Explaining Modern Finance And Economics Using Booze And Broke Alcoholics

Effective….. won’t take you long to read and it helps you see the common sense, or lack thereof in what’s happened.

-Billy Ray Valentine, Capricorn

Joe Granville: Dow Down 1,000 Points Each Quarter This Year

“Market timer” Joe Granville believes the Dow will be down 4,000 points this year.  His call is based on his proprietary market indicators.  Enjoy the clip.

-Valentine

 

Developed economies’ debt level by sector

A nice chart (click here)depicting the total debt, broken down by sector, for the developed nations, from creditwritedowns.com.

The UK stands out as having much more total debt than the US.

The household debt levels in Australia and Canada are high, relative to the US.  It’s been argued that both countries are facing significant housing corrections in the near future.

– DP

Natural Gas

There’s tons of it in North America and companies are getting in line to export it.

-BRV

Europe and Its $1 Trillion Problem

Europe needs to raise $1 Trillion in debt to refinancing existing debt coming due and to finance budget deficits.

-Valentine

Unemployment Rate to 8.5%

Although the unemployment rate is down to 8.5%, the falling labor participation rate is still the major reason for the “improvement.”  Here’s a post from Zero Hedge explaining the numbers.

-Valentine

Charts of the Year

Click here to see a chart plotting the Obama administrations forecasts of unemployment with the recovery plan that was passed, without the recovery plan, and actual unemployment (in red) which is far worse than both forecasts.

Here’s a chart of a hypothetical unemployment rate that assumes the labor force had been constant and not shrinking (due to people giving up).

Here’s a chart of wealth owned by the top  1% over the years.  It’s down to steady contrary to popular belief.

An interactive map of uprisings in the Middle-East, Northern Africa.

Anatomy of a Collapse

-Valentine

Gold!

I thought this was an interesting opinion on gold.  The price of gold is down significantly over the past few weeks as the article discusses.  Enjoy.

-BRV

ECB Balance Sheet

The ECB’s balance sheet is growing like a weed.   Here’s a good video clip summarizing.

-Billy Ray

The European Problem in 2012

An interesting chart here depicting the amount of debt troubled countries in the EU need to roll over in 2012 and corresponding yields on each country’s 10 yr treasury bonds.    These countries need to roll over 1.7 trillion Euros of debt coming due in 2012.

-BRV

 

Oil Expectations: $100+ per Barrel in 2012

Experts are predicting oil will remain in the $100 – $120 per barrel range in 2012 due largely to Iran.

-Billy

Warning on the Heels of the 100% Debt/GDP Breach

A warning from Fitch.

-Valentine

US Debt to GDP Officially Greater than 100%

We’ve crossed the line and it’s full steam ahead, no signs slowing.

-Billy

 

Difficult Year for Hedge Funds

Hedge funds are having their second-worst year on record.  Here’s a piece from the Financial Times.  Here is more detail from Zero Hedge.

-BRV

Euro Summit

Outcome of the Euro Summit is here- significant changes in the EU are afoot.  Here’s another article from The Economist.

-BRV

Shadow Banking Update

Banks are pledging as collateral to other banks your investment securities and those banks are doing the same.  This is a great post that talks about this “shadow banking” practice.  The practice is shadowy because it does not show up on banks’ balance sheets.  As the article discusses, it could have dire consequences.

-Valentine

 

40 Years of Fiat Currency — from Mises.org

For those of you feeling nostalgic, you can watch President Richard Nixon’s speech (here) in 1971 on the decision to “temporarily suspend the convertibility of the dollar into gold”.

some excerpts:  “We must protect the position of the American dollar as a pillar of monetary stability around the world”.

President Nixon notes that there had been 7 crises in the past 7 years and blames “international money speculators” because they thrive on the very events they create.

Even better, his explanation of devaluation to the audience is great.  As long as you buy American goods there’ll be no noticeable change……….Oh and we’re slapping a 10% import tariff to boot.

I guess we should blame money speculators for the charts below the video.

Enjoy,

Dick P.

Q3 Flow of Funds Report —

A trillion here, a trillion there.  What’s all the fuss about?

Check out these charts (here).  Mortgage debt is down however much of it is purported to be from defaults.   Equity as a percentage of household value held steady for decades but turned south in 2007.  Keep in mind that this includes all those homeowners without a mortgage.

Mr. Pepperfield.

Opinion: Europe & Taxes

Here is a must-read piece from Hayman Capital.  Enjoy.

-BRV

Effective Regulation, Not More

Here’s more evidence we need effective regulation and not more of it:  CFTC failure in MF Global oversight; SEC turned a blind eye to another “massive fraud.”

-Valentine

Is the ECB Printing Money?

The ECB has in place a “bond sterilization” program by which it buys bonds issued by troubled EU nations, and then tenders for deposits.  In other words, the ECB buys bonds while it borrows money from (European) banks, thus funding the purchases.  But this week its tender came up short so in effect it bought more bonds than it had borrowed funds to invest.  We will see if the situation is remedied in the coming days or if the ECB effectively starts printing money which would be a slap in Germany’s face.

-Billy Ray

Central Banks Move

Several central banks around the world moved simultaneously to provide liquidity to banks.   The move seemed to ease fears prevalent in global markets sending equities up.  This move does not mitigate the fact that several European countries are in dire financial straits.  Time will tell if additional steps are needed to cure these financial ills.

-Billy

Details on Fed Moves to Save Banks

Here is a great article detailing the Fed’s actions during the 2008 financial meltdown that saved the financial system.  It was much worse than anyone believed.

5 Yr US Treasury Auction at All-time Low Yield

The Treasury Department sold $35 billion in 5-year notes on Tuesday at a yield of 0.937%, the lowest level on record and below where traders expected the sale to come.  This the the NY Fed’s website that shows how active it was in buying these treasuries.

-Valentine

Great EU Debt Graphic

This graphic gives detail on countries that owe money to other countries, and the amount.  It is worth a look.

 

Great Interview

With fund manager Kyle Bass.  It is 24 minutes, but worth it.

-Billy  Ray

Great Commentary on the EU Condition

Here’s a great piece from Hussman Funds on the condition in Europe.

-BRV

Debt Issues in Italy

6% yield on Italian sovereign debt is unsustainable for the country!?  Uh oh.

-BRV

IP Theft

The Chinese are stealing our IP in a further attempt to destroy any advantage we have in the global marketplace.

-BRV

Tracking Government Spending

Here’s a site that tracks government spending.  There is a copious amount of data here.  Enjoy.

-BRV