tag:blogger.com,1999:blog-31989152551270381002024-02-06T22:22:38.317-05:00The Hourly G<b><big><big>A Blog About Finance, Economics & the Foolishness That Results</big></big></b>Gonzalo Lirahttp://www.blogger.com/profile/10596675676272535336noreply@blogger.comBlogger154125tag:blogger.com,1999:blog-3198915255127038100.post-3008986508340712182011-02-17T12:00:00.011-05:002011-02-17T12:00:01.078-05:00Real Hourly Earnings DroppedNot so touted as the inflation number, today the Bureau of Labor Statistics (BLS) also released its <a href="http://bls.gov/news.release/realer.nr0.htm">report</a> on real earnings and wages.<br />
<br />
The results were not definitive of anything—but they weren’t encouraging: Real wages (adjusted) dropped 0.1% in January, but for the year, real wages rose 0.2% year-to-year (January 2010 to January 2011). Which means, of course, that this past January represented a significant downturn in real wages.<br />
<br />
Was it a blip? Or was it the start of a trend?<br />
<br />
Forgotten among the discussions about inflation are wages and salaries: If wages and salaries are downturning, even as price levels are upturning, then inflation is taking a double-bite from the average worker.<br />
<br />
So keep an eye on real wages in February and especially March: If this past January’s trend continues, then people are going to be hurting even more than the inflation number would lead one to believe.<div class="blogger-post-footer"><a href="http://fosslira.blogspot.com"><img src="http://financialsurvivalradio.com/wp-content/uploads/2011/02/SVL-Half-Banner.jpg" /></a>
<p></p>
<a href="http://hyperinflationevent.blogspot.com"><img src="http://financialsurvivalradio.com/wp-content/uploads/2011/02/HIA-Half-Banner.jpg" /></a></div>Gonzalo Lirahttp://www.blogger.com/profile/10596675676272535336noreply@blogger.com14tag:blogger.com,1999:blog-3198915255127038100.post-30578545894110581742011-02-17T10:00:00.001-05:002011-02-17T10:00:14.172-05:00CPI Up 0.4%The Bureau of Labor Statistics (BLS) <a href="http://bls.gov/news.release/cpi.nr0.htm">is reporting</a> this morning that the Consumer Price Index (CPI) rose 0.4% during the month of January. For the year-to-year January 2010 through January 2011, CPI was up 1.6%.<br />
<br />
<div>So-called “core inflation” (CPI minus food and fuel) was up 0.2%<br />
</div><div>Not reported in much of the mainstream media were the following paragraph from the BLS report:<br />
<blockquote>Over the last 12 months, the food index has risen 1.8 percent with the food at home index up 2.1 percent; both 12-month changes are the highest since 2009. The energy index has increased 7.3 percent over the last 12 months, with the gasoline index up 13.4 percent. The index for all items less food and energy has risen 1.0 percent.</blockquote><span></span>This was the key news—and what will be driving the overall CPI number up over the coming months. Because really, is there any product in the wider economy that is <i>not</i> affected by the price of oil, gasoline, or food?<br />
</div><div class="blogger-post-footer"><a href="http://fosslira.blogspot.com"><img src="http://financialsurvivalradio.com/wp-content/uploads/2011/02/SVL-Half-Banner.jpg" /></a>
<p></p>
<a href="http://hyperinflationevent.blogspot.com"><img src="http://financialsurvivalradio.com/wp-content/uploads/2011/02/HIA-Half-Banner.jpg" /></a></div>Gonzalo Lirahttp://www.blogger.com/profile/10596675676272535336noreply@blogger.com6tag:blogger.com,1999:blog-3198915255127038100.post-83693856077995610082011-02-16T12:00:00.001-05:002011-02-16T12:00:01.632-05:00NOON CARTOON: A Paul Krugman TemplateRipped off wholesale from the <i><a href="http://economicsofcontempt.blogspot.com/2011/02/paul-krugman-post-template.html">Economics of Contempt</a></i> blog:<br />
<b><blockquote><b>A Paul Krugman Post [Template]</b></blockquote></b><blockquote>I'm troubled by this statement from Obama:</blockquote><blockquote>"[Insert extremely broad, generic presidential statement about the economy.]"In effect, what Obama is saying is: [insert Ridiculous Proposition, completely unrelated to above statement by Obama].</blockquote><blockquote>Let me explain why this is so ridiculous: [insert brutal, utterly devastating takedown of Ridiculous Proposition].</blockquote><blockquote>Of course, this completely vindicates me, because I said a long time ago that [insert warning about Ridiculous Proposition from the 2008 primaries or early 2009].</blockquote>Go check out the <i>Economics of Contempt</i> blog—highly recommended.<br />
<br />
<div>[Sorry, E. of C.: There was simply no way to partically quote your wonderful post.]</div><div class="blogger-post-footer"><a href="http://fosslira.blogspot.com"><img src="http://financialsurvivalradio.com/wp-content/uploads/2011/02/SVL-Half-Banner.jpg" /></a>
<p></p>
<a href="http://hyperinflationevent.blogspot.com"><img src="http://financialsurvivalradio.com/wp-content/uploads/2011/02/HIA-Half-Banner.jpg" /></a></div>Gonzalo Lirahttp://www.blogger.com/profile/10596675676272535336noreply@blogger.com0tag:blogger.com,1999:blog-3198915255127038100.post-49823521046357190132011-02-16T10:00:00.000-05:002011-02-16T10:00:13.445-05:00IBG, YBGThe New York <i>Times</i> is <a href="http://www.nytimes.com/2011/02/16/business/madoff-prison-interview.html?hp=&pagewanted=all">carrying</a> the first on-the-record interview of Bernie Madoff since being jailed.<br />
<br />
Madoff—he of the famed multi-billion dollar Ponzi scheme—said something ved interestink about the banks he had to deal with:<br />
<blockquote>“They had to know,” Mr. Madoff said. “But the attitude was sort of, ‘If you’re doing something wrong, we don’t want to know.’ ”</blockquote><blockquote>While he acknowledged his guilt in the interview and said nothing could excuse his crimes, he focused his comments laserlike on the big investors and giant institutions he dealt with, not on the financial pain he caused thousands of his more modest investors. In an e-mail written on Jan. 13, he observed that many long-term clients made more in legitimate profits from him in the years before the fraud than they could have elsewhere. “I would have loved for them to not lose anything, but that was a risk they were well aware of by investing in the market,” he wrote.</blockquote><blockquote>Mr. Madoff said he was startled to learn about some of the e-mails and messages raising doubts about his results — now emerging in lawsuits — that bankers were passing around before his scheme collapsed.</blockquote><blockquote>“I’m reading more now about how suspicious they were than I ever realized at the time,” he said with a faint smile.</blockquote>Just a few days ago, the Wall Street <i>Journal</i> carried <a href="http://online.wsj.com/article/SB10001424052748704570104576124130209760112.html">the following</a>:<br />
<blockquote><a name='more'></a>J.P. Morgan Chase potentially faces reputational damage, and maybe even more legal woes, from allegations leveled in a lawsuit by the trustee seeking to recoup losses forBernard Madoff's victims.</blockquote><blockquote>One issue raised by the suit that might be particularly troublesome is the allegation the bank sought to make money by offering financial products tied to Mr. Madoff <span class="Apple-style-span" style="background-color: yellow;">even though the bank had concerns about the legitimacy of his returns</span>.</blockquote><div>There is an expression in the financial services industry, whenever a banker or executives comes across something that is sure to blow up at some time in the future:</div><div><br />
</div><div>IBG, YBG</div><div><br />
</div><div><i>I’ll Be Gone, You’ll Be Gone.</i></div><br />
The tacit inference is, This thing will blow up—but we’ll both be long-gone by the time that happens. <div><br />
</div><div>This attitude was pervasive throughout the mortgage loan industry, especially as regards to sub-primes and alt-A’s, and the mortgage backed securities derived thereof. And it was clearly pervasive throughout Wall Street as regards to Bernie Madoff’s Ponzi scheme. </div><div><br />
</div><div>Madoff himself says in the interview (which is worth reading in full) that it was “willful blindness” on the part of the other Wall Street firms. </div><div><br />
</div><div>Another way of characterizing this attitude is with the word <i>collusion</i>. </div><div><br />
</div><div>If someone is involved in a transaction that they know for a fact will result in damages to a third party, but the damages will happen years after they are no longer involved in the business, is that person responsible? </div><div><br />
