My recent articles have been directed at the ills of fiat based currencies. In the US the media bows to the government and the Fed concerning issues of debt, currency and standard of living. This week I want you to look at two examples of the fiat based economy. Keep in mind that 40 state governments need and receive 31% of their revenues from the federal government, which in turn pass economic stimulus to their city and county government agencies. These leaders forget that their citizens do not have a rich uncle to pass economic stimulus to them. The first example is local government seeking revenues without the appearance of raiding taxes.
Whitestone Bridge
When I was young I got a job pumping gas at the old Hess station. At the same time regular gas was .30cents per gallon. Also, at the same time the toll on the Whitestone Bridge which connects the Bronx to Queens and Long Island was .25cents each way or .50cents a day. This bridge also connects to the road to the George Washington Bridge and the major interstate highway 95, to which there was another toll, but in this example of local costs to citizens, I will not include the second toll. In addition to the toll, you have to include gas which is also taxed, insurance, ditto the ever present men in blue to add to the dangers of everyday transportation.
As the years passed and citizens sought ways of avoiding inflation, ridership declined on the bridge as people used the bus or subway, especially after the first oil embargo and gas prices doubled. In response the city raised the tolls, again and again. Long story short the cost of the toll on the bridge soon distanced itself from the price of a gallon of gasoline. At present it cost $6.50 one-way or $13.00 per day. By the way it is set to rise again in 2014.
AT&T
I use the cheapest phone plan there is at $29.99 a month. I can talk on the Internet, but a phone is needed for many things beside communication. My phone bill averages $41.00 per month. How can that be when it is suppose to be under $30. per month? Good question and the answer is fiat debasing of money and corruption by the so-called regulators. Let's take a look.
I was charged $2.00 for texts. I never text, but to open a message from unknown sources, cost me.
I pay .61 for Administrative Fee which means I now pay for the phone companies employee wages.
I pay .67 for County Gross Receipts Surcharge - whatever that is?
I pay $1.43 for Federal Universal Service Charge - again paying phone company costs.
I pay .24 for MTA Telecom Surcharge. City fees paid by me.
I pay .45 for Regulatory Cost Recovery Charge. whatever that is
I pay .99 for State Telecommunications Excise Surcharge. helping the state, I guess.
I pay $1.20 for 911. Again paying some body's salary.
I pay .12 for City District sales Tax - telecom. Finally, someone admits a tax.
I pay $1.55 for City sales Tax - Telecom. another tax.
I pay .30 for Local wireless 011 Surcharge. I thought that I already paid for this?
I pay $1.38 for N.Y. state Sales Tax - Telecom. Thought I paid this one too?
Bottom line: taxes are over 25% of phone costs. Way too much!!
People avoid inflation as best as they can, but government spends more than they receive and they burden their citizens beyond reason. P.S>: Con Ed the utility company is asking for $450 million when their costs are down because they use natural gas which was paid for in the past in the transition from oil. Now, Con Ed says it is because of Hurricane Sandy. Con Ed does not put something aside for rainy days. They just take your money. Can't wait for the decision of the regulators who basically rubber stamp all requests.
Liars & Crooks: our government leaders for play acting and not doing what the constitution says, "promote the general welfare."
Cry Wolf
too many times and the effect wears off. In 2011 the market dropped over 1K points on the debt fear. Last year, it did little damage and this year, traders felt that a deal would be reached. They were right, but it only extends until mid-January. One of these days, there will not be a deal and the cry will fall on deaf ears.
Tuesday, October 15, 2013
Monday, October 7, 2013
60% Tax Hike & Other Fiat Gifts...L&C
This is a story that is taking place in Japan and coming to your nation in the near future.
60% Tax Increase
The first question you should ask, could I cope with it if this happens to my nation? The old sales tax was 5% and now, it is 8%. It is only three cents. What's the worry? Dear reader, this is how fiat currencies operate. Since the US allowed the formation of the Federal Reserve, the buying power of the dollar has lost 95% of its purchasing power. By the end of this year, it will be 96%. This is the way government steals from its citizens. It takes your money and gives it to people with influence to help them get reelected or to develop projects that these same officials will benefit. The concept of democracy is in word only. Governments do what they think is best and this is not what is beneficial to the general public. When the public realizes this fallacy of our present system, we will have a chance with a new third party. Until then, these are the type of gifts that both political parties foster, fiat. Here is another gift of fiat thinking.
In the same year as the Fed was formed, the same elected officials also passed the formation of income tax. It originally stated that it would be capped at 2% and it would only effect the rich. Ha! I've got some sad, serious news for you. According to the rules in the formation of the IRS, the government can take 100% of your income, if it needs it. Fiat, debt grows with your present money and if that isn't enough, it will take your future earnings.
