Financial Sense Blog

An old metaphor: If you take a frog and drop it into a roiling pot of boiling water, it’ll jump right out, unscathed. But if you put that same frog in a pot of cold water, and then slowly raise the heat, that frog won’t move. It’ll stay in that pot of water, calm as can be, right up until it is boiled to death.

In reasonably quick order, the governments that reduce, rather than increase, their burden on their business communities will see their economies begin to prosper while others stagnate – just as they always have. The United States in its youth provides the paradigm of this principle, but Hong Kong, Singapore, Dubai, and a handful of other, less pure examples prove the point as well.

Are there enough chairs on the Titanic?

Silver was this week’s hottest commodity, thanks to the initial stages of a short squeeze courtesy of major commercial banks such as JP Morgan and HSBC. I’m sure most of you read the headlines over the last several weeks which are bringing manipulation in the silver market to light. The way many discovered this was through the COT (Commitment of Traders), which is public information regarding trading of commodities, specifically for commercial, large and speculative traders. What we want to do isfocus on a few numbers published in this report adjusted for spreading (going both long and short) for the commercial traders, notably the top 4 and 8. The following is a summary of the weeks COT ended November 2, 2010.

Last week’s midterm elections have been characterized as a victory for grassroots Americans who are fed up with Washington and the political status quo. In particular, the elections are being touted as a clear indicator that voters demand reductions in federal spending, deficits, and debt.

Rudy Fritsch of the Gold Standard Institute has responded to my earlier post. While Fritsch raises a number of points including seasonal variation in money demand, and the inability of the price system to adapt to changes in supply, demand, and consumer preferences...

The market continues to power ahead with significant momentum. The Dow 30 Industrials, the Dow 20 Transports, the S & P 500 and the NASDAQ 100 all are taking wind from a new quantitative easing policy, extended Bush tax breaks and positive earnings guidance. In addition Wall Street likes the idea that Democrats and Republicans must work together and compromise following the mid-term Congressional elections.

Readily acknowledged is that first action of new U.S. Congress should be to call for resignations of all members of the Board of Governors of the Federal Reserve System. Their irresponsible acts to date have clearly violated their mandate to provide a healthy economic environment. With Federal Reserve Bubble III, manifesting itself in the inflated and unnatural values for non dollar currencies, distorting the global economic system, they must be removed immediately and most recent policy action nullified.

The Federal Reserve made its long anticipated announcement Wednesday on the second round of Quantitative Easing (QE2). For the most part it was met with a pretty large yawn initially. The market was cautious early Wednesday ahead of the Fed announcement.

The following is commentary that originally appeared at treasurechests.info for the benefit of subscribers on Tuesday, October 19th, 2010.