</div><div>Obviously <i>yes</i>—of course! </div><div><br />
</div><div>The question is, will the justice system in the financial sector punish the guilty? Not just Madoff—who is being punished as we speak—but the JPMorgans, and all the other counterparties to Madoff’s scheme, who likely realized what was going on, yet did and said nothing, so as to continue mining fat fees from the Madoff scheme. </div><div><br />
</div><div>The longer these people who colluded with Madoff continue not being punished, the more it disheartens the rest of the financial sector from doing “the right thing”. And in fact, the longer those who colluded with Madoff remain not just unpunished but free—that is, not in jail—the more it encourages the rest of the financial industry to aggressively pursue illegality. Because they know that they won’t be punished. At worst, they’ll get a fine—a traffic ticket. But they won’t lose their reputation, or their prerogatives, or their freedom. </div><div><br />
</div><div>Allowing IBG-YBG is no different than putting dynamite under the foundations of the Empire State Building. Yet that is what those people charged with policing the financial industry are doing, by charging no-one but Madoff, and letting all the IBG-YBG people get off scott-free. </div><div class="blogger-post-footer"><a href="http://fosslira.blogspot.com"><img src="http://financialsurvivalradio.com/wp-content/uploads/2011/02/SVL-Half-Banner.jpg" /></a>
<p></p>
<a href="http://hyperinflationevent.blogspot.com"><img src="http://financialsurvivalradio.com/wp-content/uploads/2011/02/HIA-Half-Banner.jpg" /></a></div>Gonzalo Lirahttp://www.blogger.com/profile/10596675676272535336noreply@blogger.com5tag:blogger.com,1999:blog-3198915255127038100.post-61898631971687565112011-02-16T09:00:00.000-05:002011-02-16T09:00:17.579-05:00UK Inflation Up, UK Unemployment UP—UK Interest Rates FlatWe have worries of the UK: Inflation is up, unemployment is up, and Mervyn King just announced that interest rates will remain steady.<br />
<br />
About UK unemployment, Bloomberg is <a href="http://www.businessweek.com/news/2011-02-16/u-k-january-unemployment-claims-unexpectedly-rise.html">reporting this morning</a>:<br />
<blockquote>U.K. unemployment claims unexpectedly rose in January, underlining the fragility of the labor market a year after the economy emerged from recession and as public-spending cuts start in earnest.</blockquote><blockquote>The number of people receiving jobless benefits rose 2,400 to 1.46 million, the Office for National Statistics in London said today. The median of 25 forecasts in a Bloomberg News survey was for a drop of 3,000. Unemployment based on International Labour Organization methods rose by 44,000 in the fourth quarter to 2.49 million.</blockquote><div>Meanwhile, about UK inflation and interest rates, the <i>Telegraph</i> <a href="http://www.telegraph.co.uk/finance/economics/8325130/Mervyn-King-on-the-defensive-as-inflation-hits-double-the-target.html">is reporting</a>:</div><blockquote><a name='more'></a>[Governor of the Bank of England] Mervyn King repeated his warning that the government's measure of how fast prices are rising, <span class="Apple-style-span" style="background-color: yellow;">the consumer prices index (CPI), could hit 5pc "over the next few months", after figures showed it climbed 4pc in the year to January</span>.</blockquote><blockquote>Nontheless, the UK's foremost central banker said the Bank's Monetary Policy Committee (MPC) thinks that trying to bring inflation back to the 2pc target quickly risks "undesirable volatility in output". A hit to growth could even see the target undershot in the future, he said.</blockquote><blockquote>Mr King continued to blame the over-target inflation on "temporary effects", citing the increase in VAT to 20pc at the start of the month, the fall in the pound and soaring commodity prices.</blockquote><blockquote>However, he warned: "<span class="Apple-style-span" style="background-color: yellow;">There is a great deal of uncertainty about the medium-term outlook for inflation</span>. And I do not wish to conceal that there are real differences of view within the Committee, reflecting different judgements about the risks to that outlook."</blockquote><div>If January’s CPI was 4%, then the notion that it’ll hit an annualized rate of 5% “in the next few months” is absurd—inflation will hit 5% over the next couple of months at the latest. All commodity prices are surging, and there is nothing stopping it right now. </div><div><br />
</div><div>Coupled with surging unemployment, this all spells doom for the pound sterling unless Mervy the Swervy doesn’t get out ahead of inflation and reign it in—hard. </div><div><br />
</div><div>Problem is, the BOE can’t: The UK’s government is over-indebted, product of the spend-and-borrow Labour governments. If Mervy raises rates, to stop inflation, he might shove Britain into a sovereing debt crisis. </div><div><br />
</div><div>Mervy is <i>trying</i> to spin this as “no one is sure if this inflation is the real thing or a passing thing”—but all signs point to it being the real thing. Yet Mervy the Swervy ain’t doin’ a damn’d thing about it: Steady-as-she-goes interest rates is his answer, which will only feed the inflation beast. </div><div><br />
</div>So bottom line, it looks like the UK is heading into stagflation, with the Bank of England at best chasing after inflation reactively, like it did in the 1970’s, instead of getting out ahead of it and stopping it cold. <div><br />
</div><div>So advice? Get out of gilts, get out of the pound, or best of all, get into pound debt at a fixed rate. Goes that ship’s going down. </div><div class="blogger-post-footer"><a href="http://fosslira.blogspot.com"><img src="http://financialsurvivalradio.com/wp-content/uploads/2011/02/SVL-Half-Banner.jpg" /></a>
<p></p>
<a href="http://hyperinflationevent.blogspot.com"><img src="http://financialsurvivalradio.com/wp-content/uploads/2011/02/HIA-Half-Banner.jpg" /></a></div>Gonzalo Lirahttp://www.blogger.com/profile/10596675676272535336noreply@blogger.com5tag:blogger.com,1999:blog-3198915255127038100.post-89617212117719242732011-02-15T12:00:00.000-05:002011-02-15T12:00:09.197-05:00NOON CARTOON: Jeffrey Sachs InterviewA really fascinating interview with Jeffrey Sachs, who basically says what everyone knows, but which the mainstream media does not report: That both the Democrats and the Republicans are in the back pockets of the wealthy, who are essentially forcing both parties to cut government until there is nothing left, rather than raise taxes.<br />
<br />
The video can’t be embedded, so <a href="http://www.youtube.com/watch?v=bCPz2SzROFQ">go here to see it</a>. The picture below is just a picture of Sachs.<br />
<br />
<div class="separator" style="clear: both; text-align: center;"></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgS6SzSHVqW3fgJtUgCYHGoI8cpToxyc9_dkCe4gx-vyuSEWuEPH0b8iB1Pae0YpeNXFVHWjkDgjHJQuwdhCv4PE_wmejUChyphenhyphenmyFbyLNGFXeIMbXWyrtjqcs3X5DT5mAy3IH6xs7HX4bG4/s1600/Jeffrey+Sachs.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="286" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgS6SzSHVqW3fgJtUgCYHGoI8cpToxyc9_dkCe4gx-vyuSEWuEPH0b8iB1Pae0YpeNXFVHWjkDgjHJQuwdhCv4PE_wmejUChyphenhyphenmyFbyLNGFXeIMbXWyrtjqcs3X5DT5mAy3IH6xs7HX4bG4/s640/Jeffrey+Sachs.jpg" width="520" /></a></div><div class="blogger-post-footer"><a href="http://fosslira.blogspot.com"><img src="http://financialsurvivalradio.com/wp-content/uploads/2011/02/SVL-Half-Banner.jpg" /></a>
<p></p>
<a href="http://hyperinflationevent.blogspot.com"><img src="http://financialsurvivalradio.com/wp-content/uploads/2011/02/HIA-Half-Banner.jpg" /></a></div>Gonzalo Lirahttp://www.blogger.com/profile/10596675676272535336noreply@blogger.com5tag:blogger.com,1999:blog-3198915255127038100.post-66247689554418193662011-02-15T09:00:00.035-05:002011-02-15T09:00:11.652-05:00Why Are Capital Requirements Hated By Banks?Because they lower profitability—and therefore bonuses. Substantially.<br />
<br />
Even the weak-kneed Basel requirements are having an effect, <a href="http://www.bloomberg.com/news/2011-02-14/dougan-lowers-return-on-equity-target-as-goldman-s-blankfein-clings-to-20-.html">according to</a> Bloomberg:<br />
