Well, I suppose that is where we part ways on another issue. I see the "greedy" party as the US federal reserve. Gold was traded outside of the US on an open market. It is the business of various people to make a profit in their business of mining, or processing, or fabricating of various things. It is the business of people in financial markets to make a profit. If you can buy a commodity on one market and sell it on another and make money, that is the entire purpose of the market. When a government attempts to manipulate, coerce, suppress, and flat out prevent certain people from trading in order to prop up their own ridiculous policies, THAT is greedy.
The problem is that you can not base your currency on a commodity that is also traded on an open market. The only way it can work is if ALL countries use the same standard and the ONLY trading of that commodity is by central banks. That can't happen with gold because gold is also an industrial commodity. It is consumed.
Arbitrage trading is done all the time. Natural gas is one product where the price varies greatly regionally. The price in the US might be completely different than the price in Africa. So someone might accumulate a large inventory in both places. Once they have accumulated this inventory, they purchase on one market and sell on the other and possibly transfer loads of it between the two in the background. Arbitrage trading helps to EQUALIZE prices globally. If a price is low in one area, people buy. That increases demand and tends to put upward pressure on the price. If the price is high in another area, people sell which tends to increase the supply and puts downward pressure on prices. So the arbitrage trading helps to even things out. Without it, prices would be all out of whack. Think of that trading as a siphon hose between tanks that tends to equalize levels.
When governments intervene and begin to artificially manipulate prices, it always (and I mean history ALWAYS shows this) turns out badly. In NEVER works. Governments can attempt to manipulate markets temporarily but if they attempt it for too long, it will collapse on them.
Keynes said that a government should run a surplus in good times and bank it (apply the brake to the economy a little during good times) and release that surplus as deficit spending in bad times (let off the brake). But too many people *think* he said only deficit spend in bad times and forget about the surplus side of the equation. So what most Democrats try to do isn't even Keynesian economics, it is Bozo economics.
The problem with the US $35/oz gold price was that it was arbitrarily set. It was a "phony" price pulled out of the federal reserve's ass. It had no relation to real market prices. As the government kept attempting to manipulate the global markets to keep it at $35, they kept spending more and more money doing it until our gold reserves were depleting at an amazing rate. It just can not be done. A single nation can not corner the market in a commodity when the major producers and markets are foreign. It worked fine when the US was THE major holder of gold on the planet. It stopped working when mines in other countries came on line.
The Long Cold Winter
-
geekster
- Posts: 4865
- Joined: Wed Sep 08, 2004 2:53 pm
- Location: Hospice For The Terminally Breathing
- Contact:
Want to know why the price of gold has been going up recently? It is because of the same reason anything else goes up in price. Supply and demand. Until this year, many European countries had pretty large gold reserves. Gold just sits there. It doesn't pay interest. These European central banks would sell gold and buy sovereign debt paying interest. It might have been only 3 or 4 percent, but gold pays nothing. This year they stopped selling gold. They figure they have too much questionable sovereign debt already of dubious quality, are already out on a limb, and aren't about to crawl farther out on that limb. So they have stopped selling gold. In the meantime, the demand for gold is the same as it always was. So with a constant demand and a greatly reduced supply, you see a greatly increased price.
Pabst Blue Ribbon - The beer that made Gerlach famous.
-
can't sit still
- Posts: 4645
- Joined: Tue Aug 23, 2005 4:21 pm
- Location: SoCal
Sorry,,, again we agree. I said greed. I didn't say that greed was wrong,,, only reliably in control. English is a very fluid language that can be very concise and descriptive. What does greed MEAN? Once again, I have a long, drawn out post. There was a discussion of greed at the Daily Bell. I have to quote a bunch of viewpoints.
""greed is inextinguishable"
@DB
Are you greedy? Or have you "extinguished" it in yourself?
I don't think greed really exists. The act of greed is actually just a fervent act of competitiveness. You can argue that "You have enough", but a Capitalist system is about maximizing profit, not making an in-between amount that an arbitrary moral authority says is enough.
My competitiveness was formed in me because of my relationships with my four older brothers, and our relationships with our father and his brothers. And then the competitiveness of being the smartest fellow in the room (striving for that "A").
My competitiveness has done me wonders, but I have also made enemies because of it. Yes, perhaps that is a balancing factor, but some people become extremely rich through their brotherhood with some, and their marketplace competitiveness (greed) with others.
Greed does not exist. It is the for-profit motivation which is the poison that causes most of the ills. We just have to live with it. Luckily, prisons are profitable (for when the poison kills.)
(Or we could engineer the for-profit motive out of the system, but that scares people as they can only conceive of authoritarian communitarian socialistic dictatorships or... nothing?) "
""Greed does not exist. It is the for-profit motivation which is the poison that causes most of the ills."
I'd say the opposite.
Why would anyone do something, if there wasn't some benefit (profit) in it? The benefit might be public or private...
Surely you don't expect people to put in time for other people, but not for themselves? That's self-contradictory."
""The act of greed..."
If there is any possibility of having a rational discussion on the matter of "greed" (or ANYTHING), precise definitions are mandatory. Here's mine:
Greed: Consuming more than you produce.
Productive: Producing more than you consume.
Here's where unchecked (by the victims thereof) "greed", according to real definitions leads:
Click to View Link
"It is the for-profit motivation which is the poison that causes most of the ills."
We should strive and expend energy every day "for-loss"?
Profit in all its forms (financial, social, intellectual, etc) is nothing more than a human being saying I want to improve my situation today as compared to yesterday. I cannot think of anything wrong with this desire, and I cannot imagine that a human could be "human" without such a desire " not by any definition of human that makes any sense to me.
The term "greed" has been beat up and abused, but in its best sense it is no different. Humans naturally want to improve their situation over time -- might be financially, might be otherwise. But we don't desire to work at something to stay "even" (although the way society is structured today this is the bare minimum most can hope for); we work hard because we desire to improve our lot in life."
"For profit" is poison as long as greed is poison. My point was merely that one has to stop blaming "greedy people" as if they are a kink in the perfect profit system, when they are simply people playing the game extremely well.
Greed is not consuming more than you produce. Greed is consuming as much as you can, whether you produce or not. How successful would one be considered in the profit system if they produced nothing yet attained all of the wealth? That is maximizing efficiency to the Nth degree.
As soon as you get into moralizing efficiency, then economics becomes psychology or culture or religion."
"The fact that you confuse profit with greed and think one logically leads to the other is an indictment of culture. It means we no longer understand or respect the conventions, morals, and ethical standards by which societies in previous years could actually tell the two apart quite easily. I have known extremely successful and wealthy people who were less greedy than people who wouldn't be able to turn a profit selling call-girls to congressmen.."
"The ignorance about the definition and use of the word "greed" is astounding.
Greed is taking or accepting anything one does not deserve or something one has not earned.
One can be greedy about; money, praise, credit for doing something.
One is not greedy about money or praise or credit for doing something, that one has earned without fraud."
"What is astounding is that folks want to rely on the good nature of other humans to play fair. If this is a necessity of functional economics, then human society is doomed if it continues with this structure, especially when making a profit does not require fairness (functionally).
The fact that you believe (assuming from your limited post) that greed is something morally evil instead of a function of earning profit means that you do believe that monetary economics demands moral code. The PE would wholeheartedly agree with you, and enlist you to help create a World Religion, outlawing atheists and all others.
One could argue that it is Human Nature to be greedy (my points have clearly shown that I disagree, and put the presence of greed as the result of the profit motive), and that there will always be a "bad element', but in this age of ever increasing power in smaller and cheaper packages, any system that thinks this is an acceptable part of the structure is doomed to an eventual catastrophic failure at the hands of a few unbalanced individuals."
The argument goes on and on;
http://www.thedailybell.com/1387/Land-Ho.html
""greed is inextinguishable"
@DB
Are you greedy? Or have you "extinguished" it in yourself?
I don't think greed really exists. The act of greed is actually just a fervent act of competitiveness. You can argue that "You have enough", but a Capitalist system is about maximizing profit, not making an in-between amount that an arbitrary moral authority says is enough.
My competitiveness was formed in me because of my relationships with my four older brothers, and our relationships with our father and his brothers. And then the competitiveness of being the smartest fellow in the room (striving for that "A").
