Friday, January 29, 2010

McAlvany Weekly Commentary, Jan 27, 2010

Bahamas 2010: An Interview With Bert Dohmen

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Our goal is to provide you, the investor, with fresh, current and useful content to help you make the right choices and decisions on how to invest your money and make profits over both the short and long-term. Serious investors will find a wealth of investment information, including Bert Dohmen’s own fundamental and technical analysis of the economy and markets included in each of his service.

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The Wal-Mart Model of Self-Destruction: Lowest Prices, Always

The Wal-Mart Model of Self-Destruction is simple: low prices are all that matters.

The devolution of the American citizen into a self-destructing consumer starts with the devolution of a value system into an monomaniacal obsession: "the only thing that matters is the lowest price," regardless of the true costs or consequences.

The propaganda of marketing has so hollowed out American culture that most citizens cannot recall a time that "Consumerism" wasn't the unofficial religion of American society. And what is the First Commandment of "consumerist religion"? The lowest price is all that matters.

Quality doesn't matter; we're going to move/throw it away anyway. (more)

Capitalist Fools

Few places in New York are less likely to inspire grand dreams than Stuyvesant Town and Peter Cooper Village, the twin housing projects that sprawl across 80 acres of the Lower East Side. Built by MetLife in the 1940s, the project encompasses block after block of boxy brick apartment buildings and stolid public spaces, entirely barren of inviting corners or eye-catching detail. The critic Lewis Mumford dubbed it “the architecture of the Police State”; a slightly kinder motto might have been “What do you expect for $68.50 a month?”

Yet when MetLife spruced up the complex and put it on the market in 2006, real-estate moguls jetted in for the sale. A joint venture put together by Tishman Speyer and BlackRock carried the day through its willingness to, as The New York Times noted, “pay up—way up—to unlock future profits in the sprawling Manhattan properties.” At $5.4billion, their winning bid made the sale the most expensive real-estate deal of all time. (more)

Chanos: Global Recovery Ends If China Bubble Bursts

Legendary short seller James Chanos says a bubble is building in China’s financial system that could derail the global economic recovery.

“China is the engine of growth that will hopefully pull us out of the morass that we find ourselves in,” he said in a recent speech.

“But the closer you look at that engine, the more you begin to see that it may throw a piston rod soon.”

Chanos, founder of Kynikos Associates, stresses that he doesn’t expect a crash in China anytime soon. (more)

Gartman: Dollar Rise May Trigger Big Stock Drop

With the dollar’s strength increasing, investors should be wary of the market correcting itself, says Dennis Gartman, founder of The Gartman Letter.

Stocks could easily tank, he said.

“You should be aware of the fact that a correction is probably setting in (and) that this could be a bit more than a two or three percent correction, that perhaps something along the lines of five to ten percent is upon us, and I think you need to be very, very careful," Gartman told CNBC.

Investors expecting more good news to arise from the earnings season will likely be disappointed, he said. (more)

Game Over for the American Middle Class – Inflation Adjusted Wages up 20 Percent in Last 20 Years While Housing Costs are up 56 Percent and Healthcare

The struggle for average Americans to keep up is largely becoming an act of will power and force in this current grand recession. Now you wouldn’t think that there is a definite war raging against the middle class if you simply follow the mainstream media but the facts speak to a more distilled and corporatized method of debt slavery. Americans are working more hours trying to stay in the same place that they believe would keep them on pace to having the American Dream. And this dream is merely the ability to afford a home, provide your children with a good education (public or private), and save enough to have a retirement that doesn’t require you to eat cat food after a lifetime of working. That is at the root of what most average Americans would want after a full working career. (more)

Senate permits gov't to borrow an additional $1.9T

The Democratic-controlled Senate has muscled through a plan to allow the government to go a whopping $1.9 trillion deeper in debt.

The party-line 60-40 vote was successful only because Republican Sen.-elect Scott Brown has yet to be seated. Sixty votes were required to approve the increase. The measure would lift the debt ceiling to $14.3 trillion. That's about $45,000 for every American.

Democrats had to scramble to approve the plan, which means they won't have to vote on another increase until after the midterm elections this fall. To win the votes of moderate Democrats, President Barack Obama promised to appoint a special task force to come up with a plan to reduce the deficit. The House must still vote on the measure before it's sent to Obama for his signature. (more)