Ireland choosing debt bondage for its citizens

In a fair game, there are winners and losers. The people who are winners and losers are the participants of that game. For example, in a game of chess, the two people playing CHOOSE to participate in the game, and therefore expect one will be a winner and one will be a loser. What makes it competitive is both go in expecting to win. When the game resolves, there can only be one winner.

When bond holders and investors decided to participate in investment "game", all participants I am sure expected to make money. Historically, companies may go bankrupt or undergo other unforeseen financial stress, resulting in those investors either meeting their expectations of a win or a loss.

What Ireland has decided to do, is to pick a third party to be a loser. The market participants where facing a catestrophic loss as over-leveraged private banks where on the path for default. Ireland has decided to have a sector not directly choosing to invest in the banks, the Irish citizens, to take the loss. The result is, those who invested in banks, win, there is no loser. The meta message is, there will never be a loser for market participants. The Irish citizens, many who cannot afford to make investments in bank securities, now must pay for the losses.

The result will be decades of debt bondage for all Irish citizens who decide to remain in Ireland. This diminishes their freedom, and is a blow to democracy. America has been taking similar steps to make the US citizens pay for private bank losses. Already trillion(s) have gone to private institutions through Fannie Mae and Freddie Mac, and FDIC insured losses, as well as Federal Reserve Bank purchases, and direct government subsidies. As a percent of GDP however, Ireland is in a completely different position than the USA. My prediction, assuming the Irish decide to pay this private debt of in the decades to come, is a return to the old Ireland, with high unemployment, and being regarded as the third world country of old Europe.

And if the citizens don't stand up for their interests, then this is exactly what they deserve, debt bondage.

A good video of Parliamentary member talking about the European union is a failure, and countries like Ireland is only the tip of the iceberg. The Euro is not better off than America, and the world is just discovering this. This blog stated in January 2010 would be the year nation destabilization begins, and re-iterated the European Union is headed for failure in May, when Europe decided to make private losses part of public debt. As a tribute to my friend Conrad "I'll wait for the world to catch up" to reality.

Ditto Head Returns!

Back in August of 2010, I announced my ditto head status of Gary of the Smart Money tracker. For those not looking to make money on any given month, but have a multi year time horizon, Gary is still king in my book.

But I wrote on several recent occasions that I departed from Gary, on the short term. I am very happy to say, I am back on the Gary bandwagon.

Quote from my November 14th post, when gold peaked:

I guess I need to recant my ditto head status of Gary. I am still 100% on board with Gary over the long haul, but for the short term, I am not going to try to catch falling knives. I lost a ton last year trying to that. Lesson learned.

So while I will still resist trying to catch falling knives, Gary in private advisory service (pay for his service, it pays for itself), we are now back in sync with my call on Nov 14th for a 6 to 10 weeks for gold to pull back.

That places the near term bottom of natural resources & gold between late December and late January. Gary is currently calling for mid to late December.

So for now, I'll just sit tight, and wait for more air to come out of gold and natural resources. I'll decide later if it is time to catch falling knives into the end of the year or wait until January.

For me, it this is a bit of vindication of my departure of being a Gary ditto head, and a welcome return to his leadership. In the scheme of life, a difference of 6 to 10 weeks is a drop in the bucket. By February those who aren't Gary fans (or of me) will have their answer. By then natural resource costs, and specifically precious metals, should be back onto the upswing.

I am going to delay my weekly chart posting to Tuesday or Wednesday night, to see how the markets react to black Friday sales and Cyber Monday.

Philanthropy

The show This Week with Christiana Amanpoar had a good episode this week on philanthropy.

The episode is called Billionaires Giving Back, full article and videos available at this link. In an environment that seems more of class warfare than unity in improving society, this was a refreshing presentation. Among the various discussions was Warren Buffet making the case that the top 1% should pay more. Bill and Melinda Gates focus on raising America's education standard to be better prepared to compete in a world economy. One of Ted Turner's focus is on funding UN efforts to reduce nuclear proliferation.

