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A Man of Wealth and Taste
 
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Checkmate

This week the Wall Street Buzz has been that the housing market is continuing to slide. I have had an ominous feeling about that but have not been able to figure out the ramifications of that situation. Housing sales in April were down 11%, part of the reason is that Banks are not lending money on mortgages because they feel the house they lend money on will be worth less next year. This is the beginning of a slide. Rick Santelli of CNBC said this morning that housing is going to decline even more and when it bottoms do not expect housing prices to rise. That you can forget the previous prices they are gone forever.

Further the Greek debt situation has reared its ugly head again. The Greek debt has been further down graded. It is very likely that Greece is going to default. The ECB's are trying to work out a solution, but if the Greek debt is further downgraded as a result of that restructuring the whole deal may just fall apart. Part of that restructuring is to privatize much of the Greek govt with foreign control. It has been reported that the Greek people are not on board with that. This may result in one he11 of a civil explosion in Greece. Also Greece may have to pull out of the EU. Some feel that the ECB is not concerned with Greece but are looking to Spain.

These two factors are what has been moving the Stock Markets down.

Now here is where I get nervous. With the end of QE2, the economy is tanking. What this means clearly is that without the Fed stimulating the economy the economy is a dead man walking. This is so because on one hand the only way the economy stays afloat is through in essence borrowing and on the other hand at some point the borrowing will lead to a debt crisis. What you see here is Checkmate, there are no moves left to make. QE3? This would not only just dig the hole a biit deeper, but in essence would not alleviate the malady.

Also Gold is at $1542 an oz and continuing upwards and the USD index is continuing to fall and is at 74 and change...this is a low. The price of Oil is also falling which is an indication that the economy is tanking.Ironically since the end of QE2 the 10 year Bond has gone from 3.4 down to 2.96 the last I looked. This is either an on the Beach strategy or money is coming out of the stock markets because the feeling is that the economy is going to tank. I did not see the Employment numbers this morning but have to assume that unemployment is rising again.

The Chinese and emerging market economies are also beginning to slow as well. Which is a reflection of how the US economy is doing.

So put all that economic data together and what do you get?

The word that comes to mind is DEFLATION...of the USD and Housing markets..that means that the American illusion of being wealthy is going away. The US has been living beyond its means and we are coming back down to earth. and all the kings men and all the kings horses can not put Humpty Dumpty back together again.
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Old 06-03-2011, 09:50 AM
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Some right, some wrong, but the trends are emerging.

That is why I sent you a PM about the Colt.

I always get a giggle out of gold prices: As a hedge, fine. As a commodity, I hope you hold it in your hands. Owning gold in a "market" means you are owned by speculators: a fleeting, skittish lot, prone to ignore your best interests.
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Old 06-03-2011, 11:00 AM
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Some right, some wrong, but the trends are emerging.

That is why I sent you a PM about the Colt.

I always get a giggle out of gold prices: As a hedge, fine. As a commodity, I hope you hold it in your hands. Owning gold in a "market" means you are owned by speculators: a fleeting, skittish lot, prone to ignore your best interests.
RE Gold whih way is the USD headed up or down? That tells U where Gold is headed. If one were savvy one would buy on dips. Alsoone would do well to check support levels.

Guns sell very well..
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Old 06-03-2011, 11:51 AM
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Old 06-03-2011, 01:31 PM
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This week the Wall Street Buzz has been that the housing market is continuing to slide. I have had an ominous feeling about that but have not been able to figure out the ramifications of that situation. Housing sales in April were down 11%, part of the reason is that Banks are not lending money on mortgages because they feel the house they lend money on will be worth less next year. This is the beginning of a slide. Rick Santelli of CNBC said this morning that housing is going to decline even more and when it bottoms do not expect housing prices to rise. That you can forget the previous prices they are gone forever.

Further the Greek debt situation has reared its ugly head again. The Greek debt has been further down graded. It is very likely that Greece is going to default. The ECB's are trying to work out a solution, but if the Greek debt is further downgraded as a result of that restructuring the whole deal may just fall apart. Part of that restructuring is to privatize much of the Greek govt with foreign control. It has been reported that the Greek people are not on board with that. This may result in one he11 of a civil explosion in Greece. Also Greece may have to pull out of the EU. Some feel that the ECB is not concerned with Greece but are looking to Spain.

These two factors are what has been moving the Stock Markets down.

Now here is where I get nervous. With the end of QE2, the economy is tanking. What this means clearly is that without the Fed stimulating the economy the economy is a dead man walking. This is so because on one hand the only way the economy stays afloat is through in essence borrowing and on the other hand at some point the borrowing will lead to a debt crisis. What you see here is Checkmate, there are no moves left to make. QE3? This would not only just dig the hole a biit deeper, but in essence would not alleviate the malady.

