Friday, July 31, 2009

Pimp My Clunker

Pimp My Clunker

By Nick Sorrentino

“Uncle Sam is helping you buy a new car.” The ad says. “You could get $4500 from the government just for trading in your old gas guzzling car, truck, or SUV.”

Well that’s just great. What I wonder is why Uncle Sam doesn’t just buy me the car outright. Forget the incentive. If I bring in a clunker, give me a Chevy econobox in return. Seriously. If cash for clunkers is such a great idea, why not go all the way and just buy the car for me. That way I won’t be in debt to a bank. I’ll just tack on the cost of my car to the federal ledger. I’ll have a new car. The factory workers get to keep their jobs. And since it’s a GM product my new car will likely fall apart in 3 years time, thus providing jobs for unionized workers down the road.

Why make me get a loan at all. In this Brave New World money doesn’t mean anything right? So just trade me a crappy car for my continued servitude.

But money, even paper money, does mean something. With the CARS program many people are jumping back into debt because they see it as an opportunity. But if a minivan is $35,000 when it should really be $25,000, is that really such a good deal? So what, you get $4500 supplied by your fellow hardworking taxpayers, but you’re still buying a product that will to keep you in debt.

What would you do if you had no car payment? What would you have to do if you had another $400 going to the bank every month in the form of a car note?

Trust me. I understand. It’s tempting. I’ve got a real clunker. It leaks coolant and has a loose bolt somewhere in the engine so it makes all kinds of neat noises. But it doesn’t have a payment and I like that a lot.

As I did the cash for clunkers equation, I figured that the amount I would pay for a new minivan would over 3 years equal about $31,000 even with the taxpayer paid subsidy of $4500.

So I have instead decided to “pimp my clunker.” That is, I am going to fix that coolant leak and loose bolt and maybe jack up the air conditioning system a bit. I’m even going to get the beast repainted. No flames though. In the end it’ll cost me maybe a couple thousand, versus a new obligation to pay $31000.

Now, I love new cars. I am a huge fan. But when I do the math, even with the “free money” from the tax payer, er, the government, that new car is still damned expensive. So for now, until the book advance arrives and I can justify it, we will continue to cruise around in the 2000 family truckster. But no, I won’t be taking the tribe cross country in it.

Revised numbers show more dire economic picture

Revised numbers show more dire economic picture

By Bob Willis

July 31 (Bloomberg) -- The first 12 months of the U.S. recession saw the economy shrink more than twice as much as previously estimated, reflecting even bigger declines in consumer spending and housing, revised figures showed.

Thursday, July 30, 2009

1,200 R.I. businesses face closure over sales tax

Plain Government Extortion

So in a time of near depression lets close down businesses that employ people because the state wants it's tribute. A protection racket pure and simple.

PROVIDENCE — State tax officials have put more than 1,200 businesses across the state on notice this week that they are out of business unless they pay their overdue sales taxes immediately.

For most, that action came in the form of a personal visit from the state Division of Taxation, ordering business owners to lock their doors at once.

PennyMac, Run by Ex-Countrywide Execs, Prices IPO

PennyMac, Run by Ex-Countrywide Execs, Prices IPO

PennyMac Mortgage Investment Trust, which buys distressed home loans and is run by several former Countrywide Financial executives, on Wednesday raised $320 million from an initial public offering, $80 million less than planned.

Wednesday, July 29, 2009

Taco Hell: Overdraft Debit Fees Treat Customer to $300 Fast-Food Charge

Overdraft Debit Fees Treat Customer to $300 Fast-Food Charge

By Alexis Leondis

July 29 (Bloomberg) -- Tracy Hickman’s dinner for three at Taco Bell cost $11.99. She ended up paying $300 for overdraft charges triggered by the meal and other debit purchases.

Hickman says the expense resulted from delays in processing her child-support check at the Zanesville, Ohio, branch of Cleveland-based National City Bank. The 45-year-old customer- service representative said she uses a debit card more these days after canceling her credit cards because of high fees.

“I stopped using credit cards to keep me out of trouble and then got hit with overdraft fees,” Hickman said. “It’s not fair.”

