem to me "better" than private Scottish bank notes.
  • Gold and silver seem to me "better still".

Good money always chases out bad eventually.

Gold: lift off

These are local jobs, for local people

I sympathise with people who are scared about losing their jobs, really I do.

However, the problem people really have is that they are paid too much, and other people are willing and able to do that same job for less money. These are the harsh facts that form reality. It is pure and simple supply-and-demand.

Do you really think the employers specifically WANT to employ people from other countries, and have to deal with the fallout with the locals? Are we to assume that the locals would be BETTER at the jobs and are well worth the extra cost? Surely, only a Nationalist, Protectionist, right-wing thug could presume such a thing. (See? See how spin works?)

I'm afraid, much as its not good for my nation in aggregate, I am on the side of the foreigners in this case. They have the right to work here, just as we have the right to work where they come from.

UK government really needs your money

They're paying more interest than the "private" banks, in spite of the fact that your deposit is 100% secure with an explicit government guarantee.

For example, my kids have Halifax Save4It accounts. This usually pays a decent interest rate, as its specifically a kid's savings account. I suppose money in these tends to stay put for a long time -- anyway, banks tend to pay better interest on savings for children, whatever their actual reasons might be.

But I note with interest that now a regular NS&I savings "income bond" instant access savings account, is paying 1.7% interest and it pays out the interest monthly. Meanwhile even my kids can only get 1.05% from their Halifax Save4It account, which pays out annually and doesn't have an explicit government guarantee.

Suffice to say, it looks attractive to open one of these accounts for each for my kids now, and shift their cash over. If enough people think the same thing (which is likely) Lloyds-HBOS and all the other banks with similarly unattractive offerings, will see a serious outflow and may well find they are once again in dire need of capital because they have insufficient reserves.


More green shoots eh?

Seems to me that the people who are in the position of having the best access to relevant data, don't actually think there are too many "green shoots" at all.

I think those green shoots people reckon they are seeing, are actually mung beans. They're as big as they're going to get any time soon. If you don't crop them and use them very very soon, they will wither and die. Then they will rot in the dirt.

THEN they might become the fertile soil that real mighty oaks might spring from later.

Pound is strongest of the year

Mainstream media are reporting the fact that the pound is at its strongest level of the year against the dollar, and also that this is largely due to renewed confidence in the banks.

Hmmmm. Could be a top is in for the pound. And the banks.

Gold investment demand soaring

Mainstream media are writing that gold investment demand is soaring.

Hmm. Could be a short term top is in.

Monday 18 May 2009 Where now economy?

"The onion of lies". This is a great way to put it, I think.

So many lies, layered on top of still more layers of lies. So many lies in your life that you just have to accept as the truth on faith, because hey you're busy and there are other peope to look after all that other stuff out there in the world, right? Even when you spot a lie, each is seemingly very small and inconsequential. But in aggregate they are "The Matrix".

You peel back one thin and seemingly unimportant layer and discover there is just layer after layer of BS and lies below it. If you stop to make time and look.

You don't think so? OK, well if you have the stomach for a real rollercoaster, take some time out to pick just one item on the political section of your chosen mainstream media source, I don't care which one it is you choose, and REALLY think about it. Is what is said on the face of it, what the story is REALLY about? Is it based on a myth, half-truth, or even just an outright lie? Its not unusual, as Tom Jones says.

And what about some other assumption you have in your mind, that is uncovered as you stripped away that layer of lies and deceit a moment ago? Do you find yourself looking closer at those as well, and finding -- yes, yes I think you're right goddamit! -- that next layer is on closer inspection a bunch of hocum, a web of smoke and mirrors, deceiving and laced with subtle lies and inverted logic, an intrigue?

Welcome to the reality zone.

Gold was likely a fakeout

The volume on Friday in gold was not inspiring.

The price is dropped back below $930 this morning.

Silver is also leading the way down this morning.

