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Financial news I consider important, with my opinion, which is worth as much as you paid for it.
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Sunday, March 25, 2012

Future of Society

I truly believe 100 years from now, government will be an open frame work akin to wikipedia.  It will unite humanity like old governments could not.
Between now and then I do fear much turmoil, as change is never easy.

Good video on open government.  The internet revolution doesn't end with Music, Videos, publishing, games, finance, education, etc.  It is a transformation of society.

Corruption will be marginalized in the open society, and the average citizen rewarded vs those holding position.

Friday, March 23, 2012

A journalist FINALLY gets tough

There are so few examples of journalists being tenacious with politicians and other people in positions to ask the tough questions to protect the interest of it's citizens.

The  Irish journalist Vincent Browne is tenacious and shrewd.  He  was able to avoid the tactic of microphone change once his question was asked.  The problem is there should be an army of journalists asking tough questions.  But of course, I see so rare an occasion of tough journalism, that over the years I have only a handful of examples.

Vincent Browne has a hard hitting show on TV3, well worth a watch.

I have posted how the Irish government sold it's citizens into decades of debt slaves, when smarter countries, like Iceland avoided that fate.

A great video to watch, how the law is continually perverted by governments extending payments to un-guaranteed gambling (investing?) debts at the cost of the citizens.

Vincent Browne, thank you for doing your job.

Thursday, March 22, 2012

Bernanke Villain or Hero

I read a blog post or two, and saw picture of Ben Bernanke pictured as Hero.  Article goes on to say how there is much debate about Bernanke's actions, and what this will lead to.

For those not following Ben Bernanke, he is the chairman of the most powerful banking institution of the world, the private bank named Federal Reserve Bank.  This bank is not part of the US government, but does act in concert with US government co-operation.

Mr. Bernanke took extraordinary measures to prevent an all out deflationary collapse back in 2008.  Since 2009, normal accounting measures Mark to Market have been suspended as they are to this day.  Under the new order of super low fixed interest rates, corporate accounting changed to mark to fantasy valuations, the corporate earnings have never been better.

I actually don't have a problem with the dramatic steps taken in the time of pressure.  Some decisions may have been not the best, but overall at the time, the net result cannot be disputed by anyone.  The collapse feared did not materialize.

What I have a problem with is there is zero plan to return to normal accounting measured in place since the Great Depression.  Further, I have an issue with lack of any prosecutions at all for the trillions in fraudulent mortgage operations that have been clearly documented publicly.   Also I have issue that the US government has not had a budget since George W Bush and spends money as it sees fit, without any constraint.

These acts are a perversion that will lead to consequences.  Lets not forget WHY 2008 imploded.  Basically the Federal Reserve Bank allowed fraudulent asset bubbles to occur.  Ben Bernanke himself testified numerous times that the economy was rock solid.  He was either ignorant or lying.  And now he takes the credit for being right after all the drastic measures taken and saving the world?  The entire 2008 problem was partly to blame on him and his predecessor.

But I digress.  What I realized is I actually DON'T have a problem with Quantitative easing per say.   That is the Federal Reserve Bank purchasing long term US debt (30 year bonds) in the billions to artificially lower interest rates.   I used to until today.  Why the change of heart?

I realized, that my argument in the past of "what is money" and "gold is not money" align with what Bernanke is doing.  In effect, if 30 year bond rates go to zero interest rates, he is creating the scenario that cash can be printed with no interest attached.  This is in line with my thoughts of what currency should be.  Money should be created without a "bank tax".  Each US dollar you have in your hand, or in a bank, has a tiny amount of interest that is going to someone, somewhere.  Granted, with fractional reserve lending, the rate is net lower for each dollar created, but its there.

What will make this all fall apart isn't QE.  Its enforcing law, and treating currency (QE or not) with respect. Currency can't be created with zero limitations into thin air.  Money must be created with true value of work behind it.    For example, if you photo-copy money and spend it, the fraud is you did not contribute to society to EARN the cash.  In effect, your "promise note of work" is fraudulent.

If currency is printed and doled out without work behind it, the new dollars are in fact fraudulent, and will devalue faith in the USD over time.

In closing, the consequences of actions taken by Bernanke and others will unfortunately lead to hardships for all of us, as there is nothing for free in life.  The fraud running rampant will cause an effect.   Bernanke needs to take not just the good, but the bad that he encourages through the Fed.   And in 2013, when I think things will start to get hairy, I don't think you will be seeing Hero magazines of Ben.

My friend John says, when the market hits a top or bottom, no bell rings.  Today Bernanke is claimed to be  a hero while at the same time, market volatility index the "VIX" is at a 4+ year low, with stocks at a 4-year high (SPX 1400).   VIXY may be a buy here at $39.48.  That is as close as a bell as I can hear.

Thursday, March 15, 2012

Goldman Sachs Exec resigns

Goldman Sachs has tremendous influence on every aspect of the world economy.  Their executives become governors,  United States Secretary of the Treasury, and hold many posts in various wold governments.

I have posted about Goldman before.  An executive has just resigned and posted his thoughts.  Worth a read.

Then, read the parody version, of Darth Vader resigning from the Empire.

Friday, March 9, 2012

Gas Prices and US Dollar

The video below does a great job spoon feeding the rationale that gas prices are rising due to a weak dollar.  I do agree with this principal partly.  What the video misses is there is enough world demand to keep the prices high as the US consumption falls.  That is my entire theme on why natural resources will continue to rise for the decade ahead.

With exception of missing the point above, the rest of it is spot on.

Thursday, March 8, 2012

Jim Grant on Federal Reserve latest manipulation

The Federal Reserve announced yet another plan to manipulate the market, and in essence give certain companies money.  There is no such thing as a free bailout.  These cheating actions will eventually have repercussions.

Jim Grant gives a nice interview about his opinion on the market cheating going on.

Thursday, March 1, 2012

It's all about Oil

As I have posted before, I am a believer of peak oil.  Whether the peak has past or will past soon is immaterial.  In the scheme of 100+ years of oil use, we are about to hit the peak, and afterwards we will experience continued rising costs for energy.

Governments can and have been promoting green energy.  But the adoption rate is slow, but hopefully will accelerate with technology efficiency advancements.

The growth for energy in India and China is staggering.  The consumption monster drives all energy sources higher.  China has done much with nuclear and coal to relieve pressure off oil.  

So when resource costs are going higher, what can governments do?  Why a stronger currency helps offset these pressures.  Think of it this way, if the USD was worth 10x more than other currencies, oil to US Citizens would cost less than people pay in their countries.  The irony is governments are publicly advocating cheapening of the currency to make them more competitive (and help pay down debt cheaper, but that part they don't announce).  The act of lowering money's value is a tax on every single citizen, in higher expenses.

We may be seeing another round of deflation to start, to help kick resources down a few notches in cost.  And of course, sometime between September and February of next year, another round of loose money will hit the world.  But only after resource costs go lower.

To get an idea how expensive oil is, and remember, the US and Europe are experiencing weak economies, look at the graphs below.  The second one is important, it helps make the costs of oil reletive in current dollars. By any historical standard, oil is expensive.

From WebSufinMurfs FinancialBlog2

From WebSufinMurfs FinancialBlog2