Tuesday, July 28, 2009

Just Awesome

Row Brewing Over Britain's Strongest Beer

Row Brewing Over Britain's Strongest Beer

Health campaigners have called for a review of the alcohol industry after a Scottish brewery launched Britain's strongest beer.

Gold hits 6.5 week high as dollar weakens

Gold hits 6.5 week high as dollar weakens

Gold rose to its highest level since mid-June on Monday as the dollar weakened, with investors seeking out higher risk, while platinum's move up near a six-week high offered support.

Monday, July 27, 2009

Libertarians seek a place in the New Hampshire sun

Libertarians seek a place in the New Hampshire sun

They've come for the Porcupine Freedom Festival, four days of beer, burgers and bonfires. But more importantly, they are here to carve out an enclave of less government and more liberty to do as they wish.

Saturday, July 25, 2009

Amazon CEO apologizes for deleting Orwell books

Amazon CEO apologizes for deleting Orwell books

Amazon founder Jeff Bezos has issued an apology to Kindle customers after "1984" and other books by British novelist George Orwell were remotely deleted from their electronic readers.

"This is an apology for the way we previously handled illegally sold copies of '1984' and other novels on Kindle," the Amazon chief executive said in a post on Thursday on the Kindle Community discussion forum.

Friday, July 24, 2009

Brit economy worse than expected

Brit economy worse than expected

LONDON (Reuters) - The economy shrank more than twice as fast as expected in the second quarter of 2009 to register its biggest annual decline on record, dashing hopes of a speedy recovery from the worst recession in nearly 30 years.

Thursday, July 23, 2009

U.S. Rescue May Reach $23.7 Trillion, Barofsky Says

U.S. Rescue May Reach $23.7 Trillion, Barofsky Says

July 20 (Bloomberg) -- U.S. taxpayers may be on the hook for as much as $23.7 trillion to bolster the economy and bail out financial companies, said Neil Barofsky, special inspector general for the Treasury’s Troubled Asset Relief Program.

The Treasury’s $700 billion bank-investment program represents a fraction of all federal support to resuscitate the U.S. financial system, including $6.8 trillion in aid offered by the Federal Reserve, Barofsky said in a report released today.

Wednesday, July 22, 2009

The Fiasco Continues!

*** Our government... the fiasco continues! ***
*** Will the government print money in an attempt to mitigate the mess? Is inflation coming? Are you ready? Learn financial self-defense at: ***

Paul Craig Roberts
There is no economy left to recover. The US manufacturing economy was lost to offshoring and free trade ideology. It was replaced by a mythical "New Economy."

The "New Economy" was based on services. Its artificial life was fed by the Federal Reserve’s artificially low interest rates, which produced a real estate bubble, and by "free market" financial deregulation, which unleashed financial gangsters to new heights of debt leverage and fraudulent financial products.

The real economy was traded away for a make-believe economy. When the make-believe economy collapsed, Americans’ wealth in their real estate, pensions, and savings collapsed dramatically while their jobs disappeared.

The debt economy caused Americans to leverage their assets. They refinanced their homes and spent the equity. They maxed out numerous credit cards. They worked as many jobs as they could find. Debt expansion and multiple family incomes kept the economy going.

And now suddenly Americans can’t borrow in order to spend. They are over their heads in debt. Jobs are disappearing. America’s consumer economy, approximately 70% of GDP, is dead. Those Americans who still have jobs are saving against the prospect of job loss. Millions are homeless. Some have moved in with family and friends; others are living in tent cities.

Meanwhile the US government’s budget deficit has jumped from $455 billion in 2008 to $2,000 billion this year, with another $2,000 billion on the books for 2010. And President Obama has intensified America’s expensive war of aggression in Afghanistan and initiated a new war in Pakistan.

There is no way for these deficits to be financed except by printing money or by further collapse in stock markets that would drive people out of equity into bonds.

The US government’s budget is 50% in the red. That means half of every dollar the federal government spends must be borrowed or printed. Because of the worldwide debacle caused by Wall Street’s financial gangsterism, the world needs its own money and hasn’t $2 trillion annually to lend to Washington.