Governments spend and what they cannot pay for with your tax dollars, they put on debt. When a nation had a gold standard, there were strict ratios that limited the creation of new debt because you had to have gold backing whatever number of dollars that you printed. This is why the bankers and elite created the Fed. It had two real purposes. One, it would allow the unlimited formation of debt. Secondly, in case this debt formation caused a crisis within the market, the Fed would be the backstop to protect them.
Of course, there were other options to pay for the debt. Growth would add new tax revenues. You could develop new taxes, but not so many to alarm the citizens. This tax will alarm the citizens of Japan. They already are disillusioned over the nuclear incident and the lies from Tepco utility company. Fish, their most favorite staple is threatened. We can only hope that the people will awake and demand no more debt because Japan's debt is already over 220% of GDP. This is the same road where the Fed is sending our nation. Our best hope is the people of Japan cause a protest that receives world attention. Maybe another financial crisis to see the dangers of QE. End the Fed!
Liars and Crooks: Our debt ceiling is so bad and the truth so far from the front page that writing this makes me sick. Consider this: 40 states, count them, need and count upon government assistant to meet their budgets. This amounts to over 31% of income and yet, at the same time they almost all have deficits to state pension funds. By the way three states, Louisiana, Idaho and Arizona get and need over 41% to make ends meet. How can the government not increase the debt when so many are beholding. How are we ever going to get out of this debt mess unless we End the Fed!
60% Tax Increase
The first question you should ask, could I cope with it if this happens to my nation? The old sales tax was 5% and now, it is 8%. It is only three cents. What's the worry? Dear reader, this is how fiat currencies operate. Since the US allowed the formation of the Federal Reserve, the buying power of the dollar has lost 95% of its purchasing power. By the end of this year, it will be 96%. This is the way government steals from its citizens. It takes your money and gives it to people with influence to help them get reelected or to develop projects that these same officials will benefit. The concept of democracy is in word only. Governments do what they think is best and this is not what is beneficial to the general public. When the public realizes this fallacy of our present system, we will have a chance with a new third party. Until then, these are the type of gifts that both political parties foster, fiat. Here is another gift of fiat thinking.
In the same year as the Fed was formed, the same elected officials also passed the formation of income tax. It originally stated that it would be capped at 2% and it would only effect the rich. Ha! I've got some sad, serious news for you. According to the rules in the formation of the IRS, the government can take 100% of your income, if it needs it. Fiat, debt grows with your present money and if that isn't enough, it will take your future earnings.
Governments spend and what they cannot pay for with your tax dollars, they put on debt. When a nation had a gold standard, there were strict ratios that limited the creation of new debt because you had to have gold backing whatever number of dollars that you printed. This is why the bankers and elite created the Fed. It had two real purposes. One, it would allow the unlimited formation of debt. Secondly, in case this debt formation caused a crisis within the market, the Fed would be the backstop to protect them.
Of course, there were other options to pay for the debt. Growth would add new tax revenues. You could develop new taxes, but not so many to alarm the citizens. This tax will alarm the citizens of Japan. They already are disillusioned over the nuclear incident and the lies from Tepco utility company. Fish, their most favorite staple is threatened. We can only hope that the people will awake and demand no more debt because Japan's debt is already over 220% of GDP. This is the same road where the Fed is sending our nation. Our best hope is the people of Japan cause a protest that receives world attention. Maybe another financial crisis to see the dangers of QE. End the Fed!
Liars and Crooks: Our debt ceiling is so bad and the truth so far from the front page that writing this makes me sick. Consider this: 40 states, count them, need and count upon government assistant to meet their budgets. This amounts to over 31% of income and yet, at the same time they almost all have deficits to state pension funds. By the way three states, Louisiana, Idaho and Arizona get and need over 41% to make ends meet. How can the government not increase the debt when so many are beholding. How are we ever going to get out of this debt mess unless we End the Fed!
Monday, September 30, 2013
Insights Through Retail...L&C
Since the US economy is basically a consumer economy, I thought that I(we)could get some insights on where our GDP is heading. The news isn't all that good. Pundits claim that online e-commerce is growing every year, however one man's ceiling is another man's floor(thank you, Paul Simon). While the previous sentence is correct, the brick and mortar's, our malls, shopping centers are losing market share,closing stores and many are on the brink of disappearing.
Take the gamer, Game Stop, GME, the stock is at record highs, but the company is closing stores, lowering revenue guidance and after this Christmas season, I see a big, big, fall because the quick profit on cycle games will end with nothing on the horizon.
