The Prudent Investor Now in 3 Lists of 100 Best Financial Blogs

Friday, October 30, 2009

Although I do not accept ads to exclude any possible conflict of interest as I run this blog as a non-commercial service to help my own investment decisions, I think it is nevertheless time for a bit of shoulder patting concerning the success and reach of this blog after the first 700 posts.
Always criticizing that the current economic mess is a result of getting next to no economic knowledge in all school systems worldwide I am especially proud that has listed me as the #15 - which translates into #1 in the category news blogs, 4 ranks ahead of the Wall Street Journal, in their new list of 100 blogs for future investors.
At the same time I am positively surprised that valuewiki lists me at a respectable #80 according to Alexa while their Technorati ranking puts this blog at #34.
While direct hits may lag behind other serious bloggers, I take comfort in the fact that my post get aggregated at more than 100 other websites. I have long lost count but I enjoy it tremendously to reach a worldwide audience.

Weekend Viewing: The World We Live In

This English-French rap video reflects today's world very well. Enjoy it. H/T Victor!

Dollar Danger: Iranian Oil Bourse Steps Up Activities

As Obamacare dominates the American lamestream media, the fundamentallly most important news for oil and the dollar was to be found first in the Tehran News on October 27. The Iranian Oil Bourse was finally inaugurated last Monday, after such a statement was already made in February 2008, leaving room for confusion.
According to the Tehran Times
"The Iranian Oil Bourse was inaugurated on Monday in the Persian Gulf island of Kish as a venue to export oil and petrochemical products.
National Petrochemical Company's Managing Director Adel Nejad-Salim said in the opening ceremony that all petrochemical products will be gradually offered on the market, IRNA news agency reported.
The oil bourse is intended as an exchange market for petroleum, gas, and petrochemicals in various currencies, primarily the euro and Iranian rial, and a basket of other major currencies.
On February 4, 2008 the Iranian Cabinet approved the creation of the oil bourse in two stages - first for crude and second for oil byproducts transactions.
Iran, having the world’s second largest gas reserves and third largest oil reserves, is trying to play a more active role in oil and petrochemical transactions in international markets."
These reports show that Iran is far slower progressing in its strategy to shift its oil trade from Federal Reserve Notes (FRN) to other currencies, predominantly the Euro. Iran has been selling oil in long term contracts to European buyers in Euros. Read this report from April 2006 on the Iranian Oil Bourse here that described a much more dynamic timeline.
OPEC members are required to settle oil trades in FRNs but most member states recognize the vulnewrable position of FRNs as the world's reserve currency. Any decrease in demand for FRNs will hurt the whole world - and there will be no painless way out of the current mega-giga-mess.

The Potemkin Village Called "Recovery"

So you think this spike in US economic activity in Q3 2009 is the beginning of the next upleg?
Better think twice.
Not one of the major problems like exploding deficits, unemployment, quirky wars that are now questioned by the US own top Asia specialists in a Washington Post interview, a collapsing dollar because the Fed feeds the banks with money to keep the major indices at levels that have nothing more to do with fundamental reality, has been solved.
Western "powers" keep doing what they are used to do: Come a problem, let's counter it with fresh debt.
A look at yesterday's advance estimates for US GDP growth makes me scratch my head. Adding to all problems described is the worrisome trend Obama's orgies of nationalization started. While private disposable income fell 3.4% QOQ in Q3, Federal expenditures point towards more socialization with a quarterly surge of 7.9%, only surpassed by growth in the military sector that spent 8.4% more than in the quarter before.

A 10% shrinkage of GDP is Called "Recovery"? - OK, War is Peace
A look at YOY absolute figures shows that GDP shrank more than 10% from $14.441 Trillion in 2008 to a mere $13 Trillion. Remembering home prices fell 7.8% YOY, according to this report from the Phoenix Business Journal, and seeing that the cash for clunkers initiative will cost the taxpayer $24k per car I am not at all confident that we see any fundamental turnaround but one constant: More and more GDP is created by waging wars: An F-18 crashing in Afghanistan is economically positive as it will add a billion and some change in replacement costs to the next GDP figures. This is the perversion of war: Bomb it and make money rebuilding it.
But in a time where the biggest warlord on the world, maybe a bit more eloquent than his predecessor Dubya, becomes Peace Novelist I can as well trust that all figures reported by US statistical offices are true to the 3rd digit behind the comma, can't I?
On-the-ground research offers not much hope: When did you last meet somebody discussing his next big ticket purchases as he was looking into a happy money-filled future?

