History Repeating

All Eyes on Europe This Summer

"Nothing, and I mean nothing, has been solved in Europe. The crisis will soon escalate with a vengeance. When, not if, Europe’s economy roils again, likely later this summer: First, you’re going to see trillions of euros stampede for the exits. Second, that will likely send global interest rates rocketing higher. Third, it’s going to send the U.S. dollar into rally mode, right along with gold. Fourth, it’s also going to send our stock markets roaring higher. Fifth, it’s going to give you many profit opportunities to potentially make more money that you ever dreamed of. In stocks. In commodities. In the dollar. And in gold and silver." Continue reading →

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Telegraphing the Turnaround in Gold

"While the current correction hasn't been as deep as that of the mid-'70s, the decline is already longer, and it's the most prolonged of the current cycle. It is thus reasonable to expect gold to take two years or more to regain the $1,900 level and continue beyond. Barring a black swan event, gold will likely log its first annual loss since 2000 this year. However, it's not all bad news, as the chart shows: gold nearly doubled in the two years from its '76 low to its '78 return to former highs. The message here is obvious: add to your inventory at depressed levels. And don't worry about missing the bottom." Continue reading →

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Students Underwater

"When government gets involved in any sector, it creates massive distortions. Easy government-backed student loans have resulted in heavy debt burdens for those who have recently graduated from college. At the same time, government regulations have resulted in poor job prospects. Leading to more and more students defaulting on their debt." Continue reading →

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Gazing at Egypt With Shock and Awe

"First Egypt was destabilized and then the Muslim Brotherhood was virtually invited to take over. Presumably Washington had no problem with the ascent of the Muslim Brotherhood because it is amenable to Western Intel and has been for decades. But increasingly, it seems something went wrong in Egypt once the Brotherhood was installed. Not only did they not observe the (misleading) niceties of regulatory democracy; more egregiously they declined a loan from the International Monetary Fund. And so ... exit the Muslim Brotherhood and enter, once more, the Egyptian military – Washington's main ally of power in the Upper and Lower lands of the Nile." Continue reading →

Continue ReadingGazing at Egypt With Shock and Awe

Gazing at Egypt With Shock and Awe

"First Egypt was destabilized and then the Muslim Brotherhood was virtually invited to take over. Presumably Washington had no problem with the ascent of the Muslim Brotherhood because it is amenable to Western Intel and has been for decades. But increasingly, it seems something went wrong in Egypt once the Brotherhood was installed. Not only did they not observe the (misleading) niceties of regulatory democracy; more egregiously they declined a loan from the International Monetary Fund. And so ... exit the Muslim Brotherhood and enter, once more, the Egyptian military – Washington's main ally of power in the Upper and Lower lands of the Nile." Continue reading →

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Yippee! More Bank Runs in Our Future

"The recent financial crisis was not initiated by bank depositors scrambling to withdraw their funds. Rather it was precipitated by a 'run' among short-term lenders who had purchased banks’ commercial paper or lent money to banks through 'repos' (repurchase agreements). When these lenders suddenly tried to liquidate these assets by selling them or not renewing the loans, their actions deprived banks of the short-term funds that the banks had been using to finance their long-term lending and investments. In other words, federal deposit insurance no longer works to discourage or mitigate bank runs, because it does not cover short-term lenders." Continue reading →

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Joseph Weekley: Self-Pitying Stormtrooper

“It was my gun that shot and killed a 7-year-old girl,” insists Detroit resident Joseph Weekley, who took part in a fatal home invasion on May 17, 2010. Embedded with Weekley and his comrades on that evening was a camera crew from a cable TV program called 'The First 48' – which meant that PR, rather than public safety, was the defining priority of the mission. Weekley is a museum-quality specimen of the self-pitying Stormtrooper – and the jurors who were willing to let him escape mortal accountability for his crime would likely have done the same for Weekley’s German antecedents in the 1930s." Continue reading →

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Argentina’s grand plan to recover US dollars is about as worthless as its own currency

"For three months, anyone sitting on a pile of undeclared dollars will be able to contribute to Argentina’s already astronomical debt by depositing them at the central bank in exchange for a 4% annual return through 2017. But why would anyone buy Argentine bonds right now with American dollars? People aren’t sitting on dollars in Argentina because they make comfortable cushions; they’re hoarding them because it’s the safest investment in Argentina right now. Argentines are now willing to pay more than twice the open market exchange rate. The country’s crippling default in 2001 and the ensuing flash devaluation of the Argentine peso are fresh on everyone’s mind." Continue reading →

Continue ReadingArgentina’s grand plan to recover US dollars is about as worthless as its own currency

Portugal and Greece highlight eurozone fragility

"Political turmoil in Portugal and concerns about the pace of reform in Greece have raised fears that the eurozone crisis may be about to reignite. Nervous markets pushed up borrowing costs in Portugal to a painful 8 percent Wednesday (3 July) after the governing coalition of Pedro Passos Coelho saw the resignation of its finance and foreign ministers over the social and economic costs of austerity measures. Coelho's weakened position raises doubts about whether Lisbon - until recently routinely praised for putting into place a series of harsh budget-cutting measures - will be able to meet the terms of the its €78 billion bailout, agreed in 2011." Continue reading →

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Military Plans to Maintain Power in Egypt after Coup

"Behind the scenes, the military, led by General Abdel-Fattah el-Sissi, plans to continue running the show. Since it took power in a coup in 1952, the military has remained the most important political player in Egypt. Neither Mubarak's fall in 2011, nor the short rule by Morsi, a member of the Muslim Brotherhood, have changed this. At 58, el-Sissi is the country's youngest general. He has never fought in a war, and only knows about conflicts with Israel from the stories of others. He belongs to a generation that was invited to receive military training in the West. In 1992 he was in Britain, and in 2006, the United States." Continue reading →

Continue ReadingMilitary Plans to Maintain Power in Egypt after Coup