One of the consequences or side effects of central banking monetary inflation (creating money out of thin air) is it masks over the benefit of the free market in lowering costs. That means the average person and investor doesn't understand how the battle between the free market and central banking is going, who is winning, and what is coming our way over the long term as a result.
As the size of the money supply continues to rise - which is what allows the faulty fractional reserve banking system to operate even while it's failing - it results in inflation. That is the reason the free market can be thriving, but the economy can have the appearance of struggling, because of the hidden costs associated with the monetary policies of central banks.
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Showing posts with label Central Banks. Show all posts
Showing posts with label Central Banks. Show all posts
Thursday, June 4, 2015
Monday, January 28, 2013
Currency Wars the New Normal
Even though some people such as International Monetary Fund chief economist Olivier Blanchard have attempted to downplay the stimulus released into economies by central banks around the world, which has resulting in currency wars, the reality is that more countries will respond to the aggressive actions of the Federal Reserve, which has been the institution that fired the first, gigantic salvo, which has instigated the wars.
Bizarrely, Douglas McWilliams, who is over the Centre for Economics and Business Research, based in London, blames the Bank of Japan as the entity that launched the currency wars, even though the United States has aggressively debased the U.S. dollar for several years.
Most other developed nations are looking closely at the value of their currencies versus the U.S. dollar, especially China, Germany, and the European Union, as they will respond in kind if it looks like exports, and thus growth, will be seriously hampered by the easy-money policies of America and the Federal Reserve.
It's unlikely these practices will end any time soon, as the Federal Reserve is committed to creating money out of thin air in order to attempt to grow the U.S. economy, even though the practice continues to fail to reach that goal, even while the debt continues to pile up.
Bizarrely, Douglas McWilliams, who is over the Centre for Economics and Business Research, based in London, blames the Bank of Japan as the entity that launched the currency wars, even though the United States has aggressively debased the U.S. dollar for several years.
Most other developed nations are looking closely at the value of their currencies versus the U.S. dollar, especially China, Germany, and the European Union, as they will respond in kind if it looks like exports, and thus growth, will be seriously hampered by the easy-money policies of America and the Federal Reserve.
It's unlikely these practices will end any time soon, as the Federal Reserve is committed to creating money out of thin air in order to attempt to grow the U.S. economy, even though the practice continues to fail to reach that goal, even while the debt continues to pile up.
Thursday, November 8, 2012
EU Private Sector Faltering
The recent announcements by a number of corporations participating in the EU concerning slashing tens of thousands of jobs, underscores the reality that the private sector continues to struggle, even as governments had hoped they would help turn the region around.
Among those recently announcing jobs being slashed are UBS (UBS), which said it'll be be getting rid of a massive 10,000 jobs - which has already begun. Other major employers cutting thousands of jobs (aggregately) are ING (ING), Kloeckner, Ericsson (ERIC) and Bombardier.
A growing number of economists believe the next couple of years in Europe will see jobless rates jump to even worse levels than they stand at now. We probably won't know until around the summer months because these current layoffs won't affect data until about six to nine months after the layoffs are implemented.
The major problem in Europe is that governments have finally started to shrink a little, causing bloated staffs to be laid off, but at a rate that the private sector can't keep up with.
Of course it was never a reality that outrageous government debt and spending could be compensated for by the private sector after years of abuse, fraud, and unsustainable promises and practices.
People in some countries don't even think in terms of the private sector as a legitimate work environment because they've been brainwashed into believing government is the great healer of nations. Most are finding out too late that that is a fallacy, and since the private sectors of nations were weakened by these outlooks and effects, it's impossible in a short period of time to rectify all the mistakes that have been made, even if they wanted to.
It has taken far too long for governments in the EU to shrink, and they're no paying for that ongoing irresponsible mindset, as austerity is forced upon the nations of Europe, with a private sector not robust enough to absorb the people being released from work.
The good news is over time this will be positive for the private sector as workers and the rest of the people realize that governments can't provide for them in the ways that were promised. It's productivity that results in prosperity, not artificially created government jobs that provide ridiculous benefits the productive are asked to shoulder. Those days are thankfully coming to an end, as are outrageous union demands.
Because Europe has played far too long with countries that long ago should have decreased the size of government, now the forced austerity is pressuring private companies who must operate under actual market conditions, and not the illusory markets created by governments throwing debt-induced money around while being enabled by central banks and failing Keynesian policies.