Also Gold is at $1542 an oz and continuing upwards and the USD index is continuing to fall and is at 74 and change...this is a low. The price of Oil is also falling which is an indication that the economy is tanking.Ironically since the end of QE2 the 10 year Bond has gone from 3.4 down to 2.96 the last I looked. This is either an on the Beach strategy or money is coming out of the stock markets because the feeling is that the economy is going to tank. I did not see the Employment numbers this morning but have to assume that unemployment is rising again.

The Chinese and emerging market economies are also beginning to slow as well. Which is a reflection of how the US economy is doing.

So put all that economic data together and what do you get?

The word that comes to mind is DEFLATION...of the USD and Housing markets..that means that the American illusion of being wealthy is going away. The US has been living beyond its means and we are coming back down to earth. and all the kings men and all the kings horses can not put Humpty Dumpty back together again.
Unfortunately, this is all spot on.

More and more people will begin to realize it as time goes on, and it becomes obvious to even those with their heads buried the deepest in the sand.
Old 06-03-2011, 01:33 PM
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Also, on the theme of the American illusion of being wealthy, and it going away, I heard on the radio this afternoon that currently 41% of the employed in the US are working at what was termed "menial labor" or "very low income" jobs. I.e., housekeeping, fast food, Walmart, etc.

That's other than the 9.1% that are looking for work but are unemployed.

And other than the countless other unemployed that have given up completely so aren't counted in that 9.1%.
Old 06-03-2011, 01:35 PM
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So, I think your title of "Checkmake" is quite apropro.

QE2 hasn't worked (duh), because it's simply a very expensive and very temporary bandaid.

Our govt have played every trick and pulled every lever to try to give the illusion of a recovery, and it hasn't worked. Because tricks don't work long term. Nor does a philosophy of massive govt intervention into the economy.

I don't know what is left for them to try, there aren't a whole lot of moves left on the board.
Old 06-03-2011, 01:40 PM
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Unfortunately, this is all spot on.

More and more people will begin to realize it as time goes on, and it becomes obvious to even those with their heads buried the deepest in the sand.
and then what? OK so its all spot on...so what? keep wringing your hands and losing sleep. or pretend that you'll be ok because you have 10,000 rounds in the closet. when the poo really hits the fan we're ALL going to get stink on us. face it, we've given control to the goons and we're powerless.
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Old 06-04-2011, 07:44 PM
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Old 06-04-2011, 07:50 PM
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So, I think your title of "Checkmake" is quite apropro.

QE2 hasn't worked (duh), because it's simply a very expensive and very temporary bandaid.

Our govt have played every trick and pulled every lever to try to give the illusion of a recovery, and it hasn't worked. Because tricks don't work long term. Nor does a philosophy of massive govt intervention into the economy.

I don't know what is left for them to try, there aren't a whole lot of moves left on the board.
One of the reasons why all the tricks in the book have not worked is that this is no garden variety recession or depression or whatever you want to call it. The powers that be have been trying to prop up the old system as the lessor of two evils. The other choice would have been to let it all collapse by letting the markets go into free fall. But no matter what they do they can not put Humpty Dumpty back together again.

What we have here is a major inflection point in American history..before and after...What you might say is that the financail crisis of 2008 was the end of American hegemony and seeming invincibility in the world. We ran the string of deficit and debt out so far and were living on fumes that finally it all collapsed. Now we are left with a brave new world where America is GOING to continue to slide.

I can tell you the exact dates of inflection over the past 66 years.

1. August 6Th 1945. The day the Atom Bomb was dropped on Hiroshima the USA became number one in the world. Politically, Militaryily, Tenhnologically , Financially we were it..the most POWERFUL NATION ON EARTH..

2. July 17Th 1969..The day that Neil Armstrong put his foot on the moon...was the highwater mark of US power..We had done the virtually impossible in 8 years. The USA was all powerfull..Also we had GUNS AND BUTTER...huge social programs and fighting a war half a world away and all with a peace time economy.

3. September 24TH, 2008. The day that GW Bush gave his Financial Crisis Speech was the day that American invincibilty and confidence cracked and the US power is going out like the tide.. From that point on the US has come back down to earth and now the world has realized that the USA is a bankrupt nation.
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Old 06-05-2011, 10:13 AM
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Your title is "Checkmate". So who won?
Old 06-05-2011, 10:16 AM
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Old 06-05-2011, 10:31 AM
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Old 06-05-2011, 10:43 AM
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Lest we forget, the "off-shoring" of many of our manufacturing industries which accelerated in the 1980s and continued in the 1990s was a major contributor to #3 in Tab's list. And it breaks my heart to admit that both political parties were heavily involved in that.

I'll never forget the day in 1983 when my father stopped buying steel pipe from U.S. manufacturers, because almost all the U.S. plants were closed, and those that remained couldn't compete with the prices of the new Asian manufacturers. My father could no longer win construction bids if he used American steel.

