My thoughts...
January 13, 2010
– Comments (18)
Let's start with a review of a few fresh headlines:
Here's a nugget from Mr. Ambrose Evans-Pritchard (also posted by jesusfreakinco on his blog). [Important enough to warrant repeating.]
"Difficult decisions will have to be made regarding spending and tax to underpin market confidence in the long-run sustainability of public finances. In the absence of measures to reduce the budget deficit over the next three to five years, government indebtedness will approach levels by the latter half of the decade that will bring pressure to bear on the US’s ‘AAA’ status", he said.
China Accelerated Stimulus Exit Signals Higher Rates:
Earlier in the day, that headline had read:
China’s Accelerated Exit From Stimulus Signals Higher Yuan and Lower Dollar
The earlier version contains less spin.
1 in 7.5 U.S. homeowners now delinquent or in foreclosure.
Join the Quest for Recovery Confirmation
Ready for Round II of the Mortgage Meltdown? Delay does not equal avoidance.
Here is a nugget from GFMS today:
"Because of the market's dependence on investment, the biggest threat to the gold price will obviously be the eventual shift to “business as usual” in the world's economies, Klapwijk said."
Don't worry, Mr. Klapwijk. We're a looong way from business as usual. Understatement of the year about gold: "might even go as high as $1,300". I predict $1,500 - $1,650 will be touched in 2010 or early in 2011. We may yet have volatility before we re-take $1,220s, with $1,000 still potentially in play. The longer we stay up here near $1,150, however, the greater the likelihood that the $1,080 neighborhood was our low for this corrective pause.
See also:
Your last chance to buy cheap gold and silver
Easy Does it, Goldfinger!
Sorry the news isn't better, Fools. The extent and scope of the Second Depression will begin to be understood during 2010. Hopefully thereafter fiscal sanity will prevail. Sadly, the dollar is toast.
An orchestra of interventions, bailouts, stimuli, financial propaganda, fluffed-up equity markets, and non-transparent market-making has delayed the inevitable continuation of the deleveraging event, but not avoided it.
The $600 trillion in notional derivative "assets" hiding on global balance sheets are no more sound today than they were before Bear Stearns or Lehman collapsed. Denominated primarily in dollars and Euros, these contracts are ultimately a lead weight around the neck of both currencies. This is the reality of our time.
A structural shift in our economy away from leverage, absorbing what will by now have grown into the mother of all deleveraging events even by 2008's standards, is the only way forward to a sustainable economic solution in my opinion. This I have said from the first day of Bailouts and TARP, and I will continue to believe that the collective response to the fiancial crisis in the west was 180-degrees the oppposite from a sound fiscal approach to rectify the situation we faced.
"Let them fail" seems virtually inconceivable now that we have responded with so many unfathomable trillions to reflate the giant monster of failed securitized leverage, but the irony is that it may be the final outcome no matter what actions are taken from here on. I am extremely cautious of generic investment exposure to the U.S. economy at this juncture. Please tread carefully.
With all my hope that I am wrong,
Sinchi
RSS Headlines
Fool UK