Yet some foolish economists continue to say things like there must be growth in the "public" or private sector if some of the nations in the EU are to stay in it. What about limited government and downsizing don't these quacks understand? It's inevitable. These governments and their debt coming from endless spending and programs are through. In a relatively short period of time what they were before the sovereign debt crisis will no longer exist.
There will be governments still in place of course, but the bloated monstrosities they have become will gradually be shrunk down in size to the benefit of everyone but the parasites that used them to their advantage.
In the months ahead we'll see growing pressure in Greece, and probably Spain and others in the eurozone to start thinking in terms of abandoning the euro for their own currencies. That would result in some short-term pain, but over the long haul it would be the best for all countries in the region, as well as the rest of the world.
But if nations continuing to use their central banks as a rich uncle not willing to rein in a spoiled kid's spending don't change, this will extend across the globe, as the United States is hanging on by a thread, and with over $220 trillion in unfunded liabilities facing the nation, and China having taken up some bad Keynesian money creation habits, it may be only time before pressure rises on all of them.
Tuesday, October 2, 2012
Ron Paul on "Gold is Good Money"
Ron Paul continues his decades-long assault on the Federal Reserve creating money out of thin air, saying on his congressional website that gold is in fact, "good money," against the anemic quality of paper or digital money.
According to Paul, "Fiat money is not good money because it can be issued without limit and therefore cannot act as a stable store of value."
Also of significance is Paul's exposure of the central banks, government/media axis, which continues to speak badly of gold because the "defamation of gold wrought by central banks and governments is because gold exposes the devaluation of fiat currencies and the flawed policies of government. Governments hate gold because the people cannot be fooled by it."
Paul has had other allies for years, including those associated with the Austrian school of economics, but he cites others who are apparently starting to get the message, such as the Bundesbank president, who recently stated that gold is "a timeless classic."
Also noted are a couple of analysts at Deutsche Bank (DB), which also said gold is good money.
According to Paul, gold should be considered good money because it offers everything the market (people) demand, "it is divisible, portable, recognizable and, most importantly, scarce - making it a stable store of value. It is all things the market needs good money to be and has been recognized as such throughout history," says Paul.
Contrary to the assertions of central banks around the world concerning gold not being real money, they continue to acquire more gold holdings in response to the outrageous boost in fiat money into the global economy.
Ron Paul concludes this on the evil of fiat money: "A fiat monetary system gives complete discretion to those who run the printing press, allowing governments to spend money without having to suffer the political consequences of raising taxes. Fiat money benefits those who create it and receive it first, enriching government and its cronies. And the negative effects of fiat money are disguised so that people do not realize that money the Fed creates today is the reason for the busts, rising prices and unemployment, and diminished standard of living tomorrow."
He is right. Among other things, as mentioned above, inflation is always the hidden tax associated with the creation of money out of thin air.
It has already been shown to be ineffective to boost the economy, as evidenced by the anemic results of QE1 and QE2, and will be the same results of QE3 and beyond.
People should have the option to choose what money they want to use for transactions, savings and investing, and the central banks and governments around the world fight this because it knows if that were to happen, it would expose the negative effects of fiat money, as those holding gold would wildly prosper in contrast to those using paper and digital funny money.
Why Metals, Energy Look Attractive Going Forward
With the misguided commitment from major central banks around the world to "stimulating" the economies of the countries or regions they are based in, especially the euro zone, United States and Japan (China will probably stimulate soon), it predicates the probability that energy and base metal commodities, along with gold and silver, should push up in price over the next several years, with some possibly extending even longer, such as in the case of silver.
Even if there is a further global economic slowdown, the fallout from the stimulus efforts will start to point to resources and resource companies as one of the few viable places to place one's capital.
As measured by inflationary pressures, oil, gas and other commodities get more attractive as the U.S. dollar falls in value, as it will continue to do as money continues to be created out of thin air.
The caveat will be how much competing currencies fall in relationship to the U.S. dollar.
Successful commodity investors in the near future will be those who properly analyze the valuations of a particular commodity; getting in before it begins its upward run in price.
Some commodities at this time are overbought, while others are still available at a good price.
For example, natural gas appears to be at, or close to a bottom, so there is, for the most part over time, only one place to go, and that's up.
And even if there is still a little room to move down, the price of natural gas for long-term investors is very attractive, and those entering now should reap significant rewards over the next several years.
Oil on the other hand may be in for some rough times, as it may be on the opposite end of the spectrum, possibly ready to pull back significantly after years of high prices.
