News & Analysis
DB Briefs: US Gets Verbal Spanking / Obama to Create Jobs? / Markets Plummet Amid Debt Fears / Egyptians Getting Restless
China Joins Russia in Blasting U.S. Borrowing
China, the largest foreign investor in U.S. government securities, joined Russia in criticizing American policy makers for failing to ensure borrowing is reined in after a stopgap deal to raise the nation's debt limit. People's Bank of China Governor Zhou Xiaochuan said China's central bank will monitor U.S. efforts to tackle its debt ... "China hopes the U.S. administration and the Congress would take responsible policy measures to handle its debt issue," Zhou said. He highlighted the global role of U.S. Treasuries, saying that any "large fluctuations and uncertainties" in the market for the securities would undermine financial stability and hinder the world economic recovery. Russian Prime Minister Vladimir Putin said two days ago that the U.S. is in a way "leeching on the world economy." – Bloomberg
Dominant Social Theme: US politicians have got to act responsibly.
Free-Market Analysis: The problem with this article is that it spins the theme that central planning works and that America's "wise leaders" need to do a better job of managing their country. Well ... they cannot. Central planning doesn't work. Regulatory democracy doesn't work. Socialism doesn't work. And fraudulent fiat- money-based monetary systems do not last. Russia and China are both members of the IMF, and as such, will likely be pushing hard for a new global reserve currency – one that will undoubtedly be managed by the IMF. This is not about America narrowly escaping a default on its debt and its politicians' weakness at addressing the debt ceiling sooner, this is about a collective attempt by Money Power to consolidate the world's monetary system under one roof and replace the US dollar as the world's reserve currency. This is about power consolidation and a final push towards a new world order. The eurozone experiment should make it abundantly clear to all that just by consolidating the fiat debt under one roof does nothing to alleviate the rot inherent in the foundation. The whole world is caught in an inflationary debt cycle that can end nowhere but in ruin unless the madness is stopped. TANSTAAFL.
Debt Fight Over, Obama Promises Action on Jobs
Having ceded considerable ground to Republicans in the debt ceiling fight, President Obama set out Tuesday to reclaim the initiative on the economy, promising a new effort to spur job creation while seeking to position himself as a proven voice of reason in an era of ideological overreach. ... Still, heading into an election year, Mr. Obama's advisers say he will be able to point to his role in the debt negotiations as proof of his ability to be a mature, responsible leader who is able to rise above Washington's relentlessly partisan fray. ... Mr. Obama's willingness to engage in serious deficit reduction, aides said, could buy him credibility for his other economic proposals. – NY Times
Dominant Social Theme: The American dream lives on the back of its strong leader.
Free-Market Analysis: Here again, the NY Times carries an article that is meant to inspire people with hope. Mr. Obama, after engaging in "serious deficit reduction," is now going to board a bus for the Midwestern United States and "sell" the American people on his recent debt-ceiling victory and how he has saved the country's economy. And on top of that, Obama is going to create jobs. Mr. Obama is just an actor playing a part; there was no "serious defecit reduction," no matter how many times Whitehouse officials and the manistream media play the theme. There is only the illusion of a future decrease in the rate of defecit spending over the next ten years, while the federal debt is bloated by another $2.4 trillion today. And now, off Obama goes to share how he will use his newfound trillions to "create jobs." Good luck with that. We think Americans are waking up to the truth as it relates to the destructive nature of the money magicians at the Federal Reserve who are hellbent on devaluing the dollar and wiping out what's left of the American middle class in the process. And as the Internet Reformation heats up, mainstream media outlets like the NY Times may find it harder to sell such false hope. After all, we live in an era of "ideological overreach," or as we refer to it, an awakening of the masses to the greatest financial heist in history.
Markets Tumble on Fears for US Growth and Eurozone Debts
Fresh evidence that the US recovery is faltering, and fears over the need for possible bail-outs in Italy and Spain are rocking investors' confidence. The Dow closed down 265.87 points, or 2.2pc, to close at 11,866.60. Its eighth day of declines is its worst losing streak since the height of the financial crisis in September 2008. The S&P 500 finished 2.6pc lower at 1,254.05. ... Gold touched an all-time high of $1,640.39 and the Swiss franc rallied to a fresh peak against the euro. ... European Commission officials played down fears that Spain or Italy would require a bail-out, but were monitoring the situation closely. An EC spokesman said: "We are very confident in both the Spanish and Italian authorities' determination to get their economies back on track." – UK Telegraph
Dominant Social Theme: Markets are inherently unstable, but the eurozone will be fine.
