Tuesday, July 28, 2009

Hourly Action in Gold

The US Dollar managed to bounce precisely near the critical 78.40 support level on the weekly price chart just in time for the Chinese delegation’s arrival in Washington. Even an avowed cynic such as myself has to marvel at the temerity of the US monetary authorities intervention foray this morning. The fact that the pop higher in the Dollar came at a major chart support level makes the stunt even more obvious. Were the Dollar to have broken below 78.40 and taken out this swing low made early last month, there was a very real danger of a sharp meltdown all the way to 76 before any buyers would have be anticipated to show up. That would have made the US lose face in front of China and strengthened the hand of the Chinese as they voiced their dismay at US profligacy and runamok spending. (more)

977,000 Mortgages in California are Toxic Waste: The Misleading Headline Numbers and New Home Sales Increase because of a $13,000 Price cut

With any more spinning we would be in a financial carousel. New home sales data was released on Monday and showed a “whopping” increase in sales. This is the primary headline on all mainstream reports. Little is mentioned that the median price of a new home fell to $206,200 in June from $219,000 in May (small caveat). A drop of over $13,000 in one month apparently is not important enough to discuss. (more)

The Commercial Real Estate Bust: Gearing up for a $3 Trillion Headache

The commercial real estate bust is going to be legendary. We are talking trillions of dollars. The attention of Americans is being pulled away by massive market volatility that has seen the S&P 500 shoot up 44 percent in four months. Yet the U.S. Treasury and Federal Reserve have kept their eye on this market and have started examining a “Plan C” focused on bailing out this industry even before major problems occur. The new preemptive doctrine of bailouts. That is, they want to saddle the taxpayer with further burdens on some of the most speculative bets known to humankind. (more)

Animal Farm 2009

“All animals are equal, but some animals are more equal than others.”

George Orwell – Animal Farm

The United States has gradually degenerated from a Republic based on individual liberties to a socialized oligarchy run by an exclusive few. The country was founded upon the platform of individual rights. We declared our independence from Great Britain because of excessive regulation and taxation. Americans fought for the right to live their lives free from the subjugation of an overbearing governmental body. The Founding Fathers declared our independence with these immortal words:

We hold these truths to be self evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life Liberty and the pursuit of Happiness. That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness. (more)

Peter Schiff explains why he was right about free-markets

Introduction: Peter Schiff is one of the few non-biased investment advisors to have correctly called the current bear market before it began and to have positioned his clients accordingly. He has been quoted in many of the nation's leading newspapers, and appears regularly on CNBC, CNN, Fox News, Fox Business Network, and Bloomberg. His best-selling book, "Crash Proof: How to Profit from the Coming Economic Collapse" was published by Wiley & Sons in February of 2007. His second book, "The Little Book of Bull Moves in Bear Markets: How to Keep your Portfolio Up When the Market is Down" was published by Wiley & Sons in October of 2008. An expert on money, economic theory, and international investing, Peter is a highly recommended broker by many leading financial newsletters and investment advisory services. He is also a contributing commentator for Newsweek International and served as an economic advisor to the 2008 Ron Paul presidential campaign. (more)

CNBC nonsense Positives of a Down Dollar

Gold, Silver, Oil & Nat Gas Technical Trading Setups

Commodities are trying to hold their ground and could go either way quickly. There is a lot of chatter going on about gold and silver. I am hearing extreme theories from everyone I talk with. Generally when I see the market get jumpy we tend to see volatility increase which translates into sharp rallies or sell offs. (more)

Real Treasury Yields Highest In History

The highest inflation-adjusted yields in 15 years are helping provide the Treasury with record demand at auctions as the U.S. prepares to sell $115 billion of notes this week.

Treasuries are the cheapest relative to inflation since 1994 after consumer prices fell 1.4 percent in June from a year earlier. The real yield, or the difference between rates on government securities and inflation, for 10-year notes was 5.10 percent today, compared with an average of 2.74 percent over the past 20 years. (more)

Another Credit Crisis

The next shoe to drop… credit cards?

By the time this is all over, another 14% of the $1.9 trillion U.S. consumer debt market will default, the IMF predicted over the weekend. That’s another $266 billion in coming losses for American mega banks. The IMF (not known for their worst-case scenario forecasts) expects $172 billion in similarly soured loans in Europe.

Of those bad consumer loans, credit card defaults are rising fast. Credit card charge-offs, loans that banks don’t expect to ever be repaid, have risen to a record 10.7%. Moody’s, the steward of this particular data, says charge-offs will continue to rise until unemployment begins to abate. By their estimate, joblessness will peak at 10% next year and credit card charge-offs will top 13%… both rosy projections. (more)

Don’t Trust Economists Over 30

The new issue of The Economist magazine has a cover showing a book titled “Modern Economic Theory” melting into a puddle of what looks like chocolate-coated vanilla ice cream, and with the caption “Where it went wrong – and how the crisis is changing it,” which refers to how nobody in their right mind trusts any egghead “economists” anymore, and even Paul Krugman, one of the worst of the worst of them, now admits that the last 30 years of macroeconomics as practiced by these econometric, computer-head lunatic savants was “spectacularly useless at best, and positively harmful at worst” which is still sugar-coating it, as far as I am concerned, and it has been disastrously, cataclysmically harmful in a huge inflection-point kind of way and the future will be dramatically different, as in Much, Much Worse (MMW). (more)