House Sales & prices.

Kia Ora,

Well an interesting few days. The markets are down. US dollar was up & although gold fell on at least one day it stayed in line with the US dollar.

The lastest from the US is that house prices are falling & so are sales. In Australia they are sky rocketing up & in NZ prices are rising but sales are falling.

What does this mean? Well the US sales had risen due to the stimulus but now the steam has run out. They are trying to get things going again by leaving interest rates low. Couple it with rising job losses, it has being pointed out that in the US there has not being an actual rise in number of jobs since 2000, it means there are millions just holding onto their homes who will loose them for sure if interest rates go up forcing the mortgage rates to rise.

There has being reported cases of US judges reverting to what happened in the 30's where people had defaulted on their property payments, but being allowed to stay.

There has also being a big jump in credit default swaps as the potential for sovereign debt crisises increase.

What are credit default swaps? Insurance. They are what AIG insured the banks for all those dodgy subprime loans & why it got such a big Bail out because had it falied the whole banking system would of failed & now the same insurance is being offerd to countries who have montary issues. In particular those of the EU who have no real control over their finances. Or in other words unlike the US & Britain they can't print money to pay their people stimulus.

Although the stimulus doesn't help as just in the end creates more of the same.

The stimulus could actually do what Japans did. Stagnate their economy for 20 years, but there are signs it could turn, initially some predict going deflationary as US is threatening to do again now the stimulus has run out of steam, then due to the amount of money the Japanese governments have printed over that 20 years to stimulate the economy go into hyperinflation.

Of course the US is trying to stop that, by easing off the stimulus, but without the banks lending there are no new jobs & therefore less spending, so the economy will go into deflation.

With 'Helicopter Ben' about to be reconfirmed as the head of the Federal Reserve you could almost bet on him then throwing more money at the problem. After all he is a professor who has studied the last depression & he knows how to stop it.

But then is he there because the power behind the power want hyperinflation to transfer the wealth to them?

Bears & Bulls

Kia Ora,

Well after yesterday then the News really got interesting on the volatility of the markets.

There is a saying in the stock markets that when the Bull comes up the stairs, the Bear goes out the window. In other words a positive market or Bull market climbs up in a slower steady fashion, but when a bear market hits it drops fast.

The last two months are a very good example of this.

The 'Bull' market of the supposed Green shoots recovery has built up over the last two months & then it has beign wiped out by the 'Bears' over the last three days.

It will be interesting to see where things go from here.

Gold & Silver are down, but will they stay there?

When many Asian countries governments  have allegedly being telling their people to buy Gold & Silver for some time now.

History shows that what ever happens from here on in, it is the real money of Gold & Silver that will be the winners in the long run.

Already the British Chanchallor of the Exchequer(known as the Minister of Fianance elsewhere) is basically questioning the US plans for the banks. Following on from the Head of the Bank of Englands similar comments previously.

Then we have Greece & some of the other newer members of the EU starting to have issues over payments of subsidies to farmers as their own governments have run out of money to bail them out.

The idea of one currency is great, but when local conditions demand a response, it is hard to deliver when you don't have control over your montary policy.

This was actually one of the reasons NZ gave recently for, not at this stage, joining with Australia in an ANZAC currency. It also begs the question as too who will be in charge should the much talked about Amero (a combination of US, Canada & Mexico's currencies) after the collapse of the present monetary system.

You begin to get the idea there might be something in all these combined currencies post the sort out of the present mess. But will people allow it or use it if they see the Euro issues?

Interesting times

Kia Ora,

The Markets are all down. Many of the sovereign debt issues are just below the surface. A nudge could send the whole thing crashing.

What nudge? Well it could be  that soverign debt. Iceland has already collapsed & now won't pay outstanding debt. Greece can't get a loan from the EU, Italy, Portugal, Ireland & Spain are on the Brink of collapse or re arrange the names & it is beter know as the PIIGS.

Britain is not far off & the USA is actually selling junk bonds but rated as AAA, by the same people who said ENRON was safe.

