Oldtent Archives 2007 - 2008

Lion King. You have got to look at the system as being broken…and that is broken beyond repair. All of our old ideas will not pan out as they would if there was a glimmer of hope at the end of the tunnel. Once the fear grip’s the population they will not be adding up mortor and bricks vs. the value of the dollar ..they will be fighting for their very lives. I wish it was going to be different..so I could play the old 15% quality bond game again but ..it is not in the cards …not anymore. Buy the darn gold and silver and hold the stuff till a way is figured out of this mess. But it sure will not come from the this crew in place now.  Of this I am certain.

A. Laffer….  Amazing mindset….

“Prior to my last appearance on CNBC in October 2007, I had made more than 50 appearances on the network over the prior two years. In those segments, I repeatedly exposed the superficiality of our prosperity, described the American economy as a “house of cards”, pointed out that borrowing and spending were a ticking time bomb rather than a viable plan for long term economic health, and explained how investors could prepare for the tough times ahead. At the time, those forecasts were met with ridicule and led to my being nicknamed “Dr. Doom”. Now that these predictions have come to pass, most on CNBC now claim that no one saw it coming!

In my 2006 and 2007 on-air appearances, to a chorus of sneers and laughter, I predicted the bursting of the housing bubble, the collapse of the subprime mortgage market, the credit crisis, tightening lending standards, waves of defaults, bankruptcies and foreclosures, weakness in financials, retailers and homebuilders, stagflation, surging gold, oil and other commodity prices, soaring federal budget deficits and a collapse in the value of the U.S. dollar. You would have thought that some of the reasons I gave for making those predictions would now be given some credence. They have not.

The current line at CNBC is that, prior to the “unexpected” contagion emanating from the subprime mess the U.S. economy was experiencing a “Goldilocks” era of optimal health. They now believe that if the Fed and the Government can divine the right combination of fiscal and monetary policy, Goldilocks will once again be blissfully picking daisies…or more precisely, buying SUV’s. Unfortunately, as I said then, Goldilocks was, and still is, a fairy tale. In fact, the unfolding economic disaster is a direct consequence of the misguided faith placed in that absurdly optimistic parable. And since they were incapable of diagnosing the disease, is it any wonder that their cures are completely ineffective?

This lack of understanding is further confirmed by the skepticism with which the mainstream financial community still regards my diagnosis. For example, in a Feb 22, 2008 article in TheStreet.com, entitled “Dr. Doom Zeros in on Inflation”, Mike Holland, a CNBC regular leveled two common criticisms often used to discredit me. Holland says “investors who listened to Schiff throughout the recent bull market missed out on some attractive returns in the stock market” and “A broken clock is right twice a day. If you say things are going to be bad long enough, eventually you’re going to be right.”

What attractive returns does Holland think my clients missed out on? Those who followed my advice invested in foreign stocks, bonds and currencies, as well as precious metals, oil and other commodities. Investors who listened to me instead enjoyed much greater returns by participating in the real bull markets. It’s amazing how few people have managed to figure this out!

The “stopped clock” analogy is one I have been dealing with for years. Those using it maintain that my early warnings invalidate my forecasts. It is precisely because my warnings were so early that they were so valuable to investors. In addition, such charges assume that the current downturn is unrelated to those warnings and that my critique of the U.S. economy was inaccurate until now. My critics, the real stopped clocks, still do not understand that the phony prosperity they were defending and that I was challenging lies at the root of the current crises. When the bubble was still inflating it is understandable that those trapped inside viewed me as a stopped clock. However, now that it has burst, it is amazing how many still cannot get the soap out of their eyes.

If a picture, or in this case a video, is worth 1,000 words, this CNBC match up from August 2006 between me and Arthur Laffer, a CNBC favorite, is priceless. Some of Laffer’s best one-liners include ‘the U.S. economy has never been in better shape”, and “monetary policy is spectacular”. I kid you not — Click Here and enjoy the show > www.youtube.com/watch?v=LfascZSTU4o ”

by Peter Schiff
Euro Pacific Capital
March 7, 2008

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JBI

still true .. when a gnat sets on your arm .. you swat it, but other than that you keep you eye on the target lol

pretty clear ..

First I told you “This Is It!” and clearly this is, in fact, it.

I have demonstrated to you that there is no practical solution to this gathering of problems caused by unbridled greed and the lack of regulation to facilitate it.

Now I am telling you that it is “Slipping Out Of Control”

Attempts to use tools that have no practical power to cure the problem are pushing the problem over the hill.

