Bank of America gets Wiki-whacked

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Dear reader, this week’s weekly update only features four days worth of analysis and snide commentary. So if Europe dissolves on Friday, or China dumps treasuries on Thursday night, you won’t discover that below…

Build America Balance Sheet Bonds

On Monday, Dan wrote about the disappointing lack of government debt in Australia…

By that he meant that there isn’t enough outstanding government issued bonds to go around that fulfill the new Basel requirements. Think about that for a moment. You’ll have a situation where capital requirement laws institutionalise the ownership of government debt on bank balance sheets. During a sovereign debt crisis! Imposed by politicians who brought on the sovereign debt crisis!

It sounds too outrageous to be true. But it makes perfect sense. Politicians want their colleagues to have a secured source of funding. Just force banks to buy their bonds. But will you buy it?

As a Daily Reckoning reader, you’d hope not. But maybe you like funding murderous insulation schemes and foreign wars?


Bank of America gets Wiki-whacked

Yes, Wikileaks is hinting at Bank of America’s instability. In a pair of Tweets, Wikileaks front man Julian Assange suggested avoiding the bank, telling readers to go someplace “safer”. Of course, BofA has suspended payments to Wikileaks, so it’s possibly just a spat.

But then again, if Wikileaks did have a juicy database full of revelations about the nefarious ways in which BofA runs its business, what would be the effect of publishing them?

It’s not like banks have nothing to hide. And in the marketplace, people can choose to move their money elsewhere (although you should check your own bank agreement to see what the rules are on actually withdrawing your money from the bank when you want it… it may not be as easy as you think). And capital controls by the government are another way of restricting your ability to move your money as you choose.

For BofA, business will move elsewhere as negative revelations emerge. (Or loan fraudsters will know where to go for their liars loans.) Of course, the entire banking industry isn’t likely to differ much from BofA. But there are other alternatives for Americans to park their money. Think outside the box. What asset can you hold as an alternative to cash, which will hold its purchasing power? Hint: What do you get at the Olympics, when you come in first place?


Lying the truth

A Freudian slip has occurred over at Reuters news service. Columnist James Saft may feel the following quote misrepresents him and is taken out of context. But it’s a real beut:

You can lie to your creditors or you can lie to your taxpayers.” Ermmm… No!

It gets better: “Private money is quite happy to keep funding a bankrupt entity but only so long as the moral hazard play, the implied guarantee from on high, is still in force.

Hahaha. Yes, and this is argued to be a free market. Of course, all these quotes are funny because they are true. And over in the US, we see what happens when the lying is uncovered. Dan Heinz, Comptroller of the State of Illinois, features in a mini documentary on the state of State finances in America.

Here are some excerpts as best as we could transcribe them: “… hundreds of thousands [of people] waiting to be paid by the state… They borrow in order to get by until the state pays them… Pretty much anybody who has any interaction with state government, we owe money to.

There are also stories of police having been turned away from gas stations because the state doesn’t pay its bill on time… if it does at all. (Next time you try to outrun the Sherriff, keep that one in mind.)

America is losing it. That’s the point the documentary makes, with star analyst Meredith Whitney at the forefront. She sees some massive defaults in municipal bonds within 12 months. Whether the businesses and employees who are already owed billions will get paid is a frightening question.

Lowering the bar draws fewer fans

The problem with low interest rates is that they can easily double. And that means mortgage payments can double. Debt that needs to be rolled over can quickly incur a substantially higher rate. Debt funded consumption can suddenly become unaffordable at the higher interest rate.

All this is why low interest rates can do a lot of damage to investment, instead of stimulating it. If you’re a bank or a lender, you don’t know how reliant your counterparty is on the low rates, so you don’t lend them money. Instead of being a benefit, the lower rate you earn makes lending money to potentially risky borrowers less worthwhile anyway.

Sound abstract? As you will have read, banks aren’t lending in countries with low interest rates. The new central bank money used to depress interest rates never makes it into the real economy. Instead, banks just deposit it right back with the central bank as reserves…or they invest it in the stock market.

And voila! There’s one explanation for why stocks rally when the underlying earnings picture for companies in the economy isn’t improving.

