Bubble

The government is effectively bankrupt. Using GAAP accounting principles, the annual deficit is running in the range of $4 trillion to $5 trillion. That’s beyond containment. The government can’t cover it with taxes. They’d still be in deficit if they took 100% of personal income and corporate profits. They’d also still be in deficit if they cut every penny of government spending except for Social Security and Medicare. Washington lacks the will to slash its social programs severely, to change its approach to ever bigger government. The only option left going forward is for the government eventually to print the money for the obligations it cannot otherwise cover, which sets up a hyperinflation.

Tags: Barack Obama, Bubble, Bush administration, Debt, Depression, Documentary, Dollar, Economy, Fed, Federal Reserve, George Bush, Gerald Celente, Global News, Government, Great Depression, Obama administration, Peter Schiff, Politics, U.S.

May 11

China: April Inflation Accelerates, Property Prices Jump 12.8 Percent, Lending Surges

Economy, Politics No Comments »

‘A Bubble in China’ (Would be a nice title for a book.):

- Marc Faber: China May ‘Crash’ in Next 9 to 12 Months (Bloomberg):

May 3 (Bloomberg) — Investor Marc Faber said China’s economy will slow and possibly “crash” within a year as declines in stock and commodity prices signal the nation’s property bubble is set to burst.

People walk in front of advertisements outside a department store in the Xidan district of Beijing in April. (Bloomberg)

May 11 (Bloomberg) — China’s inflation accelerated, bank lending exceeded estimates and property prices jumped by a record, increasing pressure on the government to raise interest rates and let the currency appreciate.

Consumer prices rose 2.8 percent in April from a year earlier, the fastest pace in 18 months, and property prices jumped 12.8 percent, the statistics bureau said in statements today. New lending of 774 billion yuan ($113 billion), announced by the central bank, was more than any of 24 economists forecast.

Asian stocks fell, with the local benchmark index entering into a bear market, and oil and copper slumped on concern the government will move to cool the fastest-growing major economy. China should focus on preventing excessive increases in asset prices and liquidity after Europe’s almost $1 trillion loan package reduced the risk of another global slump, central bank adviser Li Daokui said yesterday. Continue reading »

Tags: Bubble, China, Economy, Government, Inflation, Politics, Real Estate, Yuan

May 07

The No.1 Trend Forecaster Gerald Celente: Greece Only The Beginning; Wall Street Plunge; Bailout Bubble Bursting; 2010 Global Crash; Gold

Economy, Global News, Politics 2 Comments »

“I Have 80% Of My Assets In GOLD.”

Added: 7. Mai 2010

If Nostradamus were alive today, he’d have a hard time keeping up with Gerald Celente.
- New York Post

When CNN wants to know about the Top Trends, we ask Gerald Celente.
- CNN Headline News

There’s not a better trend forecaster than Gerald Celente. The man knows what he’s talking about.
- CNBC

Those who take their predictions seriously … consider the Trends Research Institute.
- The Wall Street Journal

A network of 25 experts whose range of specialties would rival many university faculties.
- The Economist

More from Gerald Celente:

- Gerald Celente: Obama’s Financial Reform Is Just A Show

- The No.1 Trend Forecaster Gerald Celente on ObamaCare, Dollar Devaluation And Gold

- Gerald Celente: This time they will close the Banks & Wall Street (03/27/10)

- Gerald Celente: ‘It’s the greatest bank robbery in world history and the banks are doing the robbing.’

- Gerald Celente: ‘The Crash is Coming in 2010.’

