Monday, March 23, 2009

Spring Madness

I want to know why anyone especially the market was shocked by lasts weeks move to monetize 300 Billion dollars of U.S. debt?

It’s not as if many people like me aren’t screaming “The End is Nigh” and yet the market and people in general seem ignorant of the simple reality that new money to cover these massive stimulus and bailout packages must be either borrowed or created from nothing. They also seem oblivious to the idea that there is not an endless market for U.S debt ignoring the warnings of people like ex Comptroller General David Walker who spend his entire term of office pointlessly trying to convince a nation it was broke.

Last weeks announcement should not have been a surprise to anyone and more importantly neither should the next wave or forty waves of monetized debt that is destined to hit the market. This trend will come not only from the Fed but most of the worlds major central banks who can neither find enough suckers for their debt issues nor want to have their currency appreciate out or a normal trading range with their biggest customers.

This a wake up call for the many people who did not believe this moment would actually arise; you have been given fair warning that monetization, currency devaluation and inflation, instead of austerity are the chosen course for western nations. Now is the time to take any money you don’t want destroyed and place it in gold, silver, food, productive land, or some other real tangible asset. This is the very scenario that brought me to asset based investing several years ago and with this confirmation being so open and so blatant we can only expect that further moves to monetize debt will be fast and furious. You’ve been warned, Act!

Other stuff

In the too stupid to believe category the FDIC saw fit to criticize a Massachusetts bank that has managed to get through the recent credit crisis with no bad loans.

The bank, East Bridgewater Savings Bank was chastised for neither "lending enough" nor "promoting its loan products" enough.

Great time line, East Bridgewater savings gets shit upon on Tuesday, and then on Friday afternoon 5 financial institutions, 3 Banks and 2 Credit Unions fail, (FDIC numbers do not include credit unions) The people who run this small but sound bank should be held up as examples of good management not badgered for refusing to take unmanaged risk.

When I wrote The Great 2009 Bank die off on Feb 16 I noted 13 failures so far this year.
Since that time, a scant 5 weeks the tally has grown from 13 to 20 failed banks, and it’s only March people! We could easily hit the 80 failures I surmised earlier in the year

There is also some definite clumping of these bank failures, 3 Georgia, 3 Illinois, 3 California, 2 Florida and 2 Oregon, 10 of 20 failures in 5 states, with all but Georgia being in the top 10 foreclosure states.

Spring time warning.

I don’t care how secure you are with your little pile of gold and silver or that sweet job with benefits but you have to face the reality that very soon the shit is going to hit the fan at a velocity just short of warp 9. Be it civil unrest, dollar destruction, 30 % unemployment or simply the bankruptcy of major shipping or food processing companies, there are going to be major disruptions in the status quo. Take a little money a little time and put aside a little extra food and necessities. If you have the land and physical ability plant yourself a garden this spring and buy a book and the equipment for canning. While Silver and Gold are financial insurance, you can’t eat them and you can’t medicate your sick kids with them, so you should look to other aspects of your personal emergency plans.


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Sebastian Ernst Ronin said...

What's your take on Clifford Wirth this week: "Gold and silver are mentioned as possible safe havens, but are not be so. The prices of gold and silver have not been going up as the world economy collapses. Both are used in electronics and jewelry and therefore the demand for these metals is collapsing. Gold and silver are a bubble waiting to burst."

As a Peak Oiler, I usually have no problem with from where Cliff is coming from. I am a bit iffy though about this step into financial analysis. Cliff can be found at:

Sebastian Ernst Ronin said...

I notice that you've started up a good debate with Cliff Wirth. Good stuff! Silver novices like me can't help but learn.

Sebastian Ernst Ronin said...

Yo! Can you break this down a bit more to layman's language?

The linked video at the end of the article is quite kewl. Is this your thinking also, $500/oz?

Carter Apps, dabbler of stuff said...

What the article is saying is that the same maniplators at the Comex level are also betting heavily in over the counter derivatives based on the price of precious metals. The heavy manipulated sell off in the fall appears to have been no so much to close out Comex short positions (which they also did) but also to make sure they did not get hurt by their even larger derivatives exposure.

This massive price drop forced highly leveraged derivative longs to sell and cover their margin calls, allowing JPmorgan the holder of a massive short postion built up my Bear Stearns to clear the books.

The Gov let Morgan kill and steal Stearns, the Government allows derivatives to be traded unmonitored, allows commodity exchanges to trade more paper than commodity, and does not force shorts to prove they have deliverable metals. This all adds up to a giant Ponzi scheme and strengthening the case for only investing in physical metals.

Carter Apps, dabbler of stuff said...

I'm not sure what the peak silver price will be because it will be measured in horribly devalued currencies all around the world.

I do expect it will have 5X plus the buying power of the money I purchased it for. It may have 10-20X more buying power if major currencies get wiped out and suddenly very few people will be competing with me for those things I wish to purchase. That is the point where I get my land, gun, still, hound, rocking chair and I retire to a life of self sufficiency, and if I don't need a passport to come visit I might drop down to your new country out east.

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