Friday, November 26, 2010

Buy Gold: It’s the Only Way to Combat Government Spending

By The Mogambo Guru

I tried to tell my boss that my unexplained absence was because I was so Completely Freaked Out (CFO) that I didn’t know what to do all weekend except hide like a little crybaby coward in the Big, Beautiful Mogambo Bunker (BBMB) waiting for the inevitable collapse of the entire world order because of the massive over-creation of money by the foul Federal Reserve, where I whimpered and cried in fear because We’re Freaking Doomed (WFD) and there is nothing – repeat, nothing! – that can be done.

Naturally, I lost track of time, and so my absence is completely understandable and not my fault, but is, instead, the fault of the foul, filthy Federal Reserve creating so much money, for so long, that the US economy has been turned into a bloated, cancerous, twisted, bloated, government-centric grotesquerie that has almost destroyed us.

I didn’t tell her that through the mist of my bitter tears, though, I still managed to get a good laugh from the quixotic earnestness of Erskine Bowles and Alan Simpson, chairmen of some idiotic National Commission on Fiscal Responsibility and Reform trying to craft a plan to reduce government spending in an effort to reduce the national debt. (more)

3 Great Stock Buys for Black Friday

American consumers will begin to show their true colors when they make an appearance at their favorite mall or retail outlet this Black Friday - the official kick-off to the holiday shopping season.

The Friday after Thanksgiving marks the day when many retailers can count on high store traffic as consumers hit shopping malls and web sites around the country. The big question this year is whether or not the American consumer will show up on Black Friday.

Investors of all stripes should be cognizant of what the consumer is doing right now, and soon the data will reveal exactly how financially healthy American's really are. I believe we'll see a stronger consumer emerge this Friday, and while I think they'll be looking for value, I also expect they'll be looking to loosen the purse strings a little bit.

A quick run-down of the retail industry revealed some great buys. First, Kohl's (NYSE: KSS) looks great after breaking out past $54 resistance. It should keep running to $60 before any kind of substantial pull back. This is a great long above $54.50. (more)

The middle men making a killing out of Facebook

Whether you are in Silicon Valley or on Wall Street – or anywhere with a portfolio of shares and some money to spare – the hottest topic in investment has long been, when will Facebook float on the stock market? But for some rich individuals, and cast of brokers and other middlemen, there is no patience for finding out. They want a piece of Facebook now – and they're getting it.

While the social networking site is firmly embedded in the culture, with more than 500 million users worldwide, its young founder, Mark Zuckerberg, is still trying to work out a way to generate profits commensurate with its social influence and with the huge financial hopes pinned on him.

Shares in the company have been given to only a small gaggle of employees, past and present, and to the firm's early venture capital backers, but that hasn't stopped a feeding frenzy in which they are changing hands at higher and higher valuations on private markets. In recent weeks, some stock has sold at a price that values the company at $41bn (£26bn), suggesting it is the No 3 most valuable internet business after Google and Amazon. (more)

European Banks ‘Nearly Bust’ If Euro Collapses, Evolution Says

The European banking system would be “nearly bust” if the euro were to be abandoned which means the 16-member currency “cannot and should not go,” Evolution Securities Ltd. said.

“If the euro is abandoned, and we go back to the peseta, lira, escudo, drachma etc., devaluations would follow immediately,” said Arturo de Frias, head of bank research at Evolution in a note to investors today, adding the industry is a “great buying opportunity.” Devaluations mean write-offs “of a size that would render the whole European banking system completely insolvent.”

Contagion from Europe’s sovereign debt crisis is spreading to Spain, sparking concern that the European rescue fund set up in May isn’t large enough. French, German and U.K. banks could lose 360 billion euros ($479 billion) if the euro collapsed, assuming a 30 percent devaluation in the wake of the restoration of national currencies, said de Frias. (more)

Is A Twenty Year Low On The Real (Not Nominal) S&P Approaching?

The fact that looking at market performance on a nominal basis (i.e., unadjusted for the decline in purchasing power, or the increase in hard asset prices) is foolish, has recently been understood by even some of the most garish financial tabloids. That said, Ben Bernanke could not be happier if the general public remained broadly dumb about the so-called Zimbabwe phenomenon: i.e. when the stock market goes up by a billion percent, yet purchasing power drops by a trillion. Which is why today we present a visual projection by Sean Corrigan of Diapason Securities, which looks at the S&P on a trade weighted basis, and which looks at the various market cycles not so much from a stock/PE boom-bust basis, but from the view of monetary strength of the underlying currency backing the US stock market, namely the dollar. Corrigan says: "Remember that it never does to get carried away by nominal prices, meaning one should always try to adjust for either or both of currency changes and alterations in the purchasing power of the cash in which an asset is quotes. On that first reckoning, asll you triskaidekaphobes might want to review the prospects for the S&P500, where a 50% loss of dollar-adjusted value over the next year or two, would just be neurologically exact for words." Why 50%? As the chart below shows, a 50% real retracement in stock prices is precisely where the downward channel of the lower lows of the S&P would take us. What that wouold mean is that by October 2012, the S&P will hit approximately a 20 year low. Considering all the monetary fornication that the chairman has embarked on vis-a-vis the middle class and the US currency, we will be lucky if in 2 years the market IS down just 50% adjusted for the amount of KY poured down (or as the case may be, up) the appropriate middle class orifice. (more)

Hungary Follows Argentina in Pension-Fund Ultimatum, `Nightmare' for Some

Hungary is giving its citizens an ultimatum: move your private-pension fund assets to the state or lose your state pension.