<blockquote>By cutting Credit Suisse Group AG’s profitability target last week, Brady Dougan acknowledged what some Wall Street bankers and investors are loathe to concede: Tougher capital rules will mean lower returns.</blockquote><blockquote>Dougan, the Zurich-based bank’s chief executive officer, lowered the goal for return on equity, a measure of profitability, to more than 15 percent from more than 18 percent. Barclays Plc said today it will aim for a 13 percent ROE, down from an average of 18 percent over the past 30 years. By contrast,Goldman Sachs Group Inc., the bank that makes the most revenue from trading, insists its target of a 20 percent return on tangible equity doesn’t need to be moved.</blockquote><blockquote><span class="Apple-style-span" style="background-color: yellow;">Profitability soared in the middle of the last decade as banks increased leverage, using borrowed money to bulk up on assets. The credit crisis exposed the risks of that strategy and resulted in $1.48 trillion of writedowns and losses worldwide. To generate the same returns while holding more capital, Wall Street firms can either discover fresh profit opportunities or reduce costs, including pay, analysts said</span>.</blockquote>A lot of fellow conservatives think that banking regulation and higher capital requirements are some sort of Commie plot. <div><br />
</div><div>But the fact is, banks will <i>always</i> play roulette with the money that they are entrusted—especially corporate banks.</div><div><br />
</div><div>Private banks—where the partners are personally exposed to their bank’s losses—will <i>never</i> take foolish risks. Their lending standards will always be prudent, their leverage positions always cautious, because their partners know that they could wind up in the poor-house if they make the wrong bets. But the flip side to this sensible caution is, private banks will always be very hesitant to lend out money, and so will not help developing industries with financing. </div><div><br />
</div><div>But corporate banks—apart from having access to greater capital through their publicly traded equity—will be more forthcoming insofar as loans to developing industries are concerned. Which is great—it spurs the economy. </div><div><br />
</div><div>However, the flip side to <i>that</i> is, the people running corporate banks do not have a personal stake in the fortunes of the bank. So they won’t be so afraid of driving the bank into the ground—as happened in the period leading up to the 2008 Global Financial Crisis. </div><div><br />
</div><div>That’s why capital requirements are necessary—and high ones at that. </div><div><br />
</div><div>The lax capital requirements of the last 20 years have created an incentive to both take huge gambles with OPM (other people’s money), and give incentive to the banks to pay huge salaries to bank employees. </div><div><br />
</div><div>Dougan is taking the first step in the new reality—let’s see if other bankers follow suit, or if there is enough push-back from the banksters that they get their way: A return to the wild-wild west days of yore. </div><div class="blogger-post-footer"><a href="http://fosslira.blogspot.com"><img src="http://financialsurvivalradio.com/wp-content/uploads/2011/02/SVL-Half-Banner.jpg" /></a>
<p></p>
<a href="http://hyperinflationevent.blogspot.com"><img src="http://financialsurvivalradio.com/wp-content/uploads/2011/02/HIA-Half-Banner.jpg" /></a></div>Gonzalo Lirahttp://www.blogger.com/profile/10596675676272535336noreply@blogger.com0tag:blogger.com,1999:blog-3198915255127038100.post-7432251979584484862011-02-15T08:00:00.004-05:002011-02-15T08:00:27.590-05:00Big Silvio in Real Trouble?The <a href="http://hosted2.ap.org/APDEFAULT/633c954da7d9434f9de7ed15f38075aa/Article_2011-02-15-Italy%20Berlusconi%20Scandal/id-3bdaeb2e6dc842eb8dab5fdd9ac15c3d">AP story</a> was short and stark, serious like a heart attack:<br />
<blockquote>An Italian judge has ordered Premier Silvio Berlusconi to stand trial on charges he paid for sex with a 17-year-old girl and then tried to cover it up. Judge Cristina Di Censo handed down the indictment Tuesday. The trial is set to begin April 6.</blockquote><div>Once again, The Hourly G isn’t interested in tawdry sex stories—but if Berlusconi falls, it could have unanticipated consequences for the euro. </div><div><br />
</div><div>Why? Because Italy is in the same hole as Spain, Ireland, Portugal and Greece—there is a <i>reason</i> they are collectively known as the PIIGS. </div><div><br />
</div><div><div>All of the weak economies in the euro-zone—the PIIGS—are over-indebted: They need further funding from the bond markets, in order to stay operational. If there is a seizure in the euro-bond market—for whatever reason—then all of these countries, no just Italy, could suffer a crash. </div></div><div><br />
</div><div>And even if it’s just Italy, that’s still a huge elephant: Italy’s GDP is $2 trillion, compared to $3.3 trillion for Germany. Italy simply cannot be bailed out like Ireland ($204 billion) or Greece ($305 billion). </div><div><br />
</div><div>Ordinarily, sexual politics wouldn’t influence macro-economic policy—but this is Italy. If the Berlusconi government falls, there will be political chaos in Italy—and therefore no clear direction for the bond markets, which at this point in time rule the European continent. </div><div><br />
</div><div>So this isn’t a Bill Clinton-style freak-show, put on for our collective amusement, but ultimately inconsequential—this Berlusconi thing <i>matters</i>. </div><div class="blogger-post-footer"><a href="http://fosslira.blogspot.com"><img src="http://financialsurvivalradio.com/wp-content/uploads/2011/02/SVL-Half-Banner.jpg" /></a>
<p></p>
<a href="http://hyperinflationevent.blogspot.com"><img src="http://financialsurvivalradio.com/wp-content/uploads/2011/02/HIA-Half-Banner.jpg" /></a></div>Gonzalo Lirahttp://www.blogger.com/profile/10596675676272535336noreply@blogger.com3tag:blogger.com,1999:blog-3198915255127038100.post-33504955032423454832011-02-15T07:00:00.000-05:002011-02-15T07:00:06.088-05:00Inflation Rises in the UK and China—Oh My!The BBC is <a href="http://www.bbc.co.uk/news/business-12462901?utm_source=twitterfeed&utm_medium=twitter">reporting</a> this morning the rise in UK inflation:<br />
<blockquote>The UK Consumer Prices Index (CPI) annual inflation rate rose to 4% in January, up from 3.7% in December, as the effects of the VAT rise were felt.</blockquote><blockquote>Higher oil prices also meant inflation remained well above the 2% target.</blockquote><blockquote>Retail Prices Index (RPI) inflation - which includes mortgage interest payments - rose to 5.1% from 4.8%.</blockquote><blockquote>The CPI figure is the highest since November 2008, and will put pressure on the Bank of England to lift interest rates to curb accelerating inflation.</blockquote>Meanwhile, inflation in China is rising as well. <a href="http://www.bloomberg.com/news/2011-02-15/china-s-january-consumer-prices-increase-4-9-producer-prices-climb-6-6-.html">According to</a> Bloomberg:<br />
<blockquote>China’s inflation accelerated in January as prices excluding food rose the most in at least six years, bolstering the case for more interest-rate increases to tame overheating risks in the fastest-growing major economy.</blockquote><blockquote>Consumer prices rose 4.9 percent from a year earlier after a 4.6 percent December gain, the statistics bureau said on its websitetoday. A separate central bank report showed banks signed 1.04 trillion yuan ($158 billion) in new loans, less than forecast while still the third-highest January total.</blockquote><div>The article further points out that: </div><blockquote>Asian economies, with rising food costs and inflows of capital driving inflation, may need to raiseinterest rates further to limit the risk of overheating and prevent a “hard landing,” International Monetary Fund Managing Director Dominique Strauss-Kahn said Feb. 1. India’s benchmark wholesale- price index rose 8.23 percent in January, Indonesia’s inflation is 7 percent and South Korea’s is 4.1 percent, the latest government data show.</blockquote><div>Now, what does this all mean?</div><div><br />
</div><div>It means that food prices are rising—courtesy of the inflation exported by the Federal Reserve, via the various iterations of Quantitative Easing—and now we are all seeing the effects on the world's economies, both developed (like the UK’s) and emerging (like China’s and the rest of Asia’s). And this will likely trigger a rise in interest rates, at a time when the global economy is not exactly feeling at its most confident and carefree. </div><div><br />