As dollars are printed, the growing supply adds to the pressure on the dollar’s role as reserve currency. Already America’s largest creditor, China, is admonishing Washington to protect China’s investment in US debt and lobbying for a new reserve currency to replace the dollar before it collapses. According to various reports, China is spending down its holdings of US dollars by acquiring gold and stocks of raw materials and energy.

The price of one ounce gold coins is $1,000 despite efforts of the US government to hold down the gold price. How high will this price jump when the rest of the world decides that the bankruptcy of "the world’s only superpower" is at hand?

And what will happen to America’s ability to import not only oil, but also the manufactured goods on which it is import-dependent?

When the over-supplied US dollar loses the reserve currency role, the US will no longer be able to pay for its massive imports of real goods and services with pieces of paper. Overnight, shortages will appear and Americans will be poorer.

Nothing in Presidents Bush and Obama’s economic policy addresses the real issues.

Instead, Goldman Sachs was bailed out, more than once. As Eliot Spitzer said, the banks made a "bloody fortune" with US aid.

It was not the millions of now homeless homeowners who were bailed out. It was not the scant remains of American manufacturing—General Motors and Chrysler—that were bailed out. It was the Wall Street Banks.

According to, Goldman Sachs’ current record earnings from their free or low cost capital supplied by broke American taxpayers has led the firm to decide to boost compensation and benefits by 33 percent. On an annual basis, this comes to compensation of $773,000 per employee.

This should tell even the most dimwitted patriot who "their" government represents.

The worst of the economic crisis has not yet hit. I don’t mean the rest of the real estate crisis that is waiting in the wings. Home prices will fall further when the foreclosed properties currently held off the market are dumped. Store and office closings are adversely impacting the ability of owners of shopping malls and office buildings to make their mortgage payments. Commercial real estate loans were also securitized and turned into derivatives.

The real crisis awaits us. It is the crisis of high unemployment, of stagnant and declining real wages confronted with rising prices from the printing of money to pay the government’s bills and from the dollar’s loss of exchange value. Suddenly, Wal-Mart prices will look like Nieman Marcus prices.

Retirees dependent on state pension systems, which cannot print money, might not be paid, or might be paid with IOUs. They will not even have depreciating money with which to try to pay their bills. Desperate tax authorities will squeeze the remaining life out of the middle class.

Nothing in Obama’s economic policy is directed at saving the US dollar as reserve currency or the livelihoods of the American people. Obama’s policy, like Bush’s before him, is keyed to the enrichment of Goldman Sachs and the armament industries.

Matt Taibbi describes Goldman Sachs as "a great vampire squid wrapped around the face of humanity, relentless jamming its blood funnel into anything that smells like money." [Rolling Stone, July 13, 2009] Look at the Goldman Sachs representatives in the Clinton, Bush and Obama administrations. This bankster firm controls the economic policy of the United States.

Little wonder that Goldman Sachs has record earnings while the rest of us grow poorer by the day.

Conservative kiosk not allowed at mall

"Free Market Warrior" Closed

CONCORD, N.C. -- “Impeach Obama. “

“Al Qaeda’s favorite days: 9/11/01 and 11/04/08.”

“Work Harder. Obama needs the money.”

The bumper stickers and posters sold at “Free Market Warrior” at Concord Mills are meant to be “biting,” the kiosk’s owner Loren Spivack said.

At least one passer-by found them racist and bigoted, and took time to tell the mall in a letter and a letter to the editor of the Charlotte Observer.

Charts Show Danger of New Bear-Market Low

If the market doesn't start to hustle now, the S&P and Dow are likely to fall from here onwards, and we could see a new bear-market low, Chris Locke, MD of Management said Wednesday.

Tuesday, July 14, 2009

Barney Frank and Paul Krugman are on the scene. No need to worry folks.

Barney Frank and Paul Krugman are on the scene. No need to worry folks.

By Nick Sorrentino 7-13-2009

Last night I tuned into the Daily Show/Colbert Report hour on Comedy Central for the first time in a couple of months and I must say that I chose a good night.

The guest on the Daily Show was everyone’s favorite congressional sea lion Barney Frank.

I don’t completely dislike Mr. Frank. He openly talked about his boyfriend in the audience which I thought was funny and he does not shy away from slightly off color humor generally, which is one of my favorite colors of humor.