My competitiveness has done me wonders, but I have also made enemies because of it. Yes, perhaps that is a balancing factor, but some people become extremely rich through their brotherhood with some, and their marketplace competitiveness (greed) with others.
Greed does not exist. It is the for-profit motivation which is the poison that causes most of the ills. We just have to live with it. Luckily, prisons are profitable (for when the poison kills.)
(Or we could engineer the for-profit motive out of the system, but that scares people as they can only conceive of authoritarian communitarian socialistic dictatorships or... nothing?) "
""Greed does not exist. It is the for-profit motivation which is the poison that causes most of the ills."
I'd say the opposite.
Why would anyone do something, if there wasn't some benefit (profit) in it? The benefit might be public or private...
Surely you don't expect people to put in time for other people, but not for themselves? That's self-contradictory."
""The act of greed..."
If there is any possibility of having a rational discussion on the matter of "greed" (or ANYTHING), precise definitions are mandatory. Here's mine:
Greed: Consuming more than you produce.
Productive: Producing more than you consume.
Here's where unchecked (by the victims thereof) "greed", according to real definitions leads:
Click to View Link
"It is the for-profit motivation which is the poison that causes most of the ills."
We should strive and expend energy every day "for-loss"?
Profit in all its forms (financial, social, intellectual, etc) is nothing more than a human being saying I want to improve my situation today as compared to yesterday. I cannot think of anything wrong with this desire, and I cannot imagine that a human could be "human" without such a desire " not by any definition of human that makes any sense to me.
The term "greed" has been beat up and abused, but in its best sense it is no different. Humans naturally want to improve their situation over time -- might be financially, might be otherwise. But we don't desire to work at something to stay "even" (although the way society is structured today this is the bare minimum most can hope for); we work hard because we desire to improve our lot in life."
"For profit" is poison as long as greed is poison. My point was merely that one has to stop blaming "greedy people" as if they are a kink in the perfect profit system, when they are simply people playing the game extremely well.
Greed is not consuming more than you produce. Greed is consuming as much as you can, whether you produce or not. How successful would one be considered in the profit system if they produced nothing yet attained all of the wealth? That is maximizing efficiency to the Nth degree.
As soon as you get into moralizing efficiency, then economics becomes psychology or culture or religion."
"The fact that you confuse profit with greed and think one logically leads to the other is an indictment of culture. It means we no longer understand or respect the conventions, morals, and ethical standards by which societies in previous years could actually tell the two apart quite easily. I have known extremely successful and wealthy people who were less greedy than people who wouldn't be able to turn a profit selling call-girls to congressmen.."
"The ignorance about the definition and use of the word "greed" is astounding.
Greed is taking or accepting anything one does not deserve or something one has not earned.
One can be greedy about; money, praise, credit for doing something.
One is not greedy about money or praise or credit for doing something, that one has earned without fraud."
"What is astounding is that folks want to rely on the good nature of other humans to play fair. If this is a necessity of functional economics, then human society is doomed if it continues with this structure, especially when making a profit does not require fairness (functionally).
The fact that you believe (assuming from your limited post) that greed is something morally evil instead of a function of earning profit means that you do believe that monetary economics demands moral code. The PE would wholeheartedly agree with you, and enlist you to help create a World Religion, outlawing atheists and all others.
One could argue that it is Human Nature to be greedy (my points have clearly shown that I disagree, and put the presence of greed as the result of the profit motive), and that there will always be a "bad element', but in this age of ever increasing power in smaller and cheaper packages, any system that thinks this is an acceptable part of the structure is doomed to an eventual catastrophic failure at the hands of a few unbalanced individuals."
The argument goes on and on;
http://www.thedailybell.com/1387/Land-Ho.html
I don't post things because I believe that they are the absolute truth. I post them because I believe that they should be considered.
-
can't sit still
- Posts: 4645
- Joined: Tue Aug 23, 2005 4:21 pm
- Location: SoCal
The demand is not constant. The new supply is shrinking.geekster wrote:Want to know why the price of gold has been going up recently? It is because of the same reason anything else goes up in price. Supply and demand. Until this year, many European countries had pretty large gold reserves. Gold just sits there. It doesn't pay interest. These European central banks would sell gold and buy sovereign debt paying interest. It might have been only 3 or 4 percent, but gold pays nothing. This year they stopped selling gold. They figure they have too much questionable sovereign debt already of dubious quality, are already out on a limb, and aren't about to crawl farther out on that limb. So they have stopped selling gold. In the meantime, the demand for gold is the same as it always was. So with a constant demand and a greatly reduced supply, you see a greatly increased price.
"last decade, gold mining has failed so spectacularly to meet the surge in demand, he could only question its "relevance" to the market's net outlook. Dollar gold prices quadrupled from 2000 to 2009, another speaker noted, yet annual mine output rose just 1%"
http://www.financialsense.com/contribut ... m_term=FSO
They just aren't finding the big lodes of earlier times.There is MUCH written about why people are buying gold. http://www.lewrockwell.com/north/north889.html
My fingers are tired. I'm just going to post links.
I don't post things because I believe that they are the absolute truth. I post them because I believe that they should be considered.
-
geekster
- Posts: 4865
- Joined: Wed Sep 08, 2004 2:53 pm
- Location: Hospice For The Terminally Breathing
- Contact:
Well, true but the wording is misleading because production never did meet demand. It has been the selling of huge gold reserves accumulated in the mid 20th century by Europeans that has filled the gap. That selling has stopped.
http://www.ft.com/cms/s/0/b9859c7e-c99b ... ab49a.html
http://www.ft.com/cms/s/0/b9859c7e-c99b ... ab49a.html
Pabst Blue Ribbon - The beer that made Gerlach famous.
-
can't sit still
- Posts: 4645
- Joined: Tue Aug 23, 2005 4:21 pm
- Location: SoCal
"production never need meet demand" RIGHT !! You and the rest of the world are going to see it all blow to hell. The PM ETFs just don't have shit. It's very easy to prove by looking at world supply figures. The ETFs absorb much of the demand for metal. Look at the world supply figures for silver at the time that SLV was formed. There was a huge jump in world silver supply when SLV announced their initial holdings. There was NO commensurate withdrawal from established bullion banks. Buffet came up with a BS story that he had supplied the initial. There are huge ongoing raids on the LBMA. They'll soon be naked. The PM community knows what is going on. The IMF and BIS and FED come up with bogus stories;
Bangladesh just bought 10 tonnes of gold. Only fools believe these cover stories.
http://www.ibtimes.com/articles/61474/2 ... f-gold.htm
Bangladesh just bought 10 tonnes of gold. Only fools believe these cover stories.
http://www.ibtimes.com/articles/61474/2 ... f-gold.htm
I don't post things because I believe that they are the absolute truth. I post them because I believe that they should be considered.
-
geekster
- Posts: 4865
- Joined: Wed Sep 08, 2004 2:53 pm
- Location: Hospice For The Terminally Breathing
- Contact:
Well, this is one time I am in complete agreement with Buffett and Soros:
Gold is a good hedge right now, but for how long? When other markets begin to turn around and people begin to look at their gold holdings as an underperformer, what happens when all that gold trading turns in the other direction?
http://www.reuters.com/article/idUSTRE6932NR20101004
There is a certain psychological peace of mind that people get from parking their money in gold ... until the price of it plummets. There is this irrational belief that you can't lose money with gold but you can lose your ass in it.Billionaire financier George Soros, echoing comments from investment guru Warren Buffett, last month described gold as the "ultimate bubble" because it is costly to dig up and has no real value except its market price.
Gold is a good hedge right now, but for how long? When other markets begin to turn around and people begin to look at their gold holdings as an underperformer, what happens when all that gold trading turns in the other direction?
http://www.reuters.com/article/idUSTRE6932NR20101004
Pabst Blue Ribbon - The beer that made Gerlach famous.
-
geekster
- Posts: 4865
- Joined: Wed Sep 08, 2004 2:53 pm
- Location: Hospice For The Terminally Breathing
- Contact:
Generally, when the average everyday investor gets "hot" on some thing or another, that is your clue to avoid it. That is my first indication of a bubble forming. When "everybody" is doing something, it is time to do the opposite because "everybody" can't do something forever, it isn't sustainable. You buy a bunch of GLD and what does it pay you? Nothing but the change in market price. It has no "earnings". It doesn't do anything.