</div><div>Inflation, in and of itself, would be bad, especially in stagnating economies—the dreaded “stagflation”. But what is happening around the world is, rising food prices are setting the stage for social unrest. We have seen that in Egypt, we are seeing it in the rest of the Middle East. We are also seeing it in Asia and to a lesser extent (so far) in Latin America. </div><div><br />
</div><div>Rising social unrest will have a severe impact on the global economy, by raising the specter of uncertainty—which will only further help drive up prices, especially of commodities, which will basically mean adding fuel to the fire. </div><div><br />
</div><div>So this isn’t over—far from it. This is merely the first signs of the beginning</div><div class="blogger-post-footer"><a href="http://fosslira.blogspot.com"><img src="http://financialsurvivalradio.com/wp-content/uploads/2011/02/SVL-Half-Banner.jpg" /></a>
<p></p>
<a href="http://hyperinflationevent.blogspot.com"><img src="http://financialsurvivalradio.com/wp-content/uploads/2011/02/HIA-Half-Banner.jpg" /></a></div>Gonzalo Lirahttp://www.blogger.com/profile/10596675676272535336noreply@blogger.com0tag:blogger.com,1999:blog-3198915255127038100.post-70525303984499311792011-02-14T09:00:00.000-05:002011-02-14T09:00:10.275-05:00Apple Unveiling Cheaper iPhoneConfirmation is coming from various sources that Apple will be unveiling a new, smaller, cheaper iPhone.<br />
<br />
<table cellpadding="0" cellspacing="0" class="tr-caption-container" style="float: right; margin-left: 1em; text-align: right;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiK1dyKdCe55BCSzxevaFFi29ms8BMaU0RNOXMWdNMi_CBTk-s6AJPQdu6xR1yBNvIDNhrkGVtL7PTDbdU_VQgv0awqd182q5o5dyQAi_5UtlYqHadxq5V-RBOhCNiq1X8ZskaTsg-YPrg/s1600/small-iPhone-4_thumb.jpg" imageanchor="1" style="clear: right; margin-bottom: 1em; margin-left: auto; margin-right: auto;"><img border="0" height="272" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiK1dyKdCe55BCSzxevaFFi29ms8BMaU0RNOXMWdNMi_CBTk-s6AJPQdu6xR1yBNvIDNhrkGVtL7PTDbdU_VQgv0awqd182q5o5dyQAi_5UtlYqHadxq5V-RBOhCNiq1X8ZskaTsg-YPrg/s320/small-iPhone-4_thumb.jpg" width="320" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><i>iPhone 3G, and mock-up of smaller iPhone.</i></td></tr>
</tbody></table>The rumor had been in the works for months, but lately both Bloomberg and the Wall Street <i>Journal</i> got confirmation from anonymous sources who had seen the new device.<br />
<br />
The new, smaller, cheaper iPhone will likely be fully subsidized by the cell carriers, making it more affordable for the average consumer. The current iPhone 4G is sold by Apple to the carriers for $650, who in turn sell it to customers at $200 plus a minimum 2-year phone plan.<br />
<br />
Currently, iPhones comprise 3.6% of the cell phone market—but they hold a 26% share of the smart-phone market, which is the fastest growing segment of the cell-phone industry.<br />
<br />
Google’s Android platform, though released after the iPhone, has leap-frogged it, in terms of market share, to 33% of the smart-phone market.<br />
<br />
The iPhone is a key product line for Apple, representing roughly 40% of its $26 billion 2010 revenue.<br />
<br />
The release of a smaller, cheaper iPhone mimics the tactic Apple used with its famed iPod: The original model, selling at $300, was joined by the iPod Nano, which sold for half the price. And though the Nano had less than half the memory capacity of the original iPod, it became the dominant seller of the product line, both in units and overall revenue.<br />
<br />
The iPod Nano also overwhelmed competing MP3 players at the time of its release, including Microsoft’s ill-fated Zune. Today, iPods represent 80% of the portable digital music player market.<br />
<br />
Let’s see if the new cheaper iPhone does the same thing for Apple in the smart-phone market.<div class="blogger-post-footer"><a href="http://fosslira.blogspot.com"><img src="http://financialsurvivalradio.com/wp-content/uploads/2011/02/SVL-Half-Banner.jpg" /></a>
<p></p>
<a href="http://hyperinflationevent.blogspot.com"><img src="http://financialsurvivalradio.com/wp-content/uploads/2011/02/HIA-Half-Banner.jpg" /></a></div>Gonzalo Lirahttp://www.blogger.com/profile/10596675676272535336noreply@blogger.com0tag:blogger.com,1999:blog-3198915255127038100.post-44254125195553886102011-02-14T08:00:00.014-05:002011-02-14T08:00:20.403-05:00FY 2011 Budget Deficit: $1.6 TrillionSo the Obama administration is submitting its fiscal year 2012 budget today—and along the way, the administration revises its FY 2011 budget deficit.<br />
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjZXk6DRbaE26OXDhci_Woxi8Ng6jRtlvngE70jyx2t2TK9KKf3ffsMNiNcIBNelSyzCOLS6y_QdcatQViOeWfmUc6a54AnouhXr_tNOBMB8x03MfKgVQZC1z6Y5XkkTc_fmNUQWHJSJYY/s1600/moneyhole.jpg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" height="320" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjZXk6DRbaE26OXDhci_Woxi8Ng6jRtlvngE70jyx2t2TK9KKf3ffsMNiNcIBNelSyzCOLS6y_QdcatQViOeWfmUc6a54AnouhXr_tNOBMB8x03MfKgVQZC1z6Y5XkkTc_fmNUQWHJSJYY/s320/moneyhole.jpg" width="274" /></a><br />
The current projected deficit for FY 2011? <span class="Apple-style-span" style="background-color: yellow;">$1.6 </span><i><span class="Apple-style-span" style="background-color: yellow;">trillion</span></i><span class="Apple-style-span" style="background-color: yellow;">.</span><br />
<br />
This comes after last month’s announcement by the Congressional Budget Office, which put the FY 2011 deficit at $1.48 trillion—which in turn was a revision over last year’s deficit projection of “only” $1.3 trillion.<br />
<br />
So in other words, in less than six months, the FY 2011 budget—which has still yet to pass, scheduled for a vote this coming March 4—has had a deficit which has risen 23%.<br />
<br />
The Wall Street <i>Journal</i> has a long, frankly tedious <a href="http://online.wsj.com/article/SB10001424052748704657104576142122744337858.html?mod=WSJ_hp_mostpop_read">discussion</a> about the ins and outs of the FY 2011 budget, and how we got here—but the money-paragraph is this:<br />
<blockquote>For now, Mr. Obama and the Republicans are choosing to clash over a narrow slice of federal spending—the 15% devoted to discretionary programs unrelated to security and defense—while the entitlement programs that are driving projected federal deficits remain unaddressed by either party.</blockquote><div>That pretty much covers it. </div><div><br />
</div><div>What ought to be noted is, today the Obama administration will release its FY 2012 budget proposal (FY 2012 runs October 2011 through September 2012)—yet as mentioned above, the FY 2011 budget has yet to pass. March 4 is the date when the continuing resolution ends, but who’s to say if the Congress and the administration kick the can further down the road. </div><div><br />
</div><div>This is the government the people elected. Jeez . . .</div><div class="blogger-post-footer"><a href="http://fosslira.blogspot.com"><img src="http://financialsurvivalradio.com/wp-content/uploads/2011/02/SVL-Half-Banner.jpg" /></a>
<p></p>
<a href="http://hyperinflationevent.blogspot.com"><img src="http://financialsurvivalradio.com/wp-content/uploads/2011/02/HIA-Half-Banner.jpg" /></a></div>Gonzalo Lirahttp://www.blogger.com/profile/10596675676272535336noreply@blogger.com1tag:blogger.com,1999:blog-3198915255127038100.post-39388741533898483902011-02-14T07:00:00.000-05:002011-02-14T07:03:16.377-05:00No German Wants the ECB Chairman’s JobLast week, Bundesbank Chairman Axel Weber, 53, publicly declined the job of European Central Bank president—which set off quite the round of tongue wagging.<br />
<br />
<table cellpadding="0" cellspacing="0" class="tr-caption-container" style="float: right; margin-left: 1em; text-align: right;"><tbody>
<tr><td style="text-align: center;"><a href="http://www.financialregulationforum.com/wpmember/wp-content/uploads/2010/03/axel_weber.jpg" imageanchor="1" style="clear: right; margin-bottom: 1em; margin-left: auto; margin-right: auto;"><img border="0" height="320" src="http://www.financialregulationforum.com/wpmember/wp-content/uploads/2010/03/axel_weber.jpg" width="235" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><i>Axel Weber</i></td></tr>
</tbody></table>The ECB presidency is rotated—at the end of Jean-Claude Trichet’s tenure, it’s Germany’s turn. Weber was the leading candidate—and a famously strict disciplinarian insofar as monetary policy was concerned, in favor of a strong euro and letting the eurozone nations fend for themselves, when it came to sovereign debt.<br />
<br />