Free-Market Analysis: We've long been saying here at the Daily Bell that Italy and Spain are bankrupt and that sooner or later "confidence chatter" would not be able to maintain the public's confidence in the euro-debt-dam. The European Commission can paint it anyway they like, but people can see clearly now that – whether it is the US dollar or the euro – all unrestrained fiat currencies are eventually inflated into the sewer leaving ruination in their wake. The euro is just another devaluing paper-promise and debt-ridden countries are still just that, regardless of whether they are tucked under the covers of a pan-european blanket. The EC's confidence is likely nothing of the sort and as gold continues to rise against all fiat money, sooner or later the debt levee is going to break and wash over populations already drowning in debt.
Trial of ex-President Hosni Mubarak opens in Egypt
Mr Mubarak, 83, was wheeled into the cage from where he observed proceedings with the other defendants, including his two sons. He is charged with corruption and ordering the killing of protesters – a charge that carries the death penalty ... Over the past month there have been renewed sit-in protests in Tahrir Square by people angry with the slow pace of change in the country. ... On Monday and Tuesday, police backed by army troops moved in to clear the last few protesters from square. – BBC
Dominant Social Theme: Justice will prevail and then change will happen.
Free-Market Analysis: The AYM inspired color revolutions that have been sweeping across the mideast and north African states – in the name of democracy – have certainly caused "people changes" but very little progress that has had anything to do with actually improving people's quality of life. The situation in Egypt will likely continue to worsen, regardless of the outcome of the Mubarak family trial. If the people of Egypt want productive change then they would be better off executing their socialist system of government and installing one that emphasizes small government, respect for the invisible hand of the free-market, protection of private property and an honest monetary system. Otherwise, Egypt, like all nations with a central bank strangling its populous in a noose of fiat-money debt, will continue to serve the desires of the few who wish to disadvantage the many.
Posted by David_Robertson on 08/04/11 03:54 PM
President Obama has introduced a new voting procedure that transfers power to the Executive Branch. In the same bill to raise the debt ceiling he created a Super Congress that will be used to create legislation relating to the deficit reductions i.e. where the "cuts" will come. This removes whatever power remains with the Congress on financial legislation that is amongst the most important duties of elected representatives.
I would expect the bills generated by the Super Congress, which must go to Congress but cannot be amended, to be voted on by the same procedure of disapproval. I have no doubt that after this just as the President has increasingly governed by Executive Orders ignoring Congress so the power of this Super Congress of only twelve leaders from both parties will grow and eventually the Congress will become like the European Parliament a merely rubber stamping body of powerless representatives and the plum jobs will be on those committees serving the Super Congress. Click to view link
Posted by dotti on 08/04/11 06:05 AM
Sounds like you have lots of fun! And get paid for it!
I'm a far better artist than hedge fund manager! LOL
I do admire your discipline and that you are able to navigate the global markets. It sounds like you have a knack for it and have developed a knowledge base over a period of years. Not to mention loads of fun!!!
Good for you!
While Hubbie recouperates we are staying at our "second home" which we are preparing to sell. It's not "fun", but it will be quite a relief when we are shed of it. It is not a financial need, but rather an emotional one. We just need to be rid of it. We have a prospective buyer. We should find out for sure this week.
I look forward to our being released by the surgeon next week to return to Virginia--hopefully, with this place under contract (no RE agent involved).
I've not really learned the new "News Briefs" system here at DB. Seems like when they post a new one, the old one is no longer available.
Thanks for your friendship. It's especially nice to have DB friends when I have to be away from home!
Posted by LibertyBelle on 08/03/11 11:30 PM
Hey elves...love this format! Keep up the good fight!
Reply from The Daily Bell
Editor's note: While we have introduced this new "Daily Bell Briefs" feature into the Daily Bell, it is not to the exclusion of our traditional format of presenting full-length news analysis. Over the next couple of weeks, the DB elves will be enjoying a much needed summer vacation. Following such, both the new "Briefs" and the traditional "Staff Reports" will be published on a daily basis. The Daily Bell Briefs are not a new format that replaces the old, simply an addition to our ever expanding mission of advancing free-market thinking around the world. Thanks for joining us.
Posted by injun1 on 08/03/11 11:25 PM
How can gold be risky for a person like you! If that's what makes you sleep better than it's a good purchase. The hell with everybody's opinion. That's the reason I don't let anyone mange my money.
IRS allows self managed funds for people like you and I. All profits that I create for that account is non-taxable. It is basically a private hedge fund, that you own and manage. You can charge a management fee and keep the rest in your fund tax free!
Why invest in a taxable stocks or public funds or gold when I can self manage and buy gold and sell that gold tax free for my own self directed fund. In my case I charge myself a 20% management fee and the balance stays in a tax free self directed fund. That's how you should be purchasing your gold or real estate or diamonds or whatever.
