Saturday, July 20, 2013

New study: Canadians can’t afford the houses they are living in

A new 18 page report on the Canadian credit and housing boom comes to a sober assessment which we have been warning on for some time: “Canada borrowed its way out of the 2009 Recession by stoking our residential housing market to absurd levels. We cannot afford the houses we are living in.”
This presents serious downside risk to the Canadian economy, our financial system, government budgets and taxpayers. See: The Canadian Housing Market for a good overview and some useful charts. As with every asset market, the best time to sell is before the downcycle hits, when prices are high and people are still complacent. For over-indebted Canadian homeowners, and boomers hoping to downsize within the next 5 years, this report is worth consideration.

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Avalanche of City Debt Downgrades and Eventual Bankruptcies Coming Up; Numerous Cities Bankrupt Over Pension Promises / By Mike “Mish” Shedlock /

Yesterday Moody’s downgrades Chicago’s credit rating, pension debt to blame.

Chicago’s credit score is on the way down. The city is getting a small down grade from Aa3 to A3, because of the city’s pension problem.

Moody’s Investors Service says it’s making the move because of “formidable legal and political barriers to pension reform” in the state. The downgrade affects $8.2 billion in debt and means it will cost the city more to borrow money.
According to Moody’s Chicago has $19 billion in unfunded pension liability and faces a “tremendous strain” in meeting their budget and paying law enforcement.

Avalanche of City Downgrades Coming Up
With the bankruptcy of Detroit and numerous cities in California, it will not be long before the rating agencies downgrade city debt en masse.
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12 Mistakes Beginning Investors Should Never Make

Millions of Americans have sat on the sidelines during the four-year bull market, nervously wondering if they should put their money at risk, and thereby having missed out on some colossal gains. Yet beginning investors are always afraid of making costly mistakes, and unfortunately, that only leads to more procrastination -- and more missed opportunities.

The best way to avoid common investing mistakes is to get fair warning about them before you make them. With the goal of giving beginning investors knowledge they can use to steer clear of potential pitfalls, here are 12 mistakes that beginning investors often make.

1. Paying too much in expenses to invest hurts your results right out of the starting gate. Instead of choosing funds with up-front sales loads and hefty annual expenses, aim your fund investments toward no-load funds with lower fees. Over your lifetime, the savings can add up to hundreds of thousands of dollars.  (more)

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Is a Rally Due in Corn, Wheat and Soybeans?

If a a grain producer is reading this report, try to realize your grain buyers and your local elevator managers this year are possibly having a hard time of it.  Basis is wide, the carrying charge is extended and with prices going down, the combination keeps farmers from selling. The buyers and managers are being told if they want it, pay more, a lot more and narrow the basis. Many buyers see a large crop and are wondering how many extra people will I need when the avalanche of grain moves off the farm into town, especially when so little is contracted or priced. 

On the other hand, elevator mangers and buyers are also being called to make sure grain orders are secure. The dog food maker who has had a standing order for 15 years wants to know when they can pick up corn, soybeans, or meal. The feedlot run by the brother-in-law who has a couple thousand feeder cattle losing money from the day they were put into the lot wants to know when his trucks arrive will the corn will be ready. The distiller who doesn't have storage expects shipments for specific times and dates and tells the manger he will go elsewhere if it can't be guaranteed. (more)

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The Rise In Gold Because Of A Shortage Will Be Spectacular / July 19, 2013
With continued propaganda coming out of the Fed, and Bernanke claiming he doesn’t understand gold, today King World News is pleased to share a piece with our global readers that was sent to us exclusively from Grant Williams out of Singapore.  Grant told KWN he wanted to do a follow-up piece to the one he recently released which garnered so much attention from around the world.  Below is his exclusive piece for King World News.
July 19 (King World News) - By Grant Williams
“Since the April smackdown in COMEX gold, physical metal has been pouring out of recognized warehouses and stockpiles as investors all over the world rush to perfect ownership of an asset that, when owned, unlevered, outside the banking system provides the ultimate hedge against market dislocations.
It is incredibly rare to see the price of something falling so precipitously at the same time people are queuing around the block to buy it so what is going on?….
The huge decline in the gold price coincides almost perfectly with the request by the Bundesbank to have 300 tonnes of gold held at the NY Fed returned to Germany – an operation which we are told will take seven years.
For years the Central Banks have been leasing out their gold to bullion banks at essentially zero interest to fund the ultimate establishment-endorsed carry trade but now that trade seems to have run its course and bullion banks are going to have to come up with potentially hundreds of tonnes of gold.
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Bernanke Confirms: “If We Were To Tighten Policy, The Economy Would Tank”

by Mac Slavo

Financial analysts have opined that the United States is well on the road to recovery. They cite various data points to make the case that the multi-trillion dollar bailouts and stimulus have brought us back from the brink of a collapse so serious that Congressional leaders had been told that should the bailouts fail, there was a real possibility of martial law being declared.
We’re doing so well, in fact, that just a couple of years ago President Obama assured the nation of our progress, claiming that we “reversed the recession, avoided a depression, [and] got the economy moving again.”
But were one to take a step back from the rhetoric of talking heads, political leaders and so-called Wall Street experts, a completely different picture begins to emerge.
Continue Reading at…
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Maguire – LBMA Now Staring At Another Gordon Brown Abyss

from KingWorldNews:
The mainstream media has this myopic focus on the over 600 tons of GLD redemptions, while in reality we are witnessing massive bullion demand far in excess of these relatively small ETF redemptions. This bullion demand is actually putting enormous pressure upon immediately deliverable LBMA bullion stocks.
“What is notable, Eric, is that since the ABN AMRO default, where exactly one day after the bank default became public, it forced that defensive attack by the Fed and the Bank for International Settlements.
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These U.S. Companies Will Suffer as China’s Economy Slows

Keep your eyes on China. One of the themes I keep reiterating in these pages is that our world is more interconnected than many investors think. While it is certainly important to be aware of how the American economy is performing, we cannot forget that we are part of the global economy.

While the U.S. is still a large player in the global economy, we are not alone at the top. Over the past decade, the Chinese economy has grown to rival our own in size, and its effects can be felt everywhere. The Chinese economy has been a huge driver for many parts of the global economy, including commodity prices and the materials sector.

However, recent attempts by leaders in that nation to shift the Chinese economy away from a production- and export-oriented nation into one that is driven more by domestic demand is causing significant problems.  (more)

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