The geopolitical situation will weigh more on the prices than other factors, as many energy companies have improved operations to the point where there is a lot of oil available at lower costs than in the recent past.
So with the certainty the Europe and the United States will continue to inflate through fiat money, and Japan continuing on the course it set a couple of decades ago, there is little reason to believe a number of commodities won't continue to be among the best performers going forward, especially in precious and base
metals, as well as in some energy segments.
Monday, September 10, 2012
Jim Rogers Says Euro Zone To Pay 'Terrible Price'
Billionaire investor and commodities expert Jim Rogers said in an interview on CNBC today that the euro zone will pay a "terrible price" going forward no matter if the European Central Bank (ECB) launches a large acquisition of bonds or not.
Rogers said: "These guys have been saying the same old garbage for a long time. It's not a game-changer - it's good for the market for maybe a month. The debt keeps going higher and higher and eventually we'll all going to pay a terrible price."
As for what he considers a misguided idea for investors to get back into buying some riskier assets because of the announcement, he said this:
"It's not an opportunity to make money for me. This is not good for the market and it's not going to last. Every three or four months they have a summit and they say: Ok guys, everything is ok now. The market goes up. But we're getting a little tired of this and the market is getting a little tired of this," Rogers noted.
As for the commodities bull market Rogers has predicted and continues to assert will last for a long time, he said this:
"The bull market in commodities will end some day - but some day is a long way away.
"Commodities have been correcting for a while. Now everybody knows they're throwing money into the market, and history tells you that when they do this the way to protect yourself is to own real assets whether it's silver or rice. If the world economy gets better, I own commodities because there's shortages developing. If it doesn't they're all going to print money. It's the wrong thing to do, but it's all they know to do."
There is also a growing belief that the Federal Reserve is poised to introduce another round of quantitative easing in the United States, and the central bank of China is also believed to be ready to provide more stimulus in its slowing economy.
Over the long term, when added together, it'll be a powerful impetus for numerous commodity price increases.
Rogers said: "These guys have been saying the same old garbage for a long time. It's not a game-changer - it's good for the market for maybe a month. The debt keeps going higher and higher and eventually we'll all going to pay a terrible price."
As for what he considers a misguided idea for investors to get back into buying some riskier assets because of the announcement, he said this:
"It's not an opportunity to make money for me. This is not good for the market and it's not going to last. Every three or four months they have a summit and they say: Ok guys, everything is ok now. The market goes up. But we're getting a little tired of this and the market is getting a little tired of this," Rogers noted.
As for the commodities bull market Rogers has predicted and continues to assert will last for a long time, he said this:
"The bull market in commodities will end some day - but some day is a long way away.
"Commodities have been correcting for a while. Now everybody knows they're throwing money into the market, and history tells you that when they do this the way to protect yourself is to own real assets whether it's silver or rice. If the world economy gets better, I own commodities because there's shortages developing. If it doesn't they're all going to print money. It's the wrong thing to do, but it's all they know to do."
There is also a growing belief that the Federal Reserve is poised to introduce another round of quantitative easing in the United States, and the central bank of China is also believed to be ready to provide more stimulus in its slowing economy.
Over the long term, when added together, it'll be a powerful impetus for numerous commodity price increases.
Monday, September 20, 2010
Euro Versus Dollar EUR/USD or Both Versus Gold?
Talk of the performance of the euro versus the dollar EUR/USD increasingly seems irrelevant in light of the misguided practices of governments and central banks around the world, who are addicted to attempting to stimulate their economies through printing money and creating more debt.
In that sense, gold is increasingly being thought of as a currency by those who didn't consider that in the past, and in that regard is considered the strongest in the world by far at this time, probably the major reason it continues to rise.
Currencies around the world are continuing to be debased because of these monetary practices.
So when comparing the U.S. dollar with the euro, it's increasingly becoming irrelevant, as are most currency comparisons. It's more relevant to compare all the currencies with gold. That's more telling and important at this time than the other.
In that sense, gold is increasingly being thought of as a currency by those who didn't consider that in the past, and in that regard is considered the strongest in the world by far at this time, probably the major reason it continues to rise.
Currencies around the world are continuing to be debased because of these monetary practices.
So when comparing the U.S. dollar with the euro, it's increasingly becoming irrelevant, as are most currency comparisons. It's more relevant to compare all the currencies with gold. That's more telling and important at this time than the other.