Take JCP, this company had to sell over 100 million shares to raise money for the Christmas season. They realized that they may not attract money through a bond issue. The reason that JCPenny and other retailer's may not attract bond money is the loses that are showing in retail like rue21. The people behind it, Bank of America, Goldman Sachs and JPMorganChase are worried that their 100 million bond issue will only return .80cents on the dollar. Then, you have the icons like Radio Shack, ANF and Sears. All of these companies have more value in real estate than in their prime business.
There are others in the litany that are headed to bankruptcy. Bottom line is that our economy is at an inflection point and I believe that Harry Dent is correct - demographics will cause lower earnings, lower growth and thus, lower stock prices.
The Fed did more than buy time for our government with low interest rates which allowed our nation to operate with lower debt-to-GDP levels, it allowed our companies to refinance their debt at lower levels too and it did not stop there. Foreign governments and their state companies were able to restructure and now, the temporary advantage held by US companies will be back to the same old-same old as state sponsored entities will attack for market share, hurting US growth, jobs and economy. Not good. The one time trick stimulus to the US and now to the world economies will resume. The lie of free trade will continue. It is the same process that caused our economy to have only 53% of available workers, working. The Fed now buys 88% of treasuries because no one else will buy at below inflation. No wonder Ben wants out. The writing is on the subway walls(thank you again, Paul Simon).
Liars and Crooks: goes to Poland who confiscated private pension money to cover its debt. A new fear for our nation.
Take the gamer, Game Stop, GME, the stock is at record highs, but the company is closing stores, lowering revenue guidance and after this Christmas season, I see a big, big, fall because the quick profit on cycle games will end with nothing on the horizon.
Take JCP, this company had to sell over 100 million shares to raise money for the Christmas season. They realized that they may not attract money through a bond issue. The reason that JCPenny and other retailer's may not attract bond money is the loses that are showing in retail like rue21. The people behind it, Bank of America, Goldman Sachs and JPMorganChase are worried that their 100 million bond issue will only return .80cents on the dollar. Then, you have the icons like Radio Shack, ANF and Sears. All of these companies have more value in real estate than in their prime business.
There are others in the litany that are headed to bankruptcy. Bottom line is that our economy is at an inflection point and I believe that Harry Dent is correct - demographics will cause lower earnings, lower growth and thus, lower stock prices.
The Fed did more than buy time for our government with low interest rates which allowed our nation to operate with lower debt-to-GDP levels, it allowed our companies to refinance their debt at lower levels too and it did not stop there. Foreign governments and their state companies were able to restructure and now, the temporary advantage held by US companies will be back to the same old-same old as state sponsored entities will attack for market share, hurting US growth, jobs and economy. Not good. The one time trick stimulus to the US and now to the world economies will resume. The lie of free trade will continue. It is the same process that caused our economy to have only 53% of available workers, working. The Fed now buys 88% of treasuries because no one else will buy at below inflation. No wonder Ben wants out. The writing is on the subway walls(thank you again, Paul Simon).
Liars and Crooks: goes to Poland who confiscated private pension money to cover its debt. A new fear for our nation.
Saturday, September 21, 2013
Revisit Europe's Economy - Plan & Results...L&C
The financial debt crisis of 2008 did more than cause a world recession, it exposed the inner finances of nations with not only their banks, but interrelated banking systems. The EU, now under Mario Draghi, has expressed the thought that the EU will do whatever it takes to return to growth. The US central bank chief, Ben Bernanke gave the world more time to get their houses in order with below inflation credit last Thursday. With that said, let us take a closer look at the results of these QE measures.
Everyone knows that Ireland and Greece were the first to implode under the recession, and both nations received bailout loans. Soon, they were followed by Spain, Portugal and Italy which caused a small riff in the EU as the wealthier northern nation's said that they were being put at risk because the poorer southern nation's could not get their act together. This too passed with time, especially when the effects of the recession hit those same northern nation's. Then, the debt crisis fell off the radar until Cyprus, which by the way, the IMF stated on Friday of last week, is suffering more than first thought. Unemployment grew from 15% to 17%. Not good, considering the haircut that depositors took from the EU, the troika and IMF's response to that nation's banking crisis. So, here's the results.
GDP
is the sum total of economic activity in a nation.
Nation Growing Declining
Greece 3.8%
Portugal 2.1%
Italy 2.1%
Netherlands 1.8%
Spain 1.6%
Belgium - 0% -
France .3%
Germany .5%
One other nation, although not a EU member, still part of economic system.
UK 1.5%
Bottom line: 63% are negative and yet, the EU and IMF always forecast positive growth. Why? You got to make people believe, but when supper's due and you have nothing to eat and then the rent's due or a unexpected bill happens, those beliefs face reality and distrust grows. Not good.
