Friday, January 22, 2010
Smarter than a Fifth Grader?
The Supreme Court ruled, yesterday, that lumbering multi-national corporations wishing to purchase the votes required to appoint justices to the Supreme Court is constitutionally protected free speech, under our citizen Bill of Rights.
Almost immediately following the ruling, the U.S. Government decided there is no such provision.
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"Investing in stocks is the way forward, because they protect against inflation, according to Faber. Real estate would be another asset for those seeking protection against price rises, but it is easier to be taxed."
ReplyDeleteMarc Faber from this morning
He thinks the dollar will rally and the coming collapse will be in the treasury market. He thinks rates will soar along with stocks
"He thinks the dollar will rally and the coming collapse will be in the treasury market. He thinks rates will soar along with stocks."
ReplyDeleteI've discussed this a lot, but --
It's important to understand that interest rates are not "set" by the Fed or by commercial banks, they are set by the free market. The Fed simply reacts to what the free market forces them to do.
Point is, 0% Treasury rates mean there is a long, long line of lenders (private equity, previous bank accounts, CDs, stock sale proceeds, etc) wanting to lend money to the government to protect it, not borrow money.
We can clearly see the result: 0% rates in a market that dwarfs the stock market.
But the CAUSE is no appetite to risk capital in a tubing economy. And CERTAINLY not to borrow venture capital from the same banks which have been cleaned out.
Dumb government says, "THE BANKS AREN'T LENDING!"
The free market says, "People aren't borrowing!"
I think he refers to the free market dumping treasuries in fear that they go into default or attempt to repay those treasury debts with worthless dollars backed only by sub prime mortgages. Sure the treasury and FED could just say print the damn dollars and pay off all our debts in whatever time it takes to print them. We could hand China $2 trillion and say your paid off, this would be inflationary, correct.
ReplyDeleteWhat do you make of todays action? Stocks in the tank, bonds under pressure, dollar down a bit, and GLD mute. Was this just money fleeing every asset in the United States?
ReplyDelete"What do you make of todays action? Stocks in the tank, bonds under pressure, dollar down a bit, and GLD mute. Was this just money fleeing every asset in the United States?"
ReplyDeleteIt's just your run of the mill global deflation.
"Sure the treasury and FED could just say print the damn dollars"
ReplyDeleteThe Fed can't print a single dollar without first finding someone dumb enough to borrow into the opening of a mega-depression. The only taker right now is the gov, and that's a sad substitute for 40:1 commercial leverage once offered by the commercial banks.
Bottom line:
The Fed can't print cash, let alone money.
This ahem correction is getting interesting. By my reckoning it started on January 19 and three scant days later we are all the way back to November 20th pricing. Three days to erase 41. Wow. At this rate we should see the 1020s by the end of next week and bust 1000 by Ground Hog Day. Let's see. Gold took fourteen trading days to do the first leg down followed by a twelve day correction (and apparent failure). Hmm...S&P to 1000ish for a two week bounce and correct to 1080 before the Ides of March for the short of a lifetime? Short damn near everything but Treasuries and judiciously adding on the stalls and rips (if there are any).
ReplyDeleteBallpark guess: what are the chances of congress, out of desperation, issuing non-debt-based currency?
ReplyDelete"Ballpark guess: what are the chances of congress, out of desperation, issuing non-debt-based currency?"
ReplyDeleteThe exact same chance as a Second American Revolution against the king's bank.
So, Obama decided to chastise and insult the supreme court during the State of the Union Address.
ReplyDeleteA real class act he is.
Just a followup with a nice pic of geithner and justices during the state of the union.
ReplyDeleteI wonder what geithner is really clapping about?
http://latimesblogs.latimes.com/washington/2010/01/obamas-state-of-the-union-address-criticism-of-the-supreme-court-campaign-finance-ruling.html