Wednesday, September 7, 2011
Jay Taylor: Turning Hard Times Into Good Times
The Prosecution of George W. Bush (or Whom?) for Murder
Eric Sprott: Financial Train Wreck Coming Soon! Got Gold? Better Yet, Got Silver?
Eric Sprott (www.sprott.com) and James Turk, Director of the GoldMoney Foundation, talk about how there isn't enough silver in the silver market to back existing "paper silver" commitments. Sprott thinks that "silver will be the investment of this decade".
They talk about the dynamics of the gold market and how it has entered the second phase of its bull market. They look at ETF, central bank and coin demand. They also look at the huge paper-to-physical mismatch. Eric calculates that only 0.75% of financial assets are currently in gold.
They discuss the importance of owning physical, not paper gold, and keeping it yourself or with a trustworthy company that gives you direct access to it. They talk about GATA and the significance of the work they do. They also talk about Sprott PHYS and PSLV and how they allow holders the option to redeem their physical metal, unlike most other ETFs.
They talk about fiat currencies and their flaws. The dollar, the euro and how bank leverage has built up since the Fed was established in 1913, setting the stage for a huge crash. Eric talks about bank failure Friday, the numbers released by the FDIC and all the signs pointing to the coming train wreck.
They talk about the attempts to prevent liquidation of bad assets and how governments are throwing good money after bad. Eric then talks about the 3 conditions that he thinks are necessary to see gold as overvalued, and how we are very far from that point at this stage. Both James and Eric see gold as reaching a parabolic phase before the bull market runs its course. They also comment on how little confidence most mining companies have in gold. This interview was recorded on August 4 2011 in London.
Eric Sprott is a shareholder of GoldMoney.
Money: How to Get It and Keep It
By Doug Casey, Casey Research
Even if you are already wealthy, some thought on this topic is worthwhile. What would you do if some act of God or of government, a catastrophic lawsuit or a really serious misjudgment took you back to Square One? One thing about a real depression is that everybody loses. As Richard Russell has quipped, the winners are those who lose the least. And as far as I’m concerned, the Greater Depression is looming, not just another cyclical downturn. You may find that, although you’re far ahead of your neighbors (you own precious metals, you’ve diversified internationally and you don’t believe much of what you hear from official sources), you’re still not as prepared as you’d like.
I think a good plan would be to approach the problem in four steps: Liquidate, Consolidate, Create and Speculate.
Step 1: Liquidate
Chances are high that you have too much “stuff.” Your garage, basement and attic are so full of possessions that you may be renting a storage unit for the overflow. That stuff is costing you money in storage cost, in depreciation and in the weight of psychological baggage. It’s limiting your options; it’s weighing you down. Get rid of it.
Right now it has a market value. Perhaps to a friend you can call. Or to a neighbor who might buy it if you have a yard sale. Or to some of the millions of people on eBay. A year from now, when we’re out of the eye of the financial hurricane and back into the storm, it will likely have much less value. But right now there’s a market. Even if most people are no longer wearing those “He who dies with the most toys, wins” T-shirts that were popular at the height of the boom, there are still buyers. But the general standard of living is dropping, and mass psychology is changing. In a year or two, you may find there aren’t any bids and the psychology of the country has changed radically. People will be desperate for cash, and they’ll all be cleaning out their storage units (partly because they can’t afford the rent on them).
Liquidate whatever you don’t actually need – clothes, furniture, tools, cars, bikes, collections, electronics, properties, you-name-it. You’ll be able to re-buy something like it, or better, cheaper. Just as important, you’ll feel light and mobile. Unburdened by a bunch of possessions that own you and weigh you down. It will definitely improve your psychology, which is critical to the next stage. And the cash it generates will be helpful for the rest of the plan.
Step 2: Consolidate
Take stock of your assets. After Step 1, that should be a lot easier, because you’ll have less junk but a lot more cash. You’ll already feel more in control and empowered. And definitely richer. But your main assets aren’t money or things. It’s the knowledge, skills and connections you possess. Take stock of them. What do you know? What can you do? Whom do you know? Make lists and think about these things, with an eye to maximizing their value.
If you’re light on knowledge, skills and connections, then do something about it – although if you’re reading this, you probably already live life in a way that builds all of those assets daily. But there’s always room for improvement. Think the Count of Monte Cristo. Or, if you’re not so classically oriented, think Sarah Connor after she met the Terminator.