What about the austerity plans and other solutions? The next fact is one that you would never believe, yet it is true. Name the one EU nation to lower its debt in the past year? Greece and this is no Ripley's Believe It or Not. Every and I mean ALL the other nations in Europe increased their debt. This government spending is the reason for some growth or a reason to contain the declining growth. Not good. By the way Portugal's debt increased by 15.3%. This is a total failure and you will be able to see this more clearly when I show you the unemployment picture.
Nation Unemployment rate
Greece 27.9%
Spain 26.3%
Portugal 16.5%
Ireland 13.8%
Italy 12.0%
France 11.0%
Belgium 8.9%
UK 7.7%
Netherlands 7.0%
Germany 5.3%
Maybe the above nations should attend a BLS conference to learn how to fudge the numbers?
Last Question
if the EU is a union, how come there are large differences in bond rates? For example, Greece pays 9.6% on a ten year note while Germany only pays 1.94%. Wake Up, Greece! You are being exploited to lower the value of the euro which allows the northern economies to export more at a lower cost. The EU wants to you end your sovereignty and until you do, they say you have to bare the costs of borrowing on your own merits, but we're here to help. Like I've stated before, leave the EU and form a new union with the southern nations where you can utilize the one benefit that you got, a lower value currency. You would be able to export more, lower your unemployment and maybe, just maybe achieve some real growth without government spending which only increases your debt picture.
Liars and Crooks: goes to the BLS, again! They stated that the August employment picture increased by 162K jobs, only to have that figure quietly revised lower by104K. Can you believe a miss by over a hundred thousand?!
Everyone knows that Ireland and Greece were the first to implode under the recession, and both nations received bailout loans. Soon, they were followed by Spain, Portugal and Italy which caused a small riff in the EU as the wealthier northern nation's said that they were being put at risk because the poorer southern nation's could not get their act together. This too passed with time, especially when the effects of the recession hit those same northern nation's. Then, the debt crisis fell off the radar until Cyprus, which by the way, the IMF stated on Friday of last week, is suffering more than first thought. Unemployment grew from 15% to 17%. Not good, considering the haircut that depositors took from the EU, the troika and IMF's response to that nation's banking crisis. So, here's the results.
GDP
is the sum total of economic activity in a nation.
Nation Growing Declining
Greece 3.8%
Portugal 2.1%
Italy 2.1%
Netherlands 1.8%
Spain 1.6%
Belgium - 0% -
France .3%
Germany .5%
One other nation, although not a EU member, still part of economic system.
UK 1.5%
Bottom line: 63% are negative and yet, the EU and IMF always forecast positive growth. Why? You got to make people believe, but when supper's due and you have nothing to eat and then the rent's due or a unexpected bill happens, those beliefs face reality and distrust grows. Not good.
What about the austerity plans and other solutions? The next fact is one that you would never believe, yet it is true. Name the one EU nation to lower its debt in the past year? Greece and this is no Ripley's Believe It or Not. Every and I mean ALL the other nations in Europe increased their debt. This government spending is the reason for some growth or a reason to contain the declining growth. Not good. By the way Portugal's debt increased by 15.3%. This is a total failure and you will be able to see this more clearly when I show you the unemployment picture.
Nation Unemployment rate
Greece 27.9%
Spain 26.3%
Portugal 16.5%
Ireland 13.8%
Italy 12.0%
France 11.0%
Belgium 8.9%
UK 7.7%
Netherlands 7.0%
Germany 5.3%
Maybe the above nations should attend a BLS conference to learn how to fudge the numbers?
Last Question
if the EU is a union, how come there are large differences in bond rates? For example, Greece pays 9.6% on a ten year note while Germany only pays 1.94%. Wake Up, Greece! You are being exploited to lower the value of the euro which allows the northern economies to export more at a lower cost. The EU wants to you end your sovereignty and until you do, they say you have to bare the costs of borrowing on your own merits, but we're here to help. Like I've stated before, leave the EU and form a new union with the southern nations where you can utilize the one benefit that you got, a lower value currency. You would be able to export more, lower your unemployment and maybe, just maybe achieve some real growth without government spending which only increases your debt picture.
Liars and Crooks: goes to the BLS, again! They stated that the August employment picture increased by 162K jobs, only to have that figure quietly revised lower by104K. Can you believe a miss by over a hundred thousand?!
Saturday, September 14, 2013
Bits and Pieces...L&C
"I'm in pieces, bits and pieces..."
- Dave Clark Five
An old rocker from the British invasion. Not a great song, but it presents a direct message about a guy and a girl. Don't fret. Not where I'm going, however in correlation to the market and the economy, it definitely relates. The market cannot decide to rise to a new high or descend to a new low. This is reflected in the economy where one report is positive, followed by another that is negative. You could make the same relationship to the global community.