We’re on the road to … Texas

Aside from skewing employment data, the US census has provided an enlightening twist. Apparently more and more Americans are following their lucky stars to Texas (where the stars at night, are big and bright, clap clap clap clap, deep in the heart of Texas). And the people going to Texas are leaving the very states which carried Barack Obama to his Presidential election victory in 2008.

Now among progressives, Texas isn’t supposed to be quite as delightful as model city program idol Detroit. But apparently its comparative economic outperformance is quite a draw. The point worth noting is that Americans are voting with their feet – literally. Electoral boundaries will have to be redrawn, supposedly to the benefit of Republicans.

Roast Pork

The press is giving some of the PIIGS a hard time at the moment. Bond fund giant PIMCO reckons the Eurozone will crack and splinter unless the debt troubled nations take leave from the Euro. Portugal Ireland and Greece were singled out in particular. The European Commission is threatening the same nations with fines for exceeding government deficit-to-GDP caps.

But why is Europe in such a mess? Is it the Euro’s fault? Are the deficits just too big? Is the debt too big? Is the welfare state too expensive? Are taxes too high? Are the unemployed too cosy?

Daily Reckoning veterans will recognise the answer. Hint: What do all the questions above have in common? Government. At least the solution is clear then. Less government. Of course, the chances of getting a majority of politicians to reduce their own power is pretty slim. The other way it could happen is if you get an outright revolution. As the French will tell you, that could also reduce government by a couple of hundred heads.

With the UK’s new record borrowing coming in under a supposedly austere government, one gets the impression that things are changing awfully slowly in Europe. That means bond markets remain the place to watch for any trouble.

Economic facts and fallaciousness

  • The bank failure count for the year has hit 157 in the US. More may be occurring to cap off the year as you read this. It’s the smaller regional ones for now. But next year, it could be the bigger ones.
  • Here’s an economic problem you don’t want to face: “A lack of toilets costs India more than $50 billion a year.” We’re not sure if Bloomberg intended it to be toilet humour, but the fact is certainly a serious one.
  • The National Inflation Association reports: “We are now at a point where if the U.S. government taxed Americans 100% of their income, the tax receipts generated would not be enough to balance the budget.
  • According to the UK-based Centre for Economic Performance, “in richer countries, an increase in government consumption of 1pc of GDP on average produces only a 0.4pc of GDP in the short term.” So spending money might prevent a technical recession, but it appears to destroy growth. Got that you Keynesians?

From cold to freezing to ice age

Melbourne’s summer weather features a temperature less than half of what a Queenslander is used to. So, in the spirit of things, it’s time to giggle at the global warming enthusiasts – always a heart warming activity.

As your editor heads towards Heathrow on the day you receive this, you will be relieved to know that “Snowfalls are now just a thing of the past” for Britain. That’s because “Global warming, the heating of the atmosphere by increased amounts of industrial gases, is now accepted as a reality by the international community.” Dr David Viner, from the climatic research unit (CRU) of the University of East Anglia reckoned that “Children just aren’t going to know what snow is.

That was the consensus in 2000. Since then…

2001 – “An unusually heavy snowfall occurred last week over London as well as over much of the United Kingdom and Ireland.

2002 – “Winter snow scene

2003 – “In January 2003 we were treated to a rare sight in London: worthwhile amounts of snow!

2004 – “Yes, it really did snow in London! And it was bloody cold.

2005 – “It’s amazing. This morning, there was still snow in Central London. In March. Not since 1960 or 1961 has it snowed so many days in a row in London, they say. It’s freezing, of course, but beautiful. So much for global warming…

2006 – “Snow squall in London

2007 – “Lots of luvverly snow in London today!

April 2008 – “Snow in London

October 2008 – “London – Snow

2009 – “The heaviest snow since 1991 transforms the capital. Snow in London is a rare occasion, to be greeted with wonderment and awe, even when we’re talking about less than 1cm of the white stuff sprinkling the ground for a few hours.

Wonderment and awe will not be your editor’s reaction to a flight that gets cancelled. But maybe we will have to get used to it. A mini ice age is the prediction of one weather forecaster with a track record to be reckoned with. Even the mayor of London is giving him a mention.