All the stars are in alignment for a down day in the gold market methinks, but it is always possible that a shitstorm comes over the sky in the US timezone and the breakout is on after a test... let's see later...

If You're Not Petrified of Obama, You're Not Paying Attention

Left wing politicians will always tell you they are doing something for the little guy. They are promoting social justice in an unfair, capitalist world. The title here states "Obama" (a wholesale borrowed title of the article linked below), but really you can substitute the name of any left winger/party -- Obama is just today's figurehead.

But, as always, you need to look at their intentions and actions and judge them by the recorded historical facts and outcomes of similar precedents. And when I say the historical facts, I mean also not just accepting popularly accepted truths/myths, but actual recorded evidence of the true facts.

For example, the minimum wage sounds like a great and wonderful idea. Until you count how many jobs are lost as a result of it, and how many people's live are subsequently stuck in the welface trap. Do you know anyone who cannot get a job? There would be jobs for everyone, if there wasn't a floor on what employers are allowed to pay. If a service can't be economically provided at a price consumers are willing/able to pay, the service will not be provided -- and the staff will not be staff. Once people find themselves stuck in the trap of being on welfare, they quickly establish that it is not possible to get themselves back into high-paying jobs, and that if they accept the low-paying jobs then they are going to be no better off than on their social security handouts. This is a vicious circle, and it does the person no good in the long term.

MISH has yet another interesting and thought-provoking article up. I can't really hope to add much here that will add value to his article, which itself stands on the shoulders of other intellectual giants. So I merely link to it here.

You can assume as a reaction to this entry, and probably many others I daresay, that I must be some right-winger anti-social scumbag if you want. But I would submit that I am instead just a realist. I find that on investigation a lot of the initiatives for social justice, ultimately do no justice to anyone but the ruling class, and have deeply anti-social outcomes.

Friday 15 May 2009

BA-BANG!! Gold spikes through $930

Not long after the Chicago open, and in the absence of the regular beating at the NY open (a slow climb during the first hour or so in NY).

Earlier, I was noting that silver was not leading and in fact was very much trailing gold's move today. Similarly for platinum/palladium. Accordingly, I didn't hold much hope for a breakout on this occasion. However, at the same time as the big move in gold in the last half hour or so, silver is leading now. This is always reassuring.

Its a little early to really say whether this is a significant breakout or it'll be just another fakeout beaten down by the shorts. But if the price can close today above $930, I think the odds are good that this will be a trending move...

No, it is NOT "within the rules".

This man has it dead-on. There is no way on god's green earth that any of the MPs expenses reported in the Telegraph meet the rules in the Green Book.

Also checkout the (first) comment at the bottom of the entry. Again, dead-on observation.

If you or I did anything remotely like this, we would be (1) sacked immediately, and (2) up before a judge for fraud. But, we don't make the rules, do we.

Mortgage? What mortgage?

I tell you what, I don't think I'll ever forget the sweet, sweet day that I pay off my mortgage.

If it ever comes, that is.

Thursday 14 May 2009

'The World's Least Favourite Airline' (Kin you giss what it is yit?)

Ryanair. You've gotta hate 'em.

Now they will charge you £40 if you don't print out your own boarding pass at home before you come to the airport.

But even better now, they'll charge you £5 to print it out at home!

Scumbags oi calls em.

End of US dollar dominance goes mainstream news

Seems like maybe the ole dollar has another new lease of life due on it, if mainstream media is reporting its demise. At least as a short term trade anyway. (There is no disputing, surely, that the days of dollar hegemony are drawing to a close.)

Maybe I should back off the precious metals for a while. Maybe there is going to be a pull back this summer after all. Hmmm.

Still, I am a Sterling-based person, and the fundamentals of the pound are more disasterous than even the dollar.

Staple goods. If you have spare cash, buy non-perishable ones.

As forecast, we are already seeing clearly that the prices of staples is rising, while the prices on discretionary items are falling away and taking paying jobs with them.