Why would Bangladesh buy a bunch of gold? The IMF is selling gold to boost its cash reserves. The IMF apparently needs more cash for more bailouts. Now why would Bangladesh be sitting on a shitpile of cash? Who needs cash from the IMF more than Bangladesh does?
Maybe this is a clue:
And what's this?
Hear the news today that Treasury is now expecting to get all $700 billion of the TARP money back? It is looking like the USG might just break even on TARP. But did it really do any good? All those toxic assets are still out there, those mortgages are still under water. The financial institutions were just making money foreclosing on them because the government was basically making sure they can't lose money on foreclosures. But foreclosures stopped today so maybe that program is ending. 5 major financials today announced they are putting a freeze on all foreclosures ... or maybe it is just a last minute (temporary) political gambit by Treasury to buy some votes before next month's elections.
If all that TARP money ends up back in the Treasury, if Germany swings farther right, if Spain moves right in their next parliamentary elections (must be held by March 2012 but can be held sooner) ... maybe the gold bubble eases. Oh, and forget Greece, I expect to see them completely default. They are a basket case that there is no saving. The people there are complete idiots demanding the turnip they call a government continue bleeding cash for them. But they are socialists. They always believe there is someone else's money available to them that they can spend.
ADDED: If the price of gold continues to rise, Bangladesh might just slowly sell their recent purchase and pocket a handy profit.
Why would Bangladesh buy a bunch of gold? The IMF is selling gold to boost its cash reserves. The IMF apparently needs more cash for more bailouts. Now why would Bangladesh be sitting on a shitpile of cash? Who needs cash from the IMF more than Bangladesh does?
I dunno, even all of that sounds like "bubble talk" to me. First of all, she is right, gold and the dollar generally move in opposite directions. You don't generally see a rising dollar AND the value of gold in dollars rising. That tells you that this is not a technical rise or not a technical rise in the conventional sense. It is certainly starting to sound like an "emotional" rise or a "bandwagon" rise and that is bubble talk.Bangladesh's central bank bought the metal for about $403 million based on market prices prevailing on Sept. 7, the IMF said yesterday. Gold, trading 1.3 percent below a record, fell the most in six weeks yesterday. Bullion is headed for a sixth weekly gain, the longest winning streak since September 2007. It usually moves inversely to the dollar, which was set for the biggest weekly gain in a month versus the euro.
The Bangladeshi purchase may "provide the additional driver gold needs to make fresh record highs," said Edel Tully, a London-based analyst at UBS AG. She cited "decent physical buying from India" after yesterday's selloff, which "does help to provide underlying support."
Maybe this is a clue:
Bangladesh bailing out Europe via the IMF? Oh, right, Bangladesh doesn't have nanny state programs they need to finance.The euro dropped this week on concern about sovereign debts in Europe. European Central Bank President Jean-Claude Trichet said in a Financial Times interview published yesterday that banks will need time to be weaned from its emergency lending measures. ECB executive board member Miguel Angel Fernandez Ordonez said yesterday another bout of financial instability can't be ruled out.
And what's this?
The largest ETF hasn't seen an increase in holdings since June?Gold holdings in the SPDR Gold Trust, the biggest exchange- traded fund backed by the metal, fell 0.91 ton to 1,293.53 tons yesterday, the company's website showed. Holdings reached a record 1,320.44 tons in June.
Hear the news today that Treasury is now expecting to get all $700 billion of the TARP money back? It is looking like the USG might just break even on TARP. But did it really do any good? All those toxic assets are still out there, those mortgages are still under water. The financial institutions were just making money foreclosing on them because the government was basically making sure they can't lose money on foreclosures. But foreclosures stopped today so maybe that program is ending. 5 major financials today announced they are putting a freeze on all foreclosures ... or maybe it is just a last minute (temporary) political gambit by Treasury to buy some votes before next month's elections.
If all that TARP money ends up back in the Treasury, if Germany swings farther right, if Spain moves right in their next parliamentary elections (must be held by March 2012 but can be held sooner) ... maybe the gold bubble eases. Oh, and forget Greece, I expect to see them completely default. They are a basket case that there is no saving. The people there are complete idiots demanding the turnip they call a government continue bleeding cash for them. But they are socialists. They always believe there is someone else's money available to them that they can spend.
ADDED: If the price of gold continues to rise, Bangladesh might just slowly sell their recent purchase and pocket a handy profit.
Pabst Blue Ribbon - The beer that made Gerlach famous.
-
can't sit still
- Posts: 4645
- Joined: Tue Aug 23, 2005 4:21 pm
- Location: SoCal
Geekster, I haven't the time for a debate on gold. Nobody loses money in gold if they don't buy at an obvious spike. Sure gold doesn't pay interest. BUT, everything that does pay interest is constantly depreciating. Gold was the best absolute return for any asset class for the last 10 years. REAL simple to understand.
You completely missed my point. Bangladesh did NOT buy any gold. they were used a sa cover because central banks are scurrying around to find any gold that they can to cover naked contracts. You're far behind when it comes to gold movements.
The central banks stopped selling gold a while ago and are now buying it. they have no confidence in paper.
http://www.financialsense.com/contribut ... sical-gold
Soros and Buffet were both BUYING gold at the same time that they claimed that it was in a bubble. There is so much profit and power at stake that you won't find any honesty out there. http://news.goldseek.com/GoldSeek/1286172360.php
You completely missed my point. Bangladesh did NOT buy any gold. they were used a sa cover because central banks are scurrying around to find any gold that they can to cover naked contracts. You're far behind when it comes to gold movements.
The central banks stopped selling gold a while ago and are now buying it. they have no confidence in paper.
http://www.financialsense.com/contribut ... sical-gold
Soros and Buffet were both BUYING gold at the same time that they claimed that it was in a bubble. There is so much profit and power at stake that you won't find any honesty out there. http://news.goldseek.com/GoldSeek/1286172360.php
I don't post things because I believe that they are the absolute truth. I post them because I believe that they should be considered.
-
geekster
- Posts: 4865
- Joined: Wed Sep 08, 2004 2:53 pm
- Location: Hospice For The Terminally Breathing
- Contact:
Nobody loses money in gold if they don't buy at an obvious spike
THAT right there is the "conventional wisdom" that causes people to lose their ass.
Gold fell for almost the entire year of 1975. If you bought gold at $185 in March, it was worth $140 in December.
By September of 1976 it was all the way down to $105. That would have been nearly an 40% loss in about a year and a half.
If you bought gold at ANY time in the 20 years after Jan 1980, you would not have made a dime and depending on when you bought it you could have lost your ass. Gold reached $700/ounce in early 1980, 20 years later it was at $300. At no time from 1981 to 2000 did it ever again get over $500.
Gold is historically a very bad long term investment.
Twenty fucking years without making a dime. Are you sure you want your money tied up that long? Particularly when we saw the biggest runup in the stock market in history over that time?
GO ahead, dude, buy your gold. Just be sure you know when to get out.
In other words, to make money you need to buy when everyone else is selling, you need to buy when gold is making record lows and sell when everyone else is buying and gold is making record highs. If everyone is amazed at how high gold is going and is jumping on the bandwagon, you want to be the one selling it to them. Then you wait for it to crash and THEN you buy. It is "buy low, sell high".
THAT right there is the "conventional wisdom" that causes people to lose their ass.
Gold fell for almost the entire year of 1975. If you bought gold at $185 in March, it was worth $140 in December.
By September of 1976 it was all the way down to $105. That would have been nearly an 40% loss in about a year and a half.
If you bought gold at ANY time in the 20 years after Jan 1980, you would not have made a dime and depending on when you bought it you could have lost your ass. Gold reached $700/ounce in early 1980, 20 years later it was at $300. At no time from 1981 to 2000 did it ever again get over $500.
Gold is historically a very bad long term investment.
Twenty fucking years without making a dime. Are you sure you want your money tied up that long? Particularly when we saw the biggest runup in the stock market in history over that time?
GO ahead, dude, buy your gold. Just be sure you know when to get out.
In other words, to make money you need to buy when everyone else is selling, you need to buy when gold is making record lows and sell when everyone else is buying and gold is making record highs. If everyone is amazed at how high gold is going and is jumping on the bandwagon, you want to be the one selling it to them. Then you wait for it to crash and THEN you buy. It is "buy low, sell high".