Of course, the EU has responded to the crisis with a constructive suggestion: “EU threatens snowbound airports with regulation.” Yes, that’s what you get for disagreeing with Government weather forecasts. More laws!

According to this article, weather could be the least of our worries. Apparently, forgetful people have been boarding flights with 6-inch hunting knives and .40 caliber guns. Yes, with a rumored “failure rate of up to 70 percent in identifying banned items“, airport security has us worried for the first time.

Then again, maybe those people boarded on the day when airport security was off work. You haven’t heard of that day? U.S. Homeland Security Secretary Janet Napolitano explains: “What I say to the American people is that . . . thousands of people are working 24/7, 364 days a year to keep the American people safe.

Anyway, we will report back on our experiences of austerity in Europe in mid January. Until then, Merry Christmas and a happy new year enjoy your festive season.

Nick Hubble
Nick Hubble is a feature editor of The Daily Reckoning and editor of The Money for Life Letter. Having gained degrees in Finance, Economics and Law from the prestigious Bond University, Nick completed an internship at probably the most famous investment bank in the world, where he discovered what the financial world was really like. He then brought his youthful enthusiasm and energy to Port Phillip Publishing, where, instead of telling everyone about The Daily Reckoning, he started writing for it. To follow Nick's financial world view more closely you can you can subscribe to The Daily Reckoning for free here. If you’re already a Daily Reckoning subscriber, then we recommend you also join him on Google+. It's where he shares investment research, commentary and ideas that he can't always fit into his regular Daily Reckoning emails.
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64 Comments on "Bank of America gets Wiki-whacked"

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masalai
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The sooner the collapse the better…

Let the banks die and become a flaming tomb for the banksters who created this mess…

Stephen
Guest

If you really want to know whats going on with Northern hemisphere climate then you should check the report card.
http://www.arctic.noaa.gov/reportcard/index.html

If we were going to have an ice-age then you think it would start in the arctic. But those regions are warmer then ever. You are cherry picking your data here. It’s called Global Warming, not just “London Warming” or “North East Europe” warming. And the fact is that the globe is warming. You need to get your facts straight.

vp
Guest
The National Inflation Association reports: “We are now at a point where if the U.S. government taxed Americans 100% of their income, the tax receipts generated would not be enough to balance the budget.” But if the US runs a current account deficit then the budget shouldn’t be ‘balanced’ anyway, or you’d be squeezing the private sector (i.e. the other side of the government balance sheet). Also, the NIA website says: “We are now at a point where our national debt is impossible to pay off” – that it utter rubbish, as long as that national debt is in dollars… Read more »
Biker Pete
Guest

And yer Civil Liberties ain’t civil, anymore:

http://www.youtube.com/watch?v=2Qdb6wC0Iz4&feature=player_embedded

Ned S
Guest

VP: Also, the NIA website says: “We are now at a point where our national debt is impossible to pay off” – that it utter rubbish, as long as that national debt is in dollars (and the vast majority would be). Who are these jokers?”

True, but as the USD and the Yuan/Renminbi continue on their merry little way to parity over the next decade or four, lots of Americans will find they aren’t enjoying living on about a quarter of their current real income.

Anthony
Guest
If you look at the figures you will see that the US is basically insolvent. Why don’t you take a look at the recent budget figures. They are running a deficit of 1.3T on top of their 2T budget and are managing to just keep the economy afloat. If they stopped spending that extra 1.3T then their economy would contract by another 10-20% at a guess and their budget deficit would blow out even further. They also have a significant liability for future pensions and the like which some say adds a huge amount to the current 13T debt they… Read more »
vp
Guest
Nes S: I agree, but I was just pointing out that what they have written is a lie, and is just scare-mongering. Anthony: the US government is the only entity which can create net financial assets in USD, and so can never be insolvent. I’m not saying that what they’ve done is OK (by any means!) but using terms like saying the the US in bankrupt or insolvent is meaningless. It’s also meaningless to say that the government has to ‘save’ USD to pay for future pensions; as sole creator of the USD, ‘saving’ in USD is completely illogical. It… Read more »
Lachlan
Guest

“I’m not saying the economy isn’t screwed either, by the way, far from it! QE is disastrous, and probably deflationary; swapping an interest-bearing piece of paper for a non-interest-bearing one, with no-one to lend to… lunacy!”