In the Weimar Republic the great plan to depreciate the currency in order to depreciate war reparations written in it was to let it “get out of control.” The currency began a march to zero and gold therefore went to infinity in terms of that currency.

I do not expect such a situation percentage wise. I pray the situation that is now “Slipping Out Of Control” does not go to such ends. The Weimar case study however is a duplicate of today’s conditions.

All you need to do is replace the words “war reparations” from the Weimar case study with “over the counter derivative meltdown in credit and default derivatives” and you have a similar situation in economic history to which you can compare today.

Gold is going to a minimum of $1650.

Every category of gold shares will participate, with many substantially outperforming gold as shorts are forced to cover.

“This is it” and it is “Slipping Out Of Control.”

Eliminate as many intermediaries between you and your assets. Own the Swiss and Cando treasury instruments. Have at least 1/3 of your liquid net assets in gold and precious metals shares. For some it will be more.

Under no circumstances use margin.

Hard assets are about to make their entrance onto the stage of the establishment equity investors.

Before you go opt for a gold ETF read the original prospectus thoroughly.

Do not try and save the world. The world will think you are crazy and get annoyed. You can only protect yourselves. The saddest thing is Joe Six Pack is LOST, sacrificed on the sick altar of greed.

Regards,
Jim

arch0708.goldtent.net/2008/02/12/from-this-time-henchforth/

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I have studied 9/11 deeply too, and am of the same opinion as you.  Kevin Barrett came to noteriety  in this very geographic area and I respect his courage.  For the record, nevertheless, his view of the military is unbalanced, that of an ignorant, inexperienced academic.  It does not square.  I was a marine infantry officer in Vietnam, my son is an army officer in Afghanistan.   The US military is far from a set of psychopaths.  The men at Valley Forge were not psychopaths.  The general experience of combat is sobering to say the least.  There is some evidence, in fact, that it is our military that has prevented at least a couple planned invasions of Iran by the psychopaths. 

Kaplan’s “Imperial Grunts” is an antidote to the Barrett stereotype.  

boy .. to have some one with the insight to carnac the future .. what model are you using ..

and your experience in these type of things … germany… lol the great depression 30’s ….homes were valued to value not inflation adjusted

in the july period of 79 interest rates were going to 12% gold topped out in jan .80 at 20 percent …as we as a society had some saving some industry// carried on.. homes were ALL OVER EMPTY AND IF YOU HAD 15 PERCENT MONEY AND DOWn PAYMENT .. HAVE AT IT..rates are now headed to !%

today savings are negative… banks are negative ..

today 12 per cent interest rates would be a ball and chain..

and derivative backed mortgage paper .and derivitives in general . 400 trillion of those things .. and the market to value who backs that up..

sure in the future some of these things may come about .. but why bring it up today.. you don’t know i don’t know.. sinclair has a pretty good handle on these things with 55 years of experience .. what has he said.. this is it.. and we get mostly silence from the advisors about sinclair .. an anathema of those who bad mouth him as often as possible

what is your position now in gold stocks //

and the fed model on inflation maybe we should wait until gold gets even up with inflation

or we get the great deflation as the value of homes , markets , goes to money heaven

and those that you hear from who are they.. inuendo and chatter .. LOL

$RCI…………..REIT Composite Index - DJ
$RCIT…………REIT CompositeTotal Return Index - DJ
$REI…………..REIT Equity Index - DJ
$REIT…………REIT Equity Total Return Index - DJ
$DJR………….REIT Index - DJ
$RMS…………REIT Index - MS

and

$DJUSRE……..DJ US Real Estate Index

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These symbols may help tell the story, PM.

JBI

I’m glad you referenced our brief exchange… after I had said thanks I went back and read and re-read your post a number of times… It seemed remarkable that although we’ve never met and only just exchanged a couple of quick comments you had managed to write something that had so much to say to me on many levels…

“That is your personality, to pick things apart, then put them back togeather hopefully lol. But some people can’t handle it, it depresses them. If you noticed everyone has different stress levels. Some can handle a large amount in their lives and be okay..hurt but okay” It’s very true……….that I can look at these things and somehow detach that bit to enable me to turn and dig amongst the repulsive and not tip up.

It might be my own background… My dad went through Dachau (a pole- so just processed to be slave labor) and was sent to work in germany …..and a lot of our relatives and his friends also had some pretty terrible experiences … they never spoke of it much, it just came up a little here and there….so as a consequence I did a lot of research by myself when I was pretty young….

