Gold & China, again

Seeing bottom building activities in gold and China related shares.

The FED

The FED will be busy "twisting" 400 billion of short term treasuries into longer term mortgage securities. This will keep it occupied for a while. The FED will not come around to printing more money until next spring, at least.

On Fri, Sep 23, 2011 at 12:35 AM, I wrote:

The market needs to plunge & plunge in order to pressure the Fed into printing more money.

Baby Boomers

Baby Boomers to dump equities for cash.

Stock markets in down trend for next 15 years.

Re: mkt reversal

The market needs to plunge & plunge in order to pressure the Fed into printing more money.

On Mon, Sep 19, 2011 at 5:58 PM, I wrote:

market reversal downward til first week of November.

mkt reversal

market reversal downward til first week of November.

2013

OK, all the bad news has been scheduled for 2013:

In Europe, the best case is that Greece will go into 'orderly default' in 2013;

The U.S. will go from spending money to cutting spending starting 2013.

The question is, what should the market do, between now and 2013?

Obama's spending plan not sustainable

A few weeks ago, all the noise irradiating from Washington was how to cut the federal deficit. There was a great struggle that shook the world yet very little was cut.

Now the President wants to spend 400+ billion dollars to create jobs.

The US is already borrowing 40% of the money it spends. If this new spending goes through, the US could be borrowing 50%. In other words, it would spend twice as much as it earns.

Not sustainable, not sustainable at all.

Of course Obama says the new spending would be offset by 400+ billion dollars of deficit cuts elsewhere. If you believe that, re-read the first paragraph.

Second Great Depression?

Today the New York Times published an article titled "A Second Great Depression, or Worse?" written by a former chief economist of the IMF. It seems the main stream media is finally warmed up to the idea that there could be another Great Depression, or something worse.

Well, during the first Great Depression, the markets dropped 90%, and then we had World War II.  What could be worse than that?  Global thermal nuclear war?

There are two "solutions" to the debt problem in the United States & Europe.  Cutting spending, OR printing lots of money.  Printing money will cause inflation, which the rich class doesn't like. So the Republicans will favor cutting spending.

Cutting government spending, unfortunately, will hurt the economy and reduce employment. (All that spending is paying for retiree's direct income, government & hospitals and company employee's salaries, and many companies' bottom lines.) This will reduce tax revenue and increase social spending and lead to even greater deficit and government debt. This will be followed by greater demand by the rich class to cut even more spending and hurt the economy even more.  So cutting spending will spiral into a great depression.

I suspect the Republicans will initially win the agenda and spending will be cut. This will lead to the second Great Depression, but by then there will be more poor people and more Democrats, so the Democratic agenda will eventually win, and the US will start to print lots of money -- this is how the second Great Depression will be different from the first one.

Printing lots of money will cause high inflation.  The USD is a global currency, so the high inflation will be a global one -- especially when there will be a global competitive devaluation of all currencies. But printing money will solve your debt problem -- if you owe 50 trillion, just print 100 trillion and keep next 50 for yourself.  The US will come out of this relatively intact -- at the cost of global hyper inflation and/or USD losing its global reserve currency status.

Nasdaq megaphone pattern

Another month-end reversal?

budget conundrum

The national interest of the United States is that of a debtor. Its interest lies in continually lowering the value of each outstanding dollar bill.

The personal interest of most Republicans (and anyone else who has a sliver of money) is the opposite.

That is that essence of the budget fight.

The Obama budget calls for the U.S. to pay out $900 billion net interest in year 2021 -- of course, all with newly minted, fresh-smelling new money.  

The Republican figure is not that much better:  $600 billion.

Egypt

Something always comes along when the market needs to move.

Re: Party's over

Yeah _that_ party is over, but we are not predicting the big one at this time.  There will be another big one, but it seems too early for it now (may be around 2013).   Maybe it'll only do a 25-30% at this time.

The party is over ... go home ....

Party's over

The party is over ... go home ....