But as Chair of the House Financial Services Committee his counterpart on the GOP side is Ron Paul and I couldn’t help but think about the two men in comparison to one another.

Frank kind of looks like the blob. He is soft and sort of rolls around in his chair. Ron Paul is in shape and at 73 still looks like he could beat most House Members in a quarter mile around the Rayburn House Office Building.

Oddly as I watched Frank list back and forth in his seat it struck me- Frank is big government, fatty and nearly always expanding. Paul is small government, lean and sharp.

There is no real coloration here I know. There are more than a few fat libertarians and lots of skinny liberal vegetarians. The contrast just struck me.

But while Barney Frank was mildly amusing and seemed to me to be a guy who would be fun to have a steak with, Colbert’s guest, Paul Krugman was just smug and completely unamusing.

Paul Krugman is the New York Times columnist and “economist” who won the Nobel Prize for economics last year just as the financial crisis began to take hold. His aloofness and clear contempt for business irks me every time I read him, or watch him, or listen to him. I don’t much care for him.

Most of the time I just disagree with him. OK, that’s not really true. Most of the time I end up yelling at the newspaper, TV, computer, or radio, until my wife whaps me in the back of the head. Thanks honey, by the way.

I usually end up yelling because I disagree with his conclusions. We just see the world differently. I see the world in a clear and simple way of course, and he sees the world through the lens of heavy handed and unduly complicated market intervention. But last night he said something that was just flat out false.

Forgive the paraphrase but when questioned about the effectiveness of the “stimulus” Krugman explained that the stimulus was making things less God awful. Ok, we can agree to disagree on that. But what he said next, that the stimulus had helped mitigate job losses from “700k a month to 300k a month,” was stretching the government supplied stats a bit.

In January the economy lost 741,000 jobs. In February and March about 650,000 or so each month. In April a bit over 500,000. And in May there was a blip, we “only” lost 325,000, (which would have been a catastrophic number just 9 months ago.) So maybe this is where Krugman was basing his argument.

However, job losses for June came in at 467,000 which holds more in line with current economic trends.

I am not even going to go into how the statistics we look at are sugarcoated, and how the real job loss and unemployment numbers are much higher if one looks at those who are underemployed, or who have just given up looking for work. Or that the only growth sector in the economy is government which is a net drain on the national economy (though this is hotly debated by the Keynesians.) I won’t go into those things. Not today anyway.

What should I expect from Krugman though? The man won’t be quoting Mises or Hayek in this lifetime. Why should I get so perturbed?

I get agitated because Krugman is held up by the establishment as the leading economic light in this dark night of America’s soul despite the fact that he would have us march right off of a cliff. Get the consumer to spend more! Print more money! Artificially create credit! Bailout banks! And carmakers! Saving in un-American!


Oh, thanks honey.

As I was saying, Krugman’s analysis is deeply flawed and I abhor his distain for free enterprise. And this is what really gets me. He doesn’t see the stimulus as a bad thing at all. He sees it as an opportunity to expand the state and to push the free market, such as it exists, farther to the margins. The “financial crisis” is a statists dream. It worked well for Mussolini and FDR right? Why not Krugman, Obama, and company?

Krugman, I believe, is probably like a professor I had years ago, a professor that I liked quite a lot personally by the way, who felt that the Constitution needed to be done away with because it restrained the hand of the state in it’s effort to “help” society run more smoothly. How could a document written 230 years ago have any value for us today? In his eyes the Constitution was a cage, not a liberating document as I and many others believe it to be.

I believe that Krugman, star of the neo-Keynesians, economic savior extraordinaire, facial hair proponent, dislikes the fact that this country was built on the premise that a significant dose of “chaos” is good for humanity and indeed vital for men to be free.

What is saddest though, and perhaps scariest of all, is that Krugman doesn’t even realize he’s a fascist.

Lenders' latest foreclosure strategy: waiting

Lenders' latest foreclosure strategy: waiting

By Todd Ruger

Published: Sunday, July 12, 2009 at 1:00 a.m.
Last Modified: Saturday, July 11, 2009 at 11:11 p.m.
Across Florida, tens of thousands of foreclosed homes are being left in limbo, between homeowners who have abandoned them and banks that have not yet taken possession of them.