If you have spare cash, and you want to find something smart to buy with it, try some non-perishable foodstuffs. ("Eurgh!? You mean canned stuff?" Yep.) Because you can pretty much guarantee, I think, that you will want to eat. I figure you might as well ensure that you will be able to do so, at least for a while.

Who bought all the Gilts? BoE quarterly report 2009Q1

Looking at the chart of monthly changes of Gilt holdings in the Bank of England quarterly report (page 13 of 58), and homing in on the right-most column, it is clear that nobody but the Bank of England is buying the Treasury's Gilts any more, and in fact everyone else is a net seller all of a sudden.

This is *exactly* what Messers Mugabe and Gono did in Zimbabwe -- buy their own new debt, with freshly issued local currency.

If this does not stop, we will see the same results, clearly.


Apparently, oil demand is set to drop by 3% or so year over year against 2008. I don't know about you, but I saw oil was around $147/barrel about a year or so ago, and then it went to like $30/b, and now is bobbing around $60/b.

Now, my maths isn't maybe the best in the world right, but somehow I think that $60 is something more than a 3% drop from $147, and that $30 was even less like a 3% drop.

I also believe in the Peak Oil theory, that available oil is actually running out pretty quickly, and that the Saudi's (among others) are feeding us all a lot of BS about the amount of oil they still have available to pump in the future. Nobody can pump billions of barrels out of the ground, and truthfully report they have a static number of barrels still in underground reserves, year after year after year. This is total BS, and is a result of the OPEC quota system -- the more you have in reserves, the, the more you are allowed to sell this year.

At $30/b, anyone with a tanker was buying a load of crude and parking it up at sea somewhere, waiting on a rebound in the price, looking at making a significant mark-up on that trade. I would say it is fair that many of them will be looking at the price recovering to $60/b now, and thinking "100% profit is good enough" -- they sell (if they hadn't already). So this is a short term glut of supply on the market, that is likely to weigh on the price again for a while. Also factor in speculators who bet long on the price, with a trailing stop to close the trade for them, and any modest drop in the price from here will see a whole cascade of sell stops activated -- turning a small price drop into a major move. Pile on some people playing it short, because if a dumbass like me can see how that works, you can be sure there are some uber-smart players in offices around Mayfair and Wall St who are going to jump on it.

But the world isn't making more oil to replace the stuff we are burning, and we stopped finding enough new reservoirs of it to replace what we were taking out long ago.

Meanwhile the currency the oil price is calibrated in [at the moment], the US$, is being inflated massively through virtual money printing at the Federal Reserve and Treasury.

To my mind, oil back at $100+ is not a case of if, but when. Probably it will go to like $30-$40 range again first though, and maybe not just once. How long could you wait, if you were to buy some and park your tanker out at sea? Is it long enough to see all the forces in the system work through and show the inevitable results (serious commodity price inflation)? That is the real question.

Do you feel lucky? Well, do you?

You think the Bank of England/Treasury have a great plan between them. You are wrong.

You might think you are safe to assume that the UK is not Zimbabwe, and the people pulling the financial levers of our country know what they're doing.

But you could not be more wrong. They are totally making it up as they go along, and if they get it even so much as 1% wrong, and the odds are overwhelming that they will do so, the consequences will be devastating to the pound in your pocket (or in your bank). The same can be said of the dollar and the monetary authorities in the good old US of A.

I don't pretend to you that I know what they should do. But I do know that they should not do what they are doing now.

What happens if the State of California goes bankrupt?

MISH has another article up about the inevitable filing for bankruptcy by the State of California. Among the threads he weaves in the article, he suggests that it is inevitable and in fact would be the best solution to the problems being faced, that the State should file for bankruptcy. I have to say that I totally agree, there is no other way to stop the public employee unions from inflicting a death by 1,000 cuts to the local economy; it just cannot be sustained for much longer before things blow sky-high.

However, I find myself asking what are the implications, if the State officials cannot and do not agree to comply with the Federal requests to stop treading on the toes of the unions or suffer the consequences? What can the Feds do? Cut off California from the Union?