- The No.1 Trend Forecaster Gerald Celente: Financial Mafia Controlling US and Wall Street

- Survivor, America: ‘It’s Only Going to Get Worse,’ Gerald Celente Says

- The No.1 Trend Forecaster Gerald Celente: The Terror And The Crash of 2010

Tags: Bailout, Banks, Bubble, Central Bank, China, Crash, Debt, Dollar, Dow Jones, Economy, EU, Europe, Fed, federal r, Gerald Celente, Global News, Gold, Greece, India, Japan, Keynesianism, Meltdown, Politics, Quantitative Easing, Stock Market, U.K., U.S., Wall Street

May 04

Marc Faber: China May ‘Crash’ in Next 9 to 12 Months

Economy, Global News No Comments »

May 3 (Bloomberg) — Investor Marc Faber said China’s economy will slow and possibly “crash” within a year as declines in stock and commodity prices signal the nation’s property bubble is set to burst.

The Shanghai Composite Index has failed to regain its 2009 high while industrial commodities and shares of Australian resource exporters are acting “heavy,” Faber said. The opening of the World Expo in Shanghai last week is “not a particularly good omen,” he said, citing a property bust and depression that followed the 1873 World Exhibition in Vienna.

“The market is telling you that something is not quite right,” Faber, the publisher of the Gloom, Boom & Doom report, said in a Bloomberg Television interview in Hong Kong today. “The Chinese economy is going to slow down regardless. It is more likely that we will even have a crash sometime in the next nine to 12 months.”

Tags: Bubble, China, Commodities, Economy, Global News, Marc Faber, Stock Market

Apr 30

Mike Krieger: This Is The Last Dance

Economy, Global News, Politics 2 Comments »

Presenting the latest terrific analysis by Michael Krieger, formerly a macro analyst at Bernstein, and currently running his own fund, KAM LP, who joins Willem Buiter and everyone else left with a gram of prudence, in realizing that this is nothing more than the “last dance.”

“History is a set of lies agreed upon.”
- Napoleon Bonaparte

Most people prefer to believe their leaders are just and fair even in the face of evidence to the contrary, because most people do not want to admit they do not have the courage to do anything about it. Most propaganda is not designed to fool the critical thinker, but only to give moral cowards an excuse not to think at all”
- Michael Rivero

Every man gotta right to decide his own destiny, And in this judgment there is no partiality. So arm in arms, with arms, we’ll fight this little struggle, ‘Cause that’s the only way we can overcome our little trouble. - Bob Marley, Zimbabwe

A Thousand Words On Conventional Wisdom

Conventional wisdom. Many market analysts define conventional wisdom in relation to what direction the market is going to head in the future, but I think this is an utter mischaracterization of the concept. For example, someone that is bullish on the market right now is likely to see conventional wisdom on stocks and the economy as overly bearish after ten years of no returns for U.S. equities. In contrast, someone that expects a market collapse will say that everyone is a cheerleader and that the “conventional wisdom” after such a huge rally is for stocks to continue to go up. This is not how I would describe conventional wisdom and all is does is drag the debate into the intellectual gutter. Rather, to me conventional wisdom is more the “zeitgeist” of the financial and economic community at any given time. Zeitgeist is defined by the Merriam-Webster dictionary as: the general intellectual, moral, and cultural climate of an era. In this sense an “era” will generally mean a lengthy period of time, several decades or perhaps even more extended periods. That said, what is interesting is that every cycle in the global economy seems to bring forward distinct “mini-zeitgeists” that the experts create to justify market movements or give credence to economic dogma.

When I define conventional wisdom in this manner what I have found is that I almost always disagree with conventional wisdom. Two very interesting recent periods were fall 2007-July 2008 and then mid-2008-early 2009 period. In the first period, it was clear to me that decoupling was impossible because the U.S. was too large and it was clearly on the verge of collapse and, more importantly, that China and the U.S. were joined at the hip in a Keynesian economic Frankenstein that would not be easily severed. Despite what I thought was pretty obvious at the time, conventional wisdom was that the BRICS had decoupled and all would be well. Rather than seeing the commodity surge as the flight out of the dollar due to the distinct money policies of the U.S. Fed and everyone else, the rally was seen as evidence of decoupling. This is mainly because conventional wisdom tends to view rising assets as a signal of prosperity. I believe this was and is generally due to a misunderstanding of economics (we are all taught mostly rubbish in schools) and a shocking ignorance of the global financial system, how it really works and who/what is pulling the levers.