Part of this process is to look at what you’re now doing. The chances are excellent there’s a better and more profitable allocation of your time. Even successful rock stars tend to reinvent themselves every few years. You don’t want to get stale. That leads to Step 3. (more)
The Misery Index: Measuring Your Misfortune
When the economy takes a tumble, economic prognosticators turn to the numbers, comparing the downturn to past recessions. The decline of major stock market indexes, such as the Dow Jones Industrial Average (DJIA) , the Standard and Poor's 500 and the Nasdaq are closely tracked. In addition, major economic indicators such as the unemployment rate and gross domestic product (GDP) are monitored and opined upon. While these indicators certainly provide insight to captains of industry and Wall Street titans, the Misery Index reflects the country's economic health through the lens of two items that matter most to those of us on Main Street: inflation and employment.
The Misery Index, created by economist Arthur Okun (and often incorrectly attributed to Robert Barro), is calculated by adding the inflation rate and the unemployment rate. Government statistics provide both numbers, with the yearly change in the Consumer Price Index (CPI) serving as half of the equation and the national unemployment rate serving as the other half.
The index is used to characterize the current economic condition. The main assumption in this index is that an increasing unemployment rate and high inflation have a negative impact on economic growth.
Fame In the 1970s
The Misery Index gained its fame in 1976 when Jimmy Carter disparaged his competitor for the oval office, Gerald Ford, by suggesting that no man responsible for giving the country a Misery Index as high as that seen during Ford's presidency had a right to even ask to be president. Four years later, the Misery Index topped 20 and set a high-water mark that still stands today. Carter was swept from office when Ronald Regan asked the American people: "Are you better off than you were four years ago?"
A Look Back at Misery
| Year | Inflation Rate (%) | Unemployment Rate (%) | Misery Index |
| 1973 | 6.16 | 4.86 | 11.02 |
| 1974 | 11.03 | 5.64 | 16.67 |
| 1975 | 9.20 | 8.48 | 17.68 |
| 1976 | 5.75 | 7.70 | 13.45 |
| 1977 | 6.50 | 7.05 | 13.55 |
| 1978 | 7.62 | 6.07 | 13.69 |
| 1979 | 11.22 | 5.85 | 17.07 |
| 1980 | 13.58 | 7.18 | 20.76 |
More Recently
The Misery Index declined in popularity after Reagan took office, largely disappearing from popular reference until 2008, when the credit crisis struck and unemployment rose. Suddenly, misery was back. Steadily climbing unemployment numbers and an uptick in inflation revived interest in tracking the nation's misery.
Misery's Return
| Year | Inflation Rate | Unemployment Rate | Misery Index |
| 2007 | 2.8% | 4.6% | 7.4 |
| 2008 | 3.8% | 5.8% | 9.6 |
| Source: Bureau of Labor Statistics | |||
How Bad Can It Get?
When unemployment is on the rise and the specter of inflation rears its ugly head, "how bad can it get?" becomes a popular question. While there is no definitive way to answer this question, there are some historical precedents to consider.
In 1980, the national inflation rate hit 13.58% when it peaked under Jimmy Carter. The Misery Index also peak in 1980, hitting 20.76 for the year. National unemployment peaked in 1982 at 9.71% under Ronald Regan.
The national statistics, however, are somewhat misleading. While they provide an average for the nation, they do not reflect reality at the more granular level. Consider that in early 2009 the unemployment rate in the state of California topped 10%. At an even more granular level, El Centro, California posted the highest unemployment rate in the nation at 22.6% in December, 2008 (more than double the 11.1% seen in Detroit, Michigan). By comparison, cities such as McKeesport, Pennsylvania saw unemployment hit 13.7% during the decline of the steel industry in the 1980s.
What You Can Do
While none of us can fix the economy or stop the ax from falling if our job is on the line, we can all take steps to prepare for the worst case scenario. Living within your means is the first step.
Once you have the spending under control, it's time to save. Take a look at Are You Living Too Close To The Edge? if a missed paycheck will make your finances collapse, and read Build Yourself An Emergency Fund for help determining if you have enough savings to cover the costs of unforeseen crises.
Planning ahead also comes into play when your job is on the line. If you must leave your job, The Layoff Payoff: A Severance Package will help you go out fighting for the best benefits you can get, and Taking The Lead In The Interview Dance will guide you as you learn the steps that will help lead you to a new career.Andrew Maguire: LBMA Shorts Will be Forced to Take Losses
Andrew Maguire continues: Read More @ KingWorldNews.com
Three Things I'm Teaching My Children About Wealth
Ellen: Hi, Tom. So, today I want to go over some basics of finance.
Tom: What’s on your mind?
Ellen: As you know, I read all the emails our readers send us. We get so many letters from people who don’t know the first thing about investing. It got me thinking about what kind of basic advice you’d give to a total novice.
Tom: Like what I’d teach my kids?
Ellen: Yeah. Like what are the first three ideas about wealth you’ll instill in your kids?