Over the past year, banks and other lenders have canceled up to 50 percent of foreclosure sales in some parts of the state, adding to a growing stockpile of unclaimed homes.

Monday, July 13, 2009

World Central Bank to be established at G20 meeting in Pittsburg?

Darling Says Global Bank Rules Needed to Cope With Bank Crisis

July 13 (Bloomberg) -- U.K. Chancellor of the Exchequer Alistair Darling, following a meeting with U.S. Treasury Secretary Timothy Geithner, said the world needs a global rulebook for banks to prevent future crises.

“We have made substantial progress in stabilizing the banking system and putting in significant measures to stabilize the economy,” Darling told reporters in London today. “That is having an effect.

‘There is recognition that because banking is global it needs to be dealt with in the global arena. There is also recognition that many issues need international cooperation.’’

Darling said he expects ‘‘in September that progress will be made’’ when leaders of the Group of 20 nations meet in Pittsburg. He said finance ministers of the G-20 will meet in London on Sept. 4 and Sept. 5.

The finance minister said he expects the U.K. economy to start growing again at the end of 2009, though there are still risks from a surge in commodity prices and stagnant global trade.

To contact the reporter on this story: Gonzalo Vina in London at

Last Updated: July 13, 2009 08:54 EDT

Sunday, July 12, 2009

After losing homes, families move into tents

After losing homes, families move into tents

"You feel about as small as you can as a man, trying to take care of your family and watching your children have to go through something like this," said Troy Renault, 39, a homebuilder and father of five boys who lost his job, then his home, when the recession hit the construction industry.

AIG Wants To Pay Financial Products Group $235 Million In Bonuses

AIG Wants To Pay Financial Products Group $235 Million In Bonuses

Uh oh. Here we go again.

From The Associated Press:

After its bonus payments ignited a firestorm of criticism earlier this year, American International Group is asking the federal government to weigh in on the insurer's plan to resume paying millions in promised retention incentives next week, according to media reports.

AIG, once the world's largest insurer, has asked the Obama administration's compensation czar, Kenneth R. Feinberg, to approve the payments in order to head off any public outrage, The Washington Post reported Thursday evening.

Saturday, July 11, 2009

Slim Jim shortage causes panic and hoarding

Slim Jim shortage causes panic and hoarding

The only Slim Jim plant in the U.S. exploded last month because of a natural gas leak and no Slim Jims have been made since then.

It will probably take another month before Slim Jims are made again.

Some very good analysis from Black Swan Trading, Market to 6000?

Check out the head and shoulders on the Dow graph.

FX Trading – China Panic!
China is dead in the water without exports. They are in panic mode. That is why they are flooding their economy with massive amounts of capital and suppressing any hint of decent everywhere. That is why they have chased out the major financial news outlets, and forced them to take all cues from the state. But no matter how many bridges they build, excess capacity they expand, stock market propping they do, dollar reserve currency jawboning they employ, or internet sites they shut down, it doesn’t change the fact that exports have crumbled and until Mr. US Consumer starts buying again, it will get worse instead of better.

What a California IOU looks like

Friday, July 10, 2009

Thursday, July 9, 2009

Catching The Gold Bug

Catching The Gold Bug

“There’s 2,000 years of history to show that gold is the best thing to own during bad inflation,” says Dr. Van Steyn, a 45-year-old orthopedic surgeon in Columbus, Ohio. “People used to laugh at me for buying gold. They don’t anymore.”

Revolution in the air

Revolution in the air

America has shed two million jobs since Obama took over the presidency; official unemployment is heading north of 10%, with some studies putting the real unemployment rate as high as 20%. Ongoing massive federal debt is the stalking horse for hyper-inflation. And Vice President Joe Biden has finally admitted that the Obama administration "misread how bad the economy was."

Art Cashin: Stimulus Package Was a 'Hoax'

Art Cashin: Stimulus Package Was a 'Hoax'

Art Cashin, director of floor operations at UBS Financial Services, offered CNBC his stock-market outlook.