Wednesday, April 7, 2010
BofA (NYSE:BAC): Columbia Peso Run Over
Columbia Peso being cooled off
Bank of America (NYSE:BAC) says the strong run of the Columbian peso is over, as central bank head Jose Dario Uribe begins to battle its strength in order to increase exports and improve the nation's economy.
The method to be used will be an increased acquisition of U.S. dollars.
Estimates are the peso will plunge by about 9 percent against the dollar by the end of 2010; by far the largest fall of any major currency the world, according to a number of analysts.
Of all emerging market countries, the Columbian peso has risen the most, gaining 6.4 percent against the dollar in the first quarter alone.
With about $8 billion being estimated to be added to foreign capital entering the country in 2010, the approximate $20 million a day spent to acquire dollars isn't considered a large enough move by many of those in business.
So far since the new policy has been instituted, the peso has dropped 1 percent in value.
Bank of America (NYSE:BAC) says the strong run of the Columbian peso is over, as central bank head Jose Dario Uribe begins to battle its strength in order to increase exports and improve the nation's economy.
The method to be used will be an increased acquisition of U.S. dollars.
Estimates are the peso will plunge by about 9 percent against the dollar by the end of 2010; by far the largest fall of any major currency the world, according to a number of analysts.
Of all emerging market countries, the Columbian peso has risen the most, gaining 6.4 percent against the dollar in the first quarter alone.
With about $8 billion being estimated to be added to foreign capital entering the country in 2010, the approximate $20 million a day spent to acquire dollars isn't considered a large enough move by many of those in business.
So far since the new policy has been instituted, the peso has dropped 1 percent in value.
Friday, February 19, 2010
Dollar Surge on Greece Fears
U.S. Dollar Sovereign Default
Although both faulty currencies, the U.S. dollar has been getting the better of the euro lately, especially in light of concerns over sovereign default be Greece continue.
Another factor is it seems the Federal Reserve could tighten up its money policy a little sooner than expected, also giving the U.S. dollar an upward thrust.
Of course Greece is far from the only concern in Europe, as the PIIGS Portugal, Ireland, Italy, Greece and Spain, are considered to be in a similar situation, with any of them exposed to sovereign default.
While long on talk and short on ideas, other than saying they're prepared to help Greece, there is growing concern on how that could be done, especially if the other exposed countries look to be, or need to be, bailed out as well.
If they collapse, there may no longer be a European Union, or a euro for that matter.
An interesting potential anomaly in all of this is gold and the U.S. dollar may increase in price and strength as a result of all this, making the usual movement of gold in opposite direction of the dollar no longer the case.
U.S. Dollar Sovereign Default
Although both faulty currencies, the U.S. dollar has been getting the better of the euro lately, especially in light of concerns over sovereign default be Greece continue.
Another factor is it seems the Federal Reserve could tighten up its money policy a little sooner than expected, also giving the U.S. dollar an upward thrust.
Of course Greece is far from the only concern in Europe, as the PIIGS Portugal, Ireland, Italy, Greece and Spain, are considered to be in a similar situation, with any of them exposed to sovereign default.
While long on talk and short on ideas, other than saying they're prepared to help Greece, there is growing concern on how that could be done, especially if the other exposed countries look to be, or need to be, bailed out as well.
If they collapse, there may no longer be a European Union, or a euro for that matter.
An interesting potential anomaly in all of this is gold and the U.S. dollar may increase in price and strength as a result of all this, making the usual movement of gold in opposite direction of the dollar no longer the case.
U.S. Dollar Sovereign Default
Tuesday, November 4, 2008
Commodities: Jim Rogers - America is bankrupt
Commodities will increase in price as last bubble - US Treasury Bonds - bursts!
America is bankrupt, according to investment legend Jim Rogers. "The American government bonds are the world’s last bubble and the price of commodities has to increase."
Charismatic
The famous and charismatic investor, guru if you will, Jim Rogers, visited ABN Amro Netherlands last Friday. RTL Z was at ABN headquarters as well and recorded a number of statements, investment tips and opinions about the world economy.
Rogers
During the seventies Jim Rogers (66) managed a successful hedge fund with George Soros. After that, he traveled and went into commodities.
Last Friday Rogers went at it in front of a roomful of ABN private banking clients. We had an exclusive 15-minute interview with Rogers.