Tom: I’ve given a lot of thought to that actually, even though my kids are still babies. The very first thing that I want my kids to know is that they are not entitled to money or wealth or anything for that matter, even Christmas presents. They’ll have to earn it. So many people these days think money is an entitlement. You see it every day in the news. But you also see it on the family level. Kids act as if they are somehow entitled to food, toys, video games, and even a roof over their heads. But why should they be? Just because they have parents, it doesn’t mean they should get everything they want…or anything at all for that matter.
So first of all, I’m not going to pay my kids an allowance.
Ellen: Why not?
Tom: Because an allowance would reinforce the sense of entitlement. They can make money by earning it: doing the dishes, making the bed, mowing the lawn...there are a million things. And my wife and I will pay them generously for doing those things. But I’m not going to just give them money.
Ellen: Okay, so are you going to charge them rent, too?
Tom: That’s not a bad idea.
Ellen: Okay, so what comes next?
Tom: The second thing that I want them to learn is the power of compound interest. Just to explain compound interest, let’s take, for example, $100 at 10% interest. At the end of a year, you’ll have $110. During the second year, you’ll earn interest on $110 instead of $100. In the third year, you’ll earn interest on $121…and so on. The numbers get enormous over time, simply because you’re earning interest on your interest.
It’s the only mathematically-certain way I know of to produce a fortune. And because time is the most important element in compounding, it’s an incredibly powerful idea for children to understand.
So, as soon as they’re old enough to understand some arithmetic, I am going to sit down with the classic compounding tables and show them how it works. After that, assuming they have the discipline to follow through, they will get rich. There’s no doubt about it.
But, on the flip side, I’ll also show them that compounding works on debt as well—which is why I hate debt. When you owe money, it compounds because you owe interest. That accumulates on top of the original debt. The debt balloons.
There are two types of people in this world: people who pay interest, and people who receive it. I’m of the latter. I have no debt, no mortgage, no credit cards, and no car payments. And I want it to stay that way.
Ellen: Wow, that’s pretty impressive.
Tom: I don’t believe in spending money that I don’t have. Debt is an expensive indulgence.
That’s the next thing I am going to teach my kids: when you’re pondering a debt, instead of looking at the interest rate (like I think everyone does), you should look at the total amount of interest you will have to pay in dollars over the lifetime of the loan. Once you look at it like that, it suddenly hits you how expensive borrowing money really is.
For example, say you borrow $100,000 with a thirty-year mortgage at 7%. Over thirty years, you'll end up paying $140,000 in interest to the bank. In the end, you’re out $240,000 for a house that cost less than half that. Not a good deal.
Ellen: Okay, but what if you don’t have $100,000 lying around?
Tom: You rent. If you don’t have the money to buy a house, you shouldn’t be buying one. That's the way it is in almost every other country in the world.
Ellen: So are you going to tell your kids that they should, under no circumstances, borrow money?
Tom: The only reason I’d ever use debt is to finance a business or a productive asset. And, I’d only do it if the asset generated a greater return than the debt cost. You could argue a house is a productive asset because it does produce rent if someone lives in it (so I can see how, in that case, a mortgage might make sense). But, I would still never incur debt to finance anything except a business.
Ellen: Anything else to add?
Tom: May I recommend a book?
Ellen: Sure.
Tom: Richard Maybury wrote the best books on finance for beginners I know of. He calls it the Uncle Eric Series. Each book is a collection of letters to his imaginary thirteen-year-old nephew. The whole series is great. It covers history, politics, economics, and law. For finance, I’d recommend Personal, Career, and Financial Security and Whatever Happened to Penny Candy?
Ellen: Thanks, Tom.
Tuesday, September 6, 2011
December 2012 : Collapse of the Dollar , Bank Holiday & Martial Law
The Collapse of December 2012 : Set in December 2012. This speech details what we believe the President might say on the day America's foreign creditors finally stop lending us money, and demand repayment for our country's debts...The largest debts EVER accumulated in the history of mankind.The prediction is that the dollar along with other currencies will collapse the NWO will demand a single currency and the Euro is being kept afloat for that reason food will be expensive so stock up now with long life products fuel will be treble today's price its all by design hyperinflation is months away claim global economists, the banks are in complete control and will achieve their goal starving nations will gathering their own wealth, we will suffer not them.Actually, that's what's gonna happen, yes. Chinese, as much as they know the dollar is not worth the paper it's not printed on (Quote Gerald Celente ) will need to buy foreign companies. That will increase the demand for USD, other than that, not much can they do. It's basically: Let's keep this system going on.
December 2012 : Collapse of the Dollar and Bank Holiday
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