Financial Sense Blog

It is broadly illegal to place into the market an order that one does not intend to execute. That is, you cannot place an order into the market intended to goad someone else into acting, or through any other device attempt to manipulate price except through a bona-fide offer to buy or sell the security in question.

In early July, Japan set a premium price for solar energy that was three times the rate of conventional power. This meant utility companies would be paid three times more for electricity sourced from solar. It's widely expected that the premium will ignite the use of solar power - and solar uses a lot of silver.

Economic data the world over indicate that a global economic slowdown is well underway. Central banks have already responded with fresh stimulus, as anticipated by financial markets. But just as the economic recovery of 2009-2011 was largely artificial and, thus, disappointing in key respects, so the unfolding slowdown is going to result in a few nasty surprises.

The market opened higher and then spiked higher a half hour into trading. The catalyst for the aggressive move came in response to better than expected numbers form the September ISM index. The number came in at 51.5 against an expectation of 49.7.

There's a belief among certain economists – and the wider population – that if the government takes a more active role in the economy, the social outcome can be improved. Dr. Lacy Hunt, executive VP of Hoisington Investment Management Company (HIMCO), says it's a false belief… and he has proof to back it up. An unprecedented buildup of debt, he shows, can only lead to one outcome: a drop in Americans' standard of living.

We just completed a three-week visit to France. Paris and the French countryside remain as lovely as ever. On the surface, life in France seems normal, with shops, restaurants and hotels full, traffic heavy, and tourism intense. Indeed, arrivals at Charles de Gaulle Airport were so numerous that it took over an hour to get through passport control. However, the country is in the grip of a growing malaise.

I used to have a deputy who said that the FHA mortgage insurance funds were where mortgages went to die. That was, however, before the creation of MERS, derivatives and the explosion of mortgage fraud during the 1990's which in combination with the “strong dollar policy” engineered what I have referred to as a financial coup d’etat.

In our “NBER Recession Model – Confirmation of last resort” research note we constructed a co-incident U.S economic composite based on the 4 indicators watched by the NBER, namely Industrial production, Personal Incomes, Retail sales and Payroll employment.

As living standards fall and livelihoods are being wretched voter anger is becoming increasingly palpable, especially in countries such as Spain and France. History provides countless lessons as to the political consequences of detached economic policies and their real effects.

Absent some earth shaking event between now and November, Obama is going to win, the House will remain in the hands of the Republicans and the Senate will continue to be equally divided. The war between Reds and Blues will be just as bad as it was a year ago. The day after the election, the fight over the fiscal cliff will commence. I expect it will be ugly.