Financial Sense Blog

USPS incurs a $6 billion loss, manufacturing index decreases, SEC releases final 'Flash Crash' report, and other market events.

All told today – and seeing the world's fastest-growing economies continue to buy and hold ever more gold as their wealth increases – maybe US and European savers are only just getting back to the future. Either way, that "bubble in gold" doesn't exist. Not by a long way just yet.

For years, the US has been pressuring China to allow its currency to appreciate. But Japan’s unilateral intervention in the foreign exchange market in September represents the opening of a new front in an escalating global currency war. Indeed, this event may be the trigger which sets off a series of similar actions elsewhere. Past episodes of global currency devaluation, such as in the 1970s and 1930s, have always led to increases in global commodity prices, even amidst relatively weak economic growth.

Billionaire David Tepper, one of the most successful hedge fund managers in the world, attracted much attention in a September 24th CNBC appearance by presenting such unrestrained optimism that even the normally buoyant network hosts were somewhat surprised. In a rare interview, Tepper argued that all asset classes would go higher no matter if the US economy recovers or not (with the possible exception of the US dollar). His faith is derived from the belief that even if the US economy deteriorates and fails to raise markets through organic growth, the Fed will certainly step in with enough liquidity to push up stock and bond prices.

Unfortunately investors as a group are slow to adapt to change, which can be a harsh and costly lesson to learn. But where there is turmoil there is also opportunity for those who can recognize change and make that adaptation.

The leading hit song in 1973 was Carly Simon's You're So Vain. It's about disappointed love, and contains the following line at the heart of the song: "I had some dreams, they were clouds in my coffee...." Last month the Center for Security Policy presented the political equivalent of Simon's song to the national security establishment, titled Shariah, the Threat to America; An Exercise in Competitive Analysis, report of Team 'B' II, which touches many a cloud in our national coffee.

As the Republic slides off the Empirical Bread & Circus Show abyss - massive acts of fraud become more and more visible to us. What we have here is a "Fraud-Doc" foreclosure factory. My prediction on this is that the Lobbyrats will bribe the Empirical Bread & Circus Rats to turn a TBTF (Too Big To Fail) "law passing trick" allowing banks to conduct No-Doc forecloses which will supersede the "Fraud-Doc" foreclosure factory that we just uncovered.

A "perfect storm" of circumstances is setting the stage for possible massive food price increases, food riots, supply chain disruptions, country versus country water disputes and increasing numbers of hungry people.

You may be asking yourself, did the central banks ever control the gold market? Yes, indeed they did! The gold Standard was the ultimate system of control they had until it was dropped. Then President Roosevelt’s Administration took control of the U.S. gold market when he confiscated all U.S. citizens held gold. Ownership of gold was only re-permitted in the early seventies.

Total explanation of the macro economic environment, especially focused on the deflation versus inflation ambiguity.