Mish's Global Economic Trend Analysis |
- Marc Faber "I love the Fact that Gold is Finally Breaking Down"; Gold vs. Apple; Patience, Gold, Japan
- Inspired By Economic Madness
- Liar, Liar, Pants on Fire; Spoon-Fed Demands by the Number
- Wells Fargo Reports 28% Jump in 401K Borrowing; Reflections on the Economy
| Posted: 12 Apr 2013 05:04 PM PDT Marc Faber loves that gold is finally breaking down. The reason is not to gloat, or a prediction. Rather "gold will offer an excellent buying opportunity". Link if video does not play Faber: Gold Isn't Down as Much as Apple. Marc Faber on Bloomberg TV on the Fall in Gold Prices "I love the markets. I love the fact that gold is finally breaking down. That will offer an excellent buying opportunity. I would just like to make one comment. At the moment, a lot of people are knocking gold down. But if we look at the records, we are now down 21% from the September 2011 high. Apple is down 39% from last year's high. At the same time, the S&P is at about not even up 1% from the peak in October 2007. Over the same period of time, even after today's correction gold is up 100%. The S&P is up 2% over the March 2000 high. Gold is up 442%. So I am happy we have a sell-off that will lead to a major low. It could be at $1400, it could be today at $1300, but I think that the bull market in gold is not completed."Patience, Gold, Japan Patience, Gold, and Japan were my central themes in the speech I gave at the Wine Country Conference. I hope to have the speech up soon. When I am in general agreement with Faber, we tend to be correct.... eventually. Like Marc, I am not at all worried about the precise timing. If you have not yet read Faber's book, Tomorrow's Gold: Asia's age of discovery, I advise you to do so. It's not about gold per se, rather about long-term investment opportunities. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com |
| Posted: 12 Apr 2013 01:07 PM PDT Do not expect any government or central bank to learn much from history, especially Japan and especially now. For example, please consider this bit of "inspirational madness": Bank of Japan Finds Inspiration in a 1930s Iconoclast. The bank's governor, Haruhiko Kuroda, announced a "new dimension in monetary easing," vowing to double the purchases of government bonds and expand the monetary base. The BOJ also formally adopted a previously announced two-year target of 2 percent inflation. Quantitative easing will be the bank's core business for the near future, a strategy that resembles the Federal Reserve's response to the collapse of Lehman Brothers Holdings Inc.Rest of the Story My friend Pater Tenebrarum on the Acting Man blog shared these thoughts via email. "For some reason, no-one seems to want to talk about how Korekiyo Takahashi's policies ended. Here's the rest of the story.... Eventually Japan went into war that ended in hyperinflation and total destruction of the Japanese economy. Praising the economic policies of Takahashi is quite a bit like praising the economic policies of Hitler. It's totally absurd." Yet here we are in the throes of Keynesian absurdity. Historical Yen Chart  click on chart for sharper image More Revised History While on the subject of revisionist history, I would like to point out a correction to a statement expressed by Wolfgang Münchau in Eurointelligence Founder Wolfgang Münchau, Once a Staunch Euro Supporter, Now Welcomes the Anti-Euro Party "Alternative for Germany". Münchau stated "Thatcher's Industry Minister Nicholas Ridley said in 1990 in a careless interview in The Spectator that the planned monetary union was a German conspiracy with the aim of seizing power in Europe." Tenebrarum responds "This was and is nonsense. Germany was practically forced into the euro by the French, who wanted to emasculate the Bundesbank. They threatened to hold back their support of German reunification if Germany didn't agree with adopting the euro." Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com |