The most important points:
America is bankrupt. American government bonds are extremely overvalued. "The world’s last bubble." America is in debt for over 13.000 billion (13 trillion) dollar and adds a 1.000 billion dollar debt each year. According to Rogers this can not continue for long. Therefore, he went short in long-term US goverment bonds. “These bonds have peaked.” By the way: Rogers owns Dutch government bonds. “They are safe.”
"The fact that the dollar is gaining rapidly is only temporary", Rogers says. “All hedge funds were short on the dollar and because of the appreciation of the dollar there is a short squeeze for the dollar. Managers have to close thier positions and they have to buy dollars instead.” “This is temporary, within a year you have to get rid of the dollar. Fundamentally it is a drama.”
Commodities
Last year we spoke Rogers as well. At that time he advised us to invest blindly in commodities and agriculture. That was a bad advice, because Rogers’ commodities index (Rici) has fallen around 40 per cent last year, while ABN’s African Commodities Certificate dropped even from 11 euros to 5 euros during that time.
Oil
Rogers: "Whether oil costs 45 or 145 dollars, it doesn’t really matter. What does matter is that with oil, like with many other commodities, supply is decreasing while demand is increasing. In the long run this will result in a considerable increase in prices."
"The question is not if the price of a barrel of oil will increase again, but how expensive a barrel of oil will be eventually?"
"The oil supply will fall with 6 to 9 per cent each year, according to the IAE. The demand for oil will increase in China and developing countries. This has nothing to do with economy, the market is simple. It is simply the law of supply and demand."
High inflation
Rogers has been telling his commodity-story for a few years now. On Friday he sighed while saying: "People don’t understand that the commodity-market will be bullish, this will lead to high inflation."
Commodity prices will be a lot higher in the future than they are now.
"The world is going to change, there is no way around it. If you don’t understand that and you don’t adapt you will be suffering in five years. The Chinese see on TV how we live in the West. They want that too! That generates an enormous demand for products and materials."
"All countries in the world have been printing money, the United States in particular. That created a huge amount of money, resulting in the icing on the cake for commodity prices. But fundamentally you have to look at supply and demand."
The United States
Rogers has been negative about the United States for a long time. "You should be worried, America is out of control". The enemies of the United States are currently looking into how to profit from the weaknesses of the United States. When we asked him: Obama or McCain? he answered: "Neither of them. They are both turkeys, they take the wrong decicions."
Bernanke or Trichet?
Rogers is not a big fan of Bernanke, the president of the Federal Reserve. With a big smile Rogers tells us: "Bernanke will continue to print money until there are no trees left in America."
He is more positive about Trichet of the ECB. At least he knows what he is doing and what it’s all about.""
Banks
Rogers is fiercely against bailing out the banks. "That has never worked. Let them go bankrupt. Right now bad-managed banks are saved with money from good banks and from you and me. After that, the failing but nationalized banks are going to compete with the well-managed banks and they gain their market share. Ridiculous. The Bail-out plan is a disaster. In 1929 we had a recession but after the government interfered, it became a depression. You should not interfere."
Stocks
Rogers: "You can make good money with stock-picking, perhaps even more than with commodities, but only if you pick the right equity at the right moment. The stockmarket in the west is still too expensive. But the market is extremely volatile. In the five years to come you can earn money with trading ranges".
China and Russia
"Do know know what the problem is? When at work, the Chinese people ask when they can work and what they can do. We ask how day's off we have. That’s a big difference."
Rogers has bought Chinese equities in the last few weeks. "I don’t know if we have reached the bottom, but the market is low. I am a bad timer, by the way."
"My daughter is five years old and she speaks Mandarin fluently. After the dollar has collapsed as a world currency, there is only one currency that could take over that role: the renminbi. That could happen in 15 to 20 years. Other currencies cannot take over the role of the dollar, including the euro."
Russia
The former Soviet Union will be split up in even more smaller countries. And with that, there will be some wars."
"In Russia you are lucky if they kill you right away. You are unlucky if they first arrest you, then keep you in prisson for 15 years, torture you and kill you after that". He joked.
"What you see therby is that the Russians take their capital abroad, while the Chinese take it home."
City or countryside?
According to Rogers farmers have a bright future. "within a few years farmers will drive Maserati’s and all stockbrokers will be cabdrivers."
In Holland you could have a farm with a lot of land at the moment. “Agriculture has been out of vogue for 30 years, but now it will be hot because the demand for food will increase greatly."
“The stupidest thing you can do right now is to sell your farm and buy a house in the city instead. The housing market is in decline."
