Financial Sense Blog

DEFENSIVE NOTES ON THE MARGIN: Investors sharing our view that financial assets in general are fundamentally overvalued in real, purchasing-power terms naturally seek to preserve wealth in alternative assets, including commodities. However, while commodities may indeed be more fairly valued, that does not mean that they can decouple entirely from developments in financial markets. Should equity markets suffer a major correction, commodity prices are also likely to fall, in particular those for industrial commodities.

The average pay for a Federal drone (aka worker) has risen by 58%, while the average pay for real workers has risen by only 30%. Therefore, the average non-government employee has seen a decrease in their standard of living as inflation has risen faster than wages. As you can calculate yourself, Federal government spending surged by 124% between 1999 and today. Have you noticed a doubling in service level, competence, educational scores, new energy solutions, or safety and security? What did we get for an extra $2.1 trillion of spending?

Mubarak resigned, journalists packed their gear, and CNN went back to talking about obesity statistics - but Egypt's troubles are far from over. After weeks of protests (leading to strikes and, understandably, no tourists), the country's economy took an estimated 1.5 billion-dollar punch to the face.

Last week, a bit of news came out that—weirdly—didn’t garner the attention or the reaction one would have thought it would

This week I had the pleasure of interviewing the Brazilian philosopher, and president of the Inter-American Institute, Olavo de Carvalho. During the conversation I suggested that something is wrong with our thinking today; that we don’t worship in the same way, or obey the rules in the same way, or observe common courtesy as we once did.

When the Tunisian, then the Egyptian revolutions succeeded we were all surprised. Many believed that at last democracy had won in the Middle East. When the King of Jordan changed his government a feeling of contagion set in. Then we heard of riots in Yemen, Libya, Bahrain, Iran and we now look at the entire Middle East as ripe for contagious revolutions. The question hangs in the air, “Are these revolutions or just exuberant demonstrations?” Will they topple regimes and disrupt oil supplies.

There have been numerous reports of bullion shortages in many parts around the world, along with rising premiums. And the two explanations – we’re running out of gold! and, it’s just a manufacturing bottleneck – are at odds with one another. So, who’s right?

Through Warren Buffett’s letters to Berkshire Hathaway’s shareholders, and his op-ed pieces, one can conclude Warren Buffett has little respect for private property rights. If Mr. Buffett took the time to read Frank Chodorov’s masterful book The Income Tax: Root of All Evil, he would properly conclude (I hope) taxation is theft.

The above quote is as true today as when it was first said over 70 years ago by john Maynard Keynes – who fancied himself an investor in the markets and was humbled on more than one occasion. Just how irrational is the market? It depends upon who you ask – and more importantly, what their invested position is at the time. The discussion is rather heated between the bullish and bearish camp with one licking their chops over what is likely to ensue given market history, the other wallowing in the knowledge the markets have not yet been argued lower.

We see the Talking Heads of the Main Stream Media waxing Poetic about the Ostensible Ongoing “Recovery”, while the highest government officials blather on about how more ‘Stimulus Spending via More Debt is’ essential to Recovery.