But he wasn’t the only German to withdraw his name from contention: <a href="http://en.wikipedia.org/wiki/Peer_Steinbrueck">Peer Steinbrueck</a>, a Social Democrat parliamentarian and former finance minister in Angela Merkel’s cabinet, has also withdrawn his name.<br />
<br />
Axel Weber’s explanation for withdrawing was neatly summed up in <a href="http://www.spiegel.de/international/germany/0,1518,745350,00.html">an interview</a> published today in <i>Der Spiegel</i>:<br />
<blockquote><b><a name='more'></a>SPIEGEL:</b> Why don't you want to be president of the ECB?</blockquote><blockquote><b>Weber:</b> My name has been mentioned in the discussion about this position over the last year and a half. I have taken clear positions on a few important decisions in the last 12 months…</blockquote><blockquote><b>SPIEGEL:</b> …especially the ECB's purchase of government bonds issued by troubled euro-zone members, a policy you are skeptical about …</blockquote><blockquote><b>Weber:</b> …and I continue to support these positions. <span class="Apple-style-span" style="background-color: yellow;">My positions might not always have served to increase my acceptability as an individual with certain governments</span>. For this reason, it's been clear to me since last May that this would adversely affect a potential candidacy. Since then, I have become increasingly convinced that I should not seek this important position.</blockquote>As to Steinbrueck, <a href="http://www.bloomberg.com/news/2011-02-13/germany-s-steinbrueck-doesn-t-want-ecb-job.html">his explanation</a> was shorter still: “I am not available for this job.”<br />
<br />
A German has to take this job—after all, it’s their turn. The tapped candidate will have to somehow cut the Gordian Knot: Be disciplined with the euro, yet bail out the weaker euro-zone nations. <div><br />
</div><div>Trichet has played that role, more or less managing to please everybody. But as inflation is rising worldwide, saving the euro or saving the sovereign debt will become mutually exclusive. </div><div><br />
</div><div>So it’s really no surprise that no German wants to get involved in this unfolding mess. </div><div class="blogger-post-footer"><a href="http://fosslira.blogspot.com"><img src="http://financialsurvivalradio.com/wp-content/uploads/2011/02/SVL-Half-Banner.jpg" /></a>
<p></p>
<a href="http://hyperinflationevent.blogspot.com"><img src="http://financialsurvivalradio.com/wp-content/uploads/2011/02/HIA-Half-Banner.jpg" /></a></div>Gonzalo Lirahttp://www.blogger.com/profile/10596675676272535336noreply@blogger.com0tag:blogger.com,1999:blog-3198915255127038100.post-29221129145986645622011-02-13T12:00:00.001-05:002011-02-13T12:00:06.068-05:00NOON CARTOON: Foreclosure Auction ExplainedHere’s something neat that came over the transom: A clear and true explanation of how foreclosure auctions happen, courtesy of ForclosureRadar.com:<br />
<br />
<iframe allowfullscreen="" frameborder="0" height="323" src="http://www.youtube.com/embed/1CanJbhGdJM" title="YouTube video player" width="520"></iframe><br />
<br />
As the professor always sez: “Vedi <i>in</i>terestink!”<div class="blogger-post-footer"><a href="http://fosslira.blogspot.com"><img src="http://financialsurvivalradio.com/wp-content/uploads/2011/02/SVL-Half-Banner.jpg" /></a>
<p></p>
<a href="http://hyperinflationevent.blogspot.com"><img src="http://financialsurvivalradio.com/wp-content/uploads/2011/02/HIA-Half-Banner.jpg" /></a></div>Gonzalo Lirahttp://www.blogger.com/profile/10596675676272535336noreply@blogger.com1tag:blogger.com,1999:blog-3198915255127038100.post-55928615293891427312011-02-10T09:00:00.004-05:002011-02-10T09:00:08.313-05:00Tonight’s Debate: Stoneleigh vs. LiraDue to tonight’s debate on deflation versus hyperinflation, posting will be thin today, picking up tomorrow after noon.<br />
<br />
For those unaware of the debate (possible), here’s <a href="http://fosslira.blogspot.com/">the link to the sign-up site</a>.<br />
<br />
Hope you enjoy it!<br />
<br />
<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi91-n-oK1T9rKRMJEugM-LcInqpSEau-hzHC9CdrWeeR6iiHEhJyywMbRE9tsO_fhAkxArYN6eeDZOGDv_I8oEJ4eZHU_Vha5G3eio3XISjtxJqOrNq_cxj6m_2DDx88psjdIDTwha_9I/s1600/SquareDebate.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi91-n-oK1T9rKRMJEugM-LcInqpSEau-hzHC9CdrWeeR6iiHEhJyywMbRE9tsO_fhAkxArYN6eeDZOGDv_I8oEJ4eZHU_Vha5G3eio3XISjtxJqOrNq_cxj6m_2DDx88psjdIDTwha_9I/s1600/SquareDebate.jpg" /></a></div><div class="blogger-post-footer"><a href="http://fosslira.blogspot.com"><img src="http://financialsurvivalradio.com/wp-content/uploads/2011/02/SVL-Half-Banner.jpg" /></a>
<p></p>
<a href="http://hyperinflationevent.blogspot.com"><img src="http://financialsurvivalradio.com/wp-content/uploads/2011/02/HIA-Half-Banner.jpg" /></a></div>Gonzalo Lirahttp://www.blogger.com/profile/10596675676272535336noreply@blogger.com1tag:blogger.com,1999:blog-3198915255127038100.post-37431395706083279642011-02-09T12:00:00.001-05:002011-02-09T12:00:00.444-05:00NOON CARTOON: What $100 Is WorthCourtesy of reader Bud Wood, a chart of the declining purchasing power of $100—quite the depressing little cartoon:<br />
<br />
<table cellpadding="0" cellspacing="0" class="tr-caption-container" style="float: left; margin-right: 1em; text-align: left;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgxzF5xGNqLuTqbabl8tfvQFKEYLZwmnPdGzEDQzZIOuBnbHP7RLDz_hgxbI2LtkpS53ouY83qoJhe-loIDv8_oZwuVfATzFMxrUpfv37cfPMwxR7ks5h1As5cvq5MUzlo1t3WjlT_6CSk/s1600/PurchasingPower-1950-2006.jpg" imageanchor="1" style="clear: left; margin-bottom: 1em; margin-left: auto; margin-right: auto;"><img border="0" height="341" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgxzF5xGNqLuTqbabl8tfvQFKEYLZwmnPdGzEDQzZIOuBnbHP7RLDz_hgxbI2LtkpS53ouY83qoJhe-loIDv8_oZwuVfATzFMxrUpfv37cfPMwxR7ks5h1As5cvq5MUzlo1t3WjlT_6CSk/s640/PurchasingPower-1950-2006.jpg" width="520" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><i>(click to enlarge)</i></td></tr>
</tbody></table><br />
<br />
<br />
<br />
Any questions?<br />
<br />
<div class="blogger-post-footer"><a href="http://fosslira.blogspot.com"><img src="http://financialsurvivalradio.com/wp-content/uploads/2011/02/SVL-Half-Banner.jpg" /></a>
<p></p>
<a href="http://hyperinflationevent.blogspot.com"><img src="http://financialsurvivalradio.com/wp-content/uploads/2011/02/HIA-Half-Banner.jpg" /></a></div>Gonzalo Lirahttp://www.blogger.com/profile/10596675676272535336noreply@blogger.com23tag:blogger.com,1999:blog-3198915255127038100.post-9374977214272119272011-02-09T07:00:00.014-05:002011-02-09T07:10:39.082-05:00And Now The States Will Get Bailed Out TooSo in 2008, the U.S. Federal government and the Federal Reserve essentially nationalized the losses of the major banks, bringing onto their respective balance sheets all the toxic assets and all the bad bets made over the last decade or so.<br />
<br />
To that, the Federal government is going to now add the insolvent state governments. <a href="http://www.nytimes.com/2011/02/09/us/politics/09states.html?_r=2&smid=tw-nytimesbusiness&pagewanted=all">According to</a> the NY <i>Times</i>:<br />
<br />
<table cellpadding="0" cellspacing="0" class="tr-caption-container" style="clear: right; float: right; margin-bottom: 1em; text-align: right;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg_cTXZmWs0KeMz3OhngH500tZyrK2Kz7xcOejgaDHo3U7pbDfCmUYydXlKo76RxrkW5KW64fE9-LP1ehBBRp9RlcjYxjBBBgwNzPivWgoUPCGNO3HXwNkrjBCu4ho7r3LTHWTZAZtLKfA/s1600/Bad+Credit+-+broken+piggy+bank3_020409a.jpg" imageanchor="1" style="clear: right; margin-bottom: 1em; margin-left: auto; margin-right: auto;"><img border="0" height="320" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg_cTXZmWs0KeMz3OhngH500tZyrK2Kz7xcOejgaDHo3U7pbDfCmUYydXlKo76RxrkW5KW64fE9-LP1ehBBRp9RlcjYxjBBBgwNzPivWgoUPCGNO3HXwNkrjBCu4ho7r3LTHWTZAZtLKfA/s320/Bad+Credit+-+broken+piggy+bank3_020409a.jpg" width="262" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><i>Looks like a corpse, doesn’t it?</i></td></tr>
</tbody></table><blockquote>President Obama is proposing to ride to the rescue of states that have borrowed billions of dollars from the federal government to continue paying unemployment benefits during the economic downturn. His plan would give the states a two-year breather before automatic tax increases would hit employers, and before states would have to start paying interest on the loans.</blockquote><blockquote>The proposal, which administration officials said would be included in the 2012 budget that the president is scheduled to unveil next week, was greeted coolly by Republicans on Capitol Hill, who warned that the plan would ultimately force many states to raise their unemployment taxes in the years to come.</blockquote>Screw the “unemployment taxes in the years to come”—the Federal government will be adding massive liabilities to its balance sheet <i>now</i>, which will force even more issuance of debt in order to keep the Federal government afloat.<br />