War
And finally: "If a war breaks out, it will begin in the Middle East. Amsterdam will be last. I would love to live here if the weather was any better... Amsterdam should have been 600 miles further to the south!"
The Treasury bond market continues to look like it's about to burst, and commodities will be the only place of safety left for investors.
America is bankrupt, according to investment legend Jim Rogers. "The American government bonds are the world’s last bubble and the price of commodities has to increase."
Charismatic
The famous and charismatic investor, guru if you will, Jim Rogers, visited ABN Amro Netherlands last Friday. RTL Z was at ABN headquarters as well and recorded a number of statements, investment tips and opinions about the world economy.
Rogers
During the seventies Jim Rogers (66) managed a successful hedge fund with George Soros. After that, he traveled and went into commodities.
Last Friday Rogers went at it in front of a roomful of ABN private banking clients. We had an exclusive 15-minute interview with Rogers.
The most important points:
America is bankrupt. American government bonds are extremely overvalued. "The world’s last bubble." America is in debt for over 13.000 billion (13 trillion) dollar and adds a 1.000 billion dollar debt each year. According to Rogers this can not continue for long. Therefore, he went short in long-term US goverment bonds. “These bonds have peaked.” By the way: Rogers owns Dutch government bonds. “They are safe.”
"The fact that the dollar is gaining rapidly is only temporary", Rogers says. “All hedge funds were short on the dollar and because of the appreciation of the dollar there is a short squeeze for the dollar. Managers have to close thier positions and they have to buy dollars instead.” “This is temporary, within a year you have to get rid of the dollar. Fundamentally it is a drama.”
Commodities
Last year we spoke Rogers as well. At that time he advised us to invest blindly in commodities and agriculture. That was a bad advice, because Rogers’ commodities index (Rici) has fallen around 40 per cent last year, while ABN’s African Commodities Certificate dropped even from 11 euros to 5 euros during that time.
Oil
Rogers: "Whether oil costs 45 or 145 dollars, it doesn’t really matter. What does matter is that with oil, like with many other commodities, supply is decreasing while demand is increasing. In the long run this will result in a considerable increase in prices."
"The question is not if the price of a barrel of oil will increase again, but how expensive a barrel of oil will be eventually?"
"The oil supply will fall with 6 to 9 per cent each year, according to the IAE. The demand for oil will increase in China and developing countries. This has nothing to do with economy, the market is simple. It is simply the law of supply and demand."
High inflation
Rogers has been telling his commodity-story for a few years now. On Friday he sighed while saying: "People don’t understand that the commodity-market will be bullish, this will lead to high inflation."
Commodity prices will be a lot higher in the future than they are now.
"The world is going to change, there is no way around it. If you don’t understand that and you don’t adapt you will be suffering in five years. The Chinese see on TV how we live in the West. They want that too! That generates an enormous demand for products and materials."
"All countries in the world have been printing money, the United States in particular. That created a huge amount of money, resulting in the icing on the cake for commodity prices. But fundamentally you have to look at supply and demand."
The United States
Rogers has been negative about the United States for a long time. "You should be worried, America is out of control". The enemies of the United States are currently looking into how to profit from the weaknesses of the United States. When we asked him: Obama or McCain? he answered: "Neither of them. They are both turkeys, they take the wrong decicions."
Bernanke or Trichet?
Rogers is not a big fan of Bernanke, the president of the Federal Reserve. With a big smile Rogers tells us: "Bernanke will continue to print money until there are no trees left in America."
He is more positive about Trichet of the ECB. At least he knows what he is doing and what it’s all about.""
Banks
Rogers is fiercely against bailing out the banks. "That has never worked. Let them go bankrupt. Right now bad-managed banks are saved with money from good banks and from you and me. After that, the failing but nationalized banks are going to compete with the well-managed banks and they gain their market share. Ridiculous. The Bail-out plan is a disaster. In 1929 we had a recession but after the government interfered, it became a depression. You should not interfere."
Stocks
Rogers: "You can make good money with stock-picking, perhaps even more than with commodities, but only if you pick the right equity at the right moment. The stockmarket in the west is still too expensive. But the market is extremely volatile. In the five years to come you can earn money with trading ranges".
China and Russia
"Do know know what the problem is? When at work, the Chinese people ask when they can work and what they can do. We ask how day's off we have. That’s a big difference."