A dinkum question for you VP if your still around. What do you personally see as a better course of action to take rather than QE etc?

Biker Pete
Guest
As an innocent bystander ;) I’m intrigued by two opposing VP predictions, which I’ve CAPITALISED, simply for emphasis: …”and easily cause INFLATION if it bought any of these which was in short supply, but could never be short of USD, and can always pay off its debts in USD….. I’m not saying the economy isn’t screwed either, by the way, far from it! QE is disastrous, and probably DEFLATIONARY…” It’s a two-bob-each-way position. Easy to see why, but inconsistent, (perhaps). The Old McDonald’s Farm view is that it will be first one, then the other. Maybe… . Logic indicates that… Read more »
nv
Guest

Comment by Anthony on 27 December 2010:

“Sure they can keep borrowing money off the Fed which is OK but are they ever going to pay this money back?”

It’s called slavery.

Your childrens childrens children………………..

Anthony
Guest

I’m tipping that the value of commodities like oil and gold are going to keep rising(in US dollars) having an inflationary effect on the US economy. The Fed will have the choice of either lifting interest rates or dealing with stagflation for a long time. Other countries will either have to let their currencies rise against the greenback or suffer inflation as well. China may have to reconsider their peg against the greenback or suffer a similar inflationary fate. The US dollar is surely doomed to capitulation.

Fred
Guest

According to Gary Shilling, consumer spending in the US has decreased by more than double the increase in government spending. As such, the US is currently has deflationary pressures and the devaluation of the USD and increases in commodity prices, etc, are purely speculative.

Lachlan
Guest

Commodities are going ballistic.

Stillgotshoeson
Guest
http://www.heraldsun.com.au/business/retailers-enter-bargain-basement-era/story-e6frfh4f-1225976793373 “according to the experts, retailers are unlikely to discern any great improvements soon. James Stewart, retail expert for corporate doctor Ferrier Hodgson, compares retail conditions to the early 1990s, when Australia was mired in recession. Except this time it’s happening in an economy that everyone from the Treasurer to the Reserve Bank of Australia to the International Monetary Fund insists is one of the best anywhere in the developed world” Consumer spending is on the wane here in Australia too.. Rate rises (still more to come) Large increases in utilities charges are biting the household budget, discretionary income is… Read more »
Biker Pete
Guest

Shoes: “How much further can the can be kicked down the road.” (?)

Maybe shoppers are getting _cannier_… . Couldn’t find a parking place anywhere near the major retailers this morning. All the parking areas are full. L-o-n-g lines to registers.

At last we’re seeing some major reductions in large flatscreens, too.
Is it the Ozbuck finally kicking in, or is it the long-overdue era of the
patient, savvy shopper?

Tens of thousands appear to be doing their family Christmas shopping, for large items, right now… . :D

Stillgotshoeson
Guest

At last we’re seeing some major reductions in large flatscreens, too.
Is it the Ozbuck finally kicking in, or is it the long-overdue era of the
patient, savvy shopper?

Neither.. it is the last desperate attempts of concerned retailers to maintain sales and cash flow, even at the expense of profits.

Lachlan
Guest
Gidday Shoes “technical recession is a distinct possibility late 2011 early 2012.” The failed wheat crops would cause that (tech.rec.) next year, according to Queensland Country Life when I read it about three weeks ago. And that was before the last 500mm of rain. It rains and rains… and rains some more. Very widespread too. Flooding again here now actually. Hate to think what wheat prices are going to do just on supply and demand with US crops etc hit by drought and East Aus crops by floods. And Russia etc .. As for risk, AUD, markets etc I’m sticking… Read more »
Stillgotshoeson
Guest

@Lachlan

Just going to keep trading the market sentiment…

Increasing holdings of a couple of stocks that I expect bigger things from first 6 months of 2011.. Selling a couple I have less expectations for.

Going to be in the Northern Hemisphere July through to September.

