GASG

Will HELOCs cause another crash?

2014-11-21T07:15:00.002-08:00

Back in June, the Wall Street Journal published a chart very similar to the mortgage payment shock chart that alerted me to the original subprime crisis back in '05. This time the payment shock is on tens of billions in home equity lines of credit.

The magnitude is roughly the same as the subprime crisis, except since these are second mortgages and the housing market has barely recovered, there is almost no collateral behind them. Wells Fargo is most at risk.

I continue to be invested in gold because of two things I learned from the last crash. I found out that the system was even closer to total collapse than I thought and I was lucky that I didn't get wiped out be being "too" right. I also learned that if I had simply invested in gold, I would have made just as much profit as all of my risky perfectly timed derivative trades and short sales, but with no risk of a systemic collapse wiping me out.

long gold.

good luck!

Bull Markets 1871 to July 2014

2014-08-04T19:38:00.002-07:00

Source: http://greenbackd.com/2014/08/04/bull-markets-1871-to-july-2014-duration-and-magnitude-update/

Rent vs Buy calculator

2014-05-22T01:37:00.001-07:00

The New York Times updated their rent vs buy calculator. They were the first ones to allow a house price fall in their model, back in 2007.

Check it out:

http://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html

I'll have a permalink on the right side of the blog.

Where is the gold?

2013-12-30T19:08:00.000-08:00

In Jan 2012, Germany announced it planned to repatriate 700 tons of gold held on their behalf (for free . . . how nice of them) from the US Federal Reserve and the Central Bank of France. They were shockingly told it would take 8 years. So far, they have received only 37 tons. In the mean time, China has imported 2,000 tons of gold.

http://www.zerohedge.com/news/2013-12-24/year-later-bundesbank-has-repatriated-only-37-tons-gold-700-total

Four Horsemen documentary

2013-11-03T14:17:00.002-08:00

This documentary starts out explaining that all empires go through 6 phases (typically spanning 250 years)

1. Pioneer
2. Conquest
3. Commerce
4. Affluence
5. Intellect
6. Decadence

It would seem that we have been in the decadence stage since the '70s.

I think we are also concurrently in the pioneer phase of the internet replacing traditional roles of government (e.g. bitcoin, on-line education, bike sharing and ride sharing for public transportation).
Hopefully we will smoothly transition to a new more robust and democratic world based on that otherwise we face a totalitarian world government and global currency rising from the ashes of the current system and starting the cycle again leading to another round of debt slavery.

-Voltron

Spy Magazine on Short Selling

2013-09-17T13:59:00.000-07:00

Here is the article from 90's humor magazine "Spy" that introduced me to short selling as an undergrad (and also warned me about the dangers of Scientology)

Fiat Money

2013-09-16T19:25:00.001-07:00

Why house prices are up (for now)

2013-08-28T08:56:00.000-07:00

Mortgage rates have just started going up, and everyone knows when mortgage rates go up, house prices go down because people can't afford to buy as much house; however, when mortgage rates start to go up, house prices "head fake" up as people rush to buy a house to "lock-in" their mortgage interest rate before it goes even higher.

Sell Facebook

2013-08-27T07:48:00.001-07:00

If I owned facebook, I'd sell it now because the insiders are allowed to sell their shares starting in September.

http://www.nypost.com/p/news/business/facebook_vaults_past_U8XGueu870ddMtiTUIpg4L

Fed GDP predictions are a joke

2013-08-18T15:14:00.001-07:00

Don't trust the Fed with gold

2013-08-17T08:05:00.002-07:00

I knew that the Fed had Germany's gold and was refusing to return it in a timely fasion, but at 2:14 in the video it is revealed that the Fed has been holding Asian countries gold since WWII and has refused to return that as well.

The Daily Show on Goldman Sachs’ Aluminum Manipulation

2013-07-26T12:36:00.003-07:00

The Daily Show with Jon Stewart
Get More: Daily Show Full Episodes,Indecision Political Humor,The Daily Show on Facebook

get rid of GLD

2013-05-10T11:43:00.000-07:00

Quick note: large holders of GLD can request delivery of physical gold (100,000 shares minimum or almost $14 million) and there is evidence they have been doing so and almost all of the physical gold they store is gone leaving only receipts for gold they have leased out. The short squeeze in gold is happening. It's time to get out of GLD and into physical gold or other assets.