Rogers has bought Chinese equities in the last few weeks. "I don’t know if we have reached the bottom, but the market is low. I am a bad timer, by the way."
"My daughter is five years old and she speaks Mandarin fluently. After the dollar has collapsed as a world currency, there is only one currency that could take over that role: the renminbi. That could happen in 15 to 20 years. Other currencies cannot take over the role of the dollar, including the euro."
Russia
The former Soviet Union will be split up in even more smaller countries. And with that, there will be some wars."
"In Russia you are lucky if they kill you right away. You are unlucky if they first arrest you, then keep you in prisson for 15 years, torture you and kill you after that". He joked.
"What you see therby is that the Russians take their capital abroad, while the Chinese take it home."
City or countryside?
According to Rogers farmers have a bright future. "within a few years farmers will drive Maserati’s and all stockbrokers will be cabdrivers."
In Holland you could have a farm with a lot of land at the moment. “Agriculture has been out of vogue for 30 years, but now it will be hot because the demand for food will increase greatly."
“The stupidest thing you can do right now is to sell your farm and buy a house in the city instead. The housing market is in decline."
War
And finally: "If a war breaks out, it will begin in the Middle East. Amsterdam will be last. I would love to live here if the weather was any better... Amsterdam should have been 600 miles further to the south!"
The Treasury bond market continues to look like it's about to burst, and commodities will be the only place of safety left for investors.
Thursday, October 23, 2008
Alan Greenspan "Shocked" at Depth of U.S. Credit Breakdown
In one of the most pathetic comments I've ever heard from an alleged financial expert, former Federal Reserve Chairman Alan Greenspan told Congress Thursday that he was "shocked" at the depth of the breakdown in the U.S. credit markets.
If that's not bad enough, now Greenspan, who formerly opposed government regulation, has found government religion, as he is saying (under pressure) that he was "'partially' wrong in his belief that some trading instruments, specifically credit default swaps, did not need oversight."
While many big-government politicians are attempting to hide the government's direct culpability in the worldwide disaster, the only politician that understands what is going on, Ron Paul, had this to say about more government interference:
"In the midst of highly unpopular bailouts of Wall Street, many justifications have been given about why Washington feels the need to act. Some claim that capitalism and the free market are to blame, but we have not had capitalism. If you compare our financial capital to our aggregate debt, this would be obvious. In the same way, we have not had a truly free market. The monetary manipulations of the Federal Reserve, a complex tax code, the many 'oversight' agencies and their mountains of regulations show that we are far removed from a free market economy."
Additional regulation is being touted to hide the fact that all this is the fault of the government in the first place. Now they're making it look like the free market is the problem, when in reality it's the abandonment of the free market that has driven this fiasco.
To get more specific, Democrats are in particular to blame for this because they pressured Freddie Mac and Fannie Mae to offer the sub-prime loans to unqualified buyers, which when they did, overall led to this disaster. Now the outrageous Democrats are trying to add more regulation to the mix, setting the nation and world up for something worse in the future.
This is the old socialist idea that everyone needs to be equal: eqalitarianism. The problem is this is a false premise, and a idealistic notion that has failed over and over again in the past, as there is a reason many people aren't able to buy homes or other financially related things: they aren't able to manage the responsibility.
Get people with no personal financial management understanding or ability into a house they can barely afford, and you have set them up for failure; they don't even think in terms of repairs or outrageous increases in taxes.
Here's how Greenspan described what happened:
"Without the excess demand from securitizers, subprime mortgage originations -- undeniably the original source of crisis -- would have been far smaller and defaults, accordingly, far fewer.
"A surge in demand for U.S. subprime securities, supported by unrealistically positive ratings by credit agencies, was the core of the problem."
What did he just admit? He admitted that government pressure to get people in homes is the underlying problem of the credit crisis. That's what he really said in words most Americans won't understand, so he felt safe to say it.
The excess demand came from the lower interest rates instituted by Greenspan, and the demand came from government pressure, especially the Democrats, to get people in homes that normally wouldn't be able to afford it.
As far as Alan Greenspan goes, there went his legacy, and deservedly so.
A number of economists that understood the extraordinary dangers facing the economy because of Greenspan's decision to keep interest rates so low, and thus cave in to the pressure to bring them low enough (and terms loose enough) to get uncreditworthy people into homes, have been saying for years this disaster was going to happen, and evidently the financial celebrity didn't think he needed to heed the warnings.
