Saturday, May 28, 2011

The week that was...

Again...most of the elliott wavers and traditional analysts are looking for the huge up move...will they be blindsided again just like last time? Is the rally on the back of the troika really sustainable? I think people will be blindsided...













Very Interesting Jim Rogers Interview

I have to say that there is one thing to measure commodities against...and that thing is the exponential bell curve. The reality is that a society in decline, decline often triggered by a peaks in the availablility of and demand for resources, tends to accellerate its contraction of demand in many ways. One of the ways that the bell curve resolves issues for us is though events that seem not to be associated with the issue. For example, excessive demand for oil that has now passed the peak of the bell curve will likely be resolved both with new technologies that do not require oil and smaller populations that will use less of it. The fact is that nature is brutal in its pursuit of balance and the reality is that Oil is in less demand now that the markets are taking into account.

Even the CEO of Exxon stated that given the end user demand he sees, prices of oil are over valued and should be in the 40 to 60 dollar area...and he's an oil pumper. Remapping of supply and demand in the context of imbalances in the credit system caused by money printing and malinvestment is torturous and likely to result in contraction on many other assets and commodities. That is what massive credit contractions tend to look like. Therefore, though I find this interview to be very interesting, I disagree with the premise that the other side of the bell curve has to be accompanied by higher prices.


Tuesday, May 24, 2011

Goldman Tax says up - means down, says down - means up

There are several charts that only need to be referred to historically since they pertain to Goldman's terrible calls, so I will not publish new ones...Oil and the dollar.

Goldman of course downgraded the dollar the day before it broke out over resistance and they upgraded Oil apparently just before it begins it trek to below $20. Here are my charts from a few days ago, they are still valid and appropriate...and how much do you want to wager that Goldman is on the other side of those calls?

Sunday, May 22, 2011

We have no right expect munipalities not to default...

Hollywood Beach Florida is apparently a little late checking the balances in their checking accounts and the expected receivables on their account rolls. The interesting thing, and example of the credit fueled complacency that the world has adopted, is that a town with revenues of less than $8,500,000, needs a $7,900,000 fire house and I'll estimate a $1,250,000 disabled water tower so you can see it from the expressway. How interesting, when you find out how it really works when your complete business model is built on spending money you don't have, before it comes in and in amounts that can only be visualized on a perpetual exponential curve...These guys must be taking lessons from BURNanke. They certainly have eaten his cooking and believed his rediculous fairy tales.

None of these people are taking into account he collpase that is going to happen in their assets and their constiuent's assets and homes...I can hear the default bells ringing.
During Wednesday’s City Commission meeting, leaders learned Hollywood was short $8.5 million of the money needed to stay afloat through the end of the budget year, which is Oct. 1.

The commission approved raiding its emergency reserves — leaving just $2 million in the city’s coffers — and making $2.1 million in cuts to upcoming expenses.

But Mayor Peter Bober said the fact that Hollywood was poised to be millions of dollars in the hole should have been reported to commissioners months ago.

Bober is now calling for the removal of Hollywood Director of Budget and Procurement Services Cynthia Forrester, although the decision ultimately rests in the hands of City Manager Cameron Benson.

If you look at the numbers from months ago, a budget person would have seen that things are not shaping up as they should be," Bober said in an interview Friday. "It should have been brought to the attention of the commission sooner. It would have allowed us to have taken strategies earlier to make necessary reductions.

He pointed to several projects approved by the commission in the last couple of months that might have been reconsidered — including using $500,000 from the current budget to finance a $7.9 million fire station being built along Hollywood Beach and approving an additional $86,000 to refurbish the city’s light blue water tower visible to motorists driving along Interstate 95 and Sheridan Avenue.

"If the rest of the commission had known then as they know now, then every expenditure from copy paper to fire stations, everything would have gotten a much higher degree of scrutiny," Bober said. "The fact that this information was not brought to our attention sooner is negligent."

In order to shore up reserves and address any financial shortcomings for the 2011-2012 budget year, Bober said the city should look at cost saving measures like outsourcing some jobs or determining if certain tasks can be handled by "new technologies."
To bolster the city’s finances, the city may also have to take a look at raising its tax rate, said Matthew Lalla, the city’s director of financial services.

Last year the city commission approved raising the rate to $6.71 for everything $1,000 of a property’s assessed value, but even then, because of declining property values, the city was projected to bring in $2.6 million less than it had brought in the year before.

An Island and an oncoming storm...


I would like to make one comment regarding all the rediculously bullish commentary regarding gold and silver due to central bank and sovereign purchases of the metals. People seem to have a short memory and have forgotten that when all the same governments that are now buying gold and silver could not figure out what else to do with their gold and silver vault deposits and paper receipts for same - they sold them. As I recall that was when gold was $250 and silver was in the low single digits when most of the official selling occured...So, the time to be selling assets which have been so hyped that governments and central banks are buying them at highly inflated prices and many are even referring to them as currencies...is when it is obvious "everyone wants to buy them". Yes, and especially when its central banks want to buy.

Hell, even Zimbabwe, the only modern nation inept enough to officially create 11,200,000% inflation...is now smart enough to futher constrain their remaining purchasing power by basing their new currency on gold. So, it is happening now...all the charletans and economists are buying Gold and silver regardless the fact that they are NOT currencies and stand very little chance of becoming functional currencies. Despite the fact that they are at inflated prices and despite being an easily manipulatable and unstable basis for exchange...especially as a basis currency.

So, now is a very interesting time to be highly skeptical of the populist perception that "WE NEED GOLD NOW"...and try to look at these metals for what they are...simple assets and a source of liquidity...which makes them highly susceptible in case of a liquidity contraction. And a liquidity contraction is exactly what we have.

The apex of the storm

 
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