Economic Principle
it is called the "Accelerator Law of Economics." It declares that if an economy is not accelerating at an accelerating rate, that economy is really decelerating.
Is this principle reflective in our present state? One could point to the vast improvement in the economies of Mexico, S.Korea, and Vietnam. To me, this is a very small list.
One could point to the turn-around in the U.K., Sweden and Colombia. Again, this is a very short list.
China has been the world leader in creating jobs, growth and trade, however there are questions to the validity of facts, a very real housing and financial bubble, not to mention a slowdown in activity in growth and trade. As special as China appears to be, as noted in previous articles, there is a fly in the chow mien.
Then, there is the US which is just as guilty as China concerning the facts of its economy. At best, it is around 2%, but from quarter-to-quarter, the growth is uneven. There are more countries in the EU that are in recession than growing. Japan, Brazil, Argentina, India, and Australia all face problems, especially with their currency. Not good. If you placed the above on a scale, you would have only 6 economies that show acceleration, while the weight of all the other nations slams the scale to the downside.
Second Opinion
Michael Hartnett, of BofA, recently gave a report that agrees with the above. He is credited in coining the term, "Great Rotation."
- The Next 5 Years, Curb Your Enthusiasm
(With) Significant monetary stimulus, the end of fiscal austerity, a booming housing market, a cheap dollar, record corporate cash balances...if he US economy does not accelerate in coming quarters, it never will.
Mortgage Bankers Association
released their refinance and purchase index on Wednesday. It was down a very large 13.5%. Now, dear reader, if housing is the largest component in a consumer economy like ours and it shows buyers in retreat in five of the last seven reports, well, that is a downward trend. In fact, mortgage applications are down 70% since the "recovery" lows of 2009. By the way, refinancing which has led this market, thanks to the Fed, is also down 20%. When you consider all the stimulus that this segment of the market has received and it cannot grow with historic low interest rates, how does this relate to the law of acceleration?
Get the Blue Box of macaroni and cheese because the blues are coming.
Liars and Crooks:President Obama wins hands down. Why? Because he now claims that the military threat to Syria is the reason that the chemical question is resolved and escalation avoided. It was the intervention of Putin of Russia who deserves all the credit. It turns out that Putin writes as well as Obama speaks. Of course, they are both politicians and cannot be really trusted.
Keep this in mind from one of our great founding fathers, James Madison.
"No nation could preserve its liberty in the midst of continual warfare."
- Dave Clark Five
An old rocker from the British invasion. Not a great song, but it presents a direct message about a guy and a girl. Don't fret. Not where I'm going, however in correlation to the market and the economy, it definitely relates. The market cannot decide to rise to a new high or descend to a new low. This is reflected in the economy where one report is positive, followed by another that is negative. You could make the same relationship to the global community.
Economic Principle
it is called the "Accelerator Law of Economics." It declares that if an economy is not accelerating at an accelerating rate, that economy is really decelerating.
Is this principle reflective in our present state? One could point to the vast improvement in the economies of Mexico, S.Korea, and Vietnam. To me, this is a very small list.
One could point to the turn-around in the U.K., Sweden and Colombia. Again, this is a very short list.
China has been the world leader in creating jobs, growth and trade, however there are questions to the validity of facts, a very real housing and financial bubble, not to mention a slowdown in activity in growth and trade. As special as China appears to be, as noted in previous articles, there is a fly in the chow mien.
Then, there is the US which is just as guilty as China concerning the facts of its economy. At best, it is around 2%, but from quarter-to-quarter, the growth is uneven. There are more countries in the EU that are in recession than growing. Japan, Brazil, Argentina, India, and Australia all face problems, especially with their currency. Not good. If you placed the above on a scale, you would have only 6 economies that show acceleration, while the weight of all the other nations slams the scale to the downside.
Second Opinion
Michael Hartnett, of BofA, recently gave a report that agrees with the above. He is credited in coining the term, "Great Rotation."
- The Next 5 Years, Curb Your Enthusiasm
(With) Significant monetary stimulus, the end of fiscal austerity, a booming housing market, a cheap dollar, record corporate cash balances...if he US economy does not accelerate in coming quarters, it never will.
Mortgage Bankers Association
released their refinance and purchase index on Wednesday. It was down a very large 13.5%. Now, dear reader, if housing is the largest component in a consumer economy like ours and it shows buyers in retreat in five of the last seven reports, well, that is a downward trend. In fact, mortgage applications are down 70% since the "recovery" lows of 2009. By the way, refinancing which has led this market, thanks to the Fed, is also down 20%. When you consider all the stimulus that this segment of the market has received and it cannot grow with historic low interest rates, how does this relate to the law of acceleration?