Pabst Blue Ribbon - The beer that made Gerlach famous.
-
ygmir
- Posts: 30403
- Joined: Thu Sep 20, 2007 8:36 pm
- Burning Since: 2007
- Camp Name: qqqq
- Location: nevada county
I see gold, not so much as an investment (although, it's done well since I bought in '98), but, as a wealth preserver.
Gold is always worth "something", unlike stocks and such.
Also, nothing is gained, or lost, until you sell..........
But, no, as an overall investment, it's probably not the best.
It does, along with silver, though, have the advantage of intrinsic value, and, demand, not only for industry, but, on an emotional level, among humans.
Gold is always worth "something", unlike stocks and such.
Also, nothing is gained, or lost, until you sell..........
But, no, as an overall investment, it's probably not the best.
It does, along with silver, though, have the advantage of intrinsic value, and, demand, not only for industry, but, on an emotional level, among humans.
YGMIR
Unabashed Nordic
Pagan
Unabashed Nordic
Pagan
-
can't sit still
- Posts: 4645
- Joined: Tue Aug 23, 2005 4:21 pm
- Location: SoCal
Geekster, you're cheery-picking the data. Gold was in a huge spike in the run up to 1980. Conventional BS wisdom says to hold on to stocks for the long run. If one had done the same with gold that was NOT bought in a spike, gold payed better than stocks.
http://www.trustedbullion.com/blog/item ... de-vs-gold
I bought silver from someone who bought during the Hunt Bros mess. They bought for $50.
I started buying at $ 7.51. My brother bought Gold at $ 350. Since it can be assumed, that the dollar will continue to slide, my money is on PM, bought at the RIGHT time.
http://www.trustedbullion.com/blog/item ... de-vs-gold
I bought silver from someone who bought during the Hunt Bros mess. They bought for $50.
I started buying at $ 7.51. My brother bought Gold at $ 350. Since it can be assumed, that the dollar will continue to slide, my money is on PM, bought at the RIGHT time.
I don't post things because I believe that they are the absolute truth. I post them because I believe that they should be considered.
-
geekster
- Posts: 4865
- Joined: Wed Sep 08, 2004 2:53 pm
- Location: Hospice For The Terminally Breathing
- Contact:
Yeah, like a 20 year period of my adult life is "cherry picking".
I predicted some months back that the wheels would start to fall off the cart in about mid-October. It looks like I was pretty close. They look like they are starting to fall off the cart this week.
Several companies in the tech industry were out yesterday with lower earnings estimates. The job numbers released on Friday will be key as will be the "adjustments" to previous numbers.
I predicted some months back that the wheels would start to fall off the cart in about mid-October. It looks like I was pretty close. They look like they are starting to fall off the cart this week.
Several companies in the tech industry were out yesterday with lower earnings estimates. The job numbers released on Friday will be key as will be the "adjustments" to previous numbers.
Pabst Blue Ribbon - The beer that made Gerlach famous.
-
geekster
- Posts: 4865
- Joined: Wed Sep 08, 2004 2:53 pm
- Location: Hospice For The Terminally Breathing
- Contact:
I think I mentioned this in the past year too, intentionally inflating the economy in order to get out from under the current debt load:
http://online.wsj.com/article/SB1000142 ... Collection
So instead of paying off the debt, you inflate the economy and trillion is the new billion.
http://online.wsj.com/article/SB1000142 ... Collection
So instead of paying off the debt, you inflate the economy and trillion is the new billion.
Pabst Blue Ribbon - The beer that made Gerlach famous.
-
can't sit still
- Posts: 4645
- Joined: Tue Aug 23, 2005 4:21 pm
- Location: SoCal
"Yeah, like a 20 year period of my adult life is "cherry picking".
No,No,No,,, I wrote "cheery picking" That's a different animal. That's where you pick out just the good parts of a report.
I won't argue with Mid-October. Others claim ,, after the election.
Something to think about; If BK works so very well for so many individuals, why not Uncle Sam ? I know that the laws are different but, default isn't such a bad idea. Look at Argentina,,, it was years before anybody bought their bonds again. That's going to happen to us anyway. Why not default and cut down on the time "in suspense" ?
No,No,No,,, I wrote "cheery picking" That's a different animal. That's where you pick out just the good parts of a report.
I won't argue with Mid-October. Others claim ,, after the election.
Something to think about; If BK works so very well for so many individuals, why not Uncle Sam ? I know that the laws are different but, default isn't such a bad idea. Look at Argentina,,, it was years before anybody bought their bonds again. That's going to happen to us anyway. Why not default and cut down on the time "in suspense" ?
I don't post things because I believe that they are the absolute truth. I post them because I believe that they should be considered.
-
can't sit still
- Posts: 4645
- Joined: Tue Aug 23, 2005 4:21 pm
- Location: SoCal
We all know that there are several "schools" of economic beliefs. There are Mises, Friedman, Keynes, monetarist, and a few others. Murray Rothbard wrote a good article on the flaws of some of the schools. He advocates a gold standard. I'm not so sure that the discipline brought by gold is worth the limitation on growth. There are ideas floating around about a fractional gold standard. Dunno.
Rothbard has far more expertise in this than I;
http://www.lewrockwell.com/rothbard/rothbard240.html
Rothbard has far more expertise in this than I;
http://www.lewrockwell.com/rothbard/rothbard240.html
I don't post things because I believe that they are the absolute truth. I post them because I believe that they should be considered.
-
geekster
- Posts: 4865
- Joined: Wed Sep 08, 2004 2:53 pm
- Location: Hospice For The Terminally Breathing
- Contact:
I thought these were interesting:
This is a pretty good example where "lower class sizes" and "increased teacher salaries" and other money thrown at the public school system in REAL inflation adjusted dollars has had practically zero impact on student results since 1970.
You might also graph, say, amount of federal dollars spent in Detroit against percentage of students graduating or even population, or median income. What you come up with is the fact that more money thrown at a problem doesn't help (best case) or makes it worse (usual case).
What we need is a wholesale slashing of departments and programs. They are expensive and they produce no positive results.
The US ranks #1 globally in per capita spending for education. We rank 23rd among the 50 developed countries in student scores. We are wasting money. More money doesn't solve problems but people have this emotional feeling that cutting a program that is designed to help whatever problem is somehow mean or bad. If it isn't helping the problem, it is a waste of money. We have thousands of such programs wasting billions of dollar annually that need to be eliminated.
I agree with this statement:
The US spends about 4x per capita on what Spain spends. We spend 2x what France, Netherlands, Canada and Japan spend.
http://www.nationmaster.com/graph/hea_s ... per-person
This is a pretty good example where "lower class sizes" and "increased teacher salaries" and other money thrown at the public school system in REAL inflation adjusted dollars has had practically zero impact on student results since 1970.
You might also graph, say, amount of federal dollars spent in Detroit against percentage of students graduating or even population, or median income. What you come up with is the fact that more money thrown at a problem doesn't help (best case) or makes it worse (usual case).
What we need is a wholesale slashing of departments and programs. They are expensive and they produce no positive results.
The US ranks #1 globally in per capita spending for education. We rank 23rd among the 50 developed countries in student scores. We are wasting money. More money doesn't solve problems but people have this emotional feeling that cutting a program that is designed to help whatever problem is somehow mean or bad. If it isn't helping the problem, it is a waste of money. We have thousands of such programs wasting billions of dollar annually that need to be eliminated.
I agree with this statement:
http://www.cato-at-liberty.org/we-have- ... s-already/If we went back to the staff-to-pupil ratio of 1970, we’d save something like $200 billion annually. And since achievement didn’t go up with the hiring boom, there’s no reason to expect it would fall if we pared back the government school rolls. And if staff reductions were focused on the lowest-performers, we would likely see student learning gains as kids were pulled out of the classes of bad teachers and placed into the classes of better ones. Our classes are currently much smaller than those of other nations that outperform us anyway (about 22 to 24 students per class in the US, versus an international average of 29).
The US spends about 4x per capita on what Spain spends. We spend 2x what France, Netherlands, Canada and Japan spend.
http://www.nationmaster.com/graph/hea_s ... per-person
Pabst Blue Ribbon - The beer that made Gerlach famous.