Middle Class Gets Wiped Out in Europe
The middle class is getting wiped out meanwhile. One of the last surviving Slovakian car suppliers with Austrian roots told me the car market gets split into 2 segments: Ultra-compact cars and the luxury class.
But there are also glimmers of hope: By now he can undercut Chinese competitors up to a third and has the advantage of shorter transport distances. All that would be needed next is an upturn in Europe: Quiet harbors, less commercial road traffic show no such signs unfortunately.
Investmentwise I remain with my perma-preference of gold and silver as we have not yet seen the big whopper on Wall Street that will come on the same silent soles as in 1929: When nobody expects it anymore, see the most overvalued period of stocks coming to an end that is very likely to happen maybe already in November.

FOMC Minutes Show Board Split - Support My Inflationary Outlook

Wednesday, October 14, 2009

The latest FOMC Minutes from the September meeting of the Fed support my inflationary fears. While showing a rift between hawks and doves the Fed makes it clear that it will remain on the (fantasy) bid for whatever dead investment instrument comes along.
The Fed's staff forecasts is bullish as ever:
The information reviewed at the September 22-23 meeting suggested that overall economic activity was beginning to pick up...
In the forecast prepared for the September FOMC meeting, the staff raised its projection for real GDP growth over the second half of 2009 and over 2010.
The participants current outlook confirm that the Fed is a boat drifting in the mist of data. It does not sound too optimistic fine-reading this FOMC quote:
Despite these positive factors, many participants noted that the economic recovery was likely to be quite restrained.
followed by lingering fears of inflation despite a contraction in money supply M2.
A few continued to see some risk of substantial further disinflation, but that risk had eased somewhat further over the intermeeting period. Over a longer horizon, a few felt the risks were tilted to the upside.
OK, this comes long after the admission that the Fed mainly tries to contain expectation inflation expectations - all the time padding their own shoulder to have been successful on this front in the past.
It does not change my view that surging commodity prices will surprise the world within the next 12 months, re-charging inflation again with oil buldifing a base above $70 a barrel.

CONFIDENTIAL - Cheney Leads Pack for Peace Nobel Prize 2010, Bernanke Economic Nominee

Excuse my absence in recent days. Waking up to the news that US president Barack Obama was awarded the Peace Nobel Prize - is yet known to what charity he will give the $1 million coming attached with it? - I cannot resist the impression that we have landed straight in George Orwell's "1984" where war is peace in the kind of newspeak Orwell theorized about in 1948 but that has become reality today, making me doubt everything that has been accepted knowledge until last weekend.
When a guy with 2 wars on his hands he loses while inofficially entering a 3rd war in the Pakistani tribal areas gets the most prestigious peace award we have finally entered an era of created reality that comes as close to reality like same-named TV shows.

1984 Is Now
Now that Obama got his Swedish medal, I can put a new rumour into the world. Next year's leading contender for the peace Nobel will be Dick Cheney - you remember, George W. Bush's vice in every meaning of the word - simply for not being in office anymore. Cheney in retirement is certainly the best that can happen to the global peace process, so why not honor him?
Or let's have a few more drinks and become really courageous.
Isn't Fed Chairman Ben Bernanke eligible too? Mainstream media (MSM) recently portrayed Bernanke positively, wrongly claiming he had saved the financial industry in the last 12 months. So please give him a medal and some other honor to his predecessor Alan Greenspan also simply for the reason that he is not in office anymore.

Iraq to Trade Oil in Euros
All this appears to me secondary though, as the media coverage of Obama's Nobel prize swept the most important fact of news under the carpet last week had to offer in MSM.
Alternative media website Alternet informed its readers on October 9, that Iraq was going to sell its oil in Euros, nullifying the last important reasons for George Bush's invasion of Iraq who rightly feared that commodity trading in other than Federal Reserve Notes might eradicate the dollars prime status as the world's reserve currency.
Isn' it strange that all MSM missed out on this truly important fact of political news that is more important for the dollar than the numbers of medals around Obama's neck?
Investmentwise nothing has changed my outlook until 2011: Stay long gold, silver, play oil on the long side if you need to gamble.

