It’s a cool Sunday afternoon here just north of Toronto and I am recovering from a monster shoulder cuff operation where the entire cuff has been lodged in the side of my neck for the last six years after the first surgery didn’t hold following a near deadly motorcycle accident. Fortunately we were able to use the cuff and not need to go ahead with the lat dorsi transfer as intended.
Thought you might like to see a pic of me the morning after the operation in hospital. It was a strange night as I got all tangled up trying to go the washroom at one point and ended up squirting blood all over as my intervenius came apart. Shortly after retuning to my bed another patient locked himself in the washroom. Made for a good laugh especially all doped up on pain killers.
Now then, I have been writing of late on some more general areas focusing on the Forex market but today I want to bring you back up to speed with whats taken place since the spring in terms of the stock market and the Feds.
After hearing the ex chief economist from CIBC speak the other day I became really clear on what caused the recession in 2008. It also has been the cause of every recession since 1971. That being high oil prices. What sparked the sub-prime bubble to collapse and almost take down the worlds financial system was triple digit oil.
Energy inflation was about 35% in the US which impacted the CPI raising inflation to 5.5%. This led the Feds headed by Alan Greenspan to raise interest rates to keep inflation in check. That caused money to not be cheap any longer or free for that matter. Next thing you know people cannot pay back their loans and what happened happened.
To try and make things better the government in bed with the Feds (which by the way is illegal accept their really isn’t a body to regulate this except for the opposition that cannot do much with minority seats) introduced quantitative easing. Thus the printing and injecting of trillions in bailout money.
Well to an extent this has worked. It has made the stock market relatively strong for the last 18 months. However this is really the only strong economic indicator that exists in the States. I write too about the States as every important country felt ’08 and all are headed back there if the US fails again. Further the countries in Europe are not out of the water they are only getting worse, Japan the third largest economy in the world has had a depression like economy for the last 20 years and it’s getting worse. They have had no growth!
Basically, the world is in deer financial trouble.
The Fed in some new bill was given permission to buy up US treasuries. This is the only reason the country is still afloat. No other countries, companies or citizens would come up with the amount required to invest in these instruments to fund the nation. Now the Fed is about to be given the ability to start buying lower grade bonds classified as junk because things are not getting better and the government feel they can print there way out of anything under Keynesian economic model. This has a lot of people beginning to believe that the Fed who has never been audited is buying stocks to make the market go higer to make the economy look better as the November Mid Terms are approaching.
This manipulaton will never last and when it comes out and the fear hits the streets you will not be able to prepair, it will be far too late.
FYI – there is some evidence to believe that the metal market has been manipulated to the extend of 100 times the actual physical gold available. Congress Man Ron Paul has called for a gold audit inquiring whether or not Fort Knox is empty. It’s that serious.
Further the world is not running out of oil however the oil which we have enjoyed all our life that’s extracted and refined cheaply is running out and thus to supply the world considering China a relatively new auto market is already close to if not the largest market in the world and with India soon to follow extracting this quantity of oil from the tar sands or shale will cost much much more. When triple digit oil prices resume the Fed’s will have to raise rates and if know one can pay their mortgage now things are really going to get ugly. This too will lead to more localised economies where your local farmer is your best friends and domestic production of industrial/consumer good will replace this foreign trade/shipping: food, clothes, products across the pacific. Bottom line the cost of transport will cost way more than local production.
So in short being short the market now is the only thing that economically makes sense with more and more terrible economic news coming out especially considering that trillions were pumped into the economy not to long ago, no economy has ever recovered in history without a recovery in housing and quantitative easing number two is likely to follow. However, being short the market is fighting the Feds and the Tape (200 day MA) which is very risky and with the manipulation present and the Mid Terms coming the next two month pose a threat to this stance.
Thus I would re-frame from taking a stance in the market at this time but due to the thinking that interest will stay low, Fed injected money is quite possible, the realization that paper money means jack sh!t, a $100 trillion dollar US debt with a deficit that is app 80% Fed funded, major markets around the world all feeling the same situation… Gold and Silver will go higher and higher!
Nothing replaces the physical product and ownership but GLD in the US and HBU in Canada are two examples of gold ETFs (2X) that will move with the price of the commodity.
To hear the truth about how this situation really started I encourage you to what the video with my buddy Andrew Cass on the right and opt-in to learn about the conspiracy against your money. It has taken the work of a lot of uber successful people’s time to break things down showing exactly how since the creation of the Fed in 1913 the purchasing power of the USD has lost 98% of its value and by going off the gold standard in 1971 this curve has gone up exponentially.
Take care and get your family prepared,