October 30, 2013

1. When is Halloween?  Oh well...

I think today I will provide several snippets.  What I really want to do is to suggest to people how to learn to invest.  Certainly there is no lack of people that will inform you how to invest.  Most of what is being told is bogus, and one comes to learn not to trust anything that Goldman Sachs, Deutsche Bank, JP Morgan, Bank of America, and so on provide as input.  I cannot even stress (in this blog anyway) how strongly I feel about this.  The whole banking sector is so against the vast majority of the people world-wide interest.  This of course, from my viewpoint includes the Federal Reserve of the USA.

FOMC (Federal Open Market Committee) started meetings yesterday.  They will announce nothing I suspect, and the markets will like that.

It may be interesting to look at speculations from the news in Binary Options marketplace as well as international news.

1. The Financial Times is of the opinion the Fed is going to begin tapering of QE infinity in December.
2. Wall Street firms are sure it will begin in March (or April) at the soonests.  
3. Society Generale thinks the Feds will increase tapering this month, and they are using the Retail Sales numbers in the USA and Europe as justification.  Now that is going out on a limb, and I doubt their money is where their forecast is.

Retail sales were extremely awful last month.  We have disruptions in the economy from the shutdown.  FOMC has all the ammunition it needs to raise the QE bar by a few billion (temporary you understand).  

Here is Fed Head Fisher:  "it would be hard to taper in light of the fiscal shenanigans."

Ha, that is plain as mud.  It very likely means FOMC is not going to do anything rash one way or another.  

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CANADA!!!  

I live on the Canadian Border, and I use to love to go to Canada (almost everyday).  I rarely go now as crossing the border (both directions) is a hassle.  The Canadians seem to be worried I will bring my pocket knife in, and oranges of all things.  The USA side is worried that I will bring in Oranges and drugs.  Sheesh... 

The reason for this blurb is that the new head of the Bank of Canada, Stephen Poloz is at odds with the Finance Minister.   

Mr. Poloz is a "trade side" supporter, which of course means he would support weakening the Canadian dollar.  Mr. Flaherty has spoken out strongly against QE for Canada, and seems to support the supply side. 

Yesterday Mr. Poloz in testimony before the MPs gave hints he would drop his tightening bias (which one could have guessed all along he would do since he is "trade side").  Dropping tightening because HE thought inflation was too low is a very poor excuse to show his true colors.  

Most of the MPs left confused on whether he would act independently of the Finance Minister in weakening the Canadian dollar.  Internationally, the markets may dictate what Mr. Poloz is actually able to do.  

To we observers outside Canada, we are all to familiar with the story Mr. Poloz told yesterday.  With all that talk of inflation being too low, the conclusion people "MUST" draw is that the Central Bank is the only ones with the knowledge to deal with trade problems.  Bankers everywhere are convinced (contrary to hundreds of years of evidence against) that they are the only ones that know how to manage the economy and their respective currency. 

However, we only have to look first at the USA and second at Japan to suggest that it does not work over very long term periods, it never has, and it never will.  Then look at Brazil, Argentina, and a host of others, and that does not work there either (meaning the central banks interfering with the currency in order to drive the economy).  If you disagree, please post and inform how it works, and be sure to use all the instances in history where fiat money that is inflated helps make an economy better.

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You can fool some of the people most of time, but Corporations can fool all the people all the time (until they can't)

September Retail Sales unexpectedly fell .1% which reversed an increase of .2% in August.  In addition PPI (which measure wholesale inflation) fell.  The report focused on a drop in consumer food prices.

Somehow we are all fooled, and the most fooled are the poor and middle class.  If wholesale prices are falling, we would think consumer prices would be falling.  Food prices are stable, but here is where corporations are fooling every one (food, clothing and any basics).  They are shrinking the size of what you get for the same price.  Or said another way what we can buy for current dollars is less than it was 4 years ago by a significant amount.

All that shrinking size for the same dollar is inflation.  It is all there before your eyes, but you don't hear about it in the papers, the TV or even radio.  However, it is inflation hidden from view.

If that kind of inflation was being measured and reported, people would be UP IN ARMS.  But they are not because that kind of inflation is felt NOT by Politicians WHO MEASURED AGAINST MY WEALTH ARE ALWAYS EXTREMELY WEALTHY (No exception).

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Government Motors (otherwise listed as General Motors)

Reuters is reporting a story (kind of on the back page so to speak) about a Congressional Report on General Motors.  I can't help remembering how Mr. Obama pumped his fist when GM paid off part of their loan with another government loan.  Haa!  http://www.reuters.com/article/2013/10/29/us-autos-gm-treasury-idUSBRE99S0WL20131029  

$9.7 billion loss on General Motors bailout

"The U.S. government has booked a loss of $9.7 billion on the nearly $50 billion bailout of U.S. automaker General Motors, according to a quarterly report to Congress on Tuesday.
In 2009, the U.S. Treasury extended $49.5 billion in loans to GM in exchange for $2.1 billion in preferred stock and a 60.8 percent equity stake.
Treasury has since whittled down its stake in GM through a series of stock sales. Those sales have all taken place below the price Treasury needed to break even on its GM investment, resulting in the loss, according to Tuesday's report from the Special Inspector General overseeing the $700 billion Troubled Asset Relief Program.
Treasury has sold its preferred stock and reduced its equity stake to 7.3 percent. Treasury owns 101.3 million GM shares as of September 26, the most recent date available.
The U.S. government has said it plans to sell its remaining GM shares by April 2014. Some analysts said Treasury could even unwind its position by year end.
The exit of Treasury will eliminate the stigma of government ownership that has hovered over the automaker since the bailout, which prompted some critics to dub the company "Government Motors."

I just have to shake my head readers.  Oh, well, the Labor Unions were kept happy for a while.  

And then:

"To inform people is hard slugging. Everything is lined up against the public being informed, or the policymakers for that matter. News is contaminated by its service to special interests and hidden agendas. Many scientists or their employers are dependent on federal money. Even psychologists and anthropologists were roped into the government's torture and occupation programs. Economists tell lies for corporations and Wall Street. Plant and soil scientists tell lies for agribusiness and Monsanto. Truth tellers are slandered and persecuted. However, persistence can eventually win out. In the long-run, truth sometimes emerges. But not always. And not always in time."  Paul Craig Roberts