Today's Highlight: WSJ Says "Marx Is Back in Fashion"

Thursday, October 08, 2009

Rub your eyes and read this:
Astonishingly, given the ruin associated with his name, Karl Marx is back in fashion. The global economic downturn has spurred sales of "Das Kapital" to an all-time high; Michael Moore with his latest movie rivals the Original Communist in denouncing the evils of capitalism; and for the past year the news media seem to have delighted in running obituaries for the owners of the means of production. Michael Hardt and Antonio Negri, then, are nicely positioned to take advantage of Marx's revival with the publication of "Commonwealth," which re-imagines Marxism for the 21st century.
If you mistakenly think this comes straight from the World Socialist Web Site you just lost a Tenner that should go to the charity of your choice.
No, nobody less than the Wall Street Journal's (WSJ) book reviewer Brian C. Anderson sub-headlines truly revolutionary
Down with capitalists, nations, bosses, families, etc.
in his review of Michael Hardt and Antonio Negri's book
"Commonwealth," which re-imagines Marxism for the 21st century.
According to Anderson's review titled"Brothers in Marx"
"Mr. Hardt teaches literature at Duke University and is a postmodernism-steeped radical—that is to say, he is an American college professor. Mr. Negri, a political theorist, has a more unusual background. Three decades ago, the Italian government believed that he was the secret intellectual leader of the leftist terrorists called the Red Brigades and that he was the architect of the group's 1978 kidnapping and murder of Christian Democratic Party leader Aldo Moro.
Unable to build a sufficient case to try Mr. Negri for murder—he has always denied the allegation—Italian authorities convicted him of "armed insurrection against the state." Facing 30 years in the slammer, Mr. Negri scooted to France, where he remained, a philosopher in exile, until 1997, when he returned to Italy to serve the remainder of a reduced sentence. He is a left-wing guru whose field work has occurred far from the faculty lounge.
"Commonwealth" completes a trilogy that began in 2000 with "Empire" and continued with "Multitude" in 2004.
The book is a witch's brew of contemporary radicalism. Capitalism deserves to die, Messrs. Hardt and Negri believe, for it has abused and corrupted "the common." The common isn't just "the fruits of the soil, and all nature's bounty," they tell us; it is the universe of things necessary for social life—"knowledges, languages, codes, information, affects." Under capitalism, nature is ravaged, society brutalized.
Yet the conditions for people's emancipation are budding within capitalism, the authors believe (just as Marx believed in the mid-19th century). Unlike the factory laborer of yesterday, today's knowledge worker has less and less need for a boss. Companies extract the most value from the worker, we're told, when he is left alone to create, connect and collaborate as he sees fit. This is also true of "affective labor" that offers services to the public, "even in the most constrained and exploited circumstances, such as call centers."
Messrs. Hardt and Negri propose getting rid of bosses, of course, but they also target another bugaboo of the hard left, private property. The possession of property supports unjust power structures—why not agree that the "common wealth" of the human and natural worlds should be everyone's responsibility, everyone's resource? Welcome to The Communist Manifesto 2.0.
Book ordered, although the WSJ wishes Marx back to hell:
"Commonwealth" is a dark, evil book, and it is troubling that it appears under the prestigious imprimatur of Harvard University Press. Countless millions were slaughtered by adherents of Karl Marx in the 20th century. God help us if the scourge returns in the 21st.
Marx must be a strong fear factor if the WSJ sees time already fit to warn of the devilish ideas and changes socialism could bring to its owner Rupert Murdoch.

Moody's Needs Urgent Help

Now that's a good one. Only 4 months after "Moody's Offers Training Courses on CDO/S - After Getting 99% of Ratings Wrong" there appears to be a polar reversal at the ratings agency that got 99% of its CDO/S ratings wrong.

SCREENSHOT: While once offering such courses the wizards of the ABCD world are now looking for help themselves, as this screenshot from web stats shows. Click to enlarge.
Pressed for time I refer you to the post "3 Figures Explain the Foolishness of Bankers" for one more smile.You can now get up again from rolling on the floor, laughing, and maybe utilize time with a risk assessment 101 course, if there are any offered.