He did tell me a lot more when I was in my mid-twenties as we went through poland and germany together and saw the places he was in during those years..a lot came out then.

Anyway, I just wanted to thank you again, it is clearly your experience that enables you to pick up a lot about people from a few comments.

As I’m the type of person who really hates to be wrong, I’ve spent a massive amount of time examining the proposal that 911 was an inside job… and now, for me, that conclusion is inescapeable. But you’re right, it is a sad subject.. and I will now try to allow it to recede into my “stored” knowledge so that while my planning and personal direction takes account of all that it means, I try to focus on the many other positive things the world contains.

I do however also still feel some obligation to try to do whateverI can to bring this story to light because as the article posted by PM Energy, “Twilight of the Psychopaths” points out… the one thing the “puppetmasters” can’t stand is simply to be found out.

www.agoracosmopolitan.com/home/Frontpage/2008/01/02/02073.html

But maybe it is all just my own ego (as you point out) that drives this? Hard for me to tell. But the way you described people and their differing ability to handle internal stress (as opposed to their willingness to “understand” or “believe” or have things “proven” as I’ve tended to see it) has been a very important insight for me to reflect on. (might have been pretty obvious to anyone else <G>…)

So thankyou, and I’ll try to be a bit more open to the idea that “Sometimes not always being in control and not knowing is the best times in life… because its a discovery…. like walking out side and seeing the flowers bloom that wernt there the day before.”

The CPI is a stuffed pig that is useless by design.  Real inflation is over 10%, most likely in the 13% range.  With inflation that high, Bond investors are losing their savings badly to inflation.   The day will come when they wake up and smell the roses.  Then, long-term rates will rocket upward as investors demand a much higher yield.  There are a historically high number of mortages in foreclosure, and an even larger number on the verge of foreclosure.  Ditto credit card holders.  If rates increase those numbers will only go higher.  Dollar inflation will continue leading to price inflation with much higher rates.  You will see one more intermediate-term correction in Gold to re-test the old highs before the parabola runs to da moon.  Somewhere down the road the mess in real estate will be worked off, but not for many years.  It will take the still rising supply (foreclosures on the overbuilding with no down payments/ re-adjusting arms) to be met with rising demand, and that will not happen until rates rise dramatically, then fall considerably.  Those falling rates will also at that time spur a general market Bull which will have more leverage than real estate so investors will flock to the Bonds and stocks, instead.  Real Estate is dead for the immediate future………..and for the intermediate future…………..US Dollars will continue to seek the Precious Metals sector as well as “real things.”  As RR always says, in this environment it is “return of principal”, not return on principle.”  Cash flow is the name of the game.  You either invest in physical Gold and Silver to stay even with the falling USD, or you can try to leverage on “real things” through stocks, or you can use a mixed strategy of both……………….or you can watch your savings go out the window.

 Does anybody have a couple symbols for indices for Real Estate that can be shown on Stockcharts?

I wholeheartedly agree with you, thanks.

I agree.  I think we’re headed into a crack-up boom of the sort you describe.  After the turn-around in real estate, temporarily negative for PMs, we should get a more traditional period of “inflation.”   This might see a sharply rising CPI,  rising interest rates that are perceived to lag the CPI,  PMs rising steadily , real estate appreciating at a lesser rate, stocks  nominally higher and bonds in a steepening decline.

Hope so anyway.  It’s the best case, imo.

I’d guess that the upward reversal in interest rates will occur after real estate values start higher.

When the all-clear sounds in real estate, there will be likely be a strong move out of all safe havens, including treasuries.  This will, per se, send interest rates sharply higher. 

Rightly or wrongly, I’m anticipating a temporary phenomenon that could be very dangerous for PM investors — a reversal of the flight into safe havens (treasuries, gold) and back into private debt.  There’s already talk of “write-ups” down the line — holders of mortgage debt one day announcing that they overreacted and are revaluing their debt higher.  That could be a bad, bad period for hard assets.

we can already see the likely result of the cheapening of the Dollar such that real estate values rise in nominal terms. The proxy is Zimbabwe. The point is not whether real estate will rise in nominal terms (clearly it will) but how it performs relative to gold. I submit that until you have stability in the currency, gold will be the preferred go-to vehicle, irrespective of the interest rate. You are effectively describing a crack-up boom. As the supply of money accelerates, people prefer to hold hard assets; Then, when their assets go up in nominal price terms, they do not sell for the depreciating currency, they hold on.