Here Are Two Incredibly Frightening Charts

from King World News
Today King World News wanted to share with its global readers two absolutely frightening charts (see below). KWN also reached out to Bill Fleckenstein, President of Fleckenstein Capital, and 20-year veteran Jason Goepfert, President & CEO of Sundial Capital Research, to get their thoughts on these troubling charts.
King World News received exclusive permission from SentimenTrader to reproduce the charts shown below.
Fleckenstein warned, “Maybe there will be a problem with the fiscal cliff, Iran and Israel or Europe? Who knows? The bottom line is these are some pretty chunky numbers on the short side for the commercials. They are very extreme.
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Kyle Bass On The Federal Budget: "I Don't Know How To Fix This"

Hayman Capital's Kyle Bass is back and cutting through the caustic bullshit that surrounds every waking moment in this kick-the-can world. Dispelling the myth of our 'deleveraging' virtue, with global debt having grown from $80tn to over $200tn in the last ten years alone (a 10.7% CAGR) and the frightening reality of central bank balance sheet growth of 16% per annum, Bass concludes (rightly) that "you can't do this for very long" as governments infinitely leverage and central banks have begun the endgame of open-ended money-printing. Addressing the question of timing, Bass notes that while Europe and Japan are 'perceived' to be 'staying together' there are in fact devastating losses occurring (ask Greek bond-holders) and he firmly believes that "Germany will never go joint-and-several with the rest of Europe." The world sits at a place it has never been before in peace-time - as far as global debt balances and deficits - and that is why the global investing playbook is so hard. He goes on to address hyper-levered economies, delayed inflationary outcomes, and worries that the cost-push (lower GDP, higher CPI) prints are just beginning in Europe. As a fiduciary, and something all investors should consider, Bass states "Given what we see coming, our job is not to lose money!"  (more)

Spain Will Default on Its Debt Just Like Greece: John Mauldin

QE Done With, Now Watch ECB! – Adrian Day

John Mauldin on Value Investing in Age of Uncertainty

Continuing coverage, we're posting up notes from the Value Investing Congress.  Below are notes from the presentation of John Mauldin of Millennium Wave Advisors.  His talk was entitled 'How Will the Elections Affect the Endgame?  Finding Value in an Upside Down World.'

He's not a stock picker, but a macroeconomic thinker and writer (author  of "Thoughts from the frontline" a newsletter.

Differences between uncertainty and risk: Uncertainty is the "unknown unknowns" the term used by Rumsfield.  The things we don't even know we don't know.   Investors are obsessed with risk.  We can model it, it makes us feel like scientists.  We have more ways to quantify risk, yet me walked into 2008 missing the obvious.  We think we can model risk. Surprises aren't only the bad things, but the good things (like the invention of the iPhone? or the steam engine)

In 1850 the number one job in the USA was a farm worker, in 1900, it was personal servant.  The cheapest thing was to hire a laborer to do the hand labor.  Uncertainty comes in all forms.  The problem with uncertainty is you can't model it.

Read more: http://www.marketfolly.com/2012/10/john-mauldin-on-value-investing-in-age.html#ixzz28ASegLJn

The Tremendous War In Gold Continues Near The $1800 Level

from King World News
Today acclaimed money manager Stephen Leeb spoke with King World News about the ongoing war in the gold market near the $1,800 level. Leeb also spoke about how it will end. Here is what Leeb had to say: “There really has been a battle just below the $1,800 level on gold. It’s fierce, and it’s ongoing. Some people will say there is some government or bank selling to keep gold in check. Others will say it’s just normal profit-taking as you get toward a round number.”
Stephen Leeb continues:
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Currency Devaluations of the 1930s

newworldeconomics.com /

For some reason, I have the urge to work on this topic a little more. I made available the raw data here:
April 15, 2012: Foreign Exchange Rates 1914-1941
The basic story of this time period, 1920-1940 is something like this: A lot of currencies left the gold standard during WWI, including the U.S. to a small degree. Some then had hyperinflation in the early 1920s. During the mid-1920s, these currencies are repegged to gold. The Great Depression begins. I thought Germany was the first of the big countries to devalue in August of 1931, but it turns out that was wrong. Germany’s government defaulted on its debt that month, and imposed heavy currency controls, but the currency was not (officially) devalued. Thus, Britain was the first of the big countries to devalue, in September 1931. Because the British pound was the world’s premier international currency, much like the dollar is today, many countries followed Britain’s lead and devalued simultaneously or soon after. Japan followed in December 1931, basically to return the yen exchange rate to its pre-devaluation level.
These are annual averages, which unfortunately do not capture some of these events well. The September 1931 devaluations, for example, get averaged into 1931, so the 1931 averages show only a slight decline for the full year. The U.S. devalues in 1933 of course, and repegs to gold in 1934 at $35/oz.
I suppose some of the points made here are that most countries devalued their currencies around the late 1931 timeframe, if not earlier in some instances. This put “beggar thy neighbor” trade pressures on all the non-devaluing countries. When the world’s premier international currency, in this case the British pound, is devalued, usually there are a lot of copycats. The result is that nearly all countries also devalued, if only to restore exchange rates to somewhere near their pre-devaluation levels.
I’ll have the remainder of the countries next week.
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