What I find startling is the total giving is about 600 billion dollars in private donations to be spent over decades. America is deficit spending over a trillion dollars a year. It is striking how the top 1% wealth being directed to philanthropy efforts is still a drop in the bucket to American Government debt.

In any event, the entire show is well worth watching. Below I provided a few excerpts from the show.

Thanks to all readers and bloggers

I have been blogging since August 2008, when I was inspired to use a blog as an outlet for my rantings of the financial situation I was following since August 2006.

Over the years, this blog has helped me articulate my own thoughts, during the process of creating articles. It also helps keep me honest about what I thought and when. It provides me a way to reflect and learn from my mistakes.

Frankly, 99.5% of my knowledge is owed to the internet, for without it, I would rarely get any meaningful information from the mass media. Of special thanks are the bloggers I place in highest regard. Mish is by far the best, with his general dissection of nearly everything. Karl of the Market Ticker is tirelessly tilting at windmills, trying to make a difference. Zero Hedge for groundbreaking news, Gary of the Smart Money Tracker for his insight into precious metals in this time of uncertainty, to the Slope of Hope for his charting pontifications, for John Hussman for his posts, and finally the Chart Store for providing the wide view when so many focus on the narrow view.

There are literally about 100 more people and sources I depend upon to get snippets of information, from podcasts, hedge fund managers, money managers, too many to list. Most of the information is through the internet. The top important ones I list on the right hand side of this blog, and under my new reader link at the top.

I am of course thankful for those who take the time to read this blog, I hope I have had a positive effect on you. At a minimum I hope I have inspired you to question and think about the events as they unfold.

I started tracking blog visits on September 4th, 2008, and have a summary of the statistics through November 24th, 2010.

Over 33,000 visits from 8,514 unique visitors in 99 countries (why couldn't it have there been 1 more?). Gary of Smart Money Tracker blog has directed 13% of total visitors to this blog.

I use Google Analytics, below is the stats.

Special thanks to Happy John, for that ill fated discussion in August 2006, that turned the light on in my head for the financial depression ahead.

Special thanks to my wife, who endures this old lunatic typing away, ranting about financial world apocalypse, and giving me a such a positive life.

Happy Thanks Giving

From WebSufinMurfs FinancialBlog2

Union Workers Double Standard

This clip is from September, sent to me by my brother Ray.

It is still funny as heck, highlights double standard by Unions. Very funny.

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North Korea attacks South Korean Island

North Korea attacked a south Korean island, as a result a USA aircraft carrier is headed for Korea.

As a result of the attack, the Central Bank in Korea has announced they are taking actions to curb herd mentality.

I expect over the next decade more international issues occurring as economic tensions rise. When they occur, such as this one, it is likely the market reaction will bring surprises.

General thought would be US dollar strengthens in times of crisis. Natural resources could go either way. One would expect stock markets to fall. In any event, I'll reserve my predictions and just say, lets see market reactions. I doubt the Korean thing will be over in a day, lets see how this unfolds and the effect.

Ben Bernanke is wrong at every turn

The Federal Reserve Bank, a private institution, is lead by the Federal Reserve Board of Governors. The leader of the board is Ben Bernanke.

He follows in the footsteps of his predecessor, Allan Greenspan.

Mr. Bernanke's opinion and approach to finances was well documented by himself, in a college thesis paper. In that paper he described how the Federal Reserve could have minimized the Great Depression through additional actions they failed to take.

What we have been witsnessing since 2002 is Mr. Bernanke following his own playbook he started when he was in college. The problem I have with this approach is, he somehow knows better than the rest of the world, and has a "Secret sauce" to save the world economy.

Mish has a post that is exceptional reading (click). Mish starts with looking at Mr. Bernanke's own words issued in 2002 on how he would minimize the deflationary forces.

I do take one noteable issue with Mish's generalist view he presents of deflation will win over inflation. The US is tied to China like it or not. China's economy, although full of asset bubbles, is generally acknowledged to be growing. And assuming China will continue to grow over the next decade, it will surpass the US as the economic powerhouse.