<div><br />
</div><div>And since the Federal government is insolvent, this added debt will force the Federal Reserve to continue buying up Treasuries. </div><div><br />
</div><div>Obvious question: Is there <i>anyone</i> in a position of power in the United States who gives a shit about the fact that the government is being driven bankrupt?</div><div> </div><div class="separator" style="clear: both; text-align: center;"></div><div class="blogger-post-footer"><a href="http://fosslira.blogspot.com"><img src="http://financialsurvivalradio.com/wp-content/uploads/2011/02/SVL-Half-Banner.jpg" /></a>
<p></p>
<a href="http://hyperinflationevent.blogspot.com"><img src="http://financialsurvivalradio.com/wp-content/uploads/2011/02/HIA-Half-Banner.jpg" /></a></div>Gonzalo Lirahttp://www.blogger.com/profile/10596675676272535336noreply@blogger.com8tag:blogger.com,1999:blog-3198915255127038100.post-80580079922247849752011-02-08T12:00:00.011-05:002011-02-08T12:00:06.756-05:00NOON CARTOON: If Only This Were True About Economists<table cellpadding="0" cellspacing="0" class="tr-caption-container" style="clear: right; float: right; margin-bottom: 1em; text-align: right;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgjq5kSjI1Z6NMfTYPX6ilm-nLoeleifim1s05FgDhYN0XmtibE_C1NVerRcigbvXcYoA8Lb972SvUAthiijR3bidr02o7xu2cOmkV0aUgDZ2XJF2g_s0P6ElKmfr9xrWtCacKTmLdXXs0/s1600/witch3d.jpg" imageanchor="1" style="clear: right; margin-bottom: 1em; margin-left: auto; margin-right: auto;"><img border="0" height="320" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgjq5kSjI1Z6NMfTYPX6ilm-nLoeleifim1s05FgDhYN0XmtibE_C1NVerRcigbvXcYoA8Lb972SvUAthiijR3bidr02o7xu2cOmkV0aUgDZ2XJF2g_s0P6ElKmfr9xrWtCacKTmLdXXs0/s320/witch3d.jpg" width="260" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><i>“I see soft third quarter earnings . . .<br />
for you, and for your little dog too!”</i></td></tr>
</tbody></table>If only this were true about economists: AP is <a href="http://hosted2.ap.org/APDefault/*/Article_2011-02-08-Romania%20Witches/id-f35a86f5dfee40539c5dfad7b87b2008">reporting</a> that Romania will fine witches who make wrong predictions.<br />
<br />
Not kidding:<br />
<blockquote>Legislation being debated in Romania would require witches to get a permit and make it possible to fine or even imprison one whose prediction turns out to be false.</blockquote>Imagine if this were the case with economists. Imagine if every time, say, Jan Hatzius predicted an unemployment number that turned out wrong, or Jim Cramer pitched some stock or other that then immediately tanked, they not only got fined—they even ran the risk of going to jail.<br />
<br />
Would we all be happier?<br />
<br />
Um . . . yeah.<br />
<br />
<div class="separator" style="clear: both; text-align: center;"></div><div class="blogger-post-footer"><a href="http://fosslira.blogspot.com"><img src="http://financialsurvivalradio.com/wp-content/uploads/2011/02/SVL-Half-Banner.jpg" /></a>
<p></p>
<a href="http://hyperinflationevent.blogspot.com"><img src="http://financialsurvivalradio.com/wp-content/uploads/2011/02/HIA-Half-Banner.jpg" /></a></div>Gonzalo Lirahttp://www.blogger.com/profile/10596675676272535336noreply@blogger.com4tag:blogger.com,1999:blog-3198915255127038100.post-80163934374648492192011-02-08T11:00:00.007-05:002011-02-08T11:00:10.646-05:00Labour Angry About Tory Levy On BankersThe world is officially nuts—or the UK’s Labour Party is fucked up beyond all recognition:<br />
<br />
George Osborne, the Conservative Chancellor of the Exchequer, in a <a href="http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/8311115/George-Osborne-levy-attacked-by-banks-and-Ed-Balls.html">surprise announcement</a> today, accelerated the implementation of a levy on British bankers, essentially a windfall profits tax aimed especially at banks that got government largesse during the 2008 Financial Crisis, and at exorbitant banker bonuses.<br />
<br />
The levy was supposed to be phased in over time—but Osborne decided to speed it up ahead of next month’s budget announcement.<br />
<br />
The Labour Party had a <i>fit</i>: Calling Osborne’s decision “hurried and panicky”, as well as accusing him of “moving the tax goalpost” and throwing a “damp squib” on the financial sector, Labour’s Shadow Chancellor, Ed Balls, was practically frothing at the mouth, as Osborne and the Conservatives effortlessly robbed Labour of its populist mantle. Labour’s reaction so far has been so bad that it seems to this observer to be sliding into the perverse position of siding with the UK banksters, who are just as cutthroat and vampire-squid-like as their U.S. counterparts.<br />
<br />
A video interview of Osborne after the jump:<br />
<br />
<a name='more'></a><br />
<br />
<iframe allowfullscreen="" frameborder="0" height="322" src="http://www.youtube.com/embed/Z97Sf4c3MPA" title="YouTube video player" width="520"></iframe><div class="blogger-post-footer"><a href="http://fosslira.blogspot.com"><img src="http://financialsurvivalradio.com/wp-content/uploads/2011/02/SVL-Half-Banner.jpg" /></a>
<p></p>
<a href="http://hyperinflationevent.blogspot.com"><img src="http://financialsurvivalradio.com/wp-content/uploads/2011/02/HIA-Half-Banner.jpg" /></a></div>Gonzalo Lirahttp://www.blogger.com/profile/10596675676272535336noreply@blogger.com1tag:blogger.com,1999:blog-3198915255127038100.post-48226971922596845682011-02-08T10:00:00.024-05:002011-02-08T10:00:04.928-05:00”Hello, He Lied”: How Can Anyone Believe Anything Goldman Sachs Says?<table cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgInHStzeCQjrWRf5ekALygurRuO5MdLUP8JCkLfGQdDI_x3-DVaVf2zxgr9g7F4vLM0aSuZkoOz1QCA3YpqdvbhktZdigvREhQSvK1LrUWok8A9wbnWuj_6EFW91JpX-XYYL3VlzbmAwY/s1600/Praying+Mantis+mating+1.jpg" imageanchor="1" style="clear: right; margin-bottom: 1em; margin-left: auto; margin-right: auto;"><img border="0" height="246" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgInHStzeCQjrWRf5ekALygurRuO5MdLUP8JCkLfGQdDI_x3-DVaVf2zxgr9g7F4vLM0aSuZkoOz1QCA3YpqdvbhktZdigvREhQSvK1LrUWok8A9wbnWuj_6EFW91JpX-XYYL3VlzbmAwY/s320/Praying+Mantis+mating+1.jpg" width="320" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><i>Goldman Sachs <br />
positioning a client for a deal. </i></td></tr>
</tbody></table>How can any customer of Goldman Sachs feel confident that they are not getting anally reamed, when something like <a href="http://www.bloomberg.com/news/2011-02-08/goldman-sachs-turns-bullish-on-stocks-in-european-banks-bond-market-shuns.html">this</a> comes out on Bloomberg:<br />
<blockquote>Goldman Sachs Group Inc. is telling investors to buy European bank stocks for the first time in more than 16 months. Bond buyers are taking the opposite view on concern that policy makers will fail to staunch the debt crisis.</blockquote>As anyone and everyone knows, the time to buy bank stocks was when Warren Buffett pumped $5 billion into Goldman Sachs, at the very height of the 2008 Crisis. Anyone buying Citigroup stock when it fell below $1 a share would have quintupled their money. The same goes for European banks. <br />
<br />
But buying American or much less European banking stock <i>now?</i> Especially when Euro-banks are seriously exposed to the sovereign debt of the PIIGS? Foolishly insane.<br />
<br />
Nevertheless, Goldman is telling their clients, <i>“Buy! Buy! Buy!”</i><br />
<br />
Which just begs the question: How can any client trust <i>anything</i> that Goldman Sachs recommends?<br />
<br />
Shrewd money managers always go against the flow—often to their and their clients’ benefit. But even just a casual look-see through Goldman’s “recommendations” over the years shows that Goldman doesn’t merely go against the flow: They seem to deliberately steer their clients straight to the most unprofitable trade, the most sure-fire money loser. <br />
<br />
There’s an old poker saying: If you can’t tell who’s the fool at the table, then he’s you. When dealing with Goldman Sachs, the saying should be: If you cannot immediately recognize how they are trying to rape you, then they have already succeeded. <br />
<br />
