mojo's Account Talk

[mojo]

Mojo,

Watch out for the Gold Bugs and Doomers...

The Gold Bugs are right - right now. But what about 2003, 2004, 2005, 2006, and 2007. Or 1993, 1994, 1995, 1996, 1997, 1998, 1999, 2000.

The Doomers have been predicting our demise for as long. They are right - right now. And, some of them documented the reasons for the recent failure. Some (Taleb, Schiff) noted the bubbles and complex risky investments. They are worth listening to, but they will be Dooming in the middle of the next big boom too. Doom and Doomer.

When President Obama realizes that Nancy Pelosi is not as smart as she looks he will hopefully find better help. Heck, there are probably lots of economists looking for work. They may work for food if Obama is slow to realize the talents of Pelosi and Reid.

Yes Boghie,
there is always someone willing to lead you down the path you want to go. I see a whole new set of circumstances developing here though as far as gold goes. I think gold has a long way to go with pullbacks along the way of course. I think gold will get stupid this year, the fear hasn't even started yet. We shall see, I'm putting some money where my mouth is
This is not just your average Doom.

http://www.[[financialsense.com/fsu/editorials/willie/2009/0227.html

"BLACK HOLES
A truly astounding event has taken place in the last several years. The public, the captains of industry, and the investment community have been exposed (if not victimized) by a great financial black hole. Of course, the bond industry has been at its center, selling securitized debt as bonds, laced with fraud, improperly linked to property titles, blessed by false debt ratings. Focus instead on the Collateralized Debt Obligation, a leveraged instrument with a bond core. The CDO has been a remarkably destructive device acting like a black hole in more perfect form than anything seen in modern history. It took future financial revenue streams, locked them into a bond security, leveraged it up five-fold, slapped on a few credit derivatives like inadequate bandaids and bandages, and sold them as CDO bonds. The credit derivatives served only to fool the public, and satisfy the debt rating agencies, enough to approve with a ‘AAA’ rating. The streams of revenue came from mortgages, as well as other diverse businesses, like from car loans, aircraft leases, and even from movie box offices. So the CDO bond sucked in future revenue, enabled vast bond trades, doled out hefty fees to Wall Street, and contributed to the financial sector destruction. The wealth and value of corporate entities that once were in possession of these future revenues streams have been lost. Their lack of liquidation means the drainage continues from future revenue, and future wealth continues to be destroyed. The active CDO trading bought a lunch, a paycheck, and a bonus for a corrupt Wall Street employee. Until liquidated, the CDO bonds continue to act, sucking value from the future. THINK BLACK HOLE! The fight against such a powerful force will send gold upward in price, not downward. The deflationist knuckleheads have it backwards, and have failed to notice that gold has risen in price since November."

 

[justbizness45]

Gold is expensive and if it goes to $2000 in the next 2 years that's great. I prefer silver and it is running the same trends as gold but I can afford it. Just something to think about, there are alternatives to gold.

http://www.thestreet.com/_yahoo/vid...=YAHOOV&cm_cat=FREE&cm_ite=NA&s=1#14375381001

 

[mojo]

Gold is expensive and if it goes to $2000 in the next 2 years that's great. I prefer silver and it is running the same trends as gold but I can afford it. Just something to think about, there are alternatives to gold.

http://www.thestreet.com/_yahoo/vid...=YAHOOV&cm_cat=FREE&cm_ite=NA&s=1#14375381001

Thanks justbizness45,
I have a lot of that too

129 over spot http://www.apmex.com/Product/43306/10_oz_999_Fine_Silver_Bars___Silvertowne_3_25.aspx

 

[mojo]

Moody's predicts default rate will exceed peaks hit in Great Depression

A bigger proportion of non-investment grade companies will go bust in the US and overseas in the coming years than during the Great Depression, according to Moody's, one of the world's foremost experts on credit.



By Edmund Conway, Economic Editor
Last Updated: 7:42PM GMT 26 Feb 2009


In what will be seen by many as die-cast confirmation that the world economy is plummeting towards an economic and corporate implosion of unprecedented proportions, Moody's said it anticipated a tidal wave of defaults was approaching.
It said that in the coming months more than 15pc of speculative-grade bonds and loans - all but the most highly-rated - would default on their debts.
This peak is even higher than the peak reached in 1933, when bank after bank throughout America was collapsing, taking hoards of other companies with them. Back then, the default rate peaked at 15.4pc; moreover these companies were former investment grade issuers regarded as more reliable credit prospects than their contemporary counterparts.