What is perplexing is Mish acknowledges this as a possible outcome, in this post here. So I am at a loss on how he presents a world where deflation across the board "wins". So while I agree with Mish about Greenspan, and deflationary forces, I am in disagreement that his typical post view does not illustrate the resource calamity we all face from China's growth.

What it will be is USD devaluation, and should not be confused with economic inflation, with respect to natural resources and Asian currencies. American's (and all western countries) will face is a lowering of standard of living even more, as most wages remain depressed, but costs increase.

I hope Mish is right and I am wrong, but I am hedging my bets.

Mish has a great post explaining all the differing sources of information and opinions he either draws from, or disagrees with titled Straight Talk" with Economic Bloggers. I encourage people to read it and seek other perspectives.

National Mortgage Fraud explained

Good video, explains plainly how mortgage fraud was created nationally.

This is an example of why I am against HR 3808.

Chris Christie calls out double standard

Very funny, well worth the watch for anyone, but especially for NJ residence.

This Week in Charts

Markets look firming up, Silver looking pretty good, as well as Oil based companies.

I am cautiously optimistic, and will add lightly to silver this week.

To the charts.

From WebSufinMurfs FinancialBlog2

From WebSufinMurfs FinancialBlog2

From WebSufinMurfs FinancialBlog2

From WebSufinMurfs FinancialBlog2

From WebSufinMurfs FinancialBlog2

Politics

As I solidify in my mind the reality of what America and the world is doing, I am starting to think more politically. For the stock market, and other trading environments today are no longer free market enterprises. I am not sure frankly, if they ever were and I was ignorant, or the recent past has changed the reality of markets.

What we are seeing is countries, and global regions pitted against each other, using what leverage they can exert to try to alter the outcome of what a free market would bring.

China refuses to un-peg the yuan. I really have no idea at this point if they freely traded the yuan if it would soar or collapse. The point is, China like it or not, is becoming the global powerhouse of the world, challenging the US. And they are not allowing currency markets to dictate their currency valuation.

The US is outwardly stating they are trying to destroy the value of the US dollar by leveraging policies called Quantitative Easing, and other tricks. The wording is such, that they don't want to damage the dollar to the point of destroying it. But they want the US dollar to go down to make America "more competitive".

Further, the European union refuses to allow countries who are obviously bankrupt, like Ireland, to actually go bankrupt. Instead they are digging a deeper hole trying to shore up that country. This in the long run punishes Irish Citizens as they take on long term debt that will take generations to pay off. In effect, crushing that countries ability to finance economic policies as the country must take on paying off their debt as a mandate.

I could go on, how China makes 95% of the worlds rare earth elements, and is using that position to bully countries, including outright blackmailing Japan.

The point is, the economy, stock valuations, resource valuation, etc, is becoming a mute discussion. What is really worth discussing is the eventual new world order, new currencies, and new actions by countries attempting to fudge capitalist markets, in an attempt to have a more favorable outcome.

What is becoming more important to me is politics. I plan to always contribute to the blog weekly at a minimum, but I am considering starting a new political blog.

For I am tired of the partisanship to such a point, that I am against both Republicans and Democrats. Any bill that starts off Obama supports it, or Republicans support it, I am 100% against it.

What I care about is what the proposed actions are, and justification that it is needed, and can be funded. What I care about, is to discuss the topics, as Americans, and what is best for the country.

This rant was brought to you by a friend (Bob) who sent me an article, that talks about Republicans sabotaging Obama. Really? I would have never guessed. I bet there may be an article about how Democrats sabotage Republicans. Wah wah! I cry for the citizens and have no pity on the parties.

What I want is articles about leadership on making realistic progress, and stops pandering to the news media noise.

Political commercial, probably never see this on TV.

Congressional Hearings on Mortgage-gate

Why HR 3808 should not be allowed to pass, require proper legal documentation.