Economy Minister Gyorgy Matolcsy announced the policy yesterday, escalating a government drive to bring 3 trillion forint ($14.6 billion) of privately managed pension assets under state control to reduce the budget deficit and public debt. Workers who opt against returning to the state system stand to lose 70 percent of their pension claim.

“This is effectively a nationalization of private pension funds,” David Nemeth, an economist at ING Groep NV in Budapest, said in a phone interview. “It’s the nightmare scenario.”

Hungary is rolling back pension changes implemented more than a decade ago as countries from Poland to Lithuania find themselves squeezed by policies designed to limit long-term liabilities by shifting workers into private funds. Now the cost is swelling debt and deficit levels at a time when the European Union is demanding greater fiscal discipline. (more)

BNN: Top Picks

Paul Harris, Partner and Portfolio Manager, Avenue Investment Management, shares his top picks.

click here for video

UBS Sees U.S. Stocks Rising Into 2011

The Standard & Poor’s 500 Index could fall as much as 3 percent in coming weeks, representing a buying opportunity for investors, as the U.S. benchmark gauge will rally into 2011, according to technical analysts at UBS AG.

Zurich-based Michael Riesner and Marc Mueller wrote in a report dated yesterday that a new support level, or floor limiting declines, for the index is between 1,155 and 1,145, a 2.2 percent to 3 percent decline from yesterday’s 1,180.73 close. The S&P 500 has slipped 0.2 percent so far this month and is headed for the first monthly decline since August as concern escalated that Europe’s debt crisis will spread.

“Another one or two weeks of consolidation should bring us into position for another bull run,” Riesner and Mueller wrote. The analysts see the first resistance level, or ceiling limiting gains, for the S&P 500 at 1,227, a 3.9 percent increase compared with yesterday’s close. “We are gaining conviction for a mid- December low projection, which finally opens the way for a classic Christmas/yearend rally.”

In technical analysis, investors and analysts study charts of trading patterns and prices to predict changes in a security, commodity, currency or index. UBS is ranked as the top bank for equity technical analysis and charting according to a 2010 Thomson Extel survey.

‘The Euro Game Is Up! Who the hell do you think you are?’ – Nigel Farage MEP

Mounting Unemployment in America: Poverty and "Social Explosion" by Bob Chapman

The social net has become a bit more frayed. Soon extended unemployment benefits will cease and 2 million Americans will have to dip into their savings, if they have any. This is an outgrowth of the effects of free trade, globalization, offshoring and outsourcing. We have lost 8.5 million jobs over the last ten years to this destructive process. We have seen more than 42,000 manufacturing plants leave the country as well. There are now more than 17 million Americans unemployed and the U6 official government unemployment figures 17%. If you remove the bogus birth/death ration, the real figure is 22-5/8%. Over that ten-year period we have lost about 5.5 million manufacturing jobs or about 1/3rd of that labor force. As recent as 1985, 25% of output was in manufacturing, now it is close to 11%. America’s physical infrastructure is in a shambles, so that transnational conglomerates can bring us cheap goods to suppress inflation and bring these companies mega-profits, which they keep stored offshore to bypass taxation. They presently have $1.7 trillion in such profits.

This in part has been caused by deficit spending and the creation of money and credit since August 15,1971, when the US left the gold standard. It is not surprising as a result that 81% of the US economy is considered in poor shape and that the IMF fears a social explosion. You could call this a financial death spiral. There is no question the economy is moribund and the next stage could be dead in the water and that is after QE1 which saw $2.5 trillion enter the economy. The first installment of QE2 is in process and that $600 billion will grow to another $2.5 trillion, to be followed by Q3 and a further injection of another $2.5 trillion. There are those who say QE2 should be eliminated. We wonder if they realize that if it is, that the American economy, and most of the world’s economy will collapse. If we had allowed a severe recession to play itself out in the early 1990s all this would have never happened, but that is not what Wall Street and banking wanted. We should have bitten the bullet three years ago, but the elitists wanted to take the problem at least one step further to be sure the final result would bring about one-world government. Readers, that is what this is really all about.(more)

Peter Schiff : The Irish Should Default On Their Debt, Not Become Slaves To Bankers