What do we call the USA, if its no longer got the U? Just SA? This would actually be quite fitting in a way I guess, given that in French/Spanish/Portuguese countries "SA" is the equivalent of "Inc." to the States, or "Limited" to the UK. The whole country is run for the benefit of the shareholders after all, like a hedge fund.

BT pension plan a train wreck waiting to happen

Reuters put out a story summarising how the pension plan deficit (not the obligations, just the deficit on the obligations) is bigger than the entire market value of the business.

How long can that last?

You can bet your sweet ass that BT are far from unique here. Are you relying on a company pension plan for your old age? (Or, even worse, just relying on the government to give you a State pension that will keep you in the style to which you have become accustomed... good luck with THAT!)

Review your pension arrangements, because if you're just trusting in others to deal with it all for you, then get ready for a big surprise when you can least afford it.

Wednesday 13 May 2009

Medicare is bankrupt? Well, there's a news flash!

Apparently, someone in the US gummint finally admits that Medicare isn't going to pay out to everyone what they have all been told they should expect. (Really, its no different in the UK, but it is yet to be admitted that the State Pension will be worthless to you when you are finally receiving it.)

They pretend that this is new information, and "who could have known?". But that is a crock. People have been discussing this elephant in the room for years, and the mathematics of it were obvious to anyone that was interested enough in the subject to actually look at the facts (you would think this might include at least a few people in the gummint, right?).

The ugly truth is that the plan was to have constant inflation, eroding the real cost of paying out on those promises. What do you think "inflation targetting" is, if it isn't that plan in action?

The elite would benefit from this constant "benign" inflation, thereby ensuring they would benefit from the long term silent robbery of the masses, who would be like frogs slowly simmering in an inflationary pot. While your house was going up in price (note how I avoid the word "value" here), you didn't think inflation was a problem -- au contraire, you thought it was wonderful. But check out how it feels to get some unwelcome deflation right now. Right now you beg for the prospect of inflation to rescue you from the awful problem of constant debts and falling asset prices, and the very real concern that any one of us might lose our jobs because other people stopped buying our products and services.

And boy, are the gummints of this world pulling out the stops now to give you inflation, good and hard.

The bad news, is that I really don't see house prices getting rocket fuel under their prices any time soon. I see the prices of staples getting that high-octane fire under them, while houses and other discretionary items still just get licked by the flames. Bummer.

Tuesday 12 May 2009

"But it’s the general lack of knowledge in the general population that concerns me. They are sitting ducks."

Oh man! Do I ever feel a connection with the sentiments of this author in this article of all articles!

The title of this entry is lifted from the linked article, by Chris Laird of The Prudent Squirrel newsletter. (This is a public version of the article on, however.)

This article just about sums up what is in my head too, and why you don't want to invite me to cocktail parties any more (and I wouldn't want to invite me either).

The good news, for you and for me, is that I now stick some of this head-fudge out here on this blog, where it is buried and few people are ever likely to have to read it. Enough to give me a release from the burden of it and enough that I feel like maybe one person in the world might get something useful from it all at some point, if I'm lucky.

That means I no longer feel the need to try to give you the hard sell on protecting yourself from what is coming down the pike, attempting in vain to spread desperately undesirable news, a subject so big and so bad that I can never hope to be succesful in selling it, certainly not in a single sitting. I've come to accept that nobody else wishes to know, nobody wants to 'go outside' in the parlance of this article. I can relate to that; I wish I hadn't gone outside now. I kinda liked just being a geek really. I was good at being a geek. But I did go outside, and now I have to live with the consequences ever since. My life has been contaminated by the burden of knowledge beyond the boundaries of my geeky sphere. I have to forget it, and get my geek back on.

So its all good. Anyone for a beer?

Who said we needed The State in the first place?

This is spot on.

Where is the place we put the cross to say "none of the above" at the ballot box? If you've seen it, let me now because I've looked and I haven't found a way to express that yet.