<div class="blogger-post-footer"><a href="http://fosslira.blogspot.com"><img src="http://financialsurvivalradio.com/wp-content/uploads/2011/02/SVL-Half-Banner.jpg" /></a>
<p></p>
<a href="http://hyperinflationevent.blogspot.com"><img src="http://financialsurvivalradio.com/wp-content/uploads/2011/02/HIA-Half-Banner.jpg" /></a></div>Gonzalo Lirahttp://www.blogger.com/profile/10596675676272535336noreply@blogger.com0tag:blogger.com,1999:blog-3198915255127038100.post-79147979811654735772011-02-08T09:00:00.033-05:002011-02-08T09:00:10.912-05:00Today’s Headline: China Raises Rates for the Third Time Since OctoberToday’s headline: China raises its key interest rates for the third time since October, and the second time in six weeks.<br />
<br />
As per <a href="http://www.reuters.com/article/2011/02/08/us-china-economy-rates-idUSTRE7171QA20110208">Reuters</a>:<br />
<blockquote>Benchmark one-year deposit rates will be lifted by 25 basis points to 3 percent, while one-year lending rates will also be raised by 25 basis points to 6.06 percent, the People's Bank of China said. The changes go into effect on Wednesday.</blockquote><blockquote><span class="Apple-style-span" style="background-color: yellow;">Although annual inflation slowed in December, analysts polled by Reuters expect it to have picked up to 5.3 percent last month, the fastest pace in more than two years, on the back of soaring food prices</span>.</blockquote><div>The rate hike was a surprise, coming as it did just before the Lunar New Year holiday. Commodity prices—especially oil—took a hit on the news, and there is concern that the hike will affect Chinese growth. </div><div><br />
</div><div>However, as highlighted, inflation is the concern. </div><div><br />
</div>Indonesia, South Korea, Thailand and India have all raised rates so far this year—all of them doing so on concerns about inflation, which has been hitting those economies rather severely. <div><br />
</div><div>The Chinese rate hike, coupled with their renewed (and ham-fisted) <a href="http://english.yonhapnews.co.kr/news/2011/02/02/0200000000AEN20110202003600320.HTML">efforts at price controls</a>, underlines how concerned the Chinese leadership is. They are also probably keeping a wary eye on developments in Egypt: After all, the Egyptian Crisis was triggered by rising food prices. </div><div><br />
</div><div>The Chinese Communist Party (CCP) has essentially a tacit understanding with the Chinese people: Let us rule you without debate, and we will give you food and prosperity. </div><div><br />
</div><div>The CCP cannot allow food price inflation to break that promise. So expect them to do everything necessary to keep food prices low. </div><div><br />
</div><div>If that means more rate hikes in the near term, then by Mao, there’ll be more rate hikes—as many as necessary, to keep the population happy. Or at least keep them from revolting.<br />
<div> </div></div><div> </div><div class="blogger-post-footer"><a href="http://fosslira.blogspot.com"><img src="http://financialsurvivalradio.com/wp-content/uploads/2011/02/SVL-Half-Banner.jpg" /></a>
<p></p>
<a href="http://hyperinflationevent.blogspot.com"><img src="http://financialsurvivalradio.com/wp-content/uploads/2011/02/HIA-Half-Banner.jpg" /></a></div>Gonzalo Lirahttp://www.blogger.com/profile/10596675676272535336noreply@blogger.com1tag:blogger.com,1999:blog-3198915255127038100.post-49460287177993390352011-02-08T08:00:00.001-05:002011-02-08T08:00:13.893-05:00Department of “So-Not-Surprised”—Ethanol Losing MoneyWith the dramatic rise in corn prices—some of which is blamed on its use in ethanol and other “blended” fuels—ethanol producers are getting squeezed to the breaking point.<br />
<br />
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhVcAa-rgAYkcFeHJkpCIuQSPgCi7IyJvk7mNZ2iNX7fQXhXrjc_qXF_okFMVzET92-_w7NxFKE1TZj13WD_OLaQ3asyt43kuJC930VIU4QFtk19budFE4Yvs4zE3p14gTdXBlIBlXulYs/s1600/ethanol-corn.jpg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" height="257" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhVcAa-rgAYkcFeHJkpCIuQSPgCi7IyJvk7mNZ2iNX7fQXhXrjc_qXF_okFMVzET92-_w7NxFKE1TZj13WD_OLaQ3asyt43kuJC930VIU4QFtk19budFE4Yvs4zE3p14gTdXBlIBlXulYs/s320/ethanol-corn.jpg" width="220" /></a>From the CME Group Ethanol Outlook <a href="http://www.insidefutures.com/article/216519/CME%20Group%20Ethanol%20Outlook%20Report%20-%20February%2007,%202011.html">Report</a>:<br />
<blockquote>Over [the past] 7-month period, corn prices have rallied by 90% whereas ethanol prices have rallied by only 55%. The relative weakness in ethanol prices has slashed the ethanol-corn crush margin to its current level of -1 cent per gallon from the 20 cent profit seen last July. Including the income earned from selling distiller dried grains (DDGs), the margin is still positive at 35 cents. However, from that 35-cent profit, U.S. corn-ethanol producers need to pay all their other expenses, meaning <span class="Apple-style-span" style="background-color: yellow;">most [corn-ethanol producers] are barely profitable at present and some are already losing money. The profit risks remain high for ethanol producers if corn continues to rally.</span></blockquote><div>The Law of Unintended Consequences: All the corn grown in the United States with generous Federal subsidies was glutting the markets—so the Bush administration had the bright idea to give even more incentives to turn that grain into fuel. </div><div><br />
</div><div>Turns out, aside from being an incredibly inefficient way to produce fuel, corn-ethanol drove up the price of corn, making ethanol uncompetitive with regular gasoline, as we are now seeing. <br />
<br />
To top it off, there is such a high demand for fuel that, if every car were turned into an ethanol user, there isn’t enough corn on the planet to satisfy demand, let alone enough left over to feed people and livestock. </div><div><br />
</div><div>So the whole ethanol thing was another government boondoggle: Your tax dollars, hard at work. </div><div><br />
</div><div class="blogger-post-footer"><a href="http://fosslira.blogspot.com"><img src="http://financialsurvivalradio.com/wp-content/uploads/2011/02/SVL-Half-Banner.jpg" /></a>
<p></p>
<a href="http://hyperinflationevent.blogspot.com"><img src="http://financialsurvivalradio.com/wp-content/uploads/2011/02/HIA-Half-Banner.jpg" /></a></div>Gonzalo Lirahttp://www.blogger.com/profile/10596675676272535336noreply@blogger.com5tag:blogger.com,1999:blog-3198915255127038100.post-80575876106173571102011-02-07T09:00:00.001-05:002011-02-07T09:00:08.788-05:00Can You Spell “Schadenfreude”?F-O-R-E-C-L-O-S-U-R-E—M-I-L-L—A-T-T-O-R-N-E-Y—I-N—B-I-G—T-R-O-U-B-L-E—<br />
<br />
—<i>that’s</i> how you spell “schadenfreude”: The Associated Press has <a href="http://hosted.ap.org/dynamic/stories/U/US_THE_FORECLOSURE_KING?SITE=NCASH&SECTION=HOME&TEMPLATE=DEFAULT">a fascinating story</a> about the rise and fall of David Stern, a top Florida foreclosure attorney and operator of a “foreclosure mill”, is in serious trouble.<br />
<br />
The key paragraph:<br />
<blockquote>The Florida attorney general's economic crimes division is investigating three law firms, including Stern's, over allegations that they created fraudulent legal documents, gouged homeowners with inflated fees, steered business to companies they owned and filed foreclosures without proving the bank actually had a legal interest in the loan. Florida authorities characterize the foreclosure process at these law firms as a "virtual morass" of "fake documents" and depicted Stern's operations as something akin to the TV show "Lost" - only instead of people that went missing, it was paperwork. Stern's employees churned out bogus mortgage assignments, faked signatures, falsified notarizations and foreclosed on people without verifying their identities, the amounts they owed or who owned their loans, according to employee testimony. The attorney general is also looking at whether Stern paid kickbacks to big banks.</blockquote>The “big banks” the piece refers to are Goldman Sachs, JPMorganChase, GMAC, and CitiGroup—Stern worked with all of them. <div><br />
</div><div>This is all good and fine—but one glaring truth simply must be pointed out: Since the start of the Global Financial Crisis—aside from the Madoff Scam—not one person has even been charged with a crime, let alone gone to jail. </div><div><br />
</div><div>And even people who, it is clear, were involved with and knew of the Madoff Scam—such as JPMorgan—aren’t being prosecuted. </div><div><br />
</div><div>The rich really are different from you and me: When they scam, they don’t go to jail.<br />