The most dangerous and bizarre thing in all this, is the non-capitalist Federal Reserve, and by extension government, have been moving away from capitalism for years, unbelievably, in the name of capitalism. So now those that want to make the government even more powerful are lying and saying it's a failure of capitalism, when in fact it's a failure of an increasingly socialist-leaning U.S. government.
If that's not bad enough, now Greenspan, who formerly opposed government regulation, has found government religion, as he is saying (under pressure) that he was "'partially' wrong in his belief that some trading instruments, specifically credit default swaps, did not need oversight."
While many big-government politicians are attempting to hide the government's direct culpability in the worldwide disaster, the only politician that understands what is going on, Ron Paul, had this to say about more government interference:
"In the midst of highly unpopular bailouts of Wall Street, many justifications have been given about why Washington feels the need to act. Some claim that capitalism and the free market are to blame, but we have not had capitalism. If you compare our financial capital to our aggregate debt, this would be obvious. In the same way, we have not had a truly free market. The monetary manipulations of the Federal Reserve, a complex tax code, the many 'oversight' agencies and their mountains of regulations show that we are far removed from a free market economy."
Additional regulation is being touted to hide the fact that all this is the fault of the government in the first place. Now they're making it look like the free market is the problem, when in reality it's the abandonment of the free market that has driven this fiasco.
To get more specific, Democrats are in particular to blame for this because they pressured Freddie Mac and Fannie Mae to offer the sub-prime loans to unqualified buyers, which when they did, overall led to this disaster. Now the outrageous Democrats are trying to add more regulation to the mix, setting the nation and world up for something worse in the future.
This is the old socialist idea that everyone needs to be equal: eqalitarianism. The problem is this is a false premise, and a idealistic notion that has failed over and over again in the past, as there is a reason many people aren't able to buy homes or other financially related things: they aren't able to manage the responsibility.
Get people with no personal financial management understanding or ability into a house they can barely afford, and you have set them up for failure; they don't even think in terms of repairs or outrageous increases in taxes.
Here's how Greenspan described what happened:
"Without the excess demand from securitizers, subprime mortgage originations -- undeniably the original source of crisis -- would have been far smaller and defaults, accordingly, far fewer.
"A surge in demand for U.S. subprime securities, supported by unrealistically positive ratings by credit agencies, was the core of the problem."
What did he just admit? He admitted that government pressure to get people in homes is the underlying problem of the credit crisis. That's what he really said in words most Americans won't understand, so he felt safe to say it.
The excess demand came from the lower interest rates instituted by Greenspan, and the demand came from government pressure, especially the Democrats, to get people in homes that normally wouldn't be able to afford it.
As far as Alan Greenspan goes, there went his legacy, and deservedly so.
A number of economists that understood the extraordinary dangers facing the economy because of Greenspan's decision to keep interest rates so low, and thus cave in to the pressure to bring them low enough (and terms loose enough) to get uncreditworthy people into homes, have been saying for years this disaster was going to happen, and evidently the financial celebrity didn't think he needed to heed the warnings.
The most dangerous and bizarre thing in all this, is the non-capitalist Federal Reserve, and by extension government, have been moving away from capitalism for years, unbelievably, in the name of capitalism. So now those that want to make the government even more powerful are lying and saying it's a failure of capitalism, when in fact it's a failure of an increasingly socialist-leaning U.S. government.
Wednesday, October 8, 2008
Central Banks Around the World Cut Rates by Half a Point
A number of key central banks around the world, including the U.S. Federal Reserve, cut interest rates in hopes of quieting the enormous turmoil in the markets. In the U.S., rates were cut to 1.5 percent. Also approved by the Fed was a half point cut in the discount rate to 1.75 percent.
The banks participating in the move all cut their rates by half a percentage point. Interestingly, the Bank of Japan declined to cut rates at this time.
Other banks cutting rates were the European Central Bank, which dropped it rates from 3.75 percent from 4.25 percent. The Bank of England trimmed their rates from 5 percent to 4.5 percent. Other central banks cutting rates were the Swiss National Bank, The Bank of Canada and the Swedish Riksbank.
The banks participating in the move all cut their rates by half a percentage point. Interestingly, the Bank of Japan declined to cut rates at this time.
Other banks cutting rates were the European Central Bank, which dropped it rates from 3.75 percent from 4.25 percent. The Bank of England trimmed their rates from 5 percent to 4.5 percent. Other central banks cutting rates were the Swiss National Bank, The Bank of Canada and the Swedish Riksbank.
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