Get the Blue Box of macaroni and cheese because the blues are coming.
Liars and Crooks:President Obama wins hands down. Why? Because he now claims that the military threat to Syria is the reason that the chemical question is resolved and escalation avoided. It was the intervention of Putin of Russia who deserves all the credit. It turns out that Putin writes as well as Obama speaks. Of course, they are both politicians and cannot be really trusted.
Keep this in mind from one of our great founding fathers, James Madison.
"No nation could preserve its liberty in the midst of continual warfare."
Saturday, September 7, 2013
Ain't No Sunshine...L&C
With yet another American contribution in the know-how to make solar energy, people and businesses are realizing that the sun gives us more than warmth and light. However, the sun does not shine every day, not to mention rain, sleet or snow. Just as humans take for granted things that are free like water, fresh air and sunshine, it takes a crisis to understand some aspects of life like the beauty of nature.
Water Pipe Break
and everyone acts crazy, running to stores, buying every water bottle available. If you can make money or save money with solar, then soon, the market has more sticks than you need to start a fire.
There are some other new truths out there.
American Know-how
let someone in our country tinker and create a new product, idea or formula, and the global community will copy it, mass produce it with state support and generally, control whatever it is that finds mass appeal.
Why?
because unless the rich or vision gifted find a way to run with it, there is no incentive to do something with it in America. No one thinks that this gizmo will develop new jobs, increase our standard of living, while at the same time, give me a return on my investment.
This is one sad side of the coin. The other is the make-up of state economies. In these vast structures, there are individual incentives along with government plans. The age old problem is greed and it is showing itself in alternative energy.
Germany
did the world a great service by showing it that a cold climate nation can develop solar energy. It use to be that Japan or Korea would enter a market if the return was there. Now, China is that nation that enters and unduly influences a market. It is the world's largest maker of solar products.
China, like almost every other nation in the global community, tries to appear as capitalistic, but it is a state supported economy. One positive aspect to this is investors find safety because the government will back a company or at least until now. The new regime in China is weening away from government support of local government actions and company projects. This showed itself to be factual when LDK Solar Co., failed to pay its debt of $23.8m last month and is trying to restructure another $240m of securities due in 2014. They are not alone. Suntech Power Holdings Co.'s, is asking or demanding, depending on your side of the desk, to renegotiate, its loan of $8.4b in renewable energy bonds due in 2014.
Like I previously stated, the Chinese government is letting the chips fall when it comes to bailouts of local government or corporate bonds. Although China's predecessor, Wen Jiabao turned China into the world's biggest maker of solar panels by spending $47.5b in support, the new administration says, it needs to stand on its own. Not to distract you, dear reader or this train of thought, but I feel that the new leader is worried about the potential real estate bubble that will run into the trillions and he does not want the same public complaint of helping with bailouts for the rich and putting people out of homes, if it comes to that like in the US.
This alternative attitude indicates Chinese energy bonds are in trouble when due in 2014. China's 10 biggest photovoltaic companies have debt of more than $100b yuan($16.3b US). Notes like 600m yuan for GCL Poly Energy Holding's LTD., the world's biggest maker of polysilicion, and 100m yuan of bonds from ZK Energy Science & Technology Co., a wind/solar hybrid maker.
Not all of Chinese solar companies are suffering. Gingli Green Energy Holding(YGE), the nation's largest and Jinko Solar Holding Co., are returning to profitability after two years of losses, but the world market is saturated and the global community is slowing while at the same time, the Chinese Photovoltaic Industry Alliance between companies and the state expects to double solar installations. I don't think the sun will shine on these type of investments for a while.
Liars and Crooks: I could give it to Obama for rejecting the advice of the G-20 on intervening in Syria, but I'll wait until the word from Congress. With that said, I'm gonna share it between the Basil Committee in Europe and the US chief on derivatives, Gary Gensler. In Europe banks got the committee to relax the fees to strenghten the derivative market by not requiring banks and brokerages to post a margin for these trades not passed through a "clearing house." They said it might harm the economy. Ha! This $633t market has the US with half of the valuation and our banks said that they would lose business to Europe which will harm the economy. Pure B.S.! Gensler bowed to the new US treasurer, Jacob Lew who bowed to the banks.
Why? Because they know the Fed is their back-up. End the Fed!
Water Pipe Break
and everyone acts crazy, running to stores, buying every water bottle available. If you can make money or save money with solar, then soon, the market has more sticks than you need to start a fire.
There are some other new truths out there.
American Know-how
let someone in our country tinker and create a new product, idea or formula, and the global community will copy it, mass produce it with state support and generally, control whatever it is that finds mass appeal.