Biker
Guest

“…ah its all fun…”

Yep. Just bought us a great big Sony flatscreen with all the you-beaut-gee-whizz bitz. Gawd, I _love_ this recession we’re having.*

* Means I can finally join the ranks of the blatantly rampant consumers!~ ;)

vp
Guest

Lachlan: Better than QE? Either something that either puts people to work (e.g. infrastructure projects) which would mean a shallower but longer recession, or just leave the whole thing alone, and have a deeeep, nasty recession/depression but which would work it out of the system quicker (but would also entail the long-term social consequences of mass unemployment). Neither option, of course, allowing the bail-out of the corrupt financial institutions which caused the crisis in the first place.

vp
Guest

Biker Pete: I don’t think they’re contradictory. The governemnt doesn’t buy anything ‘real’ (e.g. resources, goods, services) with QE, but just swaps one piece of electronic paper for another. If the government did buy ‘real’ stuff with its money then it could cause demand-driven inflation in those areas.

Biker
Guest

Lachlan: “…a deeeep, nasty recession/depression…”

Ah, but the comfortable would get more ‘comfortabler’… and the less comfortable would get most uncomfortable.

As the New Year rolls towards us, let’s be careful what we wish for… . ;)

“Neither option, of course, allowing the bail-out of the corrupt financial institutions which caused the crisis in the first place.”

Now THAT’S wishful thinking, Lachlan! :D

Biker Pete
Guest

“The governemnt doesn’t buy anything ‘real'”

Hospitals? Medical equipment? Roads? Railways? Bridges? Dams? Buses? Trains? etc, etc.

If you contend that we’re likely to see a mix of inflation and deflation (and here I use the layman’s definition of inflation / deflation) you may be right… . I just paid about a thousand bucks less for our new flatscreen than I might have three months ago. But the critical items will rise: utilities, accommodation, food, etc. Inflation is always going to be the elephant in the fridge… . ;)

Drew
Guest
@ Stephen “If we were going to have an ice-age then you think it would start in the arctic. But those regions are warmer then ever. You are cherry picking your data here. It’s called Global Warming, not just “London Warming” or “North East Europe” warming. And the fact is that the globe is warming. You need to get your facts straight.” You just cherry picked your facts. There’s no rationale why “global warming” would start in the arctic and could just as well start in the antarctic, the equator, greenland or a number of regions. Climate is complex so… Read more »
Ausdebt
Guest

Can you go bankrupt if you have the ability to print your own never ending supply of new cashola?

vp
Guest

Biker Pete: That was my point, the government *could* by real stuff (Hospitals, Medical equipment, Roads, Railways, Bridges, Dams, Buses, Trains, etc, etc.) any time it wanted, and could cause inflation if the required resources were in short supply, but that’s not what happens with QE; they just swap bonds for cash (i.e. they don;t buy that ‘real’ stuff).

Elastic
Guest

If you are running a $1.3T budget deficit and have interest rates pretty much at zero and still struggling to grow your economy you are in trouble. QE will keep continuing for years because without it the US economy will go into depression.

Biker
Guest

“…they just swap bonds for cash (i.e. they don;t buy that ‘real’ stuff)…”

So the six solar electricity systems we’ve installed so far, using very generous government grants aren’t really there? They’re illusory?

Weird!~ They look just like the real thing, y’know*…? ;)

* Fooled the power companies, too!

Lachlan
Guest
Marc Faber on QE. “The best way to visualize this process is to think of a huge money-printing machine in the US that produces an unlimited quantity of dollars. Most of these dollars flow to the corporate sector, financial institutions, and wealthy individuals. A large proportion of these dollars is then transferred to emerging economies through the US trade deficit and investment flows, and boosts economic activity and increases wealth in emerging economies relative to the US.” “Some of these dollars then find their way back to the US and support Treasury bond prices. But since fewer dollars find their… Read more »
vp
Guest
Billy Blog on QE: “Quantitative easing merely involves the central bank buying bonds (or other bank assets) in exchange for deposits made by the central bank in the commercial banking system – that is, crediting their reserve accounts. The aim is to create excess reserves which will then be loaned to chase a positive rate of return. So the central bank exchanges non- or low interest-bearing assets (which we might simply think of as reserve balances in the commercial banks) for higher yielding and longer term assets (securities). So quantitative easing is really just an accounting adjustment in the various… Read more »
Davo
Guest
Hi gang, Arrived back from good old USA on 23rd. One observation whilst travelling around was how cheap things were. Particularly fast food, taxis, public transport, souvenirs (t-shirts and the like) compared to Brisbane. Last time I was in the states was 4 years ago and I don’t recall it being that cheap then. High octane unleaded was around 90c a litre. Only paid around $10/$12 for a cocktail at the Waldorf Astoria in NYC. In Miami Beach, the local restaurant scene is obviously suffering, with several we noticed having signs outside advising customers that they had dropped their prices… Read more »
Lachlan
Guest