The same thing was happening to many other industries, and all of it was enabled by our top-level politicians and their CEO buddies. The plane crash in war-torn Bosnia that killed 30 American CEOs exposed the truth, that both political parties were actively encouraging and participating in the off-shoring of our industries.

Young people today have no idea how good we had it.

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Old 06-05-2011, 11:04 AM
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But now it is all the Cons doing.
Obama and the Dems have passed legislation to end tax breaks for companies that offshore their labor. And passed legislation to give tax incentives to offshore companies that return to the US.
They also passed legislation that close the corporate tax loopholes for US companies that keep their money offshore ( Caymen Islands for instance) in order to avoid paying us taxes.

The Republicans filibustered all three.
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Old 06-05-2011, 11:11 AM
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You're arguing a meaningless point. It's all gone. There's nothing left to protect.
Old 06-05-2011, 11:14 AM
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You're arguing a meaningless point. It's all gone. There's nothing left to protect.
That's not true, there is plenty left to protect. And while we do that we need to get that stuff overseas, back into the states.
Whether it is jobs, raw materials or cash. And none of that will happen until 2012 when the cons are pushed out of the way.

You already see it happening in recall elections around the country.
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Old 06-05-2011, 12:03 PM
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and then what? OK so its all spot on...so what? keep wringing your hands and losing sleep. or pretend that you'll be ok because you have 10,000 rounds in the closet. when the poo really hits the fan we're ALL going to get stink on us. face it, we've given control to the goons and we're powerless.
I agree, most people are powerless to really do anything, even on an individual level.

But that's because most people have nothing to lose. Most people have little to no assets, little or no cash, and little or no equity in anything.

For those, there's nothing to worry about, b/c you are right, there are no decisions to be made, you're just along for the ride.

At the other end of the spectrum, the really rich (say, net worth of $10+ million) probably don't have to worry a huge amt. That's a huge cash reserve, and even if it is devalued 75%, it's still a lot. And, there's lots of ways to spread risk with that much. I work with many of them, and, for example, many already have second houses in other countries, and assets in non-US dollars.

It's people that have worked hard, and are mid life, and have accumulated something in the middle that need to be concerned. Say, $1-2 million in assets. It's not handwringing or unnecessarily losing sleep. But in this position, you need to pay attention to what's happening, to try to make the best possible financial decisions moving forward. To try to protect what you have.

There is a lot to try to protect against, but the biggest is the devaluation of the dollar and inflation, I think. Income moving forward is another, as the failing economy hurts almost all businesses and future income is more uncertain than ever.

I sure hope the Pollyannas among us are right, and that everything is peachy (Although it reminds me of who was it, McCain (?), "the economy is fundamentally sound" while the house is burning down. But I have a hard time believing it, as much as I'd like it to be true.

And, sorry Dipso, but blaming it on the "Cons" doesn't work, and just makes you a shill in the game. The republican and democratic party are just two sides of the same coin, and they share equally in the blame. Don't be a sucker and fall for their WWF style "fighting" charade.

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Old 06-05-2011, 12:07 PM
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And, sorry Dipso, but blaming it on the "Cons" doesn't work, and just makes you a shill in the game. The republican and democratic party are just two sides of the same coin, and they share equally in the blame. Don't be a sucker and fall for their WWF style "fighting" charade.
I disagree. Although you could argue that both sides put us here. It is evident through charts and graphs that most of the damage was done during Republican administration.

Now that we are here there is only one side that is trying to get us out. That is evidenced by looking at the voting record of the Republicans since Obama has been elected.
The Republicans have done absolutely nothing except drag their feet ever since the presidency changed hands.

They were hoping to blame the economy on Obama and get back into power. That has failed. Things are looking up and Obama is getting the credit.
Also the Cons now have the house, and all spending originates in the house.

They will be blamed for any additional debt, and rightly so.
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Old 06-05-2011, 12:16 PM
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I disagree. Although you could argue that both sides put us here. It is evident through charts and graphs that most of the damage was done during Republican administration.

Now that we are here there is only one side that is trying to get us out. That is evidenced by looking at the voting record of the Republicans since Obama has been elected.
The Republicans have done absolutely nothing except drag their feet ever since the presidency changed hands.

They were hoping to blame the economy on Obama and get back into power. That has failed. Things are looking up and Obama is getting the credit.
Also the Cons now have the house, and all spending originates in the house.

They will be blamed for any additional debt, and rightly so.
That's not true. Like you say, look at the charts. The most damage was done during Democratic party controlled Congress.

See?

Things aren't looking up, with a double dip in housing coming and unemployment at 9.1%. No pres has ever been reelected with unemployment at more than 7.3%, and Obama won't be the first. Obama's and the Dem's almost 1 trillion "stimulous" plan has failed, caused nothing but a huge increase in debt, and he will be blamed for it.

Believe me, I'd love for unemployment to be back to 6.5%, and the deficit cut in half, like Obama promised. I'd vote for him in 2012 in a heartbeat if that were accomplished.
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