Road Sign to the Property Crisis

Wednesday, October 07, 2009

"Go ogling" the terms "property crisis britain" this is my favorite as the Brits lead in coming up with a truly reasonable new traffic sign. Use it for more or less any new town worldwide that is built on debt while we face a global recession.
It is a delight to point readers to HousePriseCrash as it delivers the terrifying news on the UK property market in realtime. Stick that sign on the town of your choice.
Please fill comments with the towns you know will suffer until 2011 or longer. This is not limited to the UK, all first-hand country information welcome from everywhere.

Thousands of Analysts But Not One "Solutionist" in this World!?

Tuesday, October 06, 2009

Parsing on average 500+ news pieces on an almost daily basis and trying to keep up with the continuously growing stack of yet unread books I begin to feel a little bored of this perma-diet of geopolitical, local and economic news that are modern history.
While I have the highest respect for writers like Joseph Stiglitz, Jeffrey Sachs, Noam Chomsky, Eric Hobsbawm, George Soros, Michael Panzner, Jean Ziegler and the Viennese school of economics I am still deeply worried.
All those named and so many others may excel in analysing the crisis. This was not a difficult task as this modest blog has been proving since April 2005, this being post #694.
But my main worry is that there is a huge gap in terms of practical solutions. One may get the big picture why things have happened as they have by reading some 200 or more websites everyday (I have long stopped paying for newspapers or magazines.)
I may infuriate one or the other thinker in this world but I include myself in my criticism: There are lots of good analysts around explaining very clearly our current global, national and local problems but I very rarely catch some online or other literature that would deliver solutions to the hundreds of gargantuan problems we face.
Having long given up to find such solutions with politicians who are mainly interested in pork for their constituencies and who do not have very much time in their 4-year circles of which they spend half the time trying to ensure their reelection it becomes frustrating that there is only a handful of futurists that deliver marginal insights how humanity will govern its civilised survival in the near to medium term future.
Staying with my very bearish economic outlook the only relief I have found so far comes from Ray Kurzweil's book "The Singularity is near." Kurzweil proves that people tend to extend the growth of knowledge on a linear basis whereas human knowledge actually grows exponentially.
Thousands of think tanks are of no help to tackle future problems either. Most of them, from Tavistock to the Cato institute limit their potential with dogmatic statutes.
I won't even touch the problem of the heavy imbalance of knowledge as left wing think tanks are hopelessly outnumbered by (neo)conservative think tanks - who were the unglamorous forethinkers that led us into the current global crisis.
Check out the Council on Foreign Relations (CFR), probably the most influential of all think tanks. Their analysis of the state of global affairs offers a sometimes brillant guideline why and how it all happened (the Bank for International Settlements is about on the same level) but I could not disagree more when the CFR arrives again at a solution that has impoverished every generation since the early 18th century.
Another Fiat Reserve Currency Ain't Gonna be a Solution
Replacing Federal Reserve Notes (FRN) with another unbacked funnily coloured fiat currency will only extend the inequalities on earth. Three centuries of failed fiat money experiments compared with 5,700 years of a gold/silver standard only show that modern economic scientists are looking on the world through the wrong side of their goggles.
As long as fiat money remains the ultimate dogma for the wealthiest - the secretive shareholders of central banks - of the wealthy we may see a rapid output of more research papers telling us the same crap all over again.
From Rome to Britain: every empire vanished into oblivion soon after it went off the gold standard. It is time to recognize the obvious: Unbacked money has never worked.
NOTE TO READERS: Please disagree with me and mail me your favorite think tanks, scientists, economists and whoever else you think may be capable to leave a distinguished foot print in the name of our continuing civilization. Find my email address on my profile page.

New Media Discovers Documents that Prove Gold Price Suppression Scheme

Monday, October 05, 2009

Neither CNBC, the Bull Street Journal or the Debt Times have covered the latest earth-shaking news reported in the new media concerning gold price suppression by governments and central banks. Let me first send respectful hat tips to Zerohedge, and GATA who all came out in the last 2 weeks with official documents that prove that especially the USA has a most vital interest to keep the price of gold as low as possible. Please check out all three sources to find links to countless official declassified documents that deal with the hot issue of gold manipulation.