</div><div class="blogger-post-footer"><a href="http://fosslira.blogspot.com"><img src="http://financialsurvivalradio.com/wp-content/uploads/2011/02/SVL-Half-Banner.jpg" /></a>
<p></p>
<a href="http://hyperinflationevent.blogspot.com"><img src="http://financialsurvivalradio.com/wp-content/uploads/2011/02/HIA-Half-Banner.jpg" /></a></div>Gonzalo Lirahttp://www.blogger.com/profile/10596675676272535336noreply@blogger.com2tag:blogger.com,1999:blog-3198915255127038100.post-20660479585218976262011-02-07T07:00:00.003-05:002011-02-07T07:19:09.754-05:00AOL Buys Out Huffington PostAOL bought out The Huffington Post, as announced on their site. As per <a href="http://www.bbc.co.uk/news/business-12379623?utm_source=twitterfeed&utm_medium=twitter">the BBC</a>:<br />
<blockquote>The $315m (£222m) deal will create an internet media group with 270 million users, including 117 million in the US.</blockquote><blockquote>The purchase price - $300m of which will be in cash - will be paid to co-founders Arianna Huffington and Kenneth Lerer and a few minority shareholders.</blockquote><blockquote><table cellpadding="0" cellspacing="0" class="tr-caption-container" style="float: right; margin-left: 1em; text-align: right;"><tbody>
<tr><td style="text-align: center;"><a href="http://image3.examiner.com/images/blog/replicate/EXID34929/images/huffington_post_1_.jpg" imageanchor="1" style="clear: right; margin-bottom: 1em; margin-left: auto; margin-right: auto;"><img border="0" height="320" src="http://image3.examiner.com/images/blog/replicate/EXID34929/images/huffington_post_1_.jpg" width="246" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><i>Arriana Huffington</i></td></tr>
</tbody></table>Ms Huffington - currently editor of her namesake news service - will head the combined firm's content division.</blockquote><blockquote>This means she will take on responsibility for AOL sites such as Engadget and Techcrunch, as well as retaining her current role at the intellectual centre-left website she helped set up in 2005.</blockquote>This is the future of online news.<br />
<div><br />
</div><div><a name='more'></a>The Huffington Post does two things very well: It has a clear editorial line, and it makes its readers feel a part of the news by both the social networking stuff on the site, as well as the direct connection with the specific bloggers on the site. </div><div><br />
</div><div>In other words, it gathers like-minded readers who have a vested interest in the news. These readers follow the news like social twitters, or Facebook updates—and just like Twitter or Facebook, it becomes addictive to the user. </div><div><br />
</div><div>The Huffington Post is skewed towards politics and lifestyle & entertainment—but it’s easy to see how it can be a template for other news sites. In fact, of the financial sites, Zero Hedge is probably the one closest to mimicking THP’s concept. </div><div><br />
</div><div>An important issue about the site—and essential for the business model—is that The Huffington Post derives all its revenue from advertising. Anything sold on the website is gravy—it’s the ads that make it a going concern.<br />
<br />
This is why AOL felt so confident about buying it: Unlike Murdoch’s purchase of MySpace—which became a money-pit—AOL knows The Huffington Post will stand on its own. </div><div><br />
</div><div>This deal signals the end of both network news and traditional newspapers: The Huffington Post and other similar sites can provide both written and video news, and deliver it when the user wants it, not at set times in the evening, or every morning at the newsstand.<br />
<br />
Expect other sites to ride The Huffington Post’s coattails to big-money deals. Of the financial sites, Zero Hedge is the one most likely to go in that direction. </div><div class="blogger-post-footer"><a href="http://fosslira.blogspot.com"><img src="http://financialsurvivalradio.com/wp-content/uploads/2011/02/SVL-Half-Banner.jpg" /></a>
<p></p>
<a href="http://hyperinflationevent.blogspot.com"><img src="http://financialsurvivalradio.com/wp-content/uploads/2011/02/HIA-Half-Banner.jpg" /></a></div>Gonzalo Lirahttp://www.blogger.com/profile/10596675676272535336noreply@blogger.com2tag:blogger.com,1999:blog-3198915255127038100.post-5292058438513580872011-02-05T10:00:00.004-05:002011-02-05T10:00:09.125-05:00Smooth Sailing—For NowThe Egyptian situation is stabilizing; Mubarek will likely step aside one way or another, and Egypt will go back to business.<br />
<br />
<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgN080cWVZgYZxeiOVL6ActPCcV2AaK63OdwLtvy_Z5q8kI_FsujDF-yGbpDiZn1MoNG8ksXE7cfjS2SreRdEa_TYenpbww-3HKVqdPn3e5dv3mXqbLwEhwWF6nMoEMO-Yyaf6R_s9lYps/s1600/images.jpeg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgN080cWVZgYZxeiOVL6ActPCcV2AaK63OdwLtvy_Z5q8kI_FsujDF-yGbpDiZn1MoNG8ksXE7cfjS2SreRdEa_TYenpbww-3HKVqdPn3e5dv3mXqbLwEhwWF6nMoEMO-Yyaf6R_s9lYps/s1600/images.jpeg" /></a></div>Meanwhile, in the U.S., earning are doing somewhat better than expected, the VIX index of investor anxiety dropped this past week, Friday’s U.S. jobs report—cosmetically better—is lowering anxiety, U.S. Treasury bond yields are up (signaling risk-on for the markets), and all-in-all, things seem to be going okay.<br />
<br />
So barring something out of left field, the next week is going to be Onward and Upward Ho!<br />
<br />
The only thing that will be signalling bad juju on the horizon will be commodities: Precious metals, industrial metals, oil and agros.<br />
<br />
Expect them all to creep up all of next week. Nothing to get into a twist over—just a steady march up, across the board.<br />
<br />
Friday’s closing prices:<br />
<blockquote>Light sweet Texas crude: $89.03</blockquote><blockquote>Gold: $1348.48</blockquote><blockquote>Silver: $29.11</blockquote><blockquote>Copper: $4.5795</blockquote><blockquote>Wheat: $853.75</blockquote><blockquote>Corn: $678.50</blockquote><div class="blogger-post-footer"><a href="http://fosslira.blogspot.com"><img src="http://financialsurvivalradio.com/wp-content/uploads/2011/02/SVL-Half-Banner.jpg" /></a>
<p></p>
<a href="http://hyperinflationevent.blogspot.com"><img src="http://financialsurvivalradio.com/wp-content/uploads/2011/02/HIA-Half-Banner.jpg" /></a></div>Gonzalo Lirahttp://www.blogger.com/profile/10596675676272535336noreply@blogger.com2tag:blogger.com,1999:blog-3198915255127038100.post-11617728219230974902011-02-05T08:00:00.015-05:002011-02-05T08:03:00.226-05:00Call It The Bureau of Lying With Statistics: Unemployment Supposedly at 9.0%Yesterday, the Bureau of Labor Statistics (BLS) <a href="http://bls.gov/news.release/empsit.nr0.htm">released</a> January unemployment numbers. The headline paragraph was:<br />
<blockquote><span class="Apple-style-span" style="font-family: 'Courier New', Courier, monospace;">The unemployment rate fell by 0.4 percentage point to 9.0 percent in January, while nonfarm payroll employment changed little (+36,000), the U.S. Bureau of Labor Statistics reported today. Employment rose in manufacturing and in retail trade but was down in construction and in transportation and warehousing. Employment in most other major industries changed little over the month.</span></blockquote>(We like the Courier font the original report uses, BTW.)<br />
<br />
Sounds good, right? Unemployment at 9.0%—down 0.4% from the month before. The economy recovering, right?<br />
<br />
<i>Ding-dong!</i>—wrong! It’s called “Lying With Statistics”.<br />
<br />
Basically, the BLS made three moves with the employment statistics: They reduced the number of people who could be counted as unemployed; they back-revised 2010 data, so as to count even fewer people among the unemployed; and they inflated the model they use to guesstimate new job creation.<br />
<br />
Hence, even though there was a minuscule job growth of <span class="Apple-style-span" style="background-color: yellow;">only +36,000 new jobs</span> in the month of January, the headline blare is that unemployment went down 0.4%, to 9.0%.<br />
<br />
So everybody <i>happy!-happy!-happy!</i> Right?<br />
<br />
Hmm . . . everybody except the unemployed.<div class="blogger-post-footer"><a href="http://fosslira.blogspot.com"><img src="http://financialsurvivalradio.com/wp-content/uploads/2011/02/SVL-Half-Banner.jpg" /></a>
<p></p>
<a href="http://hyperinflationevent.blogspot.com"><img src="http://financialsurvivalradio.com/wp-content/uploads/2011/02/HIA-Half-Banner.jpg" /></a></div>Gonzalo Lirahttp://www.blogger.com/profile/10596675676272535336noreply@blogger.com1