Further, stop the complaining, and start the prosecuting.

Without prosecuting, this will continue.

Follow the logic, banks are insolvent.

Three Cheers for NJ legislature, opposing TSA

Wow, makes me proud that NJ legislature is actually taking action.

I am surprised.

If you have been following the TSA body scanning story, well worth the watch.

Chinese government caught redirecting part of internet traffic

This event has no bearing directly on investing. However, as part of the larger picture where China is moving to take on the world as primary world economic leader, this can get messy.

China was caught redirecting 15% of the world's internet traffic to route through China. This breaking of trust should not be taken lightly. But you won't hear a peep from the mass media.

Click to read full article on the Market Ticker.org site

Market Bounce in order

With Wednesday's flat day, I expect Thursday/Friday/Monday to be up. I am not buying back in here. But purchasing SLV (silver ETF) looks promising.

I'll sit tight into mid next week, and see how things develop.

Slope of Hope video, with his two cents.

HR 3808 defeated

Thankfully, HR 3808 was defeated, and for this reason I removed the label of Financial Ground Zero from the last post.

In a surprise move to me, the Democrats are the ones that opposed the bill, nearly all Republicans voted to over-ride. Very interesting, and possibly a warning of what is yet to come once republicans take office.

HR 3808, represents it is improving process by allowing electronic records legal and interstate paperwork binding. The problem I have with it is, it's retroactive to past mortgages. Currently when a mortgage is signed, the physical legal papers signed are the proof of ownership, and historically must be maintained. In the event the paperwork is lost, burned, or eaten by the banks pet dog, there are legal processes that can be triggered to re-establish ownership.

The reason I opposed the bill is the retro-active nature of the bill. If the law changes stating NEW mortgages are recorded electronically or out of state documents are deemed legal, I am not vehemently opposed.

New mortgages originated under new guidelines, will give the opportunity for the lawyers involved to ensure all items are in order. When I purchased my house, I paid a lawyer to represent my interests and ensure the legal paperwork was in order. I am OK with creating an electronic process to record my house purchase, and it could involve interstate documentation. I do work in the computer industry, and change is required to be acceptable (if not preferred).

What I opposed was to change the agreement I made when I purchased my house, retroactively, to state the paperwork and process I paid my lawyer to review, was no longer required to prove home ownership.

The purpose of the bill wasn't to just merely change process to a computerized recording system, it was to cover up the problems with the book keeping an legal process the banks used.

In short, the combination of being retro-active, to NOT recording the votes for or against the bill, and the adopting out-of-state papers that are not easily verifiable - retroactively applied, just smelled to me to be abuse of law and power.

Thank you for those who took action and called your representatives. Each call lets your representative know you are paying attention.

Call your representative TODAY about HR 3808

Back on October 15th, in post titled "Is US Government is Owned by the Banks?", I noted that HR 3808 was passed by congress but was pocket vetoed by President Obama. In that post, I made the argument that banks do not own the government.....I may need to reconsider my position with the action being taken today....

HR 3808 will force states to accept documents that are notarized in other states, without verifying any of the documentation. This in effect allows foreclosures on property to be done with documents not verifiable. It has been uncovered that foreclosures have occurred in all 50 states, with multiple different banks, but not following the legal process. This was dubbed foreclosure gate, and has resulted in state attorney's in all 50 states to issue an investigation into the robo-signing practice for foreclosures.

Unfortunately, the lame duck congress, is scheduled to vote on the bill on Wednesday, November 17th. I assume it will be done by voice, with NO WRITTEN RECORD of which congress members voted for or against the bill, as was done back in October. Congress could pass with enough votes to over-ride Obama's veto.

Therefore it is critical that you call your representative ASAP to tell them you expect the law that was in place when a mortgage was issued to be the same for foreclosing. That the legal documents that where specified under law to be kept to prove ownership, stands. That foreclosing on homes with paperwork that is not verifiable is not acceptable.

If you support the bill, at the very least please call your representative and encourage them to be proud of their voting record, and demand a written record is taken of the votes.