But then again, I'm not an Investment Advisor, simply a friend. (lol)
Posted by injun1 on 08/03/11 11:04 PM
Dottie, of course each investor has their own quirks and beliefs but mine isn't as a gold bug. I do keep track of metal prices but only to assess the price for possible margin requirements that are changing.
My rule of thumb is, if I am trading in metals I hold 20% physical and 80% cash after the exit of the trade. That way I keep liquid, yet build up a storage of the physical asset for safety.
Whereas in a forex trade I keep 40% in cash and 60% in real estate after the trade is exited. In other words, assuming I exit a trade profitably, I take 60% and invest in land and take the balance and reinforce my trading account.
So my safety net is a blend of metals, real estate and offshore banking. It allows me to sleep, perhaps like holding metals provides you with a comfort of safety. My risk tolerance may be higher than yours. But whether it's emotional risk or physical/trading risk. It is all risk capital management.
Learn to manage risk and your horizon of investments ten fold overnight.
The main reason I don't play the metal markets is there is only so much money those boys with white shoes and pinky rings in Chicago and New York are going to allow you to make before they turn the spicket off with margin requirements and they can break someone like me who uses leveraged investments.
Don't make investing difficult. If you like metals then buy metals, hell I may have to borrow some someday! (lol)
Posted by dotti on 08/03/11 10:21 PM
How thoroughly exciting!!! It must give a wonderful feeling of euphoria!
I do not have lots to invest, but gold/silver give me peace of mind. Nothing else does.
I am the eternal permabear in the stock market. Hubby is engineer/MBA and has more faith in equities than I. I have been so wrong for so long....
Sleep well, my friend!
Posted by dotti on 08/03/11 10:17 PM
Seems like things are pretty quiet tonight. I decided to check on the gold reserves of various nations via CNBC data. Seeing the quantities of gold held and the percentage of reserves held in gold made me wonder if people like you who play the global currency markets--and maybe other global markets as well--pay much attention to the percentage of reserves that are held in gold.
I also noticed that the percentage of gold in reserves for Switzerland had "declined significantly" in the past year. That seemed worthy of some interest to me. What does it mean? Anything?
Just curious, but any info appreciated.
Posted by injun1 on 08/03/11 09:58 PM
I don't invest in the stock market. It's only for the insider. It's too complicated, it has too much government money sloshing around in it and it can be manipulated. I never trusted it and I still don't.
On the other hand, if one takes physical possession of commodities or metals and is able to control storage costs, which in your case you could, I think its the only way to go for the one that is interested in safety.
Remember safety has a price on it also and sometimes it can be pretty expensive, but if one believes that safety is more important than yield at the present time, how can one put a price on peace of mind. It's priceless!
You might be interested in the currency markets we discussed earlier. I have been taking a pounding up until about thirty minutes ago and there was intervention that finally happened, just as I suspected and the market moved almost 200 points in 15 minutes. It was a great feeling as I was getting worn out! I intend to make up for lost sleep tonight after not getting any for the last week! (lol) Good Luck!
Posted by dotti on 08/03/11 07:41 PM
Re: "Good luck my friend save a seat for me on your jet! "
Re: "but if a person is thinking safety and storage, is it not time to buy?"
I'm confident that gold is going up for several years--lower left to upper right as they say.
The stock market,however, I just see as very risky! I know people say "Gold is risky", but from my perspective, right here and now, CASH or STOCKS are even more risky.
Checking stats at John Williams Shadow Stats, we've already had two quarters of negative GDP and unemployment as calculated up until 1994 is above 22%. And that's with all the various stimuli that we've witnessed!!!
Yet, I keep hearing that companies' earnings are up and that's the determining factor for price of stocks. I know it's true, but I still don't get it. Can earnings continue to be up when economies around the world are faltering?
injun1, thanks for your encouragement. If I ever have a jet, you will always be welcome on it!
Posted by dright on 08/03/11 03:32 PM
I love this daily brief format, great job Tony.
Reply from The Daily Bell
We plan to make the Brief format a daily addition to The Daily Bell. We appreciate the positive feedback.
Posted by rossbcan on 08/03/11 02:03 PM
All briefs, summarized:
The sky is falling and, all the fools who falsely believe they are "in control" can do is set the script for the band, choreograph the actors and re-arrange deck chairs as the "unsinkable" ships of states, sink.
Problems imply their own solutions and states, by choosing to become "problems" have opened up market opportunity for their demise, firmly guided by the unseen hand of collective human free choice, pursuing self-interest and dealing with survival threats.
States don't lie. They actually do "serve and protect", but only themselves and cronies, alienating (and aligning in common interest) all others to unseat the "king of the hill".