Then just to to make it interesting China is taking action to slow inflation. That really caused people to get jittery.

Now there is talk about Peak Oil again.

What is Peak Oil & why is it important?

In Theory it means that the oil that is available has peaked & from now on there will be less & therefore the price will rise.

In Practice there is still enough oil around like the huge oil shale reserves in Canada though it is going to be harder to extract or a lot more costly to extract, causing the price at the pump to rise & alot of other items to rise resulting in inflation.

Already central banks are starting to raise interest rates to try & keep inflation down. This is despite actual inflation is well over 10% in many places, but the CPI's have being manipulated to hide the real numbers.

Then there is the fact that in many places there is also deflation as the stimulus packages slow to a stop. This will result in more bail outs & then more inflation.

Why the contradictions? Because each country is in a different part of the cycle.

Here in NZ it is customary for anything that happens in the US to take 12 to 18 months to have the flow on effect.

Again the smoke & mirrors are in progress trying to hide what is happening in the world.

Smoke & Mirrors

Kia ora,

Well even more smoke & mirrors being errected over the last two days.

President Obama is going to war with Wall Street. Gets him back on side with the voters, but the banks who caused all the problems are already looking at ways out. & for each 'punishment' in the fine print on page 1052 (well somewhere hidden away so people will get bored before they get there) will be the bit given back to make up for the public lashing.

Is the US President the most powerful man in the world?

No!

That would have to be on the surface anyway the head of the Federal Reserve for now 'Helicopter Ben'.

But even he is just a puppet for those who actually control the Federal Reserve. One thing you can be sure of it is not the US Gvoernment.

Again some are being told to pay back their bail outs. But then they get their money from those who are not going to have to pay it back & in fact have had the biggest bailouts & will continue to be bailed out. So as I said smoke & mirrors.

Virtually everything has dropped the last few days, but if you have done your homework then it is time to buy some investments & drop the others.

It is becoming more & more apparent  that the so called green shoots of recovery were nothing more than a stimulus inspired rise & as the stimulus efforts run out it, the recovery is stalling. It is now that 'Helicopter Ben' may have to live up to his name, that or let everything crash until the depression runs it course.

So is there a Financial Recovery?

Kia Ora,

So is there actually a financial Recovery going on?

Of course everyday you hear the 'experts' say yes there are signs, but we have to be careful.

How ever if you have being working on your financial education then It appears to be more smoke & mirrors. 2012 is looking more like the time of big change than ever.

Several economic cycles are coming together, the time that history shows a fiat currency hits zero is due in 2011 for the US at least. Since all other currencies are tied to the US currencies are tied to the US, then at some stage they too will go to zero some time soon after.

Then the cycle will probably start again as it has for thousands of years & man tries to think he can outsmart what appears to be a natural law.

First we will start with any currency tied to something like Gold again. then as time goes on there will be a war or similiar & to pay for it, someone will take currencies off the gold standard & then we have to start creating debt bubbles to grow the economy.

At the moment there are so many smoke & mirrors being put up in particular by the US to hide what is going on.

They say they are not printing money, but quantitive easing. Amounts to the same thing.

Now it looks like banks are going to have to pay back bail outs, but biggest bail outs are not going to have to be paid back (those of Freddie Mac & Fannie Mae) which was just added to be $200 billion a few weeks ago when every body was on holiday. Much of that bail out money will be paying the banks who will use it to pay off their bailouts & then they will proceed to carryon as if nothing has changed.

Then there are the ETF's which right now is in  the US courts to prove that they actually for all intense purposes are trading on what the US would call a Ponzi scehme.

If you trade in the ETF's you are supposed to be trading a cheaper way to own things such as gold & silver. Thing is take silver for example, they are said to be trading more than twice the amount fo silver available in the whole world.

Looks like we will have a 1998 again where Warren Buffett collected on his futures trade, but asked for payment in the actual silver. They had to close the markets to find the actual metal to pay him & overnight the trade on the phsyical metal jumped to nearly twice the price.