Cashin reiterated his belief that another government stimulus package would be useless — because the first package was "part illusion, part hoax." And now that the economy's problems seem to be continuing, "the fire extinguisher's empty," he said.

Wednesday, July 8, 2009

Ron Paul VS. The Fed: MSNBC?

Ron Paul’s bipartisan attack on the Fed

By Chadwick Matlin

updated 10:09 a.m. ET, Wed., July 8, 2009

Ron Paul's legislative history is a lesson in principled failure. Among the bills he has co-sponsored: ending U.S. cooperation with the United Nations, a repeal of antitrust law "to restore the inherent benefits of the market economy," and stripping the government of the right to set a minimum wage. Just last week, he again introduced a bill "to repeal the Gun-Free School Zones Act of 1990," which would presumably make schools less safe but which would reinforce our right to bear arms. For Paul, ideology almost always trumps politics.

Yuan Deposes Dollar on China Border in Sign of Future

Yuan Deposes Dollar on China Border in Sign of Future

July 8 (Bloomberg) -- Huang Xinyuan, who sells mining equipment and pesticides to customers across China’s border with Vietnam, says he no longer wants payment in U.S. dollars and prefers the yuan.

Art Cashin's Wisdom- Actual Wisdom Included

Tuesday, July 7, 2009

Federal Web sites knocked out by cyber attack

Federal Web sites knocked out by cyber attack

The Treasury Department, Secret Service, Federal Trade Commission and Transportation Department Web sites were all down at varying points over the holiday weekend and into this week, according to officials inside and outside the government. Some of the sites were still experiencing problems Tuesday evening.

"This is very strange. You don't see this," he said. "Having something 100 percent down for a 24-hour-plus period is a pretty significant event."

He added that, "The fact that it lasted for so long and that it was so significant in its ability to bring the site down says something about the site's ability to fend off (an attack) or about the severity of the attack."


SKorean Web sites hit by suspected cyber attack

Giant lizards living it up in 5 bedroom McMansions

Giant lizards living it up in 5 bedroom McMansions

"For sale: Like-new 3/2 Cape Coral home on canal with boat dock. Amenities include walk-in closets, granite countertops and family of razor-toothed dragons that will swallow your dog as deftly as you would gulp down a California roll."

U.S. Home Prices to Fall Through 2011’s First Quarter

U.S. Home Prices to Fall Through 2011’s First Quarter

July 7 (Bloomberg) -- Home prices may fall in more than half of the largest U.S. cities through the first quarter of 2011 as unemployment and foreclosures rise, mortgage insurer PMI Group Inc. said.

Dwelling For A Reason

Dwelling For A Reason

Tuesday, July 07, 2009
Ron Smith

Sometimes I get tired of my own laments and wonder why I can’t seem to turn my attention from the collapse of our civilization, taking place in our own time at breakneck speed. But then I remember there is no choice. What’s more important? The passing of Michael Jackson? Not to me.

"Black Shoots" Potential October Crash In the Market

Proprietary Trading May Cause October Crash: Investor

Global stock markets could crash in October, as by then it will be clear that the economic recovery many people pinned their hopes on will not materialize, the stimulus option will no longer be a viable one, and proprietary trading desks will decide to go short, economist and investor Enzio von Pfeil, CEO of, told CNBC.

Monday, July 6, 2009

The Fed's Chief Economist Predicted "Debt Explosion"

The Fed's Chief Economist Predicted "Debt Explosion"

The study is damning because Mr Laubach was the Fed’s economist at the time, going on to become its senior economist between 2005 and 2008, when he stepped down. As a result, the doubling in rates is the US central bank’s own prediction.

Sunday, July 5, 2009

Did someone try to steal Goldman Sachs' secret sauce?

Did someone try to steal Goldman Sachs' secret sauce?

While most in the United States were celebrating the Fourth of July holiday, a Russian immigrant living in New Jersey was being held on federal charges of stealing secret computer trading codes from a major New York-based financial institution. Authorities did not identify the firm, but sources say that institution is none other than Goldman Sachs.

India Joins Russia, China in Questioning U.S. Dollar Dominance

India Joins Russia, China in Questioning U.S. Dollar Dominance

By Mark Deen and Isabelle Mas

July 4 (Bloomberg) -- Suresh Tendulkar, an economic adviser to Indian Prime Minister Manmohan Singh, said he is urging the government to diversify its $264.6 billion foreign-exchange reserves and hold fewer dollars.