-
can't sit still
- Posts: 4645
- Joined: Tue Aug 23, 2005 4:21 pm
- Location: SoCal
OK, People, EMPTY YOUR WALLETS !!
"every US family making $31,000 in debt payments per year for 75 years to pay off our national debt."
"this policy is trashing our currency which has fallen 13% since June… as in four months ago."
Something else to consider; "So default is in the cards. Either that or hyperinflation (which occurs when investors flee a currency). "
"Flee a currency" This is another way to look at hyperinflation. It's already happening. The dollar is u]discounted[/u] in some places. A 13% fall in 3 months is quite a fall. The FED can't control the market worldwide. I suspect a default when the dollar-flow just gets too big. Nixon did it in '71. I suppose Obummer will do it next year.
http://www.zerohedge.com/article/three- ... n%E2%80%9D[
"every US family making $31,000 in debt payments per year for 75 years to pay off our national debt."
"this policy is trashing our currency which has fallen 13% since June… as in four months ago."
Something else to consider; "So default is in the cards. Either that or hyperinflation (which occurs when investors flee a currency). "
"Flee a currency" This is another way to look at hyperinflation. It's already happening. The dollar is u]discounted[/u] in some places. A 13% fall in 3 months is quite a fall. The FED can't control the market worldwide. I suspect a default when the dollar-flow just gets too big. Nixon did it in '71. I suppose Obummer will do it next year.
http://www.zerohedge.com/article/three- ... n%E2%80%9D[
I don't post things because I believe that they are the absolute truth. I post them because I believe that they should be considered.
-
can't sit still
- Posts: 4645
- Joined: Tue Aug 23, 2005 4:21 pm
- Location: SoCal
The economy is coasting along on fumes. The Dow Jones Industrial average no longer contains much in the way of industrial. It's just DJA. Big, Bad, Bald ,Ben Bernanke had something to say about all this. MSM didn't report it.
http://www.economicpolicyjournal.com/20 ... es-is.html
Just for the record, Greenspan is a bit worried too;
http://www.bloomberg.com/news/2010-10-0 ... rease.html
http://www.economicpolicyjournal.com/20 ... es-is.html
Just for the record, Greenspan is a bit worried too;
http://www.bloomberg.com/news/2010-10-0 ... rease.html
I don't post things because I believe that they are the absolute truth. I post them because I believe that they should be considered.
-
can't sit still
- Posts: 4645
- Joined: Tue Aug 23, 2005 4:21 pm
- Location: SoCal
Experience has shown that there is no thing as "collective wisdom". BUT, a large body of intelligent people can produce more evidence than a single individual.
I believe that iTulip with Eric Jantzen has 11,000 members. They have an excellent track record and that is what counts. They have an excellent article about "output gap".
http://www.itulip.com/forums/showthread ... post176721
The perfection of containerized shipping threw U.S. manufacturing into direct competition with producers who had much lower labor and capital costs. We weren't / aren't competitive. We borrowed money to maintain a standard of living that we no longer earned.
The PTB committed enormous fraud to suck in money through the financial sector to replace the money lost from diminished manufacturing. They blew bubbles.
All this was done to maintain the empire and the standard of living. Each bubble is bigger and pops with increasing violence.
Labor doesn't want to decrease it's costs. Capital is refusing to reduce it's costs.
In the end, capital will have to come to some sort of accommodation that allows more purchasing power. It's unavoidable. There is NO profit if there is no consumption.
The Current M.O. of using war to consume, to make up for what the consumer isn't buying is unsustainable. It always ends up in bankruptcy.
I believe that iTulip with Eric Jantzen has 11,000 members. They have an excellent track record and that is what counts. They have an excellent article about "output gap".
http://www.itulip.com/forums/showthread ... post176721
The perfection of containerized shipping threw U.S. manufacturing into direct competition with producers who had much lower labor and capital costs. We weren't / aren't competitive. We borrowed money to maintain a standard of living that we no longer earned.
The PTB committed enormous fraud to suck in money through the financial sector to replace the money lost from diminished manufacturing. They blew bubbles.
All this was done to maintain the empire and the standard of living. Each bubble is bigger and pops with increasing violence.
Labor doesn't want to decrease it's costs. Capital is refusing to reduce it's costs.
In the end, capital will have to come to some sort of accommodation that allows more purchasing power. It's unavoidable. There is NO profit if there is no consumption.
The Current M.O. of using war to consume, to make up for what the consumer isn't buying is unsustainable. It always ends up in bankruptcy.
I don't post things because I believe that they are the absolute truth. I post them because I believe that they should be considered.
-
can't sit still
- Posts: 4645
- Joined: Tue Aug 23, 2005 4:21 pm
- Location: SoCal
This is an interesting article. As you know, the FED is a consortium of banks. Big, Bad, Bald, Ben Bernanke is a spokesman for the banks. According to Lew Rockwell, BBBB just gave notice that the FED will NOT hyper inflate the dollar to save congress. After a certain point, they will not monetize the debt. After a certain point private lenders will desert the market. Only the FED can create dollars. If GOV were to nationalize the FED to do unlimited printing, who would buy the debt?
http://www.lewrockwell.com/north/north892.html
http://www.lewrockwell.com/north/north892.html
I don't post things because I believe that they are the absolute truth. I post them because I believe that they should be considered.
-
can't sit still
- Posts: 4645
- Joined: Tue Aug 23, 2005 4:21 pm
- Location: SoCal
The big banks and the bond rating companies were in collusion to sell a lot of crap to trusting investors. They don't trust us now. It's now become a free-for-all of survival.
It's called beggar-thy-neighbor, as all states try to grab a piece of a shrinking economic pie.
http://www.bloomberg.com/news/2010-10-1 ... nters.html
http://news.yahoo.com/s/ap/20101009/ap_ ... 5jZWxlYWRl
To remove any uncertainty, S&P claims that 60 states will be bankrupt;
http://www.rawstory.com/rs/2010/10/sp-6 ... -50-years/
All trust and cooperation is gone. Trust in the dollar is gone. Many states are trying to avoid it. http://www.gata.org/node/9138
Something has to give.
As you know, the U.S. northern command will have 80,000 troops ready to deploy inside the U.S. after the election. We've never had violent elections before. Why does GOV feel the need to do this now? It wouldn't be a complete surprise if GOV was holding back some kind of bad news until after this election. Who knows?
This is an article that speculates on a dollar devaluation taking place after the election. That would necessitate capital controls and a bank holiday. The article shouldn't be taken verbatim. It may have some accuracy in it's projections. Dunno;
http://beforeitsnews.com/story/205/111/ ... ation.html
The world doesn't like the dollar and doesn't trust America,,,or each other. We / they DO trust gold. Get some while it's still cheap.
It's called beggar-thy-neighbor, as all states try to grab a piece of a shrinking economic pie.
http://www.bloomberg.com/news/2010-10-1 ... nters.html
http://news.yahoo.com/s/ap/20101009/ap_ ... 5jZWxlYWRl
To remove any uncertainty, S&P claims that 60 states will be bankrupt;
http://www.rawstory.com/rs/2010/10/sp-6 ... -50-years/
All trust and cooperation is gone. Trust in the dollar is gone. Many states are trying to avoid it. http://www.gata.org/node/9138
Something has to give.
As you know, the U.S. northern command will have 80,000 troops ready to deploy inside the U.S. after the election. We've never had violent elections before. Why does GOV feel the need to do this now? It wouldn't be a complete surprise if GOV was holding back some kind of bad news until after this election. Who knows?
This is an article that speculates on a dollar devaluation taking place after the election. That would necessitate capital controls and a bank holiday. The article shouldn't be taken verbatim. It may have some accuracy in it's projections. Dunno;
http://beforeitsnews.com/story/205/111/ ... ation.html
The world doesn't like the dollar and doesn't trust America,,,or each other. We / they DO trust gold. Get some while it's still cheap.
I don't post things because I believe that they are the absolute truth. I post them because I believe that they should be considered.
-
can't sit still
- Posts: 4645
- Joined: Tue Aug 23, 2005 4:21 pm
- Location: SoCal
GOV and the PPT have been manipulating the crap out of asset and stock markets. In the GOV bond market there is a formula. The more bonds that are sold, the lower the rate of return paid. GOV sells hundreds of $ billions in bonds to the FED. THAT drives down the interest rate paid.
