You guys might be getting tired of old Financial Doom And Gloom Chief Instructor, but I've got to call them like I see them.
Remember this: Watch what they do, not what they say.
Bernanke Bounce: Wait a minute. I thought the economy was peachy-keen, everyone who wants a job has got one, the gasoline problem will be fixed by making ethanol out of the Green Shoots and the Prez pinky-swears he won't use his newly enhanced powers to "disappear" your ass (I guess that's where the Consumer Confidence numbers come from).
Sounds like a super-heated economy that would require the Federal Reserve Bank to contract the money supply - we don't want inflation to come in and crash the party.
Instead, they do just the opposite. If everything is so swell, why did Uncle Ben Bernanke feel the need to say he might just limber up his fingers and create more dollars out of thin air (he calls it, "Quantitative Easing")?
He belched this out, and all of the precious metals jumped big-time, as did most other commodities. So did the stock market (which is absolutely unfathomable to me).
Rats Jumping Ship: When this article (link) was sent to me on March 21st, the title of the article indicated that 358 senior executives had resigned from their banking positions in the last 7 months. We're talking about folks with "Chief", "Director" or "Executive" in their job title. One of my partners sent it to me asking if it was normal for this many senior executives from major banking organizations to all quit at basically the same time.
I told him I'd never seen anything like it in my 31 years of banking.
I clicked the link today, and they had updated the list on 3/25. The number of banking executives grabbing their Financial Bug Out Bags is now 450!
Pay no attention to this folks. Nuthin' to see here. Oh, look over there! Kittens!
From the German Spiegel Online on the Greek debt 86% haircut, and what's to come...
SPIEGEL ONLINE: Is the debt haircut enough to free Greece from its worst burdens?Why care about Greece and their taxpayers? Because it's a window into your future. You invest $100 and get back $14.
Hau: No. The agreed-upon debt haircut is insufficient. No matter what, there will be a second, proper bankruptcy. It will probably take another nine months to three years, but then there will be a really big crisis, both economically and politically. The problem has only been deferred. The next time it will only affect the taxpayers, though.
SPIEGEL ONLINE: Why?
Hau: The banks have been stalling for time over the last one and a half years. They wanted to take as many interest payments with them as possible. Now they realize that time is running out and have thus changed their strategy. They are just trying to pass on as many debts as possible to the public sector. From their perspective, this is a smart move. But it will be a catastrophe for taxpayers in the end.
No big deal, you say. You won't be buying any sovereign debt any time soon. The problem is, your bank probably did. Oh, and they also issued these little financial instruments called Credit Default Swaps (CDSs). They're kind of like an insurance policy to make sure that if you buy sovereign debt, you get paid back in full.
The problem is, US banks sold these, took the profits from the premiums, but didn't put any reserves away - you know, just in case they have to pay the claims if another sovereign debt issue blows up. Multi-trillions of dollars worth. To pay these off, they'll either have to sell bank assets, or get bailed out. Again.
You're a taxpayer, right? Go read the last sentence of that snippet from above one more time. Makes y'all warm and fuzzy inside, don't it?
Just thinking out loud here...
Let's say the dollar crashes (this is what I believe will happen). Every dollar you have in bank accounts or in currency stuffed in the mattress becomes worth less. Your purchasing power will have been diminished. Your hedge or "insurance" for this happening is to have possession of a commodity which historically trends counter to the dollar. That would be precious metals.
Let's say the dollar soars. We've seen this happen periodically over the past few years when the dollar gets stronger against some foreign currency. The euro, for instance. We'll see a blip in the dollar and a drop in gold.
But this is a false comparison. It ignores the underlying weakness of the dollar. It's like saying that terminal liver cancer is better than terminal pancreatic cancer. Both are going to kill you, but you might live a couple months longer with the liver cancer.
You see, the dollar is being systematically devalued. Regardless of how it performs against other currencies, our current national policy is to continue devaluing the buck. As I've stated before, this has to continue until our federal government either raises taxes to meet expenditures or cuts expenditures to meet tax receipts.
Obama has put out a long-term budget proposal that NEVER has a balanced budget. Never. The evil, baby-killing, old folks robbin' Ryan budget proposal doesn't have a balanced budget until 2040!
Talk about kicking the can down the road. This tells me that neither party has any real intention of balancing our budget. When these crooks won't even adhere to budgets they enacted the previous year, does anyone think that the Congress of 2040 is going to git 'er done? Right.
Regardless of who's in power, it will continue to be borrow-and-spend. And THAT will continue to devalue the dollar.
Very seriously, I'm not "married" to the idea of precious metals. I just don't see any alternative. Tell me where I'm wrong. Give me another scenario. Give me another option.
Tell me how to better preserve what I've worked for.
Copyright 2012 Bison Risk Management Associates. All rights reserved. Please note that in addition to owning Bison Risk Management, Chief Instructor is also a partner in a precious metals business. You are encouraged to repost this information so long as it is credited to Bison Risk Management Associates. www.BisonRMA.com