Also regarding the price action in gold lately, if the bull market in gold follows elliot wave pattern, I'd expect there to be another big leg down to nearly $1000 before the final bubble occurs.

On the bright side, this dip in the price of gold gives you a chance to sell your GLD and buy physical and pay less tax than if you made that exchange at a higher price.

Keen: Greenspan's bullish, time to sell

2013-04-01T05:35:00.001-07:00

Prof. Steve Keen, author of Debunking Economics and the Minsky dynamic computer model notes that former Fed Chairman Alan Greenspan is bullish on stocks and he's been so disastrously wrong in the past that it likely marks the top of the market.

Prof Keen promotes the idea that change in demand in the economy is the change in GDP plus the change in debt. Private debt is often ignored by conventional economists, but by looking at when private debt starts decelerating you may be able to anticipate market crashes. Right now we are are bit below a cyclical top stock margin debt, so look out below!

http://www.businessspectator.com.au/article/2013/4/1/markets/greenspans-bullish-time-sell

The problem in cyprus

2013-04-01T05:25:00.001-07:00

JP Morgan Chase is a criminal enterprise

2013-03-15T21:08:00.000-07:00

There was a Senate hearing today focusing on JP Morgan's poor controls and risk management resulting in a loss of $6 Billion by the "London Whale Trader", who is also now being implicated in the failure of Lehman Brothers. Like HSBC, JP Morgan is being accused of a mind boggling litany of repeat offences, including money laundering and dealing with terrorists and rogue nations. You need look no further than the fact that they spent 1/3 of last year's profits on legal fees and fines.

Watch James Rickards, author of Currency Wars, school CNBC's "money honey" Maria Bartiromo on how JP Morgan Chase exploits "too big to fail"

http://video.cnbc.com/gallery/?video=3000154861&startTime=113&endTime=546

Colbert Report: Standard & Poor’s Ratings Lawsuit

2013-02-23T04:25:00.004-08:00

Great burn on Wells Fargo at the end

The Colbert Report
Get More: Colbert Report Full Episodes,Political Humor & Satire Blog,Video Archive

here is the article referred to in the video: http://www.theatlantic.com/magazine/archive/2013/01/whats-inside-americas-banks/309196/?single_page=true

Why Gold is down

2013-02-22T11:58:00.001-08:00

The Fed released a statement that they might discontinue quantitative easing (i.e., money printing). Even though nobody believes the Fed would do this, somehow this supposedly caused a panic of gold selling, which was not at all market manipulation. Not at all. ;-)

Take a look at that 16 trillion dollar national debt number ticking to the right . . . there is NO WAY the Fed can let interest rates rise, because then the government would have to actually pay interest on that debt.

Gold pushed through a technical level called the "death cross" when the 50 day moving average went below the 200 day moving average at about 1,660. That is about as reliable as Tarot Cards, but weak hands that bought gold recently would have set stop-loss orders there at and also at 1,600.

If you look at a ten year chart, gold has been going sideways for about a year. look what happened last time it went sideways for a year (2008) it then went from 800 to over 1900 in three years. I think the third big wave is coming.

Macro Economics

2013-02-22T11:41:00.001-08:00

GDP forcasts

2013-02-19T19:06:00.002-08:00

Every year, the Congressional Budget Office predicts the economy to recover "next year". Reminds me of how the Soviets always blamed the bad crops on the weather. It's comical.

http://www.washingtonpost.com/blogs/wonkblog/wp/2013/02/19/forecasters-keep-thinking-theres-a-recovery-just-around-the-corner-theyre-always-wrong/

The farce continues

2013-02-14T12:38:00.002-08:00

In last year's State of the Union address, the President promised a "mortgage fraud task force". In short, it didn't happen. http://www.salon.com/2013/02/13/wall_street_wins_again

Banks reached an $8.5 billion settlement to compensate people who lost their homes due to fraud commuted by banks (so-called "robo-signing"). After allowing the banks to waste almost $2 billion of the settlement paying their own consultants to review mortgage files, the government is now allowing the banks to just go ahead and decide for themselves which (former) homeowners deserve compensation. http://dealbook.nytimes.com/2013/02/12/big-banks-are-told-to-review-their-own-foreclosures/?hp

You can't make this stuff up!

Stealth Inflation

2013-02-14T12:25:00.001-08:00

Although officially inflation has been under 2%, in reality it's higher. Food and energy is not included in "core" inflation: after all, who needs those things! Also, cheaper goods are routinely substituted for more expensive ones in the official basket of goods used to track inflation.