http://www.telegraph.co.uk/finance/...ill-exceed-peaks-hit-in-Great-Depression.html

 

[mojo]

FREE MONEY!

http://www.govtstimulusplan.com/government-stimulus/david/

 

[Boghie]

Gold, Silver, and Doomers

Mojo,

Concur. A nice blend of assets could very well include precious metals and other commodities. I can't invest in them yet because for about five years I 'invested' in my credit card companies:nuts:

However, I do think the little people in the great United States of America are making the necessary changes to heal their economy. And, in this case 'the little people' include the vast majority of survivors in the investment and banking industry. I guess I am aligned with Paul Kedrosky who wrote about this topic in 'Y2K, the Credit Crisis, and the Rosencrantz Fallacy'. The summary is: Folks like us and the Seville Suit Bankers are adjusting right now. Things will heal sooner than the Doomers think. They think we are rats on a treadmill. I am not. We are not. Even the Seville Suited Bankers are not.

I'm just thinking that the opportunity to buy commodities will be when the fear subsides but the economy still seems to be in the dumps. By then I can use some of my monthly credit card DCA funds to invest in the shiny stuff. Right now, I invest what I can in a market of thousands of stocks that have a value folks are not pricing properly.

 

[mojo]

I think the market is not even close to bottoming. Maybe some feel good rallies 10-20% then new lows.

 

[mojo]

When you see middle class white people getting off their a%&es and protesting you know things are changing quickly.

http://newamericanteaparty.com/

There is a very large section of the American population that quietly goes about working, living honestly, paying their taxes, mortgage ,credit cards etc.. These people are getting raped right now and it appears that the raping has just begun. These people are just starting to wake up to this new deal reality/socialism/communism whatever you want to call it. They don't at all like what they see. More to come.

 

[Boghie]

When you see middle class white people getting off their a%&es and protesting you know things are changing quickly.

http://newamericanteaparty.com/

There is a very large section of the American population that quietly goes about working, living honestly, paying their taxes, mortgage ,credit cards etc.. These people are getting raped right now and it appears that the raping has just begun. These people are just starting to wake up to this new deal reality/socialism/communism whatever you want to call it. They don't at all like what they see. More to come.

Mojo,

America is starting to heal. I think the ignoramouses in Congress and the Administration will soon get the word.

That is why I don't think we will repeat last year. Folks are watching and adjusting. To get to Great Depression levels we have to drop last years percentage from 2009/02/27 through the rest of the calendar year. I do expect CITI Group, AIG, and GM to fail. Those will be the buying opportunities. Hopefully, that gubmint will not saddle the taxpayer with a failure debt - but, with these clowns who knows...

 

[mojo]

I'm very curious where you see any healing taking place?

 

[Boghie]

I'm very curious where you see any healing taking place?

Your recent comment thread got me thinking so I posted some thoughts. Just thoughts. Some of those thoughts were on trends that point to healing. 'There, Up in the Sky, What Do I See...'

Basically:

We would need the equities markets (C/S/I) to fall another 38% from here to reach the levels of the Great Depression. Financials used to be 17% of the S&P, now they are 7%.

• Consumers are deleveraging their debt.
• The aggressive investment banks are history.
• While GM and Chrysler are begging, Ford is not.
• State and City government is starting to adjust to reality.
• Home prices are low enough to attract first time buyers.

 

[350zCommTech]

Consumers are deleveraging their debt.

How are they doing this?

 

[Boghie]

Consumer Debt Levels

How are they doing this?

I was going to blather from memory, but here is the article I read a while back:

CNN Money: "Americans' debt shrinks - 1st time ever"

I'm not saying its much (0.8% in CY2008 Q3) and I'm not saying it is necessarily a trend - being the first time

There are also solid reports on an increased savings rate. All slanted to whine about how the economy will never recover.

We should have CY2008 Q4 numbers out soon.

Regardless, with a hopeful trend in reduced credit card usage and an increased savings rate we may have:

Hope...

Change...

 

[350zCommTech]

Re: Consumer Debt Levels

I was going to blather from memory, but here is the article I read a while back:

CNN Money: "Americans' debt shrinks - 1st time ever"

I'm not saying its much (0.8% in CY2008 Q3) and I'm not saying it is necessarily a trend - being the first time

There are also solid reports on an increased savings rate. All slanted to whine about how the economy will never recover.

We should have CY2008 Q4 numbers out soon.

Regardless, with a hopeful trend in reduced credit card usage and an increased savings rate we may have:

Hope...

Change...

Here is the reason, which was stated in that article.