And, the "bailouts" are just resource infusions into a system which is not, nor can ever be self-sustaining and is running down because of the false perpetual motion (something from nothing) assumptions it relies upon.
I doubt very much that the organized forces who are doing in states have the interests of "we, the people" in mind. More like one predator eliminating another, in competition for prey (us).
So, don't waste life attempting to "reason" with predators or differentiating their various "teams". Starve the leeches by personally defending you and yours.
Posted by injun1 on 08/03/11 02:00 PM
And ford recalls over a million trucks!
Posted by John Danforth on 08/03/11 01:42 PM
by Government Motors:
Click to view link
By the way, they are building inventory like it's going out of style.
Posted by injun1 on 08/03/11 01:18 PM
I am going to sound like an Investment Advisor on TV. I have stated here before I am not a gold bug. But what has served me well throughout the years of investing is, if I believe in a market direction, I keep buying that direction until it proves me wrong. It doesn't matter to me what the investment product is.
And like buying real estate, you make your money going in, not coming out. Always leave room for the other guy. If you do it will help you avoid crashes. I trade blips and dots around the world, but if a person is thinking safety and storage, is it not time to buy?
Good luck my friend save a seat for me on your jet!
I buy into bubbles because that's where the money is at.
Posted by reegje on 08/03/11 12:53 PM
The stockmarket is a scam too!
Posted by dotti on 08/03/11 12:40 PM
Thanks much! I value your opinion, but assure you that I would never cast you in the role of "investment advisor" for any of a number of reasons.
I had only seen Cramer's opinion of his expertise. I gave him credit for calling the bottom March 9 or 2009, but others made that call as well.
Off for a busy day!! Thanks again for your feedback.
I'm watching silver because I have some "junk silver" that I want to convert into junk silver in coin form--or something.
Posted by John Danforth on 08/03/11 11:57 AM
Cramer is a schizophrenic idiot. A True Believer in Paper Money.
Click to view link
Silver is on sale today.
The 'recovery' meme is completely contradicted by every single solitary bit of data available. I would avoid the stock market like the plague (but that's just me). It is nothing more than a value sink for millisecond-speed skimming algorithms to pump up free money for the 'banks' which don't do banking anymore, so they can show 'profits'. Check out Zerohedge for hard evidence of this (HFT = high frequency trading, and "algo" = computer trading algorithm). All paid for with 401K's funded by people trapped into 'growth fund' schemes through their employment. Those who didn't get out in time before the last crash, when all the warning alarms were going off now have one last chance to get out now (but that's just my guess). If Cramer thinks it's a buying opportunity, that should be warning enough for anyone!
I am not an investment advisor, so anyone who is inclined to follow advice gotten off the internet is advised to do the opposite of what I say! Or throw darts at the financial pages, and don't buy if the dart hits anywhere on the page.
Posted by dotti on 08/03/11 11:12 AM
Seems like the commodities that are most linked to industrial need are all down today--silver goes both ways, so to speak.
Does anybody here think the market is "crashing"? Or is this a buying opportunity (of a lifetime?)?
I'm awfully suspicious of the "recovery"--a suspicion which seems to have been validated the past week or two. A friend who is a fan of Jim Cramer thinks it is a major buying opportunity.
And can the elves tell me where everybody is this morning?
Posted by dotti on 08/03/11 09:54 AM
Also, thanks for adding the FOREXPROS chart on the sidebar. Very, very helpful.
Posted by dotti on 08/03/11 09:52 AM
First, let me congratulate the Elves: My rating was the third and it appears that the average rating is 5.0. It doesn't get any better than that. The new format has tentative approval.
Now. Re: "Having ceded considerable ground to Republicans in the debt ceiling fight, President Obama set out Tuesday to reclaim the initiative on the economy, promising a new effort to spur job creation while seeking to position himself as a proven voice of reason in an era of ideological overreach. ... Still, heading into an election year, Mr. Obama's advisers say he will be able to point to his role in the debt negotiations as proof of his ability to be a mature, responsible leader who is able to rise above Washington's relentlessly partisan fray. ... Mr. Obama's willingness to engage in serious deficit reduction, aides said, could buy him credibility for his other economic proposals." - NY Times
This is the kind of reporting that seems non-biased, when it actually is quite biased. [disclaimer: I have not read entire article; i'm judging based on snippet.] By using such techniques as "...his advisors say..." the NYT is able to say very favorable things about President Obama. Things like this weasel their way into the psyche of the reader--particularly those who are open to such a tactic.
I have the hope, along with others here, that more and more citizens are recognizing this propaganda as such.
Thanks to AW and the Elf Patrol for bring us these briefs and allowing us to address these issues daily.
We are not alone.
BTW, I always like to see the time/date stamp on articles. Would that be possible for our Daily Briefs? Thanks.