Thanks for the great post vp. Debt based money sure does complicate things. I don’t have time to keep posting now so will have to retire for a little. Cheers but.

Lachlan
Guest
But before I do I’ll just give one example of something that gets me. Lets say a bank loans a government some money. They have have to pay it back with interest which is going to cause deflation when the principle is repayed with interest on top. But is it net deflationary? Because the gov will then pay gov employees or whoever else with that money and then that cash(not debt) is still left in the system after the gov has paid back the loan. Also the cash may be then used by the gov employee or whoever else as… Read more »
vp
Guest
Lachlan: the whole thing about banks loaning money to a government is a sham; the government has a bottomless pit of valueless ‘money’, so doesn’t *need* (logically anyway, legally it does) to borrow from anyone, so when they borrow from banks and repay interest it gives the banks a profit for something the government could get for free… oh, to be a bank – sounds like easy money! The transactions between the Treasury and reserve is also a sham as it’s just the ‘government sector’ and adds nothing to the private sector. It’s only when the government sector credits commercial… Read more »
Stillgotshoeson
Guest
http://www.adelaidenow.com.au/ipad/bright-lights-no-longer-lure-partygoers-on-new-years-eve/story-fn6t2xlc-1225977671534 Sister paper to the Heraldsun.com.au here in Melbourne. (where I first read the article) First link I found to it was this and that will do.. “NEW Year’s Eve revellers are forgoing fancy restaurants in favour of quiet get-togethers as soaring expenses bite. Just two days from the biggest party of the year, bookings at top Melbourne restaurants such as Maze, Maha and PM24 are languishing at the 50 per cent mark. As mortgage repayments rise, utility bills jump and petrol prices head north, more Australians are choosing to ring in 2011 from the comfort of their armchairs.” With… Read more »
Stillgotshoeson
Guest
wrong thread by I don’t care… http://www.nytimes.com/2010/12/29/us/29families.html?hp I have a friend that lives in Phoenix Arizona and I spoke with him last year about buying investment properties in Arizona (no winter worries for piping etc) He told me straight up not too… One of the many reasons he gave was so many empty houses because of multi generations living in one house, an issue that will not fix itself for some time… If you are considering buying US property for investment purposes then go over there and see for yourself.. It is not a road paved with gold for untold… Read more »
Chris in IT
Guest
“So quantitative easing is really just an accounting adjustment in the various accounts to reflect the asset exchange. The commercial banks get a new deposit (central bank funds) and they reduce their holdings of the asset they sell.” I see it differently. The fed is depositing invented money at the PD’s. The PD’s then buy treasuries. Hence, the net effect is twofold: First, the PD’s Goldman, JP, etc are putting AAA assets on their books. This adds to their reserves, allowing them to use greater leverage. In a 10:1 system, each billion of bonds bought, gives them 10 billion of… Read more »
Chris in IT
Guest
“But before I do I’ll just give one example of something that gets me. Lets say a bank loans a government some money. They have have to pay it back with interest which is going to cause deflation when the principle is repayed with interest on top.” I don’t follow? The bank had say 1billion to start with. It ‘lent’ the money to the government as say 5%, lets say for 12 months (to make the math easy). In 12 months interest and principal are repaid. Now the bank has 0.05b (50 mil) extra on it’s balance sheet (principal is… Read more »
Chris in IT
Guest
“2011 is shaping up to be a far worse year for us than the years 07 to 10 have been.” I think we’ll be lucky to leave 2012 with both the EU and USA intact. The EU has decide to FORCE deflation. That can only spell disaster for a financial system that simply cannot handle continual deflation. I suspect that riots in the EU will get far worse. The USA is looking like its setting up for hyperinflation. As a side not, an interesting fact I read recently was that during ‘hunting season’ a combination of 5 states had more… Read more »
Lachlan
Guest
Thanks Chris. Great posts. Your thoughts on civil violence in the US are shared here no doubt as I’ve said a few times here already. Just on gold. I hold it not because I’m tending towards an inflationary view. The inflation/deflation debate is a great one and I really want to keep learning. I’m glad we have a good thread here. Gold to me is a vehicle toward increasing my worth in terms of property. And I have a bias toward tangible assets. I buy shares etc because I love the adrenalin that comes with volatility and its an interest… Read more »
Stillgotshoeson
Guest