Debt mainly fell because more than a million Americans have lost their homes to foreclosure since the housing crisis hit in August 2007. When a home is foreclosed upon, the debt is transferred away from the homeowner to the bank. As a result, home mortgage debt sank a whopping 2.4% in the quarter.

Consumers are not necessary deleveraging their debt. They are just not adding on to it. They won't be adding on to it for a while. Most are suffering from maxed-out credit(there was a doc/movie on this). The mortgage ATM is no longer availabe.

 

[Boghie]

350 Concur...

350z, gota concur...

I do think the 0.8% number was culled out of the quarterly stats for CY2008(Q3). Other articles reference the same stats. That part is a reference to credit card debt. Not real clear from this article, but...

Regardless, me thinks 0.8% is flat anyway. So you are right. I remembered it as 2.5% - which includes the real estate defaults you mention. 0.8% is probably almost (or actually) statistical noise at that level. I think the Q4 report will be more interesting.

At least it isn't growing. And, the slop was flattening for the first two quarters.

 

[mojo]

Your recent comment thread got me thinking so I posted some thoughts. Just thoughts. Some of those thoughts were on trends that point to healing. 'There, Up in the Sky, What Do I See...'

Basically:

We would need the equities markets (C/S/I) to fall another 38% from here to reach the levels of the Great Depression. Financials used to be 17% of the S&P, now they are 7%.

• Consumers are deleveraging their debt.
• The aggressive investment banks are history.
• While GM and Chrysler are begging, Ford is not.
• State and City government is starting to adjust to reality.
• Home prices are low enough to attract first time buyers.

Boghie,

I believe the equities markets will drop another 38%.

If by deleveraging debt you mean more forclosures taking place I agree.

Banks are being propped up and are on life support and in a continuing crisis.

Two out of the three major car companies are on life support and possibly won't survive, I agree. Ford may follow. If the other two go so will the suppliers.

Many state and city governments around our nation are in crisis and bankrupt and have not adjusted to anything imo. Why adjust when the FEDs will prop you up.

Home prices are very low due to the crisis not because of any healing going on imo.

I do agree that we must go through the pain to start the healing process but I do not agree that we are anywhere near that point. More pain to come.


We have a banking crisis. We have a housing crisis. We have a commercial real estate crisis. We have a stock market crisis etc.. Most important of all we have an ethics crisis.
By crisis I mean a very ustable and dangerous situation

None of this is even addressing the world situation. We are in very deep.

I just see a lot of bleeding but no healing yet and the doctors on hand are incompetent.

I see Obama as a divider rather than a uniter.

I do appreciate your thoughts Boghie I just see things a lot different.

 

[mojo]

"Buffett: Sees economy in 'shambles' in '09

CHICAGO (MarketWatch) -- Berkshire Hathaway (BRKA) Chairman Warren Buffett told shareholders Saturday that 2008 was the company's worst year on record, as the per share book value of both the Class A and Class B stock fell 9.6%. In his annual letter, Buffett said neither he nor Charlie Munger, his partner in running Berkshire, can predict winning and losing years in advance, and that no one else can. "We're certain, for example, that the economy will be in shambles throughout 2009 - and, for that matter, probably well beyond - but that conclusion does not tell us whether the stock market will rise or fall." Commenting on the federal government's actions to resolve the economic crisis, Buffett said: "Economic medicine that was previously meted out by the cupful has recently been dispensed by the barrel. These once-unthinkable dosages will almost certainly bring on unwelcome aftereffects."

http://www.marketwatch.com/news/sto...6EE7B-45C8-4660-9DC6-F33EAD9F7EAD}&dist=msr_6

 

[Viva_La_Migra]

"Buffett: Sees economy in 'shambles' in '09

...Commenting on the federal government's actions to resolve the economic crisis, Buffett said: "Economic medicine that was previously meted out by the cupful has recently been dispensed by the barrel. These once-unthinkable dosages will almost certainly bring on unwelcome aftereffects."

WTF does this mean? What kind of unwelcome aftereffects?

 

[alevin]

Boghie, I respect and admire your longrange planning and the fact that you are managing your finances responsibly. Your pragmatic optimism is refreshing, I hope it's not early but am afraid it is. Hang on tight, it's gonna be one h* of a ride, and it's gonna last a lot longer than 8 seconds. No grabbing the saddle horn either. BTW, the bear's name is Typhoon and he sunfishes and throws himself over backwards too.

 

[KevinD]

WTF does this mean? What kind of unwelcome aftereffects?

Inflation?