| Liar, Liar, Pants on Fire; Spoon-Fed Demands by the Number Posted: 12 Apr 2013 10:39 AM PDT On Wednesday I reported Fools in Cyprus to Sell Gold, Hike Corporate Taxes to Finance Small Part of Bailout. That rumor was quickly (but unbelievably) denied. On Thursday, the International Business Times reported Cyprus Denies Rumor It Will Sell Its Gold To Raise Funds; Option Raises Same Question For Others. A Central Bank of Cyprus spokesperson said Wednesday that rumors stating that it would sell 75 percent (approximately 10 tons or $523 million) of its gold were inaccurately reported by Reuters. Aliki Stylianou told the Cyprus News Agency, or CNA, that no such deal was ever "raised, discussed or debated" with the bank's board of directors.No Such Deal Ever Raised! Really? In spite of denials that any such deal was ever "raised, discussed or debated" I knew what was about to happen. Sure enough .... Cyprus Gold Sale Must Cover Emergency Loan Loss ECB President Mario Draghi says Any Cyprus Gold Sale Must Cover Emergency-Loan Loss European Central Bank President Mario Draghi said the profits of any gold sales by the Cypriot central bank must be used to cover losses it may sustain from emergency loans to Cypriot commercial banks.More Lies Than One Did you catch that last statement? Draghi says central bank handling of gold is "independent from political control under European rules". Apparently independence is relative. The Central Bank of Cyprus has no such independence. It is being forced to sell its gold to cover Emergency Loan Assistance programs by the ECB. Want more lies? Check this out. Speaking alongside Draghi, Dutch Finance Minister Jeroen Dijsselbloem said "selling gold has always been an option put forward by the Cypriot authorities. But as mentioned in the program documentation, this is a decision to be made independently by the Cypriot central bank. And it's not any demand from the troika or the eurogroup." So this was an independent decision made by the central bank of Cyprus, yet denied by the central bank of Cyprus. Apparently the gold sale just happens to be the only way Cyprus can cover losses on ELA, no other method would do. So Cyprus is forced to dump most of its "excess" gold reserves. A reader asked me yesterday what was meant by "excess" gold reserves. Certainly the name is strange. It implies central banks can have too much of the stuff. They can't. In reality, the term means whatever the hell ECB wants it to mean. In this case, the term is a convenient way to make sure the noose in Cyprus' nose is as tight as can be. I discussed that idea two days ago in the link at the top. Here is the pertinent snip. Road to HyperinflationLeaks and Still More Lies About that Cyprus shortfall... As I expected, it's a lot bigger than the Troika expected, assuming you believe the Troika was telling the truth about the size of the needed bailout. The Guardian reports Cyprus forced to find extra €6bn for bailout, leaked analysis shows Cypriot politicians have reacted with fury to news that the crisis-hit country will be forced to find an extra €6bn (£5bn) to contribute to its own bailout, much of which is expected to come from savers at its struggling banks. Cyprus Hammered Into Submission Step by step, Cyprus has been hammed into submission. Its economy has been ruined for at least a decade. Recall the original deal was €13bn. It is now €23bn. Recall that Cyprus Popular Bank, Laiki, was supposed to have 30% losses. Guess what? Spoon-Fed Demands by the Number
Cyprus has been spoon-fed a pack of escalating demands by the Troika. Had Cyprus initially understood the totality of what was going to happen, Cyprus may have done the right thing which should now be obvious: Tell the Troika to go to hell, default, exit the eurozone. It's still not too late, but Cyprus needs to do so before it sells its gold. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com |
| Wells Fargo Reports 28% Jump in 401K Borrowing; Reflections on the Economy Posted: 11 Apr 2013 11:33 PM PDT In spite of the alleged recovery, in spite of falling unemployment numbers, and in spite of a stock market boom, Wells Fargo 401(k) Loans Jump 28% as Older Workers Borrow. The number of people taking loans from their 401(k) retirement accounts increased 28 percent in the fourth quarter from a year earlier as older workers tapped their savings, according to Wells Fargo (WFC) & Co.Reflections on the Economy 401K borrowing provides more evidence the economy is not as good as presented and that people are struggling in their jobs, much closer to the edge of oblivion than the Fed or Obama wants to admit. The borrowing surge happened in the 4th quarter, before the increase in payroll taxes this year, so expect matters to get worse. And if for any reason those 401K borrowers lose their jobs, they are going to be in deep trouble tax-wise. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com |
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