Right now, there is a worldwide game of chicken. Big, Bad, Bald, Ben Bernanke is printing as fast as GOV is offering. The FED now owns more bonds than Japan. China is the only entity that owns more. China produced and sent poisoned drywall and defective toys to pay for those bonds. The FED just pushed a button to get theirs.
The more dollars,,, the less that each one is worth. The people who sell real things want more dollars for their tangible stuff. Gold and oil are the most liquid tangible stuff. GOV tries to depress the price of gold so that their fiat money won't appear so devalued. The stimulus did almost nothing. The economy can NOT stand another oil shock.
Gold is climbing,, oil will soon follow. GOV has set 77 as a bottom line,,, support level for the dollar. It just blew through 77. Gold is climbing,,, oil is creeping. If GOV can't turn this around a fresh oil shock is on it's way.
http://www.dailyfx.com/forex/technical/ ... rates.html
Take a look at the angle of decline on the second graph. THAT is an indicator of your future.
Right now, there is a worldwide game of chicken. Big, Bad, Bald, Ben Bernanke is printing as fast as GOV is offering. The FED now owns more bonds than Japan. China is the only entity that owns more. China produced and sent poisoned drywall and defective toys to pay for those bonds. The FED just pushed a button to get theirs.
The more dollars,,, the less that each one is worth. The people who sell real things want more dollars for their tangible stuff. Gold and oil are the most liquid tangible stuff. GOV tries to depress the price of gold so that their fiat money won't appear so devalued. The stimulus did almost nothing. The economy can NOT stand another oil shock.
Gold is climbing,, oil will soon follow. GOV has set 77 as a bottom line,,, support level for the dollar. It just blew through 77. Gold is climbing,,, oil is creeping. If GOV can't turn this around a fresh oil shock is on it's way.
http://www.dailyfx.com/forex/technical/ ... rates.html
Take a look at the angle of decline on the second graph. THAT is an indicator of your future.
I don't post things because I believe that they are the absolute truth. I post them because I believe that they should be considered.
-
geekster
- Posts: 4865
- Joined: Wed Sep 08, 2004 2:53 pm
- Location: Hospice For The Terminally Breathing
- Contact:
Agreed. The Fed is buying debt in order to keep interest rates artificially low. But this is a policy with what is called in engineering circles "positive feedback" and is unstable. When the fed buys treasury debt, it keeps interest rates low. When US rates are low, treasury bonds are unattractive to foreign buyers who want higher return on their money. This means that with few buyers in the market, the fed must buy even more to keep those rates lower. Over time the net result is that the fed needs to pump increasingly large amounts of money into the Treasury in order to maintain that artificially low interest rate.
At the same time, since there is less demand for US bonds, the demand for dollars goes down. Nobody is buying dollars to invest on Treasuries. The dollar drops which results in gold, oil, and any other commodity traded in dollars to rise in price relative to other currencies.
At a very fundamental level, what the fed is doing is diluting the value of the dollar. Where does the fed get the money to buy those treasuries? The fed doesn't collect taxes. It just prints it. So imagine (for the sake of round numbers, the value is insignificant) there are 100,000 billion dollars in the world in circulation. Now imagine the fed prints 10 billion more and injects them into the economy by buying Treasury bills which the government spends on whatever "bread and circuses" program it has going this week. That puts even MORE dollars into circulation that nobody wants to buy further depressing the dollar. As any foreigner holding a US security is going to lose money as the dollar falls in value, this creates even less incentive for anyone outside the country to buy our debt forcing the fed to buy even more.
Interest rates "want" to go up. If they didn't, the fed wouldn't have to purchase those securities. People would be lining up to buy them. They aren't. "Quantitative Easing" is a disaster. It is the last resort measure a government applies to prevent the spiral into deflation by trying to purposely create inflation.
What we are seeing now is banks sitting on reserves to cover instability in their mortgage loan exposure. The government is scared to death to raise interest rates for fear it will set off another wave of foreclosures which hit an all time record for three months this summer (even more than during the Great Depression). They have managed to get themselves into a double-bind. They are pretty much damned no matter what they do.
This administration has absolutely squandered its ability to get themselves (ourselves) out of this. They wasted the TARP money on General Motors and Chrysler and didn't buy any of those under water mortgages that they were supposed to. They have pumped billions into the banks reserves (look at M0 ). They have bailed out AIG, they have blown the money on everything EXCEPT fixing the problem. They have been playing a game of holding off disaster in the belief that if they don't actually address the problem, it will somehow just magically fix itself. Tomorrow morning we will wake up and our mortgages will all be back above water.
Well, that might actually be the plan. They have halted foreclosures. Now I bet the inflate the living fuck out of the economy. So yeah, the value of your house will now go back to $500,000 but a latte at Starbucks will run you $20, too. But the mortgages won't be under water! NEW mortgages, though, will carry an interest rate of the inflation rate + 3 or 4 percent as they always do. So if they kick the inflation rate to 10% for a while, mortgages are going to go for about 13% or 14% or higher. Car loans will go through the roof.
The government can't sell their bonds at the current rates. They can't increase rates for fear it will collapse the banking system. The fed has to print money to buy the treasuries.
I would say "move to Canada. Right now." but winter is coming on, so make it Costa Rica or Belize.
NOTE:
So Obama gets elected, Geithner becomes Secretary of Treasury and it becomes an absolute free for all. The Treasury becomes a money fountain spewing the world with a currency nobody wants right now and refusing to actually fix the underlying problem.
What they NEED to do is to SLOWLY allow rates to rise. They need to allow foreclosures to proceed. But rather than putting those houses on the market after foreclosure, they should simply raze any homes over 10 years old and put the lot up for sale as a building lot.
That will provide a support level under housing prices by reducing supply at a rate proportional to the foreclosure rate. The more foreclosures, the faster you decrease the supply of housing. At some point market forces come into play and the cost of housing is bid up by a shortage in supply.
That would fix the problem. I first said so something like two years ago. But it is too "out of the box".
At the same time, since there is less demand for US bonds, the demand for dollars goes down. Nobody is buying dollars to invest on Treasuries. The dollar drops which results in gold, oil, and any other commodity traded in dollars to rise in price relative to other currencies.
At a very fundamental level, what the fed is doing is diluting the value of the dollar. Where does the fed get the money to buy those treasuries? The fed doesn't collect taxes. It just prints it. So imagine (for the sake of round numbers, the value is insignificant) there are 100,000 billion dollars in the world in circulation. Now imagine the fed prints 10 billion more and injects them into the economy by buying Treasury bills which the government spends on whatever "bread and circuses" program it has going this week. That puts even MORE dollars into circulation that nobody wants to buy further depressing the dollar. As any foreigner holding a US security is going to lose money as the dollar falls in value, this creates even less incentive for anyone outside the country to buy our debt forcing the fed to buy even more.
Interest rates "want" to go up. If they didn't, the fed wouldn't have to purchase those securities. People would be lining up to buy them. They aren't. "Quantitative Easing" is a disaster. It is the last resort measure a government applies to prevent the spiral into deflation by trying to purposely create inflation.
http://en.wikipedia.org/wiki/Quantitative_easingA central bank implements QE by first crediting its own account with money it creates ex nihilo ("out of nothing").[1] It then purchases financial assets, including government bonds, agency debt, mortgage-backed securities and corporate bonds, from banks and other financial institutions in a process referred to as open market operations. The purchases, by way of account deposits, give banks the excess reserves required for them to create new money, and thus hopefully induce a stimulation of the economy, by the process of deposit multiplication from increased lending in the fractional reserve banking system.
Risks include the policy being more effective than intended, spurring hyperinflation, or the risk of not being effective enough, if banks opt simply to sit on the additional cash in order to increase their capital reserves in a climate of increasing defaults in their present loan portfolio.
What we are seeing now is banks sitting on reserves to cover instability in their mortgage loan exposure. The government is scared to death to raise interest rates for fear it will set off another wave of foreclosures which hit an all time record for three months this summer (even more than during the Great Depression). They have managed to get themselves into a double-bind. They are pretty much damned no matter what they do.