Want your tax refund? Some states say; "We need it more than you."

Want your tax refund? Some states say; "We need it more than you."

Tax day—April 15—has long since come and gone, but sharp budget cuts and falling revenues have forced many states to delay income tax returns for months—and left taxpayers longing for their money.

Thursday, July 2, 2009

A Snippit on Gold

The person I was corresponding with wanted to make clear that he is very pro-gold generally but sees it as primarily a hedging tool, versus a speculative vehicle. He made a couple of points against AU, and below is my response to them.

Five Reasons Why Gold and Silver Are Mediocre Investments :

1) No financing / leverage
2) No tax benefits
3) No renters
4) Subject to confiscation
5) Subject to manipulation – Central banks around the world want to push the value of gold down and make their paper “fiat” money more valuable

My response:

I did notice that you let him make his point. I was pleased to hear that. You‘re a gracious host.

A couple of points.

You are definitely right. Gold/silver are wealth preservers not creators. The value of gold has been about the same for 5000 years. In Jesus' time you could buy a nice tunic and a pair of sandals with an ounce. In 1900 you could take a $20 gold piece, an ounce, and buy a pretty good suit and a decent pair of shoes. Today with gold at 900 to 1000 or so the same holds true.

In the period between about 1830 to 1910 the price of gold varied by less than 50 cents because the dollar was attached to gold. This allowed for real savings and real investment. We actually existed in a mildly deflationary economy yet saw this country blossom. But that is beside the point.

What I'm trying to say is that it's not that gold goes up or down in value generally-it's that the value of paper currencies vary relative to gold. This turns the whole economic reality we live in on it's head and is a challenging worldview to embrace. When the "price" of gold goes up, what we are actually witness to is the eroding of the dollar. This is why central banks hate-as Mr. Woods alluded to in your interview-gold.

As for confiscation, property has been confiscated throughout history by governments. According to the Supreme Court in Keogh it’s even legal in this country now. You can hide gold. You can't hide an apartment building. At least very tough.

No tax benis- not totally true but generally true. You can put metals into an IRA and Roth IRA but there are serious limits on contributions.

No leverage- true but that’s the point. I will say that if I were doing a real estate deal and someone offered me 10% less than what I could sell it for in paper terms I would probably do the gold deal. And there are many who would do likewise. Plus using gold to secure a loan is very easy. That’s where this whole banking thing got started after all.

No renters- true- unless you loan it out which is possible.

As for manipulation- Gold can be manipulated in the short term. Central banks can dump gold onto the market in an effort to keep the price of gold down. But gold is a finite resource. Fiat money is not. Eventually the gold runs out in the coffers and then the fiat currency inflates at ridiculous rates. Interestingly this makes your point about loading up on debt-if however the Fed can truly and solidly manipulate the “price” of gold, it works against your point.

Regardless gold is the least manipulatable investment there is in my opinion. That’s why it is a wealth storer not a wealth creator. Almost everything else is subject to the immediate whims of central banks. Real Estate, stocks, bonds, etc. Though metals are not immune to central banks gold was around at the same value before the central banks and will be after they are gone.

I look at it this way. When I look at my brokerage account or bank account I see paper. That paper can help me buy other things that paper can buy, and at this point that is nearly everything. But I also know that this paper wealth can evaporate and that until I convert that paper wealth into gold or silver the chips are still on the economic table, I haven’t “cashed out” yet. Gold is the wealth end game, and if the world economy is relatively stable not always the best place to start.

Please forgive the long response. I got rolling. Too much coffee this morning.

Wednesday, July 1, 2009

The cover charge at this club? An RFID implant

The cover charge at this club? An RFID implant

It works for Fido, so why not you?

The same RFID implants used to identify lost pets are now being adapted for use on you and me, and not how one might have originally expected. As with all pioneering technologies, it's leisure pursuits that are getting the first stab at the tech.

About Me

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Nick Sorrentino is the Editor of The Liberty and Economics Review and CEO of a social media management company.