Looking at the 10-year chart shows that all multi-billion operations by central banks in the gold market have led to nothing else than the current near-to-record prices although these institutions can short gold unlimited via futures markets.
They fear a gold price that would correctly mirror the uncountable money printing excesses which show us that central banks are no more than one-trick-ponies. Take away their privateering privileges of creating money out of thin air and it becomes understandable that tireless Congressman Ron Paul wants nothing less than abolishing the Fed.
While Ron Paul has still many hurdles in front of him he at least nurses a strongly growing community supporting him.
Happy USA - it has at least a few million citizens who understand the biggest ponzi scheme in history, AKA Federal Reserve Notes (FRN) created by the trillions nowadays, and who begin to fight this scheme that led to the impoverishment of every generation in the last 3 centuries.

The Situation in Europe is Sad at Best
The situation in Europe is sad at best. I presume that the number of Europeans understanding the diabolic actions of central banks which always ended in hyperinflation would not fill more than a small town concert hall.
While Fed Chairman Ben Bernanke encounters a more and more aggressive environment on his trips to Congress and Senate, ECB President Jean-Claude Trichet can still get away with such blatant disinformation in the European Parliament (EP) like the following 5 bullet points presented to EU politicians on September 28:
  1. First, we have fully accommodated banks’ liquidity needs at fixed interest rates.
  2. Second, we have further expanded the list of assets eligible as collateral.
  3. Third, we have further lengthened the maturities of our refinancing operations.
  4. Fourth, we have provided liquidity in foreign currencies, notably the US dollar, to address the need of euro area banks to fund their dollar assets.
  5. Fifth, and finally, we have launched a direct covered bonds purchase programme to support financial markets.
You don't have to be an expert to get angry on the nonsense Trichet tells a generally disinterested EP with no second-guessing of his elaborate speeches that hide the simple process of creating unbacked fiat money by the shipload below a couple of technical terms that work like Quaalude on the EP members.
Trusting that my readership knows about the undeniable fact that so far all experiments with unbacked money ended in hyperinflation I nevertheless want to point out that the abolition of metal standards - gold and/or silver - had at least one positive fact: All kingdoms and empires collapsed, beginning with the revolution in France in 1789 that became the first democratic republic and set a precedent for the rest of the world. Monarchic rulers have only survived on a representative level and they are certainly a proper looking circle for ribbon-cutting ceremonies of all kinds.
Allow me to point you again to the 3 sources in the first paragraph of this post (and save me from uploading PDFs when they can be found there easily) that show us that the real power has moved from policymakers to central banks since the USA abandoned the gold standard in 1971 under a pardoned criminal by the name of Richard Nixon.
The gold standard is most uncomfortable for politicians as it would limit their spending. After almost 4 decades where the public was talked out of gold with the main argument that gold is the relic of a past of un-sophisticated finance, gold is stronger than ever.

Gold has NEVER Lost its Value in 6,000 Years
Gold has never lost its value as all fiat currencies did and it is the last measure we have to calculate real inflation. If you were told that a bag of potatoes cost 3 guilders or 6 florins or 1 mark some decades ago you would not be able to get down to the real price. But if you are parsing historical price statistics and you find out that one troy ounce bought you 100 bags of potatoes it becomes pretty easy to compare it with current prices.
But this probably the last thing those in charge of the financial world want. Inflation can fool people for a long time as every history of a fiat currency begins with the soothing effect that everybody feels richer.
But there is also another undisputed pattern in the history of unbacked money. The trust about its purchasing power took always only a few months, e.g. Germany's hyperinflation, that collapsed in less than 2 years and set the ground for the rise of Adolf Hitler which then led to the demolition of Europe.
In my opinion it is astonishing that in the presently running ruination of the Western world because of unbacked paper money any discussion dogmatically avoids a return to metal backed money. While China's central bank governor favored a commodity based currency last March in a most interesting article I cannot agree to use a commodity basket as backing for a new international monetary system. All commodities are too volatile and can be manipulated in many ways. Just imagine Russia/China/India announcing that their grain stocks have been erased because of bacterial contamination.
There is only one solution to arrive at a stable monetary system: The paper money must be backed by gold and/or silver as they are a value in itself. This worked well for 5,700 years. It would be better for the world to return to this old fashion instead of wasting more time discussing how to repair the monetary system with the same built in weaknesses that have disowned every generation since 1720.

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