Tags: Bonds, Bubble, Central Bank, China, Commodities, Deflation, Dollar, Economy, Europe, Fed, Federal Reserve, Global News, Gold, Keynesianism, OECD, Oil, Politics, Quantitative Easing, U.S., Yuan

Apr 13

Q&A With Billionaire Jim Chanos Part I: ‘Greece Is A Prelude’

Economy, Global News, Politics No Comments »

Last week had the opportunity to visit Kynikos Associates in Manhattan and speak with its President, famed short-seller James S. Chanos.

The billionaire hedge funder is the stuff of legend. He made a killing shorting companies like Tyco, Worldcom, and of course, Enron. Chanos spoke with us at length on everything from how he discovered Enron’s problems to the issues at hand with Greece to the ongoing problems in China.

We’ll be running several posts on our Q&A sessions with Chanos throughout the week.

Today we talk about Dubai, Greece, and the role of derivatives in these markets.

———————–

Business Insider: Let’s talk about Dubai and Greece. Dubai - was it just a case of a nation that saw too much growth and excessive debt?

Jim Chanos: No, no. Dubai was a property bubble. Plain and simple. Go to Dubai and see what happened. It was…what I call it the “Ediffice complex” - it’s just, we can grow by putting up lots and lots of buildings and trying to attract people to come here, stay here, and put up offices here and sooner or later, you put up too many. And whether it’s the Palm Island project or the indoor ski resort or, you know, take your pick because everyone has lots of Dubai stories. At first it seemed plausible and economic and by the end of the boom, they were putting on drawing boards all kinds of crazy projects. So it didn’t take a rocket scientist to see the excesses. They were pretty visible to the naked eye.

Greece is a different issue. We’re not involved. We don’t trade sovereign debt, we don’t trade CDSes. You know I feel bad for my mother country in that they’re going through a lot of austerity now and I actually think that the Prime Minister and his team are doing the right thing. I met with them recently, actually, in Washington [DC] and they gave a pretty rational response to a problem that they, quite frankly, inherited.

You know they came in and discovered the hole in the budget deficit and discovered a lot of the off balance sheet stuff that was not of their doing. And he’s taking the politically unpopular step of extending the retirement age and cutting government wages not knowing if it’s going to be enough and so far the market is pretty skeptical, but I think the Greek government is being more courageous than some of the other western-European governments who aren’t addressing these issues and are going to be facing these same problems like Greece down the road. So Greece is a prelude to the problems that a lot of other countries will face that have made promises to their people without the ability to pay for them.

Tags: AIG, Banks, Bonds, Bubble, cds, Debt, Derivatives, Derivatives market, Dubai, Economy, EU, Europe, George Papandreou, Global News, Greece, IMF, Politics, Real Estate

Mar 28

Flashback: The Wile E Coyote Government

Economy, Funny, Politics No Comments »

Why does the American government consistently fail to foresee the future results of its own actions?

Because it is incompetent.

—

My take on that is, that it is impossible to be that much incompetent! This is an ‘intentionally incompetent’ elite puppet government that is looting the taxpayer until there is nothing left.

The government is ‘channeling’ taxpayer money through their friends on Wall Street into the hands of the elite behind the scenes (that control the US government, the Federal Reserve, Wall Street and the media), thereby bankrupting America and destroying the US dollar.

This is a controlled demolition.

—

It is managing the financial crisis Wile E Coyote style.

Added: 25. September 2008

Tags: Bailout, Banks, Ben Bernanke, Bubble, Credit Crisis, Credit Crunch, Debt, Economy, Fed, Federal Reserve, Financial Crisis, Funny, Government, Housing, Housing market, Mortgage crisis, Mortgages, Politics, Taxpayers, U.S.