Comment by Lachlan on 30 December 2010:
Just on gold.

Bought more Focus yesterday.

Lachlan
Guest

I’m confident in them Shoes.
SAR hitting 85c today but probably soon to retrace.
Any thoughts on QMN?

Stillgotshoeson
Guest

Comment by Lachlan on 30 December 2010:

Any thoughts on QMN?

Is early days with results.. look promising though. More drilling in the first quarter 2011 could be beneficial to the share price with continued good results..

Not for me but show potential. Will put them on my watch list and keep an eye on them.

Lachlan
Guest

My father bought them around 9c Shoes where I feel he’s safe for ride higher below some good support. I like them too but don’t chase things. I have a formula I follow as you do. I think there are a wide variety of formulas that can work. In fact QMN and PIO will go higher I believe. But the only thing preventing me from succeeding is my discipline to stay with my plan. A global/China collapse could spoil the fun but then everyone will be up the creek. Cheers mate.

vp
Guest
Chris: This is a useful site for visualising the macroeconomic balance sheet. Select Quantitative Easing from the drop-down and run the operation. http://econviz.com/balance-sheet-visualizer.html As for the 10:1 ‘money multiplier’/’loanable funds’ idea, you should read Steve Keen’s ‘Roving Cavaliers of Credit’ paper where it explains that the reverse is true; banks create loans & deposits and then sort out the 10:1 reserve ratio afterwards in the interbank market. This is why QE doesn’t work as expected, with the government expecting 10x the money in the economy, but because everyone’s deleveraging there’s no-one to lend to. So the banks end up with… Read more »
Ross
Guest

Shoes, I missed the details of the reconstruction of IMP How is your equity fairing?

Stillgotshoeson
Guest
@ Ross Still holding IMP. They made a $60m+ acquisition recently. Still hold good hopes for them, either a buyout or they continue to take over other NG land holdings that are financially struggling. They are still a little fish in a big pond but their debt/equity ratio is very good, finances are in a much better position than many bigger NG companies in the same area. NG prices are still down, I see that as more a limit on the share price growth than other factors at the moment, decent price increases should reflect IMPs value. Still a hold… Read more »
Chris in IT
Guest
I checked out the calculator, however as a coder for 30 years I tend not to trust programs to explain logic, as they only display what they are programmed to display. IF the economy really was that easy to predict, then that website should be all the world need to use to predict future movements. What if I wrote the code on that website? It would only be as good as my understanting, i.e., it is limited in the same ways that I am. “so encouraging investment in other assets such as shares, causing increased prices there.” …or other risk… Read more »
Lachlan
Guest
Chris this is a difficult subject for me and I can only chew on it in small pieces. Ross and vp now too give me plenty to think about. Anyhow I read Keens article, The Roving Cavaliers of Credit, and I’ve saved it to re-read later because I found it very interesting. I suppose whether you think it’s a hyperinflation in the future or a deflation or maybe both at some point, we may all be able to see that the Fed and Co. are successfully pumping emerging markets and the commods right now. Actually for my own reasons I… Read more »
Chris in IT
Guest
Traditionally, as I understand it, a recession leads to a decrease in monetary velocity in consumerland. As such, a period of deflation is generally expected. To avoid this central monetary policy usually injects money in to the system to heat things up and increase the economic activity. This means that as the recession leads in, deflation is seen, as money stops chasing assets. Think house prices going down, because nobody is bidding over the last guy. Deflation is a real risk for banks as it wipes capital reserves of their balance sheets. This also puts them at real risk of… Read more »
wpDiscuz
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