This administration has absolutely squandered its ability to get themselves (ourselves) out of this. They wasted the TARP money on General Motors and Chrysler and didn't buy any of those under water mortgages that they were supposed to. They have pumped billions into the banks reserves (look at M0 ). They have bailed out AIG, they have blown the money on everything EXCEPT fixing the problem. They have been playing a game of holding off disaster in the belief that if they don't actually address the problem, it will somehow just magically fix itself. Tomorrow morning we will wake up and our mortgages will all be back above water.
Well, that might actually be the plan. They have halted foreclosures. Now I bet the inflate the living fuck out of the economy. So yeah, the value of your house will now go back to $500,000 but a latte at Starbucks will run you $20, too. But the mortgages won't be under water! NEW mortgages, though, will carry an interest rate of the inflation rate + 3 or 4 percent as they always do. So if they kick the inflation rate to 10% for a while, mortgages are going to go for about 13% or 14% or higher. Car loans will go through the roof.
The government can't sell their bonds at the current rates. They can't increase rates for fear it will collapse the banking system. The fed has to print money to buy the treasuries.
I would say "move to Canada. Right now." but winter is coming on, so make it Costa Rica or Belize.
NOTE:
That was actually the original Bush plan. The idea was to buy "troubled assets" such as underwater mortgage portfolios. But the chairman of the NY fed at the time, some nitwit named Tim Geithner, talked Treasury out of it and went on this hare-brained bailout binge.Willem Buiter has proposed a terminology to distinguish quantitative easing, or an expansion of a central bank's balance sheet, from what he terms qualitative easing, or the process of a central bank adding riskier assets onto its balance sheet:
Quantitative easing is an increase in the size of the balance sheet of the central bank through an increase it is [sic] monetary liabilities (base money), holding constant the composition of its assets. Asset composition can be defined as the proportional shares of the different financial instruments held by the central bank in the total value of its assets. An almost equivalent definition would be that quantitative easing is an increase in the size of the balance sheet of the central bank through an increase in its monetary liabilities that holds constant the (average) liquidity and riskiness of its asset portfolio.
Qualitative easing is a shift in the composition of the assets of the central bank towards less liquid and riskier assets, holding constant the size of the balance sheet (and the official policy rate and the rest of the list of usual suspects). The less liquid and more risky assets can be private securities as well as sovereign or sovereign-guaranteed instruments. All forms of risk, including credit risk (default risk) are included.[22]
So Obama gets elected, Geithner becomes Secretary of Treasury and it becomes an absolute free for all. The Treasury becomes a money fountain spewing the world with a currency nobody wants right now and refusing to actually fix the underlying problem.
What they NEED to do is to SLOWLY allow rates to rise. They need to allow foreclosures to proceed. But rather than putting those houses on the market after foreclosure, they should simply raze any homes over 10 years old and put the lot up for sale as a building lot.
That will provide a support level under housing prices by reducing supply at a rate proportional to the foreclosure rate. The more foreclosures, the faster you decrease the supply of housing. At some point market forces come into play and the cost of housing is bid up by a shortage in supply.
That would fix the problem. I first said so something like two years ago. But it is too "out of the box".
Pabst Blue Ribbon - The beer that made Gerlach famous.
-
geekster
- Posts: 4865
- Joined: Wed Sep 08, 2004 2:53 pm
- Location: Hospice For The Terminally Breathing
- Contact:
http://www.foxnews.com/us/2010/10/13/fo ... erts-fear/
At some point someone will have to do something with them.
So is stopping all the foreclosures now a good thing, or does it just build up an inventory of homes that will be dumped onto the market later?If you think the U.S. housing market is in bad shape now, prepare yourself for the "tsunami" that's coming. That's what at least one financial expert is saying.
Charles Brown of CB3 Financial says that instead of selling foreclosed homes
, banks have been hanging onto them, waiting for the economy to improve. "These banks that have all this pent-up inventory will unleash it on the market, as soon as they see a minor uptick in real estate prices," Brown said, which will, in turn, reduce housing prices even further.
Experts agree that we have not hit rock bottom yet. People are still losing their jobs. Homes are going into foreclosure at a rate of 120,000 a month. Many who feared foreclosure in their future say they tried to work with the banks for "loan modification
" -- but they "were denied or given the runaround," Rep. Mike Quigley of Illinois said. The banks weren't working with people so they made the problem worse. "Servicers are famous for delay tactics...like claiming the fax machine was out of paper," he said.
You don't have to tell that to Mary Ramirez. When she and her husband bought their home 12 years ago, it was the American dream come true. Now, "it's a nightmare," she says.
Her husband wanted to start his own business, and the value of their home had increased so much over the years, they felt secure taking out a home equity line of credit. The business failed and Ramirez couldn't afford the two payments, mortgage and loan
At some point someone will have to do something with them.
Pabst Blue Ribbon - The beer that made Gerlach famous.
House prices are still insanely inflated over intrinsic value.
Prices will inevitably drop if we want a working economy.
Real estate interests have been fighting like crazy for years to prop up phony prices, while wholesale sales drop lower.
The bubble will end or we will keep paying for it, one way or another.
Can they fake it, now that people know what real values are?
Appraisals here run 30% to 70% below what they used to be, the real value all along.
Just harder to fool people now.
Prices will inevitably drop if we want a working economy.
Real estate interests have been fighting like crazy for years to prop up phony prices, while wholesale sales drop lower.
The bubble will end or we will keep paying for it, one way or another.
Can they fake it, now that people know what real values are?
Appraisals here run 30% to 70% below what they used to be, the real value all along.
Just harder to fool people now.
-
can't sit still
- Posts: 4645
- Joined: Tue Aug 23, 2005 4:21 pm
- Location: SoCal
I don't believe that the foreclosure moratorium was part of the plan of the PTB. First, a couple of judges said, "no docs,, you get no foreclosure. Then the BIG stink with MERS.
The banks were OK with foreclosing and then holding them off-market. The moratorium has killed the CDOs. I'm sure that the banks find that a bit problematic.
"House prices are still insanely inflated over intrinsic value. " Even the intrinsic value is secondary. The price of a house has to reflect the wages in the same area.
" or does it just build up an inventory of homes that will be dumped onto the market later? "
Nope, these houses will be razed. Nobody can afford to heat or cool a Mcmansion. Energy prices are starting to take off. Nobody will want the houses that require a long commute. This was generally recognized at the FED that these houses were worthless. Something had to be done before this fact came to light. Here's the solution;
http://www.rense.com/general92/false.htm
" "Quantitative Easing" is a disaster. It is the last resort measure a government applies to prevent the spiral into deflation by trying to purposely create inflation. "
Nope, after QE comes QE II . We may even have QE III as a "last resort"
"What they NEED to do is to SLOWLY allow rates to rise." That is the textbook solution but, the textbook is quite wrong. Raising interest rates would bring back investors, maybe. It would allow GOV to incur more debt. It would NOT bring back jobs. It would soon make debt-service impossible. Canada spends 17% of GDP on debt service. Philippines 71% [according to Eric Encina} We would be insolvent in no time.
The traditional method for exiting crushing debt is to hyperinflate the currency. BBBB Bernanke is learning that this isn't as easy as one might think. It's a death-trap anyway. All our debt has a very short maturity. If we hyperinflate to make repayment easier, we won't be able to sell any bonds. So, we make it less painful to pay current debt at the cost of crashing the economy AND chasing away all future debt buyers.
There really isn't any painless escape from a debt spiral.
Employment and house prices are inextricable linked.
The banks were OK with foreclosing and then holding them off-market. The moratorium has killed the CDOs. I'm sure that the banks find that a bit problematic.
"House prices are still insanely inflated over intrinsic value. " Even the intrinsic value is secondary. The price of a house has to reflect the wages in the same area.
" or does it just build up an inventory of homes that will be dumped onto the market later? "
Nope, these houses will be razed. Nobody can afford to heat or cool a Mcmansion. Energy prices are starting to take off. Nobody will want the houses that require a long commute. This was generally recognized at the FED that these houses were worthless. Something had to be done before this fact came to light. Here's the solution;
http://www.rense.com/general92/false.htm
" "Quantitative Easing" is a disaster. It is the last resort measure a government applies to prevent the spiral into deflation by trying to purposely create inflation. "
Nope, after QE comes QE II . We may even have QE III as a "last resort"
"What they NEED to do is to SLOWLY allow rates to rise." That is the textbook solution but, the textbook is quite wrong. Raising interest rates would bring back investors, maybe. It would allow GOV to incur more debt. It would NOT bring back jobs. It would soon make debt-service impossible. Canada spends 17% of GDP on debt service. Philippines 71% [according to Eric Encina} We would be insolvent in no time.