The closest we have, now, is that there is a new option -- Libertarian Party. Its that, or you choose between: continued serfdom at the mercy of one of the "choices" of the main parties, it doesn't matter which; stop washing you hair and live in a van on the road, smoking rollies; leave and try to find a country somewhere which is actually significantly different (good luck with that btw, write me a postcard if you find it).

Coder Emptor...

If you write code, it may be time to be afraid of the Big Bad Wolf at the EU soon by the sound of things.

Precious metals on a tear this morning

Silver knifed straight through $14/oz this morning without looking back. Its at $14.10 as I write. Gold is up sharply so far too, but not through any significant resistance yet -- currently at $918.10/oz. If it continues and gold motors through $920/oz in the next hour or so, I don't know if They will find themselves being able to defend this price level any more, at the COMEX open.

Let's see. Could be an interesting day in this market.

Update, as I write silver now up to $14.17 and gold up to $918.80. Those of your that know me personally, will know that I am not the slowest typer either.

Scary part timer numbers -- and this doesn't tell the half of it if you ask me

This article describes the very real problem of people having to accept working part time because they just cannot find full time work, rather than from choice or because of personal circumstances.

But I very strongly suspect you can double the numbers, because there are a lot of people that won't statistically show up on a database somewhere as specifically working part time, but they sure are. Lots of people will show up as getting a big big pay cut at HM Revenue and Customs, but this won't show up as those people being asked to cool their boots, working part time for the same employer, I would lay money on it.

Monday 11 May 2009

Friday 8 May 2009

Tories want to abandon inflation fighting by the BoE

... and Labour Treasury says no!?

Man! Up really IS down, and down really is up.

Since when did anyone at Labour HQ seriously aim at anything other than inflation? (Whether they were competent enough to understand inflation was going to be the outcome of their policies is another question I suppose...)

Maybe they figure there's enough inflationary pressure recently injected into the system, so there's no pressing need to drop the pretence of fighting against it just yet. Perhaps their intention is when the dust finally settles, then they'll make this kind of structural adjustment "to avoid the same mistakes in future". Right now, everyone is shit scared of deflation so they are inflating with gay abandon and everyone is cheering them on anyway right?

Fannie needs another $19B to hold it together

So, here's ANOTHER surprise. After the previous bailout from the US taxpayer a few short months ago, Fannie Mae will need a further $19,000,000,000 injection in order to keep the lights on now.

My favourite part? They need it on or before 30th June 2009. You've got to admire the audacity of these people.

Let it fail, I say. Its only a government SPONSORED agency, not a government agency. Its a private investment management business, and so is Freddie Mac the evil twin brother. Most of the mortgages these spivs have resold to "investors" will not stand up in court anyway I reckon. If these mortgage contracts were to fail due to agency bankruptcy, the homeowners will likely in fact find themselves walking away from paying the mortgage AND get to keep the house too. Nice.

Oh, well lookie here again

Gold makes another steady run up to bust through $920, and would you Adam'n'Eve it? The spot price takes a massive, massive beating all in one big fat sweep, just at the COMEX opening, again. Just right to give the bulls pause for thought and make them run for cover.

Nobody would ever reasonably think there was anything fishy about this keep happening. Noooo way. Uh-uhh. Never.

How long can They keep getting away with this, I have to ask myself.

Why am I doing this blog?

So I don't ruin your day, every day, on Facebook.

But I still get to let off some steam, screaming into the void that is the Internet. :-)

I've gots to get me a job in politics

I really, really need a new kitchen and bathroom. I don't see any way I can afford one as expensive as this unless I get you all to pay for it instead of me.

Could or should? You decide.

Labour will always take whatever they can. They will pretend it is to punish the rich capitalist fat cat swine and redistribute it to you the poor working stiffs and you will come out a winner if you just keep on voting for them. But that is the biggest, fattest lie ever told. The gap between the rich and poor widens, this is all the proof you need that its the truth. What is more, if you look back over time, you will see that you have been systematically robbed at every step along the way. And not just of your wealth, but your liberty too.