Instead of increasing prices, producers reduce the amounts (by changing to metric units, for example)

Now horse meat is being sold as beef in Europe.

http://www.zerohedge.com/contributed/2013-02-14/hidden-inflation-everywhere-watered-down-bourbon-horse-meat-chili

Daniel Hannan on Occupy Wall St.

2013-01-26T16:45:00.001-08:00

Reason.com: Nassim Taleb Talks Antifragile, Libertarianism, and Capitalism's Genius for Failure

2013-01-25T19:45:00.000-08:00

From Reason.com:

Nassim Nicholas Taleb is a former trader and hedge fund manager, a best-selling author, and a ground-breaking theorist on risk and resilience.

Taleb drew wide attention after the 2007 publication of The Black Swan: The Impact of the Highly Improbable, which warned that our institutions and risk models aren’t designed to account for rare and catastrophic events. Among other things, the book cautioned that oversized and unaccountable banks using flawed investment models could bring on a financial crisis. He also warned that the government-sanctioned housing finance agencies, Fannie Mae and Freddie Mac, were sitting on a “barrel of dynamite.”

One year after The Black Swan was published, a global banking crisis was brought on by the very factors he identified.

Taleb doesn’t identify as a libertarian, but he often sounds like one. He has argued that we need to build a society where major actors have “skin in the game” and our public intellectuals can bloviate without subjecting the rest of us to the consequences of their bad ideas. He supported Ron Paul in the 2012 presidential election and has cited the libertarian economist Friedrich Hayek as an influence.

Taleb has called New York Times columnist Thomas Friedman “vile and harmful” and coined the phrase the “Stiglitz Syndrome”after Nobel-prize winning economist Joseph Stiglitz, which refers to the phenomenon of public intellectuals being held utterly unaccountable for their bad predictions. Paul Krugman and Paul Samuelson are among Taleb’s other Nobel laureate bête noires.

Taleb's new book - Antifragile: Things That Gain from Disorder Taleb’s new book is Antifragile: Things that Gain with Disorder, which argues that in order to create robust institutions we must allow them to build resilience through adversity. The essence of capitalism, he argues, is encouraging failure, not rewarding success.

Reason’s Nick Gillespie sat down with Taleb for a wide-ranging discussion about:

why debt leads to fragility (5:16);
the importance of “skin in the game” to a properly functioning financial system (10:45);
why large banks should be nationalized (21:47);
why technology won’t rule the future (24:20);
the value of studying the classics (26:09);
his intellectual adversaries (33:30);
why removing things is often the best way to solve problems (36:50);
his intellectual influences (39:10);
why capitalism is more about disincentives than incentives (43:10);
why large, centralized states are prone to fail (44:50);
his libertarianism (47:30);
and why he’ll never take writing advice from “some academic at Cambridge who sold 2,200 copies” (51:49).

Update: Lanny Breuer quit

2013-01-24T09:04:00.000-08:00

The day after the Frontline episode aired, Lanny Breuer resigned and the Department of Justice has said they will not cooperate with the PBS program in the future. But since Lanny has successfully run out the clock and the statute of limitations has expired for any and all frauds leading up to the crash, I'm sure he'll be rewarded with a partnership at a big law firm where he will defend Wall St clients with help from his DOJ contacts.

Here are some more money quotes from Frontline's website:

"We spoke to a couple of sources from within the fraud section of the Criminal Division, and through mid-2010 they reported that when it came to Wall Street, there were no investigations going on; there were no subpoenas, no document reviews, no wiretaps."
...
"We’ve spoken to people inside the Residential Mortgage-Backed Securities Working Group who said that when they began their work in January, February, March of 2012 that they found nothing at the Justice Department in the pipeline, no ongoing cases looking at securitization." No Justice.

And here's a quote from Lanny's recent speech to the Bar Association:

"To be clear, the decision of whether to indict a corporation, defer prosecution, or decline altogether is not one that I, or anyone in the Criminal Division, take lightly. We are frequently on the receiving end of presentations from defense counsel, CEOs, and economists who argue that the collateral consequences of an indictment would be devastating for their client. In my conference room, over the years, I have heard sober predictions that a company or bank might fail if we indict, that innocent employees could lose their jobs, that entire industries may be affected, and even that global markets will feel the effects. Sometimes – though, let me stress, not always – these presentations are compelling. "

No Justice. Too big to fail --> too big to jail.