(The fact no record is kept should indicate something is wrong here.......)

To read more, click here on 4foreclosurefraud.org, zerohedge, or MarketTicker.org.

Quantitative Easing Part 2 explained

Pretty funny, and sad.

With logic like this, I still maintain natural resources is good.

This Week in Chart

It's Sunday night late, I am tired. Plus I an convinced, right or wrong, I need to stay out of the markets this week, and possibly for another 4 weeks before going long resources again.

So I am dropping the S off in This Week in Charts, and just showing one.

From WebSufinMurfs FinancialBlog2

Huge declines in Natural Resources Thursday and Friday

Well, I got to thank all the bloggers out there I quoted on Thursday AM for calling the impending natural resource decline. I sold over 50% of my positions on Thursday at the open. What proceeded to happen was natural resources lost huge ground Thursday and Friday. Gold didn't lose huge, but Sugar, Corn, and other foods did.
Sugar fell 12% in 2 days, a 22 year record in NY. Soybeans and corn fell so much, the exchanges closed.

It is possible natural resources will fall not much longer and the price hikes return in a week. I am going to be a little cautious here, and wait for 4 weeks-ish or more before buying back in. Gary of the Smart Money tracker seems to be a little more eager than me right here. I guess I need to recant my ditto head status of Gary. I am still 100% on board with Gary over the long haul, but for the short term, I am not going to try to catch falling knives. I lost a ton last year trying to that. Lesson learned.

I'll call myself wrong if gold starts hitting new highs, and I am OK with being late to the party and buying back in not at the bottom.

The question is, why am I so convinced that this retracement in natural resources is only a pause, in what we will see as a never ending rise in resources into a crisis?

Lets start with what triggered the sell off. Was food over extended, over valued and time for a return to lower prices? Perhaps. But my bet is the sell off was triggered by the exchanges changing reserve requirements on future contracts for natural resources. This triggered people leveraged to sell. This gimmick hardly changes fundamentals. All it does is punish those over-extended to sell their positions to gain back their margin.

Further, when prices correct so violently, it triggers a run for the door, accelerating the price decline. Once the herd however, realizes the house is not on fire, they will return buying, and driving prices up.

Further, we have an international currency war, with pending international trade war starting, combined with the Federal Reserve continuing it's easy money policy. The LAST thing we will see is natural resource prices hitting new lows. I freely admit, my timing could be off, and in the event the stock market falls uncontrollably, natural resources could hit new lows. But I am not betting at this point for a market crash. If you want to try to place such bets, go for it. Once again, I repeat, I am done with trying to catch falling knives.

For those thinking that deflation will take hold of natural resources and reduce prices, consider this. Sugar's low price in 2004 was 6.22 per pound, 10.47 in 2007, 18.07 in May 2010, and it hit high of 39.65 11-9-2010.

Corn 's LOW price in 2005 was 1.635, 2008 was 2.720, 2009 2.915, 6-29-10 3.025, and hit a high of 5.695 11-4-2010.

I could quote other foods and energy statistics, but there is one thing in common, prices are going higher at a relentless pace. Sure there are parabolic runs up, followed by a crash. But each crash's bottom is HIGHER than previous. The net is resources continue to March higher.

During the 2008 market crash, when many institutions where forced to liquidate, natural resources held values HIGHER than just 3 to 4 years earlier. Thats impressive considering the stock market fell to levels not seen since the 90's.

Further, this fits in my theory that natural resources will continue to march higher, as China and India's population of 2.5 billion people earn more, and will consume more. The net result will be American's/Western countries daily expenses going higher.

So while it is great to have reduced (not zero) exposure to natural resources for the moment, do not mistake this for a trend change. That won't happen unless we break 2008 lows, and I'll take any bet that it won't happen, and I'll bet every penny of my life's savings to boot.

Below is gold action since 2008, the draw downs are not far and not long.

Good luck.

From WebSufinMurfs FinancialBlog2