Why?
because unless the rich or vision gifted find a way to run with it, there is no incentive to do something with it in America. No one thinks that this gizmo will develop new jobs, increase our standard of living, while at the same time, give me a return on my investment.
This is one sad side of the coin. The other is the make-up of state economies. In these vast structures, there are individual incentives along with government plans. The age old problem is greed and it is showing itself in alternative energy.
Germany
did the world a great service by showing it that a cold climate nation can develop solar energy. It use to be that Japan or Korea would enter a market if the return was there. Now, China is that nation that enters and unduly influences a market. It is the world's largest maker of solar products.
China, like almost every other nation in the global community, tries to appear as capitalistic, but it is a state supported economy. One positive aspect to this is investors find safety because the government will back a company or at least until now. The new regime in China is weening away from government support of local government actions and company projects. This showed itself to be factual when LDK Solar Co., failed to pay its debt of $23.8m last month and is trying to restructure another $240m of securities due in 2014. They are not alone. Suntech Power Holdings Co.'s, is asking or demanding, depending on your side of the desk, to renegotiate, its loan of $8.4b in renewable energy bonds due in 2014.
Like I previously stated, the Chinese government is letting the chips fall when it comes to bailouts of local government or corporate bonds. Although China's predecessor, Wen Jiabao turned China into the world's biggest maker of solar panels by spending $47.5b in support, the new administration says, it needs to stand on its own. Not to distract you, dear reader or this train of thought, but I feel that the new leader is worried about the potential real estate bubble that will run into the trillions and he does not want the same public complaint of helping with bailouts for the rich and putting people out of homes, if it comes to that like in the US.
This alternative attitude indicates Chinese energy bonds are in trouble when due in 2014. China's 10 biggest photovoltaic companies have debt of more than $100b yuan($16.3b US). Notes like 600m yuan for GCL Poly Energy Holding's LTD., the world's biggest maker of polysilicion, and 100m yuan of bonds from ZK Energy Science & Technology Co., a wind/solar hybrid maker.
Not all of Chinese solar companies are suffering. Gingli Green Energy Holding(YGE), the nation's largest and Jinko Solar Holding Co., are returning to profitability after two years of losses, but the world market is saturated and the global community is slowing while at the same time, the Chinese Photovoltaic Industry Alliance between companies and the state expects to double solar installations. I don't think the sun will shine on these type of investments for a while.
Liars and Crooks: I could give it to Obama for rejecting the advice of the G-20 on intervening in Syria, but I'll wait until the word from Congress. With that said, I'm gonna share it between the Basil Committee in Europe and the US chief on derivatives, Gary Gensler. In Europe banks got the committee to relax the fees to strenghten the derivative market by not requiring banks and brokerages to post a margin for these trades not passed through a "clearing house." They said it might harm the economy. Ha! This $633t market has the US with half of the valuation and our banks said that they would lose business to Europe which will harm the economy. Pure B.S.! Gensler bowed to the new US treasurer, Jacob Lew who bowed to the banks.
Why? Because they know the Fed is their back-up. End the Fed!
Saturday, August 31, 2013
Periphery Red Flags...L&C
"Anything that won't go on forever...won't"
- Herb Stein
The global community and the stock market are raising red flags. There is no central, focal point to base this view, only the general whole picture. It is appearing at the edges. Things don't just spin out of control. The ancient Greeks understood this with their transition point in philosophy. You cannot go from A to C without passing B. You can only realize there is a forest when you stand outside of it, preferably from a high vantage point. These sayings and concepts are reflected in many small ways around the globe and within the market.
Bailout
Greece needs more money. They are trying to hold off on the announcement until after the German election. The previous bailout money was suppose to last until 2015. They are not the only one. Italy just lost $6.5B because they repealed their property tax law. They do not at this time have an alternative plan to cover this deficit. I'm guessing the plan is to sell more bonds to the EU, which is really a bailout.
Arab Spring
has escalated into riot form under the four stages of civil disobedience. There are other problems like evacuees that are flooding neighbor nations like Jordan and Lebanon because Syria has moved onto the revolution stage. These small nations with limited finances are suffering with this extra burden. They will ask for aid from the UN, IMF, US, Europe, anywhere they can get it.
Bonds
US notes are experiencing out-flows greater than the crisis of 2008. July's report won't come until 15 September. It won't be good. In addition, the velocity of money, which is the movement by lending is down straight from 1997. This deleveraging is one reason for low inflation. I will not say there is no inflation because it appears in energy and food. In everything else it is contained. This deflationary outlook is not good for gold and the overall economy. One other aspect, there are more stocks making new lows than are making new highs. This is a tell in card lingo. There are other currency problems with the rupee, yen and baht. They are feeling inflation due to QE by western central banks.