The traditional method for exiting crushing debt is to hyperinflate the currency. BBBB Bernanke is learning that this isn't as easy as one might think. It's a death-trap anyway. All our debt has a very short maturity. If we hyperinflate to make repayment easier, we won't be able to sell any bonds. So, we make it less painful to pay current debt at the cost of crashing the economy AND chasing away all future debt buyers.
There really isn't any painless escape from a debt spiral.
Employment and house prices are inextricable linked.
I don't post things because I believe that they are the absolute truth. I post them because I believe that they should be considered.
-
geekster
- Posts: 4865
- Joined: Wed Sep 08, 2004 2:53 pm
- Location: Hospice For The Terminally Breathing
- Contact:
The other problem with rates held artificially low and not allowed to adjust to market pressures is that nobody wants to buy the longer term maturities and the yield curve becomes inverted.
As of yesterday 30-year treasuries were paying 3.84%. Now does ANYONE in their right mind expect inflation to be below 1% for 30 years? That is what inflation has to be in order to make anything. If at any time inflation goes to 4% or more, you are LOSING money on those bonds because your cash value is declining at (inflation rate - interest rate). So if you are making 4% interest but your money is losing value at 5% a year, you are losing 1% a year by having money in 30-year bonds. If they hyper-inflate the economy, anyone holding long-term bonds loses their ass.
You can not inflate the economy without raising interest rates. It just can not happen because nobody is going to accept less interest than the inflation rate. That is why mortgages were 20% during the Carter administration.
What blew up the economy in the late 1970's and early 1980's was a combination of Johnson's "Great Society" spending and the huge bubble of boomers entering the job market. The economy could not expand fast enough to accept the boomers because it was being taxed to death to pay for Johnson's programs. Carter added insult to injury with crap like the "Community Reinvestment" program which is why we are in a recession today. Practically every recession since the Kennedy administration can be traced directly to Congressional meddling in the economy. The problem is that a Congress today can create a disaster 20 or 30 years from now and so people can not relate what is happening now to the Congress that is sitting now but whichever party is in the minority at that time will try to blame the majority party for it.
Senate Democrats blocked changes in the mortgage rules and tighter regulation of the GSEs from 2001 through the bursting of the bubble. Sure, the Republicans had a simple majority for a portion of that time but it takes 60 votes to get a bill to the floor in the Senate and the Democrats were able to block any changes in the GSEs without having a majority in Congress. And then when the Democrats finally DID get a majority, they did nothing. They went on and on about what a "fine job" the GSE's were doing.
This current crisis, like the one in the late 1970's and early 1980's is a creation by the Democrats and just like the 1970's and early 1980's, their response is to pour more fuel on the fire rather than put it out.
This is the second time they have done this in the living memory of many Americans. Government is not the answer, government is the problem.
Watching THIS speech should be REQUIRED in order to vote in this country and should be seen by every high school student in the country:
[youtube][/youtube]
We have had exactly ONE President that was an economics major on college. That was Ronald Reagan and he gave is THE LONGEST period of economic prosperity in the history of the United States.
As of yesterday 30-year treasuries were paying 3.84%. Now does ANYONE in their right mind expect inflation to be below 1% for 30 years? That is what inflation has to be in order to make anything. If at any time inflation goes to 4% or more, you are LOSING money on those bonds because your cash value is declining at (inflation rate - interest rate). So if you are making 4% interest but your money is losing value at 5% a year, you are losing 1% a year by having money in 30-year bonds. If they hyper-inflate the economy, anyone holding long-term bonds loses their ass.
You can not inflate the economy without raising interest rates. It just can not happen because nobody is going to accept less interest than the inflation rate. That is why mortgages were 20% during the Carter administration.
What blew up the economy in the late 1970's and early 1980's was a combination of Johnson's "Great Society" spending and the huge bubble of boomers entering the job market. The economy could not expand fast enough to accept the boomers because it was being taxed to death to pay for Johnson's programs. Carter added insult to injury with crap like the "Community Reinvestment" program which is why we are in a recession today. Practically every recession since the Kennedy administration can be traced directly to Congressional meddling in the economy. The problem is that a Congress today can create a disaster 20 or 30 years from now and so people can not relate what is happening now to the Congress that is sitting now but whichever party is in the minority at that time will try to blame the majority party for it.
Senate Democrats blocked changes in the mortgage rules and tighter regulation of the GSEs from 2001 through the bursting of the bubble. Sure, the Republicans had a simple majority for a portion of that time but it takes 60 votes to get a bill to the floor in the Senate and the Democrats were able to block any changes in the GSEs without having a majority in Congress. And then when the Democrats finally DID get a majority, they did nothing. They went on and on about what a "fine job" the GSE's were doing.
This current crisis, like the one in the late 1970's and early 1980's is a creation by the Democrats and just like the 1970's and early 1980's, their response is to pour more fuel on the fire rather than put it out.
This is the second time they have done this in the living memory of many Americans. Government is not the answer, government is the problem.
Watching THIS speech should be REQUIRED in order to vote in this country and should be seen by every high school student in the country:
[youtube][/youtube]
We have had exactly ONE President that was an economics major on college. That was Ronald Reagan and he gave is THE LONGEST period of economic prosperity in the history of the United States.
Pabst Blue Ribbon - The beer that made Gerlach famous.
-
geekster
- Posts: 4865
- Joined: Wed Sep 08, 2004 2:53 pm
- Location: Hospice For The Terminally Breathing
- Contact:
The ENTIRE sub-prime mortgage market in 2007 was 1.3 trillion dollars. For the amount spent on "stimulus" that didn't work and "TARP" that was used for purposes other than purchasing "troubled assets", we could have bought every single sub-prime mortgage in the US, converted them from adjustable to fixed rate, forgiven some of the capital balance, and made that up in a few months from the interest payments on the fixed-rate loans. We could have THEN sold those mortgages back into the market which would then NOT be underwater and subject to default when interest rates changed because they would have been converted to fixed rate loans.
There would have been NO NEED to bail out AIG and the other default insurers because the mortgages would not have defaulted. We would not have had a huge spike downwards in home prices because without that foreclosure activity, people would have kept their homes and they wouldn't have been thrust onto the market.
The people fiddling with our economic system are simply paying out HUGE sums to their cronies and are NOT fixing the fundamental problem.
Look for "Bailout II" coming soon to a kabuki theater near you.
There would have been NO NEED to bail out AIG and the other default insurers because the mortgages would not have defaulted. We would not have had a huge spike downwards in home prices because without that foreclosure activity, people would have kept their homes and they wouldn't have been thrust onto the market.
The people fiddling with our economic system are simply paying out HUGE sums to their cronies and are NOT fixing the fundamental problem.
Look for "Bailout II" coming soon to a kabuki theater near you.
Pabst Blue Ribbon - The beer that made Gerlach famous.
-
geekster
- Posts: 4865
- Joined: Wed Sep 08, 2004 2:53 pm
- Location: Hospice For The Terminally Breathing
- Contact:
From the Financial Times this evening:
[quote]Increasing expectations the Federal Reserve will pump more money into the US economy next month under a policy known as quantitative easing sent the dollar to new lows against the Chinese renminbi, Swiss franc and Australian dollar. It dropped to a 15-year low against the yen and an eight-month low against the euro.
...
A senior European policy-maker, who asked not to be named, said a further aggressive round of monetary easing by the US Federal Reserve would be “irresponsibleâ€
[quote]Increasing expectations the Federal Reserve will pump more money into the US economy next month under a policy known as quantitative easing sent the dollar to new lows against the Chinese renminbi, Swiss franc and Australian dollar. It dropped to a 15-year low against the yen and an eight-month low against the euro.
...
A senior European policy-maker, who asked not to be named, said a further aggressive round of monetary easing by the US Federal Reserve would be “irresponsibleâ€
Pabst Blue Ribbon - The beer that made Gerlach famous.