Of course, the Conservatives are no better though. This notion of a "democracy" is an utter joke. You get to vote for Tweedle Dee or Tweedle Dum, but either way the same people (see also:OECD) are pulling the strings and, trust me now, they are not looking out for your interests.

Thursday 7 May 2009

Green shoots of recovery. So let's print up £50M more cash anyway? Hmm. :-\

Yeah, we are supposed to believe that there is a sustainable economic recovery in progress right now. And yet... there is a need to print up £50,000,000 new pounds and put them in circulation.

Anyone else smell a rat here? If things were so dandy, they should be removing new cash they printed up with gay abandon the last few months, not create even more. If there really is a recovery under way, this cash is going to light a fire under inflation figures in due course.

No wonder gold just went back above $920/oz, and silver vaulted through $14/oz. I wonder what'll happen when NYMEX open in half an hour or so, and Chicago opens the pit doors an hour later. We'll see... Silver is definitely leading, which is reassuring (if you are a gold bug).

Don't believe the hype

If you're thinking of sticking your pension money back on red just now, because of all the talk of the green shoots of recovery in the media and you can see people have made a shedload of money in the last few weeks, good luck to you.

I reckon there's a little more juice in this rally, but it fizzles out real soon and disappears with a bang. But hey, what would I know? I'm just a thicko from a council estate in the sticks.

Flat tax. You know it makes sense.

The Times ran an article which laid out in full gory detail their case against raising taxes, and I fully agree with their sentiments. It is the stupidest thing The Darling Brown Show have done, and they have done some incredibly stupid things.

I am actually all for a flat tax regime. It would save a fortune in private sector business -- and the public purse as well for that matter -- and would no longer encourage the Brain Drain of the very best money-making talent away from British shores.

Admittedly, there would be a lot of bookkeepers, accountants and tax specialists suddenly cooling their heels. But really, they are not economically productive currently but in fact consume national wealth just as much as the the public sector does, and their undoubted smarts would almost certainly be soon better employed in some other passtime.

The case against fractional reserve lending

MISH -- the very best economic analysis you can pickup every day for free, without a question of a doubt. And on this of all topics, he is totally spot-on.

Tuesday 5 May 2009

Fiat: idiots or geniuses?

Who can say. But they really will have a massive ability to produce cars in Europe if they buy Vauxhall/Opel. Now all they need is to discover who wants to buy them all, and they'll have a winning investment.

Computers exist to make your life easier

So why do I spend so much time trying to get them to work for people, people who by that time have probably already shouted themselves hoarse at the damn things in their own ill-fated attempt at the same effort.

Friday 1 May 2009

Up is down and down is up. Welcome to the Ministry of Truth.

So what is your definition of a recession or a depression? This guy stands what you've been lead to think on its head, and his argument makes sense if you ask me.

This happens over and over when it comes to anything related to economics. We've been told to think that economics is boring and complicated, and that we should shun even thinking about it, leave it to those clever experts. Why? So that we don't question the inverted logic that is applied to spin things in someone else's favour. Think about money? Me? Eurgh! How crass! And boring too; go away little boring crass person.

Now all you have to do is to survive financially, and you will enjoy a steadily better quality of life, while the financial geniuses have to get by on less. Boo hoo. If you can keep a job, your wages will probably not come down as far as the prices of things you want to buy will. Surviving is unfortunately a tough ask for most in today's debt money world though.

More green shoots of recovery, I suppose?

Its a wonderful time to be an insolvency practitioner.
Always a bull market somewhere in the economy. :-\

Repercussions will be felt by ordinary people for many generations

"The repercussions of this banking crisis are being felt, and will continue to be felt, by ordinary people for many generations," Mr McFall said.

"Looking to the future, the rebuilding of consumer trust is key."

He can say that again.

Got a contract termination notice in the post this morning

Which was nice...

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