History Repeats
This scenario has happened twice. The first time was a short recession in 1919 and the second in 1929, which needs nothing more said.
There is someone that I follow who studies cycles. He uses these trends and he correlates them with national demographics to form concepts about economies. Harry Dent has written many books with his ideas which are very accurate. I believe that they are close to truths in relationship to economies. Dent sees a crisis due to the aging of the western nations.
One financial aspect of these trends is reflected in less revenues for government. The US will reach its spending level in October. President Obama will ask Congress to raise the debt ceiling. It has been raised 78 times since WWII. As much as the Republicans claim that the Democrats are the tax and spend party, they have raised the debt level 49x to 29x for the Dems. Last year at this time our debt level was $15.97t and it grew at 4.75% to $16.73t today. It would be nice to say our wages grew by that percentage, but they didn't and won't in the future where rising rates will make this debt figure unbearable.
Back to the top
leads us back to Herb Stein. Periphery-to-core is how things change and in this case, we are talking about an approaching recession. We, and many global nations have a problem that is centered on debt. You cannot "solve" this problem by adding more debt. Prosperity cannot be achieved by printing out of thin air which only rigs the market which only destroys trust. If you prefer a bigger name with the same idea, how about Albert Einstein, "insanity is doing the same thing, over and over and expecting a different solution."
Liars and Crooks: I cannot trust Obama anymore. The past week has the same feel as when Bush ran the show with his rush to war with his lies on Iraq, which gave us two wars for the decade which is bankrupting the nation. We are not the police for the world!
- Herb Stein
The global community and the stock market are raising red flags. There is no central, focal point to base this view, only the general whole picture. It is appearing at the edges. Things don't just spin out of control. The ancient Greeks understood this with their transition point in philosophy. You cannot go from A to C without passing B. You can only realize there is a forest when you stand outside of it, preferably from a high vantage point. These sayings and concepts are reflected in many small ways around the globe and within the market.
Bailout
Greece needs more money. They are trying to hold off on the announcement until after the German election. The previous bailout money was suppose to last until 2015. They are not the only one. Italy just lost $6.5B because they repealed their property tax law. They do not at this time have an alternative plan to cover this deficit. I'm guessing the plan is to sell more bonds to the EU, which is really a bailout.
Arab Spring
has escalated into riot form under the four stages of civil disobedience. There are other problems like evacuees that are flooding neighbor nations like Jordan and Lebanon because Syria has moved onto the revolution stage. These small nations with limited finances are suffering with this extra burden. They will ask for aid from the UN, IMF, US, Europe, anywhere they can get it.
Bonds
US notes are experiencing out-flows greater than the crisis of 2008. July's report won't come until 15 September. It won't be good. In addition, the velocity of money, which is the movement by lending is down straight from 1997. This deleveraging is one reason for low inflation. I will not say there is no inflation because it appears in energy and food. In everything else it is contained. This deflationary outlook is not good for gold and the overall economy. One other aspect, there are more stocks making new lows than are making new highs. This is a tell in card lingo. There are other currency problems with the rupee, yen and baht. They are feeling inflation due to QE by western central banks.
History Repeats
This scenario has happened twice. The first time was a short recession in 1919 and the second in 1929, which needs nothing more said.
There is someone that I follow who studies cycles. He uses these trends and he correlates them with national demographics to form concepts about economies. Harry Dent has written many books with his ideas which are very accurate. I believe that they are close to truths in relationship to economies. Dent sees a crisis due to the aging of the western nations.
One financial aspect of these trends is reflected in less revenues for government. The US will reach its spending level in October. President Obama will ask Congress to raise the debt ceiling. It has been raised 78 times since WWII. As much as the Republicans claim that the Democrats are the tax and spend party, they have raised the debt level 49x to 29x for the Dems. Last year at this time our debt level was $15.97t and it grew at 4.75% to $16.73t today. It would be nice to say our wages grew by that percentage, but they didn't and won't in the future where rising rates will make this debt figure unbearable.
Back to the top
leads us back to Herb Stein. Periphery-to-core is how things change and in this case, we are talking about an approaching recession. We, and many global nations have a problem that is centered on debt. You cannot "solve" this problem by adding more debt. Prosperity cannot be achieved by printing out of thin air which only rigs the market which only destroys trust. If you prefer a bigger name with the same idea, how about Albert Einstein, "insanity is doing the same thing, over and over and expecting a different solution."
Liars and Crooks: I cannot trust Obama anymore. The past week has the same feel as when Bush ran the show with his rush to war with his lies on Iraq, which gave us two wars for the decade which is bankrupting the nation. We are not the police for the world!
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